UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
FORM
10-K/A
(Amendment No. 1)
(Mark One)
☒
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 2021
OR
☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
☐
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from
to
Commission File
Number 001-36331
Quotient Technology Inc.Inc.
(Exact name of registrant as specified in its Charter)
Delaware
77-0485123
Delaware77-0485123
(State or other jurisdiction of
incorporation or organization)
(I.R.S. Employer
Identification No.)
1260 East Stringham Avenue,6th Floor
Salt Lake City, UT
84106
(Address of principal executive offices)
(Zip Code)
Registrant’s telephone number, including area code:
(650) 605-4600
(Former name, former address and former fiscal year, if changed since last report)
Securities Registered pursuant to Section 12(b) of the Act:
Title of each class
Trading
Symbol
Name of each exchange
on which registered
Common Stock, $0.00001 par value per share
QUOT
New York Stock Exchange
Preferred Stock Purchase Rights
New York Stock Exchange
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.    Yes
☐
No
☒
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Act.     Yes
☐
No
☒
Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes
☒
No
☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of
Regulation S-T (§
(§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).    Yes
☒
No
☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a
non-accelerated
filer, a smaller reporting company, or an emerging growth company. See the definition of “large accelerated filer”, “accelerated filer”, “smaller reporting company”, and “emerging growth company” in
Rule 12b-2
of the Exchange Act.:
Large accelerated filer☒☒Accelerated filer☐
Non-accelerated
filer
☐

☐Small reporting company☐
Emerging growth company☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.  
☐
Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report.  
☒
Indicate by check mark whether the registrant is a shell company (as defined in
Rule 12b-2
of the Exchange Act).    Yes
☐
No
☒
The aggregate market value of the voting and
non-voting
common equity held by
non-affiliates
of the registrant, as of June 30, 2021, the last business day of the registrant’s most recently completed second fiscal quarter, based on the closing price of $10.81 per share of the Registrant’s common stock as reported by the New York Stock Exchange on June 30, 2021, was $957.3 million. The calculation of the aggregate market value of voting and
non-voting
common equity excludes 5.4 million shares of the registrant held by executive officers, directors and stockholders that the registrant concluded were affiliates of the registrant on that date. Exclusion of such shares should not be construed to indicate that any such person possesses the power, direct or indirect, to direct or cause the direction of the management or policies of the registrant or that such person is controlled by or under common control with the registrant.
The number of shares of registrant’s Common Stock outstanding as of February 21, 2022 was 94,921,488.
DOCUMENTS INCORPORATED BY REFERENCE
Portions
None.
Auditor Firm PCAOB ID: 42Auditor Name: Ernst & Young LLPAuditor Location: San Jose, California
EXPLANATORY NOTE
In each of Items
10-14
of our Annual Report on Form
10-K
for fiscal year ended December 31, 2021, filed on March 1, 2022 (the “Original
10-K”)
with the registrant’s DefinitiveSecurities and Exchange Commission (the “SEC”), we disclosed that information called for by each item would be set forth in our Proxy Statement relating tofor the Annual Meeting of Stockholders are incorporated by reference into Part III of this Annual Report on Form 10-K where indicated. Such definitive Proxy Statement willto be filed with the Securities and Exchange CommissionSEC within 120 days after the end of the registrant’s fiscal year ended December 31, 2021.2021, and would be incorporated into the Original
10-K
by reference from the Proxy Statement. We are filing this Amendment No. 1 on
Form 10-K/A
(this “Form 10-K/A”) to include the information required by Items

10-14
and not included in the Original 10-K because we have not filed, and will not file, a definitive proxy statement within 120 days after the end of our fiscal year covered by the Original
10-K.
In addition, this
Form 10-K/A
deletes the reference on the cover of the Original

10-K
to the incorporation by reference of portions of our proxy statement into
Items 10-14
of the Original
10-K.
As required by Rule
12b-15





Table of Contents
Page
PART I
Item 1.
6
Item 1A.
16
Item 1B.
55
Item 2.
55
Item 3.
55
Item 4.
56
PART II
Item 5.
57
Item 6.
58
Item 7.
58
Item 7A.
74
Item 8.
76
Item 9.
112
Item 9A.
112
Item 9B.
113
PART III
Item 10.
114
Item 11.
114
Item 12.
114
Item 13.
114
Item 14.
114
PART IV
Item 15.
115
Item 16.
119

Unless the context otherwise requires, the terms “Quotient,” “Coupons,” the “Company,” “we,” “us” and “our” in this Annual Report on Form 10-K refer to Quotient Technology Inc. and its consolidated subsidiaries.
Quotient, Ubimo, Ahalogy, Elevaate, SavingStar, Shopmium and our other registered or common law trademarks, service marks or trade names appearing in this Annual Report on Form 10-K are the property of Quotient and its subsidiaries. Other trademarks and trade names referred to in this Annual Report on Form 10-K are the property of their respective owners.
1







SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
This Annual Report on Form 10-K contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”) and Section 21E ofunder the Securities Exchange Act of 1934, as amended, (the “Exchange Act”). The words “anticipate,” “believe,” “continue,” “could,” “seek,” “might,” “estimate,” “expect,” “intend,” “may,” “plan,” “potential,” “predict,” “approximately,” “project,” “should,” “will,” “would” orthis Form
10-K/A
amends Item 15 of Part IV of the negative or pluralOriginal 10-K to include certifications pursuant to Section 302 of these words or similar expressions, as they relate to our company, business and management,the Sarbanes-Oxley Act of 2002. Because no financial statements are intended to identify forward-looking statements. Forward-looking statements contained inwithin this Annual Report on Form 10-K include, but
10-K/A,
we are not limitedincluding certifications pursuant to statements about:Section 906 of The Sarbanes-Oxley Act of 2002.
•
Except as described above, this Form
10-K/A
does not modify or update disclosure in, or exhibits to, the Original
10-K,
including certain defined terms used therein. Furthermore, this Form
10-K/A
does not change any previously-reported financial results. Information not affected by this Form
10-K/A
remains unchanged and reflects the disclosures made at the time the Original
10-K
was filed.
PART III
Item 10.
Directors, Executive Officers, and Corporate Governance
Directors
Our Board is comprised of eight members. In accordance with our financial performance, including our revenues, margins, costs, expenditures, growth ratesAmended and operating expenses,Restated Certificate of Incorporation (our “Restated Certificate”) and our abilityBylaws, our Board is divided into three classes of directors, with directors serving staggered three-year terms.
Directors in a particular class are elected for a three-year term at the annual meeting of stockholders in the year in which their terms expire. As a result, only one class of directors will be elected at each annual meeting of stockholders, with the other classes continuing for the remainder of their respective three-year term. Each director’s term continues until the election and qualification of his or her successor, or his or her earlier death, resignation or removal. The class of each director is set forth in the table below. There are no arrangements or understandings between a director and any other person pursuant to generate positive cash flow and become profitable;which such director was or is to be selected as a director or nominee.
•
Set forth in the table below is information regarding our strategies relating to the growth of our platforms and our business, including pricing strategies;
•our expectations regarding the shift to digital promotions and advertising from off-line channels,current directors, and the sizenominees for election as director at our 2022 Annual Meeting of the addressable market for the solutions we offer;
•our ability to adapt to consumer-packaged goods ("CPG's") and retailers' changes in marketing goals, strategies and budgets and the timing of their spending on media and promotions solutions (collectively, "marketing spend");
•our ability to successfully and timely implement changes in our business model, including transitioning the pricing of promotions offerings from cost-per-acquisition to duration-based pricing and increasing the proportion of self-service and automated solutions on our platforms;
•the rate at which transitions in our business model will occur and the expected benefits to advertisers and retail partners;
•our ability to maintain and grow the size of our targetable audience;
•our ability to expand the use of our media and promotions offerings by consumers;
•our ability to innovate our consumer solutions and experiences to retain and grow our consumer base;
•our expectations regarding Quotient Media Platform, Quotient Retailer Performance Media Platform, Quotient Promotions Platform, Quotient Retailer Promotions Platform, Quotient Consumer Properties, Quotient Retailer Media Services and Quotient Data & Analytics Platform;
•our ability to increase revenues from CPGs already on our platforms, as well as expand our CPG base of customers;
•our ability to increase the number of smaller CPG advertisersStockholders that use, or desire to use, our solutions;
•our ability to maintain and grow retailers in our network, increase the number of network partners in our network, and expand our network with new verticals;
•our ability to maintain and expand our data rights with our retailer network;
•our ability to successfully execute and expand our digital media solutions into areas such as retail performance media;
•our ability to expand the number, variety, quality, and relevance of promotions available on our platforms and through our network;
•our ability to grow our digital promotions business by increasing the reach of our promotions platforms, and our ability to successfully execute and expand our promotions solutions into areas such as national promotions and national rebates;
•our ability to demonstrate the value of our platforms through trusted measurement metrics;
•our ability to deploy, execute, and continue to develop our measurement and analytics capabilities;
•our intent to continue to invest in developing our differentiated and proprietary platforms aimed at solving the problems of CPGs and retailers;
2






•our ability to respond to changes in the legislative or regulatory environment, including with respect to privacy and data protection, or enforcement by government regulators, including fines, orders, or consent decrees;
•our ability to hire, integrate, train and retain talented personnel;
•our ability to successfully integrate any newly acquired companies into our business;
•our ability to effectively manage scaling and international expansion of our operations;
•our ability to successfully compete with existing and new competitors; and
•our ability to maintain, protect and enhance our brand and intellectual property.
We caution you that the foregoing list may not contain all of the forward-looking statements made in this Annual Report on Form 10-K.
We have based these forward-looking statements on our current expectations and projections about future events and financial trends affecting our business. Forward-looking statements should not be read as guarantees of future performance or results, and will not necessarily be accurate indications of the times at, or by, which such performance or results will be achieved. Forward-looking statements are based on information available to our management at the date of this Annual Report on Form 10-K and our management’s good faith belief as of such date with respect to future events, and are subject to risks and uncertainties that could cause actual performance or results to differ materially from those expressed in or suggestedbeen nominated by the forward-looking statements. Forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause our actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements. We discuss these risks in greater detail in “Item 1A: Risk Factors” and elsewhere in this Annual Report on Form 10-K. Forward-looking statements speak only asCompany’s Board of the date of this Annual Report on Form 10-K. We caution you that the foregoing list of important factors may not contain all of the material factors that are important to you. Except as required by law, we assume no obligation to publicly update or revise any forward-looking statement to reflect actual results, changes in assumptions based on new information, future events or otherwise. If we update one or more forward-looking statements, no inference should be drawn that we will make additional updates with respect to those or other forward-looking statements. Given these risks and uncertainties, you are cautioned not to place undue reliance on such forward-looking statements.Directors.

3



   Independent?  Class  Age  Position  
Director
Since
   
Current
Term
Expires
   
Expiration
of
Term For
Which
Nominated
 
Board-Nominated Director
Nominees
              
Matthew Krepsik    II  40  Chief Technology Officer and
CEO-Designee
   —      —      2025 
Robert McDonald  ✓  II  68  Director - Chair   2018    2022    2025 
Continuing Directors
              
Lorraine Hariton  ✓  III  67  Director   2021    2023    —   
Andrew Gessow  ✓  III  64  Director   2013    2023    —   
David Oppenheimer  ✓  III  65  Director   2017    2023    —   
Alison Hawkins  ✓  I  56  Director   2021    2024    —   
Steve Horowitz  ✓  I  54  Director   2015    2024    —   
Eric D. Higgs  ✓  I  51  Director   2022    2024    —   
Director Who Is Not Standing For
Re-election
              
Steven Boal    II  56  CEO   1998    2022    —   

Director Nominees


Summary
Matthew Krepsik
was designated by the Board in March 2022 to succeed Steven Boal as CEO when Mr. Boal retires from the Company on or before December 31, 2022. Mr. Krepsik has served as our Chief Technology Officer since June 2021, leading the Company’s strategy and insights team as well as its engineering, product management, business development and media strategy functions. Mr. Krepsik has also recently taken over the information technology (IT) function for the Company. Prior to his promotion to Chief Technology Officer, Mr. Krepsik served as our Chief Analytics Officer from April 2021 through June 2021, having joined the Company in April 2021. Prior to joining Quotient, Mr. Krepsik served for 15 years in various managerial roles at Nielsen, most recently as Senior Vice President and General Manager of Risk FactorsOutcomes Products (2019-2021), in which he led Nielsen’s development and deployment of attribution, media planning and activation products. Mr. Krepsik’s other positions at Nielsen included Global Head of Analytics Products (2016-2019), Executive Director of Analytics Asia-Pacific, Middle East and Africa (2012-2016), and Vice President, Analytics North America (2006-2012). He also had an integral role in Nielsen’s strategic review process, which culminated in the sale of its NielsenIQ business to Advent International for $2.7 billion. Mr. Krepsik’s academic career includes coursework at the London School of Economics as well as Bachelors and Master’s degrees in Economics from Marshall University and Miami University, respectively. We have determined that Mr. Krepsik is qualified to serve as a member of our Board due not only to his
CEO-designee
status but also his deep digital industry experience as well as his institutional knowledge and operational experience acquired from leading the Company’s strategy and insights team as well as its engineering, product management, business development and media strategy functions.
Our business
Robert McDonald
has served on our Board since November 2018 and as Chairman of our Board since March 2022. Mr. McDonald currently serves on boards of various companies and organizations, private and public,
non-profit
and
for-profit.
Mr. McDonald served as the U.S. Secretary of Veterans Affairs from July 2014 until January 2017. Mr. McDonald was Chairman and Chief Executive Officer of Procter & Gamble Company from January 2010 until June 2013. Mr. McDonald joined Procter & Gamble in 1980 and served in various positions for that company. He was named Procter & Gamble’s Vice Chairman, Global Operations in 2004; Chief Operating Officer in 2007; President and Chief Executive Officer in 2009; and Chairman of the Board in 2010. Mr. McDonald has served on the board of directors of Audia Group since 2017, a private international plastics producer company, has served as chairman of the West Point Association of Graduates, a private
non-profit
organization, since January 2022. From 2005 to July 2014, Mr. McDonald served on the board of directors of Xerox Corporation, a provider of document management solutions, and from January 2014 to July 2014 Mr. McDonald served on the board of directors of United States Steel Corporation, an integrated steel producer, both of which are public companies. Mr. McDonald served on the board of directors of Partnership for Public Service from 2017 to 2021, served on the board of directors of Institute for Veterans and Military Families from 2018 to 2021, and served on the board of directors as Chairman of RallyPoint Networks from 2017 to 2022. Mr. McDonald graduated from the United States Military Academy at West Point in 1975. He earned his M.B.A. from the University of Utah in 1978. We have determined that Mr. McDonald is subjectqualified to serve as a member of our Board because of his deep industry experience and knowledge of operational matters. Additionally, his extensive experience as a public company executive and director allows him to provide valuable knowledge and guidance to the Board and to enable him to lead effectively in his capacity as Chairman of the Board.
Continuing Directors
Andrew “Jody” Gessow
has served on our Board since May 2013. Mr. Gessow currently serves as a managing partner at DivCore Equity Partners, a real estate investment firm and as senior advisor at
Divco West Real Estate Services (“Divco”). From May 2007 through December 2011, Mr. Gessow was the West Coast Partner and Managing Director of One Equity Partners LLC, the private equity platform of J.P. Morgan Chase & Co. Since January 2020, Mr. Gessow has served on the board of directors of Waterfall Security Solutions, an Israeli private industrial cybersecurity company. Previously, Mr. Gessow served as a member of the board of directors of Mandiant Corporation and the TV Guide Network. Mr. Gessow holds a B.B.A. in Business Administration from Emory University and an M.B.A. from Harvard University. We have determined that Mr. Gessow is qualified to serve as a member of our Board because of his experience in both managing and evaluating companies as an executive officer, board member and investor.
Lorraine Hariton
has served on our Board since January 2021. Ms. Hariton currently serves as the President and Chief Executive Officer of Catalyst, a global nonprofit supported by many of the world’s most powerful CEOs and leading companies to help build workplaces that work for women. Prior to joining Catalyst, Ms. Hariton worked independently as a consultant from 2014 until August 2018. Previously, Ms. Hariton spent 25 years in various senior-level positions in Silicon Valley, including CEO of two venture-backed
start-ups,
before being appointed by President Obama in 2009 as Special Representative for Commercial and Business Affairs at the U.S. Department of State. More recently, she served as SVP for Global Partnerships for the New York Academy of Sciences where she was instrumental in establishing the Global STEM Alliance. From March 2014 to February 2016, Ms. Hariton served on the board of directors of Wave Systems Corporation, a publicly traded data security company, where she was chair of the nominating and governance committee. She also served on the California Board of Accountancy; the Entrepreneurs Foundation, and the Stanford Clayman Institute for Gender Research, amongst others. Ms. Hariton earned a M.B.A. from Harvard University, and a B.S. degree from Stanford University. We have determined that Ms. Hariton is qualified to serve as a member of our Board because of her experience in the technology industry, her executive management experience, her public company experience, and her diversity, equity and inclusion (“DEI”) expertise.
Alison Hawkins
has served on our Board since July 2021. Ms. Hawkins currently serves as a Senior Advisor at Artemis Real Estate Partners (“Artemis”), a women-owned real estate private equity firm where she served as Managing Principal from 2015 to 2021. Ms. Hawkins was initially hired to lead the firm’s capital raise strategy shortly after Artemis’ founding in 2009 and remained in that role until 2013. From 2013 to 2015, Ms. Hawkins was employed by CBRE Global Investors, where as a managing director she held a senior capital-raising and strategic product development role for one of the largest global real estate firms. From 2004 to 2010, Ms. Hawkins served initially as an associate and later as director at Eastdil Secured, a national real estate investment bank, where she advised clients on investment sales and capital markets strategies. From 1999-2000, Ms. Hawkins was general counsel of Kibu, Inc., a venture-backed internet marketing company, and from 1990-1999 Ms. Hawkins served initially as an associate attorney and later as a partner with Milberg Weiss Bershad Hynes & Lerach LLP, a class action litigation firm. A graduate of Occidental College (A.B.), American University (J.D.), and the Wharton School (M.B.A.). Ms. Hawkins holds the Chartered Alternative Investments Analyst designation and is a member of the State Bar of California. She is a member of the Occidental College Board of Trustees, where she serves on the board’s audit and investment committees. We have determined that Ms. Hawkins is qualified to serve on the Board because of her executive experience, her financial skills relating to company operations, investment evaluation and capital raising, her legal practice and risk management experience, and her DEI oversight experience.
Steve Horowitz
 has served on our Board since June 2015. Mr. Horowitz is currently a partner at Alpha Edison, a venture capital firm. Mr. Horowitz served as Vice President of Technology at Snap Inc. (“Snap”), a public camera company, from September 2017 until March 2019, and previously served as Vice President of Hardware with Snap from January 2015 until September 2017. Before joining Snap, Mr. Horowitz served as Senior Vice President of Software Engineering at Motorola Mobility, LLC, a public mobile communications company, formerly a Google company, from December 2012 through January 2015. From January 2009 through November 2012, Mr. Horowitz served as our Chief Technology Officer. Prior to that he worked at Google, Microsoft and Apple. Mr. Horowitz holds a B.A. degree from the University of Michigan, Ann Arbor. We have determined that Mr. Horowitz is qualified to serve as a member of our Board because of his significant industry, technology and company experience.
David Oppenheimer
has served on our Board since July 2017. Mr. Oppenheimer is currently a President of Oppenheimer Advisors and General Partner of Verissimo Ventures. Mr. Oppenheimer served as the Chief Financial Officer at Udemy, Inc., a global marketplace for learning and teaching online, from July 2018 through February 2019. Previously Mr. Oppenheimer was Chief Financial Officer at Planet Labs Inc., a space and analytics company, having served in that role from October 2015 through August 2018. From April 2013 through February 2015, Mr. Oppenheimer served as Chief Financial Officer at Ebates Inc. (acquired by Rakuten, Inc.), an
e-commerce
company. Since April 2020, Mr. Oppenheimer has served on the board of directors of Lumus Ltd, an Israeli private augmented reality technology company. Additionally, Mr. Oppenheimer served on the board of directors and audit committee of HotChalk, Inc., a Delaware private education software company, from May 2015 until December 2020, and The Olympic Club, a private company, from January 2018 until December 2020. Mr. Oppenheimer holds a B.S. in Mechanical Engineering from the State University of New York at Buffalo and a M.B.A. from the University of California, Berkeley. We have determined that Mr. Oppenheimer is qualified to serve as a member of our Board because of his experience serving on audit committees and expertise in financial accounting at technology companies.
Eric D. Higgs
has served on our Board since
March 2022
.
Mr. Higgs has more than two decades of leadership experience overseeing marketing strategy development and product execution in the consumer goods and retail industry. Since June 2020, Mr. Higgs has served as the Chief Executive Officer of the Boys & Girls Clubs of Middle Tennessee, where he leads the organization’s strategic direction, oversight of organizational operations, financials, programming, brand reputation and talent recruitment. Prior to his role at the Boys & Girls Clubs of Middle Tennessee, Mr. Higgs served in a number of risks, including risks that may prevent usroles with increasing responsibility at Bridgestone Americas from achieving ourMay 2016 to March 2020. He served as Senior Vice President, Marketing Operations (April 2020 to May 2020), where he was responsible for helping shape the future of Bridgestone Americas’ tire and solutions business objectives or may adversely affect ourand creating synergies between the marketing and sales organizations. Prior to this, he served as President of Bridgestone Americas’ Commercial Truck and Retread business financial condition, results(September 2018 to March 2020). Prior to joining Bridgestone, he spent approximately four years at Kimberly Clark from 2012 to 2016, during which he drove sales growth in two of operations, cash flows,its key businesses. Mr. Higgs also spent over 18 years at Procter & Gamble from 1994 to 2012 leading marketing efforts and prospects. These risks are discussed more fully under "Item 1A. Risk Factors" below and include, but are not limited to, risks related to:
Risks Related to Our Business
•We have incurred net losses since inception and we may not be able to generate sufficient revenues to achieve or subsequently maintain profitability.
•We may not achieve revenue growth, including as a result of changes to our business model.
•Our revenue and business will be negatively affected if we fail to retain and expand our relationships with retailers, if we fail to obtain commitment and supportproduct launches for our platforms from retailers, and if we do not successfully renegotiate or amend retailer agreements.
•Our revenue and business will be negatively affected if we fail to develop, increase the number of and expand relationships with network partners that contribute to the growth of audiences engaging on our platforms.
•The loss of or decrease in spending by any significant customer, or the loss of or decrease in support from any significant partner, could materially and adversely affect our revenues, results of operations and financial condition.
•If the distribution, revenue sharing or other fees that we pay increase, or if we are unable to meet contractual minimums under guaranteed distribution fee arrangements, our gross profit and business will be negatively affected.
•Our gross margins are dependent on many factors, some of which are not directly controlled by us.
•We expect a number of factorsbusiness lines. Mr. Higgs holds a B.S. in Chemical Engineering from the University of Illinois and an M.B.A. from the Fuqua School of Business at Duke University. We have determined that Mr. Higgs is qualified to causeserve as a member of our operating results to fluctuate on a quarterly and annual basis, which may make it difficult to predict our future performance.
•If we are unable to successfully respond to changesBoard because he brings decades of leadership experience in the consumer goods and retail industry, his successful track record of building and growing brands through traditional and digital promotions market,outlets and in driving improved sales and profitability, and his extensive sales and marketing knowledge as bringing value to the Company’s efforts to enhance its product portfolio and business operation.
Director Not Standing For
Re-Election
Steven Boal,
the founder of the Company, announced in March 2022 that he will retire as Chief Executive Officer on or before December 31, 2022 and will not stand for
re-election
as a director of the Company when his term ends at the 2022 Annual Meeting of Stockholders.
For information on the business background of Mr. Boal, see “Executive Officers” below.
Executive Officers
The following table identifies certain information, as of April 29, 2022, about our business couldcurrent executive officers and persons chosen to become executive officers. Officers are appointed or elected by the Board to hold office until their successors are elected and qualified. There are no family relationships among any of our directors or executive officers. There are no arrangements or understandings between an executive officer and any other person pursuant to which such executive officer was or is to be negatively affected.selected as an officer.
•If we fail
Name
Age
Position(s) with Quotient
Steven Boal
(1)
56Chief Executive Officer and Board Member
Scott Raskin60President
Yuneeb Khan
(2)
46Board-Appointed Future Chief Financial Officer, Principal Accounting Officer and Treasurer
Matthew Krepsik
(3)
40Chief Technology Officer and Chief Executive Officer-Designee
Connie Chen55General Counsel, Compliance Officer and Secretary
John Kellerman
(4)
53Interim Chief Financial Officer
(1)
On March 24, 2022, the Company announced Mr. Boal’s intention to retire as CEO by December 31, 2022 and his decision to not stand for
re-election
as a Class II member of the Board of Directors.
(2)
On April 13, 2022, the Company announced Mr. Khan’s appointment as future CFO and that he is expected to join the Company by July 2022.
(3)
On March 24, 2022, the Company announced Mr. Krepsik will assume office as the Company’s next CEO upon Mr. Boal’s retirement as CEO. For information on the business background of Mr. Krepsik, see “Directors” above.
(4)
On April 13, 2022, the Company announced Mr. Kellerman’s appointment as Interim CFO effective April 5, 2022 until Mr. Khan commences his service as CFO.
Steven Boal
, who will be stepping down from the CEO role no later than December 31, 2022, founded Quotient in 1998. Mr. Boal has served as our Chief Executive Officer since August 2019, has been a member of the Board since 1998, and served as Chairman of our Board from August 2019 until March 2022. Mr. Boal was our Executive Chairman from September 2017 to maintainAugust 2019, our CEO from 1998 until September 2017, our Chairman from February 2017 until September 2017, and expandour President from 1998 until September 2015. Prior to founding Quotient, Mr. Boal served as Vice President of Business Development for Integral Development Corporation, a privately held financial software company. Mr. Boal currently serves on the use by consumersboard of digital promotionsdirectors of Matia Robotics, a private robotic mobility device company, and OneTable.org since December 2020, a national
non-profit
organization. Mr. Boal holds a B.A. from the State University of New York at Albany.
Scott Raskin
has served as our President since August 2019. Mr. Raskin served on our platforms,Board from February 2017 until August 2019 and was Lead Independent Director from November 2017 until August 2019. From June 2019 to August 2019, Mr. Raskin served as an operating partner with Khosla Ventures, a venture capital firm. Mr. Raskin served as the President and Chief Executive Officer at Spigit Inc. (formerly known as Mindjet), a provider of innovation management software from June 2006 until December 2018 (Spigit was acquired in December 2018). Prior to joining Spigit, Mr. Raskin served as President and Chief Operating Officer, from May 2001 to June 2006, at Telelogic AB, a publicly traded, international software company. Additionally, from June 2019 until January 2022 Mr. Raskin served as chairperson of the board of directors of Neology Inc., a private company and global innovator that is
re-imagining
mobility for smart cities and safer communities; from January 2015 until January 2022 served on the board of directors of MariaDB, a Finnish private company; and from January 2012 to July 2014, served on the board of directors of Cision AB, a Swedish, publicly traded software and information services company, where he was also a member of the compensation committee of its board of directors. Mr. Raskin holds a B.B.A. from the University of Texas.
Matthew Krepsik
, was designated by the Board in March 2022 to succeed Steven Boal as CEO when Mr. Boal retires from the Company on or before December 31, 2022. Mr. Krepsik
has served as our revenuesChief Technology Officer since June 2021, leading the Company’s strategy and insights team as well as its engineering, product management, business will be negatively affected.development and media strategy functions. For information on the business background of Mr. Krepsik, see “Directors” above.
•Competition presents an ongoing threat
Yuneeb Khan
, whom the
Board determined to appoint to the successCFO role on March 28, 2022 and who is expected to join the Company by July 2022, currently serves as President of the Global Consumer Insights business of NielsenIQ, a world-renowned marketing and consumer intelligence enterprise that provides critical research, data and strategic insights about consumer behavior in more than 80 countries. Mr. Khan is a seasoned executive with more than 25 years of experience in leading commercial and product strategies for global businesses, guiding meaningful financial turnarounds, and driving global mergers and acquisitions. Mr. Khan joined Nielsen in January of 2010 and, during his
12-year
tenure with the company, has served in several high impact roles and driven high profile strategic projects. Immediately prior to his current role, he served as President of the Global Customized Intelligence business of NielsenIQ from 2020 to 2021. Prior to that, he served as the Chief Financial Officer (CFO) of Nielsen Global Connect (now NielsenIQ) with revenues of over $3 billion, over 30,000 employees, and operations in 100+ countries, from 2019 to 2020. While in this role, the business returned to growth and he played a pivotal role in the strategic review process that resulted in the creation of NielsenIQ, an independent privately held company. He was instrumental in driving significant operational efficiencies as the CFO of Nielsen’s Global Technology and Operations (2014 to 2019) and significantly strengthened the global finance processes by establishing a process driven regional operating model. He is a respected leader with a well-established reputation for developing talent and high-performing global teams with a leadership style described as empathetic, principled, and genuine. In 2020, he was awarded the prestigious Arthur C. Nielsen award as recognition for the significant contributions he has made to the Nielsen business. Prior to Nielsen, from December 1995 to January 2010, Mr. Khan held several financial partnership, regulatory and advisory roles around the globe with large blue-chip companies, including General Electric, United Technologies, Kinnevik, Bristol Myers Squibb, and PricewaterhouseCoopers. He is a chartered accountant from the Institute of Chartered Accountants of Pakistan (1999) and a graduate of the Advanced Management Program (2021) of Harvard Business School.
Connie Chen
 has served as our General Counsel, Compliance Officer and Secretary since January 2016 and served as our Senior Director of Legal Affairs from October 2014 to December 2015, and Director of Legal Affairs from September 2013 to October 2014. From 2005 to August 2013, she served as vice president, litigation and deputy general counsel at Rambus Inc., a semiconductor and IP product company. Prior to Rambus, Ms. Chen held positions at the law firm of Morrison & Foerster LLP and WebMD, an internet healthcare technology company, where she served as assistant general counsel. Ms. Chen holds an A.B. from Stanford University and a J.D. from Stanford Law School.
John Kellerman
, the Company’s Vice President, Chief Accounting Officer whom the Board appointed to serve as the Company’s interim Chief Financial Officer (“interim CFO”) effective April 5, 2022 until Mr. Khan commences his service as CFO, has over 30 years of experience in financial reporting, accounting operations and internal audit services. He has served as Quotient’s Vice President, Chief Accounting Officer since March 2020. Prior to that, he served as VP Internal Audit at
Bio-Rad
Laboratories, Inc. from August 2017 to March 2020, and as VP Controller at Gracenote, Inc. from October 2015 to August 2017. He served in various roles of escalating responsibility at Autodesk, Inc. from 2000 to 2015, culminating in his position as Assistant Controller from 2011 to October 2015. Mr. Kellerman holds a B.S. in Accounting from California State University, Sacramento.
Audit Committee and Financial Experts
Our Audit Committee currently consists of Messrs. Oppenheimer and Higgs and Ms. Hawkins, with Mr. Oppenheimer serving as our Audit Committee chairperson. Ms. Hawkins joined the Audit Committee on July 30, 2021 and Mr. Higgs joined the Audit Committee on March 23, 2022. Our Board has determined that all of the members of the Audit Committee possess the level of financial literacy and sophistication required under the listing standards of the NYSE, and that Mr. Oppenheimer is an audit committee financial experts as defined by SEC rules. Our Board has also determined that Messrs. Oppenheimer and Higgs and Ms. Hawkins satisfy the independence requirements of Audit Committee members under the applicable rules and regulations of the SEC and the listing standards of the NYSE.
Code of Ethics
Our Board of Directors has adopted a code of business conduct and ethics that applies to all of our business.
•We depend in partemployees, 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 advertising agencies as intermediaries, and if we fail to develop and maintain these relationships, our business may be negatively affected.
•Our failure to attract, integrate and retain other highly qualified personnel in the future could harm our business, and in the near term is an increasing challenge due to market conditions and strategic transitions in our business.
•The effects of health epidemics, including the COVID-19 pandemic, have had, and may continue to have, an adverse impactinvestor relations page on our business, operations, and the markets and communities inwebsite which we and our partners operate.
•Acquisitions, joint ventures and strategic investments could result in operating difficulties, dilution and other harmful consequences.
•If we fail to effectively manage our growth, our business and financial performance may suffer.
•If our websites or those of our publishers fail to rank prominently in unpaid search results from search engines, trafficis located at http://investor.quotient.com. We will post any amendments to our websites could declinecode of business conduct and ethics, or waivers of its requirements, on our business would be adversely affected.website.
•Failure to deal effectively with fraudulent or other improper transactions could harm our business.
•Indemnity provisions in various agreements and our corporate documents potentially expose us to substantial liability for intellectual property infringement and other claims.
4


Delinquent Section




 16(a) Reports
•Our business depends on strong brands,
Under U.S. securities laws, directors, certain officers and if we are not able to maintain and enhance our brands, or if we receive unfavorable media coverage, our ability to retain and expand our number of advertisers, retailers and consumers will be impaired and our business and operating results will be negatively affected.
Risks Related to Government Regulation, Tax Law or Accounting Standards
•Our business is subject to complex and evolving laws, regulations and industry standards, and unfavorable interpretations of, or changes in, or our actual and perceived failure to comply with these laws, regulations and industry standards could substantially harm our business and results of operations.
•If our estimates or judgements relating to our critical accounting policies prove to be incorrect, our results of operations could be adversely affected.
•Our ability to use net operating losses to offset future taxable income may be subject to certain limitations.
Risks Related to Our Platforms, Technology and Intellectual Property
•If our security measures or information we collect and maintain are compromised or publicly exposed, advertisers, retailers and consumers may curtail or stop using our platforms and we could be subject to claims, penalties and fines.
•Our ability to generate revenue and properly capture the occurrence of certain revenue-generating events depends on the collection, reliability, and use of significant amounts of data from various sources, which may be restricted by consumer choice, restrictions imposed by retailers, publishers and browsers or other software developers, changes in technology, and new developments in laws, regulations and industry requirements or standards.
•If the use of mobile device identifiers, third-party cookies     or other tracking technology is rejected by consumers, restricted by third parties outside of our control or otherwise subject to unfavorable regulation, the benefits of our offerings and solutions could diminish, our data and media acquisition costs could increase, and we could lose customers and revenue
•Our business depends on our ability to maintain and scale the network infrastructure necessary to operate our platforms, including our websites and mobile applications, and any significant disruption in service could result in a loss of advertisers, retailers and consumers.
•We may not be able to adequately protect our intellectual property rights.
•We may be accused of infringing intellectual property rights of third parties.
•Some of our solutions contain open source software, which may pose particular risks to our proprietary software and solutions.
Risks Related to Ownership of our Common Stock
•The market pricepersons holding more than 10% of our common stock has been,must report their initial ownership of our common stock and is likelyany changes in their ownership to continuethe SEC. To our knowledge, based solely on our review of copies of the reports filed with the SEC and the written representations of our directors and executive officers that no other reports were required to be subjectfiled during our fiscal year ended December 31, 2021 (“Fiscal 2021”), we believe that for Fiscal 2021, all required reports were filed on a timely basis under Section 16(a) of the Exchange Act, except for Ms. Hariton who had one late report on Form 4 on March 3, 2021 relating to wide fluctuations and could subject usa restricted stock unit award that was granted to litigation.her on February 5, 2021.
•Our tax benefits preservation plan may reduce
Item 11.
Executive Compensation
Executive Compensation
The following discusses the volume of trading incompensation for our stock because it limits the ability of persons or entities from acquiring a significant percentage ofNamed Executive Officers (“NEOs”) for 2021: our outstanding stock.
Risks Related to Debt Financing Transactions
•We are leveraged financially, which could adversely affectChief Executive Officer, our ability to adjust our business to respond to competitive pressures and to obtain sufficient funds to satisfy our future growth, business needs and development plans.
General Risks
•Our ability to raise capital in the future may be limited,Chief Financial Officer, and our failure to raise capital when needed could prevent us from growing.three other most highly compensated executives.
•Global economic conditions could materially adversely affect our revenue and results of operations.
5Steven Boal
(1)

Founder, Chief Executive Officer and Member of the Board of Directors
Scott Raskin
President
Pamela Strayer
(2)
Former Chief Financial Officer and Treasurer
Matthew Krepsik
(3)
Chief Technology Officer and Chief Executive Officer—Designee
Connie Chen





General Counsel, Compliance Officer and Secretary
PART I
(1)
On March 24, 2022, the Company announced Mr. Boal’s intention to retire as CEO by December 31, 2022 and his decision to not stand for
re-election
as a Class II member of the Board of Directors.
(2)
Ms. Strayer resigned as CFO and Treasurer effective April 5, 2022.
(3)
Mr. Krepsik joined the Company as Chief Analytics Officer effective April 26, 2021, and was promoted to the role of Chief Technology Officer on June 1, 2021. On March 24, 2022, the Company announced Mr. Krepsik will assume office as the Company’s next CEO upon Mr. Boal’s retirement as CEO.
Item 1.     Business.
Business Overview
Business Description
Quotient Technology Inc. is an industry leading digital media and promotions technology company that powerscreates cohesive omnichannel brand-building and sales-driving marketing campaignsopportunities to deliver valuable outcomes for advertisers, retailers and retailersconsumers. The Quotient platform is powered by exclusive consumer spending data, location intelligence and purchase intent data to influence purchasing decisions throughout a shopper's path to purchase. These marketing campaigns are planned, deliveredreach millions of shoppers daily and measured using our technology platforms and data analytics tools. Our vision is to build the world's leading performance marketing platform that delivers a variety of targeted digital marketing solutions which advertisers and retailers can purchase to drivedeliver measurable, improvements in sales and customer loyalty.incremental sales.
Our customers consist primarily of consumer-packaged goods ("CPG"(“CPG”) companies and their brand marketers (together referred to as "advertisers"“advertisers”) who want to drive sales and positive brand engagement with shoppers. Our digital marketing platform is designed to produce returns on marketing investment for advertisers by utilizing consumer behavior and intent data to deliver the right marketing message to the right shopper at the right time, through multiple touchpoints while they are engaged online, out of home and
in-store.
Quotient partners with leading advertisers and retailers, including Clorox, Procter & Gamble, General Mills, Unilever, CVS, Dollar General and Peapod Digital Labs, a company of Ahold Delhaize USA.
Business Performance
2021 was a year of progress for Quotient – both financially and operationally. Despite the challenges associated with the global pandemic, we continued to execute on our transformation, and we entered 2022 as a stronger, more agile, more efficient and better positioned company, ready to deliver sustainable and profitable growth in the future.
Some of our financial and strategic highlights from 2021 include:
We partner with retailers, who primarily sell through local, physical stores as well as through eCommerce properties. generated annual revenues in 2021 of $521.5 million, up 17% over the prior year.
We are primarily focused ongenerated $40.6 million in Adjusted EBITDA in 2021
1
, lower from the US-based grocery retail marketprior year due to investments made to increase operational efficiency, business model changes to become more competitive, and the advertisers who sell products throughimpact of supply chain issues that channel. However we are expanding outside the grocery retail space,led CPG customers to broadly pull back on promotional spending.
We evolved our network partner model in order for partnerships to be more aligned to our objectives of delivering balanced and profitable growth, along with greater value to our partners. Some of our recently announced additions to our promotions network include Microsoft, Figg, and Redbox, while partners such as with partners in certain vertically-integrated industries (also known as "verticals").AutoZone have joined our retailer network.
By partnering with Quotient, retailers can monetize their proprietary sales data
During the first quarter of 2021, we introduced a new offering, our Duration-Based National Promotions solution. We believe this pricing and digital propertiesdelivery model change is beneficial to build an alternative revenue stream and offer effective marketing opportunities for their brand partners to engage consumers, with the aim of achieving higher sales through their physical stores and eCommerce sites.
Over the last five years, we have grown our platform capabilities and our network of marketing channels to reach shoppers through a combination of in-house innovation, partnerships, and acquisitions. Our network includes the digital properties of our retail partners, non-retail partners and CPG customers, social media platforms, and our consumer brand Coupons.com and digital out-of-home ("DOOH") properties. This network provides Quotient with proprietary and licensed data, including retailers' point-of-sale ("POS") shopper data, consumer behavior and purchase intent data, and location intelligence. With such data powering our platforms, customers and partners use Quotient to leverage consumer data and insights, engage consumers via digital channels, and integrate marketing and merchandising programs to drive measurable sales results and consumer engagement.
Our network is made up of several different constituencies:
•Our advertiser customers consist of approximately 900 CPGs, representing over 2,500 brands, including many of the leading food, beverage, personal care and household product manufacturers;
•Our retail partners represent multiple classes of trade such as grocery retailers, drug, automotive, mass merchant, dollar, club, and convenience merchandise channels, where most CPGs' products are sold;
•Our network partners currently include a select group of partners who invest in online consumer engagement and who help us to increase our network's reach to more US shoppers; and
•Millions of consumers who visit our owned websites, mobile properties and social channels, as well as those of our CPGs, retailer partners and other network partners.advertisers as it is outcome-based and permits aligning promotional spend with merchandising plans. Duration-based pricing promotions revenue represented approximately 32% of national promotions revenue during the fourth quarter of 2021, and we expect that percentage to increase in the upcoming quarters.
Through these relationships, we believe we have created a network effect, which engages consumers
Our Promotion Amplification offering has demonstrated strong sales lift and provides us a competitive advantage overhas expanded opportunities with both offlineexisting customers and online competitors. As our network expands and our consumer audience increases, we generate more consumer data and insights, which further improves our ability to deliver targeted and personalized media and promotions, and also strengthens our measurement and data insight solutions.new ones. We believe this will make our platforms more valuable to advertisersPromotion Amplification marks the beginning of the end of the paper circular, and feedback from both CPGs and retailers for their digital marketing campaigns. We expect thatcontinues to be strong. Hundreds of millions of dollars are spent producing the breadth of mediaweekly paper circular, and promotion content delivered through Quotient platforms from leading brands will increase and enable us to attract and retain moreboth retailers and consumers.CPGs would rather those dollars find their way to shoppers, increasing the return on investment (ROI) of that spending amount significantly.
We primarily generate revenue by advertisers and retailers using our technology platforms to help achieve their digital marketing objectives in four distinct ways:
6






•Plan and buy media and promotions campaigns to reach the right shoppers;
•Target advertising, promotions and messaging to shoppers for maximum impact;
•Sell advertising space and activate the shopper data that retailers collect through loyalty programs and digital transactions; and
•Measure the impact of advertisements, promotions or messages that have been planned, sold or placed with "closed loop" measurement, defined as the use of consumer data to help understand and evaluate how certain digital campaigns impact our advertiser customers' and retailer partners' sales.
Using shopper data from our retail partners and our proprietary data and audience segments, we deliver targeted and/or personalized digital media and promotions to shoppers through our network. As our customers and partners shift more of their marketing spend to digital channels, our solutions help them optimize the performance of such digital channels. Our platforms measure performance by attribution of digital campaigns to retail purchases in near real time, demonstrating return on spend for our customers and partners.
Our promotions products include digital paperless coupons, digital print coupons, in-lane receipt promotions, digital national promotions, shopper promotions, digital rebates and loyalty offers. Our media solutions include display, social, DOOH, Retailer.com display and sponsored search, shoppable brand pages, and audiences. A growing number of our customers purchase an integrated campaign which combines a mix of digital media and/or promotions solutions within a single campaign. While the revenue we earn from these programs is generally determined on a cost-per-click, cost-per-impression or cost-per-acquisition basis, in 2021 we launched duration-based (also known as time-based) pricing for our new offering Duration-Based National Promotions Solution, which we plan to deploy to a greater extent in the future (See "Business Model Changes" in this Item 1. Overview Section).
We generally pay a distribution fee, or revenue share, to retailers and publishers for activation or redemption of a digital promotion, for media campaigns, and for use of data targeting and/or measurement. We also pay a fee to third-party publishers and distribution partners for traffic acquisition, which consists of delivering campaigns on certain networks or properties. Generally, these distribution, revenue share and third-party service fees are included in our cost of revenues because we control the digital promotion and media advertising inventory before it is transferred to our customers. In limited instances where we do not control the digital promotion and media advertising inventory, we record revenues on a net basis, and the distribution, revenue-share and third-party service fees are deducted from gross revenues to arrive at net revenues.
During 2021, we generated revenues of $521.5 million, representing 17% growth over 2020, and a net loss of $45.6 million in 2021 as compared to a net loss of $65.4 million in 2020. See our Consolidated Financial Statements and accompanying notes for more information. For the years ended December 31, 2021 and 2020, there were no customers that accounted for greater than 10% of our total revenues during each respective period. For the year ended December 31, 2019, there was one customer that accounted for greater than 10% of our total revenues.
Business Model Changes
During 2021, we began to evolve our business model to better align our offerings to the demand in the marketplace. We have historically supported our customers using a managed service approach to digital marketing by supporting the advertiser with services throughout the campaign’s planning, execution and measurement phases. A trend in our industry is that an increasing percentage of CPGs, national advertising agencies and other advertisers are looking for transparency in the pricing and execution features of a campaign, and also for more self-service capabilities whereby they have more control over the campaign. In response to this trend, in the third quarter of 2021 we introduced self-service capabilities on some of our media products related to sponsored search. With self-service campaigns, the customer decides on campaign objectives and whichthe digital propertyproperties on which to place advertisements. We believe moving more business to self-service and away from managed services will enable us to grow more profitably by utilizing the power of our platform technology and reducing the manual effort and overhead expenses associated with managed-service campaign execution. Our sponsored search solutions are designed to utilize our data and market intelligence to target the most appropriate shoppers. As a result of these and related operational changes, we began recognizing revenue net of third-party costs on our sponsored search offering. See Management’s Discussion and Analysis of Financial Condition and Results of Operations – “Critical Accounting Policies and Estimates” for more information.
7






During the first quarter of 2021, we introduced a new offering, Duration-Based National Promotions Solution, for our national promotions business. This offering provides advertisers access to our proprietary platforms for a specific period of time (the campaign period) in exchange for a fixed fee. This allows retailers and advertisers to coordinate merchandising calendars and specify time periods during which the promotion is run. Duration-based pricing also more directly aligns with the traditional way in which promotions have been priced and executed using traditional physical coupons distributed through the free-standing insert (“FSI”) historically included in the daily or Sunday newspaper.
Promotions that are still run under our historical cost-per click or cost-per-acquisition model could result in a digital coupon or rebate that is available online for only the first few days of a campaign, if shopper activations are higher than expected. Under our new duration-based pricing model, a promotional offer will be available for use during the entire planned start and end dates, which generally are between seven and twenty-eight days.
We believe this duration-based pricing and delivery model change is beneficial to our retailer partners and advertisers as it aligns with their traditional methods of budgeting for marketing spend and executing on merchandising plans. Duration-based pricing promotions revenue represented approximately 32% of national promotions revenue during the fourth quarter of 2021, and we expect that percentage to increase rapidly in the upcoming quarters. We also plan to expand duration-based pricing to shopper promotions in 2022.
Beginning in the fourth quarter of 2021, we also began rolling out a change to our business model with respect to retailer-specific promotion or media campaigns (also known as shopper campaigns). In our traditional shopper model, advertisers are our customers and retailers are marketing distribution partners through whom we deliver shopper campaigns, where we have discretion in establishing pricing and control the digital promotion and media before the campaign is delivered to our customer. In the new shopper model, we sell shopper campaigns to advertisers on behalf of the retailers. Under the new model, retailers, who set pricing and determine how shopper media and promotions campaigns are executed through our platforms and network. In accordance withUnder generally-accepted accounting principles, in this model we are the agents“agent” of the retailers, who are our customers and pay us for the use of our platforms and services. This business model change is designed to provide several benefits to retailer customers including improved pricing transparency and control over the shopper marketing campaign’s prospects for success. We expect this business model change and increased self-service to improve our gross margins in media (though not changing gross profit dollar), with this change benefiting a product category which has historically had lower gross margins.
Our Industry
Our growth
Below is driven by several major market trends that impacta summary of our industry:financial performance for Fiscal 2021, in comparison to previous fiscal years:
Moving budgets from offline to digital – Marketing methods that traditionally have been executed offline are continuing to move to online digital marketing. Historically, the vast majority
1 
For a definition of Adjusted EBITDA and a reconciliation of Adjusted EBITDA to net loss, the most directly comparable GAAP financial measure, please see the section titled “Executive
Compensation—Non-GAAP
Financial Measure and Key Operating Metrics” below.


