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 ~~and posted on its corporate Web site, if any,~~ every Interactive Data File required to be submitted ~~and posted~~ 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 ~~and post~~ such files). Yes ☒ No ☐

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

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

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

As of October ~~31, 2017,~~30, 2020, the registrant had ~~29,539,038~~41,948,956 shares of Class A common stock and ~~11,535,524~~5,015,339 shares of Class B common stock outstanding.

	As of		As of			As of		As of
	September 30, 2017		December 31, 2016			September 30, 2020		December 31, 2019
ASSETS
Current assets:
Cash and cash equivalents	$	132,798	$	133,400		$	434,371	$	130,876
Accounts receivable, net		470,452		377,240
Short-term investments, net of allowance for credit losses of $11 and $0 as of September 30, 2020 and December 31, 2019, respectively							122,909		124,112
Accounts receivable, net of allowance for credit losses of $7,182 and $3,920 as of September 30, 2020 and December 31, 2019, respectively							1,139,860		1,166,376
Prepaid expenses and other current assets		12,712		5,763			58,847		27,857
TOTAL CURRENT ASSETS		615,962		516,403			1,755,987		1,449,221
Property and equipment, net		17,396		14,779			111,862		64,012
Deferred taxes, net		1,778		1,778
Operating lease assets							202,172		173,449
Deferred income taxes							39,928		18,950
Other assets, non-current		7,495		4,636			28,479		23,129
TOTAL ASSETS	$	642,631	$	537,596		$	2,138,428	$	1,728,761
LIABILITIES AND STOCKHOLDERS’ EQUITY
LIABILITIES
Current liabilities:
Accounts payable	$	370,532	$	321,163		$	919,694	$	868,618
Accrued expenses and other current liabilities		25,405		22,973			57,724		47,178
Operating lease liabilities							34,735		14,577
TOTAL CURRENT LIABILITIES		395,937		344,136			1,012,153		930,373
Operating lease liabilities, non-current							205,408		174,873
Debt, net		27,000		25,847			72,000		—
Other liabilities, non-current		4,435		3,233			16,240		10,998
TOTAL LIABILITIES		427,372		373,216			1,305,801		1,116,244
Commitments and contingencies (Note 10)
STOCKHOLDERS’ EQUITY
Preferred stock, par value $0.000001; 100,000 shares authorized, zero shares issued and outstanding as of September 30, 2017 and December 31, 2016		—		—
Common stock, par value $0.000001; 1,000,000 Class A shares authorized as of September 30, 2017 and December 31, 2016; 29,472 and 10,071 shares issued and outstanding as of September 30, 2017 and December 31, 2016, respectively; 95,000 Class B shares authorized as of September 30, 2017 and December 31, 2016; 11,552 and 29,060 shares issued and outstanding as of September 30, 2017 and December 31, 2016, respectively		—		—
Preferred stock, par value $0.000001; 100,000 shares authorized, 0 shares issued and outstanding as of September 30, 2020 and December 31, 2019							—		—
Common stock, par value $0.000001 Class A, 1,000,000 shares authorized; 41,930 and 40,305 shares issued and outstanding as of September 30, 2020 and December 31, 2019, respectively Class B, 95,000 shares authorized; 5,015 and 5,171 shares issued and outstanding as of September 30, 2020 and December 31, 2019, respectively							0		0
Additional paid-in capital		196,090		179,198			510,017		380,079
Retained earnings (accumulated deficit)		19,169		(14,818	)
Accumulated other comprehensive income							145		—
Retained earnings							322,465		232,438
TOTAL STOCKHOLDERS’ EQUITY		215,259		164,380			832,627		612,517
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY	$	642,631	$	537,596		$	2,138,428	$	1,728,761

The accompanying Notes to Condensed Consolidated Financial Statements are an integral part of these statements.

	Three Months Ended				Nine Months Ended					Three Months Ended							Nine Months Ended
	September 30,				September 30,					September 30,							September 30,
	2017		2016		2017		2016			2020				2019			2020			2019
Revenue	$	79,413	$	52,956	$	205,569	$	130,516		$	216,113		��	$	164,203		$	516,128		$	445,114
Operating expenses:
Platform operations		17,397		10,422		45,097		26,617			44,826				39,932			127,167			108,913
Sales and marketing		16,200		11,600		42,842		31,282			44,637				36,142			116,002			89,951
Technology and development		13,181		7,292		35,777		17,694			41,079				29,185			117,931			83,949
General and administrative		14,227		8,591		41,815		21,442			42,789				37,017			117,252			102,755
Total operating expenses		61,005		37,905		165,531		97,035			173,331				142,276			478,352			385,568
Income from operations		18,408		15,051		40,038		33,481			42,782				21,927			37,776			59,546
Interest expense		513		1,347		1,290		2,664
Change in fair value of preferred stock warrant liabilities		—		4,653		—		9,458
Foreign currency exchange loss, net		1,841		87		3,159		489
Total other expense, net		2,354		6,087		4,449		12,611
Other expense (income):
Interest expense (income), net											235				(1,480	)		(740	)		(3,763	)
Foreign currency exchange (gain) loss, net											(12	)			(412	)		1,574			784
Total other expense (income), net											223				(1,892	)		834			(2,979	)
Income before income taxes		16,054		8,964		35,589		20,870			42,559				23,819			36,942			62,525
Provision for income taxes		5,825		5,320		1,602		10,668
Provision for (benefit from) income taxes											1,312				4,397			(53,473	)		5,152
Net income	$	10,229	$	3,644	$	33,987	$	10,202		$	41,247			$	19,422		$	90,415		$	57,373
Net income (loss) attributable to common stockholders	$	10,229	$	972	$	33,987	$	(37,007	)
Earnings (loss) per share:
Earnings per share:
Basic	$	0.25	$	0.08	$	0.85	$	(3.23	)	$	0.89			$	0.43		$	1.96		$	1.29
Diluted	$	0.23	$	0.06	$	0.77	$	(3.23	)	$	0.84			$	0.40		$	1.86		$	1.20
Weighted average shares outstanding:
Basic		40,700		12,629		39,977		11,461			46,582				44,771			46,075			44,363
Diluted		44,245		17,064		43,919		11,461			49,220				48,037			48,731			47,728
										��

The accompanying Notes to Condensed Consolidated Financial Statements are an integral part of these statements.

Nine Months Ended September 30,

2017

2016

OPERATING ACTIVITIES:

Net income

$
33,987

$
10,202

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

Depreciation and amortization

5,157

2,612

Stock-based compensation

12,406

1,048

Change in fair value of preferred stock warrant liabilities

—

9,458

Bad debt expense

3,943

384

Other

(1,312
)

426

Changes in operating assets and liabilities:

Accounts receivable

(95,215
)

(82,322
)
Prepaid expenses and other assets

(7,296
)

(2,425
)
Accounts payable

51,855

94,352

Accrued expenses and other liabilities

3,506

5,252

Net cash provided by operating activities

7,031

38,987

INVESTING ACTIVITIES:

Purchases of property and equipment

(8,357
)

(3,516
)
Capitalized software development costs

(2,479
)

(1,796
)
Net cash used in investing activities

(10,836
)

(5,312
)
FINANCING ACTIVITIES:

Proceeds from line of credit

—

75,847

Repayment on line of credit

—

(40,000
)
Repayment of term debt

—

(30,000
)
Payment of debt financing costs

(153
)

(976
)
Payment of financing obligations

(677
)

(326
)
Proceeds from issuance of Series C convertible preferred stock

—

60,000

Repurchase of preferred stock and common stock

—

(54,000
)
Proceeds from exercise of stock options

1,768

433

Proceeds from employee stock purchase plan

2,294

—

Taxes paid related to net settlement of restricted stock awards

(29
)

—

Payment of stock repurchase costs

—

(155
)
Payment of Series C convertible preferred stock offering costs

—

(129
)
Proceeds from the issuance of Class A common stock in initial public offering, net of
underwriting commissions

—

78,120

Payment of offering costs—initial public offering

—

(2,568
)
Net cash provided by financing activities

3,203

86,246

Increase (decrease) in cash and cash equivalents

(602
)

119,921

Cash and cash equivalents—Beginning of period

133,400

4,047

Cash and cash equivalents—End of period

$
132,798

$
123,968

SUPPLEMENTAL CASH FLOW INFORMATION:

Capitalized assets financed by accounts payable

$
945

$
1,803

Tenant improvements paid by lessor

$
640

$
—

Stock-based compensation included in capitalized software development costs

$
453

$
9

Debt financing costs included in debt, net

$
1,153

$
—

Conversion of convertible preferred stock to Class B common stock

$
—

$
83,241

Conversion of warrant for convertible preferred stock to a warrant for Class B common
stock and net exercise of warrant to purchase Class B common stock

$
—

$
12,596

Deferred initial public offering costs included in accounts payable

$
—

$
1,758

Net exercise of warrants to purchase Series Seed convertible preferred stock

$
—

$
3,789

Asset retirement obligation

$
—

$
354

	Three Months Ended					Nine Months Ended
	September 30,					September 30,
	2020			2019		2020		2019
Net income	$	41,247		$	19,422	$	90,415	$	57,373
Other comprehensive income:
Change in unrealized (loss) gain on available-for-sale investments, net of tax		(129	)		—		145		—
Comprehensive income	$	41,118		$	19,422	$	90,560	$	57,373

	Class A and B					Additional			Accumulated Other						Total
	Common Stock					Paid-In			Comprehensive			Retained			Stockholders’
	Shares			Amount		Capital			Income			Earnings			Equity
Balance as of December 31, 2018		43,864		$	—	$	270,447		$	—		$	124,120		$	394,567
Exercise of common stock options		592			—		9,502			—			—			9,502
Restricted stock, net of forfeitures and shares withheld for taxes		23			—		(1,146	)		—			—			(1,146	)
Stock-based compensation		—			—		16,324			—			—			16,324
Net income		—			—		—			—			10,151			10,151
Balance as of March 31, 2019		44,479		$	—	$	295,127		$	—		$	134,271		$	429,398
Exercise of common stock options		284			—		7,473			—			—			7,473
Restricted stock, net of forfeitures and shares withheld for taxes		7			—		(2,488	)		—			—			(2,488	)
Stock-based compensation		—			—		21,390			—			—			21,390
Issuance of common stock under employee stock purchase plan		153			—		8,648			—			—			8,648
Net income		—			—		—			—			27,800			27,800
Balance as of June 30, 2019		44,923		$	—	$	330,150		$	—		$	162,071		$	492,221
Exercise of common stock options		196			—		4,936			—			—			4,936
Restricted stock, net of forfeitures and shares withheld for taxes		2			—		(1,110	)		—			—			(1,110	)
Stock-based compensation		—			—		19,923			—			—			19,923
Net income		—			—		—			—			19,422			19,422
Balance as of September 30, 2019		45,121		$	—	$	353,899		$	—		$	181,493		$	535,392

Balance as of December 31, 2019		45,476		$	—	$	380,079		$	—		$	232,438		$	612,517
Impact upon adoption of new accounting standard (Note 2)		—			—		—			—			(388	)		(388	)
Exercise of common stock options		539			—		19,320			—			—			19,320
Restricted stock, net of forfeitures and shares withheld for taxes		20			—		(4,893	)		—			—			(4,893	)
Stock-based compensation		—			—		23,263			—			—			23,263
Other comprehensive income		—			—		—			158			—			158
Net income		—			—		—			—			24,057			24,057
Balance as of March 31, 2020		46,035		$	—	$	417,769		$	158		$	256,107		$	674,034
Exercise of common stock options		431			—		22,375			—			—			22,375
Restricted stock, net of forfeitures and shares withheld for taxes		61			—		(2,836	)		—			—			(2,836	)
Stock-based compensation		—			—		24,516			—			—			24,516
Issuance of common stock under employee stock purchase plan		202			—		15,035			—			—			15,035
Other comprehensive income		—			—		—			116			—			116
Net income		—			—		—			—			25,111			25,111
Balance as of June 30, 2020		46,729		$	—	$	476,859		$	274		$	281,218		$	758,351
Exercise of common stock options		224			—		12,247			—			—			12,247
Restricted stock, net of forfeitures and shares withheld for taxes		(8	)		—		(6,455	)		—			—			(6,455	)
Stock-based compensation		—			—		27,366			—			—			27,366
Other comprehensive income		—			—					(129	)		—			(129	)
Net income		—			—		—			—			41,247			41,247
Balance as of September 30, 2020		46,945		$	—	$	510,017		$	145		$	322,465		$	832,627

The accompanying Notes to Condensed Consolidated Financial Statements are an integral part of these statements.

	Nine Months Ended September 30,
	2020			2019
OPERATING ACTIVITIES:
Net income	$	90,415		$	57,373
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		20,777			15,246
Stock-based compensation		73,751			56,368
Allowance for credit losses on accounts receivable		2,722			1,647
Noncash lease expense		24,052			15,394
Deferred income taxes		(20,978	)		—
Other		1,242			(2,945	)
Changes in operating assets and liabilities:
Accounts receivable		21,063			(2,739	)
Prepaid expenses and other assets		(23,919	)		(19,024	)
Accounts payable		47,728			(21,401	)
Accrued expenses and other liabilities		11,006			(3,178	)
Operating lease liabilities		(10,388	)		(8,468	)
Net cash provided by operating activities		237,471			88,273
INVESTING ACTIVITIES:
Purchases of investments		(127,117	)		(178,179	)
Maturities of investments		128,315			55,819
Purchases of property and equipment		(57,721	)		(21,659	)
Capitalized software development costs		(4,246	)		(3,849	)
Net cash used in investing activities		(60,769	)		(147,868	)
FINANCING ACTIVITIES:
Proceeds from line of credit		143,000			—
Repayment on line of credit		(71,000	)		—
Payment of debt financing costs		—			(6	)
Proceeds from exercise of stock options		53,942			21,911
Proceeds from employee stock purchase plan		15,035			8,648
Taxes paid related to net settlement of restricted stock awards		(14,184	)		(4,744	)
Net cash provided by financing activities		126,793			25,809
Increase (decrease) in cash and cash equivalents		303,495			(33,786	)
Cash and cash equivalents—Beginning of period		130,876			207,232
Cash and cash equivalents—End of period	$	434,371		$	173,446
SUPPLEMENTAL CASH FLOW INFORMATION:
Capitalized assets financed by accounts payable	$	12,842		$	1,968
Asset retirement obligation	$	1,601		$	3,543
Stock-based compensation included in capitalized software development costs	$	1,394		$	1,269
Cash paid for amounts included in the measurement of lease liabilities included in operating cash flows	$	17,702		$	12,268
Right-of-use assets obtained in exchange for operating lease liabilities	$	52,238		$	147,682

The accompanying Notes to Condensed Consolidated Financial Statements are an integral part of these statements.

The Trade Desk, Inc. (the “Company”) was formed in November 2009 as a Delaware corporation. The Company is headquartered in Ventura, California and has offices in various cities in North America, Europe, Asia and Australia. The Company is a technology company that empowers buyers of advertising ~~agencies and other buyers~~ by providing a self-service cloud-based platform ~~that enables clients to purchase~~on which ad buyers can create, manage, and ~~manage~~optimize more expressive data-driven digital advertising campaigns across ~~various advertising formats.~~

~~The Company is subject to certain business risks,~~ad formats, including ~~dependence~~display, video, audio, native, and social, on ~~key employees, competition, market acceptance~~a multitude of ~~the Company’s platform, ability to source demand from buyers of advertising inventory, availability of equity or debt financings~~devices, such as computers, mobile devices, and ~~dependence on growth to achieve its business plan.~~connected TV.

The accompanying condensed consolidated financial statements were prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial ~~information.~~information and are unaudited. Certain information and disclosures normally included in consolidated financial statements prepared in accordance with GAAP have been condensed or omitted. The condensed consolidated balance sheet as of December 31, 2019 was derived from audited financial statements but does not include all disclosures required by GAAP. Accordingly, these condensed consolidated financial statements should be read in conjunction with the Company’s audited consolidated financial statements and related notes included in its Annual Report on Form 10-K for the year ended December 31, ~~2016.~~2019.

~~The accompanying condensed consolidated financial statements are unaudited. These~~Except for the adoption of Accounting Standards Update (“ASU”) No. 2016-13, Financial Instruments-Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments (Accounting Standards Codification (“ASC”) 326 or “CECL”), there have been no changes to the Company’s accounting policies and these unaudited interim condensed consolidated financial statements have been prepared on a basis consistent with that used to prepare the Company’s audited annual consolidated financial statements for the year ended December 31, 2019, and include, in the opinion of management, all adjustments, consisting of normal recurring items, necessary for the fair statement of the condensed consolidated financial statements.

The ~~operating~~ results of operations for the three and nine months ended September 30, ~~2017~~2020 are not necessarily indicative of the results expected for the full year ending December 31, ~~2017.~~

~~There have been no significant changes in the Company’s accounting policies from those disclosed in its Annual Report on Form 10-K for the year ended December 31, 2016.~~2020.

The preparation of condensed consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the condensed consolidated financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ materially from these ~~estimates under different assumptions or circumstances.~~estimates.

~~The~~ Company considers all short-term highly liquid investments with an original maturity of three months or less to be cash equivalents. Cash equivalents are carried at fair value. Refer to Note 4—Fair Value Measurements for additional information regarding the fair value of cash equivalents.

~~The allowance for doubtful accounts was $6.0 million and $2.6 million as~~As of September 30, ~~2017~~2020, the impact of the Coronavirus pandemic (“COVID-19”) on our business continues to evolve. As a result, many of our estimates and ~~December 31,~~assumptions, including the allowance for credit losses, consider macro-economic factors in the market, which require increased judgment and carry a higher degree of variability and volatility. As events continue to evolve and additional information becomes available, our estimates may change materially in future periods.

In June 2016, ~~respectively, and the increase related primarily to specific client reserves.~~

~~In May 2014,~~ the Financial Accounting Standards Board (“FASB”) issued ~~Accounting Standards Update (“ASU”) No. 2014-09,~~ ~~Revenue from Contracts with Customers (Topic 606)~~, which amends the existing accounting standards for revenue recognition. Under ASU 2014-09, a company will recognize revenue when it transfers promised goods or services to customers in an amount that reflects the consideration to which it expects to be entitled in exchange for those goods or services. Additionally, the guidance requires improved disclosures to help users of financial statements better understand the nature, amount, timing, and uncertainty of revenue and cash flows arising from contracts with customers. In August 2015, the FASB approved the deferral of the new standard by one year. In 2016, the FASB issued additional amendments to the new revenue guidance. The new guidance is effective for annual reporting periods (including

interim periods within those periods) beginning after December 15, 2017. The guidance permits the use of either the retrospective or cumulative effect transition method. The Company does not expect that the adoption of this guidance will have a material impact on its consolidated statements of operations, however the Company will be required to include additional disclosures in the notes to the consolidated financial statements.

~~In February 2016, the FASB issued~~ ASU No. ~~2016-02,~~ ~~Leases~~2016-13, which requires an entity to recognize right-of-use assets and lease liabilities on its balance sheet and disclose key information about leasing arrangements. The guidance offers specific accounting guidance for a lessee, lessor, and sale and leaseback transactions. Lessees and lessors are required to disclose qualitative and quantitative information about leasing arrangements to enable a userthe measurement of the financial statements to assess the amount, timing and uncertainty of cash flows arising from leases. Leases will be classified as either finance or operating, with the classification affecting the pattern of expense recognition in the income statement. The guidance is effective for annual reporting periods beginning after December 15, 2018, including interim periods within that reporting period, and requires a modified retrospective adoption, with early adoption permitted. Although the Company is currently evaluating the impact of this guidance on its consolidated financial statements, the Company expects that most of its operating lease commitments will be recognized as operating lease liabilities and right-of-use assets upon adoption of the new guidance.

~~In June 2016, the FASB issued ASU No. 2016-13,~~ ~~Financial Instruments-Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments, which is intended to provide more decision-useful information about~~all expected credit losses for financial assets held at the reporting date based on ~~financial instruments~~historical experience, current conditions and ~~other commitments to extend credit held by~~reasonable and supportable forecasts. As a ~~reporting entity at each reporting date. ASU 2016-13 revises~~result, the Company revised its impairment model to utilize an expected loss methodology in place of ~~the currently used~~an incurred loss methodology ~~which will result in more timely recognition of losses on financial instruments, including, but not limited~~related to ~~available for sale debt~~its marketable securities and ~~accounts receivable.~~allowance for doubtful accounts. The Company adopted ASC 326 on January 1, 2020, using a modified retrospective transition method, which requires a cumulative-effect adjustment, if any, to the opening balance of retained earnings to be recognized on the date of adoption with prior periods not restated. The cumulative-effect adjustment recorded on January 1, 2020, was not material.

Accounts Receivable and Allowance for Credit Losses (formerly Allowance for Doubtful Accounts)

Accounts receivable are recorded at the invoiced amount, are unsecured and do not bear interest. The Company performs ongoing credit evaluations of its clients and certain advertisers when the Company’s agreements with its clients contain sequential liability terms that provide that the client payments are not due to the Company until the client has received payment from its clients who are advertisers. We maintain an allowance for credit losses for expected uncollectible accounts receivable, which is ~~required~~recorded as an offset to ~~adopt this standard starting~~accounts receivable and changes in such are classified as general and administrative expense in the Consolidated Statements of Income.

Based on the implementation of CECL during the first quarter of 2020, the Company considers macro-economic factors and industry specific default rates in the valuation of trade receivables and the related allowance for credit losses. The industry specific default rates are applied to the advertiser’s industry if the receivables are subject to sequential liability or the Company is engaged with the advertiser directly. The services of an outside valuation firm were used to assist in the determination of the macro-economic factors and the industry default rates. For the three and nine months ended September 30, 2020, our assessment considered business and market disruptions caused by COVID-19 and estimates of credit defaults by industry.

In December 2019, the FASB issued ASU No. 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes, which simplifies the accounting for income taxes. This guidance will be effective for the Company in the first quarter of ~~fiscal year 2021. Early~~2021 on a prospective basis, and early adoption is permitted. The Company is currently evaluating the impact of ~~this~~the new guidance on ~~its~~our consolidated financial statements.

In ~~August 2016,~~March 2020, the FASB issued ASU No. ~~2016-15,~~ ~~Statement of Cash Flows~~2020-04, Reference Rate Reform (Topic ~~230), Classification of Certain Cash Receipts and Cash Payments~~848) (“ASU 2020-04”), which ~~addresses eight specific cash flow issues with~~provides optional expedients and exceptions for applying GAAP to contracts, hedging relationships, and other transactions affected by the ~~objective~~discontinuation of ~~reducing~~ the ~~existing diversity in practice. ASU 2016-15 is~~London Interbank Offered Rate or by another reference rate expected to be discontinued. The amendments are effective for ~~fiscal years~~all entities as of March 12, 2020 through December 31, 2022, and can be adopted as of any date from the beginning ~~after December 15, 2017, and interim periods within those fiscal years. Early adoption is permitted, including adoption in an interim period. If adopted in~~of an interim period ~~any adjustments should be reflected as~~that includes or is subsequent to March 12, 2020. The Company is currently evaluating the impacts of the ~~beginning of the fiscal year that includes such interim period. The adoption~~provisions of ASU ~~2016-15 should be applied using a retrospective transition method to each period presented, unless impracticable to do so. The Company does not expect that the adoption~~2020-04 on our financial condition, results of ~~this guidance will have a material impact on its consolidated statement of~~operations, and cash flows.

~~In May 2017, the FASB issued ASU No. 2017-09,~~ ~~Compensation—Stock Compensation: Scope of Modification Accounting,~~ which provides guidance on the types of changes to the terms or conditions of a share-based payment award to which an entity would be required to apply modification accounting in FASB Accounting Standards Codification Topic 718, Compensation—Stock Compensation. The adoption of ASU 2017-09, is effective for annual periods beginning after December 15, 2017. The Company does not expect that the adoption of this guidance will have a material impact on its consolidated financial statements.

