424B3

 

 

 

 

 

 

 

 

PROSPECTUS SUPPLEMENT NO. 3

(to prospectus dated April 20, 2022)

Filed Pursuant to Rule 424(b)(3)
Registration No. 333-262201

 

https://cdn.kscope.io/1fdfe071015091e15abde4e296059e78-img32495409_0.jpg 

AdTheorent Holding Company, Inc.

 

Up to 76,713,193 Shares of Common Stock

Up to 15,973,904 Shares of Common Stock Issuable Upon the Exercise of Warrants

Up to 5,432,237 Warrants

 

 

This prospectus supplement is being filed to update and supplement the information contained in the prospectus dated April 20, 2022 (the “Prospectus”), related to which consists of (i) up to 10,541,667 shares of Common Stock issuable upon the exercise of 10,541,667 warrants (the “Public Warrants”) originally issued in the initial public offering of MCAP Acquisition Corporation, a Delaware corporation (“MCAP”), by the holders thereof, and (ii) up to 5,432,237 shares of Common Stock issuable upon the exercise of 5,432,237 warrants (the “Private Warrants” and, together with the Public Warrants, the “Warrants”) originally issued in a private placement in connection with the initial public offering of MCAP with the information contained in our Current Report on Form 8-K, filed with the Securities and Exchange Commission (“SEC”) on August 9, 2022 (the “Current Report”). Accordingly, we have attached the Current Report to this prospectus supplement.

 

This prospectus supplement updates and supplements the information in the Prospectus and is not complete without, and may not be delivered or utilized except in combination with, the Prospectus, including any amendments or supplements thereto. This prospectus supplement should be read in conjunction with the Prospectus and if there is any inconsistency between the information in the Prospectus and this prospectus supplement, you should rely on the information in this prospectus supplement.

 

AdTheorent Holding Company, Inc.’s Common Stock is quoted on The Nasdaq Capital Market LLC (“Nasdaq”) under the symbol, “ADTH”. On August 8, 2022, the closing price of our Common Stock was $3.14.

 

See the section entitled “Risk Factors” beginning on page 7 of the Prospectus to read about factors you should consider before buying our securities.

 

Neither the SEC nor any state securities commission has approved or disapproved of the securities to be issued under the Prospectus or determined if the Prospectus or this prospectus supplement is truthful or complete. Any representation to the contrary is a criminal offense.

 

The date of this prospectus supplement is August 9, 2022

 

 

 


 

 

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

 

FORM 8-K

 

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): August 9, 2022

 

 

AdTheorent Holding Company, Inc.

(Exact name of Registrant as Specified in Its Charter)

 

 

Delaware

001-40116

85-3978415

(State or Other Jurisdiction
of Incorporation)

(Commission File Number)

(IRS Employer
Identification No.)

 

 

 

 

 

330 Hudson Street

13th Floor

 

New York, New York

 

10013

(Address of Principal Executive Offices)

 

(Zip Code)

 

Registrant’s Telephone Number, Including Area Code: (800) 804-1359

 

 

(Former Name or Former Address, if Changed Since Last Report)

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

☐ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

☐ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

☐ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

☐ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

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


Title of each class

 

Trading
Symbol(s)

 


Name of each exchange on which registered

Common stock, par value $0.0001 per share

 

ADTH

 

The Nasdaq Stock Market

Warrants to purchase common stock

 

ADTHW

 

The Nasdaq Stock Market

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§ 230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§ 240.12b-2 of this chapter).

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. ☐

 

 

 

 


 

Item 2.02 Results of Operations and Financial Condition.

On August 9, 2022, AdTheorent Holding Company, Inc. (the “Company”) released its financial results for the quarter ended June 30, 2022. A copy of the Company’s press release is attached as Exhibit 99.1 to this Form 8-K and incorporated herein by reference.

 

The information in this report shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act, except as shall be expressly set forth by specific reference in such filing.

Item 9.01 Financial Statements and Exhibits.

d) Exhibits.

 

Exhibit No.

 

Description

 

 

 

99.1



Press release issued by AdTheorent Holding Company, Inc., dated August 9, 2022.