For a definition of CPG's budgets have been spent in offline channels, such as the FSI found in newspapers, direct mail, printed circulars, in-store aisle tags, end caps and television. These traditional offline channels are becoming less effective as consumers spend more time online, particularly through mobile devices,Adjusted EBITDA and a featurereconciliation of this trend isAdjusted EBITDA to net loss, the rising importance of using datamost directly comparable GAAP financial measure, please see the section titled “Executive
Compensation—Non-GAAP
Financial Measure and Key Operating Metrics” below.
Compensation Overview
Annual Meeting Results 2021
Following feedback from our stockholders in 2020, the Company made significant changes to drive personalized and targeted content to consumers. To reach consumers at the right time and place, now more than ever, CPGs are shifting media and promotion dollars that have been historically spent in offline channels to digital channels. Over the past year, the vast majority of US grocery purchases were still made in-person in physical grocery retail stores. However, as mobile applications and the use and utility of smartphones continue to grow, an increasing percentage of shoppers are engaging digitally in their path to purchase. The COVID-19 pandemic accelerated this shift and drove significant increases in the use of eCommerce for grocery and other retail transactions. More purchasing decisions being made online means, in our view, that advertisers must move advertising budgets to online vehicles in order to influence more shoppers during their path to purchase.
Collaborative spendexecutive compensation programs and merchandising calendars – For decades, CPGs and retailers have been focused on driving sales. However, only recently have they started to work more collaboratively to increase sales and revenue through the utilization of data, which in turn benefits both parties. CPGs sell their products to retailers, and retailers are responsible for selling those products directly to consumers. To help retailers attract consumers and ensure sales, CPGs spend over $225 billion annually in promotions, media, shopper marketing, trade and other in-store advertising. Excluding trade and certain other budgets from the $225 billion results in approximately $117 billion of spend, which we believe is a total addressable market metric for the solutions2021 fiscal year. We were responsive to investor concerns around our approach to
pay-for-performance
and took swift action to implement substantial changes to our compensation practices and disclosure.
Most notably, in 2021, we offer on Quotient's platforms.
8






restructured our program such that 50% of each NEO’s long-term equity incentive grant was made subject to the Company achieving two quantitative performance objectives over a three-year performance period. The three-year targets are aggressive but in alignment with the Company’s three-year financial plan.
At the same time, traditional retailers are paving the path for the digital shift by utilizing technology and creating digital strategiesAdditionally, we revised our peer group to better competereflect companies with similar business characteristics and drive sales. This includes focusing on retail performance media, loyalty strategies, eCommerce experiences,size in terms of market capitalization and data-driven media platforms, many of which Quotient powers for its retailersrevenue. We also enhanced disclosure around our Annual Incentive Plan design and partners. As retailers expand their digital capabilities, and as shoppers increase their digital engagement through more eCommerce purchases or a mixed mode of online and in-store purchases, greater opportunities are created for CPGs to shift marketing dollars from offline to digital, as well as to collaborate better with retailers.further described how it supports our
pay-for-performance
philosophy.
National digital promotions including rebates, primarily funded by CPGs' consumer marketing budgets, have been found to be more effective and are redeemed at higher rates compared to traditional offline promotions. We believe that the ease of creatingthese changes to our executive compensation approach reinforced
pay-for-performance
alignment and delivering digital promotions, coupled with the increasing size and broadening demographic reach of online audiences, will drive continued momentum for digital promotions.addressed stockholder concerns moving forward. Our 2021
“say-on-pay”
proposal received 96% approval, indicating strong stockholder support.
Additionally, shopper digital media and promotions, typically funded by CPGs' consumer marketing budgets to increase consumer awareness and drive sales within a specific retailer, continue to shift from traditional in-store and print promotion and media solutions to digital ones, particularly as regards the mobile device user. Consumer marketers are looking to reach consumers directly across the right touchpoints throughout the path to purchase, and thereby to influence their purchase decisions.
As the shift to digital media and promotionsThe Company continues to grow, so doesreview our
pay-for-performance
philosophy to ensure our compensation programs remain motivational for executives, competitive in the importance placed on the use of data to target audiencesmarket and measure campaign performance. As a greater portion of grocery sales have shifted from offline to online, retailers are focused on implementing omnichannel strategies, technology,against our peer comparator group, and solutions to meet consumer demands, to compete effectivelyaligned with stockholder interests, feedback, and to drive sales. This omnichannel approach, which leverages combined data from offline and online sales, is resulting in an increased number of digital touchpoints for retailers and their CPGs to target shoppers with relevant promotions and digital marketing. As retailers add more omnichannel capabilities, brands increasingly are able to shift more marketing dollars to digital. 
Our Platforms and Solutions
We offer industry-leading digital platforms providing technology and services that power integrated digital media and promotions campaigns for brands and retailers. We do this through personalized and targeted media and promotions for the purpose of driving profitable sales, building shopper loyalty and increasing brand awareness and affinity. Our customers use our platforms to plan, manage and distribute digital media and promotions, target shopper audiences, and measure campaign performance and sales results.  
Our solutions fall into the following categories:
Promotions
Quotient Promotions Platform (for CPGs)
The Quotient Promotions Platform offers digital paperless promotions, digital print promotions, and cash back rebates across our distribution network. With digital paperless and rebates, shoppers add promotions directly to retailer loyalty accounts for automatic digital redemption, or use a mobile device to take a picture of a retailer receipt with the appropriate purchase for cash back redemption. With digital print, shoppers select promotions and print them from their desktop or mobile device to redeem in store.
Through this platform, brands and retailers can reach shoppers on the web and on mobile devices by offering digital promotions through our extensive network which includes:
•brand and retailer websites and mobile applications;
•thousands of third-party publisher websites and mobile applications; and
•the Coupons.com website and our Coupons.com mobile applications.
The Quotient Promotions Platform offers national digital promotions from brands and retail-specific promotions sourced from shopper marketers and retailers. Other platform solutions include in-lane on receipt promotions, loyalty rewards promotions, digital rebates, and specialty retail or promotional codes and rebates. Promotions can be personalized and/or targeted to shoppers through a combination of data points including shopper purchase and intent data, historical purchase transactions, promotion activationsexpectations.
9

Philosophy





and redemptions, shopper interests, online click and search behavior, demographics, and location data. These techniques enable us to optimize the delivery of promotions across the network and drive campaign performance.
Quotient Retailer Promotions Platform (for retailers)
The Quotient Retailer Promotions Platform is used by top retailers in the grocery, drug, automotive, , mass merchant, dollar, club and convenience merchandise channels to integrate into their POS systems or loyalty programs. This platform solution is designed to function as a component of the retailer's digital marketing platform, to create a direct, digital relationship with shoppers, and to engage them through an omnichannel experience. Through the Quotient Retailer Promotions Platform, we use consumer data and insights to distribute personalized and targeted media and promotions, primarily funded by our advertiser customers, to help drive consumer loyalty and increase sales. Additional solutions on this platform include personalized e-mails, targeted in-lane promotions at checkout, loyalty rewards, rebate offers, digital grocery lists, digital receipts, branding landing pages, and digital circulars.
Media
Quotient Media Platform (for CPGs)
The Quotient Media platform offers targeted advertising solutions, enabling brands to reach shoppers before, during and after their shopping cycles with digital media campaigns. Brands can leverage our proprietary shopper data and audience segments to deliver targeted media ads across our network, including retail partners, other network partners and Coupons.com, and also across third-party publishers’ web, mobile and social channels outside our network. For example, we can target, with advertising within certain product categories, consumers on Meta Platforms, Inc.'s platform called Facebook ("Facebook") who have redeemed a promotion or purchased a product in that particular product category.
Our media solutions include display, social, DOOH, Retailer.com display and sponsored search, shoppable brand pages and audiences.
Quotient Retailer Performance Media Platform (for retailers)
The Quotient Retailer Performance Media Platform ("RPM") provides retailers with the technology to build a sustainable omnichannel strategy leveraging their consumer data and digital properties to drive sales and enhance the shopper experience. Through the RPM, brand marketers can use specific retail data to target and deliver media directly to shoppers and measure direct sales results. Additionally, retailers deliver digital media campaigns through RPM. Solutions included on this platform include onsite media (sponsored search and display) and offsite media (programmatic, desktop and mobile, DOOH, social and self-service demand side platform ("DSP")). Quotient distributes this targeted media content via retailer digital properties, our expansive publisher network including Coupons.com web and mobile sites, and other third-party publishing sites. We also power Quotient Digital Circular, a personalized retail circular experience for shoppers, with targeted media units for CPGs to showcase their products and drive sales.
Quotient Analytics  
Quotient Analytics provides campaign analytics and measured sales results to brands and retailers, attributing digital promotions and/or media campaigns to in-store and online purchases. Through Quotient Analytics, we combine purchase data from select retailers across the Quotient Retailer Promotion Platform and/or the Quotient Retailer Performance Media Platform with online engagement and purchase-intent data from Quotient’s flagship brand, Coupons.com, and the Company’s thousands of publishing partners. Our campaign measurement tools are also designed to provide brands and retailers with flexibility to adjust their campaigns in mid-flight to drive greater efficiency with marketing dollars. This capability and analysis is provided to customers who utilize our promotions and media platforms. Our campaign measurement tools provide the basis for our calculations to CPGs regarding their Return-on-Ad-Spend and Return-on-Promotion-Spend. As our platforms, network impact and audience numbers expand, we believe that the valueoverall objective of our dataexecutive compensation programs is to pay our executive officers competitively and analytics increases.
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Quotient Consumer Properties
Our consumer properties complement our platform offerings and enable us to deliver critical capabilities. We provide CPGs and other parties access to our Coupons.com, Coupons.com Brandcaster and Shopmium audiences, including our website and mobile properties, to market their brands in ways that include premium media and product placements on our site, promoted positions within our coupon galleries, and otherwise with premium display within our owned and operated digital properties.
Growth Strategy
We intend to grow our platforms and our business through the following key strategies:
Increase revenues from CPGs already on our platforms as well as expand our CPG base.
From our experience to date, we believe we have opportunities to continue increasing revenues from our existing customer base through:
•increasing our share of CPG spending on overall media and promotions by providing CPGs with a high return on their marketing investments and their deployment of larger digital marketing budgets as CPGs move from off-line spend to on-line digital marketing spend;
•increasing the number of brands from each advertiser that are using our platforms;
•leveraging data to provide our customers and partners with more insights, including campaign performance, and to distribute more targeted promotions, media, and analytics across our retail partner properties, our network including our owned and operated properties, and third-party sites; and
•maximizing consumer experiences across all products.
Increase the growing number of smaller CPG advertisers that use, or desire to use, our solutions.
We believe we have an opportunity to capture this revenue through:
•a dedicated sales team focused on smaller CPGs; and
•leveraging our solutions and retailer platforms to provide this segment of customers with digital opportunities on a national and shopper level versus traditional solutions such as the offline FSI that, due to such customers' smaller market size, such customers historically have not had the ability to access.
Grow our digital promotions business.      We plan to grow our digital promotions business by increasing the reach of our promotions platforms. We believe our users will increase through our increasing the number of retail partners and other network partners who are delivering our promotions to consumers, and by increasing the number of promotions that brands offer on our platforms as we leverage the shift from offline to digital channels. We expect much of this growth to come from CPG and retailer budgets that have transitioned away from traditional offline coupon solutions such as the FSI. Additionally, smaller advertisers who have been excluded from the FSI due to their smaller market size are seeking to take advantage of the market shift to digital solutions for promotions. By bringing additional retailers and other network partners into our network, our ability to expand our targeted promotions and expand our audience reach grows, increasing our ability to more effectively engage shoppers and drive sales. We plan to continue to expand consumer participation on the Quotient Promotions Platform through our solutions, such as national promotions, targeted digital paperless promotions, brand loyalty promotions, and national rebates.  
Grow our network and add retailers in new verticals.    We believe that we have an opportunity to grow our publishing network, expand our reach to engaged consumers, and drive volume of transactions on our platforms. We also believe we have an opportunity to grow the number of retailers that we partner with, thereby increasing the value of our platforms to advertisers and consumers. Also, we intend to continue growing our network with the addition to our platforms of retailers in new verticals, such as automotive, outside of our core grocery vertical.
Grow our digital media business.     As the industry continues to see eCommerce growth, the market for our digital media capabilities grows. We plan to capitalize on this through our digital media business, including the Quotient RPM, programmatic display, social, DOOH, and our self-service sponsored search offering, as we see continued demand for these solutions from CPGs and our retail partners. We plan to continue to innovate and invest in our media solutions, expanding the use of our proprietary data as well as data from select retail partnerships, and
11






by adding and expanding relationships including those with national media buyers and publishers, new partnerships, verticals, and third parties such as media agencies.
Offer more integrated digital media and promotions solutions. We continue to focus our sales strategy on further integrating digital media and promotions, including selling these offerings together through packaged solutions. We believe that brand spend on digital media and promotions will continue to grow as POS, mobile channels and social media offer new opportunities to engage consumers on their path to purchase.
Fraud Prevention and Distribution Controls
Our platforms include a proprietary digital distribution management system designed to enable CPGs and retailers to securely control the number of coupons distributed by device. We have controls in place to limit the number of digital coupons that can be printed. Similar controls are in place for linking coupons to loyalty cards and other paperless solutions, which allows us to limit the number of coupons distributed and activated. In addition, each printed coupon carries a unique identifier (ID) that is encrypted, enabling us to trace each coupon from print to redemption. All of our digital print coupons can be authenticated and validated using this unique code. This unique identifier ("ID") also can be used to detect counterfeit or altered coupons. Our platforms allow us to systematically identify and respond to fraudulent and prohibited activities by restricting a device from printing coupons. We also have a proprietary rebate distribution solution with built-in authentication capabilities through phone and payment verification. Additionally, we have transactional level controls for rebates to enforce stacking rules and prevent receipt alteration and/or manipulation.
Sales and Marketing
We have a team of dedicated, skilled specialists focused on CPGs and retailers. We believe that our sales, integration, digital media and promotions campaign management and analytics capabilities, as well as our customer success and support capabilities, are difficult to replicate and are a key reason for the growth of our business. Our sales activity is focused on expanding the number of brands within existing and new CPG customers, including smaller CPGs, that offer digital media and promotions through our platforms as well as increasing the revenue from those brands currently using our platforms. The team is also focused on expanding relationships within CPGs to include their shopper marketing and digital media teams, where we believe there is a large opportunity for growth. Additionally, we are focused on continuing to increase the size and breadth of our publisher and network partner networks. We are also seeking to partner with retailers in our non-core verticals.
In addition to sales support during the campaign planning process, our sales representatives provide additional support to CPGs and retailers with the aim of ensuring that their campaigns are launched and delivered within specified time frames. Representatives assigned to specific customers review performance metrics and share feedback with the advertiser.
We are focused on managing our brand, increasing market awareness and generating new revenue pipelines from both CPGs and retailers. We often present at industry conferences, create custom events and invest in public relations. In addition, our marketing team runs targeted digital marketing programs, develops data-led collateral and customer case studies, sponsors and conducts research, and delivers engaging content through social media channels.
Technology and Infrastructure
Since inception, we have made significant investments and we plan to continue to invest in developing our differentiated and proprietary platforms aimed at solving the problems of CPGs and retailers in ways that traditional solutions cannot. We are focused on solutions that provide measurable results. We have assembled a team of highly skilled engineers and data scientists with deep expertise across a broad range of relevant disciplines. Key focus areas of our engineering team include:
•Scalable infrastructure.    We use a combination of proprietary and open-source software in seeking to achieve a horizontally scalable, global, distributed and fault-tolerant architecture, with the goal of enabling us to ensure the continuity of our business regardless of local disruptions. Our computational infrastructure currently processes millions of events per day and is designedequitably in a way that enables us to add significant capacity to our platforms. We use a combination of public and private cloud computing
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platforms. Our private cloud technology infrastructure is hosted across data centers in co-location facilities situated in California and Virginia.
•Redundancy.    Our critical production infrastructure utilizes a hot failover configuration which allows us to switch server loads, be it a single server or an entire data center, to another data center within minutes. Data is continuously replicated between sites, and multiple copies at each site are designed to provide fast recovery whenever recovery is requested. Each single data center has been designed to handle an activity level in excess of our entire system needs, the goal of which is to enable us to perform platform maintenance, business resumption and disaster recovery without any customer impact.
•Reporting.    Our user interface provides flexible reporting and interactive visualization of the key drivers of success for each campaign. We use these reporting and visualization products internally to manage campaigns and provide campaign insights.
•AdTech.    Our media delivery is largely powered by proprietary ad servers, creative and social platforms, workflow automation tools, and data management tools. We develop and use these platforms with a range of differentiated features that are specialized for the CPG and retail industries.
•Security.    Our security policy adheres to established policies that are designed to ensure that all data, code, and production infrastructure are secure and protected. Our data centers are SSAE 16 Type II certified. We use our internal team and third parties to test, audit, and review our entire production environment to protect it.
Competition
We compete against a variety of companies with respect to different aspects of our business, including:
•providers of digital promotions such as Valassis Communications, Inc., Catalina Marketing Corporation’s Cellfire; Inmar/You Technology; Neptune Retail Services' (formerly known as News America Marketing) SmartSource; companies that offer cash back solutions such as iBotta, Inc.; and Neptune Retail Services' Checkout 51;
•offline coupon and discount services, as well as newspapers, magazines and other traditional media companies that provide coupon promotions and discounts on products and services in FSIs or other forms, including Valassis Communications, Inc., Neptune Retail Services and Catalina Marketing Corporation;
•retailers who develop and manage, with or without a third-party vendor, digital advertising or data products in-house, such as the Albertsons Companies' ("Albertsons") recently-announced launch of the Albertsons Media Collective, or The Kroger Company ("Kroger") with its wholly owned subsidiary of 84.51°;
•companies offering online and marketing services to retailers and advertisers, such as Flipp Corp.; and
•companies offering digital advertising technology, inventory, data, and services solutions and channels for advertisers and retailers including Facebook, Alphabet, Inc. ("Alphabet"), Pinterest, Inc., Amazon.com ("Amazon"), Inc., Adobe Inc., The Trade Desk, Inc., Oracle Corporation, Criteo S.A., Microsoft Corporation, Publicis Groupe's CitrusAd and others.
In certain instances, we have entered into, and in the future we may enter into, strategic alliances or partnerships with companies that are competitors in other areas of our business. We believe the principal factors that generally determine a company’s competitive advantage in our market include the following:
•scale and effectiveness of reach in connecting advertisers and retailers to consumers in a digital manner, through web, mobile and other digital properties;
•scale and reach of a company's retailer network;
•scale and reach of a company's targetable audience data;
•ability to attract consumers to a company's platform;
•platform security, usability, scalability, reliability and availability;
•integration with retailer applications, POS systems, and consumer channels;
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•access to consumer data;
•measurement that demonstrates the effectiveness of campaigns;
•quality of tools, reporting and analytics for planning, development and optimization of digital marketing campaigns;
•integration of products and solutions;
•rapid deployment of products and services for customers;
•breadth, quality and relevance of a company's solutions;
•ability to deliver high quality and increasing numbers of digital promotions that are widely available and easy to use in consumers’ preferred form;
•brand recognition and reputation; and
•ability to recruit, retain, and train employees.
While we believe we compete effectively with respect to the factors identified above, we may face increasing competition from larger, more-established and greater-resourced companies that seek to enter our market, or from smaller companies that launch new products, solutions and services that could gain market acceptance.
Human Capital Resources
Our plan for long-term business success is driven by technological innovation, superior client service, and operational excellence. We operate under a single purpose - transforming shopping to make life better for consumers, brands, retailers and our employees. Attracting, developing and retaining top talent are critical to our long-term business goals and to fulfilling our Company purpose. We know that investing in our people is just as important as investing in our products.
In 2021, the majority of our workforce continued to work remotely due to the COVID-19 pandemic. To support employees while working from home, we offered Wi-Fi reimbursement, expanded home office equipment support, enhanced health and wellness programs, and converted training to a virtual format. Quotient strongly encouraged employees to get vaccinated, providing flexible time off to accommodate employee schedules. The Bangalore office coordinated with healthcare providers to sponsor an on-site vaccination drive for employees and their families. We are planning to formally return to the office in early 2022 under a hybrid work model.
We continue positioning the Company for growth, and expect that innovation in our solutions, especially around self-service and automation, will lead to an improved bottom-line, a better customer experience and the potential to expand our customer and partner base. In the second half of 2021, the Company evaluated areas of the business in which to initiate cost-cutting activities, and in some cases, jobs were impacted. In addition, the wind down of our partnership with Albertsons led to a reduction-in-force to reduce our costs and better align spend with anticipated future revenues. Employees impacted were provided a transition period and severance package. During the fourth quarter of 2021, we recognized restructuring expense of $0.5 million related to the wind down of our partnership with Albertsons.
As of December 31, 2021, we had 1,162 full-time employees, consisting of 693 employees in the United States and 469 employees internationally. Voluntary workforce turnover was 27% in 2021. As of December 31, 2021, our global workforce was 52% female, and nearly 44% of our employees holding a "manager or above" title were women. As of such date, women represented 50% of our executive leadership team.
We strive to create an environment that welcomes and supports diversity and promotes equity and inclusion across all levels of the Company. Our volunteer-based Diversity, Equity and Inclusion ("DEI") Council focuses on four key areas: Awareness and Education, Community Outreach, Recruitment, and Development & Retention. In 2021, we partnered with Eskalera, Inc. to launch a robust training platform to build greater DEI awareness, maximize individual potential and elevate decision-making in the workplace.
We believe that investing in our employees' development is pivotal to ensuring sustainable performance success as a high-growth global technology company. We are committed to providing training and development that supports employees in their current roles and beyond.
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Our Talent and Performance process aligns performance to reward and provides actionable feedback to employees. Twice a year, leaders commit to a comprehensive organization and talent review, covering key elements such as organization structure, employee performance and potential, succession planning and employee development. In 2021, we introduced a new learning system that provides access to on-demand training through a leading learning platform with over 16,000 content and expert-led courses. In addition, internally-created content on a variety of Quotient topics provides just-in-time training for managers and employees right when they need it.
We have a long-standing culture of helping local communities and neighbors through our philanthropic program. In January 2021, the program was rebranded to Quotient for Change and is committed to providing communities with tangible outcomes through our three key pillars: Economic Stability, Technological Equity and Environmental Sustainability. We also launched a new matching gift program in 2021, which offers all full-time employees a monetary match on their charitable donations. We donated over $0.8 million during the year ended December 31, 2021, supporting over 485 charities globally, and logged over 1,750 volunteer hours.
Intellectual Property
We protect our intellectual property by relying on federal, state, and common law rights in the United States and equivalent rights in other jurisdictions, as well as contractual restrictions. We control access to our proprietary technology and algorithms by entering into confidentiality and invention assignment agreements with our employees and contractors, and confidentiality agreements with third parties.
In addition to these contractual arrangements, we also rely on a combination of trade secrets, patents, copyrights, trademarks, service marks and domain names to protect our intellectual property. We pursue the registration of our copyrights, trademarks, service marks and domain names in the United States and in certain locations outside the United States. As of December 31, 2021, we hold or have exclusive rights to 51 active issued patents in the United States and 39 active patents that have been issued outside of the United States with terms expiring between 2022 and 2039.
Circumstances outside our control could pose a threat to our intellectual property rights. For example, effective intellectual property protection may not be available in the United States or other countries in which we operate. Also, the efforts we have taken to protect our proprietary rights may not be sufficient or effective, or may require significant expenditures and other resources to enforce. Any significant impairment of our intellectual property rights or unauthorized disclosure or use of our intellectual property could harm our business and our operating results, or our ability to compete.
Companies in Internet-related and other industries may own large numbers of patents, copyrights and trademarks, and may frequently request license agreements, threaten litigation or file suit against us based on allegations of infringement or other violations of intellectual property rights. We have been subject to in the past, and we expect that we may face in the future, allegations that we have infringed the trademarks, copyrights, patents and other intellectual property rights of third parties, including our competitors and non-practicing entities. As we face increasing competition and as our business grows, we will likely face more claims of infringement.
Corporate Information
We changed our name to Quotient Technology Inc. on October 20, 2015. Our corporate website address is www.quotient.com. Information contained on, or that can be accessed through, our website does not constitute part of this report and inclusions of our website address in this report are inactive textual references only. Quotient, the Quotient logo, the Coupons.com logo, the SavingStar logo, Elevaate, Shopmium, the Shopmium logo, Ahalogy, and Ubimo are trademarks or registered trademarks of Quotient Technology Inc. and its subsidiaries in the United States and other countries. Other marks are property of their respective owners.
Available Information
We file annual, quarterly and other reports, proxy statements and other information with the Securities and Exchange Commission (SEC) under the Exchange Act. We also make available, free of charge on the investor relations portion of our website at investors.quotient.com, our annual report on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, and amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Exchange Act, each as soon as reasonably practicable after filed electronically with the SEC. The SEC also maintains an Internet website at http://www.sec.gov/ where you can obtain most of our SEC
15






filings. You can also obtain paper copies of these reports, without charge, by contacting Investor Relations at (650) 605-4600 (option 7).
Webcasts of our earnings calls and certain events we participate in or host with members of the investment community are available on our investor relations website at http://investors.quotient.com/. Additionally, we announce investor information--including news and commentary about our business and financial performance, SEC filings, noticesgoals, and ties back to overall Company and individual performance. The primary objectives of investor events,our executive compensation programs for our NEOs are:
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 and performance-based equity awards as long-term 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 awarded a portion of the 2021 equity grant to performance-based RSUs, and we are continuing to utilize performance-based RSUs in equity grants to executive officers in 2022.
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.
Strong Governance Practices
We Do
We Don’t
✓
  Review compensation programs annually with the Compensation Committee
×
   Provide single trigger change in control severance benefits
✓
  Maintain stock ownership guidelines for all NEOs
×
   Permit hedging or pledging of equity securities
✓
  Emphasize long-term equity in NEO pay mix
×
   Provide perquisites (other than in connection with relocation)
✓
  Engage independent compensation consultant
×
   Provide tax
gross-up
payments
✓
  Ensure a significant portion of executive pay is
“at-risk”
dependent on company and/or stock price performance
Compensation Elements
Our compensation program consists of base salary, annual incentive and our presslong-term incentive. Each year the Compensation Committee reviews, for each NEO, the target opportunity value of each of these three elements which we refer to as “Base Salary”, “AIP Target Opportunity”, and earnings releases--on our investor relations website,“LTI Opportunity”. We refer to the aggregate of the target opportunity value of each element as Total Direct Compensation (“TDC”). The Compensation Committee considers market practices, the criticality of the role to the business, retention objectives as well as through press releases, SEC filings, public conference calls,other factors such as company and individual performance to determine the appropriate TDC for each NEO and the mix of each element in the total. Each element is described in the table below.
Element
Purpose
Characteristics
Base SalaryAttract and retain talent
•  Fixed: 100% cash
•  Size reflects market benchmarking, role responsibility, experience and individual performance and criticality to our success
Short-Term Incentive
(
Annual Incentive Plan (“AIP”))
Motivate and reward accomplishment of short-term business goals
•  Variable: 100% cash
•  AIP Target Opportunity reflects market practice expressed as % of base salary
•  Payouts are fully formulaic
•  In 2021, metrics were revenue and Adjusted EBITDA each weighted at 50% to align with our strategy and with a 75% blended achievement threshold required for payout in order to align with stockholder interest
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, role responsibility, retention objectives, and individual performance
•  Denominated 50% in time-based RSUs and 50% in performance-based RSUs based on market best practices and aligned with stockholder interest
•  2022 performance-based RSUs are measured against Gross Margin attainment with a stock price modifier
A significant proportion of each NEO’s target TDC is variable and
at-risk
due to its dependence on the achievement of preset, objective and quantitative performance goals in the Annual Incentive Plan and long-term incentive awards based on the Company performance, as shown in the charts below.
The charts below reflect the mixture of Base Salary, AIP Target Opportunities, and LTI Opportunities for each of the NEOs.
 
(1)
Compensation Pay Mix is representative of 2021 total target compensation. Total target compensation for Mr. Krepsik is reflective of his pay after his June 1, 2021 promotion to Chief Technology Officer.
(2)
2022 Long Term Incentive target for CEO and other NEOs is denominated in 50% performance-based RSUs and 50% time-based RSUs.
How Pay Decisions Are Made
The Compensation Committee follows a robust annual cycle to plan and review philosophy, goals, and execution of our corporate blogexecutive compensation programs to ensure they align with company objectives and social mediastrategy. Typically our CEO makes compensation recommendations for NEOs and other members of the executive leadership team for consideration and approval by the Compensation Committee in orderQ1 each year. The CEO does not participate in recommendations or discussions relating to achieve broad, non-exclusionary distributionhis own compensation.
The Compensation Committee, with the assistance of informationan independent consultant, considers multiple factors including peer group and market survey data, company and individual performance, stockholder feedback, and judgment on what is in the best interests of the Company in making recommendations on CEO pay for approval by the Board.
Highlights from our annual schedule are outlined in the below table.
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 new Long-Term Incentive Program (“LTI Program”) for NEOs based on stockholder feedback, updating plan to include Performance Restricted Stock Units
•  Aligned on performance measures, targets, and plan design for the AIP and any performance-based equity metrics
Q2
•  Completed market review of Change in Control agreement provisions to ensure market competitiveness and internal equity
•  Analyzed annual Compensation Program Risk Assessment
Q3
•  Reviewed annual meeting results including 96% approval of
“say-on-pay”
advisory vote from stockholders
•  Evaluated and set peer comparator group to be used for the upcoming compensation cycle
•  Reviewed talent and leadership development goals and progress against succession planning objectives for future leadership
Q4
•  Benchmarked compensation programs against peer comparator group to further prepare for pay decisions for the coming year
•  Discussed equity strategy and approach for 2022 and beyond
•  Reviewed performance and learning culture goals and progress against performance planning objectives for executive leadership
Peer Group
When evaluating executive compensation, the Compensation Committee reviews the pay practices and pay levels in a comparative group of companies of similar size and business sector to Quotient. We review the peer group annually for relevance and alignment with best practices and investor preferences. The peer group and the compensation assessment is just one input into the Company’s policy setting and pay decisions that is considered by the Compensation Committee. The selection criteria for inclusion in the 2021 peer group are summarized in the table below.
Element
Description
Criteria
Industry/SectorThe 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.
RevenueTrailing Twelve Month (“TTM”) revenue is within a comparable range of Quotient’s revenue.Generally between
0.5x to 3.7x ($300M to $1.6B)
of Quotient revenue.
Market CapitalizationMarket capitalization is within a comparable range of Quotient’s market capitalization.Generally between
0.5x to 4.0x
($300M to $3.0B)
of Quotient market capitalization.
The peer group data analysis includes target base salary, annual incentive and long-term award values for similarly situated executives at the 25
th
, 50
th
, and 75
th
percentiles. In selecting the peer companies, the Compensation Committee tries to place the Company at or near the median or 50
th
percentile for revenue as a proxy for business scale given market volatility in valuations. At the time that the peer group was approved, the Company was at the 46th percentile for revenue.
The peer group data may also be supplemented with other relevant market data supplied by our independent compensation consultant, Aon’s Human Capital practice, a unit of Aon plc (the “Compensation Consultant”) that reflect companies of a similar profile as the peer group from broader survey data. This data is used, in addition to the public. We encourage our investorspeer group data, to ensure a relevant sample for informing pay decisions. The Compensation Committee looks at the peer group as part of its annual review and otherswill continue to reviewadjust the information that we make public in these locations,peers as such information could be deemedappropriate.
In the third quarter of 2020, the Compensation Committee approved the peer group to be material information. Pleaseused to examine executive pay levels, pay mix and pay policies for setting the
go-forward
program for the NEOs in 2021. Based on ongoing feedback from stockholders that revenue and market cap comparisons may be too aggressive, the 2021 peer group was updated to include a more balanced approach to peer comparison. Drawing from an analysis from the Compensation Consultant, the Committee approved the peer group selection criteria, and agreed to update the peer group revenue range and market cap, to align more closely to Quotient’s projected revenue.
The peer group companies for 2021 pay decisions are listed below
(1)
.
2U, Inc.LivePerson, Inc.Stamps.com Inc.
8x8, Inc.QAD
(2)
TripAdvisor
(2)
Benefitfocus, Inc.QuinStreet, Inc.TrueCar, Inc.
Box, Inc. ��Rapid7, Inc.Workiva
(2)
Cloudera, Inc.Shutterstock, Inc.Yelp Inc.
Cornerstone OnDemand, Inc.SPS Commerce, Inc.Zuora
(2)
(1)
Five9, Grubhub LogMein, Q2, and TradeDesk were removed from the peer group based on revenue and market capitalization comparison.
(2)
QAD, TripAdvisor, Workiva, and Zuora are new members of the peer group selected in 2020 based on industry, revenue, and market capitalization comparison.
Compensation Elements
Base Salary
Base pay is fixed compensation delivered in return for
day-to-day
job responsibilities, leadership skills and experience. Our goal is to provide base salary compensation that is market competitive in comparison with roles of similar size and business-decision authority in our industry. Market competitive base pay helps to attract and retain executive talent. The Compensation Committee reviews each NEO’s base salary annually considering market comparisons, prevailing market conditions, role scope, individual experience and performance, and internal equity.
During the annual compensation review process the Compensation Committee approved no change in base pay to Mr. Boal. The Compensation Committee determined that while it is imperative to continue to align Mr. Boal’s compensation to market levels, compensation opportunities for the Chief Executive Officer should be focused on a competitive pay mix and performance results through incentive pay metrics.
The Committee did approve small increases to base pay for Mr. Raskin and Ms. Chen as a reflection of their individual performance as well as role scope and compensation compared to peer group companies. Mr. Krepsik was hired on April 26, 2021, with an initial base salary of $350,000, which the Compensation Committee believed was commensurate with his role as Chief Analytics Officer. When Mr. Krepsik was promoted on June 1, 2021 to Chief Technology Officer, his compensation was adjusted to reflect the change in responsibilities. This included an increase to base pay.
Named Executive Officer
  
Base Salary as of
December 31, 2020
   
Base Salary as of
December 31, 2021
   
% Change
 
Steven Boal
  $500,000   $500,000    —  % 
Scott Raskin
  $450,000   $465,000    3% 
Pamela Strayer
  $450,000   $450,000    —  % 
Matthew Krepsik
(1)
  $—     $375,000    —  % 
Connie Chen
  $375,000   $380,000    1% 
Annual Incentive Plan
Purpose
The purpose of the Annual Incentive Plan (AIP) is to:
motivate and reward accomplishment of short-term business goals;
align executive focus on balanced revenue and Adjusted EBIDTA results.
Metrics
At the beginning of 2021, the Board, following a recommendation from the Compensation Committee, approved the AIP plan’s metrics and the performance targets that governed payouts. The Committee selected revenue and Adjusted EBITDA
2
(see note below for definition)
metrics, with such factors weighted equally.
The Committee believes that this list may be updated from time to time. Investorsselection provided the appropriate balance of growth and others can receive notifications of new information posted on our investor relations website in real time by signing upprofitability as the short-term focus for email alerts. Further corporate governance information, including our corporate governance guidelines, board committee charters, corporate social responsibility report,the executive team and code of conduct, is also available on our investor relations website under the heading “Governance.” The contents of our websites, blog, press releases, public conference calls and social media are not incorporated by reference into this Annual Report on Form 10-K or in any other report or document we filewas well aligned with the SEC (and the contents of other SEC filings are not incorporated by reference into this Annual Report on Form 10-K or any other report or document we file with the SEC except as required by law or to the extent we expressly incorporate such SEC filing into this Annual Form 10-K or other report or document we file with the SEC). Any references to our websites arestockholder priorities.
Performance targets were established for each metric that were intended to be inactive textual references only.challenging yet achievable with focus and strong execution. The targets were set to align with the annual operating plan and the full year guidance provided in Q1 2021.
2 
The Compensation Committee recommended and the Board approved revenue and Adjusted EBITDA as the corporate financial performance measures that supported our annual operating plan. We define (i) “revenue” as GAAP revenue as reflected in our quarterly and annual financial statements; and (ii) “Adjusted EBITDA” as net income (loss) adjusted for stock-based compensation, depreciation and amortization, interest expense, other income (expense) net, provision for (benefit from) income taxes, net change in fair value of escrowed shares and contingent consideration, enterprise resource planning software implementation costs, charges related to certain acquisition related costs, impairment of capitalized software development costs and restructuring charges, and as applicable, other special items.
Item 1A.    Risk Factors.
Our operations and financial results are subject to various risks and uncertainties, including those described below, which could adversely affect our business, results
AIP Target Opportunities & Payment Methodology
In 2021, with the creation of operations, cash flows, financial conditions, and the trading priceperformance-based equity awards as part of our common stock. LTI Program, and in alignment with short-term incentive plans of peer group companies, the Compensation Committee agreed that the short-term AIP would be denominated 100% in cash. This approach is representative of a balanced pay mix for our executives, and is also in alignment with market benchmarks for total target cash compensation as compared to our peer group companies.
The risks described below are notCompensation Committee reviewed incentive opportunity at target for each NEO based in part on the only risk facing us. Risksmarket practices of similarly situated companies, the criticality of the role to the Company in the context of internal peer comparisons as well as the overall total direct compensation objectives for the business. Based on this review, it was determined that the target opportunity percentage for each executive (other than Mr. Krepsik, who was hired in 2021) would remain unchanged for the 2021 AIP. The target is expressed as a percentage of base salary as outlined below.
NEO
  
2020 Target Incentive as
% of base salary
  
2021 Target Incentive as
% of base salary
 
Steven Boal
   100%   100% 
Scott Raskin
   100%   100% 
Pamela Strayer
   75%   75% 
Matthew Krepsik
(1)
   —  %   75% 
Connie Chen
   60%   60% 
(1)
Mr. Krepsik’s bonus opportunity is reflective of his compensation at the time of promotion to the Chief Technology Officer role. Upon promotion, his bonus opportunity moved from 60% to 75%. His annual bonus was
pro-rated
to reflect the portion of the year during which he was employed with the Company, as well as the bonus opportunity applicable to him prior to and following his promotion to the role of Chief Technology Officer.
Plan Formula
At the start of the year, the Compensation Committee approved the goals and uncertainties not currently known to us or that we currently deemperformance levels to be immaterial also may materially affect ourevaluated under the plan. Revenue and Adjusted EBITDA are considered key to the underlying health of the business financial condition, results of operations and prospects.
Risks Related to Our Business
We have incurred net losses since inceptionaligned with long-term stockholder success. Achievement in each metric was assessed and we may not be able to generate sufficient revenues to achieve or subsequently maintain profitability.
We have incurred net losses of $45.6 million, $65.4 million and $37.1 million in 2021, 2020 and 2019 respectively. We have an accumulated deficit of $495.9 million as of December 31, 2021. We anticipate that our costs and expenses will increase in the foreseeable future as we continue to invest in:
•retailer partnerships;
•network growth;
•sales and marketing;
•research and development, including new product development;
•our technology infrastructure, business processes, and automation;
•general administration, including legal and accounting expenses related to our growth and continued expenses;
•expanding into new markets and verticals; and
•strategic opportunities and commercial relationships.
For example, we have incurred and expect to continue to incur expenses in developing and retaining retailer partnerships and developing self-service capabilities and automation. We may not succeed in increasing our revenues sufficiently to offset these expenses.
If we are unable to execute our growth strategy and gain efficiencies in our operating costs, our business could be adversely impacted. We cannot be certain that we will be able to attain or maintain profitability on a
16






quarterly or annual basis. If we are unable to effectively manage these risks and difficulties as we encounter them, our business, financial condition and results of operations may suffer.
We may not achieve revenue growth, includingexpressed as a resultpercentage of changes to our business model.
We may not be able to achieve revenue growth, and we may not be able to generate sufficient revenues to achieve profitability. Historically the growth rate of our business, and as a result, our revenue growth, has varied from quarter-to-quarter and year-to-year, and we expect that variability to continue, particularly as we transform our business model from primarily managed services to more self-service and automated solutions through our platforms. We are also implementing transitions in our promotions pricing, from a cost-per-acquisition model to a duration-based model.
Business model changes such as these carry operational risks, and our expectations regarding the execution, success, timing, and impact of these changes may not be met. For example, an operational risk relating to our shift to self-service and automated solutions is that these new offerings may not be preferred by advertisers and retailers to alternative offerings from our competitors.
There are also financial risks, such as our ability to establish metrics and forecast performance targets associated with these business model changes. We may not, accordingly, realize financial targets based on the business model changes, and as a result our results of operations could be negatively impacted.
Our revenues may also fluctuate due to changes in marketing budgets of advertisers and retailers, and the timing of their marketing spend. Marketing spend by advertisers is considered the most flexible and easiest to cut, and advertisers can change their spend without notice, which can result in our inability to anticipate such fluctuations. For example, budget pressures or unspent budgets attarget, weighted equally (at 50% for each metric). At the end of a CPG’s fiscalthe year, may lead to, respectively, unexpected reduced or increased spendingperformance was evaluated against the
pre-established
goals. The Compensation Committee believes that this focus on our platforms.growth and profitability provides for balanced decision making and business discipline.
Decisions by advertisers or retailers to delay or reduce their digital marketing on our platforms or choose a solution from one of our competitors; changes in our fee arrangements with CPGs, retailers and other commercial partners; or
Payout under the termination of a partnership with a retailer, suchAIP is determined as the terminationaverage of the Company’s attainment of Revenue and Adjusted EBITDA metrics. Under this blended performance calculation, both metrics together must achieve a threshold of 75% to fund an incentive payout. The results are then correlated to a payout scale to determine the final payout against plan. The Revenue performance scale above and below target is narrowed such that threshold and maximum milestones are approximately 93% and 107% respectively, corresponding to funding levels of 75% and 125% respectively. This funding curve reflects our relationship with Albertsons, could also slow our revenue growth or reduce our revenues. For instance, beginning in mid-March of 2020, decisionscommitment to pay for strong performance, while not motivating excessive risk-taking by CPGsleaders. At the time that the goals were set, the Committee believed that the threshold, target and retailers to mostly pause or delay, and in some cases cancel, marketing campaigns due to the uncertainty, supply-chain disruption, and consumer purchasing behavior changes causedstretch goals would require significant operating performance by the COVID-19 pandemic had an adverse impact on our revenue and revenue growthbusiness leaders.
The Compensation Committee believes that balanced financial metrics for the second quarter of 2020. While CPGs and retailers resumed digital marketing in the second half of 2020 generally, certain CPGs and retailers still are experiencing supply chain disruption, and brands and retailers are experiencing inflationary pressures that are increasing their costs. Accordingly, we mayincentive compensation continue to see reduced digital marketing levelsdrive business performance aligned to continued growth and postponed or cancelled campaigns, particularly if COVID-19 outbreaks persist or, more broadly,profitability. The Revenue and Adjusted EBITDA targets are consistent with the pandemic worsens.Company’s strategic goals and are designed to be challenging, yet achievable with strong performance.
Our
In 2021, the Company was working through a business is complex and evolving. Wetransformation, which resulted in accounting changes that moved revenue recognition of certain products from gross revenue to net revenue. As our business evolves, we may offer new capabilities, pricing, service models, process and delivery methods to advertisers and retailers. These new capabilities may continue to change the way we generate and/or recognize revenue, which could impact our operating results. For example, we have announced that we are shifting our focus away from a lower-margin, labor-intensive managed services business and are moving towards more self-service and platform-based solutions. As a result of these changes, and the application of the accounting rules relating to such changes, in 2021 we arebegan recognizing certain media revenue on a net basis. We assumed that such revenue would be recognized on a gross basis when setting the AIP revenue target.
Despite this change in revenue recognition methodology, the Committee did not adjust the AIP targets. However, as part of the final calculation, the Committee approved a final revenue achievement that aligned to the original gross revenue-recognition assumption for the subset of 2021 revenues that was affected by this accounting methodology change.
The following tables summarize the performance – payout formula as it was applied in 2021.
2021 AIP Performance Payout Scale
Achievement
Revenue Attainment
Adjusted EBITDA Attainment
Payout
%
Maximum
585M83M125%
Target
545M66M100%
Threshold
(1)
505M50M75%
(1)
Either metric can fall below 75% of target and the plan will still pay out, as long as average of both metrics is above the 75% threshold.
Actual 2021 AIP Performance Achievement
 
Metric
  
Target
$M
  
Actual Achievement
 
Weight
%
 
Weighted Blended
Achievement
%
 
  
$M
  
%
Revenue
  545  526  88% 50%  44.0% 
Adjusted EBITDA
  66  41  62.0% 50%  31.0% 
Blended Performance
            
 
75.0
% 
Actual Annual Incentive Payouts
Final financial performance for 2021 funded the Annual Incentive Plan (AIP) at 75% as outlined in the plan design. The Compensation Committee approved the cash payment based on financial results as compared to the prior recognition on a gross basis. As another example, we are shifting from a cost-per-acquisition pricing model for promotionsplan design.
The NEO payout awards were denominated in cash in accordance with the plan design described above and as outlined in the following table. We did not apply an individual performance factor into the final calculation, preferring to non-quantity-based pricing models, such as duration-based promotions.hold all executive leaders accountable to total company performance.
We believe that our continued revenue growth will depend on our ability to:
Name
  
Target Opportunity
$
   
Payout
%
  
Payout Value
$
 
Steven Boal
   500,000    75%   375,000 
Scott Raskin
(1)
   465,000    75%   345,977 
Pamela Strayer
   337,500    75%   253,125 
Matthew Krepsik
(2)
   281,250    75%   138,198 
Connie Chen
(1)
   228,000    75%   170,446 
•successfully execute on our shift away from a lower-margin, labor-intensive services business and towards more self-service and platform-based solutions;
(1)
Payout for Mr. Raskin and Ms. Chen was
pro-rated
to account for their change in base salary effective April 1, 2021.
•increase our share of advertiser spend on promotions and media through our platforms, increase the number of brands that are using our platforms within each advertiser or CPG, and expand our advertiser or CPG base;
(2)
Payout for Mr. Krepsik was
pro-rated
for his April 26, 2021 hire date and his AIP target was also prorated based upon the bonus opportunity applicable to him during his time as his Chief Analytics Officer and then his promotion as Chief Technology Officer effective June 1, 2021.
•maintain and grow retailers in our network, increase the number of network partners in our network, and expand our network with new verticals;
•succeed with new pricing models, such as our shift to time-based (e.g., duration-based) promotions pricing;
17
Long-Term Incentive Program

Purpose
Long-term incentive awards are denominated 100% in equity to:
motivate and reward sustainable long-term performance;
align delivered long-term pay with the returns experienced by stockholders; and
attract and retain talent.

