MAGNITE INC

Previous wording

Due to the size and complexity of the digital advertising ecosystem and purchasing process, manual processes cannot effectively manage digital advertising inventory at scale. In addition, both buyers and sellers are demanding more transparency, better controls and more relevant insights from their advertising inventory purchases and sales. This has created a need for software solutions, known as programmatic advertising, that automate the process for planning, buying, selling and measuring digital advertising across screens. Programmatic advertising allows buyers and sellers to transact on an impression-by-impression basis through the use of real-time bidding technology, and allows for the use of advanced data and identity solutions to better target ad campaigns. Programmatic transactions include open auctions, where multiple buyers bid against each other in a real-time auction for the right to purchase a publisher's inventory, as well as reserve auctions, where publishers establish direct deals or private marketplaces with select buyers. These reserve auctions may be “guaranteed,” where a buyer has negotiated a pre-established price and volume with a seller.

Current wording

Due to the size and complexity of the digital advertising ecosystem and purchasing process, manual processes cannot effectively manage digital advertising inventory at scale. In addition, both buyers and sellers are demanding more transparency, better controls and more relevant insights from their advertising inventory purchases and sales. This has created a need for software solutions, known as programmatic advertising, that automate the process for planning, buying, selling and measuring digital advertising across screens. Programmatic advertising allows buyers and sellers to transact on an impression-by-impression basis through the use of real-time bidding technology, and allows for the use of advanced data and identity solutions to better target ad campaigns. Programmatic transactions include open auctions, where multiple buyers bid against each other in a real-time auction for the right to purchase a publisher's inventory, as well as reserve auctions, where publishers establish direct deals or private marketplaces with select buyers. These reserve auctions may be "guaranteed," where a buyer has negotiated a pre-established price and volume with a seller, otherwise referred to as "programmatic guaranteed."

Previous wording

CTV viewership is growing rapidly and the pace of adoption is accelerating the transition of linear television to CTV programming. As the number of CTV channels continues to proliferate, we believe that ad-supported models or hybrid models that rely on a combination of subscription fees and advertising revenue will continue to gain traction. In turn, we believe brand advertisers looking to engage with streaming viewers will continue to shift their budgets from linear to CTV. Furthermore, as the CTV market continues to mature, we believe that a greater percentage of CTV advertising inventory will be sold programmatically, and through biddable environments rather than programmatic guaranteed, similar to trends that occurred in desktop and mobile.

Current wording

CTV viewership is growing rapidly and the pace of adoption is accelerating the transition of linear television to CTV programming. Initially, many streaming services were subscription based, but as the market has matured, the largest streaming publishers have adopted ad-supported models or hybrid models that rely on a combination of subscription fees and advertising. With the proliferation of CTV advertising inventory, we believe that brand advertisers looking to engage with streaming viewers will continue to shift their budgets from linear to CTV. Moreover, we believe that as the amount of CTV inventory continues to scale, a greater percentage of CTV advertising inventory will be sold programmatically, and through biddable environments rather than programmatic guaranteed, in order to attract a broader set of advertisers that have not historically advertised on linear TV.

Previous wording

For instance, Google had previously announced plans to fully deprecate third-party cookies by the end of 2024. However, recently Google announced that they will no longer be deprecating third-party cookies and instead will be introducing features that allows consumers to opt out of third-party cookies, while further investing in their own proprietary solutions. We would expect these new features to result in an increase in the number of users opting out of third-party cookies on Chrome browsers, which could lead to some short-term uncertainty as well as a decrease in CPMs.

Current wording

For instance, Google had previously announced plans to fully deprecate third-party cookies by the end of 2024. However, recently Google announced that they will no longer be deprecating third-party cookies and instead will be introducing features that allow consumers to opt out of third-party cookies, while further investing in their own proprietary solutions. We would expect these new features to result in an increase in the number of users opting out of third-party cookies on Chrome browsers, which could lead to some short-term uncertainty as well as a decrease in CPMs.

Previous wording

Recent macroeconomic challenges, such as inflation, high interest rates, global conflicts, the risk of a recession, labor strikes, and other macroeconomic factors, have generally negatively impacted ad budgets, which in turn may lead to slower ad spend growth through our platform. Any worsening of macroeconomic conditions in future periods would likely have a negative effect on our financial results, the magnitude of which is difficult to predict. In addition, continued inflation could result in an increase in our cost base relative to our revenue. We expect our results for the second-half of 2024 to include revenue from political advertising, the magnitude of which is uncertain and depends on factors outside of our control.