104

 

Cover Page Interactive Data File (embedded within the Inline XBRL document)

 

 

 


 

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.

 

 

 

AdTheorent Holding Company, Inc.

 

 

 

 

Date:

August 9, 2022

By:

/s/ James Lawson

 

 

 

James Lawson
Chief Executive Officer

 

 


 

Exhibit 99.1

 

AdTheorent Holding Company, Inc. Reports Second Quarter 2022 Results

 

Revenue Increased 6.5% Lead By Strong Growth in CTV and Healthcare & Retail Verticals;

Company Continues to Expand Predictive Capabilities of Privacy-Forward Media Buying Platform

 

New York, NY August 9, 2022 — AdTheorent Holding Company, Inc. (Nasdaq: ADTH) (“AdTheorent” or “the Company”), a programmatic digital advertising leader using advanced machine learning technology and privacy-forward solutions to deliver real-world value for advertisers and marketers, today announced second quarter 2022 financial results.

Second Quarter 2022 Financial Highlights:

Revenue: Revenue increased by $2.6 million in second quarter 2022, or 6.5%, to $42.5 million from $39.9 million in second quarter 2021, driven by strength across a diverse portfolio of customer verticals.
Gross Profit: Gross Profit of $21.6 million in second quarter 2022 was in line with second quarter 2021. Gross Profit Margin was 50.9%, compared to 54.2% in second quarter 2021.
Adjusted Gross Profit*: Adjusted Gross Profit* increased to $28.3 million in second quarter 2022, an increase of $1.7 million, or 6.4%, as compared to second quarter 2021. Adjusted Gross Profit Margin was 66.7% compared to 66.9% in the second quarter of 2021.
Net Income: Net Income increased by $56.4 million in second quarter 2022 to $57.8 million from $1.4 million in second quarter 2021. In the second quarter 2022, the Company recognized a total of $55.9 million of mark to market gains related to the change in fair value of the Seller's Earn-Out and Warrants liabilities.
Adjusted EBITDA*: Adjusted EBITDA* decreased to $7.3 million in second quarter 2022, a decrease of $4.7 million, or 39.2%, as compared to second quarter 2021. Adjusted EBITDA as a percentage of Adjusted Gross Profit of 25.8% represented a decrease from 45.2% in second quarter 2021.

Second Quarter 2022 Business and Operating Highlights:

AdTheorent's active customers grew by 44, or 15% year-over year, to 331 at June 30, 2022.
AdTheorent’s connected television ("CTV") revenue grew by 107% during the quarter to $4.0 million, as compared to $2.0 million in the second quarter of 2021. Customers are seeing value in AdTheorent’s differentiated, machine-learning optimized version of programmatic CTV.
AdTheorent added 37 new healthcare and pharmaceutical advertiser brands, the Company's largest vertical, across its active customer base in the first half of the year, and is working to grow these opportunities as part of a strategic focus on scaling a highly differentiated AdTheorent Health offering. On the product, data and platform side, during the quarter, the Company significantly expanded its data infrastructure by executing and operationalizing a broad de-identified insurance claims data license which will allow AdTheorent to provide privacy-friendly claims data modeling to deliver more precise advertising outcomes for the world’s top pharmaceutical and healthcare brands.
AdTheorent continued investing to expand its capabilities in the consumer packaged goods ("CPG") vertical in the second quarter and formalized a partnership with Catalina to optimize campaign performance based on in-store sales attributed to AdTheorent’s media. Catalina has access to 22,000 multi-outlet retail stores nationwide and collects purchase data from more than 420 million loyalty cards through retailer point of sales systems. By pairing Catalina data with AdTheorent’s machine-learning and predictive targeting capabilities, AdTheorent is able to make real-time campaign optimizations across mobile, desktop, and CTV devices to maximize sales for its CPG clients.

