QUINSTREET, INC – 10-K – Management’s Discussion and Analysis of Financial Condition and Results of Operations – InsuranceNewsNet

You ought to learn the next dialogue and evaluation of our monetary situation
and outcomes of operations at the side of the consolidated monetary
statements and the notes thereto included elsewhere on this report. The
following dialogue incorporates forward-looking statements that mirror our plans,
estimates and beliefs. Our precise outcomes might differ materially from these
mentioned within the forward-looking statements. Factors that might trigger or
contribute to those variations embody these mentioned beneath and elsewhere in
this report, notably within the sections titled "Cautionary Note on
Forward-Looking Statements" and "Risk Factors."

Management Overview

We are a frontrunner in efficiency marketplaces and applied sciences for the monetary
companies and dwelling companies industries. We specialise in buyer acquisition for
shoppers in excessive worth, information-intensive markets or "verticals," together with
monetary companies and dwelling companies. Our shoppers embody some of the world's
largest firms and manufacturers in these markets. The majority of our operations
and income are in North America.

We ship measurable and cost-effective advertising and marketing outcomes to our shoppers,
usually within the type of certified inquiries similar to clicks, leads, calls,
functions, or clients. Clicks, leads, calls, and functions can then
convert right into a buyer or sale for shoppers at a charge that leads to an
acceptable advertising and marketing price to them. We are usually paid by shoppers after we
ship certified inquiries within the type of clicks, leads, calls, functions,
or clients, as outlined by our agreements with them. References to the supply
of clients means a sale or accomplished buyer transaction (e.g., funded loans,
certain insurance coverage insurance policies or buyer appointments with shoppers). Because we bear
the prices of media, our applications should lead to engaging advertising and marketing prices to
our shoppers at media prices and margins that present sound monetary outcomes for
us. To ship clicks, leads, calls, functions, and clients to our shoppers,
usually we:

• personal or entry focused media via enterprise preparations (e.g., income

sharing preparations with on-line writer companions, giant and small) or by

buying media (e.g., clicks from main search engines like google and yahoo);

• run ads or different kinds of advertising and marketing messages and applications in

that media that lead to client or customer responses, usually within the

type of clicks (by a client to additional qualification or matching steps,

or to on-line consumer functions or choices), leads (e.g., client

contact data), calls (from a client or to a client by our owned

and operated or contracted name facilities or by that of our shoppers or their

       brokers), functions (e.g., for enrollment or a monetary product), or
       clients (e.g., funded private loans); and

• constantly search to show shoppers and consumer choices to guests or

customers that end result within the most quantity of customers discovering options

that may meet their wants and to which they may take motion to reply,

leading to media shopping for effectivity (e.g., by segmenting media or visitors

in order that essentially the most acceptable shoppers or consumer choices could be displayed

or “matched” to every phase based mostly on match, response charges or conversion

       charges);


   •   via expertise and analytics, search to optimize mixture of
       goals to fulfill the utmost quantity of purchasing or researching

guests or customers, ship on consumer advertising and marketing goals, successfully

compete for on-line media, and generate a sound monetary consequence for us.

Our main monetary goal has been and stays creating income development
from sustainable sources, at goal ranges of profitability. Our main
monetary goal is to not maximize short-term earnings, however relatively to attain
goal ranges of profitability whereas investing in varied development initiatives, as
we proceed to imagine we're within the early levels of a big, long-term market
alternative.

Our enterprise derives its internet income primarily from charges earned via the
supply of certified inquiries similar to clicks, leads, calls, functions, or
clients. Through a vertical focus, focused media presence and our expertise
platform, we're in a position to ship focused, measurable advertising and marketing outcomes to our
shoppers.

Our monetary companies consumer vertical represented 72%, 74% and 75% of internet
income in fiscal years 2022, 2021 and 2020. Our dwelling companies consumer vertical
represented 27%, 23% and 10% of internet income in fiscal years 2022, 2021 and 2020.
Other income, which primarily contains our efficiency advertising and marketing company and
expertise companies, represented 1% of internet income in fiscal years 2022 and
2021. In addition, income acknowledged from our divested companies (together with
our former schooling consumer vertical, business-to-business expertise consumer
vertical, mortgage enterprise, and Brazil companies) represented 0%, 2% and 15%
of internet income for fiscal years 2022, 2021 and 2020. See
Note 7, Divestitures, to our consolidated monetary statements for extra
data associated to the divestitures. We generated the bulk of our
income from gross sales to shoppers in the United States.

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Trends Affecting our Business

Client Verticals

Our monetary companies consumer vertical has been challenged by a quantity of
components prior to now, together with the restricted availability of top quality media at
acceptable margins attributable to the acquisition of media sources by opponents,
elevated competitors for top of the range media and modifications in search engine
algorithms. These components might affect our enterprise sooner or later once more. To offset
this affect, now we have enhanced our product set to offer larger segmentation,
matching, transparency and proper pricing of media which have enabled higher
monetization to offer larger entry to top quality media sources. Moreover,
now we have entered into strategic partnerships and acquisitions to extend and
diversify our entry to high quality media and consumer budgets. Our monetary companies
consumer vertical additionally advantages from extra spending by shoppers in digital media and
efficiency advertising and marketing as digital advertising and marketing continues to evolve.

In addition, inside our monetary companies consumer vertical, we derive a
vital quantity of income from auto insurance coverage carriers and the monetary
outcomes rely upon the efficiency of the auto insurance coverage {industry}. For instance,
weather-related and provide chain occasions have led to will increase in insurance coverage
{industry} loss ratios, which decreased our shoppers' promoting spending and
thereby had a cloth antagonistic impact on our enterprise. More lately, the auto
insurance coverage {industry} has skilled re-rating and associated challenges, which has
affected and might proceed to have an effect on our operations and monetary leads to the
auto insurance coverage enterprise.

On July 1, 2020, we accomplished the acquisition of Modernize, a number one dwelling
enchancment efficiency advertising and marketing firm, to broaden our buyer and media
relationships within the dwelling companies consumer vertical. Our dwelling companies consumer
vertical has been increasing over the previous a number of years, primarily pushed by
profitable execution of development initiatives and synergies with the Modernize
acquisition.

Acquisitions and Divestitures

Acquisitions have traditionally been, and proceed to be, an essential aspect of
our general company technique and use of capital. We have accomplished a number of
strategic acquisitions prior to now, together with the acquisitions of Modernize,
Mayo Labs and FCE accomplished in fiscal yr 2021, and the acquisitions of AmOne,
CCM, and MBT accomplished in fiscal yr 2019.

