Cover Page
Cover Page - shares | 9 Months Ended | |
Sep. 30, 2020 | Nov. 05, 2020 | |
Cover [Abstract] | ||
Document Type | 10-Q | |
Document Quarterly Report | true | |
Document Period End Date | Sep. 30, 2020 | |
Document Transition Report | false | |
Entity File Number | 001-36384 | |
Entity Registrant Name | MAGNITE, INC. | |
Entity Incorporation, State or Country Code | DE | |
Entity Tax Identification Number | 20-8881738 | |
Entity Address, Address Line One | 12181 Bluff Creek Drive, | |
Entity Address, Address Line Two | 4th Floor | |
Entity Address, City or Town | Los Angeles, | |
Entity Address, State or Province | CA | |
Entity Address, Postal Zip Code | 90094 | |
City Area Code | (310) | |
Local Phone Number | 207-0272 | |
Title of 12(b) Security | Common stock, par value $0.00001 per share | |
Trading Symbol | MGNI | |
Security Exchange Name | NASDAQ | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Filer Category | Accelerated Filer | |
Entity Small Business | false | |
Entity Emerging Growth Company | false | |
Entity Shell Company | false | |
Entity Common Stock, Shares Outstanding | 111,958,965 | |
Entity Central Index Key | 0001595974 | |
Amendment Flag | false | |
Document Fiscal Year Focus | 2020 | |
Document Fiscal Period Focus | Q3 | |
Current Fiscal Year End Date | --12-31 |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets - USD ($) $ in Thousands | Sep. 30, 2020 | Dec. 31, 2019 |
Current assets: | ||
Cash and cash equivalents | $ 103,797 | $ 88,888 |
Accounts receivable, net | 412,435 | 217,571 |
Prepaid expenses and other current assets | 13,367 | 6,591 |
TOTAL CURRENT ASSETS | 529,599 | 313,050 |
Property and equipment, net | 18,876 | 23,667 |
Right-of-use lease asset | 42,736 | 21,491 |
Internal use software development costs, net | 17,386 | 16,053 |
Intangible assets, net | 97,131 | 11,386 |
Other assets, non-current | 2,942 | 2,103 |
Goodwill | 157,804 | 7,370 |
TOTAL ASSETS | 866,474 | 395,120 |
Current liabilities: | ||
Accounts payable and accrued expenses | 457,428 | 259,439 |
Lease liabilities, current | 11,176 | 7,282 |
Other current liabilities | 5,019 | 778 |
TOTAL CURRENT LIABILITIES | 473,623 | 267,499 |
Lease liabilities, non-current | 34,242 | 15,231 |
Other liabilities, non-current | 2,478 | 454 |
TOTAL LIABILITIES | 510,343 | 283,184 |
Commitments and contingencies (Note 11) | ||
STOCKHOLDERS' EQUITY | ||
Preferred stock, $0.00001 par value, 10,000 shares authorized at September 30, 2020 and December 31, 2019; 0 shares issued and outstanding at September 30, 2020 and December 31, 2019 | 0 | 0 |
Common stock, $0.00001 par value; 500,000 shares authorized at September 30, 2020 and December 31, 2019; 110,712 and 53,888 shares issued and outstanding at September 30, 2020 and December 31, 2019, respectively | 2 | 1 |
Additional paid-in capital | 759,116 | 453,064 |
Accumulated other comprehensive loss | (2,585) | (45) |
Accumulated deficit | (400,402) | (341,084) |
TOTAL STOCKHOLDERS' EQUITY | 356,131 | 111,936 |
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY | $ 866,474 | $ 395,120 |
Condensed Consolidated Balanc_2
Condensed Consolidated Balance Sheets (Parenthetical) - $ / shares | Sep. 30, 2020 | Dec. 31, 2019 |
Statement of Financial Position [Abstract] | ||
Preferred stock, par value (usd per share) | $ 0.00001 | $ 0.00001 |
Preferred stock, shares authorized (in shares) | 10,000,000 | 10,000,000 |
Preferred stock, shares issued (in shares) | 0 | 0 |
Preferred stock, shares outstanding (in shares) | 0 | 0 |
Common stock, par value (usd per share) | $ 0.00001 | $ 0.00001 |
Common stock, shares authorized (in shares) | 500,000,000 | 500,000,000 |
Common stock, shares, issued (in shares) | 110,712,000 | 53,888,000 |
Common stock, shares, outstanding (in shares) | 110,712,000 | 53,888,000 |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Operations - USD ($) shares in Thousands, $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | |
Income Statement [Abstract] | ||||
Revenue | $ 60,982 | $ 37,642 | $ 139,625 | $ 107,928 |
Expenses: | ||||
Cost of revenue | 21,031 | 13,869 | 56,579 | 44,070 |
Sales and marketing | 21,761 | 11,040 | 53,059 | 33,151 |
Technology and development | 13,562 | 10,293 | 37,318 | 29,848 |
General and administrative | 13,314 | 9,121 | 38,221 | 29,428 |
Merger and restructuring costs | 2,254 | 0 | 16,677 | 0 |
Total expenses | 71,922 | 44,323 | 201,854 | 136,497 |
Loss from operations | (10,940) | (6,681) | (62,229) | (28,569) |
Other (income) expense: | ||||
Interest (income) expense, net | 30 | (218) | (112) | (625) |
Other income | (1,194) | (48) | (2,487) | (236) |
Foreign exchange (gain) loss, net | 293 | (296) | (845) | (138) |
Total other income, net | (871) | (562) | (3,444) | (999) |
Loss before income taxes | (10,069) | (6,119) | (58,785) | (27,570) |
Provision (benefit) for income taxes | 446 | 55 | 533 | (569) |
Net loss | $ (10,515) | $ (6,174) | $ (59,318) | $ (27,001) |
Net loss per share: | ||||
Basic and Diluted (usd per share) | $ (0.10) | $ (0.12) | $ (0.65) | $ (0.52) |
Weighted average shares used to compute net loss per share: | ||||
Basic and Diluted (in shares) | 110,416 | 53,023 | 91,371 | 52,324 |
Condensed Consolidated Statem_2
Condensed Consolidated Statements of Comprehensive Loss - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | |
Statement of Comprehensive Income [Abstract] | ||||
Net loss | $ (10,515) | $ (6,174) | $ (59,318) | $ (27,001) |
Other comprehensive income (loss): | ||||
Unrealized gain on investments | 0 | 0 | 0 | 2 |
Foreign currency translation adjustments | 18 | (292) | (2,540) | (328) |
Other comprehensive income (loss) | 18 | (292) | (2,540) | (326) |
Comprehensive loss | $ (10,497) | $ (6,466) | $ (61,858) | $ (27,327) |
Condensed Consolidated Statem_3
Condensed Consolidated Statements of Stockholders' Equity - USD ($) shares in Thousands, $ in Thousands | Total | Common Stock | Additional Paid-In Capital | Accumulated Other Comprehensive Income (Loss) | Accumulated Deficit |
Beginning Balance (in shares) at Dec. 31, 2018 | 51,159 | ||||
Beginning Balance at Dec. 31, 2018 | $ 118,013 | $ 1 | $ 433,877 | $ (259) | $ (315,606) |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||
Exercise of common stock options (in shares) | 76 | ||||
Exercise of common stock options | 251 | 251 | |||
Restricted stock awards, net (in shares) | (182) | ||||
Issuance of common stock related to RSU vesting (in shares) | 1,171 | ||||
Shares withheld related to net share settlement (in shares) | 459 | ||||
Shares withheld related to net share settlement | (1,835) | (1,835) | |||
Stock-based compensation | 4,514 | 4,514 | |||
Other comprehensive income (loss) | 94 | 94 | |||
Net loss | (12,546) | (12,546) | |||
Ending Balance (in shares) at Mar. 31, 2019 | 51,765 | ||||
Ending Balance at Mar. 31, 2019 | 108,491 | $ 1 | 436,807 | (165) | (328,152) |
Beginning Balance (in shares) at Dec. 31, 2018 | 51,159 | ||||
Beginning Balance at Dec. 31, 2018 | 118,013 | $ 1 | 433,877 | (259) | (315,606) |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||
Other comprehensive income (loss) | (326) | ||||
Net loss | (27,001) | ||||
Ending Balance (in shares) at Sep. 30, 2019 | 53,073 | ||||
Ending Balance at Sep. 30, 2019 | 104,123 | $ 1 | 447,314 | (585) | (342,607) |
Beginning Balance (in shares) at Mar. 31, 2019 | 51,765 | ||||
Beginning Balance at Mar. 31, 2019 | 108,491 | $ 1 | 436,807 | (165) | (328,152) |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||
Exercise of common stock options (in shares) | 79 | ||||
Exercise of common stock options | 132 | $ 0 | 132 | 0 | 0 |
Issuance of common stock related to employee stock purchase plan (in shares) | 118 | ||||
Issuance of common stock related to employee stock purchase plan | 477 | 477 | |||
Issuance of common stock related to RSU vesting (in shares) | 1,022 | ||||
Shares withheld related to net share settlement | (12) | (12) | |||
Stock-based compensation | 4,949 | 4,949 | |||
Other comprehensive income (loss) | (128) | (128) | |||
Net loss | (8,281) | (8,281) | |||
Ending Balance (in shares) at Jun. 30, 2019 | 52,984 | ||||
Ending Balance at Jun. 30, 2019 | 105,628 | $ 1 | 442,353 | (293) | (336,433) |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||
Exercise of common stock options (in shares) | 83 | ||||
Exercise of common stock options | 146 | 146 | |||
Issuance of common stock related to RSU vesting (in shares) | 6 | ||||
Stock-based compensation | 4,815 | 4,815 | |||
Other comprehensive income (loss) | (292) | (292) | |||
Net loss | (6,174) | (6,174) | |||
Ending Balance (in shares) at Sep. 30, 2019 | 53,073 | ||||
Ending Balance at Sep. 30, 2019 | $ 104,123 | $ 1 | 447,314 | (585) | (342,607) |
Beginning Balance (in shares) at Dec. 31, 2019 | 53,888 | 53,888 | |||
Beginning Balance at Dec. 31, 2019 | $ 111,936 | $ 1 | 453,064 | (45) | (341,084) |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||
Exercise of common stock options (in shares) | 27 | ||||
Exercise of common stock options | 23 | 23 | |||
Issuance of common stock related to RSU vesting (in shares) | 1,861 | ||||
Shares withheld related to net share settlement (in shares) | 716 | ||||
Shares withheld related to net share settlement | (7,485) | (7,485) | |||
Stock-based compensation | 4,218 | 4,218 | |||
Other comprehensive income (loss) | (789) | (789) | |||
Net loss | (9,675) | (9,675) | |||
Ending Balance (in shares) at Mar. 31, 2020 | 55,060 | ||||
Ending Balance at Mar. 31, 2020 | $ 98,228 | $ 1 | 449,820 | (834) | (350,759) |
Beginning Balance (in shares) at Dec. 31, 2019 | 53,888 | 53,888 | |||
Beginning Balance at Dec. 31, 2019 | $ 111,936 | $ 1 | 453,064 | (45) | (341,084) |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||
Other comprehensive income (loss) | (2,540) | ||||
Net loss | $ (59,318) | ||||
Ending Balance (in shares) at Sep. 30, 2020 | 110,712 | 110,712 | |||
Ending Balance at Sep. 30, 2020 | $ 356,131 | $ 2 | 759,116 | (2,585) | (400,402) |
Beginning Balance (in shares) at Mar. 31, 2020 | 55,060 | ||||
Beginning Balance at Mar. 31, 2020 | 98,228 | $ 1 | 449,820 | (834) | (350,759) |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||
Exercise of common stock options (in shares) | 746 | ||||
Exercise of common stock options | 2,276 | 2,276 | |||
Issuance of common stock related to employee stock purchase plan (in shares) | 159 | ||||
Issuance of common stock related to employee stock purchase plan | 693 | 693 | |||
Issuance of common stock related to RSU vesting (in shares) | 1,904 | ||||
Shares withheld related to net share settlement (in shares) | 107 | ||||
Shares withheld related to net share settlement | (349) | (349) | |||
Issuance of common stock associated with the Merger (in shares) | 52,099 | ||||
Issuance of common stock associated with the Merger | 275,773 | $ 1 | 275,772 | ||
Exchange of stock options and RSU related to Merger | 11,646 | 11,646 | |||
Stock-based compensation | 10,101 | 10,101 | |||
Other comprehensive income (loss) | (1,769) | (1,769) | |||
Net loss | (39,128) | (39,128) | |||
Ending Balance (in shares) at Jun. 30, 2020 | 109,861 | ||||
Ending Balance at Jun. 30, 2020 | 357,471 | $ 2 | 749,959 | (2,603) | (389,887) |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||
Exercise of common stock options (in shares) | 563 | ||||
Exercise of common stock options | 1,569 | 1,569 | |||
Issuance of common stock related to RSU vesting (in shares) | 289 | ||||
Shares withheld related to net share settlement (in shares) | 1 | ||||
Shares withheld related to net share settlement | (7) | (7) | |||
Stock-based compensation | 7,595 | 7,595 | |||
Other comprehensive income (loss) | 18 | 18 | |||
Net loss | $ (10,515) | (10,515) | |||
Ending Balance (in shares) at Sep. 30, 2020 | 110,712 | 110,712 | |||
Ending Balance at Sep. 30, 2020 | $ 356,131 | $ 2 | $ 759,116 | $ (2,585) | $ (400,402) |
Condensed Consolidated Statem_4
Condensed Consolidated Statements of Cash Flows - USD ($) $ in Thousands | 9 Months Ended | |
Sep. 30, 2020 | Sep. 30, 2019 | |
OPERATING ACTIVITIES: | ||
Net loss | $ (59,318) | $ (27,001) |
Adjustments to reconcile net loss to net cash (used in) provided by operating activities: | ||
Depreciation and amortization | 36,157 | 24,841 |
Stock-based compensation | 21,298 | 13,877 |
(Gain) loss on disposal of property and equipment | (17) | 92 |
Provision for doubtful accounts | 31 | 897 |
Accretion of available-for-sale securities | 0 | 24 |
Non-cash lease expense | (601) | (469) |
Unrealized foreign currency gains, net | (2,108) | (391) |
Deferred income taxes | 837 | (748) |
Changes in operating assets and liabilities: | ||
Accounts receivable | (46,145) | 32,149 |
Prepaid expenses and other assets | (2,896) | 672 |
Accounts payable and accrued expenses | 23,464 | (34,018) |
Other liabilities | 5,260 | (117) |
Net cash (used in) provided by operating activities | (24,038) | 9,808 |
INVESTING ACTIVITIES: | ||
Purchases of property and equipment | (4,211) | (5,605) |
Capitalized internal use software development costs | (6,894) | (6,000) |
Cash, cash equivalents and restricted cash acquired in Merger | 54,595 | 0 |
Maturities of available-for-sale securities | 0 | 7,500 |
Net cash provided by (used in) investing activities | 43,490 | (4,105) |
FINANCING ACTIVITIES: | ||
Proceeds from exercise of stock options | 3,868 | 529 |
Proceeds from issuance of common stock under employee stock purchase plan | 693 | 477 |
Taxes paid related to net share settlement | (7,841) | (1,847) |
Net cash used in financing activities | (3,280) | (841) |
EFFECT OF EXCHANGE RATE CHANGES ON CASH, CASH EQUIVALENTS AND RESTRICTED CASH | 41 | (192) |
CHANGE IN CASH, CASH EQUIVALENTS AND RESTRICTED CASH | 16,213 | 4,670 |
CASH, CASH EQUIVALENTS AND RESTRICTED CASH — Beginning of period | 88,888 | 80,452 |
CASH, CASH EQUIVALENTS AND RESTRICTED CASH — End of period | 105,101 | 85,122 |
SUPPLEMENTAL DISCLOSURES OF OTHER CASH FLOW INFORMATION: | ||
Cash paid for income taxes | 829 | 300 |
Cash paid for interest | 49 | 46 |
Capitalized assets financed by accounts payable and accrued expenses | 2,388 | 2,005 |
Capitalized stock-based compensation | 616 | 401 |
Operating lease right-of-use assets obtained in exchange for new operating lease liabilities | 2,036 | 13,074 |
Change in restricted cash | 1,304 | 0 |
Common stock and options issued for Merger | $ 287,418 | $ 0 |
Organization and Summary of Sig
Organization and Summary of Significant Accounting Policies | 9 Months Ended |
Sep. 30, 2020 | |
Accounting Policies [Abstract] | |
