We provide digital promotions, including digital coupons, and/or media programs to our customers which consists of CPG customers, retail partners and advertising agencies whereby we use our proprietary technology platforms to create, target, deliver and analyze these programs. We typically generate revenue from our customers through the use of these programs on a cost-per-click, cost-per-impression, or cost-per-acquisition basis. Programs usually include a limit on the number of clicks and/or impressions and are billed monthly.

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 our proprietary platforms for tracking of the related clicks. We recognize revenues 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 consumers action of activating a digital promotion through our proprietary technology platform 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. We typically recognize revenues for digital promotion campaign fees as clicks occur.

We generate revenue from promotions, in which consumer packaged goods brands, or CPGs, pay us to deliver coupons to consumers through our network of publishers and retail partners. We generate revenues, as consumers select, activate, or redeem a coupon through our platform by either saving it to a retailer loyalty account for automatic digital redemption, or printing it for physical redemption at a retailer. The pricing for promotion arrangements generally includes both coupon setup fees and coupon transaction fees. Coupon setup fees are related to the creation of digital coupons and set up of the underlying campaign on our proprietary platforms for tracking of related activations or redemptions. We recognize revenues related to coupon setup fees over time, proportionally, on a per transaction basis, using the number of authorized transactions per insertion order, commencing on the date of the first coupon transaction. Coupon transaction fees are generally determined on a per unit activation or per redemption basis, and are generally billed monthly. Insertion orders generally include a limit on the number of activations, or times consumers may select a coupon.

Digital promotion programs also include our Specialty Retail business, in which specialty stores including clothing, electronics, home improvement and others, offer coupon codes that we distribute. Each time a consumer makes a purchase using a coupon code, a fee is typically paid to us. We usually generate revenues when a consumer makes a purchase using a coupon code from our platform and completion of the order is reported to us. In the same period that we recognize revenues for the delivery of coupon codes, we also estimate and record a reserve, based upon historical experience, to provide for end-user cancellations or product returns which may not be reported until a subsequent date.

Our media services enable CPGs and retailers to distribute digital media ads to promote their brands and products on our retailers' websites, and mobile applications, and through a network of affiliate publishers and non-publisher third parties that display our 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. We recognize revenue each time a digital media ad is displayed or each time a user clicks on the media ad displayed on our websites, mobile applications or on third-party websites.

~~Gross versus Net Revenue Reporting~~

In the normal course of business and through our distribution network, we deliver digital media and promotions on retailers’ websites through retailers’ loyalty programs, and on the websites of digital publishers. In these situations, we evaluate whether we are the principal (i.e., report revenues on a gross basis) or agent (i.e., report revenues on a net basis). Generally, we report digital promotion and media advertising revenues for campaigns placed on third-party owned properties on a gross basis, that is, the amounts billed to our customers are recorded as revenues, and distribution fees paid to retailers or digital publishers are recorded as cost of revenues. We are the principal because we control the digital promotion and media advertising inventory before it is transferred to our customers. Our control is evidenced by our sole ability to monetize the digital coupon and media advertising inventory, being primarily responsible to our customers, having discretion in establishing pricing for the delivery of the digital media and promotions, or a combination of these.

In other cases, we report certain digital media advertising 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. Our performance obligation in these arrangements is to provide the use of our platforms that enables customers to bid on digital advertising inventory, which is determined based on real-time bidding, use of data and


	15,625(14)	134,375	3.20	7/1/2032	—	—	—	—
	—	—	—	—	2,667(15)	9,121	—	—
	—	—	—	—	20,950(16)	71,649	—	—
	—	—	—	—	30,005(17)	102,617	—	—
	—	—	—	—	93,895(18)	321,121	—	—
	—	—	—	—	70,313(19)	240,470	—	—
	—	—	—	—	—	—	40,006	137,221
	—	—	—	—	—	—	38,250	131,198
Steven Boal	240,000	—	3.70	2/7/2023	—	—	—	—
	600,000	—	8.65	11/14/2023	—	—	—	—
	503,000	—	8.51	6/29/2025	—	—	—	—
	47,000	—	4.19	6/29/2025	—	—	—	—
	600,000	—	4.19	6/29/2025	—	—	—	—
	800,000	—	4.19	6/29/2025	—	—	—	—
	300,000	—	4.19	6/29/2025	—	—	—	—
	261,000	—	4.19	6/29/2025	—	—	—	—
	299,529	—	4.19	6/29/2025	—	—	—	—
	469,461	—	4.19	6/29/2025	—	—	—	—
Scott Raskin	23,474	—	10.65	2/6/2027	—	—	—	—
	12,931	—	11.60	6/4/2027	—	—	—	—
	915,851(20)	211,350	7.34	9/1/2029	—	—	—	—
	262,237(21)	119,200	8.95	3/1/2030	—	—	—	—
	39,062(22)	335,938	3.20	7/1/2032	—	—	—	—
	—	—	—	—	102,180(23)	349,456	—	—
	—	—	—	—	56,739(24)	194,047	—	—
	—	—	—	—	56,010(25)	191,554	—	—
	—	—	—	—	175,270(26)	599,423	—	—
	—	—	—	—	167,344(27)	572,316	—	—
	—	—	—	—	—	—	74,679	256,149
	—	—	—	—	—	—	71,905	246,634

(1)

~~other add-on features in designing and executing our campaigns. We charge our customers~~Option is subject to accelerated vesting upon a ~~platform fee based on a percentage~~qualifying termination of the ~~digital advertising inventory and data costs purchased through~~executive’s employment with us as described above in “Potential Payments upon Termination, Change of Control or Certain Other Events.”

(2)For options granted prior to our initial public offering, the ~~use of our platforms. The platform fee is not contingent on~~amounts in this column represent at least the results of a digital media advertising campaign. We have determined that we are an agent in these arrangements because we does not have control of the digital advertising inventory before it is transferred to the customer and does not set prices agreed upon within the auction marketplace.

~~Arrangements with Multiple Performance Obligations~~

Our contracts with customers may include multiple performance obligations. For these contracts, we account 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. We determine the best estimate of the standalone selling prices based on our overall pricing objectives, taking into consideration market conditions and other factors, including the value of our contracts and characteristics of targeted customers.

~~Stock-based Compensation~~

~~We account for stock-based compensation using the fair value method, which requires us to measure the stock-based compensation based on the grant-date~~per-share fair value of ~~the awards and recognize the compensation expense over the requisite service period. We account for forfeitures as they occur.~~

~~The fair value of each stock option award is estimated on the grant date using the Black-Scholes option-pricing model. The fair value of RSUs equals the market value~~a share of our common stock on the date of ~~grant. Our option-pricing model requires~~grant, as determined by our Board or, for options granted after our initial public offering, based on the ~~input of highly subjective assumptions, the expected term of the option, the expected volatility of the~~closing share price of our common stock ~~risk-free interest rates,~~on the NYSE on the date of grant.

(3)The shares of common stock underlying the RSUs are subject to accelerated vesting upon a qualifying termination of the executive’s employment with us as described above in “Potential Payments upon Termination, Change of Control or Certain Other Events.”

(4)The market values of the RSUs and PSUs in these columns that have not vested are calculated by multiplying the ~~expected dividend yield~~number of units shown in the table by the closing share price of our common ~~stock.~~stock on December 30, 2022, which was $3.43.

~~Income Taxes~~

~~We account for our income taxes using~~(5)The 2021 PSU awards are subject to vesting based upon the ~~liability method. Deferred tax assets~~Company's performance against certain performance metrics during the period beginning on January 1, 2021 and ~~liabilities~~ending on December 31, 2023. The shares of common stock underlying the 2021 PSUs reflected in this column are ~~recognized for~~assuming the ~~expected tax consequences~~threshold level of temporary differences between the tax bases of assets and liabilities and their reported amounts using enacted tax rates in effect for the year the differences are expected to reverse. In evaluating our ability to recover our deferred tax assets we consider all available positive and negative evidence including our past operating results, the existence of cumulative losses in past fiscal years, and our forecast of future taxable income in the jurisdictions.

We have placed a valuation allowance on the U.S. deferred tax assets and certain non-U.S. deferred tax assets, because realization of these tax benefits through future taxable income does not meet the more-likely-than-not threshold.

We account for uncertainty in income taxes using a two-step approach to recognize and measure uncertain tax positions. The first step is to evaluate the tax position for recognition by determining if the weight of available evidence indicates that it is more likely than not that the positionperformance conditions will be ~~sustained on audit, including resolution~~achieved and will vest upon achievement of ~~related appeals or litigation processes, if any.~~targets directly tied to the Company’s performance. The ~~second step is to measure the tax benefit as the largest amount that is more than 50% likely of being realized upon settlement.~~

~~Tax laws~~2022 PSU awards are ~~dynamic and~~ subject to ~~change as new laws~~vesting based upon the Company's achievement of stock price goals during the period beginning on March 1, 2022 and ending on March 1, 2025. The shares of common stock underlying the 2022 PSUs reflected in this column are ~~passed~~assuming the threshold level of performance conditions will be achieved and ~~new interpretations~~will vest upon achievement of targets directly tied to the Company’s stock price. Both 2021 and 2022 PSU awards are subject to accelerated vesting upon a qualifying termination of the ~~law are issued~~executive’s employment with us as described above in “Potential Payments upon Termination, Change of Control or ~~applied. The U.S. recently enacted significant tax reform,~~Certain Other Events.”

Vesting Schedule for Outstanding Stock Options and certain provisions of the new law may adversely affect us. In addition, governmental tax authorities are increasingly scrutinizing the tax positions of companies. Many countries in the European Union, as well as a number of other countries and organizations such as the Organization for Economic Cooperation and Development, are actively considering changes to existing tax laws that, if enacted, could increase our tax obligations in countries where we do business. If U.S. or other foreign tax authorities change applicable tax laws, our overall taxes could increase, and our business, financial condition or results of operations may be adversely impacted.

~~Recently Issued Accounting Pronouncements~~

See Part II, Item 8. Consolidated Financial Statements and Supplementary Data, Note 2, Summary of Significant Accounting Policies, of Notes to Consolidated Financial Statements of this Annual Report on Form 10-K, for a full description of recent accounting pronouncements, including the actual and expected dates of adoption and

~~estimated effects on our consolidated results of operations and financial condition, which is incorporated herein by reference.~~

~~Item 7A. Quantitative and Qualitative Disclosures About Market Risk.~~

We have operations both within the United States and internationally, and we are exposed to market risks in the ordinary course of our business. These risks include primarily interest rate, foreign exchange risks and inflation. We do not hold or issue financial instruments for trading purposes.

~~Interest Rate Fluctuation Risk~~

~~Our cash and cash equivalents consist of cash, money market funds, and U.S. Treasury Bills. Our borrowings under finance lease obligations are generally at fixed interest rates.~~

The primary objective of our investment activities is to preserve principal while maximizing income without significantly increasing risk. Because our cash and cash equivalents have a relatively short maturity, our portfolio’s fair value is relatively insensitive to interest rate changes. We do not believe that an increase or decrease in interest rates of 100 basis points would have a material effect on our operating results or financial condition. In future periods, we will continue to evaluate our investment policy in order to ensure that we continue to meet our overall objectives.

~~Market Risk and Market Interest Risk~~

In November 2017, we issued $200.0 million aggregate principal amount of 1.75% convertible senior notes due 2022. The fair value of our convertible senior notes is subject to interest rate risk, market risk and other factors due to the convertible feature. The fair value of the convertible senior notes will generally increase as our common stock price increases and will generally decrease as our common stock price declines in value. The interest and market value changes affect the fair value of our convertible senior notes but do not impact our financial position, cash flows or results of operations due to the fixed nature of the debt obligation.

~~Foreign Currency Exchange Risk~~

We have limited foreign currency risks related to our revenues and operating expenses denominated in currencies other than the U.S. dollar, principally the British Pound Sterling and the Euro. The volatility of exchange rates depends on many factors that we cannot forecast with reliable accuracy. Although we have experienced and will continue to experience fluctuations in our net income (loss) as a result of transaction gains (losses) related to revaluing certain cash balances, trade accounts receivable balances and intercompany balances that are denominated in currencies other than the U.S. dollar, we believe such a change will not have a material impact on our results of operations. In the event our foreign sales and expenses increase, our operating results may be more greatly affected by fluctuations in the exchange rates of the currencies in which we do business. At this time, we do not, but we may in the future, enter into derivatives or other financial instruments in an attempt to hedge our foreign currency exchange risk. It is difficult to predict the impact hedging activities would have on our results of operations.

~~Inflation Risk~~

We do not believe that inflation has had a material effect on our business, financial condition or results of operations. If our costs were to become subject to significant inflationary pressures, we may not be able to fully offset such higher costs through price increases. Our inability or failure to do so could harm our business, financial condition and results of operations.

~~Item 8. Financial Statements and Supplementary Data.~~

~~Financial Statements~~

~~INDEX TO CONSOLIDATED FINANCIAL STATEMENTS~~

Restricted Stock Units:


~~Reports of Independent Registered Public Accounting Firm~~		74
Note	Grant	Incremental Vesting Dates
~~Consolidated Financial Statements:~~(6)	6/1/2022	1/48 on 7/1/2022; 1/48 monthly thereafter for next 4 years.
(7)	5/1/2021	25% on 5/1/2022; 6.25% quarterly thereafter for next 3 years.
~~Consolidated Balance Sheets~~		77

~~Consolidated Statements of Operations~~		78

~~Consolidated Statements of Comprehensive Loss~~		79

~~Consolidated Statements of Stockholders’ Equity~~		80

~~Consolidated Statements of Cash Flows~~		81

~~Notes to Consolidated Financial Statements~~		82

~~Report of Independent Registered Public Accounting Firm~~

~~To the Stockholders and the Board of Directors of Quotient Technology Inc.~~

~~Opinion on the Financial Statements~~

We have audited the accompanying consolidated balance sheets of Quotient Technology Inc. (the Company) as of December 31, 2020 and 2019, the related consolidated statements of operations, comprehensive loss,~~stockholders' equity and cash flows for each of the three years in the period ended December 31, 2020, and the related notes~~ (collectively referred to as the “consolidated financial statements”). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company at December 31, 2020 and 2019, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2020, in conformity with U.S. generally accepted accounting principles.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company's internal control over financial reporting as of December 31, 2020, based on criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework), and our report dated February 22, 2021 expressed an unqualified opinion thereon.

~~Basis for Opinion~~

These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.

~~Critical Audit Matter~~

The critical audit matter communicated below is a matter arising from the current period audit of the financial statements that was communicated or required to be communicated to the audit committee and that: (1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective or complex judgments. The communication of the critical audit matter does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which they relate.

7438


			~~Revenue Recognition~~
~~Description of the Matter~~			As described in Note 2 to the consolidated financial statements, the Company generates its revenue by offering promotion and media services. Promotion revenue is recognized as coupons activations or redemptions occur. Media revenue is generally recognized each time a digital media ad is displayed or each time a user clicks on the media ad. The Company’s revenue recognition process utilizes multiple complex, proprietary systems and tools, for the initiation, processing and recording of a high volume of individually-low-monetary-value transactions. The revenue recognition process is dependent on the effective design and operation of multiple systems and the completeness and accuracy of data sources, which required significant audit effort.
~~How We Addressed the Matter in Our Audit~~			We obtained an understanding, evaluated the design, and tested the operating effectiveness of internal controls over the Company’s accounting for revenue from contracts with customers. For example, with the support of our information technology professionals, we identified and tested the relevant systems used for the determination of initiation, delivery, recording and billing of revenue, which included controls related to the ongoing access to the relevant systems and data, change management controls over the relevant systems and interfaces, and effective configuration of the relevant systems. To test the Company’s accounting for revenue from contracts with customers, we performed substantive audit procedures that included, among others, testing the completeness and accuracy of the underlying data within the Company’s billing system, performing data analytics by extracting data from the system to evaluate the completeness and accuracy of recorded revenue and deferred revenue amounts, tracing a sample of sales transactions to source data, and testing a sample of reconciliations of billings to cash collections.


(8)	3/1/2022	6.25% on 6/1/2022; 6.25% quarterly thereafter for next 4 years.
(9)	6/1/2022	6.25% on 9/1/2022; 6.25% quarterly thereafter for next 4 years.
(10)	8/1/2022	25% on 8/1/2023; 6.25% quarterly thereafter for next 3 years.
(11)	8/1/2022	6.25% on 11/1/2022; 6.25% quarterly thereafter for next 4 years.
(12)	3/1/2019	1/48 on 4/1/2019; 1/48 monthly thereafter for next 4 years.
(13)	3/1/2020	1/48 on 4/1/2020; 1/48 monthly thereafter for next 4 years.
(14)	7/1/2022	1/48 on 8/1/2022; 1/48 monthly thereafter for next 4 years.
(15)	3/1/2019	6.25% on 6/1/2019; 6.25% quarterly thereafter for next 4 years.
(16)	3/1/2020	6.25% on 6/1/2020; 6.25% quarterly thereafter for next 4 years.
(17)	3/1/2021	6.25% on 6/1/2021; 6.25% quarterly thereafter for next 4 years.
(18)	3/1/2022	6.25% on 6/1/2022; 6.25% quarterly thereafter for next 4 years.
(19)	7/1/2022	6.25% on 10/1/2022; 6.25% quarterly thereafter for next 4 years.
(20)	9/1/2019	25% on 9/1/2020; 1/48 monthly thereafter for next 3 years.
(21)	3/1/2020	1/48 on 4/1/2020; 1/48 monthly thereafter for next 4 years.
(22)	7/1/2022	1/48 on 8/1/2022; 1/48 monthly thereafter for next 4 years.
(23)	9/1/2019	25% on 9/1/2020; 6.25% quarterly thereafter for next 3 years.
(24)	3/1/2020	6.25% on 4/1/2020; 6.25% quarterly thereafter for next 4 years.
(25)	3/1/2021	6.25% on 4/1/2021; 6.25% quarterly thereafter for next 4 years.
(26)	3/1/2022	6.25% on 4/1/2022; 6.25% quarterly thereafter for next 4 years.
(27)	7/1/2022	6.25% on 8/1/2022; 6.25% quarterly thereafter for next 4 years.

~~/s/ Ernst & Young LLP~~Option Exercises and Stock Vested

~~We have served as~~The following table provides information regarding exercises of option awards and vesting of stock awards by our NEOs in 2022:


	Option Award		Stock Awards
Name	Number of Shares Acquired on Exercise	Value Released on Exercise ($)	Number of Shares Acquired on Vesting	Value Realized on Vesting ($)(1)
Matthew Krepsik	—	—	106,046	355,803
Yuneeb Khan	—	—	29,398	79,963
Connie Chen	—	—	69,618	245,383
Steven Boal	—	—	1,277,395	4,218,685
Scott Raskin	—	—	258,127	929,949
Pamela Strayer	—	—	27,875	174,088
John Kellerman	—	—	21,312	96,728

(1)Calculated by multiplying (i) the ~~Company’s auditor since 2009.~~closing price of our common stock on the vesting date or if such day is the weekend or a holiday, on the immediately preceding trading day, by (ii) the number of shares of our common stock acquired upon vesting.

~~San Jose, California~~CEO Pay Ratio

~~February 22, 2021~~For the year ended December 31, 2022, the median of the annual total compensation of all employees is $78,987, the annual total compensation of our CEO, Mr. Krepsik, is $4,585,802, and the ratio of this amount to the median of the annual total compensation of all employees is approximately 58 to 1.

This pay ratio is a reasonable estimate calculated in a manner consistent with SEC rules based on our payroll record and the methodology described below. Because the SEC rules for identifying the median compensated employee and calculating the pay ratio based on that employee’s annual total compensation allow companies to adopt a variety of methodologies, to apply certain exclusions, and to make reasonable estimates and assumptions

7539

~~Report~~

that reflect their compensation practices, the pay ratio reported by other companies may not be comparable to the pay ratio reported above, as other companies may have different employment and compensation practices and may utilize different methodologies, exclusions, estimates, and assumptions in calculating their own pay ratios.

For purposes of identifying our median compensated employee, we used our global employee population as of December 1, 2022, identified based on our payroll records. We used total compensation as our consistently applied compensation measure. In this context, total compensation means the annual salary or wages, plus target bonuses and commissions as of December 1, 2022. Individuals that did not work for the full year were annualized and amounts paid in foreign currencies were converted to US Dollars based on the applicable average annual exchange rate as of December 1, 2022.

Non-Employee Director Compensation

Non-employee directors receive compensation under our outside director compensation policy (the “Director Compensation Policy”) in the form of equity granted under the terms of our 2013 Plan, and cash, as described below. The policy is reviewed annually by the Compensation Committee in conjunction with the Compensation Committee’s independent compensation consultant in order to inform any decisions with respect to our executive compensation program. They consider multiple factors, including total compensation relative to our peer group, market survey data, board leadership and committees, and board governance trends.

Cash Compensation

In connection with their service as a director and consistent with the Director Compensation Policy, each non-employee director receives an annual cash retainer of $37,500 for serving on our Board. Prior to July 26, 2022 the Lead Independent ~~Registered Public Accounting Firm~~Director received an additional annual cash retainer of $15,000. Effective as of July 26, 2022, the Lead Independent Director received no additional cash retainer. Effective as of March 23, 2023, the Independent Board Chair receives an additional annual cash retainer of $40,000.

ToThe chairperson and members of the ~~Stockholders and~~three standing committees of our Board are also entitled to the following additional annual cash retainers:


Board Committee	Chairperson Fee ($)	Member Fee ($)
Audit Committee	21,500	10,000
Compensation Committee	15,000	6,250
Nominating and Corporate Governance Committee	8,000	3,500

Effective as of March 23, 2023, the members of the Strategic Committee, a non-standing committee of the Board whose members consist of ~~Directors~~Messrs. Gessow, Reece and Wargotz and Ms. Hawkins, receive an annual cash retainer of ~~Quotient Technology Inc.~~ $10,000.