Furthermore, because of this of the choice to slender our focus to the most effective
performing companies and market alternatives, we accomplished a collection of
enterprise divestitures, together with the divestiture of our former schooling consumer
vertical accomplished in fiscal yr 2021, and the divestitures of our former B2B
consumer vertical, our companies in Brazil consisting of QSB and VEMM together with
its pursuits in EDB, and our mortgage enterprise accomplished in fiscal yr 2020.

For detailed data concerning our acquisitions and divestitures, seek advice from
Note 6, Acquisitions, and Note 7, Divestitures, respectively, to our
consolidated monetary statements.

Development, Acquisition and Retention of High Quality Targeted Media

One of the first challenges of our enterprise is discovering or creating media that
is top of the range and focused sufficient to draw prospects for our shoppers at
prices that present a sound monetary consequence for us. In order to develop our
enterprise, we should have the ability to discover, develop, or purchase and retain high quality
focused media on an economical foundation. Consolidation of media sources,
modifications in search engine algorithms and elevated competitors for out there
media has, throughout some durations, restricted and might proceed to restrict our skill to
generate income at acceptable margins. To offset this affect, now we have developed
new sources of media, together with getting into into strategic partnerships with different
advertising and marketing and media firms and acquisitions. Such partnerships embody
takeovers of efficiency advertising and marketing features for big net media properties;
backend monetization of unmatched visitors for shoppers with giant media buys; and
white label merchandise for different efficiency advertising and marketing firms. We have additionally
centered on rising our income from name heart, e mail, cellular and social media
visitors sources.

Seasonality

Our outcomes are topic to vital fluctuation because of this of seasonality.
In specific, our quarters ending December 31 (our second fiscal quarter) are
usually characterised by seasonal weak spot. In our second fiscal quarters,
there's usually decrease availability of media through the vacation interval on a
price efficient foundation and some of our shoppers have decrease budgets. In our quarters
ending March 31 (our third fiscal quarter), this pattern usually reverses with
higher media availability and usually new budgets in the beginning of the yr for
our shoppers with fiscal years ending December 31.

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Our outcomes are additionally topic to fluctuation because of this of seasonality in our
shoppers' enterprise. For instance, income in our dwelling companies consumer vertical is
topic to cyclical and seasonal tendencies, as the buyer demand for dwelling
companies usually rises through the spring and summer time seasons and declines
through the fall and winter seasons. Other components affecting our shoppers'
companies embody macro components similar to credit score availability available in the market,
rates of interest, the power of the financial system and employment.

Regulations

Our income has fluctuated partially because of this of federal, state and
industry-based laws and growing requirements with respect to the
enforcement of these laws. Our enterprise is affected straight as a result of we
function web sites and conduct telemarketing and e mail advertising and marketing, and not directly
affected as our shoppers modify their operations because of this of regulatory
modifications and enforcement exercise that have an effect on their industries.

Clients in our monetary companies vertical have been affected by legal guidelines and
laws and the elevated enforcement of new and pre-existing legal guidelines and
laws. The impact of these laws, or any future laws, might
proceed to lead to fluctuations within the quantity and combine of our enterprise with
these shoppers.

An instance of a regulatory change that will have an effect on our enterprise is the modification
of the Telephone Consumer Protection Act (the "TCPA") that impacts telemarketing
calls. Our shoppers might make enterprise choices based mostly on their very own experiences
with the TCPA regardless of our merchandise and compliance practices. Those
choices might negatively have an effect on our income and profitability.

COVID-19

We proceed to watch the impacts from the COVID-19 pandemic that will
unfavorably have an effect on our enterprise, similar to reductions in consumer spending on
advertising and marketing and promoting, drops in media availability or efficiency,
deteriorating client spending, fluctuations in rates of interest, and credit score
high quality of our receivables. The COVID-19 pandemic has affected and might proceed
to have an effect on our enterprise operations, together with our workers, shoppers, publishers,
enterprise companions, and communities, and there's substantial uncertainty within the
nature and diploma of its continued results over time. For instance, inside our
monetary companies consumer vertical, sure traces of enterprise, similar to credit score
playing cards and banking, have seen and might proceed to see reductions in near-term
demand for our companies because of the weakened, or extra weakening of,
financial and employment situations, and the uncertainty over the size and
depth of the financial downturn. The extent to which the COVID-19 pandemic
impacts our enterprise going ahead will rely upon quite a few evolving components we
can't reliably predict, together with the period and scope of the pandemic;
resurgences of the pandemic because of the emergence and persistency of new variants
to COVID-19 or in any other case; enterprise and people' actions in response to the
pandemic; additional actions taken by governmental authorities to restrict the human
and financial affect of the pandemic (e.g., stimulus funds); the continued
growth, efficacy and prevalence of use of vaccines for COVID-19; and the
affect of the pandemic on financial exercise together with the size and depth of
financial or monetary market instability. These components might adversely affect
client, enterprise, and authorities spending in addition to our shoppers' skill to
pay for our companies on an ongoing foundation. Refer to Risk Factors (Part I, Item 1A
of this Form 10-K) for a dialogue of these components and different dangers.

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Basis of Presentation

Net Revenue

Our enterprise generates income primarily from charges earned via the supply
of certified inquiries similar to clicks, leads, calls, functions, or clients.
We ship focused and measurable outcomes via a vertical focus, which
contains our monetary companies consumer vertical and our dwelling companies consumer
vertical. All remaining companies that aren't vital sufficient for separate
reporting are included in different income. Our income acknowledged in fiscal years
2021 and 2020 additionally included the income generated from the divested companies
(together with our former schooling consumer vertical, business-to-business expertise
consumer vertical, mortgage enterprise, and Brazil companies). See
Note 7, Divestitures, to our consolidated monetary statements for extra
data associated to the divestitures.

Cost of Revenue

Cost of income consists primarily of media and advertising and marketing prices, personnel
prices, amortization of intangible belongings, depreciation expense and services
expense. Media and advertising and marketing prices consist primarily of charges paid to third-party
publishers, media homeowners or managers, or to strategic companions which might be straight
associated to a revenue-generating occasion and of pay-per-click, or PPC, advert purchases
from Internet search firms. We pay these third-party publishers, media
homeowners or managers, strategic companions and Internet search firms on a
revenue-share, a cost-per-lead, or CPL, or cost-per-click, or CPC, foundation.
Personnel prices embody salaries, stock-based compensation expense, bonuses,
commissions and associated taxes, and worker profit prices. Personnel prices are
primarily associated to people related to sustaining our servers and
web sites, our name heart operations, our editorial workers, consumer administration,
artistic workforce, content material, compliance group and media buying analysts. Costs
related to software program incurred within the growth part or obtained for
inside use are capitalized and amortized to price of income over the
software program's estimated helpful life.

