comScore(SCOR) - 2024 Q2 - Quarterly Report

Financial Statements Condensed Consolidated Balance Sheets As of June 30, 2024, total assets decreased to $474.14 million from $491.30 million, total liabilities slightly decreased to $240.42 million, and stockholders' equity declined to $45.84 million Balance Sheet Key Data (as of June 30) | Indicator ($ thousands) | June 30, 2024 | December 31, 2023 | | :---------------------- | :------------ | :---------------- | | Assets | | | | Cash and cash equivalents | 14,655 | 22,750 | | Accounts receivable, net | 53,904 | 63,826 | | Total current assets | 80,766 | 97,990 | | Goodwill | 309,649 | 310,360 | | Total assets | 474,142 | 491,295 | | Liabilities | | | | Accounts payable | 32,088 | 30,551 | | Accrued expenses | 30,696 | 34,422 | | Contract liabilities | 47,758 | 48,912 | | Revolving credit facility | 10,000 | 16,000 | | Total current liabilities | 174,769 | 182,561 | | Total liabilities | 240,420 | 247,307 | | Stockholders' Equity | | | | Total stockholders' equity | 45,837 | 56,103 | Condensed Consolidated Statements of Operations and Comprehensive Loss For the three months ended June 30, 2024, revenue decreased 8.4% to $85.84 million, while net loss significantly narrowed to $1.71 million due to a prior-year goodwill impairment Key Operating and Comprehensive Loss Data ($ thousands) | Indicator | 3 Months 2024 | 3 Months 2023 | 6 Months 2024 | 6 Months 2023 | | :-------- | :------------ | :------------ | :------------ | :------------ | | Revenue | 85,837 | 93,684 | 172,632 | 185,242 | | Cost of revenues | 51,953 | 52,958 | 102,020 | 104,887 | | Selling and marketing | 14,812 | 17,036 | 30,176 | 34,190 | | Research and development | 8,373 | 8,790 | 17,140 | 17,709 | | General and administrative | 11,334 | 13,274 | 24,547 | 26,848 | | Impairment of goodwill | — | 44,100 | — | 44,100 | | Operating loss | (1,928) | (47,379) | (3,805) | (51,206) | | Net loss | (1,708) | (44,909) | (2,762) | (53,580) | | Basic and diluted net loss per share | (1.19) | (10.21) | (2.28) | (12.94) | Condensed Consolidated Statements of Convertible Redeemable Preferred Stock and Stockholders' Equity As of June 30, 2024, convertible redeemable preferred stock remained at $187.89 million, while total stockholders' equity decreased to $45.84 million, primarily due to net loss and preferred stock dividends Changes in Convertible Redeemable Preferred Stock and Stockholders' Equity ($ thousands) | Indicator | December 31, 2023 | March 31, 2024 | June 30, 2024 | | :-------- | :---------------- | :------------- | :------------ | | Convertible redeemable preferred stock | 187,885 | 187,885 | 187,885 | | Total stockholders' equity | 56,103 | 51,352 | 45,837 | | Net loss | (1,054) | (1,708) | (1,708) | | Convertible redeemable preferred stock dividends | (4,240) | (4,244) | (4,244) | Condensed Consolidated Statements of Cash Flows For the six months ended June 30, 2024, net cash from operating activities was $15.60 million, while net cash used in financing activities significantly increased to $10.96 million Key Cash Flow Data ($ thousands) | Indicator | 6 Months 2024 | 6 Months 2023 | | :-------- | :------------ | :------------ | | Net cash provided by operating activities | 15,603 | 16,218 | | Net cash used in investing activities | (12,120) | (12,006) | | Net cash used in financing activities | (10,960) | (2,179) | | Effect of exchange rate changes | (616) | 580 | | Net (decrease) increase in cash, cash equivalents, and restricted cash | (8,093) | 2,613 | | Cash, cash equivalents, and restricted cash at end of period | 14,843 | 23,055 | Notes to Condensed Consolidated Financial Statements These notes detail company operations, accounting policies, revenue recognition, goodwill, preferred stock, debt, fair value, accrued expenses, related party transactions, restructuring, commitments, contingencies, and subsequent events - The company implemented a 1-for-20 reverse stock split on December 20, 2023, with all historical equity data retrospectively adjusted. In Q2 2023, a $44.1 million non-cash goodwill impairment charge was recorded due to declining stock price and market