~~As of September 30, 2017, the~~The Company ~~had two~~has 2 classes of common stock, Class A and Class B. Basic and diluted earnings ~~(loss)~~ per share (“EPS”) attributable to common stockholders for Class A and Class B common stock were the same because they were entitled to the same liquidation and dividend rights.

The ~~reconciliations~~computation of ~~the numerators and denominators of the~~ basic and diluted ~~earnings (loss) per share computations are~~EPS is as follows (in thousands, except per share amounts):

Three Months Ended

Nine Months Ended

September 30,

September 30,

2017

2016

2017

2016

Earnings (loss) per share—basic:

Numerator:

Net income

$
10,229

$
3,644

$
33,987

$
10,202

Less: Income attributable to convertible preferred stock

—

(2,672
)

—

—

Less: Premium on repurchase of convertible preferred
   stock

—

—

—

(47,209
)
Net income (loss) attributable to common
   stockholders—basic

$
10,229

$
972

$
33,987

$
(37,007
)
Denominator:

Weighted-average shares outstanding

40,700

12,629

39,977

11,461

Earnings (loss) per share—basic

$
0.25

$
0.08

$
0.85

$
(3.23
)
Earnings (loss) per share—diluted:

Numerator:

Net income (loss) attributable to common
   stockholders—diluted

$
10,229

$
972

$
33,987

$
(37,007
)
Denominator:

Weighted-average shares outstanding

40,700

12,629

39,977

11,461

Options to purchase common stock

3,078

4,430

3,593

—

Employee stock purchase plan shares

322

5

250

—

Restricted stock

145

—

99

—

Weighted-average shares outstanding—diluted

44,245

17,064

43,919

11,461

Earnings (loss) per share—diluted

$
0.23

$
0.06

$
0.77

$
(3.23
)

	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2020		2019		2020		2019
Numerator:
Net income	$	41,247	$	19,422	$	90,415	$	57,373
Denominator:
Weighted-average shares outstanding—basic		46,582		44,771		46,075		44,363
Effect of dilutive securities:
Options to purchase common stock		2,223		2,762		2,282		2,871
Employee stock purchase plan shares		370		141		293		135
Restricted stock		45		363		81		359
Weighted-average shares outstanding—diluted		49,220		48,037		48,731		47,728
Basic EPS	$	0.89	$	0.43	$	1.96	$	1.29
Diluted EPS	$	0.84	$	0.40	$	1.86	$	1.20
Anti-dilutive equity awards under stock-based award plans excluded from the determination of diluted EPS		188		163		188		163

Anti-dilutive shares for equity awards under stock-based award plans excluded from the calculations of diluted earnings (loss) per share were 0.9 million and 0.4 million for the three months ended September 30, 2017 and 2016, respectively. Anti-dilutive shares for equity awards under stock-based award plans excluded from the calculations of diluted earnings (loss) per share were 0.9 million and 5.2 million shares for the nine months ended September 30, 2017 and 2016, respectively.9

Note 4—~~Fair Value Measurements~~Cash, Cash Equivalents and Short-Term Investments

~~At September 30, 2017,~~Cash, cash equivalents ~~of $10.0 million consisted of money market funds, which were classified as Level 1 of the fair value hierarchy~~ and ~~are valued using quoted market prices~~short-term investments in active markets. The Company had no cash equivalents at December 31, 2016. The carrying amount of cash equivalents, accounts receivable, accounts payable and accrued liabilities approximates fair value due to the short-term nature of these instruments. Long-term debt approximates fair value due to the variable rate nature of the debt. The Company had no other material financial instruments that were measured at fair value as of September 30, 2017 and December 31, 2016.

The Company had convertible preferred stock warrants prior to its initial public offering (“IPO”) in September 2016. The Company’s preferred stock warrants were recorded at fair value, which increased during the three and nine months ended September 30, 2016 due to an increase in the valuation of the Company’s preferred stock. The changes in the fair value of preferred stock warrantsmarketable securities were as follows (in thousands):

The ~~Company determined the~~Company’s gross unrealized gains or losses from its short-term investments, recorded at fair value, for the periods presented within this quarterly report were immaterial.

The contractual maturities of the ~~preferred stock warrants utilizing the Black-Scholes model with the following assumptions:~~

~~Accounts payable included the following~~Company’s short-term investments are as follows (in thousands):

The components of lease expense recorded in the condensed consolidated statements of operations were as follows (in thousands):

Maturities of lease commitments as of September 30, 2020 were as follows (in thousands):

~~On May 9, 2017,~~As of September 30, 2020, the Company’s outstanding debt balance under the Second Amended and Restated Loan and Security Agreement among the Company and a syndicate of banks, led by Citibank, N.A., ~~and Citibank, N.A.,~~ as agent ~~entered into an amended and restated loan and security agreement~~ (the “Amended Revolving Credit Agreement”). Among other things, the Amended Revolving Credit Agreement provides for an increase of $75.0 million in the aggregate principal amount of commitments available under the Company’s senior secured asset-based revolving credit facility (the “Revolving Credit“Credit Facility”) and provides the Company with greater flexibility with respect to working capital, acquisitions and general corporate purposes. Available funding commitments to the Company under the Revolving Credit Facility, subject to certain conditions, total up to $200.0was $72.0 million, with a $20.0 million sublimit for swingline borrowings and a $15.0 million sublimit for the issuance of letters of credit. Under certain circumstances and subject to certain conditions, the Company has the right to increase the Revolving Credit Facility by an additional amount not to exceed $100.0 million. The Amended Revolving Credit Agreement is collateralized by substantially all of the Company’s assets, including a pledge of certain of the Company’s accounts receivable, deposit accounts, intellectual property, investment property, and equipment. Availability under the Amended Revolving Credit Agreement is based on a percentage of the value of accounts receivable, as reduced by certain reserves.

~~Loans under the Revolving Credit Facility bear~~which bore interest ~~through maturity~~ at a ~~variable rate based upon, at the Company’s option, an~~weighted average annual rate of ~~either a Base Rate or a LIBOR rate, plus an applicable margin (“Base Rate Borrowings” and “LIBOR Rate Borrowings”)~~1.64%. The Base Rate is defined as a fluctuating interest rate equal to the greatest of (1) the federal funds rate plus 0.50%, (2) Citibank, N.A.’s prime rate, and (3) one month LIBOR rate plus 2.00%. The applicable margin is defined as a rate between 1.00% to 1.50% for Base Rate Borrowings and between 2.00% and 2.50% for LIBOR Borrowings, depending on the amount of average excess

availability on the Revolving Credit Facility. The fee for undrawn amounts ranges from 0.325% to 0.375%. Interest is payable either (a) monthly for Base Rate Borrowings or (b) for LIBOR Rate Borrowings, on the earlier of (1) the last day of the interest period which can be one, two, three or six months as selected by the Company or (2) the last day of each three month interval. The Company will also be required to pay customary letter of credit fees, as necessary.

The Amended Revolving Credit Agreement contains customary conditions to borrowings, events of default and covenants, including covenants that restrict the Company’s ability to sell assets, make changes to the nature of its business, engage in mergers or acquisitions, 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 repurchase capital stock or make other investments, engage in transactions with affiliates and make payments in respect of subordinated debt. The Amended Revolving Credit Agreement also requires that if the Company’s excess availability is less than the greater of (a) $15.0 million and (b) 12.5% of the lesser of (1) the borrowing base then in effect and (2) the commitments under the Revolving Credit Facility then in effect, the Company will maintain a consolidated fixed charge coverage ratio of at least 1.15 to 1.00.

The Revolving Credit Facility matures and all outstanding amounts become due and payable on May 9, 2022. Under the Revolving Credit Facility, the Company had an outstanding debt, net balance of $27.0 million that bore interest at weighted average rate of 3.2% as of September 30, 2017. Costs financed in conjunction with the Amended Revolving Credit Agreement of $1.2 million were included in the debt, net balance. The Company was in compliance with all covenants as of September 30, ~~2017.~~2020. In March 2020, the Company drew down $143.0 million under the Credit Facility as a precautionary measure to provide increased liquidity and preserve financial flexibility in light of the worldwide decline in business activity brought about by COVID-19. Subsequent to March 2020, we repaid $71.0 million from available working capital. Availability under the Credit Facility was $70.8 million as of September 30, 2020. In October 2020, the Company repaid the remaining balance on its Credit Facility.

In March 2017, the Company completed a secondary offering (the “March 2017 Offering”) in which a total of 7,281,789 shares of Class A common stock were sold by certain selling stockholders to the public at a price of $35.50 per share, including 949,798 shares of Class A common stock sold to the underwriters pursuant to an option to purchase additional shares granted to them.

In June 2017, the Company completed another secondary offering (the “June 2017 Offering”) in which a total of 4,846,600 shares of Class A common stock were sold by certain selling stockholders to the public at a price of $52.00 per share, including 530,148 shares of Class A common stock sold to the underwriters pursuant to an option to purchase additional shares granted to them.

The Company did not receive any proceeds from either the March 2017 Offering or the June 2017 Offering. The Company incurred $0.9 million and $0.6 million in offering costs related to the March 2017 Offering and the June 2017 Offering, respectively, and these costs were included within general and administrative expenses in the condensed consolidated statements of operations during the first and second quarters of 2017, respectively.

Stock-based compensation expense ~~included~~recorded in the condensed consolidated statements of ~~operations~~income was as follows (in thousands):

~~Stock~~The following summarizes stock option ~~activity for the nine months ended September 30, 2017 was as follows:~~activity:

On January 1, ~~2017,~~2020, the number of shares authorized for grant under the Company’s 2016 Incentive Award Plan was increased by ~~1.6~~1.8 million shares in accordance with plan provisions.

Stock-based compensation expense related to the ESPP totaled $3.7 million and ~~Restricted Stock Units (“Restricted Stock”)~~

~~Restricted Stock activity~~$7.3 million for the three months ended September 30, 2020 and 2019, respectively. Stock-based compensation expense related to the ESPP totaled $17.8 million and $17.7 million for the nine months ended September 30, ~~2017 was as follows:~~

On January 1, ~~2017,~~2020, the number of shares available for issuance under the Company’s ~~Employee Stock Purchase Plan~~ESPP was increased by ~~0.4~~0.5 million shares in accordance with plan provisions. ~~In May 2017, employees purchased 0.1 million shares for $2.3 million under this plan.~~

In determining the interim provision for income taxes, the Company ~~uses~~utilized the ~~annual estimated~~discrete effective tax rate ~~applied~~method, as allowed by ASC 740-270-30-18, “Income Taxes – Interim Reporting”. Given the significant uncertainty with respect to the ~~actual year-to-date~~impact of COVID-19 on its business and results of operations, the Company was not currently able to reliably estimate its annual effective income tax rate for 2020. The discrete method treats the year to date period as if it were the annual period and ~~adds~~determines the income tax ~~effects~~expense or benefit on that basis.

For the three months ended September 30, 2020 and 2019, the provision for (benefit from) income taxes included $25.6 million and $7.7 million, respectively, of ~~any discrete items in~~benefits associated with stock-based awards. For the ~~reporting period~~nine months ended September 30, 2020 and 2019, the provision for (benefit from) income taxes included $98.7 million and $28.0 million, respectively, of benefits associated with stock-based awards. In addition, the income taxes for the nine months ended September 30, 2020 includes an income tax benefit attributable to the expected net operating loss (“NOL”) carryback provided for under the Coronavirus Aid, Relief, and Economic Security Act, or CARES Act. The expected NOL carryback applies to the Company’s 2015-2017 income tax years, in which ~~they occur.~~it paid federal income tax at a 35% tax rate.

For the nine months ended September 30, ~~2017,~~2020, and 2019, the Company’s ~~annual estimated~~ effective tax rate differed from the ~~U.S.~~United States federal statutory ~~income~~tax rate of ~~35%~~21% primarily due to ~~the discrete impact of~~ tax benefits associated with ~~stock-based awards, nondeductible stock-based compensation~~employee exercises of stock options and ~~state and foreign taxes. For the nine months ended September 30, 2016, the Company’s annual estimated effective tax rate differed from the U.S. federal statutory income rate~~vesting of ~~35% primarily due to~~restricted stock units, state taxes, foreign ~~taxes~~tax rate differences, the federal rate differential on NOL carrybacks, and ~~changes in the fair value of preferred stock warrant liabilities.~~

~~For the three~~research and nine months ended September 30, 2017, the benefit from income taxes included $3.2 million and $17.1 million, respectively, of discrete benefits associated with disqualifying dispositions of incentive stock options.development tax credits.

There were no material changes to the Company’s unrecognized tax benefits induring the nine months ended September 30, ~~2017,~~2020, and the Company does not expect to have any significant changes to unrecognized tax benefits through the end of the fiscal year.

The Company reports revenue net of amounts it pays suppliers for the cost of advertising inventory, third-party data and ~~Contingencies~~other add-on features (collectively, “Supplier Features”). The Company generally bills clients for the gross amount of Supplier Features they purchase through its platform and the platform fees, net of allowances (“Gross Billings”). The Company’s accounts receivable are recorded at the amount of Gross Billings for the amounts it is responsible to collect, and accounts payable are recorded at the net amount payable to suppliers. Accordingly, both accounts receivable and accounts payable appear large in relation to revenue reported on a net basis.

AsGross Billings, based on the billing address of ~~September 30, 2017,~~ the ~~Company’s purchase obligations, primarily with hosting services providers,~~clients or client affiliates, were as follows (in thousands):

Property and equipment, net and operating lease assets presented by principal geographic area, were as follows (in thousands):

As of September 30, 2020, the Company had non-cancelable contractual commitments of obligations to its hosting services providers, marketing contracts and providers of software as a service, and these commitments were as follows (in thousands):

As of September 30, 2020, the Company had various non-cancelable operating lease commitments for office space which have been recorded as Lease Liabilities. Refer to Note 5—Leases for additional information regarding lease commitments.

In the ordinary course of business, the Company may provide indemnifications of varying scope and terms to clients, vendors, lessors, business partners, and other parties with respect to certain matters, including, but not limited to, losses arising out of breach of such agreements, services to be provided by the Company or from intellectual property infringement claims made by third parties. In addition, the Company has entered into indemnification agreements with directors and certain officers and employees that will require the Company, among other things, to indemnify them against certain liabilities that may arise by reason of their status or service as directors, officers or employees. No demands have been made upon the Company to provide indemnification under such agreements, and thus, there are no claims that the Company is aware of that could have a material effect on the Company’s balance sheet, statement of ~~operations~~income or statement of cash flows. Accordingly, no0 amounts for any obligation have been recorded at September 30, ~~2017.~~2020.

From time to time, the Company is subject to various legal proceedings and claims, either asserted or unasserted, that arise in the ordinary course of business. Although the outcome of the various legal proceedings and claims cannot be predicted with certainty, management does not believe that any of these proceedings or other claims will have a material adverse effect on the Company’s business, financial condition, results of operations or cash flows.

The Company has entered into agreements with severance terms with certain employees and officers, all of whom are employed ~~at-will.~~on an at-will basis, subject to certain severance obligations in the event of certain involuntary terminations. The Company may be required to accelerate the vesting of certain stock options in the event of changes in control, as defined, and involuntary terminations.

~~In October 2017, the Company paid approximately $3.0 million in cash for certain technology assets of Adbrain Ltd.~~

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

This Quarterly Report on Form 10-Q contains forward-looking statements ~~including statements based upon or relating to our expectations, estimates,~~within the meaning of Section 27A of the Securities Act of 1933, as amended, and ~~projections.~~Section 21E of the Securities Exchange Act of 1934, as amended. Forward-looking statements generally relate to future events or our future financial or operating ~~performance.~~performance and may include statements concerning, among other things, our business strategy (including anticipated trends and developments in, and management plans for, our business and the markets in which we operate), financial results, the impact of COVID-19 on our business, operations, and the markets and communities in which we, our clients, and partners operate, results of operations, revenues, operating expenses, and capital expenditures, sales and marketing initiatives and competition. In some cases, you can identify forward-looking statements because they contain words such as “may,” “might,” “will,” “should,” “expects,” “plans,” “anticipates,” “could,” “intends,” “target,” “projects,” “contemplates,” “believes,” “estimates,” “predicts,” “suggests,” “potential” or “continue” or the negative of these words or other similar terms or expressions that concern our expectations, strategy, plans or intentions. These statements are not guarantees of future performance; they reflect our current views with respect to future events and are based on assumptions and are subject to known and unknown risks, uncertainties and other factors that may cause our actual results, performance or achievements to be materially different from expectations or results projected or implied by forward-looking statements.

We discuss many of these risks in Part II of this Quarterly Report on Form 10-Q in greater detail under the heading “Risk Factors” and in other filings we make from time to time with the Securities and Exchange Commission, or SEC. Also, these forward-looking statements represent our estimates and assumptions only as of the date of this Quarterly Report on Form ~~10-Q.~~10-Q, which are inherently subject to change and involve risks and uncertainties. Unless required by federal securities laws, we assume no obligation to update any of these forward-looking statements, or to update the reasons actual results could differ materially from those anticipated, to reflect circumstances or events that occur after the statements are made. Given these uncertainties, investors should not place undue reliance on these forward-looking statements.

Investors should read this Quarterly Report on Form 10-Q and the documents that we reference in this report and have filed with the SEC, including our Annual Report on Form 10-K for the year ended December 31, ~~2016,~~2019, completely and with the understanding that our actual future results may be materially different from what we expect. We qualify all of our forward-looking statements by these cautionary statements.

References to “Notes” are notes included in our unaudited condensed consolidated financial statements appearing elsewhere in this Quarterly Report on Form 10-Q.

We are a technology company that empowers buyers of advertising. Through our self-service, cloud-based platform, ad buyers ~~by providing a self-service platform that enables our clients to purchase~~can create, manage, and ~~manage~~optimize more expressive data-driven digital advertising campaigns ~~using their own teams. Our platform allows clients to manage integrated advertising campaigns~~ across ~~various advertising~~ad formats, including display, video, audio, native and social, ~~and~~ on a multitude of devices, ~~including~~such as computers, mobile devices, and connected TV (“CTV”). Our platform’s integrations with major data, inventory, and ~~digital radio, an approach that we refer~~publisher partners provides ad buyers reach and decisioning capabilities, and our enterprise APIs enable our clients to ~~as omnichannel.~~develop on top of the platform.

Our company was founded in 2009 by two pioneers of programmatic advertising buying who were motivated to allow buyers of advertising to precisely target audiences with the most relevant and highest performing ads. We commercially launched our platform in ~~May 2011. Since launch, we~~2011, targeting display advertising. We have ~~also~~since extended our platform to address additional advertising ~~formats. In 2011,~~formats, and in 2019, approximately ~~100%~~79% of gross spend on our platform was for ~~display advertising compared to 48% in 2016, with the remainder derived from~~ mobile, video, ~~social,~~audio, native and ~~audio.~~social.

Our clients are primarily the advertising agencies and other service providers for ~~advertisers. By aligning our business~~advertisers, with ~~buyers,~~whom we avoid inherent conflicts of interest that exist when serving both the buy- and sell-side, which we believe helps us build trust with our clients. We provide our platform through a self-service, browser based user interface and also enable clients to customize and build their own features and reports on our platform through our application programming interfaces. After adding a client through our sales team or an in-bound request, we teach the client how to use our platform to design and execute advertising campaigns independently.

enter into ongoing master service agreements (“MSAs”). We generate revenue by charging our clients a platform fee based on a percentage of a client’s total spend on ~~advertising,~~advertising. We also generate revenue from providing data and other ~~features through our~~value-added services and platform the total of which we refer to as gross spend. We enter into ongoing master service agreements with our clients as opposed to episodic insertion orders. To further align our interests with those of our clients, we do not buy advertising inventory in order to resell it to our clients for a profit.features.

Adjusted EBITDA is a financial measure that is not in accordance with generally accepted accounting principles (“GAAP”). For information on how we compute Adjusted EBITDA and a reconciliation of net income to Adjusted EBITDA, see the section captioned “Non-GAAP Financial Data” below.

The growing digitization of media and fragmentation of audiences has increased the complexity of advertising, and thereby increased the need for automation in ad buying, which we provide on our platform. In order to grow, we will need to continue to develop our platform’s programmatic capabilities and advertising inventory. We believe that key opportunities include our ongoing global expansion, ~~into~~continuing development of our CTV, video, audio, and ~~television~~native ad inventory, and continuing development of ~~our~~ data usage and advertising targeting capabilities.

We believe that our revenue as a percentage of gross spend, which is sometimes referred to as take rate, may fluctuate from period to period due to a number of factors, such as changes in the proportion of spend represented by our larger customers with the lowest platform fees, our clients’ use of platform features and volume discounts. Revenue as a percentage of gross spend may also decrease in the future, especially as we introduce and as our clients select new platform features, expand our omnichannel capabilities and add additional clients whose businesses may have different underlying business models. Further, we believe that our ability to integrate and offer television and digital radio advertising inventory for purchase through our platform, and in particular our ability to manage the increased costs that will accompany these purchases, will impact the future growth of our business.

We believe that growth of the programmatic advertising market is important for our ability to grow our business. Adoption of programmatic advertising by advertisers allows us to acquire new clients and grow revenue from existing clients. Although our clients include some of the largest advertising agencies in the world, we believe there is significant room for us to expand further within these clients and gain a larger amount of their advertising spend through our platform. We also believe that the industry trends noted above will lead to advertisers adopting programmatic advertising through platforms such as ours. ~~However, even if the programmatic advertising market continues to grow at its current rate, our ability to position ourselves within the market will impact the future growth of our business.~~

Similarly, the adoption of programmatic advertising by inventory owners and content providers allows us to expand the volume and type of advertising inventory that we present to our clients. For example, we have expanded our CTV, native and ~~digital~~ audio advertising offerings through our recent integrations with supply-side partners.

We ~~plan to~~ invest for long-term growth. We anticipate that our operating expenses will continue to increase significantly in the foreseeable future as we invest in platform operations and technology and development to enhance our product features, including programmatic buying of ~~television~~CTV ad inventory, and in sales and marketing to acquire new clients and reinforce our relationships with existing clients. In addition, we expect to continue making investments in our infrastructure, including our information technology, financial and administrative systems and controls, to support our growing operations.

In addition, we believe the markets outside of the United States (“U.S.”) offer an opportunity for growth, and we intend to make additional investments in sales and marketing and product development to expand in these markets, including China, where we are making significant investments in ~~launching~~ our platform and growing our team.

We believe that these investments will contribute to our long-term growth, although they may negatively impact profitability in the near term.

14Our business model has allowed us to grow significantly, and we believe that our operating leverage enables us to support future growth profitably.

The worldwide spread of COVID-19 has resulted, and is expected to continue to result, in a global slowdown of economic activity which is likely to decrease demand for a broad variety of goods and services, including those provided by our clients, while also disrupting sales channels and advertising and marketing activities for an unknown period of time until the virus is contained or economic activity normalizes. With the current decline in economic activity, our revenue growth has slowed, and the impact on our revenue and our results of operations is likely to continue, the size and duration of which we are currently unable to accurately predict. The extent of the impact of the COVID-19 pandemic on our operational and financial performance will depend on a variety of factors, including the duration and spread of the virus and its impact on our clients, partners, industry, and employees, all of which are uncertain at this time and cannot be accurately predicted. See “Risk Factors” for further discussion of the adverse impacts of the COVID-19 pandemic on our business.

