UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

_______________

FORM ~~10-Q~~10-Q/A

(Amendment No. 1)

________________

(Mark One)


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

For the quarterly period ended ~~June 30, 2021~~March 31, 2022


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

For the transition period from __________ to __________

Commission File Number: 001-39671

____________________

MediaAlpha, Inc.

(Exact name of registrant as specified in its charter)

____________________


Delaware			85-1854133
(State or other jurisdiction of incorporation or organization)			(I.R.S. Employer Identification Number)

700 South Flower Street, Suite 640

Los Angeles, California 90017

(Address of principal executive offices, including zip code)

(213) 316-6256

(Registrant's telephone number, including area code)

_______________

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading
Symbol(s)

Name of each exchange on which registered

Class A Common Stock, $0.01 par value per share

MAX

NYSE

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

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

Large accelerated filer

☐☒

Accelerated filer

☐

Non-accelerated filer

☒☐

Smaller reporting company

☐

Emerging growth company

☒☐

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

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

As of ~~July 30, 2021,~~April 29, 2022, there were ~~39,193,465~~41,584,400 shares of MediaAlpha, Inc.'s Class A common stock, $0.01 par value per share, and ~~20,962,000~~19,537,469 shares of MediaAlpha, Inc.’s Class B common stock, par value $0.01 per share, outstanding.

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EXPLANATORY NOTE

The sole purpose of this Amendment No. 1 ("the Amendment") on Form 10-Q/A is to amend the certification filed as Exhibit 31.2 to MediaAlpha, Inc.'s (the "Company") Form 10-Q for the quarterly period ended March 31, 2022, filed on May 6, 2022 (the “Original Filing”) to correct the inadvertent omission of the conformed signature. The certification was fully executed on May 6, 2022 and was in the Company's possession at the time of the Original Filing. Other than as set forth above, this Amendment does not modify, amend or update in any way the financial or other information contained in the Original Filing, nor does this Amendment reflect events that may have occurred after the Original Filing.

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MediaAlpha, Inc. and Subsidiaries

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Certain Definitions

As used in this Quarterly Report on Form 10-Q:

•“Class A-1 units” refers to the Class A-1 units of QL Holdings LLC (“QLH”).

•“Class B-1 units” refers to the Class B-1 units of QLH.

•“Company,” “we,” or “us” refers to MediaAlpha, Inc. and its consolidated subsidiaries, unless the context requires otherwise.

•“Consumer Referral” means any consumer click, call or lead purchased by a buyer on our platform.

•“Consumers” and “customers” refer interchangeably to end consumers. Examples include individuals shopping for insurance policies.

•“Digital consumer traffic” refers to visitors to the mobile, tablet, desktop and other digital platforms of our supply partners, as well as to our proprietary websites.

•“Direct-to-consumer” or “DTC” means the sale of insurance products or services directly to end consumers, without the use of retailers, brokers, agents or other intermediaries.

•“Distributor” means any company or individual that is involved in the distribution of insurance, such as an insurance agent or broker.

•“Exchange agreement” means the exchange agreement, dated as of October 27, 2020 by and among MediaAlpha, Inc., QLH, Intermediate Holdco, Inc. and certain Class B-1 unitholders ~~of QLH~~ party ~~thereto~~thereto.

•“Founders” means, collectively, Steven Yi, Eugene Nonko, and Ambrose Wang.

•“High-intent” consumer or customer means an in-market consumer that is actively browsing, researching or comparing the types of products or services that our partners sell.

•“Insignia” means Insignia Capital Group, L.P. and its affiliates.

•“Intermediate Holdco” means Guilford Holdings, Inc., our wholly owned subsidiary and the owner of all Class A-1 units.

•“Inventory,” when referring to our supply partners, means the volume of Consumer Referral opportunities.

•“IPO” means our initial public offering of our Class A common stock, which closed on October 30, 2020.

•“Legacy Profits Interest Holders” means certain current or former employees of QLH or its subsidiaries (other than the Senior Executives), who indirectly held Class B units in QLH prior to our IPO and includes any estate planning vehicles or other holding companies through which such persons hold their units in QLH (which holding companies may or may not include QL Management Holdings LLC).

•“Lifetime value” or “LTV” is a type of metric that many of our business partners use to measure the estimated total worth to a business of a customer over the expected period of their relationship.

•“NAIC” means the National Association of Insurance Commissioners.

•“Open ~~platform”~~Marketplace” refers to one of our two business models. In Open ~~platform~~Marketplace transactions, we have separate agreements with demand partners and suppliers. We earn fees from our demand partners and separately pay a revenue share to suppliers and a fee to Internet search companies to drive consumers to our proprietary websites.

•“Partner” refers to a buyer or seller on our platform, also referred to as “demand partners” and “supply partners,” respectively.

◦“Demand partner” refers to a buyer on our platform. As discussed under Item 2. Management’s Discussion & Analysis – Management Overview, our demand partners are generally insurance carriers and distributors looking to target high-intent consumers deep in their purchase journey.

◦“Supply partner” or “supplier” refers to a seller to our platform. As discussed under Item 2. Management’s Discussion & Analysis – Management Overview, our supply partners are primarily insurance carriers looking to maximize the value of non-converting or low LTV consumers, and insurance-focused research destinations or other financial websites looking to monetize high-intent consumers.

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•“Private ~~platform”~~Marketplace” refers to one of our two business models. In Private ~~platform~~Marketplace transactions, demand partners and suppliers contract with one another directly and leverage our platform to facilitate transparent, real-time transactions utilizing the reporting and analytical tools available to them from use of our platform. We charge a fee based on the Transaction Value of the Consumer Referrals sold through Private ~~platform~~Marketplace transactions.

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•“Proprietary” means, when used in reference to our properties, the websites and other digital properties that we own and operate. Our proprietary properties are a source of Consumer Referrals on our platform.

•“Reorganization ~~Transaction”~~Transactions” means the series of reorganization transactions completed on October 27, 2020 in connection with our IPO.

•“Secondary Offering” means the means the sale of 8,050,000 shares of Class A common stock pursuant to the registration statement on Form S-1 (File No. 333-254338), which was declared effective by the Securities Exchange Commission ("SEC") on March 18, 2021.

•“Senior Executives” means the Founders and the ~~following~~other current and former officers atof the Company ~~that held Class B units~~listed in ~~QLH prior~~Exhibit A to the ~~IPO: Keith Cramer, Tigran Sinanyan, Lance Martinez, Brian Mikalis, Robert Perine, Jeff Sweetser, Serge Topjian, and Amy Yeh.~~exchange agreement. This term also includes any estate planning vehicles or other holding companies through which such persons hold their units in QLH.

•“Selling Class B-1 Unit Holders” means Insignia, the Senior Executives, and the Legacy Profits Interests Holders who sold a portion of their Class B-1 units to Intermediate Holdco in connection with the IPO.

•“Transaction Value” means the total gross dollars transacted by our partners on our platform.

•“Vertical” means a market dedicated to a specific set of products or services sold to end consumers. Examples include property & casualty insurance, life insurance, health insurance, and travel.

•“White Mountains” means White Mountains Insurance Group, Ltd. and its affiliates.

•“Yield” means the return to our sellers on their inventory of Consumer Referrals sold on our platform.

Cautionary Statement Regarding Forward-Looking Statements

~~This Quarterly Report on Form 10-Q contains “forward-looking statements” within~~We are including this Cautionary Statement to caution investors and qualify for the ~~meaning~~safe harbor provisions of the Private Securities Litigation Reform Act of ~~1995.~~1995 (the “Act”) for forward-looking statements. This Quarterly Report on Form 10-Q contains forward-looking statements. These forward-looking statements reflect our current views with respect to, among other things, future events and our financial performance. These statements are often, but not always, made through the use of words or phrases such as “may,” “should,” “could,” “predict,” “potential,” “believe,” “will likely result,” “expect,” “continue,” “will,” “anticipate,” “seek,” “estimate,” “intend,” “plan,” “projection,” “would,” and “outlook,” or the negative version of those words or other comparable words or phrases of a future or forward-looking nature. These forward-looking statements are not historical facts, and are based on current expectations, estimates and projections about our industry, management’s beliefs and certain assumptions made by management, many of which, by their nature, are inherently uncertain and beyond our control. Accordingly, we caution you that any such forward-looking statements are not guarantees of future performance and are subject to risks, assumptions and uncertainties that are difficult to predict. Although we believe that the expectations reflected in these forward-looking statements are reasonable as of the date made, actual results may prove to be materially different from the results expressed or implied by the forward-looking statements.

There are or will be important factors that could cause our actual results to differ materially from those indicated in these forward-looking statements, including, but not limited to, the following:

•Our ability to attract and retain supply partners and demand partners to our platform and to make available quality Consumer Referrals at attractive volumes and prices to drive transactions on our platform;

•Our reliance on a limited number of ~~insurance carriers,~~supply partners and demand partners, many of which have no long-term contractual commitments with us, and any potential termination of those relationships;

•Fluctuations in customer acquisition spending by property and casualty insurance carriers due to unexpected changes in underwriting profitability as the carriers go through cycles in their business;

•Existing and future laws and regulations affecting the property & casualty insurance, health insurance and life insurance verticals;

•Changes and developments in the regulation of the underlying industries in which our partners operate;

•Competition with other technology companies engaged in digital customer acquisition, as well as buyers that attract consumers through their own customer acquisition strategies, third-party online platforms or other traditional methods of distribution;

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•Our ability to attract, integrate and retain qualified employees;

•Reductions in DTC digital ~~spends~~spend by our buyers;

•Mergers and acquisitions could result in additional dilution and otherwise disrupt our operations and harm our operating results and financial condition;

•Our dependence on internet search companies to direct a significant portion of visitors to our suppliers’ websites and our proprietary websites;

•The novel strain of the coronavirus and the disease it causes (COVID-19);

•The terms and restrictions of our existing and future indebtedness;

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•Disruption to operations as a result of future acquisitions;

•~~Failure~~Our failure to obtain, maintain, protect and enforce our intellectual property rights, proprietary systems, technology and brand;

•Our ability to develop new offerings and penetrate new vertical markets;

•Our ability to manage future growth effectively;

•Our reliance on data provided to us by our demand and supply partners and consumers;

•Natural disasters, public health crises, political crises, economic downturns, or other unexpected events;

•Significant estimates and assumptions in the preparation of our consolidated financial statements;

•Potential litigation and claims, including claims by regulatory agencies and intellectual property disputes;

•Our ability to collect our receivables from our partners;

•Developments with respect to LIBOR;

•Fluctuations in our financial results caused by seasonality;

•The development of the DTC insurance distribution sector and evolving nature of our relatively new business model;

•Disruptions to or failures of our technological infrastructure and platform;

•Failure to manage and maintain relationships with third-party service providers;

•Cybersecurity breaches or other attacks involving our systems or those of our partners or third-party service providers;

•Our ability to protect consumer information and other data and risks of reputational harm due to an actual or perceived failure by us to protect such information and other data;

•Risks related to being a public company;

•Risks related to internal control on financial reporting;

•Risks related to shares of our Class A common stock;

•Risks related to our intention to take advantage of certain exemptions as a “controlled company” under the rules of the NYSE, and the fact that the interests of our controlling stockholders (White Mountains, Insignia, and the Founders) may conflict with those of other investors;

•Risks related to our corporate structure; and

•The other risk factors described under Part I, Item 1A "Risk Factors" in the ~~2020~~2021 Annual Report on Form ~~10-K and under Part II, Item 1A "Risk Factors in this Quarterly Report on Form 10-Q.~~10-K.

The foregoing factors should not be construed as exhaustive and should be read together with the other cautionary statements included in this ~~Report.~~Quarterly Report on Form 10-Q. If one or more events related to these or other risks or uncertainties materialize, or if our underlying assumptions prove to be incorrect, actual results may differ materially from what we anticipate. Many of the important factors that will determine these results are beyond our ability to control or predict. Accordingly, you should not place undue reliance on any such forward-looking statements. Any forward-looking statement speaks only as of the date on which it is made, and, except as otherwise required by law, we do not undertake any obligation to publicly update or review any forward-looking statement, whether as a result of new information, future developments or otherwise. New factors emerge from time to time, and it is not possible for us to predict which will arise. In addition, we cannot assess the impact of each factor on our business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements.

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Part I. Financial Information

Item 1. Financial Statements.

MediaAlpha, Inc. and subsidiaries

Consolidated Balance Sheets

(Unaudited; in thousands, except share data and per share amounts)

June 30,
2021 December 31,
2020
Assets
Current assets
Cash and cash equivalents $ 15,000 $ 23,554
Accounts receivable, net of allowance for credit losses of $674 and $438, respectively 74,285 96,295
Prepaid expenses and other current assets 5,457 7,950
Total current assets 94,742 127,799
Property and equipment, net 1,060 762
Intangible assets, net 14,059 15,551
Goodwill 18,402 18,402
Deferred tax asset 92,240 31,613
Other assets 15,900 16,210
Total assets $ 236,403 $ 210,337
Liabilities and stockholders' deficit
Current liabilities
Accounts payable $ 46,306 $ 98,249
Accrued expenses 7,472 9,206
Total current liabilities 53,778 107,455
Long-term debt 183,344 182,668
Liabilities under tax receivable agreement, net of current portion 75,757 22,498
Other long-term liabilities 2,750 2,834
Total liabilities 315,629 315,455
Commitments and contingencies (Note 7) 0 0
Stockholders' (deficit):
Class A common stock, $0.01 par value - 1.0 billion shares authorized; 38.7 million and 33.4 million shares issued and outstanding as of June 30, 2021 and December 31, 2020, respectively 387 334
Class B common stock, $0.01 par value - 100 million shares authorized; 21.0 million and 25.5 million shares issued and outstanding as of June 30, 2021 and December 31, 2020, respectively 210 255
Preferred stock, $0.01 par value - 50 million shares authorized; 0 shares issued and outstanding as of June 30, 2021 and December 31, 2020 0 0
Additional paid-in capital 397,710 384,611
Accumulated Deficit (418,876) (418,973)
Total stockholders' (deficit) attributable to MediaAlpha, Inc. $ (20,569) $ (33,773)
Non-controlling interest (58,657) (71,345)
Total stockholders' (deficit) $ (79,226) $ (105,118)
Total liabilities and stockholders' deficit $ 236,403 $ 210,337

~~The accompanying notes are an integral part of these unaudited consolidated financial statements.~~

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~~MediaAlpha, Inc. and subsidiaries~~

~~Consolidated Statements of Operations~~

~~(Unaudited; in thousands, except share data and per share amounts)~~

Three months ended
June 30, Six Months Ended
June 30,
2021 2020 2021 2020
Revenue $ 157,353 $ 123,616 $ 330,941 $ 243,061
Cost and operating expenses
Cost of revenue 132,304 104,193 279,483 204,862
Sales and marketing 5,717 2,814 11,101 5,950
Product development 3,835 1,873 7,150 3,716
General and administrative 13,582 3,055 29,328 6,302
Total cost and operating expenses 155,438 111,935 327,062 220,830
Income from operations 1,915 11,681 3,879 22,231
Other expenses, net 171 0 21 0
Interest expense 2,237 1,535 4,538 3,250
Total other expense 2,408 1,535 4,559 3,250
(Loss) income before income taxes (493) 10,146 (680) 18,981
Income tax (benefit) (125) 0 (489) 0
Net (loss) income $ (368) $ 10,146 $ (191) $ 18,981
Net income attributable to QLH prior to Reorganization Transactions 0 10,146 0 18,981
Net (loss) attributable to non-controlling interest (171) 0 (288) 0
Net (loss) income attributable to MediaAlpha, Inc. $ (197) $ 0 $ 97 $ 0
Net (loss) income per share of Class A common stock
-Basic and diluted $ (0.01) $ 0 $ 0.00 $ 0
Weighted average shares of Class A common stock outstanding
-Basic and diluted 37,667,432 0 35,414,548 0


	March 31, 2022		December 31, 2021
Assets
Current assets
Cash and cash equivalents	$	55,288	$	50,564
Accounts receivable, net of allowance for credit losses of $464 and $609, respectively	61,163		76,094
Prepaid expenses and other current assets	7,820		10,448
Total current assets	124,271		137,106
Intangible assets, net	11,884		12,567
Goodwill	18,402		18,402
Deferred tax asset	101,859		102,656
Other assets	18,805		19,073
Total assets	$	275,221	$	289,804
Liabilities and stockholders' equity (deficit)
Current liabilities
Accounts payable	$	51,509	$	61,770
Accrued expenses	10,012		13,716
Current portion of long-term debt	8,740		8,730
Total current liabilities	70,261		84,216
Long-term debt, net of current portion	175,878		178,069
Liabilities under tax receivables agreement, net of current portion	81,850		85,027
Other long-term liabilities	4,881		4,058
Total liabilities	$	332,870	$	351,370
Commitments and contingencies (Note 6)	0		0
Stockholders' equity (deficit):
Class A common stock, $0.01 par value - 1.0 billion shares authorized; 41.6 million and 41.0 million shares issued and outstanding as of March 31, 2022 and December 31, 2021, respectively	416		410
Class B common stock, $0.01 par value - 100 million shares authorized; 19.6 million and 19.6 million shares issued and outstanding as of March 31, 2022 and December 31, 2021, respectively	196		196
Preferred stock, $0.01 par value - 50 million shares authorized; 0 shares issued and outstanding as of March 31, 2022 and December 31, 2021	—		—
Additional paid-in capital	433,157		419,533
Accumulated deficit	(431,552)		(424,476)
Total stockholders' equity (deficit) attributable to MediaAlpha, Inc.	$	2,217	$	(4,337)
Non-controlling interests	(59,866)		(57,229)
Total stockholders' (deficit)	$	(57,649)	$	(61,566)
Total liabilities and stockholders' deficit	$	275,221	$	289,804

The accompanying notes are an integral part of these unaudited consolidated financial statements.

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MediaAlpha, Inc. and subsidiaries

Consolidated Statements of ~~Redeemable Class A units, Members’ Deficit, and Stockholders’ Deficit~~Operations

(Unaudited; in thousands, except share ~~data)~~data and per share amounts)

Class A
common stock Class B
common stock Additional
Paid-In-
Capital Accumulated
deficit Non-
Controlling
Interest Total
Stockholders’
(Deficit)
Units Amount Units Amount Amount Amount Amount Amount
Balance at December 31, 2020 33,371,056 $ 334 25,536,043 $ 255 $ 384,611 $ (418,973) $ (71,345) $ (105,118)
Establishment of liabilities under tax receivable agreement and related changes to deferred tax assets associated with increases in tax basis — — — — 6,190 — — 6,190
Exchange of non-controlling interest for Class A common stock 4,457,796 45 (4,457,796) (45) (12,716) — 12,716 0
Vesting of restricted stock units 444,030 4 — — (4) — — 0
Equity-based compensation, net of forfeitures (58,608) (1) — — 10,479 — 124 10,602
Tax withholding on vesting of restricted stock units — — — — (1,276) — — (1,276)
Net income (loss) — — — — — 294 (117) 177
Balance at March 31, 2021 38,214,274 $ 382 21,078,247 $ 210 $ 387,284 $ (418,679) $ (58,622) $ (89,425)
Establishment of liabilities under tax receivable agreement and related changes to deferred tax assets associated with increases in tax basis — — — — 54 — — 54
Exchange of non-controlling interest for Class A common stock 37,248 — (37,248) — (106) — 106 0
Vesting of restricted stock units 458,262 5 — — (5) — — 0
Equity-based compensation, net of forfeitures — — — — 11,381 — 140 11,521
Tax withholding on vesting of restricted stock units — — — — (898) — — (898)
Distribution to non-controlling interests — — — — — — (110) (110)
Net (loss) — — — — — (197) (171) (368)
Balance at June 30, 2021 38,709,784 $ 387 21,040,999 $ 210 $ 397,710 $ (418,876) $ (58,657) $ (79,226)


	Three months ended March 31,
	2022		2021
Revenue	$	142,599	$	173,588
Costs and operating expenses
Cost of revenue	120,881		147,180
Sales and marketing	7,223		5,391
Product development	5,216		3,320
General and administrative	17,148		15,749
Total costs and operating expenses	150,468		171,640
(Loss) income from operations	(7,869)		1,948
Other (income), net	(523)		(150)
Interest expense	1,359		2,301
Total other expense, net	836		2,151
(Loss) before income taxes	(8,705)		(203)
Income tax expense (benefit)	1,143		(364)
Net (loss) income	$	(9,848)	$	161
Net (loss) attributable to non-controlling interest	(2,772)		(124)
Net (loss) income attributable to MediaAlpha, Inc.	$	(7,076)	$	285
Net (loss) income per share of Class A common stock
-Basic	$	(0.17)	$	0.01
-Diluted	$	(0.17)	$	0.00
Weighted average shares of Class A common stock outstanding
-Basic	40,847,941		33,136,632
-Diluted	40,847,941		62,163,390

The accompanying notes are an integral part of these unaudited consolidated financial statements.