Operating Expenses

We classify our working bills into three classes: product growth,
gross sales and advertising and marketing, and basic and administrative. Our working bills
consist primarily of personnel prices and, to a lesser extent, skilled
companies charges, services charges and different prices. Personnel prices for every
class of working bills usually embody salaries, stock-based
compensation expense, bonuses, commissions and associated taxes, and worker
profit prices.

Product Development. Product growth bills consist primarily of personnel
prices, services charges and skilled companies charges associated to the event
and upkeep of our merchandise and media administration platform. We are
constraining bills usually to the extent practicable.

Sales and Marketing. Sales and advertising and marketing bills consist primarily of personnel
prices, services charges and skilled companies charges. We are constraining
bills usually to the extent practicable.

General and Administrative. General and administrative bills consist
primarily of personnel prices of our finance, authorized, worker advantages and
compliance, technical help and different administrative personnel, accounting and
authorized skilled companies charges, services charges and dangerous debt expense. We are
constraining bills usually to the extent practicable.

Interest and Other Income, Net

Interest and different revenue, internet, consists primarily of curiosity expense, curiosity
revenue, and different revenue and expense. Interest expense is expounded to imputed
curiosity on post-closing funds associated to our acquisitions. We haven't any
borrowing agreements excellent as of June 30, 2022; nonetheless curiosity expense
might enhance if, amongst different issues, we enter into a brand new borrowing settlement
to handle liquidity or make extra acquisitions via debt financing.
Interest revenue represents curiosity earned on our money and money equivalents,
which can enhance or lower relying on market rates of interest and the
quantities invested. Other revenue and expense contains positive aspects and losses on international
forex change, positive aspects and losses on divestitures of subsidiaries, consumer
verticals and belongings that weren't thought-about to be strategically essential to
our enterprise, and different non-operating objects.

Benefit from (Provision for) Income Taxes

We are topic to tax in the United States in addition to different tax jurisdictions or
nations during which we conduct enterprise. Earnings from our restricted non-U.S.
actions are topic to native nation revenue tax and could also be topic to U.S.
revenue tax.

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Results of Operations

The following desk units forth our consolidated statements of operations for the
durations indicated:

                                                   Fiscal Year Ended June 30,
                                 2022                         2021                        2020
                                               (In 1000's, besides percentages)
Net income             $ 582,099         100.0 %    $ 578,487         100.0 %   $ 490,339         100.0 %
Cost of income (1)       528,368          90.8        507,956          87.8       437,864          89.3
Gross revenue               53,731           9.2         70,531          12.2        52,475          10.7
Operating bills:
(1)
Product growth        21,906           3.7         19,344           3.3        14,206           2.9
Sales and advertising and marketing        11,042           1.9         10,991           1.9         8,876           1.8
General and
administrative             25,501           4.4         26,270           4.6        23,188           4.7
Operating (loss)
revenue                     (4,718 )        (0.8 )       13,926           2.4         6,205           1.3
Interest revenue                10             -             39             -           230             -
Interest expense           (1,075 )        (0.2 )       (1,296 )        (0.2 )        (696 )        (0.1 )
Other revenue, internet              21             -         16,660           2.9        12,947           2.6
(Loss) revenue earlier than
revenue taxes               (5,762 )        (1.0 )       29,329           5.1        18,686           3.8
Benefit from
(provision for)
revenue taxes                  514           0.1         (5,774 )        (1.0 )        (584 )        (0.1 )
Net (loss) revenue       $  (5,248 )        (0.9 )%   $  23,555           4.1 %   $  18,102           3.7 %


(1) Cost of income and working bills embody stock-based compensation

    expense as follows:



Cost of income              $ 7,475       1.3 %   $ 8,997       1.6 %   $ 8,569       1.7 %
Product growth            2,575       0.4       2,339       0.4       1,819       0.4
Sales and advertising and marketing            2,378       0.4       2,459       0.4       1,701       0.3
General and administrative     6,078       1.0       5,838       1.0       4,628       0.9


Gross Profit

                       Fiscal Year Ended June 30,            2022 - 2021        2021 - 2020
                    2022          2021          2020          % Change           % Change
                             (In 1000's)
Net income       $ 582,099     $ 578,487     $ 490,339                 1 %               18 %
Cost of income     528,368       507,956       437,864                 4 %               16 %
Gross revenue      $  53,731     $  70,531     $  52,475               (24 %)              34 %


Net Revenue

Net income elevated by $3.6 million, or 1%, in fiscal yr 2022 in comparison with
fiscal yr 2021. Revenue from our dwelling companies consumer vertical elevated by
$24.3 million, or 18%, primarily because of this of elevated consumer budgets and the
profitable integration of the Modernize acquisition. Revenue from our monetary
companies consumer vertical decreased by $9.7 million, or 2%, primarily on account of a
lower in income in our insurance coverage enterprise related to decreased spending
by insurance coverage carriers to handle profitability issues attributable to larger
incident charges, weather-related catastrophes, inflation, and larger prices to
restore and change automobiles. This is offset by a rise in income in our
credit-driven companies on account of some financial restoration from the affect of the
COVID-19 pandemic. Other income, which primarily contains efficiency advertising and marketing
company and expertise companies, contributed $6.2 million of income for fiscal
yr 2022, as in comparison with $5.5 million of income for fiscal yr 2021. The
divestiture of our former schooling consumer vertical, accomplished in fiscal yr
2021, resulted in a lower in income by $11.6 million for fiscal yr 2022,
as in comparison with fiscal yr 2021.

Net income elevated by $88.1 million, or 18%, in fiscal yr 2021 in comparison with
fiscal yr 2020. Revenue from our dwelling companies consumer vertical elevated by
$84.6 million, or 169%, primarily because of this of inorganic and natural (synergy)
income results from the acquisition of Modernize accomplished in fiscal yr 2021.
Revenue from our monetary companies consumer vertical elevated by $60.5 million,
or 17%, primarily on account of our enhanced product set and knowledge analytics that
enabled entry to extra media and a rise

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in consumer budgets in our insurance coverage enterprise, offset by a decline in income in
the credit-driven companies on account of weakening financial and employment
situations attributable to COVID-19. Other income, which primarily
contains efficiency advertising and marketing company and expertise companies, contributed $5.5
million of income for fiscal yr 2021. The enterprise divestitures accomplished in
fiscal years 2021 and 2020 decreased income by $62.5 million for fiscal yr
2021.