The following tables set forth our condensed consolidated ~~results~~statements of ~~operations~~comprehensive income data for each of the periods presented and ~~our consolidated results of operations~~ as a percentage of our revenue for ~~the periods presented:~~those periods:

	Three Months Ended				Nine Months Ended				Three Months Ended					Nine Months Ended
	September 30,				September 30,				September 30,					September 30,
	2017		2016		2017		2016		2020		2019			2020			2019
	(in thousands)								(in thousands)
Revenue	$	79,413	$	52,956	$	205,569	$	130,516	$	216,113	$	164,203		$	516,128		$	445,114
Operating expenses:
Platform operations		17,397		10,422		45,097		26,617		44,826		39,932			127,167			108,913
Sales and marketing		16,200		11,600		42,842		31,282		44,637		36,142			116,002			89,951
Technology and development		13,181		7,292		35,777		17,694		41,079		29,185			117,931			83,949
General and administrative		14,227		8,591		41,815		21,442		42,789		37,017			117,252			102,755
Total operating expenses		61,005		37,905		165,531		97,035		173,331		142,276			478,352			385,568
Income from operations		18,408		15,051		40,038		33,481		42,782		21,927			37,776			59,546
Total other expense, net		2,354		6,087		4,449		12,611
Total other expense (income), net										223		(1,892	)		834			(2,979	)
Income before income taxes		16,054		8,964		35,589		20,870		42,559		23,819			36,942			62,525
Provision for income taxes		5,825		5,320		1,602		10,668
Provision for (benefit from) income taxes										1,312		4,397			(53,473	)		5,152
Net income	$	10,229	$	3,644	$	33,987	$	10,202	$	41,247	$	19,422		$	90,415		$	57,373

		Three Months Ended						Nine Months Ended							Three Months Ended						Nine Months Ended
		September 30,						September 30,							September 30,						September 30,
		2017			2016			2017			2016				2020			2019			2020			2019
	(as a percentage of revenue*)													(as a percentage of revenue*)
Revenue			100	%		100	%		100	%		100	%			100	%		100	%		100	%		100	%
Operating expenses:
Platform operations			22			20			22			20				21			24			25			24
Sales and marketing			20			22			21			24				21			22			22			20
Technology and development			17			14			17			14				19			18			23			19
General and administrative			18			16			20			16				20			23			23			23
Total operating expenses			77			72			81			74				80			87			93			87
Income from operations			23			28			19			26				20			13			7			13
Total other expense, net			3			11			2			10
Total other expense (income), net																—			(1	)		—			(1	)
Income before income taxes			20			17			17			16				20			14			7			14
Provision for income taxes			7			10			1			8
Provision for (benefit from) income taxes																1			3			(11	)		1
Net income			13	%		7	%		17	%		8	%			19	%		11	%		18	%		13	%

The increase in revenue for the three and nine months ended September 30, ~~2017,~~2020, compared to the same prior year ~~periods,~~period, was primarily due to ~~an increase~~increases in gross spend on our platform by existing clients, which was driven by ~~an increase~~increases in the number of advertising campaigns executed per ~~client.~~client, partially offset by a reduction in advertising spend due to the impact of COVID-19 in the latter part of the first quarter and during the second quarter.

The increase in platform operations expense for the three months ended September 30, ~~2017,~~2020, compared to the same prior year period, was primarily due to increases of ~~$4.4~~$4.6 million in hosting ~~costs, $2.0 million in personnel costs, including $0.7 million of stock-based compensation, and $0.3 million in allocated facilities~~ costs. The increase in hosting costs was due to ~~support~~ the ~~increased use of our platform by~~continued increase in media impressions presented to our clients. The increase in personnel costs was primarily due to an increase in headcount for our client support team. The increase in allocated facilities costs was primarily driven by an increase in rent expense associated with new operating leases to support our growth.

The increase in platform operations expense for the nine months ended September 30, ~~2017,~~2020, compared to the same prior year period, was primarily due to increases of ~~$12.3~~$12.0 million in hosting costs ~~$4.6~~and $3.3 million in ~~personnel costs, including $1.4 million of stock-based compensation, and $1.1 million in allocated~~ facilities costs. ~~These increases were~~The increase in hosting costs was primarily attributable to the ~~factors~~factor described above. The increase in facilities costs was primarily driven by new office leases to support our growth.

We expect platform operations expenses to increase in absolute dollars in future periods as we continue to experience increased volumes of ~~transactions~~media impressions through our platform and hire additional personnel to support our clients.

The increase in sales and marketing expense for the three months ended September 30, ~~2017,~~2020, compared to the same prior year period, was primarily due to increases of ~~$4.0~~$9.9 million in personnel costs, including ~~$1.3~~$1.9 million of stock-based compensation, and ~~$0.5~~$0.8 million in ~~allocated~~ facilities costs. The increase was partially offset by a decrease in marketing costs related to decreased company branding expenses compared to the same prior year period and postponement of corporate events as a result of COVID-19. The increase in personnel costs ~~resulted from~~was primarily due to an increase in headcount to support our sales efforts and continue to develop and maintain relationships with our clients. The increase in ~~allocated~~ facilities costs was primarily driven by ~~an increase in rent expense associated with~~ new ~~operating~~office leases to support our growth.

The increase in sales and marketing expense for the nine months ended September 30, ~~2017,~~2020, compared to the same prior year period, was primarily due to increases of ~~$11.4~~$24.5 million in personnel costs, including ~~$3.0~~$5.5 million of stock-based compensation and ~~$2.2~~$4.6 million in ~~allocated~~ facilities ~~costs, partially offset by a decrease of $2.2 million in marketing costs for industry events, tradeshows and related public relations activities, due~~costs. These increases were primarily attributable to ~~a shift in~~ the ~~timing and mix of such activities.~~factors described above.

We expect sales and marketing expenses to increase in absolute dollars in future periods, as we focus on increasing the adoption of our platform with existing and new clients and expanding our international business.

The increase in technology and development expense for the three months ended September 30, ~~2017,~~2020, compared to the same prior year period, was primarily due to increases of ~~$5.1~~$11.4 million in personnel costs, including ~~$1.8~~$0.8 million of stock-based compensation, and

~~$0.7~~ $1.4 million in ~~allocated~~ facilities costs. The increase in personnel costs was primarily ~~attributable~~due to ~~increased~~an increase in headcount to maintain and support our technology and development efforts. The increase in ~~allocated~~ facilities costs was primarily driven by ~~an increase in rent expense associated with~~ new ~~operating~~office leases to support our growth.

The increase in technology and development expense for the nine months ended September 30, ~~2017,~~2020, compared to the same prior year period, was primarily due to increases of ~~$14.2~~$29.2 million in personnel costs, including ~~$3.7~~$5.8 million of stock-based compensation, ~~$2.9~~and $6.6 million in ~~allocated~~ facilities ~~costs and $1.1 million in professional services fees. The~~costs. These increases ~~in personnel costs and allocated facilities costs~~ were primarily attributable to the factors described above. ~~The increase in professional services fees was in order to support our technology and development efforts.~~

We expect technology and development expense to increase in absolute dollars as we continue to invest in the development of our platform to support additional features and functions, increase the number of advertising and data inventory suppliers and ramp up the volume of advertising spending on our platform. We also intend to invest in technology to further automate our business processes.

The increase in general and administrative expense for the three months ended September 30, ~~2017,~~2020, compared to the same prior year period, was primarily due to increases of ~~$3.9 million in personnel costs, including $1.4~~$4.7 million of stock-based compensation ~~$1.0~~and $2.5 million in professional service ~~fees, $0.4 million in bad debt expense and $0.3 million in allocated facilities costs.~~fees.The increases were partially offset by cost savings from the postponement of certain corporate events due to COVID-19. The increase in ~~personnel costs was primarily due to increased finance and legal headcount. The increases in headcount and third-party~~ professional services fees ~~were~~was primarily related to ~~finance and legal services to support~~ our growth. The increase in bad debt expense was primarily attributable to specific client reserves. The increase in allocated facilities costs was primarily driven by an increase in rent expense associated with new operating leases to support our growth.current proxy solicitation.

The increase in general and administrative expense for the nine months ended September 30, ~~2017,~~2020, compared to the same prior year period, was primarily due to increases of ~~$12.4~~$5.7 million in ~~personnel~~facilities costs, ~~including $3.3~~$4.6 million of stock-based compensation ~~$2.6 million in professional service fees, $3.6 million in bad debt expense~~ and $1.5 million in ~~allocated facilities costs. The increases in personnel costs, bad debt expense and allocated facilities costs were primarily attributable to~~ the ~~factors described above.~~allowance for credit losses on accounts receivable. The increase in ~~third-party professional services fees~~facilities costs was primarily ~~related to finance and legal services~~driven by new office leases to support our ~~growth, including $1.5 million~~growth. The increases were partially offset by the postponement of employee-related corporate events due to COVID-19. The increase in ~~legal, accounting, printing and other costs related~~the allowance for credit losses on accounts receivable was primarily due to the ~~secondary offerings completed~~adoption of CECL beginning January 1, 2020 as well as the effects of COVID-19 on macro-economic factors used in ~~March~~the valuation of trade receivables and ~~June 2017.~~ the related allowance for credit losses (refer to Note 2 — Basis of Presentation and Summary of Significant Accounting Policies of our condensed consolidated financial statements).

We expect general and administrative expenses to increase in absolute dollars in future periods. We expect to continue to invest in corporate infrastructure and incur additional expenses associated with our operations as a public company, including increased legal and accounting costs, investor relations costs, higher insurance premiums and compliance costs associated with developing the requisite infrastructure required for internal controls.to support growth.

The ~~decrease~~increase in total other expense (income), net for the three months ended September 30, ~~2017,~~2020, compared to the same prior year period, was primarily due to ~~decreases of $4.7 million in expense related to the fair value of our convertible preferred stock warrant liabilities, which were exercised as part of our IPO in September 2016, and $0.8 million~~net increases in interest expense ~~attributable to a liquidation fee paid in the prior year period at the closing~~ of ~~our IPO related to our prior debt facility. These decreases were partially offset by an increase of $1.8~~$1.7 million inand net foreign currency exchange ~~losses resulting from higher foreign denominated accounts receivable and accounts payable balances compared to the prior year period.~~loss of $0.4 million.

The ~~decrease~~increase in total other expense (income), net for the nine months ended September 30, ~~2017,~~2020, compared to the same prior year period, was primarily due to ~~decreases of $9.5 million in expense related to the fair value of our convertible preferred stock warrant liabilities and $1.4 million~~net increases in interest expense ~~attributable~~of $3.0 million and foreign currency exchange loss, net of $0.8 million.

The U.S. federal statutory tax rate was 21% for the 2020 and 2019 periods, respectively.

The decrease in income tax expense for the three months ended September 30, 2020 compared to ~~a reduction in our debt borrowings and~~ the ~~aforementioned liquidation fee paid~~prior year period, was primarily due to an increase in the ~~prior~~

~~year period at the closing~~tax benefits associated with employee exercises of ~~our IPO related to our prior debt facility. These decreases were~~stock options and vesting of restricted stock units, partially offset by ~~an increase in foreign currency exchange losses of $2.7 million, due to the factors described above.~~

~~The increase in the provision for~~higher pre-tax profitability. In addition, income taxes for the three months ended September 30, 2020 includes an income tax benefit attributable to the expected NOL carryback provided for under the CARES Act. The expected NOL carryback applies to our 2015–2017 income tax years, in which we paid federal income tax at a 35% tax rate. For the three months ended September 30, 2020 and 2019, the tax benefits associated with employee exercises of stock options and vesting of restricted stock units were $25.6 million and $7.7 million, respectively.

The decrease in income tax expense for the nine months ended September 30, 2020, compared to the ~~same~~ prior year period was primarily due to an increase in the ~~impact of higher pre-tax income in U.S. jurisdictions, partially offset by discrete~~tax benefits ~~of $3.2 million~~ associated with ~~disqualifying dispositions~~employee exercises of ~~incentive~~ stock ~~options.~~

~~The decrease in~~options and vesting of restricted stock units and the ~~provision for income taxes for~~tax benefit related to the expected NOL carryback noted above. For the nine months ended September 30, ~~2017 compared to~~2020 and 2019, the ~~same prior year period, was primarily due to discrete~~tax benefits ~~of $17.1 million~~ associated with ~~disqualifying dispositions~~employee exercises of ~~incentive~~ stock options ~~partially offset by the impact~~and vesting of ~~higher pre-tax income in U.S. jurisdictions.~~restricted stock units were $98.7 million and $28.0 million, respectively.

As of September 30, ~~2017,~~2020, we had cash and cash equivalents of ~~$132.8~~$434.4 million, including cash ~~and cash equivalents~~ of ~~$16.5~~$41.5 million held by our international subsidiaries, short-term investments in marketable securities of $122.9 million and working capital of ~~$220.0~~$743.8 million.

We believe our existing cash and cash equivalents, and cash flows from operations, ~~and our undrawn balance under our amended credit facility (see the section captioned “Revolving Credit Facility” below)~~ will be sufficient to meet our working capital requirements for at least the next 12 months. Further, in November 2017, we filed a shelf registration statement on Form S-3 with the SEC, or the Shelf Registration, which permits us to issue equity securities and equity-linked securities from time to time, subject to certain limitations. The Shelf Registration is intended to provide us with additional flexibility to access capital markets for general corporate purposes, subject to market conditions and our capital needs. Our future capital requirements and the adequacy of available funds will depend on many factors, including those set forth under “Risk Factors” within this Quarterly Report on Form 10-Q.

In the future, we may attempt to raise additional capital through the sale of equity securities or through equity-linked or debt financing arrangements. If we raise additional funds by issuing equity or equity-linked securities, the ownership of our existing stockholders will be diluted. If we raise additional financing by the incurrence of additional indebtedness, we may be subject to increased fixed payment obligations and could also be subject to additional restrictive covenants, such as limitations on our ability to incur additional debt, and other operating restrictions that could adversely impact our ability to conduct our business. Any future indebtedness we incur may result in terms that could be unfavorable to equity investors.

There can be no assurances that we will be able to raise additional capital. ~~The~~An inability to raise capital ~~would~~could adversely affect our ability to achieve our business objectives. In addition, if our operating performance during the next 12 months is below our expectations, our liquidity and ability to operate our business could be adversely affected. In light of the recent worldwide COVID-19 pandemic, we are closely monitoring the effect that current economic conditions may have on our working capital requirements.

On ~~May 9, 2017,~~October 26, 2018, we and a syndicate of banks, led by Citibank, N.A., ~~and Citibank, N.A.,~~ as agent, entered into an amended and restated loan and security agreement (the “Amended Revolving Credit Agreement”). The Amended Revolving Credit Agreement, among other things, provides for an increase of $75.0 million in the aggregate principal amount of commitments available under the Company’s senior secured asset-based revolvingour credit ~~facility (the “Revolving Credit Facility”) and provides the Company greater flexibility with respect to working capital, acquisitions and general corporate purposes.~~facility. Available funding commitments to ~~the Company~~us under ~~the Revolving Credit Facility,~~our credit facility, subject to certain conditions, total up to ~~$200.0~~$150.0 million, with a $20.0 million sublimit for swingline borrowings and a $15.0 million sublimit for the issuance of letters of credit. Under certain circumstances, ~~the Company has~~we have the right to increase ~~the Revolving Credit Facility~~our credit facility by an amount not to exceed $100.0 million. ~~The Amended Revolving Credit Agreement is collateralized by substantially all~~In March 2020, we drew down $143.0 million under the credit facility as a precautionary measure to provide increased liquidity and preserve financial flexibility in light of the ~~Company’s assets, including a pledge of certain of our accounts receivable, deposit accounts, intellectual property, investment property, and equipment, and availability~~worldwide decline in business activity resulting from COVID-19. Subsequent to March 2020, we repaid $71.0 million from available working capital. Availability under the ~~Amended Revolving Credit Agreement is based~~credit facility was $70.8 million as of September 30, 2020. In October 2020, we repaid the remaining balance on ~~a percentage of the value of accounts receivable, as reduced by certain reserves.~~our credit facility.

~~For additional information regarding the Amended Revolving Credit Agreement, refer to Note 6—Debt.~~

Our cash flows from operating activities are primarily influenced by growth in our operations, increases or decreases in collections from our clients, and related payments to our suppliers offor advertising inventory and data. ~~The timing of cash receipts from clients and payments to suppliers can significantly impact our cash flows from operating activities.~~ We typically pay suppliers in advance of collections from our clients. Our collection and payment cycles can vary from period to period. In addition, we expect seasonality to impact cash flows from operating activities on a sequential quarterly ~~basis.~~

~~We compute our average days sales outstanding, or DSO, and average days payable outstanding, or DPO, as of a given date based on our average trade receivables or trade payables, respectively, for~~basis during the trailing 12-month period divided by, for DSO, average daily gross billings for the period, and for DPO, by the average daily cost of media, data, and operating expenses, in each case, over such period. The average trade receivables or trade payables are the average of the trade receivables or trade payables balances at the beginning and end of the 12-month period. Historically, our DSOs have fluctuated over time. If our DSOs increase significantly and we are unable to borrow against these receivables on commercially acceptable terms, our working capital availability could be reduced, and as a consequence, our results of operations and financial condition would be adversely impacted. The following table summarizes the DSO and DPO for the periods presented:

For the nine months ended September 30, ~~2017,~~2020, cash provided by operating activities of ~~$7.0~~$237.5 million resulted primarily from net income ~~from operations of $54.1 million,~~ adjusted for non-cash items anof $192.0 million and a net increase in our working capital of ~~$51.9~~$45.5 million. The net increase in working capital was primarily due to $21.1 million decrease in accounts receivables and $47.7 million increase in accounts payable, partially offset by $23.9 million increase in prepaid expenses and other assets. The decrease in accounts receivable resulted from seasonality, and the timing of cash receipts from clients. The increase in accounts payable was due to the timing of payments to suppliers for the cost of advertising inventory, data, and add-on ~~features and by an~~features. The increase in accrued expenses and other liabilities of $3.5 million. Net cash provided by operating activities was partially offset by an increase of $95.2 million in accounts receivable resulting from the increase in spend through our platform and the timing of cash receipts from clients, and an increase of $7.3 million in prepaid expenses and other assets was attributable to an increase in the income tax receivable primarily ~~due~~related to ~~estimated~~the tax ~~payments.~~

benefits associated with employee exercises of stock options and vesting of restricted stock units.

For the nine months ended September 30, ~~2016,~~2019, cash provided by operating activities of ~~$39.0~~$88.3 million resulted primarily from net income adjusted for non-cash items of $143.1 million, partially offset by a net decrease in our working capital of $54.8 million. The net decrease in working capital was ~~largely impacted by an increase~~primarily due to a decrease of ~~$94.4~~$21.4 million in accounts payable and a $19.0 million increase in prepaid expenses and other assets. The decrease in accounts payable was due to the timing of payments to suppliers for the cost of advertising inventory, data, and add-on features and to a lesser extent, by income from operations of $24.1 million, adjusted for non-cash items, including the change in fair value of preferred stock warrants of $9.5 million due to the increased valuation of our common stock. Net cash provided by operating activities was partially offset by an increase of $82.3 million in accounts receivable resulting from thefeatures. The increase in ~~gross billings~~prepaid expenses and ~~the timing of cash receipts.~~other assets was attributable to our growth.

Our primary investing activities ~~have consisted~~consist of investing in short-term investments in marketable securities, purchases of property and equipment for the expansion of our new facilities in support of our expanding headcount as a result of our growth, and capital expenditures to develop our software in support of enhancing our technology platform. 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 cycles of our software development. As our business grows, we expect our capital expenditures and our investment activity to continue to increase.

For the nine months ended September 30, ~~2017,~~2020, we used ~~$10.8~~$60.8 million of cash in investing activities, consisting of ~~$8.4~~$127.1 million to purchase short-term investments, $57.7 million to purchase property and equipment, and ~~$2.5~~$4.2 million of investments in capitalized software, topartially offset by maturities of short term investments of $128.3 million. Purchases of property and equipment and investments in capitalized software support our growth and further ~~develop~~development of our platform.

For the nine months ended September 30, ~~2016,~~2019, we used ~~$5.3~~$147.9 million of cash in investing activities, consisting of ~~$3.5~~$178.2 million to purchase short-term investments, $21.7 million to purchase property and equipment, and ~~$1.8~~$3.8 million of investments in capitalized software, topartially offset by maturities of short term investments of $55.8 million. Purchases of property and equipment and investments in capitalized software support our growth and further ~~develop~~development of our platform.

For the nine months ended September 30, ~~2017,~~2020, cash provided by financing activities of ~~$3.2~~$126.8 million was primarily due to net proceeds of $72.0 million from ~~the employee stock purchase plan of $2.3~~our credit facility, $53.9 million ~~and~~ proceeds from stock option exercises ~~of $1.8~~and $15.0 million proceeds from our employee stock purchase plan, partially offset by ~~financing obligations and costs~~$14.2 million of ~~$0.8 million.~~taxes paid for restricted stock award settlements.

For the nine months ended September 30, ~~2016,~~2019, cash provided by financing activities of ~~$86.2~~$25.8 million was ~~largely impacted by net proceeds from our IPO of $78.1~~primarily due to the $21.9 million proceeds from ~~our line of credit of $75.8~~stock option exercises and $8.6 million ~~and~~ proceeds from the ~~issuance of Series C convertible preferred~~employee stock ~~of $60.0 million, which financed our operations, capital expenditures, platform development and rapid growth. Net cash provided by financing activities was~~purchase plan, partially offset by ~~repayments~~$4.7 million of ~~the line of credit of $40.0 million and debt of $30.0 million and the repurchase of preferred and common~~taxes paid for restricted stock ~~of $54.0 million.~~award settlements.

~~In October 2017, we paid approximately $3.0 million in cash for certain technology assets of Adbrain Ltd.~~

We do not have any relationships with other entities or financial partnerships, such as entities often referred to as structured finance or special purpose entities that have been established for the purpose of facilitating off-balance sheet arrangements or other contractually narrow or limited purposes. We did not have any other off-balance sheet arrangements at September 30, ~~2017~~2020 other than ~~operating leases and~~ the indemnification agreements described below.

Our principal commitments consist of our non-cancelable operating leases for our various office facilities and other contractual commitments consisting of obligations to our hosting services providers, marketing contracts and providers of software as a service. In certain cases, the terms of the lease agreements provide for rental payments on a graduated basis.

The following table summarizes our ~~other~~ non-cancelable contractual ~~commitments, primarily with hosting services providers, as of~~obligations at September 30, ~~2017:~~2020:

In the ordinary course of business, we enter into agreements in which we may agree to indemnify clients, suppliers, vendors, lessors, business partners, lenders, stockholders, and other parties with respect to certain matters, including losses resulting from claims of intellectual property infringement, damages to property or persons, business losses, or other liabilities. Generally, these indemnity and defense obligations relate to our own business operations, obligations, and acts or omissions. However, under some circumstances, we agree to indemnify and defend contract counterparties against losses resulting from their own business operations, obligations, and acts or omissions, or the business operations, obligations, and acts or omissions of third parties. These indemnity provisions generally survive termination or expiration of the agreements in which they appear. In addition, we have entered into indemnification agreements with our directors, executive officers and other officers that will require us to indemnify them against liabilities that may arise by reason of their status or service as directors, officers or employees. NoIn the ordinary course of business, demands have been made upon us to provide indemnification under such agreements, ~~and there are no claims that~~but we are not aware of any claims that could have a material effect on our ~~consolidated financial statements.~~balance sheet, statement of income or statement of cash flows. Accordingly, no amounts for any obligation have been recorded at September 30, 2020.

Our condensed consolidated financial statements are prepared in accordance with GAAP. The preparation of these condensed consolidated financial statements requires us to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenue, 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 assumptions and estimates associated with the evaluation of revenue recognition criteria, including the determination of revenue recognition as net versus gross in our revenue arrangements, ~~the assumptions used in the valuation models to determine the fair value~~operating lease assets and liabilities, including our incremental borrowing rate and terms and provisions of ~~equity awards and~~each lease, stock-based compensation expense and income taxes have the greatest potential impact on our consolidated financial statements. Therefore, we consider these to be our critical accounting policies and estimates. By their nature,

estimates are subject to an inherent degree of uncertainty. Actual results could differ materially from these estimates. ~~There have been no material changes to our critical accounting policies and estimates from those disclosed in our Annual Report on Form 10-K for the year ended December 31, 2016.~~

~~For information regarding recent accounting pronouncements, refer~~Refer to Note 2—Basis of Presentation and Summary of Significant Accounting Policies of our condensed consolidated financial statements.