Program Design & Metrics




•adapt
Following its comprehensive review of executive compensation programs in 2020 in response to changesstockholder feedback, the Compensation Committee implemented a new LTI program for executive team members in marketing2021.
The LTI program was enhanced by introducing objective, quantitative performance conditions to the vesting of awards, making a portion of the equity awards performance-based restricted stock units (“PSUs”).
Fifty percent of each NEO’s 2021 annual LTI grant is subject to the Company achieving two quantitative performance objectives over a three-year period, as described in further detail below. The Compensation Committee selected Gross Margin dollars combined with a stock price modifier to govern payouts. The three-year targets are challenging but in alignment with the three-year financial plan.
The grant of the PSUs is intended to create a multi-year performance assessment with goals strategiesset at threshold, target, and budgets of advertisers and retailers, and the timing of their marketing spend;
•capitalize on the shift from offline to digital marketing and growth in e-commerce;
•maintain and expand our data rights with our retailer network;
•successfully execute and expand our digital media solutions in retail performance media, social influencer marketing, sponsored product search, DOOH, and programmatic media;
•successfully execute and expand our promotions solutions in national promotions, in-lane, targeted promotions, national rebates, and loyalty rewards programs;
•demonstrate the value of our platforms through trusted measurement metrics;
•maintain and grow the size of our targetable audience;
•respond to changes in the legislative or regulatory environment, includingmaximum payout. The threshold for payment with respect to privacythe PSU awards is set at 75% attainment of the Gross Margin goal, with maximum payout capped at 200% against the Gross Margin goal. At the end of the three-year assessment period, any achievement below threshold would result in no payout and data protection,all PSUs would be forfeited.
The stock price modifier metric was designed to further align executive incentive to stockholder interests and was deemed to be a stretch goal with significant effort required to achieve targets. Further, meeting or enforcement by government regulators, including fines, orders, or consent decrees;
•deploy, execute, and continue to develop our analytics capabilities;
•expandexceeding the use by consumers of our media and promotions offerings;
•successfully integrate our newly acquired companies into our business;
•innovate our consumer solutions and experiences to retain and grow our consumer base;
•expand the number, variety, quality, and relevance of promotions available on our platforms and through our network;
•increase the awareness of our brands, and earn and build our reputation;
•hire, integrate, train and retain talented personnel;
•effectively manage scaling and international expansion of our operations; and
•successfully compete with existing and new competitors.
However, we cannot assure you that we will successfully accomplish any of these actions. Failure to do so could harm our business and cause our operating results to suffer.
Our revenue and business will be negatively affected if we fail to retain and expand our relationships with retailers, if we fail to obtain commitment and support for our platforms from retailers, and if we do not successfully renegotiate or amend retailer agreements.
The success and scale of our platforms depend on our strategic relationships with retailers. The success and scale of our platforms also dependsstock price hurdle would have no impact on the levelPSU payout, but not achieving the stock price goal would reduce the final payout by 20%, regardless of commitment and support for our platforms from retailers.
Renewals or amendments of existing retailer relationships may become more challenging for us in light of our business model and pricing changes. These changes require restructuring our agreements andachievement against the way we operate with retailers and revenue arrangements for certain services. There is no assurance that retailers will agree to such changes, or that renewals or amendments will occur at all or on terms as favorable as the pre-renewal or pre-amendment terms. Should any such circumstance occur, our business could be adversely affected. More generally, if we do not expand these relationships, if we lose significant retailers, or if we do not add new retailers to our platforms, our business will be negatively affected.
For instance, our revenue and growth may be adversely impacted if retailers do not support our platforms. The success of our platforms requires integration with a retailer’s POS, loyalty programs and consumer channels. Certain platform capabilities may require integration with other retailer systems as well. This integration requires time and effort from the retailer, and may require us to work with a retailer’s third-party service providers, some of whom may be our competitors. In addition, the success of our platforms requires consumer and advertiser adoption which requires significant marketing and other support from retailers, including retailer programs that drive more advertiser spend on our platforms. If retailers do not provide sufficient or timely resources and support, platform launches could be delayed and consumer and/or advertiser adoption could be slow or minimal, which would negatively impact our revenue, costs of revenue, and recoverability of certain assets. As an example, delays in the launch of in-lane promotions and sponsored search and display adversely impacted our revenue growth for the
18






Gross Margin metric.
second half of 2019. Also, our revenue was negatively affected in the first half of 2020 when retailers mostly paused or delayed, and in some cases cancelled, marketing campaigns on our platforms in response to supply-chain challenges and out-of-stock product at shelf, consumer purchasing behavior changes, and other issues resulting from the COVID-19 pandemic.
The success of our platforms also depends inAs part on our use of consumer sales data provided by retailers, our access to retailer consumer channels, the size and quality of retailer audiences, and the national scale and reach of our retailer network. If we fail to secure, or are found to be in violation of the terms of, such data, access and scale, we could lose access to retailer data and our platforms would be less valuable to advertisers and other business partners.
In addition, we depend on retailers to comply with laws, regulations and industry standards relating to privacy and the use of consumer data. If we and our retail partners cannot timely respond to legal, regulatory and industry changes, or if retailers decide to limit or prohibit use of their data to comply with such changes, our revenue and growth would be impaired. For instance, if the California Consumer Privacy Act of 2018 (the " CCPA"), is amended to prohibit the “sale” (as defined in the CCPA) of loyalty program data, or if retailers materially restrict our use of sales and loyalty card data in light of the CCPA or similar laws or regulations, our business will be negatively affected. See the risk factor below titled “Our business is subject to complex and evolving laws, regulations and industry standards, and unfavorable interpretations of, or changes in, or failure by us to comply with these laws, regulations and industry standards could substantially harm our business and results of operations” for additional information.
Our sales cycle with retailers tends to be long. We may make investments and incur significant expenses before an agreement or renewal with a retailer is reached, if at all, and before we are able to generate any revenue from such agreement or renewal. There are no guarantees that we will be able to recoup such investments and expenses, which would have an adverse effect on our business, financial condition and results of operations.
Our revenue and business will be negatively affected if we fail to develop, increase the number of and expand relationships with network partners that contribute to the growth of audiences engaging on our platforms.
The success and scale of our platforms also depends on growing our publishing network of retailer and non-retailer partners, which we sometimes refer to as network partners.These network partners are a significant factor in our effort to increase audience and volume on our platforms and thereby enable our network to deliver the scale and reach that advertisers, and the advertising agencies that sometimes act on their behalf, are seeking. These partners can also be important in connection with the launch and marketing of new offerings, such as our self-service and automated solutions.If we are unable to grow our network or our network partners do not increase our aggregate audience reach and drive volume on our platforms, our revenue and business may be negatively impacted.
The loss of or decrease in spending by any significant customer, or the loss or decrease in support from any significant partner, could materially and adversely affect our revenues, results of operations and financial condition.
Our business is exposed to risks related to customer concentration, particularly among advertisers, and partner concentration, particularly among retailers. The loss of or decrease in spending by any of our significant customers, or the loss of or decrease in support from any of our significant partners, or a deterioration in our relationships with any of them, could materially and adversely affect our revenues, results of operations and financial condition. As an example, the loss of a retailer, such astransition from a
one-year
program to a multi-year program, the termination2021 LTI program includes an evaluation of our partnership with Albertsons, negatively impacts the amount that advertisers spend on our platforms.
If the distribution, revenue sharing or other fees that we pay increase, or if we are unable to meet contractual minimums under guaranteed distribution fee arrangements, our gross profit and business will be negatively affected.
We generally pay a distribution fee to retailer and non-retailer partners in our publishing network when we deliver media and promotions on their digital properties or through their loyalty programs. We also pay fees to retailers for use of their data to power our platforms. Such fees have increased as a percentage of our revenue in
19






recent periods. As we renew agreements or enter into new ones, we may face pressure to pay higher distribution fees. If such fees continue to increase, our cost of revenue could increase and our operating results would be adversely affected. In addition, calculations of such fees are complex, and if network partners disagree with our calculations in an audit, it could have an adverse impact on our business.
In addition, some of our agreements with retailers include certain upfront fees/payments 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 fees may not be recoverable and any shortfall, if applicable, may be payable by usperformance at the end of year 2 to create alignment to sustained improvement in Gross Margin dollars if specific targets are achieved at that point. If Gross Margin target metric(s) were achieved at the
2-year
intermediate assessment, executives would earn a portion of their PSUs in advance. Further detail of the performance conditions applicable period. We consider various factorsto the PSU awards is outlined in ourthe following table.
Goal
Metric
Plan Characteristics & Payout
Assess Operating PerformanceGross Margin Dollars
Aligned to 3 year operating plan
•  Metrics set at threshold, target, and maximum
•  Broad payout range at target to avoid consequences for performance close to target
•  Gross Margin performance will be assessed at interim
2-year
mark and if
at-or-above
target, an interim payout would be earned
Align to Stockholder InterestStock Price Modifier
Aligned to stockholder interest
•  Intended to be an aggressive goal
•  Avoids volatility of
point-in-time
measurements
•  Mitigates exposure to extraordinary impacts in final assessment year
The remaining fifty percent of whether these upfront or guaranteed distribution fees may not be recoverable, including our historical experienceeach grant was denominated in the form of RSUs subject to time-based-restrictions with a four-year ratable vest, consistent with the transaction volumes through2020 LTI program approach. The Compensation Committee believes that RSUs help stabilize retention during periods of stock price volatility.
Upon vesting, the retailerPSU and comparative retailers, ongoing communicationsRSU awards become settled in the form of common stock of the Company.
Target Opportunities
When determining the size of the awards, the Compensation Committee considers the executive’s position and responsibilities, their equity holdings, potential incentive and retention value, competitive market data, the executive’s anticipated future contribution to our success, and internal pay equity. Equity awards are also designed to ensure that executives’ long-term interests are aligned with stockholders’ interests.
Generally, all equity awards granted by the retailerCompensation Committee have the grant date and vesting commencement date of the first of the month following approval. All annual grants of RSUs vest quarterly over four years from the vesting commencement date. All new hire grants of RSUs will vest
1
⁄
4 
after one year and then vest quarterly over the following three years. All equity awards granted to increase its marketing effortsour executive officers are subject to promote our digital platforms,Stock Ownership Guidelines.
The Compensation Committee established opportunity targets for each NEO based on a review of the market data provided by the Compensation Consultant, individual performance, current equity holdings, dilution relative to market practice, and total direct compensation mix.
The table below shows the approximate grant date fair value of the PSU and RSU grants approved by the Compensation Committee, as well as the projected revenue, and associated revenue share payments. For example, in 2020,number of shares of Company common stock which the Company's effortsNEO is eligible to implement, with Albertsons, onereceive upon vesting of such grant.
2021 LTI NEO Grants
 
Name
  
RSUs
(1)
   
PSUs
(2)
   
Total LTI
 
  
$
   
#
   
$
   
#
   
$
 
Steven Boal
   2,500,000    177,809    2,500,000    177,809    5,000,000 
Scott Raskin
   1,400,000    99,573    1,400,000    99,573    2,800,000 
Pamela Strayer
   1,400,000    99,573    1,400,000    99,573    2,800,000 
Matthew Krepsik
(3)
   1,428,000    85,000    974,100    85,000    2,402,100 
Connie Chen
   750,000    53,342    750,000    53,342    1,500,000 
(1)
The Compensation Committee approved equity awards for the executive officers (other than Mr. Krepsik) with a fixed grant date dollar value. The number of units granted subject to the PSU and RSU was determined based upon the closing stock price of the Company’s common stock on the grant date (March 1, 2021), which was $14.06.
(2)
This table reflects the number of shares of Company common stock payable to the NEOs with respect to the PSU awards based upon achievement of target performance levels. Due to the rules for how the grant date fair value of long-term incentive awards must be calculated for GAAP accounting purposes, the 2021 Summary Compensation Table does not reflect the same PSU values as this table. PSUs shown here are also not reflective of actual payout amounts, which will still be determined at the close of the specific measurement period. Actual payout could be greater or less than what is illustrated here, dependent on the outcome of the applicable LTI performance metrics.
(3)
As a new hire, Mr. Krepsik was granted RSUs representing a right to receive 85,000 shares on May 1, 2021. This award will (i) fully vest with respect to 10,000 RSUs on May 1, 2022, and (ii) with respect to the remaining 75,000 RSUs will vest with respect to 25% of such RSUs on May 1, 2022, and in equal quarterly installments thereafter until May 1, 2025. Upon promotion to Chief Technology Officer on June 1, 2021, Mr. Krepsik was awarded an additional 85,000 shares denominated in PSUs to align him to the LTI all executives participate in. His PSUs will follow the same terms of the program with respect to performance metrics as outlined above.
2022 Compensation Changes
Following its review of the Company’s solutions resulted in multiple disputes being raised by each of the parties against the other, one of which disputes resulted in the Company not being able to meet the contractual minimum at the end of the applicable period under the agreement. In order to resolve certain of the disputes regarding the parties' respective obligations, the Company recognized a loss of $8.8 million during the year ended December 31, 2020. During the second quarter of 2021, the Company notified Albertsons that, due to Albertsons failure to meet certain obligations under the agreement, the Company is not obligated to meet the contractual minimums for the period that ended in October 2021. In connection with renewal discussions between the parties, we received a letter from Albertsons notifying us of their intent to early terminate our agreement related to the delivery of promotions and media campaigns, effective December 31, 2021. We informed Albertsons that we disputed their right to terminate the agreement prior to March 31, 2022. The parties are currently in litigation. If the contractual minimum applicable to the period that ended in October 2021 is enforceable, the Company may recognize a loss that, depending on a variety of factors, is estimated to be as high as $8.5 million.
Our gross margins are dependent on many factors, some of which are not directly controlled by us.
The factors potentially affecting our gross margins include:
•impacts of changes in our business model including transitioning the pricing of promotions offerings from cost-per-acquisition to duration-based pricing,executive compensation program and the degreeCompany’s long-term business strategy, and timing of advertiser and retailerin response to this transition, and also increasingfeedback from stockholders, the proportion of self-service and automated offerings;
•business model or solution deliveryCompensation Committee approved the changes with respect to a portion of our offerings, that result in revenue being recognized on a net, as opposed to a gross, basis;
•our product mix, since we have significant variations in our gross margin among products and, accordingly, any substantial change in product mix could change our aggregate gross margin;
•growth and expansion of our lower-margin media products, including programmatic ads delivered through third-party ad-tech partners and publishers;
•our efforts to add higher-margin solutions to our suite of offerings;

•our ability to meet contractual minimums under guaranteed distribution fee arrangements;
•increasing costs of maintaining, expanding and adding retailer and other network partner relationships;
•increasing data acquisition and media acquisition costs;
•evolving fee arrangements with advertisers, as well as with retailer and other network partners, which might have an impact on our gross margins;
•success of our pricing strategies, including duration-based pricing strategies;
•our decision to exit higher margin non-strategic products or business lines;

•success of our investments in technology and automation, or through acquisitions to gain cost efficiencies;
•increasing pricing pressures from competitors, advertisers and agencies representing advertisers; and
•success of higher-margin new products.
20






We have seen pressure on our gross margins, which we principally attribute to the factors described above, and we expect this pressure to continue while our growth strategy evolves and our product mix continues to change. For instance, lower-margin media products have increased in our product mix, and we face margin pressure arising from increased media and data acquisition costs due, in part, to reduced inventory and increased consumer ability to opt out of permitting their personal information to be usedbelow effective for marketing purposes. See Risk Factor below entitled "If the use of mobile device identifiers, third-party cookies or other tracking technology is rejected by consumers, restricted by third parties outside of our control, or otherwise subject to unfavorable regulation, the benefits of our offerings and solutions could diminish, our data and media acquisition costs could increase and we could lose customers and revenue". Although we expect to gain leverage as our business expands, our platforms transition to self-service, and through automation, there is no guarantee that we will succeed.
We expect a number of factors to cause our operating results to fluctuate on a quarterly and annual basis, which may make it difficult to predict our future performance.
Growth forecasts are subject to significant uncertainty and are based on assumptions and estimates that may not prove to be accurate. Historically, our revenue growth has varied from quarter-to-quarter and year-to-year, and we expect that variability to continue. In addition, our operating costs and expenses have fluctuated in the past, and we anticipate that our costs and expenses will increase over time as we continue to invest in growing our business. Our operating results could vary significantly from quarter-to-quarter and year-to-year as a result of2022. Because these and other factors, many of which are outside of our control, and as a result we have a limited ability to forecast the amount of future revenue and expenses, which may adversely affect our ability to predict financial results accurately. Our ability to forecast our future results of operations is subject to a number of uncertainties, including our ability to effectively plan for and model future growth, and especially uncertainty relating to our business model changes. We have encountered in the past, and may encounter in the future, risks and uncertainties frequently experienced by growing companies in changing industries. Our results of operations may fall below our estimates or the expectations of public market analysts and investors. Fluctuations in our quarterly operating results may lead analysts to change their long-term models for valuing our common stock, cause us to face short-term liquidity issues, impact our ability to retain or attract key personnel or cause other unanticipated issues, all of which could cause our stock price and the trading price of our convertible senior notes to decline. As a result of the potential variations in our quarterly revenue and operating results, we believe that quarter-to-quarter comparisons of our revenues and operating results may not be meaningful, and the results of any one quarter or historical patterns should not be considered indicative of our future sales activity, expenditure levels or performance.
In addition to other factors discussed in this section, factors that may contribute to the variability of our quarterly and annual results include:
•impacts of changes in our business model, including transitioning the pricing of promotions offerings from cost-per-acquisition to duration-based pricing and the degree of advertiser and retailer response to this transition, and increasing the proportion of self-service and automated offerings;
•business model changes that result in differences in accounting treatment, including whether revenue is recognized on a net or gross basis;
•our ability to adapt to changes in marketing goals, strategies and budgets of advertisers and retailers and the timing of their marketing spend;
•our ability to maintain and grow the retailer component of our network, expand our network with new verticals, and increase our number of network partners and publishers;
•our ability to maintain and expand our data rights with our retailer network;
•our ability to leverage retailer demands to increase CPG spend on retailer performance media;
•the impact of competitors or competitive products and services, and our ability to compete in digital marketing;
•the impact of pricing pressures from our competitors, advertisers or CPGs, and agencies representing advertisers or CPGs;
•the impact of increasing media acquisition and data acquisition costs;
•the impact of litigation involving us, our industry or both, including investigations by regulators or claims made by our competitors or other third parties;
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•reduction in demand or volatility in demand for one or more of our products, which may be caused by, among other things: delay or cancellation of marketing campaigns by advertisers and retailers as they focus on manufacturing in-demand products, replenishing out-of-stock items, adjusting to changes in consumer purchasing behavior, contending with supply-chain challenges, and other issues arising out of the COVID-19 pandemic;
•disruption of planned themed marketing campaigns by advertisers and retailers, including campaigns that have been adversely impacted by shelter-in-place orders and social distancing due to the COVID-19 pandemic;
•reduction in overall media spend by advertisers in reaction to the COVID-19 pandemic, which primarily had a negative effect on our media business starting in the first half of 2020, and despite a return of bookings beginning in the second half of 2020, could have an adverse effect through 2022 depending on the ultimate severity and duration of the pandemic and the governmental responses thereto;
•our ability to grow existing consumer usage of, and attract new consumers to, our digital promotion offerings and more generally to interactions with our platforms, including through our retailer partner sites and our publisher network;
•our ability to obtain and increase the number of high quality promotions;
•changes in consumer behavior with respect to digital promotions and media, how consumers access digital promotions and media, and our ability to develop applications that are widely accepted and generate revenues for advertisers, retailers and us;
•our ability to control costs including the costs of obtaining consumer data and investing, maintaining and enhancing our technology infrastructure;
•increased legal and compliance costs associated with data protection laws and regulations in various jurisdictions, including the CCPA, which went into effect on January 1, 2020, and invalidation of the EU-U.S. Privacy Shield framework and Swiss-U.S. Privacy Shield Framework in July 2020 and September 2020, respectively;
•the costs of developing new products, solutions and enhancements to our platforms;
•whether new products successfully launch on time;
•our ability to manage our growth, including scaling our platforms;
•our ability to manage innovation, including extent of investments2022, their impact will not be reflected in and success in deploying new offerings, and our ability to manage transitions from legacy platforms and solutions to new platforms and solutions such as those with self-service and automation capabilities;this
Form10-K/A;
•the success of our sales and marketing efforts;
•the costs of successfully integrating acquired companies and employees into our operations;
•changesrather, their impact will be reflected in the legislative or regulatory environment, including with respect to privacy and data protection, or enforcement by government regulators, including fines, orders, or consent decrees;
•our ability to deal effectively with fraudulent transactions or customer disputes;
•our ability to collect payment for services timely, as any significant persistence or worsening of the COVID-19 pandemic, supply chain challenges, and inflation may cause liquidity issues for some of our customers;
•the attraction and retention of qualified employees and key personnel, whether or not related to changes in U.S. immigration policies;
•the effectiveness of our internal controls; and
•changes in accounting rules, tax laws or interpretations thereof.
The effects of these factors individually or in combination, including the continuing uncertainty created by the COVID-19 pandemic and our business model changes, could cause our quarterly and annual operating results to fluctuate, as well as affect our ability to forecast those results and our ability to achieve those forecasts. As a result, comparing our operating results on a period-to-period basis may not be meaningful. You should not rely on our past results as an indication of our future performance. This variability and unpredictability could also result in our failing2023 proxy statement.
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Revisions to Peer Group for Pay Decisions in 2022





to meet or exceeding the expectations of our investors or financial analysts for any period. In addition, we may release guidance in our quarterly earnings conference calls, quarterly earnings releases, investor day, or otherwise, based on predictions of our management, which are necessarily uncertain in nature. The guidance provided depends on our predictions relating to demand for our platforms, the rate and extent of market acceptance to our business model changes, maintaining and growing our retailer network and the cost of maintaining retailer partnerships, expansion of our network audience through publishing distribution and other partnerships, which predictions can fluctuate greatly and are beyond our control. Our guidance may vary materially from actual results. If our revenue or operating results, or the rate of growth of our revenue or operating results, fall below or above the expectations of our investors or financial analysts, or below or above any forecasts or guidance we may provide to the market, or if the forecasts we provide to the market are below or above the expectations of analysts or investors, the price of our common stock could decline or increase substantially. Such a stock price decline or increase could occur even when we have met our own or other publicly stated revenue or earnings forecasts. Our failure to meet our own or other publicly stated revenue or earnings forecasts, or even when we meet our own forecasts but fall short of analyst or investor expectations, could cause our stock price to decline and expose us to costly lawsuits, including securities class action suits. Such litigation against us could impose substantial costs and divert our management’s attention and resources. If we exceed our own or other publicly stated revenue or earnings forecasts, or even when we meet our own forecasts but exceed analyst or investor expectations, our stock price could increase.
If we are unable to successfully respond to changes in the digital promotions market, our business could be negatively affected.
As consumer demand for digital promotions has increased, promotion spending has shifted from traditional promotions through traditional offline or analog channels, such as newspapers and direct mail, to digital coupons. Although we expect advertisers to reduce and eventually stop spending on the offline FSI, our expectations regarding the timing of such change or our expectations that advertisers will shift some of their FSI budgets to our platforms, or about the timing of such shifts, may not be accurate. It is also difficult to predict whether advertisers will decide to shift FSI budgets to other marketing channels if digital promotions lose favor with advertisers, retailers or consumers. For example, some large retailers do not yet use digital paperless promotions. In the event of these or any other changes to the market, our continued success will depend on our ability to successfully adjust our strategy to meet the changing market dynamics. We will need to continue to grow demand for our platforms by advertisers, retailers and consumers, including through continued innovation and implementation of new initiatives associated with digital promotions. If a retailer decides not to accept digital paperless promotions, if advertisers reduce spend in digital promotions, or if advertisers choose our competitors’ products and services, our business could be negatively affected.
If the demand for digital promotions does not continue to grow as we expect, or if we fail to successfully address this demand, our business will be harmed. For example, the growth of our revenue and gross margins require increasing or maintaining the number of brands that are using our promotions platforms within each CPG. If our projections regarding the adoption and usage of our promotions platforms by retailers, advertisers (including CPGs) and consumers do not occur or are slower than expected, our business, financial condition, results of operations and prospects will be harmed. Even if we are successful in driving the adoption and usage of promotions platforms by retailers, advertisers and consumers, if our fee arrangements (including the shift to duration-based pricing) or transaction volumes, or the mix and quality of offers, change or do not meet our projections, our revenues may be negatively affected. We expect that the market will evolve in ways which may be difficult to predict.
For example, if consumer demand for our national and shopper promotions or our mobile applications does not grow as we expect or decreases, our business may be negatively affected. Also, the success of our transitioning the pricing of promotions offerings from cost-per-acquisition to duration-based pricing depends on meeting forecasted campaign outcomes, and if we do not deliver the forecasted outcomes, advertisers may not respond to this pricing model transition to the degree we anticipate, and our business could be adversely impacted. More generally, ifwe are unable to grow or successfully respond to changes in the digital promotions market, our business could be negatively affected and our results of operations could be negatively impacted. Our revenues may also be negatively affected if we are unable to manage the transition, or if the growth of digital paperless coupons is slower than the decline in digital print coupons. Conversely, acceleration of this shift (from, for example, acceptance of digital paperless coupons by new retailers) could lead to unanticipated increases in revenue.
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If we fail to maintain and expand the use by consumers of digital promotions on our platforms, our revenues and business will be negatively affected.
We must continue to maintain and expand the use by consumers of digital promotions on our owned-and-operated sites, on retailer sites and on our publisher network in order to increase the attractiveness of our platforms to advertisers and retailers, and to increase revenues and achieve profitability. If consumers do not perceive that we offer a broad selection of relevant and high-quality digital promotions, or that the usage of digital promotions is easy and convenient through our platforms, we may not be able to attract or retain consumers. In addition, as consumer behavior in accessing digital promotions changes and new distribution channels emerge, if we do not successfully respond and do not develop products or solutions that are widely accepted, we may be unable to retain consumers or attract new consumers and as a result our business may suffer. One of our growth strategies is to increase the number of consumers using digital promotions on our platforms through growth and expansion of our publisher network. If we do not add new network partners or our partners do not result in increased consumer use of digital promotions on our platforms as expected, our revenues and business will be harmed. We also depend on our retail and other network partners to devote sufficient time, resources or funds to the promotion of our platforms and the marketing of our digital promotions to consumers. If we are unable to maintain and expand the use by consumers of digital promotions on our platforms and consumer properties, as well as the digital properties and channels of retailers and other publishers in our network, or if we do not do so to a greater extent than our competitors, advertisers may find that offering digital promotions on our platforms do not reach consumers with the scale and effectiveness that is compelling to them. Likewise, if retailers find that use of our platforms does not increase sales of the promoted products and consumer loyalty to the retailer to the extent they expect, the revenues we generate may not increase to the extent we expect, or may decrease. Any of these could harm our business. Additionally, consumer shopping behavior has changed dramatically in response to the COVID-19 pandemic. For instance, shoppers continue to minimize shopping trips, continue to rely on online grocery shopping, and continue to adjust buying habits in response to their lifestyles having been impacted by state and local orders and social distancing. If consumers decide not to use our products that involve paper as a result of the COVID-19 pandemic and do not find our purely digital products compelling, our business could be harmed.
Competition presents an ongoing threat to the success of our business.
We expect competition in digital marketing to continue to increase. This industry is competitive, fragmented and rapidly changing. We compete against a variety of companies with respect to different aspects of our business, including:
•providers of digital promotions such as Valassis Communications, Inc.; Catalina Marketing Corporation’s Cellfire;, Inmar/You Technology; Neptune Retail Services’ (formerly known as News America Marketing) SmartSource; companies that offer cash back solutions such as iBotta, Inc.; and Neptune Retail Services’ Checkout 51;
•offline coupon and discount services, as well as newspapers, magazines and other traditional media companies that provide coupon promotions and discounts on products and services in FSIs or other forms, including Valassis Communications, Inc., Neptune Retail Services and Catalina Marketing Corporation;
•retailers who develop and manage, with or without a third-party vendor, digital advertising or data products in-house, such as Albertsons’ recently-announced launch of the Albertsons Media Collective, or The Kroger Company with its wholly owned subsidiary of 84.51°;
•companies offering online and marketing services to retailers and advertisers, such as Flipp Corp.; and
•companies offering digital advertising technology, inventory, data, and services solutions and channels for advertisers and retailers including: Facebook, Alphabet, Pinterest, Inc., Amazon.com, Inc., Adobe Inc., The Trade Desk Inc., Oracle Corporation, Criteo S.A., Microsoft Corporation, Publicis Groupe's CitrusAd, and others.
In certain instances, we have entered into, and in the future we may enter into, strategic alliances or partnerships with companies that are competitors in other areas of our business. We believe the principal factors that generally determine a company’s competitive advantage in our market include the following:
•scale and effectiveness of reach in connecting advertisers and retailers to consumers in a digital manner, through web, mobile and other digital properties;
•scale and reach of a company's retailer network;
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•scale and reach of a company's targetable audience data;
•ability to attract consumers to a company's platform;
•platform security, usability, scalability, reliability and availability;
•integration with retailer applications, POS systems, and consumer channels;
•access to consumer data;
•measurement that demonstrates the effectiveness of campaigns;
•quality of tools, reporting and analytics for planning, development and optimization of digital marketing campaigns;
•integration of products and solutions;
•rapid deployment of products and services for customers;
•breadth, quality and relevance of a company's solutions;
•ability to deliver high quality and increasing numbers of digital promotions that are widely available and easy to use in consumers’ preferred form;
•brand recognition and reputation; and
•ability to recruit, retain and train employees.
We are subject to competition from large, well-established companies which have significantly greater financial, marketing and other resources than we do, and which have offerings that compete with our platforms or may choose to offer digital promotions and media and audiences as an add-on to their core business on their own or in partnership with one of our competitors that would directly compete with ours. Many of our larger actual and potential competitors have the resources to significantly change the nature of the digital promotions industry to their advantage, which could materially disadvantage us. For example, Alphabet and Facebook, retailers such as Kroger and online retailers such as Amazon have highly trafficked industry platforms which they have leveraged, or could leverage, to distribute digital promotions and media that could negatively affect our business. In addition, these potential competitors may have greater access to first-party data, and may be able to respond more quickly than we can to new or emerging technologies and changes in consumer habits. These competitors may engage in more extensive research and development efforts, undertake more far-reaching marketing campaigns and adopt more aggressive pricing policies, which may allow them to attract more consumers and, as a result, more advertisers and retailers, and thereby generate revenues more effectively than we do. Our competitors may offer digital promotions or targeted media campaigns that are similar to the digital promotions and targeted media campaigns we offer or that achieve greater market acceptance than those we offer. We are also subject to competition from smaller companies that launch similar or new products and services that we do not offer and that could gain market acceptance. We may also face claims or lawsuits from our competitors.For example, in February 2021, Catalina Marketing Corporation filed a complaint against us, alleging that we engaged in predatory pricing practices and misleading communications with potential customers in connection with our in-lane promotions solution, and in June 2021, Result Marketing Group, Ltd. filed a complaint against us, alleging misappropriation of trade secrets, interference with contract, interference with prospective business relationships and unjust enrichment.While we believe that these claims are without merit, these matters could cause us to incur substantial costs and resources defending against the claims, could distract our management from our business and could cause uncertainty among our customers or prospective customers, all of which could have an adverse effect on our business, operating results and financial condition. For additional information regarding these matters, see Item 3, “Legal Proceedings,” contained in Part I of this report.
Our success depends on the effectiveness of our platforms in connecting advertisers and retailers with consumers, and in attracting consumer use of the digital promotions and media delivered through our platforms. To the extent we fail to provide digital promotions and media for high quality, relevant products, or otherwise fail to successfully reach consumers on their mobile devices or elsewhere, consumers may become dissatisfied with our platforms and decide not to use our digital promotions, not interact with our digital media, and/or elect to use or view instead the digital promotions and media distributed by one of our competitors. As a result of these factors, our advertisers and retailers may not receive the benefits they expect, advertisers may opt to use the offerings of one of our competitors, and retailers may elect to handle promotions and media themselves or exclude us from integrating with their in-store and POS systems or consumer channels. In any of these circumstances, our operating results
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would be adversely affected. Similarly, if retailers elect to use a competitive distribution network or platform, or develop their own solution in-house and we do not have, or fail to maintain, an agreement to distribute content through that network or platform, advertisers may elect to provide digital promotions and media directly to that network or platform, instead of through our platforms. Additionally, if retailers and advertisers require our platforms to integrate with competitive offerings instead of using our products, we could lose some of our competitive advantage and our business could be negatively affected.
We also face significant competition for trade promotion and marketing spending. We compete against online and mobile businesses, including those referenced above, and traditional advertising outlets, such as television, radio and print, for marketing spending dollars (also referred to as "spend"). In order to grow our revenues and improve our operating results, we must increase our share of advertiser spending on digital promotions and media relative to traditional sources and relative to our competitors, many of whom are larger companies that offer more traditional and widely accepted media products.
We also directly compete with retailers who develop and manage, with or without a third-party vendor, digital advertising or data products in-house, such as Albertsons’ recently-announced launch of the Albertsons Media Collective, orThe Kroger Company with its wholly owned subsidiary of 84.51. Specifically, many retailers market and offer their own digital advertising solutions, including retailer performance media, targetable audiences and sponsored search, directly to advertisers. We also compete with retailers directly and indirectly for consumer traffic. Retailers will market promotions and media and directly to consumers using their own websites, email newsletters and alerts, mobile applications and social media channels. Additionally, some retailers also market and offer their own digital promotions and media directly to consumers using our platforms for which we earn no revenue. Our retailers could be more successful than we are at marketing their own digital promotions and media, develop or expand their own in-house capabilities or decide to manage retailer performance media in-house, and accordingly could decide to terminate their relationship with us or renew the relationship on less favorable terms than existed previously.
We may face competition from companies we do not yet know about. If existing or new companies develop, market or offer competitive digital coupon solutions, acquire one of our existing competitors or form a strategic alliance with one of our competitors, our ability to compete effectively could be significantly compromised and our operating results could be negatively affected. For example, in March 2019, Inmar announced that it completed the acquisition of Kroger’s subsidiary You Technology and entered into a long-term service agreement to provide digital coupon services to the Kroger family of stores. Following this acquisition, Inmar terminated our agreement with You Technology as of December 2019. This adversely affected our ability to distribute digital promotions through You Technology, which generated less than 5% of our revenue in 2019.
We depend in part on advertising agencies as intermediaries, and if we fail to develop and maintain these relationships, our business may be negatively affected.
A growing portion of our business is conducted with advertising agencies acting on behalf of advertisers and retailers. Advertising agencies are instrumental in assisting advertisers and retailers to plan, manage and purchase media and promotions, and each advertising agency generally allocates media and promotion spend from advertisers and retailers across numerous channels. As advertising agencies represent the marketing budgets of multiple advertisers and retailers, we expect they will be able to exert more pricing pressure on us. We are still developing relationships with, and do not have exclusive relationships with, advertising agencies, and we depend in part on advertising agencies to work with us as they embark on marketing campaigns for advertisers and retailers. While in most cases we have developed relationships directly with advertisers and retailers, we nevertheless depend in part on advertising agencies to present to their advertiser and retailer clients the merits of our platforms.
Because they act on behalf of our advertiser customers, advertising agencies are an area of business focus for us, not only as regards utilization of our legacy platforms but also, and especially, our newer self-service and automated solutions. Accordingly, inaccurate descriptions of our legacy or newer self-service/automated platforms by advertising agencies, over whom we have no control; negative recommendations by advertising agencies regarding use of our offerings; or failure by advertising agencies to mention our platforms at all could hurt our business. In addition, if an advertising agency is disappointed with our platforms on a particular campaign or generally, we risk losing the business of the advertiser or retailer for whom the campaign was run, and the business of other advertisers and retailers represented by that agency. Since many advertising agencies are affiliated with
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other advertising agencies in a larger corporate structure, if we fail to develop and maintain good relations with one advertising agency in such an organization, we may lose business from the affiliated advertising agencies as well.
Our sales could be adversely impacted by industry changes relating to the use of advertising agencies. Moreover, to the extent that we do not have a direct relationship with advertisers or retailers, the value we provide to advertisers and retailers may be attributed to the advertising agency rather than to us, further limiting our ability to develop long-term relationships directly with advertisers and retailers. Advertisers and retailers may move from one advertising agency to another, and we may lose the underlying business. The presence of advertising agencies as intermediaries between us and the advertisers and retailers thus creates a challenge to building our own brand awareness and affinity with the advertisers and retailers that are the ultimate source of our revenues. In addition, advertising agencies conducting business with us could develop similar digital marketing solutions. As such, these advertising agencies are, or may become, our competitors. If they further develop their own capabilities they may be more likely to offer their own solutions to advertisers, and our ability to compete effectively could be significantly compromised and our business, financial condition and operating results could be adversely affected.
Our failure to attract, integrate and retain other highly qualified personnel in the future could harm our business, and in the near term is an increasing challenge due to market conditions and strategic transitions in our business.
As an industry-leading digital promotions and media company we compete for sales, engineering and other technical talent in a highly competitive environment against large, well-established technology companies and well-funded start-ups, which have significantly greater financial and other resources than we do. If we do not succeed in attracting, hiring and integrating qualified personnel, or retaining and motivating existing personnel, we may be unable to grow effectively and our operating results may be harmed.
Following the easing of the COVID-19 pandemic restrictions in 2021, we have experienced higher employee attrition and an increasingly competitive market for talent, as factors associated with the so-called Great Resignation have impacted our company as they have other companies. In addition, if changes in our business such as the transformation of our business strategy and business model and the related operational changes in various areas of our business such as sales, cause us to experience a higher-than-anticipated attrition in certain key areas of our business or if we are unable to hire and onboard new talent quickly enough to materially meet operational needs, our results of operations could be negatively impacted.
We may be limited in our ability to recruit global talent by U.S. immigration laws, including those related to H1-B visas. The demand for H1-B visas to fill highly-skilled technology and computer science jobs is greater than the number of H-1B visas available each year. To the extent that the immigration-related regulatory environment, including H1-B visa availability, hampers our ability to recruit, hire and retain qualified skilled personnel, our business, operating results and financial condition could be adversely impacted.
The effects of health epidemics, including the COVID-19 pandemic, have had, and may continue to have, an adverse impact on our business, operations and the markets and communities in which we and our partners operate.
Our business and operations have been and may continue to be adversely affected by health epidemics, including the recent COVID-19 pandemic, impacting the markets and communities in which we and our partners operate. In December 2019, a novel strain of coronavirus, SARS-CoV-2, causing a disease referred to as COVID-19, was reported to have surfaced in Wuhan, China. Since then, COVID-19 has spread to many countries worldwide, including the United States.
In response to the COVID-19 pandemic, many state, local and foreign governments have put in place, and others in the future may put in place, quarantines, executive orders, shelter-in-place orders and similar government orders and restrictions in order to control the spread of the disease. Such orders or restrictions, or the perception that such orders or restrictions could occur, have resulted in business closures, work stoppages, slowdowns and delays, work-from-home policies, travel restrictions and cancellation of events, among other effects that could negatively impact productivity and disrupt our operations and those of our partners. Certain jurisdictions lifted such orders or restrictions only to return to these restrictions in the face of increases in new COVID-19 cases, even as vaccination efforts are being undertaken throughout the United States and in certain other countries. Although as of the winter of 2022 the pace of removing restrictions is increasing, the residual effects of such restrictions and prolonged alternative working arrangements are unknown and the eventual effectiveness of the vaccination efforts
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likewise remains uncertain, and these may negatively impact the productivity of our employee base and have a disproportionately negative impact on our sales and operations functions, which could have an adverse effect on our business, operating results, and financial condition.
In addition, the potential ultimate impact and duration of the COVID-19 pandemic on the global economy and our business in particular are difficult to assess or predict. A recession or market correction resulting from the spread of new or existing variants of COVID-19 and its impacts could decrease marketing spend, particularly in media, adversely affecting the demand for our solutions, the growth of our business, and the value of our common stock. While we have seen advertisers or CPGs maintain or increase their spend on promotions during economic downturns, there is no guarantee they will do so in a future economic downturn, including one that may be presently taking shape due to the persistence of the COVID-19 pandemic or inflationary pressures brought about as a consequence of the pandemic.
The global COVID-19 pandemic continues to rapidly evolve, and we will continue to monitor the COVID-19 situation closely. The ultimate impact of the COVID-19 pandemic or a similar health epidemic is highly uncertain and subject to change, even in light of the vaccination efforts that have been ongoing. We do not yet know the full extent of potential delays or impacts on our business, operations or the global economy as a whole. The COVID-19 pandemic, and the various responses to it, may also have the effect of heightening many of the other risks discussed in this “Risk Factors” section.
Acquisitions, joint ventures and strategic investments could result in operating difficulties, dilution and other harmful consequences.
We have acquired a number of businesses, and expect to continue to evaluate and consider a wide array of potential strategic transactions, including acquisitions and dispositions of businesses, joint ventures, technologies, services, products and other assets and strategic investments. At any given time, we may be engaged in discussions or negotiations with respect to one or more of these types of transactions. Any of these transactions could be material to our financial condition and results of operations. The process of integrating any acquired business may create unforeseen operating difficulties and expenditures, and is itself risky. The areas where we may face difficulties include:
•expected and unexpected costs incurred in identifying and pursuing strategic transactions and performing due diligence regarding potential strategic transactions that may or may not be successful;
•failure of an acquired company to achieve anticipated revenue, earnings, cash flows or other desired technological and business goals;
•effectiveness of our due diligence review and our ability to evaluate the results of such due diligence, which are dependent upon the accuracy and completeness of statements and disclosures made by the acquired company;
•diversion of management time, as well as a shift of focus, from operating the businesses to issues related to integration and administration;
•disputes as a result of certain terms and conditions of our transactions, such as payment of contingent consideration, compliance with covenants, or closing adjustments;
•the need to integrate technical operations and security protocols, which may lead to significant security breaches of, technical difficulties with, or interruptions to, the delivery and use of our products and services;
•the need to integrate the acquired company’s accounting, management, information, human resource and other administrative systems to permit effective management, and the lack of control if such integration is delayed or not implemented;
•retention of key employees from the acquired company and cultural challenges associated with integrating employees from the acquired company into our organization;
•the need to implement or improve, to standards appropriate for a public company, controls, procedures and policies of acquired companies that, prior to acquisition, had lacked such controls, procedures and policies;
•in some cases, the need to transition operations and customers onto our existing platforms;
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•in certain instances, the ability to exert control of acquired businesses that include earnout provisions in the agreements relating to such acquisitions or the potential obligation to fund an earnout for, or fulfill other obligations related to, a product that has not met expectations;
•the need to integrate operations across different geographies, cultures and languages, and to address the particular economic, currency, political and regulatory risks associated with specific countries;
•liability for activities of the acquired company before the acquisition, including violations of laws, rules and regulations, commercial disputes, tax liabilities, and other known and unknown liabilities;
•difficulties valuing intangibles related to acquired businesses, which could lead to write-offs or charges related to acquired assets or goodwill; and
•litigation or other claims in connection with the acquired company, including claims from terminated employees, users, former stockholders or other third parties, and intellectual property infringement claims.
For example, we have acquired businesses whose technologies are new to us and with which we did not have significant experience. We have made and are making investments of resources to support such acquisitions, which will result in ongoing operating expenses and may divert resources and management attention from other areas of our business. We cannot assure you that these investments and the integration of these acquisitions will be successful. If we fail to successfully integrate the companies we acquire, we may not realize the benefits expected from the transaction and our business may be negatively impacted.
Our failure to address these risks or other problems encountered in connection with our past or future acquisitions and investments could cause us to fail to realize the anticipated benefits of any or all of our acquisitions or joint ventures, or we may not realize them within the expected time frame, or could cause us to incur unanticipated liabilities, in any or all such instances potentially harming our business. Future acquisitions or joint ventures may require us to issue dilutive additional equity securities, spend a substantial portion of our available cash, incur debt or contingent liabilities, amortize expenses related to intangible assets or incur incremental operating expenses or write-offs of goodwill or impaired acquired intangible assets, which could adversely affect our results of operations and harm our business.
If we fail to effectively manage our growth, our business and financial performance may suffer.
We have significantly expanded our operations and anticipate expanding further to pursue our growth strategy. Through acquisitions we have added multiple additional offices within the last three years. Although most of our personnel continue to work from home, we recently moved our principal executive offices to Salt Lake City, Utah from Mountain View, California. Such office expansion and transition increases the complexity of our business and places significant demands on our management, operations, technical performance, financial resources and internal control over financial reporting functions. Continued growth could strain our ability to deliver solutions on our platforms; develop and improve our operational, financial, legal and management controls; and enhance our reporting systems and procedures. Failure to manage our expansion may limit our growth, damage our reputation and negatively affect our financial performance and harm our business.
To effectively manage this growth, we will need to continue to improve our operational, financial and management controls, and our reporting systems and procedures. If we do not effectively manage the growth of our business and operations, the scalability of our business and our operating results could suffer.
Our current and planned personnel, systems, procedures and controls may not be adequate to support and effectively manage our future operations. We may not be able to hire, train, retain, motivate and manage required personnel. As we continue to grow, we must effectively integrate, develop and motivate a large number of new employees. We intend to continue to expand our research and development, sales and marketing, and general and administrative organizations, and over time, expand our international operations. To attract top talent, we have had to offer, and believe we will need to continue to offer, highly competitive compensation packages before we can validate the productivity of those employees. If we fail to effectively manage our hiring needs and successfully integrate our new hires, our efficiency and ability to meet our forecasts and our employee morale, productivity and retention could suffer, and our business and operating results could be adversely affected.
Providing our products and services to our advertisers, retailers and consumers is costly, and we expect our expenses to continue to increase in the future as we grow our business with existing and new advertisers and retailers, and as we develop new products and services that require enhancements to our technology infrastructure.
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In addition, our operating expenses, such as our sales, marketing and engineering expenses, are expected to continue to grow to support our anticipated future growth. As a result of the requirements of being a public company we incur significant legal, accounting and other expenses. Our expenses may grow faster than our revenues, and our expenses may be greater than we anticipate. Managing our growth will require significant expenditures and allocation of valuable management resources. If we fail to achieve the necessary level of efficiency in our organization as it grows, our business, operating results and financial condition would be negatively affected.
If our websites or those of our publishers fail to rank prominently in unpaid search results from search engines, traffic to our websites could decline and our business would be adversely affected.
Our success depends in part on our ability to attract consumers through unpaid Internet search results on search engines, such as Alphabet's search engine called Google. The number of consumers we attract to our websites from search engines is due in large part to how and where our websites rank in unpaid search results. These rankings can be affected by a number of factors, many of which are not in our direct control, and they may change frequently. For example, major search engines frequently modify their ranking algorithms, methodologies or design layouts. As a result, links to our websites may not be prominent enough to drive traffic to our websites or we may receive less favorable placement which could reduce traffic to our website, and we may not know how or otherwise be in a position to influence the results. In some instances, search engine companies may change these rankings in order to promote their own competing products or services or the products or services of one or more of our competitors. Our websites have experienced fluctuations in search result rankings in the past, and we anticipate fluctuations in the future. For example, the search result rankings of our websites have fallen relative to the same time last year. In addition, websites must comply with search engine guidelines and policies. These guidelines and policies are complex and may change at any time. If we fail to follow such guidelines and policies properly, search engines may rank our content lower in search results or could remove our content altogether from their index. Moreover, the use of voice recognition technology, such as Amazon's Alexa, Google Assistant or Apple's Siri, may drive traffic away from search engines, which could reduce traffic to our website. Any reduction in the number of consumers directed to our websites could reduce the effectiveness of our coupon codes for specialty retailers and digital promotions for advertisers and retailers and could adversely impact our business and results of operations. It could also reduce our ability to sell media advertising on our sites, which would negatively impact revenues and harm our business. For example, we have seen a decline in the revenues from specialty retail and expect this trend to continue.
Failure to deal effectively with fraudulent or other improper transactions could harm our business.
Digital promotions can be in the form of redeemable coupons, coupon codes with unique identifiers, loyalty card linked offers, and national rebates. It is possible that third parties may create counterfeit digital coupons, coupon codes, exceed print or use limits in order, or submit fraudulent receipts or the same receipt twice to fraudulently or improperly claim discounts or credits for redemption. If we are unable to identify fraudulent national rebates claims before we pay out cash for these claims we might be unable to get reimbursement from our customers. It is possible that individuals will circumvent our anti-fraud systems using increasingly sophisticated methods or methods that our anti-fraud systems are not able to counteract. Further, we may not detect any of these unauthorized activities in a timely manner. Third parties who succeed in circumventing our anti-fraud systems may sell the fraudulent or fraudulently obtained digital coupons on social networks or claim discounts, credits or rebates that they are not entitled to, which would damage our brand and relationships with advertisers and harm our business. Legal measures we take or attempt to take against these third parties may be costly and may not be ultimately successful. In addition, our service could be subject to employee fraud or other internal security breaches, and we may be required to reimburse advertisers and retailers for any funds stolen or revenues lost as a result of such breaches. Our advertisers and retailers could also request reimbursement, or stop using our platforms and products, if they are affected by buyer fraud or other types of fraud. We may incur significant losses from fraud and counterfeit digital coupons and receipts. If our anti-fraud technical and legal measures do not succeed, our business may suffer.
Indemnity provisions in various agreements and our corporate documents potentially expose us to substantial liability for intellectual property infringement and other claims.
Our agreements with advertisers, retailers and other third parties may include indemnification provisions under which we agree to indemnify them for losses suffered or incurred as a result of claims of intellectual property infringement or other liabilities relating to or arising from our products, services or other contractual obligations
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including those relating to data use and consumer consent. The term of these indemnity provisions generally survives termination or expiration of the applicable agreement.
In addition, in accordance with our bylaws and pursuantnormal practice, the Compensation Committee reviewed a peer group analysis prepared by Compensation Consultant to indemnification agreements entered into with directors, officers and certain employees, we have indemnification obligations for claims brought against these persons arising out of certain events or occurrences while they are serving at our requestsupport pay decisions in such capacities. For example, our founder and CEO is subject to a claim from a third party, alleging that he owes certain amounts to the third party in connection with fundraising activities for Quotient that occurred between 1998 and 2006.We agreed to advance certain defense costs, subject to an undertaking to repay us such amounts if, and to the extent that, it is ultimately determined that he is not entitled to indemnification.The matter is ongoing.If this matter is resolved in favor of the third party and if we are required to indemnify our founder and CEO for a loss, we may be required to make an indemnity payment.While we maintain directors’ and officers’ liability insurance, such insurance may not be applicable, be adequate, or cover all liabilities that we may incur.
Large indemnity payments, individually or in the aggregate, could have a material impact on our financial position.
Our business depends on strong brands, and if we are not able to maintain and enhance our brands, or if we receive unfavorable media coverage, our ability to retain and expand our number of advertisers, retailers and consumers will be impaired and our business and operating results will be negatively affected.
We believe that the brand identity that we have developed has significantly contributed to the success of our business. We also believe that maintaining and enhancing our brand is critical to expanding our base of advertisers, retailers and consumers. Maintaining and enhancing our brands may require us to make substantial investments and these investments may not be successful. If we fail to promote and maintain our brands, or if we incur excessive expenses in this effort, our business would be negatively affected. We anticipate that, as our market becomes increasingly competitive, maintaining and enhancing our brands may become increasingly difficult and expensive.
Unfavorable publicity or consumer perception of our websites, mobile applications, platforms, practices or service offerings, or the offerings of our advertisers and retailers, could adversely affect our reputation, resulting in difficulties in recruiting, decreased revenues and a negative impact on the number of advertisers and retailers we feature, our user base, the loyalty of our consumers, and the number and variety of digital coupons that we offer. As a result, our business could be negatively affected.
Our use of and reliance on international research and development resources and operations may expose us to unanticipated costs or events.
We have research and development centers in India, France, and Israel. We expect to increase our headcount, development, and operations activity in Israel. There is no assurance that our reliance upon international research and development resources and operations will enable us to achieve our research and development and operational goals or enable us to achieve greater resource efficiency. Further, our international research and development and operations efforts involve significant risks, including:
•difficulty hiring and retaining appropriate personnel due to intense competition for such resources and resulting wage inflation in the cities where our research and development activities and operations are located;
•different labor regulations, especially in the European Union ("EU"), where labor laws are generally more advantageous to employees as compared to United States, including deemed hourly wage and overtime regulations in these locations;
•exposure to liabilities under anti-corruption and anti-money laundering laws, including the U.S. Foreign Corrupt Practices Act of 1977, as amended, and similar applicable laws and regulations in other jurisdictions;
•delays and inefficiencies caused by geographical separation of our international research and development activities and operations, as well as other challenges inherent to efficiently managing an increased number of employees over large geographic distances, including the need to implement appropriate systems, policies, benefits and compliance programs;
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•the knowledge transfer related to our technology and the resulting exposure to misappropriation of intellectual property or information that is proprietary to us, our customers and other third parties;
•heightened exposure to change in the economic, security and political conditions in the countries where our research and development activities and operations are located;
•fluctuations in currency exchange rates and regulatory compliance in the countries where our research and development activities and operations are located; and
•interruptions to our operations in the countries where our research and development activities and operations are located as a result of floods and other natural catastrophic events, as well as other events beyond our control such as power disruptions, terrorism or the persistence of the COVID-19 pandemic.
Difficulties resulting from the factors above could increase our research and development or operational expenses, delay the introduction of new products, or impact our product quality, the occurrence of any of which could adversely affect our business and operating results.
If we fail to expand effectively in international markets, our revenues and our business may be negatively affected.
We currently generate almost all of our revenues from the United States. We also operate to a limited extent in the United Kingdom, France and other countries in Europe. Many advertisers and retailers on our platforms have global operations, and we plan to grow our operations and offerings through expansion in existing international markets and by partnering with our advertisers and retailers to enter new geographies that are important to them. Further expansion into international markets will require management attention and resources, and we have limited experience entering new geographic markets. Entering new foreign markets will require us to localize our services to conform to a wide variety of local cultures, business practices, laws and policies. The different commercial, privacy and Internet infrastructure frameworks in other countries may make it more difficult for us to replicate our business model in non-U.S. locations. In some countries, we will compete with local companies that understand the local market better than we do, and we may not benefit from first-to-market advantages. We may not be successful in expanding into particular international markets or in generating revenues from foreign operations. As we expand internationally, we will be subject to risks of doing business internationally, including the following:
•competition with strong local competitors and preference for local providers, or competition with foreign companies entering the same markets;
•the cost and resources required to localize our platforms;
•burdens of complying with a wide variety of different laws and regulations, including intellectual property laws and regulation of digital coupons and media, Internet services, privacy and data protection; marketing and consumer protection laws; anti-competition regulations; and different liability standards, any of which may limit or prevent us from offering of our solutions in some jurisdictions or limit our ability to enforce contractual obligations;
•differences in how trade marketing spend is allocated;
•differences in the way digital promotions and media are delivered and how consumers access and use digital promotions;
•technology compatibility;
•difficulties in recruiting and retaining qualified employees and managing foreign operations;
•different employee/employer relationships and the existence of workers’ councils and labor unions;
•shorter payment cycles, different accounting practices and greater problems in collecting accounts receivable;
•higher product return rates;
•seasonal reductions in business activity;
•adverse tax effects and foreign exchange controls making it difficult to repatriate earnings and cash; and
•political and economic instability.
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Our planned corporate structure and intercompany arrangements will be implemented in a manner we believe is in compliance with current prevailing tax laws. However, the tax benefits which we intend to eventually derive could be undermined if we are unable to adapt the manner in which we operate our business in response to changing tax laws.
Our failure to manage these risks and challenges successfully could materially and adversely affect our business, financial condition and results of operations.
Risks Related to Government Regulation, Tax Law or Accounting Standards
Our business is subject to complex and evolving laws, regulations and industry standards, and unfavorable interpretations of, or changes in, or our actual and perceived failure to comply with these laws, regulations and industry standards could substantially harm our business and results of operations.
We collect, receive, access, generate, store, disclose, share, make accessible, protect, secure, and dispose of, and use (collectively "Process" or "Processing") business and personal information belonging to our users and customers. Because of this, we are subject to a variety of foreign, federal, state, local and municipal laws, regulations and industry standards that relate to privacy, electronic communications, data protection, intellectual property, eCommerce, competition, price discrimination, consumer protection, taxation and the use of promotions. The number and scope of such laws, regulations, and industry standards are changing, are subject to differing applications and interpretations and may be inconsistent among countries, or may conflict with other rules, laws or data protection obligations. We expect that there will continue to be new data protection laws and data protection obligations, and we cannot yet determine the impact such future laws and obligations may have on our business.
Many of these laws, regulations, and standards are still evolving and being tested in courts, and industry standards are still developing.2022. As a result, the regulatory frameworkCompensation Committee adjusted the peer group criteria for privacy, information security,revenue and market capitalization to better align to Quotient’s financial growth metrics. No changes were made to the peer group companies.
Revised Peer Group Criteria for Pay Decisions in 2022
Element
Description
Current Criteria
2022 Criteria
RevenueTrailing Twelve Month (“TTM”) revenue is within a comparable range of Quotient’s revenue.Generally between 0.5x and 4.0x ($200M to $1.6B) of Quotient revenue.Generally between
0.5x and 3.7x ($300M to $2B)
of Quotient revenue.
Market CapitalizationMarket capitalization is within a comparable range of Quotient’s market capitalization.Generally between 0.5x and 4.0x ($500M to $4.0B) of Quotient market capitalization.Generally between
0.5x and 4.0x
($500M to $4.1B)
of Quotient market capitalization.
Compensation Approach 2022
Base Pay and Bonus Opportunities
Following a thorough annual review of market data protection and peer group companies, the CEO proposed and the Compensation Committee agreed not to change base pay or Annual Incentive Plan (AIP) targets for NEOs in 2022. In determining compensation for our NEOs, the Compensation Committee considers many variables each year when determining any respective changes to base pay, including recommendations from the CEO.
The Compensation Committee believes that continued focus on
pay-for-performance
through
at-risk
incentive compensation is highly motivational for Quotient executives and further aligns company strategy to stockholder interest.
Compensation Committee Role
The Compensation Committee regularly reviews the philosophy and goals of our executive compensation programs to ensure they align with company objectives and strategy. Typically, our CEO makes compensation recommendations for NEOs and other members of the executive leadership team for approval by the Compensation Committee. The CEO does not participate in recommendations nor discussions relating to his own compensation.
The Compensation Committee, with the assistance of an independent consultant, considers multiple factors including market data Processing worldwidefrom a defined peer group, broader survey data reflecting companies of a similar profile, company and individual performance, stockholder feedback, and judgement on what is in the best interests of the Company in making recommendations on CEO pay for approval by the Board.
Independent Compensation Consultant
The Compensation Committee retained the Compensation Consultant, Aon, to assist in providing market data, analysis and is likelyadvice on executive and director compensation, and related governance matters, as an independent advisor. Aon and its affiliates did not provide any services to remain, uncertainQuotient in 2021 other than executive and director compensation consulting for the foreseeable future, and it is possibleCompensation Committee.
The Compensation Committee determined that these or other actual or alleged obligations may be interpreted and applied in a manner that is inconsistent from one jurisdiction to another and may conflict with other rules or practices. Our business, including our ability to operate and expand, could be adversely affected if legislation, regulations or industry standards are adopted, interpreted or implemented in a manner that is inconsistent with our current business practices and that require changes to these practices or the design of our platforms. Existing and future laws, regulations and industry standards could restrict our operations, and our ability to retain or increase our advertisers and retailers and consumers’ use of digital promotions delivered on our platforms may be adversely affected, and we may not be able to maintain or grow our revenues as anticipated.
For example, California has enacted the CCPA, which affords consumers expanded privacy protections, has required us to modify our data processing practices and policiesAon, as well as caused usits lead individual consultant that advises Quotient, satisfied the independence factors specified in the NYSE listing rules. The Committee also determined that the work performed by Aon in 2021 did not raise any conflict of interest.
Stock Ownership Guidelines
Under our stock ownership guidelines, the CEO and all other NEOs are expected to incur substantial costsaccumulate and expensesmaintain a meaningful level of share ownership. Shares may be owned directly, owned jointly with or separately by the individual’s spouse, or held in an effort to comply. For example,trust for the CCPA requires companies that process information on California residents to make new disclosures to consumers about their data collection, use and sharing practices, allows consumers to opt outbenefit of the saleindividual, the individual’s spouse or children. Under the guidelines, the CEO is expected to own shares of personal information with third parties,Quotient common stock equal to the lesser of (i) a value equal to five times the CEO’s annual base salary and provides(ii) 200,000 shares; and all other NEOs are expected to own shares of Quotient common stock equal to the lesser of (i) a private rightvalue equal to one times his or her annual base salary and (ii) 30,000 shares. Each NEO, including the CEO, is required to meet these expectations within 5 years of actionfirst becoming subject to the stock ownership guidelines.
As of December 31, 2021, Messrs. Boal and statutory damages for data breaches. The CCPA also provides for civil penalties for violations, as well as a private right of action for data breaches that may increaseRaskin and Ms. Chen have already satisfied the risk of data breach litigation, all of which may increase our compliance costsstock ownership guidelines, and potential liability. In addition, California voters recently approvedwe believe Mr. Krepsik is on track to meet the California Privacy Rights Act of 2020, or CPRA, that goes into effect on January 1, 2023. The CPRA would, among other things, give California residentsobjective within the ability to limit the use of their sensitive information, provide for penalties for CPRA violations concerning California residents under the age of 16, and establish a new California Privacy Protection Agency to implement and enforce the law.required time frame.
The enactment of the CCPA has prompted a wave of similar legislative developments in other statesownership guidelines are shown in the United States, which could create the potential for a patchwork of overlapping but different state laws. Some observers have noted that the CCPA could mark the beginning of a trend toward more stringent privacy legislation in the United States, which could increase our potential liability and adversely affect our business, results of operations, and financial condition. For example, both Virginia and Colorado have passed comprehensive privacy legislation that impose obligations similar to, but not exactly the same as, California laws, and many states are considering their own privacy legislation. Compliance with any newly enacted privacy and data security laws or regulations may be challenging, costly and time-intensive, and we may be required to put in place additional mechanisms to comply with applicable legal requirements. Legislative initiatives in other states, to the extent thattable below.
Name
Guideline
Steven Boal
Lesser of 5 x salary or 200,000 shares
Scott Raskin
Lesser of 1 x salary or 30,000 shares
Pamela Strayer
(1)
N/A
Matthew Krepsik
(2)
Lesser of 1 x salary or 30,000 shares
Connie Chen
Lesser of 1 x salary or 30,000 shares
(1)
Ms. Strayer resigned from the Company effective April 5, 2022.
(2)
Mr. Krepsik was promoted to his role as Chief Technology Officer on June 1, 2021, at which time he became subject to the stock ownership guidelines.
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Consideration of Risk