capitalization. Preferred stock is classified as mezzanine equity due to contingent redemption upon a change of control, which was deemed not probable as of June 30, 2024[23][27][28] Anti-Dilutive Common Stock Equivalents (thousands of shares) | Security Type | 3 Months 2024 | 3 Months 2023 | 6 Months 2024 | 6 Months 2023 | | :------------ | :------------ | :------------ | :------------ | :------------ | | Preferred stock | 4,700,278 | 4,362,787 | 4,614,513 | 4,285,418 | | Warrants | 260,858 | 272,851 | 266,854 | 272,851 | | Stock options and restricted stock units | 295,756 | 314,552 | 304,022 | 298,859 | | Contingent consideration | 84,003 | 302,222 | 84,003 | 302,222 | | Total | 5,340,895 | 5,252,412 | 5,269,392 | 5,159,350 | 1. Organization - Comscore, Inc. is a global information and analytics company measuring audience, consumer behavior, and advertising across media platforms, operating as a single segment with the CEO as the chief operating decision maker[20] 2. Summary of Significant Accounting Policies Basis of Presentation and Consolidation - The condensed consolidated financial statements include the accounts of the company and its wholly-owned domestic and foreign subsidiaries, with all intercompany transactions and balances eliminated upon consolidation[21] Reclassification - Certain prior-period amounts have been reclassified to conform to the current period's presentation, specifically combining changes in fair value of warrant liabilities and contingent consideration into other operating activities in the condensed consolidated statements of cash flows[22] Reverse Stock Split - The company effected a 1-for-20 reverse stock split on December 20, 2023, reducing authorized common stock from 275 million to 13.75 million shares, with all common stock and per-share information retrospectively adjusted[23] Unaudited Interim Financial Information - The interim condensed consolidated financial statements in this quarterly report are unaudited, but management believes they include all necessary adjustments for a fair presentation of financial position, results of operations, and cash flows, in compliance with SEC requirements[24][25] Use of Estimates and Judgments in the Preparation of the Condensed Consolidated Financial Statements - The preparation of financial statements requires management to make estimates and judgments concerning revenue recognition, deferred tax assets and liabilities, goodwill and intangible asset valuation, lease accounting, contingent matters, and equity award valuation, with actual results potentially differing from these estimates[26] Goodwill - The company performs goodwill impairment tests annually in the fourth quarter or more frequently if circumstances change, recording a $44.1 million non-cash impairment charge in Q2 2023[27] Preferred Stock - The company issued Series B convertible preferred stock in January 2021, classified as mezzanine equity due to potential redemption upon specific liquidation events like a change of control, which was deemed highly unlikely as of June 30, 2024[28][29] Other Income (Expense), Net Other Income (Expense), Net ($ thousands) | Indicator | 3 Months 2024 | 3 Months 2023 | 6 Months 2024 | 6 Months 2023 | | :-------- | :------------ | :------------ | :------------ | :------------ | | Change in fair value of warrant liabilities | 383 | 1,588 | 669 | (227) | | Other | (7) | 21 | (18) | 24 | | Total | 376 | 1,609 | 651 | (203) | Loss Per Share - The company uses the two-class method for net loss per share, excluding anti-dilutive potential common shares (such as preferred stock, warrants, stock options, and restricted stock units) when a net loss exists, making diluted net loss per share equal to basic net loss per share[31] Income Taxes - The company's net operating loss carryforwards are subject to annual limitations under Internal Revenue Code Section 382, leading to a revaluation of deferred tax assets related to U.S. federal net operating loss carryforwards to reflect the utilizable amounts under these limitations[33][34] Recent Accounting Guidance Issued But Not Adopted at June 30, 2024 - The company is evaluating the impact