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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 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 March 31, 2022
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from              to             
Commission File Number: 001-36331
Quotient Technology Inc.
(Exact Name of Registrant as Specified in Its Charter)
Delaware77-0485123
(State or Other Jurisdiction of
 Incorporation or Organization)
(I.R.S. Employer Identification No.)
1260 East Stringham Avenue, 6th Floor, Salt Lake City, UT
84106
(Address of Principal Executive Offices)(Zip Code)
(650)
605-4600
(Registrant’s Telephone Number, Including Area Code)
(Former name, former address and former fiscal year, 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
Common stock, $0.00001 par value QUOT New York Stock Exchange
Preferred Stock Purchase RightsNew 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 checkmark 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, smaller reporting company, or an emerging growth company. See definition of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filerAccelerated filer
Non-accelerated filerSmaller reporting company
Emerging growth company  

    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 April 29, 2022, the registrant had 95,082,450 shares of common stock outstanding.


QUOTIENT TECHNOLOGY INC.
INDEX
REPORT ON
FORM 10-Q
FOR THE QUARTER ENDED MARCH 31, 2022
 

3


PART I - FINANCIAL INFORMATION

Item 1.         Financial Statements.

QUOTIENT TECHNOLOGY INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, except share and per share data)
 March 31,
2022
December 31,
2021
(unaudited) 
Assets  
Current assets:  
Cash and cash equivalents$202,583 $237,417 
Accounts receivable, net of allowance for credit losses of $2,106 and $2,500 at
   March 31, 2022 and December 31, 2021, respectively
114,263 177,216 
Prepaid expenses and other current assets20,514 19,312 
Total current assets337,360 433,945 
Property and equipment, net21,845 22,660 
Operating lease right-of-use assets19,393 23,874 
Intangible assets, net10,355 13,003 
Goodwill128,427 128,427 
Other assets12,895 13,571 
Total assets$530,275 $635,480 
Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable$8,578 $18,021 
Accrued compensation and benefits12,241 20,223 
Other current liabilities58,009 95,279 
Deferred revenues21,209 26,778 
Contingent consideration related to acquisitions 22,275 
Convertible senior notes, net199,377 188,786 
Total current liabilities299,414 371,362 
Operating lease liabilities25,551 26,903 
Other non-current liabilities419 522 
Deferred tax liabilities1,991 1,991 
Total liabilities327,375 400,778 
Commitments and contingencies (Note 13)
Stockholders’ equity:
Preferred stock, $0.00001 par value—10,000,000 shares authorized; 250,000
 shares designated as Series A Junior Participating Preferred Stock; and no shares
   issued or outstanding at March 31, 2022 and December 31, 2021
  
Common stock, $0.00001 par value—250,000,000 shares authorized; 95,068,899
   and 94,779,442 shares issued and outstanding at March 31, 2022 and
   December 31, 2021, respectively
1 1 
Additional paid-in capital687,557 731,672 
Accumulated other comprehensive loss(1,213)(1,099)
Accumulated deficit(483,445)(495,872)
Total stockholders’ equity202,900 234,702 
Total liabilities and stockholders’ equity$530,275 $635,480 
 
See Accompanying Notes to Condensed Consolidated Financial Statements


4


QUOTIENT TECHNOLOGY INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share data)
(Unaudited)
 Three Months Ended
March 31,
 20222021
Revenues$78,456 $115,316 
Cost of revenues49,078 71,984 
Gross profit29,378 43,332 
Operating expenses:
Sales and marketing21,936 27,365 
Research and development9,756 12,056 
General and administrative22,708 12,833 
Change in fair value of contingent consideration 285 
Total operating expenses54,400 52,539 
Loss from operations(25,022)(9,207)
Interest expense(1,154)(3,730)
Other income (expense), net36 (228)
Loss before income taxes(26,140)(13,165)
Provision for income taxes166 249 
Net loss$(26,306)$(13,414)
Net loss per share, basic and diluted$(0.28)$(0.15)
Weighted-average number of common shares used in computing net loss per share, basic and diluted94,924 92,413 
 
See Accompanying Notes to Condensed Consolidated Financial Statements

5


QUOTIENT TECHNOLOGY INC.
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS
(In thousands)
(Unaudited)
 Three Months Ended March 31,
 20222021
Net loss$(26,306)$(13,414)
Other comprehensive income (loss):
Foreign currency translation adjustments(114)(14)
Comprehensive loss$(26,420)$(13,428)
 
See Accompanying Notes to Condensed Consolidated Financial Statements

6


QUOTIENT TECHNOLOGY INC.
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
(In thousands)
(Unaudited)
 Three Months Ended March 31,
 20222021
Total stockholders' equity, beginning balances$234,702 $247,029 
Common stock and additional paid-in capital:
Beginning balances$731,673 $698,334 
Cumulative-effect adjustment due to adoption of ASU 2020-06(49,090) 
Stock-based compensation5,944 5,921 
Exercise of employee stock options 13,070 
Issuance of common stock for services provided 223 
Payments for taxes related to net share settlement of equity awards
(969)(2,246)
Ending balance$687,558 $715,302 
Accumulated other comprehensive loss:
Beginning balances$(1,099)$(1,001)
Other comprehensive loss(114)(14)
Ending balance$(1,213)$(1,015)
Accumulated deficit:
Beginning balances$(495,872)$(450,304)
Cumulative-effect adjustment due to adoption of ASU 2020-0638,733  
Net loss(26,306)(13,414)
Ending balance$(483,445)$(463,718)
Total stockholders' equity, ending balances$202,900 $250,569 
 
See Accompanying Notes to Condensed Consolidated Financial Statements

7


QUOTIENT TECHNOLOGY INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)