Organization and Summary of Significant Accounting Policies | Organization and Summary of Significant Accounting Policies Company Overview Magnite, Inc. ("Magnite" or the "Company"), formerly known as The Rubicon Project, Inc., was formed and began operations in April 2007. On April 1, 2020, Magnite completed a stock-for-stock merger ("Merger") with Telaria, Inc., ("Telaria"), a leading provider of connected television ("CTV") technology. The Company operates a sell side advertising platform that offers buyers and sellers of digital advertising a single partner for transacting globally across all channels, formats, and auction types. On June 8, 2020, the Company voluntarily delisted its common stock from the New York Stock Exchange ("NYSE") and commenced listing on The Nasdaq Global Select Market of The Nasdaq Stock Market LLC ("Nasdaq"). On June 30, 2020, the Company changed its name from "The Rubicon Project, Inc." to "Magnite, Inc." In connection with the name change, the Company also changed its ticker symbol from "RUBI" to "MGNI." Magnite has its principal offices in Los Angeles, New York City, London, and Sydney, and additional offices in Europe, Asia, North America, and South America. The Company provides a technology solution to automate the purchase and sale of digital advertising inventory for buyers and sellers. The Company’s platform features applications and services for sellers of digital advertising inventory, or publishers, that own or operate websites, applications, CTV channels, and other digital media properties, to manage and monetize their inventory; applications and services for buyers, including advertisers, agencies, agency trading desks, and demand side platforms, to buy digital advertising inventory; and a transparent, independent marketplace that brings buyers and sellers together and facilitates intelligent decision making and automated transaction execution at scale. The Company's clients include many of the world's leading publishers of websites, CTV channels, mobile applications, and buyers of digital advertising inventory. Publishers monetize their inventory through the Company’s platform by seamlessly connecting to a global market of integrated buyers that transact through real-time bidding, which includes direct sale of premium inventory to a buyer, referred to as private marketplace ("PMP"), and open auction bidding, where buyers bid against each other in a real-time auction for the right to purchase a publisher’s inventory, referred to as open marketplace ("OMP"). At the same time, buyers leverage the Company’s platform to manage their advertising spending and reach their target audiences, simplify order management and campaign tracking, obtain actionable insights into audiences for their advertising, and access impression-level purchasing from thousands of sellers. Basis of Presentation and Summary of Significant Accounting Policies The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with United States Generally Accepted Accounting Principles, or GAAP, for interim financial information and the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring adjustments) considered necessary for a fair statement of the results for the interim period presented have been included. Operating results for the nine months ended September 30, 2020 are not necessarily indicative of the results that may be expected for any future interim period, the year ending December 31, 2020, or for any future year. The condensed consolidated balance sheet at December 31, 2019 has been derived from the audited financial statements at that date, but does not include all of the disclosures required by GAAP. The accompanying condensed consolidated financial statements should be read in conjunction with the Company's audited consolidated financial statements and notes thereto for the year ended December 31, 2019 included in its 2019 Annual Report on Form 10-K. There have been no significant changes in the Company's accounting policies from those disclosed in its audited consolidated financial statements and notes thereto for the year ended December 31, 2019 included in its Annual Report on Form 10-K. Reclassifications Certain prior period amounts have been reclassified to conform to the current period presentation. Specifically, this includes amounts reclassified for the three months ended March 31, 2020 to conform to the current presentation for the three and nine months ended September 30, 2020 in the condensed consolidated statements of operations related to merger and restructuring costs. Use of Estimates The preparation of condensed consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported and disclosed financial statements and accompanying footnotes. Due to the economic uncertainty as a result of the COVID-19 pandemic, it has become more difficult to apply certain assumptions and judgments into these estimates. The extent of the impact of COVID-19 pandemic on the Company's operational and financial performance will depend on future developments, which are highly uncertain and cannot be predicted, including but not limited to, the duration and spread of the outbreak, its severity, including any resurgence, the actions to contain the virus or treat its impact, and how quickly and to what extent normal economic and operating conditions can resume. During the nine months ended September 30, 2020, this uncertainty resulted in a higher level of judgment related to its estimates and assumptions. As of the date of issuance of the condensed consolidated financial statements for the three and nine months ended September 30, 2020, the Company is not aware of any specific event or circumstance that would require the Company to update its estimates, judgments, or revise the carrying value of its assets or liabilities. These estimates may change, as new events occur and additional information is obtained, and are recognized in the consolidated financial statements as soon as they become known. Actual results could differ from those estimates and any such differences may be material to the Company's financial statements. Recently Adopted Accounting Standards In June 2016, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") 2016-13— Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments (" ASU 2016-13"). This guidance requires entities to use a current expected credit loss methodology to measure impairments of certain financial assets and to recognize an allowance for its estimate of lifetime expected credit losses. The main objective of this update is to provide financial statement users with more decision-useful information about the expected credit losses on financial instruments and other commitments to extend credit held by a reporting entity at each reporting date. The guidance was effective for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years. The Company adopted ASU 2016-13 as of January 1, 2020. The standard had no material impact on its consolidated financial statements. In August 2018, the FASB issued ASU 2018-13— Fair Value Measurement (Topic 820): Disclosure Framework—Changes to the Disclosure Requirements for Fair Value Measurement ("ASU 2018-13"), to streamline the disclosure requirements of ASC Topic 820—Fair Value Measurement. ASU 2018 removes certain disclosure requirements, including the valuation process for Level 3 fair value measurements, and adds certain quantitative disclosures around Level 3 fair value measurements. This ASU is effective for annual reporting periods beginning after December 15, 2019, including interim periods within that reporting period, with early adoption permitted. The provisions of ASU 2018-13 are required to be adopted retrospectively, with the exception of disclosure of the range and weighted average of significant unobservable inputs used to develop Level 3 measurements, which can be adopted prospectively. The Company adopted ASU 2018-13 as of January 1, 2020. The standard had no material impact on its consolidated financial statements and related disclosures. In August 2018, the FASB issued ASU 2018-15— Intangibles—Goodwill and Other—Internal-Use Software (Subtopic 350-40): Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract ("ASU 2018-15"). ASU 2018-15 was issued to clarify the requirements of ASC 350-40— Intangibles—Goodwill and Other—Internal-Use Software ("ASC 350-40"). The ASU clarifies that implementation, setup and other upfront costs related to cloud computing agreements ("CCA") should be accounted for under ASC 350-40. ASC 2018-15 will require companies to capitalize certain costs incurred when purchasing a CCA that is a service. Under the new guidance, companies will apply the same criteria for capitalizing implementation costs in a CCA service as they would for internal-use software. The capitalized implementation costs will generally be expensed over the term of the service arrangement and the related assets will be assessed for impairment using the same model applied to long-lived assets. This ASU is effective for annual reporting periods beginning after December 15, 2019, including interim periods within that reporting period, with early adoption permitted. ASU 2018-15 can be applied either retrospectively or prospectively to all implementation costs incurred after the date of adoption. The Company adopted ASU 2018-15 as of January 1, 2020 on a prospective basis. The standard had no material impact on its consolidated financial statements and related disclosures. Recent Accounting Pronouncements In December 2019, the FASB issued ASU 2019-12— Simplifying the Accounting for Income Taxes ("ASU 2019-12"). ASU 2019-12 simplifies the accounting for income taxes by removing certain exceptions to general principles in Topic 740 and clarifies and amends existing guidance for clarity and consistent application. This guidance is effective for fiscal years and interim periods within those fiscal years, beginning after December 15, 2020 including interim reporting periods within those fiscal years. Early adoption is permitted. The Company is evaluating the impact of adopting this new accounting guidance on its consolidated financial statements and related disclosures, but does not anticipate it will have a material impact. The Company does not believe there are any other recently issued and effective or not yet effective pronouncements that would have or are expected to have any significant effect on the Company’s financial position, cash flows or results of operations. |
Net Income (Loss) Per Share
Net Income (Loss) Per Share | 9 Months Ended |
Sep. 30, 2020 | |
Earnings Per Share [Abstract] | |
Net Income (Loss) Per Share | Net Income (Loss) Per Share The following table presents the basic and diluted net loss per share: Three Months Ended Nine Months Ended September 30, 2020 September 30, 2019 September 30, 2020 September 30, 2019 (in thousands, except per share data) Basic and Diluted EPS: Net loss $ (10,515) $ (6,174) $ (59,318) $ (27,001) Weighted-average common shares outstanding 110,416 53,029 91,371 52,349 Weighted-average unvested restricted stock — (6) — (25) Weighted-average common shares outstanding used to compute net loss per share 110,416 53,023 91,371 52,324 Basic and diluted net loss per share $ (0.10) $ (0.12) $ (0.65) $ (0.52) The following weighted-average shares have been excluded from the calculation of diluted net loss per share attributable to common stockholders for each period presented because they are anti-dilutive: Three Months Ended Nine Months Ended September 30, 2020 September 30, 2019 September 30, 2020 September 30, 2019 (in thousands) (in thousands) Options to purchase common stock 1,920 1,078 1,720 732 Unvested restricted stock awards — — — 16 Unvested restricted stock units 3,768 5,168 3,851 3,911 Unvested performance stock units 14 — 6 — ESPP 30 48 40 35 Total shares excluded from net loss per share 5,732 6,294 5,617 4,694 |
Revenues
Revenues | 9 Months Ended |
Sep. 30, 2020 | |
Revenue from Contract with Customer [Abstract] | |
Revenues | Revenues The Company generates revenue from transactions where it provides a platform for the purchase and sale of digital advertising inventory. The Company also generates revenue from the fee it charges clients for use of its Demand Manager product, which generally is a percentage of the client's advertising spending on any advertising marketplace. The Company's platform dynamically connects sellers and buyers of advertising inventory in a digital marketplace. The Company's solution incorporates proprietary machine-learning algorithms, sophisticated data processing, high-volume storage, detailed analytics capabilities, and a distributed infrastructure. Digital advertising inventory is created when consumers access sellers’ content. Sellers provide digital advertising inventory to the Company’s platform in the form of advertising requests, or ad requests. When the Company receives ad requests from sellers, it sends bid requests to buyers, which enable buyers to bid on sellers’ digital advertising inventory. Winning bids can create advertising, or paid impressions, for the seller to present to the consumer. The total volume of spending between buyers and sellers on the Company’s platform is referred to as advertising spend. The Company keeps a percentage of that advertising spend as a fee, and remits the remainder to the seller. The fee that the Company retains from the gross advertising spend on its platform is recognized as revenue. The fee earned on each transaction is based on the pre-existing agreement between the Company and the seller and the clearing price of the winning bid. The Company recognizes revenue upon fulfillment of its performance obligation to a client, which occurs at the point in time an ad renders and is counted as a paid impression, subject to an underlying agreement existing with the client and a fixed or determinable transaction price. Performance obligations for all transactions are satisfied, and the corresponding revenue is recognized, at a distinct point in time when an ad renders. The Company does not have arrangements with multiple performance obligations. The determination of whether revenue should be reported on a gross or net basis is based on an assessment of whether the Company is acting as the principal or an agent in the transaction. In determining whether the Company is acting as the principal or an agent, the Company follows the accounting guidance for principal-agent considerations. Making such determinations involves judgment and is based on an evaluation of the terms of each arrangement, none of which are considered presumptive or determinative. For substantially all transactions on the Company's platform, the Company reports revenue on a net basis as it does not act as the principal in the purchase and sale of digital advertising inventory because it does not have control of the digital advertising inventory and does not set prices agreed upon within the auction marketplace. However, for certain transactions related to revenue streams acquired in connection with the Merger with Telaria, the Company reports revenue on a gross basis, based primarily on its determination that the Company acts as the primary obligor in the delivery of advertising campaigns for buyers with respect to such transactions. For the three months ended September 30, 2020, revenue reported on a gross basis was less than 2% of total revenue. The following