Cost of Revenue and Gross Profit Margin

Cost of income elevated by $20.4 million, or 4%, in fiscal yr 2022 in contrast
to fiscal yr 2021. This was primarily pushed by elevated media and advertising and marketing
prices of $15.4 million, elevated personnel prices of $3.3 million and elevated
amortization of intangible belongings of $0.5 million. The enhance in media and
advertising and marketing prices was related to larger income volumes. The enhance in
personnel prices was primarily attributable to the next headcount. The enhance in
amortization expense was primarily because of the acquisitions of intangible belongings
in fiscal yr 2022. Gross revenue margin, which is the distinction between internet
income and price of income as a proportion of internet income, was 9% in fiscal
yr 2022 in comparison with 12% in fiscal yr 2021. The lower in gross revenue
margin was primarily attributable to elevated media and advertising and marketing prices as a
proportion of income.

Cost of income elevated by $70.1 million, or 16%, in fiscal yr 2021 in contrast
to fiscal yr 2020. This was primarily pushed by elevated media and advertising and marketing
prices of $58.0 million, elevated personnel prices together with stock-based
compensation expense of $6.0 million, and elevated amortization of intangible
belongings of $4.7 million. The enhance in media and advertising and marketing prices was related
with larger income volumes. The enhance in personnel prices was primarily due
to larger headcount related to the Modernize acquisition, elevated
incentive compensation related to the achievement of efficiency goals
for fiscal yr 2021 and elevated stock-based compensation expense. The
enhance in amortization expense was primarily because of the acquisitions of
intangible belongings in fiscal yr 2021. Gross revenue margin was 12% in fiscal
yr 2021 in comparison with 11% in fiscal yr 2020. The enhance in gross revenue
margin was primarily attributable to decreased media and advertising and marketing prices as a
proportion of income.

Operating Expenses

                                       Fiscal Year Ended June 30,            2022 - 2021        2021 - 2020
                                    2022          2021          2020          % Change           % Change
                                             (In 1000's)
Product growth              $   21,906     $  19,344     $  14,206                13 %               36 %
Sales and advertising and marketing                  11,042        10,991         8,876                 - %               24 %
General and administrative           25,501        26,270        23,188                (3 %)              13 %
Operating bills               $   58,449     $  56,605     $  46,270                 3 %               22 %

Product Development Expenses

Product growth bills elevated by $2.6 million, or 13%, in fiscal yr
2022 in comparison with fiscal yr 2021. This was primarily on account of elevated personnel
prices of $1.5 million because of this of larger headcount, and elevated
skilled companies prices of $0.7 million.

Product growth bills elevated by $5.1 million, or 36%, in fiscal yr
2021 in comparison with fiscal yr 2020. This was primarily on account of elevated personnel
prices of $4.5 million because of this of larger headcount related to the
Modernize acquisition, elevated incentive compensation related to the
achievement of efficiency goals for fiscal yr 2021 and elevated
stock-based compensation expense.

Sales and Marketing Expenses

Sales and advertising and marketing bills have been roughly flat in fiscal yr 2022
in comparison with fiscal yr 2021.

Sales and advertising and marketing bills elevated by $2.1 million, or 24%, in fiscal yr
2021 in comparison with fiscal yr 2020. This was primarily on account of elevated personnel
prices of $2.2 million because of this of elevated incentive compensation related
with the achievement of efficiency goals for fiscal yr 2021 and
elevated stock-based compensation expense.

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General and Administrative Expenses

General and administrative bills decreased by $0.8 million, or 3%, in fiscal
yr 2022 in comparison with fiscal yr 2021. This was primarily on account of an adjustment
to contingent consideration of $0.9 million recorded in fiscal yr 2022.

General and administrative bills elevated by $3.1 million, or 13%, in fiscal
yr 2021 in comparison with fiscal yr 2020. This was primarily on account of elevated
personnel prices of $2.0 million because of this of elevated stock-based
compensation expense and elevated incentive compensation related to the
achievement of efficiency goals for fiscal yr 2021.

Interest and Other Income, Net

                                       Fiscal Year Ended June 30,            2022 - 2021        2021 - 2020
                                    2022          2021          2020          % Change           % Change
                                             (In 1000's)
Interest revenue                  $       10     $      39     $     230               (74 %)             (83 %)
Interest expense                     (1,075 )      (1,296 )        (696 )             (17 %)              86 %
Other revenue, internet                        21        16,660        12,947              (100 %)              29 %

Interest and different revenue, internet $ (1,044 ) $ 15,403 $ 12,481

          (107 %)              23 %


Interest revenue pertains to curiosity earned on our money and money equivalents in
fiscal years 2022, 2021 and 2020.

Interest expense decreased by $0.2 million, or 17%, in fiscal yr 2022 in contrast
to fiscal yr 2021 primarily on account of decreased imputed curiosity on a decrease
common excellent stability of the post-closing funds associated to our enterprise
acquisitions. Interest expense elevated by $0.6 million, or 86%, in fiscal yr
2021 in comparison with fiscal yr 2020 primarily on account of elevated imputed curiosity on
the next common excellent stability of the post-closing funds associated to our
enterprise acquisitions accomplished in fiscal yr 2021.

Other revenue, internet, was immaterial in fiscal yr 2022. Other revenue, internet, was
$16.7 million in fiscal yr 2021 primarily on account of a acquire of $16.6 million
acknowledged from the divestiture of our schooling consumer vertical. Other revenue,
internet, was $12.9 million in fiscal yr 2020 primarily on account of a internet disposition
acquire of $13.6 million acknowledged from the enterprise divestitures accomplished throughout
the fiscal yr.

Benefit from (Provision for) Income Taxes

                                                         Fiscal Year Ended June 30,
                                                     2022            2021          2020
                                                               (In 1000's)
Benefit from (provision for) revenue taxes           $   514       $    (5,774 )   $ (584 )
Effective tax charge                                      8.9 %            19.7 %      3.1 %


We recorded a profit from revenue taxes of $0.5 million in fiscal yr 2022,
primarily because of this of a internet profit for deferred federal and state revenue
taxes of $0.9 million offset by present state and international taxes of $0.4 million.

We recorded a provision for revenue taxes of $5.8 million in fiscal yr 2021,
primarily because of this of deferred federal and state revenue taxes of $5.3 million
and present state and international taxes of $0.4 million.

