BuzzFeed Inc

Previous wording

Additionally, pursuant to subscription agreements entered into in connection with the consummation of the Business Combination, we issued, and certain investors purchased, $150.0 million aggregate principal amount of unsecured convertible notes due 2026 (the “Notes”) concurrently with the closing of the Business Combination. On March 7, 2024, we repaid approximately $30.9 million to holders of the Notes, leaving approximately $119.1 million aggregate principal amount of Notes outstanding as of March 31, 2024. Refer to Notes 8 and 19 to the condensed consolidated financial statements included elsewhere within this Quarterly Report on Form 10-Q for additional details.

Current wording

Additionally, pursuant to subscription agreements entered into in connection with the consummation of the Business Combination, we issued, and certain investors purchased, $150.0 million aggregate principal amount of unsecured convertible notes due 2026 (the “Notes”) concurrently with the closing of the Business Combination. On March 7, 2024, we repaid approximately $30.9 million to holders of the Notes. Additionally, we repaid approximately $0.3 million to the holders of the Notes on June 21, 2024, leaving approximately $118.8 million aggregate principal amount of Notes outstanding as of June 30, 2024. Refer to Notes 8 and 19 to the condensed consolidated financial statements included elsewhere within this Quarterly Report on Form 10-Q for additional details.

Previous wording

In February 2024, we announced plans to reduce expenses by implementing an approximately 16% reduction in the then-current workforce (after the Disposition). In doing so, we reduced the size of our centralized operations to enable our individual brands to operate with more autonomy and deliver against their differentiated value propositions for advertisers. The reduction in workforce plan is intended to position us to be more agile, sustainable, and profitable. We incurred approximately $2.9 million of restructuring costs for the three months ended March 31, 2024, comprised mainly of severance and related benefits costs, of which $1.2 million were included in cost of revenue, excluding depreciation and amortization, $1.5 million were included in sales and marketing, and $0.2 million were included in general and administrative. As of March 31, 2024, $1.9 million remain unpaid and were included in accrued compensation on the condensed consolidated balance sheet. These costs are primarily expected to be paid in the second quarter of 2024.

Current wording

In February 2024, we announced plans to reduce expenses by implementing an approximately 16% reduction in the then-current workforce (after the Disposition). In doing so, we reduced the size of our centralized operations to enable our individual brands to operate with more autonomy and deliver against their differentiated value propositions for advertisers. The reduction in workforce plan was intended to position us to be more agile, sustainable, and profitable. We incurred approximately $2.9 million of restructuring costs for the six months ended June 30, 2024, comprised mainly of severance and related benefits costs, of which $1.2 million were included in cost of revenue, excluding depreciation and amortization, $1.5 million were included in sales and marketing, and $0.2 million were included in general and administrative.

Previous wording

(2)We define Time Spent as the estimated total number of hours spent by users on our owned and operated U.S. properties, our content on Apple News in the U.S., and our content on YouTube in the U.S., in each case, as reported by Comscore. Time Spent does not reflect time spent with our content across all platforms, including some on which we generated a portion of our advertising revenue, and excludes time spent with our content on platforms for which we have minimal advertising capabilities that contribute to our advertising revenue, including Instagram, TikTok, Facebook, Snapchat, and Twitter. There are inherent challenges in measuring the total actual number of hours spent with our content across all platforms; however, we consider the data reported by Comscore to represent industry-standard estimates of the time actually spent on our largest distribution platforms with our most significant monetization opportunities. We use Time Spent to evaluate the level of engagement of our audience. Trends in Time Spent affect our revenue and financial results by influencing the number of ads we are able to show. However, increases or decreases in Time Spent may not directly correspond to increases or decreases in our revenue. For example, the number of programmatic impressions served by third-party platforms can vary based on the advertising revenue optimization strategies of these platforms and, as a result, an increase or decrease in Time Spent does not necessarily correlate with a corresponding increase or decrease in the number of programmatic impressions served, but Time Spent can be a key indicator for our programmatic advertising revenue when the third-party platforms optimize revenue over programmatic impressions. Our definition of Time Spent is not based on any standardized industry methodology and is not necessarily defined in the same manner, or comparable to, similarly titled measures presented by other companies. Time Spent for the three months ended March 31, 2024 decreased by 16%, consistent with broader industry trends, amongst our competitive set, according to Comscore. Time Spent presented above excludes time spent on Complex Networks, as Complex Networks is presented as a discontinued operation herein (refer to Note 19 to the condensed consolidated financial statements included elsewhere within this Quarterly Report on Form 10-Q for additional details). Time Spent on Complex Networks, as reported by Comscore, was approximately 10.0 million and 28.7 million hours for the three months ended March 31, 2024 and 2023, respectively (through the date of Disposition, February 21, 2024, for the three months ended March 31, 2024). Time Spent on Complex Networks, as reported by Comscore, historically included Time Spent on First We Feast, as First We Feast was historically under the Complex Networks’ measurement portfolio of Comscore. At this time, Time Spent on First We Feast cannot be reasonably bifurcated from Time Spent on Complex Networks. A…

