Carscom Inc

Previous wording

The Net income for the three and six months ended June 30, 2023 is primarily related to the release of a significant portion of our valuation allowance for deferred tax assets that had been recorded as a result of the 2020 goodwill and indefinite-lived intangible asset impairments. For more information, see Note 10 (Income Taxes) to the accompanying Consolidated Financial Statements included in Part I, Item 1., “Financial Statements” of this Quarterly Report on Form 10-Q.

Current wording

The Net income for the nine months ended September 30, 2023 is primarily related to the release of a significant portion of our valuation allowance for deferred tax assets that had been recorded as a result of the 2020 goodwill and indefinite-lived intangible asset impairments. For more information, see Note 10 (Income Taxes) to the accompanying Consolidated Financial Statements included in Part I, Item 1., "Financial Statements" of this Quarterly Report on Form 10-Q.

Previous wording

UVs declined 3% and 2% for the three and six months ended June 30, 2024, respectively, primarily due to impact from recent search engine algorithm updates and normalizing demand from consumers given increased vehicle inventory levels, continued elevated prices and higher interest rates. Additionally, UVs for the six months ended June 30, 2023 benefited from Q1 2023 being our highest quarter ever for UVs.

Current wording

UVs declined 6% and 3% year-over-year for the three and nine months ended September 30, 2024, respectively, primarily due to normalizing demand from consumers given increased vehicle inventory levels, continued elevated prices and higher interest rates, as well as changes in marketing investment and mix across quarters and search engine algorithm updates earlier in the year. Additionally, UVs for the nine months ended September 30, 2023 benefited from Q1 2023 being our highest quarter ever for UVs.

Previous wording

During the three and six months ended June 30, 2024, Traffic increased 1% and 3%, respectively, primarily driven by the shift to RudderStack, optimization of our user acquisition strategy and higher repeat visitation, partially offset by the impact from recent search engine algorithm updates.

Current wording

During each of the three and nine months ended September 30, 2024, Traffic increased 2% compared to September 30, 2023, primarily driven by the shift to RudderStack, higher repeat visitation and optimization of our user acquisition strategy, partially offset by marketing investment and mix across quarters.

Previous wording

Dealer Customers increased 3% from June 30, 2023 and were flat from March 31, 2024. The change in year-over-year dealer customers was primarily due to the inclusion of 950 D2C Media customers as of December 31, 2023, partially offset by the anticipated churn from our 2023 marketplace repackaging initiative.

Current wording

Dealer Customers increased 3% from September 30, 2023, primarily due to the inclusion of 950 D2C Media customers as of December 31, 2023, partially offset by the anticipated churn from our 2023 marketplace repackaging initiative.

Previous wording

For the three months ended June 30, 2024, ARPD remained flat compared to the three months ended June 30, 2023. For the three months ended June 30, 2024, ARPD decreased slightly by 1% compared to the three months ended March 31, 2024.

Current wording

For the three months ended September 30, 2024, ARPD decreased 3% compared to the three months ended September 30, 2023, primarily due to the inclusion of D2C Media customers, who have a lower ARPD. For the three months ended September 30, 2024, ARPD remained flat compared to the three months ended June 30, 2024.

Previous wording

Factors Affecting Our Performance. Our business is impacted by changes in the larger automotive ecosystem, including supply and demand for new and used vehicle inventory, supply chain and information systems disruptions, semiconductor and raw material shortages, vehicle acquisition cost, vehicle retail prices, electric vehicle adoption, employee retention and changes related to automotive advertising, among other macroeconomic factors including inflation and interest rates. Changes in vehicle sales volumes in the United States and Canada also influence OEMs’ and dealerships’ willingness to increase investments in technology solutions and automotive marketplaces like Cars.com and could impact our pricing strategies and/or revenue mix.

Current wording

Factors Affecting Our Performance. Our business is impacted by changes in the larger automotive ecosystem, including supply and demand for new and used vehicle inventory, global supply chain and information systems disruptions, semiconductor and raw material shortages, vehicle acquisition cost, vehicle retail prices, electric vehicle adoption, employee retention and changes related to automotive advertising, among other macroeconomic factors including inflationary pressures and prevailing interest rates. Changes in vehicle sales volumes in the United States and Canada also influence OEMs’ and dealerships’ willingness to increase investments in technology solutions and automotive marketplaces like Cars.com and could impact our pricing strategies and/or revenue mix.