table presents our revenue by channel for the three and nine months ended September 30, 2020 and 2019: Three Months Ended Nine Months Ended September 30, 2020 September 30, 2019 September 30, 2020 September 30, 2019 (in thousands, except percentages) Channel: CTV $ 11,059 18 % $ — — % $ 18,978 14 % $ — — % Desktop 20,901 34 15,936 42 51,468 37 47,745 44 Mobile 29,022 48 21,706 58 69,179 49 60,183 56 Total $ 60,982 100 % $ 37,642 100 % $ 139,625 100 % $ 107,928 100 % The following table presents our revenue disaggregated by geographic location, based on the location of the Company's sellers: Three Months Ended Nine Months Ended September 30, 2020 September 30, 2019 September 30, 2020 September 30, 2019 (in thousands) (in thousands) United States $ 45,048 $ 26,378 $ 101,168 $ 73,654 International 15,934 11,264 38,457 34,274 Total $ 60,982 $ 37,642 $ 139,625 $ 107,928 Payment terms are specified in agreements between the Company and the buyers and sellers on its platform. The Company generally bills buyers at the end of each month for the full purchase price of impressions filled in that month. The Company recognizes volume discounts as a reduction of revenue as they are incurred. Specific payment terms may vary by agreement, but are generally seventy-five days or less. The Company's accounts receivable are recorded at the amount of gross billings to buyers, net of allowances for the amounts the Company is responsible to collect. The Company's accounts payable related to amounts due to sellers are recorded at the net amount payable to sellers (see Note 5). Accordingly, both accounts receivable and accounts payable appear large in relation to revenue reported on a net basis. At September 30, 2020, two buyers accounted for 37% and 9%, respectively, of consolidated accounts receivable. At December 31, 2019, two buyers accounted for 23% and 17%, respectively, of consolidated accounts receivable. Accounts receivable are recorded at the invoiced amount, are unsecured, and do not bear interest. The allowance for doubtful accounts is reviewed quarterly, requires judgment, and is based on the best estimate of the amount of probable credit losses in existing accounts receivable. The Company reviews the status of the then-outstanding accounts receivable on a customer-by-customer basis, taking into consideration the aging schedule of receivables, its historical collection experience, current information regarding the client, subsequent collection history, and other relevant data, in establishing the allowance for doubtful accounts. Accounts receivable is presented net of an allowance for doubtful accounts of $4.5 million at September 30, 2020, and $3.4 million at December 31, 2019. Accounts receivable are written off against the allowance for doubtful accounts when the Company determines amounts are no longer collectible. The Company reviews the associated payable to sellers for recovery of buyer receivable allowance and write-offs; in some cases, the Company can reduce the payable to sellers. The reduction of seller payables related to recovery of uncollected buyer receivables is netted against allowance expense. The contra seller payables related to recoveries were $1.9 million and $0.9 million as of September 30, 2020 and December 31, 2019, respectively. The following is a summary of activity in the allowance for doubtful accounts for the three and nine months ended September 30, 2020 and 2019: Three Months Ended Nine Months Ended September 30, 2020 September 30, 2019 September 30, 2020 September 30, 2019 (in thousands) (in thousands) Allowance for doubtful accounts, Beginning Balance $ 4,672 $ 1,720 $ 3,400 $ 1,340 Allowance for doubtful accounts, Merger-assumed — — 1,033 — Write-offs (1) (71) (1,897) (3,278) Increase (decrease) in provision for expected credit losses (274) (33) 1,854 3,554 Recoveries of previous write-offs 83 14 90 14 Allowance for doubtful accounts, September 30 $ 4,480 $ 1,630 $ 4,480 $ 1,630 During the three months ended September 30, 2020 and September 30, 2019, the provision for expected credit losses associated with accounts receivable and the offset by increases of contra seller payables related to recoveries of uncollected buyer receivables were insignificant, resulting in insignificant amount of bad debt. During the nine months ended September 30, 2020, the provision for expected credit losses associated with accounts receivable of $1.9 million was offset by increases of contra seller payables related to recoveries of uncollected buyer receivables of $1.8 million, which resulted in an insignificant amount of bad debt expense. During the nine months ended September 30, 2019, the provision for expected credit losses associated with accounts receivable of $3.6 million was offset by increases of contra seller payables related to recoveries of uncollected buyer receivables of $2.7 million, which resulted in bad debt expense of $0.9 million. |
Fair Value Measurements
Fair Value Measurements | 9 Months Ended |
Sep. 30, 2020 | |
Fair Value Disclosures [Abstract] | |
Fair Value Measurements | Fair Value Measurements Recurring Fair Value Measurements Fair value represents the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. Valuation techniques used to measure fair value must maximize the use of observable inputs and minimize the use of unobservable inputs. Observable inputs are based on market data obtained from independent sources. The fair value hierarchy is based on the following three levels of inputs, of which the first two are considered observable and the last one is considered unobservable: • Level 1 – Quoted prices (unadjusted) in active markets for identical assets or liabilities that the Company has the ability to access at the measurement date. • Level 2 – Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly. • Level 3 – Unobservable inputs. The table below sets forth a summary of financial instruments that are measured at fair value on a recurring basis at September 30, 2020: Total Quoted Prices in Significant Other Significant (in thousands) Cash equivalents $ 7,868 $ 7,868 $ — $ — The table below sets forth a summary of financial instruments that are measured at fair value on a recurring basis at December 31, 2019: Total Quoted Prices in Significant Other Significant (in thousands) Cash equivalents $ 13,501 $ 13,501 $ — $ — |
Other Balance Sheet Amounts
Other Balance Sheet Amounts | 9 Months Ended |
Sep. 30, 2020 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Other Balance Sheet Amounts | Other Balance Sheet Amounts Accounts payable and accrued expenses included the following: September 30, 2020 December 31, 2019 (in thousands) Accounts payable—seller $ 434,340 $ 247,891 Accounts payable—trade 10,065 4,822 Accrued employee-related payables 13,023 6,726 Total $ 457,428 $ 259,439 |
Goodwill and Intangible Assets
Goodwill and Intangible Assets | 9 Months Ended |
Sep. 30, 2020 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Goodwill and Intangible Assets | Goodwill and Intangible Assets The Company's goodwill balance as of September 30, 2020 and December 31, 2019 was $157.8 million and $7.4 million, respectively. The increase during the nine months ended September 30, 2020 was a result of the Merger with Telaria (see Note 7). The Company’s intangible assets as of September 30, 2020 and December 31, 2019 included the following: September 30, 2020 December 31, 2019 (in thousands) Amortizable intangible assets: Developed technology $ 77,158 $ 19,658 Customer relationships 37,450 1,650 In-process research and development 8,230 — Backlog 920 — Non-compete agreements 70 70 Trademarks 200 20 Total identifiable intangible assets, gross 124,028 21,398 Accumulated amortization—intangible assets: Developed technology (18,110) (9,823) Customer relationships (7,941) (162) In-process research and development — — Backlog (613) — Non-compete agreements (33) (7) Trademarks (200) (20) Total accumulated amortization—intangible assets (26,897) (10,012) Total identifiable intangible assets, net $ 97,131 $ 11,386 Amortization of intangible assets for the three months ended September 30, 2020 and 2019 was $7.8 million and $0.7 million, respectively, and $16.9 million and $2.3 million for the nine months ended September 30, 2020 and 2019, respectively. The estimated remaining amortization expense associated with the Company's intangible assets was as follows as of September 30, 2020: Fiscal Year Amount (in thousands) Remaining 2020 $ 7,822 2021 30,772 2022 26,132 2023 13,881 2024 13,697 Thereafter 4,827 Total $ 97,131 |
Business Combinations
Business Combinations | 9 Months Ended |
Sep. 30, 2020 | |
Business Combinations [Abstract] | |
Business Combinations | Business Combinations On April 1, 2020, (the "Acquisition Date"), the Company completed the Merger with Telaria. Upon completion of the Merger, each share of Telaria common stock issued and outstanding was converted into 1.082 shares of Magnite common stock. As a result, the Company issued 52,098,945 shares of Magnite common stock. In connection with the Merger, Magnite also assumed Telaria’s 2013 Equity Incentive Plan, as amended; 2008 Stock Plan, as amended; and the ScanScout, Inc. 2009 Equity Incentive Plan, as amended. As of the Acquisition Date, former holders of Telaria common stock owned approximately 48% and pre-merger holders of Magnite common stock owned approximately 52% of the common stock of the combined company on a fully diluted basis. The Merger was accounted for using the acquisition method of accounting in accordance with Accounting Standards Codification, referred to as ASC 805, Business Combinations . Magnite management determined that Magnite was the acquiror for financial accounting purposes. In identifying Magnite as the accounting acquiror, management considered the structure of the transaction and other actions contemplated by the merger agreement, relative outstanding share ownership and market values, the composition of the combined company’s board of directors, the relative size of Magnite and Telaria, and the designation of certain senior management positions of the combined company. In accordance with ASC 805, the Company recorded the acquisition based on the fair value of the consideration transferred and then allocated the purchase price to the identifiable assets acquired and liabilities assumed based on their respective fair values as of the Acquisition Date. The excess of the value of consideration transferred over the aggregate fair value of those net assets was recorded as goodwill. Any identified definite lived intangible assets will be amortized over their estimated useful lives and any identified intangible assets with indefinite useful lives and goodwill will not be amortized but will be tested for impairment at least annually. All intangible assets and goodwill will be tested for impairment when certain indicators are present. Determining the fair value of assets acquired and liabilities assumed requires management to use significant judgment and estimates including the selection of valuation methodologies, estimates of future revenues and cash flows, discount rates, and selection of comparable companies. Management's purchase price allocation is preliminary and subject to change pending finalization of the valuation, including finalization of tax attributes and tax related liabilities. Under the acquisition method of accounting for business combinations, if the Company identifies changes to acquired deferred tax asset ("DTA") valuation allowances or liabilities related to uncertain tax positions during the measurement period, and they are related to new information obtained about facts and circumstances that existed as of the acquisition date, those changes are considered a measurement-period adjustment, and the Company will record the offset to goodwill. The Company records all other changes to DTA valuation allowances and liabilities related to uncertain tax positions in current- period income tax expense. For purposes of measuring the estimated fair value, where applicable, of the assets acquired and the liabilities assumed as reflected in the unaudited condensed combined financial information, the Company has applied the guidance in ASC 820, Fair Value Measurement, which establishes a framework for measuring fair value. In accordance with ASC 820, fair value is an exit price and 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." Under ASC 805, acquisition-related transaction costs and acquisition-related restructuring charges are not included as components of consideration transferred but are accounted for as expenses in the period in which the costs are incurred. As part of the Merger, existing outstanding restricted stock units of Telaria common stock and stock options to purchase common stock of Telaria were exchanged for 1.082 restricted stock units of the Company and options to purchase the Company's common stock, respectively. The fair value of stock options exchanged on the date of the Merger attributable to pre-acquisition services was recorded as purchase consideration. The fair value of the restricted stock units and stock options exchanged on the date of the Merger attributable to post-acquisition services will be recorded as additional stock-based compensation expense in the Company's consolidated statements of operations over their remaining requisite service (vesting) periods. The following table summarizes the total purchase consideration (in thousands): Shares of Magnite common stock $ 274,604 Fair value of stock-based awards exchanged 11,646 Acceleration of single trigger equity awards, converted 1,168 Total purchase consideration $ 287,418 The purchase consideration for the acquisition included 52,008,316 shares of the Company's common stock with a fair value of approximately $274.6 million, based on the Company's stock price as reported on the NYSE on the Acquisition Date. The fair value of stock options and restricted stock units exchanged on the Acquisition Date attributable to pre-acquisition services of approximately $10.4 million and $1.2 million, respectively, have been recorded as purchase consideration. In addition, the Company recorded additional purchase consideration associated with acceleration of 90,629 shares of common stock issued associated with single-trigger equity awards in the amount of $1.2 million. The fair value of stock options and restricted stock units exchanged on the Acquisition Date attributable to post-acquisition services of $4.7 million and $12.2 million, respectively, will be recorded as additional stock-based compensation expense on the Company's consolidated statement of operations over their remaining requisite service (vesting) periods. The fair value of the purchase price was allocated to the identifiable assets acquired and liabilities assumed based upon their estimated fair values as of the date of the acquisition as set forth below: Cash and cash equivalents $ 51,848 Accounts