Digital Media Solutions, Inc. [DMS] Filings

10-Q 1 dms-20220930.htm 10-Q dms-20220930

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)


☒			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2022


☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from _________ to __________

_______________________________________

Digital Media Solutions, Inc.

(Exact name of Registrant as specified in its charter)

_______________________________________


Delaware	001-38393	98-1399727
(State of incorporation)	(Commission File Number)	(I.R.S. Employer Identification No.)

4800 140th Avenue N., Suite 101, Clearwater, Florida		33762
(Address of Principal Executive Offices)		(Zip Code)

Registrant's telephone number, including area code: (877) 236-8632

(Former Name or Former Address, if Changed Since Last Report)

_______________________________________

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading

Symbol(s)

Name of each exchange

on which registered

Class A common stock, $0.0001 par value per share

DMS

New York Stock Exchange

Redeemable warrants to acquire Class A common stock

DMS WS

New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.


Large accelerated filer	☐	Accelerated filer	☒
Non-accelerated filer	☐	Smaller reporting company	☒
		Emerging growth company	☒

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If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

As of November 7, 2022, 39,926,324 shares of the registrant’s Class A common stock; 25,699,464 of the registrant’s Class B common stock, par value $0.0001 per share; and 13,999,078 warrants to purchase shares of the registrant’s Class A common stock, par value $0.0001 per share, were issued and outstanding.

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Digital Media Solutions, Inc.

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		Page No.

PART I. FINANCIAL INFORMATION
Item 1.	Financial Statements	1
	Consolidated Balance Sheets (Unaudited)	1
	Consolidated Statements of Operations (Unaudited)	2
	Consolidated Statements of Changes in Deficit (Unaudited)	3
	Consolidated Statements of Cash Flows (Unaudited)	6
	Notes to Consolidated Financial Statements (Unaudited)	8
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	23
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	33
Item 4.	Evaluation of Disclosure Controls and Procedures	34
PART II. OTHER INFORMATION
Item 1.	Legal Proceedings	35
Item 1A.	Risk Factors	35
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds from Registered Securities	35
Item 3.	Defaults Upon Senior Securities	35
Item 4.	Mine Safety Disclosures	35
Item 5.	Other Information	36
Item 6.	Exhibits	37
SIGNATURES		38

Cautionary Note Regarding Forward-Looking Statements

References in this document to the “Registrant,” “DMS Inc.,” “DMS,” the “Company,” “we,” “management,” “us” or “our” refers to Digital Media Solutions, Inc. and its consolidated subsidiaries, except where the context otherwise requires or indicates.

This Quarterly Report, particularly Part I. Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”) and Part II. Item 1A. Risk Factors, and the documents we incorporate into this Quarterly Report contain certain statements that are, or may be deemed to be, forward-looking statements within the meaning of that term in Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and are made in reliance upon the protections provided by such acts for forward-looking statements. These forward looking statements are often identified by words such as “expect,” “estimate,” “project,” “budget,” “forecast,” “anticipate,” “intend,” “plan,” “may,” “will,” “could,” “should,” “believes,” “predicts,” “potential,” “continue,” and similar expressions. These forward-looking statements include, without limitation, DMS’s expectations with respect to its future performance and its ability to implement its strategy, and are based on the beliefs and expectations of our management team from the information available at the time such statements are made. These forward-looking statements involve significant risks and uncertainties that could cause the actual results to differ materially from the expected results. Most of these factors are outside DMS’s control and are difficult to predict. Factors that may cause such differences include, but are not limited to: (1) the COVID-19 pandemic or other public health crises; (2) changes in client demand for our services and our ability to adapt to such changes; (3) the entry of new competitors in the market; (4) the ability to maintain and attract consumers and advertisers in the face of changing economic or competitive conditions; (5) the ability to maintain, grow and protect the data DMS obtains from consumers and advertisers; (6) the performance of DMS’s technology infrastructure; (7) the ability to protect DMS’s intellectual property rights; (8) the ability to successfully source and complete acquisitions and to integrate the operations of companies DMS acquires, including Traverse Data, Inc., the Crisp Results assets and Aimtell, PushPros and Aramis Interactive; (9) the ability to improve and maintain adequate internal controls over financial and management systems, and remediate the identified material weakness; (10) changes in applicable laws or regulations and the ability to maintain compliance; (11) our substantial levels of indebtedness; (12) volatility in the trading price on the NYSE of our common stock and warrants; (13) fluctuations in value of our private placement warrants; and (14) other risks and uncertainties indicated from time to time in