 Three Months Ended March 31,
 20222021
Cash flows from operating activities:
Net loss$(26,306)$(13,414)
Adjustments to reconcile net loss to net cash (used in) provided by operating activities:
Depreciation and amortization4,562 9,431 
Stock-based compensation5,742 5,844 
Impairment of long-lived and right-of-use assets5,981  
Amortization of debt discount and issuance cost247 2,846 
Allowance (recovery) for credit losses(396)(143)
Deferred income taxes 249 
Change in fair value of contingent consideration 285 
Other non-cash expenses1,540 958 
Changes in operating assets and liabilities:
Accounts receivable63,348 18,125 
Prepaid expenses and other assets(1,168)4,984 
Accounts payable and other liabilities(46,577)(16,761)
Payments for contingent consideration and bonuses(19,008) 
Accrued compensation and benefits(8,003)(1,771)
Deferred revenues(5,570)(123)
Net cash (used in) provided by operating activities(25,608)10,510 
Cash flows from investing activities:
Purchases of property and equipment(2,557)(2,797)
Net cash used in investing activities(2,557)(2,797)
Cash flows from financing activities:
Proceeds from issuances of common stock under stock plans 13,070 
Payments for taxes related to net share settlement of equity awards(969)(2,246)
Principal payments on promissory note and capital lease obligations(89)(163)
Payments for contingent consideration(5,686) 
Net cash (used in) provided by financing activities(6,744)10,661 
Effect of exchange rates on cash and cash equivalents75 (40)
Net (decrease) increase in cash and cash equivalents(34,834)18,334 
Cash and cash equivalents at beginning of period237,417 222,752 
Cash and cash equivalents at end of period$202,583 $241,086 
Supplemental disclosures of cash flow information:
Cash paid for income taxes$20 $60 
Cash paid for interest$5 $8 
Supplemental disclosures of noncash investing and financing activities:
Fixed asset purchases not yet paid$900 $1,559 
Intangible asset acquisitions not yet paid$ $1,250 
 
See Accompanying Notes to Condensed Consolidated Financial Statements
8


QUOTIENT TECHNOLOGY INC.
Notes to Condensed Consolidated Financial Statements
(Unaudited)

1. Description of Business
Quotient Technology Inc. (together with its subsidiaries, the “Company” or "Quotient"), is an industry leading digital media and promotions technology company that powers cohesive omnichannel brand-building and sales-driving marketing campaigns for advertisers and retailers to influence purchasing decisions throughout a shopper's path to purchase. These marketing campaigns are planned, delivered and measured using our technology platforms and data analytics tool. The Company's network includes the digital properties of retail partners and advertiser customers (also known as consumer packaged goods ("CPG") manufacturers or brands), social media platforms, its consumer brand Coupons.com and digital out-of-home ("DOOH") properties. This network provides the Company with proprietary and licensed data, including retailers’ in-store point-of-sale ("POS") shopper data, purchase intent and online behavior, and location intelligence. With such data powering its platforms, customers and partners use Quotient to leverage consumer data and insights, engage consumers via digital channels, and integrate marketing and merchandising programs to drive measurable sales results and consumer engagement.
2. Summary of Significant Accounting Policies
Basis of Presentation and Consolidation
The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles (“U.S. GAAP”) and applicable rules and regulations of the Securities and Exchange Commission (“SEC”) regarding interim financial reporting. Certain information and note disclosures normally included in the financial statements prepared in accordance with U.S. GAAP have been condensed or omitted pursuant to such rules and regulations. As such, the information included in this Quarterly Report on Form 10-Q should be read in conjunction with the audited consolidated financial statements and accompanying notes included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2021 filed on March 1, 2022, as amended by its subsequent Form 10-K/A, Amendment No. 1, filed on April 29, 2022 (collectively, "Annual Report on Form 10-K, as amended").
The Company’s condensed consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries. All significant intercompany transactions and balances have been eliminated. The accompanying unaudited condensed consolidated financial statements reflect all normal recurring adjustments necessary to present fairly the financial position, results of operations, comprehensive loss, and cash flows for the interim periods, but are not necessarily indicative of the results of operations to be anticipated for the full year ending December 31, 2022 or for any other period.
There have been no significant changes to the Company’s significant accounting policies described in the Annual Report on Form 10-K, as amended, that have had a material impact on its condensed consolidated financial statements and related notes.
Use of Estimates
The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent liabilities at the date of the financial statements as well as the reported amounts of revenues and expenses during the reporting period. Such management estimates include, but are not limited to, revenue recognition, collectability of accounts receivable, useful lives of intangible assets, estimates related to recoverability of long-lived assets and goodwill, stock-based compensation, restructuring accruals, legal contingencies, deferred income tax assets and associated valuation allowances and distribution fee commitments. These estimates generally require judgments, may involve the analysis of historical and prediction of future trends, and are subject to change from period to period. Actual results may differ from the Company’s estimates, and such differences may be material to the accompanying condensed consolidated financial statements.

