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Table of Contents
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 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 June 30, 2021
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: 001-36384
__________________
MAGNITE, INC.
(Exact name of registrant as specified in its charter)
 __________________
Delaware20-8881738
(State or other jurisdiction of incorporation or organization)(I.R.S. Employer Identification No.)
6080 Center Drive 4th FloorLos Angeles, CA
90045
(Address of principal executive offices, including zip code)
Registrant's telephone number, including area code:
(310) 207-0272
______________

Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading Symbol(s)Name of each exchange on which registered
Common stock, par value $0.00001 per shareMGNINasdaq Global Select 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, a smaller reporting company, or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company," and "emerging growth company" in Rule 12b-2 of the Exchange Act.
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 Act).   Yes  No
Indicate the number of shares outstanding of each of the registrant's classes of common stock, as of the latest practicable date.
ClassOutstanding as of July 26, 2021
Common Stock, $0.00001 par value131,250,746


Table of Contents
MAGNITE, INC.
QUARTERLY REPORT ON FORM 10-Q
TABLE OF CONTENTS
Page No.
Part I.
Item 1.
Item 2.
Item 3.
Item 4.
Part II.
Item 1.
Item 1A.
Item 2.
Item 6.
2

Table of Contents
PART I. FINANCIAL INFORMATION
Item 1. Condensed Consolidated Financial Statements
MAGNITE, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, except per share amounts)
(unaudited)
June 30, 2021December 31, 2020
ASSETS
Current assets:
Cash and cash equivalents
$192,970$117,676
Accounts receivable, net
780,502471,666
Prepaid expenses and other current assets
30,56017,729
TOTAL CURRENT ASSETS
1,004,032607,071
Property and equipment, net
34,42723,681
Right-of-use lease asset
48,93539,599
Internal use software development costs, net
17,40316,160
Intangible assets, net
483,85489,884
Other assets, non-current
6,8934,440
Goodwill
945,731158,125
TOTAL ASSETS
$2,541,275$938,960
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable and accrued expenses
$844,045$509,315
Lease liabilities, current
15,3519,813
Debt, current
3,600
Other current liabilities
10,6823,070
TOTAL CURRENT LIABILITIES
873,678522,198
Debt, non-current, net of debt issuance costs718,641  
Deferred tax liability, net
18,743199
Lease liabilities, non-current
39,67332,278
Other liabilities, non-current
2,8542,672
TOTAL LIABILITIES
1,653,589557,347
Commitments and contingencies (Note 12)


STOCKHOLDERS' EQUITY
Preferred stock, $0.00001 par value, 10,000 shares authorized at June 30, 2021 and December 31, 2020; 0 shares issued and outstanding at June 30, 2021 and December 31, 2020
Common stock, $0.00001 par value; 500,000 shares authorized at June 30, 2021 and December 31, 2020; 131,200 and 114,029 shares issued and outstanding at June 30, 2021 and December 31, 2020, respectively
2 2
Additional paid-in capital
1,259,170 777,084
Accumulated other comprehensive loss(901)(957)
Accumulated deficit
(370,585)(394,516)
TOTAL STOCKHOLDERS' EQUITY
887,686381,613
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY
$2,541,275$938,960

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

3

Table of Contents
MAGNITE, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share amounts)
(unaudited)
 Three Months EndedSix Months Ended
June 30, 2021June 30, 2020June 30, 2021June 30, 2020
Revenue$114,541 $42,348 $175,256 $78,643 
Expenses:
Cost of revenue50,526 21,545 71,282 35,548 
Sales and marketing43,273 20,029 65,862 31,298 
Technology and development18,111 13,063 32,377 23,756 
General and administrative16,980 15,780 31,138 24,907 
Merger, acquisition, and restructuring costs32,632 12,493 35,354 14,423 
Total expenses161,522 82,910 236,013 129,932 
Loss from operations(46,981)(40,562)(60,757)(51,289)
Other (income) expense:
Interest (income) expense, net5,172 2 5,315 (142)
Other income(1,139)(1,284)(2,362)(1,293)
Foreign exchange gain, net(127)(440)(112)(1,138)
Total other (income) expense, net3,906 (1,722)2,841 (2,573)
Loss before income taxes(50,887)(38,840)(63,598)(48,716)
Provision (benefit) for income taxes(87,695)288 (87,529)87 
Net income (loss)$36,808 $(39,128)$23,931 $(48,803)
Net income (loss) per share:
Basic$0.29 $(0.36)$0.20 $(0.60)
Diluted$0.26 $(0.36)$0.18 $(0.60)
Weighted average shares used to compute net income (loss) per share:
Basic125,981 108,530 120,668 81,698 
Diluted142,982 108,530 136,262 81,698 