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DMS’s filings with the U.S. Securities and Exchange Commission (“SEC”), including those under “Risk Factors” in DMS’s Annual Report on Form 10-K for the year ended December 31, 2021, filed on March 16, 2022 (“2021 Form 10-K”) and its subsequent filings with the SEC.

There may be additional risks that we consider immaterial or which are unknown, and it is not possible to predict or identify all such risks.

DMS cautions that the foregoing list of factors is not exclusive. DMS cautions readers not to place undue reliance upon any forward-looking statements, which speak only as of the date made. DMS does not undertake or accept any obligation or undertaking to release publicly any updates or revisions to any forward-looking statements to reflect any change in its expectations or any change in events, conditions or circumstances on which any such statement is based.

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PART I - FINANCIAL INFORMATION

Item 1. Financial Statements

DIGITAL MEDIA SOLUTIONS, INC.

CONSOLIDATED BALANCE SHEETS

(Unaudited)

(in thousands, except per share data)


	September 30, 2022		December 31, 2021
ASSETS
Current assets:
Cash and cash equivalents	$	18,271	$	26,394
Accounts receivable, net of allowances of $5,654 and $4,459, respectively	45,780		51,578
Prepaid and other current assets	2,468		3,698
Income tax receivable	1,399		2,078
Total current assets	67,918		83,748
Property and equipment, net	18,167		19,168
Goodwill	77,219		76,558
Intangible assets, net	53,825		66,228

Other assets	808		889
Total assets	$	217,937	$	246,591
LIABILITIES AND DEFICIT
Current liabilities:
Accounts payable	$	36,348	$	42,073
Accrued expenses and other current liabilities	9,335		9,473
Current portion of long-term debt	2,250		2,250
Income taxes payable	721		103
Tax Receivable Agreement liability	1,190		1,310
Contingent consideration payable - current	1,371		7,370
Deferred acquisitions consideration payable - current	5,000		4,785
Total current liabilities	56,215		67,364

Long-term debt	214,838		215,505

Deferred tax liabilities	4,060		4,786
Private Placement Warrant liabilities	1,480		3,960
Contingent consideration payable - non-current	31		1,069

Other non-current liabilities	1,530		1,725
Total liabilities	278,154		294,409

Stockholders' deficit:
Preferred stock, $0.0001 par value, 100,000 shares authorized; none issued and outstanding at September 30, 2022	—		—
Class A common stock, $0.0001 par value, 500,000 shares authorized; 39,926 issued and outstanding at September 30, 2022	4		3
Class B convertible common stock, $0.0001 par value, 60,000 shares authorized; 25,699 issued and outstanding at September 30, 2022	3		3
Class C convertible common stock, $0.0001 par value, 40,000 shares authorized; none issued and outstanding at September 30, 2022	—		—
Additional paid-in capital	(17,166)		(25,239)
Treasury stock, at cost, 125 and 0 shares, respectively	(156)		—
Cumulative deficit	(17,544)		(944)
Total stockholders' deficit	(34,859)		(26,177)
Non-controlling interest	(25,358)		(21,641)
Total deficit	(60,217)		(47,818)
Total liabilities and deficit	$	217,937	$	246,591

The accompanying notes are an integral part of the unaudited consolidated financial statements.