~~Opinion~~All cash retainers are paid in quarterly installments to each non-employee director who has served in the relevant capacity for the immediately preceding fiscal quarter no later than 30 days following the end of such preceding fiscal quarter. A non-employee director who has served in the relevant capacity for only a portion of the immediately preceding fiscal quarter will receive a prorated payment of the quarterly payment of the applicable annual cash retainer.

Equity Compensation

Initial grant. Upon appointment to our Board, each non-employee director is granted an award (the “Initial Award”) of RSUs as compensation for his or her service. The number of RSUs subject to the Initial Award is determined by dividing $250,000 by the closing price of our stock on ~~Internal Control Over Financial Reporting~~the grant date or as computed in accordance with such other methodology as our Board or Compensation Committee may determine. The grant date of the Initial Award is the fifth trading day of the month immediately following the month in which the individual first becomes a non-employee director. The RSUs subject to the Initial Award vest as to one-third (1/3) of such RSUs on each of the

~~We have audited Quotient Technology Inc.’s internal control over~~

first three anniversaries of the date on which such person first becomes a non-employee director, subject to continued service as a director through the applicable vesting date.

Annual award. Each continuing non-employee director is granted an award of RSUs (the “Annual RSU Award”) on the date of the annual meeting of stockholders as compensation for his or her service. The number of RSUs subject to the Annual Award is determined by dividing $175,000 by the closing price of our stock on the grant date or as computed in accordance with such other methodology as our Board or Compensation Committee may determine. The grant date of the Annual Award is the date of the annual meeting of stockholders. The RSUs subject to the Annual Award vest upon the earlier of (i) the day prior to the next year’s annual meeting of stockholders or (ii) one year from the grant date, subject to continued service as a director through the applicable vesting date.

The following table provides information for the year ended December 31, 2022 regarding all compensation awarded to, earned by or paid to each person who served as a non-employee director in 2022.

Non-Employee Director Compensation — 2022


Name	Fees Earned or Paid in Cash ($)	Stock Awards ($)(1)	Total ($)
Kimberly Anstett	24,652	424,998	449,650
Andrew Gessow	63,667	174,998	238,665
Lorraine Hariton	41,000	174,998	215,998
Alison Hawkins	55,250	174,998	230,248
Eric Higgs	42,583	424,996	467,579
Steve Horowitz(2)	17,459	—	17,459
Robert McDonald	77,704	174,998	252,702
Matthew O'Grady(3)	39,239	424,996	464,235
David Oppenheimer	68,515	174,998	243,513
Joseph Reece	35,621	424,996	460,617
Christy Wyatt(4)	12,243	103,102	12,243

(1)The amounts reported reflect the aggregate grant date fair value of RSUs granted during the year as computed in accordance with FASB ASC Topic 718. The assumptions used to calculate these amounts are discussed in Note 10 to our notes to consolidated financial ~~reporting~~statements included in our Annual Report on Form 10-K for the year ended December 31, 2022, as filed with the SEC on March 16, 2023. As required by SEC rules, the amounts shown exclude the impact of estimated forfeitures related to service-based vesting conditions. Note that the amounts reported in this column reflect the accounting cost for these stock awards and do not correspond to the actual economic value that may be received by the directors from them. For Ms. Wyatt, this amount includes the incremental fair value associated with the modification of her outstanding 2021 Annual RSU Award granted an June 3, 2021 to provide for accelerated vesting in connection with her resignation from the Board. This amount is required to be included per SEC disclosure rules and does not reflect a new grant.

(2)Mr. Horowitz resigned from the Board effective June 3, 2022.

(3)Mr. O'Grady's Annual RSU Award of $174,998 and Initial RSU Award of $249,998 was cancelled upon his resignation from the Board, which became effective as of December 31, ~~2020, based on criteria established in Internal Control - Integrated Framework issued by~~2022.

(4)Ms. Wyatt resigned from the ~~Committee~~Board effective March 24, 2022.

Our non-employee directors held the following number of Sponsoring Organizations of the Treadway Commission (2013 framework), (the COSO criteria). In our opinion, Quotient Technology Inc. (the Company) maintained, in all material respects, effective internal control over financial reportingoutstanding stock options and RSU awards as of December 31, ~~2020, based on~~2022.


Name	Stock Options	RSUs
Kimberly Anstett	—	138,240
Andrew Gessow	151,992	55,732
Lorraine Hariton	—	72,584
Alison Hawkins	—	76,182
Eric Higgs	—	96,382
Steve Horowitz(1)	—	—
Robert McDonald	—	55,732
Matthew O'Grady(2)	—	—
David Oppenheimer	21,551	55,732
Joseph Reece	—	111,535
Christy Wyatt(3)	—	—

(1)Mr. Horowitz resigned from the ~~COSO criteria.~~Board effective June 3, 2022.

~~We also have audited, in accordance with~~(2)Mr. O'Grady resigned from the ~~standards of the Public Company Accounting Oversight~~ Board ~~(United States) (PCAOB), the consolidated balance sheets of the Company~~effective December 31, 2022 and therefore had no outstanding stock options or RSU awards as of December 31, ~~2020~~2022.

(3)Ms. Wyatt resigned from the Board effective March 24, 2022.

Compensation Committee Interlocks and ~~2019, the related consolidated statements of operations, comprehensive loss, stockholders’ equity and cash flows for each~~Insider Participation

The members of the ~~three years~~Compensation Committee during 2022 consisted of Messrs. Gessow, Higgs, Oppenheimer and Reece. Mr. Reece joined the Compensation Committee in May 2022, pursuant to the Cooperation Agreement, and became Chair in February 2023. None of the current members of the Compensation Committee is currently or has been at any time one of our officers or employees. None of our executive officers currently serves, or in the ~~period~~past year has served, as a member of the board of directors or compensation committee of any entity that has one or more executive officers serving on our Board or Compensation Committee.

Compensation Committee Report

The Compensation Committee has reviewed and discussed with management the Compensation Discussion and Analysis provided above. Based on its review and discussions, our Compensation Committee has recommended to our Board that the Compensation Discussion and Analysis be included in this Form 10-K/A and our Annual Report for the year ended December 31, ~~2020, and~~2022.

Submitted by the ~~related notes and our report dated February 22, 2021 expressed an unqualified opinion thereon.~~

~~Basis for Opinion~~

~~The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment~~Compensation Committee of the effectiveness of internal control over financial reporting included in the accompanying Management’s Annual Report on Internal Control Over Financial Reporting. Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.Board:

We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects.Joseph Reece (Chairperson)

Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.Andrew Gessow

~~Definition and Limitations of Internal Control Over Financial Reporting~~David Oppenheimer

A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

~~/s/ Ernst & Young LLP~~

~~San Jose, California~~

~~February 22, 2021~~Eric D. Higgs

7642

~~QUOTIENT TECHNOLOGY INC.~~

~~CONSOLIDATED BALANCE SHEETS~~

~~(in thousands, except share and per share data)~~

December 31,
2020 2019
Assets
Current assets:
Cash and cash equivalents $ 222,752 $ 224,764
Accounts receivable, net of allowance for credit losses of $2,070 and $2,021
at December 31, 2020 and 2019, respectively
137,649 125,304
Prepaid expenses and other current assets 18,547 22,026
Total current assets 378,948 372,094
Property and equipment, net 17,268 13,704
Operating lease right-of-use assets 16,222 7,211
Intangible assets, net 44,898 69,752
Goodwill 128,427 128,427
Other assets 1,029 750
Total assets $ 586,792 $ 591,938
Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable $ 15,959 $ 19,116
Accrued compensation and benefits 14,368 15,232
Other current liabilities 70,620 50,032
Deferred revenues 12,027 10,903
Contingent consideration related to acquisitions 8,524 27,000
Total current liabilities 121,498 122,283
Other non-current liabilities 18,314 7,119
Contingent consideration related to acquisitions 20,930 9,220
Convertible senior notes, net 177,168 166,157
Deferred tax liabilities 1,853 1,937
Total liabilities 339,763 306,716
Commitments and contingencies (Note 15) 0 0
Stockholders’ equity:
Preferred stock, $0.00001 par value—10,000,000 shares authorized and 0
shares issued or outstanding at December 31, 2020 and 2019
0 0
Common stock, $0.00001 par value—250,000,000 shares authorized;
91,743,302 and 89,371,199 shares issued and outstanding at
December 31, 2020 and 2019, respectively
1 1
Additional paid-in capital 698,333 671,060
Accumulated other comprehensive loss (1,001) (916)
Accumulated deficit (450,304) (384,923)
Total stockholders’ equity 247,029 285,222
Total liabilities and stockholders’ equity $ 586,792 $ 591,938

~~See Accompanying Notes to Consolidated Financial Statements~~

~~QUOTIENT TECHNOLOGY INC.~~

~~CONSOLIDATED STATEMENTS OF OPERATIONS~~

~~(in thousands, except per share data)~~

Year Ended December 31,
2020 2019 2018
Revenues $ 445,887 $ 436,160 $ 386,958
Cost of revenues 277,914 263,606 206,230
Gross margin 167,973 172,554 180,728
Operating expenses:
Sales and marketing 104,527 101,244 90,086
Research and development 40,316 39,076 46,873
General and administrative 54,177 58,328 49,805
    Change in fair value of escrowed shares and contingent
   consideration, net 20,234 1,571 13,190
Total operating expenses 219,254 200,219 199,954
Loss from operations (51,281) (27,665) (19,226)
Interest expense (14,521) (13,955) (13,411)
Other income, net 1,140 5,223 4,801
Loss before income taxes (64,662) (36,397) (27,836)
Provision for income taxes 719 660 482
Net loss $ (65,381) $ (37,057) $ (28,318)
Net loss per share, basic and diluted $ (0.72) $ (0.41) $ (0.30)
Weighted-average number of common shares used in computing
   net loss per share, basic and diluted 90,412 91,163 93,676

~~See Accompanying Notes to Consolidated Financial Statements~~

~~QUOTIENT TECHNOLOGY INC.~~

~~CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS~~

~~(in thousands)~~

Year Ended December 31,
2020 2019 2018
Net loss (65,381) (37,057) (28,318)
Other comprehensive income (loss):
Foreign currency translation adjustments (85) (72) (144)
Comprehensive loss $ (65,466) $ (37,129) $ (28,462)

~~See Accompanying Notes to Consolidated Financial Statements~~

~~QUOTIENT TECHNOLOGY INC.~~

~~CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY~~

~~(in thousands, except share data)~~

Common Stock Additional Paid-In Capital Treasury Stock Accumulated Deficit Total Stockholders' Equity
Shares Amount Shares Amount Accumulated Other Comprehensive Loss
Balance as of December 31, 2017 93,199,718 $ 1 $ 686,025 0 $ 0 $ (700) $ (287,285) $ 398,041
Exercise of employee stock options 1,329,361 — 4,028 — — — — 4,028
Vesting of restricted stock units 2,287,008 — — — — — — —
Issuance of common stock, stock purchase plan 323,439 — 3,467 — — — — 3,467
Payments for taxes related to net share settlement
of equity awards
(880,262) — (11,658) — — — — (11,658)
Repurchases of common stock (1,264,053) — — 1,264,053 (15,843) — — (15,843)
Retirement of treasury stock — — (9,248) (1,264,053) 15,843 — (6,595) 0
Cumulative-effect of accounting change — — — — — — 105 105
Stock-based compensation — — 31,479 — — — — 31,479
Change in fair value of escrowed shares related to
a services and data agreement
— — (1,070) — — — — (1,070)
Other comprehensive loss — — — — — (144) — (144)
Net loss — — — — — — (28,318) (28,318)
Balance as of December 31, 2018 94,995,211 $ 1 $ 703,023 0 $ 0 $ (844) $ (322,093) $ 380,087
Exercise of employee stock options 433,762 — 2,337 — — — — 2,337
Vesting of restricted stock units 2,735,184 — — — — — — —
Issuance of common stock, stock purchase plan 300,949 — 2,680 — — — — 2,680
Payments for taxes related to net share settlement
of equity awards
(1,004,914) — (9,838) — — — — (9,838)
Repurchases of common stock (8,088,993) — — 8,088,993 (85,539) — — (85,539)
Retirement of treasury stock — — (59,766) (8,088,993) 85,539 — (25,773) 0
Stock-based compensation — — 32,624 — — — — 32,624
Other comprehensive loss — — — — — (72) — (72)
Net loss — — — — — — (37,057) (37,057)
Balance as of December 31, 2019 89,371,199 $ 1 $ 671,060 0 $ 0 $ (916) $ (384,923) $ 285,222
Exercise of employee stock options 331,007 — 2,714 — — — — 2,714
Vesting of restricted stock units 2,293,593 — — — — — — —
Issuance of common stock for services provided 117,210 — 689 — — — — 689
Issuance of common stock, stock purchase plan 474,178 — 2,289 — — — — 2,289
Payments for taxes related to net share settlement
of equity awards (843,885) — (7,203) — — — — (7,203)
Stock-based compensation — — 28,784 — — — — 28,784
Other comprehensive loss — — — — — (85) — (85)
Net loss — — — — — — (65,381) (65,381)
Balance as of December 31, 2020 91,743,302 $ 1 $ 698,333 0 $ 0 $ (1,001) $ (450,304) $ 247,029

~~See Accompanying Notes to Consolidated Financial Statements~~

~~QUOTIENT TECHNOLOGY INC.~~

~~CONSOLIDATED STATEMENTS OF CASH FLOWS~~

~~(in thousands)~~

Year Ended December 31,
2020 2019 2018
Cash flows from operating activities:
Net loss $ (65,381) $ (37,057) $ (28,318)
Adjustments to reconcile net loss to net cash (used in) provided by operating
   activities:
Depreciation and amortization 36,352 31,437 25,041
Stock-based compensation 28,371 32,137 31,386
Amortization of debt discount and issuance cost 11,011 10,438 9,898
Restructuring charge related to facility exit costs 0 0 1,057
Allowance for credit losses 888 1,227 509
Deferred income taxes 719 660 482
           Change in fair value of escrowed shares and contingent
   consideration, net 20,234 1,571 13,190
Impairment of capitalized software development costs 0 3,579 0
Other non-cash expenses 3,275 2,392 207
Changes in operating assets and liabilities:
Accounts receivable (13,232) (7,142) (26,032)
Prepaid expenses and other current assets 3,164 (11,145) (861)
Accounts payable and other current liabilities 15,554 (62) 6,449
Payments for contingent consideration (15,418) 0 (9,700)
Accrued compensation and benefits (197) 1,567 (1,287)
Deferred revenues 1,125 2,216 27
Net cash provided by operating activities 26,465 31,818 22,048
Cash flows from investing activities:
Purchases of property and equipment (8,351) (9,021) (6,077)
Purchases of intangible assets (3,018) (14,811) (20,545)
Acquisitions, net of cash acquired 0 (13,730) (33,661)
Purchases of short-term investments 0 0 (75,120)
Proceeds from maturities of short-term investment 0 20,738 114,284
Net cash used in investing activities (11,369) (16,824) (21,119)
Cash flows from financing activities:
Proceeds from issuances of common stock under stock plans 5,002 5,017 7,495
Payments for taxes related to net share settlement of equity awards (7,203) (9,838) (11,658)
     Repurchases and retirement of common stock under share repurchase
program 0 (87,097) (14,285)
Principal payments on promissory note and finance lease obligations (391) (317) (310)
Payments of contingent consideration (14,582) 0 (14,800)
Net cash used in financing activities (17,174) (92,235) (33,558)
Effect of exchange rates on cash and cash equivalents 66 (23) 22
Net decrease in cash and cash equivalents (2,012) (77,264) (32,607)
Cash and cash equivalents at beginning of period 224,764 302,028 334,635
Cash and cash equivalents at end of period $ 222,752 $ 224,764 $ 302,028
Supplemental disclosures of cash flow information
Cash paid for income taxes $ 220 $ 352 $ 246
Cash paid for interest $ 3,510 $ 3,517 $ 3,655
Supplemental disclosures of noncash investing and financing activities
Repurchase of common stock not settled $ 0 $ 0 $ 1,558
Intangible asset acquisitions not yet paid $ 1,250 $ 1,000 $ 14,548
Fixed asset purchases not yet paid $ 1,757 $ 783 $ 1,253
Computer equipment acquired under promissory note $ 1,107 $ 0 $ 0

~~See Accompanying Notes to Consolidated Financial Statements~~

~~QUOTIENT TECHNOLOGY INC.~~

~~Notes to Consolidated Financial Statements~~

~~1. Background~~

~~Description of Business~~

Quotient Technology Inc. (together with its subsidiaries, the “Company”), is an industry leading digital media and promotions company that creates cohesive omnichannel brand-building and sales-driving marketing campaigns for CPGs and retailers throughout the path to purchase. These programs are delivered across the Company’s broad network of digital properties to drive measurable sales results and customer loyalty. The Company's network includes the digital properties of retail partners and CPG customers, social media platforms, third-party properties, its flagship consumer brand Coupons.com properties and DOOH properties. This network provides the Company with proprietary and licensed data, including retailers’ in-store POS shopper data, purchase intent and online behavior, location intelligence, and to deliver more valuable outcomes for CPGs, retailers, and consumers. Customers and partners use Quotient to leverage shopper data, and insights, consumers via digital channels, integrate marketing and merchandising programs, and leverage consumer data and insights to drive measurable sales results.

~~2. Summary of Significant Accounting Policies~~

~~Basis of Presentation and Consolidation~~

The accompanying consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles (“U.S. GAAP”). The Company’s consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries. All significant intercompany transactions and balances have been eliminated.

~~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, coupon code sales return reserve, valuation of assets acquired and liabilities assumed in a business combination, useful lives of intangible assets, estimates related to recoverability of long-lived assets and goodwill, stock-based compensation, measurement of contingent consideration, restructuring accruals, debt discounts, 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 consolidated financial statements.

The COVID-19 pandemic has created and may continue to create significant uncertainty in macroeconomic conditions, which may cause further business slowdowns or shutdowns, depress demand for the Company’s advertising business, and adversely impact the Company’s results of operations. The Company expects uncertainties around its key accounting estimates to continue to evolve depending on the duration and degree of impact associated with the COVID-19 pandemic. The Company’s estimates may change as new events occur and additional information emerges, and such changes are recognized or disclosed in its consolidated financial statements.

~~Cash and Cash Equivalents~~

The Company considers all highly liquid investments with original maturities of three months or less at the time of purchase to be cash equivalents. The Company classifies all cash equivalents as available-for-sale, which are recorded at fair value. Unrealized gains and losses are included in accumulated other comprehensive (loss) income in stockholders’ equity. Realized gains and losses are included in other income (expense), net.

~~Accounts Receivable, Net of Allowance for Credit Losses~~

Trade and other receivables are included in accounts receivables and primarily comprised of trade receivables that are recorded at invoiced amounts, net of an allowance for credit losses and do not bear interest.

Other receivables included unbilled receivables related to digital media and promotions advertising contracts with customers. The Company generally does not require collateral and performs ongoing credit evaluations of its customers and maintains allowances for potential credit losses. The Company maintains an allowance for credit losses based upon the expected collectability of its accounts receivable. The Company assesses collectability by reviewing accounts receivable on a collective basis where similar characteristics exist and on an individual basis when we identify specific customers with known disputes or collectability issues. In determining the amount of the allowance for credit losses, the Company reviewed credit profiles of its customers, contractual terms and conditions, current economic trends, reasonable and supportable forecasts of future economic conditions, and historical payment experience.

~~Property and Equipment, net~~

Property and equipment, net, are stated at cost less accumulated depreciation and amortization. Depreciation and amortization are computed using the straight-line method over the estimated useful lives of the assets, which are three years for computer equipment and software and five years for all other asset categories except leasehold improvements, which are amortized over the shorter of the lease term or the expected useful life of the improvements.

~~Internal-Use Software Development Costs~~

For costs incurred for computer software developed or obtained for internal use, the Company begins to capitalize its costs to develop software when preliminary development efforts are successfully completed, management has authorized and committed project funding, and it is probable that the project will be completed and the software will be used as intended. These costs are amortized to cost of revenues over the estimated useful life of the related asset, generally estimated to be three years. Costs related to preliminary project activities and post implementation activities, including training and maintenance are expensed as incurred and recorded in research and development expense on the Company’s consolidated statements of operations.

~~Leases~~

The Company determines if an arrangement is a lease at inception. Right-of-use (“ROU”) assets represent the Company’s right to use an underlying asset for the lease term and lease liabilities represent the Company’s obligation to make lease payments arising from the lease. The Company has elected the practical expedient not to recognize ROU assets and lease liabilities for short-term leases with terms of twelve months or less. Operating lease ROU assets and liabilities are recognized at commencement date based on the present value of lease payments over the lease term. As the rate implicit in each lease is not readily determinable, the Company uses an incremental borrowing rate to determine the present value of the lease payments at commencement date. The operating lease ROU asset also includes any lease payments made and excludes lease incentives. The lease terms may include options to extend or terminate the lease when it is reasonably certain that the Company will exercise that option. The Company accounts for lease and non-lease components as a single lease component. Operating lease expense is recognized on a straight-line basis over the lease term.

Operating ROU assets and lease liabilities are included on the Company’s consolidated balance sheet. Operating ROU assets are included as operating lease right-of-use assets. The current portion of the operating lease liabilities is included in other current liabilities and the long-term portion is included in other non-current liabilities on the ~~Company’s consolidated balance sheet~~.

