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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

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

FOR THE QUARTERLY PERIOD ENDED March 31, 2024

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: 001-40464

 

img141509622_0.jpg 

ZETA GLOBAL HOLDINGS CORP.

(Exact name of registrant as specified in its charter)

Delaware

80-0814458

(State or other jurisdiction of

incorporation or organization)

(I.R.S. Employer

Identification Number)

3 Park Ave, 33rd Floor

New York, NY 10016

(Address of principal executive offices) (Zip Code)

(212) 967-5055

(Registrant’s telephone number, including area code)

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, par value $0.001 per share

ZETA

The 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

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 30, 2024, 189,734,584 shares of the registrant’s Class A common stock and 29,055,489 shares of registrant’s Class B common stock were outstanding.

 


 

ZETA GLOBAL HOLDINGS CORP.

Quarterly Report on Form 10-Q

For the Quarterly Period Ended March 31, 2024

TABLE OF CONTENTS

Page

PART I - FINANCIAL INFORMATION

Item 1.

Financial Statements

3

 

Condensed Unaudited Consolidated Balance Sheets as of March 31, 2024 and December 31, 2023

3

 

Condensed Unaudited Consolidated Statements of Operations and Comprehensive Loss for the Three Months Ended March 31, 2024 and 2023

4

 

Condensed Unaudited Consolidated Statements of Stockholders’ Equity for the Three Months Ended March 31, 2024 and 2023

5

 

Condensed Unaudited Consolidated Statements of Cash Flows for the Three Months Ended March 31, 2024 and 2023

7

 

Notes to Condensed Unaudited Consolidated Financial Statements

8

 

Item 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

20

 

Item 3.

Quantitative and Qualitative Disclosures About Market Risk

30

 

Item 4.

Controls and Procedures

31

 

PART II - OTHER INFORMATION

 

 

Item 1.

Legal Proceedings

32

 

Item 1A.

Risk Factors

32

 

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

32

 

Item 3.

Defaults Upon Senior Securities

32

 

Item 4.

Mine Safety Disclosures

32

 

Item 5.

Other Information

32

 

Item 6.

Exhibits

33

 

Signatures

34

 

i


 

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), which statements involve substantial risks and uncertainties. All statements made in this Quarterly Report on Form 10-Q that are not statements of historical fact, including statements about our beliefs and expectations and regarding future events or our future results of operations, financial condition, business, strategies, financial needs, and the plans and objectives of management, are forward-looking statements and should be evaluated as such. These statements often include words such as “anticipate,” “expect,” “suggests,” “plan,” “believe,” “intend,” “estimates,” “targets,” “projects,” “should,” “could,” “would,” “may,” “will,” “forecast” and other similar expressions or the negative of those terms. We base these forward-looking statements on our current expectations, plans and assumptions that we have made in light of our experience in the industry, as well as our perceptions of historical trends, current conditions, expected future developments and other factors we believe are appropriate under the circumstances at such time. As you read this Quarterly Report on Form 10-Q, you should understand that these statements are not guarantees of future performance or results. The forward-looking statements are subject to and involve risks, uncertainties and assumptions, and you should not place undue reliance on these forward-looking statements. Although we believe that these forward-looking statements are based on reasonable assumptions at the time they are made, you should be aware that many factors could affect our business, results of operations and financial condition and could cause actual results to differ materially from those expressed in the forward-looking statements. The following important factors, along with the factors discussed in “Risk Factors” in the Company’s Annual Report on Form 10-K for the year ended December 31, 2023 (“2023 Annual Report”), may materially affect such forward-looking statements:

• Our success and revenue growth depends on our ability to add and retain scaled customers and convert our scaled customers into super-scaled customers;

• We often have long sales cycles, which can result in significant time between initial contact with a potential customer and execution of a customer agreement, making it difficult to project when, if at all, we will generate revenue from those customers;

• We may experience fluctuations in our operating results, which could make our future operating results difficult to predict;

• If we do not manage our growth effectively, the quality of our platform and solutions may suffer, and our business, operating results and financial condition may be adversely affected;

• Our industry is intensely competitive, and if we do not effectively compete against current and future competitors or fail to innovate and make the right investment decisions in our product offerings and platform, our business, operating results and financial condition could be harmed;

• Future acquisitions or strategic investments could be difficult to identify and integrate, divert the attention of management and disrupt our business, dilute stockholder value and adversely affect our business, operating results and financial condition;

• The technology industry is subject to increasing scrutiny that could result in U.S. federal or state government actions that could negatively affect our business;

• Our business and the effectiveness of our platform depends on our ability to collect and use data online. New consumer tools, regulatory restrictions and potential changes to web browsers and mobile operating systems all threaten our ability to collect such data, which could harm our operating results and financial condition and adversely affect the demand for our products and solutions;

• Actual or perceived failures to comply with applicable data protection, privacy and security laws, regulations, standards and other requirements could adversely affect our business, results of operations and financial condition;

• Any unfavorable publicity or negative public perception of current data collection practices could result in additional regulations which may impact the effectiveness of our data cloud and platform;

• A significant inadvertent disclosure or breach of confidential and/or personal information we process, or a security breach of our or our customers’, suppliers’ or other partners’ IT Systems could be detrimental to our business, reputation, financial performance and results of operations;

• We depend on third-party data centers, systems and technologies to operate our business, the disruption of which could adversely affect our business, operating results and financial condition;

• If we fail to detect or prevent fraud or malware intrusion on our platform, devices, or systems, or into the systems or devices of our customers and their consumers, publishers could lose confidence in our platform, and we could face legal claims and regulatory investigations, any of which could adversely affect our business, operating results and financial condition;

1


 

• The standards that private entities and inbox service providers adopt in the future to regulate the use and delivery of email may interfere with the effectiveness of our platform and our ability to conduct business;

• Any actual or perceived failure to comply with evolving regulatory frameworks around the development and use of artificial intelligence could adversely affect our business, results of operations, and financial condition;

• Catastrophic events such as pandemics, earthquakes, flooding, droughts, fire and power outages, and business and operational interruption by man-made problems such as war, conflicts and acts of terrorism; and

• Other factors discussed in other sections of this Quarterly Report on Form 10-Q, including the section titled “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations.”

