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Summary of Significant Accounting Policies
 12 Months Ended
Dec. 31, 2024
Accounting Policies [Abstract]  
Summary of Significant Accounting Policies Summary of Significant Accounting Policies
Basis of Presentation
The accompanying consolidated financial statements have been prepared in conformity with accounting principles
generally accepted in the United States (“GAAP”) and the rules and regulations of the Securities and Exchange
Commission. Other than net income or net loss, we do not have any other elements of comprehensive income or loss.
Principles of Consolidation
The consolidated financial statements include the financial statements of GoodRx Holdings, Inc., its wholly-owned
subsidiaries and variable interest entities (“VIEs”) for which we are the primary beneficiary. Intercompany balances and
transactions have been eliminated in consolidation. The results of operations and financial position of the VIEs are not
material to our consolidated financial statements. Results of businesses acquired are included in our consolidated financial
statements from their respective dates of acquisition.
Segment Reporting and Geographic Information
Operating segments are defined as components of an enterprise for which separate financial information is available
that is regularly provided to the chief operating decision maker ("CODM") in deciding how to allocate resources and in
assessing performance. Our CODM manages our business on the basis of one operating segment.
Our operating segment derives revenue in a manner as described in Note 2. Summary of Significant Accounting
Policies. During the years ended December 31, 2024, 2023 and 2022, all of our revenue was from customers located in the
United States. Our CODM is our principal executive officer, who is our Chief Executive Officer and President, the role
previously held by our Interim Chief Executive Officer and before that, one of our Co-Chief Executive Officers. Consolidated
net income or loss is the measure of segment profit or loss reviewed by our CODM in assessing segment performance and
deciding how to allocate resources. Our CODM uses consolidated net income or loss to monitor budget versus actual
results, review historical company performance trends, conduct benchmark analysis of our peers and competitors, and
evaluate management’s compensation. Significant expenses included in the reported measure of segment profit or loss are
reviewed by our CODM on a consolidated basis as presented in the accompanying consolidated statements of operations.
At December 31, 2024 and 2023, all of our right-of-use assets and property and equipment were in the United States.
Use of Estimates
The preparation of consolidated financial statements in conformity with GAAP requires management to make estimates
and assumptions that affect the amounts reported in the consolidated financial statements, including the accompanying
notes. We base our estimates on historical factors; current circumstances; macroeconomic events and conditions; and the
experience and judgment of our management. We evaluate our estimates and assumptions on an ongoing basis. Actual
results can differ materially from these estimates, and such differences can affect the results of operations reported in future
periods.
Certain Risks and Concentrations
Financial instruments that potentially subject us to significant concentrations of credit risk consist principally of cash,
cash equivalents and accounts receivable.
We maintain cash deposits with multiple financial institutions in the United States which, at times, may exceed federally
insured limits. Cash may be withdrawn or redeemed on demand. We believe that the financial institutions that hold our cash
are financially sound and, accordingly, minimal credit risk exists with respect to these balances. However, market conditions
can impact the viability of these institutions. In the event of failure of any of the financial institutions where we maintain our
cash and cash equivalents, there can be no assurance that we will be able to access uninsured funds in a timely manner or
at all. We have not experienced any losses in such accounts.
We extend credit to our customers based on an evaluation of their ability to pay amounts due under contractual
arrangements and generally do not obtain or require collateral. For the year ended December 31, 2024, no customer
accounted for more than 10% of our revenue. For the years ended December 31, 2023 and 2022, one customer accounted
for 13% of our revenue. At December 31, 2024 and 2023, no customer accounted for more than 10% of our accounts
receivable balance.
Cash and Cash Equivalents
We consider all short-term, highly liquid investments purchased with an original maturity of three months or less at the
date of purchase to be cash equivalents. Cash deposits are all in financial institutions in the United States. Cash and cash
equivalents consist primarily of U.S. treasury securities money market funds held with an investment bank and cash on
deposit.
Cash equivalents, consisting of U.S. treasury securities money market funds, of $405.0 million and $605.5 million at
December 31, 2024 and 2023, respectively, were classified as Level 1 of the fair value hierarchy and valued using quoted
market prices in active markets.
Accounts Receivable and Allowance for Expected Credit Losses
Accounts receivable are recognized at the amounts due from various customers, net of allowance for expected credit
losses. We estimate our expected credit losses based on factors including known facts and circumstances, historical
experience, reasonable and supportable forecasts of economic conditions, and the age of the uncollected balances. We
write off the asset when it is determined to be uncollectible. As of December 31, 2024 and 2023, the allowance for credit
losses was not material.