~~Business Combinations~~

The Company accounts for acquisitions of entities that include inputs and processes and have the ability to create outputs as business combinations. Under the acquisition method of accounting, the total consideration is allocated to the tangible and identifiable intangible assets acquired and liabilities assumed based on their estimated fair values at the acquisition date. The excess of the consideration transferred over those fair values is recorded as goodwill. During the measurement period, which may be up to one year from the acquisition date, the Company may record adjustments to the assets acquired and liabilities assumed with the corresponding offset to goodwill. Acquisition related costs are not considered part of the consideration, and are expensed as general and administrative expense as incurred. Contingent consideration, if any, is measured at fair value initially on the acquisition date as well as subsequently at the end of each reporting period, typically based on the expected achievement of certain financial metrics, until, the assessment period is over and it is finally settled.

~~Goodwill and Intangible Assets~~

Intangible assets with a finite life are amortized over their estimated useful lives. Goodwill is not subject to amortization but is tested for impairment at least annually, and more frequently upon the occurrence of certain events that may indicate that the carrying value of goodwill may not be recoverable. The Company completes its annual impairment test during the fourth quarter of each year, at the reporting unit level, which is at the company level as a whole, since the Company operates in 1 single reporting segment. There was 0 impairment of goodwill for the years ended December 31, 2020, 2019 and 2018.

~~Long-Lived assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of such assets may not be recoverable.~~

The Company evaluates intangible assets for potential impairment indicators at least quarterly and more frequently upon the occurrence of events that could impact prior conclusions. Judgment regarding the existence of impairment indicators is based on market conditions ~~and~~ as well as the operational performance of its businesses. Additionally, future events could cause the Company to conclude that impairment indicators exist, and therefore long-lived assets could be impaired.

The Company considers the following to be some examples of indicators that may trigger an impairment review: (i) actual undiscounted cash flows significantly below historical or projected future undiscounted cash flows for the associated assets; (ii) significant changes in the manner or use of the assets or in our overall strategy with respect to the manner or use of the acquired assets or changes in its overall business strategy; (iii) significant negative industry or economic trends; (iv) increased competitive pressures; and (v) a significant decline in its stock price for a sustained period of time.

Once the Company determines that a potential impairment indicator exists, it performs the test for recoverability by comparing the estimated future undiscounted cash flows associated with the intangible assets with the intangible asset’s carrying amount. Where the carrying value of the intangible asset exceeds the future undiscounted cash flows associated with the intangible assets, it is determined that the value of those intangible assets cannot be recovered. For an intangible asset failing the recoverability test, an impairment charge is recorded for the difference between the carrying value and the estimated fair value.

The key assumptions used in the Company's estimates of projected cash flow of its intangible assets deal largely with forecasts of sales levels, gross margins, and operating costs. These forecasts are typically based on historical trends and take into account recent developments as well as its plans and intentions. Any material change in the Company's assumptions could significantly impact projected future cash flows of the intangible assets and these factors are considered in evaluating impairment. Other factors, such as increased competition or a decrease in the desirability of our products, could lead to lower projected sales levels, which would adversely impact cash flows. A significant decrease in cash flows in the future could result in an impairment of long-lived assets. There was no material impairment of intangible assets for the years ended December 31, 2020 2019 and 2018.

~~Fair Value of Financial Instruments~~

The carrying values of the Company’s financial instruments, including cash equivalents, accounts receivable, accounts payable, accrued compensation and benefits, and other current liabilities, approximate fair value due to their short-term nature. The Company records money market funds, short-term investments and contingent consideration at fair value. See Note 3 ~~(Fair Value Measurements)~~.

~~Convertible Senior Notes~~

In November 2017, the Company issued $200.0 million aggregate principal amount of 1.75% convertible senior notes due 2022 (the “notes”). In accounting for the issuance of the notes, the Company separated the notes into liability and equity components. The carrying amount of the liability component was calculated by measuring the fair value of a similar liability that does not have an associated convertible feature. The carrying amount of the equity component representing the conversion option was determined by deducting the fair value of the liability component from the par value of the notes as a whole. This difference represents a debt discount that is amortized to interest expense over the terms of the notes. The equity component is not remeasured as long as it continues to meet the conditions for equity classification. In accounting for the issuance costs related to the notes, the Company allocated the total amount incurred to the liability and equity components. Issuance costs attributable to the liability components are being amortized to expense over the contractual term of the notes, and issuance costs attributable to the equity component were netted with the equity component in additional paid-in capital.

~~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, we satisfy a performance obligation~~

The Company provides digital promotions, including digital coupons, and/or media programs to its customers which consists of CPG customers, retail partners and advertising agencies whereby it uses its proprietary technology platforms to create, target, deliver and analyze these programs. The Company typically generates revenue from its customers through the use of these programs on a cost-per-click, cost-per-impression, or cost-per-acquisition basis. Programs usually include a limit on the number of clicks and/or impressions and are billed monthly.

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 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 consumers 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’s media programs enable CPGs 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.

Digital promotion programs also include the Company’s Specialty Retail business, in which specialty stores including clothing, electronics, home improvement and many others offer coupon codes that we distribute. Each time a consumer makes a purchase using a coupon code, delivered through our platform, we earn a distribution fee. The Company usually generates revenues when a consumer makes a purchase using a coupon code from its platform and completion of the order is reported to the Company. In the same period that the Company recognizes revenues for the delivery of coupon codes, it also estimates and records a reserve, based upon historical experience, to provide for end-user cancellations or product returns which may not be reported until a subsequent date.

~~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 reports certain 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 coupons and media, or a combination of these.

In other cases, the Company reports certain digital media advertising 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 digital advertising inventory, which is determined based on real-time bidding, 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 agreed upon within the auction marketplace.

~~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, 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 increase in the deferred revenue balance for year ended December 31, 2020 is primarily driven by cash payments received or due in advance of satisfying our performance obligations of $30.0 million, partially offset by $28.8 million of recognized revenue.

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). The majority of the Company’s revenue is generated from sales within the United States.~~

Year Ended December 31,
2020 2019 2018
Promotion $ 237,385 $ 246,479 $ 245,493
Media 208,502 189,681 141,465
Total Revenue $ 445,887 $ 436,160 $ 386,958

~~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.

~~Cost of Revenues~~

Cost of revenues consist primarily of distribution fees, personnel costs, depreciation related to data center equipment, and amortization expense related to capitalized internal use software, acquisition related intangible assets and purchased intangible assets, data center costs, third-party service fees including traffic acquisition costs and purchase of third-party data. Distribution fees consist of payments to partners within the Company’s network for their digital coupon publishing services. Personnel costs include salaries, bonuses, stock-based awards and

~~employee benefits and are primarily attributable to individuals maintaining the Company’s data centers and operations, which initiate, sets up and deliver digital coupon media campaigns.~~

~~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 included in sales and marketing expenses within the consolidated statements of operations.

~~Research and Development Expense~~

The Company expenses the cost of research and development as incurred. Research and development expense consists primarily of personnel and related headcount costs and costs of professional services associated with the ongoing development of the Company’s technology.

~~Stock-Based Compensation~~

The Company accounts for stock-based compensation for all stock-based awards made to employees and directors, including stock options, restricted stock units, performance-based restricted stock units, and employee stock purchase plan using the fair value method. This method requires the Company to measure the stock-based compensation based on the grant-date fair value of the awards and recognize the compensation expense over the requisite service period. The fair values of stock options and shares pursuant to Employee Stock Purchase Plan (“ESPP”) are estimated at the date of grant using the Black-Scholes-Merton option pricing model, which includes assumptions for the dividend yield, expected volatility, risk-free interest rate, and expected life. The fair values of restricted stock and restricted stock units are determined based upon the fair value of the underlying common stock at the date of grant. The Company expenses stock-based compensation using the straight-line method over the vesting term of all awards except for performance-based restricted stock units, which are expensed using the accelerated attribution method.

~~Advertising Expense~~

Advertising costs are expensed when incurred and are included in sales and marketing expense on the accompanying consolidated statements of operations. The Company incurred $2.0 million, $1.6 million and $0.3 million of advertising costs during the years ended December 31, 2020, 2019 and 2018, respectively. Advertising costs consist primarily of online marketing costs, such as sponsored search, advertising on social networking sites, e-mail marketing campaigns, loyalty programs, and affiliate programs.

~~Income Taxes~~

The Company accounts for income taxes in accordance with authoritative guidance, which requires the use of the liability method. Under this method, deferred income tax assets and liabilities are determined based upon the difference between the consolidated financial statement carrying amounts and the tax basis of assets and liabilities and are measured using the enacted tax rate expected to apply to taxable income in the years in which the differences are expected to reverse. A valuation allowance is provided when it is more likely than not that the deferred tax assets will not be realized. The Company recognizes liabilities for uncertain tax positions based upon a two-step process. To the extent a tax position does not meet a more-likely-than-not level of certainty, no benefit is recognized in the consolidated financial statements. If a position meets the more-likely-than-not level of certainty, it is recognized in the consolidated financial statements at the largest amount that has a greater than 50% likelihood of being realized upon ultimate settlement. The Company accounts for any applicable interest and penalties as a component of income tax expense.

~~Foreign Currency~~

Foreign currency denominated assets and liabilities of foreign subsidiaries, where the local currency is the functional currency, are translated into U.S. Dollars using the exchange rates in effect at the balance sheet dates, and income and expenses are translated using average exchange rates during the period. The resulting foreign currency translation adjustments are recorded in accumulated other comprehensive loss, a component of stockholders’ equity.

Gains and losses from foreign currency transactions are included in other income (expense), net in the accompanying consolidated statements of operations. Foreign currency transaction gains (losses) were immaterial for all the periods presented in the accompanying consolidated financial statements.

~~Other Comprehensive Income (Loss)~~

~~Other comprehensive income (loss) consists of foreign currency translation adjustments.~~

~~Net Income (Loss) per Share~~

The Company’s basic net income (loss) per share attributable to common stockholders is computed by dividing the net income (loss) by the weighted-average number of shares of common stock outstanding during the period. The diluted net income (loss) per share is computed by giving effect to all potentially dilutive common share equivalents outstanding during the period. The dilutive effect of dilutive common share equivalents is reflected in diluted net income (loss) per share by application of the treasury stock method. Since the Company intends to settle the principal amount of its outstanding convertible senior notes in cash, the Company uses the treasury stock method for calculating any potential dilutive effect of the conversion spread on diluted net income per share, if applicable. The effects of options to purchase common stock, RSUs, certain shares held in escrow, and convertible senior notes are excluded from the computation of diluted net loss per share attributable to common stockholders because their effect is antidilutive.

~~Segments~~

The Company’s chief operating decision maker (“CODM”), who is the Chief Executive Officer, reviews the Company’s financial information presented on a consolidated basis for purposes of allocating resources and evaluating its financial performance. There are no segment managers who are held accountable by the CODM, or anyone else, for operations, operating results, and planning for levels or components below the consolidated unit level. Accordingly, the Company has determined that it operates in 1 single reporting segment.

~~Concentration of Credit Risk~~

Financial instruments that potentially subject the Company to concentrations of credit risk consist primarily of cash, cash equivalents, short-term investments and accounts receivable. For cash, cash equivalents and short-term investments, the Company is exposed to credit risk in the event of default by the financial institutions to the extent of the amounts recorded on the accompanying consolidated balance sheets. Credit risk with respect to accounts receivable is dispersed due to the large number of customers. The Company does not require collateral for accounts receivable.

~~Recently Issued Accounting Pronouncements~~

~~Accounting Pronouncements Adopted~~

~~Credit Losses~~

In June 2016, the FASB issued Accounting Standards Update No. 2016-13 (ASU 2016-13) "Financial Instruments-Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments", which requires the measurement and recognition of expected credit losses for financial assets held at amortized cost. ASU 2016-13 replaces the existing incurred loss impairment model with an expected loss model which requires the use of a broader range of information to estimate credit losses.

~~The Company adopted ASU 2016-13 on January 1, 2020 and the impact of the adoption was not material to the Company’s condensed consolidated financial statements and related disclosures.~~

~~Accounting Pronouncements Not Yet 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. 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 standard is effective for the Company beginning January 1, 2022, and interim periods within that reporting period. The Company is currently evaluating the impact of adopting this new accounting guidance on the consolidated financial statements.

~~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.~~

Level 2—Observable inputs other than quoted prices in active markets for identical assets and liabilities, quoted prices for similar assets or liabilities in active or 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):~~

December 31, 2020
Level 1 Level 2 Level 3 Total
Assets:
Cash equivalents:
Money market funds $ 104,964 0 0 $ 104,964
Total $ 104,964 $ 0 $ 0 $ 104,964
Liabilities:
Contingent consideration related to acquisitions 0 0 29,454 29,454
Total $ 0 $ 0 $ 29,454 $ 29,454

December 31, 2019
Level 1 Level 2 Level 3 Total
Assets:
Cash equivalents:
Money market funds $ 124,303 0 0 $ 124,303
U.S. Treasury Bills 15,120 0 0 15,120
Total $ 139,423 $ 0 $ 0 $ 139,423
Liabilities:
Contingent consideration related to acquisitions 0 0 36,220 36,220
Total $ 0 $ 0 $ 36,220 $ 36,220

The valuation technique used to measure the fair value of money market funds and U.S. Treasury Bills includes using quoted prices in active markets. The money market funds have a fixed net asset value (NAV) of $1.0.

The contingent consideration as of December 31, 2020 and 2019 relates to the acquisition of MLW Squared Inc. (“Ahalogy”), Elevaate Ltd. (“Elevaate”) and Ubimo, Ltd. (“Ubimo”). The fair values of contingent consideration are based on the expected achievement of certain financial metrics as defined under the acquisition agreements and was 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.

~~The following table represents the change in the contingent consideration (in thousands):~~

Ubimo Elevaate Ahalogy Crisp
Level 3 Level 3 Level 3 Level 3 Total
Balance as of December 31, 2017 0 0 0 18,500 18,500
Addition related to acquisition
(initial measurement) 0 6,121 14,582 0 20,703
Change in fair value during the period 0 0 8,260 6,000 14,260
Payments made during the period 0 0 0 (24,500) (24,500)
Balance as of December 31, 2018 0 6,121 22,842 0 28,963
Addition related to acquisition
(initial measurement) 5,686 0 0 0 5,686
Change in fair value during the period 0 (2,587) 4,158 0 1,571
Balance as of December 31, 2019 5,686 3,534 27,000 0 36,220
Change in fair value during the period 15,244 4,990 0 0 20,234
Payments made during the period 0 0 (27,000) 0 (27,000)
Balance as of December 31, 2020 $ 20,930 $ 8,524 $ 0 $ 0 $ 29,454

During the years ended December 31, 2020, 2019, and 2018, the Company recorded a charge of $20.2 million, $1.6 million, and $14.3 million, respectively, for the re-measurement of the fair values of contingent consideration related to acquisitions, as a component of operating expenses in the accompanying consolidated statements of operations.

During the year ended December 31, 2020, the Company paid $27.0 million related to Ahalogy’s achievement of financial metrics, and as a result, 0 liability exists as of December 31, 2020. Out of the total consideration paid, $14.6 million was originally measured and recorded on the acquisition date as part of consideration transferred and $12.4 million was recorded subsequent to the acquisition date through changes in fair value of contingent consideration within the consolidated statements of operations.

During the year ended December 31, 2018, the Company paid $24.5 million related to Crisp’s achievement of financial metrics, and as a result, 0 liability existed as of December 31, 2018. Out of the total consideration paid, $14.8 million was originally measured and recorded on the acquisition date as part of consideration transferred and $9.7 million was recorded subsequent to the acquisition date through changes in fair value of contingent consideration within the consolidated statements of operations.

~~Fair Value Measurements of Other Financial Instruments~~

As of December 31, 2020 and 2019, the fair value of the 1.75% convertible senior notes due 2022 was $196.5 million and $195.4 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 9 for additional information related to the Company’s convertible debt.

~~4. Allowance for Credit Losses~~

~~The summary of activities in the allowance for credit losses is as follows (in thousands):~~

Year Ended December 31,
2020 2019 2018
Balance at beginning of period $ 2,021 $ 1,200 $ 786
Additions related to acquisitions 0 377 32
Provision for expected credit losses 888 1,227 509
Write-offs charged against the allowance (839) (783) (127)
Balance at end of period $ 2,070 $ 2,021 $ 1,200

~~5. Balance Sheet Components~~

~~Property and Equipment, Net~~

~~Property and equipment consist of the following (in thousands):~~

December 31,
2020 2019
Software $ 47,357 $ 41,876
Computer equipment 23,912 25,773
Leasehold improvements 6,197 5,883
Furniture and fixtures 2,533 2,449
Total 79,999 75,981
Accumulated depreciation and amortization (65,959) (63,543)
Projects in process 3,228 1,266
Property and equipment, net $ 17,268 $ 13,704

~~Depreciation and amortization expense of property and equipment was $7.2 million, $7.5 million and $7.2 million for the years ended December 31, 2020, 2019 and 2018, respectively.~~

The Company capitalized internal use software development costs of $7.5 million, $5.8 million, and $2.9 million during the years ended December 31, 2020, 2019 and 2018, respectively. During the years ended December 31, 2020, 2019 and 2018, the Company had $3.4 million, $2.5 million and $1.3 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. The unamortized capitalized internal use software development costs were $8.6 million and $5.8 million as of December 31, 2020 and 2019, respectively and included as part of software costs.

~~Accrued Compensation and Benefits~~

~~Accrued compensation and benefits consist of the following (in thousands):~~

December 31,
2020 2019
Commissions $ 7,247 $ 5,996
Bonus 3,150 5,997
Payroll and related expenses 3,116 2,533
Vacation 855 706
Accrued compensation and benefits $ 14,368 $ 15,232

~~Other Current Liabilities~~

~~Other current liabilities consist of the following (in thousands):~~

December 31,
2020 2019
Distribution fees $ 36,245 $ 20,360
Traffic acquisition cost 9,756 5,278
Operating lease liabilities 3,650 3,168
Prefunded Liability 3,067 5,429
Marketing expenses 2,251 2,164
Liability related to purchased intangible asset 1,250 1,000
Interest payable 282 282
Other 14,119 12,351
Other current liabilities $ 70,620 $ 50,032

~~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 preliminary 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 is 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. The fair value of the contingent consideration will be remeasured through earnings every reporting period. Refer to Note 3 for the fair value of contingent consideration at December 31, 2020.

~~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 preliminary 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 is based on Elevaate achieving certain financial metrics between February 1, 2019 through January 31, 2021. Refer to Note 3 for the fair value of contingent consideration at December 31, 2020.

~~Acquisition of SavingStar, Inc.~~

~~On August 27, 2018, the Company acquired all the outstanding shares of SavingStar, Inc. (“SavingStar”), a digital promotions companywith a CRM platform designed to help brands build and track loyalty programs with their consumers.~~

The total preliminary acquisition consideration at closing consisted of $7.5 million in cash. In addition, SavingStar may receive potential contingent consideration of up to $10.6 million payable in all cash, subject to achieving certain financial metrics between closing through February 29, 2020. At the date of acquisition, the contingent consideration’s fair value was determined to be 0 using an option pricing model. As of February 29, 2020, the date that the contingent consideration period ended, SavingStar did not achieve certain financial metrics for payout and the fair value was concluded to be 0. Accordingly, the Company determined that no payout was required when the contingent consideration period ended.

~~Acquisition of Ahalogy~~

On June 1, 2018, the Company acquired all the outstanding shares of Ahalogy, an influencer marketing firm that delivers premium content across social media channels for CPG brands. The acquisition enhances the

~~Company’s performance media solutions for CPGs and retailers, adding social media expertise and a roster of influencers.~~

The total preliminary acquisition consideration of $36.4 million consisted of $21.8 million in cash and contingent consideration of up to $30.0 million payable in all cash with an estimated fair value of $14.6 million as of the acquisition date. The contingent consideration payout was based on Ahalogy achieving certain financial metrics between closing through December 31, 2019. 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 remeasured every reporting period. As of December 31, 2019, the date that the contingent consideration period ended, Ahalogy earned the full payout of the contingent consideration by achieving certain financial metrics.The Company paid out $30.0 million during the year ended December 31, 2020, of which $27.0 million related to contingent consideration and $3.0 million related to certain bonuses; and as a result, 0 liability exists as of December 31, 2020. Of the total $30.0 million that was paid, $14.6 million is classified within financing activity and the remaining $15.4 million is 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 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 is recorded as goodwill. The goodwill arising from the acquisitions are largely attributable to the synergies expected to be realized. NaN of the goodwill recorded from the acquisitions will be deductible for income tax purposes.

~~For each of these acquisitions,~~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 consideration paid for each acquisition 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 Goodwill Goodwill
Deductible
for Taxes Acquisition
Related
Expenses
(1)
Ubimo $ 20,740 $ 384 $ 10,750 $ 9,606 Not Deductible $ 579
Elevaate $ 13,346 $ (60) $ 3,781 $ 9,625 Not Deductible $ 549
SavingStar $ 7,485 $ (1,126) $ 2,577 $ 6,034 Not Deductible $ 556
Ahalogy $ 36,432 $ 2,196 $ 11,580 $ 22,656 Not Deductible $ 684
$ 78,003 $ 1,394 $ 28,688 $ 47,921 $ 2,368

~~(1)Expensed as general and administrative~~

~~The following table sets forth each component of identifiable intangible assets acquired in connection with the acquisitions: (in thousands):~~

Ubimo Estimated
Useful
Life
(in Years) Elevaate Estimated
Useful
Life
(in Years) SavingStar Estimated
Useful
Life
(in Years) Ahalogy Estimated
Useful
Life
(in Years)
Developed technologies $ 7,100 4.0 $ 3,307 5.0 $ 1,476 3.0 $ 3,100 4.0
Customer relationships 3,400 2.0 379 5.0 1,040 3.0 6,210 6.0
Trade names 250 4.0 95 3.0 61 1.5 650 4.0
Vendor relationships — — — — — — 1,620 2.0
Total identifiable
intangible assets $ 10,750 $ 3,781 $ 2,577 $ 11,580

The financial results of the acquired companies are included in the Company’s consolidated statements of operations from their respective acquisition dates and were insignificant to the Company’s operating results. The pro forma impact of these acquisitions on consolidated revenues, income (loss) from operations and net loss was not material.