You should not place undue reliance on our forward-looking statements and you should not rely on forward-looking statements as predictions of future events. The results, events, and circumstances reflected in the forward-looking statements may not be achieved or occur, and actual results, events, or circumstances could differ materially from those described in the forward-looking statements. The forward-looking statements made in this Quarterly Report on Form 10-Q should not be construed by you to be exhaustive and speak only as of the date of this report. We undertake no obligation to update any forward-looking statements made in this report to reflect events or circumstances after the date of this report or to reflect new information or the occurrence of unanticipated events, except as required by law. If we update one or more forward-looking statements, no inference should be drawn that we will make additional updates with respect to those or other forward-looking statements.

Unless the context otherwise requires, references in this Quarterly Report on Form 10-Q to “Zeta,” “Zeta Global,” “we,” “us,” “our” or “the Company” refer to Zeta Global Holdings Corp.

Our Website and Availability of SEC Reports and Other Information

The Company maintains a website at the following address: https://zetaglobal.com. The information on the Company’s website is not incorporated by reference in, or otherwise to be regarded as part of, this Quarterly Report on Form 10-Q.

We make available on or through our website certain reports and amendments to those reports we file with or furnish to the Securities and Exchange Commission (“SEC”) pursuant to Section 13(a) or 15(d) of the Exchange Act. These include our annual reports on Form 10-K, our quarterly reports on Form 10-Q, and our current reports on Form 8-K. We make this information available on our website free of charge as soon as reasonably practicable after we electronically file the information with, or furnish it to, the SEC.

Investors and others should note that we routinely announce material information to investors and the marketplace using SEC filings, press releases, public conference calls, webcasts, and the Zeta Global Investor Relations website at https://investors.zetaglobal.com. We use these channels as well as social media channels (e.g., the Zeta Facebook account (facebook.com/ZetaGlobal); the Zeta Instagram account (instagram.com/zetaglobal); the Zeta X account (twitter.com/zetaglobal); and the Zeta LinkedIn account (linkedin.com/company/zetaglobal)) as a means of disclosing information about our business to our customers, colleagues, investors, and the public. While not all of the information that we post to the Zeta Global Investor Relations website or on our social media channels is of a material nature, some information could be deemed to be material. Accordingly, we encourage investors, the media, and others interested in Zeta to review the information that we share on the Zeta Global Investor Relations website and on our social media channels. The information on the Zeta Global Investor Relations website and the Company’s social media channels is not incorporated by reference in, or otherwise to be regarded as part of, this Quarterly Report on Form 10-Q.

2


 

PART I - FINANCIAL INFORMATION

Item 1. Financial Statements

Condensed Unaudited Consolidated Balance Sheets

(In thousands, except shares, per share and par values)

 

 

As of

 

 

March 31, 2024

 

 

December 31, 2023

 

Assets

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

Cash and cash equivalents

 

$

141,649

 

 

$

131,732

 

Accounts receivable, net of allowance of $4,107 and $3,564 as of March 31, 2024 and December 31, 2023, respectively

 

 

160,591

 

 

 

170,131

 

Prepaid expenses

 

 

7,394

 

 

 

6,269

 

Other current assets

 

 

1,283

 

 

 

1,622

 

Total current assets

 

$

310,917

 

 

$

309,754

 

Non-current assets:

 

 

 

 

 

 

Property and equipment, net

 

$

8,117

 

 

$

7,452

 

Website and software development costs, net

 

 

31,119

 

 

 

32,124

 

Right-to-use asset - operating leases, net

 

 

7,208

 

 

 

6,603

 

Intangible assets, net

 

 

46,497

 

 

 

48,781

 

Goodwill

 

 

140,903

 

 

 

140,905

 

Deferred tax assets, net

 

 

748

 

 

 

728

 

Other non-current assets

 

 

4,783

 

 

 

4,367

 

Total non-current assets

 

$

239,375

 

 

$

240,960

 

Total assets

 

$

550,292

 

 

$

550,714

 

Liabilities and Stockholders’ Equity

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

Accounts payable

 

$

53,360

 

 

$

63,572

 

Accrued expenses

 

 

83,533

 

 

 

85,455

 

Acquisition-related liabilities

 

 

15,515

 

 

 

17,234

 

Deferred revenue

 

 

4,455

 

 

 

3,301

 

Other current liabilities

 

 

7,564

 

 

 

6,823

 

Total current liabilities

 

$

164,427

 

 

$

176,385

 

Non-current liabilities:

 

 

 

 

 

 

Long-term borrowings

 

$

184,249

 

 

$

184,147

 

Acquisition-related liabilities

 

 

3,110

 

 

 

3,060

 

Other non-current liabilities

 

 

6,905

 

 

 

6,602

 

Total non-current liabilities

 

$

194,264

 

 

$

193,809

 

Total liabilities

 

$

358,691

 

 

$

370,194

 

Commitments and contingencies (See Note 8)

 

 

 

 

 

 

Stockholders’ equity:

 

 

 

 

 

 

Class A common stock $ 0.001 per share par value, up to 3,750,000,000 shares authorized, 189,623,112 and 188,631,432 shares issued and outstanding as of March 31, 2024 and December 31, 2023, respectively

 

$

190

 

 

$

189

 

Class B common stock $ 0.001 per share par value, up to 50,000,000 shares authorized, 29,055,489 shares issued and outstanding as of March 31, 2024 and December 31, 2023

 

 

29

 

 

 

29

 

Additional paid-in capital

 

 

1,191,545

 

 

 

1,140,849

 

Accumulated deficit

 

 

(998,103

)

 

 

(958,537

)

Accumulated other comprehensive loss

 

 

(2,060

)

 

 

(2,010

)

Total stockholders’ equity

 

$

191,601

 

 

$

180,520

 

Total liabilities and stockholders' equity

 

$

550,292

 

 

$

550,714

 

 

See accompanying notes to condensed unaudited consolidated financial statements.