receivable, net 150,924 Prepaid expenses and other current assets 3,190 Property and equipment, net 1,814 Right-of-use lease asset 26,627 Intangible assets 102,650 Restricted cash 2,747 Other assets, non-current 369 Deferred tax assets, non-current 103 Goodwill 150,434 Total assets acquired $ 490,706 Accounts payable and accrued expenses 173,643 Lease liabilities - current portion 5,322 Deferred revenue 11 Other current liabilities 365 Lease liabilities - non-current portion 23,323 Other liabilities, non-current 624 Total liabilities assumed 203,288 Total purchase price $ 287,418 The Company believes the amount of goodwill resulting from the purchase price allocation is primarily attributable to expected synergies from assembled workforce, an increase in development capabilities, increased offerings to customers, and enhanced opportunities for growth and innovation. Goodwill will not be amortized but instead will be tested for impairment at least annually or more frequently if certain indicators of impairment are present. In the event that goodwill has become impaired, the Company will record an expense for the amount impaired during the quarter in which the determination is made. The goodwill generated in the Merger is not tax deductible. The following table summarizes the components of the intangible assets and estimated useful lives (dollars in thousands): Estimated Useful Life Technology $ 57,500 5 years In-process research and development 8,230 4.7 years* Customer relationships 35,800 2.5 years Backlog 920 0.75 years Trademarks 200 0.25 years Total intangible assets acquired $ 102,650 * In-process research and development consists of two projects with a weighted-average useful life of 4.7 years. Amortization begins once associated projects are completed and it is determined the projects have alternative future use. The intangible assets are generally amortized on a straight-line basis, which approximates the pattern in which the economic benefits are consumed, over their estimated useful lives. Amortization of developed technology is included in cost of revenues and the amortization of customer relationships, backlog, and trademarks is included in sales and marketing expenses in the condensed consolidated statement of operations. Once the projects associated with acquired in-process research and development are completed, amortization will be included in cost of revenues in the consolidated statement of operations. The intangible assets generated in the Merger are not tax deductible. As such, as part of the Merger, deferred tax liabilities of $23.9 million were established related to the acquired intangible assets, which were fully offset by the estimated income tax effect of the partial release of Telaria's valuation allowance. The deferred tax liability was calculated based on an estimated combined tax rate of 23.3%. The Company recognized approximately $2.3 million and $16.7 million of acquisition related costs during the three and nine months ended September 30, 2020, respectively (see Note 8). In addition, as part of the Merger, the Company acquired Telaria's U.S. federal NOLs of approximately $126.2 million and state NOLs of approximately $128.0 million. Pursuant to Section 382 of the Internal Revenue Code, Telaria, Inc. underwent an ownership change for tax purposes. As a result, the use of the NOLs will be subject to annual Section 382 use limitations. The Company believes the ownership change will not impact the Company's ability to utilize substantially all of the NOLs to the extent it generates taxable income that can be offset by such losses. Unaudited Pro Forma Information The following table provides unaudited pro forma information as if Telaria had been merged with the Company as of January 1, 2019. The unaudited pro forma information reflects adjustments for additional amortization resulting from the fair value adjustments to assets acquired and liabilities assumed, adjustments for alignment of accounting policies, and transaction expenses as if the Merger occurred on January 1, 2019. The pro forma results do not include any anticipated cost synergies or other effects of the integration merged companies. Accordingly, pro forma amounts are not necessarily indicative of the results that actually would have occurred had the acquisition been completed on the dates indicated, nor is it indicative of the future operating results of the combined company. Three Months Ended Nine Months Ended September 30, 2019 September 30, 2020 September 30, 2019 (in thousands) Pro Forma Revenue $ 54,206 $ 154,663 $ 156,330 Pro Forma Net Loss $ (15,592) $ (69,706) $ (73,358) During the three and nine months ended September 30, 2020, post-Merger revenue on a stand-alone basis for Telaria was $19.7 million and $32.8 million, respectively. During the three and nine months ended September 30, 2020, due to the process of integrating the operations of Telaria into the operations of the Company, the determination of Telaria's post-Merger operating results on a standalone basis were impracticable. |
Merger and Restructuring Costs
Merger and Restructuring Costs | 9 Months Ended |
Sep. 30, 2020 | |
Restructuring and Related Activities [Abstract] | |
Merger and Restructuring Costs | Merger and Restructuring Costs Merger and restructuring costs consist primarily of professional services fees and employee termination costs, including stock-based compensation charges, associated with the Merger and resulting restructuring activities. The following table summarizes Merger and restructuring cost activity (in thousands): Three Months Ended Nine Months Ended September 30, 2020 September 30, 2020 (in thousands) Professional Service (investment banking advisory, legal and other professional services) $ 952 $ 9,533 Personnel related (severance and one-time termination benefit costs) 948 5,590 Non-cash stock-based compensation (double-trigger acceleration and severance) 354 1,554 Total merger and restructuring costs $ 2,254 $ 16,677 Accrued restructuring costs related to the Merger were $5.1 million at September 30, 2020. Accrued restructuring costs are included within other liabilities on the Company's condensed consolidated balance sheets. (in thousands) Accrued Merger and restructuring costs at December 31, 2019 $ — Restructuring costs, personnel related and non-cash stock-based compensation 7,144 Restructuring costs, Merger assumed loss contracts 3,592 Cash paid for restructuring costs (4,071) Non-cash stock-based compensation (1,554) Accrued Merger and restructuring costs at September 30, 2020 $ 5,111 |
Stock-Based Compensation
Stock-Based Compensation | 9 Months Ended |
Sep. 30, 2020 | |
Share-based Payment Arrangement [Abstract] | |
Stock-Based Compensation | Stock-Based CompensationThe Company’s equity incentive plans provide for the grant of equity awards, including non-statutory or incentive stock options, restricted stock awards ("RSAs"), and restricted stock units ("RSUs"), to the Company's employees, officers, directors, and consultants. The Company's board of directors administers the plans. Outstanding options vest based upon continued service at varying rates, but generally over four years from issuance with 25% vesting after one year of service and the remainder vesting monthly thereafter. RSAs and RSUs vest at varying rates, typically with approximately 25% vesting after approximately one year of service and the remainder vesting semi-annually thereafter, but with certain retention grants vesting 50% on each of the first and second anniversaries of the grant date. Restricted stock units granted in 2020 have approximately 25% of the award vesting after approximately one year of service and the remainder vesting quarterly thereafter. Options, RSAs, and RSUs granted under the plans accelerate under certain circumstances for certain participants upon a change in control, as defined in the governing plan or award agreement. An aggregate of 9,509,867 shares remained available for future grants at September 30, 2020 under the plans. Stock Options A summary of stock option activity for the nine months ended September 30, 2020 is as follows: Shares Under Option Weighted- Average Exercise Price Weighted- Average Contractual Life Aggregate Intrinsic Value (in thousands) (in thousands) Outstanding at December 31, 2019 4,262 $ 6.82 Granted 1,145 $ 5.32 Options assumed in Merger 4,998 $ 3.80 Exercised (1,336) $ 2.90 Expired (148) $ 13.31 Forfeited (131) $ 5.14 Outstanding at September 30, 2020 8,790 $ 5.42 5.54 years $ 20,257 Exercisable at September 30, 2020 5,732 $ 5.68 4.05 years $ 13,828 The total intrinsic values of options exercised during the nine months ended September 30, 2020 was $5.9 million. At September 30, 2020, the Company had unrecognized employee stock-based compensation expense relating to unvested stock options of approximately $8.3 million, which is expected to be recognized over a weighted-average period of 2.6 years. Total fair value of options vested during the nine months ended September 30, 2020 was $3.7 million. The Company estimates the fair value of stock options that contain service and/or performance conditions using the Black-Scholes option pricing model. The grant date fair value of options granted and assumed during the nine months ended September 30, 2020 was $3.17 per share. The grant date fair value of options granted during the nine months ended September 30, 2020, was $3.22 per share and the fair value of options assumed in the Merger was $3.16 per share. The weighted-average input assumptions used by the Company were as follows for options granted during the respective periods: Three Months Ended Nine Months Ended September 30, 2020 September 30, 2019 September 30, 2020 September 30, 2019 Expected term (in years) 6.3 N/A 6.3 6.1 Risk-free interest rate 0.33 % N/A 0.45 % 2.51 % Expected volatility 68 % N/A 67 % 60 % Dividend yield — % N/A — % — % Restricted Stock Awards A summary of RSA activity for the nine months ended September 30, 2020 is as follows: Number of Shares Weighted-Average Grant Date Fair Value (in thousands) Unvested shares of restricted stock awards outstanding at December 31, 2019 2 $ 13.49 Granted — $ — Canceled — $ — Vested (2) $ 13.49 Unvested shares of restricted stock awards outstanding at September 30, 2020 — $ — There is no unrecognized stock-based compensation expense for RSAs at September 30, 2020 as they were fully vested. Restricted Stock Units A summary of RSU activity for the nine months ended September 30, 2020 is as follows: Number of Shares Weighted-Average Grant Date Fair Value (in thousands) Unvested restricted stock units outstanding at December 31, 2019 8,077 $ 4.46 Granted 4,816 $ 5.41 Restricted stock units assumed in Merger 2,416 $ 5.40 Canceled (773) $ 5.17 Vested (4,054) $ 4.08 Unvested restricted stock units outstanding at September 30, 2020 10,482 $ 5.21 The weighted-average grant date fair value per share of RSUs granted during the nine months ended September 30, 2020 was $5.41. The aggregate fair value of RSUs that vested during the nine months ended September 30, 2020 was $32.1 million. At September 30, 2020, the intrinsic value of unvested RSUs was $72.8 million. At September 30, 2020, the Company had unrecognized stock-based compensation expense relating to unvested RSUs of approximately $42.8 million, which is expected to be recognized over a weighted-average period of 2.5 years. Performance Stock Units In April 2020, the Company granted the Company's CEO 146,341 restricted stock units that vest based on certain stock price performance metrics with a fair value of $0.9 million. The grant date fair value per share of restricted stock was $6.15, which was estimated using a Monte-Carlo lattice model. During the three and nine months ended September 30, 2020, the Company recognized $0.1 million of stock-based compensation related to these performance stock units based on a performance measurement of 44.8%. At September 30, 2020, the Company had unrecognized employee stock-based compensation expense of approximately $0.8 million, which is expected to be recognized over the remaining 2.5 years. Between 0% and 150% of the performance stock units will vest on the third anniversary of its grant date. The compensation expense will not be reversed if the performance metrics are not met. Employee Stock Purchase Plan In November 2013, the Company adopted the Company's 2014 Employee Stock Purchase Plan ("ESPP"). The ESPP is designed to enable eligible employees to periodically purchase shares of the Company's common stock at a discount through payroll deductions of up to 10% of their eligible compensation, subject to any plan limitations. At the end of each six As of September 30, 2020, the Company has reserved 2,271,459 shares of its common stock for issuance under the ESPP. The ESPP has an evergreen provision pursuant to which the share reserve will automatically increase on January 1st of each year in an amount equal to 1% of the total number of shares of capital stock outstanding on December 31st of the preceding calendar year, although the Company’s board of directors may provide for a lesser increase, or no increase, in any year. Stock-Based Compensation Expense Total stock-based compensation expense recorded in the condensed consolidated statements of operations was as follows: Three Months Ended Nine Months Ended September 30, 2020 September 30, 2019 September 30, 2020 September 30, 2019 (in thousands) (in thousands) Cost of revenue $ 122 $ 110 $ 412 $ 308 Sales and marketing 2,309 1,378 5,928 4,182 Technology and development 2,061 1,157 5,469 3,382 General and administrative 2,504 2,068 7,935 6,005 Restructuring and other exit costs 354 — 1,554 — Total stock-based compensation expense $ 7,350 $ 4,713 $ 21,298 $ 13,877 |
Income Taxes
Income Taxes | 9 Months Ended |