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


 
4

Table of Contents
MAGNITE, INC.
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
(In thousands)
(unaudited)
Three Months EndedSix Months Ended
June 30, 2021June 30, 2020June 30, 2021June 30, 2020
Net income (loss)$36,808 $(39,128)$23,931 $(48,803)
Other comprehensive income (loss):
Foreign currency translation adjustments369 (1,769)56 (2,558)
Other comprehensive income (loss)369 (1,769)56 (2,558)
Comprehensive income (loss)$37,177 $(40,897)$23,987 $(51,361)

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



5

Table of Contents
 

MAGNITE, INC.
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY
(In thousands)
(unaudited)
Common Stock Additional
Paid-In
Capital
Accumulated  Other
Comprehensive
Income (Loss)
Accumulated
Deficit
Total
Stockholders’
Equity
Shares
Amount
Balance at December 31, 201953,888 $1 $453,064 $(45)$(341,084)$111,936 
Exercise of common stock options27 — 23 — — 23 
Issuance of common stock related to RSU vesting1,861 — — — — — 
Shares withheld related to net share settlement(716)— (7,485)— — (7,485)
Stock-based compensation— — 4,218 — — 4,218 
Other comprehensive loss— — — (789)— (789)
Net loss— — — — (9,675)(9,675)
Balance at March 31, 202055,060

$1 

$449,820 

$(834)

$(350,759)

$98,228 
Exercise of common stock options746— 2,2762,276 
Restricted stock awards, net— — — 
Issuance of common stock related to employee stock purchase plan159 — 693 693 
Issuance of common stock related to RSU vesting1,904 — — 
Shares withheld related to net share settlement(107)— (349)(349)
Issuance of common stock associated with the Merger52,099 1 275,772 275,773 
Exchange of stock options and RSU related to Merger— — 11,646 11,646 
Stock-based compensation— 10,101 10,101 
Other comprehensive loss— — (1,769)(1,769)
Net loss— — (39,128)(39,128)
Balance at Balance at June 30, 2020109,861

$2 

$749,959 

$(2,603)

$(389,887)

$357,471 

6

Table of Contents
Common Stock Additional
Paid-In
Capital
Accumulated  Other
Comprehensive
Income (Loss)
Accumulated
Deficit
Total
Stockholders’
Equity
SharesAmount
Balance at December 31, 2020114,029 $2 $777,084 $(957)$(394,516)$381,613 
Exercise of common stock options733 — 5,785 — — 5,785 
Issuance of common stock related to RSU vesting1,351 — — — — — 
Stock-based compensation— — 7,108 — — 7,108 
Capped call options— — (38,960)— — (38,960)
Other comprehensive loss— — — (313)— (313)
Net loss— — — — (12,877)(12,877)
Balance at March 31, 2021116,113 $2 $751,017 $(1,270)$(407,393)$342,356 
Exercise of common stock options384 — 1,480 — — 1,480 
Issuance of common stock related to employee stock purchase plan121 — 1,154 — — 1,154 
Issuance of common stock related to RSU vesting2,208 — — — — — 
Issuance of common stock associated with the SpotX Acquisition12,374 — 495,591 — — 495,591 
Stock-based compensation— — 9,928 — — 9,928 
Other comprehensive income— — — 369 — 369
Net income— — — — 36,808 36,808 
Balance at Balance at June 30, 2021131,200 $2 $1,259,170 $(901)$(370,585)$887,686 


The accompanying notes to unaudited condensed consolidated financial statements are an integral part of these statements.
7