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MediaAlpha, Inc. and subsidiaries

Consolidated Statements of ~~Redeemable Class A units, Members’ Deficit, and~~ Stockholders’ ~~Deficit~~Equity (Deficit)

(Unaudited; in thousands, except share data)


	Class A common stock			Class B common stock			Additional Paid-In- Capital		Accumulated deficit		Non- Controlling Interest		Total Stockholders’ (Deficit)
	Units	Amount		Units	Amount		Amount		Amount		Amount		Amount
Balance at December 31, 2021	40,969,952	$	410	19,621,915	$	196	$	419,533	$	(424,476)	$	(57,229)	$	(61,566)
Establishment of liabilities under tax receivables agreement and related changes to deferred tax assets associated with increases in tax basis	—	—		—	—		19		—		—		19
Exchange of non-controlling interest for Class A common stock	60,197	—		(60,197)	—		(180)		—		180		—
Vesting of restricted stock units	593,810	6		—	—		(6)		—		—		—
Equity-based compensation	—	—		—	—		13,688		—		85		13,773
Forfeiture of equity awards	(23,294)	—		—	—		—		—		—		—
Shares withheld on tax withholding on vesting of restricted stock units	—	—		—	—		(820)		—		—		(820)
Distributions to non-controlling interests	—	—		—	—		—		—		(130)		(130)
Settlement of 2021 annual bonus as restricted stock units	—	—		—	—		880		—		—		880
Tax impact of changes in investment in partnership	—	—		—	—		43		—		—		43
Net (loss)	—	—		—	—		—		(7,076)		(2,772)		(9,848)
Balance at March 31, 2022	41,600,665	$	416	19,561,718	$	196	$	433,157	$	(431,552)	$	(59,866)	$	(57,649)

Redeemable
Class A Members'
Equity Class A
common stock Class B
common stock Additional
Paid-In-
Capital Accumulated deficit Non- Controlling Interest Total Stockholders’ (Deficit)
Units Amount Amount Units Amount Units Amount Amount Amount Amount Amount
Balance at December 31, 2019 284,211 $ 74,097 $ 79,547 0 $ 0 0 $ 0 $ 0 $ (193,143) $ 0 $ (113,596)
Remeasurement of redeemable Class A units — 20,342 — — — — — — (20,342) — (20,342)
Class B repurchased — — — — — — — — (1,952) — (1,952)
Equity-based compensation — — 1,266 — — — — — — — 1,266
Net income — — — — — — — — 8,835 — 8,835
Balance at March 31, 2020 284,211 $ 94,439 $ 80,813 0 $ 0 0 $ 0 $ 0 $ (206,602) $ 0 $ (125,789)
Remeasurement of redeemable Class A units — 86,627 — — — — — — (86,627) — (86,627)
Class B repurchased — — — — — — — — (292) — (292)
Equity-based compensation — — 681 — — — — — — — 681
Members' distributions — — — — — — — — (10,527) — (10,527)
Net income — — — — — — — — 10,146 — 10,146
Balance at June 30, 2020 284,211 $ 181,066 $ 81,494 0 $ 0 0 $ 0 $ 0 $ (293,902) $ 0 $ (212,408)

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	Class A common stock			Class B common stock			Additional Paid-In- Capital		Accumulated deficit		Non- Controlling Interest		Total Stockholders’ (Deficit)
	Units	Amount		Units	Amount		Amount		Amount		Amount		Amount
Balance at December 31, 2020	33,371,056	$	334	25,536,043	$	255	$	384,611	$	(418,973)	$	(71,345)	$	(105,118)
Establishment of liabilities under tax receivables agreement and related changes to deferred tax assets associated with increases in tax basis	—	—		—	—		6,190		—		—		6,190
Exchange of non-controlling interest for Class A common stock	4,457,796	45		(4,457,796)	(45)		(12,716)		—		12,716		—
Vesting of restricted stock units	444,030	4		—	—		(4)		—		—		—
Equity-based compensation	—	—		—	—		10,479		—		124		10,603
Forfeiture of equity awards	(58,608)	(1)		—	—		—		—		—		(1)
Shares withheld on tax withholding on vesting of restricted stock units	—	—		—	—		(1,276)		—		—		(1,276)
Net income (loss)	—	—		—	—		—		285		(124)		161
Balance at March 31, 2021	38,214,274	$	382	21,078,247	$	210	$	387,284	$	(418,688)	$	(58,629)	$	(89,441)

The accompanying notes are an integral part of these unaudited consolidated financial statements.

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MediaAlpha, Inc. and subsidiaries

Consolidated Statements of Cash Flows

(Unaudited; in thousands)


		Six Months Ended June 30,					Three Months Ended March 31,
		2021		2020			2022		2021
Cash flows from operating activities	Cash flows from operating activities					Cash flows from operating activities
Net (loss) income	Net (loss) income	$	(191)	$	18,981	Net (loss) income	$	(9,848)	$	161
Adjustments to reconcile net (loss) income to net cash (used in) provided by operating activities:
Adjustments to reconcile net (loss) income to net cash provided by (used in) operating activities:						Adjustments to reconcile net (loss) income to net cash provided by (used in) operating activities:
Non-cash equity-based compensation expense	Non-cash equity-based compensation expense	22,123		1,156		Non-cash equity-based compensation expense	13,773		10,602
Non-cash lease expense						Non-cash lease expense	177		116
Depreciation expense on property and equipment	Depreciation expense on property and equipment	173		137		Depreciation expense on property and equipment	98		82
Amortization of intangible assets	Amortization of intangible assets	1,492		1,603		Amortization of intangible assets	683		746
Amortization of deferred debt issuance costs	Amortization of deferred debt issuance costs	694		226		Amortization of deferred debt issuance costs	209		345
Bad debt expense		235		219

Credit losses						Credit losses	(88)		157
Deferred taxes	Deferred taxes	(865)		0		Deferred taxes	1,110		(358)
Tax receivable agreement liability adjustments	Tax receivable agreement liability adjustments	(156)		0		Tax receivable agreement liability adjustments	(630)		(156)
Changes in operating assets and liabilities:	Changes in operating assets and liabilities:					Changes in operating assets and liabilities:
Accounts receivable	Accounts receivable	21,775		(974)		Accounts receivable	15,019		15,870
Prepaid expenses and other current assets	Prepaid expenses and other current assets	2,472		(261)		Prepaid expenses and other current assets	2,613		690
Other assets	Other assets	310		(4,625)		Other assets	47		125
Accounts payable	Accounts payable	(51,940)		25,167		Accounts payable	(10,261)		(33,675)
Accrued expenses	Accrued expenses	(1,922)		(2,344)		Accrued expenses	(4,813)		(4,061)
Net cash (used in) provided by operating activities		(5,800)		39,285
Net cash provided by (used in) operating activities						Net cash provided by (used in) operating activities	$	8,089	$	(9,356)
Cash flows from investing activities	Cash flows from investing activities					Cash flows from investing activities
Purchases of property and equipment	Purchases of property and equipment	(470)		(92)		Purchases of property and equipment	(40)		(69)
Purchase of cost method investment		0		(10,000)

Net cash (used in) investing activities	Net cash (used in) investing activities	(470)		(10,092)		Net cash (used in) investing activities	$	(40)	$	(69)
Cash flows from financing activities	Cash flows from financing activities					Cash flows from financing activities
Proceeds received from:
Revolving line of credit		0		7,500

Payments made for:	Payments made for:					Payments made for:
Repayments on revolving line of credit		0		(7,500)

Repayments on long-term debt	Repayments on long-term debt	0		(812)		Repayments on long-term debt	(2,375)		—
Repurchase of Class B units at QLH up to fair value		0		(1,453)

Distributions	Distributions	(110)		(10,527)		Distributions	(130)		—
Shares withheld for taxes on vesting of restricted stock units	Shares withheld for taxes on vesting of restricted stock units	(2,174)		0		Shares withheld for taxes on vesting of restricted stock units	(820)		(1,276)
Net cash (used in) financing activities	Net cash (used in) financing activities	(2,284)		(12,792)		Net cash (used in) financing activities	$	(3,325)	$	(1,276)
Net (decrease) increase in cash and cash equivalents		(8,554)		16,401
Net increase (decrease) in cash and cash equivalents						Net increase (decrease) in cash and cash equivalents	4,724		(10,701)
Cash and cash equivalents, beginning of period	Cash and cash equivalents, beginning of period	23,554		10,028		Cash and cash equivalents, beginning of period	50,564		23,554
Cash and cash equivalents, end of period	Cash and cash equivalents, end of period	$	15,000	$	26,429	Cash and cash equivalents, end of period	$	55,288	$	12,853
Supplemental disclosures of cash flow information	Supplemental disclosures of cash flow information					Supplemental disclosures of cash flow information
Cash paid during the period for:	Cash paid during the period for:					Cash paid during the period for:
Interest	Interest	$	2,644	$	3,028	Interest	$	2,834	$	754
Redemption of Class B units of QLH in excess of fair value		$	0	$	791

Income taxes paid, net of refunds						Income taxes paid, net of refunds	$	(1,365)	$	51
Non-cash Investing and Financing Activities:	Non-cash Investing and Financing Activities:					Non-cash Investing and Financing Activities:
Establishment of liabilities under the tax receivable agreement		$	(53,519)	$	0
Establishment of deferred tax assets		$	(59,763)	$	0
Adjustments to liabilities under the tax receivable agreement						Adjustments to liabilities under the tax receivable agreement	$	(251)	$	(53,117)
Establishment of deferred tax assets in connection with the Reorganization Transactions						Establishment of deferred tax assets in connection with the Reorganization Transactions	$	(270)	$	(59,307)
Right-of-use assets obtained in exchange of lease obligations						Right-of-use assets obtained in exchange of lease obligations	$	—	$	2,712

The accompanying notes are an integral part of these unaudited consolidated financial statements.

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MediaAlpha, Inc. and subsidiaries

Notes to Consolidated Financial Statements

(Unaudited)

1. Summary of significant accounting policies

The Company's significant accounting policies are included in the ~~2020~~2021 Annual Report on Form 10-K and did not materially change during the ~~six~~three months ended ~~June 30, 2021.~~March 31, 2022.

Basis of presentation

The accompanying unaudited consolidated financial statements and related disclosures have been prepared in accordance with accounting principles generally accepted in the United States of America ("GAAP") applicable to interim financial information and with the instructions to Form 10-Q and Rule 10-01 of Regulation S-X. In the opinion of management, all adjustments, consisting of only those of a normal recurring nature, considered necessary for a fair statement of the financial position and interim results of the Company as of and for the periods presented have been included.

The December 31, ~~2020~~2021 balance sheet data was derived from audited consolidated financial statements; however, the accompanying interim notes to the consolidated financial statements do not include all of the annual disclosures required by GAAP. Results for interim periods are not necessarily indicative of those that may be expected for a full year. The financial information included herein should be read in conjunction with the Company's consolidated financial statements and related notes in its ~~2020~~2021 Annual Report on Form 10-K.

Revisions to previously issued consolidated financial statements

On December 31, 2021 the Company adopted ASU No. 2016-02, Leases (Topic 842) effective from January 1, 2021 using the optional transition approach by applying the new standard to all leases existing at the date of initial application and prior periods were not restated. In connection with the adoption, quarterly amounts presented in our prior Form 10-Q were revised. The impact of the adjustments was immaterial to the Company's consolidated financial statements.

Impact of COVID-19

The COVID-19 pandemic continues to impact the United States and many countries around the world as new strains of the virus are found. The outbreak and government measures taken in response have had a significant impact, both direct and indirect, on businesses and commerce. The future progression of the pandemic and its effects on the Company's business and operations are uncertain and management is unable to estimate the full impact currently. The Company's Travel vertical has experienced a decline in revenue when compared with pre-COVID-19 levels, and although management does not believe the situation will materially impact the Company's liquidity or capital position, management does not expect revenue from the travel vertical to recover fully in the foreseeable future.

~~The Company continues to monitor the potential impact of the COVID-19 pandemic on its business, results of operations and financial condition.~~ To date, the Company has not experienced material business disruptions or incurred impairment losses in the carrying values of its assets as result of the pandemic, and management is not aware of any specific related event or circumstance that would require the Company to revise the estimates reflected in these consolidated financial statements. The Company continues to monitor the potential impact of the COVID-19 pandemic on its business, results of operations and financial condition. The Company's Travel vertical has experienced a decline in revenue compared with pre-COVID-19 levels, and although management does not believe the situation will materially impact the Company's liquidity or capital position, management does not expect revenue from the travel vertical to recover fully in the foreseeable future. In addition, during the second half of 2021, supply chain disruptions and cost increases caused by the pandemic contributed to higher-than-expected property and casualty insurance claims costs, which has led many carriers to reduce their customer acquisition spending to preserve their profitability. These reductions continue to impact revenue from the Company’s P&C vertical.

The extent to which the COVID-19 pandemic will further impact the Company's business, results of operations and financial condition will depend on future developments that ~~are highly~~is uncertain, including as a result of new information that may emerge concerning COVID-19, the actions taken to contain or treat it, and the duration and intensity of the related effects.

Accounts receivable

The Company estimates expected credit losses based on collection history and management’s assessment of the current economic trends, business environment, customers’ financial condition, accounts receivable aging and any customer disputes that may impact the level of future credit losses. Accounts receivable are net of allowances for credit losses of ~~$0.7~~$0.5 million and ~~$0.4~~$0.6 million as of ~~June 30, 2021~~March 31, 2022 and December 31, ~~2020,~~2021, respectively.

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Concentrations of credit risk and of significant customers and suppliers

Financial instruments that potentially expose the Company to concentrations of credit risk consist primarily of cash and cash equivalents and accounts receivable. The Company maintains cash balances that can, at times, exceed amounts insured by the Federal Deposit Insurance Corporation. The Company has not experienced any losses in these accounts, and believes it is not exposed to unusual credit risk beyond the normal credit risk in this area based on the financial strength of the institutions with which the Company maintains its deposits.

The Company's accounts receivable, which are unsecured, may expose it to credit risk based on their collectability. The Company controls credit risk by investigating the creditworthiness of all customers prior to establishing relationships with

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them, performing periodic reviews of the credit activities of those customers during the course of the business relationship, regularly analyzing the collectability of accounts receivable, and recording allowances for credit losses.

Customer concentrations consisted of ~~two customers that accounted for approximately $45 million, or 28%, and $95 million, or 29%, of revenue for three and six months ended June 30, 2021, respectively and~~ one customer that accounted for approximately ~~$34~~$19 million, or ~~28%, and $56 million, or 23%~~13%, of revenue for the three ~~and six~~ months ended ~~June 30, 2020, respectively. The Company's two largest~~March 31, 2022, compared with three customers that collectively accounted for approximately ~~$22~~$68 million, or ~~29%, and $33 million, or 35%~~39%, of ~~its accounts receivables as of June 30, 2021 and December 31, 2020, respectively.~~

~~The Company’s accounts payable can expose the Company to business risks such as supplier concentrations. For~~revenue for the three ~~and six~~ months ended ~~June 30, 2021, the Company had~~March 31, 2021. There were no ~~supplier~~customers that accounted for more than 10% of ~~total purchases, and for~~ the ~~three and six months ended June 30, 2020,~~Company's accounts receivable as of March 31, 2022, compared with the ~~Company had two suppliers~~Company's largest customer that accounted for approximately ~~$23~~$7 million, or ~~23%~~10%, ~~and $47~~as of December 31, 2021.

The Company’s supplier concentration can expose the Company to business risks. For the three months ended March 31, 2022, the Company had one supplier that accounted for approximately $14 million, or 11%, of total purchases, compared with two suppliers that collectively accounted for approximately $32 million, or 21%, of total purchases ~~respectively.~~for the three months ended March 31, 2021. The ~~Company had one large~~Company's largest supplier ~~that~~ accounted for approximately $7$8 million, or ~~16%~~15%, of total accounts payable as of ~~June 30, 2021 and~~March 31, 2022, compared with the Company's two ~~large~~largest suppliers that collectively accounted for approximately ~~$25~~$21 million, or ~~25%~~34%, ~~of total accounts payable~~ as of December 31, ~~2020.~~2021.

Related Party Transactions

The Company is party to the tax receivables agreement ("TRA") under which it has contractually committed to pay the holders of Class B-1 units 85% of the amount of any tax benefits that the Company actually realizes, or in some cases is deemed to realize, as a result of certain transactions. During the three months ended March 31, 2022, payments of $0.2 million were made pursuant to the TRA.

The Company paid $0.9 million during the three months ended March 31, 2022 to White Mountains related to settlement of state income tax refunds for periods prior to the Reorganization Transactions. The total amount reimbursable to White Mountains was $1.5 million as of March 31, 2022 and $2.3 million as of December 31, 2021.

New Accounting Pronouncements

As an “emerging growth company,” the Jumpstart Our Business Startups Act, or the JOBS Act, allows the Company to delay adoption of new or revised accounting pronouncements applicable to public companies until such pronouncements are made applicable to private companies. The Company has elected to use the adoption dates applicable to private companies. As a result, the Company’s financial statements mayRecently issued not be comparable with the financial statements of issuers who are required to comply with the effective dates for new or revised accounting standards that are applicable to public companies. As of June 30, 2021, the Company determined that as of December 31, 2021 it will become a large accelerated filer under Rule 12b-2 of the Securities Exchange Act of 1934, as amended ("the Exchange Act") and will no longer be classified as an emerging growth company.

~~Recently~~yet adopted accounting pronouncements

In ~~June 2016,~~March 2020 and January 2021, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") 2016-13, Financial Instruments - Credit Losses (Topic 326), which changes the methodology for measuring credit losses on financial instruments and the timing of when such losses are recorded. This update replaces the existing incurred loss impairment model with an expected loss model (referred to as the Current Expected Credit Loss model, or "CECL"). The Company early adopted ASU 2016-13 and its related amendments, as applicable, on January 1, 2021. The adoption of this new accounting guidance did not have a material impact on the Company's consolidated financial statements.

In August 2018, the FASB issued Accounting Standards Update (“ASU”) No. 2018-15, Intangibles-Goodwill and Other-Internal-Use Software (Subtopic 350-40) - Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract. The ASU aligns the accounting for implementation costs incurred in a hosting arrangement that is a service contract with the accounting for implementation costs incurred to develop or obtain internal-use software under ASC 350-40. Costs for implementation activities in the application development stage are capitalized depending on the nature of the costs, while costs incurred during the preliminary project and post implementation stages are expensed as the activities are performed. ASU 2018-15 is effective annual reporting periods beginning after December 15, 2020 and the interim periods within annual periods beginning after December 15, 2021, and can be applied either prospectively to implementation costs incurred after the date of adoption or retrospectively to all arrangements. The Company adopted this ASU using prospective transition as of January 1, 2021. The adoption of the new accounting guidance did not have a material impact on the Company's consolidated financial statements.

~~In December 2019, the FASB issued ASU No. 2019-12,~~ ~~Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes~~ (“ASU 2019-12”), which simplifies the accounting for income taxes. ASU 2019-12 is effective for fiscal years beginning after December 15, 2020 for public companies and for fiscal years beginning after December 15, 2021 for all other entities and early adoption is permitted. The Company early adopted this ASU on January 1, 2021 and the adoption did not have a material impact on the Company's consolidated financial statements.

~~Recently issued not yet adopted accounting pronouncements~~

In February 2016, the FASB issued ASU No. 2016-2, Leases (ASC 842) (“ASU 2016-2”), which sets out the principles for the recognition, measurement, presentation and disclosure of leases for both parties to a contract (i.e., lessees and

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lessors). The new standard requires lessees to apply a dual approach, classifying leases as either finance or operating leases based on the principle of whether the lease is effectively a financed purchase by the lessee. This classification will determine whether lease expense is recognized based on an effective interest method or on a straight-line basis over the term of the lease, respectively. The new guidance requires lessees to recognize lease assets and liabilities on the balance sheet for both operating and financing leases, with the exception of leases with an original term of 12 months or less. Under existing guidance, recognition of lease assets and liabilities is not required for operating leases. The lease assets and liabilities to be recognized are both measured initially based on the present value of the lease payments. ASU 2016-2 initially required adoption using a modified retrospective approach, under which all years presented in the financial statements would be prepared under the revised guidance. In July 2018, the FASB issued ASU No. 2018-11 which added an optional transition method under which financial statements may be prepared under the revised guidance for the year of adoption, but not for prior years. Under the latter method, entities will recognize a cumulative catch-up adjustment to the opening balance of retained earnings in the period of adoption. In June 2020, the FASB issued ASU No. 2020-5 that deferred the effective date for non-public entities and emerging growth companies that choose to take advantage of the extended transition periods to annual reporting periods beginning after December 15, 2021, and interim periods within fiscal years beginning after December 15, 2022. For public business entities the new guidance was effective for fiscal years beginning after December 15, 2018. The Company will adopt this accounting guidance with its annual reporting for fiscal year ending December 31, 2021 as it will be designated a large accelerated filer as of that date. The Company is currently evaluating the impact of the adoption of the new accounting guidance on its consolidated financial statements.

~~In March 2020 and January 2021, the FASB issued ASU~~ No. 2020-4, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting and ASU 2021-1, Reference Rate Reform (Topic 848): Scope, respectively. ASU 2020-4 and ASU 2021-1 provide optional expedients and exceptions for applying U.S. GAAP, to contracts, and other transactions that reference the London Interbank Offered Rate or another reference rate expected to be discontinued because of reference rate reform, if certain criteria are met. The guidance in ASU 2020-4 and ASU 2021-1 was effective upon issuance and, once adopted, may be applied prospectively to contract modifications and hedging relationships through December 31, 2022. The Company is currently evaluating the impact of the adoption of ASU 2020-4 and ASU 2021-1 on its consolidated financial statements.

In October 2021, the FASB issued ASU No. 2021-08, Business Combinations (Topic 805): Accounting for Contract Assets and Contract Liabilities from contracts with customers, The ASU requires contract assets and contract liabilities acquired in a business combination to be recognized and measured by the acquirer on the acquisition date in accordance with Accounting Standards Codification (“ASC”) 606, Revenue from Contracts with Customers, as if it had originated the contracts. Under the current business combinations guidance, such assets and liabilities were recognized by the acquirer at fair value on the acquisition date. The guidance in ASU is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2022, with early adoption permitted. The Company is currently evaluating the impact of this ASU, but does not expect the adoption of this standard to have a significant impact on its consolidated financial statements.