Previous wording

Dealer revenue. Dealer revenue is typically subscription-oriented and consists of marketplace, digital experience, including website solutions and AccuTrade, and media products sold to dealer customers. Dealer revenue is our largest revenue stream, representing 89% and 91% of total revenue for the three months ended June 30, 2024 and 2023, respectively. Dealer revenue increased $6.5 million or 4%, primarily driven by the incremental revenue related to the addition of the D2C Media business and growth in digital experience revenue, including our website creation and hosting.

Current wording

Dealer revenue. Dealer revenue is typically subscription-oriented and consists of marketplace, digital experience, including website solutions and AccuTrade, and media products sold to dealer customers. Dealer revenue is our largest revenue stream, representing 89% and 90% of total revenue for the three months ended September 30, 2024 and 2023, respectively. Dealer revenue increased $2.4 million or 2%, primarily driven by the incremental revenue related to the addition of the D2C Media business and growth in digital experience revenue, partially offset by a decrease in marketplace revenue, which we believe is driven by macroeconomic trends impacting dealer customer profitability.

Previous wording

OEM and National revenue. OEM and National revenue largely consists of Cars Commerce Media Network products, including display advertising and other solutions sold to OEMs, advertising agencies, automotive dealer associations and auto adjacent businesses, including insurance companies. OEM and National revenue represented 9% and 7% of total revenue for the three months ended June 30, 2024 and 2023, respectively. OEM and National revenue increased $3.4 million or 28%, driven by OEM spending to raise consumer awareness, as on-the lot inventory continues to increase.

Current wording

OEM and National revenue. OEM and National revenue largely consists of Cars Commerce Media Network products, including display advertising and other solutions sold to OEMs, advertising agencies, automotive dealer associations and auto adjacent businesses, including insurance companies. OEM and National revenue represented 9% and 8% of total revenue for the three months ended September 30, 2024 and 2023, respectively. OEM and National revenue increased $2.5 million or 17%, driven by OEM spending to raise consumer awareness, as on-the lot inventory continues to increase.

Previous wording

Other revenue. Other revenue primarily consists of revenue related to vehicle listing data sold to third parties and pay per lead products. Other revenue represented 2% of total revenue for each of the three months ended June 30, 2024 and 2023. Other revenue increased $0.8 million or 31%, primarily driven by the incremental revenue related to the addition of the D2C Media business.

Current wording

Other revenue. Other revenue primarily consists of revenue related to vehicle listing data sold to third parties and pay per lead products. Other revenue represented 2% of total revenue for each of the three months ended September 30, 2024 and 2023. Other revenue increased $0.5 million or 17%, primarily driven by the incremental revenue related to the addition of the D2C Media business.

Previous wording

Cost of revenue and operations. Cost of revenue and operations expense primarily consists of costs related to processing dealer vehicle inventory, product fulfillment, pay per lead products and compensation costs for the product fulfillment and customer service teams. Cost of revenue and operations expense represented 17% and 18% of total revenue for the three months ended June 30, 2024 and 2023, respectively. Cost of revenue and operations increased $0.6 million or 2%, but decreased as a percentage of revenue. The change is primarily due to incremental costs related to the addition of the D2C Media business and higher third-party costs to support increases in revenue.

Current wording

Cost of revenue and operations. Cost of revenue and operations expense primarily consists of costs related to processing dealer vehicle inventory, product fulfillment, pay per lead products and compensation costs for the product fulfillment and customer service teams. Cost of revenue and operations expense represented 18% of total revenue for each of the three months ended September 30, 2024 and 2023. Cost of revenue and operations increased $0.5 million or 2%, primarily due to incremental costs related to the addition of the D2C Media business and higher third-party costs to support increases in revenue.

Previous wording

Product and technology. The product team creates and manages consumer and customer-facing innovation and consumer and customer experience. The technology team develops and supports our products, websites and mobile apps. Product and technology expense includes compensation costs, consulting and contractor costs, hardware and software maintenance, software licenses and other infrastructure costs. Product and technology expense represented 15% of total revenue for each of the three months ended June 30, 2024 and 2023. Product and technology expense increased $2.6 million or 11%, primarily due to higher compensation, including stock-based compensation and third-party costs, including licenses.