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DIGITAL MEDIA SOLUTIONS, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)

(in thousands, except per share data)


	Three Months Ended September 30,				Nine Months Ended September 30,
	2022		2021		2022		2021
Net revenue	$	90,066	$	107,399	$	290,372	$	309,281
Cost of revenue (exclusive of depreciation and amortization)	66,378		77,063		211,997		218,304
Salaries and related costs	11,668		12,449		38,612		34,426
General and administrative expenses	9,076		10,237		32,622		27,051
Depreciation and amortization	7,142		7,186		21,377		19,649
Acquisition costs	14		420		306		1,820
Change in fair value of contingent consideration liabilities	(3)		(3,085)		2,533		(2,525)
(Loss) income from operations	$	(4,209)	$	3,129	$	(17,075)	$	10,556
Interest expense	4,570		3,756		12,072		10,635
Change in fair value of warrant liabilities	1,000		(6,400)		(2,480)		(13,835)
Change in Tax Receivable Agreement liability	(121)		—		(121)		—

Loss on debt extinguishment	—		—		—		2,108

Net (loss) income before income taxes	$	(9,658)	$	5,773	$	(26,546)	$	11,648
Income tax expense	463		379		819		1,527
Net (loss) income	$	(10,121)	$	5,394	$	(27,365)	$	10,121
Net (loss) income attributable to non-controlling interest	(4,010)		1,858		(10,765)		4,217
Net (loss) income attributable to Digital Media Solutions, Inc.	$	(6,111)	$	3,536	$	(16,600)	$	5,904

Weighted-average shares outstanding - basic	39,961		36,511		37,644		35,050
Weighted-average shares outstanding - diluted	65,660		63,321		37,644		61,988
Earnings (loss) per share attributable to Digital Media Solutions, Inc.:
Basic - per common shares	$	(0.15)	$	0.10	$	(0.44)	$	0.17
Diluted - per common shares	$	(0.15)	$	0.09	$	(0.44)	$	0.16

The accompanying notes are an integral part of the unaudited consolidated financial statements.

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DIGITAL MEDIA SOLUTIONS, INC.

CONSOLIDATED STATEMENTS OF CHANGES IN DEFICIT

(Unaudited)

(in thousands, except share data)


	Class A Common Stock			Class B Common Stock			Additional Paid-in Capital		Treasury Stock		Cumulative Deficit		Total Stockholders' Deficit		Non- controlling Interest
	Shares	Amount		Shares	Amount												Total Deficit














Balance, June 30, 2022	36,564	$	3	25,699	$	3	$	(22,313)	$	—	$	(11,060)	$	(33,367)	$	(28,152)	$	(61,519)
Net loss	—	—		—	—		—		—		(6,111)		(6,111)		(4,010)		(10,121)
Shares issued in connection with the Crisp Earnout (Note 6)	2,989	1		—	—		9,999		—		—		10,000		—		10,000
Stock-based compensation	—	—		—	—		1,579		—		—		1,579		—		1,579
Shares issued under the 2020 Omnibus Incentive Plan	498	—		—	—		—		—		—		—		—		—
Treasury shares purchased under the 2020 Omnibus Incentive Plan	(125)	—		—	—		—		(156)		—		(156)		—		(156)
Impact of transactions affecting non-controlling interest (1)	—	—		—	—		(6,804)		—		—		(6,804)		6,804		—

Balance, September 30, 2022	39,926	$	4	25,699	$	3	$	(17,539)	$	(156)	$	(17,171)	$	(34,859)	$	(25,358)	$	(60,217)

____________________

(1) The carrying amount of non-controlling interest was adjusted to reflect the change in ownership interest caused by shares issued in connection with the Crisp Earnout and shares issued under the 2020 Omnibus Incentive Plan.


	Class A Common Stock			Class B Common Stock			Additional Paid-in Capital		Cumulative Deficit		Total Stockholders' Deficit		Non- controlling Interest
	Shares	Amount		Shares	Amount										Total Deficit