of ASU 2023-09 (Income Tax Disclosures) and ASU 2023-08 (Segment Reporting Disclosures) on its consolidated financial statements, expecting to adopt ASU 2023-09 on January 1, 2025, with no significant impact anticipated from ASU 2023-08[35] 3. Revenue Recognition Revenue by Solution Group ($ thousands) | Solution Group | 3 Months 2024 | 3 Months 2023 | 6 Months 2024 | 6 Months 2023 | | :------------- | :------------ | :------------ | :------------ | :------------ | | Content and Advertising Measurement | 72,189 | 77,347 | 144,809 | 154,058 | | Research and Insights Solutions | 13,648 | 16,337 | 27,823 | 31,184 | | Total | 85,837 | 93,684 | 172,632 | 185,242 | Revenue by Geographic Market ($ thousands) | Geographic Market | 3 Months 2024 | 3 Months 2023 | 6 Months 2024 | 6 Months 2023 | | :---------------- | :------------ | :------------ | :------------ | :------------ | | United States | 76,543 | 84,999 | 154,212 | 167,640 | | Europe | 5,063 | 4,545 | 10,174 | 9,228 | | Latin America | 1,769 | 1,705 | 3,445 | 3,425 | | Canada | 1,449 | 1,420 | 2,853 | 2,841 | | Other | 1,013 | 1,015 | 1,948 | 2,108 | | Total | 85,837 | 93,684 | 172,632 | 185,242 | - Approximately $220 million in revenue is expected to be recognized from remaining performance obligations as of June 30, 2024, with about 30% in the remainder of 2024, 41% in 2025, and 19% in 2026[40] 4. Goodwill Changes in Carrying Value of Goodwill ($ thousands) | Indicator | Amount | | :-------- | :------ | | Balance at December 31, 2022 | 387,973 | | Translation adjustment | 587 | | Impairment charge | (78,200) | | Balance at December 31, 2023 | 310,360 | | Translation adjustment | (711) | | Balance at June 30, 2024 | 309,649 | 5. Convertible Redeemable Preferred Stock and Stockholders' Equity - The company issued 82,527,609 shares of preferred stock on March 10, 2021, for $204 million in gross proceeds, convertible into common stock at a rate adjusted for the December 20, 2023 reverse stock split, resulting in 0.057994 shares of common stock per preferred share as of June 30, 2024, with preferred shareholders entitled to a 7.5% cumulative annual dividend (increasing to 9.5% if unpaid)[42] - Preferred shareholders have repeatedly waived annual dividends due in 2023 and 2024, resulting in $32.6 million in accrued dividends as of June 30, 2024, which were subsequently settled on July 24, 2024, by issuing 13,257,294 additional preferred shares to offset $32.8 million in accrued dividend obligations[43][69] - Series A warrants issued in 2019 expired unexercised on June 26, 2024[44] 6. Debt - The company entered into a senior secured revolving credit agreement on May 5, 2021, with an initial borrowing capacity of $25 million, subsequently amended in 2022 and 2023 to $40 million, and further amended on May 3, 2024, to extend the maturity to November 5, 2024, reduce borrowing capacity to $25 million, increase the SOFR-based loan interest rate to 4.50%, and require a $6 million principal repayment[45] - As of June 30, 2024, the company had $10 million in outstanding borrowings and $3.2 million in outstanding letters of credit under the amended revolving credit agreement, with $11.8 million remaining borrowing capacity, and was in compliance with all covenant requirements[46] 7. Fair Value Measurements Fair Value Measurements of Liabilities ($ thousands) | Liability | June 30, 2024 | December 31, 2023 | | :-------- | :------------ | :---------------- | | Contingent consideration liability | 1,191 | 4,806 | | Warrant liability | — | 669 | | Total | 1,191 | 5,475 | - Series A warrants expired on June 26, 2024, resulting in no warrant liability as of June 30, 2024[48] - A $44.1 million goodwill impairment charge was recorded in Q2 2023, classified as a non-recurring Level 3 fair value measurement[52] 8. Accrued Expenses Composition of Accrued Expenses ($ thousands) | Item | June 30, 2024 | December 31, 2023 | | :--- | :------------ | :---------------- | | Accrued data costs | 16,660 | 15,529 | | Payroll and related expenses | 8,625 | 10,604 | | Professional services fees | 1,567 | 2,203 | | Restructuring accrual | 944 | 1,630 | | Other | 2,900 | 4,456 | | Total accrued expenses | 30,696 | 34,422 | 9. Related Party Transactions Transactions with WPP ($ thousands) | Indicator | 3 Months 2024 | 3 Months 2023 | 6 Months 2024 | 6 Months 2023 | | :-------- | :------------ | :------------ | :------------ | :------------ | | Revenue | 1,591 | 2,116 | 3,262 | 4,424 | | Cost of revenues | 2,405 | 2,387 | 4,387 | 5,123 | - As of June 30, 2024, WPP held 11.6% of the company's common stock, with ongoing service transactions including product provision and data collection services. Transactions with Charter and its affiliates resulted in $0.501 million and $1.042 million in revenue and $5.607 million and $11.213 million in cost of revenues for the three and six months ended June 30, 2024, respectively, with ongoing discussions regarding a disputed DLA agreement with Charter Operating[54][56][57] Balance Sheet Balances with Charter and Affiliates ($ thousands) | Item | June 30, 2024 | December 31, 2023 | | :--- | :------------ | :---------------- | | Accounts payable | 13,704 | 10,323 | | Accrued expenses | 5,588 | 3,382 | | Non-current portion of accrued data costs | 23,903 | 21,908 | 10. Organizational Restructuring - The company announced a restructuring plan on September 29, 2022, involving workforce reductions, resource reallocation, technology platform modernization, and data storage consolidation to improve cost efficiency, with the plan expected to be substantially complete in 2024[60] Restructuring Expenses ($ thousands) | Item | 3 Months 2024 | 3 Months 2023 | 6 Months 2024 | 6 Months 2023 | | :--- | :------------ | :------------ | :------------ | :------------ | | Severance and related costs | 425 | 3,773 | 826 | 4,661 | | Other | 68 | 331 | 127 | 441 | | Total restructuring expenses | 493 | 4,104 | 953 | 5,102 | 11. Commitments and Contingencies - The company has long-term contractual arrangements, including data acquisition obligations with MVPDs and other providers totaling $301.8 million and $28.2 million, respectively, along with fixed payment obligations for leases and cloud data storage and bandwidth agreements[63] Contractual Obligations ($ thousands) | Year | Amount | | :--- | :------ | | 2024 (remaining) | 29,488 | | 2025 | 55,381 | | 2026 | 59,572 | | 2027 | 47,781 | | 2028 | 39,756 | | Thereafter | 97,944 | | Total | 329,922 | - The company is involved in various legal proceedings, but management believes the ultimate outcome of currently pending matters will not have a material adverse effect on its financial position, results of operations, or cash flows[66][67] 12. Subsequent Events - On July 24, 2024, the company issued 13,257,294 additional preferred shares to existing preferred shareholders to offset $32.8 million in accrued dividend obligations, which also reduced the special dividend threshold from $100 million to $47 million[69] Management's Discussion and Analysis of Financial Condition and Results of Operations Overview Comscore is a global information and analytics company that measures audience, consumer behavior, and advertising across media platforms using proprietary data science - The company provides cross-media audience measurement, advertising validation, and consumer segmentation services by integrating data from digital platforms, TV, DTC applications, and movie screens, leveraging proprietary data science[72] - The company's products assist digital publishers, TV stations, film studios, brand advertisers, agencies, and technology providers in understanding and monetizing their audiences and developing more effective marketing strategies[72] Results of Operations For the three months ended June 30, 2024, revenue decreased 8.4% to $85.8 million, while net loss significantly narrowed due to prior-year goodwill impairment, with operating and selling and marketing costs declining from restructuring Summary of Results of Operations ($ thousands) | Indicator | 3 Months 2024 | 3 Months 2023 | 6 Months 2024 | 6 Months 2023 | | :-------- | :------------ | :------------ | :------------ | :------------ | | Revenue | 85,837 | 93,684 | 172,632 | 185,242 | | Operating loss | (1,928) | (47,379) | (3,805) | (51,206) | | Net loss | (1,708) | (44,909) | (2,762) | (53,580) | Revenues Revenue Changes by Solution Group ($ thousands) | Solution Group | 3 Months 2024 | 3 Months 2023 | Change ($) | Change (%) | | :------------- | :------------ | :------------ | :--------- | :--------- | | Content and Advertising Measurement | 72,189 | 77,347 | (5,158) | (6.7)% | | - Syndicated Audience | 64,189 | 69,139 | (4,950) | (7.2)% | | - Cross-Platform | 8,000 | 8,208 | (208) | (2.5)% | | Research and Insights Solutions | 13,648 | 16,337 | (2,689) | (16.5)% | | Total Revenues | 85,837 | 93,684 | (7,847) | (8.4)% | - Content and advertising measurement revenue declined primarily due to lower renewal rates for syndicated audience products (especially national TV and syndicated digital) and reduced cloud computing and processing reimbursements for certain custom TV dataset deliveries, while research and insights solutions revenue decreased due to fewer custom digital product deliveries[76][77] Cost of Revenues Composition and Changes in Cost of Revenues ($ thousands) | Item | 3 Months 2024 | 3 Months 2023 | Change ($) | Change (%) | | :--- | :------------ | :------------ | :--------- | :--------- | | Data costs | 19,543 | 18,078 | 1,465 | 8.1% | | Personnel costs | 9,930 | 9,910 | 20 | 0.2% | | Systems and bandwidth costs | 6,548 | 10,321 | (3,773) | (36.6)% | | Lease expense and depreciation | 6,543 | 5,507 | 1,036 | 18.8% | | Panel costs | 3,073 | 3,539 | (466) | (13.2)% | | Total Cost of Revenues | 51,953 | 52,958 | (1,005) | (1.9)% | - System and bandwidth costs decreased due to lower cloud computing and processing costs for certain custom TV dataset deliveries, and panel costs declined from reduced recruitment and support for desktop and mobile panels, partially offset by increased data costs from expanded data coverage and higher TV data licensing[81] Selling and Marketing Composition and Changes in Selling and Marketing Expenses ($ thousands) | Item | 3 Months 2024 | 3 Months 2023 | Change ($) | Change (%) | | :--- | :------------ | :------------ | :--------- | :--------- | | Personnel costs | 11,508 | 13,904 | (2,396) | (17.2)% | | Total Selling and Marketing Expenses | 14,812 | 17,036 | (2,224) | (13.1)% | - Selling and marketing expenses decreased primarily due to reduced headcount resulting from the restructuring plan[83][84] Research and Development Composition and Changes in Research and Development Expenses ($ thousands) | Item | 3 Months 2024 | 3 Months 2023 | Change ($) | Change (%) | | :--- | :------------ | :------------ | :--------- | :--------- | | Personnel costs | 6,129 | 7,160 | (1,031) | (14.4)% | | Professional services fees | 691 | 97 | 594 | 612.4% | | Total Research and Development Expenses | 8,373 | 8,790 | (417) | (4.7)% | - Research and development expenses decreased primarily due to reduced headcount from the restructuring plan, despite a significant increase in professional services fees[85][86] General and Administrative Composition and Changes in General and Administrative Expenses ($ thousands) | Item | 3 Months 2024 | 3 Months 2023 | Change ($) | Change (%) | | :--- | :------------ | :------------ | :--------- | :--------- | | Personnel costs | 5,992 | 6,961 | (969) | (13.9)% | | Professional services fees | 2,749 | 3,598 | (849) | (23.6)% | | Total General and Administrative Expenses | 11,334 | 13,274 | (1,940) | (14.6)% | - General and administrative expenses decreased primarily due to reduced headcount resulting from the restructuring plan[88][89] Amortization of Intangible Assets - Amortization of intangible assets decreased by $2 million to $1.6 million for the six months ended June 30, 2024, compared to $3.6 million in the prior year, primarily because certain customer relationship, methodology, and technology intangible assets from the 2016 Rentrak merger reached the end of their useful lives in 2023[90] Organizational Restructuring - Restructuring expenses were $0.5 million and $1.0 million for the three and six months ended June 30, 2024, respectively, compared to $4.1 million and $5.1 million in the prior-year periods, primarily related to the 2022 workforce reduction plan, which is expected