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Current wording

(2)We define Time Spent as the estimated total number of hours spent by users on our owned and operated U.S. properties, our content on Apple News in the U.S., and our content on YouTube in the U.S., in each case, as reported by Comscore. Time Spent does not reflect time spent with our content across all platforms, including some on which we generated a portion of our advertising revenue, and excludes time spent with our content on platforms for which we have minimal advertising capabilities that contribute to our advertising revenue, including Instagram, TikTok, Facebook, Snapchat, and Twitter. There are inherent challenges in measuring the total actual number of hours spent with our content across all platforms; however, we consider the data reported by Comscore to represent industry-standard estimates of the time actually spent on our largest distribution platforms with our most significant monetization opportunities. We use Time Spent to evaluate the level of engagement of our audience. Trends in Time Spent affect our revenue and financial results by influencing the number of ads we are able to show. However, increases or decreases in Time Spent may not directly correspond to increases or decreases in our revenue. For example, the number of programmatic impressions served by third-party platforms can vary based on the advertising revenue optimization strategies of these platforms and, as a result, an increase or decrease in Time Spent does not necessarily correlate with a corresponding increase or decrease in the number of programmatic impressions served, but Time Spent can be a key indicator for our programmatic advertising revenue when the third-party platforms optimize revenue over programmatic impressions. Our definition of Time Spent is not based on any standardized industry methodology and is not necessarily defined in the same manner, or comparable to, similarly titled measures presented by other companies. For the three and six months ended June 30, 2024, Time Spent decreased by 5% and 11%, respectively, consistent with broader industry trends, amongst our competitive set, according to Comscore. Time Spent presented above excludes time spent on Complex Networks, as Complex Networks is presented as a discontinued operation herein (refer to Note 19 to the condensed consolidated financial statements included elsewhere within this Quarterly Report on Form 10-Q for additional details). Time Spent on Complex Networks, as reported by Comscore, was approximately 10.0 million hours through the date of Disposition, February 21, 2024, and 21.2 million and 50.0 million hours for the three and six months ended June 30, 2023, respectively. Time Spent on Complex Networks, as reported by Comscore, historically included Time Spent on First We Feast, as First We Feast was historically under the Complex Networks’ measurement portfolio of Comscore. At this time, Time Spent on First We Feast cannot be reasonably bifurcated from Time Spent on Complex Netwo…

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Previous wording

We use certain metrics to assess the operational and financial performance of our business. Effective January 1, 2023, we introduced new metrics with respect to our branded content revenue, which represents the majority of our reported content revenue (branded content is further defined within “Components of Results of Operations” below). Specifically, we monitor the performance of our branded content advertisers through retention and average trailing 12-month revenue per branded content advertiser. Net branded content advertiser revenue retention is an indicator of our ability to retain the spend of our existing customers year-over-year, which we view as a reflection of the effectiveness of our services. In addition, we monitor the number of branded content advertisers and the net average branded content advertiser revenue, as defined below, as these metrics provide further details with respect to the majority of our reported content revenue and influence our business planning decisions. Our use of net branded content advertiser revenue retention, branded content advertisers, and net average branded content advertiser revenue have limitations as analytical tools, and investors should not consider them in isolation. Additionally, the aforementioned metrics do not have any standardized meaning and are therefore unlikely to be comparable to similarly titled measures presented by other companies. Pro forma amounts for acquisitions and dispositions are calculated as if the acquisitions and / or dispositions occurred on the first day of the applicable period.

Current wording

We use certain metrics to assess the operational and financial performance of our business. Specifically, we monitor the performance of our branded content advertisers through retention and average trailing 12-month revenue per branded content advertiser. Net branded content advertiser revenue retention is an indicator of our ability to retain the spend of our existing customers year-over-year, which we view as a reflection of the effectiveness of our services. In addition, we monitor the number of branded content advertisers and the net average branded content advertiser revenue, as defined below, as these metrics provide further details with respect to the majority of our reported content revenue and influence our business planning decisions. Our use of net branded content advertiser revenue retention, branded content advertisers, and net average branded content advertiser revenue have limitations as analytical tools, and investors should not consider them in isolation. Additionally, the aforementioned metrics do not have any standardized meaning and are therefore unlikely to be comparable to similarly titled measures presented by other companies. Pro forma amounts for acquisitions and dispositions are calculated as if the acquisitions and / or dispositions occurred on the first day of the applicable period.

Previous wording

(1)Net branded content advertiser revenue retention is calculated by dividing the branded content revenue for the trailing 12 months from the close of the current reporting period, from advertisers who were also advertisers at the close of the same period in the prior year (the “base period”), by the branded content revenue for the trailing 12 months from the close of the base period. This analysis only considers branded content advertisers who spent greater than $250,000 (actual dollars) in the trailing 12 months from the close of the base period, and is pro forma for acquisitions and dispositions. This metric also excludes revenues derived from joint ventures and from deals not included in the branded content definition below. In both periods presented, this represents the significant majority of branded content advertiser revenue.