Sep. 30, 2020 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | Income Taxes In determining quarterly provisions for income taxes, the Company uses the annual estimated effective tax rate applied to the actual year-to-date income. The Company's annual estimated effective tax rate differs from the statutory rate primarily as a result of state taxes, foreign taxes, nondeductible stock option expenses, and changes in the Company's valuation allowance. The Company recorded income tax expense of $0.4 million and $0.1 million for the three months ended September 30, 2020 and 2019, respectively, and an income tax expense of $0.5 million and benefit of $0.6 million for the nine months ended September 30, 2020 and 2019, respectively. The tax expense for the three and nine months ended September 30, 2020 is primarily the result of the domestic valuation allowance and the tax liability associated with the foreign subsidiaries. On March 27, 2020, President Trump signed into law the Coronavirus Aid, Relief, and Economic Security Act ("CARES Act"), in response to the COVID-19 pandemic. The CARES Act is meant to infuse negatively affected companies with various tax cash benefits to ease the impact of the COVID-19 pandemic. The CARES Act, among other things, includes provisions relating to refundable payroll tax credits, deferment of employer-side social security payments, and net operating loss carryback periods. The Company has determined the tax implications of the CARES Act will not be material. To date the Company has not taken advantage of any relief under the Cares Act. In addition, various foreign jurisdictions where the Company has activity have enacted or are considering enacting a variety of measures that could impact our tax liabilities. The Company is monitoring new legislation and evaluating the potential tax implications of these measures globally. Due to uncertainty as to the realization of benefits from the Company's domestic and certain international deferred tax assets, including net operating loss carryforwards and research and development tax credits, the Company has a full valuation allowance reserved against such assets. The Company intends to continue to maintain a full valuation allowance on the deferred tax assets until there is sufficient evidence to support the reversal of all or some portion of these allowances. Due to the net operating loss carryforwards, all of the Company's United States federal and a majority of its state returns are open to examination by the Internal Revenue Service and state jurisdictions for all years since inception. The 2017 U.S. Income Tax Return for Telaria, Inc. is under examination by the IRS. The audit is in a preliminary phase and there have been no issues identified through the period ending September 30, 2020. For Canada, the Netherlands, and the United Kingdom, all tax years remain open for examination by the local country tax authorities, for France only 2018 forward are open for examination, for Singapore 2017 and forward are open for examination, for Brazil, New Zealand, and Malaysia 2016 and forward are open for examination, for Australia and Germany 2015 and forward are open for examination, and for Japan 2014 and forward remain open for examination. Pursuant to Section 382 of the Internal Revenue Code, the Company and Telaria, Inc. both underwent ownership changes for tax purposes (i.e. a more than 50% change in stock ownership in aggregated 5% shareholders) on April 1, 2020 due to the Merger. As a result, the use of our total domestic NOL carryforwards and tax credits generated prior to the ownership change will be subject to annual Section 382 use limitations. We believe that the ownership change will not impact our ability to utilize substantially all of our NOLs and carryforward credits to the extent we generate taxable income that can be offset by such losses. There were no material changes to the Company's unrecognized tax benefits in the nine months ended September 30, 2020, and the Company does not expect to have any significant changes to unrecognized tax benefits through the end of the fiscal year. |
Commitments and Contingencies
Commitments and Contingencies | 9 Months Ended |
Sep. 30, 2020 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | Commitments and Contingencies Commitments As of September 30, 2020 and December 31, 2019, the Company had $4.3 million and $2.5 million, respectively, of letters of credit associated with office leases available for borrowing, on which there were no outstanding borrowings as of either date. The Company also has operating lease agreements, discussed in more detail in Note 12. In addition, during the three months ended September 30, 2020, the Company entered into an agreement for third-party cloud-managed services. As part of the agreement, the Company has a minimum commitment to pay $20.0 million over the course of five years, with no annual minimum commitment. Guarantees and Indemnification The Company’s agreements with sellers, buyers, and other third parties typically obligate the Company to provide indemnity and defense for losses resulting from claims of intellectual property infringement, damages to property or persons, business losses, or other liabilities. Generally, these indemnity and defense obligations relate to the Company’s own business operations, obligations, and acts or omissions. However, under some circumstances, the Company agrees to indemnify and defend contract counterparties against losses resulting from their own business operations, obligations, and acts or omissions, or the business operations, obligations, and acts or omissions of third parties. For example, because the Company’s business interposes the Company between buyers and sellers in various ways, buyers often require the Company to indemnify them against acts and omissions of sellers, and sellers often require the Company to indemnify them against acts and omissions of buyers. In addition, the Company’s agreements with sellers, buyers, and other third parties typically include provisions limiting the Company’s liability to the counterparty, and the counterparty’s liability to the Company. These limits sometimes do not apply to certain liabilities, including indemnity obligations. These indemnity and limitation of liability provisions generally survive termination or expiration of the agreements in which they appear. The Company has also entered into indemnification agreements with its directors, executive officers, and certain other officers that will require the Company, among other things, to indemnify them against certain liabilities that may arise by reason of their status or service as directors, officers, or employees. No material demands have been made upon the Company to provide indemnification under such agreements and there are no claims that the Company is aware of that could have a material effect on the Company’s condensed consolidated financial statements. Litigation The Company and its subsidiaries may from time to time be parties to legal or regulatory proceedings, lawsuits and other claims incident to their business activities and to the Company’s status as a public company. Such routine matters may include, among other things, assertions of contract breach or intellectual property infringement, claims for indemnity arising in the course of the Company’s business, regulatory investigations or enforcement proceedings, and claims by persons whose employment has been terminated. Such matters are subject to many uncertainties, and outcomes are not predictable with assurance. Consequently, management is unable to ascertain the ultimate aggregate amount of monetary liability, amounts which may be covered by insurance or recoverable from third parties, or the financial impact with respect to such matters as of September 30, 2020. However, based on management’s knowledge as of September 30, 2020, management believes that the final resolution of these matters known at such date, individually and in the aggregate, will not have a material adverse effect upon the Company’s condensed consolidated financial position, results of operations or cash flows. Employment Contracts |
Lease Obligations
Lease Obligations | 9 Months Ended |
Sep. 30, 2020 | |
Leases [Abstract] | |
Lease Obligations | Lease Obligations For the three months ended September 30, 2020 and 2019, the Company recognized $3.7 million and $2.0 million, respectively, and $9.7 million and $5.7 million during the nine months ended September 30, 2020 and 2019, respectively, of lease expense under ASC 842, which included operating lease expenses associated with leases included in the lease liability and ROU asset on the condensed consolidated balance sheet. In addition, for the three months ended September 30, 2020 and 2019, the Company recognized $0.4 million and $0.1 million, respectively, and $0.8 million and $0.5 million during the nine months ended September 30, 2020 and 2019, respectively, of lease expense related to short-term leases, and $5.6 million and $2.0 million during the three months ended September 30, 2020 and 2019, respectively, and $14.0 million and $8.4 million during the nine months ended September 30, 2020 and 2019, respectively, of variable and cloud-based services related to data centers that are not included in the ROU asset or lease liability balances. The Company also received rental income of $1.2 million and $48.4 thousand for real estate leases for which it subleases the property to third parties during the three months ended September 30, 2020 and 2019, respectively, and $2.5 million and $0.2 million for the nine months ended September 30, 2020 and 2019, respectively. As of September 30, 2020, a weighted average discount rate of 5.01% has been applied to the remaining lease payments to calculate the lease liabilities included within the condensed consolidated balance sheet. The lease terms of the Company’s operating leases generally range from one year to ten years, and the weighted average remaining lease term of leases included in the lease liability is 6.22 years as of September 30, 2020. The maturity of the Company's lease liabilities were as follows (in thousands): Fiscal Year Remaining 2020 $ 3,874 2021 11,611 2022 8,403 2023 7,483 2024 6,740 Thereafter 14,954 Total lease payments (undiscounted) 53,065 Less: imputed interest (7,647) Lease liabilities—total (discounted) $ 45,418 |
Debt
Debt | 9 Months Ended |
Sep. 30, 2020 | |
Debt Disclosure [Abstract] | |
Debt | Debt On September 25, 2020, the Company amended and restated its loan and security agreement with Silicon Valley Bank ("SVB") (the "Loan Agreement"), which was scheduled to expire on September 26, 2020. The Loan Agreement provides a senior secured revolving credit facility of up to the lesser of $60.0 million and 85% of eligible accounts receivable, with a maturity date of September 25, 2022. The Loan Agreement includes a letter of credit, foreign exchange and cash management facility with a sublimit up to $10.0 million, of which $4.3 million was utilized for letters of credit related to leases as of September 30, 2020 (see Note 11). As of September 30, 2020, the amount available for borrowing was $55.7 million. The Company incurred $0.1 million of debt issuance fees that were capitalized and are being amortized over the term of the Loan Agreement. An unused revolver fee in the amount of 0.15% per annum of the average unused portion of the revolver line is charged and is payable monthly in arrears. The Company may elect for advances to bear interest calculated by reference to prime or LIBOR. If the Company elects LIBOR, amounts outstanding under the amended credit facility bear interest at a rate per annum equal to LIBOR plus 2.25%, with LIBOR having a floor of 3.5%. If the Company elects prime, advances bear interest at a rate of prime plus 0.25%, with prime having a floor of 3.5%. The Loan Agreement is collateralized by security interests in substantially all of the Company's assets. Subject to certain exceptions, the Loan Agreement restricts the Company's ability to, among other things, pay dividends, sell assets, make changes to the nature of the business, engage in mergers or acquisitions, incur, assume or permit to exist, additional indebtedness and guarantees, create or permit to exist, liens, make distributions or redeem or repurchase capital stock, or make other investments, engage in transactions with affiliates, make payments with respect to subordinated debt, and enter into certain transactions without the consent of the financial institution. The Company is required to maintain a lockbox arrangement where clients payments received in the lockbox will be deposited daily into the Company's operating bank accounts. The Loan Agreement requires the Company to comply with financial covenants, measured quarterly, with respect to a minimum liquidity ratio and maximum quarterly cash burn. The Company is required to maintain a minimum liquidity ratio of at least 1.25 on the last day of each quarter and not exceed, on an absolute basis, a maximum quarterly cash burn for specific periods, as defined in the Loan Agreement. The Liquidity Ratio is defined as Cash and Cash Equivalents, plus Accounts Receivable, less Accounts Payable - Seller, divided by all obligations the Company has to pay to SVB, including all debt balances, interest, service fees, and unused credit line fees, net of outstanding letters of credit as of the balance sheet date. Cash Burn is defined as Adjusted EBITDA less Capital Expenditures during the trailing periods as outlined in the Loan Agreement. The Loan Agreement defines Capital Expenditures as the current period unfinanced cash expenditures that are capitalized and amortized, including but not limited to property and equipment and capitalized labor costs as they relate to internal use software development costs. As of September 30, 2020, the Company was in compliance with its financial covenants. The Loan Agreement also includes customary representations and warranties, affirmative covenants, and events of default, including events of default upon a change of control and material adverse change (as defined in the Loan Agreement). Following an event of default, SVB would be entitled to, among other things, accelerate payment of amounts due under the credit facility and exercise all rights of a secured creditor. As of September 30, 2020, there were no amounts outstanding under the Loan Agreement (other than with respect to letters of credit). Future availability under the credit facility is dependent on several factors including the available borrowing base and compliance with future covenant requirements. |
Organization and Summary of S_2
Organization and Summary of Significant Accounting Policies (Policies) | 9 Months Ended |
Sep. 30, 2020 | |
Accounting Policies [Abstract] | |
Basis of Presentation and Summary of Significant Accounting Policies | Basis of Presentation and Summary of Significant Accounting Policies The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with United States Generally Accepted Accounting Principles, or GAAP, for interim financial information and the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring adjustments) considered necessary for a fair statement of the results for the interim period presented have been included. Operating results for the nine months ended September 30, 2020 are not necessarily indicative of the results that may be expected for any future interim period, the year ending December 31, 2020, or for any future year. The condensed consolidated balance sheet at December 31, 2019 has been derived from the audited financial statements at that date, but does not include all of the disclosures required by GAAP. The accompanying condensed consolidated financial statements should be read in conjunction with the Company's audited consolidated financial statements and notes thereto for the year ended December 31, 2019 included in its 2019 Annual Report on Form 10-K. |