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2. Disaggregation of revenue

The following table shows the Company’s revenue disaggregated by transaction model:


		Three months ended June 30,				Six Months Ended June 30,					Three months ended March 31,
(in thousands)	(in thousands)	2021		2020		2021		2020		(in thousands)	2022		2021
Revenue	Revenue									Revenue
Open platform transactions		$	152,522	$	120,962	$	321,870	$	237,984
Private platform transactions		4,831		2,654		9,071		5,077
Open marketplace transactions										Open marketplace transactions	$	138,096	$	169,348
Private marketplace transactions										Private marketplace transactions	4,503		4,240
Total	Total	$	157,353	$	123,616	$	330,941	$	243,061	Total	$	142,599	$	173,588

The following table shows the Company’s revenue disaggregated by product vertical:

Three months ended
June 30, Six Months Ended
June 30,
(in thousands) 2021 2020 2021 2020
Revenue
Property & casualty insurance $ 109,337 $ 88,617 $ 234,878 $ 160,690
Health insurance 33,688 26,204 69,584 54,077
Life insurance 7,479 7,320 15,432 16,873
Other (1)
6,849 1,475 11,047 11,421
Total $ 157,353 $ 123,616 $ 330,941 $ 243,061


	Three months ended March 31,
(in thousands)	2022		2021
Revenue
Property & casualty insurance	$	87,454	$	125,541
Health insurance	42,109		35,896
Life insurance	7,067		7,953
Other (1)	5,969		4,198
Total	$	142,599	$	173,588

(1)Other verticals include Travel, Education, and Consumer Finance.

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3. ~~Property and equipment~~

~~Property and equipment consisted of the following:~~

As of
(in thousands) June 30,
2021 December 31,
2020
Leasehold improvements $ 1,254 $ 918
Furniture and fixtures 364 318
Computers 449 360
Property and equipment, gross 2,067 1,596
Less: Accumulated depreciation (1,007) (834)
Property and equipment, net $ 1,060 $ 762

Depreciation expense related to property and equipment amounted to $0.1 million for the three months ended June 30, 2021 and 2020, and $0.2 million and $0.1 million for the six months ended June 30, 2021 and 2020, respectively.

4. Goodwill and intangible assets

Goodwill and intangible assets consisted of:


		As of														As of
		June 30, 2021							December 31, 2020								March 31, 2022						December 31, 2021
(in thousands)	(in thousands)	Useful life (months)	Gross carrying amount		Accumulated amortization		Net carrying amount		Gross carrying amount		Accumulated amortization		Net carrying amount		(in thousands)	Useful life (months)	Gross carrying amount		Accumulated amortization		Net carrying amount		Gross carrying amount		Accumulated amortization		Net carrying amount
Customer relationships	Customer relationships	120	$	25,040	$	(11,373)	$	13,667	$	25,040	$	(10,016)	$	15,024	Customer relationships	120	$	25,040	$	(13,362)	$	11,678	$	25,040	$	(12,730)	$	12,310
Non-compete agreements	Non-compete agreements	60	303		(240)		63		303		(211)		92		Non-compete agreements	60	303		(277)		26		303		(268)		35
Domain names	Domain names	60	1,224		(895)		329		1,224		(789)		435		Domain names	60	1,224		(1,044)		180		1,224		(1,002)		222
Intangible assets	Intangible assets		$	26,567	$	(12,508)	$	14,059	$	26,567	$	(11,016)	$	15,551	Intangible assets		$	26,567	$	(14,683)	$	11,884	$	26,567	$	(14,000)	$	12,567
Goodwill	Goodwill	Indefinite	$	18,402	—		$	18,402	$	18,402	—		$	18,402	Goodwill	Indefinite	$	18,402	$	—	$	18,402	$	18,402	$	—	$	18,402

Amortization expense related to intangible assets ~~totaled~~amounted to $0.7 ~~million and $0.8~~ million for the three months ended ~~June 30, 2021~~March 31, 2022 and 2020, respectively, and $1.5 million and $1.6 million for the six months ended June 30, 2021 and 2020, respectively. Goodwill is not amortized and is tested for impairment at least annually in the fourth quarter or when events or circumstances indicate that the fair value of a reporting unit may be below its carrying value.2021. The Company has 0no accumulated impairment of goodwill.

The following table presents the changes in goodwill and intangible assets:


		As of									As of
		June 30, 2021				December 31, 2020					March 31, 2022				December 31, 2021
(in thousands)	(in thousands)	Goodwill		Intangible assets		Goodwill		Intangible assets		(in thousands)	Goodwill		Intangible assets		Goodwill		Intangible assets
Beginning balance	Beginning balance	$	18,402	$	15,551	$	18,402	$	18,752	Beginning balance	$	18,402	$	12,567	$	18,402	$	15,551
Additions to goodwill and intangible assets		0		0		0		0

Amortization	Amortization	—		(1,492)		—		(3,201)		Amortization	—		(683)		—		(2,984)
Ending balance	Ending balance	$	18,402	$	14,059	$	18,402	$	15,551	Ending balance	$	18,402	$	11,884	$	18,402	$	12,567

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As of ~~June 30, 2021,~~March 31, 2022, future amortization expense relating to identifiable intangible assets with estimable useful lives over the next five years was as follows:


(in thousands)	(in thousands)	Amortization expense		(in thousands)	Amortization expense
2021–Remaining Period		$	1,491
2022		2,730
2022–Remaining Period				2022–Remaining Period	$	2,048
2023	2023	2,388		2023	2,388
2024	2024	2,211		2024	2,211
2025	2025	2,028		2025	2,028
2026				2026	1,880
Thereafter	Thereafter	3,211		Thereafter	1,329
		$	14,059		$	11,884

5.4. Accrued expenses

Accrued expenses consisted of:


		As of					As of
(in thousands)	(in thousands)	June 30, 2021		December 31, 2020		(in thousands)	March 31, 2022		December 31, 2021
Accrued payroll and related expenses	Accrued payroll and related expenses	$	2,879	$	6,686	Accrued payroll and related expenses	$	1,727	$	5,030
Accrued operating expenses	Accrued operating expenses	2,904		1,545		Accrued operating expenses	1,634		1,103
Other accrued expenses	Other accrued expenses	1,689		975		Other accrued expenses	6,651		7,583
Total accrued expenses	Total accrued expenses	$	7,472	$	9,206	Total accrued expenses	$	10,012	$	13,716

6.5. Long-term debt

On ~~September 23, 2020,~~July 29, 2021, the Company entered into an amendment (the "First Amendment") to the 2020 Credit Agreement dated as of September 23, 2020, with the lenders from time-to-time party thereto and JPMorgan Chase Bank, N.A., as administrative agent (as amended by the First Amendment, the “Amended Credit Agreement”). The Amended Credit Agreement provides for a new senior secured ~~credit facilities (“2020 Credit Facilities”) with a syndicate of banks and financial institutions, consisting of (a) $210.0 million~~ term loan ~~(“2020~~facility in an aggregate principal amount of $190.0 million (the "2021 Term Loan ~~Facility”~~Facility"), ~~which was fully drawn at close and (b) a revolving line~~the proceeds of ~~credit of $5.0 million (“2020 Revolving Credit Facility”). Proceeds from the $210.0 million term loan~~which were used to ~~(i) repay~~refinance all $186.4 million of the ~~2019~~existing term loans outstanding and the unpaid interest thereof as of the date of the First Amendment, fees related to these transactions, and to provide cash for general corporate purposes, and a new senior secured revolving credit facility with commitments in an aggregate amount of $50.0 million (the "2021 Revolving Credit Facility" and, together with the 2021 Term Loan ~~Facilities in full, (ii) pay $105.8 million in cash distributions to QLH Class A Unit Holders and certain QLH Class B Unit Holders, and (iii) pay related transaction expenses.~~Facility, the "2021 Credit Facilities"), which replaced the existing revolving credit facility under the 2020 Credit Agreement.

Long-term debt consisted of the following:


		As of					As of
(in thousands)	(in thousands)	June 30, 2021		December 31, 2020		(in thousands)	March 31, 2022		December 31, 2021
2020 Term Loan		$	186,375	$	186,375
2021 Term Loan						2021 Term Loan	$	187,625	$	190,000

Debt issuance costs	Debt issuance costs	(3,031)		(3,707)		Debt issuance costs	(3,007)		(3,201)
		$	183,344	$	182,668
Less: current portion		0		0
Total debt						Total debt	$	184,618	$	186,799
Less: current portion, net of debt issuance costs of $760 and $770, respectively						Less: current portion, net of debt issuance costs of $760 and $770, respectively	(8,740)		(8,730)
Total long-term debt	Total long-term debt	$	183,344	$	182,668	Total long-term debt	$	175,878	$	178,069

As of ~~June 30, 2021~~March 31, 2022 and December 31, ~~2020,~~2021, the Company had 0no outstanding ~~amount~~amounts drawn on the ~~2020~~2021 Revolving Credit Facility.

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The expected future principal payments for all borrowings as of ~~June 30, 2021 were~~March 31, 2022 was as follows:


(in thousands)	(in thousands)	Contractual maturity		(in thousands)	Contractual maturity

2021–Remaining Period		$	0
2022		0
2022–Remaining Period				2022–Remaining Period	$	7,125
2023	2023	186,375		2023	9,500
		$	186,375
2024				2024	9,500
2025				2025	9,500
2026				2026	152,000
Debt and issuance costs				Debt and issuance costs	187,625
Unamortized debt issuance costs	Unamortized debt issuance costs	(3,031)		Unamortized debt issuance costs	(3,007)
Total long-term debt		$	183,344
Total debt				Total debt	$	184,618

The Company incurred interest expense of ~~$2.2~~$1.4 million and $1.5 million during the three months ended June 30, 2021 and 2020, respectively and $4.5 million and $3.3 million during the six months ended June 30, 2021 and 2020, respectively. Interest expense included amortization of debt issuance costs of $0.3 million and $0.1$2.3 million for the three months ended ~~June 30,~~March 31, 2022 and 2021, ~~and 2020, respectively and $0.7~~respectively. Interest expense included $0.2 million and ~~$0.2~~$0.3 million of amortization of debt issuance costs for the ~~six~~three months ended ~~June 30,~~March 31, 2022 and 2021, ~~and 2020,~~ respectively. Accrued interest was ~~$1.9 million~~immaterial as of March 31, 2022 and ~~$0.7~~$1.7 million as of ~~June 30,~~December 31, 2021, and ~~December 31, 2020, respectively.~~is included within accrued expenses on the consolidated balance sheets.

The carrying amount of the current and long-term debt under ~~2020 Credit~~the 2021 Term Loan Facilities approximates the fair values thereof as the borrowings have a variable interest rate structure with no prepayment penalties and are classified within the Level 2 hierarchy.

7.6. Commitments and contingencies

~~Operating leases~~

The Company is obligated under certain non-cancellable operating leases of its facilities, which expire on various dates through 2027. Certain facility leases contain predetermined fixed escalation of minimum rents.

The Company recognizes rent expense on a straight-line basis for these leases and records the difference between recognized rental expense and the amounts payable under the lease agreement as deferred rent. The deferred rent liability was $0.4 million as of June 30, 2021 and December 31, 2020. Total rental expense amounted to $0.2 million for the three months ended June 30, 2021 and 2020, and $0.4 million and $0.3 million for the six months ended June 30, 2021 and 2020, respectively and is recorded in operating expenses in the consolidated statements of operations.

~~Future minimum lease payments under the non-cancellable leases as of June 30, 2021 were as follows:~~

(in thousands) Rent payments
2021–Remaining Period $ 401
2022 936
2023 904
2024 908
2025 936
Thereafter 874
Total $ 4,959

Litigation

The Company is subject to certain legal proceedings and claims that arise in the normal course of business. In the opinion of management, the Company does not believe that the amount of liability, if any, as a result of these proceedings and claims will have a materially adverse effect on the Company’s consolidated financial position, results of operations, and cash flows.

As of ~~June 30, 2021~~March 31, 2022 and December 31, ~~2020,~~2021, the Company did 0tnot have any contingency reserves established for any litigation liabilities.

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8.7. Equity-based compensation

The Company’s equity-based compensation plans are fully described in Part II, Item 8 "Financial Statements and Supplementary Data—Note 109 to the Consolidated Financial Statements—Equity-based compensation plans" in the ~~2020~~2021 Annual Report on Form 10-K.

~~A summary of equity-based~~Equity-based compensation cost recognized for equity based awards outstanding during the three ~~and six~~ months ended ~~June 30,~~March 31, 2022 and 2021 ~~and 2020 is~~was as follows:


		Three months ended June 30,				Six Months Ended June 30,					Three months ended March 31,
(in thousands)	(in thousands)	2021		2020		2021		2020		(in thousands)	2022		2021
QLH Class B units	QLH Class B units	0		$	681	0		$	1,947	QLH Class B units	—		$	—
QLH restricted Class B-1 units	QLH restricted Class B-1 units	140		0		265		0		QLH restricted Class B-1 units	85		124
Restricted Class A shares	Restricted Class A shares	285		0		552		0		Restricted Class A shares	348		267
Restricted stock units	Restricted stock units	11,096		0		21,306		0		Restricted stock units	13,340		10,211
Total equity-based compensation	Total equity-based compensation	$	11,521	$	681	$	22,123	$	1,947	Total equity-based compensation	$	13,773	$	10,602

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Equity-based compensation cost iswas allocated to the following expense categories in the consolidated statements of operations during the three ~~and six~~ months ended ~~June 30, 2021~~March 31, 2022 and ~~2020:~~2021:


		Three months ended June 30,				Six Months Ended June 30,					Three months ended March 31,
(in thousands)	(in thousands)	2021		2020		2021		2020		(in thousands)	2022		2021
Cost of revenue	Cost of revenue	$	442	$	18	$	842	$	40	Cost of revenue	$	398	$	400
Sales and marketing	Sales and marketing	1,981		79		3,683		155		Sales and marketing	2,705		1,702
Product development	Product development	1,665		315		2,997		629		Product development	2,249		1,332
General and administrative	General and administrative	7,433		269		14,601		1,123		General and administrative	8,421		7,168
Total equity-based compensation	Total equity-based compensation	$	11,521	$	681	$	22,123	$	1,947	Total equity-based compensation	$	13,773	$	10,602

As of ~~June 30, 2021,~~March 31, 2022, total unrecognized compensation cost related to ~~the~~unvested QLH restricted Class B-1 units, ~~Restricted~~restricted Class A shares, and ~~Restricted~~restricted stock units was ~~$1.1~~$0.5 million, ~~$2.6~~$1.6 million, and ~~$104.8~~$117.5 million, respectively, ~~and will~~which are expected to be recognized over weighted-average periods of ~~2.46~~1.65 years, ~~2.67~~1.62 years, and 2.56 years, respectively.

8. Stockholders' Equity (Deficit)

Share Repurchase Program

On March 14, 2022, the Board of Directors approved a Share Repurchase Program ("Repurchase Program") that authorized the Company to repurchase up to $5.0 million of the Company’s Class A common stock from time to time in open market transactions at prevailing market prices or by other means in accordance with federal securities laws. The Company expects the repurchases to be made over the second and third quarters of 2022. The timing and amount of any share repurchases will be determined by the Company’s management based on their ongoing evaluation of market conditions, the Company’s capital needs, debt covenants and other factors. The share repurchases are considered spot repurchases with no obligation of the Company to repurchase a fixed number of shares and each will be accounted for as of the trade date with a corresponding liability. Any excess amount of the repurchase price over the par value of the shares of Class A common stock repurchased will be recorded as an adjustment to additional-paid-in capital. No shares of Class A common stock were repurchased during the three months ended March 31, 2022.

9. Income taxes

MediaAlpha, Inc. is taxed as a corporation and pays corporate federal, state and local taxes on income allocated to it from QLH based upon MediaAlpha, Inc.’s economic interest held in QLH. QLH is treated as a pass-through partnership for income tax reporting purposes and is not subject to federal income tax. Instead, QLH’s taxable income or loss is passed through to its members, including MediaAlpha, Inc. Accordingly, the Company is not liable for income taxes on the portion of QLH’s earnings not allocated to it. MediaAlpha, Inc. files and pays corporate income taxes for U.S. federal and state income tax purposes and its corporate subsidiary, Skytiger Studio, Ltd., is subject to taxation in Taiwan. The Company expects this structure to remain in existence for the foreseeable future.

The Company estimates the annual effective tax rate for the full year to be applied to actual year-to-date income (loss) and adds the tax effects of any discrete items in the reporting period in which they occur. The Company’s effective income tax rate was ~~25.3%~~(13.1)% and ~~71.9%~~179.3% for the three ~~and six~~ months ended ~~June 30,~~March 31, 2022 and 2021, respectively. ~~The Company’s effective income tax rate was 0.0% for the three and six months ended June 30, 2020.~~

The following table summarizes the Company's income tax expense (benefit):

Three months ended
June 30, Six Months Ended
June 30,
(in thousands, except percentages) 2021 2020 2021 2020
(Loss) income before income taxes $ (493) $ 0 $ (680) $ 0
Income tax (benefit) $ (125) $ 0 $ (489) $ 0
Effective Tax Rate 25.3 % 0.0 % 71.9 % 0.0 %

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	Three months ended March 31,
(in thousands, except percentages)	2022			2021
(Loss) before income taxes	$	(8,705)		$	(203)
Income tax expense (benefit)	$	1,143		$	(364)
Effective Tax Rate	(13.1)		%	179.3		%

The Company's effective tax rate of ~~25.3% and 71.9%~~(13.1)% for the three ~~and six~~ months ended ~~June 30, 2021~~March 31, 2022 differed from the U.S. federal statutory rate of 21%, due primarily to nondeductible equity-based compensation, ~~state taxes, income~~losses associated with non-controlling interests not taxable to the Company, state taxes, and other nondeductible ~~transaction costs associated with the Secondary Offering, and the impact~~permanent items.

Table of tax benefits associated with equity-based awards. The results for the three and six months ended June 30, 2020 do not reflect any income tax expense because, prior to the Reorganization Transactions, the consolidated QLH pass through entity was not subject to corporate income tax.Contents

There were no material changes to the Company’s unrecognized tax benefits during the three ~~and six~~ months ended ~~June 30, 2021,~~March 31, 2022, and the Company does not expect to have any significant changes to unrecognized tax benefits through the end of the fiscal year.

During the three ~~and six~~ months ended ~~June 30, 2021,~~March 31, 2022, holders of Class B-1 units exchanged ~~37,248 and 4,495,044,~~a total of 60,197 Class B-1 units, ~~respectively,~~ together with an equal number of shares of Class B common stock, for shares of Class A common stock on a one-for-one basis ~~(“Exchange”~~(the “Exchanges”). ~~The~~In connection with the Exchanges, the Company recognized aan additional deferred tax asset of ~~$47.2~~$0.2 million during the three months ended March 31, 2022 associated with the basis difference in its investment in ~~QLH upon the Exchange.~~QLH. As of ~~June 30, 2021,~~March 31, 2022, the total deferred tax asset related to the basis difference in the Company's investment in QLH was ~~$72.1~~$80.1 million. The Company also recognized ~~$12.5~~$0.1 million of deferred tax assets for the three months ended March 31, 2022 related to additional tax basis increases generated from expected future payments under the Tax Receivable Agreement (“TRA”) and expected future deductions for imputed interest on such payments.

The Company evaluates the realizability of its deferred tax assets on a quarterly basis and establishes valuation allowances when it is more likely than not that all or a portion of a deferred tax asset may not be realized. As of ~~June 30, 2021~~March 31, 2022, there were no material changes to the Company's valuation ~~allowance.~~allowance and the Company's assessment of the realizability of its deferred tax assets.

Tax Receivable Agreement

In connection with the Reorganization Transactions and the IPO, the Company entered into the TRA, with Insignia, Senior Executives, and White Mountains. The Company expects to obtain an increase in its share of the tax basis in the net assets of QLH as Class B-1 units are exchanged for shares of Class A common stock (or, at the Company's election, redeemed for cash of an equivalent value). The Company intends to treat any redemptions and exchanges of Class B-1 units as direct purchases for U.S. federal income tax purposes. These increases in tax basis may reduce the amounts that it would otherwise pay in the future to various tax authorities.

The ~~Exchange~~Exchanges resulted in an increase in the tax basis of the Company's investment in QLH subject to the provisions of the TRA. The Company recognized an additional liability in the amount of ~~$53.5~~$0.3 million for the ~~TRA related~~TRA-related payments, representing 85% of the aggregate tax benefits it expects to realize from the increases in tax basis related to the redemption of Class B-1 units, after concluding it was probable that such TRA payments would be paid based on management's estimates of future taxable income. ~~No payments were made~~

During the three months ended March 31, 2022, the Company paid $0.2 million pursuant to the ~~TRA during the six months ended June 30, 2021.~~TRA. As of ~~June 30, 2021,~~March 31, 2022, the total amount of payments expected to be paid under the TRA was ~~$75.9~~$84.6 million, of which ~~$0.1~~$2.8 million was included in accrued expenses on the Company's consolidated balance ~~sheet.~~sheets.