to be substantially complete in 2024[91] Impairment of Goodwill - In Q2 2023, the company recorded a $44.1 million non-cash goodwill impairment charge following a review triggered by declining stock price and market capitalization[92] Other Income (Expense), Net - Changes in other income (expense), net, were primarily driven by fair value adjustments to warrant liabilities, with gains in the three and six months ended June 30, 2024, resulting from a decrease in common stock trading price in Q1 2024 and the unexercised expiration of Series A warrants in Q2 2024[93][94] (Loss) Gain From Foreign Currency Transactions - Foreign currency transaction (loss) gain was ($0.2) million and $0.7 million for the three and six months ended June 30, 2024, respectively, primarily influenced by fluctuations in the Euro and Chilean Peso against the U.S. Dollar and the Chilean Peso against the Euro[95] Interest Expense, Net - Interest expense, net, was $0.4 million and $1.0 million for the three and six months ended June 30, 2024, respectively, primarily comprising interest on the revolving credit agreement and finance leases[96] Income Tax Benefit - Income tax benefit was $0.5 million and $0.7 million for the three and six months ended June 30, 2024, respectively, with effective tax rates of 23.9% and 20.1%, primarily differing from 2023 due to the income tax benefit associated with the 2023 goodwill impairment[97] Liquidity and Capital Resources The company's liquidity relies on operating cash flow and a revolving credit agreement, which was amended in May 2024 to reduce borrowing capacity and increase interest rates, with preferred stock dividends settled via additional preferred shares Summary of Cash Flows ($ thousands) | Indicator | 6 Months 2024 | 6 Months 2023 | | :-------- | :------------ | :------------ | | Net cash provided by operating activities | 15,603 | 16,218 | | Net cash used in investing activities | (12,120) | (12,006) | | Net cash used in financing activities | (10,960) | (2,179) | | Net (decrease) increase in cash, cash equivalents, and restricted cash | (8,093) | 2,613 | Overview - The company's primary cash uses include data acquisition, payroll, operating expenses, capital expenditures, debt and lease service, and deferred payments for the Shareablee acquisition, with liquidity as of June 30, 2024, primarily from $14.8 million in cash, cash equivalents, and restricted cash, operating cash flow, and available amounts under the revolving credit agreement[99] - On May 3, 2024, the revolving credit agreement was amended, extending maturity to November 5, 2024, reducing borrowing capacity from $40 million to $25 million, and requiring a $6 million principal repayment, leaving $10 million in outstanding borrowings, $3.2 million in outstanding letters of credit, and $11.8 million in remaining borrowing capacity as of June 30, 2024[99] - Preferred shareholders repeatedly waived annual dividends due in 2023 and 2024, with the company subsequently issuing additional preferred shares on July 24, 2024, to offset these deferred dividend obligations[100] Macroeconomic Factors - Macroeconomic challenges, including inflation, rising interest rates, and recession concerns, have led some advertisers to reduce or delay spending, impacting product demand, with continued advertising market softness expected to affect the company's business in the second half of 2024[101] Preferred Stock - The company issued 82,527,609 shares of preferred stock on March 10, 2021, for $187.9 million in net proceeds, with shareholders entitled to a 7.5% cumulative annual dividend (increasing to 9.5% if unpaid) and the ability to demand a one-time special dividend potentially requiring debt financing[102] - Preferred shareholders repeatedly waived annual dividends due in 2023 and 2024, leading to the issuance of 13,257,294 additional preferred shares on July 24, 2024, to offset $32.8 million in deferred dividend obligations, which also reduced the special dividend threshold from $100 million to $47 million[102][104] Revolving Credit Agreement - The revolving credit agreement was amended on May 3, 2024, extending maturity to