 

 


 

Technological Enhancements:

AdTheorent improved its capabilities in the area of Predictive Contextual Advertising in which it uses impression-specific predictive scoring to identify the impressions within contextually relevant properties which are most likely to drive specific Key Performance Indicator ("KPI") conversions (such as website sales), based on historic sales or other KPI conversions which resulted from ad exposure. Now, the Company is able to identify keyword combinations on web pages which the Company's data suggests are more likely to drive sales or other KPI conversions for customer campaigns and deliver better return on advertising spend to customers.
AdTheorent made substantial progress towards its forthcoming third quarter roll-out of AdTheorent Predictive Audiences, which will allow programmatic advertisers to target “audiences” in a more precise, data-driven and less opaque manner than is currently possible with traditional targetable audience segments. In addition to the almost 900 impression-specific data objects already available to be incorporated into AdTheorent models, in the second quarter the Company signed another important data license with Peer 39 to operationalize additional contextual data into AdTheorent's solutions. Through this integration, the Company's internal and Direct Access platform users will be able to perform pre-bid targeting based on contextual sentiment, content quality and their own brand safety criteria.
AdTheorent implemented platform automation related to the ingestion of advertiser brand web site visitor engagement data for use in its predictive models. This enhancement is an example of the Company's ongoing efforts to operationalize and automate within its platform valuable data science learnings, which are already being used to improve customer campaigns. For example, during the second quarter the Company used this enhanced platform automation to drive brand website visitation for a destination marketing organization. In a very short campaign window of 2.5 weeks, the Company was able to surpass client benchmarks driving 3.6 times more visits than the client’s campaign goal.
In the second quarter, AdTheorent was pleased to be issued a U.S. Patent, “Data Learning And Analytics Apparatuses, Methods and Systems”, recognizing one of the Company's valuable Machine Learning ("ML")-based advertising innovations, which the Company leverages as part of its Cost Per Action, or CPA, and KPI optimization capability suite. This and other innovations enable AdTheorent to use advanced ML and statistics to score ad impressions and drive KPI performance for customers.

 

“During the second quarter we invested behind people and technology that will power AdTheorent for years to come, and we have never been more excited about AdTheorent’s growing potential to disrupt the market and lead programmatic digital advertising into the post-ID future,” said James Lawson, CEO of AdTheorent. “We continue to advance our technological lead over competitors and educate customers on how AdTheorent can meaningfully improve their return on ad spend. Feedback from customers and potential customers is extremely encouraging and we are confident we will benefit disproportionately as advertising budgets build back up.”

 

* Adjusted Gross Profit and Adjusted EBITDA are non-Generally Accepted Accounting Principles ("non-GAAP") financial measures. See the supplementary schedules in this press release for a discussion of how the Company defines and calculate these measures and a reconciliation thereof to the most directly comparable GAAP measures.

Third Quarter and Updated Full-Year 2022 Financial Outlook:

AdTheorent's growth may be impacted in the second half of 2022 by macroeconomic factors beyond the Company's control, such as the COVID-19 pandemic, inflationary pressures, recessionary fears and the ongoing conflict in Ukraine. Based on the current business environment, recent performance and these current trends in the marketplace and subject to the risks and uncertainties inherent in forward-looking statements, the Company's outlook for the third quarter and full-year 2022 includes the following:

Third quarter 2022:

Revenue in the range of $37.5 million to $39.5 million.
Adjusted gross profit in the range of $24.6 million to $25.9 million.
Adjusted EBITDA in the range of $3.1 million to $4.0 million.

 


 

Full-year ending December 31, 2022:

Revenue in the range of $160.0 million to $180.0 million.
Adjusted gross profit in the range of $105.9 million to $119.0 million.
Adjusted EBITDA in the range of $17.5 million to $27.5 million.

 

Although the Company provides guidance for Adjusted EBITDA, it is not able to provide guidance for net income, the most directly comparable GAAP measure. Certain elements of the composition of net income, including stock compensation expense, are not predictable, making it impractical for the Company to provide guidance on net income or to reconcile its Adjusted EBITDA guidance to net income without unreasonable efforts. For the same reason, the Company is unable to address the probable significance of the unavailable information.