3


 

Condensed Unaudited Consolidated Statements of Operations and Comprehensive Loss

(In thousands, except share and per share amounts)

 

 

Three months ended March 31,

 

 

2024

 

 

2023

 

Revenues

 

$

194,947

 

 

$

157,602

 

Operating expenses:

 

 

 

 

 

 

Cost of revenues (excluding depreciation and amortization)

 

 

76,873

 

 

 

54,350

 

General and administrative expenses

 

 

48,806

 

 

 

52,601

 

Selling and marketing expenses

 

 

71,415

 

 

 

72,549

 

Research and development expenses

 

 

19,986

 

 

 

18,519

 

Depreciation and amortization

 

 

13,741

 

 

 

11,825

 

Acquisition-related expenses

 

 

 

 

 

203

 

Total operating expenses

 

$

230,821

 

 

$

210,047

 

Loss from operations

 

 

(35,874

)

 

 

(52,445

)

Interest expense

 

 

2,625

 

 

 

2,448

 

Other expenses

 

 

671

 

 

 

1,864

 

Total other expenses

 

$

3,296

 

 

$

4,312

 

Loss before income taxes

 

 

(39,170

)

 

 

(56,757

)

Income tax provision

 

 

396

 

 

 

198

 

Net loss

 

$

(39,566

)

 

$

(56,955

)

Other comprehensive loss / (income):

 

 

 

 

 

 

Foreign currency translation adjustment

 

 

50

 

 

 

(147

)

Total comprehensive loss

 

$

(39,616

)

 

$

(56,808

)

Net loss per share

 

 

 

 

 

 

Net loss available to common stockholders

 

$

(39,566

)

 

$

(56,955

)

Basic loss per share

 

$

(0.23

)

 

$

(0.38

)

Diluted loss per share

 

$

(0.23

)

 

$

(0.38

)

Weighted average number of shares used to compute net loss per share

 

 

 

 

 

 

Basic

 

 

171,234,353

 

 

 

150,045,840

 

Diluted

 

 

171,234,353

 

 

 

150,045,840

 

 

The Company recorded stock-based compensation under respective lines of the above condensed unaudited consolidated statements of operations and comprehensive loss:

 

Three months ended March 31,

 

 

2024

 

 

2023

 

Cost of revenues (excluding depreciation and amortization)

 

$

271

 

 

$

858

 

General and administrative expenses

 

 

18,899

 

 

 

24,182

 

Selling and marketing expenses

 

 

26,550

 

 

 

33,036

 

Research and development expenses

 

 

6,918

 

 

 

6,386

 

Total

 

$

52,638

 

 

$

64,462

 

 

See accompanying notes to condensed unaudited consolidated financial statements.

4


 

Condensed Unaudited Consolidated Statements of Stockholders’ Equity

(In thousands, except shares)

 

 

 

Class A common stock

 

Class B common stock

 

 

 

 

 

 

 

 

 

Shares

 

Amount

 

Shares

 

Amount

 

Additional Paid-in Capital

 

Accumulated Deficit

 

Accumulated Other Comprehensive Loss

 

Total

Balance as of January 1, 20241

 

188,631,432

 

$189

 

29,055,489

 

$29

 

$1,140,849

 

$(958,537)

 

$(2,010)

 

$180,520

Restricted stock grants

 

1,420,286

 

1

 

 

 

(1)

 

 

 

Shares repurchased

 

(324,753)

 

 

 

 

(3,466)

 

 

 

(3,466)

Restricted stock forfeitures

 

(331,160)

 

 

 

 

 

 

 

Options exercised

 

97,158

 

 

 

 

434

 

 

 

434

Stock-based compensation

 

 

 

 

 

53,729

 

 

 

53,729

Restricted stock units vesting

 

130,149

 

 

 

 

 

 

 

Foreign currency translation adjustment

 

 

 

 

 

 

 

(50)

 

(50)

Net loss

 

 

 

 

 

 

(39,566)

 

 

(39,566)

Balance as of March 31, 20242

 

189,623,112

 

$190

 

29,055,489

 

$29

 

$1,191,545

 

$(998,103)

 

$(2,060)

 

$191,601

 

1. Includes 150,989,571 outstanding Class A common stock, 17,886,352 outstanding Class B common stock, 37,641,861 unvested Class A restricted stock and 11,169,137 unvested Class B restricted stock.

2. Includes 156,444,731 outstanding Class A common stock, 18,301,427 outstanding Class B common stock, 33,178,381 unvested Class A restricted stock and 10,754,062 unvested Class B restricted stock.

 

 

5


 

 

 

Class A common stock

 

Class B common stock

 

 

 

 

 

 

 

 

 

Shares

 

Amount

 

Shares

 

Amount

 

Additional Paid-in Capital

 

Accumulated Deficit

 

Accumulated Other Comprehensive Loss

 

Total

Balance as of January 1, 20233

 

175,266,917

 

$175

 

32,099,302

 

$32

 

$900,924

 

$(771,056)

 

$(2,045)

 

$128,030

Restricted stock grants

 

814,177

 

1

 

 

 

(1)

 

 

 

Shares repurchased

 

(329,474)

 

 

(325,923)

 

 

(6,551)

 

 

 

(6,551)

Restricted stock forfeitures

 

(208,969)

 

 

 

 

 

 

 

Class B common stock transferred to Class A common stock

 

50,000

 

 

(50,000)

 

 

 

 

 

Options exercised

 

8,500

 

 

 

 

41

 

 

 

41

Stock-based compensation

 

 

 

 

 

65,214

 

 

 

65,214

Restricted stock units vesting

 

123,241

 

 

 

 

 

 

 

Foreign currency translation adjustment

 

 

 

 

 

 

 

147

 

147

Net loss

 

 

 

 

 

 

(56,955)

 

 

(56,955)

Balance as of March 31, 20234

 

175,724,392

 

$176

 

31,723,379

 

$32

 

$959,627

 

$(828,011)

 

$(1,898)

 

$129,926

3. Includes 132,909,894 outstanding Class A common stock, 15,512,217 outstanding Class B common stock, 42,357,023 unvested Class A restricted stock and 16,587,085 unvested Class B restricted stock.

4. Includes 137,203,338 outstanding Class A common stock, 16,105,977 outstanding Class B common stock, 38,521,054 unvested Class A restricted stock and 15,617,402 unvested Class B restricted stock.

 

See accompanying notes to condensed unaudited consolidated financial statements.