In addition to our results determined in accordance with GAAP, we believe that Adjusted EBITDA, a non-GAAP measure, is useful in evaluating our business. The following table presents a reconciliation of net income to Adjusted EBITDA for the periods presented:

We use Adjusted EBITDA as a measure of operational efficiency to understand and evaluate our core business operations. We believe that Adjusted EBITDA is useful to investors for period to period comparisons of our core business. Accordingly, we believe Adjusted EBITDA provides useful information to investors and others in understanding and evaluating our operating results in the same manner as our management and board of directors.

Our use of Adjusted EBITDA has limitations as an analytical tool, and you should not consider it in isolation or as a substitute for analysis of our financial results as reported under GAAP. Some of these limitations are as follows:

Because of these and other limitations, you should consider Adjusted EBITDA along with other GAAP-based financial performance measures, including various cash flow metrics, net income and our GAAP financial results.

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 and foreign currency exchange ~~and inflation~~ risks.

We are exposed to market risk from changes in interest rates on our ~~revolving~~ credit facility, which accrues interest at a variable rate. We have not used any derivative financial instruments to manage our interest rate risk exposure. Based upon the principal balance owed on our ~~revolving~~ credit facility as of September 30, ~~2017,~~2020, a hypothetical one percentage point increase or decrease in the interest rate under our ~~revolving~~ credit facility would result in a corresponding increase or decrease in interest expense of approximately ~~$0.3~~$0.7 million annually.

We have foreign currency risks related to our revenue and expenses denominated in currencies other than the U.S. Dollar, principally the ~~Canadian Dollar,~~Euro, British Pound, ~~the Euro, Singapore~~Australian Dollar, Canadian Dollar, Indonesian Rupiah, Japanese Yen, Singapore Dollar, and ~~Australian Dollar.~~Thai Baht. The volatility of exchange rates depends on many factors that we cannot forecast with reliable accuracy. We have experienced and will continue to experience fluctuations in our net income as a result of transaction gains and losses related to ~~translating~~remeasuring cash balances, trade accounts receivable and payable balances that are denominated in currencies other than the U.S. Dollar. The effect of an immediate 10% adverse change in foreign exchange rates on foreign-denominated accounts at September 30, ~~2017,~~2020, would result in a foreign currency loss of approximately ~~$7.0~~$16.9 million. In the event our non-U.S. Dollar denominated sales and expenses increase, our ~~operating~~ results of operations may be more greatly affected by fluctuations in the exchange rates of the currencies in which we do business.

~~From time to time we may~~We enter into forward contracts or other derivative transactions in an attempt to hedge our foreign currency risk. There can be no assurance that such transactions will be effective in hedging some or all of our foreign currency exposures and under some circumstances could generate losses for us.

Our management, with the participation of our Chief Executive Officer (“CEO”) and Chief Financial Officer (“CFO”), evaluated the effectiveness of our disclosure controls and procedures as defined in Rule 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), as of September 30, ~~2017.~~ 2020. Our disclosure controls and procedures are designed to provide reasonable assurance ~~of achieving their objectives of ensuring~~ that information we are required to disclose in the reports we file or submit under the Exchange Act 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 disclosures, and is recorded, processed, summarized, and reported within the time periods specified in the SEC’s rules and forms. ~~There is no assurance~~Based on this evaluation, our CEO and CFO have concluded that our disclosure controls and procedures ~~will operate effectively under all circumstances.~~

~~During 2015, we identified certain material weaknesses in our internal control over financial reporting resulting from:~~

As discussed below, we are taking steps to remediate these material weaknesses in internal control over financial reporting; however, we are not yet able to determine whether the steps we are taking will fully remediate these material weaknesses.

Because of material weaknesses in our internal control over financial reporting as previously disclosed, our Chief Executive Officer and Chief Financial Officer concluded that, as of September 30, 2017, our disclosure controls and procedures were ~~not~~ effective at the reasonable assurance level. Our management, including our Chief Executive Officer and Chief Financial Officer, has concluded that, notwithstanding the material weaknesses in our internal control over financial reporting, the condensed consolidated financial statements in this Quarterly Report on Form 10-Q fairly present, in all material respects, our financial position, resultslevel as of ~~operations and cash flows for the periods presented in conformity with U.S. GAAP.~~

~~Starting in 2015, we commenced measures to remediate the identified material weaknesses. Those remediation measures are ongoing and include the following:~~

We believe we are making progress toward achieving the effectiveness of our internal controls and disclosure controls. The actions that we are taking are subject to ongoing senior management review, as well as audit committee oversight. We will not be able to conclude whether the steps we are taking will fully remediate these material weaknesses in our internal control over financial reporting until we have completed our remediation efforts and subsequent evaluation of their effectiveness. We may also conclude that additional measures may be required to remediate the material weaknesses in our internal control over financial reporting, which may necessitate additional implementation and evaluation time. We will continue to assess the effectiveness of our internal control over financial reporting and take steps to remediate the known material weaknesses expeditiously. September 30, 2020.

~~We are taking actions to remediate~~ During the ~~material weaknesses relating to our internal controls over financial reporting, as described above. Except as otherwise described herein,~~quarter ended September 30, 2020, there ~~was~~have been no ~~change~~changes in our internal control over financial reporting that ~~occurred during the period covered by this Quarterly Report on Form 10-Q that has~~have materially affected, or isare reasonably likely to materially affect, our internal control over financial ~~reporting.~~reporting.

Management recognizes that a control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Further, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud or error, if any, have been detected. These inherent limitations include the realities that judgments in decision making can be faulty, and that breakdowns can occur because of a simple error or mistake. Additionally, controls can be circumvented by the individual acts of some persons, by collusion of two or more people, or by management override of the controls. The design of any system of controls also is based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions; over time, controls may become inadequate because of changes in conditions, or the degree of compliance with policies or procedures may deteriorate. Because of the inherent limitations in a cost-effective control system, misstatements due to error or fraud may occur and not be detected.

We are not currently a party to any legal proceedings, litigation or claims, which, if determined adversely to us, would have a material adverse effect on our business, ~~operating~~financial condition, results ~~financial condition~~of operations or cash flows. We may from time to time, be a party to litigation and subject to claims incident to the ordinary course of business. Regardless of the outcome, litigation can have an adverse impact on us because of defense and settlement costs, diversion of management resources and other factors.

Investing in our Class A common stock involves a high degree of risk. You should consider carefully the risks and uncertainties described below, together with all of the other information contained in this quarterly report, including the condensed consolidated financial statements and the related notes and Management’s Discussion and Analysis of Financial Condition and Results of Operations, before making investment decisions related to our Class A common stock. ~~The risks and uncertainties described below include those that we consider material and that we are currently aware of, but are not the only ones we face.~~ If any of the following risks isare realized, our business, financial condition, results of operations and prospects could be materially and adversely affected. In that event, the market price of our Class A common stock could decline and you could lose part or all of your investment. We have organized the description of these risks into groupings in an effort to enhance readability but many of the risks interrelate and could be grouped or ordered in other ways. Therefore, no special significance should be attributed to the groupings or order below.

~~We have a limited operating history, which makes it difficult to evaluate our business and prospects and may increase the risks associated with your investment.~~

We were incorporated in 2009 and, as a result, have only a limited operating history upon which our business and prospects may be evaluated. Although we have experienced substantial revenue growth in our limited operating history, we may not be able to sustain this rate of growth or maintain our current revenue levels. We have encountered and will continue to encounter risks and challenges frequently experienced by growing companies in rapidly developing industries, including risks related to our ability to:

~~We cannot assure you that we will be successful in addressing these and other challenges we may face in the future.~~ If we ~~are unable to do so, our business may suffer, our revenue and operating results may decline and we may not be able to achieve further growth or sustain profitability.~~

~~Our failure~~fail to maintain and grow our client base and spend through our platform, ~~may negatively impact~~ our revenue and ~~business.~~business may be negatively impacted.

To sustain or increase our revenue, we must regularly add new clients and encourage existing clients to maintain or increase the amount of advertising inventory purchased through our platform and adopt new features and functionalities that we ~~add to our platform.~~make available. If competitors introduce lower cost or differentiated offerings that compete with or are perceived to compete with ours, our ability to sell ~~access to~~ our ~~platform~~services to new or existing clients could be impaired. We have spent significant effort in cultivating our relationships with advertising agencies, which has resulted in an increase in the budgets allocated to, and the amount of advertising purchased on, our platform. However, it is possible that we may reach a point of saturation at which we cannot continue to grow our revenue from such agencies because of internal limits that advertisers may place on the allocation of their advertising budgets to digital media to a particular provider or otherwise. While we generally have ~~master services agreements~~MSAs in place ~~for~~with our clients, such agreements allow our clients to change the amount ofthey spend through our platform or terminate ~~their use of~~ our services with limited notice. ~~Our clients~~We do not typically have exclusive relationships with ~~different providers~~our clients and there is limited cost to moving ~~budgets~~their media spend to our competitors. As a result, we ~~may~~ have limited visibility as to our future advertising ~~revenue.~~revenue streams. We cannot assure you that our clients will continue to use our platform or that we will be able to replace, in a timely or effective manner, departing clients with new clients that generate comparable revenue. If a major client representing a significant portion of our business decides to materially reduce its use of our platform or to cease using our platform altogether, it is possible that our revenue or revenue growth rate could be significantly ~~reduced.~~reduced and our business negatively impacted.

The loss of advertising agencies as clients could significantly harm our business, ~~operating~~financial condition, and results ~~and financial condition.~~of operations.

Our client base consists primarily of advertising agencies. We do not have exclusive relationships with advertising agencies, and we depend on agencies to work with us ~~as they embark on~~to build and maintain advertiser relationships and execute advertising ~~campaigns for advertisers.~~campaigns.

The loss of agencies as clients could significantly harm our business, ~~operating~~financial condition and results ~~and financial condition.~~of operations. If we fail to maintain satisfactory relationships with an advertising agency, we risk losing business from the advertisers represented by that agency.

Advertisers may change advertising agencies. If an advertiser switches from an agency that utilizes our platform to one that does not, we will lose revenue from that advertiser. In addition, some advertising agencies have their own relationships with suppliers of advertising inventory and can directly connect advertisers with such suppliers. Our business may suffer to the extent that advertising agencies and inventory suppliers purchase and sell advertising inventory directly from one another or through intermediaries other than us.

We had approximately ~~566~~820 clients, consisting primarily of advertising agencies, as of December 31, ~~2016.~~2019. Many of these agencies are owned by holding companies, where decision making is decentralized such that purchasing decisions are made, and relationships with advertisers, are located, at the agency, local branch, or division level. If all of our individual client contractual relationships were aggregated at the holding company level, Publicis Groupe and Omnicom Group Inc.~~, WPP plc and Publicis Groupe~~ would each represent more than 10% of our gross billings for ~~2016.~~2019.

In most cases, we enter into separate contracts and billing relationships with the individual agencies and account for them as separate clients. However, some holding companies for these agencies may choose to exert control over the individual agencies in the future. If so, any loss of relationships with such holding companies and, consequently, of their agencies, local branches or divisions, as clients could significantly harm our business, ~~operating~~financial condition, and results ~~and financial condition.~~of operations.

If we fail to innovate ~~and~~or make the right investment decisions in our offerings and platform, we may not attract and retain advertisers and advertising agencies and our revenue and results of operations may decline.

Our industry is subject to rapid and frequent changes in technology, evolving client needs and the frequent introduction by our competitors of new and enhanced offerings. We must constantly make investment decisions regarding offerings and technology to meet client demand and evolving industry standards. We may make ~~wrong~~bad decisions regarding these investments. If new or existing competitors have more attractive offerings, we may lose clients or clients may decrease their use of our platform. New client demands, superior competitive offerings or new industry standards could require us to make unanticipated and costly changes to our platform or business model. In addition, as we develop and introduce new products and services, including those incorporating or utilizing artificial intelligence and machine learning, they may raise new, or heighten existing, technological, legal and other challenges, and may cause unintended consequences, may not function properly or may be misused by our clients. If we fail to adapt to our rapidly changing industry or to evolving client needs, or we provide new products and services that exacerbate technological, legal or other challenges, demand for our platform could decrease and our business, financial condition and ~~operating~~ results of operations may be adversely affected.

~~Failure to manage our growth effectively could cause our business to suffer and have an adverse effect on our financial condition and operating results.~~

We have experienced significant growth in a short period of time. To manage our growth effectively, we must continually evaluate and evolve our organization. We must also manage our employees, operations, finances, technology and development and capital investments efficiently. Our efficiency, productivity and the quality of our platform and client service may be adversely impacted if we do not train our new personnel, particularly our sales and support personnel, quickly and effectively, or if we fail to appropriately coordinate across our organization. Additionally, our rapid growth may place a strain on our resources, infrastructure and ability to maintain the quality of our platform. You should not consider our revenue growth and levels of profitability in recent periods as indicative of future performance. In future periods, our revenue or profitability could decline or grow more slowly than we expect. Failure to manage our growth effectively could cause our business to suffer and have an adverse effect on our financial condition and operating results.

The market for programmatic buying for advertising campaigns is relatively new and evolving. If this market develops slower or differently than we expect, our business, growth prospects and financial condition would be adversely affected.

The substantial majority of our revenue has been derived from clients that programmatically purchase advertising inventory through our platform. We expect that spending on programmatic ad buying will continue to be our primary source of revenue for the foreseeable future and that our revenue growth will largely depend on increasing spend through our platform. The market for programmatic ad buying is an emerging market, and our current and potential clients may not shift ~~quickly enough~~ to programmatic ad buying from other buying methods ~~reducing~~as quickly as we expect, which would reduce our growth potential. If the market for programmatic ad buying deteriorates or develops more slowly than we expect, it could reduce demand for our platform, and our business, growth prospects and financial condition would be adversely affected.

In addition, our revenue may not ~~necessary~~necessarily grow at the same rate as spend on our platform. ~~Growth~~As the market for programmatic buying for advertising matures, growth in spend may outpace growth in our revenue ~~as the market for programmatic buying for advertising matures~~ due to a number of factors, including pricing competition, quantity discounts and shifts in product, media, client and channel mix shifts. For example, TV advertising typically entails relatively large advertising budgets that carry a smaller fee as a percentage of spend. Growth in the use of our platform for TV advertising could impact the rate of our revenue growth relative to the rate of growth in spend on our platform.mix. A significant change in revenue as a percentage of spend could reflect an adverse change in our business and growth prospects. In addition, any such fluctuations, even if they reflect our strategic decisions, could cause our performance to fall below the expectations of securities analysts and investors, and adversely affect the price of our common stock.

The effects of health epidemics, such as the recent global COVID-19 pandemic have had, and could in the future have an adverse impact on our revenue and results of operations.

Our business and operations have been and could in the future be adversely affected by health epidemics, such as the global COVID-19 pandemic. The COVID-19 pandemic and efforts to control its spread have curtailed the movement of people, goods and services worldwide, including in the regions in which we and our clients and partners operate, and are significantly impacting economic activity and financial markets. Many marketers have decreased or paused their advertising spending as a response to the economic uncertainty, decline in business activity, and other COVID-related impacts, which have negatively impacted, and may continue to negatively impact, our revenue and results of operations, the extent and duration of which we may not be able to accurately predict. In addition, our clients’ and advertisers’ businesses or cash flows have been and may continue to be negatively impacted by COVID-19, which has and may continue to lead them to seek adjustments to payment terms or delay making payments or default on their payables, any of which may impact the timely receipt and/or collectability of our receivables. Typically, we are contractually required to pay advertising inventory and data suppliers within a negotiated period of time, regardless of whether our clients pay us on time, or at all, and we may not be able to renegotiate better terms. As a result, our financial condition and results of operations may be adversely impacted.

Our operations are subject to a range of external factors related to the COVID-19 pandemic that are not within our control. We have taken precautionary measures intended to minimize the risk of the spread of the virus to our employees, partners and clients, and the communities in which we operate. A wide range of governmental restrictions has also been imposed on our employees, clients and partners’ physical movement to limit the spread of COVID-19. There can be no assurance that precautionary measures, whether adopted by us or imposed by others, will be effective, and such measures could negatively affect our sales, marketing, and client service efforts, delay and lengthen our sales cycles, decrease our employees’, clients’, or partners’ productivity, or create operational or other challenges, any of which could harm our business and results of operations.

The economic uncertainty caused by the COVID-19 pandemic has made and may continue to make it difficult for us to forecast revenue and operating results and to make decisions regarding operational cost structures and investments. We have committed, and we plan to continue to commit, resources to grow our business, including to expand our international presence, employee base, and technology development, and such investments may not yield anticipated returns, particularly if worldwide business activity continues to be impacted by COVID-19. The duration and extent of the impact from the COVID-19 pandemic depend on future developments that cannot be accurately predicted at this time, and if we are not able to respond to and manage the impact of such events effectively, our business may be harmed.

The market in which we participate is intensely competitive, and we may not be able to compete successfully with our current or future competitors.

We operate in a highly competitive and rapidly changing industry. ~~With the introduction of new technologies and the influx of new entrants to the market, we~~We expect competition to persist and intensify in the future, which could harm our ability to increase revenue and maintain profitability. New technologies and methods of buying advertising present a dynamic competitive challenge, as market participants develop and offer ~~multiple~~ new products and services, such as analytics, automated media buying and exchanges, aimed at capturing advertising ~~spend. In addition to existing competitors and intermediaries, we~~spend or disrupting the digital marketing landscape.

We may also face competition from new companies entering the market, ~~which may include~~including large established companies ~~all of which currently offer, or may in the future offer, products~~ and ~~services that result in additional competition for advertising spend or advertising inventory.~~

Further, we derive a significant portion of our revenue from the display advertising market, which is rapidly evolving, highly competitive, complex and fragmented. We face significant competition in this market which we expect will intensify in the future. We currently compete for advertising spend with large, well-established companies as well as smaller, privately-held companies. Some of our larger competitors with more resources may be better positioned to execute on advertising campaigns conducted over multiple channels such as social media, mobile and video.

~~We may also face competition from~~ companies that we do not yet know about or do not yet exist. If existing or new companies develop, market or resell competitive high-value ~~marketing~~ products or services that result in additional competition for advertising spend or advertising inventory or if they 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 results of operations could be harmed.

Our current and potential competitors may have significantly more financial, technical, marketing, and other resources than we have, ~~allowing~~which may allow them to devote greater resources to the development, promotion, sale and support of their products and services. They may also have more extensive advertiser bases and broader publisher relationships than we have, and may be better positioned to execute on advertising conducted over certain channels, such as social media, mobile, and video. Some of our competitors may have a longer operating ~~histories~~history and greater name recognition. As a result, these competitors may be better able to respond quickly to new technologies, develop deeper advertiser relationships or offer services at lower prices. Any of these developments would make it more difficult for us to sell ~~access to~~ our platform and could result in increased pricing pressure, increased sales and marketing expense, or the loss of market share.

~~Economic downturns and market conditions beyond our control could adversely affect our business, financial condition and operating results.~~

We may experience fluctuations in our operating results, which could make our future operating results difficult to predict or cause our operating results to fall below analysts’ and investors’ expectations.

Our quarterly and annual operating results have fluctuated in the past, and we expect our future operating results to fluctuate due to a variety of factors, many of which are beyond our control. Fluctuations in our operating results could cause our performance to fall below the expectations of analysts and investors, and adversely affect the price of our common stock. Because our business is changing and evolving rapidly, our historical operating results may not be necessarily indicative of our future operating results. Factors that may cause our operating results to fluctuate include the following:

Based upon the factors above and others beyond our control, we have a limited ability to forecast our future revenue, costs and expenses, and as a result, our operating results may, from time to time, fall below our estimates or the expectations of analysts and investors.

We often have long sales cycles, which can result in significant time between initial contact with a prospect and execution of a client agreement, making it difficult to project when, if at all, we will obtain new clients and when we will generate revenue from those clients.

Our sales cycle, from initial contact to contract execution and implementation can take significant time. Our sales efforts involve educating our clients about the use, technical capabilities and benefits of our platform. Some of our clients undertake an evaluation process that frequently involves not only our platform but also the offerings of our competitors. As a result, it is difficult to predict when we will obtain new clients and begin generating revenue from these new clients. Even if our sales efforts result in obtaining a new client, under our usage-based pricing model, the client controls when and to what extent it uses our platform. As a result, we may not be able to add clients or generate revenue as quickly as we may expect, which could harm our revenue growth ~~prospects.~~rates.

We are subject to payment-related risks that may adversely affect our business, working capital, financial condition and ~~if our clients~~results of operations, including from advertising agencies that do not pay us until they receive payment from their advertisers and from clients that dispute or ~~dispute~~do not pay their ~~invoices,~~invoices.

Spend on our ~~business, financial condition and operating results may be adversely affected.~~

platform primarily comes through our agency clients. Many of our contracts with advertising agencies provide that if the advertiser does not pay the agency, the agency is not liable to us, and we must seek payment solely from the advertiser, a type of arrangement called sequential liability. Contracting with these agencies, which in some cases have or may develop higher-risk credit profiles, may subject us to greater credit risk than if we were to contract directly with advertisers. This credit risk may vary depending on the nature of an advertising agency’s aggregated advertiser base. We may also be involved in disputes with agencies and their advertisers over the operation of our platform, the terms of our agreements or our billings for purchases made by them through our platform. If we are unable to collect or make adjustments to bills to clients, we could incur write-offs for bad debt, which could have a material adverse effect on our results of operations. In the future, bad debt may exceed reserves for such contingencies, and our bad debt exposure may increase over time. Any increase in write-offs for bad debt could have a materially negative effect on our business, financial condition and operating results. Even if we are not paid by our clients on time or at all, we are still obligated to pay for the advertising we have purchased for the advertising campaign, and as a consequence, our results of operations and financial condition would be adversely impacted.

A substantial portion of our business is from advertising agencies that do not pay us until they receive payment from the advertiser, resulting in an increased length of time between our payment for media inventory and our receipt of payment for use of our platform, and our ability to collect for non-payment may be limited to the advertiser, thereby increasing our risk of non-payment.

~~Substantially all of the spend on our platform is from advertising agencies. Generally,~~addition, typically, we are contractually required to pay advertising inventory and data suppliers within a negotiated period of time, regardless of whether our clients pay us on time, or at all. ~~Additionally, while~~In addition, we typically experience slow payment cycles by advertising agencies as is common in our industry. While we attempt to negotiate long payment periods with our suppliers and shorter periods from our clients, we are not always successful. As a result, we often face a timing issue with our accounts payable on shorter cycles than our accounts receivables, requiring us to remit payments from our own funds, and accept the risk of ~~bad debt.~~credit loss.

This ~~payment process will~~collections and payments cycle may increasingly consume working capital if we continue to be successful in growing our business. In addition, we typically experience slow payment by advertising agencies as is common in our industry. In this regard, we had average days sales outstanding, or DSO, of 102 days, and average days payable outstanding, or DPO, of 83 days at September 30, 2017. We compute our DSO and DPO as of a given date based on our average trade receivables or trade payables, respectively, for the trailing 12-month period divided by, for DSO, average daily gross billings for the period, and for DPO, by the average daily cost of media, data and operating expenses over such period. The average trade receivables or trade payables are the average of the trade receivables or trade payables balances at the beginning and end of the 12-month period. Historically, our DSOs have fluctuated over time. If ~~our DSOs increase significantly, and~~ we are unable to borrow ~~against these receivables~~ on commercially acceptable terms, our working capital availability could be reduced, and as a consequence, our financial condition and results of operations ~~and financial condition~~ would be adversely impacted.