Current wording

(1)Net branded content advertiser revenue retention is calculated by dividing the branded content revenue for the trailing 12 months from the close of the applicable reporting period, from advertisers who were also advertisers at the close of the same period in the prior year (the “base period”), by the branded content revenue for the trailing 12 months from the close of the base period. This analysis only considers branded content advertisers who spent greater than $250,000 (actual dollars) in the trailing 12 months from the close of the base period, and is pro forma for acquisitions and dispositions. This metric also excludes revenues derived from joint ventures and from deals not included in the branded content definition below. In both periods presented, this represents the significant majority of branded content advertiser revenue.

Previous wording

Cost of revenue, excluding depreciation and amortization: Consists primarily of compensation-related expenses and costs incurred for the creation of editorial, promotional, and news content across all platforms, as well as amounts due to third-party websites and platforms to fulfill customers’ advertising campaigns. Web hosting and advertising serving platform costs are also included in cost of revenue.

Current wording

Cost of revenue, excluding depreciation and amortization: Consists primarily of compensation-related expenses and costs incurred for the creation of editorial, promotional, and news content across all platforms, as well as amounts due to third-party websites and platforms to fulfill customers’ advertising campaigns. Web hosting and advertising serving platform costs are also included in cost of revenue, excluding depreciation and amortization.

Previous wording

Other (expense) income, net: Consists of foreign exchange gains and losses, gains and losses on investments, gains and losses on dispositions of subsidiaries, gains and losses on disposition of assets, and other miscellaneous income and expenses.

Current wording

Other income (expense), net: Consists of foreign exchange gains and losses, gains and losses on investments, gains and losses on dispositions of subsidiaries, gains and losses on disposition of assets, income from transition service agreements, and other miscellaneous income and expenses.

Previous wording

Change in fair value of warrant liabilities: Reflects the changes in warrant liabilities which is primarily based on the market price of our Public Warrants listed on Nasdaq under the symbol “BZFDW.” Refer to Note 4 to the condensed consolidated financial statements for additional details.

Current wording

Change in fair value of warrant liabilities: Reflects the changes in warrant liabilities, which is primarily based on the market price of our Public Warrants listed on The Nasdaq Capital Market under the symbol “BZFDW.” Refer to Note 4 to the condensed consolidated financial statements for additional details.

Previous wording

Change in fair value of derivative liability: In December 2021, we issued a $150.0 million aggregate principal amount of unsecured convertible notes due 2026 (i.e., the Notes) that contain redemption features which we determined were embedded derivatives to be recognized as liabilities and measured at fair value. At the end of each reporting period, changes in the estimated fair value during the period are recorded as a change in the fair value of derivative liability. During the year ended December 31, 2023, we determined the fair value of the derivative liability was immaterial; refer to Note 4 to the condensed consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q for additional details. On March 7, 2024, we repaid approximately $30.9 million to holders of the Notes, leaving approximately $119.1 million aggregate principal amount of Notes outstanding as of March 31, 2024.

Current wording

Change in fair value of derivative liability: In December 2021, we issued a $150.0 million aggregate principal amount of unsecured convertible notes due 2026 (i.e., the Notes) that contain redemption features which we determined were embedded derivatives to be recognized as liabilities and measured at fair value. At the end of each reporting period, changes in the estimated fair value during the period are recorded as a change in the fair value of derivative liability. During the year ended December 31, 2023, we determined the fair value of the derivative liability was immaterial; refer to Note 4 to the condensed consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q for additional details. On March 7, 2024 and June 21, 2024, we repaid approximately $30.9 million and $0.3 million, respectively, to holders of the Notes, leaving approximately $118.8 million aggregate principal amount of Notes outstanding as of June 30, 2024.

Previous wording

Income tax provision: Represents federal, state, and local taxes based on income in multiple domestic and international jurisdictions.

Current wording

Income tax (benefit) provision: Represents federal, state, and local taxes based on income in multiple domestic and international jurisdictions.

Previous wording

Comparison of results for the three months ended March 31, 2024 and 2023

Current wording

Comparison of results for the three and six months ended June 30, 2024 and 2023

Previous wording

(1)The negative stock-based compensation expense for the three months ended March 31, 2023 for research and development was due to forfeitures.

Current wording

(1)The negative stock-based compensation expense for the six months ended June 30, 2023 for research and development was due to forfeitures.

Previous wording

Content revenue decreased by $3.1 million, or 19%, for the three months ended March 31, 2024, driven by a $2.1 million decrease in revenue associated with non-recurring custom content campaigns that were delivered during the three months ended March 31, 2023, with no comparable revenue during the current three-month period. The remaining decline of $1.0 million was primarily attributable to the decline in the number of branded content customers year-over-year. We expect content revenue to continue to decline in 2024 as we focus on programmatic advertising and affiliate products.