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Recently Issued Accounting Pronouncements
Accounting Pronouncements Recently Adopted
In August 2020, the Financial Accounting Standards Board (“FASB”) issued ASU 2020-06, Debt—Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging—Contracts in Entity’s Own Equity (Subtopic 815-40): Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity ("ASU 2020-06"). The guidance simplifies an issuer's accounting for convertible debt instruments and its application of the derivatives scope exception for contracts in its own entity. The guidance eliminates two of the three models in ASC 470-20 that require separate accounting for embedded conversion features. The Company adopted this standard effective January 1, 2022 using the modified retrospective approach. Therefore, the condensed consolidated financial statements for the three months ended March 31, 2022 are presented under the new standard, while the comparative periods presented are not adjusted and continue to be reported in accordance with the Company’s historical accounting policy.
In connection with the adoption of this standard, the Company recognized a cumulative effect adjustment of $38.7 million to retained earnings on the Company’s condensed consolidated balance sheet as of January 1, 2022. This adjustment was primarily driven by the derecognition of interest expense related to the accretion of the debt discount associated with the embedded conversion option recorded in the prior period as required under the legacy guidance. In addition, the Company reclassified $50.7 million and issuance costs of $1.6 million from additional paid-in-capital to convertible senior notes, net on the Company’s condensed consolidated balance sheet as of January 1, 2022. The reclassification was recorded in order to combine the two legacy units of account into a single instrument classified as a liability since the bifurcation of the instrument into two units of account is no longer required under the new standard. Under the new guidance, the Company will no longer incur interest expense related to the accretion of the debt discount associated with the embedded conversion option. The Company will use the if-converted method to calculate diluted EPS. If the Company makes an irrevocable election to settle the principal of the convertible senior notes in cash and the excess conversion spread in shares, the if-converted method will result in a reduced number of shares issued to reflect only the excess conversion. Since the Company had a net loss for the three months ended March 31, 2022, the convertible senior notes were determined to be anti-dilutive and therefore had no impact to basic or diluted net loss per share for the period as a result of adopting ASU 2020-06.
Revenue Recognition
The Company primarily generates revenue by providing digital media and promotions solutions to its customers and partners. Revenues are recognized when control of the promised goods or services is transferred to the Company’s customers, in an amount that reflects the consideration the Company expects to be entitled to in exchange for those goods or services.
The Company determines revenue recognition through the following steps:
Identification of the contract, or contracts, with a customer
Identification of the performance obligations in the contract
Determination of the transaction price
Allocation of the transaction price to the performance obligations in the contract
Recognition of revenue when, or as, the Company satisfies a performance obligation
The Company provides digital promotions, including digital coupons, and/or media programs to its customers, which consist of advertisers, retail partners and advertising agencies. The Company uses its proprietary technology platforms to create, target, deliver and analyze these programs for customers. The Company typically generates revenue, derived from customer use of these programs, on a cost-per-click, cost-per-impression, or cost-per-acquisition basis, and customers are typically billed monthly. Duration-based campaigns are generally billed prior to campaign launch.
The pricing of digital promotions programs typically includes both promotion setup fees and promotion campaign fees. Promotion setup fees are related to the creation of digital promotions and set up of the underlying campaign on Quotient’s proprietary platforms for tracking of the related clicks. The Company recognizes revenues
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related to promotion setup fees over time, proportionally, on a per click basis, using the number of authorized clicks, per insertion order, commencing on the date of the first click. A click refers to the consumer's action of activating a digital promotion through the Company’s proprietary technology platforms by either saving it to a retailer’s loyalty account for automatic digital redemption, or printing it for physical redemption at a retailer. Promotion campaign fees are usually determined on a per click basis. The Company typically recognizes revenues for digital promotion campaign fees as clicks occur.
The Company also has a duration-based National Promotions offering, as part of its National Promotion business. This offering provides advertisers access to the Company’s proprietary platforms for a specific period of time (the campaign period) in exchange for a fixed fee. The Company provides a single service consisting of making the advertiser’s promotions available for use on its network each day during the campaign period, which generally is between seven and twenty-eight days. The Company has a stand-ready performance obligation that is satisfied over time; therefore, the Company recognizes revenue ratably over the campaign period.
The Company’s media programs enable advertisers and retailers to distribute digital media to promote their brands and products on its retailers’ websites, and mobile applications, and through a network of affiliate publishers and non-publisher third parties that display its media offerings on their websites or mobile applications. Pricing for media campaigns is usually determined on a cost-per-impression, cost-per-click or cost-per-acquisition basis. The Company recognizes revenue each time a digital media ad is displayed or each time a user clicks on the media ad displayed on the Company’s websites, mobile applications or on third-party websites.  
Gross Versus Net Revenue Reporting
In the normal course of business and through its distribution network, the Company delivers digital media and promotions on retailers’ websites through retailers’ loyalty programs, and on the websites of digital publishers. In these situations, the Company evaluates whether it is the principal (i.e., report revenues on a gross basis) or agent (i.e., report revenues on a net basis). The Company typically reports digital promotion and media advertising revenues for campaigns placed on third-party owned properties on a gross basis; that is, the amounts billed to its customers are recorded as revenues, and distribution fees paid to retailers or digital publishers are recorded as cost of revenues. The Company is the principal because it controls the digital promotion and media advertising inventory before it is transferred to its customers. The Company’s control is evidenced by its sole ability to monetize the digital coupon and media advertising inventory, being primarily responsible to its customers, having discretion in establishing pricing for the delivery of the digital promotions and media, or a combination of these.
In other cases (e.g., sponsored search and DOOH offerings), the Company reports revenues on a net basis, that is, the costs for digital advertising inventory and third-party data paid to suppliers are deducted from gross revenues to arrive at net revenues. The Company’s performance obligation in these arrangements is to provide the use of its platforms that enables customers to bid on real-time digital advertising inventory, use of data, and other add-on features in designing and executing their campaigns. The Company charges its customers a platform fee based on a percentage of the digital advertising inventory and data costs purchased through the use of its platforms. The platform fee is not contingent on the results of a digital media advertising campaign. The Company has determined that it’s an agent in these arrangements because it does not have control of the digital advertising inventory before it is transferred to the customer and does not set prices.
The Company also introduced retailer-specific promotion and media campaign offerings (either, or both, also known as "shopper" offerings). The Company has determined that it is an agent in these arrangements as the retailer is the customer, as the retailer controls the delivery of shopper promotion and media programs on its website, and as the retailer sets the pricing. The Company’s obligation in these arrangements is to provide use of its platforms to the retailers. The retailer determines how shopper promotions and media programs are executed through the Company’s platforms. Under these arrangements, the Company reports revenue on a net basis.
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Arrangements with Multiple Performance Obligations
The Company’s contracts with customers may include multiple performance obligations. For these contracts, the Company accounts for individual performance obligations separately if they are distinct. The transaction price is allocated to the separate performance obligations on a relative standalone selling price basis. The Company determines its best estimate of its standalone selling prices based on its overall pricing objectives, taking into consideration market conditions and other factors, including the value of its contracts and characteristics of targeted customers.
Deferred Revenues
Deferred revenues primarily relate to cash received or billings to customers associated with promotion setup fees, promotion campaign fees and digital media fees that are expected to be recognized upon click, or delivery of media impressions, or campaign duration, which generally occur within the next twelve months. The Company records deferred revenues, including amounts which are refundable, when cash payments are received or become due in advance of the Company satisfying its performance obligations. The decrease in the deferred revenue balance for the three months ended March 31, 2022 is primarily driven by $17.1 million of recognized revenue, partially offset by cash payments of $11.6 million received or due in advance of satisfying the Company’s performance obligations.
The Company’s payment terms vary by the type and size of its customers. For certain products or services and customer types, we require payment before the products or services are delivered to the customer.
Disaggregated Revenue
The following table presents the Company’s revenues disaggregated by type of services (in thousands, unaudited). The majority of the Company’s revenue is generated from sales in the United States.
 