10. Earnings (Loss) Per Share


							Three months ended March 31,
(in thousands except share data and per share amount)	(in thousands except share data and per share amount)	Three Months Ended June 30, 2021		Six Months Ended June 30, 2021		(in thousands except share data and per share amount)	2022		2021
Basic	Basic					Basic
Net loss		$	(368)	$	(191)
Net (loss) income						Net (loss) income	$	(9,848)	$	161
Less: net (loss) attributable to non-controlling interest	Less: net (loss) attributable to non-controlling interest	(171)		(288)		Less: net (loss) attributable to non-controlling interest	(2,772)		(124)
Net (loss) income available for basic common shares	Net (loss) income available for basic common shares	$	(197)	$	97	Net (loss) income available for basic common shares	$	(7,076)	$	285
Weighted-average shares of Class A common stock outstanding - basic and diluted	Weighted-average shares of Class A common stock outstanding - basic and diluted	37,667,432		35,414,548		Weighted-average shares of Class A common stock outstanding - basic and diluted	40,847,941		33,136,632
Net (loss) income per share of Class A common stock - basic and diluted (a)		$	(0.01)	$	0.00

(Loss) earnings per share of Class A common stock - basic						(Loss) earnings per share of Class A common stock - basic	$	(0.17)	$	0.01

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(in thousands except share data and per share amount)	Three Months Ended March 31, 2021
Diluted
Net income	$	161
Add: incremental tax benefits related to exchange of Class B-units	115
Net income available for diluted common shares	$	276
Weighted-average shares outstanding:
Class A common stock	33,136,632
Class B-1 units	25,048,775
Restricted Class A shares	3,028,209
Restricted stock units	949,774
Weighted-average shares of Class A common stock and potential Class A common stock	62,163,390
Earnings per share of Class A common stock - diluted	$	0.00

The Company’s potentially dilutive securities were not included in the calculation of diluted loss per share for the three ~~and six~~ months ended ~~June 30, 2021~~March 31, 2022 as the effect would be anti-dilutive. The following table summarizes the ~~share~~shares and ~~unit totals~~units with a potentially dilutive impact:


			As of
			~~June 30, 2021~~March 31, 2022
QLH Class ~~B /~~ B-1 Units ~~(Replacement awards)~~			~~21,076,952~~19,597,671
Restricted Class A Shares			~~789,999~~416,725
Restricted stock units			~~4,850,011~~6,659,182

Potential dilutive shares			~~26,716,962~~26,673,578

~~(a)~~Earnings per share is presented for the period subsequent to the Reorganization Transactions and IPO. Prior to it, the QLH's membership structure consisted of Class A Units and B Units. MediaAlpha, Inc.’s current capital structure is not reflective of the capital structure of QLH prior to the Reorganization Transactions. Therefore,~~earnings per sharehave not been presented forperiodsprior to the completion of the Reorganization Transactionsand IPO.~~

11.Non-Controlling Interest

In accordance with ~~the~~ QLH’s limited liability company agreement, the Company allocates the share of net income (loss) to the holders of non-controlling interests pro-rata to their holdings at a point in time. The non-controlling interests balance represents the ~~holders of~~ Class B-1 ~~units. Changes in MediaAlpha, Inc.'s ownership interest in QLH~~units, substantially all of which are ~~accounted for as equity transactions.~~held by Insignia and the Senior Executives. During the ~~six~~three months ended ~~June 30, 2021,~~March 31, 2022, holders of Class B-1 units exchanged ~~4,495,044~~60,197 Class B-1 units, together with an equal number of shares of Class B common stock, for shares of Class A common stock on a one-for-one basis.

As of ~~June 30, 2021 and December~~March 31, ~~2020,~~2022, the holders of ~~Class B-1 units~~the non-controlling interests owned ~~34.8% and 42.9%~~31.8%, ~~respectively, of the outstanding units of QLH,~~ with the remaining ~~65.2% and 57.1%~~68.2% owned by MediaAlpha, Inc. As of December 31, 2021, the holders of the non-controlling interests owned 32.1%, ~~respectively, being~~with the remaining 67.9% owned by MediaAlpha, Inc.

~~12.Subsequent~~12. Subsequent events

On ~~July 29, 2021,~~February 24, 2022, the Company entered into ~~an amendment (the "First Amendment"~~the Asset Purchase Agreement (as amended, the “Agreement”) to acquire substantially all of the ~~2020 Credit~~assets of Customer Helper Team, LLC ("CHT"), a provider of customer generation and acquisition services for Medicare insurance, automobile insurance, health insurance, life insurance, debt settlement, and credit repair companies. The Company closed the transaction on April 1, 2022. The purchase price for the acquisition was $50 million in cash at closing, adjusted for any working capital adjustments as set forth in the Agreement, ~~dated as of September 23, 2020, among the lenders from time~~plus up to time party thereto and JPMorgan Chase Bank, N.A., as administrative agent (as amended by the First Amendment, the “Amended Credit Agreement”). The Amended Credit Agreement provides for a new senior secured term loan facility in an ~~aggregate principal amount of $190.0 million, the proceeds of which were used to refinance all $186.4~~additional $20 million of contingent cash consideration based on CHT’s achievement of revenue and profitability targets over the ~~existing term loans outstanding~~next two years. The Company funded the transaction in part by drawing $25 million under the 2021 Revolving Credit Facility and the ~~unpaid interest thereof~~balance from cash on hand as of the date of the First Amendment, fees related to these transactions, and to provide cash for general corporate purposes, and a new senior secured revolving credit facility with commitments in an aggregate amount of $50.0 million, which replaced the existing revolving credit facility under the 2020 Credit Agreement. Borrowings under the Amended Credit Agreement will bear interest at a rate equal to, at the option of the Company, the London interbank offered rate plus an applicable margin, with a floor of 0.00%, or a base rate plus an applicable margin.closing. The ~~applicable margins~~transaction will be ~~based on~~accounted for using the ~~Borrower’s consolidated total net leverage ratio as calculated under~~acquisition method of accounting in accordance with ASC Topic 805, Business Combinations. Given the ~~terms of~~close proximity between the Amended Credit Agreement (the “Leverage Ratio”) for the prior fiscal quarter and range from 2.00% to 2.75% with respect to the London interbank offered rate and from 1.00% to 1.75% with respect to the base rate. Loans under the term loan facilitytransaction closing date and the ~~revolving credit facility will mature on July 29, 2026.~~filing of these consolidated financial statements, the preliminary purchase price allocation is not yet complete. Management expects to complete the initial accounting, including the purchase price allocation, during the second quarter of 2022.

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Item 2. Management’s discussion and analysis of financial condition and results of operations

The following discussion and analysis of our financial condition and results of operations should be read together with our unaudited consolidated financial statements and related notes included in Part I, Item 1 of this Quarterly Report on Form 10-Q.

This discussion, particularly information with respect to our future results of operations or financial condition, business strategy and plans, and objectives of management for future operations, includes forward-looking statements that involve risks and uncertainties as described under the heading "Cautionary Statement Regarding Forward-Looking Statements" in this Quarterly Report on Form 10-Q. You should review the disclosure under the heading "Risk Factors" in Part II, Item 1A of this Quarterly Report on Form 10-Q for a discussion of important factors that could cause our actual results to differ materially from those anticipated in these forward-looking statements.

Management overview

Our mission is to help insurance carriers and distributors target and acquire customers more efficiently and at greater scale through technology and data science. Our technology platform brings together leading insurance carriers and high-intent consumers ~~together~~ through a real-time, transparent, and results-driven ecosystem. We believe we are the largest online customer acquisition channel in our core verticals of property & casualty ("P&C") insurance, health insurance, and life insurance, supporting ~~over $1.5 billion~~$926 million in Transaction Value across our platform over the ~~last two years.~~the twelve-month period ended March 31, 2022.

We have multi-faceted relationships with top-tier insurance carriers and distributors. A buyer or a demand partner within our ecosystem is generally an insurance carrier or distributor seeking to reach high-intent insurance consumers. A seller or a supply partner is typically an insurance carrier looking to maximize the value of non-converting or low LTV consumers, or an insurance-focused research destination or other financial ~~websites~~website looking to monetize high-intent users on their websites. For the twelve-month period ended ~~June 30, 2021, an average of 32.9 million consumers each month shop for insurance products through~~March 31, 2022, the websites of our diversified group of supply partners and our proprietary websites ~~driving~~drove an average of ~~over 7.5~~8.2 million Consumer Referrals ~~per month~~ on our ~~platform.~~platform each month.

We generate revenue by earning a fee for each Consumer Referral sold on our platform. A transaction becomes payable ~~only on~~upon a qualifying consumer action, such as a click, call or lead, and is not contingent on the sale of a product to the consumer.

We believe in the disruptive power of transparency. Traditionally, insurance customer acquisition platforms operated in a black box. We recognized that a consumer may be valued differently by one insurer versus another; therefore, insurers should be able to determine pricing granularly based on the value that a particular customer segment is expected to bring to their business. As a result, we developed a technology platform that powers an ecosystem where buyers and sellers can transact with full transparency, control, and confidence, aligning the interests of the parties participating on our platform.

We believe our technology is a key differentiator and a powerful driver of our performance. We maintain deep, custom integrations with partners representing the majority of our Transaction Value, which enable automated, data-driven processes that optimize our partners’ customer acquisition spend and revenue. Through our platform, our insurance carrier partners can target and price across over 35 separate consumer attributes to manage customized acquisition strategies.

~~Financial Highlights~~

For the three and six months ended June 30, 2021, we generated $157.4 million and $330.9 million, of revenue, respectively, representing increases of 27.3% and 36.2% respectively, over the $123.6 million and $243.1 million of revenue we generated for the three and six months ended June 30, 2020, respectively, driven primarily by increases in revenue in our P&C insurance vertical of $20.7 million and $74.2 million and Health insurance vertical of $7.5 million and $15.5 million, respectively.

For the three and six months ended June 30, 2021, we had net losses of $0.4 million and $0.2 million, respectively, compared with net income of $10.1 million and $19.0 million for the three and six months ended June 30, 2020, respectively, a decrease of 104% and 101%, respectively. This decline was driven primarily by higher equity-based compensation expenses of $10.8 million and $20.2 million, higher personnel-related costs of $2.2 million and $3.5 million, during the three and six months ended June 30, 2021, respectively, and higher professional and legal fees as we continue to operate as a publicly-reporting company. In addition, the net loss for the six months ended June 30, 2021 was due in part to $2.7 million of expenses incurred in connection with the Secondary Offering. The decline was offset in part by strong growth in contribution from our P&C and Health verticals.

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For the three months ended June 30, 2021, we had net loss attributable to MediaAlpha, Inc. of $0.2 million and for the six months ended June 30, 2021 we had net income attributable to MediaAlpha, Inc. of $0.1 million. The results for the three and six months ended June 30, 2020 do not reflect any loss or income attributable to non-controlling interest because there were no non-controlling interests prior to the Reorganization Transactions and IPO. For the three and six months ended June 30, 2020, net income attributable to QLH was $10.1 million and $19.0 million, respectively.

For the three and six months ended June 30, 2021, we had Adjusted EBITDA of $14.7 million and $31.2 million, respectively, compared with $13.2 million and $25.9 million for the three and six months ended June 30, 2020, respectively, an increase of 11.2% and 20.2% that was driven primarily by strong growth in contribution from our P&C and Health verticals, offset in part by higher professional and legal fees as we continue to operate as a publicly-reporting company.

For the three and six months ended June 30, 2021, our gross margin (revenue less cost of revenue divided by revenue) was 15.9% and 15.5% compared with 15.7% for the three and six months ended June 30, 2020, primarily due to change in mix of Transaction Value from our Open platform to our Private platform, where revenue is recognized on a net basis.

For the three and six months ended June 30, 2021, our Contribution increased to $26.7 million and $54.5 million, compared with $20.4 million and $40.1 million for the three and six months ended June 30, 2020, an increase of 30.9% and 36.0%, respectively. For the three months ended June 30, 2021, Contribution Margin increased to 16.9% compared with 16.5% for the three months ended June 30, 2020 due primarily to the growth in Transaction Value from our Private platform where revenue is recognized on a net basis and translates to Contribution Margin at a higher rate. Contribution Margin percentage remained constant at 16.5% for the six months ended June 30, 2021 and 2020.

Adjusted EBITDA, Contribution, and Contribution Margin are business and operating metrics that are not presented in accordance with GAAP. We use such metrics, together with financial measures prepared in accordance with GAAP, to measure our operating performance. See “Key business and operating metrics” below. We also present Transaction Value, which is an operating metric not presented in accordance with GAAP. Although Transaction Value is a driver of revenue in accordance with GAAP, we do not believe that Transaction Value is a financial measure because it only measures the gross transaction activity across our platform. Transaction activity on the platform translates to revenue as described below under “Key components of our results of operations—Revenue.” As described below under “Key business and operating metrics—Transaction value,” we present Transaction Value because we believe it is useful to investors to assess the overall level of activity on our platform and to better understand the sources of our revenue across our different transaction models and verticals.

Key factors affecting our business

Revenue

We believe that our future performance will depend on many factors, including those described below and in Part I, Item 1A "Risk Factors" in the ~~2020~~2021 Annual Report on Form 10-K.

Secular trends in the insurance industry

Our technology platform was created to serve and grow with our core insurance end markets. We believe secular trends in the insurance industry are critical drivers of our revenue and will continue to provide strong tailwinds for our business. More insurance consumers are shopping online and direct-to-consumer marketing, which fuels our revenue, is the fastest growing insurance distribution channel. In addition, insurance customer acquisition spending is ~~growing.~~growing over time. As mass-market customer acquisition spend is becoming more costly, insurance carriers and distributors are increasingly focusing on optimizing customer acquisition spend, which is at the core of the service we deliver on our platform. As long as these secular trends persist, we expect digital insurance customer acquisition spending to continue to grow over time, and we believe we are well-positioned to benefit from this growth.

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Transaction Value

Transaction Value from Open ~~platform~~Marketplace transactions is a direct driver of our revenue, while Transaction Value from Private ~~platform~~Marketplace transactions is an indirect driver of our revenue (see “Key business and operating metrics” below). Transaction Value on our platform ~~grew~~declined to ~~$256.5 million and $519.0~~$239.0 million for the three ~~and six~~ months ended ~~June 30, 2021, respectively,~~March 31, 2022, from ~~$175.2 million and $341.3~~$262.5 million for the three ~~and six~~ months ended ~~June 30, 2020, respectively.~~March 31, 2021 due primarily to a decrease in customer acquisition spending by P&C insurance carriers in response to reductions in underwriting profitability. We have developed multi-faceted, deeply integrated partnerships with insurance carriers and distributors, who are often both buyers and sellers on our platform. We believe the versatility and breadth of our offerings, coupled with our focus on high-quality products, provide significant value to insurance carriers and distributors, resulting in strong retention rates. As a result, many insurance

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carriers and distributors use our platform as their central hub for broadly managing digital customer acquisition and monetization. For the three ~~and six~~ months ended ~~June 30, 2021, 96.8% and 98.2%~~March 31, 2022, 99.0% of total insurance Transaction Value executed on our platform ~~respectively,~~ came from demand partner relationships ~~in place during 2020.~~from 2021.

Our demand and supply partners

Our success depends on our ability to retain and grow the number of demand and supply partners on our platform. The aggregate number of demand and supply partners active on our platform increased to 1,577 during the six months ended June 30, 2021 from 1,015 during the six months ended June 30, 2020, driven by increased engagement in our P&C and Health verticals, offset in part by decreased engagement in our Travel vertical as advertising spend in this vertical decreased sharply during the the three months ended March 31, 2021, compared with the prior year period, due to reduced travel resulting from the COVID-19 pandemic. We retain and attract demand partners by finding high-quality sources of Consumer Referrals to make available to our demand partners. We seek to develop, acquire and retain relationships with high-quality supply partners by developing flexible platforms to enable our supply partners to maximize their revenue, manage their demand side relationships in scalable and flexible ways and focus on long-term sustainable economics with respect to revenue share. Our relationships with our partners are deep and ~~long standing~~longstanding and involve most of the top-tier insurance carriers in the industry. In terms of buyers, during the three months ended March 31, 2022, 15 of the top 20 largest auto insurance carriers by customer acquisition spend ~~are~~were on our platform.

Consumer Referrals

Our results depend in large part on the number of Consumer Referrals purchased on our platform. The aggregate number of consumer clicks, calls and leads purchased by insurance buyers on our platform grew to ~~22.9 million and 47.4~~24.6 million for the three ~~and six~~ months ended ~~June 30, 2021, respectively,~~March 31, 2022, from ~~18.7 million and 36.7~~24.5 million for the three ~~and six~~ months ended ~~June 30, 2020, respectively.~~March 31, 2021. We seek to increase the number and scale of our supply relationships and drive consumers to our proprietary properties through a variety of paid traffic acquisition sources. We are investing in diversifying our paid media sources to extend beyond search engine marketing, which historically represented the bulk of our paid media spend, into other online media sources, including native, social, and display advertising.

Seasonality

Our results are subject to fluctuations as a result of seasonality. In particular, our property & casualty insurance vertical is typically characterized by seasonal strength in our quarters ending March 31 ~~and September 30~~ due to a greater supply of Consumer Referrals and higher customer acquisition budgets typically during ~~those quarters,~~the start of the year, and to seasonal weakness in our quarters ending December 31 due to a lower supply of Consumer Referrals available on a cost-effective basis and lower customer acquisition budgets from some buyers during those quarters. Our health insurance vertical is typically characterized by seasonal strength in our quarters ending ~~March 31 and~~ December 31 due to open enrollment periods for health insurance and annual enrollment for Medicare during those quarters, with a material increase in consumer search volume for health products and a related increase in buyer customer acquisition budgets.

Other factors affecting our partners’ businesses include macro factors such as credit availability in the market, the strength of the economy and employment levels.

Cyclicality

Our results are also subject to fluctuations as a result of business cycles experienced by companies in the insurance industry. These cycles ~~most notably~~ in the auto insurance industry are characterized by periods of “soft” market conditions, when carriers are profitable and are focused on ~~lowering rates,~~ increasing capacity and building market share, and “hard” market conditions, when carriers tend to raise prices and prioritize profitability over growth. As our demand partners in these industries go through these market cycles, they often increase their customer acquisition spending during soft markets and reduce it during hard markets, causing their relative demand for Consumer Referrals from our platform to increase and decrease accordingly. We believe that the auto insurance industry is currently in a "hard” market due to higher than expected underwriting losses, and that many P&C insurance carriers are reducing their customer acquisition spending until they can increase their premium rates, the timing of which is difficult to predict.

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Regulations

Our revenue and earnings may fluctuate from time to time as a result of federal, state, international and industry-based laws, directives and regulations and developing standards with respect to the enforcement of those regulations. Our business is affected directly because we operate websites, conduct telemarketing and email marketing and collect, process, store, share, disclose, transfer and use consumer information and other data. Our business is affected indirectly as our clients adjust their operations as a result of regulatory changes and enforcement activity within their industries. For example, the ~~recent enactment of the~~ California Consumer Privacy Act ("CCPA"), ~~which~~ became effective on January 1, 2020, and number of other states, including Colorado and Virginia, have enacted or are considering similar laws, all of which may affect our business. While ~~the CCPA has already been amended multiple times,~~ it is unclear how this new legislation ~~will~~may be ~~further~~ modified or how itcertain provisions will be

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~~interpreted. The~~ interpreted, the effects of this legislation are potentially ~~are far-reaching, however,~~significant, and may require us to modify our data processing practices and policies and incur substantial compliance-related costs and expenses. For a description of laws and regulations to which we are generally subject, see ~~“Business—Regulation”~~Item 1 “Business” and Item 1A “Risk ~~factors—Risks related to laws and regulation”~~Factors.” in our ~~2020~~2021 Annual Report on Form 10-K.

In addition, we are impacted by the regulation of the insurance carriers with whom we do business. In most/all states, insurance carriers are required to obtain approval of their premium rates from the regulatory authority in such state. The timing of such approval process, as well as the willingness of insurance regulators to approve rate increases, can impact the profitability of new policies and the level of customer acquisition spending by carriers in a given period, which in turn can cause fluctuations in our revenue and earnings.

COVID-19

While the COVID-19 ~~and~~pandemic has changed the physical working environment of the substantial majority of our workforce to working from home, it has otherwise caused only minor disruptions to our business operations with a limited impact on ~~travel~~

~~In 2015, we began to expand into the~~our operating results thus far. Our Travel vertical ~~which~~ is ~~ultimately~~largely driven by consumer spending on airfare, hotels, rentals and other travel products. ~~However, as~~As a result of COVID-19, we have experienced a dramatic decline in revenue from the Travel vertical and expect this trend to continue for the foreseeable future. For the three ~~and six~~ months ended ~~June 30,~~March 31, 2022, 2021, and 2020, revenue from the Travel vertical comprised approximately 2.7%, 1.3%, and ~~2.0%~~7.5%, respectively, of our total ~~revenue, respectively, compared with 0.3% and 3.9% for the three and six months ended June 30, 2020.~~revenue. While we have sought to maintain our commercial relationships in the Travel vertical and remain positioned to capitalize on transactions in the Travel vertical when travel activity resumes, we do not expect that revenue from the Travel vertical will match our historical results or have any material impact on our overall revenue or profitability for the foreseeable future. In addition, during the second half of 2021, supply chain disruptions and cost increases caused by the pandemic contributed to higher-than-expected property and casualty insurance claims costs, which has led many carriers to reduce their customer acquisition spending to preserve their profitability. These reductions continue to impact revenue from our P&C vertical, and the duration and extent of this impact are difficult to estimate beyond the second quarter of 2022.