they become privacy and data security laws or regulations in various states, may have potentially conflicting requirements that would make compliance challenging. Some countries also are considering, or have passed legislation requiring, local storage and ProcessingThe Compensation Committee conducted a risk assessment of data, or similar requirements, which could increase the cost and complexity of operating our products and services as well as other aspects of our business.
Compliance with these and any other applicable privacy, data protection, data security, marketing and consumer protection guidelines, laws and regulations is a rigorous and time-intensive process, and we may be required to put in place additional mechanisms to ensure compliance with them. We believe ourQuotient’s compensation policies and practices comply in material respects with these guidelines, laws and regulations. However, if our belief is incorrect, if these guidelines, laws or regulations or their interpretation changes, or if new legislation or regulations are enacted, we may face significant fines and penaltieswhich included a report from the Compensation Consultant. The Compensation Committee concluded that could adversely affect our business, financial condition and result of operations. Further, we could be compelled to provide additional disclosures to our consumers, obtain additional consents from our consumers before collecting, using, or disclosing their information, or implement new safeguards or business processes to help individuals manage our use of their information. We also cannot control our retail partners’ approach or interpretation of CCPA, the CPRA or other new and emerging privacy laws and regulations, which may impact their willingness or ability to provide us data that our platforms and solutions are dependent upon, or the terms on which they are willing or able to provide it. Changes to our data sources may restrict our ability to maintain or grow our revenues as anticipated.
If our estimates or judgements relating to our critical accounting policies prove to be incorrect, our results of operations could be adversely affected.
The preparation of financial statements in conformity with U.S. generally accepted accounting principles ("U.S. GAAP") requires management to make estimates and assumptions that affect the amounts reported in our financial statements and accompanying notes. We base our estimates on historical experience and on various other assumptions that we believe to be reasonable under the circumstances, as provided in the section of this Report titled “Management’s Discussion and Analysis of Financial Condition and Results of Operations.” The results of these estimates form the basis for making judgments about the carrying values of assets, liabilities and equity, a the amount of revenue and expenses thatQuotient’s compensation programs are not readily apparent from other sources. Significant assumptions and estimates used in preparing our consolidated financial statements include those related to business combinations, goodwill and intangible assets, treatment of our convertible senior notes, revenue recognition, promotion revenue, media revenue, gross versus net revenue reporting, arrangements with multiple performance obligations, stock-based compensation and provision for income taxes. For example, the recognition of our revenue is governed by certain criteria that determine whether we report revenue either on a gross basis, as a principal, or on a net basis, as an agent, depending upon the nature of the sales transaction. Historically, our media products revenue has generally been recognized on a gross basis. However, beginning the second quarter of 2020 and continuing thereafter, we have been making changes to the manner in which we process and deliver certain media products. These business changes, over time, have led to our recognizing a greater proportion of our media revenues on a net basis, as compared to the prior recognition on a gross basis, and we expect this will cause a decrease in our revenue growth and impact our revenues. At the same time, we continue to have gross reporting for other portions of our media products, as well as for other revenue. Our determinations are made in light of the evolution of our existing business practices, development of new products, acquisitions, or changes in accounting standards or interpretations, with transactions being evaluated for characteristics that dictate, as appropriate, gross or net reporting. It is also possible that revenue reporting for existing businesses may change from gross to net or vice versa as a result of changes in contract terms or transaction mechanics. We may experience significant fluctuations in revenue in future periods depending upon, in part, the nature of our sales and our reporting of such revenue and related accounting treatment, without proportionate correlation to our underlying activity or net income. Any combination of net and gross revenue reporting would require us to make estimates and assumptions about the mix of gross and net-reported transactions based upon the volumes and characteristics of the transactions that we believe will comprise the total mix of revenue in the period covered by the projection. Those estimates and assumptions may be inaccurate when made, or may be rendered inaccurate by subsequent circumstances, such as changing the characteristics of our offerings or particular transactions in response to client demands, market developments, regulatory pressures, acquisitions and other factors. Even apparently minor changes in transaction terms from those initially envisioned can result in different accounting conclusions from those foreseen. In addition, we may incorrectly extrapolate, to future transactions, revenue recognition treatment of prior transactions that initially we believe to be similar but later are determined to have sufficiently different characteristics as to require a different revenue reporting treatment. These factors may make our financial reporting more complex and difficult for investors to understand, may make comparison of our results of operations to prior periods or other companies
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more difficult, may make it more difficult for us to give accurate guidance, and could increase the potential for reporting errors.
Our results of operations may be adversely affected if our assumptions change or if actual circumstances differ from those in our assumptions, which could cause our results of operations to fall below the expectations of securities analysts and investors, and thereby result in a decline in the trading price of our common stock.
Failure to comply with federal, state and foreign privacy, data protection, marketing and consumer protection laws, regulations and industry standards, or the expansion of current or the enactment or adoption of new privacy, data protection, marketing and consumer protection laws, regulations or industry standards, could adversely affect our business.
We Process data about consumers, including personally identifiable information or personal data, as well as other confidential or proprietary information necessary to operate our business, for legal and marketing purposes, and for other business-related purposes. We collect such information from individuals located both in the United States and abroad, and may store or Process such information outside the country in which it was collected.
The legal and regulatory framework for privacy and security issues is rapidly evolving across the globe, and is expected to increase our compliance costs and exposure to liability. We and our service providers and partners are subject to a variety of federal, state and foreign laws, regulations and industry standards regarding privacy, data protection, data security, marketing and consumer protection, which address the Processing of data relating to individuals, as well as the tracking of consumer behavior and other consumer data (“Data Protection Laws”). We are also subject to laws, regulations and industry standards relating to endorsements and influencer marketing. Many of these laws, regulations and industry standards are changing and expanding, including those that offer consumers additional privacy rights with regard to profiling and online behavioral advertising. These laws, regulations and industry standards may be subject to differing interpretations, may be inconsistent among countries, may becostly to comply with or inconsistent among jurisdictions, or may conflict with other rules, laws or Data Protection Obligations (defined below).
Various industry standards on privacy and data security have been developed and are expected to continue to develop, which standards may be adopted by industry participants at any time. We have committed to comply, and generally require our customers and partners to comply, with applicable self-regulatory principles such as the Network Advertising Initiative’s Code of Conduct and the Digital Advertising Alliance’s Self-Regulatory Principles for Online Behavioral Advertising in the U.S. Trade associations and industry self-regulatory groups have also promulgated best practices and other industry standards relating to targeted advertising. Our efforts to comply with these self-regulatory principles include offering Internet users notice and choices about when advertising is served to them based, in part, on their interests. If we, our clients or partners make mistakes in the implementation of these principles, if self-regulatory bodies expand these guidelines or government authorities issue different guidelines regarding Internet-based advertising, if opt out mechanisms fail to work as designed, or if Internet users misunderstand our technology or our commitments with respect to these principles, we may be subject to negative publicity, government investigation, government or private litigation, or investigation by self-regulatory bodies or other accountability groups. Any such action against us or investigations of us, even if meritless, could be costly and time consuming, require us to change our business practices, cause us to divert management’s attention and our resources away from business activities, and be damaging to our brand, reputation, and business. In addition, privacy advocates and industry groups may propose new and different self-regulatory standards that legally apply to us. We cannot yet determine the impact such future standards may have on our business.
We are or may also be subject to the terms of our external and internal privacy and security policies, codes, representations, certifications, industry standards, publications and frameworks (“Privacy Policies”). We are also subject to contractual obligations to third parties related to privacy, data protection, and information security and Processing, including contractual obligations to indemnify and hold harmless third parties from the costs or consequences of non-compliance with Data Protection Laws or other obligations (“Data Protection Obligations”). Our solutions depend in part on our ability to use data that we obtain in connection with our offerings, and our ability to use this data may be subject to restrictions in our commercial agreements and subject to the privacy policies of the entities that provide us with this data. Our service providers or our partners’ failure to adhere to these third-party restrictions on data use may result in claims, proceedings or actions against us by our business counterparties or other parties, or may result in our incurring other liabilities, including loss of business, reputational damage, and remediation costs, which could adversely affect our business.

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We expect that there will continue to be new Data Protection Laws and Data Protection Obligations, and we cannot yet determine the impact such future Data Protection Laws and Data Protection Obligations may have on our business. Any significant change to Data Protection Laws and Data Protection Obligations, including without limitation the manner in which the express or implied consent of customers for Processing is obtained, could increase our costs and require us to modify our operations, possibly in a material manner, which we may be unable to complete and which may limit our ability to store and Process data and operate our business. In particular, it should be noted that the AdTech industry has in the last few years received increased scrutiny from consumers, media outlets, regulators and lawmakers.Most recently this has been demonstrated by the €250,000 fine imposed on the Interactive Advertising Bureau Europe by the Belgian Data Protection Authority following an investigation into its Transparency and Consent Framework (“TCF”)--a framework adopted widely for the collection/management of consent to the use of cookies for targeted advertising in the EU. This decision will require us to reassess our reliance on the TCF.
Data Protection Laws and data protection worldwide is, and isreasonably likely to remain, uncertain for the foreseeable future, and our actual or perceived failure to address or comply with these laws could result in the following: increase our compliance and operational costs; limit our ability to market our products or services and attract new and retain current customers; limit or eliminate our ability to Process data; expose us to regulatory scrutiny, actions, investigations, fines and penalties; result in reputational harm; lead to a loss of business result in litigation and liability, including class action litigation; cause to incur significant costs, expenses and fees (including attorney fees); causehave a material adverse impact toon Quotient, its business operations or financial results; and otherwise result in other material harm to our business (“Adverse Data Protection Impact”).its value. Specifically, the Committee noted the following:
We are subject to Data Protection Laws, Privacy Policies and Data Protection Obligations as well as applicable foreign, federal, state, local and municipal laws, regulations and industry standards that relate to electronic communications, intellectual property, eCommerce, competition, price discrimination, consumer protection, taxation, and the use of promotions. We strive to comply with applicable laws, policies, contractual and other legal obligations as well as industry standards of conduct relating to privacy, data security, data protection, marketing and consumer protection to the extent possible, but we may at times fail to do so, or may be perceived to have failed to do so. These obligations and standards of conduct often are complex, vague, and difficult to comply with fully, and it is possible that these obligations and standards of conduct may be interpreted and applied in new ways and/ or in a manner that is inconsistent with each other or with new laws, regulations or other obligations that may be enacted.
Moreover, despite our efforts, we may not be successful in achieving compliance if our employees, partners or vendors do not comply with applicable Data Protection Laws, Privacy Policies and Data Protection Obligations. We may be subject to, and may experience, an Adverse Data Protection Impact if we fail (or are perceived to have failed) to comply with applicable Data Protection Laws, Privacy Policies and Data Protection Obligations, or if our Privacy Policies are, in whole or part, found to be inaccurate, incomplete, deceptive, unfair, or misrepresentative of our actual practices. In addition, any such failure or perceived failure could result in public statements against us by consumer advocacy groups, the media or others, which may cause us material reputational harm.Our actual or perceived failure to comply with Data Protection Laws, Privacy Policies and Data Protection Obligations could also subject us to litigation, claims, proceedings or actions, or to investigations by governmental entities, authorities or regulators, which could result in an Adverse Data Protection Impact including requiring changes to our business practices, causing the diversion of resources and the attention of management from our business, triggering regulatory oversights and audits, discontinuance of necessary Processing, or imposing other remedies that adversely affect our business.
We also expect that there will continue to be new laws, regulations, and industry standards concerning privacy, data protection, and information security proposed and enacted in various jurisdictions. In Europe, the General Data Protection Regulation (2016/679) (“EU GDPR”) went into effect in May 2018 and introduced strict requirements for Processing the personal data of data subjects. The EU GDPR has direct effect in all EU Member States and has extraterritorial effect where organizations outside of the European Economic Area ("EEA") Process personal data of individuals in the EEA in relation to the offering of goods or services to those individuals (“targeting test”) or the monitoring of their behavior (“monitoring test”). As such, the EU GDPR applies to us to the extent we are established in an EU Member State, we are Processing personal data in the context of an establishment in the EU, or we meet the requirements of either the targeting test or the monitoring test. Companies that must comply with the EU GDPR face increased compliance obligations and risk, including more robust regulatory enforcement of data protection requirements, an order prohibiting Processing of personal data of data subjects, and potential fines for noncompliance of up to €20 million, or 4% of consolidated annual worldwide gross revenues, whichever is
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Good balance of fixed and variable pay does not encourage excessive risk taking





greater. The EU also confers a private right of action on data subjects and consumer associations to lodge complaints with supervisory authorities, seek judicial remedies, and obtain compensation for damages resulting from violations of the EU GDPR.

Under the EU GDPR, we may be required to put in place additional mechanisms to ensure compliance. These include, among other things: (i) accountability and transparency requirements, and enhanced requirements for obtaining valid consent; (ii) obligations to consider data protection as any new products or services are developed, and to limit the amount of personal data processed; (iii) obligations to implement appropriate technical and organizational measures to safeguard personal data and to report certain personal data breaches to the supervisory authority without undue delay (and no later than 72 hours where feasible); and (iv) obligations to provide individuals with various data protection rights (e.g., the right to erasure of personal data).
European data protection laws including the EU GDPR also prohibit the transfer of personal data from Europe to the United States and other countries ("third countries") that are not recognized as having “adequate” data protection laws unless the parties to the transfer have implemented specific safeguards to protect the transferred personal data. One of the primary safeguards allowing U.S. companies to import personal data from Europe has historically been certification to the EU-U.S. Privacy Shield and Swiss-U.S. Privacy Shield frameworks administered by the U.S. Department of Commerce. However, the Court of Justice of the European Union, in the “Schrems II” ruling in 2020, invalidated the EU-U.S. Privacy Shield framework for purposes of international transfers. The Swiss Federal Data Protection and Information Commissioner also opined that the Swiss-U.S. Privacy Shield is inadequate for transfers of personal data from Switzerland to the U.S. While negotiations continue, it is unclear when a successor to the Privacy Shield framework will be available.
The Schrems II decision also imposed further restrictions on the use of one of the primary alternatives to the EU-U.S. Privacy Shield, namely, the European Commission’s Standard Contractual Clauses (“SCCs”), including a requirement for companies to carry out a transfer privacy impact assessment which, among other things, assesses laws governing access to personal data in the recipient country and considers whether supplementary measures that provide privacy protections additional to those provided under SCCs will need to be implemented to ensure an essentially equivalent level of data protection to that afforded in the EU. At present, there are few, if any, viable alternatives to the SCCs.
The European Commission recently adopted new EU SCCs which impose onerous obligations on the contracting parties. These new EU SCCs must be used in all new contracts going forward (where there are restricted transfers of personal data), with existing contracts entered into before September 27, 2021 requiring updating by December 27, 2021. As such, any transfers by us or our vendors of personal data from Europe may not comply with European data protection law; may increase our exposure to the EU GDPR’s heightened sanctions for violations of its cross-border data transfer restrictions; and may reduce demand from companies subject to European data protection laws. Moreover, where we rely on SCCs, we must in certain cases now evaluate and implement supplementary measures that provide privacy protections additional to those provided under SCCs. This evaluation will, in particular, include an assessment as to whether the types of personal data transferred pursuant to SCCs may be subject to government surveillance in the data importer’s country, and an assessment as to whether the data importer can meet its contractual obligations under the SCCs.Additionally, other countries outside of Europe have enacted, or are considering enacting, similar cross-border data transfer restrictions and laws requiring local data residency, which could increase the cost and complexity of delivering our products and operating our business.
Compliance with the EU GDPR involves rigorous and time-intensive processes that may increase our cost of doing business or require us to change our business practices. There may also be a risk that the measures will not be implemented correctly or that individuals within the business will not be fully compliant with the required procedures.
Further, following the UK's exit from the EU ("Brexit"), the EU GDPR’s data protection obligations continue to apply to the United Kingdom in substantially unvaried form under the so called “UK GDPR” (i.e., the EU GDPR as it continues to form part of law in the UK by virtue of section 3 of the European Union (Withdrawal) Act 2018, as amended (including by the various Data Protection, Privacy and Electronic Communications (EU Exit) Regulations)). The UK GDPR exists alongside the UK Data Protection Act 2018 that implements certain derogations in the UK GDPR into UK law.Under the UK GDPR, companies not established in the UK but who process personal information in relation to the offering of goods or services to individuals in the UK, or to monitor their behavior, will be subject to the UK GDPR – the requirements of which are (at this time) largely aligned with those under the EU
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GDPR,Good mix of short-term and as such may lead to similar compliance and operational costs with potential fines of up to £17.5 million or 4% of global turnover. As a result we are potentially exposed to two parallel data protection regimes, each of which authorizes fines and the potentiallong-term pay for divergent enforcement actions. It should also be noted that the new EU SCCs do not automatically apply in the UK since Brexit. However, on January 28, 2022, the UK Government laid before the UK Parliament its International Data Transfer Agreement (IDTA) and International Data Transfer Addendum (UK Addendum) to the new EU SCCs. If no objections are raised by the UK Parliament, the IDTA and the UK Addendum will come into force on March 21, 2022. The UK Information Commissioner’s Office (ICO) is also expected to shortly publish its version of the transfer impact assessment.
Any failure or perceived failure by us to comply with applicable laws and regulations or any of our other legal obligations relating to privacy, data protection, or information security may result in governmental investigations or enforcement actions, litigation, claims, or public statements against us, Any of the foregoing could also result in significant liability or cause our customers to lose trust in us, any of which could have an adverse effect on our reputation, operations, financial performance and business. Furthermore, the costs of compliance with, and other burdens imposed by, the laws, regulations, and policies that are applicable to the businesses of our customers may limit the adoption and use of, and reduce the overall demand for, our products and services.
In the United States, Data Protection Laws include rules and regulations promulgated under the authority of the Federal Trade Commission, the Electronic Communications Privacy Act, the Computer Fraud and Abuse Act, the CCPA and other similar state comprehensive privacy laws, and other state and federal laws relating to privacy and data security. The CCPA requires companies that process information on California residents to make new disclosures to consumers about their data collection, use and sharing practices, allows consumers to opt out of the sale of personal information with third parties, and provides a private right of action and statutory damages for data breaches. The CCPA may increase our compliance costs and potential liability. In addition, the California Privacy Rights Act of 2020, or CPRA, is scheduled to take effect on January 1, 2023, and would, among other things, give California residents the ability to limit the use of their sensitive information, provide for penalties for CPRA violations concerning California residents under the age of 16, and establish a new California Privacy Protection Agency to implement and enforce the law. The enactment of the CCPA is prompting a wave of similar legislative developments in other states in the United States, including laws already passed in Virginia and Colorado that will go into effect in 2023, which could create the potential for a patchwork of overlapping but different state laws and more stringent United States privacy requirements, which in turn could increase our potential liability and adversely affect our business, results of operations, and financial condition. Compliance with the increasing number of newly enacted privacy and data security laws and regulations may be challenging, costly and time-intensive, and we may be required to put in place additional mechanisms to comply with applicable legal requirements. Such laws and pending legislative initiatives, to the extent that they become privacy and data security laws or regulations in various states, may have potentially conflicting requirements that would make compliance challenging. Some countries also are considering or have passed legislation requiring local storage and Processing of data, or similar requirements, which could increase the cost and complexity of providing our products and services and other aspects of our business.
We expect that there will continue to be new proposed laws, regulations and industry standards concerning privacy, data protection and information security in the United States and other jurisdictions, and we cannot yet determine the impact such future laws, regulations and standards may have on our business. With laws and regulations in the EU,the United Kingdom,the United States, and other global jurisdictions imposing new and potentially costly or disruptive obligations, and with substantial uncertainty over the interpretation and application of these and other laws and regulations, there is a risk that the requirements of these laws and regulations, or of contractual or other obligations relating to privacy, data protection, or information security, could be interpreted or applied in a manner that is, or is alleged to be, inconsistent with our management and Processing practices, our policies or procedures, or our products and services.For instance, given the increasedofficers prevents undue focus on the useshort-term results, and overlapping vesting periods for equity awards exposes management to consequences of data for advertising, the anticipation and expectation of future laws, regulations, standards and other obligations could impact us and our existing and potential business partners and delay certain business partnerships or deals until there is greater certainty. In addition, as we expand our data analytics and other data-related product offerings, there may be increased scrutiny on our use of data, and we may be subject to new and unexpected regulations, including proposals for regulation of artificial intelligence. Future laws, regulations, standards and other obligations could, for example, impair our ability to collect or use information that we utilize to provide targeted digital promotions and media to consumers, advertisers and retailers, thereby impairing our ability to maintain and grow our total customers and increase revenues. Future restrictions on the collection, use, sharing or disclosure of our users’ data, or additional requirementsforexpressorimpliedconsentofusersfortheuseanddisclosureofsuch
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information,couldrequireus to modify our solutions, possibly in a material manner, and could limit our ability to develop or outright prohibit new solutions and features.
We may face challenges in addressing the requirements of any such new laws, regulations, other legal obligations or industry standards, or any changed interpretation of existing laws, regulations or other standards and making necessary changes to our policies and practices, and such changes may require us to incur additional costs and restrict our business operations. Although we endeavor to comply with our Privacy Policies and other privacy, data protection or information security-related obligations, we may at times fail to do so or may be perceived to have failed to do so. Moreover, despite our efforts, we may not be successful in achieving compliance if our employees or vendors do not comply with our Privacy Policies and other privacy, data protection or information security obligations. Any failure or perceived failure by us to comply with our Privacy Policies and our privacy, data protection, or information security-related obligations to customers or other third parties, or our failure to comply with any of our other legal obligations relating to privacy, data protection, information security, marketing or consumer protection could subject us to litigation, regulatory investigations, fines or other liabilities, as well as negative publicity or public statements against us by consumer advocacy groups or others and could result in significant liability or cause a loss of trust in us, which could have an adverse effect on our reputation and business. Furthermore, the costs of compliance with, and other burdens imposed by, the laws, regulations, and policies that are applicable to the businesses of our customers may limit the adoption and use of, and reduce the overall demand for, our products and services. Moreover, if future laws, regulations, other legal obligations or industry standards, or any changed interpretations of the foregoing limit users’, advertisers’ or retailers’ ability to use and share personally identifiable information or our ability to store, process and share personally identifiable information or other data, demand for our solutions could decrease, our costs could increase, our revenue growth could slow, and our business, financial condition and operating results could beharmed.
Additionally, if third parties we work with, such as vendors or developers, violate Data Protection Laws, Privacy Policies and Data Protection Obligations, such violations may also put our customers’ content at risk and could in turn have an adverse effect on our business. Any significant change to Data Protection Laws, Data Protection Obligations or industry practices regarding the collection, use, retention, security or disclosure of our customers’ content, or regarding the manner in which the express or implied consent of customers for the collection, use, retention or disclosure of such content is obtained, could increase our costs and require us to modify our products and services, possibly in a material manner, which we may be unable to complete and which may limit our ability to store and Process customer data or develop new applications and features.
We may be required to record a significant charge to earnings if our goodwill or amortizable intangible assets become impaired.
We are required under U.S. GAAP to review our amortizable intangible assets for impairment when events or changes in circumstances indicate the carrying value may not be recoverable. Goodwill is required to be tested for impairment at least annually. Conditions that would necessitate an impairment assessment include a significant decline in the observable market value of an asset, a significant change in the extent or manner in which an asset is used, or any other significant adverse change that would indicate that the carrying amount of an asset or group of assets may not be recoverable. The events and circumstances we consider include the business climate, legal factors, operating performance indicators and competition. In the future we may be required to record a significant charge to earnings in our consolidated financial statementsdecision-making during the period in which any impairment of our goodwill or amortizable intangible assets is determined. The determinationrisks would materialize
Revenue and recording of a significant impairment charge could adversely impact our results of operations, as for example occurred duringAdjusted EBITDA metrics fund the third quarter of 2021 in connection with the circumstances surrounding the termination of our partnership with Albertsons,Annual Incentive Plan, and also could harm our business.
Changes to financial accounting standards or the SEC’s rules and regulations may affect our financial statements and cause us to change our business practices.
We prepare our financial statements to conform to U.S. GAAP. These accounting principlespayouts are subject to interpretation by the FASB, American Institute of Certified Public Accountants (“AICPA”), the SEC and various bodies formed to interpret and create appropriate accounting policies. A change in those policies can have a significant effect on our reported results and may affect our reporting of transactions completed before a change is announced. Changes to those rules or the questioning of current practices may adversely affect our reported financial results or the way we conduct our business. For example, in August 2020, the FASB issued a new standard ASU 2020-06, Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity, whichmaximum cap
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Executive compensation is reviewed annually, including updates to the peer group