6


 

Condensed Unaudited Consolidated Statements of Cash Flows

(In thousands)

 

 

Three months ended March 31,

 

 

2024

 

 

2023

 

Cash flows from operating activities:

 

 

 

 

 

 

Net loss

 

 

(39,566

)

 

$

(56,955

)

Adjustments to reconcile net loss to net cash provided by operating activities:

 

 

 

 

 

 

Depreciation and amortization

 

 

13,741

 

 

 

11,825

 

Stock-based compensation

 

 

52,638

 

 

 

64,462

 

Deferred income taxes

 

 

(20

)

 

 

(42

)

Change in fair value of acquisition-related liabilities

 

 

504

 

 

 

1,652

 

Others, net

 

 

(42

)

 

 

46

 

Change in non-cash working capital (net of acquisitions):

 

 

 

 

 

 

Accounts receivable

 

 

9,622

 

 

 

(2,015

)

Prepaid expenses

 

 

(1,279

)

 

 

527

 

Other current assets

 

 

339

 

 

 

(366

)

Other non-current assets

 

 

(414

)

 

 

(112

)

Deferred revenue

 

 

1,026

 

 

 

1,380

 

Accounts payable

 

 

(10,727

)

 

 

5,196

 

Accrued expenses and other current liabilities

 

 

(1,459

)

 

 

(5,538

)

Other non-current liabilities

 

 

303

 

 

 

44

 

Net cash provided by operating activities

 

 

24,666

 

 

 

20,104

 

Cash flows from investing activities:

 

 

 

 

 

 

Capital expenditures

 

 

(5,811

)

 

 

(5,164

)

Website and software development costs

 

 

(3,643

)

 

 

(4,900

)

Acquisitions and other investments, net of cash acquired

 

 

 

 

 

(15,852

)

Net cash used for investing activities

 

 

(9,454

)

 

 

(25,916

)

Cash flows from financing activities:

 

 

 

 

 

 

Cash paid for acquisition-related liabilities

 

 

(2,173

)

 

 

(980

)

Proceeds from credit facilities, net of issuance cost

 

 

11,250

 

 

 

2,813

 

Exercise of options

 

 

434

 

 

 

41

 

Repurchase of shares

 

 

(3,444

)

 

 

(6,533

)

Repayments against the credit facilities

 

 

(11,250

)

 

 

(2,813

)

Net cash used for financing activities

 

 

(5,183

)

 

 

(7,472

)

Effect of exchange rate changes on cash and cash equivalents

 

 

(112

)

 

 

(32

)

Net increase / (decrease) in cash and cash equivalents

 

 

9,917

 

 

 

(13,316

)

Cash and cash equivalents, beginning of period

 

 

131,732

 

 

 

121,110

 

Cash and cash equivalents, end of period

 

$

141,649

 

 

$

107,794

 

Supplemental cash flow disclosures including non-cash activities:

 

 

 

 

 

 

Cash paid for interest, net

 

$

2,720

 

 

$

2,464

 

Cash paid for income taxes, net

 

$

386

 

 

$

46

 

Liability established in connection with acquisitions

 

$

504

 

 

$

2,791

 

Capitalized stock-based compensation as website and software development costs

 

$

1,091

 

 

$

752

 

Right-to-use asset established

 

$

883

 

 

$

 

Operating lease liabilities established

 

$

883

 

 

$

 

Non-cash consideration for website and software development costs

 

$

430

 

 

$

219

 

 

See accompanying notes to condensed unaudited consolidated financial statements.

7


 

Notes to Condensed Unaudited Consolidated Financial Statements

(In thousands, except share and per share amounts)

1. Organization and Background

(a) Nature of Business

Zeta Global Holdings Corp., a Delaware Corporation ("Zeta" or “Zeta Global Holdings”) and Zeta Global Corp., a Delaware Corporation and the operating company (“Zeta Global” individually, or collectively with Zeta Global Holdings Corp. and its consolidated entities, as context dictates, the “Company”) is a marketing technology company that uses proprietary data, artificial intelligence and software to create a technology platform that enables marketers to acquire, retain and grow customer relationships. The Company’s technology platform powers data-driven marketing programs for enterprises across a wide range of industries and utilizes all digital distribution channels including email, search, social, mobile, display and connected TV. Zeta Global was incorporated and began operations in October 2007.

2. Basis of Presentation and Summary of Significant Accounting Policies

(a) Principles of Consolidation

The accompanying condensed unaudited consolidated financial statements have been prepared by the Company in accordance with accounting principles generally accepted in the United States (“GAAP”) for interim financial reporting and as required by Rule 10-01 of Regulation S-X. Accordingly, the condensed unaudited consolidated financial statements may not include all of the information and notes required by GAAP for audited financial statements. The year-end December 31, 2023 consolidated financial statements data included herein was derived from audited financial statements but does not include all disclosures required by GAAP for complete financial statements. In the opinion of the Company’s management, the accompanying condensed unaudited consolidated financial statements contain all adjustments, consisting of items of a normal and recurring nature, necessary to present fairly the Company’s financial position as of March 31, 2024, the results of operations, comprehensive loss and stockholders’ equity for the three-months ended March 31, 2024 and 2023, respectively, and cash flows for the three-months ended March 31, 2024, and 2023, respectively. The results of operations for the three-months ended March 31, 2024 and 2023, respectively, are not necessarily indicative of the results to be expected for the full year. The preparation of consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts of assets and liabilities, and related disclosures, as of the date of the financial statements, and the amounts of revenues and expenses reported during the period. Actual results could differ from estimates. The accompanying condensed unaudited consolidated financial statements should be read in conjunction with the Company’s audited financial statements and the accompanying notes for the year ended December 31, 2023, which was included in Form 10-K filed with the SEC on February 28, 2024.

The accompanying condensed unaudited consolidated financial statements include the accounts of Zeta and its wholly owned subsidiaries. All intercompany accounts and transactions have been eliminated in consolidation.

The Company’s management considers events or transactions that occur after the balance sheet date but before the financial statements are issued to provide additional evidence relative to certain estimates or to identify matters that require additional disclosure. Subsequent events have been evaluated through the date of issuance of these financial statements. See “Note 16. Subsequent Events” for additional information.