Current wording

Content revenue decreased by $10.4 million, or 48%, for the three months ended June 30, 2024, primarily driven by a decrease in the number of branded content customers due to the continued softness in direct sold content demand and the broader macroeconomic environment, and a $1.6 million decrease in revenue associated with non-recurring custom content campaigns that were delivered during the three months ended June 30, 2023, with no comparable revenue during the current three-month period. We expect content revenue to continue to decline in 2024, as compared to the prior year, as we focus on programmatic advertising and affiliate revenue products.

Previous wording

Cost of revenue decreased by $6.2 million, or 17%, for the three months ended March 31, 2024, driven by a $3.4 million decrease in compensation expense reflecting our previous cost savings actions, a $2.6 million decrease in variable costs of revenue due to changes in the revenue mix and the decline in revenue year-over-year, and a $0.2 million decrease in content expenses, partially offset by a $1.2 million increase in restructuring expenses.

Current wording

Cost of revenue, excluding depreciation and amortization decreased by $14.0 million, or 36%, for the three months ended June 30, 2024, driven by $5.0 million decrease in variable costs of revenue due to changes in the revenue mix and the decline in revenue year-over-year, a $4.3 million decrease in restructuring expenses, a $3.2 million decrease in compensation expense reflecting our previous cost savings actions, and a $1.3 million decrease in consulting expenses.

Previous wording

Sales and marketing expenses decreased by $2.8 million, or 23%, for the three months ended March 31, 2024, driven by a $3.0 million decrease in compensation and related expenses reflecting our previous cost savings actions and a $1.1 million decrease in travel and entertainment and consulting expenses, partially offset by a $1.5 million increase in restructuring expenses.

Current wording

Sales and marketing expenses decreased by $5.6 million, or 56%, for the three months ended June 30, 2024, driven by a $4.1 million decrease in compensation and related expenses reflecting our previous cost savings actions and a $1.3 million decrease in restructuring expenses.

Previous wording

General and administrative expenses decreased by $5.2 million, or 24%, for the three months ended March 31, 2024, driven by a $1.7 million decrease in rent expense, a $1.0 million decrease in professional fees and consulting expenses, $0.5 million decrease in software expenses, a $0.3 million decrease in compensation expenses reflecting our previous cost savings actions, a $0.3 million decrease in insurance, a $0.2 million decrease in stock-based compensation expense, a $0.2 million increase in sublease income, and a $0.2 million decrease in general facilities’ expenses.

Current wording

General and administrative expenses decreased by $11.9 million, or 28%, for the six months ended June 30, 2024, driven by a $3.3 million decrease in rent expense, a $1.2 million decrease in professional fees, a $1.2 million decrease in compensation expenses reflecting our previous cost savings actions, a $1.0 million decrease in insurance, a $0.9 million decrease in software expenses, a $0.7 million increase in sublease income, a $0.6 million decrease in stock-based compensation expense, a $0.5 million decrease in consulting expenses, and a $0.5 million decrease in general facilities’ expenses.

Previous wording

For the three months ended March 31, 2024, depreciation and amortization expenses increased by $0.2 million, or 3%.

Current wording

For the three months ended June 30, 2024, depreciation and amortization expenses decreased by $0.5 million, or 9%.

Previous wording

We recorded other expense, net of $0.6 million for the three months ended March 31, 2024, compared to other income, net of $0.6 million for the three months ended March 31, 2023. The change of $1.2 million was primarily driven by a $0.9 million decrease in exchange gain (primarily unrealized) as the impact of foreign exchange rate fluctuations stabilized as compared to the year-ago period and a $0.3 million increase in other expense.

Current wording

We recorded other income, net of $2.2 million for the three months ended June 30, 2024, compared to other expense, net of $3.7 million for the three months ended June 30, 2023. The change of $5.8 million was primarily driven by the comparison against a $3.6 million loss on investment recorded during the three months ended June 30, 2023 (with no comparable loss in the current-year period), a $1.3 million increase in gain on disposition of an asset, and a $0.8 million increase in other income principally reflecting transition services’ income from the purchaser of Complex Networks.

Previous wording

Research and development expenses remained relatively flat year-over-year.

Current wording

For the three months ended June 30, 2024, interest expense, net remained relatively flat year-over-year.

Previous wording

Interest expense, net increased by $0.7 million, or 18%, for the three months ended March 31, 2024.

Current wording

Interest expense, net increased by $0.7 million, or 9%, for the six months ended June 30, 2024.

Previous wording

For the three months ended March 31, 2024, we recorded a loss of $nil on the change in fair value of warrant liabilities.

Current wording

For the three and six months ended June 30, 2024, we recorded losses of $0.6 million and $0.7 million, respectively, on the change in fair value of warrant liabilities.

Previous wording

We recorded a loss of $1.0 million on the change in fair value of derivative liability for the three months ended March 31, 2023, with no comparable loss in the current three month period.

Current wording

We recorded gains of $1.1 million and $0.1 million on the change in fair value of derivative liability for the three and six months ended June 30, 2023, respectively, with no comparable gains in the current three and six month period.