~~7. Goodwill and Intangible Assets~~

~~Goodwill:~~

Goodwill represents the excess of the consideration paid over the fair value of the net tangible and identifiable intangible assets acquired in a business combination. The changes in the carrying value of goodwill are as follows (in thousands):


	~~Goodwill~~
~~Balance as of December 31, 2018~~	$	~~118,821~~
~~Acquisition of Ubimo~~	~~9,606~~
~~Balance as of December 31, 2019~~	~~128,427~~
~~Acquisitions~~	0
~~Balance as of December 31, 2020~~	$	~~128,427~~

~~Intangible Assets:~~

~~The following table summarizes the gross carrying amount and accumulated amortization for the intangible assets (in thousands):~~

December 31, 2020
Gross Accumulated
Amortization Net Weighted
Average
Amortization
Period
(Years)
Media service rights $ 35,934 $ (25,688) $ 10,246 1.4
Promotion service rights 33,566 (17,234) 16,332 1.9
Developed technologies 27,170 (18,511) 8,659 2.5
Customer relationships 22,690 (16,105) 6,585 2.7
Data access rights 10,801 (8,420) 2,381 1.0
Domain names 5,948 (5,596) 352 0.0
Trade names 2,823 (2,546) 277 0.6
Vendor relationships 2,510 (2,510) 0 0.0
Patents 975 (909) 66 1.8
Registered users 420 (420) 0 0.0
$ 142,837 $ (97,939) $ 44,898 2.0

December 31, 2019
Gross Accumulated
Amortization Net Weighted
Average
Amortization
Period
(Years)
Media service rights $ 34,684 $ (16,098) $ 18,586 2.2
Promotion service rights 30,548 (10,682) 19,866 3.6
Developed technologies 27,170 (12,790) 14,380 3.2
Customer relationships 22,690 (12,267) 10,423 3.3
Data access rights 10,801 (6,415) 4,386 2.3
Domain names 5,948 (5,540) 408 0.8
Trade names 2,823 (1,560) 1,263 2.2
Vendor relationships 2,510 (2,172) 338 0.4
Patents 975 (873) 102 2.8
Registered users 420 (420) 0 0.0
$ 138,569 $ (68,817) $ 69,752 3.0

~~As of December 31, 2020 and 2019, 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 $29.1 million, $24.0 million and $17.8 million for the years ended December 31, 2020, 2019 and 2018, respectively. Estimated future amortization expense related to intangible assets as of December 31, 2020 is as follows (in thousands):

Total
2021 $ 25,211
2022 15,193
2023 3,583
2024 559
2025 0
Thereafter 0
Total estimated amortization expense $ 44,546

As of December 31, 2020, 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 assurances that intangible assets will not be impaired in future periods and the Company will continue to monitor the operating results, cash flow forecasts and challenges from declines in current market conditions, as well as impacts of COVID-19 for these intangible assets.

~~8. Restructuring Charges~~

The Company has carried out certain restructuring activities to further drive operational efficiencies and to align its resources with its business strategies. Restructuring charges include facility exit costs related to future contractual lease payments recorded in general and administrative expense on the consolidated statements of operations and severance and benefit costs related to headcount reduction recorded on the consolidated statement of operations based on the impacted employees function. During the years ended December 31, 2020, 2019, and 2018, the Company recognized restructuring expense of $1.5 million, $4.3 million, and $4.4 million, respectively.

~~9. Debt Obligations~~

~~2017 Convertible Senior Notes~~

In November 2017, the Company issued $200.0 million aggregate principal amount of 1.75% convertible senior notes due 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 will initially be 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 5-business day period after any 5 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 3 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. NaN sinking fund is provided for the notes.

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, 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”) is amortized to interest expense over the term of the notes at an effective interest rate of 5.8%.

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 are being 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.

~~The net carrying amount of the liability component of the notes recorded in convertible senior notes, net on the consolidated balance sheets was as follows (in thousands):~~

December 31, 2020 December 31, 2019
Principal $ 200,000 $ 200,000
Unamortized debt discount (21,046) (31,132)
Unamortized debt issuance costs (1,786) (2,711)
Net carrying amount of the liability component $ 177,168 $ 166,157

The net carrying amount of the equity component of the notes recorded in additional paid-in capital on the consolidated balance sheets was $49.1 million, net of debt issuance costs of $1.6 million as of December 31, 2020 and 2019.

~~The following table sets forth the interest expense related to the notes recognized in interest expense on the consolidated statements of operations (in thousands):~~

Year Ended December 31,
2020 2019 2018
Contractual interest expense $ 3,500 $ 3,500 $ 3,500
Amortization of debt discount 10,086 9,518 8,981
Amortization of debt issuance costs 925 921 917
Total interest expense related to the Notes $ 14,511 $ 13,939 $ 13,398

~~10. 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, and (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 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~~

~~The fair value of each option was estimated using Black-Scholes model on the date of grant for the periods presented using the following assumptions:~~

Year Ended December 31,
2020 2019 2018
Expected life (in years) 6.02 6.02 - 6.08 6.02
Risk-free interest rate 0.96% 1.42% - 2.66% 2.66 %
Volatility 50 % 50 % 50 %
Dividend yield 0 0 0

~~The weighted-average grant-date fair value of options granted was $4.26, $4.33 and $6.59 per share during the years ended December 31, 2020, 2019, and 2018, respectively.~~

~~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 grant. The RSUs are excluded from issued and outstanding shares until they are vested.~~

~~A summary of the Company’s stock option and RSUs award activity under the Plans is as follows:~~

Options Outstanding RSUs Outstanding
Shares
Available
for Grant
Number of
Shares
Weighted
Average
Exercise
Price Weighted
Average
Remaining
Contractual
Term (Years) Aggregate
Intrinsic
Value
(in thousands) Number of
Shares Weighted
Average
Grant
Date Fair
Value
Balance as of December 31, 2017 4,425,155 7,412,228 $ 10.36 6.09 $ 25,415 5,194,292 12.26
Increase in shares authorized 3,727,989 — — — — — —
Options granted (801,000) 801,000 $ 13.10 — — — —
Options exercised — (1,329,361) $ 3.03 — $ 13,821 — —
Options canceled or expired 261,861 (261,861) $ 11.38 — — — —
RSUs and PSUs granted (2,838,879) — — — — 2,838,879 13.12
RSUs released — — — — — (2,287,045) 12.97
RSUs canceled or expired 841,965 — — — — (841,965) 11.99
RSUs vested and withheld for taxes 880,262 — — — — — —
Balance as of December 31, 2018 6,497,353 6,622,006 $ 12.12 5.96 $ 9,987 4,904,161 12.48
Increase in shares authorized 3,799,808 — — — — — —
Options granted (2,799,855) 2,799,855 $ 8.74 — — — —
Options exercised — (433,762) $ 5.39 — $ 2,406 — —
Options canceled or expired 387,658 (387,658) $ 11.37 — — — —
RSUs granted (4,015,504) — — — — 4,015,504 9.49
RSUs released — — — — — (2,735,184) 11.79
RSUs canceled or expired 1,161,806 — — — — (1,161,806) 11.67
RSUs vested and withheld for taxes 1,004,914 — — — — — —
Balance as of December 31, 2019 6,036,180 8,600,441 $ 11.40 5.16 $ 8,811 5,022,675 10.66
Increase in shares authorized 3,574,847 — — — — — —
Options granted (1,150,178) 1,150,178 $ 8.95 — — — —
Options exercised — (331,007) $ 8.20 — $ 463 — —
Options canceled or expired 1,259,391 (1,259,391) $ 11.22 — — — —
RSUs granted (3,340,532) — — — — 3,340,532 8.33
RSUs released — — — — — (2,410,803) 10.41
RSUs canceled or expired 1,243,550 — — — — (1,243,550) 10.83
RSUs vested and withheld for taxes 843,885 — — — — — —
Balance as of December 31, 2020 8,467,143 8,160,221 $ 11.21 5.03 $ 7,100 4,708,854 9.09
Vested and exercisable as of December 31, 2020 5,978,237 $ 12.13 3.68 $ 4,913

~~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 shares vested during the years ended December 31, 2020, 2019, and 2018 was $7.5 million, $6.3 million and $6.7 million, respectively.~~

~~Additional information for options outstanding and exercisable as of December 31, 2020 is as follows:~~

Options Outstanding Options Exercisable
Exercise Prices Number of
Shares
Weighted Average
Remaining
Contractual Term
(Years)
Weighted
Average
Exercise
Price Number of
Shares Weighted
Average
Exercise
Price
$3.68 - $7.34 1,675,201 6.42 $ 6.45 900,251 $ 5.68
$8.51 -$8.65 1,658,497 3.08 8.59 1,658,497 8.59
$8.66 - $9.96 2,002,915 7.70 9.22 722,248 9.50
$10.53 - $16.25 2,023,608 3.68 13.81 1,897,241 13.87
$ 25.00 800,000 2.87 $ 25.00 800,000 $ 25.00
8,160,221 5,978,237

~~Employee Stock Purchase Plan~~

The Company’s Board of Directors adopted the 2013 Employee Stock Purchase Plan (“ESPP”), which became effective in March 2014, pursuant to which 1,200,000 shares of common stock were reserved for future issuance. In addition, ESPP provides for annual increases in the number of shares available for issuance on the first day of each year equal to the least of (i) 0.5% of the outstanding shares of common stock on the last day of the immediately preceding year, (ii) 400,000 shares or (iii) such other amount as may be determined by the Board of Directors. Eligible employees can enroll and elect to contribute up to 15% of their base compensation through payroll withholdings in each offering period, subject to certain limitations. Each offering period is six months in duration. 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.

~~The fair value of the option feature is estimated using the Black-Scholes model for the period presented based on the following assumptions:~~

Year Ended December 31,
2020 2019 2018
Expected life (in years) 0.5 0.5 0.5
Risk-free interest rate 0.12% - 1.59% 1.59% - 2.50% 1.42% - 2.50%
Volatility 55% - 60% 35% - 55% 35% - 40%
Dividend yield 0 0 0

During the year ended December 31, 2020, a total of 1,924,414 shares of common stock were issued under the 2013 Employee Stock Purchase Plan (“ESPP”), since inception of the plan. As of December 31, 2020, a total of 1,675,586 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 included in the Company’s consolidated statements of operations (in thousands):~~

Year Ended December 31,
2020 2019 2018
Cost of revenues $ 1,743 $ 2,193 $ 2,315
Sales and marketing 5,311 6,812 6,596
Research and development 3,831 4,804 6,137
General and administrative 17,486 18,328 16,338
Total stock-based compensation expense $ 28,371 $ 32,137 $ 31,386

During the years ended December 31, 2020, 2019, and 2018 the Company capitalized stock-based compensation cost of $0.4 million, $0.5 million, and $0.1 million, respectively, in projects in process as part of property and equipment, net on the accompanying consolidated balance sheets.

As of December 31, 2020, there was $47.9 million unrecognized stock-based compensation expense of which $9.3 million is related to stock options and ESPP and $38.6 million is related to RSUs. The total unrecognized stock-based compensation expense related to stock options and ESPP as of December 31, 2020 will be amortized over a weighted-average period of 2.57 years. The total unrecognized stock-based compensation expense related to RSUs as of December 31, 2020 will be amortized over a weighted-average period of 2.74 years.

~~11. Stockholders’ Equity~~

~~Amended and Restated Certificate of Incorporation~~

In March 2014, the Company filed an amended and restated certificate of incorporation, which became effective immediately following the completion of the Company’s IPO. Under the restated certificate of incorporation, the authorized capital stock consists of 250,000,000 shares of common stock and 10,000,000 shares of preferred stock.

~~Common Stock~~. The rights, preferences and privileges of the holders of common stock are subject to the rights of the holders of shares of any series of preferred stock which the Company may issue in the future. Subject to the foregoing, for as long as such stock is outstanding, the holders of common stock are entitled to receive ratably any dividends as may be declared by the Board of Directors out of funds legally available for dividends. Holders of common stock are entitled to 1 vote per share on any matter to be voted upon by stockholders. The amended and restated certificate of incorporation establishes a classified Board of Directors that is divided into 3 classes with staggered three years terms. Only the directors in 1 class will be subject to election at each annual meeting of stockholders, with the directors in other classes continuing for the remainder of their ~~three~~ year terms. Upon liquidation, dissolution or winding-up, the assets legally available for distribution to the Company’s stockholders would be distributable ratably among the holders of common stock and any participating preferred stock outstanding at that time, subject to prior satisfaction of all outstanding debt and liabilities and the preferential rights of and the payment of liquidation preferences, if any, on any outstanding shares of preferred stock.

~~Preferred Stock~~. The Board of Directors is authorized to issue undesignated preferred stock in one or more series without stockholder approval and to determine for each such series of preferred stock the voting powers, designations, preferences, and special rights, qualifications, limitations, or restrictions as permitted by law, in each case without further vote of action by the stockholders. The Board of Directors can also increase or decrease the number of shares of any series of preferred stock, but not below the number of shares of that series then outstanding, without any further vote or action by the stockholders. The Board of Directors may authorize the issuance of preferred stock with voting or conversion rights that could adversely affect the voting power or other rights of the holders of common stock.

~~Amendment~~. The amendment of the provisions in the restated certificate requires approval by holders of at least 66 2/3% of the Company’s outstanding capital stock entitled to vote generally in the election of directors.

~~Common Stock Repurchases~~

The Board of Directors has approved programs for the Company to repurchase shares of its common stock. In August 2019, the Company’s Board of Directors authorized a one-year share repurchase program (the “August 2019 Program”) for the Company to repurchase up to $50.0 million of its common stock from August 2019 through August 2020. During the year ended December 31, 2020, the Company did 0t repurchase any shares of its common stock, and the program expired in August 2020.

Additionally, in February 2021, the Company’s Board of Directors authorized the 2021 Program for the Company to repurchase up to $50.0 million of its common stock from February 2021 through February 2022. Stock repurchases may be made from time to time in open market transactions or privately negotiated transactions, and the Company may use a plan that is intended to meet the requirements of SEC Rule 10b5-1 to enable stock repurchases to occur during periods when the trading window would otherwise be closed. The Company may suspend, modify or terminate the 2021 Program at any time without prior notice.

~~100~~

~~12. Income Taxes~~

~~The components of the Company’s loss before provision for income taxes were as follows (in thousands):~~

Year Ended December 31,
2020 2019 2018
Domestic $ 44,237 $ 39,102 $ 26,813
Foreign 20,425 (2,705) 1,023
Total $ 64,662 $ 36,397 $ 27,836

~~The components of the provision for (benefit from) income taxes are as follows (in thousands):~~

Year Ended December 31,
2020 2019 2018
Current:
Federal $ 133 $ (14) $ 0
State 34 219 147
Foreign 642 342 390
Total current income tax expense 809 547 537
Deferred:
Federal 93 93 120
State 10 39 102
Foreign (193) (19) (277)
Total deferred income tax expense (benefit) (90) 113 (55)
Total $ 719 $ 660 $ 482

~~A reconciliation of the federal statutory income tax rate to the Company’s effective tax rate is as follows:~~

Year Ended December 31,
2020 2019 2018
Federal tax (21.00) % (21.00) % (21.00) %
State income tax, net of federal tax benefit 0.07 % 0.70 % 0.91 %
Tax credits (0.78) % (2.20) % (4.55) %
Stock-based compensation 4.31 % 2.42 % 0.44 %
Foreign income taxes at other than U.S. rates (2.15) % (0.92) % (0.85) %
Acquisition related costs 0.02 % 0.43 % 1.10 %
Contingent consideration related to acquisitions 0 % 2.35 % 10.90 %
162(m) 1.39 % 3.73 % 1.31 %
GILTI Inclusion 0 % 1.05 % 0 %
Other 0.44 % 1.26 % 1.69 %
Tax Cuts and Jobs Act 0 % 0 % 0 %
Valuation allowance, net 18.81 % 13.96 % 11.82 %
Effective tax rate 1.11 % 1.78 % 1.77 %

The Company recorded a provision for income taxes of $0.7 million, $0.7 million and $0.5 million for the years ended December 31, 2020, 2019 and 2018, respectively. The provision for income taxes for the year ended December 31, 2020, 2019 and 2018 was primarily attributable to the impact of the indefinite lived deferred tax liabilities related to tax deductible goodwill, change in the geographical mix of earnings in foreign jurisdictions and state taxes.

~~101~~

As a result of meeting certain employment and capital investment actions under Section 10AA of the Indian Income Tax Act, the Company’s Indian subsidiary is wholly exempt from income tax for tax years beginning April 1, 2014 through March 31, 2019 and partially exempt from income tax for tax years beginning April 1, 2019 through March 31, 2024.

~~The components of the Company’s deferred tax assets and liabilities are as follows (in thousands):~~

Year Ended December 31,
2020 2019
Deferred tax assets:
Credits and net operating loss carryforward $ 116,119 $ 107,163
Accrued compensation 280 174
Deferred revenues 271 199
Stock-based compensation 5,638 6,819
Property and equipment 746 79
Purchased intangible assets 4,411 38
Operating lease 4,536 1,969
Other deferred tax assets 1,682 1,056
Total deferred tax assets 133,683 117,497
Valuation allowance (121,927) (107,161)
Deferred tax liabilities:
Basis difference on purchased intangible assets 2,969 3,308
Operating lease 3,683 1,297
Other deferred tax liabilities 5,157 7,668
Tax deductible goodwill 1,800 0
Total deferred tax liabilities 13,609 12,273
Net deferred tax liabilities $ (1,853) $ (1,937)

Other deferred tax assets and liabilities are primarily comprised of the tax effects of charitable contributions, allowance for credit losses, and other miscellaneous accruals. As of December 31, 2020 and 2019, the Company had gross deferred tax assets of $133.7 million and $117.5 million, respectively. The Company also had deferred tax liabilities of $13.6 million and $12.3 million as of December 31, 2020 and 2019, respectively. Realization of the deferred tax assets is dependent upon the generation of future taxable income, if any, the amount and timing of which is uncertain. Based on the available objective evidence, and historical operating performance, management believes that it is more likely than not that all U.S. and certain foreign deferred tax assets are not realizable. Accordingly, the net deferred tax assets have been fully offset with a valuation allowance. The net valuation allowance increased by approximately $14.8 million and $11.9 million for the years ended December 31, 2020 and 2019, respectively.

As of December 31, 2020, the Company had federal net operating loss carryforwards of approximately $287.3 million which will begin to expire in the year 2021. The Company had state net and foreign operating loss carryforwards of approximately $277.1 million and $50.2 million, respectively. As of December 31, 2020, the Company has research credit carryforwards for federal income tax purposes of approximately $16.7 million which will begin to expire in the year 2032. The Company also had state net research credit carryforwards for income tax purposes of approximately $19.3 million which can be carried forward indefinitely. The Company also had MAT credit carry forwards for Indian income tax purposes of approximately $0.7 million which will begin to expire in the year 2030.

~~A reconciliation of the gross unrecognized tax benefit is as follows (in thousands):~~

~~102~~

Year Ended December 31,
2020 2019 2018
Unrecognized tax benefit - beginning balance $ 8,840 $ 8,217 $ 7,527
Decreases for tax positions taken in prior years 0 0 (242)
Increases for tax positions taken in current year 420 623 932
Unrecognized tax benefit - ending balance $ 9,260 $ 8,840 $ 8,217

The unrecognized tax benefits, if recognized, would not impact the Company's effective tax rate as the recognition of these tax benefits would be offset by changes in the Company's valuation allowance. The Company does not believe there will be any material changes in its unrecognized tax benefits over the next twelve months.

As of December 31, 2020 and 2019, the Company had 0 accrued interest or penalties related to uncertain tax positions. Due to the Company’s historical loss position, all tax years from inception through December 31, 2020 remain open due to unutilized net operating losses.

The Company files income tax returns in the United States and various states and foreign jurisdictions and is subject to examination by various taxing authorities including major jurisdiction like the United States. As such, all its net operating loss and research credit carryforwards that may be used in future years are subject to adjustment, if and when utilized.

Utilization of the net operating loss carryforwards and credits may be subject to a substantial annual limitation due to the ownership change limitations provided by the Internal Revenue Code of 1986, as amended, and similar state provisions. The annual limitation may result in the expiration of net operating losses and credits before their utilization.