(b) Revenue Recognition

Revenue arises primarily from the Company’s technology platform via subscription fees, volume-based utilization fees and fees for professional services designed to maximize the customer usage of technology.

Revenues are recognized when control of these services is transferred to the customers, in an amount that reflects the consideration we expect to be entitled to an exchange for those services. Sales and other taxes collected by the Company concurrent with revenue-producing activities are excluded from revenues.

When the Company enters into contracts with third parties in which the Company is acting as both a vendor and a customer, the Company performs an assessment of the services transferred to determine the independent nature of both the transactions. The Company presents the revenue and expense based on the fair value of the services provided or received.

8


 

Contract assets and liabilities

Contract assets represent revenue recognized for contracts that have not been invoiced to customers. Total contract assets were $7,770 and $5,346 as of March 31, 2024 and December 31, 2023, respectively, and are included in the account receivables, net, in the condensed unaudited consolidated balance sheets.

Contract liabilities consists of deferred revenue that represent amounts billed to the customers in excess of the revenue recognized. Deferred revenue is subsequently recorded as revenues when earned in accordance with the Company’s revenue recognition policies. During the three months ended March 31, 2024 and 2023, the Company billed and collected $3,382 and $3,096 in advance, respectively, and recognized $2,228 and $1,616, respectively, as revenues. As of March 31, 2024 and December 31, 2023, the deferred revenue were $4,455 and $3,301, respectively.

Remaining Performance Obligations

Remaining performance obligations represents contractual obligations that are not yet fulfilled. Revenues for such contractual obligations will be recognized in future periods. The remaining performance obligations are influenced by several factors, including seasonality, the timing of renewals, average contract terms and foreign currency exchange rates. The remaining performance obligations are subject to future economic risks including counterparty risks, bankruptcies, regulatory changes and other market factors.

As of March 31, 2024, the Company's remaining performance obligations for the next twelve months and thereafter were approximately $87,400 and $108,400, respectively.

Disaggregation of revenues from contract with customers

The Company reports disaggregation of revenues based on primary geographical markets and delivery channels / platforms. Revenues by delivery channels / platforms are based on whether the customer requirements necessitate integration with platforms or delivery channels not owned by the Company. When the Company generates revenues entirely through the Company platform, the Company considers it to be direct platform revenues. When the Company generates revenue by leveraging its platform’s integration with third parties, it is considered integrated platform revenues.

The following table summarizes disaggregation for the three months ended March 31, 2024 and 2023, respectively.

 

Three months ended March 31,

 

2024

 

2023

Direct platform revenues

 

67%

 

71%

Integrated platform revenues

 

33%

 

29%

 

Refer to the Company’s accounting policy on “Segments” below for more information about disaggregation based on primary geographical markets.

(c) Stock-based compensation and other stock-based payments:

The measurement of stock-based compensation for all stock-based payment awards, including restricted stock, performance stock units (“PSUs”), and stock options granted to the employees, consultants or advisors and non-employee directors, as well as shares purchased under our 2021 Employee Stock Purchase Plan ("2021 ESPP"), is based on the estimated fair value of the awards on the date of grant or date of modification of such grants. The Company accounts for the modification to already issued awards as per guidance in ASC 718-20-35-3 (Refer to "Note 9. Stock-Based Compensation").

The Company accounts for all stock-based payment awards using a fair value-based method. The fair value of each stock option granted to employees is estimated on the date of the grant using the Black-Scholes-Merton option pricing model, and the related stock-based compensation is recognized over the vesting term of the option. The fair value of the restricted shares granted prior to the initial public offering (the “IPO”) was determined using the Monte-Carlo simulation method and for the restricted shares granted post-IPO is based on the Company’s closing stock price as of the day prior to the date of the grants.

The Company accounts for its PSU awards based on the fair value determined using the Monte Carlo simulation method and for shares purchased under its 2021 ESPP using the Black-Scholes-Merton model, by a third-party valuation firm engaged by the Company. The Company accounts for the forfeitures, as they occur. The Company uses the graded vesting attribution method to recognize the stock-based compensation related to restricted stock awards and straight-line over the term method for all the other awards.

9


 

(d) Segments

The Company operates as one operating segment. Operating segments are defined as components of an enterprise about which separate financial information is available that is evaluated regularly by the Chief Operating Decision Maker (“CODM”) in deciding how to allocate resources and in assessing performance. The Company’s CODM is the Chief Executive Officer. Since it operates as one operating segment, all required financial segment information can be found in the condensed unaudited consolidated financial statements. Revenues and long-lived assets by geographic region are based on the physical location of the customers being served or the assets and are as follows:

Revenues by geographical region consisted of the following;

 

Three months ended March 31,

 

 

2024

 

 

2023

 

US

 

$

188,178

 

 

$

150,406

 

International

 

 

6,769

 

 

 

7,196

 

Total revenues

 

$

194,947

 

 

$

157,602

 

 

Total long-lived assets (including right-to-use asset) by geographical region consisted of the following;

 

As of

 

 

March 31, 2024

 

 

December 31, 2023

 

US

 

$

44,427

 

 

$

44,039

 

International

 

 

2,017

 

 

 

2,140

 

Total long-lived assets

 

$

46,444

 

 

$

46,179

 

 

(e) Concentration of Credit Risk

No customer accounted for more than 10% of the Company’s total revenues during the three months ended March 31, 2024 and 2023.

Financial instruments that potentially subject the Company to concentration risk consist primarily of accounts receivable from customers. As of March 31, 2024 and December 31, 2023, there were two customers and one customer, respectively, that represented more than 10% of the accounts receivables, net balance on the condensed unaudited consolidated balance sheets. The Company continuously monitors whether there is an expected credit loss arising from customers, and accordingly make provisions as warranted.

(f) Operating leases:

The Company determines if an arrangement is, or contains, a lease at inception, and whether lease and non-lease components are combined or not. A contract is or contains a lease when, (1) the contract contains an identified asset and (2) the customer obtains substantially all of the economic benefits from the use of that underlying asset and directs how and for what purpose the asset is used during the term of the contract in exchange for consideration.

Right-to-use assets and lease liabilities are initially recorded based on the present value of lease payments over the lease term, which includes the minimum unconditional term of the lease, and may include options to extend or terminate the lease when it is reasonably certain at the commencement date that such options will be exercised.

