COMSCORE, INC. (Form: 10-Q, Received: 08/10/2018 06:05:04)

Large accelerated filer

Accelerated filer

Non-accelerated filer

o (Do not check if a smaller reporting company)

Smaller reporting company

Emerging growth company

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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

________________________________________

FORM 10-Q

________________________________________

(Mark One)



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

For the quarterly period ended June 30, 2018



¨	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: 001-33520

________________________________

comScore, Inc.

(Exact name of registrant as specified in its charter)

________________________________



Delaware		54-1955550
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification Number)

11950 Democracy Drive, Suite 600

Reston, Virginia 20190

(Address of Principal Executive Offices)

(703) 438-2000

(Registrant’s Telephone Number, Including Area Code)

________________________________

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 þ No ¨

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate website, if any, every Interactive Data File required to be submitted and posted 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 and post such files). Yes þ 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.

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If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ¨ No þ

Indicate the number of shares outstanding of each of the registrant’s classes of common stock, as of the latest practicable date: As of August 7, 2018 , there were 57,899,906 shares of the registrant’s common stock outstanding.

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COMSCORE, INC.

QUARTERLY REPORT ON FORM 10-Q

FOR THE QUARTER ENDED JUNE 30, 2018

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Cautionary Note Regarding Forward Looking Statements	i
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements	2
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations	33
Item 3. Quantitative and Qualitative Disclosure about Market Risk	47
Item 4. Controls and Procedures	50
PART II. OTHER INFORMATION
Item 1. Legal Proceedings	52
Item 1A. Risk Factors	52
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds	53
Item 3. Defaults Upon Senior Securities	54
Item 4. Mine Safety Disclosures	55
Item 5. Other Information	56
Item 6. Exhibits	56
SIGNATURE	58

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CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q (this "10-Q"), including the information contained in Item 2, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” of this report, and the information incorporated by reference in this 10-Q, contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements are all statements other than statements of historical fact. We attempt, whenever possible, to identify these forward-looking statements by words such as “ may,” “will,” “should,” “could,” “expect,” “plan,” “anticipate,” “believe,” “estimate,” “predict,” “intend,” “potential,” “continue,” “seek” or the negative of those words and other comparable words. Similarly, statements that describe our business strategy, goals, prospects, opportunities, outlook, objectives, plans or intentions are also forward-looking statements. These statements may relate to, but are not limited to, expectations of future operating results or financial performance, macroeconomic trends that we expect may influence our business, plans for financing and capital expenditures, expectations regarding the introduction of new products, regulatory compliance and expected changes in the regulatory landscape affecting our business, planned remediation activities, expected impact of litigation and litigation settlements, including the expected contribution by insurance providers, plans for growth and future operations, effects of acquisitions, divestitures and partnerships, as well as assumptions relating to the foregoing.

Forward-looking statements are inherently subject to risks and uncertainties, some of which cannot be predicted or quantified. These statements are based on current expectations and assumptions regarding future events and business performance and involve known and unknown risks, uncertainties and other factors that may cause actual events or results to be materially different from any future events or results expressed or implied by these statements. These factors include those set forth in the following discussion and elsewhere within this report.

We believe that it is important to communicate our future expectations to our investors. However, there may be events in the future that we are not able to accurately predict or control and that may cause our actual results to differ materially from the expectations we describe in our forward-looking statements. You should not place undue reliance on these forward-looking statements, which apply only as of the date of this 10-Q. You should carefully review the risk factors described in other documents that we file from time to time with the U.S. Securities and Exchange Commission, or "SEC". Except as required by applicable law, including the rules and regulations of the SEC, we do not plan to publicly update or revise any forward-looking statements, whether as a result of any new information, future events or otherwise, other than through the filing of periodic reports in accordance with the Securities Exchange Act of 1934, as amended. Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, performance or achievements.

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PART I. FINANCIAL INFORMATION

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ITEM 1.	FINANCIAL STATEMENTS

COMSCORE, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands, except share amounts)



	As of			As of
	June 30, 2018			December 31, 2017
	(Unaudited)
Assets
Current assets:
Cash and cash equivalents	$	46,589		$	37,859
Restricted cash	6,599			7,266
Accounts receivable, net of allowances of $1,510 and $1,991, respectively ($1,409 and $2,899 of accounts receivable attributable to related parties, respectively)	70,182			82,029
Prepaid expenses and other current assets	19,523			15,168
Insurance recoverable on litigation settlements	10,000			37,232
Total current assets	152,893			179,554
Property and equipment, net	27,669			28,893
Other non-current assets	9,143			7,259
Deferred tax assets	3,619			4,532
Intangible assets, net	143,004			159,777
Goodwill	641,702			642,424
Total assets	$	978,030		$	1,022,439
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable ($977 and $2,715 attributable to related parties, respectively)	$	18,352		$	27,889
Accrued expenses ($5,745 and $5,857 attributable to related parties, respectively)	52,485			86,031
Accrued litigation settlements	3,800			27,718
Other current liabilities	10,335			10,485
Customer advances ($988 and $2,755 attributable to related parties, respectively)	86,310			98,367
Total current liabilities	171,282			250,490
Financing derivatives (related party)	15,900			—
Senior secured convertible notes (related party)	174,404			—
Deferred tax liabilities	5,590			3,641
Accrued litigation settlements	1,750			90,800
Other non-current liabilities	36,149			21,016
Total liabilities	405,075			365,947
Commitments and contingencies
Stockholders’ equity:
Preferred stock, $0.001 par value per share; 5,000,000 shares authorized at June 30, 2018 and December 31, 2017; no shares issued or outstanding as of June 30, 2018 and December 31, 2017	—			—
Common stock, $0.001 par value per share; 150,000,000 shares authorized as of June 30, 2018 and 100,000,000 shares authorized as of December 31, 2017; 64,651,714 shares issued and 57,886,918 shares outstanding as of June 30, 2018, and 60,053,843 shares issued and 57,289,047 shares outstanding as of December 31, 2017	58			60
Additional paid-in capital	1,528,719			1,407,717
Accumulated other comprehensive loss	(8,584		)	(6,224		)
Accumulated deficit	(717,254		)	(609,091		)
Treasury stock, at cost, 6,764,796 and 2,764,796 shares as of June 30, 2018 and December 31, 2017, respectively	(229,984		)	(135,970		)
Total stockholders’ equity	572,955			656,492
Total liabilities and stockholders’ equity	$	978,030		$	1,022,439

See accompanying Notes to Condensed Consolidated Financial Statements.

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COMSCORE, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS

(Unaudited)

(In thousands, except share and per share data)



	Three Months Ended June 30,						Six Months Ended June 30,
	2018			2017			2018			2017
Revenues ⁽¹⁾	$	101,389		$	99,439		$	207,308		$	200,300

Cost of revenues ^{(1) (2) (3)}	51,526			47,301			98,780			94,614
Selling and marketing ^{(1) (2) (3)}	29,647			31,190			55,552			60,923
Research and development ^{(1) (2) (3)}	20,889			21,502			39,605			42,522
General and administrative ^{(1) (2) (3)}	28,699			13,310			47,360			31,095
Investigation and audit related ⁽¹⁾	4,883			17,399			36,750			35,077
Amortization of intangible assets	8,266			8,443			16,810			17,178
Settlement of litigation, net	5,250			(915		)	5,250			618
Restructuring	3,833			—			5,090			—
Total expenses from operations	152,993			138,230			305,197			282,027
Loss from operations	(51,604		)	(38,791		)	(97,889		)	(81,727		)
Interest expense, net ⁽¹⁾	(4,124		)	(252		)	(7,029		)	(406		)
Other income, net	807			2,683			884			5,867
Gain (loss) from foreign currency transactions	1,045			(1,205		)	123			(1,225		)
Loss before income taxes	(53,876		)	(37,565		)	(103,911		)	(77,491		)
Income tax provision	(2,101		)	(1,061		)	(3,516		)	(1,927		)
Net loss	$	(55,977	)	$	(38,626	)	$	(107,427	)	$	(79,418	)
Net loss per common share:
Basic	$	(1.02	)	$	(0.67	)	$	(1.90	)	$	(1.38	)
Diluted	$	(1.02	)	$	(0.67	)	$	(1.90	)	$	(1.38	)
Weighted-average number of shares used in per share calculation - Common Stock:
Basic	55,192,741			57,498,228			56,703,795			57,386,516
Diluted	55,192,741			57,498,228			56,703,795			57,386,516
Comprehensive loss:
Net loss	$	(55,977	)	$	(38,626	)	$	(107,427	)	$	(79,418	)
Other comprehensive income:
Foreign currency cumulative translation adjustment	(3,975		)	2,352			(2,360		)	2,955
Unrealized gain on marketable securities, net	—			34			—			34
Total comprehensive loss	$	(59,952	)	$	(36,240	)	$	(109,787	)	$	(76,429	)

⁽¹⁾ Transactions with related parties are included in the line items above (refer to Footnote 8 , Related Party Transactions, of the Notes to Condensed Consolidated Financial Statements for additional information).
⁽²⁾ Stock-based compensation expense is included in the line items above as follows:
	Three Months Ended June 30,						Six Months Ended June 30,
	2018			2017			2018			2017
Cost of revenues	$	3,774		$	433		$	3,987		$	1,062
Selling and marketing	5,792			1,532			6,367			2,978
Research and development	3,972			450			4,316			1,271
General and administrative	9,461			409			10,210			1,333
	$	22,999		$	2,824		$	24,880		$	6,644

⁽³⁾ Excludes amortization of intangible assets, which is presented separately in the Condensed Consolidated Statements of Operations and Comprehensive Loss.

See accompanying Notes to Condensed Consolidated Financial Statements.

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COMSCORE, INC.

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(Unaudited)

(In thousands, except share data)



	Common Stock					Additional Paid-In Capital			Accumulated Other Comprehensive Income (Loss)			Accumulated Deficit			Treasury stock, at cost			Total Stockholders’ Equity
	Shares		Amount			Additional Paid-In Capital			Accumulated Other Comprehensive Income (Loss)			Accumulated Deficit			Treasury stock, at cost			Total Stockholders’ Equity
Balance as of December 31, 2017	57,289,047		$	60		$	1,407,717		$	(6,224	)	$	(609,091	)	$	(135,970	)	$	656,492
Adoption of ASC 606	—		—			—			—			(736		)	—			(736		)
Net loss	—		—			—			—			(107,427		)	—			(107,427		)
Foreign currency translation adjustment	—		—			—			(2,360		)	—			—			(2,360		)
Subscription receivable	—		—			4,676			—			—			—			4,676
Common Stock warrants issuable	—		—			5,545			—			—			—			5,545
Exercise of Common Stock options	21,809		—			164			—			—			—			164
Shares issued in connection with settlement of litigation	4,024,115		4			90,764												90,768
Repurchase of Common Stock in exchange for senior secured convertible notes	(4,000,000	)	(7		)	—			—			—			(94,014		)	(94,021		)
Restricted stock units vested	720,347		1			(1		)	—			—			—			—
Common Stock received for tax withholding	(168,400	)	—			(4,275		)	—			—			—			(4,275		)
Stock-based compensation	—		—			24,129			—			—			—			24,129
Balance as of June 30, 2018	57,886,918		$	58		$	1,528,719		$	(8,584	)	$	(717,254	)	$	(229,984	)	$	572,955

See accompanying Notes to Condensed Consolidated Financial Statements.

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COMSCORE, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

(In thousands)



	Six Months Ended June 30,
	2018			2017
Operating activities:
Net loss	$	(107,427	)	$	(79,418	)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation	8,839			11,996
Amortization of intangible assets	16,810			17,178
Stock-based compensation	24,880			6,644
Deferred tax provision	2,477			1,808
Change in fair value of financing derivatives	4,460			—
Change in fair value of investment in equity securities	(265		)	—
Accretion of debt discount	1,978			—
Amortization of deferred financing costs	445			—
Other	510			189
Changes in operating assets and liabilities:
Accounts receivable	10,638			11,724
Prepaid expenses and other assets	(5,255		)	(15,693		)
Accounts payable, accrued expenses, and other liabilities	(18,138		)	20,402
Customer advances	(14,321		)	2,912
Net cash used in operating activities	(74,369		)	(22,258		)

Investing activities:
Purchases of property and equipment	(1,287		)	(4,021		)
Capitalized internal-use software costs	(5,228		)	—
Net cash used in investing activities	(6,515		)	(4,021		)

Financing activities:
Proceeds from borrowings on senior secured convertible notes (related party)	100,000			—
Debt issuance costs	(5,123		)	—
Financing proceeds received on subscription receivable (related party)	4,676			5,822
Proceeds from the exercise of stock options	164			—
Repurchase of Common Stock (withholding taxes)	(4,275		)	(1,262		)
Principal payments on capital lease and software license arrangements	(5,359		)	(8,608		)
Net cash provided by (used in) financing activities	90,083			(4,048		)
Effect of exchange rate changes on cash and cash equivalents	(1,136		)	21
Net increase (decrease) in cash, cash equivalents and restricted cash	8,063			(30,306		)
Cash, cash equivalents and restricted cash at beginning of period	45,125			88,341
Cash, cash equivalents and restricted cash at end of period	$	53,188		$	58,035

	As of June 30,
	2018			2017
Cash and cash equivalents	$	46,589		$	47,638
Restricted cash	6,599			10,397
Total cash, cash equivalents and restricted cash	$	53,188		$	58,035


Supplemental cash flow disclosures:
Interest paid ($1,850 of 2018 interest paid attributable to related party)	$	2,286		$	482
Income taxes paid	484			406

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Supplemental non-cash activities:
Treasury stock received in connection with issuance of senior secured convertible notes	$	94,021	$	—
Litigation accrual settled through the issuance of Common Stock	90,768		—
Insurance recovery on litigation settlement	27,232		—
Common Stock warrants issuable with senior secured convertible notes	5,733		—
Fair value of financing derivatives issued with senior secured convertible notes	17,140		—
Notes Option derivative liability settlement	5,700		—

See accompanying Notes to Condensed Consolidated Financial Statements.

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COMSCORE, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS


1.	Organization

comScore, Inc., together with its consolidated subsidiaries (collectively, "comScore" or the “Company”), headquartered in Reston, Virginia, is a global information and analytics company that measures audiences, consumer behavior and advertising across media platforms. On April 23, 2018, the Company announced the appointment of Bryan J. Wiener as its new Chief Executive Officer ("CEO"), effective May 30, 2018. Upon the effective date of the CEO appointment, the Company's President and Executive Vice Chairman stepped down as President and assumed the role of Vice Chairman of the Board of Directors of the Company and special advisor to the CEO.

Operating segments are defined as components of a business that can earn revenues and incur expenses for which discrete financial information is available that is evaluated on a regular basis by the chief operating decision maker ("CODM"). The Company’s CODM is its principal executive officer, who decides how to allocate resources and assess performance. The Company operates in one operating segment. A single management team reports to the CODM who manages the entire business. The Company’s CODM reviews consolidated results of operations to make decisions, allocate resources and assess performance and does not evaluate the profit or loss from any separate geography or product lines. The Company's CEO assumed the role of CODM following his appointment.

On May 30, 2018, The Nasdaq Stock Market LLC approved the Company's application for relisting on The Nasdaq Global Select Market ("Nasdaq") and the Company's common stock, par value $0.001 per share ("Common Stock") began trading on Nasdaq effective June 1, 2018.

Uses and Sources of Liquidity and Management’s Plans

The Company’s primary need for liquidity is to fund working capital requirements of its businesses, capital expenditures and for general corporate purposes. The Company incurred significant investigation and audit related expenses with respect to the recent completion of its restatement and audit process, which significantly reduced working capital as of December 31, 2017 . In response to this reduction, in December 2017 , the Company announced that it was implementing an organizational restructuring to reduce staffing levels by approximately 10% and exit certain geographic regions, to enable the Company to decrease its global costs and more effectively align resources to business priorities. The restructuring actions discussed above are substantially complete. The Company's Board of Directors authorized management in the second quarter of 2018 to undertake an additional reduction in headcount and rationalization of its portfolio of leased properties. For additional information, refer to Footnote 10 , Organizational Restructuring .

The Company continued to incur investigation and audit related expenses during the three and six months ended June 30, 2018 . To increase the Company’s available working capital, on January 16, 2018 , the Company entered into certain agreements with funds affiliated with or managed by Starboard Value LP (collectively, “Starboard”), pursuant to which, among other things, the Company issued and sold to Starboard $150.0 million of senior secured convertible notes (the “Initial Notes") in exchange for $85.0 million in cash and 2,600,000 shares of Common Stock. On May 17, 2018 , Starboard exercised an option (the “Notes Option”) to purchase an additional $50.0 million of senior secured convertible notes (the "Option Notes", and together with the Initial Notes, the "Notes"), in exchange for $15.0 million in cash and 1,400,000 shares of Common Stock. Interest on the Notes is payable, at the option of the Company, in cash, or, subject to certain conditions, through the issuance by the Company of additional shares of Common Stock (the “PIK Interest Shares”).

In addition, under the agreements, the Company has the right to conduct a rights offering (the “Rights Offering”), which would be open to all stockholders of the Company, for up to $150.0 million in senior secured convertible notes (the “Rights Offering Notes”). Starboard also agreed to backstop up to $100.0 million in aggregate principal amount of Rights Offering Notes through the purchase of additional Notes, with the backstop obligation reduced by the amount of Option Notes purchased. If undertaken, the Rights Offering would provide $35.0 million in cash if not fully subscribed (assuming that any Notes purchased by Starboard pursuant to the backstop obligation would be issued on the same terms as the Rights Offering Notes), and at least $105.0 million in cash if fully subscribed, as stockholders of the Company who elect to participate in the Rights Offering would be allowed to elect to have up to 30% of the value of the Rights Offering Notes they acquire pursuant thereto delivered through the sale to or exchange with the Company of shares of Common Stock.

The Notes also contain certain affirmative and restrictive covenants with which the Company must comply, including (i) covenants with respect to limitations on additional indebtedness, (ii) limitations on liens, (iii) limitations on certain payments, (iv) maintenance of certain minimum cash balances and (v) the timely filing of certain disclosures with the United States Securities and Exchange Commission ("SEC"). The Company is in compliance with its debt covenants as of June 30, 2018 . On August 8, 2018 , the Company and Starboard amended the Notes in order to provide the Company with additional financial flexibility. Specifically, through

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March 31, 2019 , the minimum cash balance required to be maintained by the Company has been reduced from $40 million to $20 million , subject to certain limitations. In connection with, and as consideration for this modification, and pursuant to the amendment, the Company issued to Starboard $2.0 million in additional aggregate principal amount of senior secured convertible notes, the terms of which are identical to the terms of the Notes, except with regard to the date from which interest thereon shall begin to accrue, which is August 8, 2018 . For additional information, refer to Footnote 11 , Subsequent Events . Based on management’s current plans, including actions within management’s control, the Company does not anticipate any breach of these covenants that would result in an event of default under the Notes. For additional information, refer to Footnote 3 , Long-term Debt .

On June 21, 2018, in connection with the Company's settlement of the federal securities class action litigation and the derivative litigation discussed below in Footnote 9 , Commitments and Contingencies , the Company issued a total of 4,024,115 shares of Common Stock to a settlement fund for the benefit of authorized claimants in the federal securities class action and plaintiffs' lead counsel in the derivative litigation. For additional information, refer to Footnote 7 , Stockholders' Equity . On July 9, 2018, the Virginia Circuit Court dismissed the final derivative actions related to the settlement of the derivative litigation and $10.1 million of insurance funds held in escrow were released to the Company.

The Company continues to be focused on maintaining flexibility in terms of sources, amounts, and the timing of any potential transaction in order to best position the Company for future success. The Company continues to explore all potential available alternatives and has not committed to any specific transaction, including the Rights Offering. The Company believes that the financing actions discussed above, or other sources of financing, are probable of occurring and satisfying the Company’s estimated liquidity needs within one year after the date that the financial statements are issued. However, the Company cannot predict, with certainty, the outcome of its actions to generate liquidity, including the availability of additional debt financing, or whether such actions would generate the expected liquidity as currently planned.


2.	Summary of Significant Accounting Policies

Basis of Presentation and Consolidation

The accompanying Condensed Consolidated Financial Statements include the accounts of the Company and its wholly-owned domestic and foreign subsidiaries. All intercompany transactions and balances are eliminated upon consolidation.

Reclassification

Certain amounts in the prior year financial statements have been reclassified to conform to the current quarter presentation. Deferred rent (current) and capital lease obligations (current) have been aggregated within other current liabilities on the Condensed Consolidated Balance Sheets. Deferred rent (non-current), deferred revenue (non-current), and capital lease obligations (non-current) have been aggregated within other non-current liabilities on the Condensed Consolidated Balance Sheets. Adjustments to reconcile net loss to net cash used in operating activities related to loss from equity method investment, provision for bad debts and loss on asset disposition of property and equipment have been aggregated within other adjustments on the Condensed Consolidated Statements of Cash Flows.

Unaudited Interim Financial Information

The interim Condensed Consolidated Financial Statements included in this 10-Q have been prepared by the Company and are unaudited, pursuant to the rules and regulations of the SEC. Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles in the U.S. (“GAAP”) have been condensed or omitted pursuant to such rules and regulations. However, the Company believes that the disclosures contained in this quarterly report comply with the requirements of Section 13(a) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), for a quarterly report on Form 10-Q and are adequate to make the information presented not misleading. The interim Condensed Consolidated Financial Statements included herein reflect all adjustments (consisting of normal recurring adjustments) which are, in the opinion of management, necessary for a fair presentation of the financial position, results of operations and cash flows for the interim periods presented. These interim Condensed Consolidated Financial Statements should be read in conjunction with the Consolidated Financial Statements and Notes thereto contained in the Company’s Annual Report on Form 10-K for the year ended December 31, 2017 (the " 2017 10-K "), filed on March 23, 2018 with the SEC. The results of operations for the three and six months ended June 30, 2018 are not necessarily indicative of the results to be anticipated for the entire year ending December 31, 2018 or thereafter. All references to June 30, 2018 and 2017 in the Notes to Condensed Consolidated Financial Statements are unaudited.

Use of Estimates and Judgments in the Preparation of the Condensed Consolidated Financial Statements

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The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the reported amounts of revenue and expense during the reporting periods. Significant estimates and judgments are inherent in the analysis and the measurement of: management's standalone selling price ("SSP"), principal versus agent revenue recognition, determination of performance obligations, determination of transaction price, including the determination of variable consideration and allocation of transaction price to performance obligations, deferred tax assets and liabilities, including the identification and quantification of income tax liabilities due to uncertain tax positions, the valuation and recoverability of goodwill and intangible assets, the assessment of potential loss from contingencies, the valuation of assets and liabilities acquired in a business combination, the fair value determination of financing-related liabilities and derivatives, the allowance for doubtful accounts, and valuation of options and performance-based and market-based stock awards. Management bases its estimates and assumptions on historical experience and on various other factors that are believed to be reasonable under the circumstances. Due to the inherent uncertainty involved in making estimates, actual results reported in future periods may be affected by changes in those estimates. The Company evaluates its estimates and assumptions on an ongoing basis.

Capitalized Software

Capitalized software, which is included in property and equipment, net, consists of costs to purchase and develop internal-use software, which the Company uses to provide various services to clients. The costs are capitalized from the time that the preliminary project stage is completed, and considered probable that the software will be used to perform the function intended, until the time the software is placed in service for its intended use. Once this software is ready for use in the Company's products, these costs are amortized on a straight-line basis over the estimated useful life of the software, which is typically assessed to be 3 to 5 years. During the three and six months ended June 30, 2018 , the Company capitalized $3.3 million and $5.2 million in internal-use software costs, respectively. The Company amortized $0.2 million in capitalized internal-use software costs during the three and six months ended June 30, 2018 . During the three and six months ended June 30, 2017 , the Company did no t capitalize any internal-use software costs. Capitalized software is reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. A recoverability analysis is performed based on estimated undiscounted cash flows to be generated from the software in the future. If the analysis indicates that the carrying value is not recoverable from future cash flows, the software cost is written down to the estimated fair value and an impairment is recognized. These estimates are subject to revision as market conditions and the Company's assessments change.

Revenue Recognition

The Company applies the provisions of Accounting Standards Codification 606, Revenue from Contracts with Customers ("ASC 606" or "Topic 606"), and all related appropriate guidance. The Company recognizes revenue under the core principle to depict the transfer of control to its customers in an amount reflecting the consideration to which it expects to be entitled. In order to achieve that core principle, the Company applies the following five-step approach: (1) identify the contract with a customer, (2) identify the performance obligations in the contract, (3) determine the transaction price, (4) allocate the transaction price to the performance obligations in the contract, and (5) recognize revenue when a performance obligation is satisfied.

The Company’s contracts with customers may include multiple promised goods and services, c onsisting of the various services the Company offers. Contracts with multiple performance obligations typically consist of a mix of: subscriptions to the Company’s online database, customized data services, and delivery of periodic custom reports based on information obtained from the database. In such cases, the Company identifies performance obligations by evaluating whether the promised goods and services are capable of being distinct within the context of the contract at contract inception. Promised goods and services that are not distinct at contract inception are combined. Once the Company identifies the performance obligations, the Company will determine transaction price based on contractually fixed amounts and an estimate of variable consideration. The Company allocates the transaction price to each performance obligation based on relative standalone selling price ("SSP"). Judgment is exercised to determine the SSP of each distinct performance obligation. The Company will constrain estimates of variable consideration based on its expectation of recovery from the customer. Some sources of variable consideration like refunds, penalties, or allowances will reduce transaction price. In some instances, the Company may have non-cash consideration or elements of consideration payable to the customer, which will also be included in the transaction price. These sources of variable consideration are relatively infrequent and not significant. The Company recognizes revenue when (or as) it satisfies a performance obligation by transferring promised goods or services to a customer. Customers may obtain the control of promised goods or services over time or at a point in time. The Company recognizes revenue net of sales taxes remitted to government authorities. In general, transaction price is determined by estimating the fixed amount of consideration to which the Company is entitled for transfer of goods and services and all relevant sources and components of variable consideration. Variable consideration is estimated based on the most likely amount or expected value approach, depending on which method the Company expects to better predict the amount of consideration to which it will be entitled. Once the Company elects one of the methods to estimate variable consideration for a particular type of performance obligation, the Company will apply that method consistently.

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Subscription-based revenues are typically recognized on a straight-line basis over the access period, which ranges from three to thirty-six months .

Revenue for validated Campaign Essentials ("vCE") is recognized over time, either on a time-elapsed basis, as the Company is providing services that the customer is continuously consuming and receiving benefit from, or on an output method, such as volume of impressions processed. Activation products vary in nature, and can be recognized over time, generally on an input method time-elapsed basis, as the Company provides continuous tracking of activity. Other activation products are delivered at a point in time, based on custom attributes agreed upon by customers and the Company.

The Company believes that recognizing revenue evenly mirrors the even depiction of the transfer of control and benefit of goods and services to customers, particularly for subscription, vCE and activation products.

The Company’s customized data services are delivered in the form of custom recurring reports or ad hoc reports. Custom report performance obligations, in general, are transferred at a point in time once the product has been delivered to the customer.

Revenues are also generated through survey services under contracts ranging in term from two months to one year . Survey services consist of survey design with subsequent data collection, analysis and reporting. Survey revenue is recognized at a point in time, in general, once the final report has been delivered to the customer.

For performance obligations satisfied at a point in time, the Company evaluates a number of factors to determine whether control of goods and services has been transferred. The Company considers whether there is a present right to payment and whether the customer has accepted the asset. In many instances the Company has objective evidence of the acceptance criteria, while in other cases the acceptance provisions are substantive and the customer must affirmatively signal acceptance. The preceding two factors are not the only factors that may be considered. Other considerations include, but are not limited to, whether risks and rewards of ownership have been transferred for a particular product.

For the majority of its products and services, the Company applies an adjusted market assessment approach for the determination of SSP for identified performance obligations. In general, the Company bundles multiple products and very few are sold on a standalone basis. The Company uses rate cards and pricing calculators that are periodically reviewed and updated to reflect the latest sales data and observable inputs by industry, channel, geography, customer size, and other relevant groupings. Certain products are sold on a standalone basis in a narrow band of prices. If a product is sold outside of the narrow band of prices, it will be assigned the midpoint of the narrow band for purposes of allocating transaction price on a relative SSP basis.

Generally, customers have the right to cancel their contracts by providing a written notice of cancellation, although some subscription-based contracts are non-cancelable. If a customer cancels its contract, the customer is generally not entitled to a refund for prior services. In the event a portion of a contract is refundable, revenue recognition is delayed until the refund provision lapses. For multi-year contracts with annual price increases and no opt out clauses, the total consideration for each of the years included in the contract term will be summed up and recognized on a straight-line basis over the term of the contract.

Contract payments are generally due in advance for subscription-based services or upon delivery of custom reports. If a contract exists under Topic 606, advance payments are recorded as customer advances until services are delivered or obligations are met and revenue is earned. Customer advances represent the excess of amounts invoiced or received from the customer over amounts recognized as revenue. Customer advances to be recognized in the succeeding twelve-month period are classified as current customer advances and the remaining amounts are classified as non-current customer advances.

The Company may enter into multiple contracts with a single counterparty at or near the same time. The Company will combine contracts and account for them as a single contract when one or more of the following criteria are met: (i) the contracts are negotiated as a package with a single commercial objective, (ii) consideration to be paid in one contract depends on the price or performance of the other contract, and (iii) goods or services promised are a single performance obligation.

For transactions that involve third parties, the Company evaluates whether the Company is the principal, in which case the Company recognizes revenue on a gross basis. If the Company is an agent, the Company recognizes revenue on a net basis. In certain countries, the Company may use third-party resellers to sell its products and services. In these transactions, the Company is generally the principal as the Company controls the products and services and is primarily responsible for providing them to the end user. The Company also has certain revenue share arrangements that involve the use of partner data in its sales to end users or the use of its data in partner sales to end users. In these arrangements, the Company assesses which party controls the specified goods or services before they are transferred to the customer, as well as other indicators such as the party primarily responsible for fulfillment, inventory risk, and discretion in establishing price.

The Company enters into a limited number of monetary contracts that involve both the purchase and sale of services with a single counterparty. The Company assesses each contract to determine if the revenue and expense should be presented gross or net. The Company recognizes revenue for these contracts to the extent that SSP is established for distinct services provided. Any excess consideration above the established SSP of services is presented as an offset to cost of revenues in the Condensed Consolidated Statements of Operations and Comprehensive Loss. For contracts that have a non-cancelable term greater than one year, the transaction price allocated to unsatisfied performance obligations amounted to $1.3 million as of June 30, 2018 .