Current wording

Product and technology. The product team creates and manages consumer and customer-facing innovation and consumer and customer experience. The technology team develops and supports our products, websites and mobile apps. Product and technology expense includes compensation costs, consulting and contractor costs, hardware and software maintenance, software licenses and other infrastructure costs. Product and technology expense represented 16% and 15% of total revenue for the three months ended September 30, 2024 and 2023, respectively. Product and technology expense increased $3.9 million or 16%, primarily due to higher compensation, including stock-based compensation and third-party costs, including licenses.

Previous wording

Marketing and sales. Marketing and sales expense primarily consists of traffic and lead acquisition costs, performance and brand marketing, trade events, compensation costs and travel for the marketing, sales and sales support teams, as well as bad debt expense related to the allowance for doubtful accounts. Marketing and sales expense represented 34% and 35% of total revenue for the three months ended June 30, 2024 and 2023, respectively. Marketing and sales expense increased $2.1 million or 4%, primarily due to incremental costs related to the addition of the D2C Media business.

Current wording

Marketing and sales. Marketing and sales expense primarily consists of traffic and lead acquisition costs, performance and brand marketing, trade events, compensation costs and travel for the marketing, sales and sales support teams, as well as bad debt expense related to the allowance for doubtful accounts. Marketing and sales expense represented 32% and 35% of total revenue for the three months ended September 30, 2024 and 2023, respectively. Marketing and sales expense decreased $1.9 million or 3%, primarily due to changes in our marketing investment and mix.

Previous wording

General and administrative. General and administrative expense primarily consists of compensation costs for certain of the executive, finance, legal, human resources, facilities and other administrative employees. In addition, general and administrative expense includes the cost of office space, legal, accounting and other professional services, transaction-related costs, severance, transformation and other exit costs and costs related to the write-off of assets. General and administrative expense represented 13% and 10% of total revenue for the three months ended June 30, 2024 and 2023, respectively. General and administrative expense increased $5.3 million or 30%, the majority of which is due to incremental costs related to the addition of the D2C Media business, including the compensation expense related to the D2C Media earnout. Additionally, the change is also impacted by higher compensation, including severance and stock-based compensation. For information related to the D2C Media earnout, see Note 3 (Business Combinations) to the accompanying Consolidated Financial Statements included in Part I, Item 1., "Financial Statements" of this Quarterly Report on Form 10-Q.

Current wording

General and administrative. General and administrative expense primarily consists of compensation costs for certain of the executive, finance, legal, human resources, facilities and other administrative employees. In addition, general and administrative expense includes the cost of office space, legal, accounting and other professional services, transaction-related costs, severance, transformation and other exit costs and costs related to the write-off of assets. General and administrative expense represented 12% and 10% of total revenue for the three months ended September 30, 2024 and 2023, respectively. General and administrative expense increased $3.7 million or 21%, the majority of which is due to incremental costs related to the addition of the D2C Media business, including the compensation expense related to the D2C Media earnout. Additionally, the change is also impacted by higher compensation, including stock-based compensation. For information related to the D2C Media earnout, see Note 3 (Business Combinations) to the accompanying Consolidated Financial Statements included in Part I, Item 1., "Financial Statements" of this Quarterly Report on Form 10-Q.

Previous wording

Depreciation and amortization. Depreciation and amortization expense increased $2.9 million or 12%, primarily due to depreciation and amortization on additional assets acquired and the amortization of intangible assets related to the D2C Media acquisition, partially offset by certain assets being fully depreciated and amortized as compared to the prior-year period.

Current wording

Depreciation and amortization. Depreciation and amortization expense increased $1.9 million or 7%, primarily due to depreciation and amortization on additional assets acquired and the amortization of intangible assets related to the D2C Media Acquisition, partially offset by certain assets being fully depreciated and amortized as compared to the prior-year period.

Previous wording

Six Months Ended June 30, 2024 Compared to Six Months Ended June 30, 2023

Current wording

Nine Months Ended September 30, 2024 Compared to Nine Months Ended September 30, 2023

Previous wording

Dealer revenue. Dealer revenue is our largest revenue stream, representing 90% of total revenue for the each of the six months ended June 30, 2024 and 2023. Dealer revenue increased $18.5 million or 6%, primarily driven by the incremental revenue related to the addition of the D2C Media business and growth in digital experience revenue, including our website creation and hosting.