~~13. Net Income (Loss) per Share~~

~~Net Loss per Share Attributable to Common Stockholders~~

~~The computation of the Company’s basic and diluted net loss per share is as follows (in thousands, except per share data):~~

Year Ended December 31,
2020 2019 2018
Net loss $ (65,381) $ (37,057) $ (28,318)
Weighted-average number of shares used to
compute net loss per share, basic and diluted 90,412 91,163 93,676
Net loss per share, basic and diluted $ (0.72) $ (0.41) $ (0.30)

~~Basic and diluted net loss per share is the same for each period presented, as the inclusion of all potential common shares outstanding would have been anti-dilutive.~~

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):

Year Ended December 31,
2020 2019 2018
Stock options and ESPP 8,229 8,642 6,664
Restricted stock units 4,709 5,023 4,904
Shares related to convertible senior notes 11,521 11,521 11,521
24,459 25,186 23,089

~~103~~

~~14. Leases~~

The Company has entered into operating leases primarily for office facilities. These leases have terms which typically range from 1 year to 5 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. Effective January 1, 2019, these operating leases are included as right-of-use assets in other assets on the consolidated balance sheets, as a result of the adoption of the new leasing standard as discussed under Note 2 to the consolidated financial statements, 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 consolidated balance sheets.

Based on the present value of the lease payments for the remaining lease term of the Company's existing leases, the Company recognized 1) right-of-use assets of $8.5 million, adjusted for deferred rent and lease incentives as of the adoption date, and 2) lease liabilities for operating leases of $11.5 million on January 1, 2019. Operating lease right-of-use assets and liabilities commencing after January 1, 2019 are recognized at commencement date based on the present value of lease payments over the lease term.

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 December 31, 2020, 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 consolidated balance sheet due to the accounting policy election as discussed under Note 2 to the consolidated financial statements.

All operating lease expense is recognized on a straight-line basis over the lease term. During the year ended December 31, 2020, the Company recognized $5.3 million in total lease costs, which is comprised of $4.4 million in operating lease costs for right-of-use assets and $0.9 million 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 consolidated financial statements.

~~Supplemental cash flow information related to operating leases was as follows (in thousands):~~

Year Ended December 31,
2020 2019
Cash paid for operating lease liabilities $ 3,940 $ 5,581
Right-of-use assets obtained in exchange for lease obligations 12,297 14,287

~~Supplemental balance sheet information related to operating leases was as follows (in thousands, except lease term and discount rate):~~

~~104~~

December 31, 2020 December 31, 2019
Operating right-of-use assets reported as:
Operating lease right-of-use assets $ 16,222 $ 7,211

Operating lease liabilities reported as:
Other current liabilities $ 3,650 $ 3,168
Other non-current liabilities 15,956 6,692
Total operating lease liabilities $ 19,606 $ 9,860

Weighted average remaining lease term (in years) 7.2 3.9
Weighted average discount rate 5.8 % 7.9 %

~~Maturities of operating lease liabilities were as follows (in thousands):~~

Operating Leases
2021 $ 4,636
2022 3,555
2023 3,459
2024 2,845
2025 2,241
2026 and thereafter 7,967
Total lease payments $ 24,703

Less: Imputed Interest (5,097)
Total $ 19,606

~~15. Commitments and Contingencies~~

~~Purchase Obligations~~

~~The Company has unconditional purchase commitments, primarily related to distribution fees, software license fees and marketing services, of $37.8 million as of December 31, 2020.~~

Some of our agreements with retailers include certain prepaid or guaranteed distribution fees which, in some cases, may apply to multiple annual periods. If the adoption and usage of our platforms do not meet projections or minimums, these prepaid or guaranteed distribution fees may not be recoverable and any shortfall may be payable by us at the end of the applicable period. We considered various factors in our assessment including our historical experience with the transaction volumes through the retailer and comparative retailers, ongoing communications with the retailer to increase its marketing efforts to promote the digital platform, as well as the projected revenues, and associated revenue share payments. For example, in 2020, implementation with a retailer of one of the Company’s solutions resulted in slower than expected adoption due to a variety of factors, including the spread of COVID-19 and a dispute related to the retailer's failure to perform certain obligations under the agreement. In light of these factors, the Company was not able to meet the contractual minimum under such arrangement at the end of the applicable period, which was originally scheduled to end in October 2020. In order to resolve a disagreement regarding the parties' respective obligations under the agreement with respect to such applicable period, the Company
~~recognized a loss of $8.8 million to settle such matter. This loss is included in cost of revenues on our consolidated statements of operations.~~

~~Indemnification~~

In the normal course of business, to facilitate transactions related to the Company’s operations, the Company indemnifies certain parties, including CPGs, advertising agencies and other third parties. The Company has agreed

~~105~~

to hold certain parties harmless against losses arising from claims of intellectual property infringement or other liabilities relating to or arising from our products, services or other contractual infringement. The term of these indemnity provisions generally survive termination or expiration of the applicable agreement. To date, the Company has not recorded any liabilities related to these agreements.

In accordance with our bylaws and/or pursuant to indemnification agreements entered into with directors, officers and certain employees, we have indemnification obligations to our directors, officers and employees for claims brought against these persons arising out of certain events or occurrences while they are serving at our request in such a capacity. We maintain a director and officer liability insurance coverage to reduce our exposure to such obligations, and payments made under these agreements. To date, there have been no indemnification claims by these directors, officers and employees.

We maintain various insurance coverages, subject to policy limits, that enable us to recover a portion of any amounts paid by us in connection with our obligation to indemnify our customers and vendors. However, because our maximum liability associated with such indemnification obligations generally is not stated explicitly in the related agreements, and further because many states prohibit limitations of liability for such indemnified claims, the maximum potential amount of future payments we could be required to make under these indemnification provisions could significantly exceed insurance policy limits.

~~Litigation~~

In the ordinary course of business, the Company may be involved in lawsuits, claims, investigations, and proceedings consisting of intellectual property, commercial, employment, and other matters. The Company records a provision for these claims when it is both probable that a liability has been incurred and the amount of the loss, or a range of the potential loss, can be reasonably estimated. These provisions are reviewed regularly and adjusted to reflect the impacts of negotiations, settlements, rulings, advice of legal counsel, and other information or events pertaining to a particular case. In the event that one or more of these matters were to result in a claim against the Company, an adverse outcome, including a judgment or settlement, may cause a material adverse effect on the Company’s future business, operating results, or financial condition.

The Company believes that liabilities associated with any claims are remote, therefore the Company has not recorded any accrual for claims as of December 31, 2020 and 2019. The Company expenses legal fees in the period in which they are incurred.

~~16. Employee Benefit Plan~~

The Company maintains a defined-contribution plan in United States that is intended to qualify under Section 401(k) of the Internal Revenue Code. The 401(k) plan provides retirement benefits for eligible employees. Eligible employees may elect to contribute to the 401(k) plan. The Company provides a match of up to the lesser of 3% of each employee’s annual salary or $6,000, which vests immediately for employees with tenure of over a year of continuous employment. The Company’s matching contribution expense was $2.2 million, $1.7 million and $1.9 million for the years ended December 31, 2020, 2019 and 2018, respectively.

~~17. Concentrations~~

~~As of December 31, 2020 and 2019, there was 0 customer with an accounts receivable balance greater than 10% of total accounts receivable.~~

For the year ended December 31, 2020, there was 0 customer that accounted for revenues greater than 10% of revenues. For the year ended December 31, 2019, there was 1 customer that accounted for revenues greater than 10% of total revenues. For the year ended December 31, 2018, there was 0 customer that accounted for revenues greater than 10% of total revenues.

~~18. Information About Geographic Areas~~

Revenues generated outside of the United States were insignificant for all periods presented. Additionally, as the Company’s assets are primarily located in the United States, information regarding geographical location is not presented, as such amounts are immaterial to these consolidated financial statements taken as a whole.

~~106~~

~~19. Selected Quarterly Financial Data (Unaudited)~~

The following tables set forth our quarterly unaudited consolidated statements of operations for each of the eight quarters in the years ended December 31, 2020 and 2019 (in thousands, except per share data):

Year Ended December 31, 2020 Year Ended December 31, 2019
Q4 Q3 Q2 Q1 Q4 Q3 Q2 Q1
Revenues $ 142,529 $ 121,116 $ 83,455 $ 98,787 $ 118,532 $ 114,830 $ 104,691 $ 98,107
Cost of revenues 92,469 73,603 50,731 61,111 72,219 70,458 64,106 56,823
Gross margin 50,060 47,513 32,724 37,676 46,313 44,372 40,585 41,284
Operating expenses:
Sales and marketing 31,124 24,555 23,814 25,034 27,541 24,310 23,870 25,523
Research and development 11,358 9,744 8,621 10,593 10,771 9,236 8,699 10,370
General and administrative 14,720 12,099 12,268 15,090 14,227 17,643 12,835 13,623
Change in fair value contingent
   consideration, net 14,446 1,562 3,766 460 519 999 (3,009) 3,062
Total operating expenses 71,648 47,960 48,469 51,177 53,058 52,188 42,395 52,578
Loss from operations (21,588) (447) (15,745) (13,501) (6,745) (7,816) (1,810) (11,294)
Interest expense (3,691) (3,646) (3,610) (3,574) (3,539) (3,507) (3,470) (3,439)
Other income (expense), net 432 (59) 187 580 1,009 1,175 1,508 1,531
Loss before income taxes (24,847) (4,152) (19,168) (16,495) (9,275) (10,148) (3,772) (13,202)
Provision for (benefit from)
   income taxes 458 66 (35) 230 285 215 134 26
Net loss $ (25,305) $ (4,218) $ (19,133) $ (16,725) $ (9,560) $ (10,363) $ (3,906) $ (13,228)
Net loss per share, basic and diluted $ (0.28) $ (0.05) $ (0.21) $ (0.19) $ (0.11) $ (0.12) $ (0.04) $ (0.14)
Weighted-average number of
   common shares used in computing
   net loss per share, basic and diluted 91,300 90,585 90,112 89,638 89,123 88,789 92,558 94,263

~~20. Subsequent Events~~

In February 2021, the Company’s Board of Directors authorized the 2021 Program for the Company to repurchase up to $50.0 million of its common stock from February 2021 through February 2022. Stock repurchases may be made from time to time in open market transactions or privately negotiated transactions, and the Company may use a plan that is intended to meet the requirements of SEC Rule 10b5-1 to enable stock repurchases to occur during periods when the trading window would otherwise be closed. The Company may suspend, modify or terminate the 2021 Program at any time without prior notice.

In February 2021, the Company entered into an Office Lease (“Lease”) with approximately 25,610 rentable square feet, for office facilities located in Salt Lake City, Utah. The lease term is approximately eight years with total lease payments of $6.7 million over the lease term.

~~Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure.~~

~~None.~~

~~Item 9A. Controls and Procedures.~~

~~Evaluation of Disclosure Controls and Procedures~~

The phrase “disclosure controls and procedures” refers to controls and procedures designed to ensure that information required to be disclosed in our reports filed or submitted under the Exchange Act, such as this Annual Report on Form 10-K, is recorded, processed, summarized and reported within the time periods specified in the rules and forms of the U.S. Securities and Exchange Commission (SEC). Disclosure controls and procedures are also designed to ensure that such information is accumulated and communicated to our management, including our

~~107~~

~~chief executive officer (CEO) and chief financial officer (CFO), as appropriate to allow timely decisions regarding required disclosure.~~

Our management, under the supervision and with the participation of our CEO and CFO, evaluated the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rules 13a- 15(e) and 15d- 15(e) under the Exchange Act, as of the end of the period covered by this Annual Report on Form 10-K. Based upon such evaluation, our CEO and CFO concluded that as of December 31, 2020, our disclosure controls and procedures were effective to provide reasonable assurance that information we are required to disclose in reports that we file or submit under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified by the SEC, and that such information is accumulated and communicated to our management, including our CEO and CFO, as appropriate, to allow timely decisions regarding required disclosure.

~~Management’s Annual Report on Internal Controls Over Financial Reporting~~

Our management is responsible for establishing and maintaining adequate internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act). Management conducted an assessment of the effectiveness of our internal control over financial reporting based on the criteria set forth in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework). Based on the assessment, management has concluded that its internal control over financial reporting was effective as of December 31, 2020 to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements in accordance with GAAP.

Our independent registered public accounting firm, Ernst & Young LLP, independently assessed the effectiveness of our internal control over financial reporting, as stated in their attestation report, which is included in Part II, Item 8 of this Form 10-K.

~~Changes in Internal Control over Financial Reporting~~

There were no changes in our internal control over financial reporting identified in management’s evaluation pursuant to Rules 13a-15(d) or 15d-15(d) of the Exchange Act during the fourth quarter of 2020 that materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

~~Limitations on Effectiveness of Controls and Procedures~~

In designing and evaluating the disclosure controls and procedures, management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives. In addition, the design of disclosure controls and procedures must reflect the fact that there are resource constraints and that management is required to apply judgment in evaluating the benefits of possible controls and procedures relative to their costs.

~~Item 9B. Other Information.~~

~~None.~~

~~108~~

~~PART III~~

~~Item 10. Directors, Executive Officers, and Corporate Governance~~

The information called for by this item will be set forth in our Proxy Statement for the Annual Meeting of Stockholders to be filed with the SEC within 120 days after the end of the fiscal year ended December 31, 2020 and is incorporated herein by reference.

Our Board of Directors has adopted a code of business conduct and ethics that applies to all of our employees, officers and directors, including our Chief Executive Officer, Chief Financial Officer and other executive and senior financial officers. The full text of our code of business conduct and ethics is posted on the investor relations page on our website which is located at http://investor.quotient.com. We will post any amendments to our code of business conduct and ethics, or waivers of its requirements, on our website.

~~Item 11. Executive Compensation~~

~~The information called for by this item will be set forth in our Proxy Statement and is incorporated herein by reference.~~

Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters

Security Ownership of Certain Beneficial Owners and Management

The following table sets forth, as of March 31, 2023, except as otherwise indicated, certain information ~~required~~regarding beneficial ownership of our common stock (a) by ~~this item~~each person known by us to be the beneficial owner of more than five percent of the outstanding shares of common stock, (b) by each director and nominee for director, (c) by the NEOs (as defined in “Executive Compensation” above) and (d) by all of our current executive officers and directors as a group.

We have determined beneficial ownership in accordance with the rules of the SEC. Except as indicated by the footnotes below, we believe, based on the information furnished to us, that the persons and entities named in the table below have sole voting and investment power with respect to all shares of common stock that they beneficially own, subject to applicable community property laws.

Applicable percentage ownership is based on 98,159,584 shares of common stock outstanding at March 31, 2023. In computing the number of shares of common stock beneficially owned by a person and the percentage ownership of that person, we deemed to be outstanding all shares of common stock subject to options held by that person or entity that are currently exercisable or that will bebecome exercisable within 60 days of March 31, 2023. We did not deem these shares outstanding, however, for the purpose of computing the percentage ownership of any other person. Unless otherwise indicated, the address of each beneficial owner listed in the table below is c/o Quotient Technology Inc., 1260 East Stringham Avenue, Suite 600, Salt Lake City, Utah 84106.


Name of Beneficial Owner	Number of Shares Beneficially Owned	Percent Owned
Directors, Director Nominee(s) and Executive Officers:
Matthew Krepsik(1)	240,023	*
Yuneeb Khan(2)	69,409	*
Connie Chen(3)	694,788	*
Steven Boal(4)	6,756,987	6.88	%
Scott Raskin(5)	3,133,171	3.19	%
Pamela Strayer(6)	96,156	*
John Kellerman(7)	22,123	*
Kimberly Anstett(8)	—	*
Andrew Jody Gessow(9)	637,743	*
Lorraine Hariton(10)	32,149	*
Alison Hawkins(11)	10,224	*
Eric Higgs(12)	13,550	*
Robert McDonald(13)	95,847	*
David Oppenheimer(14)	83,762	*
Joseph Reece(15)	53,601	*
Michael Wargotz(16)	—	*
All executive officers, directors and director nominee(s) as a group (12 persons)(17)	1,931,096	1.97	%
5% Stockholders:
Engaged Capital(18)	8,107,150	8.26	%
Lynrock Lake LP(19)	6,567,376	6.69	%
Trigran Investments, Inc.(20)	5,203,508	5.30	%

•Represents beneficial ownership of less than 1% of the outstanding shares of our common stock.

(1)Consists of (i) 97,835 shares held of record by Mr. Krepsik, (ii) 4,688 shares issuable upon the vesting of RSUs within 60 days of March 31, 2023, and (iii) 137,500 shares that are issuable upon the exercise of stock options, which are currently exercisable or exercisable within 60 days of March 31, 2023.

(2)Consists of (i) 40,010 shares held of record by Mr. Khan, and (ii) 29,399 shares issuable upon the vesting of RSUs within 60 days of March 31, 2023.

(3)Consists of (i) 258,489 shares held of record by Ms. Chen, (ii) 4,687 shares issuable upon the vesting of RSUs within 60 days of March 31, 2023, and (iii) 431,612 shares that are issuable upon the exercise of stock options, which are currently exercisable or exercisable within 60 days of March 31, 2023.

(4)Based on information set forth in a Form 4 filed with the SEC on July 1, 2022, consists of (i) 2,867,286 shares held of record by Mr. Boal, (ii) 3,237 shares held by the EBB 2011 Trust dated September 23, 2011, of which Stuart Schiff is trustee, (iii) 3,237 shares held by the JMB 2011 Trust dated September 23, 2011, of which Stuart Schiff is trustee, and (iv) 3,237 shares held by the SEB 2011 Trust dated September 23, 2011, of which Stuart Schiff is trustee. This also includes 3,879,990 shares that are issuable upon the exercise of stock options, which are currently exercisable or exercisable within 60 days of March 31, 2023.

(5)Consists of (i) 1,213,128 shares held of record by Mr. Raskin, and (ii) 1,920,043 shares that are issuable upon the exercise of stock options, which are currently exercisable or exercisable within 60 days of March 31, 2023. Mr. Raskin stepped down as President effective March 31, 2023.

(6)Based on information set forth in a D&O questionnaire completed by Ms. Strayer for FY’2022 on January 12, 2023, consists of 96,156 shares held of record by Ms. Strayer as of January 6, 2023.

(7)Based on information set forth in a D&O questionnaire completed by Mr. Kellerman for FY’2022 on January 11, 2023, consists of 22,123 shares held of record by Mr. Kellerman as of January 6, 2023.

(8)Ms. Anstett holds no shares of record.

(9)Consists of (i) 85,643 shares held of record by Mr. Gessow, (ii) 400,108 shares held of record by the Gessow Family Trust for which Mr. Gessow serves as trustee and (iii) 151,992 shares that are issuable upon the exercise of stock options, which are currently exercisable or exercisable within 60 days of March 31, 2023.

(10)Consists of 32,149 shares held of record by Ms. Hariton.

(11)Consists of 10,224 shares held of record by Ms. Hawkins.

(12)Consists of 13,550 shares held of record by Mr. Higgs.

(13)Consists of 95,847 shares held of record by Mr. McDonald.

(14)Consists of (i) 62,211 shares held of record by Mr. Oppenheimer and (ii) 21,551 shares that are issuable upon the exercise of stock options, which are currently exercisable or exercisable within 60 days of March 31, 2023.

(15)Consists of (i) 35,000 shares held of record by Mr. Reece, and (ii) 18,601 shares issuable upon the vesting of RSUs within 60 days of March 31, 2023,

(16)Mr. Wargotz holds no shares of record.

(17)Consists of (i) 1,131,066 shares beneficially owned by our ~~Proxy Statement~~current directors, director nominee(s) and current executive officers, (ii) 57,375 shares issuable upon the vesting of RSUs within 60 days of March 31, 2023 for the benefit of such individuals and (ii) 742,655 shares that are issuable upon the exercise of stock options, which are currently exercisable or exercisable within 60 days of March 31, 2023.

(18)Based on information set forth in a Schedule 13D/A filed with the SEC on November 14, 2022 by Engaged Capital, LLC, Engaged Capital Holdings, LLC, Glenn W. Welling, Engaged Capital Flagship Master Fund, LP, Engaged Capital Flagship Fund, LP, and Engaged Capital Flagship Fund, Ltd. (collectively, “Engaged Capital”). Engaged Capital, LLC, Engaged Capital Holdings, LLC and Glenn W. Welling have sole voting power over 8,107,150 of the shares reported, shared voting power over zero shares reported, sole dispositive power over 8,107,150 of the shares reported, and shared dispositive power over zero shares reported. Engaged Capital Flagship Master Fund, LP, Engaged Capital Flagship Fund, LP, and Engaged Capital Flagship Fund, Ltd. have sole voting power over 7,505,432 of the shares reported, shared voting power over zero shares reported, sole dispositive power over 7,505,432 of the shares reported, and shared dispositive power over zero shares reported. The address of each of Engaged Capital Flagship Master Fund, LP and Engaged Capital Flagship Fund, Ltd. is ~~incorporated herein~~c/o Conyers Trust Company (Cayman) Limited, Cricket Square, Hutchins Drive, P.O. Box 2681, Grand Cayman KY1-1111, Cayman Islands. The address of each of Engaged Capital Flagship Fund, LP., Engaged Capital, LLC, Engaged Capital Holdings, LLC and Mr. Welling is 610 Newport Center Drive, Suite 250, Newport Beach, California 92660.

(19)Based on information set forth in a Schedule 13G/A filed with the SEC on February 14, 2023 by ~~reference.~~Lynrock Lake LP, Lynrock Lake Partners LLC and Cynthia Paul (collectively, “Lynrock Lake”). Lynrock Lake has sole voting power over 6,567,376 of the shares reported, shared voting power over zero shares reported, sole dispositive power over 6,567,376 of the shares reported, and shared dispositive power over zero shares reported. The address of Lynrock Lake is 2 International Drive, Suite 130, Rye Brook, NY 10573.