Recent developments

On ~~April 20, 2021, Google announced~~February 24, 2022, we agreed to acquire substantially all of the assets of Customer Helper Team, LLC ("CHT"), a ~~new certification program~~provider of customer generation and acquisition services for ~~Health~~Medicare insurance, ~~advertisers~~automobile insurance, health insurance, life insurance, debt settlement, and credit repair companies on the terms and subject to the conditions set forth in the ~~United States. This certification~~Asset Purchase Agreement (as amended, the “Agreement”). We closed the transaction on April 1, 2022. We believe the acquisition is a good strategic fit with our long-term objectives and will ~~allow first-party providers~~increase our ability to generate Consumer Referrals on various social media and ~~licensed third-party brokers~~short form video platforms. The purchase price for the acquisition was $50 million in cash at closing, adjusted for any working capital adjustments as set forth in the Agreement, plus up to ~~continue to advertise~~an additional $20 million of contingent cash consideration based on ~~paid search via Google Ads. To comply with~~CHT’s achievement of revenue and profitability targets over the ~~new policy, beginning June 2,~~next two years. We funded the transaction in part by drawing $25 million under the 2021 advertisers must be certified by a third-party administrator as a licensed provider of health insurance. During the three months ended June 30, 2021, we were able to obtain certifications for all 50 statesRevolving Credit Facility and the ~~District of Columbia, and the new requirements had negligible impact~~balance from cash on ~~our operations and revenue for such period.~~

On July 29, 2021, we entered into an amendment to the 2020 Credit Agreement for a new senior secured term loan facility in an aggregate principal amount of $190.0 million, the proceeds of which were used to refinance all $186.4 million of the existing term loans outstanding and the unpaid interest thereofhand as of the date of the amendment, fees related to these transactions, and to provide cash for general corporate purposes, and a new senior secured revolving credit facility with commitments in an aggregate amount of $50.0 million, which replaced the existing revolving credit facility under the 2020 Credit Agreement. See “Liquidity and Capital Resources” below for additional information regarding these transactions.closing.

Key components of our results of operations

Revenue

We operate primarily in the P&C insurance, health insurance and life insurance verticals and generate revenue through the purchase and sale of Consumer Referrals.

The price and amount of Consumer Referrals purchased and sold on our platform vary based on a number of market conditions and consumer attributes, including (i) geographic location of consumers, (ii) demographic attributes of consumers, (iii) the source of Consumer Referrals and quality of conversion by source, (iv) buyer bids and (v) buyer demand and budget.

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In our Open ~~platform~~Marketplace transactions, we have control over the Consumer Referrals that are sold to our demand partners. In these arrangements, we have separate agreements with demand partners and suppliers. Suppliers are not a party to the contractual arrangements with our demand partners, nor are the suppliers the beneficiaries of our demand partner agreements. We earn fees from our demand partners and separately pay (i) a revenue share to suppliers and (ii) a fee to internet search companies to drive consumers to our proprietary websites. We are the principal in the Open ~~platform~~Marketplace transactions. As a result, the fees paid by demand partners are recognized as revenue and the fees paid to suppliers are included in cost of revenue.

With respect to our Private ~~platform~~Marketplace transactions, buyers and suppliers contract with one another directly and leverage our platform to facilitate transparent, real-time transactions utilizing the reporting and analytical tools available to them from use of our platform. We charge a platform fee on the Consumer Referrals transacted. We act as an agent in the Private ~~platform~~Marketplace transactions and recognize revenue for the platform fee received. There are no separate payments made by us to suppliers in our Private ~~platform.~~Marketplace.

~~Cost~~Costs and operating expenses

~~Cost~~Costs and operating expenses consist primarily of cost of revenue, sales and marketing expenses, product expenses and general and administrative expenses.

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Cost of revenue

Our cost of revenue is comprised primarily of revenue share payments to suppliers and traffic acquisition costs paid to top tier search engines, as well as telephony infrastructure costs, internet and hosting costs, and merchant fees, and include salaries, wages and ~~related expenses, amortization expense~~benefits, including non-cash equity-based compensation, and other expenses.

Sales and marketing

Sales and marketing expenses consist primarily of an allocation of personnel expenses for employees engaged in demand side and supply side business development, marketing and media acquisition activities, and include salaries, wages and benefits, including non-cash equity-based compensation. Sales and marketing expenses also include costs related to attracting partners to our platform, including marketing and promotions, tradeshows and related travel and entertainment expenses. Sales and marketing expenses also include an allocated portion of rent and facilities expenses and depreciation and amortization expense.

Product development

Product development expenses consist primarily of an allocation of personnel expenses for employees engaged in technology, engineering and product development and include salaries, wages and benefits, including non-cash equity-based compensation. Product development expenses also include an allocated portion of rent and facilities expenses and depreciation and amortization expense.

General and administrative

General and administrative expenses consist primarily of an allocation of personnel expenses for executive, finance, legal, human resources, and business analytics employees, and include salaries, wages and benefits, including non-cash equity-based compensation. General and administrative expenses also include professional services and an allocated portion of rent and facilities expenses and depreciation expense.

Interest expense

Interest expense consists primarily of interest expense associated with outstanding borrowings under our loan and security agreements and the amortization of deferred financing costs ~~and debt discounts~~ associated with these arrangements.

Provision for income taxes

~~We are the sole managing member of~~MediaAlpha, Inc. is taxed as a corporation and pays corporate federal, state and local taxes on income allocated to it from QLH ~~which~~based upon MediaAlpha, Inc.’s economic interest held in QLH. QLH is treated as a pass-through partnership for ~~U.S. federal and most applicable state and local~~ income tax ~~purposes. As a partnership, QLH~~reporting purposes and is not subject to ~~U.S.~~ federal ~~and certain state and local~~ income ~~taxes. Any~~tax. Instead, QLH’s taxable income or loss ~~generated by QLH~~ is passed through

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to ~~and included in the taxable income or loss of~~ its members, including ~~us, on a pro rata basis. We are subject to U.S. federal income taxes, in addition to state and local income taxes with respect to our allocable share of any taxable income or loss generated by QLH.~~MediaAlpha, Inc. As our ownership interest in QLH increases, our share of the taxable income (loss) of QLH also increases. As of ~~June 30, 2021,~~March 31, 2022, our ownership interest in QLH was ~~65.2%~~68.2%.

~~Net income (loss) attributable to QLH prior to Reorganization Transactions~~

Net income incurred prior to the completion of the Reorganization Transactions is attributed to QLH. Net income attributable to QLH prior to Reorganization Transactions was $10.1 million and $19.0 million for the three and six months ended June 30, 2020, respectively.

Net income (loss) attributable to Non-controlling interest

Net income (loss) is attributed to non-controlling interests in accordance with QLH’s limited liability company agreement. We allocate the share of net income (loss) incurred subsequent to the Reorganization Transactions to the non-controlling interest holders pro-rata to their holdings. The non-controlling interests balance represents the ~~holders of~~ Class B-1 ~~units. Net loss attributable to non-controlling interest was $0.2 million~~units, substantially all of which are held by Insignia and ~~$0.3 million for~~ the ~~three and six months ended June 30, 2021, respectively.~~

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Senior Executives.

Operating results for the three months ended ~~June 30,~~March 31, 2022 and 2021 ~~and 2020~~

The following table sets forth our operating results in absolute dollars and as a percentage of revenue for the three months ended ~~June 30, 2021~~March 31, 2022 and ~~2020:~~2021:


		Three months ended June 30,									Three months ended March 31,
(in thousands)	(in thousands)	2021				2020				(in thousands)	2022				2021
Revenue	Revenue	$	157,353	100.0	%	$	123,616	100.0	%	Revenue	$	142,599	100.0	%	$	173,588	100.0	%
Cost and operating expenses
Costs and operating expenses										Costs and operating expenses
Cost of revenue	Cost of revenue	132,304		84.1	%	104,193		84.3	%	Cost of revenue	120,881		84.8	%	147,180		84.8	%
Sales and marketing	Sales and marketing	5,717		3.6	%	2,814		2.3	%	Sales and marketing	7,223		5.1	%	5,391		3.1	%
Product development	Product development	3,835		2.4	%	1,873		1.5	%	Product development	5,216		3.7	%	3,320		1.9	%
General and administrative	General and administrative	13,582		8.6	%	3,055		2.5	%	General and administrative	17,148		12.0	%	15,749		9.1	%
Total cost and operating expenses		155,438		98.8	%	111,935		90.6	%
Income from operations		1,915		1.2	%	11,681		9.4	%
Other expenses, net		171		0.1	%	—		0.0	%
Total costs and operating expenses										Total costs and operating expenses	150,468		105.5	%	171,640		98.9	%
(Loss) income from operations										(Loss) income from operations	(7,869)		(5.5)	%	1,948		1.1	%
Other (income), net										Other (income), net	(523)		(0.4)	%	(150)		(0.1)	%
Interest expense	Interest expense	2,237		1.4	%	1,535		1.2	%	Interest expense	1,359		1.0	%	2,301		1.3	%
Total other expense		2,408		1.5	%	1,535		1.2	%
(Loss) income before income taxes		(493)		-0.3	%	10,146		8.2	%
Income tax (benefit)		(125)		-0.1	%	—		0.0	%
Total other expense, net										Total other expense, net	836		0.6	%	2,151		1.2	%
(Loss) before income taxes										(Loss) before income taxes	(8,705)		(6.1)	%	(203)		(0.1)	%
Income tax expense (benefit)										Income tax expense (benefit)	1,143		0.8	%	(364)		(0.2)	%
Net (loss) income	Net (loss) income	$	(368)	-0.2	%	$	10,146	8.2	%	Net (loss) income	$	(9,848)	(6.9)	%	$	161	0.1	%
Net income attributable to QLH prior to Reorganization Transactions		—		0.0	%	10,146		8.2	%
Net (loss) attributable to non-controlling interest	Net (loss) attributable to non-controlling interest	(171)		-0.1	%	—		0.0	%	Net (loss) attributable to non-controlling interest	(2,772)		(1.9)	%	(124)		(0.1)	%
Net (loss) income attributable to MediaAlpha, Inc.	Net (loss) income attributable to MediaAlpha, Inc.	$	(197)	-0.1	%	$	—	0.0	%	Net (loss) income attributable to MediaAlpha, Inc.	$	(7,076)	(5.0)	%	$	285	0.2	%
Net (loss) income per share of Class A common stock	Net (loss) income per share of Class A common stock									Net (loss) income per share of Class A common stock
-Basic and diluted		$	(0.01)			$	—

-Basic										-Basic	$	(0.17)			$	0.01
-Diluted										-Diluted	$	(0.17)			$	0.00
Weighted average shares of Class A common stock outstanding	Weighted average shares of Class A common stock outstanding									Weighted average shares of Class A common stock outstanding
-Basic and diluted		37,667,432				—

-Basic										-Basic	40,847,941				33,136,632
-Diluted										-Diluted	40,847,941				62,163,390

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Revenue

The following table presents our revenue, disaggregated by vertical, for the three months ended ~~June 30,~~March 31, 2022 and 2021, ~~and 2020,~~ and the dollar and percentage changes between the two periods:


(dollars in thousands)	(dollars in thousands)	Three Months Ended June 30, 2021			$		%		Three Months Ended June 30, 2020			(dollars in thousands)	Three Months Ended March 31, 2022			$		%		Three Months Ended March 31, 2021
Property & Casualty insurance	Property & Casualty insurance	$	109,337		$	20,720	23.4	%	$	88,617		Property & Casualty insurance	$	87,454		$	(38,087)	(30.3)	%	$	125,541
Percentage of total revenue	Percentage of total revenue	69.5		%					71.7		%	Percentage of total revenue	61.3		%					72.3		%
Health insurance	Health insurance	33,688			7,484		28.6	%	$	26,204		Health insurance	42,109			6,213		17.3	%	$	35,896
Percentage of total revenue	Percentage of total revenue	21.4		%					21.2		%	Percentage of total revenue	29.5		%					20.7		%
Life insurance	Life insurance	7,479			159		2.2	%	$	7,320		Life insurance	7,067			(886)		(11.1)	%	$	7,953
Percentage of total revenue	Percentage of total revenue	4.8		%					5.9		%	Percentage of total revenue	5.0		%					4.6		%
Other	Other	6,849			5,374		364.3	%	$	1,475		Other	5,969			1,771		42.2	%	$	4,198
Percentage of total revenue	Percentage of total revenue	4.4		%					1.2		%	Percentage of total revenue	4.2		%					2.4		%
Revenue	Revenue	$	157,353		33,737		27.3	%	$	123,616		Revenue	$	142,599		(30,989)		(17.9)	%	$	173,588

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~~For the three months ended June 30, 2021,~~The decrease in P&C insurance revenue ~~increased $20.7 million, or 23.4%, from $88.6 million~~ for the three months ended ~~June 30, 2020. The increase~~March 31, 2022, compared with the three months ended March 31, 2021, was due to ~~an increase~~a decrease in customer acquisition spending by certain insurance carriers to address profitability concerns caused by higher-than-expected automobile repair and replacement costs and overall inflationary pressures and certain carriers and supply partners shifting their transactions with each other from our Open Marketplace to our Private Marketplace due to lower platform fees for our Private Marketplace, which transact on a net revenue basis . The auto insurance industry began to experience a cyclical downturn in the second half of 2021, with many P&C carriers ~~driven by improving carrier~~experiencing lower than expected underwriting profitability, ~~and~~leading them to reduce marketing budget allocations to our channel. We are currently unable to predict the ~~growing trend~~duration of this cyclical downturn or its impact on our revenue from the P&C insurance ~~carriers allocating increasing portions~~vertical, or our profitability, beyond the second quarter of ~~their customer acquisition budgets to the DTC channel, resulting in our supply partners driving more consumers through their websites. This led to a period-over-period~~2022.

The increase in supply of Consumer Referrals from both new and existing supply partners. During the three months ended June 30, 2021, due in part to a resumption of more typical driving patterns, we began to see early signs of easing growth in customer acquisition investments from certain P&C carriers due to profitability considerations though we also saw increased customer acquisition spend from certain other carriers.

~~For the three months ended June 30, 2021,~~ health insurance revenue ~~increased $7.5 million, or 28.6%, from $26.2 million~~ for the three months ended ~~June 30, 2020. This increase~~March 31, 2022, compared with the three months ended March 31, 2021, was driven by increased customer acquisition ~~budget allocation from~~spending in our marketplaces by health insurance carriers ~~resulting in~~and brokers, as well as by an increased supply of customer referrals to our marketplaces by our supply partners ~~driving more consumers through their websites,~~ and ~~increased supply from~~ our proprietary websites ~~as we increased the volume of media spend~~due to ~~satisfy~~ the increased demand. Additionally, the Open and Annual Enrollment periods for fiscal 2021, which typically end by December 15th, were extended until January 15, 2022, resulting in increased revenue from our health insurance vertical during the current quarter.

~~For the three months ended June 30, 2021,~~The decrease in life insurance revenue ~~increased by $0.2 million, or 2.2%, from $7.3 million~~ for the three months ended June 30, 2020. This increase was driven by an increase in customer acquisition budget allocation from life insurance carriers, resulting in our supply partners driving more consumers through their websites.

~~For~~March 31, 2022, compared with the three months ended ~~June 30,~~March 31, 2021, was driven by a decrease in customer shopping for life insurance as concerns related to COVID-19 eased.

The increase in other revenue ~~increased $5.4 million, or 364.3%, from $1.5 million~~ for the three months ended ~~June 30, 2020. This decrease~~March 31, 2022, compared with the three months ended March 31, 2021, was driven primarily by an increase in travel comparison shopping, due to the easing of concerns related to COVID-19, as well as ~~an increase in consumer referrals~~higher activity levels from our ~~education~~consumer finance supply ~~partners.~~and demand partners due to the continued strength in the mortgage and refinance market.

Cost of revenue

The following table presents our cost of revenue for the three months ended ~~June 30,~~March 31, 2022 and 2021, ~~and 2020,~~ and the dollar and percentage changes between the two periods:


(dollars in thousands)	(dollars in thousands)	Three Months Ended June 30, 2021			$		%		Three Months Ended June 30, 2020			(dollars in thousands)	Three Months Ended March 31, 2022			$		%		Three Months Ended March 31, 2021
Cost of revenue	Cost of revenue	$	132,304		$	28,111	27.0	%	$	104,193		Cost of revenue	$	120,881		$	(26,299)	(17.9)	%	$	147,180
Percentage of revenue	Percentage of revenue	84.1		%					84.3		%	Percentage of revenue	84.8		%					84.8		%

~~For the three months ended June 30, 2021,~~The decrease in cost of revenue ~~increased by $28.1 million, or 27.0%, from $104.2 million~~ for the three months ended June 30, 2020. The increase is correlated with the overall increase in revenue volume and the corresponding increase in revenue share payments to suppliers. Cost of revenue as a percentage of revenue declined slightly due to an increase in mix of Transaction Value from our Private platform, where we recognize revenue on a net basis.

~~Sales and marketing~~

~~The following table presents our sales and marketing expenses for the three months ended June 30, 2021 and 2020, and the dollar and percentage changes between the two periods:~~

(dollars in thousands) Three Months Ended
June 30, 2021 $ % Three Months Ended
June 30, 2020
Sales and marketing $ 5,717 $ 2,903 103.2 % $ 2,814
Percentage of revenue 3.6 % 2.3 %

For the three months ended June 30, 2021, sales and marketing expenses increased by $2.9 million, or 103.2%, from $2.8 million for the three months ended June 30, 2020. The increase in sales and marketing expense was due primarily to higher equity-based compensation expenses of $1.9 million and an increase in personnel-related costs of $0.9 million resulting from planned headcount additions.

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~~Product development~~

~~The following table presents our product development expenses for the three months ended June 30, 2021 and 2020, and the dollar and percentage changes between the two periods:~~

(dollars in thousands) Three Months Ended
June 30, 2021 $ % Three Months Ended
June 30, 2020
Product development $ 3,835 $ 1,962 104.8 % $ 1,873
Percentage of revenue 2.4 % 1.5 %

For the three months ended June 30, 2021, product development expense increased by $2.0 million, or 104.8%, from $1.9 million for the three months ended June 30, 2020. The increase in product development expense was due primarily to higher equity-based compensation expenses of $1.4 million and an increase in personnel-related costs $0.6 million resulting from planned headcount additions.

~~General and administrative~~

~~The following table presents our general and administrative expense for the three months ended June 30, 2021 and 2020, and the dollar and percentage changes between the two periods:~~

(dollars in thousands) Three Months Ended
June 30, 2021 $ % Three Months Ended
June 30, 2020
General and administrative $ 13,582 $ 10,527 344.6 % $ 3,055
Percentage of revenue 8.6 % 2.5 %

For the three months ended June 30, 2021, general and administrative expense increased by $10.5 million, or 344.6%, from $3.1 million for the three months ended June 30, 2020. The increase in general and administrative expense was due primarily to higher equity-based compensation expenses of $7.2 million, costs related to directors and officers insurance premiums of $1.5 million and higher professional and other fees as we continue to operate as a publicly-reporting company.

~~Equity-based compensation~~

The following table presents our equity-based compensation expense that was included in cost and operating expenses for the three months ended June 30, 2021 and 2020, and the dollar and percentage changes between the two periods:

(dollars in thousands) Three Months Ended
June 30, 2021 $ % Three Months Ended
June 30, 2020
Cost of revenue $ 442 $ 424 2,355.6 % $ 18
Sales and marketing 1,981 1,902 2,407.6 % 79
Product development 1,665 1,350 428.6 % 315
General and administrative 7,433 7,164 2,663.2 % 269
Total $ 11,521 $ 10,840 1,591.8 % $ 681

~~For the three months ended June 30, 2021, equity-based compensation expense increased $10.8 million, or 1591.8%,~~March 31, 2022, compared with the three months ended June 30, 2020. This change was driven primarily by grants of equity-based awards to Senior Executives and Legacy Profit Interest Holders at the time of our IPO and grants of restricted stock units under the 2020 Omnibus Incentive Plan.

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~~Depreciation~~

~~The following table presents our depreciation expense that was included in cost and operating expenses for the three months ended June 30,~~March 31, 2021, ~~and 2020, and the dollar and percentage changes between the two periods:~~

(dollars in thousands) Three Months Ended
June 30, 2021 $ % Three Months Ended
June 30, 2020
Cost of revenue $ 8 $ 2 33.3 % $ 6
Sales and marketing 38 13 52.0 % 25
Product development 27 5 22.7 % 22
General and administrative 18 1 5.9 % 17
Total $ 91 $ 21 30.0 % $ 70

~~The increase in depreciation expense for the three months ended June 30, 2021 compared with the three months ended June 30, 2020 was not material.~~

~~Amortization~~

The following table presents our amortization of intangible asset expense that was included in cost and operating expenses for the three months ended June 30, 2021 and 2020, and the dollar and percentage changes between the two periods:

(dollars in thousands) Three Months Ended
June 30, 2021 $ % Three Months Ended
June 30, 2020
Sales and Marketing $ 746 $ (53) (6.6) % $ 799

~~The decrease in amortization expense for the three months ended June 30, 2021 compared with the three months ended June 30, 2020 was not material.~~

~~Interest expense~~

~~The following table presents our interest expense for the three months ended June 30, 2021 and 2020, and the dollar and percentage changes between the two periods:~~

(dollars in thousands) Three Months Ended
June 30, 2021 $ % Three Months Ended
June 30, 2020
Interest expense $ 2,237 $ 702 45.7 % $ 1,535
Percentage of revenue 1.4 % 1.2 %

For the three months ended June 30, 2021, interest expense increased by $0.7 million, or 45.7%, from $1.5 million for the three months ended June 30, 2020, driven by a higher principal balance on the 2020 Credit Facility resulting from the refinancing of our 2019 Credit Facilities in September 2020.