Table of Contents

MAGNITE, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(unaudited)
Six Months Ended
June 30, 2021June 30, 2020
OPERATING ACTIVITIES:
Net income (loss)$23,931 $(48,803)
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:
Depreciation and amortization48,382 22,081 
Stock-based compensation16,697 13,948 
(Gain) loss on disposal of property and equipment72 (12)
Provision for doubtful accounts(163)44 
Amortization of debt issuance costs1,516  
Non-cash lease expense2,988 (232)
Deferred income taxes(87,202)361 
Unrealized foreign currency gain(1,801)(2,296)
Changes in operating assets and liabilities:
Accounts receivable(109,726)73,728 
Prepaid expenses and other assets997 8,716 
Accounts payable and accrued expenses131,018 (83,193)
Other liabilities702 (5,838)
Net cash provided by (used in) operating activities27,411 (21,496)
INVESTING ACTIVITIES:
Purchases of property and equipment(10,939)(3,420)
Capitalized internal use software development costs(5,178)(4,718)
Cash (used in), net of cash acquired, in merger and acquisition activities(623,974)54,595 
Net cash (used in) provided by investing activities(640,091)46,457 
FINANCING ACTIVITIES:
Proceeds from Convertible Notes offering400,000  
Proceeds from issuance of debt, net of debt discount349,200  
Payment for capped call options(38,960) 
Payment for debt issuance costs(30,378) 
Proceeds from exercise of stock options7,265 2,299 
Proceeds from issuance of common stock under employee stock purchase plan1,154 693 
Taxes paid related to net share settlement (7,834)
Net cash provided by (used in) financing activities688,281 (4,842)
EFFECT OF EXCHANGE RATE CHANGES ON CASH, CASH EQUIVALENTS AND RESTRICTED CASH(109)(265)
CHANGE IN CASH, CASH EQUIVALENTS AND RESTRICTED CASH75,492 19,854 
CASH, CASH EQUIVALENTS AND RESTRICTED CASH — Beginning of period117,731 88,888 
CASH, CASH EQUIVALENTS AND RESTRICTED CASH — End of period$193,223 $108,742 
RECONCILIATION OF CASH, CASH EQUIVALENTS AND RESTRICTED CASH TO CONSOLIDATED BALANCE SHEETS
Cash and cash equivalents$192,970 $107,490 
Restricted cash included in other assets, non-current, and prepaid expenses and other current assets253 1,252 
Total cash, cash equivalents and restricted cash$193,223 $108,742 
The accompanying notes to unaudited condensed consolidated financial statements are an integral part of these statements.
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MAGNITE, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(unaudited)

Six Months Ended
SUPPLEMENTAL DISCLOSURES OF OTHER CASH FLOW INFORMATION:June 30, 2021June 30, 2020
Cash paid for income taxes$677 $306 
Cash paid for interest$1,673 $34 
Capitalized assets financed by accounts payable and accrued expenses$1,915 $56 
Capitalized stock-based compensation$339 $371 
Operating lease right-of-use assets obtained in exchange for new operating lease liabilities$ $162 
Common stock and options issued for Mergers and Acquisitions495,591 $287,418 
Debt discount, non-cash$10,800 $ 