Property and Equipment
Property and equipment is stated at cost, less accumulated depreciation. Depreciation is computed using the straight-
line method over the estimated useful lives of the assets, which are five years for furniture and fixtures and three years for
computer equipment. Leasehold improvements are depreciated on the straight-line basis over the shorter of the life of the
asset or the remaining lease term. Expenditures for repairs and maintenance are charged to general and administrative
expenses as incurred.
Equity Investments
We retain minority equity interests in privately-held companies without readily determinable fair values. Our ownership
interests are less than 20% of the voting stock of the investees and we do not have the ability to exercise significant
influence over the operating and financial policies of the investees. The equity investments are accounted for under the
measurement alternative in accordance with Accounting Standards Codification (“ASC”) 321, Investments – Equity
Securities, which is cost minus impairment, if any, plus or minus changes resulting from observable price changes. Due to
indicators of a decline in the financial condition of one of our investees, we recognized an impairment loss of $4.0 million on
one of our minority equity interest investments during the year ended December 31, 2023 which was presented as other
expense on the consolidated statement of operations for the year then ended. We otherwise have not recognized any other
impairment losses or changes resulting from observable price changes during the years ended December 31, 2024, 2023
and 2022. Equity investments included in other assets in the consolidated balance sheets was $15.0 million as of
December 31, 2024 and 2023.
Business Combinations
The results of businesses acquired in a business combination are included in the consolidated financial statements from
the date of acquisition. Acquisition accounting results in assets and liabilities of an acquired business being recognized at
their estimated fair values on the acquisition date. Any excess consideration over the fair value of assets acquired and
liabilities assumed is recognized as goodwill.
We perform valuation of assets acquired and liabilities assumed for an acquisition and allocate the purchase price to its
respective net tangible and intangible assets. Determining the fair value of assets acquired and liabilities assumed requires
management to use significant judgment and estimates including the selection of valuation methodologies, comparable
guideline public companies, and Level 3 inputs in the fair value hierarchy such as forecasts of revenue and margins and
estimates of royalty and discount rates, as applicable. We may engage the assistance of valuation specialists in concluding
on fair value measurements of certain assets acquired or liabilities assumed in a business combination. During the
measurement period, which shall not exceed one year from the acquisition date, we may adjust provisional amounts
recognized for assets acquired and liabilities assumed to reflect new information subsequently obtained regarding facts and
circumstances that existed as of the acquisition date.
Certain acquisitions contain provisions for contingent consideration to be transferred or received based on the post-
acquisition results of the acquired businesses. The acquisition date estimated fair value of contingent consideration
associated with business combinations is based on the amount of the consideration expected to be transferred or received
using significant inputs that are not observable in the market (Level 3 inputs). Contingent consideration is remeasured to its
estimated fair value on a recurring basis. Changes in the estimated fair value of contingent consideration, if any, is
recognized within general and administrative expenses in the consolidated statements of operations.
Transaction costs associated with business combinations are expensed as incurred and are included in general and
administrative expenses in the consolidated statements of operations.
Goodwill
Goodwill represents the excess of the consideration transferred over the fair value of the identifiable assets acquired
and liabilities assumed in a business combination. We had one reporting unit during 2024, 2023 and 2022. We review
goodwill for impairment annually in the fourth quarter and whenever events or changes in circumstances indicate the
carrying amount of goodwill may not be recoverable. When testing goodwill for impairment, we may first perform an optional
qualitative assessment. If we determine it is not more likely than not our reporting unit’s fair value is less than its carrying
value, then no further analysis is necessary. If we determine that it is more likely than not that the fair value of our reporting
unit is less than its carrying amount, then the quantitative impairment test will be performed. Under the quantitative
impairment test, if the carrying amount of our reporting unit exceeds its fair value, we will recognize an impairment loss in an
amount equal to that excess but limited to the total amount of goodwill. No impairments were recognized in 2024, 2023 or
2022. Gains and losses on the disposition of a business, which are recognized in general and administrative expenses in the
consolidated statements of operations, include the carrying amount of goodwill related to the business disposed. When a
portion of a reporting unit that constitutes a business is to be disposed of, the amount of goodwill to be included in that
carrying amount is determined based on the relative fair values of the business disposed and the portion of the reporting unit
that will be retained.
