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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

 

FORM 10-Q

 

(Mark One)

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

For the quarterly period ended September 30, 2023

OR

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: 001-40116

AdTheorent Holding Company, Inc.

(Exact Name of Registrant as Specified in its Charter)

 

 

Delaware

85-3978415

( State or other jurisdiction of

incorporation or organization)

(I.R.S. 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

 

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 (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 November 2, 2023, the registrant had 88,241,898 shares of common stock outstanding.

 

 

 

 


 

Table of Contents

Page

PART I.

FINANCIAL INFORMATION

3

 

Item 1.

Financial Statements (Unaudited)

3

Condensed Consolidated Balance Sheets as of September 30, 2023 and December 31, 2022

3

Condensed Consolidated Statements of Operations for the three month and nine month periods ended September 30, 2023 and 2022

4

Condensed Consolidated Statements of Equity for the three month and nine month periods ended September 30, 2023 and 2022

5

Condensed Consolidated Statements of Cash Flows for the nine month periods ended September 30, 2023 and 2022

7

Notes to Unaudited Condensed Consolidated Financial Statements

8

Item 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

23

Item 3.

Quantitative and Qualitative Disclosures About Market Risk

36

Item 4.

Controls and Procedures

36

 

PART II.

OTHER INFORMATION

36

 

Item 1.

Legal Proceedings

36

Item 1A.

Risk Factors

36

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

37

Item 3.

Defaults Upon Senior Securities

37

Item 4.

Mine Safety Disclosures

37

Item 5.

Other Information

37

Item 6.

Exhibits

37

SIGNATURES

 

2


 

PART I. FINANCIAL INFORMATION

 

Item 1. Financial Statements (Unaudited).

 

ADTHEORENT HOLDING COMPANY, INC AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(in thousands, except share data)

(unaudited)

 

 

 

September 30, 2023

 

 

December 31, 2022

 

ASSETS

 

 

 

 

 

 

Current assets

 

 

 

 

 

 

Cash and cash equivalents

 

$

74,339

 

 

$

72,579

 

Accounts receivable, net

 

 

48,693

 

 

 

56,027

 

Income tax recoverable

 

 

177

 

 

 

145

 

Prepaid expenses

 

 

2,673

 

 

 

1,466

 

Total current assets

 

 

125,882

 

 

 

130,217

 

Property and equipment, net

 

 

465

 

 

 

520

 

Operating lease right-of-use assets

 

 

4,987

 

 

 

5,732

 

Investment in SymetryML Holdings

 

 

636

 

 

 

789

 

Customer relationships, net

 

 

1,119

 

 

 

4,475

 

Other intangible assets, net

 

 

7,854

 

 

 

6,708

 

Goodwill

 

 

34,842

 

 

 

34,842

 

Deferred income taxes, net

 

 

12,067

 

 

 

6,962

 

Other assets

 

 

308

 

 

 

359

 

Total assets

 

$

188,160

 

 

$

190,604

 

 

 

 

 

 

 

LIABILITIES AND STOCKHOLDERS’ EQUITY

 

 

 

 

 

 

Current liabilities

 

 

 

 

 

 

Accounts payable

 

$

10,294

 

 

$

9,479

 

Accrued compensation

 

 

5,117

 

 

 

8,939

 

Accrued expenses

 

 

5,076

 

 

 

6,224

 

Operating lease liabilities, current

 

 

1,265

 

 

 

1,265

 

Total current liabilities

 

 

21,752

 

 

 

25,907

 

Warrants

 

 

862

 

 

 

2,298

 

Seller's Earn-Out

 

 

23

 

 

 

773

 

Operating lease liabilities, non-current

 

 

5,253

 

 

 

6,201

 

Total liabilities

 

 

27,890

 

 

 

35,179

 

Stockholders’ equity

 

 

 

 

 

 

Preferred stock, $0.0001 per share, 20,000,000 shares authorized, no shares issued and outstanding as of September 30, 2023 and December 31, 2022

 

 

 

 

 

 

Common stock, $0.0001 par value, 350,000,000 shares authorized; 88,206,048 and 86,968,309 shares issued and outstanding as of September 30, 2023 and December 31, 2022, respectively

 

 

9

 

 

 

9

 

Additional paid-in capital

 

 

89,746

 

 

 

83,566

 

Retained earnings

 

 

70,515

 

 

 

71,850

 

Total stockholders' equity

 

 

160,270

 

 

 

155,425

 

Total liabilities and stockholders’ equity

 

$

188,160

 

 

$

190,604

 

See accompanying notes to condensed consolidated financial statements.