~~Due~~We may also be involved in disputes with clients, and in the case of agencies, their advertisers, over the operation of our platform, the terms of our agreements or our billings for purchases made by them through our platform. If we are unable to ~~this imbalance~~resolve disputes with our clients, we may lose clients or clients may decrease their use of our platform and our financial performance and growth may be adversely affected. If we are unable to collect or make adjustments to bills to clients, we could incur write-offs for credit loss, which could harm our results of operations. In the future, credit loss may exceed reserves for such contingencies and our credit loss exposure may increase over time. Any increase in write-offs for credit loss could harm our ~~DSOs~~business, financial condition and ~~DPOs,~~results of operations. Even if we ~~rely~~are not paid by our clients on time or at all, we are still obligated to pay for the advertising inventory, third-party data, and other add-on features that clients purchase on our ~~credit facility to partially or completely fund our working capital requirements. We cannot assure you that~~platform, and as ~~we continue to grow,~~a consequence, our business, ~~will generate sufficient cash flow from~~financial condition and results of operations or that future borrowings will be available to us under the credit facility in an amount sufficient to fund our working capital needs. If our cash flows and credit facility borrowings are insufficient to fund our working capital requirements, we may not be able to grow at the rate we currently expect or at all. In addition, in the absence of sufficient cash flows from operations, we might be unable to meet our obligations under our credit facility, and we may therefore be at risk of default thereunder. We cannot assure you that we would be ~~able to locate additional financing or increase amounts borrowed under our existing credit facility on commercially reasonable terms or at all.~~adversely impacted.

~~Our business is primarily dependent on advertisers buying display advertising. A~~26

Any decrease in the use of ~~display~~the advertising ~~would~~channels that we are primarily dependent upon, failure to expand the use of emerging channels, or unexpected shift in use among the channels in which we operate, could harm our ~~business,~~ growth prospects, financial condition and results of operations.

Historically, our clients have predominantly used our platform to purchase mobile, display and video advertising inventory. We expect that ~~display advertising~~these will continue to be a significant ~~channel~~channels used by our ~~clients. Should~~clients for digital advertising in the future. We also believe that our revenue growth may depend on our ability to expand within social, native, audio, and in particular, CTV, and we have been, and are continuing to, enhance such channels. Any decrease in the use of mobile, display and video advertising, whether due to clients ~~lose~~losing confidence in the value or effectiveness of ~~display advertising, the demand for our platform could decline.~~

We are working to enhance our social, native, digital radio and television offerings, including the capability to buy ads on digital television using our platform. We refer to the ability to provide offerings across thesesuch channels, ~~as omnichannel. These markets may not reach the scale of display advertising, and our omnichannel offerings may not gain market acceptance. A decrease in the use of display advertising,~~regulatory restrictions or ~~our~~other causes, or any inability to further penetrate ~~display~~social, native, audio, CTV or enter new and ~~other~~emerging advertising channels, ~~would~~could harm our growth prospects, financial condition and results of operations.

28Each advertising channel presents distinct and substantial risk and, in many cases, requires us to continue to develop additional functionality or features to address the particular requirements of the channel. Our ability to provide capabilities across multiple advertising channels, which we refer to as omnichannel, may be constrained if we are not be able to maintain or grow advertising inventory for such channels, and some of our omnichannel offerings may not gain market acceptance. We may not be able to accurately predict changes in overall advertiser demand for the channels in which we operate and cannot assure you that our investment in channel development will correspond to any such changes. Furthermore, if our channel mix changes due to a shift in client demand, such as clients shifting their spending more quickly or more extensively than expected to channels in which we have relatively less functionality, features, or inventory, then demand for our platform could decrease, and our business, financial condition, and results of operations could be adversely affected.

We may experience fluctuations in our results of operations, which could make our future results of operations difficult to predict or cause our results of operations to fall below analysts’ and investors’ expectations.

Our quarterly and annual results of operations have fluctuated in the past and we expect our future results of operations to fluctuate due to a variety of factors, many of which are beyond our control. Fluctuations in our results of operations could cause our performance to fall below the expectations of analysts and investors, and adversely affect the price of our common stock. Because our business is changing and evolving rapidly, our historical results of operations may not be necessarily indicative of our future results of operations. Factors that may cause our results of operations to fluctuate include the following:

Based upon the factors above and others beyond our control, we have a limited ability to forecast our future revenue, costs and expenses. If we fail to meet or exceed the operating results expectations of analysts and investors or if analysts and investors have estimates and forecasts of our future performance that are unrealistic or that we do not meet, the market price of our common stock could decline. In addition, if one or more of the analysts who cover us adversely change their recommendation regarding our stock, the market price of our common stock could decline.

If our access to quality advertising inventory is diminished or fails to expand, our revenue could decline and our growth could be impeded.

We must maintain a consistent supply of attractive ad inventory. Our success depends on our ability to secure quality inventory on reasonable terms across a broad range of advertising networks and exchanges and social media platforms, including video, display, CTV, audio and mobile ~~inventory, and social media platforms.~~inventory. The amount, quality and cost of inventory available to us can change at any time. A few inventory suppliers hold a significant portion of the programmatic inventory either generally or concentrated in a particular ~~channel.~~channel, such as audio and social media. In addition, we compete with companies with which we have business relationships. For example, Google is one of our largest advertising inventory suppliers in addition to being one of our competitors. If Google or ~~a similarly situated~~any other company with attractive advertising inventory limits our access to its advertising inventory, our business could be adversely affected. If our relationships with ~~any~~certain of our suppliers were to cease, or if the material terms of these relationships were to change unfavorably, our business would be negatively impacted. Our suppliers are generally not bound by long-term contracts. As a result, there is no guarantee that we will have access to a consistent supply of quality inventory on favorable terms. If we are unable to compete favorably for advertising inventory available on real-time advertising exchanges, or if real-time advertising exchanges decide not to make their advertising inventory available to us, we may not be able to place advertisements or find alternative sources of inventory with comparable traffic patterns and consumer demographics in a timely manner. Furthermore, the inventory that we access through real-time advertising exchanges may be of low quality or misrepresented to us, despite attempts by us and our suppliers to prevent fraud and conduct quality assurance checks.

Inventory suppliers control the bidding process, rules and procedures for the inventory they supply, and their processes may not always work in our favor. For example, suppliers may place restrictions on the use of their inventory, including prohibiting the placement of advertisements on behalf of specific advertisers. Through the bidding process, we may not win the right to deliver advertising to the inventory that is selected through our platform and may not be able to replace inventory that is no longer made available to us.

As new types of inventory ~~such as digital advertising for television,~~ become available, we will need to expend significant resources to ensure we have access to such new inventory. ~~Although~~For example, although television advertising is a large market, only a very small percentage of it is currently purchased through digital advertising exchanges. We are investing heavily in our programmatic television offering, including by increasing our workforce and by adding new features, functions and integrations to our platform. If the ~~digital television advertising~~CTV market does not grow as we anticipate or we fail to successfully serve such market, our growth prospects could be harmed.

Our success depends on consistently adding valued inventory in a cost-effective manner. If we are unable to maintain a consistent supply of quality inventory for any reason, client retention and loyalty, and our financial condition and ~~operating~~ results of operations could be harmed.

Economic downturns and market conditions beyond our control could adversely affect our business, financial condition and results of operations.

Our business depends on the overall demand for advertising and on the economic health of advertisers that benefit from our platform. Economic downturns or unstable market conditions may cause advertisers to decrease or pause their advertising budgets, which could reduce spend though our platform and adversely affect our business, financial condition and results of operations. As described above, public health crises may disrupt the operations of our customers and partners for an unknown period of time, including as a result of travel restrictions and/or business shutdowns, all of which could negatively impact our business and results of operations, including cash flows. As we explore new countries to expand our business, economic downturns or unstable market conditions in any of those countries could result in our investments not yielding the returns we anticipate.

Seasonal fluctuations in advertising activity could have a ~~material~~negative impact on our revenue, cash flow and ~~operating results.~~results of operations.

Our revenue, cash flow, ~~operating~~ results of operations and other key operating and performance metrics may vary from quarter to quarter due to the seasonal nature of our clients’ spending on advertising campaigns. For example, clients tend to devote more of their advertising budgets to the fourth calendar quarter to coincide with consumer holiday spending. Moreover, advertising inventory in the fourth quarter may be more expensive due to increased demand for ~~advertising inventory.~~it. Political advertising could also cause our revenue to increase during election cycles and decrease during other periods. Our historical revenue growth has masked the impact of seasonality, but if our growth rate declines or seasonal spending becomes more pronounced, seasonality could have a more ~~material~~significant impact on our revenue, cash flow and ~~operating~~ results of operations from period to period.

Failure to manage our growth effectively could cause our business to suffer and have an adverse effect on our financial condition and results of operations.

We have experienced and continue to experience significant growth in a short period of time. To manage our growth effectively, we must continually evaluate and evolve our organization. We must also manage our employees, operations, finances, technology and development and capital investments efficiently. Our efficiency, productivity and the quality of our platform and client service may be adversely impacted if we do not train our new personnel, particularly our sales and support personnel, quickly and effectively, or if we fail to appropriately coordinate across our organization. Additionally, our rapid growth may place a strain on our resources, infrastructure and ability to maintain the quality of our platform. Our revenue growth and levels of profitability in recent periods should not be considered as indicative of future performance. In future periods, our revenue or profitability could decline or grow more slowly than we expect. Failure to manage our growth effectively could cause our business to suffer and have an adverse effect on our financial condition and results of operations.

As our costs increase, we may not be able to generate sufficient revenue to sustain profitability.

We have expended significant resources to grow our business in recent years by increasing the offerings of our platform, growing our number of employees and expanding ~~internationally into several countries. We~~internationally. Despite the decline in revenue during the three months ended September 30, 2020, we anticipate continued growth that could require substantial financial and other resources to, among other things:

Investing in the foregoing, however, may not yield anticipated ~~returns.~~returns, especially during the pendency of the impacts from the COVID-19 pandemic. Consequently, as our costs increase, we may not be able to generate sufficient revenue to sustain profitability.

~~We have identified material weaknesses in our internal control over financial reporting and, if our remediation of these material weaknesses is not effective, or if~~If we fail to maintain an effective system of internal control over financial reporting in the future, we may not be able to accurately or timely report our financial condition or results of operations. If our internal control over financial reporting is not effective, it may adversely affect investor confidence in us and the price of our common stock.

As a public company, we are required to maintain internal control over financial reporting and to report any material weaknesses in such internal control. Section 404 of the Sarbanes-Oxley Act of 2002, or the Sarbanes-Oxley Act, requires that we evaluate and determine the effectiveness of our internal control over financial reporting and ~~beginning with our annual report on Form 10-K for our year ending December 31, 2017,~~ provide a management report on internal control over financial reporting. ~~A material weakness is a deficiency or combination of deficiencies~~

Our platform system applications are complex, multi-faceted and include applications that are highly customized in ~~internal control over~~order to serve and support our clients, advertising inventory and data suppliers, as well as support our financial reporting obligations. We regularly make improvements to our platform to maintain and enhance our competitive position. In the future, we may implement new offerings and engage in business transactions, such ~~that there is~~as acquisitions, reorganizations or implementation of new information systems. These factors require us to develop and maintain our internal controls, processes and reporting systems, and we expect to incur ongoing costs in this effort. We may not be successful in developing and maintaining effective internal controls, and 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 may result in a ~~reasonable possibility that a material misstatement~~restatement of our financial statements ~~will not be prevented or detected on a timely basis.~~for prior periods.

See “Item 4. Controls and Procedures” in this Quarterly Report on Form 10-Q for a list of the material weaknesses identified during 2015 in our internal control over financial reporting and a list of the steps taken to date to address the internal control deficiencies that contributed to these material weaknesses.

While we believe that these efforts will improve our internal control over financial reporting, the implementation of these measures is ongoing and will require validation and testing of the design and operating effectiveness of internal controls over a sustained period of financial reporting cycles. We cannot assure you that the measures we have taken to date, and are continuing to implement, will be sufficient to remediate the material weaknesses we have identified or avoid potential future material weaknesses. If the steps we take do not correct the material weaknesses in a timely manner, we will be unable to conclude that we maintain effective internal control over financial reporting. Accordingly, there could continue to be a reasonable possibility that these deficiencies or others could result in a misstatement of our accounts or disclosures that would result in a material misstatement of our financial statements that would not be prevented or detected on a timely basis.

The process of designing and implementing internal control over financial reporting required to comply with Section 404 of the Sarbanes-Oxley Act will be time consuming, costly and complicated. Based on the trading price of our common stock and the holdings of our non-affiliate stockholders as of the end of our second quarter of 2017 and effective as of our year ending December 31, 2017, we will no longer be eligible for “emerging growth company” status, as defined in the JOBS Act. Accordingly, in addition to our evaluation of our internal controls over financial reporting, we and our independent registered public accounting firm will be required to report on the effectiveness of our internal control over financial reporting pursuant to Section 404 commencing with our annual report on Form 10-K for our year ending December 31, 2017. If during the evaluation and testing process, we identify ~~other~~ material weaknesses in our internal control over financial reporting, ~~or determine that existing material weaknesses have not been remediated, our management~~we will be unable to assert that our internal control over financial reporting is effective. Even if our management concludes that our internal control over financial reporting is effective, our independent registered public accounting firm may conclude that there are material weaknesses with respect to our internal controls or the level at which our internal controls are documented, designed, implemented or reviewed. If we are unable to assert that our internal control over financial reporting is effective, or if our independent registered public accounting firm is unable to express an opinion as to the effectiveness of our internal control over financial reporting, or if we ~~will need~~are unable to ~~undertake various actions, such as implementing new internal controls and procedures and hiring additional staff to remediate~~comply with the ~~material weaknesses. As~~requirements of the Sarbanes-Oxley Act in a ~~result,~~timely manner, then, we may be late with

the filing of our periodic reports, investors may lose confidence in the accuracy and completeness of our financial reports and the market price of our common stock could be ~~adversely affected and we~~negatively affected. Such failures could ~~become~~also subject us to ~~litigation or~~ investigations by Nasdaq, the stock exchange on which our securities are listed, the SEC or other regulatory authorities, and to litigation from stockholders, which could ~~require additional~~harm our reputation, financial condition, or divert financial and management ~~resources.~~resources from our core business.

We allow our clients to utilize application programming interfaces, or APIs, with our platform, which could result in outages or security breaches and negatively impact our business, financial condition and ~~operating results.~~results of operations.

The use of APIs by our clients has significantly increased in recent years. Our APIs allow clients to build their own media buying and data management interface by using our APIs to develop custom integration of their business with our platform. The increased use of APIs increases security and operational risks to our systems, including the risk for intrusion attacks, data theft, or ~~denial-of-service~~denial of service attacks. Furthermore, while APIs allow clients greater ease and power in accessing our platform, they also increase the risk of overusing our systems, potentially causing outages. We have experienced system slowdowns due to client overuse of our systems through our APIs. 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 ~~have a material adverse impact on~~harm our business, financial condition and ~~operating results.~~results of operations.

We may experience outages and disruptions on our platform if we fail to maintain adequate security and supporting infrastructure as we scale our platform, which may harm our reputation and negatively impact our business, financial condition and ~~operating results.~~results of operations.

As we grow our business, we expect to continue to invest in technology services and equipment, including data centers, network services and database technologies, as well as potentially increase our reliance on open source software. Without these improvements, our operations might suffer from unanticipated system disruptions, slow transaction processing, unreliable service levels, impaired quality or delays in reporting accurate information regarding transactions in our platform, any of which could negatively affect our reputation and ability to attract and retain clients. In addition, the expansion and improvement of our systems and infrastructure may require us to commit substantial financial, operational and technical resources, with no assurance ~~that~~ our business will increase. If we fail to respond to technological change or to adequately maintain, expand, upgrade and develop our systems and infrastructure in a timely fashion, our growth prospects and results of operations could be adversely affected. The steps we take to increase the reliability, integrity and security of our platform as it scales are expensive and complex, and our execution could result in operational failures and increased vulnerability to ~~cyber-attacks.~~cyberattacks. Such ~~cyber-attacks~~cyberattacks could include denial-of-service attacks impacting service availability (including the ability to deliver ads) and reliability, tricking company employees into releasing control of their systems to a hacker, or the introduction of computer viruses or malware into our systems with a view to steal confidential or proprietary data. ~~Cyber-attacks~~Cyberattacks of increasing sophistication may be difficult to detect and could result in the theft of our intellectual property and data from our platform. We are also vulnerable to unintentional errors or malicious actions by persons with authorized access to our systems that exceed the scope of their access rights, distribute data erroneously, or, unintentionally or intentionally, interfere with the intended operations of our platform. Moreover, we could be adversely impacted by outages and disruptions in the online platforms of our inventory and data suppliers, such as ~~the~~ real-time advertising exchanges. Outages and disruptions of our platform, including due to ~~cyber-attacks,~~cyberattacks, may harm our reputation and negatively impact our business, financial condition and results of operations.

Operational performance and ~~performance~~internal control issues with our platform, whether real or perceived, including a failure to respond to technological changes or to upgrade our technology systems, may adversely affect our business, financial condition and ~~operating results.~~results of operations.

We depend upon the sustained and uninterrupted performance of our platform to manage our inventory supply; bid on inventory for each campaign; collect, process and interpret data; ~~and~~ optimize campaign performance in real ~~time~~time; and provide billing information to our financial systems. If our platform cannot scale to meet demand, if there are errors in our execution of any of these functions on our platform or if we experience outages, then our business may be harmed. We may also face material delays in introducing new services, products and enhancements. If competitors introduce new products and services using new technologies or if new industry standards and practices emerge, our existing proprietary technology and systems may become obsolete.

Our platform is complex and multifaceted, and operational and performance issues could arise both from the platform itself and from outside factors. Errors, failures, vulnerabilities orand bugs have been found in the past, and may be found in the ~~future, be found.~~future. Our platform also relies on third-party technology and systems to perform properly and ~~our platform~~ is often used in connection with computing environments utilizing different operating systems, system management software, equipment and networking configurations, which may cause errors in, or failures of, our platform or such other computing environments. Operational and performance issues with our platform could include the failure of our user interface, outages, errors during upgrades or patches, discrepancies in costs billed versus costs paid, unanticipated volume overwhelming our databases, server failure, or catastrophic events affecting one or more server farms. While we have built redundancies in our systems, full redundancies do not exist. Some failures will shut our platform down completely, others only partially. Partial failures, which we have experienced in the past, could result in unauthorized bidding, cessation of our ability to bid or deliver impressions or deletion of our reporting, in each case resulting in unanticipated financial obligations or impact.

Operational, performance and ~~performance~~internal control issues with our platform could also result in negative publicity, damage to our brand and reputation, loss of clients, loss of or delay in market acceptance of our platform, increased costs or loss of revenue, loss of the ability to access our platform, loss of competitive position, or claims by clients for losses sustained by ~~them.~~them and loss of stockholder confidence in the accuracy and completeness of our financial reports. Alleviating problems resulting from such issues could require significant expenditures of capital and other resources and could cause interruptions, delays or the cessation of our business, any of which may adversely affect our business, financial condition and ~~operating results.~~results of operations.

~~Legislation~~If unauthorized access is obtained to user, client or inventory and ~~regulation~~third-party provider data, or our platform is compromised, our services may be disrupted or perceived as insecure, and as a result, we may lose existing clients or fail to attract new clients, and we may incur significant reputational harm and legal and financial liabilities.

Our products and services involve the storage and transmission of ~~online businesses,~~significant amounts of data from users, clients, and inventory and data providers, a large volume of which is hosted by third-party service providers. Our services and data could be exposed to unauthorized access due to activities that breach or undermine security measures, including: negligence or malfeasance by internal or external actors; attempts by outside parties to fraudulently induce employees, clients or vendors to disclose sensitive information in order to gain access to our data; or errors or vulnerabilities in our systems, products or processes or in those of our service providers, clients, and vendors. For example, from time to time, we experience cyberattacks of varying degrees and other attempts to obtain unauthorized access to our systems, including ~~privacy~~to employee mailboxes. We have dedicated and expect to continue to dedicate resources toward security protections that shield data from these activities. However, such measures cannot provide absolute security. Further, we can expect that the deployment of techniques to circumvent our security measures may occur with more frequency and sophistication and may not be recognized until launched against a target. Accordingly, we may be unable to anticipate or detect these techniques or to implement adequate preventative measures. Finally, while we have developed worldwide incident response teams and dedicated resources to incident response processes, such processes could, among other issues, fail to be adequate or accurately assess the incident severity, not proceed quickly enough, or fail to sufficiently remediate an incident.

A breach of our security and/or our failure to respond sufficiently to a security incident could disrupt our services and result in theft, misuse, loss, corruption, or improper use or disclosure of data. This could result in government investigations, enforcement actions and other legal and financial liability, and/or loss of confidence in the availability and security of our products and services, all of which could seriously harm our reputation and brand and impair our ability to attract and retain clients. While we contractually prohibit clients, data providers and inventory suppliers from importing or otherwise providing information that directly identifies individuals on our platform, if a partner provided such information in violation of our policies and our systems are breached, we could be subject to contractual breach and indemnification claims from other clients and partners. Cyberattacks could also compromise our own trade secrets and other sensitive information and result in such information being disclosed to others and becoming less valuable, which could negatively affect our business.

Privacy and data protection ~~regimes, could create~~laws to which we are subject may cause us to incur additional or unexpected costs, subject us to enforcement actions for compliance failures, or cause us to change our platform or business model, which may have a material adverse effect on our business.

~~U.S. and foreign governments have enacted or are considering enacting legislation related~~Information relating to digital advertising and we expect to see an increase in, or changes to, legislation and regulation related to our industry, including the use of geo-location data to inform advertising, the collection and use of non-identifiable or identifiable Internet user data and unique device identifiers, such as IP address or mobile unique device identifiers, and other data protection and privacy-related regulation.

~~Additionally, industry groups in the United States, such as the Digital Advertising Alliance, or DAA, and the Network Advertising Initiative, or NAI,~~individuals and their international counterparts have self-regulatory guidelines to which we have agreed to adhere. Such legislation and regulation could cause us to incur unexpected compliance costs and adversely affect demand for our platform,devices (sometimes called “personal information” or ~~otherwise harm our business, results of operation and financial condition.~~

~~For instance,~~“personal data”) is regulated under a wide variety of local, state, national, and international laws and regulations that apply to the collection, use, retention, protection, disclosure, transfer (including transfer across national boundaries) and other processing of ~~data collected from or about consumers and devices. While we have not collected data that is traditionally considered personal data,~~ such ~~as an individual’s name, email address, address, phone numbers, social security numbers, or credit card numbers, we~~data. We typically do collect and store IP addresses and other device identifiers (such as unique cookie identifiers and mobile ~~app~~application identifiers), which are or may be considered personal data or personal information in some jurisdictions or otherwise may be the subject of ~~legislation~~regulation.

Recently, the State of California adopted two laws broadly regulating businesses’ processing of personal information, the California Consumer Privacy Act of 2018, or ~~regulation. On October 27, 2016,~~CCPA, and the ~~Federal Communications Commission adopted~~California Privacy Rights Act, or CPRA. The CCPA, which went into effect January 1, 2020, defines “personal information” broadly enough to include online identifiers provided by individuals’ devices, applications, and protocols (such as IP addresses, mobile application identifiers and unique cookie identifiers) and individuals’ location data, if there is potential that individuals can be identified by such data. The CCPA establishes a new privacy framework for covered businesses by, among other requirements, establishing new data privacy rights for consumers in the State of California (including rights to deletion of and access to personal information), imposing special rules ~~for broadband providers, which significantly broadened~~on the ~~definition~~collection of ~~“sensitive information”~~consumer data from minors, creating new notice obligations and new limits on the “sale” of personal information (interpreted by many observers to include ~~geo-location information, web browsing history~~common advertising technology practices), and ~~app usage history. Use~~creating a new and potentially severe statutory damages framework for violations of ~~such “sensitive information”~~the CCPA and for businesses that fail to implement reasonable security procedures and practices to prevent data breaches. The CCPA also offers the possibility for a consumer to recover statutory damages for certain violations and could open the door more broadly to additional risks of individual and class-action lawsuits even though the statute’s private right of action is limited in scope.