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Nonmonetary transactions represent data exchanges, which may consist of digital usage and general demographic data. The data obtained through nonmonetary transactions differs from the data provided by the Company in the exchange. Under Topic 606, the transaction price of a nonmonetary exchange that has commercial substance is based on the fair value of the non-cash consideration received. If an entity cannot reasonably estimate the fair value of the non-cash consideration received, then it uses the estimated selling price of the promised goods or services. None of the nonmonetary transactions entered into by the Company met the requirements to recognize revenue or expense. Therefore, these nonmonetary transactions are not reflected in the Condensed Consolidated Financial Statements.

Nature of Products and Services

The following is a description of principal activities from which the Company generates its revenue:


i.	Digital Audience

Digital Audience products and services provide measurement of the behavior and characteristics of digital consumers based on information from the Company's data sources, including panels, census network, demographic and other available data across multiple digital platforms. These products and services are primarily subscription-based, for which the accounting policy is described above. Certain contracts may contain custom solutions.


ii.	TV and Cross-Platform

TV and Cross-Platform products and services provide measurement of the behavior and characteristics of television viewers, and combine such measurement across digital and TV platforms. These products and services are designed to help customers find the most relevant viewing audience, whether that viewing is linear, time shifted/recorded, online or on-demand. These products and services are primarily subscription-based, for which the accounting policy is described above. Certain contracts may contain custom solutions.


iii.	Advertising

Advertising products and services include vCE, activation and survey-based products. These products and services provide end-to-end solutions for planning, optimization and evaluation of advertising campaigns and brand protection. These products and services are primarily a part of customized data services, for which the accounting policy is described above.


iv.	Movies

Movies products and services are generally subscription-based for which the accounting policy is described above. The products measure movie viewership and box office results by capturing movie ticket sales in real time or near real time and include box office analytics, trend analysis and insights for movie studios and movie theater operators worldwide. The services provided under subscription-based agreements consist of a single performance obligation, access to the Company's portal, and generally result in transfer of control over time as services are rendered. Certain contracts may contain custom solutions.

Disaggregation of Revenue

In the following table, revenue is disaggregated by product line, geographical market and timing of transfer of products and services. The Company has one reportable segment in accordance with Topic 280, Segment Reporting; as such, the disaggregation of revenue below reconciles directly to its unique reportable segment.

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(In thousands)	Three Months Ended June 30, 2018		Six Months Ended June 30, 2018
By Product lines:
Digital Audience	$	49,882	$	107,670
TV and Cross-Platform	29,455		54,772
Advertising	11,696		23,892
Movies	10,356		20,974
Total	$	101,389	$	207,308
By Geographical markets:
United States	$	88,057	$	179,534
Europe	8,737		17,872
Latin America	2,170		4,781
Canada	1,731		3,651
Other	694		1,470
Total	$	101,389	$	207,308
Timing of revenue recognition:
Products and services transferred at a point in time	$	29,633	$	58,928
Products and services transferred over time	71,756		148,380
Total	$	101,389	$	207,308

Contract Balances

The following table provides information about receivables, contract assets and customer advances from contracts with customers:



	As of		As of
(In thousands)	June 30, 2018		January 1, 2018
Accounts receivable, net	$	70,182	$	81,914
Current and non-current contract assets	1,437		612
Current and non-current contract costs	1,964		500
Current customer advances	86,310		99,886
Non-current customer advances	681		1,975

Accounts receivable are billed and unbilled amounts related to the Company's rights to consideration for work completed when the rights to payment become unconditional but for the passage of time.

Contract assets (current) are included in prepaid expenses and other current assets, and contract assets (non-current) are included in other non-current assets within the Condensed Consolidated Balance Sheets. Contract assets represent the excess of goods and other services transferred to the customer prior to the either receipt of consideration or before payment is due.

Customer advances primarily relate to amounts billed in advance or advance consideration received from customers, for which transfer of control of the good or service occurs at a later point in time. Non-current customer advances are included in other non-current liabilities within the Condensed Consolidated Balance Sheets.

Significant changes in the contract assets and the customer advances balances during the six months ended June 30, 2018 are as follows:



(In thousands)	Customer advances (current)
Revenue recognized that was included in the customer advances balance at the beginning of period	$	(69,819	)
Cash received or amounts billed in advance and not recognized as revenue	58,870

Transaction Price Allocated to the Remaining Performance Obligations

As of June 30, 2018 , approximately $228.8 million of revenue is expected to be recognized from remaining performance obligations that are unsatisfied (or partially unsatisfied) for non-cancelable contracts. The Company expects to recognize revenue on

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approximately 80% of these remaining performance obligations through December 31, 2019 , with the remaining balance recognized thereafter.

The Company applies the optional exemptions and does not disclose: a) information about remaining performance obligations that have an original expected duration of one year or less and b) transaction price allocated to unsatisfied performance obligations for which variable consideration is allocated entirely to a wholly unsatisfied performance obligation or to a wholly unsatisfied promise to transfer a distinct good or service that forms part of a single performance obligation in accordance with the series guidance. Variable consideration relates to usage based revenue which is generally part of the Advertising, TV and Cross-Platform product lines.

Costs to Obtain or Fulfill a Contract

Applying the practical expedient, the Company recognizes the incremental costs of obtaining contracts as an expense when incurred if the amortization period of the assets is one year or less. These costs include commission programs to compensate employees for obtaining new contracts and are included in selling and marketing expenses.

The Company has incurred incremental costs to obtain contracts that meet the criteria for capitalization and are not subject to the practical expedient as the amortization period is over one year. These costs are amortized based on the pattern of transfer of goods or services to which the assets relate. The typical amortization period for capitalized costs to obtain a contract is twenty-four months , and such costs are included in selling and marketing expenses.

Certain costs to fulfill are capitalized in relation to long-term contracts wherein the transfer of goods and services will occur at a point in time. These costs include dedicated employees, subcontractors, and other third-party costs. The Company will assess capitalized costs to fulfill at each reporting period for recoverability. These costs are generally included in costs of revenues and research and development and are recognized in the same manner as the corresponding performance obligation(s).

As of June 30, 2018 , the Company had $2.0 million in capitalized contract costs. For the three and six months ended June 30, 2018 , $0.2 million and $0.2 million contract costs have been amortized or expensed, respectively.

Changes in Accounting Policies

Except for the changes below, the Company has consistently applied accounting policies to all periods presented in the Condensed Consolidated Financial Statements.

The Company adopted Topic 606 with a date of initial application of January 1, 2018, using the modified retrospective transition method, and hence applied Topic 606 to contracts with customers that were not completed as of the date of initial application. Comparative information has not been adjusted and continues to be reported under Topic 605. Details of the significant changes and quantitative impact of the changes are set out below:

•

As of the date of initial application of January 1, 2018, and under the commission plan in place until then, costs to obtain a contract (generally commissions) qualified for the practical expedient allowing such costs to be expensed as incurred, consistent with Topic 605. Therefore, there was no change in accounting as of the date of initial application. Effective January 1, 2018, the Company implemented a new commission plan whereby the Company expects some costs to obtain a contract to continue to qualify for the practical expedient, but the Company expects to incur some commissions costs that meet the criteria for capitalization as the amortization period is over one year.


•	Certain fulfillment costs meet the criteria for capitalization as they relate directly to a contract, generate or enhance a resource being used in satisfying the Company's performance obligation, and are expected to be recovered.

The adoption of the standard related to revenue recognition impacted the Company's previously reported results as follows:

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(In thousands)	As previously reported as of December 31, 2017		New revenue standard adjustments			As adjusted as of January 1, 2018
Accounts receivable, net	$	82,029	$	(115	)	$	81,914
Current and non-current contract assets	—		612			612
Current and non-current contract costs	—		500			500
Current customer advances	98,367		1,519			99,886
Other current liabilities	2,998		292			3,290
Non-current customer advances	2,053		(78		)	1,975
Stockholders' equity	656,492		(736		)	655,756

The following tables summarize the impact of adopting Topic 606 on the Company’s Condensed Consolidated Financial Statements as of and for the period ended June 30, 2018 ( amounts in thousands, except share and per share data ):


I.	Impact on Condensed Consolidated Balance Sheets



Impact of changes in accounting policies
As of June 30, 2018	As reported			Adjustments			Balance without adoption of Topic 606
Accounts receivable, net	$	70,182		$	966		$	71,148
Current and non-current contract assets	1,437			(1,437		)	—
Current and non-current contract costs	1,964			(1,964		)	—

Current customer advances	$	86,310		$	(272	)	$	86,038
Other current liabilities	10,335			(505		)	9,830
Other non-current liabilities	36,149			(184		)	35,965
Accumulated deficit	(717,254		)	(1,474		)	(718,728		)

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II.	Impact on Condensed Consolidated Statements of Operations and Comprehensive Loss



Impact of changes in accounting policies
For the Three Months Ended June 30, 2018	As reported			Adjustments			Balance without adoption of Topic 606
Revenues	$	101,389		$	(340	)	$	101,049
Cost of revenues	51,526			1,214			52,740
Selling and marketing	29,647			(125		)	29,522
Income tax provision	(2,101		)	—			(2,101		)
Net loss	$	(55,977	)	$	(1,429	)	$	(57,406	)
Net loss per common share:
Basic	$	(1.02	)				$	(1.04	)
Diluted	$	(1.02	)				$	(1.04	)
Weighted-average number of shares used in per share calculation - Common Stock:
Basic	55,192,741						55,192,741
Diluted	55,192,741						55,192,741



Impact of changes in accounting policies
For the Six Months Ended June 30, 2018	As reported			Adjustments			Balance without adoption of Topic 606
Revenues	$	207,308		$	(746	)	$	206,562
Cost of revenues	98,780			1,414			100,194
Selling and marketing	55,552			50			55,602
Income tax provision	(3,516		)	—			(3,516		)
Net loss	$	(107,427	)	$	(2,210	)	$	(109,637	)
Net loss per common share:
Basic	$	(1.90	)				$	(1.93	)
Diluted	$	(1.90	)				$	(1.93	)
Weighted-average number of shares used in per share calculation - Common Stock:
Basic	56,703,795						56,703,795
Diluted	56,703,795						56,703,795

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III.	Impact on Condensed Consolidated Statements of Cash Flows



Impact of changes in accounting policies
For the Six Months Ended June 30, 2018	As reported			Adjustments			Balance without adoption of Topic 606
Operating activities
Net loss	$	(107,427	)	$	(2,210	)	$	(109,637	)
Adjustments to reconcile net loss to net cash used in operating activities	60,134			2,210			62,344
Net cash used in operating activities	(74,369		)	—			(74,369		)
Investing activities	(6,515		)	—			(6,515		)
Financing activities	90,083			—			90,083
Effect of exchange rate changes on cash and cash equivalents	(1,136		)	—			(1,136		)
Net increase in cash, cash equivalents and restricted cash	8,063			—			8,063
Cash, cash equivalents and restricted cash at beginning of period	45,125			—			45,125
Cash, cash equivalents and restricted cash at end of period	53,188			—			53,188
Cash and cash equivalents	46,589			—			46,589
Restricted cash	6,599			—			6,599
Total cash, cash equivalents and restricted cash	$	53,188		$	—		$	53,188

Other Income, Net

The following is a summary of other income, net:



	Three Months Ended June 30,					Six Months Ended June 30,
(In thousands)	2018			2017		2018			2017
Transition services agreement income from the Digital Analytix ("DAx") disposition	$	2,182		$	2,630	$	4,847		$	5,827
Change in fair value of investment in equity securities	714			—		265			—
Change in fair value of financing derivatives	(2,280		)	—		(4,460		)	—
Other	191			53		232			40
Total other income, net	$	807		$	2,683	$	884		$	5,867

Income Taxes

On December 22, 2017, U.S. tax reform legislation known as the Tax Cuts and Jobs Act (the “TCJA”) was signed into law. The TCJA made substantial changes to U.S. tax law, including a reduction in the corporate tax rate from 35% to 21%, a limitation on deductibility of interest expense, a limitation on the use of net operating losses to offset future taxable income, the allowance of immediate expensing of capital expenditures, deemed repatriation of foreign earnings through a transition tax and significant changes to the taxation of foreign earnings going forward.

In December 2017, the SEC staff issued Staff Accounting Bulletin 118 (codified under ASU 2018-05), which provides guidance on how to appropriately report significant legislative changes in financial statements when the accounting for the changes has not been completed. The guidance allows companies to report a provisional amount based on a reasonable estimate of the impact in their financial statements that can be adjusted during a one-year measurement period, similar to the accounting for business combinations.

As of June 30, 2018 , the Company's accounting for the TCJA is still to be completed. As described in the Company's 2017 10-K , the Company has not yet been able to reasonably estimate the effects of certain provisions, some of which did not take effect until January 1, 2018, including but not limited to: a limitation of the deductibility of certain officers' compensation, a limitation on the current deductibility of net interest expense in excess of 30% of adjusted taxable income, a limitation of net operating losses generated after 2018 to 80% of taxable income, an incremental tax (base erosion anti-abuse or “BEAT”) on excessive amounts paid to foreign related parties, and a minimum tax on certain foreign earnings in excess of 10% of the foreign subsidiaries tangible assets (global intangible low-taxed income or “GILTI”). For the three and six months ended June 30, 2018 , the Company is still

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reviewing and assessing the impact of these provisions. However, given the Company’s loss position in the U.S. and the valuation allowance recorded against its U.S. net deferred tax assets, the Company does not believe these provisions will have a material impact on its financial statements.

Loss Per Share

Basic net loss per common share excludes dilution for potential Common Stock issuances and is computed by dividing net loss by the weighted-average number of shares of Common Stock outstanding for the period. 250,000 warrants issuable ("penny warrants") are included in the number of outstanding shares used for the computation of basic loss per share. In periods where the Company reports a net loss, the effect of anti-dilutive stock options, stock appreciation rights, restricted stock units and senior secured convertible notes are excluded and diluted loss per share is equal to basic loss per share. The weighted-average shares outstanding for Common Stock, used in per share calculations, have been adjusted to reflect share repurchases made during the three and six months ended June 30, 2018 and 2017 , respectively.

The following is a summary of the Common Stock equivalents for the securities outstanding during the respective periods that have been excluded from the computation of diluted net loss per common share, as their effect would be anti-dilutive:



	Three Months Ended June 30,		Six Months Ended June 30,
	2018	2017	2018	2017
Stock options, stock appreciation rights, restricted stock units and senior secured convertible notes	8,857,858	3,296,348	7,874,656	3,377,927

Debt Issuance Costs

The Company reflects debt issuance costs in the Condensed Consolidated Balance Sheets as a direct deduction from the gross amount of debt, consistent with the presentation of a debt discount. Debt issuance costs are amortized to interest expense, net over the term of the underlying debt instrument, utilizing the effective interest method for the Notes.

Derivative Financial Instruments

The Company has derivative financial instruments that are not hedges and do not qualify for hedge accounting. Changes in the fair value of these instruments are immediately recorded in other income, net in the Condensed Consolidated Statements of Operations and Comprehensive Loss.

Stock-Based Compensation

The Company estimates the fair value of stock-based awards on the date of grant. The fair value of stock options with only service conditions is determined using the Black-Scholes option pricing model. The fair value of restricted stock units and restricted stock awards is based on the closing price of the Company's Common Stock on the date of grant. The Company amortizes the fair value of awards expected to vest on a straight-line basis over the requisite service periods of the awards, which is generally the period from the grant date to the end of the vesting period. The determination of the fair value of the Company's stock option awards is based on a variety of factors, including, but not limited to, the Company's Common Stock price, risk-free rate, expected stock price volatility over the expected life of awards, dividend yield and actual and projected exercise behavior. Additionally, the Company has estimated forfeitures for stock-based awards at the dates of grant based on historical experience and adjusted for future expectation. The Company performs a review of the forfeiture rate assumption at least annually or as deemed necessary if there are changes that could potentially significantly impact the future rate of forfeiture of its stock-based awards. The forfeiture estimate is revised as necessary if actual forfeitures differ from these estimates.

The Company issues restricted stock unit awards with restrictions that lapse upon the passage of time (service vesting), achieving performance targets, fulfillment of market conditions or some combination. For those restricted stock unit awards with only service vesting, the Company recognizes compensation cost on a straight-line basis over the service period. For awards with performance conditions only, or both performance and service conditions, the Company starts recognizing compensation cost over the remaining service period, when it is probable the performance condition will be met. Stock awards that contain performance vesting conditions are excluded from diluted earnings per share computations until the contingency is met as of the end of that reporting period.

For awards with both market and service conditions, the Company starts recognizing compensation cost over the remaining service period, with the effect of the market condition reflected in the calculation of the award's fair value at grant date. The Company values awards with market and service conditions using certain valuation techniques, such as the binomial lattice model. The Company determines the requisite service period based on the longer of the explicit service period and the derived service period. Stock awards that contain market vesting conditions are included in the computations of diluted EPS reflecting the number of

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shares that would be issued based on the current market price at the end of the period being reported on, if their effect is dilutive. If the condition is based on an average of market prices over some period of time, the corresponding average for the period is used.

Under our annual incentive compensation plan, the Company may grant immediately vesting restricted stock to certain employees. Under this plan, stock-based compensation expense is recognized over the requisite service period, which generally precedes the grant date. We accrue stock-based compensation expense for these liability classified awards until the date of grant.

The Company's stockholders approved the 2018 Equity and Incentive Compensation Plan (the "2018 Plan") at the Company's 2018 Annual Meeting of Stockholders (the "2018 Annual Meeting"), held on May 30, 2018. On June 5, 2018, the Company granted equity awards under the 2018 Plan that were recommended for employees, directors and consultants in 2016, 2017 and 2018. The equity awards have vesting terms ranging from immediate vesting at the time of grant to five -year vesting terms. The fair value of the unvested equity awards at the grant date will be amortized ratably on a straight-line basis over the requisite service period of the awards, the period from the grant date to the end of the vesting period. Refer to Footnote 7 , Stockholders' Equity , for additional information.

Accounting Standards Recently Adopted

In January 2016, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") 2016-01, Financial Instruments-Overall (Subtopic 825-10), that substantially revises the recognition, measurement and presentation of financial assets and financial liabilities. The new guidance, among other things (i) requires equity investments (except those accounted for under the equity method of accounting or those that result in consolidation of the investee) to be measured at fair value with changes in fair value recognized in net loss, with some exceptions, (ii) simplifies the impairment assessment of equity investments without readily determinable fair values by requiring a qualitative assessment to identify impairment, (iii) requires public business entities to use the exit price notion when measuring the fair value of financial instruments for disclosure purposes, (iv) requires separate presentation of financial assets and financial liabilities by measurement category and form of financial asset on the balance sheet or the accompanying notes to the financial statements, and (v) clarifies that an entity should evaluate the need for a valuation allowance on a deferred tax asset related to available-for-sale securities in combination with the entity’s other deferred tax assets. The Company adopted the standard effective January 1, 2018. In February 2018, the FASB issued ASU 2018-03, Technical Corrections and Improvements to Financial Instruments-Overall (Subtopic 825-10), which clarifies certain aspects of the guidance issued in ASU 2016-01. The technical corrections and improvements did not have an effect on the Company's adoption of the guidance.

Prior to adoption of ASU 2016-01, the Company had one cost-method investment in preferred stock of an entity. The $4.6 million value of the cost-method investment was included in other non-current assets in the Condensed Consolidated Balance Sheets as of December 31, 2017 . Upon adoption, the Company did not have a cumulative adjustment related to the fair value of the investment. During the six months ended June 30, 2018 , the entity went public and the preferred stock held by the Company was converted to common stock of the entity. As of June 30, 2018 , the $4.9 million fair value of the investment was included in other non-current assets in the Condensed Consolidated Balance Sheets. The gain related to the change in the fair value of the investment of $0.7 million and $0.3 million during the three and six months ended June 30, 2018 , respectively, are recorded in other income, net within the Condensed Consolidated Statements of Operations and Comprehensive Loss.

In August 2016, the FASB issued ASU 2016-15, Statement of Cash Flows (Topic 230): Clarification of Certain Cash Receipts and Cash Payments. The objective of ASU 2016-15 is to reduce the diversity in practice related to the classification of certain cash receipts and cash payments in the statement of cash flows, by adding or clarifying guidance on eight specific cash flow issues. The Company adopted ASU 2016-15 effective January 1, 2018. The adoption of the guidance did not have an impact on the Condensed Consolidated Statements of Cash Flows.

In May 2017, the FASB issued ASU 2017-09, Scope of Modification Accounting , which amends the scope of modification accounting for share-based payment arrangements and provides guidance on the types of changes to the terms or conditions of share-based payment awards to which an entity would be required to apply modification accounting under ASC 718, Compensation - Stock Compensation . For all entities, ASU 2017-09 is effective for annual reporting periods, including interim periods within those annual reporting periods, beginning after December 15, 2017. The adoption of the guidance did not have an impact on the Condensed Consolidated Financial Statements.

Recently Issued Accounting Pronouncements

In February 2016, the FASB issued ASU 2016-02, Leases . ASU 2016-02 requires, among other things, a lessee to recognize a right-of-use asset representing an entity's right to use the underlying asset for the lease term and a liability for lease payments on its balance sheet, regardless of classification of a lease as operating or financing. For leases with a term of twelve months or less, a lessee is permitted to make an accounting policy election by class of underlying asset not to recognize lease assets and liabilities and account for the lease similar to existing guidance for operating leases today. This new guidance supersedes all prior guidance. The guidance is effective for interim periods and fiscal years beginning after December 15, 2018. Early adoption is permitted. The

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standard requires lessees and lessors to recognize and measure leases at the beginning of the earliest period presented using a modified retrospective approach. The Company has commenced the assessment phase of the project and is in the process of evaluating the impact of this new guidance on its Condensed Consolidated Financial Statements.

In January 2017, the FASB issued ASU 2017-04, Simplifying the Test for Goodwill Impairment , which eliminates the requirement to compare the implied fair value of goodwill with its carrying amount as part of step 2 of the goodwill impairment test. As a result, under ASU 2017-04, an entity should perform its annual, or interim, goodwill impairment test by comparing the fair value of a reporting unit with its carrying amount and should recognize an impairment charge for the amount by which the carrying amount exceeds the reporting unit’s fair value; however, the impairment loss recognized should not exceed the total amount of goodwill allocated to that reporting unit. This guidance is effective prospectively for fiscal years beginning after December 15, 2019. Early adoption is permitted for interim or annual goodwill impairment tests performed after January 1, 2017. The Company is evaluating the impact to its Condensed Consolidated Financial Statements.

In July 2017, the FASB issued ASU 2017-11, Earnings Per Share, Distinguishing Liabilities from Equity; Derivatives and Hedging . This update was issued to address complexities in accounting for certain equity-linked financial instruments containing down round features. The amendments in ASU 2017-11 change the classification analysis of these financial instruments (or embedded features) so that equity classification is no longer precluded. The amendments in ASU 2017-11 are effective for annual reporting periods beginning after December 15, 2018, including interim reporting periods within those annual reporting periods. Early adoption is permitted. The Company is evaluating the impact to its Condensed Consolidated Financial Statements.

In June 2018, the FASB issued ASU 2018-07, Compensation—Stock Compensation (Topic 718): Improvements to Non-employee Share-Based Payment Accounting. This update was issued to allow companies to account for share-based payment transactions with non-employees in the same way as share-based payment transactions with employees with the main differences being the accounting for attribution and a contractual term election for valuing non-employee equity share options. The amendments in ASU 2018-07 are effective for annual reporting periods beginning after December 15, 2018, including interim reporting periods within those annual reporting periods. Early adoption is permitted only if the Company has adopted ASC 606, Revenue from Contracts with Customers . The Company is evaluating the impact to its Condensed Consolidated Financial Statements.


3.	Long-term Debt

Issuance and Sale of Initial Notes

On January 16, 2018 , the Company entered into certain agreements with Starboard, pursuant to which, among other things, the Company issued and sold to Starboard $150.0 million of Initial Notes in exchange for $85.0 million in cash and 2,600,000 shares of Common Stock valued at $65.0 million . Based upon the closing bid price of the Common Stock on the OTC Pink Tier on the closing date of the Initial Notes issuance, January 16, 2018 , which was $24.45 per share, the difference of $1.4 million was recorded as an issuance discount to the Initial Notes. The Company also granted to Starboard the Notes Option to acquire up to an additional $50.0 million in Option Notes and agreed to grant Starboard warrants to purchase 250,000 shares of Common Stock. In addition, under the agreements, the Company has the right to conduct a Rights Offering, which would be open to all of the Company's stockholders, for up to $150.0 million in Rights Offering Notes.

The conversion price for the Notes (the “Conversion Price”) is equal to a 30% premium to the volume weighted average trading prices of the Common Stock on each trading day during the 10 consecutive trading days commencing on January 16, 2018 , subject to a Conversion Price floor of $28.00 per share. In accordance with the foregoing, the Conversion Price was set at $31.29 .

The Notes mature on January 16, 2022 . Based upon the determination of the Conversion Price, interest on the Notes will accrue at 6.0% per year through January 30, 2019 . On each of January 30, 2019 , January 30, 2020 and February 1, 2021 , the interest rate on the Notes will reset, and interest will thereafter accrue at a minimum of 4.0% per year and a maximum of 12.0% per year, based upon the then-applicable conversion premium in accordance with the terms of the Notes. The interest rate reset feature of the Initial Notes was determined by management to be a derivative instrument that qualifies for liability treatment. The derivative instrument is initially measured at fair value and classified as a liability on the balance sheet, with subsequent changes in fair value being recorded in earnings. To determine the fair value of the interest rate reset feature, management utilized a "with-and-without" convertible bond model, modified to incorporate the interest rate reset feature, using the following key assumptions:


•	Credit adjusting discount rate : The Company estimated a market based discount rate of 25% .


•	Stock Price : The stock price was measured using the closing bid price of the Common Stock on the OTC Pink Tier on the closing date of the Initial Notes issuance, January 16, 2018, which was $24.45 per share.


•	Risk Free Rate : Assumed to be 2.2% based on the Federal Reserve bond yield.


•	Volatility : Based on the historical volatility of the Company's Common Stock, determined to be 41.3% as of the valuation date.

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•	Term : Based on the time period of the Notes maturity, 4 years.

Based upon the modified convertible bond model utilized by management, the fair value of the interest rate reset feature was determined to be $6.4 million as of January 16, 2018 and was recognized as an issuance discount for the Initial Notes at inception.

Interest on the Initial Notes is payable on a quarterly basis in arrears beginning on April 1, 2018, at the option of the Company, in cash, or, subject to certain conditions, through the issuance by the Company of PIK Interest Shares. Any PIK Interest Shares so issued will be valued at the arithmetic average of the volume-weighted average trading prices of the Common Stock on each trading day during the 10 consecutive trading days ending immediately preceding the applicable interest payment date.

Management evaluated the Notes Option and determined it met the definition of a derivative as it represented a written option. The Notes Option qualified for liability treatment and was initially measured at fair value, with subsequent changes in fair value being recorded in earnings. To determine the fair value of the Notes Option, management utilized an option pricing model as the option represents a put option that gains value as the underlying asset (Common Stock) decreases in value. The following key assumptions were utilized in the Company's estimate of the fair value of the Notes Option derivative:


•	Stock Price : The stock price was measured using the closing bid price of the Common Stock on the OTC Pink Tier on the closing date of the Initial Notes issuance, January 16, 2018, which was $24.45 per share.


•	Risk Free Rate : Assumed to be 1.6% based on the Federal Reserve bond yield with a term commensurate with the remaining life of the Notes Option.


•	Volatility : Based on the historical volatility of the Company's Common Stock, determined to be 38.4% as of the valuation date.


•	Term : Based on the time period of the Notes Option, 6 months.

Based upon the option pricing model utilized, management estimated the fair value of the Notes Option as of January 16, 2018 to be $2.1 million . The fair value was recognized as an issuance discount for the Initial Notes at inception.

The Initial Notes contain redemption provisions whereby, upon the occurrence of certain change of control transactions, a holder would have the right to require the Company to redeem all or any portion of such holder's outstanding Initial Notes for cash at a price determined in accordance with the terms of the Initial Notes. Management evaluated this change of control redemption feature and determined that it represented an embedded derivative that must be bifurcated and accounted for separately from the Initial Notes. The change of control derivative is treated as a liability, initially measured at fair value with subsequent changes in fair value recorded in earnings. Management utilized a probability-adjusted binomial lattice model to determine the fair value of the change of control derivative, with the following key assumptions:


•	Risk Free Rate : Assumed to be 2.2% based on the U.S. Treasury bonds on the valuation date with a term commensurate with the remaining life of the change of control derivative.


•	Probability : The Company utilized a range between 0% and 10% to estimate the likelihood of occurrence.


•	Term : Based on the time period of the feature, 4 years.

Based on the binomial lattice model, the Company determined the fair value as of January 16, 2018 to be $4.4 million . The fair value was recognized as an issuance discount of the Initial Notes at inception.

The Notes contain certain affirmative and restrictive covenants with which the Company must comply, including (i) covenants with respect to limitations on additional indebtedness, (ii) limitations on liens, (iii) limitations on certain payments, (iv) maintenance of certain minimum cash balances (currently at $20 million ) and (v) the timely filing of certain disclosures with the SEC. The Company is in compliance with its debt covenants as of June 30, 2018 . Based on management’s current plans, including actions within management’s control, the Company does not anticipate any breach of these covenants that would result in an event of default under the Initial Notes.

In connection with the issuance of the Initial Notes, the Company also agreed to issue to Starboard warrants to purchase 250,000 shares of Common Stock at a price of $0.01 per share. The warrants are issuable on the earlier of the closing of the Rights Offering and October 16, 2018, and will be exercisable for five years from the date of issuance. The Company valued the warrants using the Black-Scholes model, with the following key assumptions:


•	Stock Price : The stock price was measured using the closing bid price of the Common Stock on the OTC Pink Tier on the closing date of the Initial Notes issuance, January 16, 2018, which was $24.45 per share.


•	Volatility : The Company determined volatility to be 39.6% based on the historical volatility of its Common Stock daily volume weighted average price with a look-back period commensurate with the term of the warrants.


•	Dividend Yield : Assumed to be zero based on the historical payout history of the Company.


•	Risk Free Rate : Assumed to be 2.4% based on U.S. Treasury bonds on the valuation date with a 5 -year term.

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Based on the Black-Scholes model, the Company determined that the fair value of the warrants as of January 16, 2018 was $6.1 million . The Company recorded the warrants at allocated proceeds of $5.7 million , less allocated issuance costs of $0.2 million , as additional paid-in capital.

The cash proceeds and Common Stock received by the Company in exchange for the Initial Notes were net of a $20.1 million issuance discount and $4.6 million in third party debt issuance costs. The Company amortized $0.2 million and $0.4 million in debt issuance costs related to the Initial Notes during the three and six months ended June 30, 2018 , respectively. The Company accreted $1.0 million and $1.9 million in issuance discount related to the Initial Notes during the three and six months ended June 30, 2018 , respectively.