Current wording

Macroeconomic challenges, such as inflation, the interest rate environment, global conflicts, the risk of a recession, and labor strikes, generally have a negative impact on ad budgets, which in turn may lead to slower ad spend growth through our platform. Any worsening of macroeconomic conditions in future periods would likely have a negative effect on our financial results, the magnitude of which is difficult to predict. In addition, continued inflation could result in an increase in our cost base relative to our revenue.

Previous wording

For the three and six months ended June 30, 2024, our revenue reported on a gross basis was 16% and 17%, respectively, of total revenue, and for the three and six months ended June 30, 2023, our revenue reported on a gross basis was 19% and 18%, respectively, of total revenue. Any mix shift that causes an increase in the relative percentage of our revenue accounted for on a gross basis would result in a higher revenue contribution and an associated decrease in our gross margin percentage (with no underlying impact on gross profit or Contribution ex-TAC, as defined in section "Key Operating and Financial Performance Metrics"). Our revenue recognition policies are discussed in more detail in our audited consolidated financial statements and notes thereto for the year ended December 31, 2023 included in our Annual Report on Form 10-K and in Note 3 of the accompanying Notes to the Condensed Consolidated Financial Statements.

Current wording

For the three and nine months ended September 30, 2024, our revenue reported on a gross basis was 12% and 16%, respectively, of total revenue, and for the three and nine months ended September 30, 2023, our revenue reported on a gross basis was 18% and 18%, respectively, of total revenue. Any mix shift that causes an increase in the relative percentage of our revenue accounted for on a gross basis would result in a higher revenue contribution and an associated decrease in our gross margin percentage (with no underlying impact on gross profit or Contribution ex-TAC, as defined in section "Key Operating and Financial Performance Metrics"). Our revenue recognition policies are discussed in more detail in our audited consolidated financial statements and notes thereto for the year ended December 31, 2023 included in our Annual Report on Form 10-K and in Note 3 of the accompanying Notes to the Condensed Consolidated Financial Statements.

Previous wording

Cost of Revenue. Our cost of revenue primarily consists of cloud hosting, data center, and bandwidth costs, ad verification costs, depreciation and maintenance expense of hardware supporting our revenue-producing platform, amortization of software costs for the development of our revenue-producing platform, amortization expense associated with acquired developed technologies, and personnel costs. In addition, for revenue booked on a gross basis, cost of revenue includes traffic acquisition costs. Personnel costs included in cost of revenue include salaries, bonuses, and stock-based compensation, and are primarily attributable to personnel in our network operations group who support our platform. We capitalize costs associated with software that is developed or obtained for internal use and amortize the costs associated with our revenue-producing platform in cost of revenue over their estimated useful lives. We amortize acquired developed technologies over their estimated useful lives.

Current wording

Cost of Revenue. Our cost of revenue primarily consists of cloud hosting, data center, and bandwidth costs, ad verification costs, depreciation and maintenance expense of hardware supporting our revenue-producing platform, amortization of internally-developed software costs for the development of our revenue-producing platform, amortization expense associated with acquired developed technologies, personnel costs, and software costs. In addition, for revenue booked on a gross basis, cost of revenue includes traffic acquisition costs. Personnel costs included in cost of revenue include salaries, bonuses, and stock-based compensation, and are primarily attributable to personnel in our network operations group who support our platform. We capitalize costs associated with software that is developed or obtained for internal use and amortize the costs associated with our revenue-producing platform in cost of revenue over their estimated useful lives. We amortize acquired developed technologies over their estimated useful lives.

Previous wording

Technology and Development. Our technology and development expenses primarily consists of personnel costs, including salaries, bonuses, and stock-based compensation, as well as professional services associated with the ongoing development and maintenance of our solution, third-party software license costs, facilities-related costs, and depreciation and amortization expense. These expenses include costs incurred in the development, implementation, and maintenance of internal use software, including platform and related infrastructure. Technology and development costs are expensed as incurred, except to the extent that such costs are associated with internal use software development that qualifies for capitalization, which are then recorded as internal use software development costs, net, on our condensed consolidated balance sheets. We amortize internal use software development costs that relate to our revenue-producing activities on our platform to cost of revenue and amortize other internal use software development costs to technology and development costs or general and administrative expenses, depending on the nature of the related project. We amortize acquired intangibles associated with technology and development functions from our business acquisitions over their estimated useful lives.