About AdTheorent:

AdTheorent (Nasdaq: ADTH) uses advanced machine learning technology and privacy-forward solutions to deliver impactful advertising campaigns for marketers. AdTheorent's machine learning-powered Platform A\T powers its predictive targeting, geo-intelligence, audience extension solutions and in-house creative capability, Studio A\T. Leveraging only non-sensitive data and focused on the predictive value of machine learning models, AdTheorent's product suite and flexible transaction models allow advertisers to identify the most qualified potential consumers coupled with the optimal creative experience to deliver superior results, measured by each advertiser's real-world business goals.

AdTheorent is consistently recognized with numerous technology, product, growth and workplace awards. AdTheorent was awarded "Best AI-Based Advertising Solution" (AI Breakthrough Awards) for four consecutive years and "Most Innovative Product" (B.I.G. Innovation Awards) for five consecutive years. Additionally, AdTheorent is the only six-time recipient of Frost & Sullivan's "Digital Advertising Leadership Award." AdTheorent is headquartered in New York, with fourteen offices across the United States and Canada. For more information, visit adtheorent.com.

Conference Call and Webcast Details:

AdTheorent will host a conference call and webcast at 4:30 p.m. ET today, August 9, 2022, to discuss its second quarter 2022 financial results and business highlights. The conference call can be accessed by dialing (888) 346-9287 from the United States and Canada or (412) 902-6656 International and asking to join the "AdTheorent conference call." The live webcast of the conference call and other materials related to AdTheorent’s financial performance can be accessed from AdTheorent’s investor relations website at investors.adtheorent.com.

Following the completion of the call until 11:59 p.m. ET on Tuesday, August 16, 2022, a telephone replay will be available by dialing (877) 344-7529 from the United States, (855) 669-9658 from Canada, or (412) 317-0088 International with Conference ID 7379375. A webcast replay will also be available at investors.adtheorent.com for 12 months.

Presentation:

The Business Combination on December 22, 2021 was accounted for as a reverse recapitalization and accordingly, pursuant to GAAP, the condensed consolidated financial statements presented below as of and for the three and six months ended June 30, 2021 have been recast and are presented on an as-converted basis using a calculated exchange ratio. In addition, the exchange ratio is utilized for calculating earnings per share in all prior periods presented.

 


 

Forward-Looking Statements:

This communication contains “forward-looking statements” within the meaning of the safe harbor provisions of the U.S. Private Securities Litigation Reform Act of 1995. Forward-looking statements include, without limitation, any statement that may predict, forecast, indicate or imply future results, performance or achievements, and may contain words such as “believe,” “anticipate,” “expect,” “estimate,” “intend,” “project,” “plan,” or words or phrases with similar meaning. Forward-looking statements should not be read as a guarantee of future performance or results and will not necessarily be accurate indications of the times at, or by, which such performance or results will be achieved. Forward-looking statements contained in this press release relate to, among other things, the Company’s projected financial performance and operating results, including projected revenue, Adjusted Gross Profit and Adjusted EBITDA, as well as statements regarding the COVID-19 pandemic, inflationary pressures, recessionary fears and the ongoing conflict in Ukraine.

 

Forward-looking statements are based on current expectations, forecasts and assumptions that involve risks and uncertainties, including, but not limited to, the market for programmatic advertising developing slower or differently than the Company’s expectations, the demands and expectations of clients and the ability to attract and retain clients and other economic, competitive, governmental and technological factors outside of the Company's control, that may cause the Company's business, strategy or actual results to differ materially from the forward-looking statements. The Company does not intend and undertake no obligation to update any forward-looking statements, whether as a result of new information, future events or otherwise, except as may be required by applicable law. Investors are referred to AdTheorent's filings with the Securities and Exchange Commission, including its Annual Report on Form 10-K and any subsequent filings on Forms 10-Q or 8-K, for additional information regarding the risks and uncertainties that may cause actual results to differ materially from those expressed in any forward-looking statement.