Intangible Assets
Intangible assets reflect the value of customer relationships, developed technology, trademarks, content library and
backlog recognized in connection with our acquisitions. Purchased intangible assets are recognized at their acquisition date
fair value, less accumulated amortization. We determine the appropriate useful life of intangible assets by performing an
analysis of expected cash flows of the acquired assets. Intangible assets are amortized over their estimated useful lives on a
straight-line basis, which approximates the pattern in which the economic benefits of the assets are consumed, which is
reassessed whenever applicable facts and circumstances indicate a change in the estimated useful life of such asset has
occurred. In such event, we will adjust the estimated useful life and amortize the carrying value prospectively over the
adjusted remaining useful life.
Capitalized Software Costs
We account for our internal-use software costs in accordance with ASC 350-40, Internal-Use Software. Capitalization of
internal-use costs begins when the preliminary project stage is complete, management with the relevant authority authorizes
and commits to funding the project, it is probable that the project will be completed, and the software will be used for the
function intended. Capitalization of these costs ceases once the project is substantially complete and the software is ready
for its intended purpose. Costs for post-configuration training, maintenance and minor modifications or enhancements are
included in product development and technology expenses in the consolidated statements of operations as incurred.
Capitalized internal-use costs are amortized on a straight-line basis over their estimated useful life of three years, which is
reassessed whenever applicable facts and circumstances indicate a change in the estimated useful life of such asset has
occurred. In such event, we will adjust the estimated useful life and amortize the carrying value prospectively over the
adjusted remaining useful life.
Leases
We account for leases in accordance with ASC 842, Leases. We have elected to account for lease and non-lease
components as a single lease component and also elected not to recognize operating lease right-of-use assets and
operating lease liabilities for leases with an initial term of twelve months or less. Lease payments for short-term leases are
recognized as lease expense on a straight-line basis over the lease term.
We determine if a contract is, or contains, a lease at inception. All of our leases are operating leases. Right-of-use
assets and lease liabilities are recognized at the lease commencement date based on the present value of lease payments,
less any tenant improvement allowance incentives when it is reasonably certain they will be received, over the lease term
discounted using our incremental borrowing rate. As none of our leases provide an implicit rate, the incremental borrowing
rate used is estimated based on what we would be required to pay for a collateralized loan over a similar term as the lease.
Lease payments include fixed payments and variable payments based on an index or rate, if any, and are recognized as
lease expense on a straight-line basis over the term of the lease. Variable lease payments not based on a rate or index are
expensed as incurred. The lease term includes options to extend or terminate the lease when it is reasonably certain they
will be exercised. Certain of our leases contain renewal options for periods of up to ten years and early termination options
by up to two years, at our election. We have not recognized any renewal or early termination options in our estimate of the
lease term as they are not reasonably certain of exercise. Right-of-use assets are evaluated for impairment in accordance
with ASC 360, Property, Plant, and Equipment, when events or changes in circumstances indicate that their carrying values
may not be recoverable. After a right-of-use asset is impaired, the remaining carrying value of the right-of-use asset is de-
linked from the lease liability and amortized on a straight-line basis over the remaining lease term. The lease liability
continues to be amortized using the same effective interest method as before the impairment. Thus, after impairment, the
operating lease no longer qualifies for the straight-line treatment of total lease expense.
Impairment of Long-Lived Assets
We account for the impairment of long-lived assets in accordance with ASC 360, Property, Plant, and Equipment. In
accordance with ASC 360, long-lived assets to be held and used are reviewed for impairment when events or changes in
circumstances indicate that their carrying values may not be recoverable. We perform impairment testing at the asset group
level that represents the lowest level for which identifiable cash flows are largely independent of the cash flows of other
assets and liabilities. An impairment loss is recognized when estimated undiscounted future cash flows expected to result
from the use of the asset and its eventual disposition are less than its carrying value. If an asset is determined to be
impaired, the impairment is measured by the amount that the carrying value of the asset exceeds its fair value. In 2022, we
recognized an impairment loss of $11.3 million within general and administrative expenses to reduce the carrying value of an
operating lease right-of-use asset we determined to sublease to its estimated fair value of $8.9 million as rental rates have
declined since the date the lease was executed. The estimated fair value was determined by using a discounted cash flow
method which is a non-recurring fair value measurement based on Level 3 inputs. Key inputs used in this estimate included
projected sublease income and a discount rate which incorporated the risk of achievement associated with the forecast.
Other than the aforementioned, we have not recognized any other material impairment losses of long-lived assets for the
years ended December 31, 2024, 2023 and 2022.