We recorded a provision for revenue taxes of $0.6 million in fiscal yr 2020,
primarily because of this of deferred federal and state revenue taxes of $3.5
million, offset by an anticipated tax refund of $3.1 million to be obtained from
the California Franchise Tax Board, based mostly on a settlement reached within the third
quarter of fiscal yr 2020.

Our efficient tax charge was 8.9%, 19.7%, and 3.1% in fiscal years 2022, 2021 and
2020.

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A provision of the Tax Cuts and Jobs Act (TCJA) is efficient for us for the
fiscal yr ending June 30, 2023, creating a big change to the remedy
of analysis and experimental (R&E) expenditures beneath Section 174 of the IRC
(Sec. 174 bills). Historically, companies have had the choice of deducting
Sec. 174 bills within the yr incurred or capitalizing and amortizing the prices
over 5 years. The new TCJA provision, nonetheless, eliminates this selection and
requires Sec. 174 bills related to analysis carried out within the U.S. to be
capitalized and amortized over a 5-year interval. For bills related to
analysis outdoors of the United States, Sec. 174 bills are required to be
capitalized and amortized over a 15-year interval. We are at present assessing the
affect of the availability, nonetheless a cloth affect to money taxes shouldn't be anticipated
on account of out there internet working losses and tax credit.

Liquidity and Capital Resources

As of June 30, 2022, our principal sources of liquidity consisted of money and
money equivalents of $96.4 million and money we anticipate to generate from future
operations. Our money and money equivalents are maintained in extremely liquid
investments with remaining maturities of 90 days or much less on the time of
buy. We imagine our money equivalents are liquid and accessible.

Our short-term and long-term liquidity necessities primarily come up from our
working capital necessities, capital expenditures, inside software program
growth prices, repurchases of our widespread inventory, and acquisitions from time
to time. Our acquisitions additionally might have deferred buy worth parts and
contingent consideration which requires us to make a collection of funds
following the acquisition time limit. Our main working money necessities
embody the fee of media prices, personnel prices, prices of data
expertise techniques and workplace services. Our skill to fund these necessities
will rely upon our future money flows, that are decided, partially, by future
working efficiency and are, subsequently, topic to prevailing world
macroeconomic situations together with the affect of COVID-19, and monetary,
enterprise and different components, some of that are past our management. Even although we
might not want extra funds to fund anticipated liquidity necessities, we might
nonetheless elect to acquire debt financing or difficulty extra fairness securities for
different causes.

We imagine that our principal sources of liquidity will probably be enough to fulfill
our at present anticipated money necessities via at the very least the subsequent 12 months
and thereafter for the foreseeable future.

The following desk summarizes our money flows for the durations indicated:

                                                            Fiscal Year Ended June 30,
                                                         2022          2021          2020
                                                                  (In 1000's)
Net money offered by working
actions                                             $  28,672     $  50,615     $  47,608
Net money (utilized in) offered by
investing actions                                      (9,225 )     (36,457 )       8,868
Net money utilized in financing
actions                                               (33,315 )     (11,312 )     (11,632 )

Net Cash Provided by Operating Activities

Cash flows from working actions are primarily the end result of our internet (loss)
revenue adjusted for depreciation and amortization, provision for or profit from
gross sales returns and uncertain accounts receivable, stock-based compensation
expense, change within the honest worth of contingent consideration, non-cash lease
expense, positive aspects and losses on divestitures of companies, deferred revenue taxes
and modifications in working capital parts.

Cash offered by working actions was $28.7 million in fiscal yr 2022
in comparison with $50.6 million in fiscal yr 2021 and $47.6 million in fiscal yr
2020.

Cash offered by working actions in fiscal yr 2022 consisted of internet loss
of $5.2 million, adjusted for non-cash changes of $33.8 million and modifications
in working capital accounts of $0.1 million. The non-cash changes primarily
consisted of depreciation and amortization of $17.0 million and stock-based
compensation expense of $18.5 million. The modifications in working capital accounts
have been primarily attributable to a lower in accrued liabilities of $5.0 million
and a lower in accounts payable of $2.9 million, offset by a lower in
accounts receivable of $5.5 million and a lower in pay as you go bills and different
belongings of $3.0 million. The decreases in accounts receivable, accrued
liabilities and accounts payable have been primarily on account of decrease income ranges in
the 2 months ended June 30, 2022 as in comparison with the 2 months ended June 30,
2021, and the timing of receipts and funds. The lower in pay as you go bills
and different belongings was primarily because of the state tax refund of $3.3 million.

Cash offered by working actions in fiscal yr 2021 consisted of internet
revenue of $23.6 million, adjusted for non-cash changes of $24.2 million and
modifications in working capital accounts of $2.8 million. The non-cash changes
primarily consisted

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of stock-based compensation expense of $19.6 million, depreciation and
amortization of $16.2 million, and a lower in deferred tax belongings of $5.4
million primarily on account of provision for revenue taxes recorded in fiscal yr
2021, offset by a acquire of $16.6 million acknowledged from the divestiture of our
schooling consumer vertical. The modifications in working capital accounts have been
primarily attributable to a rise in accrued liabilities of $10.6 million,
a rise in accounts payable of $6.6 million, and a lower in pay as you go
bills and different belongings of $6.0 million, offset by a rise in accounts
receivable of $20.1 million. The will increase in accounts payable and accrued
liabilities have been because of the timing of funds. The lower in pay as you go bills
and different belongings was primarily because of the refund of an unamortized pay as you go
expense of $5.3 million. The enhance in accounts receivable was because of the
timing of receipts.

Cash offered by working actions in fiscal yr 2020 consisted of internet
revenue of $18.1 million, adjusted for non-cash changes of $19.4 million and
modifications in working capital accounts of $10.1 million. The non-cash changes
primarily consisted of stock-based compensation expense of $16.7 million and
depreciation and amortization of $11.5 million, offset by a internet disposition acquire
of $13.6 million acknowledged from the enterprise divestitures accomplished in fiscal
yr 2020. The modifications in working capital accounts have been primarily attributable
to a lower in accounts receivable of $11.4 million and a lower in different
belongings, noncurrent of $5.5 million, offset by a rise in pay as you go bills
and different belongings of $8.1 million. The lower in accounts receivable was on account of
the timing of receipts. The lower in different belongings, noncurrent, was primarily
on account of a reclassification of unamortized pay as you go expense of $4.3 million from
long-term to short-term as we anticipated to obtain fee throughout the subsequent 12
months. The enhance in pay as you go bills and different belongings was primarily on account of
the reclassification of $4.3 million as mentioned above, in addition to an anticipated
tax refund of $3.1 million to be obtained from the California Franchise Tax
Board, based mostly on a settlement reached within the third quarter of fiscal yr 2020.