Current wording

Technology and Development. Our technology and development expenses primarily consists of personnel costs, including salaries, bonuses, and stock-based compensation, as well as professional services associated with the ongoing development and maintenance of our solution, software costs, facilities-related costs, and depreciation and amortization expense. These expenses include costs incurred in the development, implementation, and maintenance of internal use software, including platform and related infrastructure. Technology and development costs are expensed as incurred, except to the extent that such costs are associated with internal use software development that qualifies for capitalization, which are then recorded as internal use software development costs, net, on our condensed consolidated balance sheets. We amortize internal use software development costs that relate to our revenue-producing activities on our platform to cost of revenue and amortize other internal use software development costs to technology and development costs or general and administrative expenses, depending on the nature of the related project. We amortize acquired intangibles associated with technology and development functions from our business acquisitions over their estimated useful lives.

Previous wording

Revenue increased $29.5 million, or 10%, for the six months ended June 30, 2024 compared to the prior year period. Our revenue growth was primarily driven by growth in CTV and mobile. Revenue from CTV and mobile increased by $19.5 million, or 15%, and $9.3 million, or 9%, respectively.

Current wording

Revenue increased $11.9 million, or 8%, for the three months ended September 30, 2024 compared to the prior year period. Our revenue growth was primarily driven by growth in CTV and mobile revenue, including contributions from political advertising. Revenue from CTV and mobile increased by $8.5 million, or 12%, and $3.5 million, or 6%, respectively.

Previous wording

Revenue increased $10.3 million, or 7%, for the three months ended June 30, 2024 compared to the prior year period. Our revenue growth was primarily driven by growth in CTV and mobile revenue. Revenue from CTV and mobile increased by $6.0 million, or 8%, and $3.6 million, or 6%, respectively.

Current wording

Revenue increased $41.4 million, or 10%, for the nine months ended September 30, 2024 compared to the prior year period. Our revenue growth was primarily driven by growth in CTV and mobile revenue. Revenue from CTV and mobile increased by $28.0 million, or 14%, and $12.8 million, or 8%, respectively.

Previous wording

Our revenue is largely a function of the number of advertising transactions and the price, or CPM, at which the inventory is sold, which results in total advertising spend on our platform, and, with respect to our revenue reported on a net basis, the take rate we charge for our services. Because pricing and take rate vary across publisher, channel, and transaction type, our revenue is subject to changes in publisher-specific take rates, and shifts in the mix of advertising spend on our platform among publishers and transaction types. For instance, managed services tend to have higher take rates while reserve auctions tend to have lower take rates. For full-year 2024, we believe our revenue will increase compared to the prior year period and we expect CTV will be our biggest growth driver for the remainder of 2024.

Current wording

Our revenue is largely a function of the number of advertising transactions and the price, or CPM, at which the inventory is sold, which results in total advertising spend on our platform, and, with respect to our revenue reported on a net basis, the take rate we charge for our services. Because pricing and take rate vary across publisher, channel, and transaction type, our revenue is subject to changes in publisher-specific take rates, and shifts in the mix of advertising spend on our platform among publishers and transaction types. For instance, managed services tend to have higher take rates while reserve auctions tend to have lower take rates. We expect our revenue to increase through the remainder of 2024 compared to 2023 and we expect CTV will continue to be our biggest growth driver, inclusive of political advertising.

Previous wording

Cost of revenue decreased $67.6 million, or 52%, for the three months ended June 30, 2024 compared to the prior year period, primarily due to a decrease of $69.9 million in depreciation and amortization, which was primarily driven by certain acquired intangible assets becoming fully amortized in the third quarter of 2023. The decrease was partially offset by increases of $3.1 million in cloud hosting, data center, and bandwidth expenses, primarily due to revenue growth.

Current wording

Cost of revenue decreased $22.3 million, or 26%, for the three months ended September 30, 2024 compared to the prior year period, primarily due to decreases of $24.5 million in depreciation and amortization, which was primarily driven by certain acquired intangible assets becoming fully amortized in the third quarter of 2023, and $4.4 million in traffic acquisition costs due to a decrease in revenue reported on a gross basis. The decrease was partially offset by increases of $3.6 million in software costs primarily due to revenue growth.