~~Income tax (benefit)~~

~~The following table presents our income tax (benefit) for the three months ended June 30, 2021 and 2020, and the dollar and percentage changes between the two periods:~~

(dollars in thousands) Three Months Ended
June 30, 2021 $ % Three Months Ended
June 30, 2020
Income taxes $ (125) $ (125) 100 % $ —
Percentage of revenue (0.1) % 0.0 %

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For the three months ended June 30, 2021, we recorded an income tax benefit of $0.1 million resulting from our effective tax rate of 25.3%, which differed from the U.S. federal statutory rate of 21%, due primarily to nondeductible equity-based compensation, state taxes, income not taxable to us associated with the non-controlling interest, and the impact of tax benefits associated with equity-based awards. The results for the three months ended June 30, 2020 do not reflect an income tax expense because, prior to the Reorganization Transactions, the consolidated QLH pass through entity was not subject to corporate taxation.

~~Operating results for the six months ended June 30, 2021 and 2020~~

~~The following table sets forth our operating results in absolute dollars and as a percentage of revenue for the six months ended June 30, 2021 and 2020:~~

Six Months Ended
June 30,
(in thousands) 2021 2020
Revenue $ 330,941 100.0 % $ 243,061 100.0 %
Cost and operating expenses
Cost of revenue 279,483 84.5 % 204,862 84.3 %
Sales and marketing 11,101 3.4 % 5,950 2.4 %
Product development 7,150 2.2 % 3,716 1.5 %
General and administrative 29,328 8.9 % 6,302 2.6 %
Total cost and operating expenses 327,062 98.8 % 220,830 90.9 %
Income from operations 3,879 1.2 % 22,231 9.1 %
Other expenses, net 21 0.0 % — 0.0 %
Interest expense 4,538 1.4 % 3,250 1.3 %
Total other expense 4,559 1.4 % 3,250 1.3 %
(Loss) income before income taxes (680) -0.2 % 18,981 7.8 %
Income tax (benefit) (489) -0.1 % — 0.0 %
Net (loss) income $ (191) -0.1 % $ 18,981 7.8 %
Net income attributable to QLH prior to Reorganization Transactions — 0.0 % 18,981 7.8 %
Net (loss) attributable to non-controlling interest (288) -0.1 % — 0.0 %
Net (loss) income attributable to MediaAlpha, Inc. $ 97 0.0 % $ — 0.0 %
Net (loss) income per share of Class A common stock
-Basic and diluted $ 0.00 $ —
Weighted average shares of Class A common stock outstanding
-Basic and diluted 35,414,548 —

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~~Revenue~~

~~The following table presents our revenue, disaggregated by vertical, for the six months ended June 30, 2021 and 2020, and the dollar and percentage changes between the two periods:~~

(dollars in thousands) Six months ended June 30, 2021 $ % Six months ended June 30, 2020
Property & Casualty insurance $ 234,878 $ 74,188 46.2 % $ 160,690
Percentage of total revenue 71.0 % 66.1 %
Health insurance 69,584 15,507 28.7 % $ 54,077
Percentage of total revenue 21.0 % 22.2 %
Life insurance 15,432 (1,441) (8.5) % $ 16,873
Percentage of total revenue 4.7 % 6.9 %
Other 11,047 (374) (3.3) % $ 11,421
Percentage of total revenue 3.3 % 4.7 %
Revenue $ 330,941 87,880 36.2 % $ 243,061

For the six months ended June 30, 2021, P&C insurance revenue increased $74.2 million, or 46.2%, from $160.7 million for the six months ended June 30, 2020. The increase was due to an increase in spend from auto insurance carriers, driven by improving carrier profitability and the growing trend of property & casualty insurance carriers allocating customer acquisition budgets to the DTC channel, resulting in our supply partners driving more consumers through their websites. This led to a period over period increase in supply from both new and existing supply partners.

~~For the six months ended June 30, 2021, health insurance revenue increased $15.5 million, or 28.7%, from $54.1 million for the six months ended June 30, 2020. This increase~~ was driven by increased customer acquisition budget allocation from health insurance carriers, resulting in our supply partners driving more consumers through their websites, and increased supply from our proprietary websites as we increased the volume of media spend to satisfy the increased demand.

For the six months ended June 30, 2021, life insurance revenue decreased by $1.4 million, or 8.5%, from $16.9 million for the six months ended June 30, 2020. This decrease was driven by certain supply partners that migrated their consumer referral inventory from our Open platform to our Private platform as certain supply partners leverage our platform to monetize their consumers.

For the six months ended June 30, 2021, other revenue decreased $0.4 million, or 3.3%, from $11.4 million for the six months ended June 30, 2020. This decrease was driven primarily in Travel vertical, due to concerns around COVID-19, offset in part by an increase in our Consumer Finance vertical.

~~Cost of revenue~~

~~The following table presents our cost of revenue for the six months ended June 30, 2021 and 2020, and the dollar and percentage changes between the two periods:~~

(dollars in thousands) Six months ended June 30, 2021 $ % Six months ended June 30, 2020
Cost of revenue $ 279,483 $ 74,621 36.4 % $ 204,862
Percentage of revenue 84.5 % 84.3 %

~~For the six months ended June 30, 2021, cost of revenue increased by $74.6 million, or 36.4%, from $204.9 million for the six months ended June 30, 2020. The increase is correlated with~~ the overall ~~increase~~decrease in revenue volume and the corresponding increase in revenue share payments to suppliers. Cost of revenue as a percentage of revenue increased slightly due in part to an increase in operations with partners with higher share payments and also due to a change in mix of Transaction Value from our Private platform, where we recognize revenue on a net basis.

revenue.

3025

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Sales and marketing

The following table presents our sales and marketing expenses for the ~~six~~three months ended ~~June 30,~~March 31, 2022 and 2021, ~~and 2020,~~ and the dollar and percentage changes between the two periods:


(dollars in thousands)	(dollars in thousands)	Six months ended June 30, 2021			$		%		Six months ended June 30, 2020			(dollars in thousands)	Three Months Ended March 31, 2022			$		%		Three Months Ended March 31, 2021
Sales and marketing	Sales and marketing	$	11,101		$	5,151	86.6	%	$	5,950		Sales and marketing	$	7,223		$	1,832	34.0	%	$	5,391
Percentage of revenue	Percentage of revenue	3.4		%					2.4		%	Percentage of revenue	5.1		%					3.1		%

~~For the six months ended June 30, 2021, sales and marketing expenses increased by $5.2 million, or 86.6%, from $6.0 million for the six months ended June 30, 2020.~~ The increase in sales and marketing ~~expense~~expenses for the three months ended March 31, 2022, compared with the three months ended March 31, 2021, was due primarily to higher equity-based compensation ~~expenses~~expense of ~~$3.5~~$1.0 million and an increase in personnel-related costs of ~~$1.4~~$0.8 million resulting from planned headcount additions.

Product development

The following table presents our product development expenses for the ~~six~~three months ended ~~June 30,~~March 31, 2022 and 2021, ~~and 2020,~~ and the dollar and percentage changes between the two periods:


(dollars in thousands)	(dollars in thousands)	Six months ended June 30, 2021			$		%		Six months ended June 30, 2020			(dollars in thousands)	Three Months Ended March 31, 2022			$		%		Three Months Ended March 31, 2021
Product development	Product development	$	7,150		$	3,434	92.4	%	$	3,716		Product development	$	5,216		$	1,896	57.1	%	$	3,320
Percentage of revenue	Percentage of revenue	2.2		%					1.5		%	Percentage of revenue	3.7		%					1.9		%

~~For the six months ended June 30, 2021, product development expense increased by $3.4 million, or 92.4%, from $3.7 million for the six months ended June 30, 2020.~~ The increase in product development ~~expense~~expenses for the three months ended March 31, 2022, compared with the three months ended March 31, 2021, was due primarily to higher equity-based compensation ~~expenses~~expense of ~~$2.4~~$0.9 million and an increase in personnel-related costs of ~~$1.0~~$0.8 million resulting from planned headcount ~~additions.~~additions to continue to enhance our technology.

General and administrative

The following table presents our general and administrative ~~expense~~expenses for the ~~six~~three months ended ~~June 30,~~March 31, 2022 and 2021, ~~and 2020,~~ and the dollar and percentage changes between the two periods:


(dollars in thousands)	(dollars in thousands)	Six months ended June 30, 2021			$		%		Six months ended June 30, 2020			(dollars in thousands)	Three Months Ended March 31, 2022			$		%		Three Months Ended March 31, 2021
General and administrative	General and administrative	$	29,328		$	23,026	365.4	%	$	6,302		General and administrative	$	17,148		$	1,399	8.9	%	$	15,749
Percentage of revenue	Percentage of revenue	8.9		%					2.6		%	Percentage of revenue	12.0		%					9.1		%

~~For the six months ended June 30, 2021, general and administrative expense increased by $23.0 million, or 365.4%, from $6.3 million for the six months ended June 30, 2020.~~ The increase in general and administrative expenses for the three months ended March 31, 2022, compared with the three months ended March 31, 2021, was due primarily to higher equity-based compensation ~~expenses~~expense of ~~$13.5~~$1.3 million and an increase in personnel-related costs ~~related to directors~~of $0.7 million resulting from planned headcount additions, offset in part by lower legal and ~~officers insurance premiums of $2.9 million,~~ professional ~~and legal fees of $2.7 million incurred in connection with the Secondary Offering, and other professional fees as we continue to operate as a publicly-reporting company.~~

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fees.

Equity-based compensation

The following table presents our equity-based compensation expense that was included in ~~cost~~costs and operating expenses for the ~~six~~three months ended ~~June 30,~~March 31, 2022 and 2021, ~~and 2020,~~ and the dollar and percentage changes between the two periods:


(dollars in thousands)	(dollars in thousands)	Six months ended June 30, 2021		$		%		Six months ended June 30, 2020		(dollars in thousands)	Three Months Ended March 31, 2022		$		%		Three Months Ended March 31, 2021
Cost of revenue	Cost of revenue	$	842	$	802	2,005.0	%	$	40	Cost of revenue	$	398	$	(2)	(0.5)	%	$	400
Sales and marketing	Sales and marketing	3,683		3,528		2,276.1	%	155		Sales and marketing	2,705		1,003		58.9	%	1,702
Product development	Product development	2,997		2,368		376.5	%	629		Product development	2,249		917		68.8	%	1,332
General and administrative	General and administrative	14,601		13,478		1,200.2	%	1,123		General and administrative	8,421		1,253		17.5	%	7,168
Total	Total	$	22,123	$	20,176	1,036.3	%	$	1,947	Total	$	13,773	$	3,171	29.9	%	$	10,602

~~For the six months ended June 30, 2021,~~The increase in equity-based compensation expense ~~increased $20.2 million, or 1,036.3%,~~for the three months ended March 31, 2022, compared with the ~~six~~three months ended ~~June 30, 2020. This change~~March 31, 2021, was driven primarily by ~~grants of equity-based awards~~expenses related to ~~Senior Executives and Legacy Profit Interest Holders at IPO and grants of~~additional restricted stock units ~~under the 2020 Omnibus Incentive Plan.~~granted during 2021.

~~Depreciation~~

The following table presents our depreciation expense that was included in cost and operating expenses for the six months ended June 30, 2021 and 2020, and the dollar and percentage changes between the two periods:

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(dollars in thousands) Six months ended June 30, 2021 $ % Six months ended June 30, 2020
Cost of revenue $ 15 $ 4 36.4 % $ 11
Sales and marketing 72 23 46.9 % 49
Product development 51 7 15.9 % 44
General and administrative 35 2 6.1 % 33
Total $ 173 $ 36 26.3 % $ 137

~~The increase in depreciation expense for the six months ended June 30, 2021 compared with the six months ended June 30, 2020 was not material.~~

Amortization

The following table presents our amortization of intangible asset expense that was included in ~~cost~~costs and operating expenses for the ~~six~~three months ended ~~June 30,~~March 31, 2022 and 2021, ~~and 2020,~~ and the dollar and percentage changes between the two periods:


(dollars in thousands)	(dollars in thousands)	Six months ended June 30, 2021		$		%		Six months ended June 30, 2020		(dollars in thousands)	Three Months Ended March 31, 2022		$		%		Three Months Ended March 31, 2021

Sales and Marketing	Sales and Marketing	$	1,492	$	(111)	(6.9)	%	$	1,603	Sales and Marketing	$	683	$	(63)	(8.4)	%	$	746

~~For~~The decrease in amortization expense for the ~~six~~three months ended ~~June 30,~~March 31, 2022 compared with the three months ended March 31, 2021 ~~amortization expense decreased by $0.1 million, or 6.9%~~was not material.

Other (income), ~~from $1.6 million~~net

The following table presents our other income for the ~~six~~three months ended ~~June 30, 2020.~~ March 31, 2022 and 2021, and the dollar and percentage changes between the two periods:


(dollars in thousands)	Three Months Ended March 31, 2022			$		%		Three Months Ended March 31, 2021
Other (income), net	$	(523)		$	(373)	248.7	%	$	(150)
Percentage of revenue	(0.4)		%					(0.1)		%

The ~~decline~~increase in other income for the three months ended March 31, 2022, compared with the three months ended March 31, 2021, was driven primarily by ~~lower amortization based on~~estimated future state tax benefits adjustments related to the ~~economic life of our customer relationships.~~

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tax receivables agreement ("TRA").

Interest expense

The following table presents our interest expense for the ~~six~~three months ended ~~June 30,~~March 31, 2022 and 2021, ~~and 2020,~~ and the dollar and percentage changes between the two periods:


(dollars in thousands)	(dollars in thousands)	Six months ended June 30, 2021			$		%		Six months ended June 30, 2020			(dollars in thousands)	Three Months Ended March 31, 2022			$		%		Three Months Ended March 31, 2021
Interest expense	Interest expense	$	4,538		$	1,288	39.6	%	$	3,250		Interest expense	$	1,359		$	(942)	(40.9)	%	$	2,301
Percentage of revenue	Percentage of revenue	1.4		%					1.3		%	Percentage of revenue	1.0		%					1.3		%

~~For~~The decrease in interest expense for the ~~six~~three months ended ~~June 30, 2021, interest expense increased by $1.3 million, or 39.6%, from $3.3 million for~~March 31, 2022, compared with the ~~six~~three months ended ~~June 30, 2020,~~March 31, 2021, was driven by a ~~higher principal balance~~lower interest rate on the ~~2020~~2021 Credit Facility ~~in connection with~~resulting from the refinancing of our ~~2019~~2020 Credit Facilities ~~in 2020.~~on July 29, 2021.

Income tax expense (benefit)

The following table presents our income tax ~~(benefit)~~expense for the ~~six~~three months ended ~~June 30,~~March 31, 2022 and 2021, ~~and 2020,~~ and the dollar and percentage changes between the two periods:


(dollars in thousands)	(dollars in thousands)	Six months ended June 30, 2021			$		%		Six months ended June 30, 2020			(dollars in thousands)	Three Months Ended March 31, 2022			$		%		Three Months Ended March 31, 2021
Income tax (benefit)		$	(489)		$	(489)	100	%	$	—
Income tax expense (benefit)												Income tax expense (benefit)	$	1,143		$	1,507	(414.0)	%	$	(364)
Percentage of revenue	Percentage of revenue	(0.1)		%					0.0		%	Percentage of revenue	0.8		%					(0.2)		%

For the ~~six~~three months ended ~~June 30, 2021,~~March 31, 2022, we recorded an income tax ~~benefit~~expense of ~~$0.5 million. Our~~$1.1 million resulting from our effective tax rate of ~~71.9%~~(13.1)%, which differed from the U.S. federal statutory rate of 21%, due primarily to nondeductible equity-based compensation, losses associated with non-controlling interests not taxable to us, state taxes, and other nondeductible permanent items. For the three months ended March 31, 2021, we recorded an income tax benefit of $0.4 million resulting from our effective tax rate of 179.3% which differed from the U.S. federal statutory rate of 21%, primarily due to nondeductible equity-based compensation, state taxes, income not taxable to us associated with the non-controlling interest, nondeductible transaction costs associated with the ~~Secondary Offering~~secondary offering and the impact of tax benefits associated with equity-based awards. The results for the six months ended June 30, 2020 do not reflect any income tax expense because, prior to the Reorganization Transactions, the consolidated QLH pass through entity was not subject to corporate taxation.

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Key business and operating metrics

In addition to traditional financial metrics, we rely upon certain business and operating metrics that are not presented in accordance with GAAP to estimate the volume of spending on our platform, estimate and recognize revenue, evaluate our business performance and facilitate our operations. Such business and operating metrics should not be considered in isolation from, or as an alternative to, measures presented in accordance with GAAP and should be considered together with other operating and financial performance measures presented in accordance with GAAP. Also, such business and operating metrics may not necessarily be comparable to similarly titled measures presented by other companies.

Adjusted EBITDA

We define “Adjusted EBITDA” as net income excluding interest expense, income tax benefit (expense), depreciation expense on property and equipment, ~~and~~ amortization of intangible assets, as well as equity-based compensation expense and certain other adjustments as listed in the table below. Adjusted EBITDA is a non-GAAP financial measure that we present to supplement the financial information we present on a GAAP basis. We monitor and present Adjusted EBITDA because it is a key measure used by our management to understand and evaluate our operating performance, to establish budgets and to develop operational goals for managing our business. We believe that Adjusted EBITDA helps identify underlying trends in our business that could otherwise be masked by the effect of the expenses that we exclude in the calculations of Adjusted EBITDA. Accordingly, we believe that Adjusted EBITDA provides useful information to investors and others in understanding and evaluating our operating results, enhancing the overall understanding of our past performance and future prospects. In addition, presenting Adjusted EBITDA provides investors with a metric to evaluate the capital efficiency of our business.

Adjusted EBITDA is not presented in accordance with GAAP and should not be considered in isolation of, or as an alternative to, measures presented in accordance with GAAP. There are a number of limitations related to the use of Adjusted EBITDA rather than net income, which is the most directly comparable financial measure calculated and presented in accordance with GAAP. These limitations include the fact that Adjusted EBITDA excludes interest expense on debt, income

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tax benefit (expense), equity-based compensation expense, depreciation and amortization, and certain other adjustments that we consider useful information to investors and others in understanding and evaluating our operating results. In addition, other companies may use other measures to evaluate their performance, including different definitions of “Adjusted EBITDA,” which could reduce the usefulness of our Adjusted EBITDA as a tool for comparison.

The following table reconciles Adjusted EBITDA with net income (loss), the most directly comparable financial measure calculated and presented in accordance with GAAP, for the three ~~and six~~ months ended ~~June 30, 2021~~March 31, 2022 and ~~2020.~~2021.


		Three months ended June 30,				Six months ended June 30,					Three months ended March 31,
(in thousands)	(in thousands)	2021		2020		2021		2020		(in thousands)	2022		2021
Net income		$	(368)	$	10,146	$	(191)	$	18,981
Net (loss) income										Net (loss) income	$	(9,848)	$	161
Equity-based compensation expense	Equity-based compensation expense	11,521		681		22,123		1,947		Equity-based compensation expense	13,773		10,602
Interest expense	Interest expense	2,237		1,535		4,538		3,250		Interest expense	1,359		2,301
Income tax (benefit)		(125)		—		(489)		—
Income tax expense (benefit)										Income tax expense (benefit)	1,143		(364)
Depreciation expense on property and equipment	Depreciation expense on property and equipment	91		70		173		137		Depreciation expense on property and equipment	98		82
Amortization of intangible assets	Amortization of intangible assets	746		799		1,492		1,603		Amortization of intangible assets	683		746
Transaction expenses(1)	Transaction expenses(1)	66		—		2,731		—		Transaction expenses(1)	380		2,665
Employee-related costs(2)	Employee-related costs(2)	99		—		349		—		Employee-related costs(2)	—		250
SOX implementation costs(3)	SOX implementation costs(3)	297		—		449		—		SOX implementation costs(3)	110		152
Changes in TRA related liability(4)	Changes in TRA related liability(4)	—		—		(156)		—		Changes in TRA related liability(4)	(630)		(156)
Reduction in Tax Indemnification Receivable(5)		147		—		147		—
Settlement of federal and state income tax refunds(5)										Settlement of federal and state income tax refunds(5)	74		—
Adjusted EBITDA	Adjusted EBITDA	$	14,711	$	13,231	$	31,166	$	25,918	Adjusted EBITDA	$	7,142	$	16,439

(1)Transaction expenses ~~include $0.1 million and $2.7~~consist of $0.4 million of expenses incurred by us for the three ~~and six~~ months ended ~~June 30,~~March 31, 2022 in connection with the acquisition of CHT. For the three months ended March 31, 2021 ~~respectively,~~transaction expenses consist of $2.7 million for legal, accounting, and other consulting fees in connection with the Secondary Offering.

(2)Employee-related costs include ~~$0.1 million and~~ $0.3 million of expenses incurred by us for the three ~~and six~~ months ended ~~June 30,~~March 31, 2021 ~~respectively,~~ for amounts payable to recruiting firms in connection with the hiring of certain executive officers ~~as we transition~~ to ~~being~~support our operation as a publicly-reporting company.

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(3)SOX implementation costs ~~include $0.3~~consist of $0.1 million and ~~$0.4~~$0.2 million of expenses incurred by us for the three ~~and six~~ months ended ~~June 30,~~March 31, 2022 and 2021, respectively, for third-party consultants to assist us with the development, implementation, and documentation of new and enhanced internal controls and processes for compliance with SOX Section 404(b). For the three months ended June 30, 2021, we updated our Adjusted EBITDA definition to exclude these costs and accordingly determined that it was appropriate to recast our Adjusted EBITDA calculation for ~~the three months ended March 31, 2021 to exclude these costs of $0.2 million.~~

2021.