Current wording

Dealer revenue. Dealer revenue is our largest revenue stream, representing 89% and 90% of total revenue for the nine months ended September 30, 2024 and 2023, respectively. Dealer revenue increased $20.9 million or 5%, primarily driven by the incremental revenue related to the addition of the D2C Media business and growth in digital experience revenue, including our website creation and hosting.

Previous wording

OEM and National revenue. OEM and National revenue represented 9% and 8% of total revenue for the six months ended June 30, 2024 and 2023, respectively. OEM and National revenue increased $5.2 million or 20%, primarily due to increased OEM spending to raise consumer awareness, as on-the lot inventory continues to increase.

Current wording

OEM and National revenue. OEM and National revenue represented 9% and 8% of total revenue for the nine months ended September 30, 2024 and 2023, respectively. OEM and National revenue increased $7.7 million or 19%, primarily due to increased OEM spending to raise consumer awareness, as on-the lot inventory continues to increase.

Previous wording

Other revenue. Other revenue represented 1% and 2% of total revenue for the six months ended June 30, 2024 and 2023, respectively. Other revenue increased $0.1 million or 2%, primarily due to the incremental revenue related to the addition of the D2C Media business, partially offset by the first quarter 2023 expiration of a license agreement entered into as part of the AccuTrade acquisition.

Current wording

Other revenue. Other revenue represented 2% of total revenue for each of the nine months ended September 30, 2024 and 2023. Other revenue increased $0.6 million or 7%, primarily due to the incremental revenue related to the addition of the D2C Media business, partially offset by the first quarter 2023 expiration of a license agreement entered into as part of the AccuTrade acquisition.

Previous wording

Cost of revenue and operations. Cost of revenue and operations expense represented 17% and 18% of total revenue for the six months ended June 30, 2024 and 2023, respectively. Cost of revenue and operations increased $0.8 million or 1%, but decreased as a percentage of revenue. The change is primarily due to the incremental cost related to the addition of the D2C Media business.

Current wording

Cost of revenue and operations. Cost of revenue and operations expense represented 17% and 18% of total revenue for the nine months ended September 30, 2024 and 2023, respectively. Cost of revenue and operations increased $1.3 million or 1%, but decreased as a percentage of revenue. The change is primarily due to the incremental costs related to the addition of the D2C Media business.

Previous wording

Product and technology. Product and technology expense represented 16% and 15% of total revenue for the six months ended June 30, 2024 and 2023, respectively. Product and technology expense increased $6.6 million or 13%, primarily due to higher compensation, including stock-based compensation and third-party costs, including licenses.

Current wording

Product and technology. Product and technology expense represented 16% and 15% of total revenue for the nine months ended September 30, 2024 and 2023, respectively. Product and technology expense increased $10.5 million or 14%, primarily due to higher compensation, including stock-based compensation and third-party costs, including licenses.

Previous wording

Marketing and sales. Marketing and sales expense represented 33% and 35% of total revenue for the six months ended June 30, 2024 and 2023, respectively. Marketing and sales expense increased $2.9 million or 3%, primarily due to incremental costs related to the addition of the D2C Media business.

Current wording

Marketing and sales. Marketing and sales expense represented 33% and 35% of total revenue for the nine months ended September 30, 2024 and 2023, respectively. Marketing and sales expense increased $1.0 million or 1%, primarily due to incremental costs related to the addition of the D2C Media business, partially offset by changes in our marketing investment and mix.

Previous wording

General and administrative. General and administrative expense represented 13% and 11% of total revenue for the six months ended June 30, 2024 and 2023, respectively. General and administrative expense increased $9.9 million or 27%, the majority of which is due to incremental costs related to the addition of the D2C Media business, including the compensation expense related to the D2C Media earnout. Additionally, the change is impacted by higher compensation, including stock-based compensation. For information related to the D2C Media earnout, see Note 3 (Business Combinations) to the accompanying Consolidated Financial Statements included in Part I, Item 1., "Financial Statements" of this Quarterly Report on Form 10-Q.

Current wording

General and administrative. General and administrative expense represented 13% and 11% of total revenue for the nine months ended September 30, 2024 and 2023, respectively. General and administrative expense increased $13.6 million or 25%, the majority of which is due to incremental costs related to the addition of the D2C Media business, including the compensation expense related to the D2C Media earnout. Additionally, the change is impacted by higher compensation, including stock-based compensation. For information related to the D2C Media earnout, see Note 3 (Business Combinations) to the accompanying Consolidated Financial Statements included in Part I, Item 1., "Financial Statements" of this Quarterly Report on Form 10-Q.