 

 

 

3


 

ADTHEORENT HOLDING COMPANY, INC AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(in thousands, except share and per share amounts)

(unaudited)

 

 

 

Three Months Ended September 30,

 

 

Nine Months Ended September 30,

 

 

 

2023

 

 

2022

 

 

2023

 

 

2022

 

Revenue

 

$

40,890

 

 

$

37,584

 

 

$

111,151

 

 

$

114,301

 

Operating expenses:

 

 

 

 

 

 

 

 

 

 

 

 

Platform operations

 

 

22,019

 

 

 

19,581

 

 

 

61,141

 

 

 

58,207

 

Sales and marketing

 

 

11,119

 

 

 

11,127

 

 

 

32,050

 

 

 

32,540

 

Technology and development

 

 

3,794

 

 

 

3,955

 

 

 

10,453

 

 

 

12,393

 

General and administrative

 

 

4,113

 

 

 

4,729

 

 

 

11,638

 

 

 

15,433

 

Total operating expenses

 

 

41,045

 

 

 

39,392

 

 

 

115,282

 

 

 

118,573

 

Loss from operations

 

 

(155

)

 

 

(1,808

)

 

 

(4,131

)

 

 

(4,272

)

Interest income (expense), net

 

 

707

 

 

 

97

 

 

 

1,750

 

 

 

(59

)

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

 

 

225

 

 

 

2,901

 

 

 

750

 

 

 

15,664

 

Gain on change in fair value of warrants

 

 

1,290

 

 

 

5,674

 

 

 

1,436

 

 

 

8,261

 

Gain on deconsolidation of SymetryML

 

 

 

 

 

 

 

 

 

 

1,939

 

Loss on change in fair value of SAFE Notes

 

 

 

 

 

 

 

 

 

 

 

(788

)

Gain (loss) on fair value of investment in SymetryML Holdings

 

 

5

 

 

 

(39

)

 

 

(153

)

 

 

(49

)

Other expense, net

 

 

(12

)

 

 

(5

)

 

 

(49

)

 

 

(24

)

Total other income, net

 

 

2,215

 

 

 

8,628

 

 

 

3,734

 

 

 

24,944

 

Net income (loss) before income taxes

 

 

2,060

 

 

 

6,820

 

 

 

(397

)

 

 

20,672

 

(Provision) benefit for income taxes

 

 

(6,254

)

 

 

(1,095

)

 

 

(938

)

 

 

540

 

Net (loss) income

 

$

(4,194

)

 

$

5,725

 

 

$

(1,335

)

 

$

21,212

 

Less: Net loss attributable to noncontrolling interest

 

 

 

 

 

 

 

 

 

 

 

550

 

Net (loss) income attributable to AdTheorent Holding Company, Inc.

 

$

(4,194

)

 

$

5,725

 

 

$

(1,335

)

 

$

21,762

 

(Loss) earnings per share:

 

 

 

 

 

 

 

 

 

 

 

 

     Basic

 

$

(0.05

)

 

$

0.07

 

 

$

(0.02

)

 

$

0.25

 

     Diluted

 

$

(0.05

)

 

$

0.06

 

 

$

(0.02

)

 

$

0.23

 

Weighted-average common shares outstanding:

 

 

 

 

 

 

 

 

 

 

 

 

     Basic

 

 

88,175,813

 

 

 

86,492,025

 

 

 

87,869,345

 

 

 

86,003,514

 

     Diluted

 

 

88,175,813

 

 

 

92,122,421

 

 

 

87,869,345

 

 

 

92,885,851

 

 

See accompanying notes to condensed consolidated financial statements.

 

4


 

ADTHEORENT HOLDING COMPANY, INC AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF EQUITY

(in thousands, except for number of shares)

(unaudited)

 

 

 

Common Stock

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Shares

 

 

Amount

 

 

Additional
Paid-in
Capital

 

 

Retained
Earnings

 

 

Noncontrolling
Interests

 

 

Total
Stockholders'
Equity

 

December 31, 2022

 

 

86,968,309

 

 

$

9

 

 

$

83,566

 

 

$

71,850

 

 

$

 

 

 

155,425

 

Equity-based compensation

 

 

 

 

 

 

 

 

1,552

 

 

 

 

 

 

 

 

 

1,552

 

Exercises of options

 

 

80,520

 

 

 

 

 

 

57

 

 

 

 

 

 

 

 

 

57

 

Vesting of restricted stock, net of shares withheld for taxes

 

 

605,854

 

 

 

 

 

 

(399

)

 

 

 

 

 

 

 

 

(399

)

Shares issued under employee stock purchase plan

 

 

111,433

 

 

 

 

 

 

172

 

 

 

 

 

 

 

 

 

172

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

(5,223

)

 

 

 

 

 

(5,223

)

March 31, 2023

 

 

87,766,116

 

 

$

9

 

 

$

84,948

 

 

$

66,627

 

 

$

 

 

$

151,584

 

Equity-based compensation

 

 

 

 

 

 

 

 

1,932

 

 

 

 

 

 

 

 

 

1,932

 

Exercises of options

 

 

152,947

 

 

 

 

 

 

93

 

 

 

 

 

 

 

 

 

93

 

Vesting of restricted stock, net of shares withheld for taxes

 

 

51,834

 

 

 

 

 

 

(38

)