 Three Months Ended March 31,
 20222021
Promotion$50,162 $69,614 
Media28,294 45,702 
Total Revenue$78,456 $115,316 
 Practical Expedients and Exemptions
The Company does not disclose the value of unsatisfied performance obligations for (i) contracts with an original expected length of one year or less and (ii) contracts for which it recognizes revenue for an amount where it has the right to invoice for services performed.
Sales Commissions
The Company generally incurs and expenses sales commissions upon recognition of revenue for related goods and services, which typically occurs within one year or less. Sales commissions earned related to revenues for initial contracts are commensurate with sales commissions related to renewal contracts. These costs are recorded in sales and marketing expenses within the condensed consolidated statements of operations.
3. Fair Value Measurements
The fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Fair value is estimated by applying the following hierarchy, which prioritizes the inputs used to measure fair value into three levels and bases the categorization within the hierarchy upon the lowest level of input that is available and significant to the fair value measurement:
Level 1—Quoted prices (unadjusted) in active markets for identical assets or liabilities.
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Level 2—Observable inputs other than quoted prices in active markets for identical assets and liabilities, quoted prices for identical or similar assets or liabilities in inactive markets, or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities.
Level 3—Inputs that are generally unobservable and typically reflect management’s estimate of assumptions that market participants would use in pricing the asset or liability.
Assets and Liabilities Measured at Fair Value on a Recurring Basis
The Company’s fair value hierarchy for its financial assets and liabilities that are measured at fair value on a recurring basis are as follows (in thousands):
 
March 31, 2022
Level 1Level 2Level 3Total
Assets:
Cash equivalents:
Money market funds$105,014   $105,014 
Total$105,014 $ $ $105,014 
Liabilities:
Contingent consideration related to acquisitions    
Total$ $ $ $ 
 December 31, 2021
 Level 1Level 2Level 3Total
Assets:    
Cash equivalents:    
Money market funds$105,004   $105,004 
Total$105,004 $ $ $105,004 
Liabilities:
Contingent consideration related to acquisitions  22,275 22,275 
Total$ $ $22,275 $22,275 
The valuation technique used to measure the fair value of money market funds includes using quoted prices in active markets. The money market funds have a fixed net asset value of $1.0.
The contingent consideration relates to the acquisitions of Elevaate Ltd. (“Elevaate”) and Ubimo Ltd. (“Ubimo”). The fair values of contingent consideration are based on the expected achievement of certain revenue targets as defined under the acquisition agreements and were estimated using an option pricing method with significant inputs that are not observable in the market, thus classified as a Level 3 instrument. The inputs included the expected achievement of certain financial metrics over the contingent consideration period, volatility and discount rate. The fair value of the contingent consideration is classified as a liability and is re-measured each reporting period. Refer to Note 6 for further details related to the acquisitions.
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The following table represents the change in the contingent consideration (in thousands):
 Three Months Ended March 31, 2022
 UbimoElevaate
 Level 3Level 3
Balance at the beginning of period$22,275 $ 
Change in fair value during the period  
Payments made during the period(22,275) 
Total$ $ 
 Three Months Ended March 31, 2021
 UbimoElevaate
 Level 3Level 3
Balance at the beginning of period$20,930 $8,524 
Change in fair value during the period238 47 
Payments made during the period  
Total$21,168 $8,571 
The Company recorded a charge of zero and $0.3 million during the three months ended March 31, 2022, and March 31, 2021, respectively, for the re-measurement of the fair values of contingent consideration related to acquisitions, as a component of operating expenses in the accompanying condensed consolidated statements of operations.
During the three months ended March 31, 2022, the Company paid $22.3 million related to Ubimo's achievement of financial metrics subject to contingent consideration during the measurement period ending December 31, 2021, and as a result, no liability existed as of March 31, 2022. Out of the total consideration paid, $5.7 million was originally measured and recorded on the acquisition date and $16.6 million was recorded subsequent to the acquisition date through changes in fair value of contingent consideration within the condensed consolidated statements of operations.
Fair Value Measurements of Other Financial Instruments
As of March 31, 2022 and December 31, 2021, the fair value of the Company’s 1.75% convertible senior notes due 2022 was $192.0 million and $193.8 million, respectively. The fair value was determined based on a quoted price of the convertible senior notes in an over-the-counter market on the last trading day of the reporting period. Accordingly, these convertible senior notes are classified within Level 2 in the fair value hierarchy. Refer to Note 8 for additional information related to the Company’s convertible debt.

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4. Allowance for Credit Losses  
The summary of activity in the allowance for credit losses is as follows (in thousands):
 Three Months Ended March 31,
 20222021
Balance at the beginning of period$2,500 $2,070 
Provision for expected credit losses120 193 
Write-offs charged against the allowance, net of recoveries(514)(316)
Balance at the end of period$2,106 $1,947 

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5. Balance Sheet Components
Property and Equipment, Net
Property and equipment consist of the following (in thousands):
 March 31,
2022
December 31,
2021
Software$58,263 $51,093 
Computer equipment23,472 23,696 
Leasehold improvements6,137 8,362 
Furniture and fixtures2,286 2,552 
Total90,158 85,703 
Accumulated depreciation and amortization(69,629)(68,052)
Projects in process1,316 5,009 
Total property and equipment, net$21,845 $22,660 
Depreciation and amortization expense related to property and equipment was $1.9 million and $2.0 million for the three months ended March 31, 2022 and 2021, respectively.
The Company capitalized internal use software development and enhancement costs of $2.5 million and $2.3 million during the three months ended March 31, 2022 and 2021, respectively. During the three months ended March 31, 2022 and 2021, the Company had $1.0 million and $1.1 million, respectively, in amortization expense related to internal use software, which is included in property and equipment depreciation and amortization expense, and recorded as cost of revenues. Once the software is placed into service, the asset is included in software within "property and equipment, net". The unamortized capitalized development costs were $13.2 million and $11.6 million as of March 31, 2022 and December 31, 2021, respectively.
Accrued Compensation and Benefits
Accrued compensation and benefits consist of the following (in thousands):
 March 31,
2022
December 31,
2021
Payroll and related expenses$4,591 $4,253 
Commissions3,146 5,838 
Bonus3,357 9,045 
Vacation1,147 1,087 
Total accrued compensation and benefits$12,241 $20,223 
 