The accompanying notes to unaudited condensed consolidated financial statements are an integral part of these statements.
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MAGNITE, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
Note 1—Organization and Summary of Significant Accounting Policies
Company Overview
Magnite, Inc. ("Magnite" or the "Company"), formerly known as The Rubicon Project, Inc., was formed in Delaware and began operations in April 2007. On April 1, 2020, Magnite completed a stock-for-stock merger with Telaria, Inc. ("Telaria" and such merger the "Telaria Merger"), a leading sell side advertising platform and provider of connected television ("CTV") technology. On April 30, 2021, the Company completed its acquisition of SpotX, Inc. ("SpotX" and such acquisition the "SpotX Acquisition"), a leading CTV and video advertising platform. The Company operates a sell side advertising platform that offers buyers and sellers of digital advertising a single partner for transacting globally across all channels, formats, and auction types. The Company is headquartered in Los Angeles, California and New York, New York.
The Company provides a technology solution to automate the purchase and sale of digital advertising inventory. The Company’s platform features applications and services for sellers of digital advertising inventory, or publishers, that own or operate websites, applications, CTV channels, and other digital media properties, to manage and monetize their inventory; applications and services for buyers, including advertisers, agencies, agency trading desks, and demand side platforms, to buy digital advertising inventory; and a transparent, independent marketplace that brings buyers and sellers together and facilitates intelligent decision making and automated transaction execution at scale. The Company's clients include many of the world's leading sellers and buyers of digital advertising inventory.
Basis of Presentation and Summary of Significant Accounting Policies
The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with United States Generally Accepted Accounting Principles, or GAAP, for interim financial information and the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring adjustments) considered necessary for a fair statement of the results for the interim period presented have been included. Operating results for the three and six months ended June 30, 2021 are not necessarily indicative of the results that may be expected for any future interim period, the year ending December 31, 2021, or for any future year.
The condensed consolidated balance sheet at December 31, 2020 has been derived from the audited financial statements at that date, but does not include all of the disclosures required by GAAP. The accompanying condensed consolidated financial statements should be read in conjunction with the Company's audited consolidated financial statements and notes thereto for the year ended December 31, 2020 included in its 2020 Annual Report on Form 10-K.
Aside from the adoption of ASU 2020-06, as described below, there have been no significant changes in the Company's accounting policies from those disclosed in its audited consolidated financial statements and notes thereto for the year ended December 31, 2020 included in its Annual Report on Form 10-K.
Use of Estimates
The preparation of condensed consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported and disclosed financial statements and accompanying footnotes. Due to the economic uncertainty as a result of the COVID-19 pandemic, it has become more difficult to apply certain assumptions and judgments into these estimates. The extent of the impact of COVID-19 pandemic on the Company's operational and financial performance will depend on future developments, which are highly uncertain and cannot be predicted, including but not limited to, the duration and spread of the pandemic, its severity, including any resurgence, the actions to contain the virus or treat its impact, and how quickly and to what extent normal economic and operating conditions can resume. During the six months ended June 30, 2021, this uncertainty continued to result in a higher level of judgment related to its estimates and assumptions. As of the date of issuance of the condensed consolidated financial statements for the three and six months ended June 30, 2021, the Company is not aware of any specific event or circumstance that would require the Company to update its estimates, judgments, or revise the carrying value of its assets or liabilities. These estimates may change, as new events occur and additional information is obtained, and are recognized in the consolidated financial statements as soon as they become known. Actual results could differ materially from these estimates.