At January 16, 2018 , the date of issuance of the Initial Notes, and at June 30, 2018 , the Company's non-current debt related to the Initial Notes was as follows:



			As of			As of
			January 16, 2018			June 30, 2018
(In thousands, except interest rates)	Stated interest rate	Effective interest rate
Initial Notes at face value, due January 16, 2022	6.0%	11.2%	$	150,000		$	150,000
Less:
Original issuance discount			(20,103		)	(18,204		)
Deferred financing costs			(4,610		)	(4,175		)
Net carrying value			$	125,287		$	127,621

The estimated fair value of the Initial Notes, using Level 3 inputs based on interest rates available for debt with terms and maturities similar to the Company's outstanding debt, was $152.2 million as of June 30, 2018 .

Issuance and Sale of Option Notes

On May 17, 2018 , the Notes Option was exercised by Starboard, pursuant to which the Company issued and sold to Starboard $50.0 million of Option Notes in exchange for $15.0 million in cash and 1,400,000 shares of Common Stock valued at $35.0 million . Based upon the closing bid price of the Common Stock on the OTC Pink Tier on the closing date of the Option Notes issuance, May 17, 2018 , which was $21.75 per share, the difference of $4.6 million was recorded as an issuance discount to the Option Notes. The Option Notes have the same terms, including maturity, interest rate, convertibility, and security, as the Initial Notes issued on January 16, 2018. Upon the exercise of the Notes Option, the derivative liability recorded for the Notes Option at inception was settled. Management determined the fair value of the Notes Option immediately prior to settlement utilizing an option pricing model using the following key assumptions:


•	Stock Price : The stock price was measured using the closing bid price of the Common Stock on the OTC Pink Tier on the closing date of the Option Notes, May 17, 2018, which was $21.75 per share.


•	Risk Free Rate : Assumed to be 1.8% based on the Federal Reserve bond yield with a term commensurate with the remaining life of the Notes Option.


•	Volatility : Based on the historical volatility of the Company's Common Stock, determined to be 26.3% as of the valuation date.


•	Term : Based on the time period of the expected exercise of the Notes Option, 0.16 years.

Based upon the option pricing model utilized, management estimated the fair value of the Notes Option as of May 17, 2018 to be $5.7 million . The loss related to the change in fair value of $1.6 million was recorded in other income, net on the Condensed Consolidated Statement of Operations and Comprehensive Loss. The fair value of the Notes Option was recognized as an issuance premium for the Option Notes at inception.

The interest rate reset feature of the Option Notes was determined by management to be a derivative instrument that qualifies for liability treatment. The derivative instrument is initially measured at fair value and classified as a liability on the balance sheet, with subsequent changes in fair value being recorded in earnings. To determine the fair value of the interest rate reset feature, management utilized a "with-and-without" convertible bond model, modified to incorporate the interest rate reset feature, using the following key assumptions:


•	Credit adjusting discount rate : The Company estimated a market-based discount rate of 24% .


•	Stock Price : The stock price was measured using the closing bid price of the Common Stock on the OTC Pink Tier on the closing date of the Option Notes issuance, May 17, 2018 , which was $21.75 per share.


•	Risk Free Rate : Assumed to be 2.8% based on the Federal Reserve bond yield.

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•	Volatility : Based on the historical volatility of the Company's Common Stock, determined to be 42.6% as of the valuation date.


•	Term : Based on the time period of the Option Notes maturity, 3.7 years.

Based upon the modified convertible bond model utilized by management, the fair value of the interest rate reset feature was determined to be $3.0 million as of May 17, 2018 and was recognized as an issuance discount for the Option Notes at inception.

The Option Notes contain redemption provisions whereby, upon the occurrence of certain change of control transactions, a holder would have the right to require the Company to redeem all or any portion of such holder's outstanding Option Notes for cash at a price determined in accordance with the terms of the Option Notes. Management evaluated this change of control redemption feature and determined that it represented an embedded derivative that must be bifurcated and accounted for separately from the Option Notes. The change of control derivative is treated as a liability, initially measured at fair value with subsequent changes in fair value recorded in earnings. Management utilized a probability-adjusted binomial lattice model to determine the fair value of the change of control derivative, with the following key assumptions:


•	Risk Free Rate : Assumed to be 2.8% based on U.S. Treasury bonds on the valuation date with a term commensurate with the remaining life of the change of control derivative.


•	Probability : The Company utilized a range between 0% and 10% to estimate the likelihood of occurrence.


•	Term : Based on the time period of the feature, 3.7 years.

Based on the binomial lattice model, the Company determined the fair value as of May 17, 2018 to be $1.2 million . The fair value was recognized as an issuance discount of the Option Notes at inception.

The cash proceeds and Common Stock received by the Company in exchange for the Option Notes were net of a $3.1 million issuance discount and $0.2 million in third-party debt issuance costs. The Company accreted $0.1 million and $0.1 million in issuance discount related to the Option Notes during the three and six months ended June 30, 2018 , respectively.

At May 17, 2018 , the date of issuance of the Option Notes, and at June 30, 2018 , the Company's non-current debt related to the Option Notes was as follows:



			As of			As of
			May 17, 2018			June 30, 2018
(In thousands, except interest rates)	Stated interest rate	Effective interest rate
Option Notes at face value, due January 16, 2022	6.0%	8.1%	$	50,000		$	50,000
Less:
Original issuance discount			(3,050		)	(2,979		)
Deferred financing costs			(244		)	(238		)
Net carrying value			$	46,706		$	46,783

The estimated fair value of the Option Notes, using Level 3 inputs based on interest rates available for debt with terms and maturities similar to the Company's outstanding debt, was $50.8 million as of June 30, 2018 .

Terms of Rights Offering

Subject to the terms of the Rights Offering, if undertaken, the Company would distribute to all of the Company's stockholders rights to acquire Rights Offering Notes. Stockholders of the Company who elect to participate in the Rights Offering would be allowed to elect to have up to 30% of the Rights Offering Notes they acquire pursuant thereto delivered through the sale to or exchange with the Company of shares of Common Stock, with the per share value thereof equal to the closing price of the Common Stock on the last trading day immediately prior to the commencement of the Rights Offering. The Rights Offering Notes would be substantially similar to the Notes, except, among other things, with respect to: (i) the date from which interest thereon would begin to accrue and the maturity date thereof (which would be 4 years from the date of issuance of the Rights Offering Notes) and (ii) the conversion price thereof, which would be equal to 130% of the closing price of the Common Stock on the last trading day immediately prior to the commencement of the Rights Offering (subject to a conversion price floor of $28.00 per share). Starboard also agreed to enter into one or more backstop commitment agreements, pursuant to which Starboard agreed to backstop up to $100.0 million in aggregate principal amount of Rights Offering Notes through the purchase of additional Notes, with such backstop obligation reduced by the amount of Option Notes purchased.

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Guarantee and Security of Notes

The Notes are guaranteed by certain of the Company’s direct and indirect wholly-owned domestic subsidiaries (the “Guarantors”) and are secured by a security interest in substantially all of the assets of the Company and the Guarantors, pursuant to a Guaranty, dated as of January 16, 2018, entered into by the Guarantors, and a Pledge and Security Agreement, dated as of January 16, 2018, among the Company, the Guarantors and Starboard Value and Opportunity Master Fund Ltd. as collateral agent.

Registration of Underlying Shares

The Company filed a registration statement on Form S-1 with the SEC for the registration of the shares underlying the Notes, potential PIK Interest Shares, and warrants on July 19, 2018. In conjunction with this registration, WPP plc (together with its affiliates, "WPP") exercised its registration right to have its shares of Common Stock included on the registration statement. For additional information, refer to Footnote 8 , Related Party Transactions .

Issuance of Additional Senior Secured Convertible Notes

On August 8, 2018 , in connection with entering into an amendment to the terms of the outstanding Notes to reduce the requirement thereunder to maintain certain minimum cash balances, the Company issued to Starboard $2.0 million in additional aggregate principal amount of senior secured convertible notes. The terms of the additional notes are identical to the terms of the Notes, except with regard to the date from which interest thereon shall begin to accrue, which is August 8, 2018 . The Company also agreed to register the shares of Common Stock underlying the additional notes and potential PIK Interest Shares related thereto. For additional information, refer to Footnote 11 , Subsequent Events .

Revolving Credit Facility

On September 26, 2013, the Company entered into a Credit Agreement (the “Credit Agreement”) with several banks with a maturity date of September 26, 2018. Bank of America, N.A. was the administrative agent and lead lender of this revolving credit facility. The Credit Agreement provided for a five -year revolving credit facility of $100.0 million , which included a $10.0 million sublimit for issuance of standby letters of credit (subsequently reduced to $3.6 million in September 2017), a $10.0 million sublimit for swing line loans and a $10.0 million sublimit for alternative currency lending. On January 11, 2018 , the Company voluntarily terminated the Credit Agreement and the Security and Pledge Agreement between the Company and Bank of America, N.A., as administrative agent, and other lenders. At the time of termination of the Credit Agreement, $3.5 million in letters of credit remained outstanding and were cash collateralized. As of June 30, 2018 , $1.2 million in letters of credit remain outstanding and are cash collateralized under the Credit Agreement.

On June 1, 2018 , the Company entered into a Security Agreement with Wells Fargo Bank, N.A. to issue standby letters of credit. As of June 30, 2018 , $2.0 million in letters of credit are outstanding and are cash collateralized under the Security Agreement with Wells Fargo Bank, N.A.


4.	Fair Value Measurements

Fair value is an exit price representing the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants. The accounting standard for fair value measurements establishes a three-tier value hierarchy, which prioritizes the inputs used in measuring fair value as follows:

Level 1 — observable inputs such as quoted prices in active markets;

Level 2 — inputs other than the quoted prices in active markets that are observable either directly or indirectly;

Level 3 — unobservable inputs of which there is little or no market data, which require the Company to develop its own

assumptions.

Assets and Liabilities Measured on a Recurring Basis

A financial instrument's level within the fair value hierarchy is based on the lowest level of input that is significant to the fair value measurement. The financial instruments measured at fair value in the accompanying Condensed Consolidated Balance Sheets on a recurring basis consist of the following:

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	As of								As of
	June 30, 2018								December 31, 2017
(In thousands)	Level 1		Level 2		Level 3		Total		Level 1		Level 2		Level 3		Total
Assets:
Money market funds ⁽¹⁾	$	910	$	—	$	—	$	910	$	860	$	—	$	—	$	860
Investment in equity securities ⁽²⁾	4,922		—		—		4,922		—		—		—		—
Total	$	5,832	$	—	$	—	$	5,832	$	860	$	—	$	—	$	860
Liabilities:
Financing derivatives: no hedging designation
Interest rate reset ⁽³⁾	—		—		11,100		11,100		—		—		—		—
Change of control redemption ⁽⁴⁾	—		—		4,800		4,800		—		—		—		—
Total	$	—	$	—	$	15,900	$	15,900	$	—	$	—	$	—	$	—

⁽¹⁾ Level 1 cash equivalents are invested in money market funds that are intended to maintain a stable net asset value of $1.00 per share by investing in liquid, high quality U.S. dollar-denominated money market instruments with maturities less than three months.

⁽²⁾ The Company's investment in equity securities in common stock of an entity, which is included in other non-current assets, is valued using a market approach based on the quoted market price of the security. Prior to adoption of ASU 2016-01, this investment was classified as a cost-method investment and was measured at historical cost in the prior year.

⁽³⁾ The fair value of the Company's interest rate reset derivative liability is determined using a with-and-without approach, using a standard binomial tree convertible bond model . The fair value estimate is determined using an estimate for the Company's credit rating, the premium attributable to the payment-in-kind feature of the Notes, and premium estimates for company-specific risk factors. The valuation is derived from techniques which utilize unobservable Level 3 inputs.

⁽⁴⁾ The fair value of the Company's change of control redemption derivative liability is determined using a probability adjusted binomial lattice model. The fair value estimate is determined using an estimate for the probability of change of control of the Company, risk-free rate, and remaining term of the redemption feature. These estimates represent Level 3 inputs within the fair value hierarchy.

The Company did not have any transfers between Level 1 and Level 2 fair value measurements during the periods presented.

Due to their short-term nature, the carrying amounts reported approximate the fair value for accounts receivable, accounts payable, capital leases and accrued expenses. The carrying values of capitalized lease obligations approximate their fair value as the terms and interest rates approximate market rates (Level 2). There were no changes to the Company's valuation methodologies during the three and six months ended June 30, 2018 or 2017 , respectively.

The following table presents the changes in our Level 3 fair valued instruments for the six months ended June 30, 2018 :



(In thousands)	Financing Derivatives
Balance as of December 31, 2017	$	—
Issuances	17,200
Total losses included in other income, net ⁽¹⁾	4,400
Settlement ⁽²⁾	(5,700		)
Balance as of June 30, 2018	$	15,900

⁽¹⁾ Represents change in fair value of interest rate reset derivative liability ( $1.7 million loss), Notes Option derivative liability ( $3.3 million loss), and change of control derivative liability ( $0.6 million gain). All losses and gains were recorded in other income, net in the Condensed Consolidated Statements of Operations and Comprehensive Loss.

⁽²⁾ Represents settlement of the Notes Option derivative liability through the issuance of the Option Notes on May 17, 2018 . The derivative was net settled with the Option Notes and recorded as an issuance premium. Refer to Footnote 3 , Long-term debt, for further information.

The following table displays valuation techniques and the significant unobservable inputs for our Level 3 liabilities measured at fair value as of June 30, 2018 :

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	Fair value measurements as of June 30, 2018
	Significant valuation technique	Significant unobservable inputs	Input
Interest rate reset derivative liability	Discounted Cash Flow	Discount rate	24.0%
		Stock price	$21.80
		Risk-free rate	2.7%
		Volatility	44.0%
		Term	3.5 years

Change of control redemption derivative liability	Option pricing model	Probability	0-10%
		Risk-free rate	2.7%

The fair values of the Company's financing derivatives are estimated using forward projections and are discounted back at rates commensurate with the remaining term of the related derivative. The primary sensitivity in each model is driven by the Company's Common Stock price at the measurement date, the observable volatility of the Common Stock, and the discount rate used to determine the present value of the instrument.


5.	Accrued Expenses



	As of		As of
	June 30,		December 31,
(In thousands)	2018		2017
Payroll and payroll-related	$	12,318	$	20,821
Expected retention awards	—		16,947
Accrued data costs	17,351		14,445
Professional fees	9,885		14,456
Restructuring	4,005		9,184
Amounts due to Adobe	1,962		5,395
Accrued interest	2,617		—
Other	4,347		4,783
	$	52,485	$	86,031

The decrease in payroll and payroll-related accrued expenses as of June 30, 2018 was primarily due to the June 30, 2018 balance including six months of bonus-related and sales commission accrued expenses compared to the December 31, 2017 balance which included a full year of bonus-related and sales commission accrued expenses. Additionally, the reduction in headcount that began in late 2017 has impacted this balance. Refer to Footnote 10 , Organizational Restructuring , for further information regarding the Company's restructuring efforts.

As a result of the stockholders' approval of the 2018 Plan, the Company will settle the expected retention awards liability through the issuance of shares. Prior to the approval of the 2018 Plan, the Company settled the liability in cash upon the departure of certain employees. Consequently, the liability for these awards was reclassified to Other non-current liabilities as of June 30, 2018 in the Condensed Consolidated Balance Sheets.


6.	Income Taxes

The Company’s income tax provision for interim periods is calculated by applying its estimated annual effective tax rate on its projected ordinary book income (loss) before taxes to year-to-date ordinary book income (loss) before taxes. The income tax effects of any extraordinary, significant unusual or infrequent items not included in ordinary book income (loss) are determined separately and recognized in the period in which the items arise. During the three and six months ended June 30, 2018 , the Company recorded an income tax provision of $2.1 million and $3.5 million , resulting in an effective tax rate of 3.9% and 3.4% , respectively. During the three and six months ended June 30, 2017 , the Company recorded an income tax provision of $1.1 million and $1.9 million , resulting in an effective tax rate of 2.8% and 2.5% , respectively. These effective tax rates differ from the U.S. federal statutory rate primarily due to the effects of foreign tax rate differences and increases in the Company’s valuation allowance against its domestic deferred tax assets. As of June 30, 2018 and December 31, 2017 , the Company had unrecognized tax benefits of approximately $2.6 million and $2.5 million , respectively. The Company recognizes accrued interest and penalties related to unrecognized tax benefits in income tax expense.

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7.	Stockholders' Equity

2018 Equity and Incentive Compensation Plan

The Company's stockholders approved the 2018 Plan at the Company's 2018 Annual Meeting. Under the 2018 Plan, the Company may grant option rights, appreciation rights, restricted stock awards, restricted stock units, performance shares and performance units up to 10,650,000 shares of Common Stock. The aggregate number of shares of Common Stock available will be reduced by: (i) one share of Common Stock for every one share of Common Stock subject to an award of option rights or appreciation rights granted under the 2018 Plan and (ii) two shares of Common Stock for every one share of Common Stock subject to an award other than option rights or appreciation rights granted under the 2018 Plan. If any award granted under the 2018 Plan (in whole or in part) is cancelled or forfeited, expires, is settled in cash, or is unearned, the shares of Common Stock subject to such award will, to the extent of such cancellation, forfeiture, expiration, cash settlement, or unearned amount, again be available at a rate of one share of Common Stock for every one share of Common Stock subject to awards of option rights or appreciation rights and two shares of Common Stock for every one share of Common Stock subject to awards other than of option rights or appreciation rights. Additionally, if, after December 31, 2017, any shares of Common Stock subject to an award granted under the 2007 Equity Incentive Plan (the "2007 Plan") are forfeited, or an award granted under the 2007 Plan (in whole or in part) is canceled or forfeited, expires, is settled in cash, or is unearned, the shares of Common Stock subject to such award will, to the extent of such cancellation, forfeiture, expiration, cash settlement, or unearned amount, be available for awards under the 2018 Plan at a rate of one share for every one share subject to such award. The Company registered the securities under the 2018 Plan with the SEC effective June 1, 2018 .

Stock Awards

On June 5, 2018, the Company's Compensation Committee approved and awarded 2,078,151 restricted stock units ("RSUs") under the 2018 Plan to employees, directors and certain consultants of the Company that were recommended in 2016, 2017 and 2018. On June 5, 2018, the closing sales price of Common Stock on Nasdaq was $24.23 .

Of these RSUs granted, 1,264,115 vested immediately, of which 229,173 shares were delivered to certain consultants during the three months ended June 30, 2018 . 165,086 of the consultant shares related to the compensation of the Company's former CEO as part of his retirement and transition services agreement. The remainder of the shares that vested immediately are expected to be delivered to the participants between August 2018 and December 2018, contingent on market trading restrictions and applicable deferral features. These shares are classified as unvested awards until the date of delivery of the shares underlying these awards.

Upon the grant of the awards, the Company recognized $21.1 million in stock-based compensation expense during the three months ended June 30, 2018 . After issuance of these awards, the maximum number of shares available for issuance under the 2018 Plan as of June 30, 2018 is 6,511,184 .

A summary of the unvested stock awards as of June 30, 2018 is presented below:



Unvested Stock Awards	Restricted Stock Awards		Restricted Stock Units		Number of Shares Underlying Awards		Weighted Average Grant-Date Fair Value
Unvested as of December 31, 2017	2,125		779,912		782,037		$	37.22
Granted	—		2,078,151		2,078,151		24.07
Vested and delivered	(2,125	)	(720,347	)	(722,472	)	32.74
Forfeited	—		(15,090	)	(15,090	)	36.65
Unvested as of June 30, 2018	—		2,122,626		2,122,626		$	25.29

The weighted-average remaining vesting period for unvested RSUs as of June 30, 2018 was 2.0 years . As of June 30, 2018 , total unrecognized compensation expense related to unvested RSUs was $19.2 million , of which $7.0 million is expected to be recognized during the second half of 2018. Total unrecognized compensation expense may be increased or decreased in future periods for subsequent grants or forfeitures.

Stock Options

A summary of the options outstanding, exercised and expired during the six months ended June 30, 2018 is presented below:

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	Number of shares		Weighted-Average Exercise Price
Options outstanding as of December 31, 2017	3,444,252		$	30.65
Options exercised	(21,809	)	12.94
Options expired	(298	)	5.99
Options outstanding as of June 30, 2018	3,422,145		$	30.77
Options exercisable as of June 30, 2018	3,422,145		$	30.77

No stock options were granted during the six months ended June 30, 2018 . The total intrinsic value of the options exercised in 2018 was $0.2 million . The weighted average remaining contractual life of options outstanding and exercisable as of June 30, 2018 is 1.32 years .


8.	Related Party Transactions

Transactions with WPP

As of June 30, 2018 , WPP owned 11,319,363 shares of the Company's outstanding Common Stock, representing 19.6% ownership in the Company. On July 19, 2018 , the Company filed a registration statement on Form S-1 with the SEC for the purpose of registering the shares of Common Stock owned by WPP in order to fulfill the Company's contractual obligations under a stockholders' rights agreement entered into by the Company and WPP in 2015. The Company provides WPP, in the normal course of business, services amongst its different product lines and receives various services from WPP supporting the Company's data collection efforts. In early 2015, there were a series of business and asset acquisitions and sales and issuances of Common Stock between the Company and WPP (giving rise to the stockholders' rights agreement described above) as well as a Subscription Receivable agreement that the Company entered into with GroupM, a WPP subsidiary.

In 2015, the Company and GroupM entered into an agreement in which GroupM agreed to a minimum commitment to purchase $20.9 million of the Company's products over five years , which is recorded as Subscription Receivable. In January 2016, as part of the Company's merger with Rentrak Corporation ("Rentrak"), the Company acquired two contracts with net present value of $14.5 million with WPP wholly-owned subsidiaries which were reflected as Subscription Receivable. The Company has recorded the Subscription Receivable as contra equity within additional paid-in capital on the Condensed Consolidated Statements of Stockholders' Equity. As cash is received on the Subscription Receivable, additional paid-in capital is increased by the amount of cash received and the Company recognizes imputed interest income.

The Company has a cancelable five -year agreement with Lightspeed, a WPP subsidiary, to conduct a proof of concept and follow-on program (the "Program") to demonstrate the capability of designing and deploying a program to collect browsing and demographic data for individual participating households. The agreement provides that the Company makes payments to Lightspeed of approximately $5.0 million per year. The Program is designed to be a comprehensive data collection effort across multiple in-home devices (e.g., television, streaming devices, computers, mobile phones, tablets, gaming devices and wearables) monitored via the installation of household internet routers (“Meters”) in panelist households. The Meters will collect and send the data back to the Company for use in its Total Home Panel product. Under the terms of the Program, Lightspeed is paid to manage the operational aspects of panel recruitment, compliance, inventory management, support and collection of panel demographic data.

Transactions with Starboard

On January 16, 2018, the Company entered into certain agreements with certain funds affiliated with or managed by Starboard, then a beneficial owner of more than five percent of the Company’s outstanding Common Stock. Pursuant to the agreements, the Company: (i) issued and sold to Starboard $150.0 million of Initial Notes in exchange for $85.0 million in cash and 2,600,000 shares of Common Stock valued at $65.0 million ; (ii) granted to Starboard the Notes Option to purchase up to an additional $50.0 million of Option Notes in exchange for a range of $15.0 million to $35.0 million of Common Stock, at Starboard’s option, and the balance in cash; (iii) agreed to grant Starboard warrants to purchase 250,000 shares of Common Stock; and (iv) has the right to conduct a rights offering, which would be open to all stockholders of the Company, for up to $150.0 million of Rights Offering Notes, and Starboard agreed to enter into one or more backstop commitment agreements by which it would backstop up to $100.0 million of the Rights Offering Notes, with such backstop obligation reduced by the amount of Option Notes purchased.

On May 17, 2018 , the Company issued to Starboard $50.0 million in Option Notes in exchange for $15.0 million of cash and 1,400,000 shares of Common Stock valued at $35.0 million , pursuant to Starboard's exercise in full of the Notes Option.

The Notes mature on January 16, 2022. Interest on the Notes accrues at 6.0% per year through January 30, 2019, and interest will thereafter accrue at a minimum of 4.0% per year and a maximum of 12.0% per year, based upon the then-applicable conversion

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premium. Interest on the Notes is payable, at the option of the Company, in cash, or, subject to certain conditions, through the issuance by the Company of PIK Interest Shares.

As a result of the aforementioned agreements and transactions contemplated thereby, as of January 16, 2018, Starboard ceased to be a beneficial owner of more than five percent of the Company’s outstanding Common Stock.

The Company's results from transactions with WPP, Starboard and other related parties, as reflected in the Condensed Consolidated Statements of Operations and Comprehensive Loss, are detailed below:



	Three Months Ended June 30,					Six Months Ended June 30,
(In thousands)	2018			2017		2018			2017
Revenues ⁽¹⁾	$	2,143		$	3,033	$	4,435		$	6,345

Cost of revenues	2,784			3,140		5,306			6,887
Selling and marketing	42			33		85			68
Research and development	47			24		100			53
General and administrative	162			137		189			161
Investigation and audit related ⁽²⁾	—			3,523		—			6,857

Interest (expense) income, net	(3,919		)	195		(6,611		)	403

⁽¹⁾ The Company entered into certain agreements with WPP and its affiliates that were not characterized as revenue arrangements under GAAP. Accordingly, despite cash being received by the Company under these agreements, no revenue has been recognized other than imputed interest income on the net present value of anticipated future cash payments from WPP.

⁽²⁾ The investigation and audit related expenses relate to accounting advisory services, audit preparation support, and process improvement services provided by CrossCountry Consulting, LLC, whose managing partner served as the Company’s interim Chief Financial Officer and Treasurer during late 2017 pursuant to an interim services agreement.

The Company has the following balances related to transactions with WPP, Starboard and other related parties, as reflected in the Condensed Consolidated Balance Sheets:



	As of		As of
	June 30,		December 31,
(In thousands)	2018		2017
Accounts receivable, net	$	1,409	$	2,899
Subscription receivable (Additional paid-in capital)	5,578		10,254
Accounts payable	977		2,715
Accrued expenses	5,745		5,857
Customer advances	988		2,755
Financing derivatives	15,900		—
Senior secured convertible notes	174,404		—


9.	Commitments and Contingencies

Operating Leases

The Company is obligated under various non-cancellable operating leases for office facilities and equipment. The leases require us to pay taxes, insurance and ordinary repairs and maintenance. These leases generally provide for renewal options and escalation increases. On May 30, 2018, the Company entered into an amendment with the landlord of its corporate headquarters, extending the lease term which was scheduled to expire on July 31, 2022. Pursuant to the terms of the extension, the new lease term will begin on August 1, 2022 and will expire on July 31, 2027. The Company will continue to occupy approximately 83,500 rentable square feet of the headquarters premises, with a base rent over the five -year term of approximately $25.0 million .

Future minimum payments under non-cancellable lease agreements with initial terms of one year or more were as follows:

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(In thousands)
2018	$	7,508
2019	14,125
2020	11,892
2021	11,073
2022	8,157
Thereafter	39,349
Total minimum lease payments	$	92,104

Rent expense, under non-cancellable operating leases, was $3.8 million and $4.1 million for the three months ended June 30, 2018 and 2017 , respectively, and $7.9 million and $8.3 million for the six months ended June 30, 2018 and 2017 , respectively.

Unconditional Purchase Obligations

The Company is obligated under certain unconditional agreements with network operators. The future fixed and determinable payments under these agreements with initial terms of one year or more were as follows:



(In thousands)
2018	$	17,732
2019	39,422
2020	40,959
2021	23,870
2022	19,182
Thereafter	18,522
Total	$	159,687

Contingencies

The Company is involved in various legal proceedings from time to time. The Company establishes reserves for specific legal proceedings when management determines that the likelihood of an unfavorable outcome is probable and the amount of loss can be reasonably estimated. The Company has also identified certain other legal matters where an unfavorable outcome is reasonably possible and/or for which no estimate of possible losses can be made. In these cases, the Company does not establish a reserve until it can reasonably estimate the loss. Legal fees are expensed as incurred. The outcomes of legal proceedings are inherently unpredictable, subject to significant uncertainties, and could be material to the Company's operating results and cash flows for a particular period.

Derivative Litigation

The Consolidated Virginia Derivative Action . In May 2016 and July 2016, two purported shareholder derivative actions, Terry Murphy v. Serge Matta et al. and Ron Levy v. Serge Matta et al ., were filed in the Circuit Court of Fairfax County, Virginia against the Company as a nominal defendant and against certain of its current and former directors and officers. The complaints alleged that the defendants intentionally or recklessly made materially false or misleading statements regarding the Company and asserted claims of breach of fiduciary duty, unjust enrichment, abuse of control, gross mismanagement and waste of corporate assets against the defendants. The complaints sought declarations that the plaintiffs can maintain the action on behalf of the Company, declarations that the individual defendants have breached fiduciary duties or aided and abetted such breaches, awards to the Company for damages sustained, purported corporate governance reforms, awards to the Company of restitution from the individual defendants and reasonable attorneys’ and experts’ fees. On April 13, 2017, the Court entered a consent order consolidating the Murphy and Levy actions.

The Assad Action . On April 14, 2017, another purported shareholder derivative action, George Assad v. Gian Fulgoni et al. , was filed in the Circuit Court of Fairfax County, Virginia against the Company as a nominal defendant and against the same current and former directors and officers of the Company as the Murphy and Levy actions, as well as certain additional individuals. The Assad complaint alleged claims for breach of fiduciary duty, waste of corporate assets, and unjust enrichment, as well as a claim seeking to compel the Company's Board of Directors to hold an annual stockholders’ meeting. In addition to an order compelling the Board of Directors to hold an annual stockholders’ meeting, the Assad complaint sought judgment against the defendants in

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the amount by which the Company was allegedly damaged, an order directing defendants to provide operations reports and financial statements for all previous quarters allegedly identified by the Audit Committee as inaccurate, purported corporate governance reforms, the restriction of proceeds of defendants’ trading activities pending judgment, an award of restitution from the defendants, and an award of attorneys’ fees and costs. On August 4, 2017, the Company moved for an order of consolidation of the Assad action into the consolidated Virginia derivative action noted above. The motion was not brought for a hearing due to the pendency of the derivative litigation settlement noted below.

The Consolidated Federal Derivative Action . In December 2016 and February 2017, two purported shareholder derivative actions, Wayne County Employees’ Retirement System v. Fulgoni et al. and Michael C. Donatello v. Gian Fulgoni et al. , were filed in the District Court for the Southern District of New York against the Company and certain of the Company's current and former directors and officers. The complaints alleged, among other things, that the defendants provided materially false and misleading information regarding the Company, its business and financial performance. The Donatello complaint also alleged that the defendants breached their fiduciary duties, failed to maintain internal controls and were unjustly enriched to the detriment of the Company. The complaints sought awards of monetary damages, purported corporate governance reforms, the award of punitive damages, and attorneys’, accountants’ and experts’ fees and other relief. On April 25, 2017, the Court signed and entered the parties’ stipulation to consolidate the Wayne County and Donatello actions. Following proposed settlement discussions, the Court stayed the case on September 21, 2017 pending application for preliminary approval of settlement.