Net Cash (Used in) Provided by Investing Activities

Cash flows from investing actions usually embody capital expenditures,
capitalized inside software program growth prices, acquisitions occasionally,
enterprise divestitures, and funding in fairness securities.

Cash utilized in investing actions was $9.2 million in fiscal yr 2022, in contrast
to money utilized in investing actions of $36.5 million in fiscal yr 2021 and
money offered by investing actions of $8.9 million in fiscal yr 2020.

Cash utilized in investing actions in fiscal yr 2022 was primarily on account of
capital expenditures and inside software program growth prices of $7.5 million,
and $1.8 million money paid on the closing of two immaterial acquisitions
accomplished in fiscal yr 2022.

Cash utilized in investing actions in fiscal yr 2021 was primarily on account of
funds for the acquisitions of Modernize, Mayo Labs and FCE, internet of money
acquired, of $49.3 million, capital expenditures and inside software program
growth prices of $5.1 million, and funding in fairness securities of $4.0
million, offset by $21.9 million of money obtained from the divestitures of our
schooling consumer vertical and B2B consumer vertical.

Cash offered by investing actions in fiscal yr 2020 was primarily on account of
$15.4 million money obtained from the enterprise divestitures accomplished in fiscal
yr 2020, internet of money divested of $0.3 million, offset by capital expenditures
and inside software program growth prices of $4.3 million, and a money fee of
$2.0 million related to an insignificant enterprise acquisition accomplished in
fiscal yr 2020.

Net Cash Used in Financing Activities

Cash flows from financing actions usually embody repurchases of widespread
inventory, fee of withholding taxes associated to the discharge of restricted inventory,
internet of share settlement, proceeds from the train of inventory choices, and
post-closing funds associated to enterprise acquisitions.

Cash utilized in financing actions was $33.3 million in fiscal yr 2022,
in comparison with money utilized in financing actions of $11.3 million in fiscal yr
2021 and $11.6 million in fiscal yr 2020.

Cash utilized in financing actions in fiscal yr 2022 was on account of repurchases of
widespread inventory of $15.3 million, fee of post-closing funds and contingent
consideration associated to acquisitions of $12.6 million, and the fee of
withholding taxes associated to the discharge of restricted inventory, internet of share
settlement of $7.3 million, offset by proceeds from the train of inventory
choices of $1.9 million.

Cash utilized in financing actions in fiscal yr 2021 was because of the fee of
withholding taxes associated to the discharge of restricted inventory, internet of share
settlement of $8.0 million, and fee of post-closing funds and contingent
consideration associated to acquisitions of $7.7 million, offset by proceeds from
the train of inventory choices of $4.4 million.

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Cash utilized in financing actions in fiscal yr 2020 was because of the
post-closing funds and contingent consideration associated to acquisitions of
$9.3 million, and funds of withholding taxes associated to the discharge of
restricted inventory, internet of share settlement of $6.4 million, offset by proceeds
from the train of inventory choices of $4.1 million.

Off-Balance Sheet Arrangements

During the durations offered, we didn't have any materials relationships with
unconsolidated entities or monetary partnerships, similar to entities usually
known as structured finance or particular goal entities, which might have
been established for the aim of facilitating off-balance sheet preparations
or different contractually slender or restricted functions.

Contractual Obligations

The following desk units forth funds due beneath our contractual obligations as
of June 30, 2022:

                                       Total         Less than 1 Year       1-3 Years       3-5 Years
                                                              (In 1000's)
Operating leases (1)                 $   10,865     $            6,084     $     4,708     $        73
Post-closing fee associated to
acquisitions (2)                         28,437                 11,673          11,816           4,948
Contingent consideration associated
to acquisitions (2)                       1,787                  1,102             685               -
Total                                $   41,089     $           18,859     $    17,209     $     5,021


(1) We lease varied workplace services, together with our company headquarters in

Foster City, California. The phrases of sure lease agreements embody lease

escalation provisions and tenant enchancment allowances.

In February 2010, we entered right into a lease settlement for our company
headquarters situated at 950 Tower Lane, Foster City, California with an
expiration date in October 2018 and an choice to increase the time period of the lease
twice by one extra yr. In April 2018, the lease settlement was amended to
lengthen the lease time period via October 31, 2023. Under the amended lease
settlement, through the first yr of the prolonged lease time period, the month-to-month base
lease was abated for the primary eight months and elevated to $0.2 million for the
remaining 4 months. During the second yr of the prolonged lease time period, the
month-to-month base lease was abated for the primary 5 months and elevated to $0.3
million for the remaining seven months. Subsequently, after every 12-month
anniversary, the month-to-month base lease will increase by roughly 3%. We have an
choice to increase the time period of the lease for a further 5 years following
October 31, 2023.
(2) In accordance with the phrases of the acquisitions accomplished in fiscal years

2022, 2021 and 2019, we’re required to make post-closing funds and

contingent consideration funds. See Note 6, Acquisitions, to our

consolidated monetary statements for extra data on the post-closing

funds and contingent consideration funds associated to our enterprise

acquisitions.

The above desk doesn’t embody roughly $2.5 million of long-term revenue
tax liabilities for uncertainty in revenue taxes on account of the truth that we’re
unable to moderately estimate the timing of these potential future funds.

Critical Accounting Policies and Estimates

We have ready our consolidated monetary statements in conformity with
accounting ideas usually accepted in the United States of America
("GAAP"). In doing so, we're required to make estimates and assumptions that
have an effect on the reported quantities of belongings and liabilities, disclosure of contingent
belongings and liabilities on the date of the monetary statements and reported
quantities of income and bills through the reporting interval. Actual outcomes might
differ considerably from these estimates. Some of the estimates and assumptions
we're required to make relate to issues which might be inherently unsure as they
pertain to future occasions. We base these estimates and assumptions on historic
expertise or on varied different components that we imagine to be affordable and
acceptable beneath the circumstances. On an ongoing foundation, we rethink and
consider our estimates and assumptions.

We refer to those estimates and assumptions as important accounting insurance policies and
estimates. We imagine that the important accounting insurance policies listed beneath contain
our extra vital judgments, estimates and assumptions and, subsequently, might
have the best potential affect on our consolidated monetary statements. In
addition, we imagine {that a} dialogue of these insurance policies is critical to
perceive and consider the consolidated monetary statements contained on this
report.