Recently Adopted Accounting Standards
On January 1, 2021, the Company adopted ASU 2020-06, Debt—Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging—Contracts in Entity's Own Equity (Subtopic 815-40): Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity (ASU "2020-06") on a prospective basis, which simplifies the accounting for convertible instruments by reducing the number of accounting models available for convertible debt instruments that require separating embedded conversion features from convertible instruments. This guidance also eliminates the treasury stock method to
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calculate diluted earnings per share for convertible instruments and requires the use of the if-converted method. The adoption of this standard is included in the financial statements as of June 30, 2021 and for the three and six months ended June 30, 2021 and June 30, 2020, respectively. Refer to Note 14—"Convertible Notes" for additional information related to accounting for convertible debt issued during the six months ended June 30, 2021.
On January 1, 2021, the Company adopted ASU 2019-12—Simplifying the Accounting for Income Taxes ("ASU 2019-12"). ASU 2019-12 simplifies the accounting for income taxes by removing certain exceptions to general principles in Topic 740 and clarifies and amends existing guidance for clarity and consistent application. There was no material impact to the quarterly or year to date income tax provision.
Recent Accounting Pronouncements
In March 2020, the FASB issued Update No. 2020-04, Reference Rate Reform (Topic 848), which provides temporary optional guidance to companies impacted by the transition away from the LIBOR. The amendment provides certain expedients and exceptions to applying GAAP in order to lessen the potential accounting burden when contracts, hedging relationships, and other transactions that reference LIBOR as a benchmark rate are modified. Further, in January 2021, the FASB issued Update No. 2021-01, Reference Rate Reform (Topic 848), which clarifies the scope of Topic 848 so that derivatives affected by the discounting transition are explicitly eligible for certain optional expedients and exceptions in Topic 848. These amendments are effective upon issuance and expire on December 31, 2022. The Company is currently assessing the impact of the LIBOR transition on the Company's condensed consolidated financial statements.
The Company does not believe there are any other recently issued and effective or not yet effective pronouncements that would have or are expected to have any significant effect on the Company’s financial position, cash flows or results of operations.
Note 2—Net Income (Loss) Per Share
The following table presents the basic and diluted net loss per share:
Three Months EndedSix Months Ended
June 30, 2021June 30, 2020June 30, 2021June 30, 2020
(in thousands, except per share data)
Basic Income (Loss) Per Share:
Net income (loss)$36,808 $(39,128)$23,931 $(48,803)
Weighted-average common shares outstanding125,981 108,530 120,668 81,698 
Weighted-average common shares outstanding used to compute net income (loss) per share125,981 108,530 120,668 81,698 
Basic net income (loss) per share$0.29 $(0.36)$0.20 $(0.60)
Diluted Income (Loss) Per Share:
Net income (loss)$36,808 $(39,128)$23,931 $(48,803)
Add back:
Interest expense, Convertible Notes, net of tax184  217  
Net income (loss), diluted income (loss)36,992 (39,128)24,148 (48,803)
Weighted-average common shares used in basic EPS125,981 108,530 120,668 81,698 
Dilutive effect of weighted-average common stock options4,622  5,011  
Dilutive effect of weighted-average performance stock units194  196  
Dilutive effect of weighted-average restricted stock units5,878  6,687  
Dilutive effect of weighted-average ESPP45  68  
Dilutive effect of weighted-average Convertible Notes6,262  3,632  
Weighted-average shares used to compute diluted net income (loss) per share142,982 108,530 136,262 81,698 
Diluted net income (loss) per share$0.26 $(0.36)$0.18 $(0.60)
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The following weighted-average shares have been excluded from the calculation of diluted net loss per share attributable to common stockholders for each period presented because they are anti-dilutive:
Three Months EndedSix Months Ended
June 30, 2021June 30, 2020June 30, 2021June 30, 2020
(in thousands)(in thousands)
Options to purchase common stock 1,999  1,619 
Unvested restricted stock awards 1  1 
Unvested restricted stock units 3,805  3,892 
Unvested performance stock units 5  3 
ESPP 30  45 
Total shares excluded from net loss per share 5,840  5,560 