Derivative Litigation Settlement . On September 10, 2017 the Company, along with all derivative plaintiffs and named individual defendants, reached a proposed settlement, subject to court approval, to resolve all of the above shareholder derivative actions on behalf of the Company. Under the terms of the proposed settlement, the Company would receive a $10.0 million cash payment, funded by the Company’s insurer. Pursuant to this proposed settlement, the Company agreed, subject to court approval, to contribute $8.0 million in Common Stock toward the payment of attorneys’ fees. The Company also agreed as part of the proposed settlement to adopt certain corporate governance and compliance terms that were negotiated by derivative plaintiffs’ counsel and the Company. As of December 31, 2017 , the Company reserved $8.0 million in accrued litigation settlements, and recorded $10.0 million in insurance recoverable on litigation settlements for the insurance proceeds expected from its insurers. On June 7, 2018 , the Court granted final approval of the settlement and dismissed the consolidated federal derivative action. On June 21, 2018 , the Company issued to the plaintiffs’ lead counsel, 354,671 shares of Common Stock, valued at $8.0 million , as payment of attorneys’ fees. On July 9, 2018 , the consolidated Virginia derivative action and the Assad action were dismissed in Virginia state court and the $10.1 million in insurance proceeds held in escrow were released to the Company.

Oregon Section 11 Litigation

In October 2016, a class action complaint, Ira S. Nathan v. Serge Matta et al ., was filed in the Multnomah County Circuit Court in Oregon against certain of the Company's current and former directors and officers and Ernst & Young LLP ("EY"). The complaint alleged that the defendants provided untrue statements of material fact in the Company's registration statement on Form S-4 filed with the SEC and declared effective on December 23, 2015. The complaint sought a determination of the propriety of the class, a finding that the defendants are liable and an award of attorneys’ and experts’ fees. On March 17, 2017, a separate action, John Hulme v. Serge Matta et al. , was filed in the Multnomah County Circuit Court in Oregon alleging materially similar claims as the Nathan complaint against the same defendants. On April 18, 2017, the Nathan and Hulme cases were consolidated by order of the court. On February 14, 2018, following a hearing, the Court granted class certification only as to EY. On April 23, 2018, the Court issued an order staying the case pending the final approval hearing in the Fresno County Employees' Retirement Association case noted below, and, following the final approval hearing on June 7, 2018 , the parties filed a joint stipulation of dismissal. The claims against the Company’s current and former directors and officers were dismissed with prejudice on July 17, 2018 .

Federal Securities Class Action Litigation

In October 2016, a consolidated class action complaint, Fresno County Employees’ Retirement Association et al. v. comScore, Inc. et al. , was filed in the District Court for the Southern District of New York against the Company, certain of the Company's current and former directors and officers, Rentrak and certain former directors and officers of Rentrak. On January 13, 2017, the lead plaintiffs filed an amended complaint alleging that the defendants provided materially false and misleading information regarding the Company and its financial performance, including in the Company and Rentrak’s joint proxy statement/prospectus, and failed to disclose material facts necessary in order to make the statements made not misleading. The complaint sought a determination of the propriety of the class, compensatory damages and the award of reasonable costs and expenses incurred in the action, including attorneys’ and experts’ fees. On September 10, 2017, the parties reached a proposed settlement, subject to court approval, pursuant to the terms of which the settlement class would receive a total of $27.2 million in cash and $82.8 million in Common Stock to be issued and contributed by comScore to a settlement fund to resolve all claims asserted against the Company. All of the $27.2 million in cash would be funded by the Company's insurers. The proposed settlement further provided that comScore denies all claims of wrongdoing or liability. On January 29, 2018, the Court granted preliminary approval of the settlement. On June 7, 2018, the Court granted final approval of the settlement and entered judgment dismissing the case with prejudice. No appeals of the judgment were filed. As of December 31, 2017 , the Company reserved $110.0 million in accrued litigation settlements for the

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gross settlement amount, and recorded $27.2 million in insurance recoverable on litigation settlements for the insurance proceeds expected from the Company's insurers. On June 21, 2018, the Company issued to a settlement fund for the benefit of authorized claimants 3,669,444 shares of Common Stock, valued at $82.8 million . The insurance proceeds of $27.2 million were contributed to the settlement fund concurrently.

Privacy Class Action Litigation

On September 11, 2017, the Company and a wholly-owned subsidiary, Full Circle Studies, Inc., (“Full Circle”), received demand letters on behalf of named plaintiffs and all others similarly situated alleging that the Company and Full Circle collected personal information from users under the age of 13 without verifiable parental consent in violation of Massachusetts law and the federal Children’s Online Privacy Protection Act. The letters alleged that the Company and Full Circle collected such personal information by embedding advertising software development kits ("SDKs") in applications created or developed by Disney. The letters sought monetary damages, attorneys’ fees and damages under Massachusetts law. The Company and Full Circle responded to the demand letters on October 11, 2017. On June 4, 2018, the plaintiffs filed amended complaints adding the Company and Full Circle as defendants in a purported class action against Disney, Twitter and other defendants, alleging violations of California’s constitutional right to privacy and intrusion upon seclusion law, New York’s deceptive trade practices statute, and Massachusetts’ deceptive trade practices and right to privacy statutes. The complaints allege damages in excess of $5 million , with any award to be apportioned among the defendants. The Company and Full Circle deny any wrongdoing or liability and intend to vigorously defend against these claims. Although the ultimate outcome of this matter is unknown, the Company believes that a material loss was not probable or estimable as of June 30, 2018.

Nielsen Arbitration/Litigation

On September 22, 2017, Nielsen Holdings PLC (“Nielsen”) filed for arbitration against comScore, alleging that the Company breached the parties’ agreement regarding an alleged unauthorized use of Nielsen’s data to compete directly against Nielsen’s linear television services. On September 22 and 25, 2017, Nielsen also filed a civil complaint against the Company in the United States District Court for the Southern District of New York seeking preliminary injunctive relief against any unauthorized use of Nielsen’s data. On March 6, 2018, Nielsen's motion for preliminary injunction was denied, and the case was stayed pending completion of arbitration. The arbitration was completed and resolved in April 2018, and the U.S. District Court dismissed the case on May 10, 2018.

SEC Investigation

The SEC is investigating allegations regarding revenue recognition, internal controls, non-GAAP disclosures and whistleblower retaliation. The SEC has made no decisions regarding this matter including whether any securities laws have been violated. The Company is cooperating fully with the SEC.

Export Controls Review

The Company recently became aware of possible violations of U.S. export controls and economic sanctions laws and regulations involving the Company. The circumstances giving rise to these possible violations pertain to the Company’s collection of survey data from panelists within U.S. embargoed countries, as a part of the Company’s larger global survey efforts not intentionally targeted at such countries. The Company filed a joint initial notice of voluntary disclosure with the U.S. Department of the Treasury’s Office of Foreign Assets Control (“OFAC”) and the U.S. Commerce Department’s Bureau of Industry and Security (“BIS”) and commenced an internal review to identify the causes and scope of transactions that could constitute violations of the OFAC and BIS regulations. On May 31, 2018, the Company filed a final voluntary disclosure with OFAC and BIS. If OFAC and BIS move forward with this matter, the Company could be subject to fines or penalties. Although the ultimate outcome of this matter is unknown, the Company believes that a material loss was not probable or estimable as of June 30, 2018 .

Other Matters

In addition to the matters described above, the Company is, and may become, a party to a variety of legal proceedings from time to time that arise in the normal course of the Company's business. While the results of such legal proceedings cannot be predicted with certainty, management believes that, based on current knowledge, the final outcome of any such current pending matters will not have a material adverse effect on the Company's financial position, results of operations or cash flows. Regardless of the outcome, legal proceedings can have an adverse effect on the Company because of defense costs, diversion of management resources and other factors.

Indemnification

The Company has entered into indemnification agreements with each of the Company's directors and certain officers, and the Company's amended and restated certificate of incorporation requires it to indemnify each of its officers and directors, to the fullest

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extent permitted by Delaware law, who was or is a party or is threatened to be made a party to any threatened, pending or completed action, suit or proceeding by reason of the fact that he or she is or was a director or officer of the Company. The Company has paid and continues to pay legal counsel fees incurred by the present and former directors and officers who are involved in legal proceedings that require indemnification.

Similarly, certain of the Company's commercial contracts require it to indemnify contract counterparties under specified circumstances, and the Company may incur legal counsel fees and other costs in connection with these obligations.


10.	Organizational Restructuring

In December 2017, the Company implemented a reduction in force plan that resulted in the termination of approximately 10% of its workforce and total restructuring costs of $11.8 million , of which $ 10.5 million was recognized in the fourth quarter of 2017. The reduction in force was implemented following management’s determination to reduce its staffing levels and exit certain geographic regions, in order to enable the Company to decrease its global costs and more effectively align resources to business priorities. The majority of the employees impacted by the reduction in force exited the Company in the fourth quarter of 2017, with the remainder exiting in 2018.

In the second quarter of 2018, the Company's Board of Directors authorized management to implement additional reductions in its workforce and rationalize its portfolio of leased properties due to the reductions in headcount. This additional restructuring effort resulted in the termination of one operating lease and the extension of the lease related to the Company's headquarters in the second quarter of 2018. Additional space rationalization is ongoing, and through the first quarter of 2019, the Company expects to incur less than $5.0 million in additional restructuring charges related to the early termination or sublease of certain operating leases of office space. Employees separated or to be separated from the Company as a result of these restructuring initiatives were offered severance. Other direct costs incurred in the first quarter of 2018 consist of the lease exit cost for one non-U.S. entity.

During the three and six months ended June 30, 2018 , the Company recognized $3.8 million and $5.1 million , respectively, in restructuring costs.

The table below summarizes the balance of accrued restructuring expenses and the changes in the accrued amounts as of and for the six months ended June 30, 2018 :



(In thousands)	Accrued Balance as of December 31, 2017		Restructuring Expense for the Six Months Ended June 30, 2018		Payments			Foreign Exchange		Accrued Balance as of June 30, 2018
Severance pay and benefits	$	8,972	$	4,943	$	(10,199	)	$	7	$	3,723
Other direct costs	212		147		(77		)	—		282
Total	$	9,184	$	5,090	$	(10,276	)	$	7	$	4,005


11.	Subsequent Events

On August 8, 2018 (the “Closing Date”), the Company and Starboard entered into a Second Amendment to Senior Secured Convertible Notes (the “Amendment”). Pursuant to the Amendment, the Notes were amended to provide the Company with additional financial flexibility thereunder, among other things. Specifically, through March 31, 2019 , the minimum cash balance required to be maintained by the Company has been reduced to $20 million , subject to certain limitations. In connection with, and as consideration for this modification, on the Closing Date the Company issued to Starboard $2.0 million in additional aggregate principal amount of senior secured convertible notes, the terms of which are identical to the terms of the Notes, except with regard to the date from which interest thereon shall begin to accrue, which is the Closing Date. Pursuant to the Amendment, the Company also agreed to register the shares of Common Stock underlying the additional notes and potential PIK Interest Shares related thereto.

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ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our Condensed Consolidated Financial Statements and the related Notes to Condensed Consolidated Financial Statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q, or 10-Q. In addition to historical financial information, the following discussion and analysis contains forward-looking statements that involve risks, uncertainties and assumptions. Our actual results and timing of selected events in future periods may differ materially from those anticipated or implied in these forward-looking statements as a result of many factors, including those discussed under Item 1A, “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2017, or 2017 10-K , and elsewhere in this 10-Q. See also " Cautionary Note Regarding Forward-Looking Statements " at the beginning of this 10-Q.

Overview

We are a global information and analytics company that measures consumer audiences and advertising across media platforms. We create our products using a global data platform that combines information about content and advertising consumption on digital (smartphones, tablets and computers), television and movie screens with demographics and other descriptive information. We have developed proprietary data science that enables measurement of person-level and household-level audiences, removing duplicated viewing across devices and over time. This combination of data and methods helps companies across the media ecosystem better understand and monetize their broad range of audiences, and develop marketing plans and products to more efficiently and effectively reach those audiences. Our ability to unify behavioral and other descriptive data enables us to provide accredited audience ratings, advertising verification, and granular consumer segments that describe hundreds of millions of consumers. Our customers include buyers and sellers of advertising including digital publishers, television networks, content owners, advertisers, agencies and technology providers.

The platforms we measure include television sets, smartphones, computers, tablets, over-the-top ("OTT") devices and movie theaters, and the information we analyze crosses geographies, types of content and activities, including websites, mobile apps, video games, television and movie programming, e-commerce and advertising.

Appointment of CEO

On April 23, 2018, we announced the appointment of Bryan J. Wiener as our Chief Executive Officer ("CEO"), effective May 30, 2018. Upon the effective date of the CEO appointment, William P. Livek, our President and Executive Vice Chairman, stepped down as President and assumed the role of Vice Chairman of the Board of Directors and special advisor to the CEO.

Relisting on Nasdaq

On May 30, 2018, The Nasdaq Stock Market LLC approved our application for relisting on The Nasdaq Global Select Market ("Nasdaq") and our common stock, par value $0.001 per share ("Common Stock"), began trading on Nasdaq effective June 1, 2018.

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Results of Operations

The following table sets forth selected Condensed Consolidated Statements of Operations data as a percentage of total revenues for each of the periods indicated. Percentages may not add due to rounding.



	Three Months Ended June 30,										Six Months Ended June 30,
	2018					2017					2018					2017
(In thousands)	Dollars			% of Revenue		Dollars			% of Revenue		Dollars			% of Revenue		Dollars			% of Revenue
Revenues ⁽¹⁾	$	101,389		100.0	%	$	99,439		100.0	%	$	207,308		100.0	%	$	200,300		100.0	%
Cost of revenues	51,526			50.8	%	47,301			47.6	%	98,780			47.6	%	94,614			47.2	%
Selling and marketing	29,647			29.2	%	31,190			31.4	%	55,552			26.8	%	60,923			30.4	%
Research and development	20,889			20.6	%	21,502			21.6	%	39,605			19.1	%	42,522			21.2	%
General and administrative	28,699			28.3	%	13,310			13.4	%	47,360			22.8	%	31,095			15.5	%
Investigation and audit related	4,883			4.8	%	17,399			17.5	%	36,750			17.7	%	35,077			17.5	%
Amortization of intangible assets	8,266			8.2	%	8,443			8.5	%	16,810			8.1	%	17,178			8.6	%
Settlement of litigation, net	5,250			5.2	%	(915		)	(0.9	)%	5,250			2.5	%	618			0.3	%
Restructuring	3,833			3.8	%	—			—	%	5,090			2.5	%	—			—	%
Total expenses from operations	152,993			150.9	%	138,230			139.0	%	305,197			147.2	%	282,027			140.8	%
Loss from operations	(51,604		)	(50.9	)%	(38,791		)	(39.0	)%	(97,889		)	(47.2	)%	(81,727		)	(40.8	)%
Interest expense, net	(4,124		)	(4.1	)%	(252		)	(0.3	)%	(7,029		)	(3.4	)%	(406		)	(0.2	)%
Other income, net	807			0.8	%	2,683			2.7	%	884			0.4	%	5,867			2.9	%
Gain (loss) from foreign currency transactions	1,045			1.0	%	(1,205		)	(1.2	)%	123			0.1	%	(1,225		)	(0.6	)%
Loss before income tax provision	(53,876		)	(53.1	)%	(37,565		)	(37.8	)%	(103,911		)	(50.1	)%	(77,491		)	(38.7	)%
Income tax provision	(2,101		)	(2.1	)%	(1,061		)	(1.1	)%	(3,516		)	(1.7	)%	(1,927		)	(1.0	)%
Net loss	$	(55,977	)	(55.2	)%	$	(38,626	)	(38.8	)%	$	(107,427	)	(51.8	)%	$	(79,418	)	(39.6	)%

⁽¹⁾ As discussed in Footnote 2 , Summary of Significant Accounting Policies, revenue for the three and six months ended June 30, 2017 is not comparable to the three and six months ended June 30, 2018 due to our adoption of Accounting Standards Codification 606, Revenue from Contracts with Customers ("ASC 606" or "Topic 606"). Refer to our reconciliation of as reported revenue to compare the periods presented.

Revenues

Our products and services are organized around measurement, planning and optimization in four offerings:

Digital Audience: focused on the size, engagement, and other behavioral and qualitative characteristics of audiences around the world, across multiple digital platforms including computers, tablets, smartphones and other connected devices.

TV and Cross-Platform: focused on consumer viewership of both linear and on-demand television content in the U.S. at the national level and in local markets. Provides a view of cross-platform consumer behavior when integrated with our Digital Audience and Advertising products and services.

Advertising: provides end-to-end solutions for planning, optimization and evaluation of advertising campaigns.

Movies: measures movie viewership, captures audience demographics and sentiment via social media and exit polling and provides software tools to movie studios and movie theater customers around the world.

We categorize our revenue along these four offerings; however, our cost structure is tracked at the corporate level and not by our product offerings. These costs include, but are not limited to, employee costs, operational overhead, data centers and our technology that supports multiple product offerings.

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Revenues from these four offerings of products and services are as follows:



	Three Months Ended June 30,
(In thousands)	2018		% of Revenue		2017 ⁽¹⁾		% of Revenue		$ Variance			% Variance
Digital Audience	$	49,882	49.2	%	$	54,393	54.7	%	$	(4,511	)	(8.3	)%
TV and Cross-Platform	29,455		29.1	%	25,363		25.5	%	4,092			16.1	%
Advertising	11,696		11.5	%	10,481		10.5	%	1,215			11.6	%
Movies	10,356		10.2	%	9,202		9.3	%	1,154			12.5	%
Total revenues	$	101,389	100	%	$	99,439	100	%	$	1,950		2.0	%

⁽¹⁾ As discussed in Footnote 2 , Summary of Significant Accounting Policies, revenue for the three months ended June 30, 2017 is not comparable to the three months ended June 30, 2018 due to our adoption of ASC 606. Refer to our reconciliation of as reported revenue to compare the periods presented.

Revenues increased by $2.0 million , or 2.0% , for the three months ended June 30, 2018 as compared to the three months ended June 30, 2017 . Included in the 2018 revenues amount was an increase of $0.3 million related to our adoption of ASC 606, primarily included in Advertising above.

Digital Audience revenue decreased $4.5 million in the three months ended June 30, 2018 as compared to the three months ended June 30, 2017 . Revenue continued to be impacted by changes in our products along with an evolving advertising market. Our investment to strengthen our products through the addition of mobile data sources resulted in some data trends disruption, which impacted customers. As a result, certain customers ceased purchases and others delayed renewals. In addition, changes in industry-wide ad buying weakened smaller publishers and as such, some of our smaller customers did not renew during 2017. As a result, while our largest customers continued to purchase these products, our overall customer base shrunk during 2017 and the first half of 2018, which impacted 2018 revenue.

The increase in revenue for TV and Cross-Platform resulted in part from the establishment of stand-alone selling price over certain distinct performance obligations in arrangements that include the purchase and sale of services during the three months ended June 30, 2018 . The remaining increase in revenue was primarily the result of increased demand for our national and local TV station offerings which resulted in the expansion of agreements with existing customers. Movies revenue increased as our global footprint remained strong and our products continued to result in higher contract values. As we collect data from box office locations worldwide, our customers continued to expand and renew agreements, which we expect to continue during 2018.

Advertising revenue increased from growth in both our emerging products and certain legacy offerings.



	Six Months Ended June 30,
(In thousands)	2018		% of Revenue		2017 ⁽¹⁾		% of Revenue		$ Variance			% Variance
Digital Audience	$	107,670	51.9	%	$	112,303	56.1	%	$	(4,633	)	(4.1	)%
TV and Cross-Platform	54,772		26.4	%	47,384		23.7	%	7,388			15.6	%
Advertising	23,892		11.5	%	22,041		11.0	%	1,851			8.4	%
Movies	20,974		10.1	%	18,572		9.3	%	2,402			12.9	%
Total revenues	$	207,308	100	%	$	200,300	100	%	$	7,008		3.5	%

⁽¹⁾ As discussed in Footnote 2 , Summary of Significant Accounting Policies, the revenue for the six months ended June 30, 2017 is not comparable to the six months ended June 30, 2018 due to our adoption of ASC 606. Refer to our reconciliation of as reported revenue to compare the periods presented.

Revenues increased by $7.0 million , or 3.5% , for the six months ended June 30, 2018 as compared to the six months ended June 30, 2017 . Included in the 2018 revenues amount was an increase of $0.7 million related to our adoption of ASC 606, primarily included in Advertising and TV and Cross-Platform above.

Digital Audience revenue decreased $4.6 million in the six months ended June 30, 2018 as compared to the six months ended June 30, 2017 . Revenue continued to be impacted by changes in our products along with an evolving advertising market. Our investment to strengthen our products through the addition of mobile data sources resulted in some data trends disruption, which impacted customers. As a result, certain customers ceased purchases and others delayed renewals. In addition, changes in industry-wide ad buying weakened smaller publishers and as such, some of our smaller customers did not renew during 2017. As a result, while our largest customers continued to purchase these products, our overall customer base shrunk during 2017 and the first half of 2018, which impacted 2018 revenue.

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strong and our products continued to result in higher contract values. As we collect data from box office locations worldwide, our customers continued to expand and renew agreements, which we expect to continue during 2018.

Advertising revenue increased from growth in both our emerging products and certain legacy offerings.

Cost of Revenues

Cost of revenues consists primarily of expenses related to operating our network infrastructure, producing our products, and the recruitment, maintenance and support of our consumer panels. Expenses associated with these areas include employee costs including salaries, benefits, stock-based compensation and other related personnel costs of network operations, survey operations, custom analytics and technical support, all of which are expensed as they are incurred. Cost of revenues also includes costs to obtain, process and cleanse our panel and census based data used in our products as well as operational costs associated with our data centers, including depreciation expense associated with computer equipment that supports our panels and systems, allocated overhead, which is comprised of rent and other facilities related costs, and depreciation expense generated by general purpose equipment and software.



	Three Months Ended June 30,
(In thousands)	2018		% of Revenue		2017		% of Revenue		$ Change			% Change
Employee costs	$	15,805	15.6	%	$	15,102	15.2	%	$	703		4.7	%
Data costs	14,451		14.3	%	10,155		10.2	%	4,296			42.3	%
Panel costs	5,837		5.8	%	5,819		5.9	%	18			0.3	%
Systems and bandwidth costs	5,955		5.9	%	4,711		4.7	%	1,244			26.4	%
Rent and depreciation	3,130		3.1	%	4,416		4.4	%	(1,286		)	(29.1	)%
Professional fees	1,156		1.1	%	1,398		1.4	%	(242		)	(17.3	)%
Sample and survey costs	1,462		1.4	%	1,323		1.3	%	139			10.5	%
Technology	1,566		1.5	%	1,264		1.3	%	302			23.9	%
Royalties and resellers	1,043		1.0	%	1,187		1.2	%	(144		)	(12.1	)%
Other	1,121		1.1	%	1,926		1.9	%	(805		)	(41.8	)%
Total cost of revenues	$	51,526	50.8	%	$	47,301	47.6	%	$	4,225		8.9	%

Cost of revenues increased $4.2 million , or 8.9% , for the three months ended June 30, 2018 as compared to the three months ended June 30, 2017 . The increase in cost of revenues was largely attributable to a $4.3 million increase in data costs, a $1.2 million increase in systems and bandwidth costs, and a $0.7 million increase in employee costs, offset by the decrease of $1.3 million in rent and depreciation costs and $0.8 million in other costs. Employee costs increased due to $3.3 million of increased stock-based compensation expense, primarily driven by the most recent awards granted on June 5, 2018, offset by a decrease in costs as a result of our restructuring efforts, reduced employee headcount and capitalized fulfillment costs. Increased data costs in 2018 were incurred as a result of the establishment of standalone selling price for distinct services provided under certain arrangements that include the purchase and sale of services during the three months ended June 30, 2018 . In addition, we continued to invest in TV and Cross-Platform through the acquisition of additional TV data, as well as investing in our digital platform through purchasing additional mobile data. We believe this investment is necessary to support our products and expand our offerings, and these costs are expected to increase throughout 2018. These increases were offset by a decrease in rent and depreciation attributable to decreased purchases of capital assets and lower associated depreciation expense. Other costs decreased by $0.8 million related to a license agreement that was not renewed in 2018. We also capitalized $0.9 million of internal-use software development costs in the three months ended June 30, 2018 . We did not capitalize internal-use software development costs during 2017. Additionally, 2018 cost of revenues was reduced by $1.2 million related to our adoption of ASC 606, primarily driven by capitalized fulfillment costs for the second quarter of 2018.

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	Six Months Ended June 30,
(In thousands)	2018		% of Revenue		2017		% of Revenue		$ Change			% Change
Employee costs	$	29,665	14.3	%	$	29,197	14.6	%	$	468		1.6	%
Data costs	26,767		12.9	%	19,720		9.8	%	7,047			35.7	%
Panel costs	11,456		5.5	%	13,005		6.5	%	(1,549		)	(11.9	)%
Systems and bandwidth costs	11,880		5.7	%	10,055		5.0	%	1,825			18.2	%
Rent and depreciation	6,432		3.1	%	8,969		4.5	%	(2,537		)	(28.3	)%
Professional fees	2,730		1.3	%	2,894		1.4	%	(164		)	(5.7	)%
Sample and survey costs	3,178		1.5	%	2,694		1.3	%	484			18.0	%
Technology	3,100		1.5	%	2,507		1.3	%	593			23.7	%
Royalties and resellers	1,492		0.7	%	1,855		0.9	%	(363		)	(19.6	)%
Other	2,080		1.0	%	3,718		1.9	%	(1,638		)	(44.1	)%
Total cost of revenues	$	98,780	47.6	%	$	94,614	47.2	%	$	4,166		4.4	%

Cost of revenues increased by $4.2 million or 4.4% for the six months ended June 30, 2018 as compared to the six months ended June 30, 2017 . The increase in cost of revenues was largely attributable to the increase of $7.0 million in data costs, increase of $1.8 million in systems and bandwidth costs and an increase of $0.5 million in employee costs, offset by a $1.5 million decrease in panel costs, a $2.5 million decrease in rent and depreciation, and a $1.6 million reduction in other costs. Increased data costs in 2018 were incurred as a result of the establishment of standalone selling price for distinct services provided under certain arrangements that include the purchase and sale of services during the second quarter of 2018 . In addition, we continued to invest in TV and Cross-Platform through the acquisition of additional TV data, as well as investing in our digital platform through purchasing additional mobile data. We believe this investment is necessary to support our products and expand our offerings, and these costs are expected to increase throughout 2018. Employee costs increased due to $4.0 million of increased stock-based compensation expense, primarily related to the most recent awards granted on June 5, 2018, offset by $1.4 million in capitalized internal-use software development costs in the six months ended June 30, 2018 that were not capitalized during 2017, reductions related to reduced headcount due to restructuring of the business and capitalized fulfillment costs. The reduction in panel costs related to a reduction in our Total Home Panel investment. The decrease in rent and depreciation is attributable to decreased purchases of capital assets and lower associated depreciation. Additionally, 2018 cost of revenues was reduced by $1.4 million related to our adoption of ASC 606, primarily driven by capitalized fulfillment costs for the first half of 2018.

Selling and Marketing

Selling and marketing expenses consist primarily of employee costs including salaries, benefits, commissions, stock-based compensation and other related costs paid to our direct sales force and industry experts, as well as costs related to online and offline advertising, industry conferences, promotional materials, public relations, other sales and marketing programs and allocated overhead, which is comprised of rent and other facilities related costs, and depreciation expense generated by general purpose equipment and software. All selling and marketing costs are expensed as they are incurred. Commission plans are developed for our account managers with criteria and size of sales quotas that vary depending upon the individual’s role.



	Three Months Ended June 30,
(In thousands)	2018		% of Revenue		2017		% of Revenue		$ Change			% Change
Employee costs	$	24,237	23.9	%	$	23,122	23.3	%	$	1,115		4.8	%
Rent and depreciation	1,824		1.8	%	2,454		2.5	%	(630		)	(25.7	)%
Travel	1,314		1.3	%	2,047		2.1	%	(733		)	(35.8	)%
Professional fees	972		1.0	%	1,951		2.0	%	(979		)	(50.2	)%
Other	1,300		1.3	%	1,616		1.6	%	(316		)	(19.6	)%
Total selling and marketing expenses	$	29,647	29.2	%	$	31,190	31.4	%	$	(1,543	)	(4.9	)%

Selling and marketing expenses decreased by $1.5 million , or 4.9% , for the three months ended June 30, 2018 as compared to the three months ended June 30, 2017 . The decrease in selling and marketing expenses was a result of a decrease in professional fees, travel and rent and depreciation, offset by an increase in employee costs. Employee costs increased $4.3 million due to increased stock-based compensation expense related to the most recent awards granted on June 5, 2018. This increase was offset by lower costs resulting from our reduction in headcount and restructuring of the business and a decrease in rent and depreciation mainly attributable to decreased purchases of capital assets and lower associated depreciation. The decrease in professional fees was

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mainly due to the decreased use of outside consultants. The decreased travel costs were a result of our focus on cost reduction efforts.



	Six Months Ended June 30,
(In thousands)	2018		% of Revenue		2017		% of Revenue		$ Change			% Change
Employee costs	$	44,475	21.5	%	$	45,536	22.7	%	$	(1,061	)	(2.3	)%
Rent and depreciation	3,972		1.9	%	4,948		2.5	%	(976		)	(19.7	)%
Travel	2,320		1.1	%	3,624		1.8	%	(1,304		)	(36.0	)%
Professional fees	2,137		1.0	%	3,405		1.7	%	(1,268		)	(37.2	)%
Marketing events	363		0.2	%	838		0.4	%	(475		)	(56.7	)%
Other	2,285		1.1	%	2,572		1.3	%	(287		)	(11.2	)%
Total selling and marketing expenses	$	55,552	26.8	%	$	60,923	30.4	%	$	(5,371	)	(8.8	)%

Selling and marketing expenses decreased by $5.4 million , or 8.8% , for the six months ended June 30, 2018 as compared to the six months ended June 30, 2017 . The decrease in selling and marketing expenses was a result of a decrease in employee costs that was largely attributable to our reduction in headcount, offset by a $3.4 million increase in stock-based compensation related to the new awards granted on June 5, 2018. In addition, our focus on cost reduction efforts resulted in lower expenses across the majority of our associated categories. We expect these costs to continue to decrease compared to 2017 as a result of lower personnel costs and our focus on cost reduction efforts.