 

Investor Contact:

April Scee, ICR

AdTheorentIR@icrinc.com (646) 277-1219

 

Press Contact:

Press@adtheorent.com

 

 

 

 


 

 

ADTHEORENT HOLDING COMPANY, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited; in thousands)

 

 

June 30,

 

 

December 31,

 

 

 

2022

 

 

2021

 

ASSETS

 

 

 

 

 

 

Current assets

 

 

 

 

 

 

Cash and cash equivalents

 

$

63,628

 

 

$

100,093

 

Accounts receivable, net

 

 

44,089

 

 

 

55,936

 

Income tax recoverable

 

 

99

 

 

 

95

 

Prepaid expenses

 

 

7,901

 

 

 

3,801

 

Total current assets

 

 

115,717

 

 

 

159,925

 

Property and equipment, net

 

 

571

 

 

 

409

 

Operating lease right of use assets

 

 

6,249

 

 

 

 

Investment in SymetryML Holdings

 

 

851

 

 

 

 

Customer relationships, net

 

 

6,712

 

 

 

8,986

 

Other intangible assets, net

 

 

6,830

 

 

 

7,608

 

Goodwill

 

 

34,842

 

 

 

35,778

 

Deferred income taxes, net

 

 

3,670

 

 

 

434

 

Other assets

 

 

368

 

 

 

402

 

Total assets

 

$

175,810

 

 

$

213,542

 

 

 

 

 

 

 

 

LIABILITIES AND STOCKHOLDERS’ EQUITY

 

 

 

 

 

 

Current liabilities

 

 

 

 

 

 

Accounts payable

 

$

9,989

 

 

$

12,382

 

Accrued compensation

 

 

3,985

 

 

 

10,530

 

Accrued expenses

 

 

2,422

 

 

 

4,664

 

Operating lease liabilities, current

 

 

1,276

 

 

 

 

Total current liabilities

 

 

17,672

 

 

 

27,576

 

Revolver borrowings

 

 

 

 

 

39,017

 

SAFE Notes

 

 

 

 

 

2,950

 

Warrants

 

 

9,579

 

 

 

12,166

 

Seller's Earn-Out

 

 

5,318

 

 

 

18,081

 

Operating lease liabilities, non-current

 

 

6,832

 

 

 

 

Deferred rent

 

 

 

 

 

1,869

 

Total liabilities

 

 

39,401

 

 

 

101,659

 

Commitments and contingencies

 

 

 

 

 

 

 

 

 

 

 

 

 

Stockholders’ equity

 

 

 

 

 

 

Preferred Stock

 

 

 

 

 

 

Common Stock

 

 

9

 

 

 

9

 

Additional paid-in capital

 

 

77,851

 

 

 

70,778

 

Retained earnings

 

 

58,549

 

 

 

42,512

 

Total stockholders’ equity attributable to AdTheorent Holding Company, Inc.

 

 

136,409

 

 

 

113,299

 

Noncontrolling interests in consolidated subsidiaries

 

 

 

 

 

(1,416

)

Total stockholders' equity

 

 

136,409

 

 

 

111,883

 

Total liabilities and stockholders’ equity

 

$

175,810

 

 

$

213,542

 

 

 

 

 

 


 

 

 

ADTHEORENT HOLDING COMPANY, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

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

 

 

 

Three Months Ended June 30,

 

 

Six Months Ended June 30,

 

 

 

2022

 

 

2021

 

 

2022

 

 

2021

 

Revenue

 

$

42,476

 

 

$

39,867

 

 

$

76,717

 

 

$

70,834

 

Operating expenses:

 

 

 

 

 

 

 

 

 

 

 

 

Platform operations

 

 

20,854

 

 

 

18,263

 

 

 

38,626

 

 

 

33,151

 

Sales and marketing

 

 

11,083

 

 

 

8,422

 

 

 

21,413

 

 

 

16,480

 

Technology and development

 

 

4,153

 

 

 

2,670

 

 

 

8,438

 

 

 

5,133

 

General and administrative

 

 

5,103

 

 

 

7,977

 

 

 

10,704

 

 

 

10,114

 

Total operating expenses

 

 

41,193

 

 

 

37,332

 

 

 

79,181

 

 

 

64,878

 

Income (loss) from operations

 

 

1,283

 

 

 

2,535

 

 

 

(2,464

)

 

 

5,956

 

Interest expense, net

 