 

 

 

 

 

 

 

 

(38

)

Net income

 

 

 

 

 

 

 

 

 

 

 

8,082

 

 

 

 

 

 

8,082

 

June 30, 2023

 

 

87,970,897

 

 

$

9

 

 

$

86,935

 

 

$

74,709

 

 

$

 

 

$

161,653

 

Equity-based compensation

 

 

 

 

 

 

 

 

2,697

 

 

 

 

 

 

 

 

 

2,697

 

Vesting of restricted stock, net of shares withheld for taxes

 

 

114,179

 

 

 

 

 

 

(29

)

 

 

 

 

 

 

 

 

(29

)

Shares issued under employee stock purchase plan

 

 

120,972

 

 

 

 

 

 

143

 

 

 

 

 

 

 

 

 

143

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

(4,194

)

 

 

 

 

 

(4,194

)

September 30, 2023

 

 

88,206,048

 

 

$

9

 

 

$

89,746

 

 

$

70,515

 

 

$

 

 

$

160,270

 

 

See accompanying notes to condensed consolidated financial statements.

 

 

5


 

ADTHEORENT HOLDING COMPANY, INC AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF EQUITY (continued)

(in thousands, except for number of shares)

(unaudited)

 

 

 

Common Stock

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Shares

 

 

Amount

 

 

Additional
Paid-in
Capital

 

 

Retained
Earnings

 

 

Noncontrolling
Interests

 

 

Total
Stockholders'
Equity

 

December 31, 2021

 

 

85,743,994

 

 

$

9

 

 

$

70,778

 

 

$

42,512

 

 

$

(1,416

)

 

 

111,883

 

Equity-based compensation

 

 

 

 

 

 

 

 

1,988

 

 

 

 

 

 

 

 

 

1,988

 

Seller's Earn-Out equity-based compensation

 

 

 

 

 

 

 

 

492

 

 

 

 

 

 

 

 

 

492

 

Conversion of SAFE Notes into SymetryML preferred stock

 

 

 

 

 

 

 

 

 

 

 

 

 

 

3,938

 

 

 

3,938

 

SymetryML preferred stock issuance

 

 

 

 

 

 

 

 

 

 

 

 

 

 

400

 

 

 

400

 

Deconsolidation of SymetryML Holdings

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(2,372

)

 

 

(2,372

)

Net loss

 

 

 

 

 

 

 

 

 

 

 

(41,740

)

 

 

(550

)

 

 

(42,290

)

March 31, 2022

 

 

85,743,994

 

 

$

9

 

 

$

73,258

 

 

$

772

 

 

$

 

 

$

74,039

 

Equity-based compensation

 

 

 

 

 

 

 

 

3,856

 

 

 

 

 

 

 

 

 

3,856

 

Seller's Earn-Out equity-based compensation

 

 

 

 

 

 

 

 

499

 

 

 

 

 

 

 

 

 

499

 

Exercises of options

 

 

355,629

 

 

 

 

 

 

183

 

 

 

 

 

 

 

 

 

183

 

Exercises of warrants

 

 

10

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Transaction cost adjustment

 

 

 

 

 

 

 

 

55

 

 

 

 

 

 

 

 

 

55

 

Net income

 

 

 

 

 

 

 

 

 

 

 

57,777

 

 

 

 

 

 

57,777

 

June 30, 2022

 

 

86,099,633

 

 

$

9

 

 

$

77,851

 

 

$

58,549

 

 

$

 

 

$

136,409

 

Equity-based compensation

 

 

 

 

 

 

 

 

2,783

 

 

 

 

 

 

 

 

 

2,783

 

Seller's Earn-Out equity-based compensation

 

 

 

 

 

 

 

 

373

 

 

 

 

 

 

 

 

 

373

 

Exercises of options

 

 

244,922

 

 

 

 

 

 

163

 

 

 

 

 

 

 

 

 

163

 

Vesting of restricted stock, net of shares withheld for taxes

 

 

346,875

 

 

 

 

 

 

(231

)

 

 

 

 

 

 

 

 

(231

)

Net income

 

 

 

 

 

 

 

 

 

 

 

5,725

 

 

 

 

 

 

5,725

 

September 30, 2022

 

 

86,691,430

 

 

$

9

 

 

$

80,939

 

 

$

64,274

 

 

$

 

 

$

145,222

 

 

See accompanying notes to condensed consolidated financial statements.

6


 

ADTHEORENT HOLDING COMPANY, INC AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)

(unaudited)

 

 

 

Nine Months Ended September 30,

 

 

 

2023

 

 

2022

 

Cash flows from operating activities

 

 

 

 

 

 

Net (loss) income

 

$

(1,335

)

 

$

21,212

 

Adjustments to reconcile net (loss) income to net cash provided by operating activities:

 

 

 

 

 

 

Provision for credit losses

 

 

10

 

 

 

240

 

Amortization expense

 

 

6,473

 

 

 

5,872

 

Depreciation expense