Previous wording

Depreciation and amortization. Depreciation and amortization expense increased $6.2 million or 13%, primarily due to depreciation and amortization on additional assets acquired and the amortization of intangible assets related to the D2C Media acquisition, partially offset by certain assets being fully depreciated and amortized as compared to the prior-year period.

Current wording

Depreciation and amortization. Depreciation and amortization expense increased $8.1 million or 11%, primarily due to depreciation and amortization on additional assets acquired and the amortization of intangible assets related to the D2C Media Acquisition, partially offset by certain assets being fully depreciated and amortized as compared to the prior-year period.

Previous wording

Other income, net. Other income, net changed primarily due to the change in the fair value of contingent consideration associated with the AccuTrade and CreditIQ acquisitions and the impact of foreign exchange rates. For more information related to contingent consideration, see the Liquidity and Capital Resources section below and Note 4 (Fair Value Measurements) to the accompanying Consolidated Financial Statements included in Part I, Item 1., “Financial Statements” of this Quarterly Report on Form 10-Q.

Current wording

Other income, net. Other income, net changed primarily due to the change in the fair value of contingent consideration associated with the AccuTrade and CreditIQ acquisitions. For more information related to contingent consideration, see the Liquidity and Capital Resources section below and Note 4 (Fair Value Measurements) to the accompanying Consolidated Financial Statements included in Part I, Item 1., "Financial Statements" of this Quarterly Report on Form 10-Q.

Previous wording

We may also seek to raise funds through debt or equity financing in the future to fund operations, significant investments or acquisitions that are consistent with our strategy. If we need to access the capital markets, there can be no assurance that financing may be available on attractive terms, if at all. As of June 30, 2024, Cash and cash equivalents were $29.1 million and including our undrawn Revolving Loan, our total liquidity was $304.1 million.

Current wording

We may also seek to raise funds through debt or equity financing in the future to fund operations, significant investments or acquisitions that are consistent with our strategy. If we need to access the capital markets, there can be no assurance that financing may be available on attractive terms, if at all. As of September 30, 2024, Cash and cash equivalents were $49.6 million and including our undrawn Revolving Loan, our total liquidity was $329.6 million.

Previous wording

Indebtedness. As of June 30, 2024, the outstanding aggregate principal amount of our indebtedness was $475.0 million, at an average interest rate of 6.5%, including $400.0 million of outstanding aggregate principal under the 6.375% Senior Unsecured Notes due in 2028 and $75.0 million of outstanding principal under the Revolving Loan which had an interest rate of 7.4%.

Current wording

Indebtedness. As of September 30, 2024, the outstanding aggregate principal amount of our indebtedness was $470.0 million, at an average interest rate of 6.4%, including $400.0 million of outstanding aggregate principal under the 6.375% Senior Unsecured Notes due in 2028 and $70.0 million of outstanding principal under the Revolving Loan which had an interest rate of 6.8%.

Previous wording

During the six months ended June 30, 2024, we made $10.0 million in mandatory Term Loan payments and repaid $5.0 million on our Revolving Loan. In connection with the Fifth Amendment, we borrowed $80.0 million under the new Revolving Loan to repay the outstanding $45.0 million in aggregate principal amount of existing Term Loan and $35.0 million aggregate principal amount of existing Revolving Loan balances. As of June 30, 2024, $275.0 million was available to borrow under the Revolving Loan. Our borrowings are limited by our Senior Secured Leverage Net Ratio and Consolidated Interest Coverage Ratio, in addition to other factors. Calculated in accordance with our Credit Agreement, these ratios were 0.2x and 6.4x, respectively, as of June 30, 2024. For further information, see Note 5 (Debt) to the accompanying Consolidated Financial Statements included in Part I, Item 1., "Financial Statements" of this Quarterly Report on Form 10-Q.