As the rate implicit for each of the Company's leases is not readily determinable, the Company uses its incremental borrowing rate at commencement date in determining the present value of lease payments. Right-of-use assets also include any initial direct costs and any lease payments made prior to the lease commencement date and are reduced by any lease incentives received. Lease expense is recognized on a straight-line basis over the term of the lease. Lease expense is a combination of interest on lease liability and amortization of right-of-use assets. Operating lease expenses are included in general and administrative expenses in the condensed unaudited consolidated statements of operations and comprehensive loss. Refer to "Note 10 - Leases" for additional information.

New accounting pronouncements

In December 2023, the FASB issued ASU 2023-09, "Income Taxes (Topic 740): Improvements to Income Tax Disclosures". ASU 2023-09 is intended to enhance the transparency and decision usefulness of income tax disclosures. The amendments in ASU 2023-09 address investor requests for enhanced income tax information primarily through changes to the rate

10


 

reconciliation and income taxes paid information. Early adoption is permitted. A public entity should apply the amendments in ASU 2023-09 prospectively to all annual periods beginning after December 15, 2024. The Company is currently evaluating the impact of incorporating ASU 2023-09 guidance on its consolidated financial statements and related disclosures.

In November 2023, the FASB issued ASU No. 2023-07, “Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures” (“ASU 2023-07”). ASU 2023-07 requires disclosure of significant segment expenses regularly presented to the Chief Operating Decision Maker ("CODM") and incorporated into each reported segment profit or loss measure. Entities are required to provide both the amount and a detailed description of the composition of other segment items to reconcile them with the segment profit or loss. Furthermore, organizations must disclose the title and position of their CODM. ASU 2023-07 will be effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024. Early adoption is permitted and the amendments in this update are required to be applied on a retrospective basis. The Company is currently evaluating the impact of incorporating ASU 2023-07 guidance on its consolidated financial statements and related disclosures.

3. Intangible Assets

The details of intangible assets and related accumulated amortization are set forth below:

 

 

As of March 31, 2024

 

 

As of December 31, 2023

 

 

Gross
value

 

 

Accumulated
amortization

 

 

Net
value

 

 

Gross
value

 

 

Accumulated
amortization

 

 

Net
value

 

Data supply relationships

 

$

47,919

 

 

$

24,344

 

 

$

23,575

 

 

$

43,484

 

 

$

20,350

 

 

$

23,134

 

Tradenames

 

 

2,720

 

 

 

2,720

 

 

 

 

 

 

2,720

 

 

 

2,706

 

 

 

14

 

Completed technologies

 

 

34,932

 

 

 

27,210

 

 

 

7,722

 

 

 

34,932

 

 

 

26,164

 

 

 

8,768

 

Customer relationships

 

 

74,453

 

 

 

59,253

 

 

 

15,200

 

 

 

74,453

 

 

 

57,588

 

 

 

16,865

 

Total intangible assets

 

$

160,024

 

 

$

113,527

 

 

$

46,497

 

 

$

155,589

 

 

$

106,808

 

 

$

48,781

 

 

Amortization expense of intangibles for the three months ended March 31, 2024 and 2023 was $6,719 and $4,824, respectively.

Weighted average useful life of the unamortized intangibles as of March 31, 2024 was 2.64 years. Based on the amount of intangible assets subject to amortization, the Company’s estimated future amortization expense over the next five years and beyond are as follows:

 

 

As of March 31, 2024

 

Year ended December 31,

 

 

 

Remaining nine months of 2024

 

$

16,498

 

2025

 

 

17,217

 

2026

 

 

8,758

 

2027

 

 

2,542

 

2028

 

 

1,482

 

2029 and thereafter

 

 

 

Total

 

$

46,497

 

 

4. Goodwill

Following is a summary of the carrying value of goodwill:

 

Balance as of January 1, 2024

 

$

140,905

 

Foreign currency translation

 

 

(2

)

Balance as of March 31, 2024

 

$

140,903

 

 

There were no events during the three months ended March 31, 2024 to which an impairment analysis would be warranted.

5. Acquisitions

The Company uses the purchase method of accounting in accordance with ASC 805, Business Combinations. This standard requires that the total cost of an acquisition be allocated to the tangible and intangible assets acquired and liabilities assumed

11


 

based on the fair value of the tangible and intangible assets acquired and liabilities assumed at the acquisition date. The Company’s estimates and assumptions used in assessing fair value are inherently uncertain and subject to refinement. During the measurement period, which may be up to one year from the acquisition date, the Company may record adjustments to the fair value of these tangible and intangible assets acquired and liabilities assumed, with the corresponding offset to goodwill. In addition, uncertain tax positions and tax-related valuation allowances are initially recorded in connection with a business combination as of the acquisition date. Acquisition-related expenses are expensed when incurred.

The Company may also agree to pay a portion of the purchase price for certain acquisitions in the form of contingent consideration. The unpaid amounts of these liabilities are included in the acquisition-related liabilities on the condensed unaudited consolidated balance sheets as of March 31, 2024 and December 31, 2023.

WhatCounts, Inc.

On March 1, 2023, the Company entered into an asset purchase agreement with the Output Services Group, Inc. to purchase certain assets of WhatCounts, Inc. ("WhatCounts"), including customer contracts, technology assets and certain employees who were engaged in these businesses.

The Company concluded the transaction represents an acquisition of a business under ASC 805, Business Combinations. The total consideration of WhatCounts acquisition is $15,990, including $1,011 as estimated earn-outs based on the achievement of certain operating targets of the acquired businesses, and $128 as working capital adjustment. During the year ended December 31, 2023, the Company finalized the purchase price allocations for its WhatCounts acquisition. Accordingly, the Company has recognized $960 as customer relationships intangibles, $6,140 as completed technologies, $7,824 as goodwill and $1,066 as other net assets associated with this acquisition. The Company amortizes the intangible assets over the weighted average life of 3.0 years.

Prior to the acquisition, WhatCounts' technology asset was being used as an Email Service Provider (“ESP”). Therefore, the Company paid a premium to acquire these assets, which is represented as Goodwill in the above purchase price allocation. The Company incurred $203 as acquisition-related expenses related to this acquisition.