(4)Changes in TRA related liability ~~include~~consist of $0.6 million and $0.2 million of income for the ~~six~~three months ended ~~June 30,~~March 31, 2022 and 2021, respectively, due to a change in the estimated future state tax benefits and other changes in the estimate resulting in ~~reduction~~reductions of the TRA ~~liability created in connection with the Reorganization Transactions.~~

liability.

(5)~~Reduction in Tax Indemnification Receivable includes~~Settlement of federal and state tax refunds consist of $0.1 million of ~~expenses~~expense incurred by us for the three ~~and six~~ months ended ~~June 30, 2021~~March 31, 2022 related to ~~a reduction in~~reimbursement to White Mountains for state tax refunds for the ~~tax indemnification receivable recorded in connection with~~period prior to the Reorganization ~~Transactions.~~Transaction related to 2020 tax returns. The settlement also resulted in a benefit of the same amount which has been recorded within income tax expense (benefit).

Contribution and Contribution Margin

We define “Contribution” as revenue less revenue share payments and online advertising costs, or, as reported in our consolidated statements of operations, revenue less cost of revenue (i.e., gross profit), as adjusted to exclude the following items from cost of revenue: equity-based compensation; salaries, wages, and ~~related;~~related costs; internet and ~~hosting;~~hosting costs; amortization; depreciation; other services; and merchant-related fees. We define “Contribution Margin” as Contribution expressed as a percentage of revenue for the same period. Contribution and Contribution Margin are non-GAAP financial measures that we present to supplement the financial information we present on a GAAP basis. We use Contribution and Contribution Margin to measure the return on our relationships with our supply partners (excluding certain fixed costs), the financial return on and efficacy of our online advertising costs to drive consumers to our proprietary websites, and our operating leverage. We do not use Contribution and Contribution Margin as measures of overall profitability. We present Contribution and Contribution

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Margin because they are used by our management and board of directors to manage our operating performance, including evaluating our operational performance against budget and assessing our overall operating efficiency and operating leverage. For example, if Contribution increases and our headcount costs and other operating expenses remain steady, our Adjusted EBITDA and operating leverage increase. If Contribution Margin decreases, we may choose to re-evaluate and re-negotiate our revenue share agreements with our supply partners, to make optimization and pricing changes with respect to our bids for keywords from primary traffic acquisition sources, or to change our overall cost structure with respect to headcount, fixed costs and other costs. Other companies may calculate Contribution and Contribution Margin differently than we do. Contribution and Contribution Margin have their limitations as analytical tools, and you should not consider them in isolation or as substitutes for analysis of our results presented in accordance with GAAP.

The following table reconciles Contribution with gross profit, the most directly comparable financial measure calculated and presented in accordance with GAAP, for the three ~~and six~~ months ended ~~June 30, 2021~~March 31, 2022 and ~~2020:~~2021:


		Three months ended June 30,						Six months ended June 30,							Three months ended March 31,
(in thousands)	(in thousands)	2021			2020			2021			2020			(in thousands)	2022			2021
Revenue	Revenue	$	157,353		$	123,616		$	330,941		$	243,061		Revenue	$	142,599		$	173,588
Less cost of revenue	Less cost of revenue	(132,304)			(104,193)			(279,483)			(204,862)			Less cost of revenue	(120,881)			(147,180)
Gross profit	Gross profit	25,049			19,423			51,458			38,199			Gross profit	21,718			26,408
Adjusted to exclude the following (as related to cost of revenue):	Adjusted to exclude the following (as related to cost of revenue):													Adjusted to exclude the following (as related to cost of revenue):
Equity-based compensation	Equity-based compensation	442			20			842			41			Equity-based compensation	398			400
Salaries, wages, and related	Salaries, wages, and related	558			385			1,022			741			Salaries, wages, and related	656			464
Internet and hosting	Internet and hosting	108			98			211			221			Internet and hosting	104			102
Other expenses	Other expenses	111			68			216			136			Other expenses	127			107

Depreciation	Depreciation	8			6			15			11			Depreciation	6			7
Other services	Other services	256			209			547			428			Other services	530			291
Merchant-related fees	Merchant-related fees	139			165			230			317			Merchant-related fees	15			90
Contribution	Contribution	26,671			20,374			54,541			40,094			Contribution	23,554			27,869
Gross margin	Gross margin	15.9		%	15.7		%	15.5		%	15.7		%	Gross margin	15.2		%	15.2		%
Contribution Margin	Contribution Margin	16.9		%	16.5		%	16.5		%	16.5		%	Contribution Margin	16.5		%	16.1		%

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Transaction Value

We define “Transaction Value” as the total gross dollars transacted by our partners on our platform. Transaction Value is a driver of revenue, with differing revenue recognition based on the economic ~~relationships~~relationship we have with our partners. Our partners use our platform to transact via Open and Private ~~platform~~Marketplace transactions. In our Open ~~platform~~Marketplace model, Transaction Value is equal to revenue recognized ~~represents the Transaction Value~~ and revenue share payments to our supply partners represent costs of revenue. In our Private ~~platform~~Marketplace model, revenue recognized represents a platform fee billed to the demand partner or supply partner based on an agreed-upon percentage of the Transaction Value for the Consumer Referrals transacted, and accordingly there are no associated costs of revenue. We utilize Transaction Value to assess revenue and to assess the overall level of transaction activity through our platform. We believe it is useful to investors to assess the overall level of activity on our platform and to better understand the sources of our revenue across our different transaction models and verticals.

The following table presents Transaction Value by platform model for the three ~~and six~~ months ended ~~June 30, 2021~~March 31, 2022 and ~~2020:~~2021:

Three months ended
June 30, Six months ended
June 30,
(dollars in thousands) 2021 2020 2021 2020
Open platform transactions $ 152,522 $ 120,962 $ 321,870 $ 237,984
Percentage of total Transaction Value 59.5 % 69.0 % 62.0 % 69.7 %
Private platform transactions 104,005 54,245 197,119 103,271
Percentage of total Transaction Value 40.5 % 31.0 % 38.0 % 30.3 %
Total Transaction Value $ 256,527 $ 175,207 $ 518,989 $ 341,255

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	Three months ended March 31,
(dollars in thousands)	2022			2021
Open Marketplace transactions	$	138,096		$	169,348
Percentage of total Transaction Value	57.8		%	64.5		%
Private Marketplace transactions	100,916			93,114
Percentage of total Transaction Value	42.2		%	35.5		%
Total Transaction Value	$	239,012		$	262,462

The following table presents Transaction Value by vertical for the three ~~and six~~ months ended ~~June 30, 2021~~March 31, 2022 and ~~2020:~~2021:


		Three months ended June 30,						Six months ended June 30,							Three months ended March 31,
(dollars in thousands)	(dollars in thousands)	2021			2020			2021			2020			(dollars in thousands)	2022			2021
Property & Casualty insurance	Property & Casualty insurance	$	176,646		$	124,772		$	360,073		$	229,632		Property & Casualty insurance	$	148,083		$	183,426
Percentage of total Transaction Value	Percentage of total Transaction Value	68.9		%	71.2		%	69.4		%	67.3		%	Percentage of total Transaction Value	62.0		%	69.9		%
Health insurance	Health insurance	47,240			31,743			97,583			65,089			Health insurance	60,255			50,342
Percentage of total Transaction Value	Percentage of total Transaction Value	18.4		%	18.1		%	18.8		%	19.1		%	Percentage of total Transaction Value	25.2		%	19.2		%
Life insurance	Life insurance	13,933			9,774			28,374			20,089			Life insurance	12,392			14,442
Percentage of total Transaction Value	Percentage of total Transaction Value	5.4		%	5.6		%	5.5		%	5.9		%	Percentage of total Transaction Value	5.2		%	5.5		%
Other (1)	Other (1)	18,708			8,918			32,959			26,445			Other (1)	18,282			14,252
Percentage of total Transaction Value	Percentage of total Transaction Value	7.3		%	5.1		%	6.4		%	7.7		%	Percentage of total Transaction Value	7.6		%	5.4		%
Total Transaction Value	Total Transaction Value	$	256,527		$	175,207		$	518,989		$	341,255		Total Transaction Value	$	239,012		$	262,462

(1)Our other verticals include Travel, Education and Consumer Finance.

Consumer Referrals

We define “Consumer Referral” as any consumer click, call or lead purchased by a buyer on our platform. Click revenue is recognized on a pay-per-click basis and revenue is earned and recognized when a consumer clicks on a listed buyer’s advertisement that is presented subsequent to the consumer’s search (e.g., auto insurance quote search or health insurance quote search). Call revenue is earned and recognized when a consumer transfers to a buyer and remains engaged for a requisite duration of time, as specified by each buyer. Lead revenue is recognized when we deliver data leads to buyers. Data leads are generated either through insurance carriers, insurance-focused research destination websites or other financial websites that make the data leads available for purchase through our platform, or when consumers complete a full quote request on our proprietary websites. Delivery occurs at the time of lead transfer. The data we generate from each Consumer Referral feeds into our analytics model to generate conversion probabilities for each unique consumer, enabling discovery of predicted return and cost per sale across the platform and helping us to improve our platform technology. We monitor the number of Consumer Referrals on our platform in order to measure Transaction Value, revenue and overall business performance across our verticals and platform models. For the three ~~and six~~ months ended ~~June 30,~~March 31, 2022, Transaction Value generated from clicks, calls and leads was 77.7%, 11.7% and 10.6%, respectively. For the three months ended March 31, 2021, Transaction Value generated from clicks, calls and leads was ~~81.5%~~82.6%, ~~7.4%~~7.2% and ~~11.1% and 82.1%, 7.3% and 10.6%~~10.2%, respectively.

~~Number~~

Table of ~~demand and supply partners~~Contents

The aggregate number of demand and supply partners on our platform determines in part the level of Consumer Referral demand and supply on our platform. We use the number of demand and supply partners on our platform to evaluate our current business performance and future business prospects.

Segment information

We operate in the United States and in a single operating segment. Operating segments are defined as components of an enterprise about which separate financial information is available that is evaluated regularly by the chief operating decision maker, or decision-making group, in deciding how to allocate resources and in assessing performance. Our chief operating decision maker is our chief executive officer, who reviews financial information presented on a consolidated basis for purposes of allocating resources and evaluating financial performance. No expense or operating income is evaluated at a segment level. Since we operate in one operating segment and reportable segment, all required financial segment information can be found in the consolidated financial statements.

Liquidity and capital resources

Overview

~~Prior to the completion~~Our principal sources of ~~our IPO in October 2020, our~~ liquidity ~~needs were funded primarily through~~are our cash flows generated from operations. Our principal uses of cash ~~have been~~include to fund operations, interest payments and mandatory principal payments on our long-term ~~debt, if any.~~

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On October 30, 2020, we completed our IPO selling 7,027,606 shares of Class A common stock at a public offering price of $19.00 per share, which includes 769,104 shares issued pursuant to the underwriters’ over-allotment option. We received $124.2 million, net of underwriting discounts and commissions.

~~The Secondary Offering did not generate any proceeds for the Company.~~

debt. As of ~~June 30, 2021~~March 31, 2022 and December 31, ~~2020,~~2021, our cash and cash equivalents totaled ~~$15.0~~$55.3 million and ~~$23.6~~$50.6 million, respectively.

We believe that our current sources of liquidity, which include cash flow generated from operations, cash and funds available under the ~~new senior secured revolving credit facility under the Amended~~2021 Credit ~~Agreement entered into on July 29, 2021, as discussed in more detail below,~~Facilities, will be sufficient to meet our projected operating and debt service requirements for at least the next 12 months. To the extent that our current liquidity is insufficient to fund future activities, we may need to raise additional funds. Our business is seasonal and cyclical in nature and these trends, if continued for a long period of time, could impact the cash flows generated from operations requiring us to draw on our available borrowing capacity under the 2021 Revolving Credit Facility or raise additional funds in the short term. During the second half of 2021, the auto insurance industry began to experience a cyclical downturn and supply chain disruptions and cost increases caused by the pandemic contributed to higher-than-expected property and casualty insurance claims costs, which led many carriers to reduce their customer acquisition spending to preserve their profitability. These reductions continue to impact revenue from our P&C vertical and we are currently unable to estimate the impact beyond the second quarter of 2022. We have typically not used funds available under our credit facilities to fund our operations and payments under the credit facilities.

On February 24, 2022, we entered into an agreement to acquire substantially all of the assets of Customer Helper Team, LLC ("CHT") for a purchase price of $50.0 million in cash at closing, adjusted for any working capital adjustments, plus up to an additional $20.0 million of contingent cash consideration based on CHT’s achievement of revenue and profitability targets over the next two years. We closed the transaction on April 1, 2022. We funded the transaction in part by drawing $25.0 million under the 2021 Revolving Credit Facility and the balance from cash on hand as of the closing.

On March 14, 2022, our Board of Directors approved the repurchase of shares of our Class A common stock having an aggregate value of up to $5.0 million from time to time in open market transactions at prevailing market prices or by other means in accordance with federal securities laws. We expect the repurchases to be made over the second and third quarters of 2022. The timing and amount of any share repurchases will be determined by our management team based on their ongoing evaluation of market conditions, our capital needs, debt covenants and other factors. The repurchases will be financed from our cash balances.

We may engage in additional merger and acquisition or other activities that could require us to draw on our existing credit facilities or may need to raise additional funds. In the future, we may attempt to raise additional capital through the sale of equity securities or through debt financing arrangements. If we raise additional funds by issuing equity securities, the ownership of our existing stockholders will be diluted. The incurrence of additional debt financing would result in debt service obligations, and any future instruments governing such debt could provide for operating and financing covenants that could restrict our operations. Our material cash requirements include our long-term debt, operating lease obligations, and liabilities under the TRA.

Cash Flows

The following table presents a summary of our cash flows for the ~~six~~three months ended ~~June 30,~~March 31, 2022 and 2021, ~~and 2020,~~ and the dollar and percentage changes between the periods:

(dollars in thousands) Six months ended June 30, 2021 $ % Six months ended June 30, 2020
Net cash (used in) provided by operating activities $ (5,800) $ (45,085) (114.8) % $ 39,285
Net cash used in investing activities (470) 9,622 (95.3) % (10,092)
Net cash used in financing activities (2,284) 10,508 (82.1) % (12,792)

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(dollars in thousands)	Three months ended March 31, 2022		$		%		Three months ended March 31, 2021
Net cash provided by (used in) operating activities	$	8,089	$	17,445	(186.5)	%	$	(9,356)
Net cash used in investing activities	(40)		29		(42.0)	%	(69)
Net cash used in financing activities	(3,325)		(2,049)		160.6	%	(1,276)

Operating activities

Cash flows provided by operating activities were $8.1 million for the three months ended March 31, 2022, compared with cash flows used in operating activities ~~were $5.8~~of $9.4 million for the ~~six~~three months ended ~~June 30, 2021, compared with cash flows provided by operating activities of $39.3 million for the six months ended June 30, 2020.~~March 31, 2021. The ~~decrease~~increase resulted from ~~higher~~lower working capital usage due primarily to the timing of our payables and higher working capital usage in the 2020 and 2021 driven primarily by growth in our business and expenses incurred in connection with the IPO and Reorganization Transactions and Secondary Offering, offset in part by ~~better management of our accounts receivable.~~the higher net loss in the current period.

Investing activities

Cash flows used in investing activities were ~~$0.5 million~~immaterial for the ~~six~~three months ended June 30, 2021 as compared with $10.1 million for the six months ended June 30, 2020. During the six months ended June 30, 2020 we entered into a cost method investment of $10.0 million for which there was no comparable investment in the six months ended June 30,March 31, 2022 and 2021.

Financing activities

Cash flows used in financing activities were ~~$2.3~~$3.3 million for the ~~six~~three months ended ~~June 30, 2021 as~~March 31, 2022, compared with ~~$12.8~~$1.3 million for the ~~six~~three months ended ~~June 30, 2020.~~March 31, 2021. The ~~decrease~~increase in net cash used was due ~~primarily to higher distributions~~ to the ~~members of QLH to meet their tax obligations and cash paid to repurchase Class B units of QLH during~~principal payment on the six months ended June 30, 2020, offset in part by cash payments made in connection with shares withheld in satisfaction of the withholding tax obligations related to the vesting of restricted units which did not occur in the prior year period.2021 Term Loan Facility.

Senior secured credit facilities

~~2020~~2021 Credit ~~Agreement~~

~~As of June 30, 2021, we had $183.3 million of outstanding borrowings, net of deferred debt issuance costs of $3.0 million, under the 2020 Credit~~ Facilities ~~which consist of (i) a $210.0 million term loan (the “2020 Term Loan Facility”) and (ii) a $5.0 million revolving credit facility (the “2020 Revolving Credit Facility”).~~

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On September 23, 2020, we terminated and repaid in full the 2019 Credit Facilities, and Quote Lab, LLC (“QL”) entered into the 2020 Credit Agreement with JPMorgan Chase Bank, N.A., as lender and administrative agent, and the other lenders from time-to-time party thereto, providing for the 2020 Credit Facilities.

Our obligations under the 2020 Credit Facilities are guaranteed by QLH and the domestic subsidiaries of QL, subject to certain exceptions. The 2020 Credit Facilities are secured by a first priority security interest in substantially all of the tangible and intangible assets of QL and the guarantors under the 2020 Credit Agreement (including, without limitation, all of the equity interests in QL held by QLH), subject to permitted liens and certain exceptions. QL and its subsidiaries are subject under the 2020 Credit Facilities to customary affirmative and negative covenants, including limitations on their ability to incur additional indebtedness and engage in certain business transactions, such as distributions and other restricted payments, acquisitions and other investments and mergers. In addition, the 2020 Credit Agreement contains two financial maintenance covenants, requiring QL to comply with (1) a maximum Consolidated Total Net Leverage Ratio (as defined in the 2020 Credit Agreement) and (2) maintain a minimum Consolidated Fixed Charge Coverage Ratio (as defined in the 2020 Credit Agreement). As of June 30, 2021, the Company was in compliance with these covenants.

The 2020 Credit Facilities bear interest at a variable rate based upon, at our option, a per annum rate of either the Alternate Base Rate (“ABR”) or Adjusted LIBO Rate, plus an Applicable Rate (“ABR Borrowings” and “Eurodollar Borrowings”).The ABR is defined as a fluctuating interest rate equal to the greatest of (a) the U.S. Prime Rate published by the Wall Street Journal, (b) the NYFRB Rate plus 0.50% and (c) the Adjusted LIBO Rate for a one-month interest period plus 1.00% with a floor of 1.50%.~~If the Adjusted LIBO Rate is determined to be less than 0.50%, such rate shall be deemed to 0.50%.The Applicable Rate is between 2.25% and 2.75% for ABR Borrowings and between 3.25% and 3.75% for Eurodollar borrowings based on us maintaining certain leverage ratios.~~

Proceeds from the 2020 Term Loan Facility were used to refinance the 2019 Credit Facilities and pay related fees and expenses and fund a distribution to equity holders of QLH. The 2020 Revolving Credit Facility is available for general corporate purposes and includes a letter of credit sub-facility of up to $2.5 million. The 2020 Credit Facilities also include an uncommitted incremental facility, which, subject to certain conditions, provides for additional term loan facilities, an increase in commitments under the 2020 Term Loan Facility and/or an increase in commitments under the 2020 Revolving Credit Facility, in an aggregate amount of up to $50.0 million.

~~First Amendment to the 2020 Credit Agreement~~

On July 29, 2021, we entered into an amendment (the “First Amendment”) to the 2020 Credit Agreement (as amended by the First Amendment, the "Amended Credit Agreement"). The ~~First Amendment~~Amended Credit Agreement provides for a new senior secured term loan facility in an aggregate principal amount of $190.0 million (the “2021 Term Loan Facility”), the proceeds of which were used to refinance all of the $186.4 million of the existing 2020 Term Loan Facility outstanding and the unpaid interest thereof as of the date of the First Amendment, to pay fees related to these transactions, and to provide cash for general corporate purposes, and a new senior secured revolving credit facility with commitments in an aggregate amount of $50.0 million (the “2021 Revolving Credit Facility” and, together with the 2021 Term Loan Facility, the "2021 Credit Facilities"), which replaced the 2020 ~~Revolver~~Revolving Credit Facility. Our obligations under the ~~term loan facility and the revolving credit facility~~2021 Credit Facilities are guaranteed by QLH and secured by substantially all assets of QLH and ~~QL.~~QuoteLab, LLC.

Borrowings under the ~~Amended~~2021 Credit ~~Agreement will~~Facilities bear interest at a rate equal to, at ~~the~~our option, the ~~Borrower, the~~ London ~~interbank offered rate~~Interbank Offered Rate plus an applicable margin, with a floor of 0.00%, or base rate plus an applicable margin. The applicable margins will be based on ~~the Borrower’s~~our consolidated total net leverage ratio as calculated under the terms of the Amended Credit Agreement (the “Leverage Ratio”) for the prior fiscal quarter and range from 2.00% to 2.75% with respect to the London interbank offered rate and from 1.00% to 1.75% with respect to the base rate.