See Note 2, Summary of Significant Accounting Principles, to our consolidated
monetary statements for additional data on our important and different
vital accounting insurance policies.

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Revenue Recognition

We generate our income primarily from charges earned via the supply of
certified inquiries similar to clicks, leads, calls, functions, or clients. We
acknowledge income after we switch management of promised items or companies to our
shoppers in an quantity that displays the consideration to which we anticipate to be
entitled in change for these items or companies. We acknowledge income pursuant
to the five-step framework contained in ASC 606, Revenue from Contracts with
Customers: (i) establish the contract with a consumer; (ii) establish the
efficiency obligations within the contract, together with whether or not they're distinct in
the context of the contract; (iii) decide the transaction worth, together with
the constraint on variable consideration; (iv) allocate the transaction worth to
the efficiency obligations within the contract; and (v) acknowledge income when (or
as) the Company satisfies the efficiency obligations.

As half of figuring out whether or not a contract exists, chance of assortment is
assessed on a client-by-client foundation on the outset of the contract. Clients are
subjected to a credit score overview course of that evaluates the shoppers' monetary
place and the power and intention to pay. If it's decided from the
outset of an association that the consumer doesn't have the power or intention
to pay, we'll conclude {that a} contract doesn't exist and will constantly
reassess our analysis till we're in a position to conclude {that a} contract does
exist.

Generally, our contracts specify the interval of time as one month, however in some
cases the time period could also be longer. However, for many of our contracts with
shoppers, both social gathering can terminate the contract at any time with out penalty.
Consequently, enforceable rights and obligations solely exist on a day-to-day
foundation, leading to particular person day by day contracts through the specified time period of the
contract or till one social gathering terminates the contract previous to the top of the
specified time period.

We have assessed the companies promised in our contracts with shoppers and have
recognized one efficiency obligation, which is a collection of distinct companies.
Depending on the consumer's wants, these companies consist of a specified or an
limitless quantity of clicks, leads, calls, functions, clients, and so on.
(hereafter collectively known as "advertising and marketing outcomes") to be delivered over
a interval of time. We fulfill these efficiency obligations over time because the
companies are offered. We don't promise to offer some other vital items
or companies to our shoppers.

Transaction worth is measured based mostly on the consideration that we anticipate to
obtain from a contract with a consumer. Our contracts with shoppers comprise
variable consideration as the value for a person advertising and marketing end result varies on
a day-to-day foundation relying on the market-driven quantity a consumer has dedicated
to pay. However, as a result of we make sure the said interval of our contracts doesn't
usually span a number of reporting durations, the contractual quantity inside a
interval relies on the quantity of advertising and marketing outcomes delivered throughout the interval.
Therefore, the transaction worth for any given interval is mounted and no estimation
of variable consideration is required.

If a advertising and marketing end result delivered to a consumer doesn't meet the contractual
necessities related to that advertising and marketing end result, our contracts enable for
shoppers to return a advertising and marketing end result usually inside 5-10 days of having
obtained the advertising and marketing end result. Such returns are factored into the quantity billed
to the consumer on a month-to-month foundation and consequently lead to a discount to
income in the identical month the advertising and marketing result's delivered. No warranties are
supplied to our shoppers.

We don't allocate transaction worth as now we have just one efficiency obligation
and our contracts don't usually span a number of durations. Taxes collected from
shoppers and remitted to governmental authorities should not included in income. We
elected to make use of the sensible expedient which permits us to document gross sales
commissions as expense as incurred when the amortization interval would have been
one yr or much less.

We invoice shoppers month-to-month in arrears for the advertising and marketing outcomes delivered throughout
the previous month. Our commonplace fee phrases are 30-60 days. Consequently, we
shouldn't have vital financing parts in our preparations.

Separately from the agreements that now we have with shoppers, now we have agreements
with Internet search firms, third-party publishers and strategic companions
that we interact with to generate focused advertising and marketing outcomes for our shoppers. We
obtain a charge from our shoppers and individually pay a charge to the Internet search
firms, third-party publishers and strategic companions. We consider whether or not we
are the principal (i.e., report income on a gross foundation) or agent (i.e., report
income on a internet foundation). In doing so, we first consider whether or not we management the
items or companies earlier than they're transferred to the shoppers. If we management the
items or companies earlier than they're transferred to the shoppers, we're the
principal within the transaction. As a end result, the charges paid by our shoppers are
acknowledged as income and the charges paid to our Internet search firms,
third-party publishers and strategic companions are included in price of income.
If we don't management the products or companies earlier than they're transferred to the
shoppers, we're the agent within the transaction and acknowledge income on a internet
foundation. We have one subsidiary, CCM, which supplies efficiency advertising and marketing company
and expertise companies to shoppers in monetary companies, schooling and different
markets, recognizing income on a internet foundation. Determining whether or not we management the
items or companies earlier than they're transferred to the shoppers might require
judgment.

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Stock-Based Compensation

We measure and document the expense associated to stock-based transactions based mostly on
the honest values of stock-based fee awards, as decided on the date of
grant. The honest worth of restricted inventory items with a service situation
("service-based RSU") is decided based mostly on the closing worth of our widespread
inventory on the date of grant. To estimate the honest worth of inventory choices and
buy rights granted beneath the worker inventory buy plan ("ESPP"), we
chosen the Black-Scholes choice pricing mannequin. The honest worth of restricted
inventory items with a service and efficiency situation ("performance-based RSU")
is decided based mostly on the closing worth of our widespread inventory on the date of
grant. Grant date as outlined by ASC 718 is decided when the parts that
comprise the efficiency targets have been absolutely established. If a grant date
has not been established, the compensation expense related to the
performance-based RSUs is re-measured at every reporting date based mostly on the
closing worth of our widespread inventory at every reporting date till the grant date
has been established. For restricted inventory items with a service and market
situation ("market-based RSU"), we chosen the Monte Carlo simulation mannequin to
estimate the honest worth on the date of grant. In making use of these fashions, our
dedication of the honest worth of the award is affected by assumptions
concerning a quantity of subjective variables. These variables embody, however should not
restricted to, the anticipated inventory worth volatility over the time period of the award and
the workers' precise and projected inventory choice train and pre-vesting
employment termination behaviors. We estimate the anticipated volatility of our
widespread inventory based mostly on our historic volatility over the anticipated time period of the
award. We haven't any historical past or expectation of paying dividends on our widespread
inventory. The risk-free rate of interest relies on the U.S. Treasury yield for a
time period according to the anticipated time period of the award.