Current wording

During the nine months ended September 30, 2024, we made $10.0 million in mandatory Term Loan payments and repaid $10.0 million on our Revolving Loan. In connection with the Fifth Amendment, we borrowed $80.0 million under the new Revolving Loan to repay the outstanding $45.0 million in aggregate principal amount of existing Term Loan and $35.0 million aggregate principal amount of existing Revolving Loan balances. As of September 30, 2024, $280.0 million was available to borrow under the Revolving Loan. Our borrowings are limited by our Senior Secured Net Leverage Ratio and Consolidated Interest Coverage Ratio, in addition to other factors. Calculated in accordance with our Credit Agreement, these ratios were 0.1x and 6.4x, respectively, as of September 30, 2024. For further information, see Note 5 (Debt) to the accompanying Consolidated Financial Statements included in Part I, Item 1., "Financial Statements" of this Quarterly Report on Form 10-Q.

Previous wording

Share Repurchase Program. In February 2022, our Board of Directors authorized a three-year share repurchase program to acquire up to $200.0 million of our common stock. The repurchase program may be suspended or discontinued at any time and does not obligate us to repurchase any specific amount or number of shares. We may repurchase shares from time to time in open market transactions or through privately negotiated transactions in accordance with applicable federal securities laws and other applicable legal requirements, and subject to our blackout periods. We intend to fund the share repurchase program principally with cash from operations. During the six months ended June 30, 2024, we repurchased and subsequently retired 0.8 million shares for $14.4 million at an average price paid per share of $17.91.

Current wording

Share Repurchase Program. In February 2022, our Board of Directors authorized a three-year share repurchase program to acquire up to $200.0 million of our common stock. The repurchase program may be suspended or discontinued at any time and does not obligate us to repurchase any specific amount or number of shares. We may repurchase shares from time to time in open market transactions or through privately negotiated transactions in accordance with applicable federal securities laws and other applicable legal requirements, and subject to our blackout periods. We intend to fund the share repurchase program principally with cash from operations. During the nine months ended September 30, 2024, we repurchased and subsequently retired 2.0 million shares for $35.7 million at an average price paid per share of $17.85.

Previous wording

Contingent Consideration and Earnout. The fair value as of June 30, 2024 for the contingent consideration related to the CreditIQ and AccuTrade acquisitions was $21.1 million.

Current wording

Contingent Consideration and Earnout. The fair value as of September 30, 2024 for the contingent consideration related to the CreditIQ and AccuTrade acquisitions was $0.5 million.

Previous wording

Within the next twelve months, we expect to pay $37.1 million of potential contingent consideration and D2C Media earnout discussed below. During the six months ended June 30, 2024, we paid $30.4 million related to contingent consideration and earnout which reduced the corresponding liability. The contingent consideration and earnout consists of the following:

Current wording

Within the next twelve months, we expect to pay $11.6 million of potential contingent consideration and D2C Media earnout discussed below. During the nine months ended September 30, 2024, we paid $30.4 million related to contingent consideration and earnout, which reduced the corresponding liability. The contingent consideration and earnout consists of the following:

Previous wording

As part of the D2C Media acquisition, we may be required to pay additional cash consideration to certain former owners who are now employees of Cars Commerce based on the achievement of a revenue performance metric. The amount to be paid will be determined by the acquired business’ future achievement of certain revenue-related financial targets through December 31, 2025 and expensed over each performance period. We may expense up to CAD$15.0 million (approximately USD$11.0 million as of June 30, 2024) associated with the remaining portion of the earnout for each of the years ending December 31, 2024 and 2025.

Current wording

As part of the D2C Media Acquisition, we may be required to pay additional cash consideration to certain former owners who are now employees of Cars Commerce based on the achievement of a revenue performance metric. The amount to be paid will be determined by the acquired business’ future achievement of certain revenue-related financial targets through December 31, 2025 and expensed over each performance period. We may expense up to CAD$15.0 million (approximately USD$11.1 million as of September 30, 2024) associated with the remaining portion of the earnout for each of the years ending December 31, 2024 and 2025.

Previous wording

Quarterly Report on Form 10-Q and Note 3 (Business Combinations) in Part II, Item 8., "Financial Statements and Supplementary Data", of our Annual Report on Form 10-K for the year ended December 31, 2023 as filed with the SEC on February 22, 2024.

Current wording

For information related to the contingent consideration and earnout, see Note 3 (Business Combinations) and Note 4 (Fair Value Measurements) to the accompanying Consolidated Financial Statements included in Part I, Item 1., "Financial Statements" of this Quarterly Report on Form 10-Q and Note 3 (Business Combinations) in Part II, Item 8., "Financial Statements and Supplementary Data", of our Annual Report on Form 10-K for the year ended December 31, 2023 as filed with the SEC on February 22, 2024.