Reclassifications | Reclassifications Certain prior period amounts have been reclassified to conform to the current period presentation. Specifically, this includes amounts reclassified for the three months ended March 31, 2020 to conform to the current presentation for the three and nine months ended September 30, 2020 in the condensed consolidated statements of operations related to merger and restructuring costs. |
Use of Estimates | Use of Estimates The preparation of condensed consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported and disclosed financial statements and accompanying footnotes. Due to the economic uncertainty as a result of the COVID-19 pandemic, it has become more difficult to apply certain assumptions and judgments into these estimates. The extent of the impact of COVID-19 pandemic on the Company's operational and financial |
Recently Adopted and Recent Accounting Pronouncements | Recently Adopted Accounting Standards In June 2016, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") 2016-13— Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments (" ASU 2016-13"). This guidance requires entities to use a current expected credit loss methodology to measure impairments of certain financial assets and to recognize an allowance for its estimate of lifetime expected credit losses. The main objective of this update is to provide financial statement users with more decision-useful information about the expected credit losses on financial instruments and other commitments to extend credit held by a reporting entity at each reporting date. The guidance was effective for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years. The Company adopted ASU 2016-13 as of January 1, 2020. The standard had no material impact on its consolidated financial statements. In August 2018, the FASB issued ASU 2018-13— Fair Value Measurement (Topic 820): Disclosure Framework—Changes to the Disclosure Requirements for Fair Value Measurement ("ASU 2018-13"), to streamline the disclosure requirements of ASC Topic 820—Fair Value Measurement. ASU 2018 removes certain disclosure requirements, including the valuation process for Level 3 fair value measurements, and adds certain quantitative disclosures around Level 3 fair value measurements. This ASU is effective for annual reporting periods beginning after December 15, 2019, including interim periods within that reporting period, with early adoption permitted. The provisions of ASU 2018-13 are required to be adopted retrospectively, with the exception of disclosure of the range and weighted average of significant unobservable inputs used to develop Level 3 measurements, which can be adopted prospectively. The Company adopted ASU 2018-13 as of January 1, 2020. The standard had no material impact on its consolidated financial statements and related disclosures. In August 2018, the FASB issued ASU 2018-15— Intangibles—Goodwill and Other—Internal-Use Software (Subtopic 350-40): Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract ("ASU 2018-15"). ASU 2018-15 was issued to clarify the requirements of ASC 350-40— Intangibles—Goodwill and Other—Internal-Use Software ("ASC 350-40"). The ASU clarifies that implementation, setup and other upfront costs related to cloud computing agreements ("CCA") should be accounted for under ASC 350-40. ASC 2018-15 will require companies to capitalize certain costs incurred when purchasing a CCA that is a service. Under the new guidance, companies will apply the same criteria for capitalizing implementation costs in a CCA service as they would for internal-use software. The capitalized implementation costs will generally be expensed over the term of the service arrangement and the related assets will be assessed for impairment using the same model applied to long-lived assets. This ASU is effective for annual reporting periods beginning after December 15, 2019, including interim periods within that reporting period, with early adoption permitted. ASU 2018-15 can be applied either retrospectively or prospectively to all implementation costs incurred after the date of adoption. The Company adopted ASU 2018-15 as of January 1, 2020 on a prospective basis. The standard had no material impact on its consolidated financial statements and related disclosures. Recent Accounting Pronouncements In December 2019, the FASB issued ASU 2019-12— Simplifying the Accounting for Income Taxes ("ASU 2019-12"). ASU 2019-12 simplifies the accounting for income taxes by removing certain exceptions to general principles in Topic 740 and clarifies and amends existing guidance for clarity and consistent application. This guidance is effective for fiscal years and interim periods within those fiscal years, beginning after December 15, 2020 including interim reporting periods within those fiscal years. Early adoption is permitted. The Company is evaluating the impact of adopting this new accounting guidance on its consolidated financial statements and related disclosures, but does not anticipate it will have a material impact. The Company does not believe there are any other recently issued and effective or not yet effective pronouncements that would have or are expected to have any significant effect on the Company’s financial position, cash flows or results of operations. |
Net Income (Loss) Per Share (Ta
Net Income (Loss) Per Share (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
Earnings Per Share [Abstract] | |
Schedule of Net Loss Per Share, Basic and Diluted | The following table presents the basic and diluted net loss per share: Three Months Ended Nine Months Ended September 30, 2020 September 30, 2019 September 30, 2020 September 30, 2019 (in thousands, except per share data) Basic and Diluted EPS: Net loss $ (10,515) $ (6,174) $ (59,318) $ (27,001) Weighted-average common shares outstanding 110,416 53,029 91,371 52,349 Weighted-average unvested restricted stock — (6) — (25) Weighted-average common shares outstanding used to compute net loss per share 110,416 53,023 91,371 52,324 Basic and diluted net loss per share $ (0.10) $ (0.12) $ (0.65) $ (0.52) |
Schedule of Antidilutive Securities Excluded from Computation of Diluted Net Loss Per Share | The following weighted-average shares have been excluded from the calculation of diluted net loss per share attributable to common stockholders for each period presented because they are anti-dilutive: Three Months Ended Nine Months Ended September 30, 2020 September 30, 2019 September 30, 2020 September 30, 2019 (in thousands) (in thousands) Options to purchase common stock 1,920 1,078 1,720 732 Unvested restricted stock awards — — — 16 Unvested restricted stock units 3,768 5,168 3,851 3,911 Unvested performance stock units 14 — 6 — ESPP 30 48 40 35 Total shares excluded from net loss per share 5,732 6,294 5,617 4,694 |
Revenues (Tables)
Revenues (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
Revenue from Contract with Customer [Abstract] | |
Summary of Disaggregation of Revenue | The following table presents our revenue by channel for the three and nine months ended September 30, 2020 and 2019: Three Months Ended Nine Months Ended September 30, 2020 September 30, 2019 September 30, 2020 September 30, 2019 (in thousands, except percentages) Channel: CTV $ 11,059 18 % $ — — % $ 18,978 14 % $ — — % Desktop 20,901 34 15,936 42 51,468 37 47,745 44 Mobile 29,022 48 21,706 58 69,179 49 60,183 56 Total $ 60,982 100 % $ 37,642 100 % $ 139,625 100 % $ 107,928 100 % The following table presents our revenue disaggregated by geographic location, based on the location of the Company's sellers: Three Months Ended Nine Months Ended September 30, 2020 September 30, 2019 September 30, 2020 September 30, 2019 (in thousands) (in thousands) United States $ 45,048 $ 26,378 $ 101,168 $ 73,654 International 15,934 11,264 38,457 34,274 Total $ 60,982 $ 37,642 $ 139,625 $ 107,928 |
Accounts Receivable, Allowance for Credit Loss | The following is a summary of activity in the allowance for doubtful accounts for the three and nine months ended September 30, 2020 and 2019: Three Months Ended Nine Months Ended September 30, 2020 September 30, 2019 September 30, 2020 September 30, 2019 (in thousands) (in thousands) Allowance for doubtful accounts, Beginning Balance $ 4,672 $ 1,720 $ 3,400 $ 1,340 Allowance for doubtful accounts, Merger-assumed — — 1,033 — Write-offs (1) (71) (1,897) (3,278) Increase (decrease) in provision for expected credit losses (274) (33) 1,854 3,554 Recoveries of previous write-offs 83 14 90 14 Allowance for doubtful accounts, September 30 $ 4,480 $ 1,630 $ 4,480 $ 1,630 |
Fair Value Measurements (Tables
Fair Value Measurements (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
Fair Value Disclosures [Abstract] | |
Fair Value, Assets Measured on Recurring Basis | The table below sets forth a summary of financial instruments that are measured at fair value on a recurring basis at September 30, 2020: Total Quoted Prices in Significant Other Significant (in thousands) Cash equivalents $ 7,868 $ 7,868 $ — $ — The table below sets forth a summary of financial instruments that are measured at fair value on a recurring basis at December 31, 2019: Total Quoted Prices in Significant Other Significant (in thousands) Cash equivalents $ 13,501 $ 13,501 $ — $ — |
Other Balance Sheet Amounts (Ta
Other Balance Sheet Amounts (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Schedule of Accounts Payable and Accrued Expenses | Accounts payable and accrued expenses included the following: September 30, 2020 December 31, 2019 (in thousands) Accounts payable—seller $ 434,340 $ 247,891 Accounts payable—trade 10,065 4,822 Accrued employee-related payables 13,023 6,726 Total $ 457,428 $ 259,439 |
Goodwill and Intangible Assets
Goodwill and Intangible Assets (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Schedule of Finite-Lived Intangible Assets | The Company’s intangible assets as of September 30, 2020 and December 31, 2019 included the following: September 30, 2020 December 31, 2019 (in thousands) Amortizable intangible assets: Developed technology $ 77,158 $ 19,658 Customer relationships 37,450 1,650 In-process research and development 8,230 — Backlog 920 — Non-compete agreements 70 70 Trademarks 200 20 Total identifiable intangible assets, gross 124,028 21,398 Accumulated amortization—intangible assets: Developed technology (18,110) (9,823) Customer relationships (7,941) (162) In-process research and development — — Backlog (613) — Non-compete agreements (33) (7) Trademarks (200) (20) Total accumulated amortization—intangible assets (26,897) (10,012) Total identifiable intangible assets, net $ 97,131 $ 11,386 |
Schedule of Finite-Lived Intangible Assets, Future Amortization Expense | The estimated remaining amortization expense associated with the Company's intangible assets was as follows as of September 30, 2020: Fiscal Year Amount (in thousands) Remaining 2020 $ 7,822 2021 30,772 2022 26,132 2023 13,881 2024 13,697 Thereafter 4,827 Total $ 97,131 |
Business Combinations (Tables)
Business Combinations (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
Business Combinations [Abstract] | |
Purchase Consideration | The following table summarizes the total purchase consideration (in thousands): Shares of Magnite common stock $ 274,604 Fair value of stock-based awards exchanged 11,646 Acceleration of single trigger equity awards, converted 1,168 Total purchase consideration $ 287,418 |
Schedule of Recognized Identified Assets Acquired and Liabilities Assumed | The fair value of the purchase price was allocated to the identifiable assets acquired and liabilities assumed based upon their estimated fair values as of the date of the acquisition as set forth below: Cash and cash equivalents $ 51,848 Accounts receivable, net 150,924 Prepaid expenses and other current assets 3,190 Property and equipment, net 1,814 Right-of-use lease asset 26,627 Intangible assets 102,650 Restricted cash 2,747 Other assets, non-current 369 Deferred tax assets, non-current 103 Goodwill 150,434 Total assets acquired $ 490,706 Accounts payable and accrued expenses 173,643 Lease liabilities - current portion 5,322 Deferred revenue 11 Other current liabilities 365 Lease liabilities - non-current portion 23,323 Other liabilities, non-current 624 Total liabilities assumed 203,288 Total purchase price $ 287,418 The following table summarizes the components of the intangible assets and estimated useful lives (dollars in thousands): Estimated Useful Life Technology $ 57,500 5 years In-process research and development 8,230 4.7 years* Customer relationships 35,800 2.5 years Backlog 920 0.75 years Trademarks 200 0.25 years Total intangible assets acquired $ 102,650 * In-process research and development consists of two projects with a weighted-average useful life of 4.7 years. Amortization begins once associated projects are completed and it is determined the projects have alternative future use. |
Unaudited Pro Forma Information | Three Months Ended Nine Months Ended September 30, 2019 September 30, 2020 September 30, 2019 (in thousands) Pro Forma Revenue $ 54,206 $ 154,663 $ 156,330 Pro Forma Net Loss $ (15,592) $ (69,706) $ (73,358) |
Merger and Restructuring Costs
Merger and Restructuring Costs (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
Restructuring and Related Activities [Abstract] | |
Merger and Restructuring Cost Activity | The following table summarizes Merger and restructuring cost activity (in thousands): Three Months Ended Nine Months Ended September 30, 2020 September 30, 2020 (in thousands) Professional Service (investment banking advisory, legal and other professional services) $ 952 $ 9,533 Personnel related (severance and one-time termination benefit costs) 948 5,590 Non-cash stock-based compensation (double-trigger acceleration and severance) 354 1,554 Total merger and restructuring costs $ 2,254 $ 16,677 (in thousands) Accrued Merger and restructuring costs at December 31, 2019 $ — Restructuring costs, personnel related and non-cash stock-based compensation 7,144 Restructuring costs, Merger assumed loss contracts 3,592 Cash paid for restructuring costs (4,071) Non-cash stock-based compensation (1,554) Accrued Merger and restructuring costs at September 30, 2020 $ 5,111 |
Stock-Based Compensation (Table
Stock-Based Compensation (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
Share-based Payment Arrangement [Abstract] | |
Schedule of Share-based Compensation, Stock Options, Activity | A summary of stock option activity for the nine months ended September 30, 2020 is as follows: Shares Under Option Weighted- Average Exercise Price Weighted- Average Contractual Life Aggregate Intrinsic Value (in thousands) (in thousands) Outstanding at December 31, 2019 4,262 $ 6.82 Granted 1,145 $ 5.32 Options assumed in Merger 4,998 $ 3.80 Exercised (1,336) $ 2.90 Expired (148) $ 13.31 Forfeited (131) $ 5.14 Outstanding at September 30, 2020 8,790 $ 5.42 5.54 years $ 20,257 Exercisable at September 30, 2020 5,732 $ 5.68 4.05 years $ 13,828 |