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Other Current Liabilities  
Other current liabilities consist of the following (in thousands):
 March 31,
2022
December 31,
2021
Distribution fees$29,389 $46,313 
Operating lease liabilities5,424 4,935 
Traffic acquisition cost4,057 12,033 
Deferred cost related to a retailer agreement 8,000 
Rebate liability3,668 2,444 
Prefunded liability3,646 4,782 
Interest payable1,167 292 
Marketing expenses73 636 
Other10,585 15,844 
Total other current liabilities$58,009 $95,279 

6. Acquisitions
Acquisition of Ubimo
On November 19, 2019, the Company acquired all outstanding shares of Ubimo, a leading data and media activation company.
The total acquisition consideration of $20.7 million consisted of $15.0 million in cash and contingent consideration of up to $24.8 million payable in cash with an estimated fair value of $5.7 million as of the acquisition date. The contingent consideration payout was based on Ubimo achieving certain financial metrics between the date of the acquisition through December 31, 2021. The acquisition date fair value was determined using an option pricing model. As of December 31, 2021, the date that the contingent consideration period ended, Ubimo achieved certain financial metrics. During the three months ended March 31, 2022, the Company paid $24.7 million, of which $22.3 million related to contingent consideration and $2.4 million related to certain bonuses; and as a result, no liability existed as of March 31, 2022. Of the total $24.7 million that was paid, $5.7 million was classified within financing activity and the remaining $19.0 million was classified within operating activity on the Company's condensed consolidated statements of cash flows.
Acquisition of Elevaate
On October 26, 2018, the Company acquired all the outstanding shares of Elevaate, a sponsored search company for retail partners and CPG brands.
The total acquisition consideration of $13.3 million consisted of $7.2 million in cash and contingent consideration of up to $18.5 million payable in cash with an estimated fair value of $6.1 million as of the acquisition date. The contingent consideration payout was based on Elevaate achieving certain financial metrics between February 1, 2019 through January 31, 2021. The acquisition date fair value of the contingent consideration was determined by using an option pricing model. The fair value of the contingent consideration was re-measured every reporting period. As of January 31, 2021, the date that the contingent consideration period ended, Elevaate achieved certain financial metrics. During the year ended December 31, 2021, the Company paid $9.0 million, of which $8.6 million related to contingent consideration and $0.4 million related to certain bonuses; and, as a result, no liability existed as of December 31, 2021. Of the total $9.0 million that was paid, $6.1 million was classified within financing activity and the remaining $2.9 million was classified within operating activity on the Company's consolidated statements of cash flows.
 Each of these acquisitions were accounted for as a business combination. Accordingly, assets acquired and liabilities assumed were recorded at their estimated fair values as of the acquisition date when control was obtained. The Company expensed all transaction costs in the period in which they were incurred. The Company acquired various intangible assets resulting from these acquisitions, such as, customer relationships, vendor relationships, developed technologies and trade names. The fair value of the customer relationships was determined by using a
17


discounted cash flow model. The fair value of the vendor relationships was determined by using a cost approach. The fair value of developed technologies was determined by using the relief from royalty method or the with-and-without method. The fair value of trade names was determined by using the relief from royalty method. The excess of the consideration paid over the fair value of the net tangible assets and liabilities and identifiable intangible assets acquired was recorded as goodwill. The goodwill arising from the acquisitions are largely attributable to the synergies expected to be realized. None of the goodwill recorded from these acquisitions were deductible for income tax purposes.
For each of these transactions, the fair value of the consideration transferred and the assets acquired and liabilities assumed was determined by the Company and in doing so management engaged a third-party valuation specialist to measure the fair value of identifiable intangible assets and obligations related to deferred revenue and contingent consideration. The estimated fair value of the identifiable assets acquired and liabilities assumed in the relevant acquisition is based on management’s best estimates.
The following table summarizes the acquisition consideration and the related fair values of the assets acquired and liabilities assumed (in thousands):
 
 Purchase
Consideration
Net
Tangible
Assets
Acquired/
(Liabilities
Assumed)
Identifiable
Intangible
Assets
GoodwillGoodwill
Deductible
for Taxes
(1)
Acquisition
Related
Expenses
Ubimo$20,740 $384 $10,750 $9,606 Not Deductible$579 
Elevaate13,346 (60)3,781 9,625 Not Deductible549 
 $34,086 $324 $14,531 $19,231  $1,128 
(1)Expensed as general and administrative
The following sets forth each component of identifiable intangible assets acquired in connection with the acquisitions (in thousands):
 
 UbimoEstimated
Useful
Life
(in Years)
ElevaateEstimated
Useful
Life
(in Years)
Developed technologies$7,100 4.0$3,307 5.0
Customer relationships3,400 2.0379 5.0
Trade names250 4.095 3.0
Total identifiable intangible assets$10,750 $3,781 

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7. Intangible Assets
 
The following table summarizes the gross carrying amount and accumulated amortization for the intangible assets (in thousands):  
 
 March 31, 2022
 GrossAccumulated
Amortization
NetWeighted
Average
Amortization
Period
(Years)
Media service rights$35,582 $(33,390)$2,192 0.4
Developed technologies27,170 (23,035)4,135 1.5
Promotion service rights24,426 (23,796)630 0.3
Customer relationships22,690 (19,665)3,025 2.1
Data access rights10,206 (10,206) 0.0
Domain names5,948 (5,596)352 0.0
Trade names2,823 (2,823) 0.0
Vendor relationships2,510 (2,510) 0.0
Patents975 (954)21 0.6
Registered users420 (420) 0.0
 $132,750 $(122,395)$10,355 1.4
 December 31, 2021
 GrossAccumulated
Amortization
NetWeighted
Average
Amortization
Period
(Years)
Media service rights$35,582 $(32,282)$3,300 0.7
Developed technologies27,170 (22,235)4,935 1.7
Promotion service rights24,426 (23,419)1,007 0.6
Customer relationships22,690 (19,311)3,379 2.4
Data access rights10,206 (10,206) 0.0
Domain names5,948 (5,596)352 0.0
Trade names2,823 (2,823) 0.0
Vendor relationships2,510 (2,510) 0.0
Patents975 (945)30 0.8
Registered users420 (420) 0.0
 $132,750 $(119,747)$13,003 1.5
As of March 31, 2022 and December 31, 2021, the Company has a domain name with a gross value of $0.4 million with an indefinite useful life that is not subject to amortization.
Intangible assets subject to amortization are amortized over their useful lives as shown in the table above. Amortization expense related to intangible assets subject to amortization was $2.6 million and $7.4 million during the three months ended March 31, 2022 and 2021, respectively. Estimated future amortization expense related to intangible assets as of March 31, 2022 is as follows (in thousands):    
 
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Total
2022, remaining nine months$5,860 
20233,583 
2024559 
2025 
2026 
2027 and beyond 
Total estimated amortization expense$10,002 
 As of March 31, 2022, the Company performed an analysis of the impact of recent events, including business and market disruption caused by COVID-19, on the fair values of its intangible assets, and determined that an impairment does not exist. However, there can be no assurance that intangible assets will not be impaired in future periods, and the Company will continue to monitor its operating results, cash flow forecasts and challenges from declines in current market conditions, as well as impacts of COVID-19, for future determinations regarding these intangible assets.