Goodwill acquired by the Company in its WhatCounts acquisition is deductible for tax purposes.

 

6.
Acquisition-Related Liabilities

The following is a summary of acquisition-related liabilities:

 

eBay CRM

 

 

Kinetic

 

 

Vital

 

 

Apptness

 

 

ArcaMax

 

 

What Counts

 

 

Total

 

Balance as of January 1, 2024

 

$

4,225

 

 

$

245

 

 

$

1,000

 

 

$

5,859

 

 

$

6,336

 

 

$

2,629

 

 

$

20,294

 

Payments made during the period

 

 

(2,113

)

 

 

(60

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(2,173

)

Change in fair value of earn-out

 

 

 

 

 

 

 

 

 

 

 

397

 

 

 

107

 

 

 

 

 

 

504

 

Balance as of March 31, 2024

 

$

2,112

 

 

$

185

 

 

$

1,000

 

 

$

6,256

 

 

$

6,443

 

 

$

2,629

 

 

$

18,625

 

During the three months ended March 31, 2024, the businesses acquired by the Company in its Apptness and ArcaMax acquisitions have performed better than the estimates used for the initial purchase price allocation, as such the Company recorded the changes in the fair value of the earn-outs, which are included in "other expenses" on the condensed unaudited consolidated statements of operations and comprehensive loss.

During the year ended December 31, 2023, the Company settled the litigation in relation to certain acquisition related liabilities for its eBay CRM. As of March 31, 2024, $2,112 is the remaining amount for that settlement, that the Company expects to pay within the next 12 months and included this amount in acquisition-related liabilities (current) in the condensed unaudited consolidated balance sheet as of March 31, 2024.

7. Credit Facilities

The Company’s long-term borrowings are as follows:

 

As of March 31, 2024

 

 

As of December 31, 2023

 

Credit facility

 

$

185,000

 

 

$

185,000

 

Less: unamortized deferred financing cost

 

 

(751

)

 

 

(853

)

Long-term borrowings

 

$

184,249

 

 

$

184,147

 

 

12


 

 

On February 3, 2021, the Company entered into a $222,500 Senior Secured Credit Facility (“Senior Secured Credit Facility”) with a syndicate of financial institutions and institutional lenders, which consists of (i) a $73,750 initial revolving facility, (ii) a $111,250 term loan facility, and (iii) a $37,500 in incremental revolving facility commitment. On March 22, 2023, the Company entered into a $25,000 incremental revolving facility commitment pursuant to an amendment to the Senior Secured Credit Facility (the “2023 Incremental Revolving Commitment”), thereby increasing the total credit facility of the Company to $247,500. Out of the total credit facility, $34,375 remains undrawn as of March 31, 2024. In addition, the Company has an outstanding letter of credit amounting to $1,244 against the available revolving credit facility. The credit facility was fully secured by the financial institution with a first lien on the Company’s assets.

Interest on the current outstanding balances is payable quarterly and calculated using a SOFR rate of no lower than SOFR+2.125% and no higher than SOFR+2.625% based on the Company’s consolidated net leverage ratio stated in the credit agreement. The effective interest rate on this debt for the three months ended March 31, 2024 was 7.6%. The extensions of credit may be used solely (a) to refinance existing indebtedness, (b) to pay any expenses associated with this line of credit agreement, (c) for acquisitions, and (d) for other general corporate purposes. The Company is required to repay the principal balance and any unpaid accrued interest on the Senior Secured Credit Facility on February 3, 2026. During the three months ended March 31, 2024, the Company borrowed $11,250 against the revolver facility and repaid the same amount against the term loan under the credit facility. The initial debt issuance costs of $1,902 incurred in the form of the legal fee, underwriter’s fee, etc., are recognized as a reduction in long-term borrowings in the condensed unaudited consolidated balance sheets, and are being amortized over the term of the contract on a straight-line basis.

The Senior Secured Credit Facility contains certain financial maintenance covenants including consolidated net leverage ratio and consolidated fixed charge coverage ratio. In addition, this agreement contains restrictive covenants that may limit the Company’s ability to, among other things, acquire equity interests of the Company from its stockholders, repurchase / retire any of the Company’s securities, and pay dividends or distribute excess cash flow. Additionally, the Company is required to submit periodic financial covenant letters that would include current net leverage ratio and fixed charge coverage ratio, among others. As of March 31, 2024, the applicable total leverage ratio and fixed charge coverage ratio were 2.50 and 1.25, respectively, and the Company was in compliance with these covenants.

As of March 31, 2024, the repayment schedule for the long-term borrowings was as follows:

 

 

As of March 31, 2024

 

Year ended December 31,

 

 

 

Remaining nine months of 2024

 

$

 

2025

 

 

16,875

 

2026

 

 

168,125

 

Total*

 

$

185,000

 

 

*Includes $4,219 repayable against the term loan facility within the twelve-month period ending March 31, 2025. The Company intends to draw against the available revolving facility to pay off term loan installments and therefore the total borrowings are included in “Long-term borrowings” on the condensed unaudited consolidated balance sheet as of March 31, 2024.

8. Commitments and Contingencies

(a) Purchase obligations

The Company entered into non-cancellable vendor agreements to purchase services. As of March 31, 2024, the Company was party to outstanding purchase contracts as follows:

 

As of March 31, 2024

 

Year Ended December 31,

 

 

 

Remaining nine months of 2024

 

$

24,436

 

2025

 

 

13,750

 

2026

 

 

4,651

 

2027

 

 

620

 

2028

 

 

 

Total

 

$

43,457

 

 

13


 

(b) Other contingencies

 

The Company is a party to various litigations and administrative proceedings related to claims arising from its operations in the ordinary course of business including in relation to certain acquisition related liabilities (Refer to "Note 6. Acquisition Related Liabilities"). The Company records provisions for losses when claims become probable, and the amounts are estimable. Although the outcome of these matters cannot be predicted with certainty, the Company’s management believes that the resolution of the matters will not have a material impact on the Company’s business, results of operations, financial condition, or cash flows.