Loans under the ~~term loan facility and the revolving credit facility~~2021 Credit Facilities will mature on July 29, 2026. Loans under the ~~term loan facility~~2021 Term Loan Facility will amortize quarterly, beginning with the first business day after December 31, 2021 and ending with June 30, 2026, by an amount equal to 1.25% of the aggregate outstanding principal amount of the term loans initially made. ~~The Amended~~

As of March 31, 2022, we had $184.6 million of outstanding borrowings, net of deferred debt issuance costs of $3.0 million, under the 2021 Credit ~~Agreement contains customary affirmative and negative covenants and default provisions.~~Facilities. On April 1, 2022, we borrowed $25.0 million under the 2021 Revolving Credit Facility to pay a portion of the purchase price for our acquisition of CHT.

Tax ~~receivable agreements~~receivables agreement

Our ~~purchase~~purchases (through Intermediate Holdco) of Class B-1 units from certain unitholders ~~(including the Selling Class B-1 Unit Holders)~~ in connection with the IPO, as well as ~~any~~ exchanges of Class B-1 units subsequent to the IPO ~~together~~(together with an equal number of shares of our Class B common ~~stock,~~stock) for shares of our Class A common stock (or, at our election, cash of

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an equivalent value) ("Exchange"), and the Pre-IPO Leveraged Distribution and other actual or deemed distributions by QLH to its members pursuant to the Exchange Agreement,

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have resulted and are expected to continue to result in increases in our allocable tax basis in the assets of QLH. These increases in tax basis are expected to increase (for tax purposes) depreciation and amortization deductions allocable to us and, therefore, reduce the amount of tax that we otherwise would be required to pay in the future. This increase in tax basis may also decrease gain (or increase loss) on future dispositions of certain assets to the extent tax basis is allocated to those assets.

In connection with the IPO, we entered into the ~~Tax Receivables Agreement (“TRA”)~~TRA with Insignia, the Senior Executives, and White Mountains related to the tax basis step-up of the assets of QLH and certain net operating losses of Intermediate Holdco. The agreement requires us to pay Insignia and the Senior Executives 85% of the cash savings, if any, in U.S. federal, state and local income tax we realize (or are deemed to realize) as a result of (i) any increases in tax basis of assets of QLH resulting from any ~~exchange of Class B-1 units of QLH, as discussed above,~~Exchange, and ~~(3)~~(ii) certain other tax benefits related to making our payments under the TRA. The TRA also requires us to pay White Mountains 85% of the amount of the cash savings, if any, in U.S. federal, state and local income tax that we realize (or are deemed to realize) as a result of the utilization of the net operating losses of Intermediate Holdco attributable to periods prior to the IPO and the deduction of any imputed interest attributable to our payment obligations under the TRA.

In addition to tax expenses, we will also make payments under the TRA, which we expect to be significant. We ~~will~~ account for the income tax effects and corresponding TRA effects resulting from ~~future exchanges of Class B-1 units~~any Exchange by recognizing an increase in our deferred tax assets, based on enacted tax rates at the date of the ~~exchange.~~Exchange. Further, we ~~will~~ evaluate the likelihood that we will realize the benefit represented by the deferred tax asset and, to the extent that we estimate that it is more likely than not that we will not realize the benefit, we will reduce the carrying amount of the deferred tax asset with a valuation allowance. The amounts to be recorded for both the deferred tax assets and the liability for our obligations under the TRA ~~will be~~are estimated at the time of any purchase or ~~redemption~~exchange as a reduction to ~~shareholders’~~stockholders’ equity, and the effects of changes in any of our estimates after this date will be included in net income (loss). Similarly, the effect of subsequent changes in the enacted tax rates will be included in net income (loss). ~~Judgement~~Judgment is required in assessing the future tax consequences of events that have been recognized in our consolidated financial statements. A change in our assessment of such consequences, such as realization of deferred tax assets, changes in blended tax rates, changes in tax laws or interpretations thereof could materially impact our results.

Recent accounting pronouncements

For a discussion of new accounting pronouncements recently adopted and not yet adopted, see Note 21 to the consolidated financial statements appearing in Part I, Item 1 of this Quarterly Report on Form 10-Q.

Critical accounting policies and estimates

Our critical accounting policies and estimates are included in the ~~2020~~2021 Annual Report on Form 10-K and did not materially change during the ~~six~~three months ended ~~June 30, 2021.~~March 31, 2022.

Item 3. Quantitative and Qualitative Disclosures about Market Risk

In the normal course of business, we are subject to market risks. Market risk represents the risk of loss that may impact our financial position due to adverse changes in financial market prices and rates.

Interest rate risk

The ~~2020~~2021 Credit Facilities bear interest at a variable rate. As a result, we may be exposed to fluctuations in interest rates to the extent of our outstanding borrowings under the ~~2020~~2021 Credit Facilities. A hypothetical 1.0% increase or decrease in the interest rate associated with the ~~2020~~2021 Credit Facilities would have resulted in a ~~$0.9~~$0.5 million change in our interest expense for the ~~six~~three months ended ~~June 30, 2021.~~March 31, 2022.

Concentrations of credit risk and of significant demand and supply partners

Financial instruments that potentially expose us to concentrations of credit risk consist primarily of cash and cash equivalents and accounts receivable. We maintain cash balances that can, at times, exceed amounts insured by the Federal Deposit Insurance Corporation. We have not experienced any losses in these accounts, and believe we are not exposed to ~~any~~ unusual credit risk beyond the normal credit risk in this area based on the financial strength of the institutions with which we maintain our deposits.

Our accounts receivable, which are unsecured, may expose us to credit ~~risks~~risk based on their collectability. We control credit risk by investigating the creditworthiness of all customers prior to establishing relationships with them, performing

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periodic reviews of the credit activities of those customers during the course of the business relationship, regularly analyzing the collectability of accounts ~~receivables.~~receivable, and recording allowances for credit losses.

Customer concentrations consisted of ~~two customers that accounted for approximately $45 million, or 28%, and $95 million, or 29%, of revenue for three and six months ended June 30, 2021, respectively and~~ one customer that accounted for approximately ~~$34~~$19 million, or ~~28%, and $56 million, or 23%~~13%, of revenue for the three ~~and six~~ months ended ~~June 30, 2020, respectively. Our two largest~~March 31, 2022, compared with three customers that collectively accounted for approximately ~~$22~~$68 million, or ~~29%, and $33 million, or 35%~~39%, of ~~its accounts receivables as of June 30, 2021and December 31, 2020, respectively.~~

~~Our accounts payables can expose us to business risks such as supplier concentrations. For~~revenue for the three ~~and six~~ months ended ~~June 30, 2021~~March 31, 2021. There were no ~~supplier~~customers that accounted for more than 10% of ~~total purchases, and for the three and six months ended June 30, 2020 and had two suppliers that accounted for approximately $23 million, or 23%, and $47 million, or 21%,~~our accounts receivable as of ~~total purchases, respectively. We had one large supplier~~March 31, 2022, compared with our largest customer that accounted for approximately $7 million, or ~~16%~~10%, as of December 31, 2021.

Our supplier concentration can expose us to business risks. For the three months ended March 31, 2022, we had one supplier that accounted for approximately $14 million, or 11%, of total purchases, compared with two suppliers that collectively accounted for approximately $32 million, or 21%, of total purchases for the three months ended March 31, 2021. Our largest supplier accounted for approximately $8 million, or 15%, of total accounts payable as of ~~June 30, 2021 and~~March 31, 2022, compared with our two ~~large~~largest suppliers that collectively accounted for approximately ~~$25~~$21 million, or ~~25%~~34%, ~~of total accounts payable~~ as of December 31, ~~2020.~~2021.

Item 4. Controls and Procedures

Evaluation of Disclosure Controls and Procedures

As of ~~June 30, 2021,~~March 31, 2022, we carried out an evaluation, under the supervision and with the participation of our management, including our Chief Executive Officer (principal executive officer) and Chief Financial Officer (principal financial officer), of the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended ~~(“the Exchange~~(the “Exchange Act”)) to determine whether such disclosure controls and procedures provide reasonable assurance that information to be disclosed by us in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the rules and forms of the SEC and such information is accumulated and communicated to management, including our principal executive officer and principal financial ~~officers~~officer or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure. Based on that evaluation, our principal executive officer and our principal financial officer have concluded ~~that as of June 30, 2021,~~ our disclosure controls and procedures were ~~not~~ effective to provide reasonable assurance ~~because~~as of ~~the previously reported material weakness in our internal control over financial reporting that we describe in Part II, Item 9A “Controls and Procedures” of the 2020 Annual Report on Form 10-K.~~

~~Management’s Remediation Plan for the Previously Identified Material Weakness~~

We have made progress towards remediation and continue to implement our previously reported remediation plan. Additional time is required to complete this implementation and to assess and ensure the sustainability of the relevant processes and controls. The material weakness cannot be considered remediated until the applicable remedial controls operate for a sufficient period of time and we have concluded, through testing, that these controls are designed and operating effectively.March 31, 2022.

Changes in Internal Control Over Financial Reporting

There was no change in our internal control over financial reporting during the ~~quarter~~three months ended ~~June 30, 2021~~March 31, 2022, that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

Inherent Limitations on Effectiveness of Controls

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

PART II. OTHER INFORMATION

Item 1. Legal Proceedings

~~Table~~The content of ~~Contents~~Part I, Item 1

~~From time-to-time we are a party to various litigation matters incidental~~"Financial Statements—Note 6 to the ~~conduct~~Consolidated Financial Statements—Commitments Contingencies - Litigation" of ~~our business. We are not presently party to any legal proceedings the resolution of which we believe would have a material adverse effect~~this Quarterly Report on ~~our business, prospects, financial condition, liquidity, results of operation, cash flows or capital levels.~~Form 10-Q is hereby incorporated by reference in its entirety in this Item 1.

Item 1A. Risk Factors

There have been no material changes to the risk factors disclosed under Part I, Item 1A "Risk Factors" in the ~~2020~~2021 Annual Report on Form 10-K other than certain updates to the risk factor disclosed in Part II, Item 1A "Risk Factors" of our Quarterly Report on Form 10-Q for the quarter ended March 31, 2021 and the risk factors presented below.

As a result of being a public company, we are obligated to develop and maintain proper and effective internal control over financial reporting in order to comply with Section 404 of the Sarbanes- Oxley Act. We may not complete our analysis of our internal control over financial reporting in a timely manner, these internal controls may not be determined to be effective, or our independent registered public accountants may issue an adverse opinion on these controls once we lose our status as an emerging growth company, all of which may adversely affect investor confidence in us and, as a result, the value of our Class A common stock.

As a result of our IPO, we are required by Section 404 of the Sarbanes-Oxley Act to furnish a report by management on, among other things, the effectiveness of our internal control over financial reporting as of the year ending December 31, 2021. The process of designing and implementing internal control over financial reporting required to comply with this requirement will be time- consuming, costly and complicated. If during the evaluation and testing process we identify one or more additional material weaknesses in our internal control over financial reporting, or we are unable to remediate the existing material weakness, our management will be unable to assert that our internal control over financial reporting is effective. In addition, if we fail to achieve and maintain the adequacy of our internal controls, as such standards are modified, supplemented or amended from time to time, we may not be able to ensure that we can conclude on an ongoing basis that we have effective internal controls over financial reporting in accordance with Section 404 of the Sarbanes-Oxley Act.

~~Even~~ if our management concludes that our internal control over financial reporting is effective, our independent registered public accounting firm may issue a report that is qualified if it is not satisfied with our controls or the level at which our controls are documented, designed, operated or reviewed. Our independent registered public accounting firm is currently not be required to attest formally to the effectiveness of our internal control over financial reporting pursuant to Section 404 of the Sarbanes-Oxley Act because we currently qualify as an “emerging growth company.” However, based on the aggregate market value of the shares of our Class A common stock held by non-affiliates as of June 30, 2021, we will become a “large accelerated filer” and lose emerging growth company status beginning with our Annual Report on Form 10-K for the year ended December 31, 2021. Accordingly, our independent registered public accounting firm will be required to formally attest to the effectiveness of our internal control over financial reporting as of December 31, 2021. At such time, 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. Any failure to maintain effective disclosure controls and procedures and internal control over financial reporting could materially and adversely affect our business, results of operations and financial condition and could cause a decline in the trading price of our common stock.

We cannot be certain as to the timing of completion of our evaluation, testing and any remediation actions or the impact of the same on our operations. If we are not able to implement the requirements of Section 404 of the Sarbanes-Oxley Act in a timely manner or with adequate compliance, our independent registered public accounting firm may issue an adverse opinion due to ineffective internal controls over financial reporting, and we may be subject to sanctions or investigation by regulatory authorities, such as the SEC. As a result, there could be a negative reaction in the financial markets due to a loss of confidence in the reliability of our financial statements. In addition, we may be required to incur costs in improving our internal control system and the hiring of additional personnel. Any such action could negatively affect our results of operations and cash flows.

The requirements of being a public company, particularly after we are no longer an “emerging growth company,” may strain our resources and distract our management, which could make it difficult to manage our business.

As a public company, we incur legal, accounting and other expenses that we did not previously incur. We are subject to the reporting requirements of the Exchange Act, and the Sarbanes-Oxley Act, the listing requirements of the NYSE and other applicable securities rules and regulations. For as long as we continue to be an emerging growth company, we are eligible for certain exemptions from various public company reporting requirements. These exemptions include, but are not limited to, (i) not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act, (ii) reduced

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disclosure obligations regarding executive compensation in our periodic reports, proxy statements and registration statements, (iii) exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and shareholder approval of any golden parachute payments not previously approved, and (iv) an extended transition period to comply with new or revised accounting standards applicable to public companies. However, based on our aggregate market value of the shares of our Class A common stock held by non-affiliates as of June 30, 2021, we will become a “large accelerated filer” and lose emerging growth company status beginning with our Annual Report on Form 10-K for the year ended December 31, 2021. At such time, we will no longer be eligible to rely on the various exemptions available for “emerging growth companies” in our filings with the SEC. Compliance with these rules and regulations will continue to increase our legal and financial compliance costs, make some activities more difficult, time-consuming or costly and increase demand on our systems and resources. We have made, and will continue to make, changes to our internal controls and procedures for financial reporting and accounting systems to meet our reporting obligations as a public company. However, the measures we take may not be sufficient to satisfy our obligations as a public company. In addition, these rules and regulations increase our legal and financial compliance costs and make some activities more time-consuming and costly. For example, these rules and regulations make it more difficult and more expensive for us to obtain director and officer liability insurance, and we may be required to incur substantial costs to maintain the same or similar coverage. These additional obligations could have a material adverse effect on our business, financial condition and results of operations.10-K.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

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Recent Sales of Unregistered Securities

None.

Issuer Purchases of Equity Securities

On March 14, 2022, the Board of Directors approved a share repurchase program that authorized the Company to purchase up to $5.0 million of the Company’s Class A common stock from time to time in open market transactions at prevailing prices or by other means in accordance with federal securities laws.

The following table provides information about the Company's share repurchase activity for the three months ended March 31, 2022:


Period:	Total Number of Shares (or Units) Purchased (1)	Average Price Paid per Share (or Unit)		Total Number of Shares (or Units) Purchased as Part of Publicly Announced Plans or Programs	Maximum Number (or Approximate Dollar Value) of Shares (or Units) that May Yet Be Purchased Under the Plans or Programs (b)
January, 2022	99	$	14.73	N/A	N/A
February, 2022	65,047	$	12.59	N/A	N/A
March, 2022	—	$	—	N/A	$	5,000,000

(1)These shares of Class A Common Stock were withheld to satisfy tax withholding obligations in connection with the vesting of restricted stock units issued to employees of the Company. The Company withheld these shares at their fair market values based upon the closing prices of our Class A Common Shares on NYSE on the purchase dates.

Item 3. Defaults Upon Senior Securities

None.

Item 4. Mine Safety Disclosures

Not applicable.

Item 5. Other Information

Not applicable.

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Item 66. Exhibits

Incorporated by Reference
Exhibit
Number Exhibit Description Form File No. Exhibit Filing Date
10.1
First Amendment dated as of July 29, 2021, among QuoteLab, LLC, QL Holdings LLC, the Lenders party thereto, the Issuing Bank party thereto and JPMorgan Chase Bank, N.A., as Administrative Agent.
8-K 001-39671 10.1 August 3, 2021
31.1*
Certification of Chief 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 Chief 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**
Certifications of Chief Executive Officer and Chief Financial Officer pursuant to 18 USC. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
101.INS Inline XBRL Instance Document
101.SCH Inline XBRL Taxonomy Extension Schema Document
101.CAL Inline XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF Inline XBRL Taxonomy Extension Definition Linkbase Document
101.LAB Inline XBRL Taxonomy Extension Label Linkbase Document
101.PRE Inline XBRL Taxonomy Extension Presentation Linkbase Document
104 Cover Page Interactive Data File (Embedded with the Inline XBRL document)

Incorporated by Reference

Exhibit
Number

Exhibit Description

Form

File No.

Exhibit

Filing Date

2.1

Asset Purchase Agreement, dated as of February 24, 2022, by and among QuoteLab, LLC, CHT Buyer, LLC, Customer Helper Team, LLC and the Seller Members

8-K

001-39671

2.1

March 2, 2022

2.2

First Amendment to Asset Purchase Agreement, dated as of March 29, 2022, by and among QuoteLab, LLC, CHT Buyer, LLC, Customer Helper Team, LLC and the Seller Members

8-K

001-39671

2.1

March 30, 2022

10.1+

Amendment to Amended and Restated Employment Agreement among the Company, QuoteLab, LLC and Steven Yi, dated March 22, 2022

8-K

001-39671

10.1

March 28, 2022

10.2+

Amendment to Amended and Restated Employment Agreement among the Company, QuoteLab, LLC and Eugene Nonko, dated March 22, 2022

8-K

001-39671

10.2

March 28, 2022

10.3+*

Form of Performance-Based Restricted Stock Unit Award Agreement for Founders under 2020 Omnibus Incentive Plan

31.1*

Certification of Chief 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 Chief 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**

Certifications of Chief Executive Officer and Chief Financial Officer pursuant to 18 USC. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

101.INS

Inline XBRL Instance Document

101.SCH

Inline XBRL Taxonomy Extension Schema Document

101.CAL

Inline XBRL Taxonomy Extension Calculation Linkbase Document

101.DEF

Inline XBRL Taxonomy Extension Definition Linkbase Document

101.LAB

Inline XBRL Taxonomy Extension Label Linkbase Document

101.PRE

Inline XBRL Taxonomy Extension Presentation Linkbase Document

104

Cover Page Interactive Data File (Embedded with the Inline XBRL document)

+ Management contract or compensatory plan or arrangement.

* Filed herewith.

** Furnished herewith. This exhibit should not be deemed to be "filed" for purposes of Section 18 of the Exchange Act.

4336

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SIGNATURES

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.


			MEDIAALPHA, INC.

Date:	~~August 13, 2021~~May 6, 2022	/s/ ~~Tigran Sinanyan~~Patrick R. Thompson
		~~Tigran Sinanyan~~Patrick R. Thompson
		Chief Financial Officer & Treasurer

4437




	PART I. FINANCIAL INFORMATION
Item 1	Financial Statements	67
	Consolidated Balance Sheets	67
	Consolidated Statements of Operations	67
	Consolidated Statements of ~~Changes in Redeemable Class A units, Members’ deficit,~~ Stockholders’ ~~deficit~~Equity (Deficit)	89
	Consolidated Statements of Cash Flows	1011
	Notes to Consolidated Financial Statements	1112
Item 2	Management's Discussion and Analysis of Financial Condition and Results of Operations	20
Item 3	Quantitative and Qualitative Disclosures About Market Risk	3933
Item 4	Controls and Procedures	4034
	PART II. OTHER INFORMATION
Item 1	Legal Proceedings	4034
Item 1A	Risk Factors	4134
Item 2	Unregistered Sales of Equity Securities and Use of Proceeds	4234
Item 3	Defaults Upon Senior Securities	4235
Item 4	Mine Safety Disclosures	4235
Item 5	Other Information	4235
Item 6	Exhibits	4336

Signatures		4437


	Redeemable Class A			Members' Equity		Class A common stock			Class B common stock			Additional Paid-In- Capital		Accumulated deficit		Non- Controlling Interest		Total Stockholders’ (Deficit)
	Units	Amount		Amount		Units	Amount		Units	Amount		Amount		Amount		Amount		Amount
Balance at December 31, 2019	284,211	$	74,097	$	79,547	0	$	0	0	$	0	$	0	$	(193,143)	$	0	$	(113,596)
Remeasurement of redeemable Class A units	—	20,342		—		—	—		—	—		—		(20,342)		—		(20,342)
Class B repurchased	—	—		—		—	—		—	—		—		(1,952)		—		(1,952)
Equity-based compensation	—	—		1,266		—	—		—	—		—		—		—		1,266
Net income	—	—		—		—	—		—	—		—		8,835		—		8,835
Balance at March 31, 2020	284,211	$	94,439	$	80,813	0	$	0	0	$	0	$	0	$	(206,602)	$	0	$	(125,789)
Remeasurement of redeemable Class A units	—	86,627		—		—	—		—	—		—		(86,627)		—		(86,627)
Class B repurchased	—	—		—		—	—		—	—		—		(292)		—		(292)
Equity-based compensation	—	—		681		—	—		—	—		—		—		—		681
Members' distributions	—	—		—		—	—		—	—		—		(10,527)		—		(10,527)
Net income	—	—		—		—	—		—	—		—		10,146		—		10,146
Balance at June 30, 2020	284,211	$	181,066	$	81,494	0	$	0	0	$	0	$	0	$	(293,902)	$	0	$	(212,408)


(in thousands)	Rent payments

2021–Remaining Period	$	401
2022	936
2023	904
2024	908
2025	936
Thereafter	874
Total	$	4,959