8. Debt Obligations
2017 Convertible Senior Notes
In November 2017, the Company issued and sold $200.0 million aggregate principal amount of 1.75% convertible senior notes due December 2022 in a private placement to qualified institutional buyers pursuant to Rule 144A under the Securities Act of 1933, as amended (the “notes”). The notes are unsecured obligations of the Company and bear interest at a fixed rate of 1.75% per annum, payable semi-annually in arrears on June 1 and December 1 of each year, commencing on June 1, 2018. The total net proceeds from the debt offering, after deducting transaction costs, were approximately $193.8 million.  
The conversion rate for the notes is initially 57.6037 shares of the Company’s common stock per $1,000 principal amount of notes, which is equivalent to an initial conversion price of approximately $17.36 per share of common stock, subject to adjustment upon the occurrence of specified events.
Holders of the notes may convert their notes at their option at any time prior to the close of business on the business day immediately preceding September 1, 2022, only under the following circumstances: (1) during any calendar quarter commencing after the calendar quarter ending on March 31, 2018 (and only during such calendar quarter), if the last reported sale price of the Company’s common stock for at least 20 trading days (whether or not consecutive) during a period of 30 consecutive trading days ending on, and including, the last trading day of the immediately preceding calendar quarter is greater than or equal to 130% of the conversion price on each applicable trading day; (2) during the five-business day period after any five consecutive trading day period (the “measurement period”) in which the trading price per $1,000 principal amount of notes for each trading day of the measurement period was less than 98% of the product of the last reported sale price of the Company’s common stock and the conversion rate for the notes on each such trading day; (3) if the Company calls any or all of the notes for redemption, at any time prior to the close of business on the scheduled trading day immediately preceding the redemption date; or (4) upon the occurrence of specified corporate events. On or after September 1, 2022, holders may convert all or any portion of their notes at any time prior to the close of business on the scheduled trading day immediately preceding the maturity date regardless of the foregoing conditions. Upon conversion, the Company will pay or deliver, as the case may be, cash, shares of its common stock or a combination of cash and shares of its common stock, at its election. The Company intends to settle the principal amount of the notes with cash.
The Company may not redeem the notes prior to December 5, 2020. It may redeem for cash all or any portion of the notes, at its option, on or after December 5, 2020 if the last reported sale price of its common stock has been at least 130% of the conversion price then in effect for at least 20 trading days (whether or not consecutive) during any 30 consecutive trading day period (including the last trading day of such period) ending not more than three trading days preceding the date on which it provides notice of redemption at a redemption price equal to 100% of the principal amount of the notes to be redeemed, plus accrued and unpaid interest to, but excluding, the redemption date. No sinking fund is provided for the notes.
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If the Company undergoes a fundamental change prior to the maturity date, holders may require the Company to repurchase for cash all or any portion of their notes at a fundamental change repurchase price equal to 100% of the principal amount of the notes to be repurchased, plus accrued and unpaid interest to, but excluding, the fundamental change repurchase date.
In accounting for the issuance of the notes, prior to the adoption of ASU 2020-06 on January 1, 2022, the Company separated the notes into liability and equity components. The carrying amount of the liability component of $149.3 million was calculated by measuring the fair value of a similar debt instrument that does not have an associated convertible feature. The carrying amount of the equity component of $50.7 million, representing the conversion option, was determined by deducting the fair value of the liability component from the par value of the notes. The excess of the principal amount of the liability component over its carrying amount (“debt discount”) was amortized to interest expense over the term of the notes at an effective interest rate of 5.8%.
Prior to the adoption of ASU 2020-06 on January 1, 2022, the Company allocated the total debt issuance costs incurred of $6.2 million to the liability and equity components of the notes in proportion to the respective values. Issuance costs attributable to the liability component of $4.6 million were amortized to interest expense using the effective interest method over the contractual terms of the notes. Issuance costs attributable to the equity component of $1.6 million were netted with the equity component in additional paid-in capital.
Subsequent to the adoption of ASU 2020-06 on January 1, 2022, which the Company elected to adopt using the modified retrospective method, the Company removed the impact of recognizing the equity component of the notes (at issuance and subsequent accounting impact of additional interest expense from debt discount amortization). The cumulative effect of the accounting change as of January 1, 2022 was an increase to the carrying amount of the convertible notes of $10.4 million, an increase to beginning retained earnings of $38.7 million, and a reduction to additional paid-in capital of $49.1 million.
The net carrying amount of the liability component of the notes recorded in convertible senior notes, net on the condensed consolidated balance sheets was as follows (in thousands):
March 31,
2022
December 31,
2021
Principal$200,000 $200,000 
Unamortized debt discount (10,358)
Unamortized debt issuance costs(623)(856)
Net carrying amount of the liability component$199,377 $188,786 
The following table sets forth the interest expense related to the notes recognized in interest expense on the condensed consolidated statements of operations (in thousands):
 Three Months Ended March 31,
 20222021
Contractual interest expense$875 $875 
Amortization of debt discount 2,614 
Amortization of debt issuance costs233 232 
Total interest expense related to the Notes$1,108 $3,721 
ABL Credit Agreement
On November 17, 2021, the Company, as borrower, and certain subsidiaries of the Company as guarantors, entered into a Loan, Guaranty and Security Agreement (the "ABL Credit Agreement") with Bank of America, N.A., a national banking association, and certain other financial institutions from time to time that may become parties to the agreement (the "Lenders").
The ABL Credit Agreement provides for an asset-based revolving credit facility (the "ABL Facility") for available borrowings up to $100.0 million with the actual amount dependent on a "borrowing base" number consisting of the sum of various categories of eligible accounts receivable (the lesser of such number and $100.0 million, the "Line Cap"). The ABL Facility matures and all outstanding amounts, if any, become due and
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payable on November 17, 2026 ("fixed ABL maturity date"), except that the maturity date shall be accelerated to the date that is 91 days prior to the maturity of the Company’s outstanding 1.75% Convertible Senior Notes due 2022 (the “Notes”), unless (i) the Notes are repaid in full or converted to equity at least 91 days prior to the maturity of the Notes, (ii) the Notes are refinanced and/or extended to a maturity date that is at least 91 days after the fixed ABL maturity date, or (iii) during the 91 day period prior, the Company has sufficient cash to repay the Notes in full, the Company meets a certain liquidity test after giving pro forma effect to the repayment to the Notes, and there is no event of default under the ABL Facility. The commitments of the Lenders under the ABL Facility will terminate and outstanding borrowings under the ABL Facility will mature on the fifth anniversary of the closing of the ABL Facility or sooner as described above.
