The following discussion should be read in conjunction with the unaudited
condensed consolidated financial statements and related notes thereto included
elsewhere in this Quarterly Report on Form 10-Q and the audited consolidated
financial statements and related notes thereto included in our Annual Report on
Form 10-K for the year ended
Critical Accounting Policies and Estimates
There have been no material changes to our critical accounting policies and
estimates from the information provided in Item 2, "Management's Discussion and
Analysis of Financial Condition and Results of Operations," included in our
Annual Report filed on Form 10-K for the year ended
Recently Issued Pronouncements
See "Recently Issued Accounting Standards" under Note 1, "Summary of Significant Accounting Policies," of the Notes to Unaudited Condensed Consolidated Financial Statements for a discussion of certain accounting standards that have been issued during 2022.
Use of Non-GAAP Financial Measures
This Form 10-Q includes the following financial measures defined as non-GAAP
financial measures by the
Contribution ex-TAC is a profitability measure akin to gross profit. It is
calculated by deducting traffic acquisition costs ("TAC") from revenue and
reconciled to gross profit through the exclusion of other cost of revenue.
Contribution ex-TAC is not a measure calculated in accordance with
Adjusted EBITDA is our consolidated earnings before financial income (expense), income taxes, depreciation and amortization, adjusted to eliminate the impact of equity awards compensation expense, pension service costs, restructuring related and transformation costs and certain other non-recurring items impacting net income (loss). Adjusted EBITDA and Adjusted EBITDA margin are key measures used by our management and board of directors to understand and evaluate our core operating performance and trends, to prepare and approve our annual budget and to develop short- and long-term operational plans. In particular, we believe that by eliminating equity awards compensation expense, pension service costs, restructuring related and transformation costs, and certain other non-recurring items impacting net income (loss). Adjusted EBITDA and Adjusted EBITDA margin can provide useful measures for period-to-period comparisons of our business. Accordingly, we believe that Adjusted EBITDA and Adjusted EBITDA margin provide useful information to investors and the market generally in understanding and evaluating our results of operations in the same manner as our management and board of directors.
Adjusted Net Income is our net income adjusted to eliminate the impact of equity awards compensation expense, amortization of acquisition-related intangible assets, restructuring related and transformation costs, certain other non-recurring items impacting net income (loss), and the tax impact of these adjustments. Adjusted Net Income and Adjusted diluted EPS are key measures used by our management and board of directors to evaluate operating performance, generate future operating plans and make strategic decisions regarding the allocation of capital. In particular, we believe that by eliminating equity awards compensation expense, amortization of acquisition-related intangible assets, restructuring related and transformation costs, certain other non-recurring items impacting net income (loss), and the tax impact of these adjustments, Adjusted Net Income and Adjusted diluted EPS can provide useful measures for period-to-period comparisons of our business. Accordingly, we believe that Adjusted Net Income and Adjusted diluted EPS provide useful information to investors and the market generally in understanding and evaluating our results of operations in the same manner as our management and board of directors.
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Please refer to the supplemental financial tables provided for a reconciliation
of Contribution ex-TAC to gross profit, Adjusted EBITDA to net income, and
Adjusted Net Income to net income in each case, the most comparable
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