Previous wording

Cost of revenue decreased $126.5 million, or 50%, for the six months ended June 30, 2024, compared to the prior year period, primarily due to a decrease of $139.6 million in depreciation and amortization due to the same reason above. The decrease was partially offset by increases of $8.7 million in cloud hosting, data center, and bandwidth expenses, primarily due to revenue growth.

Current wording

Cost of revenue decreased $148.8 million, or 44%, for the nine months ended September 30, 2024, compared to the prior year period, primarily due to decreases of $164.0 million in depreciation and amortization due to the same reason above. The decrease was partially offset by increases of $10.3 million in cloud hosting, data center, and bandwidth expenses, primarily due to revenue growth.

Previous wording

We expect cost of revenue to decrease through the remainder of 2024 compared to 2023 in absolute dollars primarily due to certain acquired intangible assets becoming fully amortized in 2023 and due to the change in estimated useful life of our network hardware assets. On January 1, 2024, we extended theestimated useful lives of our network hardware assets from three years to five years, which was due to actual and expected longer refresh cycles for these assets. Based on the related asset balance as of December 31, 2023 and those placed in service during thesix months ended June 30, 2024, the effect of this change is estimated to reduce depreciation expense by $12.0 million for the full year ending December 31, 2024 when compared to what depreciation expense would have been based on the original expected useful lives of three years.

Current wording

On January 1, 2024, we extended theestimated useful lives of our network hardware assets from three years to five years, which was due to actual and expected longer refresh cycles for these assets. Based on the related asset balance as of December 31, 2023 and those placed in service during thenine months ended September 30, 2024, the effect of this change is estimated to reduce depreciation expense by$12.7 million for the full year ending December 31, 2024 when compared to what depreciation expense would have been based on the original expected useful lives of three years.

Previous wording

Cost of revenue may fluctuate from quarter to quarter and period to period, on an absolute dollar basis and as a percentage of revenue, depending on revenue levels and the volume of transactions we process supporting those revenues, and the timing and amounts of depreciation and amortization of equipment and software.

Current wording

We expect cost of revenue to remain relatively flat through the remainder of 2024 compared to 2023 in absolute dollars. Cost of revenue may fluctuate from quarter to quarter and period to period, on an absolute dollar basis and as a percentage of revenue, depending on revenue levels and the volume of transactions we process supporting those revenues, and the timing and amounts of depreciation and amortization of equipment and internally-developed software costs.

Previous wording

Sales and marketing expenses decreased $2.9 million, or 6%, for the three months ended June 30, 2024 compared to the prior year period, primarily due to a decrease of $4.7 million in depreciation and amortization, which was primarily driven by certain acquired intangible assets becoming fully amortized in the third quarter of 2023. The decrease was partially offset by an increase of $1.7 million of personnel related expenses.

Current wording

Sales and marketing expenses decreased $10.9 million, or 8%, for the nine months ended September 30, 2024 compared to the prior year period, primarily due to decreases of $17.3 million in depreciation and amortization, which was primarily driven by certain acquired intangible assets becoming fully amortized in 2023. The decrease was partially offset by increases of $6.3 million in personnel costs.

Previous wording

We expect sales and marketing expenses to increase through the remainder of 2024 compared to 2023 in absolute dollars primarily due to increases in personnel related expenses.

Current wording

We expect sales and marketing expenses to increase through the remainder of 2024 compared to 2023 in absolute dollars primarily due to increases in personnel costs.

Previous wording

We expect technology and development expenses to increase through the remainder of 2024 compared to 2023 in absolute dollars due to increases in software license expenses.

Current wording

We expect technology and development expenses to remain relatively flat through the remainder of 2024 compared to 2023 in absolute dollars.

Previous wording

The timing and amount of our capitalized development and enhancement projects may affect the amount of development costs expensed in any given period. As a percentage of revenue, technology and development expense may fluctuate from quarter to quarter and period to period based on revenue levels, the timing and amounts of technology and development efforts, the timing and the rate of the amortization of capitalized projects and the timing and amounts of future capitalized internal use software development costs.