The California Attorney General issued final regulations implementing the CCPA that became enforceable recently. Additional modifications to the regulations were proposed in October 2020. In addition, a new ballot initiative that just passed, the CPRA, would impose additional notice and opt out obligations on the digital advertising space, including an obligation to provide an opt-out for behavioral advertising. When the CPRA goes into full effect in January 2023, it will cause us to incur additional compliance costs and may impose additional restrictions on us and on our industry partners. Although we have attempted to mitigate certain risks posed by ~~broadband providers or sharing~~the CCPA and CPRA through contractual and platform changes, we cannot predict with certainty the effect of ~~such data with third parties requires opt-in consent~~the CCPA and CPRA and their implementing regulations on our business. Responding to requirements under these laws and the ~~new rules. While these rules do not directly govern us, they are expected~~related regulations will continue to ~~impact how broadband providers collect and use customer data for advertising purposes. This may, in turn, limit~~affect our ~~access to certain types~~operations (and those of ~~data and~~ our ~~ability to allow our clients to use that data.~~industry partners).

~~Additionally, evolving definitions~~Laws governing the processing of ~~what is considered~~ personal data ~~within~~in Europe (including the European Union ~~(the “EU”)~~ and ~~elsewhere may~~European Economic Area, or EEA, and the countries of Iceland, Liechtenstein, and Norway) also continue to impact ~~us. On October 19, 2016, the Court of Justice of the EU ruled that IP addresses in certain circumstances are “personal data” under current EU law, at least when such IP addresses are held by ISPs~~us and ~~other companies that have the ability~~continue to ~~identify a user’s real-life identity. In addition, significant changes to the privacy regime in the EU, such as the~~evolve. The General Data Protection Regulation, ~~anticipated~~or GDPR, which applies to ~~come~~us, came into effect on May 25, 2018. Like the CCPA, the GDPR defines “personal data” broadly, and it enhances data protection obligations for controllers of such data and for service providers processing the data. It also provides certain rights, such as access and deletion, to the individuals about whom the personal data relates. The digital advertising industry has collaborated to create a user-facing framework for establishing and managing legal bases under the GDPR and other EU privacy laws including ePrivacy (discussed below). Although the framework is actively in ~~May 2018, may cause us~~use, we cannot predict its effectiveness over the long term. European regulators have questioned its viability and activists have filed complaints with regulators of alleged non-compliance by specific companies that employ the framework. Non-compliance with the GDPR can trigger steep fines of up to ~~change~~the greater of €20 million or 4% of total worldwide annual revenue. Continuing to maintain compliance with the GDPR’s requirements, including monitoring and adjusting to rulings and interpretations that affect our approach to compliance, requires significant time, resources and expense, as will the effort to monitor whether additional changes to our business practices ~~require significant changes to~~and our backend configuration are needed, all of which may increase operating costs, or limit our ability to operate or expand our business.

~~We take commercially reasonable measures to protect~~Regulatory investigations and enforcement actions could also impact us. In the security of information that we collect, use and disclose in the operation of our business, and to offer privacy protections with respect to such information, including conducting third-party audits of our privacy practices and review our privacy policy. Such measures, however, may not always be effective and may not identify data security or privacy related risks or inadequate or inappropriate practices we have used or adopted.

Additionally, as the advertising industry evolves, and new ways of collecting, combining and using data are created, governments may enact legislation that could result in our having to re-design features or functions of our platform, therefore incurring unexpected compliance costs. For example,U.S., the Federal Trade Commission, or ~~the~~ FTC, has examined, and likely will continue to examine, the privacy issues that arise as marketers track consumers across several devices, otherwise known as cross-device tracking. The FTC may promulgate guidance regarding cross-device tracking, may encourage legislation governing these practices, and may useuses its enforcement powers under Section 5 of the Federal Trade Commission Act (which prohibits “unfair” and “deceptive” trade practices) to investigate companies engaging in ~~cross-device~~online tracking.

~~While we contractually prohibit~~ Other companies in the advertising technology space have been subject to government investigation by regulatory bodies, including, in Europe, a 2016 inquiry into Criteo’s compliance with French data privacy laws. Advocacy organizations have also filed complaints with data protection authorities against advertising technology companies, arguing that certain of these companies’ practices do not comply with the GDPR. In response to these complaints, the Belgian Data Protection Authority recently issued a report questioning the legal validity of an industry framework to process personal data for targeted advertising purposes. We cannot avoid the possibility that one of these investigations or enforcement actions will require us to alter our ~~clients and inventory and data suppliers from supplying personally identifiable information~~practices. Further, our legal risk depends in part on our clients’ or other ~~sensitive information~~third parties' adherence to our system, we may inadvertently receive such information, which may result in us breaching privacy-related legislation or regulations. Additionally, we have contractual obligations to indemnify and hold harmless some of our clients and suppliers for the costs or consequences of our failure to comply with privacy-related legislation and regulations, which may be triggered by such inadvertent ingestion of personally identifiable information in our platform.

~~In addition to government regulation, the DAA, NAI and other~~ privacy ~~advocates and industry groups, may propose new and different self-regulatory standards that either legally or contractually apply to us. We also expect that there will continue to be new proposed~~ laws and regulations ~~concerning~~and their use of our services in ways consistent with end user expectations. We rely on representations made to us by clients that they will comply with all applicable laws, including all relevant privacy and data protection regulations. Although we make reasonable efforts to enforce such representations and ~~information security,~~contractual requirements, we do not fully audit our clients’ compliance with our recommended disclosures or their adherence to privacy laws and regulations. If our clients fail to adhere to our expectations or contracts in this regard, we and our clients could be subject to adverse publicity, damages, and related possible investigation or other regulatory activity.

Adapting our business to the CCPA, the CPRA and their implementing regulations and to the enhanced and evolving privacy obligations in the EU and elsewhere could continue to involve substantial expense and may cause us to divert resources from other aspects of our operations, all of which may adversely affect our business. Further, adaptation of the digital advertising marketplace requires increasingly significant collaboration between participants in the market, such as publishers and advertisers. Failure of the industry to adapt to changes required for operating under laws including the CCPA, CPRA and the GDPR and user response to such changes could negatively impact inventory, data, and demand. We cannot control or predict the pace or effectiveness of such adaptation, and we cannot ~~yet determine~~currently predict the impact such ~~future laws, regulations and standards~~changes may have on our business. ~~Future~~

Uncertainty caused by lack of uniformity among laws ~~regulations, standards~~to which we are or may become subject and ~~other obligations, and changes~~instability in the ~~interpretation~~global legal landscape may cause us to incur additional or unexpected costs and ~~enforcement~~legal risk, increase our risk of ~~existing laws, regulations, standards~~reputational harm, or cause us to change our platform or business model.

We cannot predict the future of the regulatory landscape regarding the protection of personal information. U.S. (state and ~~other obligations, as well as increased enforcement by~~federal) and foreign governments are considering enacting additional legislation related to privacy and data protection and we expect to see an increase in, or changes to, legislation and regulation in this area. For example, in the U.S., a federal privacy law is the subject of active discussion and several bills have been introduced. Additionally, industry groups in the U.S. and their international counterparts have self-regulatory guidelines that are subject to periodic updates to which we have agreed to adhere. High profile incidents involving breaches of personal information or ~~data protection authorities,~~misuse of consumer information may increase the likelihood of new U.S. federal, state, or international laws or regulations in addition to those set out above, and such laws and regulations may be inconsistent across jurisdictions.

These laws and other obligations may be interpreted and applied in a manner that is inconsistent with our existing data management practices or the features of our platform. If so, in addition to the possibility of fines, lawsuits and other claims, we could be required to fundamentally change our business activities and practices or modify our products, which could have an adverse effect on our business. We may be unable to make such changes and modifications in a commercially reasonable manner or at all, and our ability to develop new products and features could be limited.

~~Data protection and privacy concerns are an important part~~ All of ~~the programmatic advertising buying industry. Even the perception of privacy concerns, whether~~this could impair our or ~~not valid, may harm~~ our ~~reputation and inhibit~~clients’ ability to collect, use, ofor disclose information relating to consumers, which could decrease demand for our platform, increase our costs, and impair our ability to maintain and grow our client base and increase our revenue.

Commitments to advertising technology industry self-regulation may subject us to investigation by ~~current~~government or self-regulatory bodies, government or private litigation, and ~~future clients. For example, claims~~operational costs or ~~adverse publicity could result from the perception of pharmaceuticals~~harm to reputation or ~~medical advertisements targeting conditions. Our failure or perceived failure~~brand.

In addition to our legal obligations, we have committed to comply, and generally require our clients and partners to comply, with applicable laws and regulations could result in enforcement actions against us, including fines, imprisonment of our officers and public censure, claims for damages by consumers and other affected individuals, damage to our reputation and loss of goodwill, any of which could have a material adverse impact on our business, financial condition and operating results.

~~If the use of “third-party cookies” is rejected by Internet users, restricted or otherwise subject to unfavorable regulation, our performance may decline and we may lose advertisers and revenue.~~

Internet advertising relies on the use of “cookies,” pixels and other similar technology, which are small text files placed on an Internet user’s computer. To provide our platform, we utilize “third-party cookies,” which are cookies owned and used by parties other than the owners of the website visited by the Internet user. Our cookies record non-personal information,self-regulatory principles, such as ~~when an Internet user views an ad, clicks on an ad or visits one of our advertiser’s websites through a browser while~~ the cookie is active. We use cookies to help us achieve our advertisers’ campaign goals, to help us ensure that the same Internet user does not unintentionally see the same advertisement, to report aggregate information to our advertisers regarding the performance of their advertising campaigns and to detect and prevent fraudulent activity throughout our network of inventory. We also use data from cookies, which enable websites to collect information from users, to help our clients decide whether to bid on, and how to price, an opportunity to place an advertisement in a specific location, at a given time, in front of a particular Internet user. Without cookie data, our clients would bid on advertising without sufficient insight into activity that has taken place through an Internet user’s browser. Consequently, lack of cookie data may compromise the ability to determine which inventory to purchase for a specific campaign, and undermine the effectiveness of our platform.

Cookies may be deleted or blocked by Internet users who do not want information to be collected about them. The most commonly used Internet browsers—Chrome, Firefox, Internet Explorer and Safari—allow Internet users to modify their browser settings to prevent cookies from being accepted by their browsers. Additionally, the Safari browser currently blocks third-party cookies by default and the browser provider Mozilla, which publishes the Firefox browser, has announced its intent to block third-party cookies by default in future versions of its browser. In addition, Internet users can also delete cookies from their computers at any time. Some Internet users also download free or paid ad blocking software that prevents third-party cookies from being stored on a user’s computer. Additionally, the DAA, NAI and our company have certain opt-out mechanisms for users to opt out of the collection of their information, via cookies. If more Internet users adopt these settings or delete their cookies more frequently than they currently do, or restrictions are imposed by advertisers and publishers, there are changes in technology or new developments in laws, regulations or industry standards around cookies, our business could be harmed.

In addition, in the EU, Directive 2009/136/EC, commonly referred to as the “Cookie Directive,” directs EU member states to ensure that accessing information on an Internet user’s computer, such as through a cookie, is allowed only if the Internet user has given his or her consent. In response, some member states have adopted and implemented, and may continue to adopt and implement, legislation that negatively impacts the use of cookies for online advertising. Limitations on the use or effectiveness of cookies, whether imposed by EU member state implementations of the Cookie Directive or otherwise, may impact the performance of our platform. We may be required to, or otherwise may determine that it is advisable to, develop or obtain additional tools and technologies to compensate for the lack of cookie data. We may not be able to develop, implement or acquire additional tools that compensate for the lack of cookie data. Moreover, even if we are able to do so, such additional tools may be subject to further regulation, time consuming to develop or costly to obtain, and less effective than our current use of cookies.

Potential “Do Not Track” standards or government regulation could limit our access to the user data that informs the advertising campaigns we run and, as a result, undermine the effectiveness of our platform.

As the use of cookies has received ongoing media attention over the past several years, some government regulators and privacy advocates have suggested creating a “Do Not Track” standard that would allow Internet users to express a preference, independent of cookie settings in their browser, not to have their online browsing activities tracked. Similar standards are being set at device-level so that activities on mobile devices, including browsing and app uses, are not tracked. The FTC has issued a staff report criticizing the advertising industry’s self-regulatory efforts as too slow and lacking adequate consumer protections, emphasizing a need for simplified notice, choice and transparency to the consumer regarding the collection, use and sharing of data, and suggested implementing a “Do Not Track” browser setting that allows consumers to choose whether or not to allow tracking of their online browsing activities. The major Internet browsers have implemented some version of a “Do Not Track” setting. Internet Explorer 10, for instance, includes a “Do Not Track” setting that is selected by default. The potential regulatory and self-regulatory landscape is inherently uncertain at this point in time, as there is no definition of tracking, no consensus regarding what message is conveyed by a “Do Not Track” setting and no industry standards regarding how to respond to a “Do Not Track” preference. The World Wide Web Consortium, or W3C, chartered a “Tracking Protection Working Group” in 2011 to convene a multi-stakeholder group of academics, thought leaders, companies, industry groups and consumer advocacy organizations, to create a voluntary “Do Not Track” standard for the World Wide Web. The group has yet to agree upon a standard and has considered disbanding due to uncertainty regarding the implementation of a “Do Not Track” standard. Despite the lack of consensus in this arena, the FTC has suggested that it will pursue legislation if the industry cannot agree upon a standard. If a “Do Not Track” browser setting is adopted by many Internet users or if a “Do Not Track” standard imposed by state or federal legislation, or agreed upon by standard setting groups, prohibits us from using non-personal data as we currently do, we may have to change our business practices, our clients may reduce their use of our platform, and our business, financial condition and operating results could be adversely affected.

~~Failure to comply with industry self-regulation could harm our brand, reputation and business.~~

~~We have committed to comply with the NAI’s~~Network Advertising Initiative’s Code of Conduct and the ~~DAA’s~~Digital Advertising Alliance’s Self-Regulatory Principles for Online Behavioral Advertising in the ~~United States, as well as~~U.S., and similar self-regulatory principles in Europe and Canada adopted by the local Digital Advertising Alliance. 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 ~~transparency~~choice when advertising is served to them based, in part, on ~~browsing data recorded by cookies. We also offer Internet users the ability to opt out of receiving interest-based advertisements.~~their interests. If we or our clients or partners make mistakes in ~~our~~the implementation of these principles, or if self-regulatory bodies expand these guidelines or government authorities issue different guidelines regarding Internet-based advertising, or ~~our~~ 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, as a result, 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, 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, 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 either legally or contractually apply to us. We cannot yet determine the impact such future standards may have on our business.

Third parties control our access to unique identifiers, and if the use of “third-party cookies” or other technology to uniquely identify devices is rejected by Internet users, restricted or otherwise subject to unfavorable regulation, blocked or limited by technical changes on end users’ devices and web browsers, or our and our clients’ ability to use data on our platform is otherwise restricted, our performance may decline and we may lose advertisers and revenue.

Our ability to successfully leverage user data and generate revenue from opportunities to serve advertisements could be impacted by restrictions imposed by third parties, including restrictions on our ability to use or read cookies, device identifiers, or other tracking features or our ability to use real-time bidding networks or other bidding networks. For example, if publishers or supply-side platforms decide to limit the data that we receive in order to comply (in their view) with the opt-out of sale provisions of the CCPA or a potential federal privacy law, then our service may prove to be less valuable to our clients and we may find it more difficult to generate revenue. That is, if third parties on which we rely for data or opportunities to serve advertisements impose limitations (for whatever reason) or are restricted by other ecosystem participants or applicable regulations, we may lose the ability to access data, bid on opportunities, or purchase digital ad space, which could have a substantial impact on our revenue.

Digital advertising mostly relies on the ability to uniquely identify devices across websites and applications, and to collect data about user interactions with those devices for purposes such as serving relevant ads and measuring the effectiveness of ads. Devices are identified through unique identifiers stored in cookies, provided by device operating systems for advertising purposes, or generated based on statistical algorithms applied to information about a device, such as the IP address and device type. We use device identifiers to record such information as when an Internet user views an ad, clicks on an ad, or visits one of our advertiser’s websites or applications. We use device identifiers to help us achieve our advertisers’ campaign goals, including to limit the instances that an Internet user sees the same advertisement, report information to our advertisers regarding the performance of their advertising campaigns, and detect and prevent malicious behavior and invalid traffic throughout our network of inventory. We also use data associated with device identifiers to help our clients decide whether to bid on, and how to price, an opportunity to place an advertisement in a specific location, at a given time, in front of a particular Internet user. Additionally, our clients rely on device identifiers to add information they have collected or acquired about users into our platform. Without such data, our clients may not have sufficient insight into an Internet user’s activity, which may compromise their and our ability to determine which inventory to purchase for a specific campaign and may undermine the effectiveness of our platform or our ability to improve our platform and remain competitive.

Today, digital advertising, including our platform, makes significant use of cookies to store device identifiers for the advertising activities described above. When we use cookies, they are generally considered third-party cookies, which are cookies owned and used by parties other than the owners of the website visited by the Internet user. The most commonly used Internet browsers—Chrome, Firefox, Internet Explorer and Safari—allow Internet users to modify their browser settings to prevent some or all cookies from being accepted by their browsers. Internet users can delete cookies from their computers at any time. Additionally, some browsers currently, or may in the future, block or limit some third-party cookies by default or may implement user control settings that algorithmically block or limit some cookies. Today, three major web browsers-Apple’s Safari, Mozilla’s Firefox, and Microsoft’s Edge-block third party cookies by default. Google’s Chrome has introduced new controls over third-party cookies and announced plans to deprecate support for third-party cookies and user agent strings entirely by January 2022. Some Internet users also download free or paid ad blocking software that not only prevents third-party cookies from being stored on a user’s computer, but also blocks all interaction with a third-party ad server. In addition, Google has introduced ad blocking software in its Chrome web browser that will block certain ads based on quality standards established under a multi-stakeholder coalition. If such a feature inadvertently or mistakenly blocks ads that are not within the established blocking standards, or if such capabilities become widely adopted and the advertising technology industry does not collaboratively develop alternative technologies, our business could be harmed. The IAB and DAA have also developed frameworks that allow users to opt out of the “sale” of their personal information under the CCPA in ways that stop or severely limit the ability to show targeted ads.

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 preference with respect to data collection for advertising, including 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 a way that may negatively impact our business. For example, Apple announced earlier this year that it will require user opt-in before permitting access to Apple’s unique identifier, or IDFA. Apple initially targeted this fall for implementing these changes but has pushed that date out until at least early next year. This shift from enabling user opt-out to an opt-in requirement is likely to have a substantial impact on the mobile advertising ecosystem and could harm our growth in this channel.

In addition, in the EU, Directive 2002/58/EC (as amended by Directive 2009/136/EC), commonly referred to as the ePrivacy or Cookie Directive, directs EU member states to ensure that accessing information on an Internet user’s computer, such as through a cookie and other similar technologies, is allowed only if the Internet user has been informed about such access and given his or her consent. A recent ruling by the Court of Justice of the European Union clarified that such consent must be reflected by an affirmative act of the user, and European regulators are increasingly agitating for more robust forms of consent. These developments may result in decreased reliance on implied consent mechanisms that have been used to meet requirements of the Cookie Directive in some markets. A replacement for the Cookie Directive is currently under discussion by EU member states to complement and bring electronic

communication services in line with the GDPR and force a harmonized approach across EU member states. Like the GDPR, the proposed ePrivacy Regulation has extra-territorial application as it applies to businesses established outside the EU who provide publicly available electronic communications services to, or gather data from the devices of, users in the EU. Though still subject to debate, the proposed ePrivacy Regulation may further raise the bar for the use of cookies and the fines and penalties for breach may be significant. We may be required to, or otherwise may determine that it is advisable to, make significant changes in our business operations and product and services to obtain user opt-in for cookies and use of cookie data, or develop or obtain additional tools and technologies to compensate for a lack of cookie data.

As the collection and use of data for digital advertising has received media attention over the past several years, some government regulators, such as the FTC, and privacy advocates have suggested creating a “Do Not Track” standard that would allow Internet users to express a preference, independent of cookie settings in their browser, not to have their online browsing activities tracked. “Do Not Track” has seen renewed emphasis from proponents of the CCPA, and the final proposed regulations (currently pending review and acceptance by the Office of Administrative Law) contemplate browser-based or similar “do not sell” signals. California’s new ballot initiative, the CPRA, similarly contemplates the use of technical opt outs for the sale and sharing of personal information for advertising purposes as well as to opt out of the use of sensitive information for advertising purposes, and allows for AG rulemaking to develop these technical signals. If a “Do Not Track,” “Do Not Sell,” or similar control is adopted by many Internet users or if a “Do Not Track” standard is imposed by state, federal, or foreign legislation (such as the proposed ePrivacy Regulation or CCPA regulations), or is agreed upon by standard setting groups, we may have to change our business practices, our clients may reduce their use of our platform, and our business, financial condition, and results of operations could be adversely affected.

Increased transparency into the collection and use of data for digital advertising introduced both through features in browsers and devices and regulatory requirements, such as the GDPR, the CCPA, “Do Not Track”, and ePrivacy, as well as compliance with such requirements, may create operational burdens to implement and may lead more users to choose to block the collection and use of data about them. Adapting to these and similar changes has in the past and may in the future require significant time, resources and expense, which may increase our cost of operation or limit our ability to operate or expand our business.

Concerns regarding data privacy and security relating to our industry’s technology and practices, and perceived failure to comply with laws and industry self-regulation, could damage our reputation and deter current and potential clients from using our products and services.

Public perception regarding data protection and privacy are significant in the programmatic advertising buying industry. Concerns about industry practices with regard to the collection, use, and disclosure of personal information, whether or not valid and whether driven by applicable laws and regulations, industry standards, client or inventory provider expectations, or the broader public, may harm our reputation, result in loss of goodwill, and inhibit use of our platform by current and future clients. For example, perception that our practices involve an invasion of privacy, whether or not such practices are consistent with current or future laws, regulations, or industry practices, may subject us to public criticism, private class actions, reputational harm, or claims by regulators, which could disrupt our business and expose us to increased liability.

Our failure to meet ~~content and inventory~~ standards and provide services that our advertisers and inventory suppliers trust, could harm our brand and reputation and those of our partners and negatively impact our business, financial condition and ~~operating results.~~results of operations.

We do not provide or control ~~either~~ the content of the advertisements that we serve or ~~that~~the content of the websites providing the inventory. Advertisers provide the advertising content and inventory suppliers provide the inventory. Both advertisers and inventory suppliers are concerned about being associated with content they consider inappropriate, competitive or inconsistent with their brands, or illegal, and they are hesitant to spend money or make inventory available, respectively, without ~~guaranteed~~some guarantee of brand security. ~~Additionally, advertisers may seek to display advertising campaigns in jurisdictions that do not permit such advertising (for example, pharmaceutical advertising is not permitted in many countries).~~ Consequently, our reputation depends in part on providing services that our advertisers and inventory suppliers trust, and we have contractual obligations to meet content and inventory standards. We contractually prohibit the misuse of our platform by ~~agencies (and their advertiser clients)~~our clients and inventory suppliers. Additionally, we use our proprietary technology and third-party services to, and we participate in industry co-ops that work to, detect malware and other content issues as well as click fraud (whether by humans or software known as “bots”) and to block fraudulent inventory, including “tool bar” inventory, which is inventory that appears within an application and displaces any advertising that would otherwise be displayed on the website. Despite such efforts, our clients may inadvertently purchase inventory that proves to be unacceptable for their campaigns, in which case we may not be able to recoup the amounts paid to inventory suppliers. Preventing and combating fraud is an industry-wide issue that requires constant vigilance, and we cannot guarantee that we will be ~~fully~~ successful in ~~doing so. There are other means we~~our efforts. Our clients could intentionally run campaigns that do not meet the standards of our inventory suppliers or attempt to use illegal or unethical targeting practices or seek to display advertising in jurisdictions that do not permit such asadvertising or in which the regulatory environment is uncertain, in which case our supply of ad inventory from such suppliers could be jeopardized. Some of our competitors undertake human review of content, ~~we serve, that some of our competitors undertake,~~ but because our platform is self-service, and because such means are cost-intensive, we do not utilize all means available to decrease ~~this risk.~~these risks. We may provide access to inventory that is objectionable to our advertisers, ~~or we may~~ serve advertising that contains malware, or objectionable content, or is based on questionable targeting criteria to our inventory suppliers, or be unable to detect and prevent non-human traffic, any one of which could harm our or our clients’ brand and reputation, decrease their trust in our platform, and negatively impact our business, financial condition and ~~operating results.~~results of operations.