Research and Development

Research and development expenses include new product development costs, consisting primarily of employee costs including salaries, benefits, stock-based compensation and other related costs for personnel associated with research and development activities, third-party expenses to develop new products, third-party data costs and allocated overhead, which is comprised of rent and other facilities related costs, and depreciation expense related to general purpose equipment and software.



	Three Months Ended June 30,
(In thousands)	2018		% of Revenue		2017		% of Revenue		$ Change			% Change
Employee costs	$	17,051	16.8	%	$	17,265	17.4	%	$	(214	)	(1.2	)%
Rent and depreciation	1,704		1.7	%	1,907		1.9	%	(203		)	(10.6	)%
Technology	1,261		1.2	%	1,050		1.1	%	211			20.1	%
Professional fees	429		0.4	%	496		0.5	%	(67		)	(13.5	)%
Other	444		0.4	%	784		0.8	%	(340		)	(43.4	)%
Total research and development expenses	$	20,889	20.6	%	$	21,502	21.6	%	$	(613	)	(2.9	)%

Research and development expenses decreased by $0.6 million , or 2.9% , for the three months ended June 30, 2018 as compared to the three months ended June 30, 2017 . The decrease was primarily attributable to decreases in employee costs and rent and depreciation, including the impact of $2.4 million of capitalized internal-use software development costs in the three months ended June 30, 2018 that were not capitalized during 2017. These decreases were offset by an increase in technology costs as we increased our focus on new product offerings as well as an increase in stock-based compensation of $3.5 million related to the awards granted on June 5, 2018. We expect these costs to continue decreasing compared to 2017 as a result of lower personnel costs and our focus on cost reduction efforts.



	Six Months Ended June 30,
(In thousands)	2018		% of Revenue		2017		% of Revenue		$ Change			% Change
Employee costs	$	31,717	15.3	%	$	33,948	16.9	%	$	(2,231	)	(6.6	)%
Rent and depreciation	3,531		1.7	%	3,832		1.9	%	(301		)	(7.9	)%
Technology	2,573		1.2	%	2,070		1.0	%	503			24.3	%
Professional fees	951		0.5	%	1,328		0.7	%	(377		)	(28.4	)%
Other	833		0.4	%	1,344		0.7	%	(511		)	(38.0	)%
Total research and development expenses	$	39,605	19.1	%	$	42,522	21.2	%	$	(2,917	)	(6.9	)%

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Research and development expenses decreased by $2.9 million , or 6.9% , for the six months ended June 30, 2018 as compared to the six months ended June 30, 2017 . The decrease was primarily attributable to decreases in employee costs, professional fees and rent and depreciation. We also capitalized $3.8 million of internal-use software development costs in the six months ended June 30, 2018 that were not capitalized during 2017. These decreases were offset by an increase in technology costs as we increased our focus on new product offerings and an increase in stock-based compensation as a result of the awards granted on June 5, 2018. We expect these costs to continue decreasing compared to 2017 as a result of lower personnel costs and our focus on cost reduction efforts.

General and Administrative

General and administrative expenses consist primarily of employee costs including salaries, benefits, stock-based compensation and other related costs, and related expenses for executive management, finance, accounting, human capital, legal and other administrative functions, as well as professional fees, overhead, including allocated overhead, which is comprised of rent and other facilities related costs, and depreciation expense related to general purpose equipment and software, and expenses incurred for other general corporate purposes.



	Three Months Ended June 30,
(In thousands)	2018		% of Revenue		2017		% of Revenue		$ Change			% Change
Employee costs	$	15,764	15.5	%	$	4,940	5.0	%	$	10,824		219.1	%
Professional fees	6,137		6.1	%	2,660		2.7	%	3,477			130.7	%
DAx transition services agreement	2,183		2.2	%	2,629		2.6	%	(446		)	(17.0	)%
Rent and depreciation	1,070		1.1	%	858		0.9	%	212			24.7	%
Bad debt expense	567		0.6	%	498		0.5	%	69			13.9	%
Other	2,978		2.9	%	1,725		1.7	%	1,253			72.6	%
Total general and administrative expenses	$	28,699	28.3	%	$	13,310	13.4	%	$	15,389		115.6	%

General and administrative expenses increased by $15.4 million , or 115.6% , for the three months ended June 30, 2018 as compared to the three months ended June 30, 2017 . The increase was primarily attributable to an increase in employee costs and professional fees. Employee costs increased due to $9.1 million in increased stock-based compensation expense related to the most recent awards granted on June 5, 2018. Professional fees increased from legal and audit fees not associated with the prior year audit and investigation. These increased costs were offset by a $0.4 million decrease in the Digital Analytix ("DAx") transition services agreement costs.



	Six Months Ended June 30,
(In thousands)	2018		% of Revenue		2017		% of Revenue		$ Change			% Change
Employee costs	$	22,405	10.8	%	11,500		5.7	%	$	10,905		94.8	%
Professional fees	11,880		5.7	%	6,543		3.3	%	5,337			81.6	%
DAx transition services agreement	4,848		2.3	%	5,751		2.9	%	(903		)	(15.7	)%
Rent and depreciation	2,159		1.0	%	1,763		0.9	%	396			22.5	%
Bad debt expense	484		0.2	%	681		0.3	%	(197		)	(28.9	)%
Other	5,584		2.7	%	4,857		2.4	%	727			15.0	%
Total general and administrative expenses	$	47,360	22.8	%	$	31,095	15.5	%	$	16,265		52.3	%

General and administrative expenses increased by $16.3 million , or 52.3% , for the six months ended June 30, 2018 as compared to the six months ended June 30, 2017 . The increase was attributable to an increase in employee costs and professional fees. Employee costs increased due to an $8.9 million increase in stock-based compensation expense, primarily related to the most recent awards granted on June 5, 2018. Professional fees increased from legal and audit fees not associated with the prior year audit and investigation. These increased costs were offset by a $0.9 million decrease in DAx transition services agreement costs.

Investigation and Audit Related

As previously disclosed, in February 2016, the Audit Committee of the Company's Board of Directors commenced an internal investigation, with the assistance of outside advisors, into matters related to the Company's revenue recognition practices, disclosures, internal controls, corporate culture, and certain employment practices. Investigation, audit, and litigation related expenses associated with this matter were $4.9 million and $17.4 million for the three months ended June 30, 2018 and 2017 , respectively, and $36.8 million and $35.1 million for the six months ended June 30, 2018 and 2017 , respectively. Investigation

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expenses include professional fees associated with legal and forensic accounting services rendered as part of the investigation. Audit related expenses consist of professional fees associated with accounting related consulting services and external auditor fees associated with the audit of our Consolidated Financial Statements for 2017 and prior years. Litigation related expenses include legal fees associated with various lawsuits or investigations that were initiated either directly or indirectly as a result of the Audit Committee's investigation. We expect these costs to continue for the remainder of 2018 due to ongoing legal proceedings and other associated costs, as well as legal expenses associated with indemnification of current and former directors and officers, but at a lower level than the first half of 2018 or the prior year.

Settlement of Litigation, Net

Settlement of litigation, net, consists of losses from the settlement of various litigation matters. The net settlement of litigation expenses for the three and six months ended June 30, 2018 primarily relates to the settlement and final resolution of the federal securities class action and the derivative actions. The net settlement of litigation expenses for the three and six months ended June 30, 2017 primarily relates to the settlement of the Rentrak Corporation merger litigation.

Organizational Restructuring

In December 2017, we announced that we were implementing an organizational restructuring to reduce staffing levels by approximately 10%, and exiting certain geographic regions in order to enable us to decrease our global costs and more effectively align our resources to business priorities. The majority of the employees impacted by the restructuring exited in the fourth quarter of 2017, with the remainder exiting in 2018.

In the second quarter of 2018, our Board of Directors authorized management to implement further reductions in headcount and rationalize our portfolio of leased properties which resulted in the termination of one operating lease and the extension of the lease related to our headquarters in the second quarter of 2018. In connection with the restructuring, we incurred expenses of $3.8 million and $5.1 million during the three and six months ended June 30, 2018 , respectively, related to termination benefits and other lease exit costs. Additional space rationalization is ongoing, and we expect to incur less than $5.0 million in additional restructuring charges through the first quarter of 2019 related to the early termination or sublease of some operating leases of office space.

Other Income, Net

Other income, net, represents income and expenses incurred that are generally not recurring in nature nor part of our normal operations. The following is a summary of other income, net:



	Three Months Ended June 30,
(In thousands)	2018			2017
Transition services agreement income from the DAx disposition	$	2,182		$	2,630
Change in fair value of investment in equity securities	714			—
Change in fair value of financing derivatives	(2,280		)	—
Other	191			53
Total other income, net	$	807		$	2,683

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	Six Months Ended June 30,
(In thousands)	2018			2017
Transition services agreement income from the DAx disposition	$	4,847		$	5,827
Change in fair value of investment in equity securities	265			—
Change in fair value of financing derivatives	(4,460		)	—
Other	232			40
Total other income, net	$	884		$	5,867

Income from transition services represents Adobe Systems Incorporated's reimbursement of costs incurred under the DAx transition services agreement and are offset in general and administrative expenses. The decrease for the three and six months ended June 30, 2018 compared to the three and six months ended June 30, 2017 primarily relates to reduced activity in the third year of the transition services agreement. In addition, the change in other income, net was driven by the changes in fair value of our financing derivatives and equity securities investment, as described in Footnote 4 , Fair Value Measurements .

Gain(Loss) from Foreign Currency Transactions

Our foreign currency transactions are recorded as a result of fluctuations in the exchange rate between the transactional currency and the functional currency of foreign subsidiary transactions. For the three months ended June 30, 2018 , the gain from foreign currency transactions was $1.0 million , primarily related to differences in the U.S. dollar to euro exchange rates during the quarter. For the three months ended June 30, 2017 , the loss from foreign currency transactions was $1.2 million .

For the six months ended June 30, 2018 , the gain from foreign currency transactions was $0.1 million . The 2018 gain was primarily related to fluctuations in the average U.S. dollar to euro and Chilean peso exchange rates. For the six months ended June 30, 2017 , the loss from foreign currency transactions was $1.2 million .

Provision for Income Taxes

A valuation allowance has been established against our net U.S. federal and state deferred tax assets, including net operating loss carryforwards. As a result, our income tax position is primarily related to foreign tax activity and U.S. deferred taxes for tax deductible goodwill and other indefinite-lived liabilities.

During the three months ended June 30, 2018 and 2017 , we recorded an income tax provision of $2.1 million and $1.1 million , respectively, resulting in an effective tax rate of 3.9% and 2.8% , respectively. During the six months ended June 30, 2018 and 2017 , we recorded an income tax provision of $3.5 million and $1.9 million , respectively, resulting in an effective tax rate of 3.4% and 2.5% , respectively. These effective tax rates differ from the U.S. federal statutory rate primarily due to the effects of foreign tax rate differences and increases in the valuation allowance against our domestic deferred tax assets.

Non-GAAP Financial Measures

To provide investors with additional information regarding our financial results, we are disclosing herein Adjusted EBITDA and non-GAAP net loss, each of which are non-GAAP financial measures used by our management to understand and evaluate our core operating performance and trends. We believe that these non-GAAP financial measures provide useful information to investors and others in understanding and evaluating our operating results, as they permit our investors to view our core business performance using the same metrics that management uses to evaluate our performance.

EBITDA is defined as GAAP net income (loss) plus or minus interest, taxes, depreciation and amortization of intangible assets. We define Adjusted EBITDA as EBITDA plus or minus stock-based compensation expense as well as other items and amounts which we view as not indicative of our core operating performance, specifically: charges for matters relating to the Audit Committee investigation described in the 2017 10-K , such as litigation and investigation-related costs, costs associated with tax projects, audits and other professional, consulting or other fees; settlement of litigation, net; restructuring costs and non-cash changes in the fair value of financing derivatives and investments in equity securities.

We define non-GAAP net loss as GAAP net income (loss) plus or minus stock-based compensation expense as well as other items and amounts which we view as not indicative of our core operating performance, specifically: charges for matters relating to the Audit Committee investigation described in the 2017 10-K , such as litigation and investigation-related costs, costs associated with tax projects, audits and other professional, consulting or other fees; settlement of litigation, net; restructuring costs and non-cash changes in the fair value of financing derivatives and investments in equity securities.

Our use of these non-GAAP financial measures has limitations as an analytical tool, and investors should not consider these measures in isolation or as a substitute for analysis of our results as reported under GAAP. The limitations of such non-GAAP measures include the following:


•	Adjusted EBITDA does not reflect tax or interest payments that represent a reduction in cash available to us;

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•	Depreciation and amortization are non-cash charges and the assets being depreciated may have to be replaced in the future. Adjusted EBITDA does not reflect cash capital expenditure requirements for such replacements or for new capital expenditure requirements;


•	Adjusted EBITDA does not reflect changes in, or cash requirements for, our working capital needs;

•

Adjusted EBITDA and non-GAAP net loss do not reflect cash payments relating to litigation and the Audit Committee investigation described herein, such as litigation and investigation-related costs, costs associated with tax projects, restructuring costs, audits and other professional, consulting or other fees incurred in connection with our 2017 and prior-year audits and all related legal proceedings, all of which represent a reduction in cash available to us;


•	Adjusted EBITDA and non-GAAP net loss do not consider the impact of stock-based compensation and similar arrangements;


•	Adjusted EBITDA and non-GAAP net loss do not consider possible cash gains or losses related to our financing derivatives or investment in equity securities; and


•	Other companies, including companies in our industry, may calculate any of these non-GAAP financial measures differently, which reduces their usefulness as comparative measures.

Because of these and other limitations, you should consider Adjusted EBITDA and non-GAAP net loss alongside GAAP-based financial performance measures, including GAAP revenue and various cash flow metrics, net income (loss) and our other GAAP financial results. Management addresses the inherent limitations associated with using non-GAAP financial measures through disclosure of such limitations, presentation of our financial statements in accordance with GAAP and a reconciliation of Adjusted EBITDA and non-GAAP net loss to the most directly comparable GAAP measure, net income (loss). Consolidated EBITDA, as defined for purposes of the senior secured convertible notes ("Notes") issued in 2018, was the same as Adjusted EBITDA as presented below.

The following table presents a reconciliation of net loss (GAAP) to Adjusted EBITDA for each of the periods identified:



	Three Months Ended June 30,						Six Months Ended June 30,
(In thousands)	2018			2017			2018			2017
Net loss (GAAP)	$	(55,977	)	$	(38,626	)	$	(107,427	)	$	(79,418	)

Income tax provision	2,101			1,061			3,516			1,927
Interest expense, net	4,124			252			7,029			406
Depreciation	4,276			5,867			8,839			11,996
Amortization of intangible assets	8,266			8,443			16,810			17,178
EBITDA	(37,210		)	(23,003		)	(71,233		)	(47,911		)

Adjustments:
Stock-based compensation	22,999			2,824			24,880			6,644
Investigation and audit related	4,883			17,399			36,750			35,077
Settlement of litigation, net	5,250			(915		)	5,250			618
Restructuring costs	3,833			—			5,090			—
Other loss (income), net ⁽¹⁾	1,506			(53		)	4,135			(40		)
Adjusted EBITDA	$	1,261		$	(3,748	)	$	4,872		$	(5,612	)

⁽¹⁾ In 2018, adjustments to other income, net, reflect non-cash changes in the fair value of financing derivatives and equity securities investment included in other income, net on our Condensed Consolidated Statements of Operations and Comprehensive Loss. These financial instruments were not held in the prior period. The prior period adjustment to other income, net reflects items classified as non-operating other income, net on our Condensed Consolidated Statements of Operations and Comprehensive Loss, excluding the other income associated with the transition services agreement for Digital Analytix ("DAx") disposition. Our change to exclude non-operating other income, net from our calculation of Adjusted EBITDA for 2018 is intended to conform Adjusted EBITDA to the Consolidated EBITDA definition under our senior secured convertible notes issued to funds affiliated with or managed by Starboard Value LP.

The following table presents a reconciliation of net loss (GAAP) to non-GAAP net loss for each of the periods identified:

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	Three Months Ended June 30,						Six Months Ended June 30,
(In thousands)	2018			2017			2018			2017
Net loss (GAAP)	$	(55,977	)	$	(38,626	)	$	(107,427	)	$	(79,418	)

Adjustments:
Stock-based compensation	22,999			2,824			24,880			6,644
Investigation and audit related	4,883			17,399			36,750			35,077
Settlement of litigation, net	5,250			(915		)	5,250			618
Restructuring costs	3,833			—			5,090			—
Other loss (income), net ⁽¹⁾	1,506			(53		)	4,135			(40		)
Non-GAAP net loss	$	(17,506	)	$	(19,371	)	$	(31,322	)	$	(37,119	)

⁽¹⁾ In 2018, adjustments to other income, net, reflect non-cash changes in the fair value of financing derivatives and equity securities investment included in other income, net on our Condensed Consolidated Statements of Operations and Comprehensive Loss. These financial instruments were not held in the prior period. The prior period adjustment to other income, net reflects items classified as non-operating other income, net on our Condensed Consolidated Statements of Operations and Comprehensive Loss, excluding the other income associated with the transition services agreement for the DAx disposition. We have excluded non-operating other income, net from our calculation of non-GAAP net loss for 2018.

Liquidity and Capital Resources

The following table summarizes our cash flows:



	Six Months Ended June 30,
(In thousands)	2018			2017
Condensed Consolidated Statements of Cash Flow Data:
Net cash used in operating activities	$	(74,369	)	$	(22,258	)
Net cash used in investing activities	$	(6,515	)	$	(4,021	)
Net cash provided by (used in) financing activities	$	90,083		$	(4,048	)
Effect of exchange rate changes on cash and cash equivalents	$	(1,136	)	$	21

Our principal uses of cash historically consisted of cash paid for payroll and other operating expenses and payments related to investments in equipment, primarily to support our consumer panels and technical infrastructure required to deliver our products and services and support our customer base. In 2016, 2017 and the first half of 2018, we incurred significant professional fees primarily consisting of legal, forensic accounting and related advisory services as a result of our Audit Committee's investigation, subsequent audit and compliance efforts relating to the filing of our 2015, 2016 and 2017 Consolidated Financial Statements included in the 2017 10-K filed on March 23, 2018.

As of June 30, 2018 , our principal sources of liquidity consisted of cash and cash equivalents totaling $53.2 million , including $6.6 million in restricted cash.

Our principal sources of liquidity have historically been our cash and cash equivalents, as well as cash flow generated from our operations. Our recent operating losses, including the significant costs associated with the investigation and completing the audit of our financial statements, resulted in a need to secure long-term financing. In January 2018, we issued $150.0 million in Notes as described below to support our anticipated liquidity requirements and provide capital for future investment. In May 2018, we issued an additional $50.0 million in Option Notes as described below. In addition, on July 9, 2018, the Virginia Circuit Court dismissed the final derivative actions and the $10.1 million of insurance proceeds held in escrow were released to us. We believe that our sources of funding are sufficient to satisfy our currently anticipated requirements for at least the next twelve months. We continue to be focused on maintaining flexibility in terms of sources, amounts and the timing of any potential transaction in order to best position us for future success. Our liquidity could be negatively affected by a decrease in demand for our products and services or additional losses from operations, including ongoing costs relating to compliance and legal proceedings.

Restricted cash represents our requirement to collateralize outstanding letters of credit, certain capital lease obligations, lines of credit related to certain of our corporate credit card programs, as well as certain international treasury exposure. As of June 30, 2018 and December 31, 2017 , we had $6.6 million and $7.3 million of restricted cash, respectively.

Credit Facility

On September 26, 2013, we entered into a Credit Agreement (the “Credit Agreement”) with Bank of America, N.A., as the administrative agent and lead lender, and certain other lenders for a five -year revolving credit facility of $100.0 million , which included a $10.0 million sublimit for issuance of standby letters of credit (subsequently reduced to $3.6 million in September 2017), a $10.0 million sublimit for swing line loans and a $10.0 million sublimit for alternative currency lending. The maturity

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date for the revolving credit facility was September 26, 2018. On January 11, 2018 , we voluntarily terminated the Credit Agreement and the Security and Pledge Agreement between the Company and Bank of America, N.A., as administrative agent, and other lenders. At the time of termination, $3.5 million in letters of credit remained outstanding and were cash collateralized. As of June 30, 2018 , $1.2 million letters of credit remain outstanding and are cash collateralized.

On June 1, 2018 , we entered into a Security Agreement with Wells Fargo Bank, N.A. to issue standby letters of credit on our behalf. As of June 30, 2018 , $2.0 million in letters of credit are outstanding and are cash collateralized under the Security Agreement with Wells Fargo Bank, N.A.

Issuance and Sale of Senior Secured Convertible Notes

On January 16, 2018 , we entered into certain agreements with funds affiliated with or managed by Starboard Value LP (collectively, “Starboard”), pursuant to which, among other things, we issued and sold to Starboard $150.0 million in senior secured convertible notes (“Initial Notes”) in exchange for $85.0 million in cash and 2,600,000 shares of the Company's common stock, par value $0.001 per share ("Common Stock"), valued at $65.0 million . We also granted to Starboard an option (the “Notes Option”) to acquire up to an additional $50.0 million in senior secured convertible notes (the “Option Notes” and, together with the Initial Notes, the "Notes"). On May 17, 2018, the Notes Option was exercised by Starboard, whereby we issued and sold to Starboard $50.0 million of Option Notes in exchange for $15.0 million in cash and 1,400,000 shares of Common Stock owned by Starboard, valued at $35.0 million . The Option Notes have the same terms, including maturity, interest rate, convertibility, and security, as the Initial Notes.

In addition, under the agreements, we have the right to conduct a rights offering (the “Rights Offering”), which would be open to all of our stockholders, for up to $150.0 million in senior secured convertible notes (the “Rights Offering Notes”).

The conversion price for the Notes (the “Conversion Price”) is equal to a 30% premium to the volume weighted average trading prices of the Common Stock on each trading day during the ten consecutive trading days commencing on January 16, 2018, subject to a Conversion Price floor of $28.00 per share. In accordance with the foregoing, the Conversion Price was set at $31.29 per share.

The Notes mature on January 16, 2022 (the “Maturity Date”). Based upon the determination of the Conversion Price, interest on the Notes will accrue at 6.0% per year through January 30, 2019 . On each of January 30, 2019 , January 30, 2020 and February 1, 2021 , the interest rate on the Notes will reset, and interest will thereafter accrue at a minimum of 4.0% per year and a maximum of 12.0% per year, based upon the then-applicable conversion premium in accordance with the terms of the Notes. Interest on the Notes is payable, at our option, in cash, or, subject to certain conditions, through the issuance by us of additional shares of Common Stock (the “PIK Interest Shares”). Any PIK Interest Shares so issued will be valued at the arithmetic average of the volume-weighted average trading prices of the Common Stock on each trading day during the ten consecutive trading days ending immediately preceding the applicable interest payment date.

Subject to the terms of the Rights Offering, if undertaken, we would distribute to all of our stockholders' rights to acquire Rights Offering Notes. Stockholders of the Company who elect to participate in the Rights Offering would be allowed to elect to have up to 30% of the Rights Offering Notes they acquire pursuant thereto delivered through the sale to or exchange with the Company of shares of Common Stock, with the per share value thereof equal to the closing price of the Common Stock on the last trading day immediately prior to the commencement of the Rights Offering. The Rights Offering Notes would be substantially similar to the Notes, except, among other things, with respect to: (i) the date from which interest thereon will begin to accrue and the maturity date thereof (which would be four years from the date of issuance of the Rights Offering Notes) and (ii) the conversion price thereof, which would be equal to 130% of the closing price of the Common Stock on the last trading day immediately prior to the commencement of the Rights Offering (subject to a conversion price floor of $28.00 per share). Starboard also agreed to enter into one or more backstop commitment agreements, pursuant to which they would backstop up to $100.0 million in aggregate principal amount of Rights Offering Notes through the purchase of additional Notes, with such backstop obligation reduced by the amount of the Option Notes purchased.

The Notes contain certain affirmative and restrictive covenants with which we must comply, including (i) covenants with respect to limitations on additional indebtedness, (ii) limitations on liens, (iii) limitations on certain payments, (iv) maintenance of certain minimum cash balances (currently at $20 million ) and (v) the timely filing of certain disclosures with the SEC. We are in compliance with the debt covenants as of June 30, 2018 . Based on our current plans, we do not currently anticipate any breach of these covenants that would result in an event of default under the Notes. Our liquidity could be negatively affected in the event of a default under the Notes.

We filed a registration statement on Form S-1 with the SEC for the registration of the shares underlying the Notes, potential PIK Interest Shares, and warrants on July 19, 2018. In conjunction with this registration, WPP plc (together with its affiliates, "WPP") exercised its registration right to have its shares of Common Stock included on the registration statement.

On August 8, 2018 , we and Starboard amended the Notes in order to provide us with additional financial flexibility. Specifically, through March 31, 2019 , the minimum cash balance required to be maintained by us has been reduced from $40 million to $20

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million , subject to certain limitations. In connection with and as consideration for this modification, and pursuant to the amendment, we issued to Starboard $2.0 million in additional aggregate principal amount of senior secured convertible notes, the terms of which are identical to the terms of the Notes, except with regard to the date from which interest thereon shall begin to accrue, which is August 8, 2018 . We also agreed to register the shares of Common Stock underlying the additional notes and potential PIK interest shares related thereto. For additional information, refer to Footnote 11 , Subsequent Events .

Operating Activities

Our primary source of cash provided by operating activities is revenues generated from sales of our digital audience, advertising, TV and cross-platform and movies measurement, planning and optimization products and services. Our primary uses of cash from operating activities include personnel costs, data and infrastructure to develop our products and services and support the anticipated growth in our business and customers using our products. We have also incurred significant professional fees relating to the Audit Committee's investigation, subsequent audit and compliance efforts and related litigation.

Cash used in operating activities is calculated by adjusting our net loss for changes in working capital, as well as to exclude non-cash items such as: depreciation, amortization of intangible assets, stock-based compensation, deferred tax provision, change in the fair value of financing derivatives and equity securities, accretion of debt discount, amortization of deferred financing costs and other.

Net cash used in operating activities for the six months ended June 30, 2018 was $74.4 million compared to net cash used of $22.3 million for the six months ended June 30, 2017 . The increase in cash used in operating activities during the six months ended June 30, 2018 as compared to the six months ended June 30, 2017 was primarily attributable to a $38.5 million increase in payments of our outstanding liabilities, driven by investigation and audit related expenses incurred.

Investing Activities

Cash used in investing activities primarily consists of payments related to purchases of computer network equipment to support our technical infrastructure, furniture and equipment, and capitalized internal-use software costs. The extent of these investments will be affected by our ability to expand relationships with existing customers, grow our customer base and introduce new digital formats.

Net cash used in investing activities for the six months ended June 30, 2018 was $6.5 million compared to net cash used in investing activities of $4.0 million for the six months ended June 30, 2017 . This increase in cash used in investing activities was mainly attributable to costs of $5.2 million to develop internal-use software, offset by a $2.7 million decrease in purchases of property and equipment.

Financing Activities

Net cash provided by financing activities during the six months ended June 30, 2018 was $90.1 million compared to net cash used in financing activities of $4.0 million during the six months ended June 30, 2017 . The change was largely due to the cash proceeds from the issuance of the Notes of $100.0 million . These proceeds were offset by debt issuance costs and the use of $4.3 million of cash to cover minimum statutory withholding taxes due upon the vesting of certain restricted stock and restricted stock unit awards.

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Contractual Payment Obligations

On May 30, 2018, the Company entered into an amendment with the landlord of our corporate headquarters, extending the lease term which was scheduled to expire on July 31, 2022. Pursuant to the terms of the extension, the new lease term will begin on August 1, 2022 and will expire on July 31, 2027. Refer to Footnote 9 , Commitments and Contingencies .

On June 1, 2018, we entered into a new agreement with a network operator, extending the term of our agreement through December 2023. Refer to Footnote 9 , Commitments and Contingencies .

Future Capital Requirements

Our ability to generate cash is subject to our performance, general economic conditions, industry trends and other factors, including expenses from ongoing compliance efforts and related to various legal proceedings. To the extent that our existing cash, cash equivalents, short-term investments, operating cash flow and the proceeds from the 2018 issuance and sale of senior secured convertible notes are insufficient to fund our future activities and requirements, we may need to raise additional funds through public or private equity or debt financing. If we issue additional equity securities in order to raise additional funds, further dilution to existing stockholders may occur. The delayed filing of our periodic reports with the SEC prior to our filing of the 2017 10-K may impair our ability to obtain additional financing and access the capital markets. As a result of our delayed filings, we will not be eligible to register the offer and sale of our securities using a registration statement on Form S-3 until we have timely filed all periodic reports required under the Exchange Act for twelve months.

2018 Equity and Incentive Compensation Plan

Our stockholders approved the 2018 Equity and Incentive Compensation Plan (the 2018 "Plan") at our 2018 Annual Meeting of Stockholders. Under the 2018 Plan, we may grant option rights, appreciation rights, restricted stock, restricted stock units, performance shares and performance units up to 10,650,000 shares of Common Stock. The aggregate number of shares of Common Stock available will be reduced by: (i) one share of Common Stock for every one share of Common Stock subject to an award of option rights or appreciation rights granted under the 2018 Plan and (ii) two shares of Common Stock for every one share of Common Stock subject to an award other than of option rights or appreciation rights granted under the 2018 Plan. If any award granted under the 2018 Plan (in whole or in part) is cancelled or forfeited, expires, is settled for cash, or is unearned, the shares of Common Stock subject to such award will, to the extent of such cancellation, forfeiture, expiration, cash settlement, or unearned amount, again be available at a rate of one share of Common Stock for every one share of Common Stock subject to awards of Option Rights or Appreciation rights and two shares of Common Stock for every one share of Common Stock subject to awards other than of Option Rights or Appreciation Rights. Additionally, if, after December 31, 2017, any shares of Common Stock subject to an award granted under the 2007 Equity Incentive Plan (the "2007 Plan") are forfeited, or an award granted under the 2007 Plan (in whole or in part) is canceled or forfeited, expires, is settled in cash, or is unearned, the shares of Common Stock subject to such award will, to the extent of such cancellation, forfeiture, expiration, cash settlement, or unearned amount, be available for awards under the 2018 Plan at a rate of one share for every one share subject to such award. We registered the securities under the 2018 Plan with the SEC effective June 1, 2018.

On June 5, 2018, our Compensation Committee approved and awarded 2,078,151 restricted stock units under the 2018 Plan to employees, directors and certain consultants that were recommended in 2016, 2017 and 2018. The closing sales price of our Common Stock on Nasdaq on June 5, 2018 was $24.23 . Upon the grant of these awards, we recognized $21.1 million in stock-based compensation expense during the three months ended June 30, 2018 . Refer to Footnote 7 , Stockholders' Equity .

Off-Balance Sheet Arrangements

We have no off-balance sheet arrangements (as defined in Item 303 of Regulation S-K) other than operating lease obligations and other purchase obligations.