Current wording

The timing and amount of our capitalized development and enhancement projects may affect the amount of development costs expensed in any given period. As a percentage of revenue, technology and development expense may fluctuate from quarter to quarter and period to period based on revenue levels, the timing and amounts of technology and development efforts, the timing and the rate of the amortization of internally-developed capitalized projects and the timing and amounts of future capitalized internally-developed software costs.

Previous wording

General and administrative expenses decreased $3.0 million, or 12%, for the three months ended June 30, 2024 compared to the prior year period, primarily due to a decrease of $4.4 million in bad debt expense, which was primarily attributable to a buyer that filed for bankruptcy in the second quarter of 2023. The decrease was partially offset by an increase of $1.7 million in personnel expenses.

Current wording

General and administrative expenses increased $5.8 million, or 8%, for the nine months ended September 30, 2024, compared to the prior year period, primarily due to increases of $5.0 million in personnel costs and $4.1 million in expenses associated with refinancing our 2021 Credit Agreement (defined below) in February 2024 and repricing our 2024 Term Loan B Facility in September 2024. The increase was partially offset by a decrease of $3.7 million in bad debt expense, which was primarily attributable to a buyer that filed for bankruptcy in the second quarter of 2023.

Previous wording

We expect general and administrative expenses to increase the remainder of 2024 compared to 2023 in absolute dollars primarily due to increases in personnel related expenses.

Current wording

We expect general and administrative expenses to remain relatively flat through the remainder of 2024 compared to 2023 in absolute dollars.

Previous wording

We did not incur any merger, acquisition, and restructuring costs for the six months ended June 30, 2024. Merger, acquisition, and restructuring costs incurred during the six months ended June 30, 2023 were $7.5 million, and included $3.4 million of severance related expenses, $2.2 million of facilities related loss contracts, and $1.4 million of exit costs, all due to restructuring activities as a result of consolidating our legacy CTV and SpotX CTV platforms following the acquisition of SpotX, Inc.

Current wording

We did not incur any merger, acquisition, and restructuring costs for the nine months ended September 30, 2024. Merger, acquisition, and restructuring costs incurred during the nine months ended September 30, 2023 were $7.5 million, and included $3.4 million of severance related expenses, $2.2 million of facilities related loss contracts, and $1.4 million of exit costs, all due to restructuring activities as a result of consolidating our legacy CTV and SpotX CTV platforms following the acquisition of SpotX, Inc.

Previous wording

Interest expense, net decreased $1.7 million and $1.9 million for the three and six months ended June 30, 2024, compared to the prior year periods, respectively. The net decrease is due to an increase in interest income and a decrease in interest expense as a result of lower convertible debt outstanding in 2024 as compared to the prior year period.

Current wording

Interest expense, net decreased $0.7 million and $2.7 million for the three and nine months ended September 30, 2024, compared to the prior year periods, respectively. The net decrease is due to an increase in interest income and a decrease in interest expense as a result of lower convertible debt outstanding in 2024 as compared to the prior year period and the lower interest incurred under the 2024 Term Loan B Facility (defined below) compared to the 2021 Term Loan B Facility (defined below).

Previous wording

Foreign exchange (gain) loss, net changed by $0.8 million and $1.7 million for the three and six months ended June 30, 2024 compared to the prior year periods, respectively, due to movements in foreign currency exchange rates and the amount of foreign currency-denominated cash, receivables, and payables, which were impacted by our billings to buyers, payments to sellers, and intercompany balances.

Current wording

Foreign exchange (gain) loss, net changed by $4.5 million and $2.8 million for the three and nine months ended September 30, 2024 compared to the prior year periods, respectively, due to movements in foreign currency exchange rates and the amount of foreign currency-denominated cash, receivables, and payables, which were impacted by our billings to buyers, payments to sellers, and intercompany balances.

Previous wording

The loss on extinguishment of debt of $7.4 million for the six months ended June 30, 2024, was due to the refinancing of our 2021 Credit Agreement (defined below). The gain on extinguishment of debt of $5.4 million and $14.0 million during the three and six months ended June 30, 2023, respectively, was due to the repurchase of portions of our Convertible Senior Notes (defined below).

Current wording

The loss on extinguishment of debt of $0.3 million and $7.7 million for the three and nine months ended September 30, 2024, respectively was due to the refinancing of our 2021 Credit Agreement (defined below) in February 2024 and the repricing of our 2024 Term Loan B Facility (defined below) in September 2024, which are further discussed below. The gain on extinguishment of debt of $4.2 million and $18.1 million during the three and nine months ended September 30, 2023, respectively, was due to the repurchase of portions of our Convertible Senior Notes (defined below).