(20)Based on information set forth in a Schedule 13G/A filed with the SEC on February 10, 2023 by Trigran Investments, Inc., Douglas Granat, Lawrence A. Oberman, Steven G. Simon, Bradley F. Simon and Steven R. Monieson (collectively, “Trigran Investments”). Trigran Investments has sole voting power over zero shares reported, shared voting power over 4,789,327 of the shares reported, sole dispositive power over zero shares reported, and shared dispositive power over 5,203,508 of the shares reported. The address of Trigran Investments is 630 Dundee Road, Suite 230, Northbrook, IL 60062.

Equity Compensation Plan Information

Securities Authorized for Issuance Under Equity Compensation Plans

The following table includes information as of December 31, 2022 for equity compensation plans:


Plan Category	Number of securities to be issued upon exercise of outstanding options, warrants and rights	Weighted-average exercise price of outstanding options, warrants and rights	Number of securities remaining available For future issuance under equity compensation plans
Equity compensation plans approved by security holders	12,279,032(1)	11.32(2)	11,766,364(3)
Equity compensation plans not approved by security holders	n/a	n/a	n/a
Total	12,279,032		11,766,364

(1)Excludes purchase rights accruing under our 2013 Employee Stock Purchase Plan.

(2)The weighted average exercise price relates solely to outstanding stock option shares since shares subject to RSUs have no exercise price.

(3)Includes 1,598,303 shares of common stock that remain available for purchase under the 2013 Employee Stock Purchase Plan and 10,168,061 shares of common stock that remain available for purchase under our 2013 Plan. Additionally, our 2013 Plan provides for automatic increases in the number of shares available for issuance under it on the first day of each year starting on January 1, 2015 and each subsequent anniversary through 2023, by an amount equal to the smaller of (a) 4% of the number of shares of our common stock issued and outstanding on the immediately preceding December 31, or (b) an amount determined by the Board. Our 2013 Employee Stock Purchase Plan provides for automatic increases in the number of shares available for issuance under it on the first day of each year starting on January 1, 2015 and each subsequent anniversary through 2023, equal to the smallest of (a) 400,000, (b) 0.5% of the number of shares of our common stock issued and outstanding on the immediately preceding December 31, or (c) an amount determined by the Board. The amounts in this table do not include the evergreen increase that was effective on January 1, 2022.

Item 13. Certain Relationships and Related Transactions, and Director Independence

Certain Relationships and Related Transactions

Other than the executive and non-employee director compensation arrangements, including the employment, termination of employment and change in control arrangements, discussed in the “Executive Compensation” section, the indemnification arrangements with our executive officers and non-employee directors, and the transactions described below in this section, we were not party to any transactions since January 1, 2022 in which:

•the amounts involved exceeded or will exceed $120,000; and

•any of our directors, executive officers or holders of more than 5% of our capital stock, or any member of the immediate family of, or person sharing the household with, the foregoing persons, had or will have a direct or indirect material interest.

San Francisco Office Lease

The ~~information, if any, required by this item will be set forth~~Company entered into a lease agreement with DW Cal 301 Howard, LLC ("DW Cal") on February 28, 2020, for approximately 15,607 square feet of office space in San Francisco, for a term of 10 years. The total minimum future rental payments for the lease is $16.3 million. DW Cal is a joint venture in which DivcoWest Real Estate Services, LLC is a minority member. Mr. Gessow, one of our ~~Proxy Statement~~independent directors, serves as a Senior Advisor at Divco and is ~~incorporated herein~~a managing partner at DivCore Equity Partners which is affiliated with Divco. All terms of the lease were negotiated at arms-length. The transaction was presented to our Audit Committee and approved in accordance with our Policy and Procedures with Respect to Transactions with Related Persons; and was also approved by ~~reference.~~our Board. Mr. Gessow was not involved in decisions regarding the lease or in the Board and Audit Committee's approval thereof.

Amended and Restated Investor Rights Agreement

~~Item 14. Principal Accounting Fees~~In June 2011, we entered into an Eighth Amended and ~~Services~~Restated Investor Rights Agreement with the holders of our preferred stock. Such agreement provides, among other things, for certain rights relating to the registration of their shares of common stock, including those issued upon conversion of their preferred stock, including the right to demand that we file a registration statement or request that their shares be covered by a registration statement that we are otherwise filing.

Cooperation Agreement with Engaged Capital, LLC

On May 16, 2022, the Company entered into the Cooperation Agreement with the Engaged Group. The Cooperation Agreement expired by its own terms on March 1, 2023.

Pursuant to the Cooperation Agreement, the Board appointed Matthew O’Grady to the Board to serve as a Class II director and Joseph Reece (together with Mr. O’Grady, the “New Directors”) to the Board to serve as a Class III director. The Board also, on May 24, 2022, appointed Mr. O’Grady to the Nominating and Corporate Governance Committee and Mr. Reece to the Compensation Committee. Mr. O’Grady was also appointed to serve as Lead Independent Director for the duration of the Cooperation Agreement. Effective as of the Company's 2022 annual meeting of stockholders, all Class III directors became Class II directors. Mr. O'Grady resigned as a director effective as of December 31, 2022.

The ~~information required~~Board also agreed to nominate for election at the 2022 annual meeting of stockholders Matthew Krepsik, Robert McDonald, and Matthew O’Grady. The Cooperation Agreement having expired as of March 1, 2023, there are no other arrangements or understandings between any of our directors and any other person pursuant to which any person was selected as a director.

Pursuant to the Cooperation Agreement, the Company agreed to seek stockholder approval of an amendment to our charter (i.e., certificate of incorporation), which amendment was approved at the 2022 annual meeting of stockholders. Further, under the terms of the Cooperation Agreement, Steven Boal agreed to retire as CEO no later

than the 2022 annual meeting and to not stand for reelection as a director at the 2022 annual meeting, each of which events occurred.

The Cooperation Agreement further provided, among other things, that:

• During the term of the Cooperation Agreement, the number of authorized directors on the Board will not exceed ten directors without the consent of the Engaged Group, with such consent not to be unreasonably withheld.

• During the term of the Cooperation Agreement and for so long as the Engaged Group continuously beneficially owned in the aggregate at least the lesser of (i) 2.5% of outstanding shares of the Company’s common stock and (ii) 2,373,037 shares of common stock, the Engaged Group was entitled to recommend a replacement independent director who is not an affiliate of the Engaged Group in the event any New Director ceases to be a director of the Company for any reason, subject to certain conditions and the approval of the Nominating and Corporate Governance Committee and the Board, such approval not to be unreasonably withheld. Subsequent to Mr. O'Grady's resignation as a director, the Engaged Group recommended a replacement director, Michael Wargotz. On February 22, 2023, the Board appointed Mr. Wargotz to the Board.

• During the term of the Cooperation Agreement, the Engaged Group was subject to customary standstill restrictions, including with respect to nominating persons for election to the Board, submitting any proposal for consideration at any stockholder meeting and soliciting any proxy, consent or other authority to vote from stockholders or conducting any other referendum (including any “withhold,” “vote no” or similar campaign), and acquiring beneficial ownership of, or economic exposure to, more than 9.9% of the Common Stock for so long as the Company’s Tax Benefits Preservation Plan and the rights established thereunder remained in force. The Company Tax Benefits Preservation Plan expired on January 3, 2023.

• During the term of the Cooperation Agreement, the Engaged Group agreed to vote all shares of common stock and voting securities beneficially owned, directly or indirectly, by ~~this item will~~the Engaged Group at all annual and special meetings as well as in any consent solicitation of the Company’s stockholders (i) in favor of the nominees for director recommended by the Board, (ii) in favor of the board declassification proposal at the 2022 annual meeting of stockholders, and (iii) in accordance with the Board’s recommendation with respect to any other matter (unless Institutional Shareholder Services Inc. issued a contrary recommendation). Pursuant to the Cooperation Agreement, the Engaged Group was permitted to vote on any proposals relating to an extraordinary transaction in its sole discretion.

• Each party agreed not to disparage the other party, subject to certain exceptions.

• During the term of the Cooperation Agreement, each party agreed not to institute a lawsuit against the other party, subject to certain exceptions including the seeking of remedies for a breach of the Cooperation Agreement. Additionally, during the term of the Cooperation Agreement and for an additional two years after its termination, each party agreed not to institute a lawsuit against the other party relating to or arising out of any event occurring on or prior to the date of the Cooperation Agreement.

• By its terms, the Cooperation Agreement was to terminate as of the earliest to occur of (i) 30 calendar days prior to the notice deadline under the Company’s Bylaws for the nomination of director candidates for election to the Board at the Company’s 2023 annual meeting of stockholders, (ii) 120 calendar days prior to the first anniversary of the Company’s 2022 annual meeting of stockholders and (iii) the consummation of an extraordinary transaction. Such termination date was March 1, 2023.

The foregoing summary of the Cooperation Agreement does not purport to be ~~set forth in our Proxy Statement~~complete and is ~~incorporated herein~~subject to, and qualified in its entirety, by ~~reference.~~the full text of the Cooperation Agreement, which is attached as Exhibit 10.1 to the Current Report on Form 8-K filed by the Company on May 18, 2022.

Review, approval or ratification of transactions with related parties

Our Board recognizes that transactions between our Company and persons or entities that may be deemed related persons can present potential or actual conflicts of interest and create the appearance of impropriety. Accordingly, our Board has delegated authority for the review and approval of all related person transactions to the Audit Committee. We have adopted a written Policy and Procedures with Respect to Transactions with Related Persons to provide procedures for reviewing, approving and ratifying any transaction involving our Company or any of its subsidiaries in which a 5% or greater stockholder, director, executive officer or members of their immediate family have or will have a direct or indirect material interest. This policy is intended to supplement, and not to supersede, our Company’s other policies that may be applicable to or involve transactions with related persons.

The policy provides that the Audit Committee reviews transactions subject to the policy and determines whether or not to approve or ratify those transaction. In reviewing transactions subject to the policy, the Audit or the Chair of the Audit Committee, as applicable, considers among other factors it deems appropriate:

•the material terms of the transaction;

•the nature of the related party’s interest;

•the nature of the related party’s relationship with the Company;

•the role of Company employees in arranging the transaction;

•the impact on the independence of any director;

•the costs and benefits to the Company; and

•an assessment of whether the transaction is competitively bid, or otherwise on terms that are fair to the Company and comparable to those that could be obtained in an arms-length negotiation with an unrelated third party.

Director Independence

Our Board has undertaken a review of the independence of each director. Based on information provided by each director concerning his or her background, employment and affiliations, our Board has determined that each of Messrs. Gessow, Higgs, McDonald, Oppenheimer, Reece and Wargotz, along with each of Mses. Hariton, Hawkins, and Anstett, do not have a relationship that would interfere with the exercise of independent judgment in carrying out the responsibilities of a director and that each of these directors is “independent” as that term is defined under the applicable rules and regulations of the SEC and the listing standards of the NYSE. Our Board also determined that former directors Steve Horowitz and Matthew O'Grady were independent during the respective periods that each served on our Board.

In considering the independence of the directors, the Board considered the Company's 10-year lease agreement with DW Cal 301 Howard, LLC, a joint venture in which DivcoWest Real Estate Services, LLC is a minority member; and Mr. Gessow's role as Senior Advisor at Divco and as a managing partner at DivCore Equity Partners which is affiliated with Divco. The terms of the lease were negotiated at arms-length and were consistent with market comparisons. Mr. Gessow was not involved in negotiating the lease, making any decisions regarding the lease, or approving the lease. In addition, Divco's share of the total lease payment of $16.3 million was less than 1% of the consolidated gross revenues of each of the Company and Divco in 2020, when we entered into the lease. This level is significantly below the maximum amount permitted under the NYSE listing standards for director independence (i.e., 2% of consolidated gross revenues). Accordingly, the Board determined that Mr. Gessow is independent.

~~109~~48

Item 14. Principal Accountant Fees and Services

During our Fiscal 2022, Ernst & Young served as our independent registered public accounting firm.

Fees Paid to the Independent Registered Public Accounting Firm

The following table presents fees billed or to be billed by Ernst & Young for professional services rendered with respect to the years ended December 31, 2022 and 2021. All of these services were preapproved by the Audit Committee.


	2022 ($)	2021($)
Audit Fees(1)	3,164,010	2,973,590
Audit-Related Fees	—	—
Tax Fees(2)	—	7,336
All Other Fees(3)	1,850	2,000
TOTAL	3,165,860	2,982,926

(1)“Audit fees” consist of fees for professional services provided in connection with the audit of our annual consolidated financial statements, the review of our quarterly consolidated financial statements, and audit services that are normally provided by our independent registered public accounting firm in connection with regulatory filings. The audit fees also include fees for professional services incurred with rendering an opinion under Section 404 of the Sarbanes-Oxley Act of 2002.

(2)“Tax fees” include fees for professional services related to tax advice. Tax advice fees encompass permissible services mainly related to international tax planning.

(3)"All Other Fees" include subscription fee to Ernst & Young's accounting research tool.

Auditor Independence

Under its charter, the Audit Committee pre-approves all services rendered by our independent registered public accounting firm, Ernst & Young. The Audit Committee has determined that the rendering of non-audit services by Ernst & Young was compatible with maintaining their independence.

Pre-Approval Policies and Procedures.

Consistent with requirements of the SEC and the Public Company Accounting Oversight Board (the “PCAOB”) regarding auditor independence, our Audit Committee is responsible for the appointment, compensation and oversight of the work of our independent registered public accounting firm. In recognition of this responsibility, our Audit Committee (or a member of the Audit Committee delegated by the Audit Committee) pre-approves all audit and permissible non-audit services provided by the independent registered public accounting firm. These services may include audit services, audit-related services, tax services and other services.

PART IV

Item 15. Exhibits, Financial Statement Schedules.

Documents filed as part of this report are as follows:

1.Consolidated Financial Statements

Our consolidated financial statements are listed in the “Index To Consolidated Financial Statements” in Part II, Item 8 of ~~this Annual Report on~~the Form 10-K.

2.Financial Statement Schedules

Financial statement schedules have been omitted because they are not applicable or the required information has been provided in the consolidated financial statements or in the notes thereto of ~~this Annual Report on~~the Form 10-K.

3.Exhibits

The exhibits listed in the accompanying “Index to Exhibits” are filed or incorporated by reference as part of this report.

~~110~~50

Exhibit Index

Incorporated by Reference
Exhibit
Number Exhibit Description Form File No. Exhibit Filing
Date Filed
Herewith
3.1
Amended and Restated Certificate of Incorporation of the Registrant, as amended effective October 20, 2015.
10-K 001-36331 3.1 3/11/2016
3.2
Amended and Restated Bylaws of the Registrant.
8-K 001-36331 3.2 10/6/2015
4.1
Form of Registrant’s Common Stock Certificate.
S-1/A 333-193692 4.1 2/25/2014
4.2
Eighth Amended and Restated Investors’ Rights Agreement among the Registrant and certain holders of its capital stock, dated June 1, 2011.
S-1 333-193692 4.2 1/31/2014
4.3
Indenture, dated November 17, 2017, between Quotient Technology, Inc. and U.S. Bank National Association
8-K 001-36331 4.1 11/17/2017
4.4
Form of 1.75% Convertible Senior Note due 2022 (included in Exhibit 4.3)
8-K 001-36331 4.1 11/17/2017
4.5
Description of the Registrant’s Securities Registered Pursuant to Section 12 of the Securities Exchange Act of 1934
10-K 001-36331 4.5 3/2/2020
10.1†
Form of Indemnification Agreement for directors and officers.
S-1/A 333-193692 10.1 2/14/2014
10.2†
2000 Stock Plan, as amended, and forms of agreement thereunder.
S-1 333-193692 10.2 1/31/2014
10.3†
2006 Stock Plan, as amended, and forms of agreement thereunder.
S-1 333-193692 10.3 1/31/2014
10.4†
2013 Equity Incentive Plan.
S-1 333-193692 10.4 1/31/2014
10.5†
Form of Restricted Stock Unit Agreement
10-Q 001-36331 10.6 11/8/2016
10.6†
Form of Restricted Stock Unit Agreement for Non-Employee Directors
10-Q 001-36331 10.1 11/3/2017
10.7†
Form of Option Agreement for Employees
10-Q 001-36331 10.7 11/8/2016
10.8†
Form of Option Agreement for Non-Employee Directors
10-Q 001-36331 10.8 11/8/2016
10.9†
Notice of Grant of Restricted Stock Units for Employees
10-Q 001-36331 10.1 11/9/2018
10.10†
Notice of Grant of Restricted Stock Units for Non-Employee Directors – Initial Award
10-Q 001-36331 10.2 11/3/2017
10.11†
Notice of Grant of Restricted Stock Units for Non-Employee Directors – Annual Grant
10-Q 001-36331 10.3 11/3/2017
10.12†
Amended and Restated 2013 Employee Stock Purchase Plan, dated April 25, 2017
10-Q 001-36331 10.1 5/5/2017
10.13†
Executive Bonus Plan
S-1 333-193692 10.9 2/25/2014
10.14†
Employment Offer Letter between the Registrant and Mir Aamir, dated February 18, 2014.
S-1/A 333-193692 10.6 2/25/2014
10.15†
Mir Aamir Consulting Agreement, dated August 27, 2019
10-Q 001-36331 10.1 11/8/2019
10.16†
Offer Letter of Employment with Ronald J. Fior, dated July 25, 2016
10-Q 001-36331 10.2 11/8/2016
10.17†
Offer Letter of Employment with Scott Raskin, dated August 5, 2019
10-Q 001-36331 10.2 11/8/2019
10.18†
Offer Letter of Employment with Pam Strayer, dated October 31, 2019
10-K 001-36331 10.2 3/2/2020
10.19†
Transition Agreement, by and between the Registrant and Richard Hornstein, dated January 4, 2016.
10-K 001-36331 10.8 3/11/2016

Incorporated by Reference

Exhibit

Number

Exhibit Description

Form

File No.

Exhibit

Filing

Date

Filed

Herewith

3.1

Amended and Restated Certificate of Incorporation of the Registrant, as amended effective October 20, 2015.

10-K

001-36331

3.1

3/11/2016

3.2

Certificate of Designation of the Series A Junior Preferred Stock of the Registrant, dated November 12, 2021

8-A

001-36331

3.1

11/12/2021

3.3

Certificate of Amendment of Amended and Restated Certificate of Incorporation of the Registrant, effective June 29, 2022.

8-K

001-36331

3.1

6/30/2022

3.4

Certificate of Elimination of the Series A Junior Participating Preferred Stock of the Company.

8-K

001-36331

3.1

1/3/2023

3.5

Amended and Restated Bylaws of the Registrant.

10-Q

001-36331

3.4

8/9/2022

4.1

Form of Registrant’s Common Stock Certificate.

S-1/A

333-193692

4.1

2/25/2014

4.2

Eighth Amended and Restated Investors’ Rights Agreement among the Registrant and certain holders of its capital stock, dated June 1, 2011.

S-1

333-193692

4.2

1/31/2014

4.3

Tax Benefits Preservation Plan, dated as of November 11, 2021, by and between the Registrant and American Stock Transfer & Trust Company, LLC as rights agent

8-A

001-36331

4.1

11/12/2021

4.4

First Amendment to Tax Benefits Preservation Plan, dated as of November 11, 2021, by and between the Registrant and American Stock Transfer & Trust Company, LLC as rights agent

8-K

001-36331

4.2

4/29/2022

4.5

Description of the Registrant’s Securities Registered Pursuant to Section 12 of the Securities Exchange Act of 1934

10-K

001-36331

4.5

3/16/2023

10.1†

Form of Indemnification Agreement for directors and officers.