Previous wording

For the three months ended March 31, 2024, the Company’s effective tax rate on continuing operations differed from the U.S. federal statutory income tax rate of 21% primarily due to (i) limited tax benefits provided for against its current year pre-tax operating loss, as the Company maintains a full valuation allowance against its U.S. deferred tax assets that are not realizable on a more-likely-than-not basis, and (ii) permanent adjustments and state taxes related to the Disposition.

Current wording

For the and six three months ended June 30, 2024, the Company’s effective tax rate on continuing operations differed from the U.S. federal statutory income tax rate of 21% primarily due to limited tax benefits provided for against its current year pre-tax operating loss, as the Company maintains a full valuation allowance against its U.S. deferred tax assets that are not realizable on a more-likely-than-not basis, and the discrete impact of finalization of Canadian tax return filings.

Previous wording

For the three months ended March 31, 2023, the Company’s effective tax rate on continuing operations differed from the U.S. federal statutory income tax rate of 21% primarily due to limited tax benefits provided for against its current year pre-tax operating loss as the Company maintains a full valuation allowance against its U.S. deferred tax assets that are not realizable on a more-likely-than-not basis.

Current wording

For the three and six months ended June 30, 2023, the Company’s effective tax rate on continuing operations differed from the U.S. federal statutory income tax rate of 21% primarily due to limited tax benefits provided for against its current year pre-tax operating loss as the Company maintains a full valuation allowance against its U.S. deferred tax assets that are not realizable on a more-likely-than-not basis.

Previous wording

For the three months ended March 31, 2024, net loss from discontinued operations, net of tax increased by $2.3 million, or 34%. The increase was primarily due to a $4.9 million loss on partial debt extinguishment, partially offset by a $2.2 million improvement in loss from discontinued operations and a $0.9 million final gain on remeasurement of classification to held for sale. The results for the three months ended March 31, 2024 includes activity only from January 1, 2024 through the date of Disposition (i.e., February 21, 2024).

Current wording

For the six months ended June 30, 2024, net loss from discontinued operations, net of tax, decreased by $2.1 million, or 17.5%, reflecting a $4.9 million loss on partial debt extinguishment, partially offset by a $2.2 million improvement in loss from discontinued operations and a $0.9 million final gain on remeasurement of classification as held for sale. Apart from the income tax adjustments described in Note 19 to the condensed consolidated financial statements included elsewhere within this Quarterly Report on Form 10-Q, the results for the six months ended June 30, 2024 includes activity only from January 1, 2024 through the date of Disposition (i.e., February 21, 2024).

Previous wording

Adjusted EBITDA is a non-GAAP financial measure and represents a key metric used by management and the our board of directors to measure the operational strength and performance of our business, to establish budgets, and to develop operational goals for managing our business. We define Adjusted EBITDA as net loss from continuing operations, excluding the impact of net loss attributable to noncontrolling interests, income tax provision, interest expense, net, other expense (income), net, depreciation and amortization, stock-based compensation, change in fair value of warrant liabilities, change in fair value of derivative liability, restructuring costs, and other non-cash and non-recurring items that management believes are not indicative of ongoing operations.

Current wording

Adjusted EBITDA is a non-GAAP financial measure and represents a key metric used by management and our board of directors to measure the operational strength and performance of our business, to establish budgets, and to develop operational goals for managing our business. We define Adjusted EBITDA as net loss from continuing operations, excluding the impact of net income (loss) attributable to noncontrolling interests, income tax (benefit) provision, interest expense, net, other (income) expense, net, depreciation and amortization, stock-based compensation, change in fair value of warrant liabilities, change in fair value of derivative liability, restructuring costs, and other non-cash and non-recurring items that management believes are not indicative of ongoing operations.

Previous wording

(1)Refer to elsewhere above in Item 2. “Management’s Discussion and Analysis of Financial Condition and Results of Operations” herein for a discussion of the distinct restructuring activity during the three months ended March 31, 2024. We exclude restructuring expenses from our non-GAAP measures because we believe they do not reflect expected future operating expenses, they are not indicative of our core operating performance, and they are not meaningful in comparisons to our past operating performance.

Current wording

(1)Refer to elsewhere above in Item 2. “Management’s Discussion and Analysis of Financial Condition and Results of Operations” herein for a discussion of the distinct restructuring activities during the six months ended June 30, 2024 and 2023. We exclude restructuring expenses from our non-GAAP measures because we believe they do not reflect expected future operating expenses, they are not indicative of our core operating performance, and they are not meaningful in comparisons to our past operating performance.

Previous wording

Since our inception, we have generally incurred significant losses and used net cash flows from operations to grow our owned and operated properties and our iconic brands. During the three months ended March 31, 2024, the Company incurred a net loss of $35.8 million (and a net loss of $26.6 million from continuing operations) and used net cash flows from its operations of $13.3 million (and net cash used in operating activities from continuing operations was $5.3 million). Additionally, as of March 31, 2024, the Company had unrestricted cash and cash equivalents of $44.5 million to fund its operations and an accumulated deficit of $647.5 million.