Schedule of Share-based Payment Award, Stock Options, Valuation Assumptions | The weighted-average input assumptions used by the Company were as follows for options granted during the respective periods: Three Months Ended Nine Months Ended September 30, 2020 September 30, 2019 September 30, 2020 September 30, 2019 Expected term (in years) 6.3 N/A 6.3 6.1 Risk-free interest rate 0.33 % N/A 0.45 % 2.51 % Expected volatility 68 % N/A 67 % 60 % Dividend yield — % N/A — % — % |
Nonvested Restricted Stock Shares Activity | A summary of RSA activity for the nine months ended September 30, 2020 is as follows: Number of Shares Weighted-Average Grant Date Fair Value (in thousands) Unvested shares of restricted stock awards outstanding at December 31, 2019 2 $ 13.49 Granted — $ — Canceled — $ — Vested (2) $ 13.49 Unvested shares of restricted stock awards outstanding at September 30, 2020 — $ — |
Schedule of Nonvested Restricted Stock Units Activity | A summary of RSU activity for the nine months ended September 30, 2020 is as follows: Number of Shares Weighted-Average Grant Date Fair Value (in thousands) Unvested restricted stock units outstanding at December 31, 2019 8,077 $ 4.46 Granted 4,816 $ 5.41 Restricted stock units assumed in Merger 2,416 $ 5.40 Canceled (773) $ 5.17 Vested (4,054) $ 4.08 Unvested restricted stock units outstanding at September 30, 2020 10,482 $ 5.21 |
Schedule of Compensation Cost for Share-based Payment Arrangements, Allocation of Share-based Compensation Costs for all Plans | Total stock-based compensation expense recorded in the condensed consolidated statements of operations was as follows: Three Months Ended Nine Months Ended September 30, 2020 September 30, 2019 September 30, 2020 September 30, 2019 (in thousands) (in thousands) Cost of revenue $ 122 $ 110 $ 412 $ 308 Sales and marketing 2,309 1,378 5,928 4,182 Technology and development 2,061 1,157 5,469 3,382 General and administrative 2,504 2,068 7,935 6,005 Restructuring and other exit costs 354 — 1,554 — Total stock-based compensation expense $ 7,350 $ 4,713 $ 21,298 $ 13,877 |
Lease Obligations (Tables)
Lease Obligations (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
Leases [Abstract] | |
Schedule of Maturity of Lease Liabilities | The maturity of the Company's lease liabilities were as follows (in thousands): Fiscal Year Remaining 2020 $ 3,874 2021 11,611 2022 8,403 2023 7,483 2024 6,740 Thereafter 14,954 Total lease payments (undiscounted) 53,065 Less: imputed interest (7,647) Lease liabilities—total (discounted) $ 45,418 |
Net Income (Loss) Per Share - B
Net Income (Loss) Per Share - Basic and Diluted Net Loss Per Share (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands | 3 Months Ended | 9 Months Ended | ||||||
Sep. 30, 2020 | Jun. 30, 2020 | Mar. 31, 2020 | Sep. 30, 2019 | Jun. 30, 2019 | Mar. 31, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | |
Basic and Diluted EPS: | ||||||||
Net loss | $ (10,515) | $ (39,128) | $ (9,675) | $ (6,174) | $ (8,281) | $ (12,546) | $ (59,318) | $ (27,001) |
Weighted-average common shares outstanding (in shares) | 110,416 | 53,029 | 91,371 | 52,349 | ||||
Weighted-average unvested restricted stock (in shares) | 0 | (6) | 0 | (25) | ||||
Weighted-average common shares outstanding used to compute net loss per share (in shares) | 110,416 | 53,023 | 91,371 | 52,324 | ||||
Basic and diluted net loss per share (usd per share) | $ (0.10) | $ (0.12) | $ (0.65) | $ (0.52) |
Net Income (Loss) Per Share - S
Net Income (Loss) Per Share - Shares Excluded From Calculation of Diluted Net Loss Per Share (Details) - shares shares in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | |
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||||
Total shares excluded from net loss per share (in shares) | 5,732 | 6,294 | 5,617 | 4,694 |
Options to purchase common stock | ||||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||||
Total shares excluded from net loss per share (in shares) | 1,920 | 1,078 | 1,720 | 732 |
Unvested restricted stock awards | ||||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||||
Total shares excluded from net loss per share (in shares) | 0 | 0 | 0 | 16 |
Unvested restricted stock units | ||||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||||
Total shares excluded from net loss per share (in shares) | 3,768 | 5,168 | 3,851 | 3,911 |
Unvested performance stock units | ||||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||||
Total shares excluded from net loss per share (in shares) | 14 | 0 | 6 | 0 |
ESPP | ||||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||||
Total shares excluded from net loss per share (in shares) | 30 | 48 | 40 | 35 |
Revenues - Narrative (Details)
Revenues - Narrative (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | 12 Months Ended | |||||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | Dec. 31, 2019 | Jun. 30, 2020 | Jun. 30, 2019 | Dec. 31, 2018 | |
Disaggregation of Revenue [Line Items] | ||||||||
Percent of revenue (less than) | 2.00% | |||||||
Payment terms | 75 days | |||||||
Concentration risk, percentage | 100.00% | 100.00% | 100.00% | 100.00% | ||||
Accounts receivable, allowance for credit loss | $ 4,480 | $ 1,630 | $ 4,480 | $ 1,630 | $ 3,400 | $ 4,672 | $ 1,720 | $ 1,340 |
Contra seller payable | 1,900 | 1,900 | $ 900 | |||||
Provision for doubtful accounts | $ (274) | $ (33) | 1,854 | 3,554 | ||||
Increase in contra seller payable | 1,800 | 2,700 | ||||||
Provision for doubtful accounts | $ 31 | $ 897 | ||||||
Customer One | Customer Concentration Risk | ||||||||
Disaggregation of Revenue [Line Items] | ||||||||
Concentration risk, percentage | 37.00% | 23.00% | ||||||
Customer Two | Customer Concentration Risk | ||||||||
Disaggregation of Revenue [Line Items] | ||||||||
Concentration risk, percentage | 9.00% | 17.00% |
Revenues - Revenue Disaggregate
Revenues - Revenue Disaggregated by Sales Distribution Channel (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | |
Disaggregation of Revenue [Line Items] | ||||
Revenue | $ 60,982 | $ 37,642 | $ 139,625 | $ 107,928 |
Concentration risk, percentage | 100.00% | 100.00% | 100.00% | 100.00% |
CTV | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenue | $ 11,059 | $ 0 | $ 18,978 | $ 0 |
Concentration risk, percentage | 18.00% | 0.00% | 14.00% | 0.00% |
Desktop | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenue | $ 20,901 | $ 15,936 | $ 51,468 | $ 47,745 |
Concentration risk, percentage | 34.00% | 42.00% | 37.00% | 44.00% |
Mobile | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenue | $ 29,022 | $ 21,706 | $ 69,179 | $ 60,183 |
Concentration risk, percentage | 48.00% | 58.00% | 49.00% | 56.00% |
Revenues - Revenue Disaggrega_2
Revenues - Revenue Disaggregated by Geographic Location (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | |
Disaggregation of Revenue [Line Items] | ||||
Revenue | $ 60,982 | $ 37,642 | $ 139,625 | $ 107,928 |
United States | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenue | 45,048 | 26,378 | 101,168 | 73,654 |
International | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenue | $ 15,934 | $ 11,264 | $ 38,457 | $ 34,274 |
Revenues - Schedule of Allowanc
Revenues - Schedule of Allowance for Doubtful Accounts (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | |
Accounts Receivable, Allowance for Credit Loss [Roll Forward] | ||||
Allowance for doubtful accounts, beginning balance | $ 4,672 | $ 1,720 | $ 3,400 | $ 1,340 |
Allowance for doubtful accounts, Merger-assumed | 0 | 0 | 1,033 | 0 |
Write-offs | (1) | (71) | (1,897) | (3,278) |
Increase (decrease) in provision for expected credit losses | (274) | (33) | 1,854 | 3,554 |
Recoveries of previous write-offs | 83 | 14 | 90 | 14 |
Allowance for doubtful accounts, ending balance | $ 4,480 | $ 1,630 | $ 4,480 | $ 1,630 |
Fair Value Measurements - Finan
Fair Value Measurements - Financial Instruments (Details) - Recurring - USD ($) $ in Thousands | Sep. 30, 2020 | Dec. 31, 2019 |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Cash equivalents | $ 7,868 | $ 13,501 |
Quoted Prices in Active Markets for Identical Assets (Level 1) | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Cash equivalents | 7,868 | 13,501 |
Significant Other Observable Inputs (Level 2) | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Cash equivalents | 0 | 0 |
Significant Unobservable Inputs (Level 3) | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Cash equivalents | $ 0 | $ 0 |
Fair Value Measurements - Narra
Fair Value Measurements - Narrative (Details) - Recurring - USD ($) $ in Thousands | Sep. 30, 2020 | Dec. 31, 2019 |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Cash equivalents | $ 7,868 | $ 13,501 |
Money Market Funds | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Cash equivalents | $ 7,900 | $ 13,500 |
Other Balance Sheet Amounts - A
Other Balance Sheet Amounts - Accounts Payable and Accrued Expenses (Details) - USD ($) $ in Thousands | Sep. 30, 2020 | Dec. 31, 2019 |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | ||
Accounts payable—seller | $ 434,340 | $ 247,891 |
Accounts payable—trade | 10,065 | 4,822 |
Accrued employee-related payables | 13,023 | 6,726 |
Total | $ 457,428 | $ 259,439 |
Other Balance Sheet Amounts - N
Other Balance Sheet Amounts - Narrative (Details) - USD ($) | Sep. 30, 2020 | Dec. 31, 2019 |
Condensed Balance Sheet Statements, Captions [Line Items] | ||
Restricted cash | $ 1,300,000 | $ 0 |
Prepaid Expenses and Other Current Assets | ||
Condensed Balance Sheet Statements, Captions [Line Items] | ||
Restricted cash | 600,000 | |
Other Noncurrent Assets | ||
Condensed Balance Sheet Statements, Captions [Line Items] | ||
Restricted cash | $ 700,000 |
Goodwill and Intangible Asset_2
Goodwill and Intangible Assets - Narrative (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | Dec. 31, 2019 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |||||
Goodwill | $ 157,804 | $ 157,804 | $ 7,370 | ||
Amortization expense of intangible assets | $ 7,800 | $ 700 | $ 16,900 | $ 2,300 |
Goodwill and Intangible Asset_3
Goodwill and Intangible Assets - Finite-Lived Intangible Assets (Details) - USD ($) $ in Thousands | Sep. 30, 2020 | Dec. 31, 2019 |
Finite-Lived Intangible Assets [Line Items] | ||
Total identifiable intangible assets, gross | $ 124,028 | $ 21,398 |
Total accumulated amortization—intangible assets | (26,897) | (10,012) |
Total | 97,131 | 11,386 |
Developed technology | ||
Finite-Lived Intangible Assets [Line Items] | ||
Total identifiable intangible assets, gross | 77,158 | 19,658 |
Total accumulated amortization—intangible assets | (18,110) | (9,823) |
Customer relationships | ||
Finite-Lived Intangible Assets [Line Items] | ||
Total identifiable intangible assets, gross | 37,450 | 1,650 |
Total accumulated amortization—intangible assets | (7,941) | (162) |
In-process research and development | ||
Finite-Lived Intangible Assets [Line Items] | ||
Total identifiable intangible assets, gross | 8,230 | 0 |
Total accumulated amortization—intangible assets | 0 | 0 |
Backlog | ||
Finite-Lived Intangible Assets [Line Items] | ||
Total identifiable intangible assets, gross | 920 | 0 |
Total accumulated amortization—intangible assets | (613) | 0 |
Non-compete agreements | ||
Finite-Lived Intangible Assets [Line Items] | ||
Total identifiable intangible assets, gross | 70 | 70 |
Total accumulated amortization—intangible assets | (33) | (7) |
Trademarks | ||
Finite-Lived Intangible Assets [Line Items] | ||
Total identifiable intangible assets, gross | 200 | 20 |
Total accumulated amortization—intangible assets | $ (200) | $ (20) |
Goodwill and Intangible Asset_4
Goodwill and Intangible Assets - Finite-Lived Intangible Assets, Future Amortization Expense (Details) - USD ($) $ in Thousands | Sep. 30, 2020 | Dec. 31, 2019 |
Fiscal Year | ||
Remaining 2020 | $ 7,822 | |
2021 | 30,772 | |
2022 | 26,132 | |
2023 | 13,881 | |
2024 | 13,697 | |
Thereafter | 4,827 | |
Total | $ 97,131 | $ 11,386 |
Business Combinations - Narrati
Business Combinations - Narrative (Details) - USD ($) $ in Thousands | Apr. 01, 2020 | Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 |
Business Acquisition [Line Items] | |||||
Percent of company owned by pre-merger holders of company | 52.00% | ||||
Merger and restructuring costs | $ 2,254 | $ 0 | $ 16,677 | $ 0 | |
Telaria | |||||
Business Acquisition [Line Items] | |||||
Common stock, shares, issued and outstanding (in shares) | 1.082 | ||||
Issued in merger plus acceleration (in shares) | 52,098,945 | ||||
Percent of company owned by holders of acquired company | 48.00% | ||||
Issued in merger (in shares) | 52,008,316 | ||||
Shares of Magnite common stock | $ 274,604 | ||||
Stock options exchanged pre-acquisition | 10,400 | ||||
Restricted stock units exchanged pre-acquisition | $ 1,200 | ||||
Common stock, acceleration (in shares) | 90,629 | ||||
Acceleration of single trigger equity awards, converted | $ 1,168 | ||||
Stock options exchanged post-acquisition | 4,700 | ||||
Restricted stock units exchanged post-acquisition | 12,200 | ||||
Deferred tax liabilities | $ 23,900 | ||||
Deferred tax liabilities estimated tax rate | 23.30% | ||||
Merger and restructuring costs | 2,254 | 16,677 | |||
Net operating loss, federal | 126,200 | ||||
Net operating loss, state | 128,000 | ||||
Post merger revenue | $ 19,700 | $ 32,800 |
Business Combinations - Purchas
Business Combinations - Purchase Consideration (Details) - Telaria $ in Thousands | Apr. 01, 2020USD ($) |
Business Acquisition [Line Items] | |
Shares of Magnite common stock | $ 274,604 |
Fair value of stock-based awards exchanged | 11,646 |
Acceleration of single trigger equity awards, converted | 1,168 |
Total purchase consideration | $ 287,418 |
Business Combinations - Schedul
Business Combinations - Schedule of Recognized Identified Assets Acquired and Liabilities Assumed (Details) - USD ($) $ in Thousands | Sep. 30, 2020 | Apr. 01, 2020 | Dec. 31, 2019 |
Business Acquisition [Line Items] | |||
Goodwill | $ 157,804 | $ 7,370 | |
Telaria | |||
Business Acquisition [Line Items] | |||
Cash and cash equivalents | $ 51,848 | ||
Accounts receivable, net | 150,924 | ||
Prepaid expenses and other current assets | 3,190 | ||
Property and equipment, net | 1,814 | ||
Right-of-use lease asset | 26,627 | ||
Intangible assets | 102,650 | ||
Restricted cash | 2,747 | ||
Other assets, non-current | 369 | ||
Deferred tax assets, non-current | 103 | ||
Goodwill | 150,434 | ||
Total assets acquired | 490,706 | ||
Accounts payable and accrued expenses | 173,643 | ||
Lease liabilities - current portion | 5,322 | ||
Deferred revenue | 11 | ||
Other current liabilities | 365 | ||
Lease liabilities - non-current portion | 23,323 | ||
Other liabilities, non-current | 624 | ||
Total liabilities assumed | 203,288 | ||
Total purchase price | $ 287,418 |
Business Combinations - Compone
Business Combinations - Components of Intangible Assets and Estimated Useful Lives (Details) - Telaria $ in Thousands | Apr. 01, 2020USD ($)project |