For the three and six months ended June 30, 2021, diluted shares used to compute diluted earnings per share included outstanding performance stock units granted during 2020 and 2021 based on expected achievement of 150% and 0%, respectively. Refer to Note 9—"Stock-Based Compensation" for additional information related to performance stock units.

For the three and six months ended June 30, 2021, the Company included the shares that would be issuable assuming conversion of all of the Convertible Notes (as defined in Note 14). Diluted earnings per share for the Convertible Notes is calculated under the if-converted method in accordance with ASC 260, Earnings Per Share. The Convertible Notes have an initial conversion rate of 15.6539 shares of common stock per $1,000 principal amount of the Convertible Notes, which will be subject to anti-dilution adjustments in certain circumstances. As of June 30, 2021, the number of shares that would be issuable assuming conversion of all of the Convertible Notes is approximately 6,261,560. Refer to Note 14—"Convertible Notes" for additional information related to accounting for Convertible Notes issued and associated Capped Call Transactions.
Note 3—Revenues
For the majority of transactions on the Company's platform, the Company reports revenue on a net basis as it does not act as the principal in the purchase and sale of digital advertising inventory because it does not have control of the digital advertising inventory and does not set prices agreed upon within the auction marketplace. For certain advertising campaigns that are transacted through insertion orders, the Company reports revenue on a gross basis, based primarily on its determination that the Company acts as the primary obligor in the delivery of advertising campaigns for buyers with respect to such transactions.
Prior to the SpotX Acquisition, revenue reported on a gross basis was less than 3% of total revenue. As a result of the SpotX Acquisition, an increased percentage of the Company's revenue is reported on a gross basis. The following table presents our revenue recognized on a net basis and on a gross basis for the three and six months ended June 30, 2021 and June 30, 2020, respectively.
Three Months EndedSix Months Ended
June 30, 2021June 30, 2020June 30, 2021June 30, 2020
(in thousands, except percentages)
Revenue:
Net basis$93,374 82 %$41,856 99 %$152,370 87 %$78,151 99 %
Gross basis21,167 18 492 1 22,886 13 492 1 
Total$114,541 100 %$42,348 100 %$175,256 100 %$78,643 100 %