Current wording

Since our inception, we have generally incurred significant losses and used net cash flows from operations to grow our owned and operated properties and our iconic brands. During the six months ended June 30, 2024, the Company incurred a net loss of $43.1 million (and a net loss of $33.1 million from continuing operations) and used net cash flows from its operations of $25.7 million (and net cash used in operating activities from continuing operations was $16.8 million). Additionally, as of June 30, 2024, the Company had unrestricted cash and cash equivalents of $45.5 million to fund its operations and an accumulated deficit of $655.0 million.

Previous wording

As described in Note 8 to the condensed consolidated financial statements included elsewhere within this Quarterly Report on Form 10-Q, we repaid approximately $30.9 million of the Notes on March 7, 2024, leaving approximately $119.1 million aggregate principal amount of Notes outstanding as of March 31, 2024. As described in Note 8 to the condensed consolidated financial statements included elsewhere within this Quarterly Report on Form 10-Q, each holder of a Note has the right under the indenture governing the Notes to require us to repurchase, for cash, all or a portion of the Notes held by such holder (i) at any time on or after December 3, 2024, at a repurchase price equal to the principal amount plus accrued and unpaid interest, or (ii) upon the occurrence of a fundamental change (as defined in the indenture) before the maturity date (i.e., December 3, 2026), at a repurchase price equal to 101% of the principal amount plus accrued and unpaid interest. Moreover, we will be required to repay the Notes, in cash, at their maturity, unless earlier converted, redeemed, or repurchased. In the event some or all of the holders of the Notes exercise their call rights, we currently do not have sufficient cash on hand or projected cash flows to fund the potential call. Our failure to comply with the provisions of the indenture governing the Notes, including our failure to repurchase the Notes, as required by the indenture, could trigger an event of default under the indenture, which would allow the holders of Notes to accelerate the maturity of the Notes and require us to repay the Notes prior to their maturity. In addition, on February 28, 2024, we amended the indenture governing the Notes to provide that, among other things, 95% of the net proceeds of future asset sales must be used to repay the Notes

Current wording

As described in Note 8 to the condensed consolidated financial statements included elsewhere within this Quarterly Report on Form 10-Q, we repaid approximately $30.9 million and $0.3 million of the Notes on March 7, 2024 and June 21, 2024, respectively, leaving approximately $118.8 million aggregate principal amount of Notes outstanding as of June 30, 2024. As described in Note 8 to the condensed consolidated financial statements included elsewhere within this Quarterly Report on Form 10-Q, each holder of a Note has the right under the indenture governing the Notes to require us to repurchase, for cash, all or a portion of the Notes held by such holder (i) at any time on or after December 3, 2024, at a repurchase price equal to the principal amount plus accrued and unpaid interest, or (ii) upon the occurrence of a fundamental change (as defined in the indenture) before the maturity date (i.e., December 3, 2026), at a repurchase price equal to 101% of the principal amount plus accrued and unpaid interest. Moreover, we will be required to repay the Notes, in cash, at their maturity, unless earlier converted, redeemed, or repurchased. In the event some or all of the holders of the Notes exercise their call rights, we currently do not have sufficient cash on hand or projected cash flows to fund the potential call. Our failure to comply with the provisions of the indenture governing the Notes, including our failure to repurchase the Notes, as required by the indenture, could trigger an event of default under the indenture, which would allow the holders of Notes to accelerate the maturity of the Notes and require us to repay the Notes prior to their maturity. In addition, on February 28, 2024, we amended the indenture governing the Notes to provide that, among other things, 95% of the net proceeds of future asset sales must be used to repay the Notes.

Previous wording

On December 30, 2020, the Company entered into a three-year, $50.0 million, revolving loan and standby letter of credit facility agreement, which was amended and restated on December 3, 2021 in connection with the closing of the Business Combination, further amended and restated on December 15, 2022, and amended on each of June 29, 2023 and September 26, 2023 (i.e., the Revolving Credit Facility). Among other things, the Revolving Credit Facility provided for the issuance of up to $15.5 million of standby letters of credit, which were issued during the three months ended March 31, 2021 in favor of certain of the Company’s landlords. The Company had outstanding letters of credit of $15.5 million under the Revolving Credit Facility at both March 31, 2024 and December 31, 2023.

Current wording

On December 30, 2020, the Company entered into a three-year, $50.0 million, revolving loan and standby letter of credit facility agreement, which was amended and restated on December 3, 2021 in connection with the closing of the Business Combination, further amended and restated on December 15, 2022, and amended on each of June 29, 2023 and September 26, 2023 (i.e., the Revolving Credit Facility). Among other things, the Revolving Credit Facility provided for the issuance of up to $15.5 million of standby letters of credit, which were issued during the three months ended March 31, 2021 in favor of certain of the Company’s landlords. The Company had outstanding letters of credit of $15.5 million under the Revolving Credit Facility at December 31, 2023 (none at June 30, 2024, as described below).