Balance, June 30, 2021	35,818	$	3	25,699	$	3	$	(27,642)	$	(737)	$	(28,373)	$	(24,534)	$	(52,907)
Net income	—	—		—	—		—		3,536		3,536		1,858		5,394
Shares issued under the 2020 Omnibus Incentive Plan	350	—		—	—		—		—		—		—		—
Stock-based compensation	—	—		—	—		1,583		—		1,583		—		1,583
Impact of transactions affecting non-controlling interest (1)	—	—		—	—		(1,416)		—		(1,416)		1,416		—
Correction of Business Combination Tax Receivable Agreement	—	—		—	—		(322)		—		(322)		—		(322)
Other (2)	—	—		—	—		80		—		80		(75)		5
Balance, September 30, 2021	36,168	$	3	25,699	$	3	$	(27,717)	$	2,799	$	(24,912)	$	(21,335)	$	(46,247)

____________________

(1) The carrying amount of non-controlling interest was adjusted to reflect the change in ownership interest caused by shares issued under the 2020 Omnibus Incentive Plan.

(2) Includes costs associated with the issuance of equity shares.

The accompanying notes are an integral part of the unaudited consolidated financial statements.

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	Class A Common Stock			Class B Common Stock			Additional Paid-in Capital		Treasury Stock		Cumulative Deficit		Total Stockholders' Deficit		Non- controlling Interest
	Shares	Amount		Shares	Amount												Total Deficit
Balance, December 31, 2021	36,226	$	3	25,699	$	3	$	(25,239)	$	—	$	(944)	$	(26,177)	$	(21,641)	$	(47,818)
Net loss	—	—		—	—		—		—		(16,600)		(16,600)		(10,765)		(27,365)
SmarterChaos DMSH units redeemed and issued to Class A Common Stock (1)	153	—		—	—		—		—		—		—		—		—
Shares issued in connection with the Crisp Earnout (Note 6)	2,989	1		—	—		9,999		—		—		10,000		—		10,000

Stock-based compensation	—	—		—	—		5,695		—		—		5,695		—		5,695
Shares issued under the 2020 Omnibus Incentive Plan	683	—		—	—		—		—		—		—		—		—
Distributions to non-controlling interest holders (2)	—	—		—	—		—		—		—		—		(573)		(573)
Treasury shares purchased under the 2020 Omnibus Incentive Plan	(125)	—		—	—		—		(156)		—		(156)		—		(156)
Impact of transactions affecting non-controlling interest (3)	—	—		—	—		(7,621)		—		—		(7,621)		7,621		—

Balance, September 30, 2022	39,926	$	4	25,699	$	3	$	(17,166)	$	(156)	$	(17,544)	$	(34,859)	$	(25,358)	$	(60,217)

____________________

(1) On January 17, 2022, the Sellers of SmarterChaos redeemed their remaining non-controlling interest held through DMSH Units in exchange for 153 thousand shares of Class A Common Stock in DMS, Inc. The non-controlling interest held by the Sellers of SmarterChaos did not include related Class B Common Stock to be retired upon redemption.

(2) Represents tax distributions to shareholders Prism, Clairvest and the Sellers of SmarterChaos. As of September 30, 2022, $10 thousand of these distributions have not been paid.

(3) The carrying amount of non-controlling interest was adjusted primarily to reflect the change in ownership interest caused by additional DMSH units redeemed and issued to Class A Common Stock by the Sellers of SmarterChaos, shares issued in connection with the Crisp Earnout and shares issued under the 2020 Omnibus Incentive Plan.

The accompanying notes are an integral part of the unaudited consolidated financial statements.