generally requires companies to report our convertible debt instrument as
Compensation Committee retains an independent compensation consultant
Robust share ownership guidelines for executive officers
Existence of a single liability instrumentcompany-wide Code of Conduct Policy
Robust prohibition against short sales, hedging and pledging activity
Severance and Change of Control
We believe that severance and change of control protections play valuable roles in attracting and retaining executive officers. The Company entered into severance and change of control agreements (each a “Change of Control Severance Agreement” and collectively the “Change of Control Severance Agreements”) with no separate accounting for the embedded conversion features. Additionally, this ASU amends the diluted earnings per share calculation for convertible instruments by requiring the useMessrs. Boal, Raskin and Krepsik and Mses. Strayer and Chen. Details of the if-converted method. The treasury stock method is no longer available. This new standard became effective for us beginning January 1, 2022.
If we fail to maintain an effective system of disclosure controls and internal control over financial reporting, our ability to produce timely and accurate financial statements or comply with applicable regulations could be impaired.
We are subject to the reporting requirements of the Exchange Act, Sarbanes-Oxley ("SOX"), and the rules and regulations of the New York Stock Exchange, or the NYSE. We expectseverance payments that the requirements of these rules and regulations will continue to increase our legal, accounting and financial compliance costs, make some activities more difficult, time consuming and costly, and place significant strain on our personnel, systems and resources.
SOX requires, among other things, that we maintain effective disclosure controls and procedures and internal control over financial reporting. Our ability to comply with internal control reporting requirements depends on the effectiveness of our financial reporting and data systems and controls across our company. We are continuing to develop and refine our disclosure controls and other procedures that are designed to ensure that information required to be disclosed by us in the reports that we will file with the SEC is recorded, processed, summarized and reported within the time periods specified in SEC rules and forms, and that information required to be disclosed in reports under the Exchange Act is accumulated and communicated to our principal executive and financial officers. We are also continuing to improve our internal control over financial reporting. In order to maintain and improve the effectiveness of our disclosure controls and procedures and internal control over financial reporting, we have expended, and anticipate that we will continue to expend, significant resources, including accounting-related costs and significant management oversight. Any failure to implement and maintain effective internal control over financial reporting also could adversely affect the results of periodic management evaluations and annual independent registered public accounting firm attestation reports regarding the effectiveness of our internal control over financial reporting that we will be required to include in our periodic reports we will file with the SEC under Section 404 of SOX. In the event that we are not able to demonstrate compliance with Section 404 of SOX, that our internal control over financial reporting is perceived as inadequate or that we are unable to produce timely or accurate financial statements, investors may lose confidence in our operating results and our stock price could decline.
Our current controls and any new controls that we develop may become inadequate because of changes in conditions in our business. Further, weaknesses in our disclosure controls or our internal control over financial reporting may be discovered in the future. Any failure to develop or maintain effective controls, or any difficulties encountered in their implementation or improvement, could harm our operating results or cause us to fail to meet our reporting obligations and could result in a restatement of our financial statements for prior periods. Any failure to implement and maintain effective internal control over financial reporting also could adversely affect the results of management evaluations and independent registered public accounting firm audits of our internal control over financial reporting that we will eventually be required to include in our periodic reports that will be filed with the SEC. Ineffective disclosure controls and procedures and internal control over financial reporting could also cause investors to lose confidence in our reported financial and other information, which would likely have a negative effect on the trading price of our common stock. In addition, if we are unable to continue to meet these requirements, our common stock may not be able to remain listed on the NYSE.
Any failure to maintain effective disclosure controls and internal control over financial reporting could have a material and adverse effect on our business and operating results, and cause a decline in the price of our common stock.
State and foreign laws regulating money transmission could impact our rebates solutions.
Many states and certain foreign jurisdictions impose license and registration obligations on those companies engaged in the business of money transmission, with varying definitions of what constitutes money transmission. If our rebates solutions were to subject us to any applicable state or foreign laws, it could subject us to increased compliance costs and delay our ability to offer this product in certain jurisdictions pending receipt of any necessary licenses or registrations. If we need to make product and operational changes in light of these laws, the growth and adoption of these products may be adversely impacted, and our revenues may negatively affected.
Our ability to use our net operating losses to offset future taxable income may be subject to certain limitations.
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In general, under Section 382 of the U.S. Internal Revenue Code of 1986, as amended, or the Code, and similar state law provisions, a corporation that undergoes an “ownership change” is subject to limitations on its ability to utilize its pre-change net operating losses, or NOLs, to offset post-change taxable income. If we have experienced an ownership change our existing NOLs may be subject to limitations under Section 382 of the Code. Future changes in our stock ownership, some of which are outside of our control despite our having adopted a "tax benefits preservations plan" (as hereinafter defined) in November of 2021, also could result in an ownership change under Section 382 of the Code. Additionally, our NOLs arising in tax years beginning prior to January 1, 2018 are subject to expiration and may expire prior to being utilized. Under the 2017 Tax Cuts and Jobs Act (the "Tax Act"), as modified by the Coronavirus Aid, Relief and Economic Security Act (the "CARES Act"), NOLs arising in tax years beginning after December 31, 2017, are not subject to expiration and may be carried forward indefinitely, but the deductibility of such NOLs in tax years beginning after December 31, 2020, is limited to 80% of taxable income. It is uncertain if and to what extent various states will conform to the Tax Act or the CARES Act.
On November 11, 2021, we adopted a tax benefits preservation plan to protect the value of tax assets associated with NOL carryforwards under Section 382 of the Code against a potential change in ownership as defined in Section 382. However, the tax benefits preservations plan does not guarantee against such a change in ownership.
There is also a risk that our NOLs could otherwise be unavailable to offset future income tax liabilities due to changes in the law, including regulatory changes, such as suspensions on the use of NOLs or other unforeseen reasons. In addition, at the state level, there may be periods during which the use of net operating loss carryforwards is suspended or otherwise limited, which could accelerate or permanently increase state taxes owed. We do not expect this to have a material impact on our financial statements because we currently maintain a full valuation allowance on our U.S. deferred tax assets. For these reasons, we may not be able to utilize all of our NOLs, even if we attain profitability.
Changes in the U.S. and foreign tax law or challenges by taxing authorities of the jurisdictions in which we operate could increase our worldwide effective tax rate and have a negative effect on our financial position and results of operations.
Changes in the U.S. taxation of international activities may increase our worldwide effective tax rate and harm our financial condition and results of operations. The taxing authorities of the jurisdictions in which we operate may challenge our methodologies for valuing developed technology or intercompany arrangements, including our transfer pricing, or determine that the manner in which we operate our business does not achieve the intended tax consequences, which could increase our worldwide effective tax rate and harm our financial position and results of operations. Significant judgment will be required in evaluating our tax positions and determining our provision for income taxes. During the ordinary course of business, there will be many transactions and calculations for which the ultimate tax determination is uncertain. As we expand our business to operate in numerous taxing jurisdictions, the application of tax laws may be subject to diverging and sometimes conflicting interpretations by tax authorities of these jurisdictions. It is not uncommon for taxing authorities in different countries to have conflicting views. In addition, tax laws are dynamic and subject to change as new laws are passed and new interpretations of the law are issued or applied. New income, sales, use or other tax laws, statutes, rules, regulations or ordinances could be enacted at any time, which could adversely affect our business operations and financial performance.
Further, existing tax laws, statutes, rules, regulations or ordinances could be interpreted, changed, modified or applied adversely to us. For example, Tax Act enacted many significant changes to the U.S. tax laws. Future guidance from the Internal Revenue Service and other tax authorities with respect to the Tax Act may affect us, and certain aspects of the Tax Act could be repealed or modified in future legislation. For example, the CARES Act modified certain provisions of the Tax Act. In addition, it is uncertain if and to what extent various states will conform to the Tax Act, the CARES Act, or any newly enacted federal tax legislation. Changes in corporate tax rates, the realization of net deferred tax assets relating to our operations, the taxation of foreign earnings, and the deductibility of expenses under the Tax Act or future reform legislation could have a material impact on the value of our deferred tax assets, could result in significant one-time charges, and could increase our future U.S. income tax expense.
Risks Related to Our Platforms, Technology and Intellectual Property
If our security measures or information we collect and maintain are compromised or publicly exposed, advertisers, retailers and consumers may curtail or stop using our platforms and we could be subject to claims, penalties and fines.
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We process data about consumers, including personally identifiable information or personal data, as well as other confidential or proprietary information necessary to operate our business, for legal and marketing purposes, and for other business-related purposes.
While we and our third-party service providers have implemented security measures designed to protect against security breaches, like all businesses that use computer systems and the Internet, our security measures, as well as those of companies we may acquire and our third-party service providers and partners, could fail or may be insufficient, resulting in the unauthorized disclosure, modification, misuse, unavailability, destruction, or loss of our or our customers’ data or other sensitive information. Any security breach of our operational systems, physical facilities, or the systems of our third-party partners, or the perception that one has occurred, could result in litigation, indemnity obligations, regulatory enforcement actions, investigations, fines, penalties, mitigation and remediation costs, disputes, reputational harm, diversion of management’s attention, and other liabilities and damage to our business. Even though we do not control the security measures of third parties, we may be responsible for any breach of such measures or suffer reputational harm even where we do not have recourse to the third party that caused the breach. In addition, any failure by our retail partners or other third-party partners to comply with applicable law or regulations could result in proceedings against us by governmental entities or others.
Cyberattacks, denial-of-service attacks, ransomware attacks, business email compromises, computer malware, viruses, social engineering (including phishing) and other malicious internet-based activity are prevalent in our industry, and our customers and partners’ industries, and continue to increase. In addition, we may experience software or other code vulnerabilities, attacks, unavailable systems, unauthorized access or disclosure due to employee or other theft or misuse, denial-of-service attacks, sophisticated attacks by nation-state and nation-state supported actors, and advanced persistent threat intrusions. We and our third party service providers regularly defend against and respond to a variety of cybersecurity attacks and incidents. Despite our efforts to ensure the security, privacy, integrity, confidentiality, availability and authenticity of the IT networks and systems, processing and information, we may not be able to anticipate or to implement effective preventive and remedial measures against, or adequately respond to mitigate the impact of, all data security and privacy threats and attacks. We cannot guarantee that the recovery systems, security protocols, network protection mechanisms and other security measures that we have integrated into our systems, networks and physical facilities, which are designed to protect against, detect and minimize security breaches, will be adequate to prevent or detect service interruption, system failure data loss or theft, or other material adverse consequences. No security solution, strategy, or measures can address all possible security threats or block all methods of penetrating a network or otherwise perpetrating a security incident. The risk of unauthorized circumvention of our security measures, or those of our third-party providers, clients and partners, has been heightened by advances in computer and software capabilities and the increasing sophistication of hackers who employ complex techniques, including without limitation the theft or misuse of personal and financial information, counterfeiting, “phishing” attacks (including those directed toward SMS/texting services) or social engineering incidents, ransomware, extortion, publicly announcing security breaches, account takeover attacks, denial or degradation of service attacks, malware, fraudulent payment and identity theft. The techniques used to sabotage, disrupt or to obtain unauthorized access to our applications, systems, networks, or physical facilities in which data is stored or through which data is transmitted change frequently, and we may be unable to implement adequate preventative measures or stop security breaches while they are occurring. The recovery systems, security protocols, network protection mechanisms and other security measures that we have integrated into our applications, systems, networks and physical facilities, which are designed to protect against, detect and minimize security breaches, may not be adequate to prevent or detect service interruption, system failure or data loss. Additionally, to provide protection against the occurrence of a cybersecurity event, we rely on the IT professionals within our organization to monitor, diagnose and remediate threats arising within our network. To the extent we experience attrition in this area and are required to shift workloads, or acquire and train supplementary IT talent, we could face increased risks of experiencing a materially harmful cybersecurity event.
In addition, our applications, systems, networks, and physical facilities could be breached, or personal information could be otherwise compromised, due to employee error or malfeasance if, for example, third parties attempt to fraudulently induce our employees, customers or partners to disclose information or user names and/or passwords, or otherwise compromise the security of our networks, systems and/or physical facilities. Third parties may also exploit vulnerabilities in, or obtain unauthorized access to, platforms, applications, systems, networks and/or physical facilities utilized by our vendors. We have been, and may in the future become, the target of cyber-attacks by third parties seeking unauthorized access to our or our customers or partners’ data or to disrupt our operations or ability to provide our services. While we have been successful in preventing such unauthorized access and disruption in the past, we may not continue to be successful against these or other attacks in the future.
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Due to the COVID-19 pandemic, a high percentage of our employees are temporarily working remotely, which may pose additional data security risks. These risks will continue as we intend to adopt a hybrid work policy upon our offices re-opening for all employees. If we, or our service providers and partners, experience compromises to security that result in performance or availability problems, or experience the complete shutdown of one or more of our platforms, digital properties and mobile applications, or suffer the misuse, loss or unauthorized access to or disclosure of confidential information, personally identifiable information or other personal or proprietary data, advertisers, retailers, and consumers may lose trust and confidence in us and decrease their use of our platforms or stop using our platforms entirely. Such compromises to personal or sensitive information or proprietary data could lead to litigation or other adversarial actions by business partners such as retailers or consumers.
The costs to respond to a security breach and/or to mitigate any security vulnerabilities that may be identified could be significant, our efforts to address these problems may not be successful, and these problems could result in unexpected interruptions, delays, cessation of service, negative publicity, and other harm to our business and our competitive position.We could be required to fundamentally change our business activities and practices in response to a security breach or related regulatory actions or litigation, which could have an adverse effect on our business.
We have contractual and legal obligations to notify relevant stakeholders of security breaches. Most jurisdictions have enacted laws requiring companies to notify individuals, regulatory authorities, and others of security breaches involving certain types of data. In addition, our agreements with certain customers and partners may require us to notify themapply in the event of terminations inside and outside a security breach involving customerchange of control period are detailed under “Potential Payments upon Termination, Change of Control or partner data onCertain Other Events”. As part of a standard periodic review, all change of control agreements underwent analysis against market and peer benchmarks. No changes were made to the Change of Control Severance Agreements with our systemsCEO or those of subcontractors processing customer or partner data on our behalf. Such mandatory disclosures are costly, could lead to negative publicity, may cause our customers to lose confidence in the effectivenessany of our security measures,other NEOs in 2021. However, in April 2022 changes were made to the Change of Control Severance Agreements of Messrs. Raskin and require usKrepsik, and Ms. Chen. Pease see “Potential Payments upon Termination, Change of Control or Certain Other Events”.
Tax and Accounting Implications
Under Financial Accounting Standard Board ASC Topic 718 we are required to expend significant capitalestimate and other resourcesrecord an expense for each award of equity compensation over the vesting period of the award. We record share-based compensation expense on an ongoing basis according to respond to or alleviate problems caused byASC 718.
Section 162(m) of the actual or perceived security breach may cause us to breach customer contracts. DependingCode places a limit of $1 million on the facts and circumstances of such an incident, these damages, penalties and costs could be significant and may not be covered by insurance, or could exceed our applicable insurance coverage limits. Such an event also could harm our reputation and result in litigation against us. Any of these results could materially adversely affect our financial performance. Our agreements with certain customers may require us to use industry-standard, reasonable, or other specified measures to safeguard sensitive personal information or confidential information, and any actual or perceived breach of such measures may increase the likelihood and frequency of customer audits under our agreements, which is likely to increase the costs of doing business. An actual or perceived security breach could lead to claims by our customers or other relevant stakeholders that we have failed to comply with such legal or contractual obligations. As a result, we could be subject to legal action or our customers could end their relationships with us. There can be no assurance that any limitations of liability in our contracts, which we have in certain agreements, would be enforceable or adequate or would otherwise protect us from liabilities or damages.
Litigation resulting from security breaches may adversely affect our business. Unauthorized access to our applications, systems, networks, or physical facilities could result in litigation with our customers or other relevant stakeholders. These proceedings could force us to spend money in defense or settlement, divert management’s time and attention, increase our costs of doing business, or adversely affect our reputation. We could be required to fundamentally change our business activities and practices, or to modify our business and operational capabilities in response to such litigation, which could have an adverse effect on our business. If a security breach were to occur, and the confidentiality, integrity or availability of our data or the data of our partners or our customers were to be disrupted, we could incur significant liability, or our applications, systems or networks may be perceived as less desirable, which could negatively affect our business and damage our reputation.
If we fail to detect or remediate a security breach in a timely manner, or a breach otherwise affects a large amount of data of one or more of our customers or partners, or if we suffer a cyberattack that impacts our ability to operate our applications, systems or networks, we may suffer material damage to our reputation, business, financial condition and results of operations. Further, we may not have adequate insurance coverage for security incidents or breaches, including fines, judgments, settlements, penalties, costs, attorney fees and other impacts that arise out of incidents or breaches. Depending on the facts and circumstances of such an incident, the damages, penalties and costs could be significant and may not be covered by insurance, or could exceed our applicable insurance coverage limits. If the impacts of a security incident or breach, or the successful assertion of one or more large claims against us that exceeds our available insurance coverage, or results in changes to our insurance policies (including premium increases or the imposition of largecompensation deductible or co-insurance requirements), it could have an adverse effect on our business. In addition, we cannot be sure that our existing insurance coverage and coverage for errors
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and omissions will continue to be available on acceptable terms or that our insurers will not deny coverage as to all or part of any future claim or loss. Our risks are likely to increase as we continue to expand our applications, systems, or networks, grow our customer base, and Process, store, and transmit increasingly large amounts of proprietary and sensitive data.
Remediation of any potential cyber security breach may involve significant time, resources and expenses, whichmayresultinpotentialregulatoryinquiries,litigationorotherinvestigations,andcouldaffectourfinancialand operationalcondition.
Our ability to generate revenue and properly capture the occurrence of certain revenue-generating events depends on the collection, reliability, and use of significant amounts of data from various sources, which may be restricted by consumer choice, restrictions imposed by retailers, publishers and browsers or other software developers, changes in technology, and new developments in laws, regulations and industry requirements or standards.
Our ability to generate revenue, and properly capture the occurrence of certain revenue-generating events, depends on the collection, reliability, and use of significant amounts of data from various sources, including data that we receive from retailers and other parties. Additionally, our ability to deliver our solutions depends on our ability to successfully leverage data, including data that we collect from consumers, data we receive from retailers and other parties, and data from our own operating history. Using loyalty card numbers both online and in-store, device identifiers (including Google AdID and Apple IDFA), cookies, and other tracking technologies, we, our retail partners and other data providers collect information about the interactions of consumers with our retail partners’ digital properties and in-store, our owned and operated properties, and certain other publisher sites and mobile applications, as well as other data such as location. We may enhance this data with other data, such as demographic information that we obtain from data providers.
As an example, for certain media campaigns, we receive tracking information from the systems of retailers, their service providers, and other third parties. If those parties fail to provide us information, fail to provide information in a timely fashion, or provide incorrect information, or if for other reasons we are unable to properly track such information, our results of operations and our ability to timely determine our revenue share payment obligation to retailers could be adversely impacted. Additionally, our ability to successfully leverage such data depends on our continued ability to access and use data from various sources, which can be restricted by a number of factors, including consumer choice; the successcompany in obtaining consumer consent; restrictions imposed by our retail and other data partners or other third parties, publishers and web browser developers or other software developers; changes in technology, including changes in web browser technology; and new developments in, or new interpretations of laws, regulations and industry standards. For example, Apple in 2021 began implementing several changes to iOS that will require consumers to opt-in to sharing data with publisher sites and app, which may adversely impact our business. Consumer resistance to the collection and sharing of the data used to deliver targeted advertising, increased visibility of consent or “do not track” mechanism as a result of industry regulatory and/or legal developments, the adoption by consumers of browsers settings or “ad-blocking” software and the development and deployment of new technologies could materially impact our ability to collect data or reduce our ability to deliver relevant promotions or media, which could materially impair the results of our operations. See the risk factor above titled “Our business is subject to complex and evolving laws, regulations and industry standards, and unfavorable interpretations of, or changes in, or failure by us to comply with these laws, regulations and industry standards could substantially harm our business and results of operations” for additional information.
In addition, unfavorable publicity and negative public perception about our industry, or data collection and use, could adversely affect our business and operating results. With the growth of online advertising and eCommerce, there is increasing awareness and concern among the general public, privacy advocates, mainstream media, governmental bodies and others regarding marketing, advertising, and privacy matters, particularly as they relate to individual privacy interests. Any unfavorable publicity or negative public perception about our use of data, or about data-focused industries, could affect our business and results of operations, and may lead digital publishers like Facebook to change their business practices or trigger additional regulatory scrutiny or lawmaking that could affect us. Negative public attention could cause advertisers or our retail partners to discontinue using our targeted advertising solutions and limit our ability to measure campaigns delivered through our platforms. This public scrutiny may also lead to general distrust of data and marketing companies, consumer reluctance to share and permit use of personal data, and increased consumer opt-out rates, any of which circumstances could negatively influence, change or reduce our current and prospective customers’ demand for our products and services and adversely affect our business and operating results.
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If the use of mobile device identifiers, third-party cookies or other tracking technology is rejected by consumers, restricted by third parties outside of our control, or otherwise subject to unfavorable regulation, the benefits of our offerings and solutions could diminish, our data and media acquisition costs could increase and we could lose customers and revenue.
We and our third-party partners use, or might opt to use, a number of technologies to collect information used to deliver our solutions. For instance, mobile device identifiers such as Apple IDFA and Google AdID help us and our third-party partners identify, target and measure relevant promotions and media to consumers. Advertising shown on mobile applications can also be affected by blocking or restricting use of mobile device identifiers. Data regarding interactions between users and devices are tracked mostly through stable, pseudonymous advertising identifiers that are built into the device operating system with privacy controls that allow users to express a preferenceone year with respect to data collection for advertising, includingcompensation paid to disable the identifier. These identifiers and privacy controls are defined by the developers of the platforms through which the applications are accessed and could be changed by the platforms in ways that could impair our ability to deliver, target, or measure the effectiveness of our solutions, any of which may negatively impact our business. In addition, mobile operating system and browser providers have implemented product changes and have announced additional planned changes to limit the ability of websites and application developers to collect and use these mobile device identifiers and other data to target and measure advertising. For example, in April 2021 Apple shifted to require user opt-in before permitting access to Apple’s unique identifier, or IDFA. This shift from enabling user opt-out to an opt-in requirement is likely to have a substantial impact on the mobile advertising ecosystem, increase data and media acquisition costs, and could harm our growth.
Our platforms use location data to localize and deliver geographically relevant content to shoppers. For instance, our DOOH solution tracks a mobile device user’s geographical proximity to the public DOOH display so that localized relevant marketing campaigns will be displayed to the user when they are nearby. Our ability to obtain and use location data could also become limited by consumer choice and subject to privacy-related restrictions.If such restrictions and regulations negatively impact our ability to use location data in our solutions, such as our ability to track identifiable mobile device users within the proximity of DOOH display screens, there could be less customer demand for our platforms and solutions and our business and revenue would be negatively impacted.
We also use small text files (referred to as "cookies"), placed through an Internet browser on a consumer's machine which corresponds to a data set that we keep on our servers, to gather important data to help deliver our solution. Certain of our cookies, including those that we predominantly use in delivering our solutions through Internet browsers, are known as "third-party" cookies because they are delivered by third parties rather than by us. Our cookies collectinformation, such as when a consumer views an advertisement, clicks on an advertisement or visits one of our advertisers' websites. In some countries, including countries in the European Economic Area, and certain states within the United States such as California, this information may be considered personal information under applicable data protection laws. When a consumer interacts with our solutions on a mobile device, we may also obtain location-based information about the user's device through our cookies or other tracking technologies. We use these technologies to achieve our customers' campaign goals, to ensure that the same consumer does not unintentionally see the same media too frequently, to report aggregate information to our customers regarding the performance of their digital promotions and marketing campaigns, and to detect and prevent fraudulent activity throughout our network. We also use data from cookies to help us decide whether and how much to bid on an opportunity to place an advertisement in a certain Internet location and at a given time in front of a particular consumer. A lack of data associated with or obtained from third-party cookies may detract from our ability to make decisions about which inventory to purchase for a customer's campaign, and thereby may adversely affect the effectiveness of our solution and harm our business.
Cookies may be deleted or blocked by consumers. The most commonly used Internet browsers (including Chrome, Firefox, and Safari) allow their users to prevent cookies from being accepted by their browsers. Consumers can also delete cookies from their computers. Some consumers also download "ad blocking" software that prevents cookies from being stored on a user's computer. If more consumers adopt these settings or delete their cookies more frequently than they currently do, our business could be negatively affected. In addition, certain web browsers may block third-party cookies by default. For example, Apple previously released an update to its Safari browser that limits the use of cookies, and other browsers may do so in the future. Unless such default settings in browsers are altered by consumers to permit the placement of third-party cookies, we would be able to set fewer of our cookies in users’ browsers, which reduces our ability to achieve our customers' campaign goals, measure performance of these campaigns, and detect and fraudulent activity, any of which could adversely affect our business. In addition, companies such as Google have publicly disclosed their intention to move away from cookies to another form of persistent unique identifier, or ID, to identify individual consumers or Internet-connected
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devices in the bidding process on advertising exchanges. If companies do not use shared IDs across the entire ecosystem, this could have a negative impact on our ability to find the same user across different web properties, and reduce the effectiveness of our solutions.
In addition, the EU Directive 2009/136/EC, commonly referred to as the "Cookie Directive," directs EU Member States to ensure that collecting information on a consumer's computer, such as through a cookie, is allowed only if the consumer has appropriately given his or her prior freely given, specific, informed and unambiguous consent. Similarly, this Directive, which also contains specific rules for the sending of marketing communications, limits the use of marketing texts messages and e-mails. Additionally, the "e-Privacy Regulation", which will replace the Cookie Directive with requirements that could be stricter in certain respects, will apply directly to activities within the EU without the need to be transposed in each Member State’s Law, and could impose stricter requirements regarding the use of cookies, marketing e-mails and text messages. Additional penalties for noncompliance have been proposed in connection with the e-Privacy Regulation, although at this time it is unclear whether the e-Privacy Regulation will be approved as it is currently drafted or when its requirements will be effective. We may experience challenges in obtaining appropriate consent to our use of cookies from consumers or to send marketing communications to consumers within the EU, which may affect our ability to run promotions and our operating results and business in European markets, and we may not be able to develop or implement additional tools that compensate for the lack of data associated with cookies. Moreover, even if we are able to do so, such additional tools may be subject to further regulation, may be time consuming to develop or costly to obtain, and may be less effective than our current use of cookies.
We allow our clients and partners to utilize application programming interfaces ("APIs"), with our platforms, which could result in outages or security breaches and negatively impact our business, financial condition and results of operations.
The use of APIs by our customers, as well as by retailer and other network partners have significantly increased in recent years. Our APIs allow customers, as well as retailer and other network partners, to integrate their own business system with our platforms. The increased use of APIs increases security and operational risks to our systems, including risks relating to management of system access controls such as timely retirement of network user IDs as well asthe risks of intrusion attacks, data theft, or denial of service attacks. Furthermore, while APIs allow greater ease and power in accessing our platforms, they also increase the risk of overusing our systems, potentially causing outages. While we have taken measures intended to decrease security and outage risks associated with the use of APIs, we cannot guarantee that such measures will be successful. Our failure to prevent outages or security breaches resulting from API use could result in government enforcement actions against us, claims for damages by consumers and other affected individuals, costs associated with investigation and remediation damage to our reputation and loss of goodwill, any of which could harm our business, financial condition and results of operations.
Our business relies in part on electronic messaging, including emails and SMS text messages, and any technical, legal or other restrictions on the sending of electronic messages or an inability to timely deliver such communications could harm our business.
Our business is in part dependent upon electronic messaging. We provide emails, mobile alerts and other messages to consumers informing them of the digital coupons on our websites, and we believe these communications help generate a significant portion of our revenues. We also use electronic messaging as part of the consumer sign-up and verification process. Because electronic messaging services are important to our business, if we are unable to successfully deliver electronic messages to consumers, if there are legal restrictions on delivering these messages to consumers, or if consumers do not or cannot open our messages, our revenues and profitability could be adversely affected. Changes in how webmail applications or other email management tools organize and prioritize email may result in our emails being delivered or routed to a less prominent location in a consumer’s inbox, or may be viewed as “spam” by consumers, and thereby may reduce the likelihood of that consumer opening our emails. Actions taken by third parties that block, impose restrictions on, or charge for the delivery of, electronic messages could also harm our business. From time to time, Internet service providers or other third parties may block bulk email transmissions or otherwise experience technical difficulties that result in our inability to successfully deliver emails or other messages to consumers.
Changes in laws or regulations, or changes in interpretations of existing laws or regulations, including the Telephone Consumer Protection Act ("TCPA") in the United States and laws regarding commercial electronic messaging in other jurisdictions, that would limit our ability to send such communications or impose additional
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requirements upon us in connection with sending such communications could also adversely impact our business. For example, the Federal Communications Commission in recent years amended certain of its regulations under the TCPAofficers, called covered employees. To maintain flexibility in compensating our executive officers in a manner that could increase our exposure to liability for certain types of telephonic communication with customers, including butpromotes varying corporate goals, the Compensation Committee has not limited to text messages to mobile phones. Under the TCPA, plaintiffs may seek actual monetary loss or statutory damages per violation, whichever is greater, and courts may treble the damage award for willful or knowing violations. Given the enormous number of communications we send to consumers, the actual or perceived improper sending of communications, oradopted a determinationpolicy that there have been violations of the TCPA or other communications-based statutes, could subject us to potential risks including liabilities or claims relating to consumer protection laws, and could expose us to significant damage awards that could, individually or in the aggregate, materially harm our business. Moreover, even if we prevail, such litigation against us could impose substantial costs and divert our management’s attention and resources.
We also rely on social networking messaging services to send communications. Changes to these social networking services’ terms of use or terms of service that limit promotional communications; restrictions that would limit our ability or our customers’ ability to send communications through their services, disruptions or downtime experienced by these social networking services; or reductions in the use of or engagement with social networking services by customers and potential customers could also harm our business.
We rely on a third-party service for the delivery of daily emails and other forms of electronic communication, and delay or errors in the delivery of such emails or other messaging we send may occur and be beyond our control, which could damage our reputation or harm our business, financial condition and operating results. If we were unable to use our current electronic messaging services, alternate services are available; however, we believe our sales could be impacted for some period as we transition to a new provider, and the new provider may be unable to provide equivalent or satisfactory electronic messaging service. Any disruption or restriction on the distribution of our electronic messages, termination or disruption of our relationship with our messaging service providers, including our third-party service that delivers our daily emails, or any increase in our costs associated with our email and other messaging activities, could harm our business.
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Our business depends on our ability to maintain and scale the network infrastructure necessary to operate our platforms, including our websites and mobile applications, and any significant disruption in service could result in a loss of advertisers, retailers and consumers.
We deliver digital promotions and media via our platforms, including over our websites and mobile applications, as well as through those of our advertisers and retailers and our publishers and other third parties. Our reputation and ability to acquire, retain and serve advertisers and retailers, as well as consumers who use digital promotions or view media on our platforms, are dependent upon the reliable performance of our platforms. As the number of our advertiser customers, retailers and consumers; the number of digital promotions, digital media and information shared through our platforms;and the number of network endpoints (for example, DOOH display screens) continue to grow, we will need an increasing amount of network capacity and computing power. Our technology infrastructure and platforms are hosted across two data centers in co-location facilities in California and Virginia. We also operate our applications and services on industry-leading cloud platforms. We have spent and expect to continue to spend substantial amounts in our data centers, cloud platforms, and equipment and related network infrastructure to handle the traffic on our platforms. The operation of these systems is expensive and complex, and could result in operational failuresand/or slow remediation response times in the event of a network incident. In the event that the number of transactions or the amount of traffic on our platforms grows more quickly than anticipated, we may be required to incur significant additional costs. In addition, as we scale, we must continually invest in our information technology, and also continue to invest in information security, infrastructure and automation as we strive to reduce complexities and siloed elements of our platforms. Deployment of new software or processes, whether or not relating to the transition from legacy to new IT systems, may adversely affect the performance of our services and harm the customer experience. If we fail to support our platforms or provide a strong customer experience, our ability to retain and attract customers may be negatively affected. Interruptions in these systems or service disruptions, whether due to system failures, computer viruses, malware, ransomware, denial of service attacks, attempts to degrade or disrupt services, or physical or electronic break-ins, could affect the security or availability of our websites and platforms, and prevent advertisers, retailers or consumers from accessing our platforms. A substantial portion of our network infrastructure is hosted by third-party providers. Any disruption in these services or any failure of these providers to handle existing or increased traffic could significantly harm our business. Any financial or other difficulties these providers face may adversely affect our business, and we exercise little control over these providers, which increases our vulnerability to problems with the services they provide. If we do not maintain or expand our network infrastructure successfully or if we experience operational failures, we could lose current and potential advertisers, retailers and consumers, which could harm our operating results and financial condition.
We currently have not experienced disruptions to our network or operations as a result of COVID-19, but there are no guarantees there will not be disruptions in the future. However, due to the continuing impact of the COVID-19 pandemic both inside and outside the U.S., and especially in India where a significant portion of our operations, engineering and IT personnel are situated, we could experience disruptions to our operations, network or product development activities, which could impact our provision of services to customers as well as our internal operations and support functions.
We are dependent on technology systems and electronic communications networks that are supplied and managed by third parties, which could result in our inability to prevent or respond to disruptions in our services.
Our ability to provide services to consumers depends on our ability to communicate with advertisers, retailers and consumers through the public Internet and electronic networks that are owned and operated by third parties. Our solutions and services also depend on the ability of our users to access the public Internet. In addition, in order to provide services promptly, our computer equipment and network serversall compensation must be functional 24 hours per day, which requires access to telecommunications facilities managed by third parties and the availability of electricity, neither of which we control. Severe disruptions, outages, defects, or other security performance and quality problems with one or more of these networks, including as a result of utility or third-party system interruptions, or any material change in our contractual and other business relationships with third-party providers, could impair our ability to process information, which in turn could impede our ability to provide digital promotions and media to consumers; harm our reputation; increase expenses, including significant, unplanned capital investments and/or contractual obligations; and result in a loss of consumers or advertisers and retailers, any of which could adversely affect our business, financial condition, and operating results.
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For example, currently as a result of work and travel restrictions related to the ongoing COVID-19 pandemic, our employees are working remotely and dependent upon their respective internet service providers to be able to access the internet, our systems and systems of our service providers. In other words, our business workflows now rely on availability of residential broadband bandwidth as well as connectivity which is currently under considerable strain. If the residential broadband and internet access break down under strain, our business and operations would be negatively affected.
We may not be able to adequately protect our intellectual property rights.
We regard our trademarks, service marks, copyrights, patents, trade dress, trade secrets, proprietary technology, and similar intellectual property as critical to our success.
We strive to protect our intellectual property rights in a number of jurisdictions, a process that is expensive and may not be successful or which we may not pursue in every location. We strive to protect our intellectual property rights by relying on federal, state and common law rights, contractual restrictions, and rights provided under foreign laws. Applicable laws are subject to change at any time and could further restrict our ability to protect our intellectual property rights.
We also may not be able to acquire or maintain appropriate domain names in all countries in which we do business. Furthermore, regulations governing domain names may not protect our trademarks and similar proprietary rights. We may be unable to prevent third parties from acquiring domain names that are similar to, infringe upon, or diminish the value of our trademarks and other proprietary rights.
We typically enter into confidentiality and invention assignment agreements with our employees and contractors, and confidentiality agreements with parties with whom we conduct business in order to limit access to, and disclosure and use of, our proprietary information. Also, from time to time, we make our intellectual property rights available to others under license agreements. However, these contractual arrangements and the other steps we have taken to protect our intellectual property may not prevent the misappropriation or disclosure of our proprietary information, infringement of our intellectual property rights or deter independent development of similar technologies by others, and may not provide an adequate remedy in the event of such misappropriation or infringement. Third parties that license our proprietary rights also may take actions that diminish the value of our proprietary rights or reputation.
Obtaining and maintaining effective intellectual property rights is expensive, including the costs of defending our rights. Even where we have such rights, they may be later found to be unenforceable or have a limited scope of enforceability. We may not be able to discover or determine the extent of any unauthorized use of our proprietary rights. Litigation may be necessary to enforce our intellectual property rights, protect our trade secrets, or determine the validity and scope of proprietary rights claimed by others. Any litigation of this nature, regardless of outcome or merit, could result in substantial costs and diversion of management and technical resources, any of which could adversely affect our business and operating results. If we fail to maintain, protect and enhance our intellectual property rights, our business and operating results may be negatively affected.
We may be accused of infringing intellectual property rights of third parties.
Other parties may claim that we infringe their proprietary rights. We are, have been subject to, and expect to continue to be subject to, claims and legal proceedings regarding alleged infringement by us of the intellectual property rights of third parties. Such claims, whether or not meritorious, may result in the expenditure of significant financial and managerial resources, injunctions against us, or the payment of damages, including to satisfy indemnification obligations. We may need to obtain licenses from third parties who allege that we have infringed their rights, but such licenses may not be available on terms acceptable to us or at all. In addition, we may not be able to obtain or utilize on terms that are favorable to us, or at all, licenses or other rights with respect to intellectual property we do not own. These risks have been amplified by the increase in third parties whose sole or primary business is to assert such claims.
We may be unable to continue to use the domain names that we use in our business, or prevent third parties from acquiring and using domain names that infringe on, are similar to, or otherwise decrease the value of our brand or our trademarks or service marks.
We may lose significant brand equity in our “Coupons.com” domain name, our “Quotient.com” domain name, our Shopmium.com domain name, and other valuable domain names. If we lose the ability to use a domain name,
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whether due to trademark claims, failure to renew an applicable registration, or any other cause, we may be forced to market our products under new domain names, which could cause us substantial harm or to incur significant expense in order to purchase rights to the domain names in question. In addition, our competitors and others could attempt to capitalize on our brand recognition by using domain names similar to ours. We also may not be able to acquire or maintain appropriate domain names or trademarks in all countries in which we do business. Domain names similar to ours have been registered in the United States and elsewhere. We may be unable to prevent third parties from acquiring and using domain names that infringe on, are similar to, or otherwise decrease the value of our brand or our trademarks or service marks. Protecting and enforcing our rights in our domain names may require litigation, which could result in substantial costs and diversion of management’s attention, and thereby harm our business.
Some of our solutions contain open source software, which may pose particular risks to our proprietary software and solutions.
We use open source software in our solutions and plan to use open source software in the future. From time to time, we may face claims from third parties that are claiming ownership of, or demanding release of, the open source software and/or derivative works that we developed using such software (which could include our proprietary source code), or that are otherwise seeking to enforce the terms of the applicable open source license. These claims could result in litigation and could require us to purchase a costly license or cease offering the implicated solutions unless and until we can re-engineer them to avoid infringement. This re-engineering process could require significant additional research and development resources. In addition to risks related to license requirements, use of certain open source software can lead to greater risks than use of third-party commercial software, as open source licensors generally do not provide warranties or controls on the origin of software. Any of these risks could be difficult to eliminate or manage and, if not addressed, could have a negative effect on our business and operating results.
Risks Related to Ownership of our Common Stock
The market price of our common stock has been, and is likely to continue to be, subject to wide fluctuations and could subject us to litigation.
The price of our common stock may change in response to variations in our operating results and also may change in response to other factors, including factors specific to technology companies, many of which are beyond our control. As a result, our stock price may experience significant volatility. Among other factors that could affect our stock price are:
•the financial projections that we or analysts may choose to provide to the public, any changes in these projections or our failure for any reason to meet these projections;
•actual or anticipated changes or fluctuations in our results of operations;
•whether our results of operations meet the expectations of securities analysts or investors;
•addition or loss of significant customers or commercial business partners;
•price and volume fluctuations in the overall stock market from time to time;
•fluctuations in the trading volume of our shares or the size of our public float;
•success of competitive products or services;
•the public’s response to press releases or other public announcements by us or others, including our filings with the SEC;
•disputes or other developments related to proprietary rights, including patents, litigation matters, or our ability to obtain intellectual property protection for our technologies;
•announcements relating to litigation;
•speculation about our business in the press or the investment community;
•reports, guidance and ratings issued by securities or industry analysts;
•future sales of our common stock by our significant stockholders, officers and directors;
•changes in our capital structure, such as future issuances of debt or equity securities;
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•our entry into new markets;
•regulatory developments in the United States or foreign countries;
•strategic actions by us or our competitors, such as acquisitions or restructurings;
•business model or solution delivery changes that result in differences in accounting treatment, including whether revenue is recognized on a net or gross basis; and
•changes in accounting principles.
If any of the foregoing occurs, it could cause our stock price or trading volume to decline. In addition, the stock market in general has experienced substantial price and volume volatility that is often seemingly unrelated to the operating results of any particular companies. Moreover, if the market for technology stocks or the stock market in general experiences uneven investor confidence, the market price of our common stock could decline for reasons unrelated to our business, operating results or financial condition. The market price for our stock might also decline in reaction to events that affect other companies within, or outside, our industry, even if these events do not directly affect us. Some companies that have experienced volatility in the trading price of their stock have been subject of securities litigation. If we are the subject of such litigation, it could result in substantial costs and a diversion of management’s attention and resources.

Our tax benefits preservation plan may reduce the volume of trading in our stock because it limits the ability of persons or entities from acquiring a significant percentage of our outstanding stock.
Our tax benefits preservation plan is designed to preserve the value of certain tax assets associated with NOL carryforwards under Section 382 of the Internal Revenue Code of 1986. The inability of some stockholders to acquire a significant position in our common stock could substantially reduce the market liquidity of our common stock, making it more difficult for a stockholder to dispose of, or obtain accurate quotations for the price of, our common stock.
Substantial future sales of shares by our stockholders could negatively affect our stock price.
Sales of a substantial number of shares of our common stock in the public market could depress the market price of our common stock and could impair our ability to raise capital through the sale of additional equity securities. We have approximately 94,779,442 shares of common stock outstanding as of December 31, 2021, assuming no exercise of our outstanding options or vesting of our outstanding RSUs.
Our equity incentive plans allow us to issue, among other things, stock options, restricted stock and restricted stock units, and we have filed a registration statement under the Securities Act to cover the issuance of shares upon the exercise or vesting of awards granted under those plans.
The concentration of our common stock ownership with our executive officers, directors and owners of 5% or more of our outstanding common stock will limit our ability to influence corporate matters.
Our executive officers, directors and owners of 5% or more of our outstanding common stock together beneficially own approximately 31% of our outstanding common stock, based on the number of shares outstanding as of December 31, 2021. These stockholders therefore have significant influence over management and affairs, and over all matters requiring stockholder approval, including the election of directors and significant corporate transactions, such as a merger or other sale of our company or its assets, for the foreseeable future. This concentrated control limits stockholders' ability to influence corporate matters and, as a result, we may take actions that our stockholders do not view as beneficial. This ownership could affect the value of a stockholder's shares of common stock.
If securities analysts do not publish research or if securities analysts or other third parties publish inaccurate or unfavorable research about us, the price of our common stock could decline.
The trading market for our common stock will rely in part on the research and reports that securities analysts and other third parties choose to publish about us. We do not control these analysts or other third parties. The price of our common stock could decline if one or more securities analysts downgrade our common stock or if one or more securities analysts or other third parties publish inaccurate or unfavorable research about us or cease publishing reports about us.
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We do not intend to pay dividends for the foreseeable future.
We intend to retain all of our earnings for the foreseeable future to finance the operation and expansion of our business, and do not anticipate paying cash dividends on our common stock. As a result, a stockholder can expect to receive a return on the stockholder's investment in our common stock only if the market price of the stock increases.
Provisions in our charter documents and under Delaware law could discourage a takeover that stockholders may consider favorable.
Provisions in our certificate of incorporation and by-laws may have the effect of delaying or preventing a change of control or changes in our management. Amongst other things, these provisions:
•authorize the issuance of “blank check” preferred stock that could be issued by our Board of Directors to defend against a takeover attempt;
•establish a classified Board of Directors, as a result of which the successors to the directors whose terms have expired will be elected to serve from the time of election and qualification until the third annual meeting following their election;
•require that directors only be removed from office for cause and only upon a majority stockholder vote;
•provide that vacancies on the Board of Directors, including newly created directorships, may be filled only by a majority vote of directors then in office rather than by stockholders;
•prevent stockholders from calling special meetings; and
•prohibit stockholder action by written consent, requiring all actions to be taken at a meeting of the stockholders.
In addition, we are governed by the provisions of Section 203 of the Delaware General Corporation Law, which generally prohibits a Delaware corporation from engaging in a broad range of business combinations with any “interested” stockholder for a period of three years following the date on which the stockholder becomes an “interested” stockholder.
Risks Related to Debt Financing Transactions
We are leveraged financially, which could adversely affect our ability to adjust our business to respond to competitive pressures and to obtain sufficient funds to satisfy our future growth, business needs and development plans.
In November 2017, we issued $200 million aggregate principal amount of convertible senior notes (the “notes”).  
Additionally, in November 2021, we entered into an asset-based credit agreement (the “ABL Credit Agreement”) which provides for available borrowings up to $100 million (the "ABL Facility"), with the actual amount dependent on a “borrowing base” number consisting of the sum of various categories of eligible accounts receivable (the lesser of such number and $100 million, the “Line Cap”). The ABL Facility matures and all outstanding amounts, if any, become due and payable in November 2026 (“fixed ABL maturity date”), except that such maturity date shall be accelerated to be the date that is 91 days prior to the notes’ maturity date (currently December 1, 2022) unless (i) the notes shall have been repaid in full or converted to equity as of such 91-days-prior date, or unless (ii) the notes are refinanced and/or extended to a maturity date that is 91 days after the fixed ABL maturity date, or unless (iii) during such 91-days-prior period we have sufficient cash to repay the notes in full, we meet a certain liquidity test after giving pro forma effect to the repayment of the notes, and there is no event of default under the ABL Credit Agreement.
The ABL Credit Agreement contains customary conditions as to borrowings, events of default and covenants that restrict the our ability to sell assets; make changes to the nature of our business; engage in merger or acquisition activity; incur, assume or permit to exist additional indebtedness and guarantees; create or permit to exist liens; pay dividends; issue equity instruments; make distributions or redeem or purchase capital stock or make other investments; and make payments in respect of certain debt. The ABL Credit Agreement also requires that if the Company’s Excess Availability (defined as the Line Cap less borrowed amounts or issued letters of credit) is less that the greater of (i) the Line Cap and (ii) $10 million, the Company will maintain a compliance with a fixed
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charge coverage ratio of at least 1.00 to 1.00. In addition, the ABL Credit Agreement includes customary events of default, the occurrence of which may requiredeductible, particularly given that the Company pay an additional 2.0% interest on the outstanding loans under the ABL Credit Agreement.
Our leveraged capital structure could have negative consequences, including, but not limited to, the following:
•our ability to maintain compliance with the financial covenants is dependent upon our futurecurrently carries net operating performance and future financial condition, both of which are subject to various risks and uncertainties;losses.
•we may be more vulnerable to economic downturns, less able to withstand competitive pressures, and less flexible in responding to changing business and economic conditions;
•our ability to obtain additional financing in the future for working capital, capital expenditures, acquisitions, general corporate or other purposes may be limited;
•a substantial portion of our cash flow from operations in the future may be required for the payment of the principal amount of our existing indebtedness when it becomes due; and
•we may elect to make cash payments upon any conversion of the convertible notes, which would reduce our cash on hand.
Our ability to meet our payment obligations under our notes and the ABL Facility, as well as maintain compliance with financial covenants under the ABL Credit Agreement, depends on our ability to generate significant cash flow in the future. This, to some extent, is subject to general economic, financial, competitive, legislative, and regulatory factors as well as other factors that are beyond our control. There can be no assurance that our business will generate cash flow from operations, or that additional capital will be available to us, in an amount sufficient to enable us to meet our debt payment obligations and to fund other liquidity needs. If we are unable to generate sufficient cash flow to service our debt obligations, we may need to refinance or restructure our debt, sell assets, reduce or delay capital investments, or seek to raise additional capital. If we were unable to implement one or more of these alternatives, we may be unable to meet our debt payment obligations, which could have a material adverse effect on our business, results of operations, or financial condition.
The conditional conversion feature of the notes, if triggered, may adversely affect our financial condition and operating results.
In the event the conditional conversion feature of the notes is triggered, holders of the notes will be entitled to convert their notes at any time during specified periods at their option. Upon conversion, we will pay or deliver, as the case may be, cash, shares of our common stock or a combination of cash and shares of our common stock, at our election. If one or more holders elect to convert their notes, (unless we elect to satisfy our conversion obligation by delivering solely shares of our common stock (other than paying cash in lieu of delivering any fractional share)), we intend to settle a portion or all of our conversion obligation in cash, which could adversely affect our liquidity. In addition, even if holders of notes do not elect to convert their notes, we could be required under applicable accounting rules to reclassify all or a portion of the outstanding principal of the notes as a current rather than long-term liability, which would result in a material reduction of our net working capital.
The accounting method for convertible debt securities that may be settled in cash, such as the notes, could have a material effect on our reported financial results.
Under Accounting Standards Codification 470-20, Debt with Conversion and Other Options (“ASC 470-20”), an entity must separately account for the liability and equity components of the convertible debt instruments (such as the notes) that may be settled entirely or partially in cash upon conversion in a manner that reflects the issuer’s economic interest cost. The effect of ASC 470-20 on the accounting for the notes is that the equity component is required to be included in the additional paid-in capital section of stockholders’ equity on our consolidated balance sheet at the issuance date and the value of the equity component would be treated as debt discount for purposes of accounting for the debt component of the notes. As a result, we will be required to record a greater amount of non-cash interest expense as a result of the amortization of the discounted carrying value of the notes to their face amount over the term of the notes. We will report larger net losses (or lower net income) in our financial results because ASC 470-20 will require interest to include both the amortization of the debt discount and the instrument’s nonconvertible coupon interest rate, which could adversely affect our reported or future financial results, the trading price of our common stock and the trading price of the notes.
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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 effect of which is that the shares issuable upon conversion of such notes are not included in the calculation of diluted earnings per share except to the extent that the conversion value of such notes exceeds their principal amount. Under the treasury stock method, for diluted earnings per share purposes, the transaction is accounted for as if the number of shares of common stock that would be necessary to settle such excess, if we elected to settle such excess in shares, are issued. We cannot be sure that the accounting standards in the future will continue to permit the use of the treasury stock method. If we are unable or otherwise elect not to use the treasury stock method in accounting for the shares issuable upon conversion of the notes, then our diluted earnings per share could be adversely affected.
Conversion of our notes will dilute the ownership interest of existing stockholders and may depress the price of our common stock.
The conversion of some or all of our notes, if such conversion occurs, will dilute the ownership interests of then-existing stockholders to the extent we deliver shares upon conversion of any of the notes.  Any sales in the public market of the common stock issuable upon such conversion could adversely affect prevailing market prices of our common stock.  In addition, the existence of the notes may encourage short selling by market participants because the conversion of the notes could be used to satisfy short positions, or anticipated conversion of the notes into shares of our common stock could depress the price of our common stock.
General Risks
Our business is subject to interruptions, delays or failures resulting from earthquakes, other natural catastrophic events or terrorism.
Our headquarters is currently located in Salt Lake City, Utah. Our current technology infrastructure is hosted across two data centers in co-location facilities in California and Virginia. In addition, we use industry-leading cloud providers to host our applications and services. Our services, operations and the data centers from which we provide our services are vulnerable to damage or interruption from earthquakes, fires, floods, public health crises such as pandemics and epidemics, power losses, telecommunications failures, terrorist attacks, acts of war, human errors, break-ins and similar events (such as the COVID-19 pandemic). A significant natural disaster, such as an earthquake, fire or flood, could have a material adverse impact on our business, financial condition and results of operations, and our insurance coverage may be insufficient to compensate us for losses that may occur. In addition, global climate change could result in certain types of natural disasters occurring more frequently or with more intense effects. Acts of terrorism could cause disruptions to the Internet, our business or the economy as a whole. We may not have sufficient protection or recovery plans in certain circumstances, such as natural disasters affecting areas where data centers upon which we rely are located, and our business interruption insurance may be insufficient to compensate us for losses that may occur. Such disruptions could negatively impact our ability to run our websites, which could harm our business.
Our ability to raise capital in the future may be limited, and our failure to raise capital when needed could prevent us from growing.
We may in the future be required to raise additional capital through public or private financing or other arrangements. Such financing may not be available on acceptable terms, or at all, and our failure to raise capital when needed could harm our business. Additional equity or equity-linked financing, such as our convertible senior notes, may dilute the interests of our stockholders, and additional debt financing, if available, may involve restrictive covenants and could reduce our profitability. If we cannot raise funds on acceptable terms, we may not be able to grow our business. In addition, while the ultimate potential impact and duration of the COVID-19 pandemic on the global economy and our business in particular may be difficult to assess or predict, the pandemic has resulted in, and could result in, significant disruption of global financial markets, reducing our ability to access capital, which could negatively affect our liquidity in the future.
Global economic conditions could materially adversely affect our revenue and results of operations.
Our business has been and may continue to be affected by a number of factors that are beyond our control, such as general geopolitical, economic and business conditions; conditions in the financial markets; and changes in the overall demand for, or supply of, CPG products. A severe and/or prolonged economic downturn could adversely affect our customers' financial condition and the levels of marketing spend of our customers. While we have seen advertisers or CPGs continue spend, or increase spend, on promotions during economic downturns, there is no
54






guarantee they will do so in a future economic downturn, including one that may be presently taking shape due to the persistence of the COVID-19 pandemic and inflationary pressures. Weakness in, and uncertainty about, global economic conditions may cause advertisers and retailers to postpone marketing in response to tighter credit, negative financial news and/or declines in income or asset values. If inflation were to increase, advertisers and retailers could face higher manufacturing, supply chain or related input costs associated with the goods they produce and offer for sale, which could negatively impact their margins and otherwise make them less apt to utilize our solutions, which in turn would negatively impact our revenue. As also noted in the risk factor “The effects of health epidemics, including the COVID-19 pandemic, have had, and may continue to have, an adverse impact on our business, operations and the markets and communities in which we and our partners operate” above, the COVID-19 pandemic has significantly increased economic uncertainty. Some advertisers continue to experience supply chain pressures and have not returned to pre-pandemic levels of promotional marketing spend. The economic slowdown that was severe in the initial months following the pandemic’s breakout in 2020 has moderated, but due to the persistent presence of COVID-19 hotspots both in the U.S. and in non-U.S. countries, risks of a global recession remain. Adverse changes in economic conditions, including as a result of the pandemic, can significantly harm demand for our marketing solutions (or change the mix of solutions demanded) and make it more challenging to forecast our operating results and make business decisions.
In addition, the economic problems affecting the financial markets and the uncertainty in global economic conditions resulted in a number of adverse effects including a low level of liquidity in many financial markets; extreme volatility in credit, equity, currency and fixed income markets; instability in the stock market; and high unemployment. There could be a number of other follow-on effects from these economic developments on our business, including customer insolvencies, decreased demand for our marketing solutions, decreasedcustomer ability to paytheir accounts, and increased collections risk and defaults.
Item 1B.    Unresolved Staff Comments.

None.
Item 2.    Properties.

Our principal executive office is located in Salt Lake City, UT, totaling approximately 25,610 rentable square feet under lease expiring in May 2029. We had additional principal office space in Mountain View, California, totaling approximately 42,000 square feet under lease that expired in December 2021. In 2022, pursuant to a lease that expires in 2025, we leased 31,250 square feet of office space in Santa Clara, California for our employees who were working in our Mountain View facility. We consolidated our office space in Cincinnati, Ohio, totaling approximately 32,006 square feet under a lease arrangement expiring in June 2024. We maintain additional leased spaces in San Francisco, California, New York, New York, Nashville, Tennessee, Bangalore, India, Paris, France, London, United Kingdom, and Tel Aviv, Israel. We believe our properties are generally suitable to meet our needs for the foreseeable future. In addition, to the extent we require additional space in the future, we believe that it would be readily available on commercially reasonable terms.

Item 3.    Legal Proceedings.

We do not list all routine litigation matters with which we are a party. We discuss below certain pending matters. In determining whether to discuss a pending matter, we consider both quantitative and qualitative factors to assess materiality, such as, among others, the amount of damages alleged and the nature of other relief sought, if specified; our view of the merits of the claims and of the strength of our defenses; and whether the action purports to be, or is, a class action the jurisdiction in which the proceeding is pending.
Catalina Marketing Corp. v. Quotient Technology Inc.On February 24, 2021, Catalina Marketing Corporation filed a complaint in the Florida Circuit Court of the Sixth Judicial District against us asserting claims for unlawful and unfair trade practices; tortious interference with business relationship; and tortious interference with prospective business relationship. The complaint alleges that we engaged in predatory pricing practices and misleading
55






communications with potential customers in connection with our in-lane coupon solution. The complaint seeks unspecified compensatory and punitive damages and injunctive relief. While it is not possible at this time to predict with any degree of certainty the ultimate outcome of this action, we believe that Catalina’s claims lack merit.
Result Marketing Group, Ltd. v. Southeastern Grocers et al.On June 17, 2021, Result Marketing Group, Ltd. (“RMG”) filed a complaint in the U.S. District Court for the Middle District of Florida, against Southeastern Grocers, LLC, Bio-Lo, LLC, Winn-Dixie Stores, Inc. (collectively, "SEG") and us. The complaint alleges SEG breached its non-disclosure agreement with RMG by providing us with RMG's trade secrets, including the business concept of and "playbook" for a retail media hub. The complaint alleges we and SEG misappropriated such trade secrets to develop the SEG Media Hub, and that we further misappropriated such trade secrets to develop our "retail performance media platform", which we sell to end users. The complaint further alleges that we interfered with RMG's contract and prospective business relationship with SEG. RMG contends that SEG defrauded it of no less than $59 million, and that we and SEG are jointly and severally liable for treble damages of no less than $177 million. The complaint seeks compensatory and punitive damages, a constructive trust, and attorney's fees. While it is not possible at this time to predict with any degree of certainty the ultimate outcome of this action, we believe that RMG’s claims lack merit.
Fortis Advisors LLC v. Quotient Technology, Inc.On August 20, 2021, Fortis Advisors LLC, as the SavingStar stockholder representative, ("Fortis") filed a complaint in the Delaware Court of Chancery alleging breach of contract, declaratory judgment, and in the alternative, breach of the implied covenant of good faith and fair dealing. The complaint alleges that we ceased to make generally available the SavingStar customer relationship management (CRM) business, which would trigger an earnout payment of $8.5 million under the terms of the Agreement and Plan of Merger, dated August 23, 2018, between Quotient Technology Inc. and SavingStar, Inc. While it is not possible at this time to predict with any degree of certainty the ultimate outcome of this action, we believe that Fortis's claims lack merit.
Albertsons Companies, Inc. v. Quotient Technology, Inc. On November 16, 2021, Quotient informed Albertsons Companies, Inc. (“Albertsons”) that, in light of Albertsons' failure to cure its material breach of the Services and Data Agreement ("the Agreement"), it was terminating the Agreement effective November 19, 2021. Quotient offered to continue to provide certain services beyond the termination date for the benefit of the CPGs. On November 19, 2021, Albertsons filed a complaint against us in the Superior Court of the State of California, County of Santa Clara alleging claims of breach of contract and breach of implied covenant of good faith and fair dealing. The complaint alleges that Quotient failed to achieve alleged minimum revenue targets, failed to make certain revenue share payments in the amount of $5.0 million, failed to pay a guaranteed annual minimum payment of $10.0 million under Statement of Work (SOW) No. 5, and improperly terminated the Agreement.On November 22, 2021, consistent with Quotient's offer in its November 16, 2021 termination letter, the parties entered into a stipulation, where Quotient agreed to sell campaigns through December 15, 2021, and provide services and support for those campaigns through February 26, 2022 so long as Albertsons provided the necessary logistical steps to enable Quotient to deliver the services and support.Quotient also agreed to support the In-Lane Tool through December 10, 2021. On December 9, 2021, Albertsons filed for a temporary restraining order to prevent Quotient from discontinuing its digital-coupon-service or its In-Lane Tool or otherwise refusing to support Albertsons advertising and coupon programs, and for an order to show cause re preliminary injunction.On December 13, 2021, the Court issued an order denying Albertsons’ request for a temporary restraining order and order to show cause re preliminary injunction because, on the basis of the evidence presented by Albertsons, it found that Albertsons was unlikely to prevail on its claims at trial.While it is not possible at this time to predict with any degree of certainty the ultimate outcome of this action, we believe that Albertsons’ claims lack merit.
Item 4.    Mine Safety Disclosures.

None.
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PART II
Other Benefits


Item 5.    Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities.
Market Information
Our common stock, $0.00001 par value, began trading on the New York Stock Exchange under the symbol “COUP” on March 7, 2014, the date of our IPO. We changed our nameNEOs are eligible to Quotient Technology Inc. on October 20, 2015. Our common stock began trading on the New York Stock Exchange under the symbol “QUOT” on October 21, 2015.
Holders
As of February 11, 2022, there were 45 holders of record of our common stock. Because most of our shares of common stock are held by brokers and other institutions on behalf of stockholders, we are unable to estimate the total number of beneficial stockholders represented by these record holders.
Dividend Policy
We have never declared or paid any dividends on our common stock and do not anticipate that we will pay any dividends to holders of our common stockparticipate in the foreseeable future. Instead, we currently plan to retain any earnings to finance the growth of our business. Any future determination relating to dividend policy will be made at the discretion of our Board of Directorssame broad-based retirement, health and will depend on our financial condition, results of operationswelfare, and capital requirements as wellbusiness expense reimbursement policies as other factors deemed relevant by our Board of Directors.full-time salaried employees.
Issuer Purchases of Equity Securities
In February 2021, the Company’s Board of Directors authorized a one-year share repurchase program ("February 2021 Program")certain circumstances, when necessary for the Company to repurchase up to $50.0 million of its common stock from February 2021 through February 2022. Under the February 2021 Program, stock repurchasesbusiness purposes, we 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 February 2021 Program at any time without prior notice. During the year ended December 31, 2021, the Company did not repurchase any shares of its common stock, nor did the Company repurchase any of its common stock thereafter. The Company terminated the program prior to its expiration.
Performance Graph
The following shall not be deemed “filed”provide additional assistance for purposes of Section 18 of the Exchange Act, or incorporated by reference into any of our other filings under the Exchange Act or the Securities Act, except to the extent we specifically incorporate it by reference into such filing.executive relocation circumstances.
This chart compares the cumulative total return on our common stock with that of the Russell 3000 and the S&P North American Technology Sector Index. The chart assumes $100 was invested at the close of market on December 31, 2016, in our common stock, the Russell 3000 and the S&P North American Technology Sector Index, and assumes the reinvestment of any dividends. The stock price performance on the following graph is not necessarily indicative of future stock price performance.
57Non-GAAP






quot-20211231_g1.jpg
INDEXED RETURNS
Quarter Ending
Company / Index12/31/201612/31/201712/31/201812/31/201912/31/202012/31/2021
Quotient Technology Inc.$100 $109 $99 $92 $88 $69 
Russell 3000 Index$100 $119 $111 $142 $169 $209 
S&P North American
   Technology Sector Index		$100 $136 $139 $196 $282 $355 
Unregistered Sales of Equity Securities
Not applicable.


Item 6.    Reserved.



Item 7.        Management’s Discussion and Analysis of Financial Condition and Results of Operations.