Previous wording

We recorded an income tax provision of $4.6 million and a tax benefit of $3.2 million for the three and six months ended June 30, 2024, respectively, and an income tax provision of $0.7 million and $0.4 million for the three and six months ended June 30, 2023, respectively. The tax provision and benefit for the three and six months ended June 30, 2024, respectively, was primarily the result of the Company's ability to recognize DTAs subject to the domestic valuation allowance and the foreign income tax provision. The tax provision for the three and six months ended June 30, 2023 was primarily the result of the Company's ability to recognize DTAs subject to the domestic valuation allowance and the foreign income tax provision.

Current wording

We recorded an income tax provision of $1.0 million and a tax benefit of $2.2 million for the three and nine months ended September 30, 2024, respectively, and an income tax benefit of $1.0 million and $0.6 million for the three and nine months ended September 30, 2023, respectively. The tax provision and benefit for the three and nine months ended September 30, 2024, respectively, was primarily the result of the Company's ability to recognize DTAs subject to the domestic valuation allowance and the foreign income tax provision. The tax benefit for the three and nine months ended September 30, 2023 was primarily the result of the Company's ability to recognize DTAs subject to the domestic valuation allowance and the foreign income tax provision.

Previous wording

The following table presents the calculation of gross profit and reconciliation of gross profit to Contribution ex-TAC for the three and six months ended June 30, 2024 and 2023:

Current wording

The following table presents the calculation of gross profit and reconciliation of gross profit to Contribution ex-TAC for the three and nine months ended September 30, 2024 and 2023:

Previous wording

Contribution ex-TAC increased $12.1 million, or 9%, for the three months ended June 30, 2024 compared to the three months ended June 30, 2023. The increase in Contribution ex-TAC was primarily due to the growth drivers described above for revenue.

Current wording

Contribution ex-TAC increased $16.3 million, or 12%, for the three months ended September 30, 2024 compared to the three months ended September 30, 2023. The increase in Contribution ex-TAC was primarily due to the growth drivers described above for revenue.

Previous wording

Contribution ex-TAC increased $26.6 million, or 11%, for the six months ended June 30, 2024 compared to the six months ended June 30, 2023. The increase in Contribution ex-TAC was primarily due to the growth drivers described above for revenue.

Current wording

Contribution ex-TAC increased $42.9 million, or 11%, for the nine months ended September 30, 2024 compared to the nine months ended September 30, 2023. The increase in Contribution ex-TAC was primarily due to the growth drivers described above for revenue.

Previous wording

For the remainder of 2024, we expect Contribution ex-TAC to increase compared to the prior year period and we expect CTV will be our biggest growth driver in 2024.

Current wording

We expect our Contribution ex-TAC to increase through the remainder of 2024 compared to 2023 and we expect CTV will continue to be our biggest growth driver.

Previous wording

The following table presents a reconciliation of net loss, the most comparable GAAP measure, to Adjusted EBITDA for the three and six months ended June 30, 2024 and 2023 (in thousands):

Current wording

The following table presents a reconciliation of net income (loss), the most comparable GAAP measure, to Adjusted EBITDA for the three and nine months ended September 30, 2024 and 2023 (in thousands):

Previous wording

Adjusted EBITDA increased by $7.4 million during the three months ended June 30, 2024 compared to the prior year period, primarily due to increases in revenue described above, which were partially offset by increases in expenses to support this revenue growth. Refer to discussion in section "Comparison of the Three and Six Months Ended June 30, 2024 and 2023."

Current wording

Adjusted EBITDA increased by $10.3 million during the three months ended September 30, 2024 compared to the prior year period, primarily due to increases in revenue, described above, which were partially offset by increases in expenses to support this revenue growth. Refer to discussion in section "Comparison of the Three and Nine Months Ended September 30, 2024 and 2023."

Previous wording

Adjusted EBITDA increased by $9.1 million during the six months ended June 30, 2024 compared to the prior year period for the same reasons above. Refer to discussion in section "Comparison of the Three and Six Months Ended June 30, 2024 and 2023."

Current wording

Adjusted EBITDA increased by $19.4 million during the nine months ended September 30, 2024 compared to the prior year period for the same reasons above. Refer to discussion in section "Comparison of the Three and Nine Months Ended September 30, 2024 and 2023."