Previous wording

On February 21, 2024, in connection with the Disposition, the Company terminated the Revolving Credit Facility, except for the $15.5 million in letters of credit outstanding, which were cash collateralized in the amount of $17.1 million and resulted in restricted cash classification on the condensed consolidated balance sheet. The letters of credit bear interest at a rate equal to the Secured Financing Overnight Rate (SOFR) Index, plus a margin of 3.75% on the undrawn amount of letters of credit (the implied interest rate was 9% as of March 31, 2024). Refer to Notes 8 and 19 to the condensed consolidated financial statements included elsewhere within this Quarterly Report on Form 10-Q for further details on this termination.

Current wording

On February 21, 2024, in connection with the Disposition discussed within Note 19 to the condensed consolidated financial statements included elsewhere within this Quarterly Report on Form 10-Q, the Company terminated the Revolving Credit Facility, except for the $15.5 million in letters of credit then-outstanding. However, during the second quarter of 2024, the Company terminated the $15.5 million in letters of credit outstanding under the Revolving Credit Facility, resulting in the full termination of the Revolving Credit Facility.

Previous wording

In June 2021, in connection with the entry into the merger agreement pursuant to which the Business Combination was consummated, we entered into subscription agreements with certain investors to sell $150.0 million aggregate principal amount of unsecured convertible notes due 2026 (i.e., the Notes). In connection with the closing of the Business Combination, we issued, and those investors purchased, the Notes. The Notes are convertible into shares of our Class A common stock at a conversion price of approximately $50.00 and bear interest at a rate of 8.50% per annum, payable semi-annually. The Notes mature on December 3, 2026. As of March 31, 2024, the Notes were convertible into approximately 2,382,007 shares of our Class A common stock.

Current wording

In June 2021, in connection with the entry into the merger agreement pursuant to which the Business Combination was consummated, we entered into subscription agreements with certain investors to sell $150.0 million aggregate principal amount of unsecured convertible notes due 2026 (i.e., the Notes). In connection with the closing of the Business Combination, we issued, and those investors purchased, the Notes. The Notes are convertible into shares of our Class A common stock at a conversion price of approximately $50.00 and bear interest at a rate of 8.50% per annum, payable semi-annually. The Notes mature on December 3, 2026. As of June 30, 2024, the Notes were convertible into approximately 2,375,347 shares of our Class A common stock.

Previous wording

We repaid approximately $30.9 million of the Notes on March 7, 2024, leaving approximately $119.1 million aggregate principal amount of Notes outstanding as of March 31, 2024. Refer to Note 8 to the condensed consolidated financial statements included elsewhere within this Quarterly Report on Form 10-Q for details.

Current wording

We repaid approximately $30.9 million and $0.3 million of the Notes on March 7, 2024 and June 21, 2024, respectively, leaving approximately $118.8 million aggregate principal amount of Notes outstanding as of June 30, 2024. Refer to Notes 8 and 19 to the condensed consolidated financial statements included elsewhere within this Quarterly Report on Form 10-Q for details.

Previous wording

On March 21, 2023, we filed a shelf registration statement on Form S-3 (the “Shelf Registration Statement”) under which we may, from time to time, sell securities in one or more offerings having an aggregate offering price of up to $150.0 million. The Shelf Registration Statement was declared effective as of April 5, 2023. On June 20, 2023, we entered into an At-The-Market Offering agreement with Craig-Hallum Capital Group LLC pursuant to which we may, from time to time, sell up to 3,316,503 shares of our Class A common stock. As of March 31, 2024, we sold, in the aggregate, 517,385 shares of our Class A common stock, at an average price of $2.08 per share, for aggregate net proceeds of $0.9 million after deducting commissions and offering expenses. We used the aggregate net proceeds for general corporate purposes, and we have 2,799,118 remaining shares available under the At-The-Market-Offering agreement.

Current wording

On March 21, 2023, we filed a shelf registration statement on Form S-3 (the “Shelf Registration Statement”) under which we may, from time to time, sell securities in one or more offerings having an aggregate offering price of up to $150.0 million. The Shelf Registration Statement was declared effective as of April 5, 2023. On June 20, 2023, we entered into an At-The-Market Offering Agreement with Craig-Hallum Capital Group LLC pursuant to which we may, from time to time, sell up to 3,316,503 shares of our Class A common stock. As of June 30, 2024, we sold, in the aggregate, 517,385 shares of our Class A common stock, at an average price of $2.08 per share, for aggregate net proceeds of $0.9 million after deducting commissions and offering expenses. We used the aggregate net proceeds for general corporate purposes, and we had 2,799,118 remaining shares available under the At-The-Market-Offering Agreement. In July 2024, the Company increased the size of the offering available under the At-The-Market-Offering Agreement. Refer to Note 20 to the condensed consolidated financial statements included elsewhere within this Quarterly Report on Form 10-Q for additional details.