November 5, 2024, reducing borrowing capacity to $25 million, and increasing the SOFR-based loan interest rate to 4.50%, with financial covenants requiring maintenance of minimum consolidated fixed charge coverage, minimum consolidated asset coverage, and minimum liquidity, all of which the company met as of June 30, 2024[105] - As of June 30, 2024, the company had $10 million in outstanding borrowings and $3.2 million in outstanding letters of credit, with $11.8 million in remaining borrowing capacity, and its liquidity could be impacted by insufficient operating cash flow or inability to repay or refinance the revolving credit agreement upon its November 2024 maturity[105] Sale of Common Stock and Warrants - The company sold common stock and Series A, B-1, B-2, and C warrants to CVI in 2019 for $20 million in gross proceeds; Series B-1 and B-2 warrants expired unexercised in 2020, Series C warrants were exercised in 2019, and Series A warrants expired unexercised on June 26, 2024[106] Operating Activities - Net cash provided by operating activities was $15.6 million for the six months ended June 30, 2024, slightly lower than $16.2 million in the prior-year period, partly due to reduced net cash generated from operating assets and liabilities, primarily from lower customer billings and cash collections in 2024[107] Investing Activities - Cash used in investing activities primarily funded capitalized internal-use software costs, purchases of computer and networking equipment, and furniture and equipment, totaling $12.1 million for the six months ended June 30, 2024, consistent with the prior-year period[108][109] Financing Activities - Net cash used in financing activities was $11.0 million for the six months ended June 30, 2024, significantly higher than $2.2 million in the prior-year period, primarily due to a $6 million principal repayment on the revolving credit agreement and payment of the second contingent consideration for the 2021 Shareablee acquisition[110] Contractual Payment Obligations - The company has long-term contractual payment obligations, including data licensing agreements with MVPDs and connected TV providers totaling $301.8 million and $28.2 million, respectively, operating and finance leases for office space and equipment totaling $43.6 million, and fixed payment obligations for cloud data storage and bandwidth agreements totaling $21.3 million[111] Future Capital Requirements - The company's ability to generate cash is influenced by performance, macroeconomic conditions, and industry trends; if existing cash, cash equivalents, and operating cash flow are insufficient, the company may need to raise additional funds through equity or debt financing, or for repayment of the revolving credit agreement and preferred stock dividends[112] Critical Accounting Estimates The company's financial statements rely on management's critical accounting estimates and assumptions regarding revenue recognition, deferred taxes, goodwill, intangible assets, leases, contingencies, and equity awards - The preparation of the company's financial statements relies on critical accounting estimates and assumptions concerning revenue recognition, deferred tax assets and liabilities, goodwill and intangible asset valuation, lease accounting, contingent matters, and equity award valuation[113] Quantitative and Qualitative Disclosures about Market Risk The company faces interest rate risk from its revolving credit agreement, which was amended in May 2024 to increase the SOFR-based loan interest rate to 4.50%, and foreign currency exchange rate risk from global operations - The company is exposed to interest rate risk, primarily from its revolving credit agreement, and foreign currency exchange rate risk from its global operations; the revolving credit agreement was amended on May 3, 2024, increasing the SOFR-based loan interest rate to 4.50%[114] Controls and Procedures Evaluation of Disclosure Controls and Procedures As of June 30, 2024, the CEO and CFO concluded that the company's disclosure controls and procedures were effective in ensuring timely and accurate information reporting - As of June 30, 