Critical Accounting Policies

Our discussion and analysis of our financial condition and results of operations are based on our Condensed Consolidated Financial Statements, which have been prepared in accordance with generally accepted accounting principles in the U.S. ("GAAP"). The preparation of these financial statements requires us to make estimates, assumptions and judgments that affect the amounts reported in our Condensed Consolidated Financial Statements and the accompanying Notes to Condensed Consolidated Financial Statements. We base our estimates on historical experience and on various other assumptions that we believe to be reasonable under the circumstances. Actual results may differ from these estimates.

Our critical accounting policies are those that are both material to the presentation of our financial condition and results of operations and require management’s most subjective and complex judgments. Other than our accounting policy for revenue recognition, which was updated as a result of the adoption of ASC 606, Revenue from Contracts with Customers, there have been no material

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changes to our existing critical accounting policies during the three and six months ended June 30, 2018 from those disclosed in our 2017 10-K . Refer below to the discussion of our current revenue recognition accounting policy.

Revenue Recognition

We apply the provisions of ASC 606, Revenue from Contracts with Customers and all related appropriate guidance. We recognize revenue under the core principle of depicting the transfer of promised goods and services to our customers in an amount that reflects the consideration to which we expect to be entitled. In order to achieve that core principle, we apply the following five-step approach: (1) identify the contract with a customer, (2) identify the performance obligations in the contract, (3) determine the transaction price, (4) allocate the transaction price to the performance obligations in the contract, and (5) recognize revenue when a performance obligation is satisfied.

Our contracts with customers may include multiple promised goods and services, c onsisting of the various services the Company offers. Contracts with multiple performance obligations typically consist of a mix of subscriptions to online products, our online database and custom products and services. At contract inception, we identify performance obligations by evaluating whether the promised goods and services are capable of being distinct within the context of the contract. Promised goods and services that are not distinct are combined until the combined bundle of goods and services is distinct.

In general, transaction price is determined by estimating the fixed amount of consideration to which the Company is entitled to for transfer of goods and services and all relevant sources and components of variable consideration. Variable consideration is estimated based on the most likely amount or expected value approach. Once we select a method to estimate variable consideration for a particular type of performance obligation, we will apply that method consistently. We will constrain estimates of variable consideration only to the extent that it is probable that significant reversal in the amount of cumulative revenue recognized will not occur.

Significant judgment is required to determine the stand-alone selling price (“SSP") for each performance obligation. We allocate transaction price to each performance obligation based on relative SSP.

For the majority of our products and services, we apply an adjusted market assessment approach for the determination of SSP for identified performance obligations. In general, we bundle multiple products and very few are sold on a standalone basis. We use rate cards and pricing calculators that are periodically reviewed and updated to reflect the latest sales data and observable inputs by industry, channel, geography, customer size, and other relevant groupings. Certain products are sold on a standalone basis in a narrow band of prices. If a product is sold outside of the narrow band of prices, it will be assigned the midpoint of the narrow band for purposes of allocating transaction price on a relative SSP basis.

We recognize revenue when (or as) we satisfy a performance obligation by transferring promised goods or services to a customer. Customers may obtain the control of promised goods or services over time or at a point in time.

We enter into a limited number of monetary contracts that involve both the purchase and sale of services with a single counterparty. We assess each contract to determine if the revenue and expense should be presented gross or net. We recognize revenue for these contracts to the extent that SSP is established for distinct services provided. Any excess consideration above the established standalone selling price of services is presented as an offset to cost of revenues in the Condensed Consolidated Statements of Operations and Comprehensive Loss.

Refer to Footnote 2 , Summary of Significant Accounting Policies for the impact of adopting Topic 606 on our Condensed Consolidated Financial Statements for the period ended June 30, 2018 .



ITEM 3.	QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Market risk represents the risk of loss that may impact our financial position due to adverse changes in financial market prices and rates. We hold equity securities and derivative financial instruments which are subject to market risk.

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Interest rate risk

We are subject to interest rate risk as a result of having $202.0 million aggregate principal amount of Notes outstanding, which are convertible into shares of Common Stock at a conversion price of $31.29 per share (the "Conversion Price"). The interest rate on the Notes is currently 6.0% per year and resets at each of January 30, 2019, January 30, 2020 and February 1, 2021 (each an "Interest Reset Date"), based on the then-applicable Conversion Premium which is calculated by dividing the Conversion Price by the arithmetic average of the volume-weighted average trading prices of our Common Stock on each of the ten consecutive trading days immediately preceding the applicable Interest Reset Date (the "VWAP"). The interest rate is then determined in accordance with the table below:



If the Conversion Premium (as of the applicable Interest Reset Date) is:		Then the Interest Rate from the applicable Interest Reset Date until the next subsequent Interest Reset Date shall be:
1.0 or less		4.0%
1.05		4.3%
1.10		4.7%
1.15		5.0%
1.20		5.3%
1.25		5.7%
1.30		6.0%
1.35		8.0%
1.40		10.0%
1.45 or higher		12.0%

If the Conversion Premium is between two Conversion Premium amounts in the table above, the interest rate is determined by straight-line interpolation between the interest rates for the higher and lower Conversion Premium amounts.

The interest reset feature of the Notes increases the risk that interest charges could increase materially. Based on the $202.0 million aggregate principal Notes outstanding, each 1.0% increase in the interest rate on the Notes would increase our annual interest expense by $2.0 million. As of June 30, 2018, the VWAP of our Common Stock for the immediately preceding ten consecutive trading days was $22.74, which would equate to a 1.38 Conversion Premium and, accordingly, would result in a 9.0% annual interest rate on the outstanding Notes if June 30, 2018 were an Interest Reset Date. An interest rate increase from 6.0% to 9.0% would result in an approximately $6.1 million increase in interest expense over the next twelve months and, assuming that the interest rate remained at 9.0% for each successive Interest Reset Date, approximately $22.0 million through the maturity date of the Notes, which is January 16, 2022. As discussed in Footnote 3 , Long-term Debt , we have the ability, subject to certain conditions, to pay interest on the Notes through the issuance of PIK Interest Shares. We filed a registration statement on Form S-1 with the SEC for the purpose of registering the potential PIK Interest Shares on July 19, 2018.

Derivative financial instruments

As described below, the interest reset feature and the change of control conversion premium feature of the Notes represent complex derivative financial instruments. These derivatives are not considered hedging instruments. We engage third party experts to assist management in determining the fair value of our derivative financial instruments and to perform review procedures over the models and assumptions used to determine the fair value of these derivative financial instruments. For additional information on the determination of fair value, including the assumptions used in those determinations, refer to Footnote 3 , Long-term Debt and Footnote 4 , Fair Value Measurements . As of June 30, 2018, the fair value of our outstanding derivative financial instruments of $15.9 million was recorded as financing derivatives within the Condensed Consolidated Balance Sheets.

The fair value of our interest rate reset derivative liability relates to the interest rate reset feature of the Notes. Changes in the fair market value of the interest rate reset derivative liability are primarily driven by changes in the price and volatility of a share of our Common Stock. Generally, as our stock price decreases, the fair value of the derivative liability will increase, although not in a linear relationship. Similar to an option, over time, and at each of the Interest Reset Dates, the value of the interest rate reset derivative liability will decrease as the time to maturity shortens and each Interest Reset Date passes.

The fair value of our change in control derivative liability relates to a change of control conversion premium feature of the Notes whereby, upon the occurrence of certain change of control transactions, a Note holder would have the right to require the Company to redeem all or any portion of such holder’s outstanding Notes for cash at a price determined in accordance with the terms of the

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Notes. Generally, as our stock price decreases, the fair value of the derivative liability will increase, although not in a linear relationship. Over time, the value of the change of control derivative liability will decrease based on the previously disclosed make-whole change of control premium multiplier table.

For discussion of our market risk associated with foreign currency risk, refer to Item 7A , "Quantitative and Qualitative Disclosures About Market Risk" within the 2017 10-K.

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ITEM 4.	CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

Our management, with the participation and supervision of our principal executive officer and principal financial officer, is responsible for our disclosure controls and procedures pursuant to Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the "Exchange Act"). Disclosure controls and procedures are controls and other procedures that are designed to ensure that information required to be disclosed in our reports filed or submitted under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified under SEC rules and forms. Disclosure controls and procedures include controls and procedures designed to ensure that information required to be disclosed in our reports filed under the Exchange Act is accumulated and communicated to our management, including our principal executive officer and our principal financial officer, as appropriate, to allow timely decisions regarding required disclosure.

Our management, including our principal executive officer and our principal financial officer, carried out an evaluation of the effectiveness of our disclosure controls and procedures as of June 30, 2018 . Based on this evaluation, our management concluded that as of June 30, 2018 , these disclosure controls and procedures were not effective at the reasonable assurance level as a result of the material weaknesses in our internal control over financial reporting, which are described in Item 9A , "Controls and Procedures" of our 2017 10-K.

Changes in Internal Control over Financial Reporting

Under applicable SEC rules (Exchange Act Rules 13a-15(d) and 15d-15(d)) management is required to evaluate, with the participation of our principal executive officer and principal financial officer, any changes in internal control over financial reporting that occurred during each fiscal quarter that materially affected, or are reasonably likely to materially affect, our internal control over financial reporting. Other than as disclosed under “Remediation Efforts to Address Material Weaknesses in Internal Control over Financial Reporting” below, there were no changes in our internal control over financial reporting during our most recent fiscal quarter that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

Remediation Efforts to Address Material Weaknesses in Internal Control Over Financial Reporting

As discussed in Item 9A , "Controls and Procedures" of the 2017 10-K, we identified material weaknesses in the areas of revenue accounting, business combinations & significant asset acquisitions, financial close & reporting, and tax accounting. Some of the progress made in 2018 towards remediating these material weaknesses includes:


•	We hired additional headcount, including a Vice President of Accounting Operations, Senior Director of Accounting Operations and additional technical accountants.


•	We provided over 60 hours of internal and external training related to revenue, leases and other accounting and reporting topics.


•	We developed desktop manuals for certain accounting processes, with additional enhancements expected during the remainder of 2018.


•	We enhanced our processes within revenue accounting to provide additional oversight regarding various aspects of the revenue cycle.


•	We improved our financial close process by focusing on accounting reconciliations, analytical review and documentation of close responsibilities.


•	We updated our controls related to tax accounting and implemented additional levels of review over the tax provision, valuation allowance and uncertain tax positions.


•	We engaged an outside party to assist with the review of the tax provision and tax-related disclosures.


•	We developed a business combination and divestiture policy and approval authority matrix that is expected to be finalized in the third quarter 2018.

We will continue to evaluate the results of our control assessments and testing procedures to determine whether the new controls have been designed appropriately, are operating effectively, and whether the material weaknesses have been remediated. We expect that our remediation efforts will continue through 2018, with the goal to fully remediate all material weaknesses by year-end 2018.

Inherent Limitation on the Effectiveness of Internal Controls

The effectiveness of any system of internal control over financial reporting is subject to inherent limitations, including the exercise of judgment in designing, implementing, operating, and evaluating the controls and procedures, and the inability to eliminate misconduct completely. Accordingly, any system of internal control over financial reporting can only provide reasonable, not

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absolute, assurances. In addition, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. We intend to continue to monitor and upgrade our internal controls as necessary or appropriate for our business, but cannot assure that such improvements will be sufficient to provide us with effective internal control over financial reporting.

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PART II. OTHER INFORMATION



ITEM 1.	LEGAL PROCEEDINGS

For a discussion of material legal proceedings in which we are involved, please refer to Footnote 9 , Commitments and Contingencies of the Notes to Condensed Consolidated Financial Statements included in Part I, Item 1 of this 10-Q, which is incorporated herein by reference.



ITEM 1A.	RISK FACTORS

An investment in our Common Stock involves a substantial risk of loss. In addition to the information in this report, you should carefully consider the risks discussed below and in Item 1A "Risk Factors" of our 2017 10-K. The risks identified below and in our 2017 10-K could materially adversely affect our business, financial condition and operating results. In that case, the trading price of our Common Stock could decline, and you may lose part or all of your investment. The risks described below and in our 2017 10-K are not the only risks we face. Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial also may materially and adversely affect our business, financial condition and operating results, and may result in the loss of part or all of your investment.

Domestic or foreign laws, regulations or enforcement actions may limit our ability to collect and incorporate media usage information in our products, which may decrease their value and cause an adverse impact on our business and financial results.

Our business could be adversely impacted by existing or future laws, regulations or actions by domestic or foreign regulatory agencies. For example, privacy, data protection and personal information, intellectual property, advertising, data security, data retention and deletion, protection of minors, consumer protection, economic or other trade prohibitions or sanctions concerns could lead to legislative, judicial and regulatory limitations on our ability to collect, maintain and use information about consumers’ behavior or media consumption in the U.S. and abroad. State and federal laws within the U.S. and foreign laws and regulations are varied, and at times conflicting, resulting in higher risk related to compliance. A number of new laws coming into effect and/or proposals pending before federal, state and foreign legislative and regulatory bodies will likely affect our business. For example, the European Union’s ("EU") General Data Protection Regulation ("GDPR") became effective in May 2018, imposing more stringent EU data protection requirements and providing for greater penalties for noncompliance. Additionally, the European Commission continues to evaluate changes to the ePrivacy Regulation, a companion regulation to GDPR that will likely have a significant impact on our solutions. As another example, the State of California recently enacted the California Consumer Privacy Act ("CCPA"), which will be effective in January 2020. The CCPA expands the scope of what is considered “personal information” and creates new data access and opt-out rights for consumers, which will likely create new requirements for comScore and other companies that operate in California. These U.S. federal and state and foreign laws and regulations, which in some cases can be enforced by private parties in addition to government entities, are constantly evolving and can be subject to significant change.

We have implemented policies and procedures to comply with the GDPR and other laws, and we continue to evaluate and implement processes and enhancements. However, the application, interpretation, and enforcement of these laws and regulations are often uncertain, particularly in the new and rapidly evolving industry in which we operate, and may be interpreted and applied inconsistently from country to country and inconsistently with our current policies and practices. Additionally, the costs of compliance with, and the other burdens imposed by, these and other laws or regulatory actions may prevent us from selling our products or increase the costs associated with selling our products, and may affect our ability to invest in or jointly develop products in the U.S. and in foreign jurisdictions. In addition, failure to comply with these and other laws and regulations may result in, among other things, administrative enforcement actions and significant fines, class action lawsuits and civil and criminal liability. Any regulatory or civil action that is brought against us, even if unsuccessful, may distract our management’s attention, divert our resources, negatively affect our public image or reputation among our panelists and customers and harm our business.

The issuance of shares of Common Stock upon conversion of, or payment of interest on, our senior secured convertible notes and the exercise of warrants to purchase our Common Stock could substantially dilute your investment and could impede our ability to obtain additional financing.

Our senior secured convertible notes ("Notes") are convertible into, and our warrants are exercisable for, shares of our Common Stock and give such holders thereof an opportunity to profit from a rise in the market price of our Common Stock such that conversion or exercise thereof will result in dilution of the equity interests of our stockholders. Further, the issuance of shares of our Common Stock, at our election, in lieu of cash, in payment of interest on the Notes, would result in dilution of the equity

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interests of our other stockholders. We have no control over whether the holders of Notes and warrants will exercise their right, in whole or in part, to convert their Notes or exercise their warrants. For these reasons, we are unable to forecast or predict with any certainty the total number of shares of Common Stock that may be issued under the Notes and warrants. The existence and potentially dilutive impact of the Notes and our warrants may prevent us from obtaining additional financing in the future on acceptable terms, or at all.

The terms of our Notes, our warrants and our registration rights agreement with certain investors could impede our ability to enter into corporate transactions or obtain additional financing and could result in our paying premiums or penalties to the holders of the Notes and warrants.

The terms of our Notes and our warrants require us, upon the consummation of any “Fundamental Transaction” (as defined in the Notes), to cause any successor entity resulting from such Fundamental Transaction to assume all of our obligations under the Notes and warrants and the associated transaction documents. Further, the terms of the Notes and the warrants could impede our ability to enter into certain transactions or obtain additional financing in the future.

The Notes and the warrants require us to deliver the number of shares of our Common Stock issuable upon conversion or exercise within a specified time period. If we are unable to deliver the shares of Common Stock within the timeframe required, we may be obligated to reimburse the holders for the cost of purchasing the shares of our Common Stock in the open market or pay them the profit they would have realized upon the conversion or exercise and sale of such shares.

Our registration rights agreement with certain funds affiliated with or managed by Starboard Value LP (collectively, “Starboard”) provides that in the event that (i) an initial registration or any subsequent registration statement fails to register the minimum number of shares of Common Stock required under the Starboard registration rights agreement, (ii) we do not file a registration statement required to be filed under the Starboard registration rights agreement within the prescribed time period, (iii) the SEC has not declared effective a registration statement required to be filed under the Starboard registration rights agreement within the prescribed time period, or (iv) a registration statement required to be filed under the Starboard registration rights agreement ceases to be effective and available to the selling stockholders party thereto under certain circumstances, we must pay to the selling stockholders on the 121 ^st day after the occurrence of each such event and on every 30th day thereafter until the applicable event is cured, an amount in cash equal to 1.0% of the Conversion Amount (as defined in the Notes), subject to a maximum of 3% of the aggregate principal amount outstanding under the Notes for any 30-day period.

The payments we may be obligated to make to the holders of the Notes and our warrants described above may adversely affect our financial condition, liquidity and results of operations.

We may be obligated to redeem our Notes at a premium upon the occurrence of an Event of Default (as defined in the Notes) or a Change of Control (as defined in the Notes).

If we fail to comply with the various covenants in our Notes, including the financial covenants, we could be in default. Upon an Event of Default under the Notes, we could be required to redeem the Notes at a premium. In addition, upon the occurrence of specific kinds of Change of Control events, we will be required to offer to redeem the Notes at a premium as set out in the Notes.

In either event, the source of funds for any such redemption would be our available cash or, possibly, other financing. We may not be able to redeem the Notes pursuant to the terms thereof because we may not have the financial resources to do so, and no assurances can be provided as to our ability to obtain other requisite financing in amounts, or at times, as may be needed. Our failure to repurchase the Notes upon a Change of Control in accordance with the terms thereof would also result in an Event of Default under the Notes. In the event the holders of the Notes exercised their rights thereunder and we were unable to redeem the Notes, it could have important consequences including, potentially, forcing us into bankruptcy or liquidation.



ITEM 2.	UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

(a) Unregistered Sales of Equity Securities during the Three Months Ended June 30, 2018

As described in Footnote 3 , Long-term Debt , on January 16, 2018 , we entered into certain agreements with Starboard, pursuant to which, among other things, we issued and sold to Starboard $150.0 million of senior secured convertible notes (the "Initial Notes") in exchange for $85.0 million in cash and 2,600,000 shares of Common Stock valued at $65.0 million . In addition, under the agreements, we granted to Starboard an option (the "Notes Option") to purchase up to an additional $50.0 million of senior secured convertible notes (the "Option Notes") and agreed to grant Starboard warrants to purchase 250,000 shares of Common Stock. On May 17, 2018 , we issued and sold to Starboard $50.0 million in Option Notes in exchange for $15.0 million in cash and 1,400,000 shares of Common Stock valued at $35.0 million , pursuant to Starboard's exercise in full of the Notes Option.

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These transactions were effected under a private placement exemption for accredited investors, pursuant to Regulation D under the Securities Act of 1933, as amended (the "Securities Act"). For additional information, including the terms of conversion or exercise of the securities sold to Starboard, refer to Footnote 3 , Long-term Debt .

On June 7, 2018, the United States District Court for the Southern District of New York (the “Court”) entered separate orders granting final approval of (i) the settlement of the consolidated securities class action captioned Fresno County Employees’ Retirement Association et al. v. comScore, Inc. et al. , No. 1:16-cv-01820-JGK (S.D.N.Y.) (the “Class Action”) and (ii) the settlement of the derivative actions captioned In re comScore, Inc. Shareholder Derivative Litigation , No. 1:16-cv-09855-JGK (S.D.N.Y.), In re comScore, Inc. Virginia Shareholder Derivative Litigation , No. CL-2016-0009465 (Va. Cir. Ct., Fairfax Cnty.) and Assad v. Fulgoni, et al. , No. CL-2017-0005503 (Va. Cir. Ct., Fairfax Cnty.) (collectively, the “Derivative Actions”). Pursuant to the terms of the settlements, on June 21, 2018 we issued (i) 3,669,444 shares of Common Stock to a settlement fund for the benefit of authorized claimants in the Class Action and (ii) 354,671 shares of Common Stock to plaintiffs’ lead counsel in the Derivative Actions as payment of attorneys’ fees. In accordance with the orders entered by the Court, these shares were issued without registration under the Securities Act, in reliance on the exemption from registration afforded by Section 3(a)(10) of the Securities Act.

(b) Use of Proceeds from Sale of Registered Equity Securities

None.

During the three months ended June 30, 2018 , we repurchased shares of Common Stock in connection with the following:


i.	The issuance to Starboard of $50.0 million of Option Notes in exchange for $15.0 million in cash and 1,400,000 shares of Common Stock valued at $35.0 million ; and


ii.	Shares surrendered to satisfy minimum statutory withholding tax obligations due upon the vesting of certain restricted stock units and exercising of certain stock options, which shares were valued at the then current fair market value of the shares.



	Total Number of Shares Purchased		Average Price Per Share		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs ⁽¹⁾	Maximum Number (or Approximate Dollar Value) of Shares that May Yet Be Repurchased Under the Plans or Programs ⁽¹⁾
April 1 - April 30, 2018	4,803	⁽²⁾	$	19.20	—	$	—
May 1 - May 31, 2018	1,404,578	^{(2) (3)}	24.99		—	—
June 1 - June 30, 2018	615	⁽²⁾	23.55		—	—
Total	1,409,996		$	24.97	—	$	—


⁽¹⁾	During the three months ended June 30, 2018 , there were no shares purchased pursuant to our share repurchase programs. On March 5, 2016, our Board of Directors suspended the share repurchase program indefinitely.


⁽²⁾	Shares surrendered by employees to cover minimum statutory withholding taxes due upon the vesting of certain restricted stock units and exercising of certain stock options. For restricted stock units and stock options, these amounts do not represent issued shares.


⁽³⁾	1,400,000 out of 1,404,578 represent shares received by us in connection with the May 17, 2018 issuance to Starboard of $50.0 million of Option Notes in exchange for $15.0 million in cash and 1,400,000 shares of Common Stock valued at $35.0 million , as described in Footnote 3 , Long-term Debt . The closing bid price of our Common Stock on the OTC Pink Tier on May 17, 2018 was $21.75 per share.



ITEM 3.	DEFAULTS UPON SENIOR SECURITIES

Not applicable.

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ITEM 4.	MINE SAFETY DISCLOSURES

Not applicable.

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ITEM 5.	OTHER INFORMATION

Not Applicable.



ITEM 6.	EXHIBITS



Exhibit No.		Exhibit Document


3.1		Certificate of Amendment of Amended and Restated Certificate of Incorporation of comScore, Inc. (incorporated by reference to Exhibit 4.2 to the Registrant’s Registration Statement on Form S-8, filed June 4, 2018) (File No. 333-225400)

3.2		Amended and Restated Bylaws of comScore, Inc .

4.1		Form of Note (incorporated by reference to Exhibit 4.1 to the Registrant's Current Report on Form 8-K, filed May 17, 2018) (File No. 001-33520)

10.1		Amendment Agreement, dated as of April 18, 2018, by and among comScore, Inc., Starboard Value LP and certain affiliates of Starboard Value LP (incorporated by reference to Exhibit 10.1 to the Registrant's Current Report on Form 8-K, filed April 20, 2018) (File No. 001-33520)

10.2*		Executive Employment Agreement, dated as of April 20, 2018, by and between comScore, Inc. and Bryan Wiener (incorporated by reference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K, filed April 26, 2018 (File No. 001-33520)

10.3*		Performance Restricted Stock Units Award Notice, dated as of June 5, 2018, by and between comScore, Inc. and Bryan Wiener (incorporated by reference to Exhibit 10.46 to the Registrant’s Registration Statement on Form S-1, filed July 19, 2018) (File No. 333-226246)

10.4*		Restricted Stock Units and Common Stock Award Notice, dated as of June 5, 2018, by and between comScore, Inc. and Bryan Wiener (incorporated by reference to Exhibit 10.47 to the Registrant’s Registration Statement on Form S-1, filed July 19, 2018) (File No. 333-226246)

10.5		First Amendment to Senior Secured Convertible Notes, dated as of May 17, 2018, by and between comScore, Inc. and each of the investors listed on the signature pages attached thereto (incorporated by reference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K, filed May 17, 2018) (File No. 001-33520)

10.6		Amendment No. 6 to Deed of Lease, dated as of May 30, 2018, by and between South of Market LLC and comScore, Inc. (incorporated by reference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K, filed June 5, 2018

10.7*		comScore, Inc. 2018 Equity and Incentive Compensation Plan (incorporated by reference to Exhibit 10.1 to the Registrant’s Registration Statement on Form S-8, filed June 4, 2018) (File No. 333-225400)

10.8*		Form of Restricted Stock Units Award Notice for Employees (incorporated by reference to Exhibit 10.3 to the Registrant’s Current Report on Form 8-K, filed June 5, 2018) (File No. 001-33520)

10.9*		Form of Restricted Stock Units and Common Stock Award Notice for Employees (incorporated by reference to Exhibit 10.4 to the Registrant’s Current Report on Form 8-K, filed June 5, 2018) (File No. 001-33520)

10.10*		Form of Restricted Stock Units Award Notice for Directors (incorporated by reference to Exhibit 10.5 to the Registrant’s Current Report on Form 8-K, filed June 5, 2018) (File No. 001-33520)

10.11*		Form of Common Stock Award Notice for Employees (incorporated by reference to Exhibit 10.6 to the Registrant’s Current Report on Form 8-K, filed June 5, 2018) (File No. 001-33520)

10.12*		Form of Common Stock Award Notice for Directors (incorporated by reference to Exhibit 10.7 to the Registrant’s Current Report on Form 8-K, filed June 5, 2018) (File No. 001-33520)

10.13*		Form of Common Stock Award Notice for Consultants (incorporated by reference to Exhibit 10.8 to the Registrant’s Current Report on Form 8-K, filed June 5, 2018) (File No. 001-33520)

10.14		Second Amendment to Senior Secured Convertible Notes, dated as of August 8, 2018, by and between comScore, Inc. and each of the investors listed on the signature pages attached thereto (incorporated by reference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K, filed August 9, 2018) (File No. 001-33520)

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Exhibit No.		Exhibit Document


31.1		Certification of Principal Executive Officer pursuant to Rule 13a-14(a) and Rule 15d-14(a) of the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

31.2		Certification of Principal Financial Officer pursuant to Rule 13a-14(a) and Rule 15d-14(a) of the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

32.1		Certification of Principal Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

32.2		Certification of Principal Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

101.1		XBRL Instance Document

101.2		XBRL Taxonomy Extension Schema Document

101.3		XBRL Taxonomy Extension Calculation Linkbase Document

101.4		XBRL Taxonomy Extension Definition Linkbase Document

101.5		XBRL Taxonomy Extension Label Linkbase Document

101.6		XBRL Taxonomy Extension Presentation Linkbase Document

	*	Management contract or compensatory plan or arrangement.

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SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.



	COM S CORE , I NC .

	By:	/s/ Gregory A. Fink
		Gregory A. Fink
		Chief Financial Officer and Treasurer
		(Principal Financial Officer, Principal Accounting Officer and Duly Authorized Officer)

August 9, 2018

EXHIBIT 3.2

AMENDED AND RESTATED

BYLAWS

COMSCORE, INC.

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		Page
ARTICLE I	CORPORATE OFFICES	1
1.1	REGISTERED OFFICE	1
1.2	OTHER OFFICES	1
ARTICLE II	MEETINGS OF STOCKHOLDERS	1
2.1	TIME AND PLACE OF MEETINGS	1
2.2	ANNUAL MEETING	1
2.3	SPECIAL MEETING	1
2.4	NOTICE OF STOCKHOLDERS’ MEETINGS	1
2.5	MANNER OF GIVING NOTICE; AFFIDAVIT OF NOTICE	2
2.6	QUORUM	2
2.7	RECESSED AND ADJOURNED MEETING; NOTICE	2
2.8	VOTING	3
2.9	WAIVER OF NOTICE	3
2.10	NO STOCKHOLDER ACTION BY WRITTEN CONSENT	3
2.11	RECORD DATE FOR STOCKHOLDER NOTICE, VOTING, DIVIDENDS, AND RIGHTS	3
2.12	PROXIES	4
2.13	LIST OF STOCKHOLDERS ENTITLED TO VOTE; STOCK LEDGER	4
2.14	NOMINATIONS AND PROPOSALS BY STOCKHOLDERS AT ANNUAL MEETING	5
2.15	ORGANIZATION	8
ARTICLE III	DIRECTORS	8
3.1	POWERS	9
3.2	NUMBER OF DIRECTORS	9
3.3	ELECTION, QUALIFICATION AND TERM OF OFFICE OF DIRECTORS	9
3.4	RESIGNATION AND VACANCIES	9
3.5	PLACE OF MEETINGS, MEETINGS BY TELEPHONE	10
3.6	REGULAR MEETINGS	10
3.7	SPECIAL MEETINGS; NOTICE	10
3.8	QUORUM	10
3.9	WAIVER OF NOTICE	10
3.10	ADJOURNED MEETING; NOTICE	10
3.11	BOARD ACTION BY WRITTEN CONSENT WITHOUT A MEETING	11
3.12	FEES AND COMPENSATION OF DIRECTORS	11

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(continued)



		Page
3.13	REMOVAL OF DIRECTORS	11
ARTICLE IV	COMMITTEES	11
4.1	COMMITTEES OF DIRECTORS	11
4.2	COMMITTEE MINUTES	11
4.3	MEETINGS AND ACTION OF COMMITTEES	12
ARTICLE V	OFFICERS	12
5.1	OFFICERS	12
5.2	ELECTION OF OFFICERS	12
5.3	SUBORDINATE OFFICERS	12
5.4	REMOVAL AND RESIGNATION OF OFFICERS	12
5.5	VACANCIES IN OFFICES	13
5.6	CHAIR OF THE BOARD	13
5.7	CHIEF EXECUTIVE OFFICER	13
5.8	PRESIDENT	13
5.9	VICE PRESIDENT	13
5.10	SECRETARY	13
5.11	CHIEF FINANCIAL OFFICER	14
5.12	ASSISTANT SECRETARY	14
5.13	ASSISTANT TREASURER	14
5.14	AUTHORITY AND DUTIES OF OFFICERS	14
ARTICLE VI	INDEMNITY	14
6.1	RIGHT TO INDEMNIFICATION IN PROCEEDINGS OTHER THAN THOSE BY OR IN THE RIGHT OF THE CORPORATION	14
6.2	RIGHT TO INDEMNIFICATION IN PROCEEDINGS BY OR IN THE RIGHT OF THE CORPORATION	15
6.3	AUTHORIZATION OF INDEMNIFICATION	15
6.4	GOOD FAITH DEFINED	16
6.5	INDEMNIFICATION BY A COURT	16
6.6	EXPENSES PAYABLE IN ADVANCE	16
6.7	NONEXCLUSIVITY OF INDEMNIFICATION AND ADVANCEMENT OF EXPENSES	16
6.8	INSURANCE	17
6.9	CERTAIN DEFINITIONS	17
6.10	SURVIVAL OF INDEMNIFICATION AND ADVANCEMENT OF EXPENSES	17

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(continued)



		Page
6.11	LIMITATION ON INDEMNIFICATION	17
6.12	INDEMNIFICATION OF EMPLOYEES AND AGENTS	17
ARTICLE VII	RECORDS AND REPORTS	18
7.1	MAINTENANCE AND INSPECTION OF RECORDS	18
7.2	INSPECTION BY DIRECTORS	18
7.3	REPRESENTATION OF SHARES OF OTHER CORPORATIONS	18
ARTICLE VIII	GENERAL MATTERS	19
8.1	CHECKS	19
8.2	EXECUTION OF CORPORATE CONTRACTS AND INSTRUMENTS	19
8.3	STOCK CERTIFICATES	19
8.4	SPECIAL DESIGNATION ON CERTIFICATES	19
8.5	LOST CERTIFICATES	19
8.6	CONSTRUCTION; DEFINITIONS	20
8.7	DIVIDENDS	20
8.8	FISCAL YEAR	20
8.9	SEAL	20
8.10	TRANSFER OF STOCK	20
8.11	REGISTERED STOCKHOLDERS	20
8.12	EXCLUSIVE FORUM	21
ARTICLE IX	AMENDMENTS	21

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BYLAWS

COMSCORE, INC.