You should read the following discussion and analysis of our financial condition and results of operations in conjunction with the consolidated financial statements and the related notes to consolidated financial statements included elsewhere in this annual report on Form 10-K. In addition to historical financial information, the following discussion contains forward-looking statements that reflect our plans, estimates, beliefs and expectations that involve risks and uncertainties. Our actual results and the timing of events could differ materially from those discussed in these forward-looking statements. Factors that could cause or contribute to these differences include those discussed below and elsewhere in this prospectus, particularly in “Risk Factors” and “Special Note Regarding Forward-Looking Statements.”
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Overview
Quotient Technology Inc. is an industry leading digital media and promotions technology company that powers cohesive omnichannel brand-building and sales-driving marketing campaigns for advertisers and retailers to influence purchasing decisions throughout a shopper's path to purchase. These marketing campaigns are planned, delivered and measured using our technology platforms and data analytics tool. Our vision is to build the world's leading performance marketing platform that delivers a variety of targeted digital marketing solutions which advertisers and retailers can purchase to drive measurable improvements in sales and customer loyalty.
Our customers consist primarily of consumer-packaged goods ("CPG") companies and their brand marketers (together referred to as "advertisers") who want to drive sales and positive brand engagement with shoppers. Our digital marketing platform is designed to produce returns on marketing investment for advertisers by utilizing consumer behavior and intent data to deliver the right marketing message to the right shopper at the right time, through multiple touchpoints while they are engaged online, out of home and in-store. We partner with retailers, who primarily sell through local, physical stores as well as through eCommerce properties. We are primarily focused on the US-based grocery retail market and the advertisers who sell products through that channel. However, we are aiming to expand outside the grocery retail space, such as with partners in certain vertically-integrated industries (also known as "verticals").
By partnering with Quotient, retailers can monetize their proprietary sales data and digital properties to build an alternative revenue stream and offer effective marketing opportunities for their brand partners to engage consumers, with the aim of achieving higher sales through their physical stores and eCommerce sites.
Over the last five years, we have grown our platform capabilities and our network of marketing channels to reach shoppers through a combination of in-house innovation, partnerships, and acquisitions. Our network includes the digital properties of our retail partners, non-retail partners and CPG customers, social media platforms, and our flagship consumer brand Coupons.com and DOOH properties. This network provides Quotient with proprietary and licensed data, including retailers' POS shopper data, consumer behavior and purchase intent data, and location intelligence. With such data powering our platforms, customers and partners use Quotient to leverage consumer data and insights, engage consumers via digital channels, and integrate marketing and merchandising programs to drive measurable sales results and consumer engagement.
Our network is made up of several different constituencies:
•Our advertiser customers consist of approximately 900 CPGs, representing over 2,500 brands, including many of the leading food, beverage, personal care and household product manufacturers;
•Our retail partners represent multiple classes of trade such as grocery retailers, drug, automotive, mass merchant, dollar, club, and convenience merchandise channels, where most CPGs' products are sold;
•Our network partners currently include a select group of partners who invest heavily in online consumer engagement and who help us increase our network's reach to more US shoppers; and
•Millions of consumers who visit our owned websites, mobile properties and social channels, as well as those of our CPGs, retailer partners and other network partners.
Through these relationships, we believe we have created a network effect, which engages consumers and provides us a competitive advantage over both offline and online competitors. As our network expands and our consumer audience increases, we generate more consumer data and insights, which further improves our ability to deliver targeted and personalized media and promotions, and also strengthens our measurement and data insight solutions. We believe this will make our platforms more valuable to advertisers and retailers for their digital marketing campaigns. We expect that the breadth of media and promotion content delivered through Quotient platforms from leading brands will increase and enable us to attract and retain more retailers and consumers.
We primarily generate revenue by advertisers and retailers using our technology platforms to help achieve their digital marketing objectives in four distinct ways:
•Plan and buy media and promotions campaigns to reach the right shoppers;
•Target advertising, promotions and messaging to shoppers for maximum impact;
•Sell advertising space and activate the shopper data that retailers collect through loyalty programs and digital transactions; and
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•Measure the impact of advertisements, promotions or messages that have been planned, sold or placed with "closed loop" measurement, defined as the use of consumer data to help understand and evaluate how certain digital campaigns impact our advertiser customers' and retailer partners' sales.
Using shopper data from our retail partners and our proprietary data and audience segments, we deliver targeted and/or personalized digital media and promotions to shoppers through our network. As our customers and partners shift more of their marketing spend to digital channels, our solutions help them optimize the performance of such digital channels. Our platforms measure performance by attribution of digital campaigns to retail purchases in near real time, demonstrating return on spend for our customers and partners.
Our promotions products include digital paperless coupons, digital print coupons, in-lane on receipt promotions, digital national promotions, shopper promotions, digital rebates and loyalty offers. Our media solutions include display, social, DOOH, Retailer.com display and sponsored search, shoppable brand pages, and audiences. A growing number of our customers purchase an integrated campaign which combines a mix of digital media and/or promotions solutions within a single campaign. While the revenue we earn from these programs is generally determined on a cost-per-click, cost-per-impression or cost-per-acquisition basis, in 2021 we launched duration-based pricing for our new offering Duration-Based National Promotions Solution, which we plan to deploy to a greater extent in the future.
We generally pay a distribution fee, or revenue share, to retailers and publishers for activation or redemption of a digital promotion, for media campaigns, and for use of data for targeting or measurement. We also pay a fee to third-party publishers for traffic acquisition, which consists of delivering campaigns on certain networks or properties. Generally, these distribution, revenue share and third-party service fees are included in our cost of revenues because we control the digital promotion and media advertising inventory before it is transferred to our customers. In limited instances where we do not control the digital promotion and media advertising inventory, we record revenues on a net basis, and the distribution, revenue-share and third-party service fees are deducted from gross revenues to arrive at net revenues.
We expect our operating expenses to decline in absolute dollars as we remove costs from the business. However, we also expect operating expenses to increase as a percentage of revenue as more of our future revenue is recognized on a net basis compared to the prior periods due to the business model changes.. When revenues begin to grow again, we expect to increase spending to support that growth.
For 2021, 2020 and 2019, our revenues were $521.5 million, $445.9 million, and $436.2 million, respectively. Our net loss for 2021, 2020 and 2019 was $45.6 million, $65.4 million, and $37.1 million, respectively.
Seasonality
Some of the Company’s products experience seasonal sales and buying patterns mirroring those in the CPG, retail, advertising, and eCommerce markets, including back-to-school and holiday campaigns, where demand increases during the second half of the Company’s fiscal year. Seasonality may also be affected by CPG annual budget cycles, as some large CPGs have fiscal years ending in June. We believe that this seasonality pattern has affected, and will continue to affect, our business and the associated revenues during the first half and second half of our fiscal year. We recognized 54%, 59% and 54% of our annual revenue during the second half of 2021, 2020 and 2019, respectively. We believe the first half of 2020 results were negatively impacted by the COVID-19 pandemic, resulting in a higher percentage of revenues in our second half of the year than we have experienced in the past.
Impact of COVID-19
We are cognizant of the ongoing COVID-19 pandemic and the resulting global implications. In an effort to protect the health and safety of our employees, our workforce has had, and continues in most instances, to spend a significant amount of time working remotely, and travel has been impacted. Many government measures initially imposed to contain COVID-19 or slow its spread, including orders to close all businesses not deemed “essential,” isolate residents to their homes or places of residence, and practice social distancing, have been lifted in certain global locations and have been lifted widely in the U.S., although as a result of new virus variants arising, it is possible that such measures may be reinstated in the future. We anticipate that these actions and the global health crisis caused by the COVID-19 pandemic will continue to negatively impact business activity across the globe, even though vaccination efforts are continuing throughout the United States and, to varying extents, in other countries.
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While we observed revenue growth during 2021, we cannot estimate the impact COVID-19 will have in the future as government entities and businesses make decisions about whether and when to open businesses or whether to return to restrictive measures after re-openings have occurred, and we also cannot estimate what impact these decisions will have on consumer activity across the globe, especially as it remains uncertain how strong or lasting the impact of the vaccinations will be.
We will continue to actively monitor the pandemic situation and may take further actions that alter our business operations as may be required by federal, state, local or foreign authorities, or that we determine are in the best interests of our employees, customers, partners and stockholders. If brands or retailers pause, delay, or cancel campaigns due to the continuing uncertainty, supply-chain disruption, inflationary input-cost factors affecting advertiser and retailers, and consumer purchasing behavior changes caused by COVID-19, there may be an adverse impact on our promotion and media revenues, and the growth of our business. The full extent of the impact of the COVID-19 pandemic on our business, operations and financial results will depend on numerous evolving factors that we may not be able to accurately predict. See Part I, Item 1A, Risk Factors, for an additional discussion of risks related to COVID-19.
Non-GAAP Financial Measure and Key Operating Metrics
Adjusted Earnings Before Interest, Taxes, Depreciation and Amortization (“Adjusted EBITDA”), a
non-GAAP
financial measure, is a key metric used by our management and our Board of Directors to understand and evaluate our core operating performance and trends, to prepare and approve our annual budget, to develop short and long-term operational plans, and to determine bonus payouts. In particular, we believe that the exclusion of certain income and expenses in calculating Adjusted EBITDA can provide a useful measure for
period-to-period
comparisons of our core business. Additionally, Adjusted EBITDA is a key financial metric used by the compensation committee of our Board of Directors in connection with the determination of compensation for our executive officers. Accordingly, we believe that Adjusted EBITDA provides useful information to investors and others in understanding and evaluating our operating results in the same manner as it does for our management and Board of Directors.
Adjusted EBITDA excludes
non-cash
charges, such as depreciation, amortization and stock-based compensation, because such
non-cash
expenses in any specific period may not directly correlate to the underlying performance of our business operations and can vary significantly between periods. Additionally, it excludes the effects of interest expense; income taxes; other (income) expense net; change in fair value contingent consideration; impairment of certain intangible assets; certain acquisition related costs; restructuring charges; and a loss contingency/settlement related to a contract dispute. We exclude certain items because we believe that these costs (benefits) do not reflect expected future operating expenses. Additionally, certain items are inconsistent in amounts and frequency, making it difficult to contribute to a meaningful evaluation of our current or past operating performance.
Net loss and Adjusted EBITDA for each of the periods presented were as follows:
Year Ended December 31,
202120202019
(in thousands)
Net loss$(45,568)$(65,381)$(37,057)
Adjusted EBITDA$40,626 $46,037 $45,150 
   
Year Ended December 31,
 
   
2021
   
2020
   
2019
 
   
(in thousands)
 
Net loss
  $(45,568)   $(65,381)   $(37,057) 
Adjusted EBITDA
  $40,626   $46,037   $45,150 
Our use of Adjusted EBITDA has limitations as an analytical tool, and one should not consider it in isolation or as a substitute for analysis of our results as reported under U.S. GAAP. Some of these limitations are:
•
although depreciation and amortization are
non-cash
charges, the assets being depreciated and amortized may have to be replaced in the future, and Adjusted EBITDA does not reflect cash capital expenditure requirements for such replacements or for new capital expenditure requirements;
•
Adjusted EBITDA does not reflect changes in, or cash requirements for, our working capital needs;
•
Adjusted EBITDA does not reflect interest and tax payments that may represent a reduction in cash available to us;
•
Adjusted EBITDA also does not include the effects of stock-based compensation; amortization of acquired intangible assets; change in fair value of contingent consideration; interest expense; other (income)
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expense, net; provision for income taxes; impairment of certain intangible assets; certain acquisition related costs; restructuring charges; and a loss contingency/settlement related to a contract dispute; and
•
other companies, including companies in our industry, may calculate Adjusted EBITDA differently than we do, which reduces its usefulness as a comparative measure.
A reconciliation of Adjusted EBITDA to net loss, the most directly comparable GAAP financial measure, for each of the periods presented is set forth as follows:
Year Ended December 31,
202120202019
(in thousands)
Net loss$(45,568)$(65,381)$(37,057)
Adjustments:
Stock-based compensation22,812 28,371 32,137 
         Depreciation and amortization29,464 36,352 31,437 
         Acquisition related costs and other (1)13,508 12,361 7,670 
         Change in fair value of contingent
   consideration, net		1,392 20,234 1,571 
Interest expense15,177 14,521 13,955 
Other income (expense), net210 (1,140)(5,223)
Provision for income taxes3,631 719 660 
Total adjustments$86,194 $111,418 $82,207 
Adjusted EBITDA$40,626 $46,037 $45,150 
 
   
Year Ended December 31,
 
   
2021
   
2020
   
2019
 
   
(in thousands)
 
Net loss
  $(45,568)   $(65,381)   $(37,057) 
Adjustments:
               
Stock-based compensation
   22,812    28,371    32,137 
Depreciation and amortization
   29,464    36,352    31,437 
Acquisition related costs and other (1)
   13,508    12,361    7,670 
Change in fair value of contingent consideration, net
   1,392    20,234    1,571 
Interest expense
   15,177    14,521    13,955 
Other income (expense), net
   210    (1,140)    (5,223) 
Provision for income taxes
   3,631    719    660 
Total adjustments
  $86,194   $111,418   $82,207 
                
Adjusted EBITDA
  $40,626   $46,037   $45,150 
(1)For the year ended December 31, 2021, Other includes a charge of $9.1 million related to the impairment of certain intangible assets due to the circumstances surrounding the termination of our partnership with Albertsons, and restructuring charges of $2.7 million. For the year ended December 31, 2020, Other includes a $8.8 million loss contingency/settlement related to a contract dispute with Albertsons associated with a guaranteed distribution fee arrangement, and restructuring charges of $1.5 million. For the year ended December 31, 2019, Other includes restructuring charges of $4.3 million. Restructuring charges relate to severance for impacted employees. Acquisition related costs primarily include certain bonuses contingent upon the acquired company meeting certain financial metrics over the contingent consideration period, together with diligence, accounting, and legal expenses incurred related to certain acquisitions.
(1)
For the year ended December 31, 2021, Other includes a charge of $9.1 million related to the impairment of certain intangible assets due to the circumstances surrounding the termination of our partnership with Albertsons, and restructuring charges of $2.7 million. For the year ended December 31, 2020, Other includes a $8.8 million loss contingency/settlement related to a contract dispute with Albertsons associated with a guaranteed distribution fee arrangement, and restructuring charges of $1.5 million. For the year ended December 31, 2019, Other includes restructuring charges of $4.3 million. Restructuring charges relate to severance for impacted employees. Acquisition related costs primarily include certain bonuses contingent upon the acquired company meeting certain financial metrics over the contingent consideration period, together with diligence, accounting, and legal expenses incurred related to certain acquisitions.
This
non-GAAP
financial measure is not intended to be considered in isolation from, as substitute for, or as superior to, the corresponding financial measure prepared in accordance with U.S. GAAP. Because of these and other limitations, Adjusted EBITDA should be considered along with U.S. GAAP-based financial performance measures, including various cash flow metrics, net loss, and our other U.S. GAAP financial results.
Factors Affecting Our Performance
Obtaining high quality promotions, increasing the number of brand-authorized activations, and capitalizing on new pricing/revenue models for promotions.   Our ability to grow revenue will depend upon our ability to shift more dollars to our platforms from our brand customers, to continue to obtain high quality promotions and to increasethenumber of brand-authorized activations available through our platforms, and to capitalize on new pricing/revenue models for promotions, such as duration-based pricing. If we are unable to do any of these, growth in our revenue may be adversely affected.
Increasing revenue from advertisers on our platforms.    Our ability to grow our revenue in the future depends upon our ability to continue to increase revenues from existing and new advertisers on our platforms through national brand coupons, targeted media and measurement, and increasing the number of brands that are using our platforms within each advertiser.
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SUMMARY COMPENSATION TABLE





Variability in promotional and media spend by advertisers or brands.    Our revenues may fluctuate due to changes in promotional or media spending budgets of advertisers as well as the timing of their promotional and media spending. Decisions by major advertisers, whether or not due to the impact of COVID-19 and related supply chain and inflation input-cost issues, to delay or reduce their promotional and media spending, move campaigns, or divert spending away from digital promotions or media, could slow our revenue growth or reduce our revenues.
Grow our network. The success and scale of our platforms and our ability to grow revenue will depend on our ability to grow our publishing network, expand our reach to engaged consumers, and drive volume of transactions on our platforms. If we do not add network partners or expand our relationship with existing network partners, or if network partners do not deliver active users to our platforms, our business and revenue growth will be negatively impacted.
Ability to retain and expand our relationships with retailers, obtain commitment and support for our platforms from retailers, and successfully renegotiate or amend retailer agreements. The success and scale of our platforms depend on our strategic relationships with retailers. The success and scale of our platforms also depends on the level of commitment and support for our platforms from retailers. Renewals or amendments of existing retailer relationships may become more challenging for us in light of our business model and pricing changes. These changes require restructuring our agreements and the way we operate with retailers and revenue arrangements for certain services. If we do not expand these relationships, if we do not renew or amend these relationships on as favorable terms as were in place immediately prior to renewal or amendment, if we lose significant retailers, or if we do not add new retailers to our platforms, our business will be negatively affected. In the near term, we expect that the forthcoming termination of our relationship with Albertsons will have a negative impact on our financial performance.
Innovation in our media and promotions offerings, expansion of our consumer reach and growth of our data and analytics capabilities.    Our ability to grow our revenue in the future will depend on our ability to (i) innovate and invest in promotion and media solutions, particularly with regard to automation and self-service offerings; and (ii) invest in solutions around our data and analytic capabilities, referred to as Quotient Analytics and Audiences, for advertisers and retailers.
International Growth and Acquisitions.   Our ability to grow our revenues will also depend on our ability to grow our operations and offerings in existing international markets and expand our business through selective acquisitions, similar to our acquisitions of MLW Squared inc. ("Ahalogy"), Crisp Media, Inc. ("Crisp"), Elevaate Ltd. ("Elevaate"), SavingStar Inc. ("SavingStar"), Shopmium SAS ("Shopmium") and Ubimo Ltd. ("Ubimo"), and our ability to integrate such acquisitions with the core business of the Company.
Components of Our Results of Operations
Revenues
We generate revenues by providing digital media and promotions solutions to our customers and partners. We provide digital promotions, including digital coupons, and/or media programs to our customers which consist of advertisers, 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, which are typically billed monthly. Duration-based campaigns are generally billed prior to campaign launch.
Digital Media.    Our media programs enable advertisers and retailers to distribute digital media to promote their brands and products on our retailer's 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. 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.Changes to the way we process and deliver media or changes in our arrangements with retailers or partners, including whether we are acting as the retailers' agent, could affect whether revenue is recognized on a gross or net basis.
Digital Promotions.    Our digital promotions programs typically include both promotion set up fees and promotion campaign fees. Promotion setup fees relates to the creation of digital promotions and setup of the underlying campaign on our proprietary platforms for tracking of related clicks. We recognize revenues related to
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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 platforms by either saving it to a retailer's loyalty account for automatic digital redemption, or by 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. Changes to the way we process and deliver promotions or changes in our arrangements with retailers or partners, including whether we are acting as the retailers' agent, could affect whether revenue is recognized on a gross or net basis.
National Promotions. Our digital promotions also include our national promotions business which are non-retailer specific. Historically, offerings have been sold on a cost-per-click basis. Beginning the first quarter of 2021, we introduced a new offering, Duration-Based National Promotions Solution. This offering provides advertisers access to our proprietary platforms for a specific period of time (the campaign period) in exchange for a fixed fee. We provide a single service of making the advertiser's promotions available for use on our network each day during the campaign period, which generally is between seven and twenty-eight days. The performance obligation is satisfied over time, therefore we recognize revenue ratably over the campaign period.
Shopper Promotions and Media. Our media and promotions programs include shopper campaigns which are retailer-specific. Historically, we recognize revenue for shopper campaign fees as clicks occur.In the fourth quarter of 2021, we introduced a new shopper arrangement whereby retailers pay us for the use of our platforms to sell shopper campaigns to advertisers on behalf of the retailers. We have determined that we are an agent in these arrangements as the retailer is the customer, the retailer controls the delivery of shopper promotion and media programs on our website, and sets the pricing. Our obligation in these arrangements is to provide use of our platforms to the retailers. The retailer determines how shopper promotions and media programs are executed through our platforms; therefore, we recognize revenue on a net basis under these arrangements. Revenue under these arrangements was not significant during 2021, however, we expect revenue for these arrangements to increase during 2022.
Cost of Revenues
Cost of revenues includes the costs resulting from distribution fees or revenue share. If we deliver a digital promotion or media on a retailer’s website or mobile applications, or through its loyalty program, or through the website or mobile applications of a publisher, we generally pay a distribution fee or revenue share to the retailers or publisher which is included in our cost of revenues. These costs are expensed as incurred. We generally do not pay a distribution fee for a coupon, rebate or code which is offered through the website of the advertiser or retailer that is offering the coupon, rebate or coupon code. From time to time, we have entered into arrangements pursuant to which we have agreed to the payment of minimum distribution or other service fees that are included in our cost of revenues.
Cost of revenues also includes personnel compensation costs; depreciation and amortization expense of equipment; software and acquired intangible assets associated with revenue producing technologies; amortization of certain exclusivity rights acquired under strategic partnerships; data center costs; third-party service fees including traffic acquisition costs which consists of payments related to delivering campaigns on certain networks; and purchase of third-party data. Personnel costs related to costs of revenues include salaries, bonuses, stock-based compensation and employee benefits. These costs are primarily attributable to individuals maintaining our data centers and members of our network operations group which initiates, sets up and delivers digital promotion and media campaigns. We capitalize costs related to software that is developed or obtained for internal use. Costs incurred in connection with internal software development for revenue-producing technologies are capitalized and are amortized in cost of revenues over the internal use software’s useful life. The amortization of these costs begins when the internally developed software is ready for its intended use.
Operating Expenses
We classify our operating expenses primarily into three categories: sales and marketing, research and development, and general and administrative. Our operating expenses consist primarily of personnel compensation costs and, to a lesser extent, professional fees and facilities expense. Personnel costs for each category of operating expenses generally include salaries, bonuses, stock-based compensation, and employee benefits.
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Sales and marketing.    Our sales and marketing expenses consist primarily of personnel compensation costs (including salaries and benefits, sales commissions, and stock-based compensation) provided to our sales and marketing personnel. Sales and marketing expenses also include facility costs and other related overhead costs; marketing programs; amortization of acquired intangible assets; travel costs; and trade show expenses. We expect to continue to invest in sales and marketing in order to support our growth and business objectives, while also continuing to optimize our investment in promotional and advertising activities.
Research and development.    Our research and development expenses consist primarily of personnel compensation costs (including salaries and benefits, bonuses and stock-based compensation) provided to our engineering personnel; facility costs and other related overhead costs; costs related to the development of new products and the enhancement of existing products; fees for design, testing and consulting activities; and other related services.
We believe that continued investment in technology, as well as business process and automation, is critical to attaining our strategic objectives, and we intend to balance our investment in research and development with our continued operational and cost optimization efforts. We intend to continue to expand our tools and products that will enable our business to scale and provide more offering to our customers.
General and administrative.    Our general and administrative expenses consist primarily of personnel compensation costs (including salaries and benefits, bonuses and stock-based compensation) provided to our executives, finance, legal, human resource, and administrative personnel; facility costs and other related overhead costs; fees paid for professional services including legal, tax, accounting services; and otherrelated expenses.
We expect general and administrative expenses to remain relatively consistent in future periods as we balance our investment in corporate infrastructure with our continued operational and cost optimization efforts.
Change in fair value of contingent consideration.    The change in fair value of contingent consideration is due to the re-measurement of contingent consideration liabilities resulting from acquisitions based on the expected achievement of certain financial metrics over each acquisition’s respective contingent consideration period.
Interest expense
Interest expense consists of cash coupon interest, accretion of debt discounts and issuance costs and primarily relates to our debt obligations under our convertible senior notes issued during the fourth quarter of 2017.
Other Income (Expense), Net
Other income (expense), net, includes interest income on U.S. Treasury Bills held as cash equivalents and foreign currency exchange gains and losses.
Provision for Income Taxes
We recorded a provision for income taxes of $3.6 million, $0.7 million, and $0.7 million for the years ended December 31, 2021, 2020 and 2019, respectively. The provision for income taxes for the year ended December 31, 2021 was primarily due to increased earnings in foreign jurisdictions.
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Results of Operations
The following tables set forth our consolidated results of operations and our consolidated results of operations as a percentage of revenues for the periods presented.
Year Ended December 31,
202120202019
(in thousands, except percentages)
Revenues$521,494 100.0 %$445,887 100.0 %$436,160 100.0 %
Cost of revenues332,67263.8 %277,91462.3 %263,60660.4 %
Gross margin188,822 36.2 %167,973 37.7 %172,554 39.6 %
Operating expenses:
Sales and marketing112,263 21.5 %104,527 23.4 %101,244 23.2 %
Research and development44,941 8.6 %40,316 9.0 %39,076 9.0 %
General and administrative56,776 10.9 %54,177 12.2 %58,328 13.4 %
    Change in fair value of contingent
    consideration		1,392 0.3 %20,234 4.5 %1,571 0.4 %
Total operating expenses215,372 41.3 %219,254 49.2 %200,219 46.0 %
Loss from operations(26,550)(5.1)%(51,281)(11.5)%(27,665)(6.3)%
Interest expense(15,177)(2.9)%(14,521)(3.3)%(13,955)(3.2)%
Other income (expense), net(210)— %1,140 0.3 %5,223 1.2 %
Loss before income taxes(41,937)(8.0)%(64,662)(14.5)%(36,397)(8.3)%
Provision for income taxes3,631 0.7 %719 0.2 %660 0.2 %
Net loss$(45,568)(8.7)%$(65,381)(14.7)%$(37,057)(8.5)%
Disaggregated Revenue
The following table presents the Company’s revenues disaggregatedprovides information regarding all plan and
non-plan
compensation awarded to, earned by, typeor paid to, each of services. The majority of the Company’s revenue is generated from sales within the United States.
 Year Ended December 31,2020 to 20212019 to 2020
(in thousands, except percentages)202120202019$ Change% Change$ Change% Change
Promotion$252,831 $237,385 $246,479 $15,446 7 %$(9,094)(4)%
Media268,663 208,502 189,681 60,161 29 %18,821 10 %
Total revenue$521,494 $445,887 $436,160 $75,607 17 %$9,727 2 %
Revenues
Year Ended December 31,2020 to 20212019 to 2020
(in thousands, except percentages)202120202019$ Change% Change$ Change% Change
Revenues$521,494 $445,887 $436,160 $75,607 17 %$9,727 2 %
Revenues increased by $75.6 million, or 17%,our NEOs during the year ended December 31, 2021, December 31, 2020 and December 31, 2019. Except as comparedspecified, the footnote disclosures below generally relate only to 2020. The increase was primarily duecompensation for 2021. We included footnotes to compensation for prior years in the growth in 2021 of retailer programs driving more advertising spend on our platform which increased media revenue, and an increase in promotion revenue as brands ramp spend on our platforms. The higher growth in media revenues in 2021 has been primarily dueproxy statements relating to retailer programs that drive more brand spending through Quotient's RPM platform. These retailer programs incentivize advertisers to invest in marketing programs that target the retailer’s shoppers to increase sales and generate more distribution fees payments to our retailer partners. During 2021, revenues from digital promotion and media campaigns were 48% and 52% of total revenues, respectively, as compared to 53% and 47% of total revenues, respectively, for 2020.those years.
Name and
Principal
Position
  
Year
   
Salary
($)
   
Stock
Awards
($)
(1)
   
Option
Awards
($)
(2)
   
Non-Equity
Incentive Plan
Compensation
($)
(3)
   
All Other
Compensation
($)
  
Total ($)
 
Steven Boal
   2021    500,000    2,499,995    —      375,000    6,000(4)   3,380,995 
Founder, Chief Executive Officer and Member of the Board of Directors
   2020    500,000    2,499,986    1,999,575    —      7,032   5,006,593 
    2019    441,218    1,797,900    1,500,401    —      6,552   3,746,071 
Scott Raskin
   2021    461,250    1,399,996    —      345,977    6,000(4)   2,213,223 
President
   2020    450,000    1,849,992    1,624,655    —      57,032   3,981,679 
    2019    224,567    4,267,493    4,016,217    40,018    5,874   8,554,169 
Pamela Strayer
(6)
   2021    450,000    1,399,996    —      253,125    —     2,103,121 
Former CFO & Treasurer
   2020    450,000    168,743    —      —      100,552   719,295 
    2019    75,000    1,499,999    1,499,613    —      92   3,074,704 
Matthew Krepsik
(5)
   2021    254,545    1,388,900    —      138,198    6,000(4)   1,787,643 
Chief Technology Officer and Chief Executive Officer - Designee
                                  
Connie Chen
   2021    378,750    749,989    —      170,446    6,000(4)   1,305,185 
GC, Compliance Officer and Secretary
   2020    368,804    712,492    599,871    —      6,552   1,687,719 
(1)
The amounts reported in this column for 2021 reflect the aggregate grant date fair value of RSUs and PSUs 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 statements included in our Annual Report on Form
10-K
as of December 31, 2021, as filed with the SEC on March 1, 2022. In accordance with SEC rules, the amounts included in this column for the PSU awards granted during 2021 are calculated based on the probable outcome of the performance conditions. 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 NEOs from them. The value of the PSUs granted in 2021, assuming that the highest level of performance conditions will be achieved, is as follows: $4,722,607 for Mr. Boal, $2,644,659 for Mr. Raskin, $2,644,659 for Ms. Strayer, $1,700,000 for Mr. Krepsik, and $1,416,777 for Ms. Chen.
(2)
The amounts reported in this column for 2021 reflect the aggregate grant date fair market value of the options granted during the year, as computed in accordance with FASB ASC Topic 718.
(3)
The amounts reflected in this column for 2021 represent cash payments earned under our Annual Incentive Plan. For more information please see “
Executive Compensation - Compensation Elements – Annual Incentive Plan.
”
(4)
The amount reported represents 401(k) matching contributions.
(5)
Mr. Krepsik was hired as Chief Analytics Officer effective as of April 26, 2021, and was appointed the Company’s Chief Technology Officer in June 2021.
(6)
Ms. Strayer resigned as CFO and Treasurer effective April 5, 2022.
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GRANT OF PLAN-BASED AWARDS





Cost of Revenues and Gross Profit
Year Ended December 31,2020 to 20212019 to 2020
(in thousands, except percentages)202120202019$ Change% Change$ Change% Change
Cost of revenues$332,672 $277,914 $263,606 $54,758 20 %$14,308 5 %
Gross profit$188,822 $167,973 $172,554 $20,849 12 %$(4,581)(3)%
Gross margin36 %38 %40 %
Cost of revenues for the year ended December 31, 2021 increased by $54.8 million, or 20%, as compared to the same period in 2020. The increase was primarily due to a net increase of $57.6 million in distribution fees paid to our retailer partners for media and promotion campaigns delivered through our platforms, offset by a decrease in data and media acquisition costs for offsite media on non-owned-and-operated properties; a charge of $9.1 million related to the impairment of certain intangible assets due to circumstances surrounding the termination of our partnership with Albertsons; an increase in compensation costs of $3.5 million; an increase in overhead expenses of $0.3 million related to facilities and infrastructure support; and an increase in restructuring charges of $0.2 million related to severance for impacted employees. The collective impact of these factors was partially offset by a decrease in amortization expense of $7.0 million related to acquired intangible assets and the benefit of the non-recurring settlement charge of $8.9 million recorded in the prior year related to a contract dispute with Albertsons associated with a guaranteed distribution fee arrangement.
Gross margin for the year ended December 31, 2021 decreased to 36% from 38%, as compared to the same period in 2020. The decrease was primarily due to a charge related to the impairment of certain intangible assets as well as the shift in our product mix towards more media revenues, which have higher cost of sales due to media acquisition costs and distribution fees and which increased as a percentage of our total revenue as compared to our promotion revenue. This was partially offset by a higher proportion of revenue recognized on a net basis.
We expect the cost of revenues during fiscal 2022 to decline, in absolute dollars, as we expect a higher proportion of our revenue to be recognized on a net basis. We recognize revenue on a net basis for arrangements when we are act as an agent and do not control the service provided by the retailer or the price charged by the partner. CPGs and retailers are responsible for the determination of where a campaign is delivered and retailers are responsible for providing the underlying services.
Sales and Marketing
Year Ended December 31,2020 to 20212019 to 2020
(in thousands, except percentages)202120202019$ Change% Change$ Change% Change
Sales and marketing$112,263 $104,527 $101,244 $7,736 7 %$3,283 3 %
Percent of revenues22 %23 %23 %
Sales and marketing expenses increased by $7.7 million, or 7%, during the year ended December 31, 2021 as compared to the same period in 2020. The increase was primarily the result of an increase in compensation costs of $11.1 million related to hiring additional employees to support our growth and business objectives; an increase in restructuring charges of $0.9 million related to severance for impacted employees; and an increase in intangible asset amortization expense of $1.3 million. The collective impact of these factors was partially offset by reduced spending in travel, entertainment, and other costs of $5.6 million.
We expect sales and marketing expenses, as a percentage of revenue, to increase as we plan to continue to invest in sales and marketing in order to support our growth and business objectives.
Research and Development
Year Ended December 31,2020 to 20212019 to 2020
(in thousands, except percentages)202120202019$ Change% Change$ Change% Change
Research and development$44,941 $40,316 $39,076 $4,625 11 %$1,240 3 %
Percent of revenues9 %9 %9 %
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Research and development expenses increased by $4.6 million, or 11%, during the year ended December 31, 2021, as compared to the same period in 2020. The increase was primarily due to an increase in compensation costs of $5.6 million related to hiring additional employees to support our growth and business objectives and an increase in restructuring charges of $0.3 million related to severance for impacted employees. The collective impact of these factors was partially offset by a net increase in capitalization of internal use software development costs of $1.3 million.
During the year ended December 31, 2021, we capitalized internal use software development costs of $7.0 million, as compared to $5.7 million during the year ended December 31, 2020.
We believe that continued investment in technology is critical to attaining our strategic objectives, and we intend to balance our investment in research and development with our continued operational and cost optimization efforts. However, we expect research and development expenses, in absolute dollars, to decline in future periods as we consolidate our engineering function to drive efficiencies. Over the long term, we plan to continue to expand our tools and products that will enable our business to scale and provide more offerings to our customers.
General and Administrative
Year Ended December 31,2020 to 20212019 to 2020
(in thousands, except percentages)202120202019$ Change% Change$ Change% Change
General and administrative$56,776 $54,177 $58,328 $2,599 5 %$(4,151)(7)%
Percent of revenues11 %12 %13 %
General and administrative expenses increased by $2.6 million, or 5%, during the year ended December 31, 2021, as compared to the same period in 2020. The increase was primarily due to an increase in professional service fees of $5.3 million, including higher legal fees due to litigation matters, partially offset by a decrease in compensation costs of $1.2 million, a decrease in other administrative expenses of $1.1 million, a decrease in acquisition related charges of $0.3 million, and a decrease in restructuring charges of $0.1 million.
We expect general and administrative expenses, in absolute dollars, to remain relatively consistent in future periods as we balance our investment in corporate infrastructure with our continued operational and cost optimization efforts.
Change in Fair Value of Contingent Consideration
Year Ended December 31,2020 to 20212019 to 2020
(in thousands, except percentages)202120202019$ Change% Change$ Change% Change
Change in fair value of contingent consideration$1,392 $20,234 $1,571 $(18,842)(93)%$18,663 1,188 %
During the year ended December 31, 2021, we recorded a net charge of $1.4 million related to the re-measurement of contingent consideration associated with both Ubimo and Elevaate, due to the increase in expected achievement of certain financial metrics over the contingent consideration period, as discussed in Note 3 (Fair Value Measurements) to our Consolidated Financial Statements.
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Interest Expense and Other Income (Expense), Net
Year Ended December 31,2020 to 20212019 to 2020
(in thousands, except percentages)202120202019$ Change% Change$ Change% Change
Interest expense$(15,177)$(14,521)$(13,955)$(656)5 %$(566)4 %
Other income (expense), net(210)1,140 5,223 (1,350)(118)%(4,083)(78)%
$(15,387)$(13,381)$(8,732)$(2,006)15 %$(4,649)53 %
Interest expense is related to the convertible senior notes, promissory note and finance lease obligations.  
Other income (expense), net consists primarily of interest income on U.S. Treasury Bills held as cash equivalents. The decrease in other income (expense), net during the year ended December 31, 2021, as compared to the same period in 2020, was due to lower interest income earned on U.S. Treasury Bills held as cash equivalents, net of the effect of re-measuring balances in foreign currency due to exchange rate fluctuations.
Provision for Income Taxes
Year Ended December 31,2020 to 20212019 to 2020
(in thousands, except percentages)202120202019$ Change% Change$ Change% Change
Provision for income taxes$3,631 $719 $660 $2,912 405 %$59 9 %
The provision for income taxes of $3.6 million for the year ended December 31, 2021 was primarily due to increased earnings in foreign jurisdictions.
Liquidity and Capital Resources
We have financed our operations and capital expenditures primarily through cash flows from operation as well as from the proceeds from the issuance of convertible senior notes in 2017. As of December 31, 2021, our principal source of liquidity was cash and cash equivalents of $237.4 million, which were held for working capital purposes. Our cash equivalents are comprised primarily of money market funds.
We have incurred and expect to continue to incur legal, accounting, regulatory compliance and other costs in future periods as we continue to invest in corporate infrastructure and in connection with litigation matters. In addition, we may use cash to fund acquisitions or invest in other businesses, or incur capital expenditures including leasehold improvements or technology development activities. We intend to continue to manage our operating expenses in line with our existing cash and available financial resources, and we anticipate we will incur increased spending in future periods in order to execute our long-term business plan and to support our growth to fund our operating expenses.
Our Board of Directors previously approved programs for us to repurchase shares of our common stock. In February 2021, the Company’s Board of Directors authorized the Company to repurchase up to $50.0 million of its common stock from February 2021 through February 2022 (the "February 2021 Program"). Under the February 2021 Program, 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 February 2021 Program provides that the Company may suspend, modify or terminate the February 2021 Program at any time without prior notice. During the year ended December 31, 2021, the Company did not repurchase any shares of its common stock, nor did the Company repurchase any of its common stock thereafter. The Company terminated the February 2021 Program prior to its expiration.
Some of our agreements with retailers include an upfront payment for exclusive service rights for the term of the agreement. These payments are generally recognized as an expense or contra-revenue over the term of the exclusive right benefit. We expect payments related to exclusive service rights to total approximately $8.0 million over the next fiscal quarter.
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In addition, some of our agreements with retailers include certain 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 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 related to the retailer's marketing efforts to promote the digital platform, and revenues and associated revenue share payments for the particular retailer relationship that were projected. For example, in 2020 the Company's efforts to implement, with Albertsons, one of our solutions resulted in multiple disputes being raised by each of the parties against the other, one of which disputes resulted in the Company not being able to meet the contractual minimum at the end of the applicable period under the agreement. In order to resolve certain of the disputes regarding the parties' respective obligations, we recognized a loss of $8.8 million during the year ended December 31, 2020. This loss was included in cost of revenues on our consolidated statements of operations. During the second quarter of 2021, the Company notified Albertsons that, due to Albertsons' failure to meet certain obligations under the agreement, the Company is not obligated to meet the contractual minimums for the period that ended in October 2021. In connection with renewal discussions between the parties, we received a letter in October 2021 from Albertsons notifying us of their intent to early terminate our agreement related to the delivery of promotions and media campaigns, effective December 31, 2021. We informed Albertsons that we disputed their right to terminate the agreement prior to March 31, 2022. The parties are currently in litigation. If the contractual minimum applicable to the period that ended in October 2021 is enforceable, the Company may recognize a loss that, depending on a variety of factors, is estimated to be as high as $8.5 million.
In November 2017, we 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 notes will mature on December 1, 2022, unless earlier repurchased, redeemed, or converted in accordance with their terms.
In November 2021, we entered into a Loan, Guaranty, and Security Agreement (the "ABL Credit Agreement") which provides for an asset-backed revolving credit facility in the aggregate amount of $100.0 million and a sublimit for letters of credit of $10.0 million (the "ABL Facility"). The ABL Facility matures on November 17, 2026 with a springing maturity 91 days prior to the maturity of the notes under certain circumstances.
We did not have any off-balance sheet arrangements as of December 31, 2021.
We believe our existing cash, cash equivalents, cash flow from operations, and access to financing sources, including our ABL facility, will be sufficient to meet our scheduled debt repayment obligations, working capital and capital expenditure needs for the next 12 months and beyond. To the extent that current and anticipated future sources of liquidity are insufficient to fund our future business activities and requirements, we may be required to seek additional equity or debt financing. In the event additional financing is required from outside sources, we may not be able to raise it on terms acceptable to us or at all. During this period of uncertainty and volatility related to the COVID-19 pandemic, we will continue to monitor our liquidity. See Part I, Item 1A, Risk Factors, for an additional discussion of risks related to COVID-19.
Our material cash requirements from known contractual and other obligations primarily relate to our purchase obligations, debt, and lease obligations. Expected timing of those payments are as follows (in thousands):
TotalNext 12 MonthsBeyond 12 Months
Debt (1)$203,208 $203,208 $— 
Operating leases (2)31,838 4,907 26,931 
Purchase obligations (3)24,574 11,214 13,360 
Total$259,620 $219,329 $40,291 
(1) Represents aggregate principal amount and estimated interest obligation of the convertible senior notes due 2022, without the effect of associated discounts. See Note 9 Debt Obligations in the accompanying notes to our consolidated financial statements for further details.
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(2) We have various lease office facilities, including our corporate headquarters in Salt Lake City, Utah, and various sales offices under operating lease agreements that expire on various dates through and including January 2031.
(3) We have an unconditional purchase commitment through 2034 in the amount of $5.4 million for marketing arrangements relating to the purchase of a 20-year suite license for a professional sports team which we use for sales and marketing purposes. We have unconditional purchase commitments, primarily related to distribution fees, ongoing software license fees and marketing services collectively totaling $11.2 million. We also have expected payments related to exclusive service rights of $8.0 million.
Cash Flows
The following table summarizes our cash flows for the periods presented (in thousands):
Year Ended December 31,
202120202019
Cash flows provided by operating activities$26,010 $26,465 $31,818 
Cash flows used in investing activities(14,720)(11,369)(16,824)
Cash flows provided by (used in) financing activities3,309 (17,174)(92,235)
Effects of exchange rates on cash66 66 (23)
Net increase (decrease) in cash and cash equivalents$14,665 $(2,012)$(77,264)
Operating Activities
Cash provided by operating activities is a resultprovides information regarding grants of our net income or loss for the period, adjusted for net non-cash income or expenses and changes in our operating assets and liabilities.
During 2021, net cash provided by operating activities of $26.0 million reflected our net loss of $45.6 million, adjusted for net non-cash expenses of $80.5 million and cash used as a result of changes in working capital of $8.9 million. Non-cash expenses included depreciation and amortization; stock-based compensation; amortization of debt discount and issuance costs; allowance for credit losses; deferred income taxes; change in fair value of contingent consideration; impairment of certain intangible assets; and other non-cash expenses including amortization of right-of-use asset, amortization of deferred cost and loss on disposal of property and equipment. The primary sources of cash from working capital items included an increase in accounts payable and other liabilities of $27.6 million due to timing of services and payments, an increase in deferred revenues of $14.7 million due to higher billings for campaigns, and an increase in accrued compensation of $6.1 million related to bonuses and compensation. The collective impact of these factors was partially offset by an increase in accounts receivable of $40.1 million due to timing of invoicing and collections, an increase in prepaid expenses and other assets of $14.3 million primarily for deferred cost related to a retailer agreement, and an Elevaate contingent consideration payment of $2.9 million related to the changes in fair value over the contingent consideration period.
Investing Activities
Purchases of property and equipment may vary from period-to-period due to the timing of the expansion of our operations, the addition of headcount, and the development activities relatedplan-based awards to our future offerings. We expect to continue to invest in property and equipment, and in the further development and enhancement of our software platforms for the foreseeable future. In addition, from time to time, we may consider potential acquisitions that would complement our existing offerings, enhance our technical capabilities, or expand our marketing and sales presence. Any such future transaction could require potentially significant amounts of capital or could require us to issue our stock and dilute existing stockholders.NEOs during Fiscal 2021:
During 2021, net cash used in investing activities of $14.7 million reflected purchase of property and equipment, which includes capitalized software development costs, and technology hardware and software to support our growth.
       
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)
   
Grant Date
Fair Value
of Stock
And Option
Awards ($)
(4)
 
Steven Boal
   —      375,000    500,000    625,000    —      —      —      —      —   
   3/1/2021    —      —      —      133,356    177,809    355,618    —      —   
   3/1/2021    —      —      —      —      —      —      177,809    2,499,995 
Scott Raskin
   —      348,750    465,000    581,250    —      —      —      —      —   
   3/1/2021    —      —      —      74,679    99,573    199,146    —      —   
   3/1/2021    —      —      —      —      —      —      99,573    1,399,996 
Pamela Strayer
   —      253,125    337,500    421,875    —      —      —      —      —   
   3/1/2021    —      —      —      74,679    99,573    199,146    —      —   
   3/1/2021    —      —      —      —      —      —      99,573    1,399,996 
Matthew Krepsik
     210,938    281,250    351,563    —      —      —      —      —   
   8/1/2021    —      —      —      63,750    85,000    170,000    —      —   
   5/1/2021    —      —      —      —      —      —      75,000    1,225,500 
   5/1/2021    —      —      —      —      —      —      10,000    163,400 
Connie Chen
   —      171,000    228,000    285,000    —      —      —      —      —   
   3/1/2021    —      —      —      40,006    53,342    106,685    —      —   
   3/1/2021    —      —      —      —      —      —      53,342    749,989 
Financing Activities
(1)
In 2021, the Company changed its Annual Incentive Plan to denominate payout in 100% cash to all NEOs; therefore, all amounts reflect cash, if any, issued under the Company’s Annual Incentive Plan. These amounts represent the threshold, target and maximum cash award levels set in 2021 under the AIP.
(2)
The PSU awards, which were issued under the 2013 Equity Incentive Plan (the “2013 Plan”), are subject to vesting based upon the Company’s performance against certain performance metrics during the period beginning on January 1, 2021 and ending on December 31, 2023. The PSU awards vest with respect to 75% of the target number of PSUs for threshold performance, 100% for target performance, and 200% for maximum performance; provided that (i) up to
one-third
of the maximum possible PSUs may be deemed “banked” based upon Company performance which is at or above target as of December 31, 2022, and such PSUs have the potential to become vested even in the event that performance goals have been met at less than threshold level as of December 31, 2023, and (ii) the final payment of these awards may be adjusted downward by 20% based upon the Company’s performance against certain performance metrics. The numbers reflected in this column do not reflect any 20% downward adjustment as described herein. With the exception of certain qualifying terminations of employment (as described under “Potential Payments upon Termination, Change of Control or Certain Other Events,” the executive generally must provide service through the vesting date in order to vest in his or her PSUs.
(3)
The RSUs granted under the 2013 Plan to each of the NEOs (other than Mr. Krepsik) in 2021 were granted subject to time-based vesting in quarterly installments over the four year period beginning on March 1, 2021, provided that the executive remains continually employed through each applicable vesting date. Mr. Krepsik’s May 1, 2021 award of 75,000 RSUs shall vest with respect to 25% of the award on May 1, 2022, and in equal quarterly installments thereafter until the May 1, 2025, and his May 1, 2021 award of 10,000 RSUs shall vest in full on May 1, 2022, in each case, subject to his continuous employment through each applicable vesting date.
(4)
The amounts reported in this column reflect the grant date values of stock awards made to our NEOs computed in accordance with with FASB ASC Topic 718. If the outcome of the performance conditions as of the date of grant had been maximum performance, then the grant date fair value of the PSUs would have been as follows: $4,722,607 for Mr. Boal, $2,644,659 for Mr. Raskin, $2,644,659 for Ms. Strayer, $1,700,000 for Mr. Krepsik, and $1,416,777 for Ms. Chen. The assumptions used to calculate these amounts are discussed in Note 10 to our notes to consolidated financial statements included in our Annual Report on Form
10-K
as of December 31, 2021, as filed with the SEC on March 1, 2022.
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Executive Employment Arrangements





Steven Boal
Our financing activities have consisted primarily of payments made for shares withheld to cover payroll withholding taxes and the issuance of shares of common stock upon the exercise of stock options.
During 2021, net cash provided by financing activities of $3.3 million reflected $16.2 million of proceeds received from exercises of stock options under equity incentive plans, as well as proceeds from purchases of shares pursuant to the Employee Stock Purchase Plan (ESPP). These items were partially offset by payments made for shares withheld to cover the required payroll withholding taxes of $6.3 million, Elevaate contingent consideration payments of $6.1 million (initially measured and included as part of purchase consideration on the date of acquisition), and payments on promissory note and finance lease obligations of $0.5 million.
Critical Accounting Policies and Estimates
Our consolidated financial statements are prepared in accordance with U.S. GAAP. The preparation of these consolidated financial statements requires us to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues, expenses and related disclosures. We evaluate our estimates and assumptions on an ongoing basis. Our estimates are based on historical experience and various other assumptions that we believe to be reasonable under the circumstances. Our actual results could differ from these estimates.
We believe that the assumptionshave not entered into an employment agreement with Steven Boal, our Chief Executive Officer, and estimates associated with revenue recognition and goodwill and intangible assets have the greatest potential impact on our consolidated financial statements. Therefore, we consider these to be our critical accounting policies and estimates. For further information on all of our significant accounting policies, see the notes to our consolidated financial statements.his employment is
at-will.
Revenue Recognition
We primarily generate revenue by providing digital media and promotions solutions to our customers and partners. Revenues are recognized when control of the promised goods or services is transferred to our customers, in an amount that reflects the consideration we expect to be entitled to in exchange for those goods or services.
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). We typically 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, by being primarily responsible to our customers, by having discretion in establishing pricing for the delivery of the digital coupons and media, or by a combination of these factors.
In other cases (e.g., sponsored search and DOOH offerings), we report 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 real-time digital advertising inventory, use of data and other add-on features in designing and executing our campaigns. We charge our customers a platform fee based on a percentage of the digital advertising inventory and data costs purchased through the use of our platforms. We have determined that we are an agent in these arrangements because we do not have control of the digital advertising inventory before it is transferred to the customer and do not set prices. The revenue we recognized on a net basis was not significant during 2021, 2020 or 2019.
Additionally, during the fourth quarter of 2021, we introduced retailer-specific promotion or media campaigns (also known as shopper campaigns). We have determined that we are an agent in these arrangements as the retailer is the customer, the retailer controls the delivery of shopper promotion and media programs on its website and sets the pricing. Our obligation in these arrangements is to provide use of our platforms to the retailers. The retailer determines how shopper promotions and media programs are executed through our platform. Under these arrangements, we report revenue on a net basis.

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Goodwill and Intangible Assets
Goodwill
Goodwill 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. Events or circumstances that could trigger an impairment test include, but are not limited to, a significant adverse change in the business climate or in legal factors; an adverse action or assessment by a regulator; a loss of key personnel; significant changes in our use of the acquired assets or the strategy for our overall business; significant negative industry or economic trends; significant underperformance relative to operating performance indicators; downward revisions to internal forecasts; a significant decline in market capitalization; and significant changes in competition. We operate in a single reporting unit, and we typically complete our annual impairment test during the fourth quarter of each year.
In connection with renewal discussions between the parties, we received a letter in October 2021 from Albertsons notifying us of its intent to early terminate the agreement between the parties related to the delivery of promotions and media campaigns, effective December 31, 2021. We informed Albertsons that we disputed Albertsons' right to terminate the agreement prior to March 31, 2022. The parties are currently in litigation. Due to circumstances surrounding the termination of our partnership with Albertsons, we determined a triggering event had occurred during the third quarter of 2021 that required an interim impairment assessment for our goodwill reporting unit and intangible assets and other long-lived assets.
In performing our qualitative interim impairment assessment during the third quarter of 2021, we considered (i) the results of our impairment testing from the most recent testing date, which was in the fourth quarter of 2020 (in particular, the magnitude of the excess of fair value over carrying value observed), (ii) downward revisions to internal forecasts, (iii) trends in market multiples and (iv) declines in market capitalization. The interim test resulted in our determination that the fair values of our reporting unit exceeded its carrying value and, therefore our goodwill was not impaired.
In the fourth quarter of 2021, we performed our annual impairment test and based on the results of our assessment, we determined that the fair value of the reporting unit exceeded its carrying value and, therefore, our goodwill was not impaired. There were no changes in the carrying value of goodwill andMr. Boal’s base salary as of December 31, 2021 was $500,000 and 2020, goodwillhis annual target bonus was $128.4 million. There was100% of his base salary. Mr. Boal is also eligible to participate in the employee benefit plans made available to most of our other employees.
Please see “Potential Payments upon Termination, Change of Control or Certain Other Events” for additional information.
Scott Raskin
Scott Raskin, our President since August 5, 2019, is employed with us pursuant to an offer letter dated August 5, 2019, which sets forth the terms and conditions of his employment with us. The offer letter has no impairmentspecific term and constitutes
at-will
employment. Mr. Raskin’s base salary as of goodwill for the years ended December 31, 2021 2020was $465,000 and 2019. We will continuehis annual target bonus was 100% of his base salary. Mr. Raskin is also eligible to monitor the operating results, cash forecasts and challenges from declinesparticipate in current business and market conditions, as well as impacts of COVID-19 for our reporting unit.
Intangible Assets
Intangible assets with a finite lifeemployee benefit plans that are amortized over their estimated useful lives. Intangible assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of intangible assets may not be recoverable.
We evaluate the need for an impairment charge relatinggenerally available to long-lived assets whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. The estimated future undiscounted cash flows associated with the asset are compared to the asset’s carrying amount to determine if a write-down to a new depreciable basis is required. If required, an impairment charge is recorded based on an estimate of future discounted cash flows.
We evaluate our 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 as well as the operational performancemost of our businesses. Additionally, future events could cause us to conclude that impairment indicators exist and that therefore, long-lived assets could be impaired.employees.
We consider the following to be some examples
Please see “Potential Payments upon Termination, Change of indicators that may trigger an impairment review: (i) actual undiscounted cash flows significantly below historicalControl or projected future undiscounted cash flowsCertain Other Events” 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 our overall business strategy; (iii) significant negative industry or economic trends; (iv) increased competitive pressures; and (v) a significant decline in our stock price for a sustained period of time.additional information.
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Pamela Strayer


Pamela Strayer, our Chief Financial Officer and Treasurer beginning November 11, 2019 who resigned from the Company effective April 5, 2022, was employed pursuant to an offer letter dated October 31, 2019, which sets forth the terms and conditions of her employment with us. This offer letter has no specific term and constitutes
at-will



Once we determineemployment. Ms. Strayer’s base salary as of December 31, 2021 was $450,000 and her annual target bonus was 75% of her base salary. Ms. Strayer was also eligible to participate in employee benefit plans that a potential impairment indicator exists, we perform 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, a determination is made 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.
As a result of performing our interim intangibles impairment assessment dueare generally available to the triggering event noted above, we recorded an intangible asset impairment charge of $2.6 million and $6.5 million during the second and third quarter of 2021, respectively, related to promotion service rights, media service rights, and data access rights. The impairment charges were recorded within cost of revenues, on the consolidated statements of operations.
In the fourth quarter of 2021, we performed an updated impairment assessment analysis and determined that impairment did not exist.
The key assumptions used in our estimates of projected cash flow associated with our 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 our plans and intentions. Any material change in our assumptions could significantly impact projected future cash flows associated with the intangible assets, and these factors are considered in evaluating impairment. Other factors, such as increased competition or a decrease in the desirabilitymost of our products, could leadother employees.
Please see “Potential Payments upon Termination, Change of Control or Certain Other Events” for additional information.
Matthew Krepsik
Matthew Krepsik, our Chief Technology Officer since June 1, 2021, is employed pursuant to lower projected sales levels,an offer letter dated March 29, 2021, which would adversely impact cash flows. A significant decreasesets forth the terms and conditions of his employment with us. This offer letter has no specific term and constitutes
at-will
employment. Mr. Krepsik’s base salary as of December 31, 2021 was $375,000 and his annual target bonus was 75% of his base salary. Mr. Krepsik is also eligible to participate in cash flows in the future could result in an impairment of long-lived assets. We will continueemployee benefit plans that are generally available to monitor the operating results, cash flow forecasts and challenges from declines in current market conditions, as well as circumstances relating to the terminationmost of our partnership with Albertsons and the impactsother employees.
Please see “Potential Payments upon Termination, Change of COVID-19,Control or Certain Other Events” for the possible additional impairment of these intangible assets.information.
Recently Issued Accounting Pronouncements
See Part II, Item 8, Consolidated Financial Statements and Supplementary Data, and Note 2, Summary of Significant Accounting Policies, of the Notes to Consolidated Financial Statements 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 risk, foreign exchange risks and inflation risk. 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 also 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
74






market value changes affect the fair value of our convertible senior notes, but those factors 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, the foreign currencies being 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 (i) our net income (loss) as a result of transaction gains (losses) related to revaluing certain cash balances, and (ii) trade accounts receivable balances and intercompany balances that are denominated in currencies other than the U.S. dollar, we believe such fluctuations 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. Although we may in the future, at this time we do not 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.