Previous wording

For the three months ended March 31, 2024, cash used in operating activities from continuing operations was $5.3 million compared to cash provided by operating activities from continuing operations of $3.3 million for the three months ended March 31, 2023. The change was primarily driven by a $2.2 million improvement in net loss, adjusted for non-cash items, a $18.8 million increase in the change in accrued compensation, a $8.5 million increase in the change in accrued expenses, other current liabilities and other liabilities, and a $2.9 million increase in the change in deferred revenue. These were partially offset by a $23.0 million decrease in the change in accounts payable, a $17.7 million decrease in the change in accounts receivable, and a $0.9 million increase in the change in prepaid expenses and other current assets and prepaid expenses and other assets.

Current wording

For the six months ended June 30, 2024, cash used in operating activities from continuing operations was $16.8 million compared to cash used in operating activities from continuing operations of $2.1 million for the six months ended June 30, 2023. The change was primarily driven by a $13.3 million improvement in net loss, adjusted for non-cash items, an $11.8 million increase in the change in accrued compensation, an $11.8 million increase in the change in accrued expenses, other current liabilities and other liabilities, a $1.6 million increase in the change in deferred revenue, and a $1.4 million increase in the change in lease liabilities. These were partially offset by a $39.0 million decrease in the change in accounts payable, a $15.5 million decrease in the change in accounts receivable, and a $0.1 million decrease in the change in prepaid expenses and other current assets and prepaid expenses and other assets.

Previous wording

For the three months ended March 31, 2024, cash used in investing activities from continuing operations was $3.4 million, which consisted of $3.3 million of capital expenditures on internal-use software and $0.1 million of other capital expenditures. For the three months ended March 31, 2024, net cash provided by investing activities from discontinued operations was $108.6 million, which represents the cash received for the sale of certain assets relating to the business of Complex Networks (i.e., the Disposition) and is non-recurring in nature.

Current wording

For the six months ended June 30, 2024, cash used in investing activities from continuing operations was $6.3 million, which consisted of $6.4 million of capital expenditures on internal-use software and $0.2 million of other capital expenditures, partially offset by $0.4 million in proceeds from the sale of an asset. For the six months ended June 30, 2024, net cash provided by investing activities from discontinued operations was $108.6 million, which represents the cash received for the sale of certain assets relating to the business of Complex Networks (i.e., the Disposition) and is non-recurring in nature.

Previous wording

For the three months ended March 31, 2023, cash used in investing activities from continuing operations was $4.2 million, which consisted of $4.0 million of capital expenditures on internal-use software and $0.4 million of other capital expenditures, partially offset by a $0.2 million gain on the sale of an asset.

Current wording

For the six months ended June 30, 2023, cash used in investing activities from continuing operations was $8.0 million, which consisted of $7.7 million of capital expenditures on internal-use software and $0.5 million of other capital expenditures, partially offset by a $0.2 million gain on the sale of an asset.

Previous wording

For the three months ended March 31, 2024, cash used in financing activities was $65.8 million, which consisted of a $33.8 million full repayment of the Revolving Credit Facility, a $30.9 million partial repayment on the Notes, a $0.6 million payment of deferred issuance costs, and a $0.5 million early termination payment for the Revolving Credit Facility.

Current wording

For the six months ended June 30, 2024, cash used in financing activities was $66.4 million, which consisted of a $33.8 million full repayment of the Revolving Credit Facility, $31.2 million in partial repayments on the Notes, a $0.6 million payment of deferred issuance costs, and a $0.5 million early termination payment for the Revolving Credit Facility.

Previous wording

For the three months ended March 31, 2023, cash used in financing activities was $1.5 million, which consisted of $1.3 million repayment on the Revolving Credit Facility and $0.2 million payment for withholding taxes on the vesting of certain restricted stock units.

Current wording

For the six months ended June 30, 2023, cash provided by financing activities was $1.4 million, which consisted of $2.1 million of borrowings on the Revolving Credit Facility and $0.8 million of net proceeds from the sale of common stock pursuant to our at-the-market offering after deducting commissions and fees. These were partially offset by a $1.3 million repayment on the Revolving Credit Facility and a $0.2 million payment for withholding taxes on the vesting of certain restricted stock units.

Previous wording

We prepare our condensed consolidated financial statements and related notes in accordance with GAAP. In doing so, we have to make estimates and assumptions that affect our reported amounts of assets, liabilities, revenues, expenses, and related disclosures. We evaluate our estimates and assumptions on an ongoing basis. Our estimates are based on historical experience and other assumptions that we believe are reasonable under the circumstances. To the extent that there are material differences between these estimates and actual results, our financial condition or operating results would be affected.

Current wording

We prepare our condensed consolidated financial statements and related notes in accordance with U.S. GAAP. In doing so, we have to make estimates and assumptions that affect our reported amounts of assets, liabilities, revenues, expenses, and related disclosures. We evaluate our estimates and assumptions on an ongoing basis. Our estimates are based on historical experience and other assumptions that we believe are reasonable under the circumstances. To the extent that there are material differences between these estimates and actual results, our financial condition or operating results would be affected.