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	Class A Common Stock			Class B Common Stock			Additional Paid-in Capital		Cumulative Deficit		Total Stockholders' Deficit		Non- controlling Interest
	Shares	Amount		Shares	Amount										Total Deficit
Balance, December 31, 2020	32,393	$	3	25,999	$	3	$	(48,027)	$	(3,146)	$	(51,167)	$	(44,518)	$	(95,685)
Net (loss) income	—	—		—	—		—		5,945		5,945		4,176		10,121
Shares issued in connection with acquisition of Aramis, PushPros and Aimtell (Note 6)	1,293	—		—	—		9,384		—		9,384		5,616		15,000
Shares issued in connection with acquisition of Crisp Results (Note 6)	1,595	—		—	—		11,513		—		11,513		8,310		19,823
Exercise of warrants to issue Class A common stock	1	—		—	—		17		—		17		—		17
Prism shares redeemed and issued to Class A Common Stock	300	—		(300)	—		192		—		192		—		192
SmarterChaos DMSH units redeemed and issued to Class A Common Stock (1)	154	—		—	—		392		—		392		—		392
Shares issued under the 2020 Omnibus Incentive Plan	432	—		—	—		—		—		—		—		—
Stock-based compensation	—	—		—	—		4,342		—		4,342		—		4,342
Impact of transactions affecting non-controlling interest (2)	—	—		—	—		(5,204)		—		(5,204)		5,204		—
Correction of Business Combination Tax Receivable Agreement	—	—		—	—		(322)		—		(322)		—		(322)
Other (3)	—	—		—	—		(4)		—		(4)		(123)		(127)
Balance, September 30, 2021	36,168	$	3	25,699	$	3	$	(27,717)	$	2,799	$	(24,912)	$	(21,335)	$	(46,247)

____________________

(1) On June 30, 2021, the sellers of SmarterChaos redeemed approximately one-half of their non-controlling interest held through DMSH Units in exchange for Class A Common Stock in DMS Inc. The non-controlling interest held by the sellers of SmarterChaos did not include related Class B Common Stock to be retired upon redemption.

(2) The carrying amount of non-controlling interest was adjusted to reflect the change in ownership interest caused by additional controlling shares contributed as a result of the Crisp acquisition and non-controlling redemptions by Prism and the sellers of SmarterChaos.

(3) Includes costs associated with the issuance of equity shares.

The accompanying notes are an integral part of the unaudited consolidated financial statements.

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DIGITAL MEDIA SOLUTIONS, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

(in thousands)


	Nine Months Ended September 30,
	2022		2021
Cash flows from operating activities
Net (loss) income	$	(27,365)	$	10,121
Adjustments to reconcile net income to net cash provided by operating activities
Provision for bad debt	1,305		1,384
Depreciation and amortization	21,377		19,649



Lease restructuring charges	(167)		(81)
Loss on debt extinguishment	—		2,108
Stock-based compensation, net of amounts capitalized	5,332		3,976

Amortization of debt issuance costs	1,149		1,006
Deferred income tax provision, net	(1,160)		(856)

Change in fair value of contingent consideration	2,533		(2,525)
Change in fair value of warrant liability	(2,480)		(13,835)
Change in Tax Receivable Agreement liability	(120)		—
Change in income tax receivable and payable	1,297		(728)
Change in accounts receivable	4,824		(7,324)
Change in prepaid expenses and other current assets	1,120		(2,121)
Change in accounts payable and accrued expenses	(5,341)		(2,367)
Change in other liabilities	(195)		(516)
Net cash provided by operating activities	$	2,109	$	7,891
Cash flows from investing activities
Additions to property and equipment	$	(5,247)	$	(7,875)
Acquisition of businesses, net of cash acquired	(2,579)		(24,830)

Net cash used in investing activities	$	(7,826)	$	(32,705)
Cash flows from financing activities

Proceeds from issuance of long-term debt	$	—	$	220,840
Payments of long-term debt and notes payable	(1,687)		(200,414)
Proceeds from borrowings on revolving credit facilities	—		11,000
Payments of borrowings on revolving credit facilities	—		(15,000)
Payment of debt issuance costs	—		(3,565)

Payment of equity issuance	—		(475)
Payment of early termination	—		(188)
Proceeds from warrants exercised	—		11
Purchase of treasury stock related to stock-based compensation	(156)		—
Distributions to non-controlling interest holders	(563)		—
Other	—		(60)
Net cash (used in) provided by financing activities	$	(2,406)	$	12,149
Net change in cash	$	(8,123)	$	(12,665)
Cash, beginning of period	26,394		31,397
Cash, end of period	$	18,271	$	18,732

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	Nine Months Ended September 30,
	2022		2021
Supplemental Disclosure of Cash Flow Information
Cash Paid During the Period For
Interest	$	10,651	$	10,908
Income taxes	$	662	$	3,837
Non-Cash Investing and Financing Transactions:
Contingent and deferred acquisition consideration	$	2,971	$	11,877
Stock-based compensation capitalized in property and equipment	$	363	$	366
Capital expenditures included in accounts payable	$	236	$	550
Issuance of equity for Aimtell/Aramis//PushPros, and Crisp Results	$	10,000	$	35,000

The accompanying notes are an integral part of the unaudited consolidated financial statements.