If we fail to offer sufficient client training and support, our business and reputation would suffer.

Because we offer a ~~self-serve~~self-service platform, client training and support is important for the successful marketing and continued use of our platform and for maintaining and increasing spend through our platform from existing and new clients. Providing this training and support requires that our platform operations personnel have specific domain knowledge and expertise ~~making~~along with the ability to train others, which makes it more difficult for us to hire qualified personnel and to scale up our support operations due to the extensive training required. The importance of high-quality client service will increase as we expand our business and pursue new clients. If we are not responsive and proactive regarding our clients’ advertising needs, or do not provide effective support for our clients’ advertising campaigns, our ability to retain our existing clients would suffer and our reputation with existing or potential clients would be harmed, which would negatively impact our business.

If the non-proprietary technology, software, products and services that we use are unavailable, have future terms we cannot agree to, or do not perform as we expect, our business, financial condition and ~~operating~~ results of operations could be harmed.

We depend on various technology, software, products and services from third parties or available as open source, including ~~for critical features and functionality of our platform,~~ data centers and API technology, payment processing, payroll and other technology and professional ~~services.~~services, some of which are critical to the features and functionality of our platform. For example, in order for clients to target ads in ways they desire and otherwise optimize and verify campaigns, our platform must have access to data regarding Internet user behavior and reports with demographic information regarding Internet users. Identifying, negotiating, complying with and integrating with third-party terms and technology are complex, costly and time-consuming matters. Failure by third-party providers to maintain, support or secure their technology either generally or for our accounts specifically, or downtime, errors or defects in their products or services, could ~~materially and~~ adversely impact our platform, our administrative obligations or other areas of our business. Having to replace any third-party providers or their technology, products or services could result in outages or difficulties in our ability to provide our services. ~~For example,~~If we ~~rely~~are unsuccessful in establishing or maintaining our relationships with our third-party providers or otherwise need to replace them, internal resources may need to be diverted and our business, financial condition and results of operations could be harmed.

Disruptions to service from our third-party data center hosting facilities and cloud computing and hosting providers could impair the delivery of our services and harm our business.

A significant portion of our business relies upon hardware and services that are hosted, managed and controlled by third-party co-location providers for our data centers, and we are dependent on these third parties to provide continuous power, cooling, Internet connectivity and physical and technological security for our servers. In the event that these third-party providers experience any interruption in operations or cease business for any reason, or if we are unable to agree on satisfactory terms for continued hosting relationships, we would be forced to enter into a relationship with other service providers or assume some hosting responsibilities ourselves. ~~In addition, even~~Even a disruption as brief as a few minutes could have a negative impact on marketplace activities and could ~~therefore~~ result in a loss of revenue. IfThese facilities may be located in areas prone to natural disasters and may experience catastrophic events such as earthquakes, fires, floods, power loss, telecommunications failures,public health crises and similar events. They may also be subject to break-ins, sabotage, intentional acts of vandalism, cyber-attacks and similar misconduct. Although we ~~are unsuccessful~~have made certain disaster recovery and business continuity arrangements, such events could cause damage to, or failure of, our systems generally, or those of the third-party cloud computing and hosting providers, which could result in ~~establishing or maintaining~~disruptions to our ~~relationships with our third-party providers or otherwise need to replace them, internal resources may need to be diverted and our business, financial condition and operating results could be harmed.~~service.

We face potential liability and harm to our business based on the human factor of inputting information into our platform.

Campaigns are set up using several variables available to our clients on our platform. While our platform includes several checks and balances, it is possible for human error to result in significant ~~over-spending.~~overspending. The system requires a daily cap at the ad group level. We also provide for the client to input daily and overall caps at the advertising inventory campaign level at their discretion. Additionally, we set a credit limit for each user so that they cannot spend beyond the level of credit risk we are willing to accept. Despite these protections, the ability for overspend exists. For example, campaigns which last for a period of time can be set to pace evenly or as quickly as possible. If a client with a high credit limit enters ~~into~~ the wrong daily cap with a campaign set to a rapid pace, it is possible for a campaign to accidently go significantly over budget. While our client contracts state that clients are responsible for media purchased through our platform, we are ultimately responsible for paying the inventory providers, and we may be unable to collect ~~for~~from clients facing such ~~issues.~~issues, in which case our results of operations would be harmed.

~~International expansion subjects~~We have international operations and plan to continue expanding abroad where we have more limited operating experience, which may subject us to additional ~~costs~~cost and economic risks that can adversely affect our business, financial condition and ~~operating results.~~results of operations.

~~International~~Our international operations and expansion ~~subjects us to many~~plans create challenges associated with supporting a rapidly growing business across a multitude of cultures, customs, monetary, legal and regulatory systems and commercial infrastructures. We have a limited operating history outside of the ~~United States,~~U.S., and our ability to manage and expand our business and conduct our operations internationally requires considerable attention and resources.

We ~~currently~~ have ~~sales~~ personnel in countries within North America, Central America, Europe, Asia, and Australia, and we ~~anticipate expanding~~are continuing to expand our international ~~operations in~~operations. Some of the ~~future, including in China and~~countries into which we are, or potentially ~~other countries that~~may, expand score unfavorably on the Corruption Perceptions Index, or CPI, of the Transparency International. Our ~~sales organization~~teams in locations outside the ~~United States is~~U.S. are substantially smaller than some of our ~~sales organization~~teams in the ~~United States.~~U.S. To the extent we are unable to effectively engage with non-U.S. advertising agencies or international divisions of U.S. agencies due to our limited sales force capacity, or we are unable to secure quality non-U.S. ad inventory and data on reasonable terms due to our limited inventory and data team capacity, we may be unable to effectively grow in international markets.

~~Approximately 9% of our gross spend in 2016 was derived from outside of the United States.~~ Our international operations and expansion subject us to a variety of additional risks, including:

We have a U.K. entity through which we have entered into international client and partner agreements, including with those in the EU, which are governed by English Law, and some of our clients and partners pay us in British Pounds and Euros. It is unclear what effects Brexit will have on the operational execution and enforcement of those agreements, transborder transactions generally, matters of taxation, transborder data flows, regulators’ jurisdiction over our business, and other matters related to how we do business in the U.K. and EU. Brexit may adversely affect economic conditions in the ~~countries~~U.K., EU and ~~regions where we operate;~~

We may incur significant operating expenses as a result of our international operations and expansion, and itwe may not be successful. Our international business also subjects us to the impact of ~~global and regional recessions and economic and political instability,~~ differing regulatory requirements, costs and difficulties in managing a distributed workforce, and potentially adverse tax consequences in the ~~United States~~U.S. and ~~abroad~~abroad. If our international activities were found to be in violation of any existing or future international laws or regulations or if interpretations of those laws and ~~restrictions on the repatriation of funds~~regulations were to ~~the United States.~~change, our business in those countries could be subject to fines and other financial penalties, have licenses revoked, or be forced to restructure operations or shut down entirely. In addition, advertising markets outside of the ~~United States~~U.S. are not as developed as those within the ~~United States,~~U.S., and we may be unable to grow our business sufficiently. ~~Our~~Any failure to successfully manage ~~these~~the risks and challenges ~~successfully~~related to our international operations could ~~materially and~~ adversely affect our business, financial condition and ~~operating results.~~results of operations.

Exposure to foreign currency exchange rate fluctuations could negatively impact our ~~operating results.~~results of operations.

While the majority of the transactions through our platform are denominated in U.S. dollars, we have transacted in foreign currencies, both for ~~both~~ inventory and for payments by clients from use of our ~~platform, including~~platform. We also have expenses denominated in currencies other than the ~~Canadian dollar, British Pound, the Euro, Singapore Dollar, Indonesian Rupiah, Japanese Yen and Australian~~U.S. Dollar. Given our anticipated international growth, we expect the number of transactions in a variety of foreign currencies to continue to grow in the future. While we dogenerally require a fee from our clients that pay in non-U.S. currency, this fee may not always cover foreign currency exchange rate fluctuations. WeAlthough we currently have a program to hedge exposure to foreign currency ~~fluctuations. However,~~fluctuations, the use of hedging instruments may not be available for all currencies or may not always offset losses resulting

from foreign currency exchange rate fluctuations. Moreover, the use of hedging instruments can itself result in losses if we are unable to structure effective hedges with such instruments.

Credit ratings and pricing of our investments can be negatively affected by liquidity, credit deterioration or losses, financial results, foreign exchange rates, changes in interest rates, or other factors. As a result, the value and liquidity of our cash, cash equivalents and marketable securities may fluctuate substantially. Although we have not realized any significant losses on our cash, cash equivalents or marketable securities, future fluctuations in their value could result in a significant realized loss, which could adversely affect our financial condition and results of operations.

Future acquisitions, strategic investments or alliances could disrupt our business and harm our business, financial condition and ~~operating results.~~results of operations.

We ~~may in the future~~ explore, on an ongoing basis, potential acquisitions of companies or technologies, strategic investments, or alliances to strengthen our ~~business. However,~~business, however, we have limited experience in acquiring and integrating businesses, products and technologies. Even if we identify an appropriate acquisition candidate, we may not be successful in negotiating the terms or financing of the acquisition, and our due diligence may fail to identify all of the problems, liabilities or other shortcomings or challenges of an acquired business, product or technology, including issues related to intellectual property, product quality or architecture, regulatory compliance practices, revenue recognition or other accounting practices or employee or client issues. Acquisitions involve numerous risks, any of which could harm our business, including:

Failure to appropriately mitigate these risks or other issues related to such acquisitions and strategic investments could result in reducing or completely eliminating any anticipated benefits of transactions, and harm our business generally. Future acquisitions could also result in dilutive issuances of our equity securities, the incurrence of debt, contingent liabilities, amortization expenses or the impairment of goodwill, any of which could harm our business, financial condition and ~~operating results.~~results of operations.

We may not be able to secure additional financing on favorable terms, or at all, to meet our future capital needs, which may in turn impair our growth.

We intend to continue to grow our business, which will require additional capital to develop new features or enhance our platform, improve our operating infrastructure, finance working capital requirements, or acquire complementary businesses and technologies. We cannot assure you that our business will generate sufficient cash flow from operations or that future borrowings will be available to us under our existing credit facility in an amount sufficient to fund our working capital needs. Accordingly, we may need to engage in additional equity or debt financings to secure additional capital. IfWe cannot assure you that we ~~raise~~would be able to locate additional ~~funds through future issuances of equity~~financing on commercially reasonable terms or convertible debt securities, our existing stockholders could suffer significant dilution, and any new equity securities we issue could have rights, preferences and privileges superior to those of holders of our common stock.at all. Any debt financing that we secure in the future could involve restrictive covenants relating to our capital raising activities and other financial and operational matters, which may make it more difficult for us to obtain additional capital and to pursue business opportunities. If our cash flows and credit facility borrowings are insufficient to fund our working capital requirements, we may not be able to grow at the rate we currently expect or at all. In addition, in the absence of sufficient cash flows from operations, we might be unable to meet our obligations under our credit facility, and we may therefore be at risk of default thereunder. If we raise additional funds through future issuances of equity or convertible debt securities, our existing

stockholders could suffer significant dilution, and any new equity securities we issue could have rights, preferences and privileges superior to those of holders of our common stock. If we are unable to secure additional funding on favorable terms, or at all, when we require it, our ability to continue to grow our business to react to market conditions could be impaired and our business may be harmed.

~~Our~~We have entered into, and may in the future enter into, credit ~~facility contains~~facilities which may contain operating and financial covenants that restrict our business and financing activities.

~~Our~~We have entered into, and may in the future enter into, credit ~~facility contains~~facilities which contain restrictions that limit our flexibility in operating our business. In March 2016, we entered into a loan and security agreement with a syndicate led by Citibank, N.A., which we refer to as our credit facility. In May 2017, terms of our credit facility were amended and restated, and subject to certain customary conditions, we now have access to borrow up to $200.0 million aggregate principal amount of revolver borrowings. The amount of borrowing availability under our credit facility is based on our accounts receivable balance, reduced by certain reserves. As of September 30, 2017, the outstanding principal balance under our credit facility was $27.0 million. Our credit facility ~~also~~ contains, and any future credit facility may contain, various covenants that limit our ability to engage in specified types of transactions. Subject to limited exceptions, these covenants limit our ability to, among other things:

In addition, our credit facility contains a fixed charge coverage ratio which, if our excess availability under the credit facility is less than the greater of (1) $15.0 million and (2) 12.5% of the lesser of (a) the borrowing base then in effect and (b) the commitments under the credit facility then in effect, requires us to maintain a certain ratio of our earnings to principal and interest payable under the credit facility in a given period. Our obligations under ~~the~~our credit facility are collateralized by a pledge of substantially all of our assets, including accounts receivable, deposit accounts, intellectual property, and investment property and equipment. The covenants in our credit facility may limit our ability to take actions and, in the event that we breach one or more covenants, our lenders may choose to declare an event of default and require that we immediately repay all amounts outstanding, terminate the commitment to extend further credit and foreclose on the collateral granted to them to collateralize such indebtedness, which includes our intellectual property. In addition, if we fail to meet the required covenants, we will not have access to further draw-downs under ~~the~~our credit facility.

Our future success depends on the continuing efforts of our key employees, including Jeff T. Green and David R. Pickles, and our ability to attract, hire, retain and motivate highly skilled employees in the future.

Our future success depends on the continuing efforts of our executive officers and other key employees, including our two founders, Jeff T. Green, our ~~chief executive officer,~~Chief Executive Officer, and David R. Pickles, our ~~chief technology officer.~~Chief Technology Officer. We rely on the leadership, knowledge, and experience that our executive officers provide. They foster our corporate culture, which has been instrumental to our ability to attract and retain new talent. We also rely on our ability to hire and retain qualified and motivated employees, particularly those employees in our product development, support, and sales teams tothat attract and keep key clients.

The market for talent in many of our ~~key~~ areas of operations, including California and New York, is intensely competitive, ~~which could increase our costs~~as technology companies like ours compete to attract the best talent. As a business-to-business company, we do not have the same level of name recognition among potential recruits as business-to-consumer companies. Additionally, we have less experience with recruiting and ~~retain talented~~less name recognition in geographies outside of the U.S. and may face additional challenges in attracting and retaining international employees. As a result, we may incur significant costs to attract and retain employees, including significant expenditures related to salaries and benefits and compensation expenses related to equity awards, and we may lose new employees to our competitors or other companies before we realize the benefit of our investment in recruiting and training them. New employees often require significant training and, in many cases, take significant time before they achieve full productivity. Our account managers, for instance, need to be trained quickly on the features of our platform since failure to offer high-quality support may adversely affect our relationships with our clients. Technology companies like ours compete to attract the best talent. Additionally, we have little experience with recruiting in geographies outside of the United States, and may face additional challenges in attracting and retaining international employees.

Employee turnover, including changes in our management team, could disrupt our business. None of our founders or other key employees ~~has~~have an employment agreement for a specific term, and ~~any~~all of our employees may terminate his or her employment with us at any time. The loss of one or more of our executive officers, especially our two founders, or our inability to attract and retain highly skilled employees could have an adverse effect on our business, financial condition and ~~operating results.~~results of operations.

We became a public company in September 2016. Most members of our management team have limited ~~or no~~ experience managing a ~~publicly-traded~~publicly traded company, interacting with public company investors, and complying with the increasingly complex laws, rules and regulations that govern public companies. As a public company, we are ~~now~~ subject to significant obligations relating to reporting, procedures and internal controls, and our management team may not successfully or efficiently manage such obligations. These ~~new~~

obligations and scrutiny will require significant attention from our management and could divert their attention away from the day-to-day management of our business, which could adversely affect our business, financial condition, and ~~operating results.~~results of operations.

If we do not effectively grow and train our sales and ~~support~~client service teams, we may be unable to add new clients or increase sales to our existing clients and our business will be adversely affected.

We are substantially dependent on our sales and ~~support~~client service teams to obtain new clients and to increase spend by our existing clients. We believe that there is significant competition for sales personnel with the skills and technical knowledge that we require. Our ability to achieve revenue growth will depend, in large part, on our success in recruiting, training, integrating and retaining sufficient numbers of sales personnel to support our growth. Due to the complexity of our platform, new hires require significant training and it may take significant time before they achieve full productivity. Our recent and planned hires may not become productive as quickly as we expect, and we may be unable to hire or retain sufficient numbers of qualified individuals in the markets where we do business or plan to do business. If we are unable to hire and train sufficient numbers of effective sales personnel, or the sales personnel are not successful in obtaining new clients or increasing our existing clients’ spend with us, our business will be adversely affected.

Our corporate culture has contributed to our success and, if we are unable to maintain it as we grow, our business, ~~operating~~financial condition, and results ~~and financial condition~~of operations could be harmed.

We have experienced and may continue to experience rapid expansion of our employee ranks. We believe our corporate culture has been a key element of our success. However, as our organization grows, it may be difficult to maintain our culture, which could reduce our ability to innovate and operate effectively. The failure to maintain the key aspects of our culture as our organization grows could result in decreased employee satisfaction, increased difficulty in attracting top talent, increased turnover and could compromise the quality of our client service, all of which are important to our success and to the effective execution of our business strategy. In the event we are unable to maintain our corporate culture as we grow to scale, our business, ~~operating~~financial condition and results ~~and financial condition~~of operations could be harmed.

Our proprietary rights may be difficult to enforce, which could enable others to copy or use aspects of our technology without compensating us, thereby eroding our competitive advantages and harming our business.

We rely upon a combination of trade secrets, third-party confidentiality and non-disclosure agreements, additional contractual restrictions on disclosure and use, and trademark, copyright, patent and other intellectual property laws to establish and protect our proprietary rights. These laws, procedures and restrictions provide only limited protection. We currently have ~~“The Trade Desk, Inc.”~~“theTradeDesk” and variants and other marks registered as ~~a trademark~~trademarks or pending ~~registration~~registrations in the ~~United States~~U.S. and certain foreign countries. We also rely on copyright laws to protect computer programs related to our platform and our proprietary technologies, although to date we have not registered for statutory copyright protection. We have registered numerous Internet domain names in the ~~United States~~U.S. and certain foreign countries related to our ~~business in order to protect our proprietary interests.~~business. We endeavor to enter into agreements with our employees and contractors in order to limit access to and disclosure of our proprietary information, as well as to clarify rights to intellectual property associated with our business. Protecting our intellectual property is a challenge, especially after our employees or our contractors end their relationship with us, and, in some cases, decide to work for our competitors. Our contracts with our employees and contractors that relate to intellectual property issues generally restrict the use of our confidential information solely in connection with our services, and strictly prohibit ~~reverse-engineering.~~reverse engineering. However, reverse engineering our software or the theft or misuse of our proprietary information could occur by employees or ~~contractors~~other third parties who have access to our technology. Enforceability of the non-compete agreements that we have in place is not guaranteed, and contractual restrictions could be breached without discovery or adequate remedies. Historically, we have prioritized keeping our technology architecture, trade secrets, and engineering roadmap private, and as a general matter, have not patented our proprietary technology. As a result, we cannot look to patent enforcement rights to protect much of our proprietary technology. Furthermore, our patent strategy is still in its early stages. We may not be able to obtain any further patents, and our pending applications may not result in the issuance of patents. Any issued patents may be challenged, invalidated or circumvented, and any rights granted under these patents may not actually provide adequate defensive protection or competitive advantages to us. Additionally, the process of obtaining patent protection is expensive and time-consuming, and we may not be able to prosecute all necessary or desirable patent applications at a reasonable cost or in a timely manner.

Policing unauthorized use of our technology is difficult. In addition, the laws of some foreign countries may not be as protective of intellectual property rights as those of the ~~United States,~~U.S., and mechanisms for enforcement of our proprietary rights in such countries may be inadequate. If we are unable to protect our proprietary rights (including in particular, the proprietary aspects of our platform), we may find ourselves at a competitive disadvantage to others who have not incurred the same level of expense, time and effort to create and protect their intellectual property.

We may be sued by third parties for alleged infringement of their proprietary rights, which would result in additional expense and potential damages.

There is significant patent and other intellectual property development activity in the digital advertising industry. Third-party intellectual property rights may cover significant aspects of our technologies or business methods or block us from expanding our

offerings. Our success depends on the continual development of our platform. From time to time, we may receive claims from third parties that our platform and underlying technology infringe or violate such third parties’ intellectual property rights. To the extent we gain greater public recognition, we may face a higher risk of being the subject of intellectual property claims. The cost of defending against such claims, whether or not the claims have merit, is significant, regardless of whether we are successful in our defense, and could divert the attention of management, technical personnel and other employees from our business operations. Litigation regarding intellectual property rights is inherently uncertain due to the complex issues involved, and we may not be successful in defending ourselves in such matters. Additionally, we ~~may be obligated~~have obligations to indemnify our clients or inventory and data suppliers in connection with ~~any such litigation.~~certain intellectual property claims. If we are found to infringe these rights, we could potentially be required to cease utilizing portions of our platform. We may also be required to develop alternative non-infringing technology, which could require significant time and expense. ~~Alternatively,~~Additionally, we could be required to pay royalty payments, either as a one-time fee or ongoing, as well as damages for past use that was deemed to be infringing. If we cannot license or develop technology for any allegedly infringing aspect of our business, we would be forced to limit our service and may be unable to compete effectively. Any of these results could harm our business.

We face potential liability and harm to our business based on the nature of our business and the content on our platform.

Advertising often results in litigation relating to misleading or deceptive claims, copyright or trademark infringement, public performance royalties or other claims based on the nature and content of advertising that is distributed through our platform. Though we contractually require ~~agencies~~clients to generally represent to us that their advertisements comply with our ad standards and our inventory providers’ ad standards and that they have the rights necessary to serve advertisements through our platform, we do not independently verify whether we are permitted to deliver, or review the content of, such advertisements. If any of these representations are untrue, we may be exposed to potential liability and our reputation may be damaged. While our clients are typically obligated to indemnify us, such indemnification may not fully cover us, or we may not be able to collect. In addition to settlement costs, we may be responsible for our own ~~litigations~~litigation costs, which can be ~~extensive.~~expensive.

We are subject to anti-bribery, anti-corruption and similar laws and non-compliance with such laws can subject us to criminal penalties or significant fines and harm our business and reputation.

We are subject to anti-bribery and similar laws, such as the U.S. Foreign Corrupt Practices Act of 1977, as amended, ~~or the FCPA,~~ the U.S. domestic bribery statute contained in 18 U.S.C. § 201, the USA PATRIOT Act, U.S. Travel Act, the U.K. Bribery Act 2010 and Proceeds of Crime Act 2002, and possibly other anti-corruption, anti-bribery and anti-money laundering laws in countries in which we conduct ~~activities.~~business. Anti-corruption laws have been enforced with great rigor in recent years and are interpreted ~~broadly and~~broadly. Such laws prohibit companies and their employees and their agents from making or offering improper payments or other benefits to government officials and others in the private sector. As we increase our international sales and business, particularly in countries with a low score on the CPI by Transparency International, and increase our use of third parties such as sales agents, distributors, resellers or consultants, our risks under these laws will increase. We adopt appropriate policies and procedures and conduct training, but cannot guarantee that improprieties will not occur. Noncompliance with these laws could subject us to investigations, sanctions, settlements, prosecution, other enforcement actions, disgorgement of profits, significant fines, damages, other civil and criminal penalties or injunctions, suspension and/or debarment from contracting with specified persons, the loss of export privileges, reputational harm, adverse media coverage, and other collateral consequences. Any investigations, actions and/or sanctions could have a material negative impact on our business, ~~operating~~financial condition and results ~~and financial condition.~~of operations.