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Item 8.    Financial Statements
Connie Chen
Connie Chen, our General Counsel, Compliance Officer and Supplementary Data.Secretary since January 1, 2016, is employed pursuant to an offer letter dated August 19, 2013, which sets forth the terms and conditions of her employment with us. This offer letter has no specific term and constitutes
at-will
employment. Ms. Chen’s base salary as of December 31, 2021 was $380,000 and her annual target bonus was 60% of her base salary. Ms. Chen is also eligible to participate in employee benefit plans that are generally available to most of our other employees.
Please see “Potential Payments upon Termination, Change of Control or Certain Other Events” for additional information.
Financial Statements
Potential Payments upon Termination, Change of Control or Certain Other Events
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
We believe that severance and change of control protections play valuable roles in attracting and retaining executive officers.
Change of Control Severance Agreements
The Company entered into a Change of Control Severance Agreement with Steven Boal on August 2, 2016, as amended on May 1, 2019; with Scott Raskin on August 5, 2019; with Pamela Strayer on November 11, 2019; with Matthew Krepsik on April 26, 2021; and with Connie Chen on July 26, 2016, as amended on May 1, 2019.
On April 25, 2022, the Compensation Committee approved changes, effective May 1, 2022, to each of the Change of Control Severance Agreements for Messrs. Krepsik and Raskin and Ms. Chen (each NEO agreement, as changed or unchanged as the case may be, a “Current Change of Control Agreement,” and each agreement prior to the change, as applicable, a “Former Change of Control Agreement”). The changes to each Change of Control Agreement were approved by the Compensation Committee for the purpose of retaining our key employees, and minimizing the risk of their departure, in light of the pending proxy contest. No changes were made to Mr. Boal and Ms. Strayer’s Change of Control Agreements.
Each Current Change of Control Agreement has a three-year term, which automatically renews for successive three-year periods thereafter, and any obligations of the Company will lapse upon the end of the term. Pursuant to the Current Change of Control Agreements, if the NEO’s employment with the Company is terminated without “Cause” (as such term is defined in the Current Change of Control Agreement and summarized below) and not by reason of death or “Disability” (as such term is defined in the Current Change of Control Agreement), or in case of Messrs. Boal, Raskin and Krepsik and Ms. Strayer, if the NEO terminates their employment with the Company for “Good Reason” (as such term is defined in the Current Change of Control Agreement and summarized below), and, in any event, such termination does not occur within six months (excepting Mr. Boal and Ms. Strayer for whom the period is three months) before or twelve months after a “Change of Control” (as such term is defined in the Current Change of Control Agreement) of the Company (the “Change of Control Period”), then, provided the NEO signs and does not revoke a separation agreement and release of claims in favor of the Company and subject to the terms of the Current Change of Control Agreement, the NEO will receive benefits as summarized in the table below and described more fully in the text following the table. Under each of the Former Change of Control Agreements, the Change of Control Period commenced three months prior to a Change of Control of the Company.
 
Reports
Name
Termination Event
Lump Sum (% of Independent Registered Public Accounting Firm (PCAOB ID: 42)annual
base salary)
77
Health Coverage Lump
Sum (monthly COBRA
premium factor)
Consolidated Financial Statements:
Consolidated Balance Sheets
Steven Boal
80
Termination Without Cause/Resign for Good Reason100% x 12
Consolidated Statements of Operations
Scott Raskin
81
Termination Without Cause/Resign for Good Reason100% x 12
Consolidated Statements of Comprehensive Loss
Pamela Strayer
82
Termination Without Cause/Resign for Good Reason100% x 12
Consolidated Statements of Stockholders’ Equity
Matthew Krepsik
83
Termination Without Cause/Resign for Good Reason100% x 12
Consolidated Statements of Cash Flows
Connie Chen
84
Termination Without Cause
75
85
% 		x 9

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As indicated in the table above, if the termination event occurs outside of the Change of Control Period, the NEO will receive the following benefits: (i) a
lump-sum
payment (less applicable withholding taxes) equal to 100% for Messrs. Boal, Raskin and Krepsik and Ms. Strayer and 75% for Ms. Chen, of the NEO’s annual base salary as in effect immediately prior to the NEO’s termination date, and (ii) a taxable
lump-sum
payment (less applicable withholding taxes) in an amount equal to the monthly COBRA premium that the NEO would be required to pay to continue the NEO’s group health coverage in effect on the date of NEO’s termination of employment, multiplied by twelve for Messrs. Boal, Raskin and Krepsik and Ms. Strayer and nine for Ms. Chen. Under Mr. Krepsik’s Former Change of Control Agreement, he would have received the following benefits: (i) a lump-sum payment (less applicable withholding taxes) equal to 75% of his annual base salary as in effect immediately prior to his termination date, and (ii) a taxable lump-sum payment (less applicable withholding taxes) in an amount equal to the monthly COBRA premium that he would be required to pay to continue his group health coverage in effect on the date of his termination of employment, multiplied by nine.




Pursuant to the terms of the Current Change of Control Agreement, if the NEO’s employment with the Company is terminated by the Company without Cause and not by reason of death or Disability or the NEO terminates his or her employment with the Company for Good Reason, and, in any event, such termination occurs during the Change of Control Period, then, provided the NEO signs and does not revoke a separation agreement and release of claims in favor of the Company and subject to the terms of the Current Change of Control Agreement, the NEO will receive benefits as summarized in the table below and described more fully in the text following the table.
Report
Name
  
Lump sum
% of annual base
salary
  
Lump sum % of target
annual incentive
  
Health coverage monthly
COBRA premium factor
   
Outstanding and
unvested equity at
termination
(1)
Steven Boal
   150%   150%   x 18   100% vesting of time-vesting Equity Awards
Scott Raskin
   150%   150%   x 18   100% vesting of time-vesting Equity Awards
Pamela Strayer
   150%   150%   x 18   100% vesting of time-vesting Equity Awards
Matthew Krepsik
   150%   150%   x 18   100% vesting of time-vesting Equity Awards
Connie Chen
   100%   100%   x 12   100% vesting of time-vesting Equity Awards
(1)
As noted below, the Current Change of Control Agreements provide that for any Equity Awards which are subject to performance-based vesting, all such performance goals and other vesting criteria shall be treated as set forth in the underlying award agreement – see “Equity Incentive Awards” below for a description of the terms applicable to the PSU awards held by each NEO in the event of a termination in connection with a Change in Control.
As indicated in the table above, if the termination event occurs during the Change of Independent Registered Public Accounting FirmControl Period, the NEO will receive the following benefits: (i) a
lump-sum
payment (less applicable withholding taxes) equal to 150% for Messrs. Boal, Raskin and Krepsik and Ms. Strayer and 100% for Ms. Chen, of the NEO’s annual base salary as in effect immediately prior to the NEO’s termination date or, if greater, at the level in effect immediately prior to the Change of Control; (ii) a
lump-sum
payment (less applicable withholding taxes) equal to 150% for Messrs. Boal, Raskin and Krepsik and Ms. Strayer and 100% for Ms. Chen, of the NEO’s annual bonus for the year of termination at target level, as in effect immediately prior to the NEO’s termination date, or if greater, at the level in effect immediately prior to the Change of Control; (iii) a taxable
lump-sum
payment (less applicable withholding taxes) in an amount equal to the monthly COBRA premium that the NEO would be required to pay to continue NEO’s group health coverage in effect on the date of the NEO’s termination of employment, multiplied by eighteen for Messrs. Boal, Raskin and Krepsik and Ms. Strayer and twelve for Ms. Chen; and (iv) 100% of the NEO’s then-outstanding and unvested Equity Awards (as such term is defined in the Current Change of Control Agreement) will become vested in full and in the case of stock options and stock appreciation rights, will become exercisable; provided that in the case of any Equity Awards which are subject to performance-based vesting, all such performance goals and other vesting criteria shall be treated as set forth in the underlying award agreement. Under Mr. Krepsik’s Former Change of Control Agreement, he would have received the following benefits: (i) a lump-sum payment (less applicable withholding taxes) equal to 100% of his annual base salary as in effect immediately prior to his termination date or, if greater, at the level in effect immediately prior to the Change of Control; (ii) a lump-sum payment (less applicable withholding taxes) equal to 100% of his annual bonus for the year of termination at target level, as in effect immediately prior to his termination date, or if greater, at the level in effect immediately prior to the Change of Control; (iii) a taxable lump-sum payment (less applicable withholding taxes) in an amount equal to the monthly COBRA premium that he would be required to pay to continue his group health coverage in effect on the date of his termination of employment, multiplied by twelve; and (iv) 100% of the his then-outstanding and unvested Equity Awards would have become vested in full and in the case of stock options and stock appreciation rights, would have become exercisable; provided that in the case of any Equity Awards which were subject to performance-based vesting, all such performance goals and other vesting criteria would be treated as set forth in the underlying award agreement.
ToIn the Stockholdersevent that the severance and other benefits payable to the NEO constitute “parachute payments” under Section 280G of the U.S. tax code and would be subject to the applicable excise tax, then the NEO’s severance benefits will be either (A) delivered in full or (B) delivered to such lesser extent which would result in no portion of such benefits being subject to the excise tax, whichever results in the receipt by the NEO on an
after-tax
basis of the greatest amount of benefits.
For purposes of each Current Change of Control Agreement, “Cause” means the occurrence of any of the following: (i) NEO’s conviction of, or plea of “no contest” to, a felony or any crime involving fraud or embezzlement; (ii) NEO’s intentional misconduct; (iii) NEO’s material failure to perform his or her employment duties; (iv) NEO’s unauthorized use or disclosure of any proprietary information or trade secrets of the Company, or any of its subsidiaries, or any other party to whom NEO owes an obligation of nondisclosure as a result of his or her relationship with the Company or any of its subsidiaries; (v) an act of material fraud or dishonesty against the Company or any of its subsidiaries; (vi) NEO’s material violation of any policy of the Company or any of its subsidiaries or material breach of any written agreement with the Company or any of its subsidiaries; or (vii) NEO’s failure to cooperate with the Company in any investigation or formal proceeding.
For purposes of each Current Change of Control Agreement, “Good Reason” means the NEO’s termination of his or her employment in accordance with the next sentence after the occurrence of one or more of the following events without the NEO’s express written consent: (i) a material reduction of the NEO’s duties, authorities, or responsibilities relative to NEO’s duties, authorities, or responsibilities in effect immediately prior to such reduction; (ii) a material reduction by the Company in the NEO’s rate of annual base salary; provided, however, that, a reduction of annual base salary that also applies to substantially all other similarly situated employees of the Company will not constitute “Good Reason”; (iii) a material change in the geographic location of the NEO’s primary work facility or location; provided, that a relocation of less than thirty-five miles from the NEO’s then present location will not be considered a material change in geographic location; or (iv) the failure of the Company to obtain from any successor or transferee of the Company an express written and unconditional assumption of the Company’s obligations to the NEO under the Current Change of Control Agreement. Ms. Strayer’s Change of Control Agreement and the Current Change of Control Agreement for each of Messrs. Krepsik and Raskin and Ms. Chen provide that the first clause above also includes circumstances in which such material reduction results solely by virtue of the Company being acquired or made part of a larger entity (as, for example, when the Chief Financial Officer of the Company remains as such following a Change of Control but is not made the Chief Financial Officer of the acquiring corporation). The Former Change of Control Agreements for Messrs. Krepsik and Raskin and Ms. Chen did not have the foregoing clause. In order for the NEO’s termination of employment to be for Good Reason, the NEO must not terminate employment with the Company without first providing the Company with written notice of the acts or omissions constituting the grounds for “Good Reason” within ninety days of the initial existence of the grounds for “Good Reason” and a cure period of thirty days following the date of written notice (the “Cure Period”), such grounds must not have been cured during such time, and the NEO must terminate his employment within thirty days following the Cure Period.
Equity Incentive Awards
Our 2006 Stock Plan (the “2006 Plan”) provides that if, in the event of a merger or change in control, any award is not assumed or replaced with an equivalent substitute award by the successor corporation, then such award will fully vest and be subject to settlement or will become fully exercisable, if applicable, for a specified period prior to the corporate transaction. The award will then terminate upon the expiration of the specified time period. As of December 31, 2021, no NEO held any outstanding unvested awards under the 2006 Plan.
In the event of a “Change in Control” as defined in the 2013 Plan, the acquiring or successor entity may assume or continue all or any awards outstanding under the 2013 Plan or substitute substantially equivalent awards. Any awards which are not assumed or continued in connection with a Change in Control or are not exercised or settled prior to the Change in Control will terminate effective as of the time of the Change in Control. The Compensation Committee may provide for the acceleration of vesting of any or all outstanding awards upon such terms and to such extent as it determines, except that the vesting of all awards held by members of the Board who are not employees will automatically be accelerated in full. The 2013 Plan authorizes the Compensation Committee, in its discretion and without the consent of Directorsany participant, to cancel each or any outstanding award denominated in shares upon a Change in Control in exchange for a payment to the participant with respect to each share subject to the cancelled award of Quotient Technology Inc.an amount equal to the excess of the consideration to be paid per share of common stock in the Change in Control transaction over the exercise price per share, if any, under the award.
Opinion
Under each of the Restricted Stock Unit Agreements pursuant to which the NEOs have been issued RSUs under the 2013 Plan, generally speaking, the NEO generally must be in service on the Financial Statementsapplicable vesting date in order to be eligible for vesting of the NEO’s RSUs. However, in the case of RSUs granted on or after February 3, 2021, if the NEO’s employment or service with a “Participating Group Company” (as such term is defined in the 2013 Plan) (“Service”) terminates due to death on or after the first anniversary of the date of grant, then the RSUs held by the NEO will become fully vested. In the event the executive’s Service has not terminated prior to the consummation of the Change in Control, all unvested RSUs that are not assumed or continued by the acquiror or replaced with a substitute award with respect to the acquiror’s stock in connection with the Change in Control will become fully vested as of immediately prior to the consummation of the Change in Control. If the unvested RSUs are assumed or continued following the Change in Control, the vesting of the RSUs will depend on whether the NEO has entered into a Change of Control Agreement, as described above. If the NEO has entered into a Change of Control Agreement and the NEO’s Service is terminated by the
We
Participating Company Group other than for “Cause” or by the NEO for “Good Reason” (as such terms are defined in the Current Change of Control Agreements) during the six month (excepting Mr. Boal and Ms. Strayer for whom it is a three month) period before or the twelve month period following a Change of Control, all unvested RSUs held by the NEO will become fully vested as of the later of the date of such termination or the date of the Change of Control. If the NEO has not entered into a Change of Control Agreement and the NEO’s Service is terminated by the Participating Group Company without Cause (including death, but excluding Disability) during the twelve month period following a Change in Control, then the RSUs will become fully vested as of the date of termination.
With respect to each of the outstanding PSU awards issued to the NEOs under the 2013 Plan, the applicable grant notices provide that in the event of the NEO’s termination of Service by reason of death occurring on or after the first anniversary of the grant date (but prior to a Change in Control), the number of PSUs associated with a 100% payout percentage shall become vested and settled on the first of the month following such termination date. In the event of a termination of the NEO’s Service by reason of Disability prior to a Change in Control, a number of PSUs equal to the number of PSUs associated with a 100% payout percentage, multiplied by a percentage equal to the number of months in the performance period that the NEO was in service divided by 36 shall become vested and settled on the first day of the month following such termination date. In the event of a termination of the NEO’s Service by the Company other than for Cause (other than for death or Disability) that occurs on or after the first anniversary of the grant date (but prior to a Change in Control), a number of PSUs equal to the full number of PSUs subject to the award multiplied by a percentage equal to the number of months in the performance period that the NEO was in service divided by 36 shall become vested (to the extent, if any, based on actual performance) on the original vesting date that would have auditedapplied in the accompanying consolidated balance sheetsabsence of Quotient Technology Inc. (the Company)the NEO’s termination. In the event of any other termination of Service prior to a Change in Control, the PSUs will immediately terminate.
With respect to each of the outstanding PSU awards issued to the NEOs under the 2013 Plan, in the event of a Change in Control, if the acquiror assumes, continues or substitutes for the award, a number of PSUs shall be deemed eligible for vesting equal to the greater of (i) actual performance against certain applicable performance metrics under the awards, determined as if the date of the Change in Control was the final day of the performance period, or (ii) a number of PSUs associated with a 100% payout percentage (such higher number of PSUs, the “CIC Eligible Units”). The CIC Eligible Units will become vested on January 1, 2024, subject to the NEO’s continued Service through such date, except that in the event of the NEO’s termination of Service during the Change of Control Period (as such term is defined in the NEO’s Current Change of Control Agreement, if applicable) by the Company without Cause or by the NEO for Good Reason (as defined in the applicable Current Change of Control Agreement) or by reason of the NEO’s death, the CIC Eligible Units will immediately become vested upon the date of such termination or, if later, the date of the Change in Control (and in the event of any other termination, will immediately terminate). In the event of a Change in Control in which the acquiror does not assume, continue or substitute for the PSU award, the CIC Eligible Units will become vested as of immediately prior to the Change in Control, subject to the NEO’s continued Service through immediately prior to such event.
Under the Stock Option Agreements pursuant to which each of the NEOs, other than Mr. Krepsik, held unvested stock options as of December 31, 2021, unvested options thereunder shall terminate immediately upon the NEO’s termination of Service, except that, if the NEO is a party to a Change of Control Agreement, and 2020, the related consolidated statementsNEO’s Service is terminated by the Participating Company Group other than for “Cause” or by the NEO for “Good Reason” (as such terms are defined in the Current Change of operations, comprehensive loss,stockholders' equityControl Agreements) during the six month (excepting Mr. Boal and cash flowsMs. Strayer for eachwhom it is a three month) period before or the twelve month period following a Change of Control, all unvested Options will become fully vested as of the three yearslater of the date of termination or the date of the Change of Control.
The following table sets forth the estimated incremental payments and benefits that would have been payable to our NEOs in different termination scenarios under each NEOs Former Change of Control Agreement, assuming that the triggering event occurred on December 31, 2021. Due to the number of factors that affect the nature and amount of any potential payments or benefits, actual payments and benefits may differ from those presented in the table below.
Name
  
Scenario
  
Cash
Severance ($)
   
COBRA
Benefits($)
   
RSU & PSU
Awards ($)
 (1)
   
Option
Awards ($)
(2)
   
Total
($)
 
Steven Boal
  Termination Without Cause/
Resignation
for Good Reason
   500,000    37,570    —      —      537,570 
  Termination for Death   —      —      —      —      —   
  Termination for Disability   —      —      439,776    —      439,776 
  Termination without Cause or
Resignation
for Good Reason during the Change
of Control Period
   1,500,000    56,355    3,761,784    —      5,318,139 
  Termination for Death During the
Change in Control Period		   —      —      1,319,343    —      1,319,343 
  Change of Control   —      —      3,761,784    —      3,761,784 
Scott Raskin
  Termination Without Cause/
Resignation for Good Reason		   465,000    26,631    —      —      491,631 
  Termination for Death   —      —      —      —      —   
  Termination for Disability   —      —      246,277    —      246,277 
  Termination without Cause or
Resignation
for Good Reason during the Change
of Control Period
   1,395,000    39,947    3,866,020    39,452    5,340,419 
  Termination for Death During the
Change in Control Period		   —      —      738,832    —      738,832 
  Change of Control   —      —      3,866,020    —      3,866,020 
Pamela Strayer
  Termination Without
Cause/Resignation for Good Reason		   450,000    26,631    —      —      476,631 
  Termination for Death   —      —      —      —      —   
  Termination for Disability   —      —      246,277    —      246,277 
  Termination without Cause or
Resignation
for Good Reason during the Change
of Control Period
   1,181,250    39,947    1,981,748    —      3,202,945 
  Termination for Death During the
Change in Control Period		   —      —      738,832    —      738,832 
  Change of Control   —      —      1,981,748    —      1,981,748 
Matthew Krepsik
  Termination Without Cause   281,250    28,177    —      —      309,427 
  Termination for Death   —      —      —      —      —   
  Termination for Disability   —      —      140,149    —      140,149 
  Termination without Cause or
Resignation
for Good Reason during the Change
of Control Period
   656,250    37,570    1,261,400    —      1,955,220 
  Termination for Death During the
Change in Control Period		   —      —      630,700    —      630,700 
  Change of Control   —      —      1,261,400    —      1,261,400 
Connie Chen
  Termination Without Cause   285,000    18,685    —      —      303,685 
  Termination for Death   —      —      —      —      —   
  Termination for Disability   —      —      131,928    —      131,928 
  Termination without Cause or
Resignation
for Good Reason during the Change
of Control Period
   608,000    24,913    1,114,692    —      1,747,605 
  Termination for Death During the
Change in Control Period		   —      —      395,798    —      395,798 
  Change of Control   —      —      1,114,692    —      1,114,692 
(1)
The value of accelerated vesting of unvested RSUs and PSUs is based upon the closing stock price on December 31, 2021, which was $7.42 per share. For the purpose of calculating the value of the acceleration of PSU awards in connection with a Change of Control in the absence of a termination of employment, this table assumes that such PSUs were not assumed, continued or substituted by the acquiror in connection with the Change of Control.
(2)
The value of accelerated vesting of unvested stock options is based on the difference between the closing stock price on December 31, 2021, which was $7.42 per share, and the exercise price per option multiplied by the number of unvested options. This does not reflect any dollar value associated with the acceleration of unvested stock options with exercise prices in excess of $7.42 per share.
Outstanding Equity Awards as of December 31, 2021
The following table sets forth information regarding equity awards held by our NEOs at December 31, 2021.
   
Option Award
   
Stock Awards
 
Name
  
Number of
Securities
Underlying
Unexercised
Options (#)
Exercisable
  
Number of
Securities
Underlying
Unexercised
Options (#)
Unexercisable
(1)
  
Option
Exercise
Price
($)
(2)
   
Option
Expiration
Date
   
Number of
Shares or
Units of Stock
That Have Not
Vested (#)
(3)
  
Market Value
of Shares or
Units of Stock
That Have
Not Vested
($)
(4)
   
Equity
Incentive
Plan
Awards:
Number of
Unearned
Shares, Units
or Other
Rights That
Have Not
Vested
(5)
   
Equity
Incentive
Plan
Awards:
Market or
Payout
Value of
Unearned
Shares, Units
or Other
Rights That
Have Not
Vested
(4)
 
Steven Boal
   200,000
(6)
 		  —     5.33    2/6/2022    —     —      —      —   
   240,000
(7)
 		  —     3.70    2/6/2023    —     —      —      —   
   800,000
(8)
 		  —     25.00    11/13/2023    —     —      —      —   
   600,000
(9)
 		  —     16.25    11/13/2023    —     —      —      —   
   600,000
(10)
 		  —     8.65    11/13/2023    —     —      —      —   
   503,000
(11)
 		  —     8.51    2/16/2026    —     —      —      —   
   300,000
(12)
 		  —     13.00    2/13/2027    —     —      —      —   
   244,687
(13)
 		  16,313
(13)
 		  13.10    3/1/2028    —     —      —      —   
   205,926
(14)
 		  93,603
(14)
 		  9.96    3/1/2029    —     —      —      —   
   205,389
(15)
 		  264,072
(15)
 		  8.95    3/1/2030    —     —      —      —   
   47,000
(42)
 		  —     8.51    2/16/2026    —     —      —      —   
   —     —     —      —      125,698
(26)
 		  932,679    —      —   
   —     —     —      —      47,064
(27)
 		  349,215    —      —   
   —     —     —      —      144,470
(28)
 		  1,071,967    —      —   
   —     —     —      —      11,938
(29)
 		  88,580    —      —   
   —     —     —      —      —     —      133,356    989,502 
Scott Raskin
   23,474
(16)
 		  —     10.65    2/6/2027    —     —      —      —   
   12,931
(17)
 		  —     11.60    6/4/2027    —     —      —      —   
   634,051
(18)
 		  493,150
(18)
 		  7.34    9/1/2029    —     —      —      —   
   166,878
(19)
 		  214,559
(19)
 		  8.95    3/1/3030    —     —      —      —   
   —     —     —      —      238,420
(30)
 		  1,769,076    —      —   
   —     —     —      —      102,130
(31)
 		  757,805    —      —   
   —     —     —      —      80,904
(32)
 		  600,308    —      —   
   —     —     —      —      —     —      74,679    554,118 
Pamela Strayer
   184,754
(20)
 		  169,974
(20)
 		  8.66    11/1/2029    —     —      —      —   
   —     —     —      —      86,605
(33)
 		  642,609    —      —   
         80,904
(34)
 		  600,308    —      —   
   —     —     —      —      —     —      74,679    554,118 
Matthew Krepsik
   —     —     —      —      75,000
(35)
 		  556,500    —      —   
   —     —     —      —      10,000
(36)
 		  74,200    —      —   
   —     —     —      —      —     —      63,750    473,025 
Connie Chen
   12,666
(21)
 		  —     8.51    2/16/2026    —     —      —      —   
   100,000
(22)
 		  —     13.00    2/13/2027    —     —      —      —   
   50,625
(23)
 		  3,375
(23)
 		  13.10    3/1/2028    —     —      —      —   
   58,345
(24)
 		  26,521
(24)
 		  9.96    3/1/2029    —     —      —      —   
   61,616
(25)
 		  79,222
(25)
 		  8.95    3/1/2030    —     —      —      —   
   37,334
(41)
 		  —     8.51    2/16/2026    —     —      —      —   
   —     —     —      —      2,500
(37)
 		  18,550    —      —   
   —     —     —      —      13,335
(38)
 		  98,946    —      —   
   —     —     —      —      37,710
(39)
 		  279,808    —      —   
   —     —     —      —      43,341
(40)
 		  321,590    —      —   
   —     —     —      —      —     —      40,006    296,845 
(1)
Option is 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.”
(2)
For options granted prior to our initial public offering, the amounts in this column represent at least the
per-share
fair value of a share of our common stock on the date of grant, as determined by our Board or, for options granted after our initial public offering, based on the closing share price of our common stock 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 number of units shown in the table by the closing share price of our common stock on December 31, 2021, which was $7.42.
(5)
The PSU awards are subject to vesting based upon the Company’s performance against certain performance metrics during the period beginning on January 1, 2021 and ending on December 31, 2023. The shares of common stock underlying the PSUs reflected in this column are assuming the threshold level of performance conditions will be achieved and will vest upon achievement of targets directly tied to the Company’s performance and 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.”
Vesting Schedule for Outstanding Stock Options and Restricted Stock Units:
NoteGrantIncremental Vesting Dates
(6)
2/7/201225% on 2/7/2013; 1/48 monthly thereafter for next 3 years.
(7)
2/7/201325% on 2/7/2014; 1/48 monthly thereafter for next 3 years.
(8)
11/14/201325% on 11/14/2014; 1/48 monthly thereafter for next 3 years.
(9)
11/14/201325% on 11/14/2014; 1/48 monthly thereafter for next 3 years.
(10)
11/14/201325% on 11/14/2014; 1/48 monthly thereafter for next 3 years.
(11)
2/17/201625% on 2/17/2017; 1/48 monthly thereafter for next 3 years.
(12)
2/14/201725% on 2/14/2018; 1/48 monthly thereafter for next 3 years.
(13)
3/1/20181/48 on 4/1/2018; 1/48 monthly thereafter for next 4 years.
(14)
3/1/20191/48 on 4/1/2019; 1/48 monthly thereafter for next 4 years.
(15)
3/1/20201/48 on 4/1/2020; 1/48 monthly thereafter for next 4 years.
(16)
2/7/201725% on 2/7/2018; 1/48 monthly thereafter for next 3 years.
(17)
6/5/2017100% on 6/5/2018.
(18)
9/1/201925% on 9/1/2020; 1/48 monthly thereafter for next 3 years.
(19)
3/1/20201/48 on 4/1/2020; 1/48 monthly thereafter for next 4 years.
(20)
11/1/201925% on 11/1/2020; 1/48 monthly thereafter for next 3 years.
(21)
2/17/201625% on 2/17/2017; 1/48 monthly thereafter for next 3 years.
(22)
2/14/201725% on 2/14/2018; 1/48 monthly thereafter for next 3 years.
(23)
3/1/20181/48 on 4/1/2018; 1/48 monthly thereafter for next 4 years.
(24)
3/1/20191/48 on 4/1/2019; 1/48 monthly thereafter for next 4 years.
(25)
3/1/20201/48 on 4/1/2020; 1/48 monthly thereafter for next 4 years.
(26)3/1/20206.25% on 6/1/2020; 6.25% quarterly thereafter for next 4 years.
(27)3/1/20196.25% on 6/1/2019; 6.25% quarterly thereafter for next 4 years.
(28)3/1/20216.25% on 6/1/2021; 6.25% quarterly thereafter for next 4 years.
(29)3/1/20186.25% on 6/1/2018; 6.25% quarterly thereafter for next 4 years.
(30)9/1/201925% on 9/1/2020; 6.25% quarterly thereafter for next 3 years.
(31)3/1/20206.25% on 6/1/2020; 6.25% quarterly thereafter for next 4 years.
(32)3/1/20216.25% on 6/1/2021; 6.25% quarterly thereafter for next 4 years.
(33)11/1/201925% on 11/1/2020; 6.25% quarterly thereafter for next 3 years.
(34)3/1/20216.25% on 6/1/2021; 6.25% quarterly thereafter for next 4 years.
(35)5/1/202125% on 5/1/2022; 6.25% quarterly thereafter for next 3 years.
(36)5/1/2021100% on 5/1/2022.
(37)3/1/20186.25% on 6/1/2018; 6.25% quarterly thereafter for next 4 years.
(38)3/1/20196.25% on 6/1/2019; 6.25% quarterly thereafter for next 4 years.
(39)3/1/20206.25% on 6/1/2020; 6.25% quarterly thereafter for next 4 years.
(40)3/1/20216.25% on 6/1/2021; 6.25% quarterly thereafter for next 4 years.
(41)2/17/201625% on 2/17/2017; 1/48 monthly thereafter for next 3 years.
(42)2/17/201625% on 2/17/2017; 1/48 monthly thereafter for next 3 years.
Option Exercises and Stock Vested
The following table provides information regarding exercises of option awards and vesting of stock awards by our NEOs in 2021:
   
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)
 
Steven Boal
   —      —      187,105    1,789,289 
Scott Raskin
   —      —      212,869    2,127,605 
Pamela Strayer
   —      —      71,398    754,931 
Matthew Krepsik
   —      —      —      —   
Connie Chen
   —      —      59,963    598,756 
(1)
Calculated by multiplying (i) the 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.
401(k) Plan
We maintain a
tax-qualified
retirement plan that provides eligible employees with an opportunity to save for retirement on a tax advantaged basis. Eligible employees are able to participate in the 401(k) plan following the date they meet the plan’s eligibility requirements, and participants are able to defer a percentage of their eligible compensation subject to applicable annual Internal Revenue Code (the “Code”) and plan limits. Participants are 100% vested in their deferrals. The 401(k) plan permits us to make matching contributions and profit sharing contributions to eligible participants. We currently make a discretionary matching contribution equal to 50% of salary deferrals, not to exceed the lesser of 3% of compensation or $6,000. Participants are vested 100% after one year of service in matching and profit sharing contributions allocated to their account. Both employee contributions and Company contributions are allocated to individual participant accounts, and then are invested in investment alternatives selected by each participant. The 401(k) plan is intended to qualify under Sections 401(a) and 501(a) of the Code.
CEO Pay Ratio
For the year ended December 31, 2021, the median of the annual total compensation of all employees is $86,376, the annual total compensation of our CEO is $8,103,602, and the related notes(collectively referredratio of these amounts is approximately 94 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 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, 2021, identified based on our payroll records. We used total compensation as our consistently applied compensation measure. In this context, total compensation means the “consolidated financial statements”). In our opinion,annual salary or wages, plus target bonuses and commissions as of December 1, 2021. Individuals that did not work for the consolidated financial statements present fairly,full year were annualized and amounts paid in all material respects,foreign currencies were converted to US Dollars based on the financial positionapplicable average annual exchange rate as of December 1, 2021.
Compensation Committee Interlocks and Insider Participation
The members of the Company at December 31,Compensation Committee during 2021 consisted of Messrs. Gessow and 2020,Oppenheimer and the results of its operations and its cash flows for eachMs. Wyatt. None of the three yearscurrent 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 periodpast 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, 2021,2021.
Submitted by the Compensation Committee of the Board:
Andrew Gessow (Chairperson)
David Oppenheimer
Eric D. Higgs
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, 2022, certain information regarding beneficial ownership of our common stock (a) by 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 conformity with U.S. generally accepted accounting principles.“Executive Compensation” above) and (d) by all of our current executive officers and directors as a group.
We also have audited,determined beneficial ownership in accordance with the standardsrules of the Public Company Accounting Oversight Board (United States) (PCAOB)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 95,068,889 shares of common stock outstanding at March 31, 2022. 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 become exercisable within 60 days of March 31, 2022. 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., the Company's internal control over financial reporting1260 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:
    
Steven Boal
(1)
   8,414,076    8.85% 
Scott Raskin
(2)
   1,481,048    1.56% 
Pamela Strayer
(3)
   529,580    * 
Matthew Krepsik
(4)
   191,000    * 
Connie Chen
(5)
   671,199    * 
John Kellerman
(6)
   18,901    * 
Andrew Jody Gessow
(7)
   521,446    * 
Lorraine Hariton
(8)
   8,426    * 
Alison Hawkins
(9)
   —      * 
Eric Higgs
(10)
   —     
Steve Horowitz
(11)
   421,489    * 
Robert McDonald
(12)
   75,333    * 
David Oppenheimer
(13)
   68,465    * 
All executive officers, directors and director nominee(s) as a group (12 persons)
(14)
   11,871,383    12.49% 
5% Stockholders:
    
The Vanguard Group
(15)
   8,060,947    8.48% 
Trigran Investments, Inc.
(16)
   7,347,371    7.73% 
Engaged Capital
(17)
   6,107,150    6.42% 
Lynrock Lake LP
(18)
   5,666,666    5.96% 
BlackRock, Inc.
(19)
   5,385,556    5.66% 
*
Represents beneficial ownership of less than 1% of the outstanding shares of our common stock.
(1)
Consists of (i) 2,171,281 shares held of record by Mr. Boal, (ii) 456,174 shares held by the SMSEJ Family Trust U/A dated July 18, 2005 of which Mr. Boal is a
co-trustee,
(iii) 3,237 shares held by the EBB 2011 Trust dated September 23, 2011, of which Stuart Schiff is trustee, (iv) 3,237 shares held by the JMB 2011 Trust dated September 23, 2011, of which Stuart Schiff is trustee, (v) 3,237 shares held by the SEB 2011 Trust dated September 23, 2011, of which Stuart Schiff is trustee, (vi) 3,842,418 shares that are issuable upon the exercise of stock options, which are currently exercisable or exercisable within 60 days of March 31, 2022, and (vii)1,934,492 shares owned by Mr. Boal’s former spouse pursuant to a domestic relations order (the “DRO”) of which Mr. Boal maintains sole voting power pursuant to a grant of irrevocable proxy contained in the DRO. Mr. Boal exercises no voting power and no dispositive power over the shares described in clauses (iii), (iv) and (v) of the preceding sentence.
(2)
Consists of (i) 486,565 shares held of record by Mr. Raskin, and (ii) 994,483 shares that are issuable upon the exercise of stock options, which are currently exercisable or exercisable within 60 days of March 31, 2022.
(3)
Consists of (i) 297,049 shares held of record by Ms. Strayer, (ii) 10,826 shares issuable upon the vesting of RSUs within 60 days of March 31, 2022, and (iii) 221,705 shares that are issuable upon the exercise of stock options, which are currently exercisable or exercisable within 60 days of March 31, 2022. Ms. Strayer resigned as CFO and Treasurer effective April 5, 2022.
(4)
Consists of (i) 162,250 shares held of record by Mr. Krepsik, and (ii) 28,750 shares issuable upon the vesting of RSUs within 60 days of March 31, 2022.
(5)
Consists of (i) 323,727 shares held of record by Ms. Chen, and (ii) 347,472 shares that are issuable upon the exercise of stock options, which are currently exercisable or exercisable within 60 days of March 31, 2022.
(6)
Consists of (i) 16,464 shares held of record by Mr. Kellerman, and (ii) 2,437 shares issuable upon the vesting of RSUs within 60 days of March 31, 2022.
(7)
Consists of (i) 59,346 shares held of record by Mr. Gessow, (ii) 310,108 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, 2022.
(8)
Consists of 8,426 shares held of record by Ms. Hariton.
(9)
Ms. Hawkins holds no shares of record.
(10)
Mr. Higgs holds no shares of record.
(11)
Consists of (i) 52,454 shares held of record by Mr. Horowitz, (ii) 325,000 shares held of record by the Horowitz Family Trust for which Mr. Horowitz serves as a trustee and (iii) 44,035 shares that are issuable upon the exercise of stock options, which are currently exercisable or exercisable within 60 days of March 31, 2022.
(12)
Consists of 75,333 shares held of record by Mr. McDonald.
(13)
Consists of (i) 46,914 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, 2022.
(14)Consists of (i) 6,438,245 shares beneficially owned by our current directors, director nominee(s) and executive officers, (ii) 31,187 shares issuable upon the vesting of RSUs within 60 days of March 31, 2022 for the benefit of such individuals and (iii) 5,401,951 shares that are issuable upon the exercise of stock options, which are currently exercisable or exercisable within 60 days of March 31, 2022.
(15)
Based on information set forth in a Schedule 13G/A filed with the SEC on February 10, 2022 by The Vanguard Group. The Vanguard Group has sole voting power over zero shares reported, shared voting power over 166,173 of the shares reported, sole dispositive power over 7,828,830 of the shares reported, and shared dispositive power over 232,117 of the shares reported. The address of The Vanguard Group is 100 Vanguard Blvd., Malvern, PA 19355.
(16)
Based on information set forth in a Schedule 13G/A filed with the SEC on February 10, 2022 by Trigran Investments, Inc. and several affiliated individuals. Trigran Investments, Inc. has sole voting power over zero shares reported, shared voting power over 6,890,118 of the shares reported, sole dispositive power over zero shares reported, and shared dispositive power over 7,347,371 of the shares reported. The address of Trigran Investments, Inc. is 630 Dundee Road, Suite 230, Northbrook, IL 60062.
(17)
Based on information set forth in a Schedule 13D/A filed with the SEC on March 1, 2022 by Engaged Capital LLC, Engaged Capital Holdings, LLC, Glenn W. Welling, Engaged Capital Flagship Master Fund, LP, Engaged Capital Flagship Fund, LP, Engaged Capital Flagship Fund, Ltd., Christopher B. Hetrick and Matthew O’ Grady (collectively, “Engaged Capital”). Engaged Capital LLC, Engaged Capital Holdings, LLC and Glenn W. Welling have sole voting power over 6,107,150 of the shares reported, shared voting power over zero shares reported, sole dispositive power over 6,107,150 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 5,636,142 of the shares reported, shared voting power over zero shares reported, sole dispositive power over 5,636,142 of the shares reported, and shared dispositive power over zero shares reported. Christopher B. Hetrick and Matthew O’Grady have sole voting power over zero shares reported, shared voting power over zero shares reported, sole dispositive power over zero of the shares reported, and shared dispositive power over zero shares reported. The address of each of Engaged Capital Flagship Master and Engaged Capital Offshore is 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 Fund, Engaged Capital, Engaged Holdings and Messrs. Welling and Hetrick is 610 Newport Center Drive, Suite 250, Newport Beach, California 92660. The address of Mr. O’Grady is PO Box 3004, Sag Harbor, New York 11937.
(18)
Based on information set forth in a Schedule 13G filed with the SEC on February 14, 2022 by Lynrock Lake LP, Lynrock Lake Partners LLC and Cynthia Paul (collectively, “Lynrock Lake”). Lynrock has sole voting power over 5,666,666 of the shares reported, shared voting power over zero shares reported, sole dispositive power over 5,666,666 of the shares reported, and shared dispositive power over zero shares reported. The address of Lynrock is 2 International Drive, Suite 130, Rye Brook, NY 10573.
(19)
Based on information set forth in a Schedule 13G/A filed with the SEC on February 3, 2022 by BlackRock, Inc. BlackRock, Inc. has sole voting power over 5,278,531 of the shares reported, shared voting power over zero shares reported, sole dispositive power over 5,385,556 of the shares reported, and shared dispositive power over zero shares reported. The address of BlackRock, Inc. is 55 East 52nd Street, New York, NY 10055.
Equity Compensation Plan Information
Securities Authorized for Issuance Under Equity Compensation Plans
The following table includes information as of December 31, 2021 based on criteria establishedfor 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 Internal Control-Integrated Framework issued bycontrol arrangements, discussed above under “Item 11. Executive Compensation,” the Committeeindemnification 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, 2021 in which:
the amounts involved exceeded or will exceed $120,000; and
any of Sponsoring Organizationsour directors, executive officers or holders of more than 5% of our capital stock, or any member of the Treadway Commission (2013 framework),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 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 independent directors, serves as a Senior Advisor at Divco and our report dated March 1, 2022 expressed an unqualified opinion thereon.
Basis for Opinion
These financial statements are the responsibilityis a managing partner at DivCore Equity Partners which is affiliated with Divco. All terms of the Company's management. 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 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
In June 2011, we entered into an Eighth Amended and 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.
Review, approval or ratification of transactions with related parties
Our responsibilityBoard 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 express an opinionsupplement, 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 Company’s financial statements basedindependence of any director;
the costs and benefits to the Company; and
an assessment of whether the transaction is competitively bid, or otherwise on our audits. Weterms that are a public accounting firm registered with the PCAOB and are required to be independent with respectfair to the Company and comparable to those that could be obtained in accordancean 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, Horowitz, McDonald, and Oppenheimer, along with each of Mses. Hariton and Hawkins, do not have a relationship that would interfere with the U.S. federal securities lawsexercise 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 Securities and Exchange CommissionSEC and the PCAOB.
We conducted our audits in accordance with thelisting standards of the PCAOB. Those standards requireNYSE. Our Board also determined that we planformer directors Christy Wyatt and performMichelle McKenna were independent during the audit to obtain reasonable assurance about whetherrespective time each served on our Board.
In considering 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 misstatementindependence of the financial statements, whether due to error or fraud,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 performing procedures that respond to those risks. Such procedures included examining, onMr. Gessow’s role as Senior Advisor at Divco and as a test basis, evidencemanaging 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 amounts and disclosures inlease, or approving the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentationlease. In addition, Divco’s share 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 audittotal lease payment of $16.3 million was less than 1% 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 communicationconsolidated gross revenues of each of the critical audit matter does not alterCompany and Divco in any way our opinion on2020, 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 financial statements, taken as a whole, and we are not, by communicatinggross revenues). Accordingly, the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.Board determined that Mr. Gessow is independent.
77






Revenue Recognition
Description of the Matter
Item 14.
As described in Note 2 to the consolidated financial statements, the Company generates its revenue by offering promotion
Principal Accounting Fees 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.Services

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.