The ABL Credit Agreement includes conditions to borrowings, representations and warranties, affirmative and negative covenants and events of default customary for financings of this type and size. In the event of default, all obligations will be automatically due and payable and all commitments will terminate. The ABL Credit Agreement requires the Company to maintain a minimum fixed charge coverage ratio at all times. The ABL Credit Agreement limits the Company’s and its subsidiaries’ ability to, among other things, incur additional indebtedness, create liens on any assets, pay dividends or make certain restricted payments, consummate certain assets sales and merge, consolidate and/or sell or dispose of certain assets. The ABL Credit Agreement also requires that if the Company's Excess Availability (defined as the Line Cap less borrowed amounts or issued letters of credit) is less than the greater of (i) the Line Cap and (ii) $10.0 million, the Company will maintain a fixed coverage charge ratio of at least 1.00 to 1.00. In addition, the ABL Credit Agreement includes customary events of default, which may require the Company to pay an additional 2% interest on the outstanding loans under the ABL Credit Agreement. As set forth in the ABL Credit Agreement, borrowings under the ABL Facility initially will bear interest at a rate equal to, for BSBY Loans, the BSBY Rate plus the Applicable Margin or, for Base Rate Loans, the Base Rate plus the Applicable Margin. The Applicable Margin is determined based on average daily borrowing availability.
As of March 31, 2022, the borrowing base was $60.0 million. During the three months ended March 31, 2022, there were no borrowings or repayments under the ABL Facility.
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9. Stock-based Compensation
2013 Equity Incentive Plan
In October 2013, the Company adopted the 2013 Equity Incentive Plan (the “2013 Plan”), which became effective in March 2014 and serves as the successor to the Company’s 2006 Stock Plan (the “2006 Plan”). Pursuant to the 2013 Plan, 4,000,000 shares of common stock were initially reserved for grant, plus (1) any shares that were reserved and available for issuance under the 2006 Plan at the time the 2013 Plan became effective, (2) any shares that become available upon forfeiture or repurchase by the Company under the 2006 Plan and (3) any shares added to the 2013 Plan pursuant to the next paragraph.
Under the 2013 Plan, the Company may grant stock options, stock appreciation rights, restricted stock and restricted stock units (“RSUs”), performance-based stock and units to employees, directors and consultants. The shares available will be increased at the beginning of each year by the lesser of (i) 4% of outstanding common stock on the last day of the immediately preceding year, or (ii) such number determined by the Board of Directors and subject to additional restrictions relating to the maximum number of shares issuable pursuant to incentive stock options. Under the 2013 Plan, both the ISOs and NSOs are granted at a price per share not less than 100% of the fair market value on the effective date of the grant. The Board of Directors determines the vesting period for each option award on the grant date, and the options generally expire 10 years from the grant date or such shorter term as may be determined by the Board of Directors.
Stock Options
There were no option grants during the three months ended March 31, 2022 and 2021.
Restricted Stock Units and Performance-Based Restricted Stock Units
The fair value of RSUs equals the market value of the Company’s common stock on the date of the grant. The RSUs are excluded from issued and outstanding shares until they are vested.
On March 1, 2021, the Company granted a total of 938,831 performance-based restricted stock units (“2021 PSU Awards”), under the 2013 Equity Incentive Plan, to certain executive leaders with a grant date fair value of $13.28. The PSU Award represents the right to receive shares of the Company’s common stock upon meeting certain vesting conditions. The PSU Awards will vest in three years subject to the achievement of certain operating performance goals, stock performance goals and continued employment. The fair value of the PSU Award was measured using a Monte Carlo simulation. As of March 31, 2022, the Company performed an assessment and determined that the likelihood of achievement of certain operating performance goals was not deemed probable. As such, during the three months ended March 31, 2022, no compensation expense was recognized in the Company's condensed consolidated financial statements related to the 2021 PSU Awards. During the three months ended March 31, 2021, the Company recorded $0.3 million in compensation expense in its condensed consolidated financial statements related to the 2021 PSU Awards.
On March 1, 2022, (“2022 Grant Date”), the Company granted a total of 1,171,494 performance-based restricted stock units (“2022 PSU Awards”), under the 2013 Equity Incentive Plan, to certain executive leaders with a grant date fair value of $4.82, $3.87 and $3.14, for each respective tranche. The PSU Award represents the right to receive shares of the Company’s common stock upon meeting certain vesting conditions. The PSU Awards vest subject to the achievement of stock performance goals and the awardee being an employee at the time of vesting. Any unvested portion of the PSU award will be forfeited on the third anniversary of the 2022 Grant Date. The fair value of the PSU Award was measured using a Monte Carlo simulation. During the three months ended March 31, 2022, the expense recognized in its condensed consolidated financial statements related to the 2022 PSU Awards was $0.3 million.
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A summary of the Company’s stock option and RSU, including PSU award activity under the 2013 Plan is as follows:
  RSUs OutstandingOptions Outstanding
 Shares
Available
for Grant
Number of
Shares
Weighted
Average
Grant
Date Fair
Value
Number of
Shares
Weighted
Average
Exercise
Price
Weighted
Average
Remaining
Contractual
Term (Years)
Aggregate
Intrinsic
Value
(in thousands)
Balance at December 31, 202110,168,061 5,381,039 $10.78 6,897,993 $11.32 4.89$1,596 
Increase in shares authorized3,791,177 — — — — — — 
Options granted— — — — — — — 
Options exercised— — — — — — — 
Options canceled or expired200,000 — — (200,000)$5.33 — — 
RSUs granted(2,790,964)2,790,964 $5.42 — — — — 
RSUs vested— (432,366)$10.36 — — — — 
RSUs canceled or expired210,656 (210,656)$10.48 — — — — 
RSUs vested and withheld for taxes142,909 — — — — — — 
Balance as of March 31, 202211,721,839 7,528,981 $8.83 6,697,993 $11.50 4.79$734 
Vested and exercisable as of March 31, 20225,535,520 $12.15 4.19$734 
The aggregate intrinsic value disclosed in the table above is based on the difference between the exercise price of the options and the fair value of the Company’s common stock.
The aggregate total fair value of options vested was $0.9 million and $1.4 million during the three months ended March 31, 2022 and 2021, respectively.
Employee Stock Purchase Plan
The Company’s Board of Directors adopted the 2013 Employee Stock Purchase Plan (“ESPP”), which became effective in March 2014. Eligible employees can enroll and elect to contribute up to 15% of their base compensation through payroll withholdings in each offering period which is six months in duration, subject to certain limitations. The purchase price of the stock is the lower of 85% of the fair market value on (a) the first day of the offering period or (b) the purchase date.
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The fair value of the option feature is estimated using the Black-Scholes model for the period presented based on the following assumptions:
 