S-1/A

333-193692

10.1

2/14/2014

10.2†

2000 Stock Plan, as amended, and forms of agreement thereunder.

S-1

333-193692

10.2

1/31/2014

10.3†

2006 Stock Plan, as amended, and forms of agreement thereunder.

S-1

333-193692

10.3

1/31/2014

10.4†

2013 Equity Incentive Plan.

S-1

333-193692

10.4

1/31/2014

10.5†

Form of Restricted Stock Unit Agreement

10-Q

001-36331

10.6

11/8/2016

10.6†

Form of Restricted Stock Unit Agreement for Non-Employee Directors

10-Q

001-36331

10.1

11/3/2017

10.7†

Form of Option Agreement for Employees

10-Q

001-36331

10.7

11/8/2016

10.8†

Form of Option Agreement for Non-Employee Directors

10-Q

001-36331

10.8

11/8/2016

10.9†

Notice of Grant of Restricted Stock Units for Employees

10-Q

001-36331

10.1

11/9/2018

10.10†

Notice of Grant of Restricted Stock Units for Non-Employee Directors – Initial Award

10-Q

001-36331

10.2

11/3/2017

10.11†

Notice of Grant of Restricted Stock Units for Non-Employee Directors – Annual Grant

10-Q

001-36331

10.3

11/3/2017

10.12†

Amended and Restated 2013 Employee Stock Purchase Plan, dated April 25, 2017

10-Q

001-36331

10.1

5/5/2017

10.13†

Executive Bonus Plan

S-1

333-193692

10.9

2/25/2014

~~111~~51

Incorporated by Reference
Exhibit
Number Exhibit Description Form File No. Exhibit Filing
Date Filed
Herewith
10.20†
Change of Control Severance Agreement with Steven R. Boal, dated August 2, 2016
10-Q 001-36331 10.3 11/8/2016
10.21†
Change of Control Severance Agreement with Mir Aamir, dated August 2, 2016
10-Q 001-36331 10.4 11/8/2016
10.22†
Change of Control Severance Agreement with Ronald J. Fior, dated August 2, 2016
10-Q 001-36331 10.1 8/9/2019
10.23†
Change of Control Severance Agreement with Jason Young, dated May 2, 2017
10-Q 001-36331 10.2 8/9/2019
10.24†
Change of Control Severance Agreement with Chad Summe, dated January 1, 2018
10-K 001-36331 10.21 2/27/2019
10.25†
Change of Control Severance Agreement with Scott Raskin, dated August 5, 2019
10-Q 001-36331 10.3 11/8/2019
10.26†
Change of Control Severance Agreement with Pam Strayer, dated November 11, 2019
10-K 001-36331 10.26 3/2/2020
10.27†
Form of Amendment to Change of Control
10-Q 001-36331 10.3 8/9/2019
10.28
Lease Agreement by and between the Registrant and 400 Logue LLC, successor in interest to MSCP Logue, LLC, successor in interest to Divco West Real Estate Services, Inc., dated August 11, 2006.
S-1 333-193692 10.14 1/31/2014
10.29
Amendment No. 1 to Lease Agreement by and between the Registrant and 400 Logue LLC, successor in interest to MSCP Logue, LLC, dated March 19, 2009.
S-1 333-193692 10.15 1/31/2014
10.30
Amendment No. 2 to Lease Agreement by and between the Registrant and 400 Logue LLC, dated February 25, 2015.
10-K 001-36331 10.15 3/19/2015
10.31
Amendment No. 3 to Lease Agreement by and between the Registrant and 400 Logue LLC, dated August 3, 2020.
10-Q 001-36331 10.1 8/5/2020
10.32
Office Lease Mountain View Technology Park by and between Registrant and BP MV Technology Park LLC., dated December 22, 2010.
S-1 333-193692 10.16 1/31/2014
10.33
Amendment No. 1 to Office Lease Mountain View Technology Park by and between Registrant and BP MV Technology Park LLC., dated May 31, 2012.
S-1 333-193692 10.17 1/31/2014
10.34
Amendment No. 2 to Office Lease Mountain View Technology Park by and between Registrant and GOOGLE INC. successor in interest to BP MV Technology Park LLC., dated July 1, 2016.
10-Q 333-193692 10.1 8/8/2016
10.35
Office Lease by and between Registrant and DW CAL 301 Howard LLC, dated February 12, 2020.
10-Q 001-36331 10.1 8/5/2020
10.36
Sublease Agreement, dated February 8, 2021 between Quotient Technology Inc. and sPower, LLC.
8-K 001-36331 10.1 2/10/2021
10.37
Agreement and Plan of Merger by and among Quotient Technology Inc., Carrot Merger Sub, Inc., Crisp Media, Inc., and Shareholder Representative Services LLC, as Securityholder Representative, dated May 2, 2017
10-Q 001-36331 10.1 8/4/2017

10.14†

Offer Letter of Employment with Scott Raskin, dated August 5, 2019

10-Q

001-36331

10.2

11/8/2019

10.15†

Offer Letter of Employment with Pam Strayer, dated October 31, 2019

10-K

001-36331

10.18

3/2/2020

10.16†

Offer Letter of Employment with Connie Chen, dated August 19, 2013

10-Q

001-36331

10.2

5/10/2021

10.17†

Offer Letter of Employment with Matthew Krepsik, dated March 29, 2021

10-Q

001-36331

10.1

5/5/2022

10.18†

Offer Letter of Employment with Yuneeb Khan, dated March 1, 2022

10-Q

001-36331

10.5

8/9/2022

10.19†

Change of Control Severance Agreement with Steven R. Boal, dated August 2, 2016

10-Q

001-36331

10.3

11/8/2016

10.20†

Change of Control Severance Agreement with Scott Raskin, dated August 5, 2019

10-Q

001-36331

10.3

11/8/2019

10.21†

Amendment to the Change of Control Severance Agreement with Scott Raskin, effective as of May 1, 2022

10-Q

001-36331

10.3

5/5/2022

10.22†

Amendment No. 2 to the Change of Control Severance Agreement with Scott Raskin, effective as of June 10, 2022

10-Q

001-36331

10.9

8/9/2022

10.23†

Change of Control Severance Agreement with Pam Strayer, dated November 11, 2019

10-K

001-36331

10.26

3/2/2020

10.24†

Change of Control Severance Agreement with Connie Chen, effective as of July 26, 2016

10-Q

001-36331

10.3

5/10/2021

10.25†

Amendment No. 1 to the Change of Control Severance Agreement with Connie Chen, effective as of May 1, 2019

10-Q

001-36331

10.4

5/10/2021

10.26†

Amendment No. 2 to the Change of Control Severance Agreement with Connie Chen, effective as of May 1, 2022

10-Q

001-36331

10.4

5/5/2022

10.27†

Amendment No. 3 to the Change of Control Severance Agreement with Connie Chen, effective as of June 10, 2022

10-Q

001-36331

10.11

8/9/2022

10.28†

Change of Control Severance Agreement with Matthew Krepsik, effective as of May 1, 2022

10-Q

001-36331

10.2

5/5/2022

10.29†

Change of Control Severance Agreement with Yuneeb Khan, effective as of July 5, 2022

10-Q

001-36331

10.6

8/9/2022

10.30†

Change of Control Severance Agreement with John Kellerman, effective as of May 1, 2022

10-Q

001-36331

10.7

8/9/2022

10.31†

Form of Amendment to Change of Control Severance Agreement

10-Q

001-36331

10.3

8/9/2019

10.32†

Separation Agreement with Steven Boal, effective May 16, 2022

10-Q

001-36331

10.4

8/9/2022

10.33†

Separation Agreement with Pamela Strayer, effective April 15, 2022

10-Q

001-36331

10.3

8/9/2022

10.34†

Cooperation Agreement by and between Quotient Technology Inc., Engaged Capital LLC and certain of its affiliates, dated May 16, 2022

8-K

001-36331

10.1

5/18/2022

10.35

Office Lease by and between Registrant and DW CAL 301 Howard LLC, dated February 12, 2020.

10-Q

001-36331

10.1

8/5/2020

10.36

Sublease Agreement, dated February 8, 2021 between Quotient Technology Inc. and sPower, LLC.

8-K

001-36331

10.1

2/10/2021

~~112~~52

Incorporated by Reference
Exhibit
Number Exhibit Description Form File No. Exhibit Filing
Date Filed
Herewith
10.38
Purchase Agreement, dated as of November 14, 2017, Between Quotient Technology Inc. and Morgan Stanley & Co. LLC, as representative of the Initial Purchasers listed in Schedule I thereto
8-K 001-36331 10.1 11/17/2017
21.1
List of Subsidiaries of Registrant.
X
23.1
Consent of Independent Registered Public Accounting Firm.
X
24.1
Power of Attorney (Included on the signature page to this report).
X
31.1
Certification of Chief Executive Officer pursuant to Rule 13a-14(a) or Rule 15d-14(a) of the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of The Sarbanes-Oxley Act of 2002.
X
31.2
Certification of Chief Financial Officer pursuant to Rule 13a-14(a) or Rule 15d-14(a) of the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of The Sarbanes-Oxley Act of 2002.
X
32.1*
Certification of Chief Executive Officer pursuant to Rule 13a014(b) or Rule 15d-14(b) of the Securities Exchange Act of 1934 and 18 U.S.C. Section 1350 as adopted pursuant to Section 906 of The Sarbanes-Oxley Act of 2002.
X
32.2*
Certification of Chief Financial Officer pursuant to Rule 13a014(b) or Rule 15d-14(b) of the Securities Exchange Act of 1934 and 18 U.S.C. Section 1350 as adopted pursuant to Section 906 of The Sarbanes-Oxley Act of 2002.
X
101.INS
Inline XBRL Instance Document the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL Document
X
101.SCH Inline XBRL Taxonomy Extension Schema Document X
101.CAL Inline XBRL Taxonomy Extension Calculation Linkbase Document X
101.DEF Inline XBRL Taxonomy Extension Definition Linkbase Document X
101.LAB Inline XBRL Taxonomy Extension Label Linkbase Document X
101.PRE Inline XBRL Taxonomy Extension Presentation Linkbase Document X
104 Cover Page Interactive Data File (formatted as inline XBRL with applicable taxonomy extension information contained in Exhibits 101) X

10.37

ABL Agreement by and between Registrant and PNC Bank, National Association

8-K

001-36331

10.1

12/6/2022

10.38

Term Loan Agreement by and between Registrant and Blue Torch Capital LP

8-K

001-36331

10.2

12/6/2022

21.1

List of Subsidiaries of Registrant.

10-K

001-36331

21.1

3/16/2023

23.1

Consent of Independent Registered Public Accounting Firm.

10-K

001-36331

23.1

3/16/2023

24.1

Power of Attorney (Included on the signature page to this report).

10-K

001-36331

24.1

3/16/2023

31.1

Certification of Chief Executive Officer pursuant to Rule 13a-14(a) or Rule 15d-14(a) of the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of The Sarbanes-Oxley Act of 2002.

10-K

001-36331

31.1

3/16/2023

31.2

Certification of Chief Financial Officer pursuant to Rule 13a-14(a) or Rule 15d-14(a) of the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of The Sarbanes-Oxley Act of 2002.

10-K

001-36331

31.2

3/16/2023

31.3

Certification of Chief Executive Officer pursuant to Rule 13a-14(a) or Rule 15d-14(a) of the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of The Sarbanes-Oxley Act of 2002.

31.4

Certification of Chief Financial Officer pursuant to Rule 13a-14(a) or Rule 15d-14(a) of the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of The Sarbanes-Oxley Act of 2002.

32.1*

Certification of Chief Executive Officer pursuant to Rule 13a-14(b) or Rule 15d-14(b) of the Securities Exchange Act of 1934, and 18 U.S.C. Section 1350 as adopted pursuant to Section 906 of The Sarbanes-Oxley Act of 2002.

10-K

001-36331

32.1

3/16/2023

32.2*

Certification of Chief Financial Officer pursuant to Rule 13a-14(b) or Rule 15d-14(b) of the Securities Exchange Act of 1934, and 18 U.S.C. Section 1350 as adopted pursuant to Section 906 of The Sarbanes-Oxley Act of 2002.

10-K

001-36331

32.2

3/16/2023

101.INS

Inline XBRL Instance Document the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL Document

101.SCH

Inline XBRL Taxonomy Extension Schema Document

101.CAL

Inline XBRL Taxonomy Extension Calculation Linkbase Document

101.DEF

Inline XBRL Taxonomy Extension Definition Linkbase Document

101.LAB

Inline XBRL Taxonomy Extension Label Linkbase Document

101.PRE

Inline XBRL Taxonomy Extension Presentation Linkbase Document

104

Cover Page Interactive Data File (formatted as inline XBRL with applicable taxonomy extension information contained in Exhibits 101)


†			Indicates a management contract or compensatory plan or arrangement.
*			The certifications attached as Exhibit 32.1 and 32.2 that ~~accompany this Annual Report~~accompanied the Form 10-K filed on ~~Form 10-K~~March 16, 2023 are not deemed filed with the Securities and Exchange Commission and are not to be incorporated by reference into any filing of Quotient under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended, whether made before or after the date of ~~this~~the Form 10-K filed on March 16, 2023, irrespective of any general incorporation language contained in such filing.

~~113~~

~~Item 16. Form 10-K Summary.~~

~~None.~~

~~114~~

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, as amended, the Registrant has duly caused this ~~Report~~Form 10-K/A, Amendment No. 1 to be signed on its behalf by the undersigned, thereunto duly authorized.


	Quotient Technology Inc.

Date: ~~February 22, 2021~~April 28, 2023	By:	/s/ ~~Steven Boal~~Matt Krepsik
		~~Steven Boal~~Matt Krepsik
		Chief Executive Officer

~~POWER OF ATTORNEY~~

KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature appears below constitutes and appoints Steven Boal, Pamela Strayer and Connie Chen, jointly and severally, his attorney-in-fact, each with the full power of substitution, for such person, in any and all capacities, to sign any and all amendments to this Annual Report on Form 10-K, and to file the same, with all exhibits thereto and other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorney-in-fact and agent full power and authority to do and perform each and every act and thing requisite and necessary to be done in connection therewith, as fully to all intents and purposes as he might do or could do in person hereby ratifying and confirming all that each of said attorneys-in-fact and agents, or his substitute, may do or cause to be done by virtue hereof.

Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, this Report has been signed below by the following persons on behalf of the Registrant in the capacities and on the dates indicated.

~~Name~~

~~Title~~

~~Date~~

~~/s/ Steven Boal~~

~~Chief Executive Officer and Director (Principal Executive Officer)~~

~~February 22, 2021~~

~~Steven Boal~~

~~/s/ Pamela Strayer~~

~~Chief Financial Officer and Treasurer (Principal Financial Officer and Principal Accounting Officer)~~

~~February 22, 2021~~

~~Pamela Strayer~~

~~/s/ Andrew J. Gessow~~

~~Director~~

~~February 22, 2021~~

~~Andrew J. Gessow~~

~~/s/ Lorraine Hariton~~

~~Director~~

~~February 22, 2021~~

~~Lorraine Hariton~~

~~/s/ Steve Horowitz~~

~~Director~~

~~February 22, 2021~~

~~Steve Horowitz~~

~~/s/ Robert McDonald~~

~~Director~~

~~February 22, 2021~~

~~Robert McDonald~~

~~/s/ Michelle McKenna~~

~~Director~~

~~February 22, 2021~~

~~Michelle McKenna~~

~~/s/ David Oppenheimer~~

~~Director~~

~~February 22, 2021~~

~~David Oppenheimer~~

~~/s/ Christy Wyatt~~

~~Director~~

~~February 22, 2021~~

~~Christy Wyatt~~

~~115~~55


Delaware		77-0485123
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)
~~400 Logue Avenue~~ ~~Mountain View, CA~~		(I.R.S. Employer Identification No.)
1260 East Stringham Avenue, 6th Floor Salt Lake City, UT	~~94043~~	84106
(Address of principal executive offices)		(Zip Code)


Large accelerated filer	☒☐	Accelerated filer	☐☒

Non-accelerated filer	☐	Small reporting company	☐

Emerging growth company	☐


Name	Age	~~Page~~Position(s) with Quotient
Matthew Krepsik	41	Chief Executive Officer and Board Member
	~~PART I~~
~~Item 1.~~ Yuneeb Khan	~~Business~~47	6Chief Financial Officer, Principal Accounting Officer and Treasurer, and Chief Operating Officer
~~Item 1A.~~	~~Risk Factors~~	15
~~Item 1B.~~	~~Unresolved Staff Comments~~	51
~~Item 2.~~	~~Properties~~	51
~~Item 3.~~	~~Legal Proceedings~~	51
~~Item 4.~~	~~Mine Safety Disclosures~~	52
	~~PART II~~
~~Item 5.~~	~~Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities~~	53
~~Item 6.~~	~~Selected Financial Data~~	54
~~Item 7.~~	~~Management’s Discussion and Analysis of Financial Condition and Results of Operations~~	56
~~Item 7A.~~	~~Quantitative and Qualitative Disclosures About Market Risk~~	72
~~Item 8.~~	~~Financial Statements and Supplementary Data~~	73
~~Item 9.~~	~~Changes in and Disagreements With Accountants on Accounting and Financial Disclosure~~	~~107~~
~~Item 9A.~~	~~Controls and Procedures~~	~~107~~
~~Item 9B.~~	~~Other Information~~	~~108~~
Connie Chen	~~PART III~~
~~Item 10.~~	~~Directors, Executive Officers and Corporate Governance~~	~~109~~
~~Item 11.~~	~~Executive Compensation~~	~~109~~
~~Item 12.~~	~~Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters~~	~~109~~
~~Item 13.~~	~~Certain Relationships and Related Transactions, and Director Independence~~	~~109~~
~~Item 14.~~	~~Principal Accounting Fees and Services~~	~~109~~
56	~~PART IV~~General Counsel, Compliance Officer and Secretary
~~Item 15.~~	~~Exhibits, Financial Statement Schedules~~	~~110~~
~~Item 16.~~	~~Form 10-K Summary~~	~~114~~


NEO			Title
Matthew Krepsik(1)			Chief Executive Officer and Member of the Board of Directors
Yuneeb Khan(2)			Chief Financial Officer, Principal Accounting Officer and Treasurer
Connie Chen			General Counsel, Compliance Officer and Secretary
Steven Boal(3)			Former Chief Executive Officer
Scott Raskin(4)			President
Pamela Strayer(5)			Former Chief Financial Officer and Treasurer
John Kellerman(6)			Former VP of Accounting, Former Interim Chief Financial Officer


Pay-for-Performance			A significant portion of pay for executive officers is at-risk and performance-based with metrics that align total compensation with the Company’s sustainable growth strategy and values, annual financial objectives, and performance of our stock price. At-risk compensation includes short-term cash incentives and long-term performance-based equity incentives.
Alignment with Stockholders			Our compensation programs align executive officers’ interests with those of our stockholders, by providing equity-based forms of compensation and tying pay to Company and stock performance. We maintain stock ownership guidelines for all executive officers, and we remain committed to a culture of shared success through long-term equity awards. In response to stockholder feedback, we continued to award a portion of the 2022 equity grant in the form of performance-based RSUs with stringent vesting conditions. We believe the stock price vesting metrics are in alignment with stockholder interest.
Competitive Appeal			Our compensation programs are designed to attract, reward, and retain talented and highly qualified executive officers whose abilities and alignment to our values are critical to our success. We use market-based pay information to align each executive officer’s compensation to their position, responsibilities, and impact.
Drive Sustainable Growth			We use our compensation programs to invest in and reward talent with the greatest potential to drive the long-term growth of our Company, while holding employees accountable to the Company’s strategy and values.


	INDEXED RETURNS Quarter Ending
Company / Index	12/31/2015		12/31/2016		12/31/2017		12/31/2018		12/31/2019		12/31/2020
Quotient Technology Inc.	$	100	$	158	$	172	$	157	$	145	$	138
Russell 3000 Index	$	100	$	110	$	131	$	122	$	157	$	186
S&P North American Technology Sector Index	$	100	$	112	$	153	$	156	$	220	$	316


	Year Ended December 31,
	2020		2019		2018		2017		2016
	(in thousands, except per share data)
Revenues	$	445,887	$	436,160	$	386,958	$	322,115	$	275,190
Cost of revenues (1)	277,914		263,606		206,230		140,752		114,870
Gross margin	167,973		172,554		180,728		181,363		160,320
Operating expenses:
Sales and marketing (1)	104,527		101,244		90,086		92,833		92,596
Research and development (1)	40,316		39,076		46,873		50,009		50,503
General and administrative (1)	54,177		58,328		49,805		48,124		43,404
Change in fair value of escrowed shares and contingent consideration, net	20,234		1,571		13,190		5,515		(6,450)
Total operating expenses	219,254		200,219		199,954		196,481		180,053
Loss from operations	(51,281)		(27,665)		(19,226)		(15,118)		(19,733)
Interest expense	(14,521)		(13,955)		(13,411)		(1,589)		—
Other income, net	1,140		5,223		4,801		928		495
Loss before income taxes	(64,662)		(36,397)		(27,836)		(15,779)		(19,238)
Provision for (benefit from) income taxes	719		660		482		(702)		241
Net loss	$	(65,381)	$	(37,057)	$	(28,318)	$	(15,077)	$	(19,479)
Net loss per share, basic and diluted	$	(0.72)	$	(0.41)	$	(0.30)	$	(0.17)	$	(0.23)
Weighted-average number of common shares used in computing net loss per share, basic and diluted	90,412		91,163		93,676		89,505		84,157


We Do			We Don't
üReview compensation programs annually with the Compensation Committee			ûProvide single trigger change of control severance benefits
üMaintain robust stock ownership guidelines for all NEOs			ûPermit hedging or pledging of equity securities
üEmphasize long-term equity in NEO pay mix			ûProvide perquisites
üRely on the advice of an independent compensation consultant reporting directly to the Compensation Committee			ûProvide tax gross-up payments
üEnsure a significant portion of executive pay is "at-risk" and/or variable, dependent on company and/or stock price performance			û On a go-forward basis, intend to allow repricing without stockholder approval (if and upon obtaining approval of a new equity incentive plan that we intend to submit for approval at the 2023 Annual Meeting)
üUse a market comparison of executive compensation against a relevant peer group			ûOn a go-forward basis, intend to provide for automatic annual increases in the shares available under our equity incentive plan (if and upon obtaining approval of a new equity incentive plan that we intend to submit for approval at the 2023 Annual Meeting)


Element	Purpose	Characteristics
Base Salary	Attract and retain talent	•Fixed: 100% cash •Size reflects role responsibility, experience and individual performance, criticality to our success, and market benchmarking against our peer group
Short-Term Incentive (Annual Incentive Plan ("AIP"))	Motivate and reward accomplishment of short-term business goals	•Variable: 100% cash •AIP target payout opportunity reflects market practice expressed as % of base salary •Payouts are fully formulaic •In 2022, the primary metric under the 2022 AIP was Reported Adjusted EBITDA (in order to strongly incentivize performance on this metric)
Long-Term Incentive (Long-Term Incentive ("LTI"))	Motivate and reward sustainable long-term performance Align delivered pay to returns experienced by stockholders Attract and retain talent	•Variable: 100% equity •LTI opportunity is sized based on market practices, which includes benchmarking against our peer group, role responsibility, retention objectives, and individual performance •In 2022, annual LTI awards were denominated 50% in time-based RSUs and 50% in performance-based RSUs based on market best practices and aligned with stockholder interest, emphasize performance-based component of compensation, align with governance best practices, and market trends •2022 performance-based RSUs were subject to satisfaction of challenging Company stock price hurdles.