We are subject to governmental economic sanctions requirements and export and import controls that could impair our ability to compete in international markets or subject us to liability if we are not in compliance with applicable laws.

As a U.S. company, we are subject to U.S. export control and economic sanctions laws and regulations, and we are required to export our technology and services in compliance with those laws and regulations, including the U.S. Export Administration Regulations and economic embargo and trade ~~sanction~~sanctions programs administered by the Treasury Department’s Office of Foreign Assets Control. U.S. economic sanctions and export control laws and regulations prohibit the shipment of specified products and services to countries, governments and persons targeted by U.S. sanctions. While we ~~are currently taking~~take precautions to prevent doing any business, directly or indirectly, with countries, governments and persons targeted by U.S. sanctions and to ensure that our technology and services are not exported or used by countries, governments and persons targeted by U.S. sanctions, such measures may be circumvented. There can be no assurance that we will be in compliance with U.S. export control or economic sanctions laws and regulations in the future. Any such violation could result in significant criminal or civil fines, penalties or other sanctions and repercussions, including reputational harm that could materially adversely impact our business.

Furthermore, if we export our technology, the exports may require authorizations, including a license, a license exception or other appropriate government authorization. Complying with export control and sanctions regulations may be time-consuming and may result in the delay or loss of opportunities.

In addition, various countries regulate the import of encryption technology, including the imposition of import permitting and licensing requirements, and have enacted laws that could limit our ability to offer our platform or could limit our clients’ ability to use our platform in those countries. Changes in our platform or future changes in export and import regulations may create delays in the introduction of our platform in international markets or prevent our clients with international operations from deploying our platform globally. Any change in export or import regulations, economic sanctions or related legislation, or change in the countries, governments, persons, or technologies targeted by such regulations, could result in decreased use of our platform by, or in our decreased ability to export our technology and services to, existing or potential clients with international operations. Any decreased use of our platform or limitation on our ability to export our platform would likely adversely affect our business, ~~operating~~financial condition and results ~~and financial condition.~~of operations.

The market growth forecasts included in this quarterly report may prove to be inaccurate and, even if the market in which we compete achieves forecasted growth, we cannot assure you our business will grow at similar rates, if at all.

Market growth forecasts are subject to significant uncertainty and are based on assumptions and estimates which may not prove to be accurate. The forecasts in this quarterly report relating to expected growth in the digital advertising and real-time buying markets may prove to be inaccurate. Even if these markets experience the forecasted growth, we may not grow our business at similar rates, or at all. Our growth is subject to many factors, including our success in implementing our business strategy, which is subject to many risks and uncertainties.

The U.S. and non-U.S. tax laws applicable to our business activities are subject to ~~interpretation.~~interpretation and are changing. We are subject to audit by the Internal Revenue Service and by taxing authorities of the state, local and foreign jurisdictions in which we operate. Our tax obligations are based in part on our corporate operating structure, including the manner in which we develop, value, use and ~~use~~hold our intellectual property, the jurisdictions in which we operate, how tax authorities assess revenue-based taxes such as sales and use taxes, the scope of our international operations and the value we ascribe to our intercompany transactions. Taxing authorities may challenge, and have challenged, our tax positions and methodologies for valuing developed technology or intercompany arrangements, ~~as well as our~~ positions regarding the collection of sales and use taxes, and the jurisdictions in which we are subject to taxes, which could expose us to additional taxes. Any adverse outcomes of such challenges to our tax positions couldresult in additional taxes for prior periods, interest and penalties, as well as higher future taxes. In addition, our future tax expense could increase as a result of changes in tax laws, regulations or accounting principles, or as a result of earning income in jurisdictions that have higher tax rates. AnFor example, the European Commission has proposed, and various jurisdictions have enacted or are considering enacting laws that impose separate taxes on specified digital services, which may increase our tax obligations in such jurisdictions. Any increase in our tax expense could have a negative effect on our financial ~~position~~condition and results of operations. Moreover, the determination of our provision for income taxes and other tax liabilities requires significant estimates and judgment by management, and the tax treatment of certain transactions is uncertain. Given uncertainty with respect to the impact of COVID-19 on our operations, the income tax benefit/expense we record may vary significantly in future periods. Any changes, ambiguity, or uncertainty in taxing jurisdictions’ administrative interpretations, decisions, policies and positions, including, the position of taxing authorities with respect to revenue generated by reference to certain digital services, could also materially impact our income tax liabilities. Although we believe we will make reasonable estimates and judgments, the ultimate outcome of any particular issue may differ from the amounts previously recorded in our financial statements and any such occurrence could materially affect our financial ~~position~~condition and results of operations.

The market price of our Class A common stock may be volatile or may decline regardless of our operating performance, and you may not be able to resell your shares at or above your purchase price.

The market price of our stock and of equity securities of technology companies has historically experienced high levels of volatility. If you purchase shares of our Class A common stock, you may not be able to resell those shares at or above your purchase price. The market price of our Class A common stock has fluctuated and may fluctuate significantly in response to numerous factors, some of which are beyond our control and may not be related to our operating performance, including:

In addition, if the stock market for technology companies, or the stock market generally, experiences a loss of investor confidence, the trading price of our Class A common stock could decline for reasons unrelated to our business, ~~operating~~financial condition, or results ~~or financial condition.~~of operations. Stock prices of many technology companies have fluctuated in a manner unrelated or disproportionate to the operating performance of those companies. The trading price of our Class A common stock might also decline in reaction to events that affect other companies in our industry even if these events do not directly affect us. In the past, stockholders have filed securities class action litigation following periods of market volatility. If we were to become involved in securities litigation, it could subject us to substantial costs, divert resources and the attention of management from our core business, and adversely affect our business.

Substantial future sales of shares of our common stock could cause the market price of our Class A common stock to decline.

The market price of our Class A common stock could decline as a result of substantial sales of our common stock, particularly sales by our directors, executive officers, and significant stockholders or the perception in the market that holders of a large number of shares intend to sell their shares.

Additionally, ~~the~~our directors, executive officers, employees and, in certain instances, service providers, hold shares of common stock subject to outstanding options, restricted stock awards and restricted stock units under our equity incentive ~~plans~~plans. Those shares and the shares reserved for future issuance under our equity incentive plans are and will become eligible for sale in the public market, ~~in the future,~~ subject to certain legal and contractual limitations.

Certain holders of our common stock have rights, subject to some conditions, to require us to file registration statements covering their shares or to include their shares in registration statements that we may file for ourselves or our stockholders.

Insiders have substantial control over our company, including as a result of the dual class structure of our common stock, which could limit your ability to influence the outcome of key decisions, including a change of control.

Our Class B common stock has ten votes per share, and our Class A common stock, which is the stock we offered in our ~~IPO,~~initial public offering, has one vote per share. Stockholders who hold shares of Class B common stock, including our executive officers, employees, and directors and their affiliates, together hold approximately 80% of the voting power of our outstanding capital stock as of September 30, 2017. Because of the ten-to-one voting ratio between our Class B and Class A common stock, the holders of our Class B common stock would collectively continue to control a majority of the combined voting power of our common stock and therefore are able to control all matters submitted to our stockholders for approval so long as the shares of Class B common stock represent at least 9.1% of all outstanding shares of our Class A and Class B common stock, and our certificate of incorporation, as currently in effect, further provides that all Class B common stock will convert automatically into Class A common stock when the number of outstanding shares of our Class B common stock represent less than 10% of all outstanding shares of our Class A and Class B common stock. Additionally, our board of directors has recently proposed for stockholder approval, amendments to our certificate of incorporation to change the events upon which all of our shares of Class B common stock will automatically convert into Class A common stock. If such amendments are approved, the duration of this concentrated control could be extended to a set period of five years from the date of such amendments. As of September 30, 2020, Stockholders who hold shares of Class B common stock, including our executive officers, employees, and directors and their affiliates, together hold approximately 55% of the voting power of our outstanding capital stock. This concentrated control limits or precludes your ability to influence corporate matters ~~for~~, as the ~~foreseeable future. These stockholders~~holders of Class B common stock are able to influence or control matters requiring approval by our stockholders, including the election of directors and the approval of mergers, acquisitions or other extraordinary transactions. Their interests may differ from yours and they may vote in a manner that is adverse to your interests. This ownership concentration may deter, delay or prevent a change of control of our company, deprive our stockholders of an opportunity to receive a premium for their common stock as part of a sale of our company and may ultimately affect the market price of our common stock. Furthermore, in connection with the proposed amendments and related matters to be voted on at our upcoming Special Meeting of Stockholders to be held on December 7, 2020, or the Special Meeting, we may experience legal proceedings, including securities class action claims and/or derivative litigation. Any legal proceedings related to items to be voted upon at the Special Meeting may divert management’s time and attention and may result in the incurrence of significant expense, including legal fees.

~~Future transfers~~Transfers by holders of Class B common stock will generally result in those shares converting to Class A common stock, subject to limited exceptions, such as transfers effected for estate planning or charitable purposes. ~~The~~However, until the automatic conversion of all outstanding shares of Class B common stock, the conversion of Class B common stock to Class A common stock will have the effect, over time, of increasing the ~~relative~~ voting power of those holders of Class B common stock who retain their shares in the long term.

The requirements of being a public company may strain our resources, divert our management’s attention and affect our ability to attract and retain qualified board members.

As a public company, we are subject to the reporting requirements of the Exchange Act, and are required to comply with the applicable requirements of the Sarbanes-Oxley Act and the Dodd-Frank Wall Street Reform and Consumer Protection Act, the listing

requirements of NASDAQ, and other applicable securities rules and regulations. Compliance with these rules and regulations ~~will increase~~increases our legal and financial compliance costs, make some activities more difficult, time-consuming or costly and increase demand on our systems and resources. Among other things, the Exchange Act requires that we file annual, quarterly and current reports with respect to our business and ~~operating~~ results of operations and maintain effective disclosure controls and procedures and internal controls over financial reporting. Significant resources and management oversight are required to maintain and, if required, improve our disclosure controls and procedures and internal controls over financial reporting to meet this standard. As a result, management’s attention may be diverted from other business concerns, which could harm our business and operating results. Although we have already hired additional employees to comply with these requirements, we may need to hire even more employees in the future, which will increase our costs and expenses.

~~We have historically not been required to annually report the~~ results of an evaluation of the effectiveness of our internal control over financial reporting. As a public company, we will be required to provide an annual management report on the effectiveness of our internal control over financial reporting commencing with our annual report on Form 10-K for the year ending December 31, 2017. Based on the trading price of our common stock and the holdings of our non-affiliate stockholders as of the end of our second quarter of 2017 and effective as of our year ending December 31, 2017, we will no longer be eligible for “emerging growth company” status, as defined in the JOBS Act. Accordingly, we and our independent registered public accounting firm will be required to report on the effectiveness of our internal control over financial reporting pursuant to Section 404 commencing with our annual report on Form 10-K for our year ending December 31, 2017. Our independent registered public accounting firm may issue a report that is adverse in the event it is not satisfied with the level at which our internal control over financial reporting is documented, designed or operating.

Being a public company may make it more expensive for us to obtain director and officer liability insurance, and we may be required to accept reduced coverage or incur substantially higher costs to obtain coverage. These factors could also make it more difficult for us to attract and retain qualified members of our board of directors, particularly to serve on our audit committee and compensation committee, and qualified executive officers.

We are currently an “emerging growth company” and we cannot be certain if the reduced disclosure requirements applicable to emerging growth companies will make our common stock less attractive to investors.

We are currently an “emerging growth company” as defined in the JOBS Act, and through the end of 2017, we will take advantage of exemptions from various requirements that are applicable to public companies that are “emerging growth companies,” including not being required to comply with the independent auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act, reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements and exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and stockholder approval of any golden parachute payments not previously approved. Investors may find our common stock less attractive because we rely on these exemptions. If some investors find our common stock less attractive as a result, there may be a less active trading market for our common stock, and our stock price may be more volatile and may decline.

In addition, Section 107 of the JOBS Act also provides that an “emerging growth company” can take advantage of an extended transition period for complying with new or revised accounting standards. However, we chose to “opt out” of such extended transition period, and as a result, we will comply with new or revised accounting standards on the relevant dates adoption of such standards is required for non-emerging growth companies. Our decision to opt out of the extended transition period for complying with new or revised accounting standards is irrevocable.

Based on the trading price of our common stock and the holdings of our non-affiliate stockholders as of the end of our second quarter of 2017 and effective as of our year ending December 31, 2017, we will become a “large accelerated filer” and we will no longer be eligible for “emerging growth company” status, as defined in the JOBS Act.operations.

Our charter documents and Delaware law could discourage takeover attempts and other corporate governance changes.

Our certificate of incorporation and bylaws, as currently in effect, contain provisions that could delay or prevent a change in control of our company. These provisions could also make it difficult for stockholders to elect directors that are not nominated by the current members of our board of directors or take other corporate actions, including effecting changes in our management. These provisions include the following provisions:

In addition, as a Delaware corporation, we are subject to Section 203 of the Delaware General Corporation Law. These provisions may prohibit large stockholders, in particular those owning 15% or more of our outstanding voting stock, from merging or combining with us for a period of time.

Our certificate of incorporation provides that the Court of Chancery of the State of Delaware is the exclusive forum for substantially all disputes between us and our stockholders, which limits our stockholders’ ability to choose other forums for disputes with us or our directors, officers or employees.

Our certificate of incorporation provides that the Court of Chancery of the State of Delaware is the sole and exclusive forum for: (1) any derivative action or proceeding brought on our behalf; (2) any action asserting a claim of breach of a fiduciary duty by any of our directors, officers, employees, or our stockholders owed to us or our stockholders; (3) any action asserting a claim arising pursuant to any provision of the Delaware General Corporation Law, our certificate of incorporation or our bylaws, or as to which the Delaware General Corporation Law confers jurisdiction on the Court of Chancery of the State of Delaware; or (4) any action asserting a claim governed by the internal affairs doctrine. This choice of forum provision may limit a stockholder’s ability to bring a claim in other judicial forums for disputes with us or our directors, officers, or other employees, which may discourage lawsuits against us and our directors, officers and other employees in jurisdictions other than Delaware. Alternatively, if a court were to find the choice of forum provision contained in our certificate of incorporation to be inapplicable or unenforceable in an action, we may incur additional costs associated with resolving such action in other jurisdictions, which could have a material adverse effect our business, financial condition, or results of operations.

Exhibit
Number

Exhibit Description

Incorporated by Reference


Filed
Herewith


Form

Filing Date


Number



    3.1

Amended and Restated Certificate of Incorporation.

S-1/A


9/6/2016



3.2



    3.2

Amended and Restated Bylaws.

S-1


8/22/2016



3.4



    4.1

Reference is made to Exhibits 3.1 and 3.2.








    4.2

Form of Class A Common Stock Certificate.

S-1/A


9/6/2016



4.2



    4.3

Form of Class B Common Stock Certificate.

S-8


9/22/2016



4.4



    4.4

Second Amended and Restated Investor Rights Agreement dated as of February 9, 2016, by and among The Trade Desk, Inc. and the investors listed therein.

S-1/A

9/6/2016

10.1

  31.1

Certification of Principal Executive Officer Pursuant to Exchange Act Rules 13a-14(a) and 15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.







X

  31.2

Certification of Principal Financial Officer Pursuant to Exchange Act Rules 13a-14(a) and 15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.







X

  32.1 (1)

Certifications of Principal Executive Officer and Principal Financial Officer Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.







X

101.ins

XBRL Instance Document







X

101.sch

XBRL Taxonomy Schema Linkbase Document







X

101.cal

XBRL Taxonomy Calculation Linkbase Document







X

101.def

XBRL Taxonomy Definition Linkbase Document







X

101.lab

XBRL Taxonomy Label Linkbase Document







X

101.pre

XBRL Taxonomy Presentation Linkbase Document







X

Exhibit

Number

Exhibit Description

Incorporated by Reference

Filed

Herewith

Form

Filing Date

Number

3.1

Amended and Restated Certificate of Incorporation.

S-1/A

9/6/2016

3.2

Amended and Restated Bylaws.

S-1

8/22/2016

3.4

4.1

Reference is made to Exhibits 3.1 and 3.2.

4.2

Form of Class A Common Stock Certificate.

S-1/A

9/6/2016

4.2

4.3

Form of Class B Common Stock Certificate.

S-8

9/22/2016

4.4

Second Amended and Restated Investor Rights Agreement dated as of February 9, 2016, by and among The Trade Desk, Inc. and the investors listed therein.

S-1/A

9/6/2016

10.1

Employment agreement dated as of August 24, 2020, between The Trade Desk, Inc. and Jay Grant

31.1

Certification of Principal Executive Officer Pursuant to Exchange Act Rules 13a-14(a) and 15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

31.2

Certification of Principal Financial Officer Pursuant to Exchange Act Rules 13a-14(a) and 15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

32.1 (1)

Certifications of Principal Executive Officer and Principal Financial Officer Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

101.ins

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

101.sch

Inline XBRL Taxonomy Schema Document

101.cal

Inline XBRL Taxonomy Calculation Linkbase Document

101.def

Inline XBRL Taxonomy Definition Linkbase Document

101.lab

Inline XBRL Taxonomy Label Linkbase Document

101.pre

Inline XBRL Taxonomy Presentation Linkbase Document

104

Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

Title of each class		Trading Symbol		Name of each exchange on which registered
Class A Common Stock, par value $0.000001 per share		TTD		The Nasdaq Stock Market LLC

	Three Months Ended			Nine Months Ended
	September 30, 2016			September 30, 2016
Beginning balance	$	7,943		$	6,927
Change in value of convertible preferred stock warrants recorded in other expense, net		4,653			9,458
Reclassification to convertible preferred stock upon net exercise of Series Seed warrant		—			(3,789	)
Conversion of convertible preferred stock warrants to Class B common stock warrants upon the closing of the Company's IPO on September 26, 2016		(12,596	)		(12,596	)
Ending balance	$	—		$	—

	As of September 30, 2020
	Cash and
	Cash		Short-Term
	Equivalents		Investments		Total
Cash	$	135,564	$	—	$	135,564
Level 1:
Money market funds		283,606		—		283,606
Level 2:
Commercial paper		13,698		28,875		42,573
Corporate debt securities		1,503		59,173		60,676
U.S. government and agency securities		—		34,861		34,861
Total	$	434,371	$	122,909	$	557,280

	As of December 31, 2019
	Cash and
	Cash		Short-Term
	Equivalents		Investments		Total
Cash	$	32,123	$	—	$	32,123
Level 1:
Money market funds		45,588		—		45,588
Time deposits		35,000		—		35,000
Level 2:
Commercial paper		15,666		24,975		40,641
Corporate debt securities		—		78,998		78,998
U.S. government and agency securities		2,499		20,139		22,638
Total	$	130,876	$	124,112	$	254,988

		Page
Part I.	FINANCIAL INFORMATION		3
Item 1.	Condensed Consolidated Financial Statements (Unaudited)		3
	Condensed Consolidated Balance Sheets as of September 30, ~~2017~~2020 and December 31, ~~2016~~2019		3
	Condensed Consolidated Statements of ~~Operations~~Income for the Three and Nine Months Ended September 30, ~~2017~~2020 and ~~2016~~2019		4
	Condensed Consolidated Statements of Comprehensive Income for the Three and Nine Months Ended September 30, 2020 and 2019		5
	Condensed Consolidated Statements of Stockholders’ Equity for the Three and Nine Months Ended September 30, 2020 and 2019		6
	Condensed Consolidated Statements of Cash Flows for the Nine Months Ended September 30, ~~2017~~2020 and ~~2016~~2019		5	7
	Notes to Condensed Consolidated Financial Statements		6	8
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations		13	15
Item 3.	Quantitative and Qualitative Disclosures About Market Risk		21	23
Item 4.	Controls and Procedures		22	23
Part II.	OTHER INFORMATION		24
Item 1.	Legal Proceedings		24
Item 1A.	Risk Factors		24
Item 6.	Exhibits		44	46
Signatures			45	47

	As of September 26, 2016
	Series Seed			Series A3
Contractual term (years)		4.9			6.5
Expected volatility		59.1	%		59.1	%
Risk-free interest rate		1.1	%		1.3	%
Estimated dividend yield		—	%		—	%

	September 30, 2020
Due in one year	$	112,360
Due in one to two years		10,549
Total	$	122,909

Year	Amount
2020 (for remaining three months)	$	5,248
2021		52,334
2022		49,788
2023		45,603
2024		37,035
Thereafter		167,800
Total undiscounted lease commitments		357,808
Less: commitments for leases not yet commenced		(76,178	)
Less: interest		(41,487	)
Present value of lease liabilities		240,143
Less: operating lease liabilities, current		(34,735	)
Operating lease liabilities, non-current	$	205,408

	Shares Under Option (in thousands)			Weighted- Average Exercise Price		Shares Under Option (in thousands)			Weighted- Average Exercise Price
Outstanding as of December 31, 2016 (1)		5,429		$	4.94
Outstanding as of December 31, 2019							4,064		$	70.74
Granted		966			40.55		292			301.49
Exercised		(1,758	)		1.01		(1,194	)		45.20
Cancelled		(192	)		17.17		(150	)		123.00
Outstanding as of September 30, 2017 (2)		4,445		$	13.71
Exercisable as of September 30, 2017		2,163		$	3.63
Outstanding as of September 30, 2020							3,012		$	100.66
Exercisable as of September 30, 2020							1,478		$	52.22

	RSU (in thousands)			Weighted- Average Grant Date Fair Value
Unvested as of December 31, 2019		457		$	120.65
Granted		347			309.80
Vested		(108	)		126.65
Forfeited		(51	)		158.05
Unvested as of September 30, 2020		645		$	218.53

	Shares (in thousands)			Weighted- Average Grant Date Fair Value
Unvested as of December 31, 2016		193		$	29.65
Granted		123			35.25
Vested		(1	)		22.90
Forfeited		(28	)		29.92
Unvested as of September 30, 2017		287		$	32.07

Year	Amount
2017 (for remaining three months)	$	20,485
2018		8,683
2019		8,229
	$	37,397

	September 30, 2020		December 31, 2019
U.S.	$	212,064	$	157,245
International		101,970		80,216
Total	$	314,034	$	237,461

					Change									Change
	2017		2016		$		%			2020		2019		$		%
	($ in thousands)									($ in thousands)
Three months ended September 30,	$	79,413	$	52,956	$	26,457		50	%	$	216,113	$	164,203	$	51,910		32	%
Nine months ended September 30,	$	205,569	$	130,516	$	75,053		58	%	$	516,128	$	445,114	$	71,014		16	%

	2017		2016		$ Change			2020		2019			$ Change
	(in thousands)							(in thousands)
Three months ended September 30,	$	2,354	$	6,087	$	(3,733	)	$	223	$	(1,892	)	$	2,115
Nine Months Ended September 30,	$	4,449	$	12,611	$	(8,162	)
Nine months ended September 30,								$	834	$	(2,979	)	$	3,813

	Payments Due by Period
	Total		Less than 1 Year (Remaining 2017)		1-3 Years (2018 and 2019)		3-5 Years (2020 and 2021)		More than 5 Years (Thereafter)
	(in thousands)
Other contractual commitments	$	37,397	$	20,485	$	16,912	$	—	$	—

	Payments Due by Period
	Less than 1 Year (Remaining 2020)		1-3 Years (2021 and 2022)		3-5 Years (2023 and 2024)		More than 5 Years (Thereafter)		Total
Debt obligations (1)	$	287	$	73,378	$	—	$	—	$	73,665
Operating lease commitments		5,248		102,122		82,638		167,800		357,808
Other contractual commitments		16,016		71,408		62,642		—		150,066
Total	$	21,551	$	246,908	$	145,280	$	167,800	$	581,539


				THE TRADE DESK, INC. (Registrant)

Dated: November ~~9, 2017~~5, 2020				/s/ ~~Paul E. Ross~~Blake J. Grayson
				~~Paul E. Ross~~Blake J. Grayson
				Chief Financial Officer (Principal Financial and Accounting Officer)

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