Previous wording

Operating Activities. Cash provided by operating activities for the six months ended June 30, 2024 increased due to Net income after non-cash adjustments and changes in working capital compared to the six months ended June 30, 2023.

Current wording

Operating Activities. Cash provided by operating activities for the nine months ended September 30, 2024 increased due to changes in working capital and Net income after non-cash adjustments compared to the nine months ended September 30, 2023.

Previous wording

Financing Activities. During the six months ended June 30, 2024, cash used in financing activities was primarily related to payments of contingent consideration, debt repayments, repurchases of common stock and tax payments made in connection with the vesting of certain equity awards. During the six months ended June 30, 2023, cash used in financing activities was primarily related to debt repayments, repurchases of common stock and tax payments made in connection with the vesting of certain equity awards. For information related to our debt, repurchases of common stock and contingent consideration, see Note 4 (Fair Value Measurements), Note 5 (Debt) and Note 7 (Stockholders' Equity) to the accompanying Consolidated Financial Statements included in Part I, Item 1., "Financial Statements" of this Quarterly Report on Form 10-Q.

Current wording

Financing Activities. During the nine months ended September 30, 2024, cash used in financing activities was primarily related to repurchases of common stock, payments of contingent consideration, debt repayments and tax payments made in connection with the vesting of certain equity awards. During the nine months ended September 30, 2023, cash used in financing activities was primarily related to debt repayments, repurchases of common stock and tax payments made in connection with the vesting of certain equity awards. For information related to our debt, repurchases of common stock and contingent consideration, see Note 4 (Fair Value Measurements), Note 5 (Debt) and Note 7 (Stockholders' Equity) to the accompanying Consolidated Financial Statements included in Part I, Item 1., "Financial Statements" of this Quarterly Report on Form 10-Q.

Previous wording

Critical Accounting Policies. For information related to critical accounting policies, see "Critical Accounting Policies and Estimates" in Part II, Item 7., "Management’s Discussion and Analysis of Financial Condition and Results of Operations", of our Annual Report on Form 10-K for the year ended December 31, 2023 as filed with the SEC on February 22, 2024 and see Note 1 (Description of Business and Summary of Significant Accounting Policies) to the accompanying Consolidated Financial Statements included in Part I, Item 1., "Financial Statements" of this Quarterly Report on Form 10-Q. During the six months ended June 30, 2024, there have been no changes to our critical accounting policies.

Current wording

Critical Accounting Policies. For information related to critical accounting policies, see "Critical Accounting Policies and Estimates" in Part II, Item 7., "Management’s Discussion and Analysis of Financial Condition and Results of Operations", of our Annual Report on Form 10-K for the year ended December 31, 2023 as filed with the SEC on February 22, 2024 and see Note 1 (Description of Business and Summary of Significant Accounting Policies) to the accompanying Consolidated Financial Statements included in Part I, Item 1., "Financial Statements" of this Quarterly Report on Form 10-Q. During the nine months ended September 30, 2024, there have been no changes to our critical accounting policies.

Previous wording

Recently Issued Accounting Standards Not Yet Adopted. In December 2023, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures, which requires presentation of specific categories of reconciling items, as well as reconciling items that meet a quantitative threshold, in the reconciliation between the income tax provision and the income tax provision using statutory tax rates. The standard also requires disclosure of income taxes paid disaggregated by jurisdiction with separate disclosure of income taxes paid to individual jurisdictions that meet a quantitative threshold. This amendment is effective for fiscal years beginning after December 15, 2024, on a prospective basis and early adoption and retrospective application are permitted. We are currently evaluating this new guidance and its impact on our Consolidated Financial Statements and related disclosures.

Current wording

In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures, which requires presentation of specific categories of reconciling items, as well as reconciling items that meet a quantitative threshold, in the reconciliation between the income tax provision and the income tax provision using statutory tax rates. The standard also requires disclosure of income taxes paid disaggregated by jurisdiction with separate disclosure of income taxes paid to individual jurisdictions that meet a quantitative threshold. This amendment is effective for fiscal years beginning after December 15, 2024, on a prospective basis and early adoption and retrospective application are permitted. We are currently evaluating this new guidance and its impact on our Consolidated Financial Statements and related disclosures.