ARTICLE I

CORPORATE OFFICES


1.1	REGISTERED OFFICE

The address of the registered office of comScore, Inc. (the “ Corporation ”) in the State of Delaware is Corporation Trust Center, 1209 Orange Street, Wilmington, New Castle County, Delaware 19801. The name of the registered agent at such address is The Corporation Trust Company.


1.2	OTHER OFFICES

The Board of Directors of the Corporation (the “ Board ”) may at any time establish other offices at any place or places where the Corporation is qualified to do business.

ARTICLE II

MEETINGS OF STOCKHOLDERS


2.1	TIME AND PLACE OF MEETINGS

Meetings of stockholders shall be held at any place, within or outside the State of Delaware, designated by the Board. In the absence of any such designation, stockholders’ meetings shall be held at the Corporation’s principal executive office. The Board may cancel or reschedule to an earlier or later date any previously scheduled meeting of stockholders.


2.2	ANNUAL MEETING

The annual meeting of stockholders shall be held each year on a date and at a time designated by the Board. At the annual meeting, directors shall be elected and any other proper business may be transacted.


2.3	SPECIAL MEETING

Special meetings of the stockholders may be called at any time only by the Board acting pursuant to a resolution duly adopted by a majority of the Board, the Chair of the Board, the Chief Executive Officer or the President, but such special meetings may not be called by any other person or persons.

Only such business shall be considered at a special meeting of stockholders as shall have been stated in the notice for such meeting. Stockholders shall not be permitted to propose business to be brought before a special meeting of stockholders. Nothing contained in this paragraph of this Section 2.3 shall be construed as limiting, fixing, or affecting the time when a meeting of stockholders called by action of the Board may be held.


2.4	NOTICE OF STOCKHOLDERS’ MEETINGS

All notices of meetings with stockholders shall be in writing and shall be sent or otherwise given in accordance with Section 2.5 of these Bylaws not less than ten (10) nor more than sixty (60) calendar days before the date of the meeting to each stockholder entitled to vote at such meeting, except as otherwise provided by law. The notice shall specify the place, date and hour of the meeting, the means of remote communications, if any, by which stockholders and proxy holders may be deemed to be present in person and vote at such meeting (as authorized by the Board in its sole discretion pursuant to Section 211(a)(2) of the General Corporation Law of Delaware (the “ DGCL ”)), and, in the case of a special meeting, the purpose or purposes for which the meeting is called. Unless the Certificate of Incorporation of the Corporation, as the same may be amended and/or restated from time to time (as so amended and restated, the “ Certificate ”) provides otherwise, any previously scheduled meeting of stockholders may be postponed, rescheduled or cancelled by resolution duly adopted by a majority of the Board members then in office upon public notice given prior to the date previously scheduled for such meeting of stockholders.


2.5	MANNER OF GIVING NOTICE; AFFIDAVIT OF NOTICE

Except as otherwise provided by law, these Bylaws, or the Certificate, whenever by law or under the provisions of the Certificate or these Bylaws notice is required to be given to any stockholder, it will not be construed to require personal notice, but such notice may be given in writing, by mail or courier service or, to the extent permitted by the DGCL, by electronic transmission, addressed to such stockholder. Any notice sent to stockholders by mail or courier service shall be sent to the address of such stockholder as it appears on the records of the Corporation, with postage thereon prepaid, and such notice will be deemed to be given at the time when the same is deposited in the United States mail or with the courier service. Notices sent by electronic transmission shall be deemed effective as set forth in Section 232 of the DGCL. For purposes of this Section 2.5 , “ electronic transmission ” means any form of communication, not directly involving the physical transmission of paper, that creates a record that may be retained, retrieved and reviewed by a recipient thereof, and that may be directly reproduced in paper form by such a recipient through an automated process. An affidavit of the Secretary or an Assistant Secretary, the transfer agent or other agent of the Corporation that the notice has been given shall, in the absence of fraud, be prima facie evidence of the facts stated therein.


2.6	QUORUM

The holders of a majority of the stock issued and outstanding and entitled to vote thereat, present in person or represented by proxy, shall constitute a quorum at all meetings of the stockholders for the transaction of business, except as otherwise provided by statute or the Certificate. If, however, such quorum is not present or represented at any meeting of the stockholders, then a majority of the stockholders entitled to vote thereat, present in person or represented by proxy, shall have power to adjourn the meeting from time to time, without notice other than announcement at the meeting, until a quorum is present or represented. At such adjourned meeting at which a quorum is present or represented, any business may be transacted that might have been transacted at the meeting as originally noticed. The stockholders present at a duly called meeting at which quorum is present may continue to transact business until adjournment, notwithstanding the withdrawal of enough stockholders to leave less than a quorum.


2.7	RECESSED AND ADJOURNED MEETING; NOTICE

The Chair of the meeting shall have the power to recess or adjourn any meeting of stockholders at any time and for any reason, and the stockholders shall have the power to adjourn any meeting of stockholders in accordance with Section 2.6 of these Bylaws. When a meeting is adjourned to another time or place, unless these Bylaws otherwise require, notice need not be given of the adjourned meeting if the time and

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place thereof, and the means of remote communications, if any, by which stockholders and proxy holders may be deemed to be present in person and vote at such adjourned meeting (as authorized by the Board in its sole discretion pursuant to Section 211(a)(2) of the DGCL), are announced at the meeting at which the adjournment is taken. At the adjourned meeting, the Corporation may transact any business that might have been transacted at the original meeting. If the adjournment is for more than thirty (30) days, or if after the adjournment a new record date for voting or notice is fixed for the adjourned meeting, a notice of the adjourned meeting shall be given to each stockholder of record entitled to vote at the meeting.


2.8	VOTING

The stockholders entitled to vote at any meeting of stockholders shall be determined in accordance with the provisions of Section 2.11 of these Bylaws, subject to the provisions of Sections 217 and 218 of the DGCL (relating to voting rights of fiduciaries, pledgors and joint owners of stock and to voting trusts and other voting agreements).

Except as otherwise provided in the provisions of Section 213 of the DGCL (relating to the fixing of a date for determination of stockholders of record), or as may be otherwise provided in the Certificate, each stockholder shall be entitled to one (1) vote for each share of capital stock held by such stockholder.

In all matters, other than the election of directors and except as otherwise required by law, the affirmative vote of the majority of shares present or represented by proxy at the meeting and entitled to vote on the subject matter shall be the act of the stockholders. Directors shall be elected by a plurality of the votes of the shares present in person or represented by proxy at the meeting and entitled to vote on the election of directors.


2.9	WAIVER OF NOTICE

Whenever notice is required to be given under any provision of the DGCL, the Certificate, or these Bylaws, a written waiver thereof, signed by the person entitled to notice, or a waiver by electronic transmission by the person entitled to notice, whether before or after the time stated therein, shall be deemed equivalent to notice. Attendance of a person at a meeting shall constitute a waiver of notice of such meeting, except when the person attends a meeting for the express purpose of objecting, at the beginning of the meeting, to the transaction of any business because the meeting is not lawfully called or convened. Neither the business to be transacted at, nor the purpose of, any regular or special meeting of the stockholders need be specified in any written waiver of notice, or any waiver by electronic transmission, unless so required by the Certificate or these Bylaws.


2.10	NO STOCKHOLDER ACTION BY WRITTEN CONSENT

Any action required or permitted to be taken by the stockholders of the Corporation must be effected at a duly called annual or special meeting of such holders and may not be effected by any consent in writing by such holders.


2.11	RECORD DATE FOR STOCKHOLDER NOTICE, VOTING, DIVIDENDS, AND RIGHTS

In order that the Corporation may determine the stockholders entitled to notice of any meeting of stockholders or any adjournment thereof, or entitled to vote at any meeting of stockholders or any adjournment thereof, or entitled to receive payment of any dividend or other distribution or allotment of any rights, or entitled to exercise any rights in respect of any change, conversion or exchange of stock or for the purpose of any other lawful action, the Board may fix, in advance, a record date, which such date shall not precede

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the date upon which the resolution fixing the record date is adopted by the Board and which such date shall not be more than sixty (60) nor less than ten (10) calendar days before the date of such meeting, nor more than sixty (60) days prior to any other action.

If the Board does not so fix a record date:

(a) The record date for determining stockholders entitled to notice of or to vote at a meeting of stockholders shall be at the close of business on the day next preceding the day on which notice is given, or, if notice is waived, at the close of business on the day next preceding the day on which the meeting is held.

(b) The record date for determining stockholders for any other purpose shall be at the close of business on the day on which the Board adopts the resolution relating thereto.

A determination of stockholders of record entitled to notice of or to vote at a meeting of stockholders shall apply to any adjournment of the meeting; provided, however , that the Board may fix a new record date for the determination of stockholders entitled to vote at the recessed or adjourned meeting and, in such case, shall also fix, as the record date for stockholders entitled to notice of the recessed or adjourned meeting, the same or an earlier date as that fixed for determination of stockholders entitled to vote at the recessed or adjourned meeting.


2.12	PROXIES

Each stockholder entitled to vote at a meeting of stockholders may authorize another person or persons to act for him, her or it by a written proxy, signed by the stockholder and filed with the Secretary of the Corporation, but no such proxy shall be voted or acted upon after three (3) years from its date, unless the proxy provides for a longer period. A stockholder may authorize another person or persons to act for him, her or it as proxy in the manner(s) provided under Section 212(c) of the General Corporate Law of Delaware or as otherwise provided under Delaware law. The revocability of a proxy that states on its face that it is irrevocable shall be governed by the provisions of Section 212(e) of the DGCL.


2.13	LIST OF STOCKHOLDERS ENTITLED TO VOTE; STOCK LEDGER

The officer who has charge of the stock ledger shall prepare and make, at least ten (10) calendar days before every meeting of stockholders, a complete list of the stockholders entitled to vote at the meeting; provided, however , if the record date for determining the stockholders entitled to vote is less than ten (10) days before the meeting date, the list shall reflect the stockholders entitled to vote as of the tenth (10 ^th ) day before the meeting date, arranged in alphabetical order, and showing the address of each stockholder and the number of shares registered in the name of each stockholder. Nothing contained in this Section 2.13 shall require the Corporation to include electronic mail addresses or other electronic contact information on such list. Such list shall be open to the examination of any stockholder, for any purpose germane to the meeting, for a period of at least ten (10) calendar days prior to the meeting: (a) on a reasonably accessible electronic network, provided that the information required to gain access to such list is provided with the notice of the meeting, or (b) during ordinary business hours at the principal place of business of the Corporation.

In the event that the Corporation determines to make the list available on an electronic network, the Corporation may take reasonable steps to ensure that such information is available only to the stockholders of the Corporation. The list shall be produced and kept at the time and place of the meeting during the whole time thereof, and may be inspected by any stockholder who is present.

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2.14	NOMINATIONS AND PROPOSALS BY STOCKHOLDERS AT ANNUAL MEETING

(a) Only such business shall be conducted at the annual meeting of the stockholders as shall have been properly brought before the meeting. To be properly brought before the meeting, business must be: (A) specified in the notice of meeting (or any supplement thereto) given by or at the direction of the Board, (B) otherwise properly brought before the meeting by or at the direction of the Board, or (C) otherwise properly brought before the meeting by a stockholder (i) who is a stockholder of record on the date of the giving of notice provided for in this Section 2.14(a) and on the record date for the determination of stockholders entitled to vote at such annual meeting and (ii) who complies with the notice procedures set forth in this Section 2.14(a) (a “ Proposing Person ”). For business to be properly brought before an annual meeting by a Proposing Person, the Proposing Person must have given timely notice thereof in writing, containing all information required by this Section 2.14(a)(I)-(II) , to the Secretary of the Corporation. To be timely, a Proposing Person’s notice must be delivered to or mailed and received at the principal executive offices of the Corporation not less than ninety (90) but no more than one hundred twenty (120) calendar days in advance of the date that is the one year anniversary of the date on which the Corporation first mailed its proxy statement to stockholders in connection with the previous year’s annual meeting of stockholders; provided, however , that in the event that no annual meeting was held in the previous year or the date of the annual meeting has been changed by more than thirty (30) days from the date that is the one year anniversary of the prior year’s meeting, notice by the Proposing Person to be timely must be so received not later than the close of business on the tenth (10 ^th ) day following the day notice of the date of the meeting was mailed or such public disclosure was made, whichever occurs first. A Proposing Person’s notice to the Secretary shall set forth as to each matter the Proposing Person proposes to bring before the annual meeting:

I) Information Regarding the Proposal : (i) a description in reasonable detail of the business desired to be brought before the annual meeting and the reasons for conducting such business at the annual meeting, including why the Proposing Person believes that the taking of the action or actions proposed would be in the best interests of the Corporation and its stockholders; (ii) a description in reasonable detail of any material interest of any Proposing Person and any Associated Person (as defined below) in such business and a description in reasonable detail of all agreements, arrangements and understandings between the Proposing Person or any Associated Person and any other person or entity in connection with the proposal; and (iii) the text of the proposal or business (including the text of any resolutions proposed for consideration); and

II) Information Regarding the Proposing Person : (i) the name and address of such Proposing Person and any Associated Person, as they appear on the Corporation’s books; (ii) the class, series and number of shares of the Corporation directly or indirectly beneficially owned or held of record by the Proposing Person or any Associated Person (including any shares of any class or series of the Corporation as to which such Proposing Person or any Associated Person has a right to acquire beneficial ownership, whether such right is exercisable immediately or only after the passage of time); (iii) a representation (1) that the Proposing Person is a holder of record of stock of the Corporation entitled to vote at the annual meeting and intends to appear at the annual meeting to bring such business before the annual meeting and (2) as to whether the Proposing Person intends to deliver a proxy statement and form of proxy to holders of at least the percentage of shares of the Corporation entitled to vote and required to approve the proposal; (iv) a description of (1) any option, warrant, convertible security, stock appreciation right or similar right or interest (including any derivative securities, as defined under Rule 16a-1 under the Securities Exchange Act of 1934, as amended (the “ Exchange Act ”)), whether or not presently exercisable, with an exercise or conversion privilege or a settlement payment or mechanism at a price related to any class or series of securities of the Corporation or with a value derived in whole or in part from the value of any class or series

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of securities of the Corporation, whether or not such instrument or right is subject to settlement in whole or in part in the underlying class or series of securities of the Corporation or otherwise, directly or indirectly held of record, owned beneficially, or otherwise owned or held by such Proposing Person or any Associated Person and (2) each other direct or indirect right or interest that may enable such Proposing Person or any Associated Person to profit or share in any profit derived from, or to manage the risk or benefit from, any increase or decrease in the value of the Corporation’s securities, in each case regardless of whether (x) such right or interest conveys any voting rights in such security to such Proposing Person or any Associated Person, (y) such right or interest is required to be, or is capable of being, settled through delivery of such security, or (z) such Proposing Person or any Associated Person may have entered into other transactions that hedge the economic effect of any such right or interest (any such right or interest referred to in this clause (iv) being a “ Derivative Interest ”); (v) any proxy, contract, arrangement, understanding or relationship pursuant to which the Proposing Person or any Associated Person has a right to vote any shares of the Corporation or which has the effect of increasing or decreasing the voting power of such Proposing Person or any Associated Person; (vi) any rights directly or indirectly held of record, beneficially, or otherwise by the Proposing Person or any Associated Person to dividends on the shares of the Corporation that are separated or separable from the underlying shares of the Corporation; (vii) any performance-related fees (other than an asset-based fee) to which the Proposing Person or any Associated Person may be entitled as a result of any increase or decrease in the value of shares of the Corporation or Derivative Interests; and (vii) any other information that is required to be provided by the stockholder pursuant to Regulation 14A under the Exchange Act, in such Proposing Person’s capacity as a proponent to a stockholder proposal.

Notwithstanding anything in these Bylaws to the contrary, no business shall be conducted at any annual meeting except in accordance with the procedures set forth in this paragraph (a). The Chair of the annual meeting shall, if the facts warrant, determine and declare at the meeting that business was not properly brought before the meeting and in accordance with the provisions of this paragraph (a), and, if he or she should so determine, shall so declare at the meeting that any such business not properly brought before the meeting shall not be transacted.

Notwithstanding the foregoing, in order to include information with respect to a stockholder proposal in the proxy statement and form of proxy for a stockholder’s meeting, stockholders must provide notice as required by the regulations promulgated under the Exchange Act.

(b) Only persons who are nominated in accordance with the procedures set forth in this paragraph (b) shall be eligible for election as directors, except as otherwise provided in the Certificate with respect to the right of holders of preferred stock of the Corporation. Nominations of persons for election to the Board may be made at a meeting of stockholders by or at the direction of the Board or by any stockholder of the Corporation entitled to vote in the election of directors at the meeting who complies with the notice procedures set forth in this paragraph (b) (each such stockholder, a “ Nominating Person ”). Such nominations, other than those made by or at the direction of the Board, shall be made pursuant to timely notice in writing to the Secretary of the Corporation in accordance with the timing provisions of paragraph (a) of this Section 2.14 . Such Nominating Person’s notice shall set forth as to each person, if any, whom the stockholder proposes to nominate for election or re-election as a director (the “ Proposed Nominee ”):

(I) Information Regarding the Proposed Nominee : (i) the name, age, business address, residence address, and principal occupation or employment of the Proposed Nominee; (ii) the information required by Section 2.14(a)(II), if the Proposed Nominee were a “Proposing Person;” (iii) any information relating to the Proposed Nominee that is required to be disclosed in solicitations of

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proxies for elections of directors, or is otherwise required, in each case pursuant to Regulation 14A under the Exchange Act (including without limitation the Proposed Nominee’s written consent to being named in the proxy statement, if any, as a nominee and to serving as a director if elected); (iv) all information that would be required to be disclosed pursuant to Items 403 and 404 under Regulation S-K if the Nominating Person were the “registrant” for purposes of such rule and the Proposed Nominee were a director or executive officer of such registrant; (v) a completed questionnaire (in the form provided by the Secretary upon written request) with respect to the identity, background and qualification of the Proposed Nominee and the background of any other person or entity on whose behalf the nomination is being made; (vi) a description of all agreements, arrangements, or understandings between or among any of (A) the Nominating Person, (B) the Proposed Nominee, (C) any Associated Person of either the Nominating Person or the Proposed Nominee, and (D) any other person or persons (naming such person or persons), that relate to the nomination or pursuant to which the nomination or nominations are to be made by the Nominating Person or relating to the candidacy or service of the Proposed Nominee as a director of the Corporation; and (vii) a written representation and agreement (in the form provided by the Secretary upon written request) that the Proposed Nominee and all Associated Persons (1) are not and will not become a party to (x) any agreement, arrangement or understanding with, and has not given any commitment or assurance to, any person or entity as to how the Proposed Nominee, if elected as a director of the Corporation, will act or vote on any issue or question (a “ Voting Commitment ”) that has not been disclosed to the Corporation or (y) any Voting Commitment that could limit or interfere with the Proposed Nominee’s ability to comply, if elected as a director of the Corporation, with the Proposed Nominee’s fiduciary duties under applicable law, (2) are not and will not become a party to any agreement, arrangement or understanding with any person or entity other than the Corporation with respect to any direct or indirect compensation, reimbursement or indemnification in connection with service or action as a director that has not been disclosed to the Corporation, and (3) if elected as a director of the Corporation, the Proposed Nominee would be in compliance and will comply, with all applicable publicly disclosed corporate governance, ethics, conflict of interest, confidentiality and stock ownership and trading policies and guidelines of the Corporation.

(II) Information Regarding the Nominating Person : the information required to be provided pursuant to Section 2.14(a)(II) if the Nominating Person were a “Proposing Person.”

No person shall be eligible for election as a director of the Corporation unless nominated in accordance with the procedures set forth in this paragraph (b). The Chair of the meeting shall, if the facts warrant, determine and declare at the annual meeting that a nomination was not made in accordance with the provisions of this paragraph (b), and if he or she should so determine, shall so declare at the meeting that the defective nomination shall be disregarded.

(c) A Proposing Person or a Nominating Person providing notice of business or any nomination proposed to be brought before an annual meeting pursuant to this Section 2.14 must further update and supplement such notice, if necessary, so that the information provided or required to be provided in such notice pursuant to this Section 2.14 is true and correct at all times up to and including the date of the meeting (including any date to which the meeting is recessed, adjourned or postponed). Any such update and supplement must be delivered to, or mailed and received by, the Secretary at the principal executive offices of the Corporation, as promptly as practicable.

(d) A stockholder is not entitled to have its proposal or director nomination included in the Corporation’s proxy statement and form of proxy solely as a result of such stockholder’s compliance with the foregoing provisions of this Section 2.14 .

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(e) Notwithstanding the foregoing provisions of this Section 2.14 , a stockholder shall also comply with all applicable requirements of the Exchange Act and the rules and regulations thereunder with respect to matters set forth in this Section 2.14 . Nothing in this Section 2.14 shall be deemed to affect any rights of stockholders to request inclusion of proposals in the Corporation’s proxy statement pursuant to Rule 14a-8 under the Exchange Act.

(f) An “ Associated Person ” of a person is (i) any person that is an associate of such person within the meaning of Rule 14a-1(a) under the Exchange Act and (ii) any person that directly, or indirectly through one or more intermediaries, controls, or is controlled by, or is under common control with, such person; the term “control” (including the terms “controlled by” and “under common control with”) means the possession, direct or indirect, of the power to direct or cause the direction of the management and policies of a person, whether through the ownership of voting securities, by contract, or otherwise.


2.15	ORGANIZATION

Meetings of stockholders shall be presided over by (a) the Chair of the Board or, in the absence thereof, (b) such person as the Chair of the Board shall appoint or, in the absence thereof or in the event that the Chair of the Board shall fail to make such appointment, (c) such person as the Chair of the executive committee of the Corporation shall appoint or, in the absence thereof or in the event that the Chair of the executive committee of the Corporation shall fail to make such appointment, any officer of the Corporation elected by the Board. In the absence of the Secretary of the Corporation, the secretary of the meeting shall be such person as the Chair of the meeting appoints.

The Board shall, in advance of any meeting of stockholders, appoint one (1) or more inspector(s), who may include individual(s) who serve the Corporation in other capacities, including without limitation as officers, employees or agents, to act at the meeting of stockholders and make a written report thereof. The Board may designate one (1) or more persons as alternate inspector(s) to replace any inspector who fails to act. If no inspector or alternate has been appointed or is able to act at a meeting of stockholders, the Chair of the meeting shall appoint one (1) or more inspector(s) to act at the meeting. Each inspector, before discharging his or her duties, shall take and sign an oath to faithfully execute the duties of inspector with strict impartiality and according to the best of his or her ability. The inspector(s) or alternate(s) shall have the duties prescribed pursuant to Section 231 of the DGCL or other applicable law.

The Board shall be entitled to make such rules or regulations for the conduct of meetings of stockholders as it shall deem necessary, appropriate or convenient. Subject to such rules and regulations, if any, the Chair of the meeting shall have the right and authority to prescribe such rules, regulations and procedures and to do all acts as, in the judgment of such Chair, are necessary, appropriate or convenient for the proper conduct of the meeting, including without limitation establishing an agenda of business of the meeting, rules or regulations to maintain order, restrictions on entry to the meeting after the time fixed for commencement thereof, restrictions on the persons (other than stockholders of the Corporation or their duly appointed proxy holders) that may attend the meeting, the circumstances in which any person may make a statement or ask questions at the meeting, and the fixing of the date and time of the opening and closing of the polls for each matter upon which the stockholders will vote at a meeting (and shall announce such at the meeting).

ARTICLE III

DIRECTORS

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3.1	POWERS

The business and affairs of the Corporation shall be managed by or under the direction of the Board. In addition to the power and authorities these Bylaws expressly confer upon them, the Board may exercise all such powers of the Corporation and do all such lawful acts and things as are not required by statute, the Certificate, or these Bylaws to be exercised or done by the stockholders.


3.2	NUMBER OF DIRECTORS

Subject to the rights of the holders of any preferred stock of the Corporation to elect additional directors under specified circumstances, the authorized number of directors of the Corporation shall be fixed from time to time exclusively by the Board pursuant to a resolution duly adopted by a majority of the Board members then in office.

No reduction of the authorized number of directors shall have the effect of removing any director before such director’s term of office expires.


3.3	ELECTION, QUALIFICATION AND TERM OF OFFICE OF DIRECTORS

Except as provided in the Certificate or Section 3.4 of these Bylaws, directors shall be classified, with respect to the time for which they severally hold office, into three (3) classes, as nearly equal in number as possible, each director in each class to be elected for a term of three (3) years. At each annual meeting of stockholders, directors shall be elected for a term of office to expire at the third succeeding annual meeting of stockholders after their election, with each director to hold office until his or her successor shall have been duly elected and qualified, and if authorized by a resolution of the Board, directors may be elected to fill any vacancy on the Board, regardless of how such vacancy shall have been created (as set forth in Section 3.4 below).

Directors need not be stockholders unless so required by the Certificate, these Bylaws, or other policies adopted by the Board from time to time, wherein other qualifications for directors may be prescribed.

Elections of directors at all meetings of the stockholders at which directors are to be elected shall be by ballot and, subject to the rights of the holders of any preferred stock of the Corporation to elect additional directors under specified circumstances, a plurality of the votes cast thereat shall elect directors. The ballot shall state the name of the stockholder or proxy voting or such other information as may be required under the procedure established by the Chair of the meeting. If authorized by the Board, such requirement of a ballot shall be satisfied by a ballot submitted by electronic transmission provided that any such electronic transmission must either set forth or be submitted with information from which it can be determined that the electronic submission was authorized.


3.4	RESIGNATION AND VACANCIES

Any director may resign at any time upon written notice or by electronic transmission to the Corporation.

Subject to the rights of the holders of any series of preferred stock of the Corporation then outstanding and unless the Board otherwise determines, newly created directorships resulting from any increase in the authorized number of directors, or any vacancies on the Board resulting from the death, resignation, retirement, disqualification, removal from office or other cause shall, unless otherwise provided by law or resolution of the Board, be filled only by a majority vote of the directors then in office, whether or not less

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than a quorum, and directors so chosen shall hold office for a term expiring at the annual meeting of stockholders at which the term of office of the class to which they have been elected expires.


3.5	PLACE OF MEETINGS; MEETINGS BY TELEPHONE

The Board may hold meetings, both regular and special, either within or outside the State of Delaware.

Unless otherwise restricted by the Certificate or these Bylaws, members of the Board, or any committee designated by the Board, may participate in a meeting of the Board, or any committee, by means of conference telephone or other communications equipment by means of which all persons participating in the meeting can hear each other, and such participation in a meeting shall constitute presence in person at the meeting.


3.6	REGULAR MEETINGS

Regular meetings of the Board may be held without notice immediately after the annual meeting of the stockholders or at such other time and place as shall from time to time be determined by the Board.


3.7	SPECIAL MEETINGS; NOTICE

Special meetings of the Board for any purpose(s) may be called at any time by the Chair of the Board, the Chief Executive Officer, the President or a majority of the members of the Board then in office. The person(s) authorized to call special meetings of the Board may fix the place and time of the meetings.

The Secretary shall give at least one day’s notice of any special meeting of the Board to each director by whom such notice is not waived, given in a manner permitted by Section 2.5 , if such director were a “stockholder” under Section 2.5 , or by the DGCL. The time and place of any such special meeting shall be as specified in the notice of such meeting.


3.8	QUORUM

At all meetings of the Board, a majority of the Whole Board (as defined below) shall constitute a quorum for all purposes, and the act of a majority of the directors present at any meeting at which there is a quorum shall be the act of the Board, except as may be otherwise specifically provided by statute or by the Certificate. The term “ Whole Board ” shall mean the total number of authorized directors of the Corporation whether or not there exist any vacancies in previously authorized directorships.


3.9	WAIVER OF NOTICE

Whenever notice is required to be given under any provisions of the DGCL, the Certificate or these Bylaws, a written waiver thereof, signed by the director entitled to notice, or a waiver by electronic transmission by the director entitled to notice, whether before or after the time stated therein, shall be deemed equivalent to notice. Attendance of a director at a meeting shall constitute a waiver of notice of such meeting, except when the director attends a meeting for the express purpose of objecting, at the beginning of the meeting, to the transaction of any business because the meeting is not lawfully called or convened. Neither the business to be transacted at, nor the purpose of, any regular or special meeting of the directors, or members of a committee of directors, need be specified in any written waiver of notice or any waiver by electronic transmission unless so required by the Certificate or these Bylaws.


3.10	ADJOURNED MEETING; NOTICE

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If a quorum is not present at any meeting of the Board, then a majority of the directors present thereat may adjourn the meeting from time to time, without notice other than announcement at the meeting, until a quorum is present.


3.11	BOARD ACTION BY WRITTEN CONSENT WITHOUT A MEETING

Unless otherwise restricted by the Certificate or these Bylaws, any action required or permitted to be taken at any meeting of the Board, or of any committee thereof, may be taken without a meeting if all members of the Board or committee, as the case may be, consent thereto in writing or by electronic transmission and the writing(s) or electronic transmission(s) are filed with the minutes of proceedings of the Board or committee. Such filing shall be in paper form if the minutes are maintained in paper form and shall be in electronic form if the minutes are maintained in electronic form.