9. Stock-Based Compensation

Stock-based compensation plan

In 2008, the Company adopted its 2008 Stock Option/Stock Issuance Plan, and, in 2017, adopted the Zeta Global Holdings Corp. 2017 Incentive Plan (collectively, the “Plans”).

The Plans permitted the issuance of stock options, restricted stock and restricted stock units to employees, directors, and officers, consultants or advisors and non-employee directors of the Company. Options granted under the Plans expire no later than ten years from the grant date. Prior to the IPO, the restricted stock and restricted stock units granted under the Plans generally did not vest until a change in control. Upon a change in control, restricted stock and restricted stock units vest as to 25% of the shares with the balance of the shares vesting in equal quarterly installments following the change in control over the remainder of a five-year term from the original date of grant. The restricted stock and restricted stock units fully vest upon a change in control to the extent five years has passed from the original date of grant of the restricted stock or restricted stock units. Since the vesting of these awards was contingent upon the change of control event, which was not considered probable until it occurred, the Company did not record any stock-based compensation for such awards prior to the IPO, a change in control event. The stock-based compensation has been recognized following the vesting of restricted stock, restricted stock units and options as described below. The Company ceased granting awards under the Plans following its adoption of the 2021 Plan (as defined below) in connection with the IPO.

In connection with the IPO, the Company adopted the Zeta Global Holdings Corp. 2021 Incentive Award Plan (the “2021 Plan”), which was effective as of the day prior to the first public trading date of our Class A common stock and under which restricted stock, restricted stock units and options have been granted to service providers. With certain exceptions, the equity awards granted under the 2021 Plan generally vest over four years, with 25% of the shares vesting upon the first anniversary of the grant date and the remainder of the shares vesting in equal quarterly installments thereafter.

During the three months ended March 31, 2024 and 2023, the Company recognized stock-based compensation expense of $52,638 and $64,462, respectively.

Restricted Stock and Restricted Stock Units

As noted above, the Company’s restricted stock and restricted stock units granted prior to the IPO did not vest until a change of control. On March 24, 2021, the Company’s board of directors approved a modification in the vesting terms of its restricted stock and restricted stock unit awards. This modification was accounted for under the guidance in ASC 718-20-35-3. Given the vesting of the modified awards contained a performance condition associated with the IPO, the Company had determined that the modification was considered improbable-to-improbable under ASC 718-20-55-118 through 119. The Company recognized compensation expense over the modified vesting terms, based on the fair value as of the date of modification.

During the three months ended March 31, 2023, the Company's board of directors approved the modification of the vesting schedule of certain awards granted prior to the IPO, to accelerate the vesting of those grants. These modifications were accounted for in accordance with ASC 718-20-35-3 and did not have any material impact on the stock-based compensation during the three months ended March 31, 2023. There were no such modifications during the three months ended March 31, 2024.

Following is the activity of restricted stock and restricted stock units granted by the Company:

 

Shares

 

 

Weighted Average
Grant Date Fair
Value

 

Non-vested as of January 1, 2024

 

 

49,698,329

 

 

$

10.54

 

Granted (1)

 

 

1,428,238

 

 

 

9.48

 

Vested

 

 

(6,097,830

)

 

 

10.02

 

Forfeited (2)

 

 

(361,622

)

 

 

9.46

 

Non-vested as of March 31, 2024 (3)

 

 

44,667,115

 

 

$

10.59

 

 

14


 

(1)
During the three months ended March 31, 2024, the Company granted 1,420,286 shares of restricted stock and 7,952 restricted stock units to its employees, advisors and non-employee directors.
(2)
During the three months ended March 31, 2024, 331,160 shares of restricted stock and 30,462 restricted stock units were forfeited.
(3)
Includes 33,178,381 unvested shares of Class A restricted stock, 10,754,062 unvested shares of Class B restricted stock and 734,672 unvested restricted stock units as of March 31, 2024.

Stock options

Following is the summary of transactions under the Plans and the 2021 Plan:

 

 

Number of
options

 

 

Weighted
average
exercise
price

 

 

Weighted
average
remaining
contractual
life (years)

 

 

Aggregate
intrinsic
value (per share)

 

Outstanding options as of January 1, 2024

 

 

2,619,937

 

 

$

8.49

 

 

 

4.97

 

 

$

0.57

 

Granted

 

 

 

 

 

 

 

 

 

 

 

 

Exercised

 

 

(97,158

)

 

 

4.47

 

 

 

 

 

 

 

Forfeited

 

 

(44,685

)

 

 

9.00

 

 

 

 

 

 

 

Outstanding options as of March 31, 2024

 

 

2,478,094

 

 

$

8.64

 

 

 

4.96

 

 

$

2.54

 

 

As of March 31, 2024, the Company had 618,942 outstanding exercisable options with a weighted-average exercise price of $6.79. Options granted by the Company expire no later than ten years from the grant date. The Company did not grant any options during the three months ended March 31, 2024.

Performance Stock Unit (“PSU”) Award

During the years ended on December 31, 2023 and 2022, the Compensation Committee of the Board of Directors granted PSUs under the 2021 Plan to certain employees. Each PSU represents the right to receive shares of Class A common stock as set forth in the PSU grant agreement or, at the option of the Company, an equivalent amount of cash. Participants have no right to the distribution of any shares or payment of any cash until the time (if ever) the PSUs are earned and have vested. Each PSU provides for the right to receive a dividend equivalent to the value of any ordinary cash dividends paid on substantially all the outstanding shares of Class A common stock if the PSUs are earned and vested. The PSUs are earned as a percentage of the target number of PSUs granted based on the 20-day volume-weighted average closing price per share (“VWAP”) for each quarter during the applicable performance period. The number of PSUs earned for such quarter shall be reduced by the number of PSUs, if any, earned in any prior quarter. Upon achievement of certain stock price conditions, vesting and settlement of the PSUs could result in the issuance of up to 300% of the target number of PSUs granted being settled in shares of Class A common stock.

Earned PSUs vest in three equal annual installments, with the first installment vesting on the date the Company determines the number of PSUs that are eligible to vest for such quarter, and the second and third installments vesting on the first and second anniversaries of such determination date, subject to accelerated vesting in connection with certain qualifying terminations of employment or a change in control.

Following is the summary of PSUs under the Company’