Previous wording

As of June 30, 2024, we had cash and cash equivalents of $326.5 million, of which $51.5 million was held in foreign currency denominated cash accounts, and an aggregate gross principal amount of $569.2 million of indebtedness outstanding under our 2024 Term Loan B Facility (as defined below) and our Convertible Senior Notes (as defined below). In addition, we were party to a $175.0 million 2024 Revolving Credit Facility (as defined below), of which approximately $5.2 million was assigned to outstanding but undrawn letters of credit. See "Capital Resources" below for further information about our outstanding debt.

Current wording

As of September 30, 2024, we had cash and cash equivalents of $387.2 million, of which $54.4 million was held in foreign currency denominated cash accounts, and an aggregate gross principal amount of $569.2 million of indebtedness outstanding under our 2024 Term Loan B Facility (as defined below) and our Convertible Senior Notes (as defined below). In addition, we were party to a $175.0 million 2024 Revolving Credit Facility (as defined below), of which approximately $5.2 million was assigned to outstanding but undrawn letters of credit. See "Capital Resources" below for further information about our outstanding debt.

Previous wording

In March 2021, we sold convertible senior notes ("Convertible Senior Notes") for gross proceeds of $400.0 million. The Convertible Senior Notes are senior, unsecured obligations with interest payable semi-annually in cash at a rate of 0.25% per annum in arrears on March 15 and September 15. The Convertible Senior Notes will mature on March 15, 2026, unless earlier converted, redeemed, or repurchased. The initial conversion rate is 15.6539 shares per $1,000 principal amount of notes, which represents an initial conversion price of approximately $63.88 per share of the Company’s common stock and is subject to adjustment as described in the Offering Memorandum. At June 30, 2024, the balance of the Convertible Senior Notes was $203.1 million, net of unamortized debt issuance costs of $2.0 million. Accrued interest for the Convertible Senior Notes at June 30, 2024 was immaterial.

Current wording

In March 2021, we sold convertible senior notes ("Convertible Senior Notes") for gross proceeds of $400.0 million. The Convertible Senior Notes are senior, unsecured obligations with interest payable semi-annually in cash at a rate of 0.25% per annum in arrears on March 15 and September 15. The Convertible Senior Notes will mature on March 15, 2026, unless earlier converted, redeemed, or repurchased. The initial conversion rate is 15.6539 shares per $1,000 principal amount of notes, which represents an initial conversion price of approximately $63.88 per share of the Company’s common stock and is subject to adjustment as described in the Offering Memorandum. At September 30, 2024, the balance of the Convertible Senior Notes was $203.3 million, net of unamortized debt issuance costs of $1.7 million.

Previous wording

On February 6, 2024, we entered into a credit agreement (the “2024 Credit Agreement”) with Morgan Stanley Senior Funding, Inc. as our term loan administrative agent and Citibank, N.A. as our revolving facility administrative agent and collateral agent, and other lender parties thereto. The 2024 Credit Agreement provided for a $365.0 million seven-year senior secured term loan facility (the "2024 Term Loan B Facility") and a $175.0 million five-year senior secured revolving credit facility (the "2024 Revolving Credit Facility"). The proceeds from the 2024 Term Loan B Facility were used, among other things, to terminate and to repay in full the outstanding facilities under the prior credit agreement entered into in April 2021 (the "2021 Credit Agreement"), which included a term loan facility (the "2021 Term Loan B Facility") and a revolving facility (the "2021 Revolving Credit Facility"). At June 30, 2024, the balance of the 2024 Term Loan Facility was $349.6 million, net of unamortized debt discount and debt issuance costs of $14.5 million, and amounts available under the 2024 Revolving Credit Facility were $169.8 million, net of letters of credit outstanding in the amount of $5.2 million. Accrued interest for the 2024 Term Loan B Facility at June 30, 2024 was $1.6 million.