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DIGITAL MEDIA SOLUTIONS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

NOTE 1. BUSINESS, BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Business

Digital Media Solutions, Inc. (“DMS Inc.”) is a digital performance marketing company offering a diversified lead and software delivery platform that drives high value and high intent leads to its customers. As used in this Quarterly Report, the “Company” refers to DMS Inc. and its consolidated subsidiaries, (including its wholly-owned subsidiary, CEP V DMS US Blocker Company, a Delaware corporation (“Blocker”)). The Company is headquartered in Clearwater, Florida. The Company primarily operates and derives most of its revenues in the United States.

Basis of Presentation

These consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) and applicable rules and regulations of the U.S. Securities and Exchange Commission (“SEC”) regarding interim financial reporting. Accordingly, they do not include all of the information and notes required by GAAP for annual financial statements. In the opinion of management, all adjustments consisting of normal and recurring entries considered necessary for a fair presentation of the results for the interim periods presented have been included. All significant intercompany balances and transactions have been eliminated. The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect reported amounts in the financial statements and accompanying notes. These estimates are based on information available as of the date of the unaudited consolidated financial statements; therefore, actual results could differ from those estimates. Interim results are not necessarily indicative of the results for a full year.

Business Combination

On July 15, 2020, Digital Media Solutions Holding (“DMSH”) consummated the Business Combination with Leo Holdings Corp. (“Leo”) pursuant to the Business Combination Agreement (“Business Combination”). Pursuant to the Business Combination, DMS Inc. acquired, directly and through its acquisition of the equity of Blocker, approximately 60.8% of the membership interest in DMSH, while Prism Data, LLC, a Delaware limited liability company (“Prism”), CEP V-A DMS AIV Limited Partnership, a Delaware limited partnership (“Clairvest Direct Seller”) and related entities (the “Sellers”) retained approximately 39.2% of the membership interest in DMSH (“non-controlling interests”). For additional information, see Note 2. Business Combination in the Notes to Consolidated Financial Statements in our 2021 Form 10-K.

Non-controlling Interest

The non-controlling interest represents the membership interest in DMSH held by holders other than the Company. As of September 30, 2022, the Prism, Clairvest Direct Sellers and SmarterChaos combined ownership percentage in DMSH was 39.2% and as of December 31, 2021 it was 41.6%.

Principles of Consolidation

The Company consists of DMS Inc. and its wholly-owned subsidiary, Blocker. The Company consolidates the assets, liabilities and operating results of DMSH and its wholly-owned subsidiaries. All intercompany transactions and balances have been eliminated in consolidation. The results of operations attributable to the non-controlling interests are included in the Company’s consolidated statements of operations, and the non-controlling interests are reported as a separate component of equity.

Use of Estimates

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported as separate financial statement line items in the consolidated financial statements. Actual results could differ from those estimates. Management regularly makes estimates and assumptions that are inherent in the preparation of the consolidated financial statements including, but not limited to, the fair value of private placement warrants, the allowance for doubtful accounts, stock-based compensation, fair value of intangibles acquired in business combinations, loss contingencies, contingent consideration liabilities, asset impairments, and deferred taxes and amounts associated with the Tax Receivable Agreement.

Reclassifications

Certain prior period balances have been reclassified to conform to the current period presentation in the consolidated financial statements and the accompanying notes.

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Significant Accounting Policies

There have been no material changes to our significant accounting policies as compared to the significant accounting policies described in Note 1. Business, Basis of Presentation and Summary of Significant Accounting Policies in our 2021 Form 10-K.