Business Acquisition [Line Items] | |
Intangible assets | $ 102,650 |
Developed technology | |
Business Acquisition [Line Items] | |
Intangible assets | $ 57,500 |
Estimated Useful Life | 5 years |
In-process research and development | |
Business Acquisition [Line Items] | |
Intangible assets | $ 8,230 |
Estimated Useful Life | 4 years 8 months 12 days |
Number of projects | project | 2 |
Customer relationships | |
Business Acquisition [Line Items] | |
Intangible assets | $ 35,800 |
Estimated Useful Life | 2 years 6 months |
Backlog | |
Business Acquisition [Line Items] | |
Intangible assets | $ 920 |
Estimated Useful Life | 9 months |
Trademarks | |
Business Acquisition [Line Items] | |
Intangible assets | $ 200 |
Estimated Useful Life | 3 months |
Business Combinations - Unaudit
Business Combinations - Unaudited Pro forma Information (Details) - Telaria - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | |
Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | |
Business Acquisition [Line Items] | |||
Pro Forma Revenue | $ 54,206 | $ 154,663 | $ 156,330 |
Pro Forma Net Loss | $ (15,592) | $ (69,706) | $ (73,358) |
Merger and Restructuring Cost_2
Merger and Restructuring Costs - Merger and Restructuring Cost Activity (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | |
Restructuring Cost and Reserve [Line Items] | ||||
Total merger and restructuring costs | $ 2,254 | $ 0 | $ 16,677 | $ 0 |
Telaria | ||||
Restructuring Cost and Reserve [Line Items] | ||||
Professional Service (investment banking advisory, legal and other professional services) | 952 | 9,533 | ||
Personnel related (severance and one-time termination benefit costs) | 948 | 5,590 | ||
Non-cash stock-based compensation (double-trigger acceleration and severance) | 354 | 1,554 | ||
Total merger and restructuring costs | $ 2,254 | $ 16,677 |
Merger and Restructuring Cost_3
Merger and Restructuring Costs - Narrative (Details) - USD ($) $ in Thousands | Sep. 30, 2020 | Dec. 31, 2019 |
Telaria | ||
Business Acquisition [Line Items] | ||
Accrued restructuring costs related to the merger | $ 5,111 | $ 0 |
Merger and Restructuring Cost_4
Merger and Restructuring Costs - Accrued Merger and Restructuring Cost Activity (Details) - Telaria - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended |
Sep. 30, 2020 | Sep. 30, 2020 | |
Restructuring Reserve [Roll Forward] | ||
Accrued Merger and restructuring costs at December 31, 2019 | $ 0 | |
Restructuring costs, personnel related and non-cash stock-based compensation | 7,144 | |
Restructuring costs, Merger assumed loss contracts | 3,592 | |
Cash paid for restructuring costs | (4,071) | |
Non-cash stock-based compensation | $ (354) | (1,554) |
Accrued Merger and restructuring costs at September 30, 2020 | $ 5,111 | $ 5,111 |
Stock-Based Compensation - Narr
Stock-Based Compensation - Narrative (Details) | 9 Months Ended |
Sep. 30, 2020shares | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Number of shares available for grant | 9,509,867 |
Stock Option | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Vesting period | 4 years |
Stock Option | Vesting After One Year of Service | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Vesting period | 1 year |
Award vesting rights, percentage | 25.00% |
RSAs and RSUs | Vesting After One Year of Service | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Award vesting rights, percentage | 25.00% |
RSAs and RSUs | Vesting on First and Second Anniversary | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Award vesting rights, percentage | 50.00% |
Restricted Stock Units (RSUs) | Vesting After One Year of Service | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Vesting period | 1 year |
Award vesting rights, percentage | 25.00% |
Stock-Based Compensation - Stoc
Stock-Based Compensation - Stock Options Outstanding (Details) $ / shares in Units, shares in Thousands, $ in Thousands | 9 Months Ended |
Sep. 30, 2020USD ($)$ / sharesshares | |
Shares Under Option | |
Beginning balance (in shares) | shares | 4,262 |
Granted (in shares) | shares | 1,145 |
Options assumed in merger (in shares) | shares | 4,998 |
Exercised (in shares) | shares | (1,336) |
Expired (in shares) | shares | (148) |
Forfeited (in shares) | shares | (131) |
Ending balance (in shares) | shares | 8,790 |
Exercisable (in shares) | shares | 5,732 |
Weighted- Average Exercise Price | |
Beginning balance (usd per share) | $ / shares | $ 6.82 |
Granted (usd per share) | $ / shares | 5.32 |
Options assumed in merger (usd per share) | $ / shares | 3.80 |
Exercised (usd per share) | $ / shares | 2.90 |
Expired (usd per share) | $ / shares | 13.31 |
Forfeited (usd per share) | $ / shares | 5.14 |
Ending balance (usd per share) | $ / shares | 5.42 |
Exercisable (usd per share) | $ / shares | $ 5.68 |
Weighted- Average Contractual Life | |
Outstanding | 5 years 6 months 14 days |
Exercisable | 4 years 18 days |
Aggregate Intrinsic Value | |
Outstanding | $ | $ 20,257 |
Exercisable | $ | $ 13,828 |
Stock-Based Compensation - St_2
Stock-Based Compensation - Stock Options Narrative (Details) - Stock Option $ / shares in Units, $ in Millions | 9 Months Ended |
Sep. 30, 2020USD ($)$ / shares | |
Number of Shares | |
Intrinsic values of options exercised | $ | $ 5.9 |
Unrecognized employee stock-based compensation | $ | $ 8.3 |
Unrecognized employee stock-based compensation, period for recognition | 2 years 7 months 6 days |
Fair value of options vested in period | $ | $ 3.7 |
Grant date fair value of options granted ad assumed (usd per share) | $ / shares | $ 3.17 |
Grant date fair value of options granted (usd per share) | $ / shares | 3.22 |
Grant date fair value of options assumed (usd per share) | $ / shares | $ 3.16 |
Stock-Based Compensation - Valu
Stock-Based Compensation - Valuation Assumptions (Details) - Stock Option | 3 Months Ended | 9 Months Ended | |
Sep. 30, 2020 | Sep. 30, 2020 | Sep. 30, 2019 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Expected term (in years) | 6 years 3 months 18 days | 6 years 3 months 18 days | 6 years 1 month 6 days |
Risk-free interest rate | 0.33% | 0.45% | 2.51% |
Expected volatility | 68.00% | 67.00% | 60.00% |
Dividend yield | 0.00% | 0.00% | 0.00% |
Stock-Based Compensation - Rest
Stock-Based Compensation - Restricted Stock Activity (Details) - Unvested restricted stock awards shares in Thousands | 9 Months Ended |
Sep. 30, 2020$ / sharesshares | |
Number of Shares | |
Beginning balance (in shares) | shares | 2 |
Granted (in shares) | shares | 0 |
Canceled (in shares) | shares | 0 |
Vested (in shares) | shares | (2) |
Ending balance (in shares) | shares | 0 |
Weighted-Average Grant Date Fair Value | |
Beginning balance (in dollars per share) | $ / shares | $ 13.49 |
Granted (in dollars per share) | $ / shares | 0 |
Canceled (in dollars per share) | $ / shares | 0 |
Vested (in dollars per share) | $ / shares | 13.49 |
Ending balance (in dollars per share) | $ / shares | $ 0 |
Stock-Based Compensation - Re_2
Stock-Based Compensation - Restricted Stock Narrative (Details) | Sep. 30, 2020USD ($) |
Unvested restricted stock awards | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Unrecognized employee stock-based compensation | $ 0 |
Stock-Based Compensation - Re_3
Stock-Based Compensation - Restricted Stock Units Activity (Details) - Restricted Stock Units (RSUs) - $ / shares | 1 Months Ended | 9 Months Ended |
Apr. 30, 2020 | Sep. 30, 2020 | |
Number of Shares | ||
Beginning balance (in shares) | 8,077,000 | |
Granted (in shares) | 146,341 | 4,816,000 |
Restricted stock units assumed in merger (in shares) | 2,416,000 | |
Canceled (in shares) | (773,000) | |
Vested (in shares) | (4,054,000) | |
Ending balance (in shares) | 10,482,000 | |
Weighted-Average Grant Date Fair Value | ||
Beginning balance (in dollars per share) | $ 4.46 | |
Granted (in dollars per share) | 5.41 | |
Restricted stock units assumed in merger (in dollars per share) | 5.40 | |
Canceled (in dollars per share) | 5.17 | |
Vested (in dollars per share) | $ 6.15 | 4.08 |
Ending balance (in dollars per share) | $ 5.21 |
Stock-Based Compensation - Re_4
Stock-Based Compensation - Restricted Stock Units Narrative (Details) - Restricted Stock Units (RSUs) - USD ($) $ / shares in Units, $ in Millions | 1 Months Ended | 9 Months Ended |
Apr. 30, 2020 | Sep. 30, 2020 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Granted (in dollars per share) | $ 5.41 | |
Fair value of restricted stock vested | $ 0.9 | $ 32.1 |
Intrinsic value of nonvested unit | 72.8 | |
Unrecognized employee stock-based compensation | $ 42.8 | |
Unrecognized employee stock-based compensation, weighted average period | 2 years 6 months |
Stock-Based Compensation - Empl
Stock-Based Compensation - Employee Stock Purchase Plan Narrative (Details) - shares | 1 Months Ended | 9 Months Ended |
Nov. 30, 2013 | Sep. 30, 2020 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Number of shares reserved | 9,509,867 | |
Employee Stock | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Annual percentage increase | 1.00% | |
2014 Employee Stock Purchase Plan | Employee Stock | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Maximum employee subscription rate | 10.00% | |
Offering period | 6 months | |
Purchase price of common stock, percent | 85.00% | |
Number of shares reserved | 2,271,459 |
Stock-Based Compensation - St_3
Stock-Based Compensation - Stock-Based Compensation Expense (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | |
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items] | ||||
Stock-based compensation expense | $ 7,350 | $ 4,713 | $ 21,298 | $ 13,877 |
Cost of revenue | ||||
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items] | ||||
Stock-based compensation expense | 122 | 110 | 412 | 308 |
Sales and marketing | ||||
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items] | ||||
Stock-based compensation expense | 2,309 | 1,378 | 5,928 | 4,182 |
Technology and development | ||||
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items] | ||||
Stock-based compensation expense | 2,061 | 1,157 | 5,469 | 3,382 |
General and administrative | ||||
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items] | ||||
Stock-based compensation expense | 2,504 | 2,068 | 7,935 | 6,005 |
Restructuring and other exit costs | ||||
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items] | ||||
Stock-based compensation expense | $ 354 | $ 0 | $ 1,554 | $ 0 |
Stock-Based Compensation - Perf
Stock-Based Compensation - Performance Stock Units (Details) - USD ($) $ / shares in Units, $ in Thousands | 1 Months Ended | 3 Months Ended | 9 Months Ended | ||
Apr. 30, 2020 | Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Stock-based compensation expense | $ 7,350 | $ 4,713 | $ 21,298 | $ 13,877 | |
Restricted Stock Units (RSUs) | |||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Granted (in shares) | 146,341 | 4,816,000 | |||
Fair value of restricted stock vested | $ 900 | $ 32,100 | |||
Vested (in dollars per share) | $ 6.15 | $ 4.08 | |||
Unrecognized employee stock-based compensation | 42,800 | $ 42,800 | |||
Performance Shares Units | |||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Stock-based compensation expense | $ 100 | $ 100 | |||
Performance measurement percentage | 44.80% | 44.80% | |||
Unrecognized employee stock-based compensation | $ 800 | $ 800 | |||
Unrecognized employee stock-based compensation, period for recognition | 2 years 6 months | ||||
Performance Shares Units | Minimum | Vesting on third anniversary | |||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Award vesting rights, percentage | 0.00% | ||||
Performance Shares Units | Maximum | Vesting on third anniversary | |||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Award vesting rights, percentage | 150.00% |
Income Taxes (Details)
Income Taxes (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | |
Income Tax Disclosure [Abstract] | ||||
Provision (benefit) for income taxes | $ 446 | $ 55 | $ 533 | $ (569) |
Commitments and Contingencies (
Commitments and Contingencies (Details) - USD ($) $ in Millions | 3 Months Ended | |
Sep. 30, 2020 | Dec. 31, 2019 | |
Other Commitments [Line Items] | ||
Minimum commitment amount | $ 20 | |
Commitment period | 5 years | |
Financial Standby Letter of Credit | ||
Other Commitments [Line Items] | ||
Letters of credit outstanding, amount | $ 4.3 | $ 2.5 |
Lease Obligations - Narrative (
Lease Obligations - Narrative (Details) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | |
Lessee, Lease, Description [Line Items] | ||||
Lease expense | $ 3,700,000 | $ 2,000,000 | $ 9,700,000 | $ 5,700,000 |
Short-term lease expense | 400,000 | 100,000 | 800,000 | 500,000 |
Sublease income | $ 1,200,000 | 48,400 | $ 2,500,000 | 200,000 |
Weighted average discount rate | 5.01% | 5.01% | ||
Operating lease, weighted average remaining lease term | 6 years 2 months 19 days | 6 years 2 months 19 days | ||
Minimum | ||||
Lessee, Lease, Description [Line Items] | ||||
Operating lease, remaining lease term | 1 year | 1 year | ||
Maximum | ||||
Lessee, Lease, Description [Line Items] | ||||
Operating lease, remaining lease term | 10 years | 10 years | ||
Data centers for cloud-based services | ||||
Lessee, Lease, Description [Line Items] | ||||
Variable lease cost | $ 5,600,000 | $ 14,000,000 | ||
Lease cost | $ 2,000,000 | $ 8,400,000 |
Lease Obligations - Schedule of
Lease Obligations - Schedule of Lease Liability Maturities (Details) $ in Thousands | Sep. 30, 2020USD ($) |
Fiscal Year | |
Remaining 2020 | $ 3,874 |
2021 | 11,611 |
2022 | 8,403 |
2023 | 7,483 |
2024 | 6,740 |
Thereafter | 14,954 |
Total lease payments (undiscounted) | 53,065 |
Less: imputed interest | (7,647) |
Lease liabilities—total (discounted) | $ 45,418 |
Debt (Details)
Debt (Details) - USD ($) | Sep. 25, 2020 | Sep. 30, 2020 | Dec. 31, 2019 |
Financial Standby Letter of Credit | |||
Debt Instrument [Line Items] | |||
Letters of credit outstanding, amount | $ 4,300,000 | $ 2,500,000 | |
Revolving Credit Facility | Loan Agreement | |||
Debt Instrument [Line Items] | |||
Maximum borrowing capacity | $ 60,000,000 | ||
Eligible accounts receivable | 85.00% | ||
Available borrowing capacity | 55,700,000 | ||
Capitalized debt issuance costs | 100,000 | ||
Unused capacity fee, percentage | 0.15% | ||
Minimum liquidity ratio | 1.25 | ||
Debt outstanding amount | 0 | ||
Revolving Credit Facility | Loan Agreement | Streamline Period Does Not Apply | London Interbank Offered Rate (LIBOR) | |||
Debt Instrument [Line Items] | |||
Variable interest rate | 2.25% | ||
Debt instrument, variable rate floor | 3.50% | ||
Revolving Credit Facility | Loan Agreement | Streamline Period Applies | Prime Rate | |||
Debt Instrument [Line Items] | |||
Variable interest rate | 0.25% | ||
Debt instrument, variable rate floor | 3.50% | ||
Revolving Credit Facility | Loan Agreement Sublimit | |||
Debt Instrument [Line Items] | |||
Maximum borrowing capacity | $ 10,000,000 |