 

(47

)

 

 

(610

)

 

 

(156

)

 

 

(1,210

)

Gain on change in fair value of Seller's Earn-Out

 

 

37,419

 

 

 

 

 

 

12,763

 

 

 

 

Gain on change in fair value of warrants

 

 

18,523

 

 

 

 

 

 

2,587

 

 

 

 

Gain on deconsolidation of SymetryML

 

 

 

 

 

 

 

 

1,939

 

 

 

 

Loss on change in fair value of SAFE Notes

 

 

 

 

 

 

 

 

(788

)

 

 

 

Loss on fair value of investment in SymetryML Holdings

 

 

(10

)

 

 

 

 

 

(10

)

 

 

 

Other (expense) income, net

 

 

(1

)

 

 

20

 

 

 

(19

)

 

 

20

 

Total other income (expense), net

 

 

55,884

 

 

 

(590

)

 

 

16,316

 

 

 

(1,190

)

Net income before benefit (provision) for income taxes

 

 

57,167

 

 

 

1,945

 

 

 

13,852

 

 

 

4,766

 

Benefit (provision) for income taxes

 

 

610

 

 

 

(584

)

 

 

1,635

 

 

 

(1,572

)

Net income

 

$

57,777

 

 

$

1,361

 

 

$

15,487

 

 

$

3,194

 

Less: Net loss attributable to noncontrolling interest

 

 

 

 

 

171

 

 

 

550

 

 

 

341

 

Net income attributable to AdTheorent Holding Company, Inc.

 

$

57,777

 

 

$

1,532

 

 

$

16,037

 

 

$

3,535

 

Earnings per share:

 

 

 

 

 

 

 

 

 

 

 

 

     Basic

 

$

0.67

 

 

$

0.03

 

 

$

0.19

 

 

$

0.06

 

     Diluted

 

$

0.62

 

 

$

0.02

 

 

$

0.17

 

 

$

0.06

 

Weighted-average common shares outstanding:

 

 

 

 

 

 

 

 

 

 

 

 

     Basic

 

 

85,766,302

 

 

 

59,873,921

 

 

 

85,755,210

 

 

 

59,863,656

 

     Diluted

 

 

93,402,650

 

 

 

67,078,778

 

 

 

93,263,518

 

 

 

63,688,104

 

 

 

 


 

 

 

 

Non-GAAP Financial Measures

 

The Company uses financial measures that are not calculated in accordance with GAAP including Adjusted EBITDA and Adjusted gross profit. The Company's management believes that this information can assist investors in evaluating the Company's operational trends, financial performance, and cash generating capacity and make strategic decisions. Management believes these non-GAAP measures allow investors to evaluate the Company’s financial performance using some of the same measures as management.

 

Because of the limitations associated with these non-GAAP financial measures, “Adjusted Gross Profit,” “EBITDA,” “Adjusted EBITDA,” “Adjusted Gross Profit as a % of Revenue” and “Adjusted EBITDA as a percent of Adjusted Gross Profit” should not be considered in isolation or as a substitute for performance measures calculated in accordance with GAAP. The Company compensates for these limitations by relying primarily on its GAAP results and using non-GAAP measures on a supplemental basis. You should review the reconciliation of the non-GAAP financial measures below and not rely on any single financial measure to evaluate AdTheorent's business.

The tables below show the Company’s non-GAAP financial metrics reconciled to the comparable GAAP financial metrics included in this release.

Adjusted Gross Profit

Adjusted Gross Profit is a non-GAAP profitability measure. Adjusted Gross Profit is a non-GAAP financial measure of campaign profitability, monitored by management and the board, used to evaluate the Company's operating performance and trends, develop short- and long-term operational plans, and make strategic decisions regarding the allocation of capital. The Company believes this measure provides a useful period-to-period comparison of campaign profitability and is useful information to investors and the market in understanding and evaluating its operating results in the same manner as its management and board. Gross profit is the most comparable GAAP measurement, which is calculated as revenue less platform operations costs. In calculating Adjusted Gross Profit, the Company adds back other platform operations costs, which consist of amortization expense related to capitalized software, depreciation expense, allocated costs of personnel which set up and monitor campaign performance, and platform hosting, license, and maintenance costs, to gross profit.