Timing			Focus Areas
Q1			•Evaluated business performance and financial metrics for the prior fiscal year under the Annual Incentive Plan (AIP) •Discussed individual contributions, performance, and future potential of NEOs to determine compensation adjustments and overall pay mix targets •Finalized updated 2022 Long-Term Incentive Program ("LTI Program") design for NEOs •Aligned on performance measures, targets, and plan design for the 2022 AIP and any performance-based equity metrics
Q2			•Approved new compensation structure for Mr. Krepsik in connection with his promotion to CEO •Approved retention packages for Mr. Raskin and Ms. Chen •Approved adjustments to Quotient's non-employee director compensation program
Q3			•Reviewed and discussed usage of equity incentive compensation for non-NEOs and monitored ongoing dilution •Discussed plans for putting forward a new equity plan in 2023 and beyond
Q4			•Reviewed annual meeting results including results of "say-on-pay" advisory vote from stockholders •Engaged in outreach to shareholders to seek their input on our executive compensation practices •Discussed modifications to the Company's compensation program in response to shareholder feedback •Approved Company peer group to be used for the 2023 executive compensation decisions •Discussed progress against equity budget, equity strategy and approach for 2023 and beyond


Element	Description	Criteria
Industry/Sector	The markets in which the Company competes for product success and talent.	Public US-based software-as-a-service companies, marketing services companies, and interactive media & services companies. If possible, companies with corporate headquarters in key technology hub locations.
Revenue	Trailing Twelve Month ("TTM") revenue is within a range that is comparable to Quotient’s revenue.	Generally between 0.5x to 3.7x ($300M to $2.0B) of Quotient revenue.
Market Capitalization	Market capitalization is within a range that is comparable to Quotient’s market capitalization.	Generally between 0.5x to 4.0x($500M to $4.1B) of Quotient market capitalization.


2U, Inc.	LivePerson, Inc.	Stamps.com Inc.
8x8, Inc.	QAD Inc.	TripAdvisor, Inc.
Benefitfocus, Inc.	QuinStreet, Inc.	TrueCar, Inc.
Box, Inc.	Rapid7, Inc.	Workiva Inc.
Cloudera, Inc.	Shutterstock, Inc.	Yelp Inc.
Cornerstone OnDemand, Inc.	SPS Commerce, Inc.	Zuora, Inc.


Named Executive Officer	Base Salary as of December 31, 2021	Base Salary as of December 31, 2022(2)	% Change
Matthew Krepsik	$375,000	$500,000	33%
Scott Raskin	$465,000	$465,000	—%
Yuneeb Khan	$—	$460,000	—%
Connie Chen	$380,000	$380,000	—%
Steven Boal	$500,000	$500,000	—%
Pamela Strayer	$450,000	$450,000	—%
John Kellerman (1)	$316,200	$338,000	7%


	Threshold	Target	Maximum
Reported Adjusted EBITDA(1)	$37M	$49M	$61M
Reported Revenue(2)	$323M	$351M	$379M


Achievement of Reported Adjusted EBITDA Target	75% or below	80%	85%	90%	95%	100% -125%
Weight of Reported Adjusted EBITDA Performance	100%	90%	80%	70%	60%	50%
Weight of Reported Revenue Performance	0%	10%	20%	30%	40%	50%


2022 LTI NEO Grants
Name	RSUs(1)		PSUs(2)		Total LTI
	$	#	$	#	$
Matthew Krepsik	1,053,000	162,249	1,053,000	162,250	2,106,000
Scott Raskin	1,400,000	215,716	1,400,000	215,716	2,800,000
Yuneeb Khan	1,350,000	470,383	1,350,000	470,383	2,700,000
Connie Chen	750,000	115,562	750,000	115,562	1,500,000
Steven Boal	2,500,000	385,208	2,500,000	385,208	5,000,000
Pamela Strayer	1,350,000	208,012	1,350,000	208,012	2,700,000


Name	Termination Event	Lump Sum (% of annual base salary)	Health Coverage Lump Sum (monthly COBRA premium factor)
Matthew Krepsik(1)	Termination Without Cause/Resign for Good Reason	100%	x 12
Yuneeb Khan	Termination Without Cause/Resign for Good Reason	100%	x 12
Scott Raskin	Termination Without Cause/Resign for Good Reason	100%	x 12
Connie Chen	Termination Without Cause	75%	x 9


Final Plan Achievement (%)	<70	75	80	85	90	95	100	105	110	115	120	125	>125
Executive Plan Funding level (as a percentage of target)	0	50	67	81	90	95	100	105	110	119	133	150	150


NEO	Target Payout Opportunity (as % of Base Salary)	2022 AIP Payout
Matthew Krepsik	100%	$0
Scott Raskin	100%	$0
Yuneeb Khan	75%	$0
Connie Chen	60%	$0
Steven Boal	100%	$0
Pamela Strayer	75%	$0
John Kellerman	40%	$0


RSUs			•50% of target long-term incentive opportunity •Ratable quarterly time-based vesting over a four-year period
PSUs			•50% of target long-term incentive opportunity •Three-year performance period ending on March 1, 2025 •Performance-based vesting conditions satisfied with respect to 1/3 of PSUs subject to award based upon achievement of stock price hurdles $9.735, $12.98, and $16.225 •If a stock price hurdle is achieved in the first year (or, in the case of Mr. Khan, first seven months) of the performance period, then in alignment with long-term incentive intent, 50% of earned shares will be subject to further vesting conditions


Element	Description	2022 Criteria	2023 Criteria
Revenue	Trailing Twelve Month ("TTM") revenue is within a range comparable to Quotient’s revenue.	Generally between 0.5x and 3.7x ($300M to $2B) of Quotient revenue.	Generally between 0.5x and 3.25x ($150M to $1B) of Quotient revenue.
Market Capitalization	Market capitalization is within a range comparable to Quotient’s market capitalization.	Generally between 0.5x and 4.0x ($500M to $4.1B) of Quotient market capitalization.	Generally between 0.75x and 5.0x ($150M to $1B) of Quotient market capitalization.


Name and Principal Position	Year	Salary ($)	Bonus ($)	Stock Awards ($)(1)	Option Awards ($)(2)	Non-Equity Incentive Plan Compensation ($)(3)	All Other Compensation ($)	Total ($)
Matthew Krepsik(11)	2022	450,521	—	2,901,801	1,227,480	—	6,000(4)	4,585,802
CEO and Member of the Board	2021	254,545	—	1,388,900	—	138,198	6,000	1,787,643
Yuneeb Khan(12)	2022	226,515	150,000(5)	3,249,824	—	—	125,000(6)	3,751,339
CFO, PAO and Treasurer
Connie Chen	2022	380,000	—	1,445,696	243,210	—	6,000(4)	2,074,906
GC, Compliance Officer and Secretary	2021	378,750	—	749,989	—	170,446	6,000	1,305,185
	2020	368,804	—	712,492	599,871	—	6,552	1,687,719
Steven Boal(13)	2022	250,000	—	6,823,034(7)	7,328,996(7)	—	2,130,769(8)	16,532,799
Former CEO	2021	500,000	—	2,499,995	—	375,000	6,000	3,380,995
	2020	500,000	—	2,499,986	1,999,575	—	7,032	5,006,593
Scott Raskin(14)	2022	465,000	—	2,821,836	608,025	—	6,000(4)	3,900,861
Former President	2021	461,250	—	1,399,996	—	345,977	6,000	2,213,223
	2020	450,000	—	1,849,992	1,624,655	—	57,032	3,981,679
Pamela Strayer(15)	2022	117,614	—	2,170,258(9)	—	—	—	2,287,872
Former CFO & Treasurer	2021	450,000	—	1,399,996	—	253,125	—	2,103,121
	2020	450,000	—	168,743	—	—	100,552	719,295
John Kellerman(16)	2022	287,739	—	163,790(10)	—	—	6,000(4)	457,529
Former Interim CFO


		Estimated Future Payouts Under Non-Equity Incentive Plan Awards(1)			Estimated Future Payouts Under Equity Incentive Plan Awards(2)
Name	Grant Date	Threshold ($)	Target ($)	Maximum ($)	Threshold (#)	Target (#)	Maximum (#)	All Other Stock Awards: Number of Shares of Stock or Units (#)(3)	All Other Option Awards: Number of Securities Underlying Options (#)	Exercise or base price of option awards ($/Sh)	Grant Date Fair Value of Stock And Option Awards ($)(5)
Matthew Krepsik	—	250,000	500,000	750,000	—	—	—	—	—	—	—
	3/1/2022	—	—	—	54,083	162,250	162,250	—	—	—	639,805
	3/1/2022	—	—	—	—	—	—	162,249	—	—	1,052,996
	6/1/2022	—	—	—	—	—	—	300,000	—	—	1,209,000
	6/1/2022	—	—	—	—	—	—	—	600,000(4)	4.03	1,227,480
Yuneeb Khan	—	172,500	345,000	517,500	—	—	—	—	—	—	—
	8/1/2022	—	—	—	156,794	470,383	470,383	—	—	—	399,825
	8/1/2022	—	—	—	—	—	—	470,383	—	—	1,349,999
	8/1/2022	—	—	—	—	—	—	522,648	—	—	1,500,000
Connie Chen	—	114,000	228,000	342,000	—	—	—	—	—	—	—
	3/1/2022	—	—	—	38,520	115,562	115,562	—	—	—	455,699
	3/1/2022	—	—	—	—	—	—	115,562	—	—	749,997
	7/1/2022	—	—	—	—	—	—	75,000	—	—	240,000
	7/1/2022	—	—	—	—	—	—	—	150,000(4)	3.20	243,210
Steven Boal	—	250,000	500,000	750,000	—	—	—	—	—	—	—
	3/1/2022	—	—	—	128,402	385,208	385,208	—	—	—	1,519,003


	Year Ended December 31,						2019 to 2020				2018 to 2019
(in thousands, except percentages)	2020		2019		2018		$ Change		% Change		$ Change		% Change
Promotion	$	237,385	$	246,479	$	245,493	$	(9,094)	(4)	%	$	986	—	%
Media	208,502		189,681		141,465		18,821		10	%	48,216		34	%
Total revenue	$	445,887	$	436,160	$	386,958	$	9,727	2	%	$	49,202	13	%


	Payments Due by Period
	Total		Less Than 1 Year		1 - 3 Years		3 - 5 Years		More Than 5 Years
Convertible senior notes (1)	$	200,000	$	—	$	200,000	$	—	$	—
Interest obligations (2)	6,708		3,500		3,208		—		—
Operating leases (3)	24,703		4,636		7,014		5,086		7,967
Purchase obligations (4)	43,155		23,465		14,970		714		4,006
Total	$	274,566	$	31,601	$	225,192	$	5,800	$	11,973


Name	Scenario	Cash Severance ($)	COBRA Benefits($)	RSU & PSU Awards ($)(1)	Option Awards ($)(2)	Total ($)
Matthew Krepsik	Termination Without Cause/Resignation for Good Reason	500,000	39,680	—	—	539,680
	Termination for Death	—	—	452,331	—	452,331
	Termination for Disability	—	—	292,263	—	292,263
	Termination without Cause or Resignation for Good Reason during the Change of Control Period	1,500,000	59,520	2,361,394	—	3,920,914
	Termination for Death During the Change of Control Period	—	—	848,068	—	848,068
	Change of Control	—	—	848,068	—	848,068
Scott Raskin	Termination Without Cause/Resignation for Good Reason During the Retention Period	1,860,000	56,087	2,993,814	77,266	4,987,167
	Termination for Death	—	—	533,650	—	533,650
	Termination for Disability	—	—	433,219	—	433,219
	Termination without Cause or Resignation for Good Reason during the Change of Control Period and Retention Period	1,860,000	56,087	2,993,814	77,266	4,987,167
	Termination for Death During the Change of Control Period	—	—	1,081,441	—	1,081,441
	Change of Control	—	—	1,081,441	—	1,081,441
Yuneeb Khan	Termination Without Cause/Resignation for Good Reason	460,000	9,362	—	—	469,362
	Termination for Death	—	—	—	—	—
	Termination for Disability	—	—	260,227	—	260,227
	Termination without Cause or Resignation for Good Reason during the Change of Control Period	1,207,500	14,043	4,918,675	—	6,140,218
	Termination for Death During the Change of Control Period	—	—	1,613,414	—	1,613,414
	Change of Control	—	—	1,613,414	—	1,613,414
Connie Chen	Termination Without Cause During the Retention Period	912,000	39,491	373,578	15,453	1,340,522


Termination for Death	—	—	285,880	—	285,880
Termination for Disability	—	—	232,077	—	232,077
Termination without Cause or Resignation for Good Reason during the Change of Control Period and Retention Period	912,000	39,491	1,326,498	30,906	2,308,895
Termination for Death During the Change of Control Period	—	—	579,341	—	579,341
Change of Control	—	—	579,341	—	579,341


	December 31,
	2020		2019
Assets
Current assets:
Cash and cash equivalents	$	222,752	$	224,764
Accounts receivable, net of allowance for credit losses of $2,070 and $2,021 at December 31, 2020 and 2019, respectively	137,649		125,304
Prepaid expenses and other current assets	18,547		22,026
Total current assets	378,948		372,094
Property and equipment, net	17,268		13,704
Operating lease right-of-use assets	16,222		7,211
Intangible assets, net	44,898		69,752
Goodwill	128,427		128,427
Other assets	1,029		750
Total assets	$	586,792	$	591,938
Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable	$	15,959	$	19,116
Accrued compensation and benefits	14,368		15,232
Other current liabilities	70,620		50,032
Deferred revenues	12,027		10,903
Contingent consideration related to acquisitions	8,524		27,000
Total current liabilities	121,498		122,283
Other non-current liabilities	18,314		7,119
Contingent consideration related to acquisitions	20,930		9,220
Convertible senior notes, net	177,168		166,157
Deferred tax liabilities	1,853		1,937
Total liabilities	339,763		306,716
Commitments and contingencies (Note 15)	0		0
Stockholders’ equity:
Preferred stock, $0.00001 par value—10,000,000 shares authorized and 0 shares issued or outstanding at December 31, 2020 and 2019	0		0
Common stock, $0.00001 par value—250,000,000 shares authorized; 91,743,302 and 89,371,199 shares issued and outstanding at December 31, 2020 and 2019, respectively	1		1
Additional paid-in capital	698,333		671,060
Accumulated other comprehensive loss	(1,001)		(916)
Accumulated deficit	(450,304)		(384,923)
Total stockholders’ equity	247,029		285,222
Total liabilities and stockholders’ equity	$	586,792	$	591,938


	Common Stock			Additional Paid-In Capital		Treasury Stock					Accumulated Deficit		Total Stockholders' Equity
	Shares	Amount				Shares	Amount		Accumulated Other Comprehensive Loss
Balance as of December 31, 2017	93,199,718	$	1	$	686,025	0	$	0	$	(700)	$	(287,285)	$	398,041
Exercise of employee stock options	1,329,361	—		4,028		—	—		—		—		4,028
Vesting of restricted stock units	2,287,008	—		—		—	—		—		—		—
Issuance of common stock, stock purchase plan	323,439	—		3,467		—	—		—		—		3,467
Payments for taxes related to net share settlement of equity awards	(880,262)	—		(11,658)		—	—		—		—		(11,658)
Repurchases of common stock	(1,264,053)	—		—		1,264,053	(15,843)		—		—		(15,843)
Retirement of treasury stock	—	—		(9,248)		(1,264,053)	15,843		—		(6,595)		0
Cumulative-effect of accounting change	—	—		—		—	—		—		105		105
Stock-based compensation	—	—		31,479		—	—		—		—		31,479
Change in fair value of escrowed shares related to a services and data agreement	—	—		(1,070)		—	—		—		—		(1,070)
Other comprehensive loss	—	—		—		—	—		(144)		—		(144)
Net loss	—	—		—		—	—		—		(28,318)		(28,318)
Balance as of December 31, 2018	94,995,211	$	1	$	703,023	0	$	0	$	(844)	$	(322,093)	$	380,087
Exercise of employee stock options	433,762	—		2,337		—	—		—		—		2,337
Vesting of restricted stock units	2,735,184	—		—		—	—		—		—		—
Issuance of common stock, stock purchase plan	300,949	—		2,680		—	—		—		—		2,680
Payments for taxes related to net share settlement of equity awards	(1,004,914)	—		(9,838)		—	—		—		—		(9,838)
Repurchases of common stock	(8,088,993)	—		—		8,088,993	(85,539)		—		—		(85,539)
Retirement of treasury stock	—	—		(59,766)		(8,088,993)	85,539		—		(25,773)		0
Stock-based compensation	—	—		32,624		—	—		—		—		32,624
Other comprehensive loss	—	—		—		—	—		(72)		—		(72)
Net loss	—	—		—		—	—		—		(37,057)		(37,057)
Balance as of December 31, 2019	89,371,199	$	1	$	671,060	0	$	0	$	(916)	$	(384,923)	$	285,222
Exercise of employee stock options	331,007	—		2,714		—	—		—		—		2,714
Vesting of restricted stock units	2,293,593	—		—		—	—		—		—		—
Issuance of common stock for services provided	117,210	—		689		—	—		—		—		689
Issuance of common stock, stock purchase plan	474,178	—		2,289		—	—		—		—		2,289
Payments for taxes related to net share settlement of equity awards	(843,885)	—		(7,203)		—	—		—		—		(7,203)
Stock-based compensation	—	—		28,784		—	—		—		—		28,784
Other comprehensive loss	—	—		—		—	—		(85)		—		(85)
Net loss	—	—		—		—	—		—		(65,381)		(65,381)
Balance as of December 31, 2020	91,743,302	$	1	$	698,333	0	$	0	$	(1,001)	$	(450,304)	$	247,029


	December 31, 2020
	Level 1		Level 2		Level 3		Total
Assets:
Cash equivalents:
Money market funds	$	104,964	0		0		$	104,964
Total	$	104,964	$	0	$	0	$	104,964
Liabilities:
Contingent consideration related to acquisitions	0		0		29,454		29,454
Total	$	0	$	0	$	29,454	$	29,454


	December 31, 2019
	Level 1		Level 2		Level 3		Total
Assets:
Cash equivalents:
Money market funds	$	124,303	0		0		$	124,303
U.S. Treasury Bills	15,120		0		0		15,120
Total	$	139,423	$	0	$	0	$	139,423
Liabilities:
Contingent consideration related to acquisitions	0		0		36,220		36,220
Total	$	0	$	0	$	36,220	$	36,220


	Ubimo		Elevaate		Ahalogy		Crisp
	Level 3		Level 3		Level 3		Level 3		Total
Balance as of December 31, 2017	0		0		0		18,500		18,500
Addition related to acquisition (initial measurement)	0		6,121		14,582		0		20,703
Change in fair value during the period	0		0		8,260		6,000		14,260
Payments made during the period	0		0		0		(24,500)		(24,500)
Balance as of December 31, 2018	0		6,121		22,842		0		28,963
Addition related to acquisition (initial measurement)	5,686		0		0		0		5,686
Change in fair value during the period	0		(2,587)		4,158		0		1,571
Balance as of December 31, 2019	5,686		3,534		27,000		0		36,220
Change in fair value during the period	15,244		4,990		0		0		20,234
Payments made during the period	0		0		(27,000)		0		(27,000)
Balance as of December 31, 2020	$	20,930	$	8,524	$	0	$	0	$	29,454


	Purchase Consideration		Net Tangible Assets Acquired/ (Liabilities Assumed)		Identifiable Intangible Assets		Goodwill		Goodwill Deductible for Taxes	Acquisition Related Expenses (1)
Ubimo	$	20,740	$	384	$	10,750	$	9,606	Not Deductible	$	579
Elevaate	$	13,346	$	(60)	$	3,781	$	9,625	Not Deductible	$	549
SavingStar	$	7,485	$	(1,126)	$	2,577	$	6,034	Not Deductible	$	556
Ahalogy	$	36,432	$	2,196	$	11,580	$	22,656	Not Deductible	$	684
	$	78,003	$	1,394	$	28,688	$	47,921		$	2,368


	Ubimo		Estimated Useful Life (in Years)	Elevaate		Estimated Useful Life (in Years)	SavingStar		Estimated Useful Life (in Years)	Ahalogy		Estimated Useful Life (in Years)
Developed technologies	$	7,100	4.0	$	3,307	5.0	$	1,476	3.0	$	3,100	4.0
Customer relationships	3,400		2.0	379		5.0	1,040		3.0	6,210		6.0
Trade names	250		4.0	95		3.0	61		1.5	650		4.0
Vendor relationships	—		—	—		—	—		—	1,620		2.0
Total identifiable intangible assets	$	10,750		$	3,781		$	2,577		$	11,580


	December 31, 2020
	Gross		Accumulated Amortization		Net		Weighted Average Amortization Period (Years)
Media service rights	$	35,934	$	(25,688)	$	10,246	1.4
Promotion service rights	33,566		(17,234)		16,332		1.9
Developed technologies	27,170		(18,511)		8,659		2.5
Customer relationships	22,690		(16,105)		6,585		2.7
Data access rights	10,801		(8,420)		2,381		1.0
Domain names	5,948		(5,596)		352		0.0
Trade names	2,823		(2,546)		277		0.6
Vendor relationships	2,510		(2,510)		0		0.0
Patents	975		(909)		66		1.8
Registered users	420		(420)		0		0.0
	$	142,837	$	(97,939)	$	44,898	2.0


	Total
2021	$	25,211
2022	15,193
2023	3,583
2024	559
2025	0
Thereafter	0
Total estimated amortization expense	$	44,546


	December 31, 2020		December 31, 2019
Principal	$	200,000	$	200,000
Unamortized debt discount	(21,046)		(31,132)
Unamortized debt issuance costs	(1,786)		(2,711)
Net carrying amount of the liability component	$	177,168	$	166,157