Current wording

On February 6, 2024, we entered into a credit agreement (the "2024 Credit Agreement") with Morgan Stanley Senior Funding, Inc. as our term loan administrative agent and Citibank, N.A. as our revolving facility administrative agent and collateral agent, and other lender parties thereto. The 2024 Credit Agreement provided for a $365.0 million seven-year senior secured term loan facility (the "2024 Term Loan B Facility") and a $175.0 million five-year senior secured revolving credit facility (the "2024 Revolving Credit Facility"). The proceeds from the 2024 Term Loan B Facility were used, among other things, to terminate and to repay in full the outstanding facilities under the prior credit agreement entered into in April 2021 (the "2021 Credit Agreement"), which included a term loan facility (the "2021 Term Loan B Facility") and a revolving facility (the "2021 Revolving Credit Facility").

Previous wording

On February 1, 2024, the Board of Directors approved a new repurchase plan (the "February 2024 Repurchase Plan"), which fully replaced the prior repurchase plan, pursuant to which we are authorized to repurchase common stock or Convertible Senior Notes, with an aggregate market value of up to $125.0 million, through February 1, 2026.

Current wording

On February 1, 2024, the Board of Directors approved a new repurchase plan (the "February 2024 Repurchase Plan"), which fully replaced the prior repurchase plan, pursuant to which we are authorized to repurchase common stock or Convertible Senior Notes, with an aggregate market value of up to $125.0 million, through February 1, 2026. During the three months ended September 30, 2024, we repurchased 697,719 shares of the Company's common stock for an aggregate amount of $9.0 million. As of September 30, 2024, $116.0 million remains available under the February 2024 Repurchase Plan. From October 1, 2024 to November 6, 2024, we repurchased 462,777 additional shares of the Company's common stock for an aggregate amount of $5.6 million, resulting in $110.4 million remaining available under the February 2024 Repurchase Plan as of November 6, 2024.

Previous wording

For the six months ended June 30, 2024, net cash provided by operating activities was $29.2 million compared to net cash provided by operating activities of $43.2 million for the six months ended June 30, 2023. Our operating activities included our net loss of $18.8 million and $172.6 million for the six months ended June 30, 2024 and 2023, respectively, which were offset by non-cash adjustments of $70.7 million and $217.7 million, respectively. Net changes in our working capital resulted in $22.7 million and $1.9 million of cash used in operating activities for the six months ended June 30, 2024 and June 30, 2023, respectively. The net changes in working capital for both periods presented are primarily due to the timing of cash receipts from buyers and the timing of payments to sellers.

Current wording

For the nine months ended September 30, 2024, net cash provided by operating activities was $120.5 million compared to net cash provided by operating activities of $125.3 million for the nine months ended September 30, 2023. Our operating activities included our net loss of $13.6 million and $190.1 million for the nine months ended September 30, 2024 and 2023, respectively, which were offset by non-cash adjustments of $107.7 million and $268.0 million, respectively. Net changes in our working capital resulted in $26.4 million and $47.4 million of cash provided by operating activities for the nine months ended September 30, 2024 and September 30, 2023, respectively. The net changes in working capital for both periods presented are primarily due to the timing of cash receipts from buyers and the timing of payments to sellers.

Previous wording

During the six months ended June 30, 2024 and 2023, our investing activities used net cash of $22.6 million and $18.5 million, respectively. During the six months ended June 30, 2024 and 2023, we used cash for purchases of property and equipment of $15.0 million and $12.7 million, respectively, and used cash for investments in our internally developed software of $7.5 million and $5.8 million, respectively.

Current wording

During the nine months ended September 30, 2024 and 2023, our investing activities used net cash of $40.7 million and $25.3 million, respectively. During the nine months ended September 30, 2024 and 2023, we used cash for purchases of property and equipment of $29.1 million and $17.1 million, respectively, and used cash for investments in our internally developed software of $11.6 million and $8.2 million, respectively.

Previous wording

We anticipate cash flows used in our investing activities will generally increase through the remainder of 2024 compared to 2023 in order to support our overall growth, in particular with respect to investments in property and equipment and internally developed software.

Current wording

We anticipate cash flows used in our investing activities will remain relatively flat through the remainder of 2024 compared to 2023.

Previous wording

Our financing activities consisted of our debt refinancing activities, Convertible Senior Notes transactions, repayment of amounts borrowed under our 2024 Term Loan B Facility and our 2021 Term Loan B Facility, and transactions related to our equity plans.

Current wording

Our financing activities consisted of our debt refinancing and repricing activities, Convertible Senior Notes transactions, repayment of amounts borrowed under our 2024 Term Loan B Facility and our 2021 Term Loan B Facility, and transactions related to our share repurchases and equity plans.