/s/During our Fiscal 2021, Ernst & Young LLP
We have served as the Company’s auditor since 2009.our independent registered public accounting firm.
San Jose, California
March 1, 2022
78






Report ofFees Paid to the Independent Registered Public Accounting Firm
To the Stockholders and the Board of Directors of Quotient Technology Inc.  
Opinion on Internal Control Over Financial Reporting
We have audited Quotient Technology Inc.’s internal control over financial reporting as of December 31, 2021, based on criteria established in Internal Control - Integrated Framework issued by the Committee 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 reporting as of December 31, 2021, based on the COSO criteria.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated balance sheets of the Company as of December 31, 2021 and 2020, 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, 2021, and the related notes and our report dated March 1, 2022 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 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.
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.
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.
Definition and Limitations of Internal Control Over Financial Reporting
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
March 1, 2022
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QUOTIENT TECHNOLOGY INC.
CONSOLIDATED BALANCE SHEETS
(in thousands, except share and per share data)
 December 31,
 20212020
Assets  
Current assets:  
Cash and cash equivalents$237,417 $222,752 
Accounts receivable, net of allowance for credit losses of $2,500 and $2,070
  at December 31, 2021 and 2020, respectively
177,216 137,649 
Prepaid expenses and other current assets19,312 18,547 
Total current assets433,945 378,948 
Property and equipment, net22,660 17,268 
Operating lease right-of-use assets23,874 16,222 
Intangible assets, net13,003 44,898 
Goodwill128,427 128,427 
Other assets13,571 1,029 
Total assets$635,480 $586,792 
Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable$18,021 $15,959 
Accrued compensation and benefits20,223 14,368 
Other current liabilities95,279 70,620 
Deferred revenues26,778 12,027 
Contingent consideration related to acquisitions22,275 8,524 
Convertible senior notes, net188,786 — 
Total current liabilities371,362 121,498 
Operating lease liabilities26,903 15,956 
Other non-current liabilities522 2,358 
Contingent consideration related to acquisitions— 20,930 
Convertible senior notes, net— 177,168 
Deferred tax liabilities1,991 1,853 
Total liabilities400,778 339,763 
Commitments and contingencies (Note 15)— — 
Stockholders’ equity:
Preferred stock, $0.00001 par value—10,000,000 shares authorized; 250,000
 shares designated as Series A Junior Participating Preferred Stock; and no
  shares issued or outstanding at December 31, 2021 and 2020
— — 
Common stock, $0.00001 par value—250,000,000 shares authorized;
  94,779,442 and 91,743,302 shares issued and outstanding at
  December 31, 2021 and 2020, respectively
1 1 
Additional paid-in capital731,672 698,333 
Accumulated other comprehensive loss(1,099)(1,001)
Accumulated deficit(495,872)(450,304)
Total stockholders’ equity234,702 247,029 
Total liabilities and stockholders’ equity$635,480 $586,792 
See Accompanying Notes to Consolidated Financial Statements

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QUOTIENT TECHNOLOGY INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share data)
 Year Ended December 31,
 202120202019
Revenues$521,494 $445,887 $436,160 
Cost of revenues332,672 277,914 263,606 
Gross margin188,822 167,973 172,554 
Operating expenses:
Sales and marketing112,263 104,527 101,244 
Research and development44,941 40,316 39,076 
General and administrative56,776 54,177 58,328 
    Change in fair value of contingent consideration1,392 20,234 1,571 
Total operating expenses215,372 219,254 200,219 
Loss from operations(26,550)(51,281)(27,665)
Interest expense(15,177)(14,521)(13,955)
Other income (expense), net(210)1,140 5,223 
Loss before income taxes(41,937)(64,662)(36,397)
Provision for income taxes3,631 719 660 
Net loss$(45,568)$(65,381)$(37,057)
Net loss per share, basic and diluted$(0.49)$(0.72)$(0.41)
Weighted-average number of common shares used in computing
   net loss per share, basic and diluted		93,686 90,412 91,163 
See Accompanying Notes to Consolidated Financial Statements

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QUOTIENT TECHNOLOGY INC.
CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS
(in thousands)
 Year Ended December 31,
 202120202019
Net loss$(45,568)$(65,381)$(37,057)
Other comprehensive income (loss):
Foreign currency translation adjustments(98)(85)(72)
Comprehensive loss$(45,666)$(65,466)$(37,129)
See Accompanying Notes to Consolidated Financial Statements

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QUOTIENT TECHNOLOGY INC.
CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY
(in thousands, except share data)
 Common StockAdditional Paid-In CapitalTreasury StockAccumulated DeficitTotal Stockholders' Equity
 SharesAmountSharesAmountAccumulated Other Comprehensive Loss
Balance as of December 31, 201894,995,211 $1 $703,023 — $— $(844)$(322,093)$380,087 
Exercise of employee stock options433,762 — 2,337 — — — — 2,337 
Vesting of restricted stock units2,735,184 — — — — — — — 
Issuance of common stock, stock purchase plan300,949 — 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)— 
Stock-based compensation— — 32,624 — — — — 32,624 
Other comprehensive loss— — — — — (72)— (72)
Net loss— — — — — — (37,057)(37,057)
Balance as of December 31, 201989,371,199 $1 $671,060 — $— $(916)$(384,923)$285,222 
Exercise of employee stock options331,007 — 2,714 — — — — 2,714 
Vesting of restricted stock units2,293,593 — — — — — — — 
Issuance of common stock for services provided117,210 — 689 — — — — 689 
Issuance of common stock, stock purchase plan474,178 — 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, 202091,743,302 $1 $698,333 — $— $(1,001)$(450,304)$247,029 
Exercise of employee stock options1,245,453 — 13,199 — — — — 13,199 
Vesting of restricted stock units1,904,217 — — — — — — — 
Issuance of common stock for services provided35,535 — 223 — — — — 223 
Issuance of common stock, stock purchase plan477,283 — 3,020 — — — — 3,020 
Payments for taxes related to net share settlement
   of equity awards		(626,348)— (6,333)— — — — (6,333)
Stock-based compensation— — 23,230 — — — — 23,230 
Other comprehensive loss— — — — — (98)— (98)
Net loss— — — — — — (45,568)(45,568)
Balance as of December 31, 202194,779,442 $1 $731,672 — $— $(1,099)$(495,872)$234,702 

See Accompanying Notes to Consolidated Financial Statements
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QUOTIENT TECHNOLOGY INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
 Year Ended December 31,
 202120202019
Cash flows from operating activities:   
Net loss$(45,568)$(65,381)$(37,057)
Adjustments to reconcile net loss to net cash provided by operating
   activities:
Depreciation and amortization29,464 36,352 31,437 
Stock-based compensation22,812 28,371 32,137 
Amortization of debt discount and issuance cost11,618 11,011 10,438 
Impairment of intangible assets9,086 — — 
Allowance for credit losses568 888 1,227 
Deferred income taxes138 719 660 
           Change in fair value of contingent consideration1,392 20,234 1,571 
Impairment of capitalized software development costs— — 3,579 
Other non-cash expenses5,465 3,275 2,392 
Changes in operating assets and liabilities:
Accounts receivable(40,135)(13,232)(7,142)
Prepaid expenses and other assets(14,326)3,164 (11,145)
Accounts payable and other liabilities27,576 15,554 (62)
Payments for contingent consideration and bonuses(2,901)(15,418)— 
Accrued compensation and benefits6,070 (197)1,567 
Deferred revenues14,751 1,125 2,216 
Net cash provided by operating activities26,010 26,465 31,818 
Cash flows from investing activities:
Purchases of property and equipment(14,720)(8,351)(9,021)
Purchases of intangible assets— (3,018)(14,811)
Acquisitions, net of cash acquired— — (13,730)
Proceeds from maturities of short-term investment— — 20,738 
Net cash used in investing activities(14,720)(11,369)(16,824)
Cash flows from financing activities:
Proceeds from issuances of common stock under stock plans16,219 5,002 5,017 
Payments for taxes related to net share settlement of equity awards(6,333)(7,203)(9,838)
     Repurchases and retirement of common stock under share repurchase
    program		— — (87,097)
Principal payments on promissory note and finance lease obligations(456)(391)(317)
Payments of contingent consideration(6,121)(14,582)— 
Net cash provided by (used in) financing activities3,309 (17,174)(92,235)
Effect of exchange rates on cash and cash equivalents66 66 (23)
Net increase (decrease) in cash and cash equivalents14,665 (2,012)(77,264)
Cash and cash equivalents at beginning of period222,752 224,764 302,028 
Cash and cash equivalents at end of period$237,417 $222,752 $224,764 
Supplemental disclosures of cash flow information
Cash paid for income taxes$287 $220 $352 
Cash paid for interest$3,533 $3,510 $3,517 
Supplemental disclosures of noncash investing and financing activities
Intangible asset acquisitions not yet paid$— $1,250 $1,000 
Fixed asset purchases not yet paid$20 $1,757 $783 
Computer equipment acquired under promissory note$— $1,107 $— 
See Accompanying Notes to Consolidated Financial Statements
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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 technology company that powers cohesive omnichannel brand-building and sales-driving marketing campaigns for advertisers and retailers to influence purchasing decisions throughout a shopper's path to purchase. These marketing campaigns are planned, delivered and measured using our technology platforms and data analytics tools. The Company's network includes the digital properties of retail partners and advertiser customers (also known as consumer packaged goods "(CPGs") manufacturers or brands), social media platforms, its consumer brand Coupons.com and digital out-of-home ("DOOH") properties. This network provides the Company with proprietary and licensed data, including retailers’ in-store point-of-sale ("POS") shopper data, purchase intent and online behavior, and location intelligence. With such data powering its platforms, customers and partners use Quotient to leverage consumer data and insights, engage consumers via digital channels, and integrate marketing and merchandising programs to drive measurable sales results and consumer engagement.
2. Summary of Significant Accounting Policies
Basis of Presentation and Consolidation
The accompanying 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, useful lives of intangible assets, estimates related to recoverability of long-lived assets and goodwill, stock-based compensation, measurement of contingent consideration, restructuring accruals, legal contingencies, deferred income tax assets and associated valuation allowances and distribution fee commitments. These estimates generally require judgments, may involve the analysis of historical and prediction of future trends, and are subject to change from period to period. Actual results may differ from the Company’s estimates, and such differences may be material to the accompanying consolidated financial statements.
The COVID-19 pandemic has created and may continue to create 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, even in light of ongoing vaccination efforts. 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.
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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. Contingent consideration, if any, is measured at fair value initially on the acquisition date as well as
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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, which operates in a single reporting unit, completes its annual impairment test during the fourth quarter of each year.
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 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 its intangible assets or long-lived assets.
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
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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 consist of advertisers, 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, which are billed monthly. Duration-based campaigns are generally billed prior to campaign launch.
The pricing of digital promotions programs typically includes both promotion setup fees and promotion campaign fees. Promotion setup fees are related to the creation of digital promotions and set up of the underlying campaign on Quotient’s proprietary platforms for tracking of the related clicks. The Company recognizes revenues 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.
During the first quarter of 2021, the Company introduced a new offering, Duration-Based National Promotions Solution, for its National Promotion business. This offering provides advertisers access to the Company’s proprietary platforms for a specific period of time (the campaign period) in exchange for a fixed fee. The Company provides a single service of making the advertiser’s promotions available for use on its network each day during the campaign period, which generally is between seven and twenty-eight days. The performance obligation is satisfied over time, therefore the Company recognizes revenue ratably over the campaign period.
The Company’s media programs enable advertisers and retailers to distribute digital media to promote their brands and products on its retailers' websites, and mobile applications, and through a network of affiliate publishers and non-publisher third parties that display its media offerings on their websites or mobile applications. Pricing for media campaigns is usually determined on a cost-per-impression, cost-per-click or cost-per-acquisition basis. The Company recognizes revenue each time a digital media ad is displayed or each time a user clicks on the media ad displayed on the Company’s websites, mobile applications or on third-party websites. 
Gross versus Net Revenue Reporting
In the normal course of business and through its distribution network, the Company delivers digital media and promotions on retailers’ websites through retailers’ loyalty programs, and on the websites of digital publishers. In these situations, the Company evaluates whether it is the principal (i.e., report revenues on a gross basis) or agent (i.e., report revenues on a net basis). The Company typically reports digital promotion and media advertising revenues for campaigns placed on third-party owned properties on a gross basis, that is, the amounts billed to its customers are recorded as revenues, and distribution fees paid to retailers or digital publishers are recorded as cost
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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 (e.g., sponsored search and DOOH offerings), the Company reports revenues on a net basis, that is, the costs for digital advertising inventory and third-party data paid to suppliers are deducted from gross revenues to arrive at net revenues. The Company’s performance obligation in these arrangements is to provide the use of its platforms that enables customers to bid on real-time digital advertising inventory, use of data and other add-on features in designing and executing their campaigns. The Company charges its customers a platform fee based on a percentage of the digital advertising inventory and data costs purchased through the use of its platforms. The Company has determined that it’s an agent in these arrangements because it does not have control of the digital advertising inventory before it is transferred to the customer and does not set prices. The Company's revenue recognized on a net basis was not significant during 2021, 2020, or 2019.
Additionally, during the fourth quarter of 2021, the Company introduced retailer-specific promotion or media campaigns (also known as shopper campaigns). The Company has determined that it is an agent in these arrangements as the retailer is the customer, the retailer controls the delivery of shopper promotion and media programs on its website and sets the pricing. The Company’s obligation in these arrangements is to provide use of its platforms to the retailers. The retailer determines how shopper promotions and media programs are executed through the Company’s platforms. Under these arrangements, the Company reports revenue on a net basis.
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, delivery of media impressions, or campaign duration, which generally occur within the next twelve months. The Company records deferred revenues, including amounts which are refundable, when cash payments are received or become due in advance of the Company satisfying its performance obligations. The increase in the deferred revenue balance for year ended December 31, 2021 is primarily driven by cash payments received or due in advance of satisfying our performance obligations of $53.2 million, partially offset by $38.4 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 disaggregatedfees billed or to be billed 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,
 202120202019
Promotion$252,831 $237,385 $246,479 
Media268,663 208,502 189,681 
Total Revenue$521,494 $445,887 $436,160 
Practical Expedients and Exemptions
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The Company does not disclose the value of unsatisfied performance obligationsErnst & Young 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 the 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 performs an analysis quarterly to determine if the stock options or restricted stock awards granted are spring-loaded and therefore require an adjustment to the fair values. 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 $1.8 million, $2.0 million and $1.6 million of advertising costs during the years ended December 31, 2021, 2020 and 2019, respectively. Advertising costs consist primarily of online marketing costs, such as 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
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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 riskrendered 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 Recently Adopted
In December 2019, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2019-12, Simplifying the Accounting for Income Taxes (Topic 740). ASU 2019-12 removes certain exceptions for performing intraperiod tax allocations, recognizing deferred taxes for investments, and calculating income taxes in interim periods. The guidance also simplifies the accounting for franchise taxes, transactions that
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result in a step-up in the tax basis of goodwill, and the effect of enacted changes in tax laws or rates in interim periods. The Company adopted ASU 2019-12 in the first quarter of 2021 and the adoption had no material impact to the Company’s consolidated financial statements.
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, 2021
 Level 1Level 2Level 3Total
Assets:    
Cash equivalents:    
Money market funds$105,004 — — $105,004 
Total$105,004 $— $— $105,004 
Liabilities:
Contingent consideration related to acquisitions— — 22,275 22,275 
Total$— $— $22,275 $22,275 
 December 31, 2020
 Level 1Level 2Level 3Total
Assets:    
Cash equivalents:    
Money market funds$104,964 — — $104,964 
Total$104,964 $— $— $104,964 
Liabilities:
Contingent consideration related to acquisitions— — 29,454 29,454 
Total$— $— $29,454 $29,454 
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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, 2021 and 2020 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):
 UbimoElevaateAhalogy 
 Level 3Level 3Level 3Total
Balance as of December 31, 2018— 6,121 22,842 28,963 
Addition related to acquisition
   (initial measurement)		5,686 — — 5,686 
Change in fair value during the period— (2,587)4,158 1,571 
Balance as of December 31, 20195,686 3,534 27,000 36,220 
Change in fair value during the period15,244 4,990 — 20,234 
Payments made during the period— — (27,000)(27,000)
Balance as of December 31, 202020,930 8,524 — 29,454 
Change in fair value during the period1,345 47 — 1,392 
Payments made during the period— (8,571)— (8,571)
Balance as of December 31, 2021$22,275 $— $— $22,275 
During the years ended December 31, 2021, 2020, and 2019, the Company recorded a charge of $1.4 million, $20.2 million, and $1.6 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, 2021, the Company paid $8.6 million related to Elevaate's achievement of certain financial metrics subject to contingent consideration during the measurement period ending January 31, 2021. Out of the total consideration paid, $6.1 million was originally measured and recorded on the acquisition date and $2.5 million was recorded subsequent to the acquisition date through changes in fair value of contingent consideration within the consolidated statements of operations. In May 2021, the Company received a letter from certain former shareholders of Elevaate claiming that the Company owes additional contingent consideration. The Company believes that the claim is without merit.
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, no liability existed 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.
Fair Value Measurements of Other Financial Instruments
As of December 31, 2021 and 2020, the fair value of the 1.75% convertible senior notes due 2022 was $193.8 million and $196.5 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.
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4. Allowance for Credit Losses
The summary of activities in the allowance for credit losses is as follows (in thousands):
 Year Ended December 31,
 202120202019
Balance at beginning of period$2,070 $2,021 $1,200 
Additions related to acquisitions— — 377 
Provision for expected credit losses568 888 1,227 
Write-offs charged against the allowance(138)(839)(783)
Balance at end of period$2,500 $2,070 $2,021 
5. Balance Sheet Components
Property and Equipment, Net
Property and equipment consist of the following (in thousands):
 December 31,
 20212020
Software$51,093 $47,357 
Computer equipment23,696 23,912 
Leasehold improvements8,362 6,197 
Furniture and fixtures2,552 2,533 
Total85,703 79,999 
Accumulated depreciation and amortization(68,052)(65,959)
Projects in process5,009 3,228 
Property and equipment, net$22,660 $17,268 
Depreciation and amortization expense of property and equipment was $7.7 million, $7.2 million and $7.5 million for the years ended December 31, 2021, 2020 and 2019, respectively.
The Company capitalized internal use software development costs, which is included in projects in process within "property and equipment, net" on the consolidated balance sheets of $12.0 million, $7.5 million, and $5.8 million during the years ended December 31, 2021, 2020 and 2019, respectively. During the years ended December 31, 2021, 2020 and 2019, the Company had $4.1 million, $3.4 million and $2.5 million, respectively, in amortization expense related to internal use software, which is included in property and equipment depreciation and amortization expense and recorded as cost of revenues. Once the software is placed into service, the asset is included in software within "property and equipment, net". The unamortized capitalized internal use software development costs were $11.6 million and $8.6 million as of December 31, 2021 and 2020, respectively.
Accrued Compensation and Benefits
Accrued compensation and benefits consist of the following (in thousands):
 December 31,
 20212020
Bonus$9,045 $3,150 
Commissions5,838 7,247 
Payroll and related expenses4,253 3,116 
Vacation1,087 855 
Accrued compensation and benefits$20,223 $14,368 

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Other Current Liabilities
Other current liabilities consist of the following (in thousands):
 December 31,
 20212020
Distribution fees46,313 36,245 
Traffic acquisition cost12,033 9,756 
Deferred cost related to a retailer agreement8,000 — 
Operating lease liabilities4,935 3,650 
Prefunded liability4,782 3,067 
Rebate liability2,444 2,696 
Marketing expenses636 2,251 
Liability related to purchased intangible asset— 1,250 
Interest payable292 282 
Other15,844 11,423 
Other current liabilities$95,279 $70,620 

6. Acquisitions
Acquisition of Ubimo
On November 19, 2019, the Company acquired all outstanding shares of Ubimo, a leading data and media activation company.
The total acquisition consideration of $20.7 million consisted of $15.0 million in cash and contingent consideration of up to $24.8 million payable in cash with an estimated fair value of $5.7 million as of the acquisition date. The contingent consideration payout 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, 2021.
Acquisition of Elevaate
On October 26, 2018, the Company acquired all the outstanding shares of Elevaate, a sponsored search company for retail partners and CPG brands.
The total acquisition consideration of $13.3 million consisted of $7.2 million in cash and contingent consideration of up to $18.5 million payable in cash with an estimated fair value of $6.1 million as of the acquisition date. The contingent consideration payout 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, 2021.
Acquisition of SavingStar, Inc.
On August 27, 2018, the Company acquired all the outstanding shares of SavingStar, Inc. (“SavingStar”), a digital promotions companywith a customer relationship management (CRM) platform designed to help brands build and track loyalty programs with their consumers.
The total acquisition consideration at closing consisted of $7.5 million in cash. In addition, SavingStar could have earned 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 zero 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 zero. Accordingly, the Company determined that no payout was required when the contingent consideration period ended.
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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 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, no liability exists as of December 31, 2020 and thereafter. 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. None 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, as well as 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		GoodwillGoodwill
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):
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 UbimoEstimated
Useful
Life
(in Years)		ElevaateEstimated
Useful
Life
(in Years)		SavingStarEstimated
Useful
Life
(in Years)		AhalogyEstimated
Useful
Life
(in Years)
Developed technologies$7,100 4.0$3,307 5.0$1,476 3.0$3,100 4.0
Customer relationships3,400 2.0379 5.01,040 3.06,210 6.0
Trade names250 4.095 3.061 1.5650 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.
In connection with renewal discussions between the parties, the Company received a letter in October 2021 from The Albertsons Companies ("Albertsons") notifying the Company of its intent to early terminate the agreement between the parties related to the delivery of promotions and media campaigns, effective December 31, 2021. The Company informed Albertsons that the Company disputed Albertsons' right to terminate the agreement prior to March 31, 2022. The parties are currently in litigation. Due to circumstances surrounding the termination of its partnership with Albertsons, the Company determined a triggering event had occurred during the third quarter of 2021 that required an interim impairment assessment for its goodwill reporting unit and intangible assets and other long-lived assets.
In performing its qualitative interim impairment assessment in the third quarter of 2021, the Company considered (i) the results of its impairment testing from the most recent testing date, which was in the fourth quarter of 2020 (in particular, the magnitude of the excess of fair value over carrying value observed), (ii) downward revisions to internal forecasts, (iii) trends in market multiples and (iv) declines in market capitalization. The interim test resulted in the Company’s determination that the fair values of its reporting unit exceeded its carrying value and, therefore its goodwill was not impaired.
In the fourth quarter of 2021, the Company performed its annual impairment test and based on the results of its assessment, the Company determined that the fair value of the reporting unit exceeded its carrying value and, therefore, its goodwill was not impaired. There were no changes in the carrying value of goodwill and as of December 31, 2021 and 2020, goodwill was $128.4 million. There was no impairment of goodwill for the years ended December 31, 2021, 2020 and 2019. The Company will continue to monitor the operating results, cash forecasts and challenges from declines in current business and market conditions, as well as impacts of COVID-19 for its reporting unit.
Intangible Assets:
As a result of performing its interim intangibles impairment assessment due to the triggering event noted above, the Company recorded an intangible asset impairment charge of $2.6 million and $6.5 million during the second and third quarter of 2021, respectively, related to promotion service rights, media service rights, and data access rights. The impairment charges were recorded within cost of revenues, on the consolidated statements of operations.
In the fourth quarter of 2021, the Company performed an updated impairment assessment analysis and determined that impairment did not exist. The Company will continue to monitor the operating results, cash flow forecasts and challenges from declines in current market conditions, as well as circumstances relating to the
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termination of the Company's partnership with Albertsons and the impacts of COVID-19, for the possible additional impairment of these intangible assets.
The following table summarizes the gross carrying amount and accumulated amortization for the intangible assets (in thousands):  
 December 31, 2021
 GrossAccumulated
Amortization		NetWeighted
Average
Amortization
Period
(Years)
Media service rights$35,582 $(32,282)$3,300 0.7
Developed technologies27,170 (22,235)4,935 1.7
Promotion service rights24,426 (23,419)1,007 0.6
Customer relationships22,690 (19,311)3,379 2.4
Data access rights10,206 (10,206)— 0.0
Domain names5,948 (5,596)352 0.0
Trade names2,823 (2,823)— 0.0
Vendor relationships2,510 (2,510)— 0.0
Patents975 (945)30 0.8
Registered users420 (420)— 0.0
 $132,750 $(119,747)$13,003 1.5
 December 31, 2020
 GrossAccumulated
Amortization		NetWeighted
Average
Amortization
Period
(Years)
Media service rights$35,934 $(25,688)$10,246 1.4
Promotion service rights33,566 (17,234)16,332 1.9
Developed technologies27,170 (18,511)8,659 2.5
Customer relationships22,690 (16,105)6,585 2.7
Data access rights10,801 (8,420)2,381 1.0
Domain names5,948 (5,596)352 0.0
Trade names2,823 (2,546)277 0.6
Vendor relationships2,510 (2,510)— 0.0
Patents975 (909)66 1.8
Registered users420 (420)— 0.0
 $142,837 $(97,939)$44,898 2.0
As of December 31, 2021 and 2020, 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.
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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 $21.8 million, $29.1 million and $24.0 million for the years ended December 31, 2021, 2020 and 2019, respectively. Estimated future amortization expense related to intangible assets as of December 31, 2021 is as follows (in thousands):
 Total
2022$8,508 
20233,583 
2024559 
2025— 
2026— 
Thereafter— 
Total estimated amortization expense$12,650 
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 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, 2021, 2020, and 2019, the Company recognized restructuring expense of $2.7 million, $1.5 million, and $4.3 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
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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. No 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, 2021December 31, 2020
Principal$200,000 $200,000 
Unamortized debt discount(10,358)(21,046)
Unamortized debt issuance costs(856)(1,786)
Net carrying amount of the liability component$188,786 $177,168 
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, 2021 and 2020.
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,
 202120202019
Contractual interest expense$3,500 $3,500 $3,500 
Amortization of debt discount10,689 10,086 9,518 
Amortization of debt issuance costs929 925 921 
Total interest expense related to the Notes$15,118 $14,511 $13,939 
ABL Credit Agreement
On November 17, 2021, the Company, as borrower, and certain subsidiaries of the Company as guarantors, entered into a Loan, Guaranty and Security Agreement (the "ABL Credit Agreement") with Bank of America, N.A., a national banking association, and certain other financial institutions from time to time that may become parties to the agreement (the "Lenders").
The ABL Credit Agreement provides for an asset-based revolving credit facility (the "ABL Facility") for available borrowings up to $100.0 million with the actual amount dependent on a "borrowing base" number
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consisting of the sum of various categories of eligible accounts receivable (the lesser of such number and $100.0 million, the "Line Cap"). The ABL Facility matures and all outstanding amounts, if any, become due and payable on November 17, 2026 ("fixed ABL maturity date"), except that the maturity date shall be accelerated to the date that is 91 days prior to the maturity of the Company’s outstanding 1.75% Convertible Senior Notes due 2022 (the “Notes”), unless (i) the Notes are repaid in full or converted to equity at least 91 days prior to the maturity of the Notes, (ii) the Notes are refinanced and/or extended to a maturity date that is at least 91 days after the fixed ABL maturity date, or (iii) during the 91 day period prior, the Company has sufficient cash to repay the Notes in full, the Company meets a certain liquidity test after giving pro forma effect to the repayment to the Notes, and there is no event of default under the ABL Facility. The commitments of the Lenders under the ABL Facility will terminate and outstanding borrowings under the ABL Facility will mature on the fifth anniversary of the closing of the ABL Facility or sooner as described above.
The ABL Credit Agreement includes conditions to borrowings, representations and warranties, affirmative and negative covenants and events of default customary for financings of this type and size. In the event of default, all obligations will be automatically due and payable and all commitments will terminate. The ABL Credit Agreement requires the Company to maintain a minimum fixed charge coverage ratio at all times. The ABL Credit Agreement limits the Company’s and its subsidiaries’ ability to, among other things, incur additional indebtedness, create liens on any assets, pay dividends or make certain restricted payments, consummate certain assets sales and merge, consolidate and/or sell or dispose of certain assets. The ABL Credit Agreement also requires that if the Company's Excess Availability (defined as the Line Cap less borrowed amounts or issued letters of credit) is less than the greater of (i) the Line Cap and (ii) $10.0 million, the Company will maintain a fixed coverage charge ratio of at least 1.00 to 1.00. In addition, the ABL Credit Agreement includes customary events of default, which may require the Company to pay an additional 2% interest on the outstanding loans under the ABL Credit Agreement. As set forth in the ABL Credit Agreement, borrowings under the ABL Facility initially will bear interest at a rate equal to, for BSBY Loans, the BSBY Rate plus the Applicable Margin or, for Base Rate Loans, the Base Rate plus the Applicable Margin. The Applicable Margin is determined based on average daily borrowing availability.
During the year ended December 31, 2021, there were no borrowings or repayments under the ABL Facility.
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:
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 Year Ended December 31,
 202120202019
Expected life (in years)— 6.026.02 - 6.08
Risk-free interest rate— %0.96%1.42% - 2.66%
Volatility— %50 %50 %
Dividend yield— — — 
There were no option grants during the year ended December 31, 2021. The weighted-average grant-date fair value of options granted was $4.26 and $4.33 per share during the years ended December 31, 2020 and 2019, 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.
On March 1, 2021, the Company granted a total of 938,831 performance-based restricted stock units (“PSU Awards”), under the 2013 Equity Incentive Plan, to certain executive leaders with a grant date fair value of $13.28. On August 1, 2021, the Company granted an additional 170,000 PSU Award to an executive in conjunction with a promotion with a grant date fair value of $10.00. The PSU Award represents the right to receive shares of the Company’s common stock upon meeting certain vesting conditions. All PSU Awards will vest in three years from the original grant date, subject to the achievement of certain operating performance goals, stock performance goals and continued employment. The fair value of the PSU Award was measured using a Monte Carlo simulation. As of December 31, 2021, the Company performed an assessment and determined that the likelihood of achievement of certain operating performance goals was not deemed probable. As such, during the year ended December 31, 2021, no compensation expense was recognized in the Company's consolidated financial statements related to the PSU Awards.
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A summary of the Company’s stock option and RSU, including PSU award activity under the 2013 Plan are as follows:
  Options OutstandingRSUs 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, 20186,497,353 6,622,006 $12.12 5.96$9,987 4,904,161 12.48 
Increase in shares authorized3,799,808 — — — — — — 
Options granted(2,799,855)2,799,855 $8.74 — — — — 
Options exercised— (433,762)$5.39 — $2,406 — — 
Options canceled or expired387,658 (387,658)$11.37 — — — — 
RSUs granted(4,015,504)— — — — 4,015,504 9.49 
RSUs released— — — — — (2,735,184)11.79 
RSUs canceled or expired1,161,806 — — — — (1,161,806)11.67 
RSUs vested and withheld for taxes1,004,914 — — — — — — 
Balance as of December 31, 20196,036,180 8,600,441 $11.40 5.16$8,811 5,022,675 10.66 
Increase in shares authorized3,574,847 — — — — — — 
Options granted(1,150,178)1,150,178 $8.95 — — — — 
Options exercised— (331,007)$8.20 — $463 — — 
Options canceled or expired1,259,391 (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 expired1,243,550 — — — — (1,243,550)10.83 
RSUs vested and withheld for taxes843,885 — — — — — — 
Balance as of December 31, 20208,467,143 8,160,221 $11.21 5.03$7,100 4,708,854 9.09 
Increase in shares authorized3,669,732 — — — — — — 
Options granted— — $— — — — — 
Options exercised— (1,245,453)$10.60 — $3,777 — — 
Options canceled or expired16,775 (16,775)$10.53 — — — — 
RSUs granted(3,970,802)— — — — 3,970,802 11.98 
RSUs released— — — — — (1,939,752)9.85 
RSUs canceled or expired1,358,865 — — — — (1,358,865)9.75 
RSUs vested and withheld for taxes626,348 — — — — — — 
Balance as of December 31, 202110,168,061 6,897,993 $11.32 4.89$1,596 5,381,039 10.78 
Vested and exercisable as of December 31, 20215,537,204 $12.02 4.17$1,557 
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, 2021, 2020, and 2019 was $5.1 million, $7.5 million and $6.3 million, respectively.
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Additional information for options outstanding and exercisable as of December 31, 2021 is as follows:
 Options OutstandingOptions Exercisable
Exercise PricesNumber of
Shares
Weighted Average
Remaining
Contractual Term
(Years)
Weighted
Average
Exercise
Price		Number of
Shares		Weighted
Average
Exercise
Price
$3.70 - $7.341,667,201 5.45$6.46 1,174,051 $6.09 
$8.51 - $8.661,585,678 4.108.60 1,415,704 8.59 
$8.95 - $10.651,399,605 7.839.26 721,628 9.38 
$11.60 - $16.251,445,509 3.9314.34 1,425,821 14.36 
$25.00800,000 1.87$25.00 800,000 $25.00 
 6,897,993 5,537,204 
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, the 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,
 202120202019
Expected life (in years)0.50.50.5
Risk-free interest rate0.03% - 0.12%0.12% - 1.59%1.59% - 2.50%
Volatility60% - 75%55% - 60%35% - 55%
Dividend yield— — — 
During the year ended December 31, 2021, a total of 2,401,697 shares of common stock were issued under the 2013 Employee Stock Purchase Plan (“ESPP”), since inception of the plan. As of December 31, 2021, a total of 1,598,303 shares are available for issuance under the ESPP.  
Stock-based Compensation Expense
The following table sets forth the total stock-based compensation expense resulting from stock options, RSUs, and ESPP shares included in the Company’s consolidated statements of operations (in thousands):
 Year Ended December 31,
 202120202019
Cost of revenues$1,905 $1,743 $2,193 
Sales and marketing5,012 5,311 6,812 
Research and development3,876 3,831 4,804 
General and administrative12,019 17,486 18,328 
Total stock-based compensation expense$22,812 $28,371 $32,137 
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During the years ended December 31, 2021, 2020, and 2019 the Company capitalized stock-based compensation cost of $0.4 million, $0.4 million, and $0.5 million, respectively, in projects in process as part of property and equipment, net on the accompanying consolidated balance sheets.
As of December 31, 2021, there was $46.7 million unrecognized stock-based compensation expense of which $5.7 million is related to stock options and ESPP and $41.0 million is related to RSUs. The total unrecognized stock-based compensation expense related to stock options and ESPP as of December 31, 2021 will be amortized over a weighted-average period of 1.73 years. The total unrecognized stock-based compensation expense related to RSUs as of December 31, 2021 will be amortized over a weighted-average period of 2.82 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 February 2021, the Company’s Board of Directors authorized the Company to repurchase up to $50.0 million of its common stock from February 2021 through February 2022 (the "February 2021 Program"). Under the February 2021 Program, 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 February 2021 Program at any time without prior notice. During the year ended December 31, 2021, the Company did not repurchase any shares of its common stock, nor did the Company repurchase any of its common stock thereafter. The Company terminated the February 2021 Program prior to its expiration.

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Series A Junior Participating Preferred Stock
On November 12, 2021, the Company filed with the Delaware Secretary of State, a Certificate of Designation designating 250,000 shares of Series A Junior Participating Preferred Stock ("Series A Preferred Stock”), $0.00001 per share par value. The Company designated the Series A Preferred Stock in connection with the Company’s Board’s approval on November 10, 2021 of a Tax Benefits Preservation Plan, as discussed below.
Tax Benefits Preservation Plan
On November 10, 2021, the Company’s Board of Directors approved the Company's entering into the Tax Benefits Preservation Plan. The Tax Benefits Preservation Plan is designed to protect the Company against a possible limitation of the Company's ability to use its net operating losses (the "NOLs") and certain other tax attributes to reduce potential future U.S. federal income tax obligations. The NOLs and certain other tax attributes are valuable assets to the Company, which may inure to the benefit of the Company and its stockholders. However, if the Company experiences an “ownership change,” as defined in Section 382 of the Internal Revenue Code of 1986, as amended (the “Code”), its ability to fully utilize the NOLs and certain other tax attributes will be substantially limited and the timing of the usage of the NOLs and other tax attributes could be substantially delayed, which could significantly impair the value of those assets. Generally, an “ownership change” occurs if the percentage of the Company’s stock owned by one or more of its “5-percent shareholders” (as such term is defined in Section 382 of the Code) increases by more than 50 percentage points over the lowest percentage of stock owned by such stockholder or stockholders at any time over a three-year period. The Tax Benefits Preservation Plan is intended to prevent against such an “ownership change” by deterring any person or group, together with its affiliates and associates, from acquiring beneficial ownership of 4.9% or more of the Company’s securities.
Pursuant to the Tax Benefits Preservation Plan, the Company’s Board declared of a dividend of 1 preferred share purchase right (“Right”) for each outstanding share of Company common stock, par value $0.00001 per share, to stockholders of record at the close of business on November 24, 2021. Each Right entitles its holder to purchase one one-thousandth of a share of the Company's newly-designated Series A Junior Preferred Stock, par value $0.00001 per share at an exercise price of $28.00 per Right, subject to adjustment.
Subject to certain exceptions, the Rights become exercisable and trade separately from Common Stock only upon the "Distribution Time", which occurs upon the earlier of: (i) the close of business on the tenth (10th) day after the “Stock Acquisition Date” (which is (a) the first date of public announcement that any person or group has become an “Acquiring Person,” which is defined as a person or group that, together with its affiliates and associates, beneficially owns 4.9% or more of the outstanding shares of Common Stock (with certain exceptions, including those described below) or (b) such other date, as determined by the Board, on which a person or group has become an Acquiring Person), or (ii) the close of business on the tenth (10th) business day (or such later date as may be determined by the Board prior to such time as any person or group becomes an Acquiring Person) after the commencement of a tender offer or exchange offer that, if consummated, would result in a person or group becoming an Acquiring Person.
The Board may determine that any person is an Acquiring Person if such person becomes the beneficial owner of 4.9% or more of the then-outstanding shares of Common Stock under the regulations promulgated under the Code.
The Rights will expire on the earliest to occur of: (a) the close of business on November 11, 2024, (b) the time at which the Rights are redeemed or exchanged by the Company, (c) (i) the close of business on the first business day following the certification of the voting results of the Company’s 2022 annual meeting of stockholders, if stockholder approval of the Tax Benefits Preservation Plan has been proposed and not obtained at such meeting or (ii) November 11, 2022, if stockholder approval of the Tax Benefits Preservation Plan has not been obtained by such date, (d) upon the closing of any merger or other acquisition transaction involving the Company pursuant to a merger or other acquisition agreement that has been approved by the Board before any person or group becomes an Acquiring Person and (e) the time at which the Board determines that the NOLs and certain other tax attributes are utilized in all material respects or that an ownership change under Section 382 of the Code would not adversely impact in any material respect the time period in which the Company could use the NOLs and other tax attributes or materially impair the amount of NOLs and other tax attributes that could be used by the Company in any particular time period, for applicable tax purposes.
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12. Income Taxes
The components of the Company’s loss before provision for income taxes were as follows (in thousands):
 Year Ended December 31,
 202120202019
Domestic$45,991 $44,237 $39,102 
Foreign(4,054)20,425 (2,705)
Total$41,937 $64,662 $36,397 
The components of the provision for income taxes are as follows (in thousands):
 Year Ended December 31,
 202120202019
Current:   
Federal$436 $133 $(14)
State45 34 219 
Foreign3,012 642 342 
Total current income tax expense3,493 809 547 
Deferred:
Federal93 93 93 
State114 10 39 
Foreign(69)(193)(19)
Total deferred income tax expense (benefit)138 (90)113 
Total$3,631 $719 $660 
A reconciliation of the federal statutory income tax rate to the Company’s effective tax rate is as follows:
 Year Ended December 31,
 202120202019
Federal tax(21.00)%(21.00)%(21.00)%
State income tax, net of federal tax benefit0.38 %0.07 %0.70 %
Tax credits(1.09)%(0.78)%(2.20)%
Stock-based compensation2.00 %4.31 %2.42 %
Foreign income taxes at other than U.S. rates9.65 %(2.15)%(0.92)%
Acquisition related costs— %0.02 %0.43 %
Contingent consideration related to acquisitions— %— %2.35 %
162(m)2.35 %1.39 %3.73 %
GILTI Inclusion1.42 %— %1.05 %
Other0.12 %0.44 %1.26 %
Valuation allowance, net14.82 %18.81 %13.96 %
Effective tax rate8.65 %1.11 %1.78 %
The Company recorded a provision for income taxes of $3.6 million, $0.7 million and $0.7 million for the years ended December 31, 2021, 2020 and 2019, respectively. The provision for income taxes for the year ended December 31, 2021 was primarily due to increased earnings in foreign jurisdictions. The provision for income taxes for the years ended December 31, 2020 and 2019 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.
As a result of meeting certain employment and capital investment actions under Section 10AA of the India Income Tax Act, the Company’s India subsidiary is wholly exempt from income tax for tax years beginning April 1,
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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,
 20212020
Deferred tax assets:  
Credits and net operating loss carryforward$114,758 $116,119 
Accrued compensation644 280 
Deferred revenues603 271 
Stock-based compensation4,571 5,638 
Property and equipment538 746 
Purchased intangible assets9,211 4,411 
Operating lease7,770 4,536 
Other deferred tax assets2,124 1,682 
Total deferred tax assets140,219 133,683 
Valuation allowance(130,823)(121,927)
Deferred tax liabilities:
Basis difference on purchased intangible assets1,044 2,969 
Operating lease5,670 3,683 
Other deferred tax liabilities2,667 5,157 
Tax deductible goodwill2,006 1,800 
Total deferred tax liabilities11,387 13,609 
Net deferred tax liabilities$(1,991)$(1,853)
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, 2021 and 2020, the Company had gross deferred tax assets of $140.2 million and $133.7 million, respectively. The Company also had deferred tax liabilities of $11.4 million and $13.6 million as of December 31, 2021 and 2020, 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 $8.9 million and $14.8 million for the years ended December 31, 2021 and 2020, respectively.2020. All of these services rendered were preapproved by the Audit Committee.
As of December 31, 2021, the Company had federal NOL carryforwards of approximately $287.8 million which will begin to expire in the year 2022. The Company had state and foreign net operating loss carryforwards of approximately $279.0 million and $33.4 million, respectively. As of December 31, 2021, the Company has research credit carryforwards for federal income tax purposes of approximately $17.3 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 $20.2 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.
   
2021 ($)
   
2020 ($)
 
Audit Fees
(1)
   2,973,590    2,204,830 
Audit-Related Fees
     —   
Tax Fees
(2)
   7,336    —   
All Other Fees
(3)
   2,000    —   
TOTAL
   2,982,926    2,204,830 
A reconciliation of the gross unrecognized tax benefit is as follows (in thousands):
(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.
 Year Ended December 31,
 202120202019
Unrecognized tax benefit - beginning balance$9,260 $8,840 $8,217 
Increases for tax positions taken in prior years317 — — 
Increases for tax positions taken in current year374 420 623 
Unrecognized tax benefit - ending balance$9,951 $9,260 $8,840 
(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.
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Auditor Independence





The unrecognized tax benefits, if recognized, would not impactUnder its charter, the Company's effective tax rate as the recognition of these tax benefits would be offsetAudit Committee
pre-approves
all services rendered 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.
The Company’s policy to recognize interest and penalties related to income tax matters in income tax expense. As of December 31, 2021 and 2020, the Company had no 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, 2021 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. The most recent analysis of the Company's historical ownership changes was completed through October 31, 2021. Based on the analysis, the Company does not anticipate a current limitation on the tax attributes.
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,
 202120202019
Net loss$(45,568)$(65,381)$(37,057)
Weighted-average number of shares used to
   compute net loss per share, basic and diluted		93,686 90,412 91,163 
Net loss per share, basic and diluted$(0.49)$(0.72)$(0.41)
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,
 202120202019
Stock options and ESPP6,956 8,229 8,642 
Restricted stock units5,381 4,709 5,023 
Shares related to convertible senior notes11,521 11,521 11,521 
 23,858 24,459 25,186 
14. Leases
The Company has entered into operating leases primarily for office facilities. These leases have terms which typically range from 1 year to 10 years, and often include options to renew. These renewal terms can extend the lease term up to 6 years, and are included in the lease term when it is reasonably certain that the Company will exercise the option. 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
109






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, 2021, 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, 2021, the Company recognized $6.5 million in total lease costs, which is comprised of $6.0 million in operating lease costs for right-of-use assets and $0.5 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,
 20212020
Cash paid for operating lease liabilities$4,808 $3,940 
Right-of-use assets obtained in exchange for lease obligations12,021 12,297 
Supplemental balance sheet information related to operating leases was as follows (in thousands, except lease term and discount rate):
 December 31, 2021December 31, 2020
Operating right-of-use assets reported as: 
Operating lease right-of-use assets$23,874 $16,222 
 
Operating lease liabilities reported as:
Other current liabilities$4,935 $3,650 
Other non-current liabilities26,903 15,956 
Total operating lease liabilities$31,838 $19,606 
 
Weighted average remaining lease term (in years)6.27.2
Weighted average discount rate5.0 %5.8 %
Maturities of operating lease liabilities were as follows (in thousands):
110






 Operating Leases
2022$6,407 
20236,899 
20246,239 
20254,774 
20263,344 
2027 and thereafter9,836 
Total lease payments$37,499 
 
Less: Imputed Interest(5,661)
Total$31,838 
15. Commitments and Contingencies
Purchase Obligations
The Company has unconditional purchase commitments, primarily related to distribution fees, software license fees and marketing services of $11.2 million as of December 31, 2021.
Some of our agreements with retailers include certain 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 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 the Company's efforts to implement, with Albertsons, one of the Company’s solutions resulted in multiple disputes being raised by each of the parties against the other, one of which disputes resulted in the Company not being able to meet the contractual minimum at the end of the applicable period under the agreement. In order to resolve certain of the disputes regarding the parties' respective obligations, the Company recognized a loss of $8.8 million during the year ended December 31, 2020. This loss was included in cost of revenues on our consolidated statements of operations.
During the second quarter of 2021, the Company notified Albertsons that due to the Albertsons' failure to meet certain obligations under the agreement, the Company is not obligated to meet the contractual minimums for the period that ended in October 2021. In connection with renewal discussions between the parties, the Company received a letter in October 2021 from Albertsons notifying us of their intent to early terminate our agreement related to the delivery of promotions and media campaigns, effective December 31, 2021. The Company informed Albertsons that we disputed their right to terminate the agreement prior to March 31, 2022. The parties are currently in litigation. If the contractual minimum applicable to the period that ended in October 2021 is enforceable, the Company may recognize a loss that, depending on a variety of factors, is estimated to be as high as $8.5 million.
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, retailers and other third parties. The Company has agreed to hold certain parties harmless against losses arising from claims of intellectual property infringement or other liabilities relating to or arising from our products or 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. We also have entered into indemnification agreements with our officers and directors, and our Amended and Restated Bylaws also contain provisions relating to circumstances under which the Company may indemnify certain other parties.
111






The Company’s founder and CEO (“CEO”) is subject to a claim from a third party, alleging that he owes certain amounts to the third party in connection with fundraising activities for Quotient that occurred between 1998 and 2006. The Company agreed to advance certain defense costs, subject to an undertaking to repay such amounts if, and to the extent that, it is ultimately determined that he is not entitled to indemnification. The matter is ongoing. If this matter is resolved in favor of the third party and the Company is required to indemnify the CEO for a loss, the Company may be required to make an indemnity payment. While the Company maintains directors’ and officers’ liability insurance, such insurance may not be applicable, adequate or cover all liabilities that may be incurred.
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 existing claims are remote; therefore the Company has not recorded any accrual for existing claims as of December 31, 2021 and 2020. 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 $2.5 million, $2.2 million and $1.7 million for the years ended December 31, 2021, 2020 and 2019, respectively.
17. Concentrations
As of December 31, 2021 and 2020, there was no customer with an accounts receivable balance greater than 10% of total accounts receivable.
For the year ended December 31, 2021 and 2020, there was no customer that accounted for revenues greater than 10% of revenues for each respective period. For the year ended December 31, 2019, there was 1 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.
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
112






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 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, 2021, 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, 2021 to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements in accordance with U.S. GAAP.
Our independent registered public accounting firm, Ernst & Young. The Audit Committee has determined that the rendering of
non-audit
services by Ernst & Young LLP, independently assessedwas compatible with maintaining their independence.
Pre-Approval
Policies and Procedures.
Consistent with requirements of the effectivenessSEC 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 internal control over financial reporting, as stated in their attestation report, which is included in Part II, Item 8independent registered public accounting firm. In recognition of this Form 10-K.
Changes in Internal Control over Financial Reporting
There were no changes inresponsibility, our internal control over financial reporting identified in management’s evaluation pursuant to Rules 13a-15(d) or 15d-15(d)Audit Committee (or a member of the Exchange Act duringAudit Committee delegated by the fourth quarter of 2021 that materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.Audit Committee)
pre-approves
Limitations on Effectiveness of Controlsall audit and Procedurespermissible
non-audit
In designing and evaluatingservices provided by 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.
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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, 2021 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 Officerindependent registered public accounting firm. These services may include audit services, audit-related services, tax services 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
The information required by this item will be set forth in our Proxy Statement and is incorporated herein by reference.
Item 13.     Certain Relationships and Related Transactions, and Director Independence
The information, if any, required by this item will be set forth in our Proxy Statement and is incorporated herein by reference.
Item 14.     Principal Accounting Fees and Services
The information required by this item will be set forth in our Proxy Statement and is incorporated herein by reference.

services.
114






PART IV
Item 15.
Exhibits, Financial Statement Schedules
Item 15.     Exhibits, Financial Statement Schedules.
Documents filed as part of this report are as follows:
1.Consolidated Financial Statements
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 Form the Original
10-K.
2.Financial Statement Schedules
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 onthe Original
10-K.
Form 10-K.
3.
Exhibits
3.Exhibits
The exhibits listed in the accompanying “Index to Exhibits”“Exhibit Index” are filed or incorporated by reference as part of this report.
115






Exhibit Index
  Incorporated by Reference
Exhibit
Number		Exhibit DescriptionFormFile No.ExhibitFiling
Date		Filed
Herewith
3.110-K001-363313.13/11/2016 
3.28-K001-363313.210/6/2015 
3.38-A001-363313.111/12/2021
4.1S-1/A333-1936924.12/25/2014 
4.2S-1333-1936924.21/31/2014 
4.38-K001-363314.111/17/2017 
4.48-K001-363314.111/17/2017 
4.58-A001-363314.111/12/2021
4.6X
10.1†S-1/A333-19369210.12/14/2014 
10.2†S-1333-19369210.21/31/2014 
10.3†S-1333-19369210.31/31/2014 
10.4†S-1333-19369210.41/31/2014 
10.5†10-Q001-3633110.611/8/2016 
10.6†10-Q001-3633110.111/3/2017 
10.7†10-Q001-3633110.711/8/2016 
10.8†10-Q001-3633110.811/8/2016 
10.9†10-Q001-3633110.111/9/2018 
10.10†10-Q001-3633110.211/3/2017 
10.11†10-Q001-3633110.311/3/2017 
10.12†10-Q001-3633110.15/5/2017 
10.13†S-1333-19369210.92/25/2014 
10.14†10-Q001-3633110.211/8/2019 
10.15†10-K001-3633110.23/2/2020
10.16†10-Q001-3633110.25/10/2021
      
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   
3.3  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   
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  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   
4.6  Description of the Registrant’s Securities Registered Pursuant to Section 12 of the Securities Exchange Act of 1934   10-K    001-36331    4.6    3/1/2022   
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†  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    10.2    3/2/2020   
116


10.16†  Offer Letter of Employment with Connie Chen, dated August 19, 2013   10-Q    001-36331    10.2    5/10/2021   
10.17†  Change of Control Severance Agreement with Steven R. Boal, dated August 2, 2016   10-Q    001-36331    10.3    11/8/2016   
10.18†  Change of Control Severance Agreement with Scott Raskin, dated August 5, 2019   10-Q    001-36331    10.3    11/8/2019   
10.19†  Change of Control Severance Agreement with Pam Strayer, dated November 11, 2019   10-K    001-36331    10.26    3/2/2020   
10.20†  Change of Control Severance Agreement with Connie Chen, effective as of July 26, 2016   10-Q    001-36331    10.3    5/10/2021   
10.21†  Amendment No. 1 to Change of Control Severance Agreement with Connie Chen, effective as of May 1, 2019   10-Q    001-36331    10.4    5/10/2021   
10.22†  Form of Amendment to Change of Control Severance Agreement   10-Q    001-36331    10.3    8/9/2019   
10.23  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   
10.24  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   
10.25  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   
10.26  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   
10.27  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   
10.28  Sublease Agreement, dated February 8, 2021 between Quotient Technology Inc. and sPower, LLC.   8-K    001-36331    10.1    2/10/2021   
10.29  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   
10.30  Loan,Guaranty and Security Agreement dated as of November 17, 2021, by and between the Registrant, Bank of America, N.A., as agent, and the lenders party thereto   8-K    001-36331    10.1    11/17/2021   
21.1  List of Subsidiaries of Registrant.   10-K    001-36331    21.1    3/1/2022   
23.1  Consent of Independent Registered Public Accounting Firm.   10-K    001-36331    23.1    3/1/2022   
24.1  Power of Attorney (Included on the signature page to this report).   10-K    001-36331    24.1    3/1/2022   
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    3/1/2022   




  Incorporated by Reference
Exhibit
Number		Exhibit DescriptionFormFile No.ExhibitFiling
Date		Filed
Herewith
10.17†10-Q001-3633110.311/8/2016
10.18†10-Q001-3633110.311/8/2019
10.19†10-K001-3633110.263/2/2020
10.20†10-Q001-3633110.35/10/2021
10.21†10-Q001-3633110.45/10/2021
10.22†10-Q001-3633110.38/9/2019
10.23S-1333-19369210.141/31/2014
10.24S-1333-19369210.151/31/2014
10.2510-K001-3633110.153/19/2015
10.2610-Q001-3633110.18/5/2020
10.2710-Q001-3633110.18/5/2020
10.288-K001-3633110.12/10/2021
10.298-K001-3633110.111/17/2017
10.308-K001-3633110.111/17/2021
21.1X
23.1X
24.1X
31.1X
31.2X
117


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    3/1/2022   
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.           X 
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.           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.   10-K    001-36331    32.1    3/1/2022   
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.   10-K    001-36331    32.2    3/1/2022   
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 




Incorporated by Reference
Exhibit
Number		Exhibit DescriptionFormFile No.ExhibitFiling
Date		Filed
Herewith
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.SCHInline XBRL Taxonomy Extension Schema DocumentX
101.CALInline XBRL Taxonomy Extension Calculation Linkbase DocumentX
101.DEFInline XBRL Taxonomy Extension Definition Linkbase DocumentX
101.LABInline XBRL Taxonomy Extension Label Linkbase DocumentX
101.PREInline XBRL Taxonomy Extension Presentation Linkbase DocumentX
104Cover Page Interactive Data File (formatted as inline XBRL with applicable taxonomy extension information contained in Exhibits 101)X
†
Indicates a management contract or compensatory plan or arrangement.
*
The certifications attached as Exhibit 32.1 and 32.2 that accompany this Annual Report on Form accompanied the Original
10-K
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 Form the Original
10-K,
irrespective of any general incorporation language contained in such filing.

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Item 16.     Form 10-K Summary.
None.
119








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 ReportForm
10-K/A,
Amendment No. 1 to be signed on its behalf by the undersigned, thereunto duly authorized
.
 
Quotient Technology Inc.
Date: March 1, 2022By:/s/ Steven Boal
Steven Boal
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.
NameDate: April 29, 2022TitleBy:Date
/s/ Steven Boal
Steven Boal
Chief Executive Officer and Director (Principal Executive Officer)
March 1, 2022
Steven Boal
/s/ Pamela StrayerChief Financial Officer and Treasurer (Principal Financial Officer and Principal Accounting Officer)March 1, 2022
Pamela Strayer
/s/ Andrew J. GessowDirectorMarch 1, 2022
Andrew J. Gessow
/s/ Lorraine HaritonDirectorMarch 1, 2022
Lorraine Hariton
/s/ Alison HawkinsDirectorMarch 1, 2022
Alison Hawkins
/s/ Steve HorowitzDirectorMarch 1, 2022
Steve Horowitz
/s/ Robert McDonaldDirectorMarch 1, 2022
Robert McDonald
/s/ David OppenheimerDirectorMarch 1, 2022
David Oppenheimer
/s/ Christy WyattDirectorMarch 1, 2022
Christy Wyatt
120