The following table sets forth a reconciliation of revenue to adjusted gross profit for the periods presented:

 

 

 

Three Months Ended June 30,

 

 

Six Months Ended June 30,

 

 

 

2022

 

 

2021

 

 

2022

 

 

2021

 

 

 

(In thousands)

 

Revenue

 

$

42,476

 

 

$

39,867

 

 

$

76,717

 

 

$

70,834

 

Less: Platform operations

 

 

20,854

 

 

 

18,263

 

 

 

38,626

 

 

 

33,151

 

Gross Profit

 

 

21,622

 

 

 

21,604

 

 

 

38,091

 

 

 

37,683

 

Add back: Other platform operations

 

 

6,724

 

 

 

5,048

 

 

 

13,240

 

 

 

9,767

 

Adjusted Gross Profit

 

$

28,346

 

 

$

26,652

 

 

$

51,331

 

 

$

47,450

 

EBITDA and Adjusted EBITDA

EBITDA is a non-GAAP financial measure defined by us as net income (loss), before interest expense, net, depreciation, amortization and income tax expense. Adjusted EBITDA is defined as EBITDA before stock compensation expense, transaction costs, management fees, non-core operations and other potential non-recurring items. Net income (loss) is the most comparable GAAP measurement.

Collectively these non-GAAP financial measures are key profitability measures used by the Company's management and board to understand and evaluate its operating performance and trends, develop short-and long-term operational

 


 

plans and make strategic decisions regarding the allocation of capital. The Company believes that these measures can provide useful period-to-period comparisons of campaign profitability. Accordingly, the Company believes that these measures provide useful information to investors and the market in understanding and evaluating its operating results in the same manner as its management and board.

The following table sets forth a reconciliation of net income to Adjusted EBITDA for the periods presented:

 

 

 

Three Months Ended June 30,

 

 

Six Months Ended June 30,

 

 

 

2022

 

 

2021

 

 

2022

 

 

2021

 

 

 

(In thousands)

 

Net income

 

$

57,777

 

 

$

1,361

 

 

$

15,487

 

 

$

3,194

 

Interest expense, net

 

 

47

 

 

 

610

 

 

 

156

 

 

 

1,210

 

Tax (benefit) expense

 

 

(610

)

 

 

584

 

 

 

(1,635

)

 

 

1,572

 

Depreciation and amortization

 

 

1,954

 

 

 

2,122

 

 

 

4,042

 

 

 

4,224

 

EBITDA

 

$

59,168

 

 

$

4,677

 

 

$

18,050

 

 

$

10,200

 

Equity based compensation

 

 

3,856

 

 

 

108

 

 

 

5,844

 

 

 

272

 

Seller's Earn-Out equity-based compensation

 

 

499

 

 

 

 

 

 

991

 

 

 

 

Transaction costs (1)

 

 

(271

)

 

 

2,197

 

 

 

(131

)

 

 

2,438

 

Gain on change in fair value of Seller's Earn-Out (3)

 

 

(37,419

)

 

 

 

 

 

(12,763

)

 

 

 

Gain on change in fair value of warrants (4)

 

 

(18,523

)

 

 

 

 

 

(2,587

)

 

 

 

Gain on deconsolidation of SymetryML (5)

 

 

 

 

 

 

 

 

(1,939

)

 

 

 

Loss on change in fair value of SAFE Notes (6)

 

 

 

 

 

 

 

 

788

 

 

 

 

Loss on fair value of investment in SymetryML Holdings

 

 

10

 

 

 

 

 

 

10

 

 

 

 

Management fees (7)

 

 

 

 

 

218

 

 

 

 

 

 

435

 

Lease termination fee

 

 

 

 

 

4,243

 

 

 

 

 

 

4,243

 

Non-core operations (8)

 

 

 

 

 

595

 

 

 

351

 

 

 

1,194

 

Adjusted EBITDA

 

$

7,320

 

 

$

12,038

 

 