 Three Months Ended March 31,
 20222021
Expected life (in years)0.50.5
Risk-free interest rate0.07%0.12%
Volatility60%60%
Dividend yield
 
As of March 31, 2022, a total of 2,401,697 shares of common stock were issued under the ESPP since inception of the plan. As of March 31, 2022, a total of 1,998,303 shares are available for issuance under the ESPP.
Stock-based Compensation Expense
The following table sets forth the total stock-based compensation expense resulting from stock options, RSUs and ESPP shares included in the Company’s condensed consolidated statements of operations (in thousands):

 Three Months Ended March 31,
 20222021
Cost of revenues$532 $423 
Sales and marketing891 1,255 
Research and development967 972 
General and administrative3,352 3,194 
Total stock-based compensation expense$5,742 $5,844 
 
As of March 31, 2022, there was $53.7 million of unrecognized stock-based compensation expense, of which $4.6 million is related to stock options and ESPP shares, and $49.1 million is related to RSUs. The total unrecognized stock-based compensation expense related to stock options and ESPP shares as of March 31, 2022 will be amortized over a weighted-average period of 1.58 years. The total unrecognized stock-based compensation expense related to RSUs as of March 31, 2022 will be amortized over a weighted-average period of 2.68 years.
During the three months ended March 31, 2022 and 2021, the Company capitalized $0.2 million and $0.1 million, respectively, of stock-based compensation expense in projects in process as part of property and equipment, net on the accompanying condensed consolidated balance sheets.
Common Stock Repurchases
The Board of Directors previously approved programs for the Company to repurchase shares of its common stock. In February 2021, the Company’s Board of Directors authorized the Company to repurchase up to $50.0 million of its common stock from February 2021 through February 2022 (the "February 2021 Program"). During the three months ended March 31, 2022, the Company did not repurchase any shares of its common stock, nor did the Company repurchase any of its common stock thereafter. The Company terminated the February 2021 Program prior to its expiration.
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10. Income Taxes
The Company recorded a provision for income taxes of $0.2 million for each respective period during the three months ended March 31, 2022 and 2021. The provision for income taxes was primarily attributable to the Company’s foreign operations, amortization of tax deductible goodwill from prior acquisitions, and state taxes.
11. Net Loss Per Share
The computation of the Company’s basic and diluted net loss per share is as follows (in thousands, except per share data):
 Three Months Ended March 31,
 20222021
Net loss$(26,306)$(13,414)
Weighted-average number of common shares
   used in computing net loss per share, basic
   and diluted
94,924 92,413 
Net loss per share, basic and diluted$(0.28)$(0.15)
The outstanding common equivalent shares excluded from the computation of the diluted net loss per share for the periods presented because including them would have been antidilutive are as follows (in thousands):
 Three
Months Ended March 31,
 20222021
Stock options and ESPP6,858 7,127 
Restricted stock units7,529 5,435 
Shares related to convertible senior notes11,521 11,521 
 25,908 24,083 

12. Leases
 
The Company has entered into operating leases primarily for office facilities. These leases have terms which typically range from 1 year to 10 years, and often include options to renew. These renewal terms can extend the lease term up to 6 years, and are included in the lease term when it is reasonably certain that the Company will exercise the option. These operating leases are included as operating lease right-of-use assets on the condensed consolidated balance sheets, and represent the Company’s right to use the underlying asset for the lease term. The present value of the Company’s obligation to make lease payments are included in other current liabilities and other non-current liabilities on the condensed consolidated balance sheets.
The Company has entered into short-term leases primarily for office facilities with an initial term of twelve months or less, and a professional sports team suite with a 20-year term, which it uses for sales and marketing purposes. The effective lease term for the professional sports team suite is based on the cumulative days available for use throughout the 20-year contractual term, which is less than twelve months and therefore is classified as a short-term lease. As of March 31, 2022, the Company’s lease commitment of $5.4 million, relating to the professional sports team suite, expires in 2034, and does not reflect short-term lease costs. These leases are not recorded on the Company's condensed consolidated balance sheet due to the accounting policy election as discussed under Note 2 to the condensed consolidated financial statements.
 All operating lease expense is recognized on a straight-line basis over the lease term. During the three months ended March 31, 2022 and 2021, the Company recognized $1.5 million in total lease costs during each respective period, which is comprised of $1.4 million and $1.3 million, respectively, in operating lease costs for right-
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of-use assets and $0.1 million and $0.2 million, respectively, in short-term lease costs related to short-term operating leases.
 Because the rate implicit in each lease is not readily determinable, the Company uses its incremental borrowing rate to determine the present value of the lease payments. The Company has certain contracts for office facilities which may contain lease and non-lease components which it has elected to be treated as a single lease component due to the accounting policy election as discussed under Note 2 to the condensed consolidated financial statements.