We acknowledge stock-based compensation expense for choices and service-based RSUs
utilizing the straight-line technique, and for performance-based RSUs and market-based
RSUs utilizing the graded vesting technique, based mostly on awards in the end anticipated to
vest. We acknowledge stock-based compensation expense for the acquisition rights
granted beneath the ESPP utilizing the straight-line technique over the providing interval.
We estimate future forfeitures on the date of grant. On an annual foundation, we
assess modifications to our estimate of anticipated forfeitures based mostly on current
forfeiture exercise. The impact of changes made to the forfeiture charges, if
any, is acknowledged within the interval that change is made.

Business Combinations

We account for enterprise combos utilizing the acquisition technique, which
requires that the overall consideration for every of the acquired enterprise be
allotted to the belongings acquired and liabilities assumed based mostly on their
estimated honest values on the acquisition date. The extra of the acquisition worth
over the honest values of these identifiable belongings and liabilities is recorded as
goodwill. During the measurement interval, which can be as much as one yr from the
acquisition date, we might document changes to the belongings acquired and
liabilities assumed with the corresponding offset to goodwill.

In figuring out the honest worth of belongings acquired and liabilities assumed in a
enterprise mixture, we used the revenue strategy to worth our most important
acquired belongings. Significant assumptions regarding our estimates within the revenue
strategy embody base income, income development charge internet of consumer attrition,
projected gross margin, low cost charges, projected working bills and the
future efficient revenue tax charges. The valuations of our acquired companies
have been carried out by a third-party valuation specialist beneath our administration's
supervision. We imagine that the estimated honest worth assigned to the belongings
acquired and liabilities assumed are based mostly on affordable assumptions and
estimates that market individuals would use. However, such assumptions are
inherently unsure and precise outcomes might differ from these estimates.
Future modifications in our assumptions or the interrelationship of these assumptions
might negatively affect future valuations. In future measurements of honest worth,
antagonistic modifications in discounted money movement assumptions might lead to an
impairment of goodwill or intangible belongings that will require a non-cash cost
to the consolidated statements of operations and might have a cloth impact on
our monetary situation and working outcomes.

Acquisition associated prices should not thought-about half of the consideration, and are
expensed as working bills as incurred. Contingent consideration, if any, is
measured at honest worth initially on the acquisition date in addition to subsequently
on the finish of every reporting interval till settlement on the finish of the
evaluation interval. We embody the outcomes of operations of the companies
acquired as of the start of the acquisition dates.

Goodwill

We conduct a take a look at for the impairment of goodwill on the reporting unit degree on
at the very least an annual foundation and every time there are occasions or modifications in
circumstances that will extra possible than not cut back the estimated honest worth of
a reporting unit beneath its carrying worth. Application of the goodwill
impairment take a look at requires judgment, together with the identification of reporting
items, assigning belongings and liabilities to reporting items, assigning goodwill
to reporting items, and figuring out the honest worth of every reporting unit.
Significant judgments required to estimate the honest worth of reporting items
embody estimating future money flows and figuring out acceptable low cost charges,
development charges, an acceptable management premium and different assumptions. Changes in
these

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estimates and assumptions might materially have an effect on the dedication of honest
worth for every reporting unit which might set off impairment.

We carry out our annual goodwill impairment take a look at on April 30 and conduct a
qualitative evaluation to find out whether or not it's essential to carry out a
quantitative goodwill impairment take a look at. In assessing the qualitative components, we
take into account the affect of key components similar to modifications within the basic financial
situations together with the affect of COVID-19, modifications in {industry} and aggressive
setting, inventory worth, precise income efficiency in comparison with earlier years,
forecasts and money movement technology. We had one reporting unit for functions of
allocating and testing goodwill for fiscal years 2022 and 2021. Based on the
outcomes of the qualitative evaluation accomplished as of April 30, 2022 and 2021,
there have been no indicators of impairment.

Long-Lived Assets

We consider long-lived belongings, similar to property and tools and bought
intangible belongings with finite lives, for impairment every time occasions or modifications
in circumstances point out that the carrying worth of an asset will not be
recoverable. If mandatory, a quantitative take a look at is carried out that requires the
utility of judgment when assessing the honest worth of an asset. When we
establish an impairment, we cut back the carrying quantity of the asset to its
estimated honest worth based mostly on a reduced money movement strategy or, when out there
and acceptable, to comparable market values. As of April 30, 2022 and 2021, we
evaluated our long-lived belongings and concluded there have been no indicators of
impairment.

Income Taxes

We account for revenue taxes utilizing an asset and legal responsibility strategy to document
deferred taxes. Our deferred revenue tax belongings symbolize short-term variations
between the monetary assertion carrying quantity and the tax foundation of present
belongings and liabilities that may lead to deductible quantities in future years,
together with internet working loss carry forwards. Deferred tax belongings and liabilities
are measured utilizing the at present enacted tax charges that apply to taxable revenue
in impact for the years during which these tax belongings and liabilities are anticipated
to be realized or settled. Valuation allowances are offered when essential to
cut back deferred tax belongings to the quantity anticipated to be realized. We commonly
assess the realizability of our deferred tax belongings. Judgment is required to
decide whether or not a valuation allowance is critical and the quantity of such
valuation allowance, if acceptable. We take into account all out there proof, each
optimistic and destructive, to find out, based mostly on the load of out there proof,
whether or not it's extra possible than not that some or all of the deferred tax belongings
won't be realized. In evaluating the necessity, or continued want, for a valuation
allowance we take into account, amongst different issues, the character, frequency and severity of
present and cumulative taxable revenue or losses, forecasts of future
profitability, and the period of statutory carryforward durations. Our judgment
concerning future profitability might change on account of future market situations
together with the affect of COVID-19, modifications in U.S. or worldwide tax legal guidelines and
different components.

We acknowledge tax advantages from an unsure tax place solely whether it is extra
possible than not, based mostly on the technical deserves of the place, that the tax
place will probably be sustained on examination by the tax authorities. The tax
advantages acknowledged within the monetary statements from such positions are then
measured based mostly on the most important profit that has a larger than 50% probability of
being realized upon final settlement.

Recent Accounting Pronouncements

See Note 2, Summary of Significant Accounting Policies, to our consolidated
monetary statements for data with respect to current accounting
pronouncements and the affect of these pronouncements on our consolidated
monetary statements.



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