3.12	FEES AND COMPENSATION OF DIRECTORS

Unless otherwise restricted by the Certificate or these Bylaws, the Board shall have the authority to fix the compensation of directors.


3.13	REMOVAL OF DIRECTORS

Unless otherwise restricted by statute, the Certificate or these Bylaws, any director, or all of the directors, may be removed from the Board, but only for cause, and only by the affirmative vote of the holders of at least a majority of the voting power of all the then outstanding shares of capital stock of the Corporation then entitled to vote at the election of directors, voting together as a single class.

No reduction of the authorized number of directors shall have the effect of removing any director prior to the expiration of such director’s term of office.

ARTICLE IV

COMMITTEES


4.1	COMMITTEES OF DIRECTORS

The Board may from time to time, by resolution passed by a majority of the Whole Board, designate one (1) or more committees of the Board, with such lawfully delegable powers and duties as it thereby confers, with each committee to consist of one (1) or more of the directors of the Corporation; provided, however , that no such committee shall have the power or authority to: (a) approve or adopt, or recommend to the stockholders, any action or matter (other than the election or removal of directors) expressly required by the DGCL to be submitted to stockholders for approval or (b) make, adopt, amend or repeal any provision of these Bylaws. The Board may designate one (1) or more directors as alternate members of any committee, who may replace any absent or disqualified member at any meeting of the committee. In the absence or disqualification of a member of a committee, the member(s) thereof present at any meeting and not disqualified from voting, whether or not such member(s) constitute a quorum, may unanimously appoint another member of the Board to act at the meeting in the place of any such absent or disqualified member.


4.2	COMMITTEE MINUTES

Each committee shall keep regular minutes of its meetings and report the same to the Board when required.

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4.3	MEETINGS AND ACTION OF COMMITTEES

Meetings and actions of committees shall be governed by, and held and taken in accordance with, Section 3.5 (place of meetings and meetings by telephone), Section 3.6 (regular meetings), Section 3.7 (special meetings and notice), Section 3.8 (quorum), Section 3.9 (waiver of notice), Section 3.10 (adjournment and notice of adjournment), and Section 3.11 (action without a meeting) of these Bylaws, with such changes in the context of those Bylaws as are necessary to substitute the committee and its members for the Board and its members; provided, however , that the time of regular and special meetings of committees may also be called by resolution of the Board. The Board may adopt rules for the government of any committee not inconsistent with the provisions of these Bylaws.

ARTICLE V

OFFICERS


5.1	OFFICERS

The officers of the Corporation shall be a President and a Secretary. The Corporation may also have, at the discretion of the Board, a Chair of the Board, a Vice Chair of the Board, a Chief Executive Officer, a Chief Financial Officer, a Treasurer, one or more Vice Presidents, Assistant Vice Presidents, Assistant Secretaries, and Assistant Treasurers, and any such other officers as may be appointed in accordance with the provisions of Section 5.3 of these Bylaws. Any number of offices may be held by the same person.


5.2	ELECTION OF OFFICERS

The officers of the Corporation, except such officers as may be appointed in accordance with the provisions of Section 5.3 of these Bylaws, shall be chosen by the Board, which shall consider such subject at its first meeting after every annual meeting of stockholders, subject to the rights, if any, of an officer under any contract of employment. Each officer shall hold office until his or her successor is elected and qualified or until his or her earlier resignation or removal. A failure to elect officers shall not dissolve or otherwise affect the Corporation.


5.3	SUBORDINATE OFFICERS

The Board may appoint, or empower the Chief Executive Officer or, in the absence of a Chief Executive Officer, the President, to appoint, such other officers as the business of the Corporation may require, each of whom shall hold office for such period, have such authority, and perform such duties as are provided in these Bylaws or as the Board may from time to time determine.


5.4	REMOVAL AND RESIGNATION OF OFFICERS

Subject to the rights, if any, of an officer under contract of employment, any officer may be removed, either with or without cause, by an affirmative vote of the majority of the Board at any regular or special meeting of the Board.

Any officer may resign at any time by giving written notice to the Corporation. Any resignation shall take effect at the date of the receipt of that notice or at any later time specified in that notice. Unless otherwise specified in such notice, the acceptance of the resignation shall not be necessary to make it effective. Any resignation is without prejudice to the rights, if any, of the Corporation under any contract to which the officer is a party.

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5.5	VACANCIES IN OFFICES

Any vacancy occurring in any office of the Corporation shall be filled by the Board.


5.6	CHAIR OF THE BOARD

The Chair of the Board, if such an officer be elected, shall, if present, preside at meetings of the Board and exercise and perform such other powers and duties as may from time to time be assigned to him or her by the Board or as may be prescribed by these Bylaws.


5.7	CHIEF EXECUTIVE OFFICER

Subject to such supervisory powers, if any, as the Board may give to the Chair of the Board, the Chief Executive Officer, if any, shall, subject to the control of the Board, have general supervision, direction, and control of the business and affairs of the Corporation and shall report directly to the Board. All other officers, officials, employees and agents shall report directly or indirectly to the Chief Executive Officer. The Chief Executive Officer shall see that all orders and resolutions of the Board are carried into effect. The Chief Executive Officer shall serve as chairperson of and preside at all meetings of the stockholders. In the absence of a Chair of the Board, the Chief Executive Officer shall preside at all meetings of the Board.


5.8	PRESIDENT

In the absence or disability of the Chief Executive Officer, the President shall perform all the duties of the Chief Executive Officer. When acting as the Chief Executive Officer, the President shall have all the powers of, and be subject to all the restrictions upon, the Chief Executive Officer. The President shall have such other powers and perform such other duties as from time to time may be prescribed for him or her by the Board, these Bylaws, the Chief Executive Officer or the Chair of the Board.


5.9	VICE PRESIDENT

In the absence or disability of the President, the Vice President(s), if any, in order of their rank as fixed by the Board or, if not ranked, a Vice President designated by the Board, shall perform all the duties of the President and, when so acting, shall have all the powers of, and be subject to all the restrictions upon, the President. The Vice President(s) shall have such other powers and perform such other duties as from time to time may be prescribed for them respectively by the Board, these Bylaws, the Chair of the Board, the Chief Executive Officer or, in the absence of a Chief Executive Officer, the President.


5.10	SECRETARY

The Secretary shall keep or cause to be kept, at the principal executive office of the Corporation or such other place as the Board may direct, a book of minutes of all meetings and actions of directors, committees of directors, and stockholders. The minutes shall show the time and place of each meeting, whether regular or special (and, if special, how authorized and the notice given), the names of those present at directors’ meetings or committee meetings, the number of shares present or represented at stockholders’ meetings, and the proceedings thereof.

The Secretary shall keep, or cause to be kept, at the principal executive office of the Corporation or at the office of the Corporation’s transfer agent or registrar, as determined by resolution of the Board, a share register, or a duplicate share register, showing the names of all stockholders and their addresses, the number and classes of shares held by each, the number and date of certificates evidencing such shares, and the number

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and date of cancellation of every certificate surrendered for cancellation. Such share register shall be the “ stock ledger ” for purposes of Section 2.13 of these Bylaws.

The Secretary shall give, or cause to be given, notice of all meetings of the stockholders and of the Board, or committee of the Board, required to be given by law or by these Bylaws. He or she shall keep the seal of the Corporation, if one be adopted, in safe custody and shall have such other powers and perform such other duties as may be prescribed by the Board or by these Bylaws.


5.11	CHIEF FINANCIAL OFFICER

The Chief Financial Officer shall keep and maintain, or cause to be kept and maintained, adequate and correct books and records of accounts of the properties and business transactions of the Corporation, including accounts of its assets, liabilities, receipts, disbursements, gains, losses, capital and retained earnings.

The Chief Financial Officer shall deposit all money and other valuables in the name and to the credit of the Corporation with such depositaries as may be designated by the Board or Chief Executive Officer. The Chief Financial Officer shall disburse the funds of the Corporation as may be ordered by the Board, shall render to the Board and Chief Executive Officer, or in the absence of a Chief Executive Officer the President, whenever they request, an account of all of his or her transactions as Chief Financial Officer and of the financial condition of the Corporation, and shall have such other powers and perform such other duties as may be prescribed by the Board or these Bylaws. In lieu of any contrary resolution duly adopted by the Board, the Chief Financial Officer shall be the Treasurer of the Corporation.


5.12	ASSISTANT SECRETARY

The Assistant Secretary(ies), if any, in the order determined by the Board (or if there be no such determination, then in the order of their election) shall, in the absence of the Secretary or in the event of his or her inability or refusal to act, perform the duties and exercise the powers of the Secretary and shall perform such other duties and have such other powers as the Board may from time to time prescribe.


5.13	ASSISTANT TREASURER

The Assistant Treasurer(s), if any, in the order determined by the Board (or if there be no such determination, then in the order of their election), shall, in the absence of the Chief Financial Officer or in the event of his or her inability or refusal to act, perform the duties and exercise the powers of the Chief Financial Officer and shall perform such other duties and have such other powers as the Board may from time to time prescribe.


5.14	AUTHORITY AND DUTIES OF OFFICERS

In addition to the foregoing authority and duties, all officers of the Corporation shall respectively have such authority and perform such duties in the management of the business of the Corporation as may be designated from time to time by the Board.

ARTICLE VI

INDEMNITY


6.1	RIGHT TO INDEMNIFICATION IN PROCEEDINGS OTHER THAN THOSE BY OR IN THE RIGHT OF THE CORPORATION

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Subject to Section 6.3 of this Article VI , the Corporation shall indemnify any Indemnitee (as defined below in this Section 6.1) who was or is a party or is threatened to be made a party to any threatened, pending or completed claim, demand, action, suit or proceeding, whether civil, criminal, administrative, arbitrative or investigative (each, a “ Proceeding ”) (other than an action by or in the right of the Corporation) by reason of the fact that such person is or was a director or officer of the Corporation, or is or was a director or officer of the Corporation serving at the request of the Corporation as a director or officer, employee or agent of another corporation, partnership, joint venture, trust, employee benefit plan or other enterprise (each such person, an “ Indemnitee ”), against expenses (including attorneys’ fees), judgments, fines and amounts paid in settlement actually and reasonably incurred by such Indemnitee in connection with such Proceeding if the Indemnitee acted in good faith and in a manner the Indemnitee reasonably believed to be in or not opposed to the best interests of the Corporation, and, with respect to any criminal action or proceeding, had no reasonable cause to believe the Indemnitee’s conduct was unlawful (the “ Standard of Conduct ”). The termination of any Proceeding by judgment, order, settlement, conviction, or upon a plea of nolo contendere or its equivalent, shall not, of itself, create a presumption that the Indemnitee did not satisfy the Standard of Conduct.


6.2	RIGHT TO INDEMNIFICATION IN PROCEEDINGS BY OR IN THE RIGHT OF THE CORPORATION

Subject to Section 6.3 of this Article VI , the Corporation shall indemnify any Indemnitee who was or is a party or is threatened to be made a party to any threatened, pending or completed Proceeding by or in the right of the Corporation to procure a judgment in its favor against expenses (including attorneys’ fees) actually and reasonably incurred by such person in connection with the defense or settlement of such Proceeding if the Indemnitee satisfied the applicable Standard of Conduct; except that no indemnification shall be made in respect of any claim, issue or matter as to which the Indemnitee shall have been adjudged to be liable to the Corporation unless and only to the extent that the Court of Chancery or the court in which such Proceeding was brought shall determine upon application that, despite the adjudication of liability but in view of all the circumstances of the case, the Indemnitee is fairly and reasonably entitled to indemnity for such expenses which the Court of Chancery or such other court shall deem proper.


6.3	AUTHORIZATION OF INDEMNIFICATION

Any indemnification under this Article VI (unless ordered by a court) shall be made by the Corporation only as authorized in the specific case upon a determination that indemnification of the Indemnitee is proper in the circumstances because the Indemnitee has met the applicable Standard of Conduct set forth in Section 6.1 or Section 6.2 of this Article VI , as the case may be. Such determination shall be made, with respect to an Indemnitee who is a director or officer at the time of such determination, (a) by a majority vote of the directors who are not parties to such action, suit or proceeding, even though less than a quorum, or (b) by a committee of such directors designated by a majority vote of such directors, even though less than a quorum, or (c) if there are no such directors, or if such directors so direct, by independent legal counsel in a written opinion or (d) by the stockholders (but only if a majority of the directors who are not parties to such action, suit or proceeding, if they constitute a quorum of the board of directors, presents the issue of entitlement to indemnification to the stockholders for their determination). Any person or persons having the authority to act on the matter on behalf of the Corporation shall make such determination, with respect to former directors and officers. To the extent, however, that any Indemnitee has been successful on the merits or otherwise in defense of any Proceeding, or in defense of any claim, issue or matter therein, the Indemnitee shall be indemnified against expenses (including attorneys’ fees) actually and reasonably incurred by such person in connection therewith, without the necessity of authorization in the specific case.

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6.4	GOOD FAITH DEFINED

For purposes of any determination under Section 6.3 of this Article VI , an Indemnitee shall be deemed to have satisfied the applicable Standard of Conduct if the Indemnitee’s action is based on the records or books of account of the Corporation or another corporation, partnership, joint venture, trust, employee benefit plan or other enterprise (each, “ Another Enterprise ”), or on information supplied to such person by the officers of the Corporation or Another Enterprise in the course of their duties, or on the advice of legal counsel for the Corporation or Another Enterprise or on information or records given or reports made to the Corporation or Another Enterprise by an independent certified public accountant or by an appraiser or other expert selected with reasonable care by the Corporation or Another Enterprise. The provisions of this Section 6.4 shall not be deemed to be exclusive or to limit in any way the circumstances in which an Indemnitee may be deemed to have met the applicable Standard of Conduct set forth in Section 6.1 or Section 6.2 of this Article VI , as the case may be.


6.5	INDEMNIFICATION BY A COURT

Notwithstanding any contrary determination in the specific case under Section 6.3 of this Article VI , and notwithstanding the absence of any determination thereunder, any Indemnitee may apply to the Court of Chancery in the State of Delaware (but in no event later than forty-five (45) days after written receipt of the written request by said Indemnitee) for indemnification to the extent otherwise permissible under Section 6.1 and Section 6.2 of this Article VI . The basis of such indemnification by a court shall be a determination by such court that indemnification of the Indemnitee is proper in the circumstances because the Indemnitee has met the applicable Standard of Conduct set forth in Section 6.1 or Section 6.2 of this Article VI , as the case may be. Neither a contrary determination in the specific case under Section 6.3 of this Article VI nor the absence of any determination thereunder shall be a defense to such application or create a presumption that the Indemnitee seeking indemnification has not met any applicable Standard of Conduct. Notice of any application for indemnification pursuant to this Section 6.5 shall be given to the Corporation promptly upon the filing of such application. If successful, in whole or in part, the Indemnitee seeking indemnification shall also be entitled to be paid the expense of prosecuting such application.


6.6	EXPENSES PAYABLE IN ADVANCE

Expenses (including attorneys’ fees) incurred by an Indemnitee in defending any Proceeding shall be paid by the Corporation in advance of the final disposition of such Proceeding upon receipt of an undertaking by or on behalf of such director or officer to repay such amount if it shall ultimately be determined that such person is not entitled to be indemnified by the Corporation as authorized in this Article VI .


6.7	NONEXCLUSIVITY OF INDEMNIFICATION AND ADVANCEMENT OF EXPENSES

The indemnification and advancement of expenses provided by or granted pursuant to this Article VI shall not be deemed exclusive of any other rights to which those seeking indemnification or advancement of expenses may be entitled under the Certificate, any Bylaw, agreement, vote of stockholders or disinterested directors or otherwise, both as to action in such person’s official capacity and as to action in another capacity while holding such office. A right to indemnification or to advancement of expenses arising under a provision of the Certificate or these Bylaws shall not be eliminated or impaired by an amendment to the Certificate or these Bylaws after the occurrence of the act or omission that is the subject to the Proceeding for which indemnification or advancement of expenses is sought, unless the provision in effect at the time of such act or omission explicitly authorizes such elimination or impairment after such action or omission has occurred. It is the policy of the Corporation that indemnification of the persons specified in Section 6.1 and Section 6.2 of this Article VI shall be made to the fullest extent permitted by law. The provisions of this Article VI

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shall not be deemed to preclude the indemnification of any person who is not specified in Section 6.1 or Section 6.2 of this Article VI but whom the Corporation has the power or obligation to indemnify under the provisions of the DGCL, or otherwise.


6.8	INSURANCE

The Corporation may purchase and maintain insurance on behalf of any person who is or was a director or officer of the Corporation, or is or was a director or officer of the Corporation serving at the request of the Corporation as a director, officer, employee or agent of Another Enterprise against any liability asserted against such person and incurred by such person in any such capacity, or arising out of such person’s status as such, whether or not the Corporation would have the power or the obligation to indemnify such person against such liability under the provisions of this Article VI .


6.9	CERTAIN DEFINITIONS

For purposes of this Article VI , references to the “ Corporation ” shall include, in addition to the resulting corporation, any constituent corporation (including any constituent of a constituent) absorbed in a consolidation or merger which, if its separate existence had continued, would have had power and authority to indemnify its directors or officers, so that any person who is or was a director or officer of such constituent corporation, or is or was a director or officer of such constituent corporation serving at the request of such constituent corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust, employee benefit plan or other enterprise, shall stand in the same position under the provisions of this Article VI with respect to the resulting or surviving corporation as such person would have with respect to such constituent corporation if its separate existence had continued. For purposes of this Article VI , references to “ fines ” shall include any excise taxes assessed on a person with respect to an employee benefit plan; and references to “ serving at the request of the Corporation ” shall include any service as a director, officer, employee or agent of the Corporation which imposes duties on, or involves services by, such director or officer with respect to an employee benefit plan, its participants or beneficiaries; and a person who acted in good faith and in a manner such person reasonably believed to be in the interest of the participants and beneficiaries of an employee benefit plan shall be deemed to have acted in a manner “ not opposed to the best interests of the Corporation ” as referred to in this Article VI .


6.10	SURVIVAL OF INDEMNIFICATION AND ADVANCEMENT OF EXPENSES

The indemnification and advancement of expenses provided by, or granted pursuant to, this Article VI shall, unless otherwise provided when authorized or ratified, continue as to a person who has ceased to be a director or officer and shall inure to the benefit of the heirs, executors and administrators of such a person.


6.11	LIMITATION ON INDEMNIFICATION

Notwithstanding anything contained in this Article VI to the contrary, except for proceedings to enforce rights to indemnification (which shall be governed by Section 6.5 hereof), the Corporation shall not be obligated to indemnify any director or officer in connection with a Proceeding (or part thereof) initiated by such person unless such Proceeding (or part thereof) was authorized or consented to by the Board.


6.12	INDEMNIFICATION OF EMPLOYEES AND AGENTS

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The Corporation may, to the extent authorized from time to time by the Board, provide rights to indemnification and to the advancement of expenses to employees and agents of the Corporation similar to those conferred in this Article VI to directors and officers of the Corporation.

ARTICLE VII

RECORDS AND REPORTS


7.1	MAINTENANCE AND INSPECTION OF RECORDS

The Corporation shall, either at its principal executive office or at such place or places as designated by the Board, keep a record of its stockholders listing their names and addresses and the number and class of shares held by each stockholder, a copy of these Bylaws, as may be amended to date, minute books, accounting books and other records.

Any such records maintained by the Corporation may be kept on, or by means of, or be in the form of, any information storage device or method, provided that the records so kept can be converted into clearly legible paper form within a reasonable time. The Corporation shall so convert any records so kept upon the request of any person entitled to inspect such records pursuant to the provisions of the DGCL. When records are kept in such manner, a clearly legible paper form produced from or by means of the information storage device or method shall be admissible in evidence, and accepted for all other purposes, to the same extent as an original paper form accurately portrays the record.

Any stockholder of record, in person or by attorney or other agent, shall, upon written demand under oath stating the purpose thereof, have the right during the usual hours for business to inspect for any proper purpose the Corporation’s stock ledger, a list of its stockholders, and its other books and records and to make copies or extracts therefrom. A proper purpose shall mean a purpose reasonably related to such person’s interest as a stockholder. In every instance where an attorney or other agent is the person who seeks the right to inspection, the demand under oath shall be accompanied by a power of attorney or such other writing that authorizes the attorney or other agent to so act on behalf of the stockholder. The demand under oath shall be directed to the Corporation at its registered office in Delaware or at its principal place of business.


7.2	INSPECTION BY DIRECTORS

Any director shall have the right to examine the Corporation’s stock ledger, a list of its stockholders, and its other books and records for a purpose reasonably related to his or her position as a director. The Court of Chancery is hereby vested with the exclusive jurisdiction to determine whether a director is entitled to the inspection sought. The Court may summarily order the Corporation to permit the director to inspect any and all books and records, the stock ledger, and the stock list and to make copies or extracts therefrom. The Court may, in its discretion, prescribe any limitations or conditions with reference to the inspection, or award such other and further relief as the Court may deem just and proper.


7.3	REPRESENTATION OF SHARES OF OTHER CORPORATIONS

Unless otherwise directed by the Board, the Chief Executive Officer, the President, or any other person authorized by the President, is authorized to vote, represent, and exercise on behalf of the Corporation all rights incident to any and all shares of any other corporation(s) standing in the name of the Corporation. The authority granted herein may be exercised either by such person directly or by any other person authorized to do so by proxy or power of attorney duly executed by such person having the authority.

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ARTICLE VIII

GENERAL MATTERS


8.1	CHECKS

From time to time, the Board shall determine by resolution which person or persons may sign or endorse all checks, drafts, other orders for payment of money, notes or other evidences of indebtedness that are issued in the name of or payable to the Corporation, and only the persons so authorized shall sign or endorse those instruments.


8.2	EXECUTION OF CORPORATE CONTRACTS AND INSTRUMENTS

The Board, except as otherwise provided in these Bylaws, may authorize any officer or officers, or agent or agents, to enter into any contract or execute any instrument in the name of and on behalf of the Corporation. Such authority may be general or confined to specific instances. Unless so authorized or ratified by the Board or within the agency power of an officer, no officer, agent or employee shall have any power or authority to bind the Corporation by any contract or engagement or to pledge its credit or to render it liable for any purpose or for any amount.


8.3	STOCK CERTIFICATES

The shares of the Corporation shall be represented by certificates, provided that the Board may provide by resolution that some or all of any or all classes or series of its stock shall be uncertificated shares. Any such resolution shall not apply to shares represented by a certificate until such certificate is surrendered to the Corporation. Notwithstanding the adoption of such a resolution by the Board, every holder of stock represented by certificates shall be entitled to have a certificate signed by, or in the name of, the Corporation by any two authorized officers of the Corporation representing the number of shares registered in certificate form. Any or all of the signatures on the certificate may be a facsimile. In case any officer, transfer agent or registrar who has signed or whose facsimile signature has been placed upon a certificate has ceased to be such officer, transfer agent or registrar before such certificate is issued, it may be issued by the Corporation with the same effect as if he or she were such officer, transfer agent or registrar at the date of issue.


8.4	SPECIAL DESIGNATION ON CERTIFICATES

If the Corporation is authorized to issue more than one (1) class of stock or more than one (1) series of any class, then the powers, the designations, the preferences, and the relative, participating, optional or other special rights of each class of stock or series thereof and the qualifications, limitations or restrictions of such preferences and/or rights shall be set forth in full or summarized on the face or back of the certificate that the Corporation shall issue to represent such class or series of stock; provided, however , that, except as otherwise provided in Section 202 of the DGCL, in lieu of the foregoing requirements, there may be set forth on the face or back of the certificate that the Corporation shall issue to represent such class or series of stock a statement that the Corporation will furnish without charge to each stockholder who so requests the powers, the designations, the preferences, and the relative, participating, optional or other special rights of each class of stock or series thereof and the qualifications, limitations or restrictions of such preferences and/or rights.


8.5	LOST CERTIFICATES

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Except as provided in this Section 8.5 , no new certificates for shares shall be issued to replace a previously issued certificate unless the latter is surrendered to the Corporation and cancelled at the same time. The Corporation may issue a new certificate of stock or uncertificated shares in the place of any certificate theretofore issued by it, alleged to have been lost, stolen or destroyed, and the Corporation may require, or may require any transfer agent, if any, for the shares to require, the owner of the lost, stolen or destroyed certificate, or his, her or its legal representative, to give the Corporation a bond sufficient to indemnify it against any claim that may be made against it on account of the alleged loss, theft or destruction of any such certificate or the issuance of such new certificate or uncertificated shares.


8.6	CONSTRUCTION; DEFINITIONS

Unless the context requires otherwise, the general provisions, rules of construction and definitions in the Delaware General Corporation Law shall govern the construction of these Bylaws. Without limiting the generality of this provision, the singular number includes the plural, the plural number includes the singular, and the term “ person ” includes both a corporation and a natural person.


8.7	DIVIDENDS

The directors of the Corporation, subject to any restrictions contained in the Certificate, may declare and pay dividends upon the shares of its capital stock pursuant to the DGCL. Dividends may be paid in cash, in property or in shares of the Corporation’s capital stock.

The directors of the Corporation may set apart out of any of the funds of the Corporation available for dividends a reserve or reserves for any proper purpose and may abolish any such reserve. Such purposes shall include but not be limited to equalizing dividends, repairing or maintaining any property of the Corporation, and meeting contingencies.


8.8	FISCAL YEAR

The fiscal year of the Corporation shall be fixed by resolution of the Board and may be changed by resolution of the Board.


8.9	SEAL

This Corporation may have a corporate seal, which may be adopted or altered at the pleasure of the Board, and may use the same by causing it or a facsimile thereof, to be impressed or affixed or in any other manner reproduced.


8.10	TRANSFER OF STOCK

Upon surrender to the Corporation or the transfer agent of the Corporation, if any, of a certificate for shares duly endorsed or accompanied by proper evidence of succession, assignation or authority to transfer (as determined by legal counsel to the Corporation), it shall be the duty of the Corporation, as the Corporation may so instruct its transfer agent, if any, to issue a new certificate to the person entitled thereto, cancel the old certificate, and record the transaction in its books.


8.11	REGISTERED STOCKHOLDERS

The Corporation shall be entitled to recognize the exclusive right of a person registered on its books as the owner of shares to receive dividends and to vote as such owner, shall be entitled to hold liable for

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calls and assessments the person registered on its books as the owner of shares, and shall not be bound to recognize any equitable or other claim to or interest in such share or shares on the part of another person, whether or not it shall have express or other notice thereof, except as otherwise provided by the laws of Delaware.


8.12	EXCLUSIVE FORUM

Unless the Corporation consents in writing to the selection of an alternative forum, the sole and exclusive forum for (a) any derivative action or proceeding brought on by or in the right of the Corporation, (b) any action asserting a claim of breach of a fiduciary duty owed by any director, officer or other employee of the Corporation to the Corporation or the Corporation’s stockholders, (c) an action asserting a claim arising pursuant to any provision of the DGCL, the Certificate, or these Bylaws, or (d) any action asserting a claim governed by the internal affairs doctrine, shall be the Court of Chancery in the State of Delaware (or, if the Court of Chancery does not have jurisdiction, the federal district court for the District of Delaware). If any action the subject matter of which is within the scope of the preceding sentence is filed in a court other than a court located within the State of Delaware (a “ Foreign Action ”) in the name of any stockholder, such stockholder shall be deemed to have consented to (i) the personal jurisdiction of the state and federal courts located within the State of Delaware in connection with any action brought in any such court to enforce the preceding sentence and (ii) having service of process made upon such stockholder in any such action by service upon such stockholder’s counsel in the Foreign Action as agent for such stockholder.

ARTICLE IX

AMENDMENTS

Except as otherwise provided by law or by the Certificate or these Bylaws, these Bylaws or any Bylaw may be amended in any respect or repealed at any time, either (a) at any meeting of the stockholders, provided that any amendment or supplement proposed to be acted upon at any such meeting has been described or referred to in the notice of such meeting, or (b) by the Board, provided that no amendment adopted by the Board may vary or conflict with any amendment adopted by the stockholders in accordance with the Certificate or these Bylaws.

Notwithstanding the foregoing, in addition to any vote of the holders of any class or series of stock of the Corporation required by law or by the Certificate, Article II , Section 3.2 (number of directors), Section 3.3 (election, qualification and term of office of directors), Section 3.4 (resignation and vacancies), Section 3.13 (removal of directors), Article VI , Section 8.12 (Exclusive Forum) and this Article IX may not be amended or repealed by the stockholders, and no provision inconsistent therewith may be adopted by the stockholders, without the affirmative vote of at least sixty-six and two-thirds percent (66.67%) of the voting power of the then outstanding shares of voting stock entitled to vote generally in the election of directors, voting together as a single class.

Last revised May 30, 2018

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Exhibit 31.1

CERTIFICATIONS

I, Bryan J. Wiener, certify that:

1. I have reviewed this Quarterly Report on Form 10-Q of comScore, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

/s/ Bryan J. Wiener

Bryan J. Wiener

Chief Executive Officer

(Principal Executive Officer)

Date: August 9, 2018

Exhibit 31.2

CERTIFICATIONS

I, Gregory A. Fink, certify that:

1. I have reviewed this Quarterly Report on Form 10-Q of comScore, Inc.;

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting

/s/ Gregory A. Fink

Gregory A. Fink

Chief Financial Officer and Treasurer

(Principal Financial Officer)

Date: August 9, 2018

Exhibit 32.1

Certification Pursuant to 18 U.S.C. Section 1350

In connection with the Quarterly Report of comScore, Inc. (the “Company”) on Form 10-Q for the quarter ended June 30, 2018 , as filed with the Securities and Exchange Commission (the “SEC”) on the date hereof (the “Report”), I, Bryan J. Wiener, Chief Executive Officer, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, to the best of my knowledge:

(1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

A signed original of this written statement has been provided to the Company and will be retained by the Company and furnished to the SEC or its staff upon request.

/s/ Bryan J. Wiener

Bryan J. Wiener

Chief Executive Officer

(Principal Executive Officer)

Date: August 9, 2018

Exhibit 32.2

Certification Pursuant to 18 U.S.C. Section 1350

In connection with the Quarterly Report of comScore, Inc. (the “Company”) on Form 10-Q for the quarter ended June 30, 2018 , as filed with the Securities and Exchange Commission (the “SEC”) on the date hereof (the “Report”), I, Gregory A. Fink, Chief Financial Officer and Treasurer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, to the best of my knowledge:

(1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

A signed original of this written statement has been provided to the Company and will be retained by the Company and furnished to the SEC or its staff upon request.

/s/ Gregory A. Fink

Gregory A. Fink

Chief Financial Officer and Treasurer

(Principal Financial Officer)

Date: August 9, 2018