New Accounting Standards

Accounting Standards Not Yet Adopted

In February 2016, the FASB issued authoritative guidance ASC 842, Lease Accounting, regarding the accounting for leases, and has since issued subsequent updates to the initial guidance. The amended guidance requires the recognition of assets and liabilities for operating leases. The standard was initially effective for annual and interim reporting periods beginning after December 15, 2019. However, in November 2019, the FASB issued amended guidance, which defers for Emerging Growth Companies (“EGC”) the effective date for fiscal years beginning after December 15, 2021, and interim periods within fiscal years beginning after December 15, 2022. The standard must be adopted using a modified retrospective transition. We plan to adopt the standard using the optional transition method whereby we would apply the new lease requirements through a cumulative-effect adjustment on the effective date of adoption. We plan to elect the package of practical expedients permitted under the transition guidance of the new standards, which allows us to not reassess whether any expired or existing contracts contain leases, allows us to carry forward the historical lease classification and permits us to exclude from our assessment initial direct costs for any existing leases. We will also make an accounting policy election to exclude leases with an initial term of twelve months or less from our transition adjustment. We will adopt this standard in the last fiscal quarter of 2022 and we expect the adoption will have a material impact on our consolidated financial statements and disclosures.

The Company qualifies as an “emerging growth company” and has elected to adhere to the extended transition period for complying with new or revised accounting standards under Section 102(b)(1) of the JOBS Act. This election allows the Company to delay the adoption of new or revised accounting standards that have different effective dates for public and private companies until those standards apply to private companies.

In June 2016, the FASB issued authoritative guidance ASC 326 Financial Instruments - Credit Losses, regarding the impairment model known as the current expected credit loss (“CECL”) model on accounting for credit losses on financial instruments, including trade receivables, and has since issued subsequent updates to the initial guidance. The amended guidance requires the application of a CECL model, which measures credit losses based on relevant information about past events, including historical experience, current conditions, and reasonable and supportable forecasts. The guidance requires adoption using a modified retrospective approach and is effective for emerging growth companies for fiscal years beginning after December 15, 2022, including interim periods within those fiscal years. We are currently evaluating the impact on our consolidated financial statements.

NOTE 2. REVENUE

Disaggregation of Revenue

The following tables present the disaggregation of revenue by reportable segment and type of service (in thousands):


	Three Months Ended September 30, 2022
	Brand Direct		Marketplace		Technology Solutions		Intercompany eliminations		Total
Net revenue:
Customer acquisition	$	41,381	$	53,230	$	—	$	(8,059)	$	86,552
Managed services	937		—		1,076		—		2,013
Software services	—		—		1,501		—		1,501
Total Net revenue	$	42,318	$	53,230	$	2,577	$	(8,059)	$	90,066

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	Three Months Ended September 30, 2021
	Brand Direct		Marketplace		Technology Solutions		Intercompany eliminations		Total
Net revenue:
Customer acquisition	$	63,332	$	58,278	$	—	$	(18,133)	$	103,477
Managed services	1,667		—		1,471		—		3,138
Software services

Digital Media Solutions, Inc. [DMS] Filings
Digital Media Solutions, Inc. [DMS-WT] Filings
10-Q	[2022-11-09]
10-Q	[2022-08-09]
10-Q	[2022-05-10]
10-K	[2022-03-16]
10-Q	[2021-11-09]
10-Q	[2021-08-09]
10-Q	[2021-08-09]
10-Q	[2021-08-09]
S-1	[2021-05-27]
10-Q	[2021-05-18]
10-K	[2021-03-16]
10-Q	[2020-11-09]
10-Q	[2020-08-10]
S-1	[2020-07-31]
10-Q	[2020-05-08]
10-K	[2020-03-13]
10-Q	[2019-11-12]
10-Q	[2019-08-09]
10-Q	[2019-05-10]
10-K	[2019-03-29]
10-Q	[2018-11-09]
10-Q	[2018-08-10]
10-Q	[2018-05-11]
S-1	[2018-01-18]

Digital Media Solutions, Inc. [DMS] Filings

Digital Media Solutions, Inc. [DMS-WT] Filings