2024, the company's Chief Executive Officer and Chief Financial Officer evaluated and concluded that its disclosure controls and procedures were effective in providing reasonable assurance that information is timely recorded, processed, summarized, and reported[115] Changes in Internal Control over Financial Reporting No significant changes in internal control over financial reporting occurred during the quarter that materially affected or are reasonably likely to materially affect internal control - No significant changes in internal control over financial reporting occurred during the quarter that materially affected, or are reasonably likely to materially affect, internal control over financial reporting[116] Inherent Limitation on the Effectiveness of Internal Controls Any internal control system has inherent limitations, providing reasonable rather than absolute assurance, and while the company monitors and upgrades controls, future effectiveness cannot be guaranteed - Any system of internal controls has inherent limitations, providing reasonable rather than absolute assurance, and while the company continues to monitor and upgrade its internal controls, it cannot guarantee their effectiveness in future periods[117] PART II. OTHER INFORMATION ITEM 1. Legal Proceedings This section refers to Note 11, "Commitments and Contingencies," in the financial statements for detailed information on the company's legal proceedings - Legal proceedings information is incorporated by reference to Note 11, 'Commitments and Contingencies,' to the condensed consolidated financial statements in Part I, Item 1 of this Form 10-Q[119] ITEM 1A. Risk Factors The company faces significant risks of insufficient cash to meet obligations and potential substantial dilution for existing shareholders from current and future equity issuances - The company faces significant risk of being unable to generate or obtain sufficient cash to meet its debt, dividend obligations, facility leases, and trade payables, which could limit its flexibility to invest in the business and adapt to market changes, potentially leading to bankruptcy or liquidation[121] - The company's existing securities, such as preferred stock, warrants, stock options, and restricted stock units, and any future equity issuances, could result in immediate and substantial dilution for existing shareholders, reducing their percentage ownership of common stock[122] ITEM 2. Unregistered Sales of Equity Securities, Use of Proceeds, and Issuer Purchases of Equity Securities For the three months ended June 30, 2024, there were no unregistered sales of equity securities, use of proceeds, or issuer purchases of equity securities - For the three months ended June 30, 2024, there were no unregistered sales of equity securities, use of proceeds, or issuer purchases of equity securities[123] ITEM 3. Defaults Upon Senior Securities Not applicable - Not applicable[123] ITEM 4. Mine Safety Disclosures Not applicable - Not applicable[123] ITEM 5. Other Information During the quarter ended June 30, 2024, no directors or officers adopted or terminated Rule 10b5-1 trading arrangements or non-Rule 10b5-1 trading arrangements - During the quarter ended June 30, 2024, no directors or officers adopted or terminated Rule 10b5-1 trading arrangements or non-Rule 10b5-1 trading arrangements[124] ITEM 6. Exhibits This section lists various exhibits filed with Form 10-Q, including articles of incorporation, preferred stock certificates, revolving credit agreement amendments, equity incentive plans, and waiver and subscription agreements - Exhibits include articles of incorporation, preferred stock certificates of designation, revolving credit agreement amendments, equity incentive plans, cash incentive plans, and waiver and subscription agreements related to preferred shareholders[126][127] SIGNATURE This report was formally signed by Comscore, Inc. on August 9, 2024, authorized by Mary Margaret Curry, Chief Financial Officer and Treasurer - This report was formally signed by Comscore, Inc. on August 9, 2024, authorized by Chief Financial Officer and Treasurer Mary Margaret Curry[129][130]