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The following table presents our revenue by channel for the three and six months ended June 30, 2021 and 2020:
Three Months EndedSix Months Ended
June 30, 2021June 30, 2020June 30, 2021June 30, 2020
(in thousands, except percentages)
Channel:
CTV$45,179 40 %$7,919 19 %$57,155 33 %$7,919 10 %
Desktop28,742 25 15,271 36 49,593 28 30,567 39 
Mobile40,620 35 19,158 45 68,508 39 40,157 51 
Total$114,541 100 %$42,348 100 %$175,256 100 %$78,643 100 %

    The following table presents the Company's revenue disaggregated by geographic location, based on the location of the Company's sellers:
Three Months EndedSix Months Ended
June 30, 2021June 30, 2020June 30, 2021June 30, 2020
(in thousands)(in thousands)
United States$90,600 $30,587 $133,211 $56,120 
International23,941 11,761 42,045 22,523 
Total$114,541 $42,348 $175,256 $78,643 

Payment terms are specified in agreements between the Company and the buyers and sellers on its platform. The Company generally bills buyers at the end of each month for the full purchase price of impressions filled in that month. The Company recognizes volume discounts as a reduction of revenue as they are incurred. Specific payment terms may vary by agreement, but are generally seventy-five days or less. The Company's accounts receivable are recorded at the amount of gross billings to buyers, net of allowances for the amounts the Company is responsible to collect. The Company's accounts payable related to amounts due to sellers are recorded at the net amount payable to sellers (see Note 5). Accordingly, both accounts receivable and accounts payable appear large in relation to revenue reported on a net basis.
Accounts receivable are recorded at the invoiced amount, are unsecured, and do not bear interest. The allowance for doubtful accounts is reviewed quarterly, requires judgment, and is based on the best estimate of the amount of probable credit losses in existing accounts receivable. The Company reviews the status of the then-outstanding accounts receivable on a customer-by-customer basis, taking into consideration the aging schedule of receivables, its historical collection experience, current information regarding the client, subsequent collection history, and other relevant data, in establishing the allowance for doubtful accounts. Accounts receivable is presented net of an allowance for doubtful accounts of $3.3 million at June 30, 2021, and $2.4 million at December 31, 2020. Accounts receivable are written off against the allowance for doubtful accounts when the Company determines amounts are no longer collectible.
The Company reviews the associated payable to sellers for recovery of buyer receivable allowance and write-offs; in some cases, the Company can reduce the payable to sellers. The reduction of seller payables related to recovery of uncollected buyer receivables is netted against allowance expense. The contra seller payables related to recoveries were $2.2 million and $1.5 million as of June 30, 2021 and December 31, 2020, respectively.
The following is a summary of activity in the allowance for doubtful accounts for the three and six months ended June 30, 2021 and 2020:
Three Months EndedSix Months Ended
June 30, 2021June 30, 2020June 30, 2021June 30, 2020
(in thousands)(in thousands)
Allowance for doubtful accounts, Beginning Balance December 31$1,499 $3,080 $2,360 $3,400 
Allowance for doubtful accounts, Merger-assumed410 1,033 410 1,033 
Write-offs(17)(1,156)(21)(1,896)
Increase (decrease) in provision for expected credit losses1,387 1,715 510 2,128 
Recoveries of previous write-offs  20 7 
Allowance for doubtful accounts, June 30$3,279 $4,672 $3,279 $4,672 
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During the three and six months ended June 30, 2021, the provision for expected credit losses associated with accounts receivable increased by $1.4 million and $0.5 million was offset by decreases of contra seller payables related to recoveries of uncollected buyer receivables of $1.4 million and $0.7 million, which resulted in an immaterial amount and $(0.2) million, respectively, of bad debt recoveries. During the three and six months ended June 30, 2020, the provision for expected credit losses associated with accounts receivable of $1.7 million and $2.1 million was offset by increases of contra seller payables related to recoveries of uncollected buyer receivables of $1.7 million and $2.1 million, respectively, which resulted in an immaterial amount of bad debt expense during the period.
Note 4—Fair Value Measurements
Recurring Fair Value Measurements    
Fair value represents the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. Valuation techniques used to measure fair value must maximize the use of observable inputs and minimize the use of unobservable inputs. Observable inputs are based on market data obtained from independent sources. The fair value hierarchy is based on the following three levels of inputs, of which the first two are considered observable and the last one is considered unobservable:
Level 1 – Quoted prices (unadjusted) in active markets for identical assets or liabilities that the Company has the ability to access at the measurement date.
Level 2 – Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly.
Level 3 – Unobservable inputs.
The table below sets forth a summary of financial instruments that are measured at fair value on a recurring basis at June 30, 2021:
TotalQuoted Prices in
Active Markets for
Identical Assets
(Level 1)
Significant Other
Observable Inputs
(Level 2)
Significant
Unobservable Inputs 
(Level 3)
(in thousands)
Cash equivalents
$7,869 $7,869 $ $ 
The table below sets forth a summary of financial instruments that are measured at fair value on a recurring basis at December 31, 2020:
TotalQuoted Prices in
Active Markets for
Identical Assets
(Level 1)
Significant Other
Observable Inputs
(Level 2)
Significant
Unobservable Inputs 
(Level 3)
(in thousands)
Cash equivalents
$7,868 $7,868 $ $ 
At June 30, 2021 and December 31, 2020, cash equivalents of $7.9 million and $7.9 million, respectively, consisted of money market funds and commercial paper, with original maturities of three months or less. The carrying amounts of cash equivalents are classified as Level 1 or Level 2 depending on whether or not their fair values are based on quoted market prices for identical securities that are traded in an active market.
At June 30, 2021, the Company had Convertible Notes included in its balance sheet. The estimated fair value of the Company's Convertible Notes was $354.4 million as of June 30, 2021. The estimated fair value of Convertible Notes is based on market rates and the closing trading price of the Convertible Notes as of June 30, 2021 and is classified as Level 2 in the fair value hierarchy.
There were no transfers between Level 1 and Level 2 fair value measurements during the six months ended June 30, 2021 and the year ended December 31, 2020.
Note 5—Other Balance Sheet Amounts
Accounts payable and accrued expenses included the following:
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June 30, 2021December 31, 2020
(in thousands)
Accounts payable—seller$803,301 $492,605 
Accounts payable—trade16,788 4,268 
Accrued employee-related payables23,956 12,442 
Total$844,045 $509,315 

Restricted cash was $0.3 million and $0.1 million at June 30, 2021 and December 31, 2020, respectively, which was included within other assets, non-current.
Note 6—Goodwill, Intangible Assets, and Capitalized Costs Incurred in Cloud Computing Arrangements
The Company's goodwill balance as of June 30, 2021 and December 31, 2020 was $945.7 million and $158.1 million, respectively. The increase during the six months ended June 30, 2021 was a result of the SpotX Acquisition (see Note 7).

The Company’s intangible assets as of June 30, 2021 and December 31, 2020 included the following:
June 30, 2021December 31, 2020
(in thousands)
Amortizable intangible assets:
Developed technology$359,558 $77,658 
Customer relationships168,250 37,950 
In-process research and development13,830 8,030 
Backlog11,100  
Non-compete agreements1,570 70 
Trademarks500  
Total identifiable intangible assets, gross554,808 123,708 
Accumulated amortization—intangible assets:
Developed technology(38,793)(21,905)
Customer relationships(28,854)(11,877)
In-process research and development(