$

8,614

 

 

$

18,782

 

 

(1)
Includes incurred transaction-related expenses and costs related to strategic initiatives in the three and six months ended June 30, 2021 which were suspended due to the COVID-19 pandemic. In the three and six months ended June 30, 2022, includes professional fees directly related to the SPAC merger with MCAP Acquisition Corporation (the "Business Combination") on December 22, 2021.
(2)
In connection with the Business Combination, a Seller's Earn-Out liability was recorded. The gain represents the increase in fair value of the Seller's Earn-Out in the three and six months ended June 30, 2022.
(3)
In connection with the Business Combination, a liability for warrants was recorded. The gain represents the increase in fair value of the warrants in the three and six months ended June 30, 2022.
(4)
On March 31, 2022, the Company deconsolidated SymetryML which resulted in a gain. Refer to Note 18 — SymetryML and SymetryML Holdings of the Company's Condensed Consolidated Financial Statements, included in its Form 10-Q as of June 30, 2022 filed today, for more information.
(5)
On March 31, 2022, the SAFE Notes were valued which resulted in a loss. Refer to Note 18 — SymetryML and SymetryML Holdings of the Company's Condensed Consolidated Financial Statements, included in its Form 10-Q as of June 30, 2022 filed today, for more information.
(6)
On December 22, 2016, the Company closed a growth recapitalization transaction with H.I.G. Capital. The agreements related to fees paid to H.I.G. Capital were discontinued effective December 22, 2021, the closing date of the Business Combination.
(7)
Effective as of March 1, 2020, the Company effectuated a contribution of its SymetryML department into a new subsidiary, SymetryML, Inc. The Company periodically raised capital to fund Symetry operations, by entering into Simple Agreement for Future Equity Notes (“SAFE Notes”) with several parties. The Company viewed SymetryML operations as non-core, and did not fund future operational expenses incurred in excess of SAFE Note funding secured. Effective March 31, 2022, the Company no

 


 

longer consolidates SymetryML. Refer to Note 18 — SymetryML and SymetryML Holdings of the Company's Condensed Consolidated Financial Statements, included in its Form 10-Q as of June 30, 2022 filed today, for more information.

 

The following table presents Adjusted EBITDA as a Percentage of Adjusted Gross Profit and Adjusted Gross Profit as a Percentage of Revenue:

 

 

 

Three Months Ended June 30,

 

 

Six Months Ended June 30,

 

 

 

2022

 

 

2021

 

 

2022

 

 

2021

 

 

 

(In thousands, except for percentages)

 

Gross Profit

 

$

21,622

 

 

$

21,604

 

 

$

38,091

 

 

$

37,683

 

Net income

 

$

57,777

 

 

$

1,361

 

 

$

15,487

 

 

$

3,194

 

Net income as a % of Gross Profit

 

 

267.2

%

 

 

6.3

%

 

 

40.7

%

 

 

8.5

%

Adjusted Gross Profit

 

$

28,346

 

 

$

26,652

 

 

$

51,331

 

 

$

47,450

 

Adjusted EBITDA

 

$

7,320

 

 

$

12,038

 

 

$

8,614

 

 

$

18,782

 

Adjusted EBITDA as a % of Adjusted Gross Profit

 

 

25.8

%

 

 

45.2

%

 

 

16.8

%

 

 

39.6

%

Gross Profit

 

$

21,622

 

 

$

21,604

 

 

$

38,091

 

 

$

37,683

 

Revenue

 

$

42,476

 

 

$

39,867

 

 

$

76,717

 

 

$

70,834

 

Gross Profit as a % of Revenue

 

 

50.9

%

 

 

54.2

%

 

 

49.7

%

 

 

53.2

%

Revenue

 

$

42,476

 

 

$

39,867

 

 

$

76,717

 

 

$

70,834

 

Adjusted Gross Profit

 

$

28,346

 

 

$

26,652

 

 

$

51,331

 

 

$

47,450

 

Adjusted Gross Profit as a % of Revenue

 

 

66.7

%

 

 

66.9

%

 

 

66.9

%

 

 

67.0

%