Debt Issuance Costs
Costs incurred in connection with the issuance of long-term debt are capitalized and amortized to interest expense over
the contractual life of the loan using the effective-interest method. These costs are recognized as a reduction of the related
long-term debt balance on the consolidated balance sheets. Costs incurred in connection with the issuance of revolving
credit facilities are recognized in other assets on the consolidated balance sheets and are amortized to interest expense in
the consolidated statements of operations on a straight-line basis over the term of the revolving credit facility.
Income Taxes
Deferred income tax assets and liabilities are determined based upon the net tax effects of the differences between the
consolidated financial statements carrying amounts and the tax basis of assets and liabilities and are measured using the
enacted tax rate expected to apply to taxable income in the years in which the differences are expected to be reversed.
Deferred tax assets are evaluated for recoverability each reporting period by assessing all available evidence, both positive
and negative, to determine whether, based on the weight of that evidence, a valuation allowance for deferred tax assets is
needed. A valuation allowance is used to reduce some or all of the deferred tax assets if, based upon the weight of available
evidence, it is more likely than not that those deferred tax assets will not be realized. To the extent sufficient positive
evidence becomes available, all or a portion of the valuation allowance may be released in one or more future periods. A
release of the valuation allowance, if any, would result in the recognition of certain deferred tax assets and an income tax
benefit for the period in which such release is recognized.
We recognize the tax benefit from an uncertain tax position only if it is more likely than not that the tax position will be
sustained on examination by the taxing authorities, based on the technical merits of the position. The tax benefits
recognized in the consolidated financial statements from such positions are then measured based on the largest benefit that
has a greater than 50% likelihood of being realized. We recognize interest and penalties accrued related to our uncertain tax
positions in income tax (expense) benefit in the consolidated statements of operations.
Revenue
We recognize revenue in accordance with ASC 606, Revenue from Contracts with Customers, when control of the
promised good or service is transferred to the customer in an amount that reflects the consideration for which we are
expected to be entitled to in exchange for those services. We consider pharmacy benefit managers ("PBMs"), pharmacies,
pharma manufacturers and consumers of our subscription and telehealth services, for which we have direct contractual
agreements with, to be our primary customers. Consideration paid or payable to customers is recognized as a reduction of
revenue if we do not receive a distinct good or service for which we can reasonably estimate fair value. Any excess of
consideration paid or payable to customers over the fair value of a distinct good or service is also recorded as a reduction of
revenue. The reduction of revenue is recognized at the later of when the related revenue is recognized or when we pay or
promise to pay the consideration to the customers. Given the time between us transferring a promised good or service to the
customer and the customer paying for that good or service is one year or less based on the terms of our revenue
arrangements, as a practical expedient, we do not adjust the promised amount of consideration for effects of a significant
financing component.
For the years ended December 31, 2024, 2023 and 2022, revenue comprised the following:
Year Ended December 31,
(in thousands)
2024
2023
2022
Prescription transactions revenue
$577,549
$550,738
$550,536
Subscription revenue
86,536
94,410
96,167
Pharma manufacturer solutions revenue (1)
107,237
85,065
99,425
Other revenue
21,002
20,052
20,426
Total revenue
$792,324
$750,265
$766,554
____________________________________________________
(1)Pharma manufacturer solutions revenue for the year ended December 31, 2023 included a $10.0 million contract
termination payment to a pharma manufacturer solutions client in connection with our restructuring activities, which
was recognized as a reduction of revenue. See "Note 17. Restructuring" for additional information.
Prescription Transactions Revenue
We operate a price comparison platform that provides consumers with curated, geographically relevant prescription
pricing, and provides access to negotiated prices through our codes that can be used to save money on prescriptions across
the United States. These services are free to the consumers.
Prescription transactions revenue is primarily generated from PBMs, or customers, when a prescription is filled with our
code provided through our platform. We contract with PBMs that manage formularies and prescription transactions including
establishing pricing between consumers and pharmacies. Beginning in late 2022, we began to enter into direct contractual
agreements with select pharmacies ("partner pharmacies") that provide consumers access to prescription pricing negotiated
directly with the partner pharmacies through our platform. The partner pharmacies are our customers in these
arrangements.
Our performance obligation to our customers is to direct prescription volume through our platform for PBMs or process
consumer claims at the point of sale for partner pharmacies, which may include marketing through our mobile apps,
websites, and cards.
Contracts with customers provide that we are entitled to either a variable or fixed fee per transaction when a consumer
uses our code from our platform to fill a prescription. Certain arrangements with customers provide that the amount of
consideration we are entitled to is based on the volume of prescription fills each month. Our performance obligation is
satisfied upon the completion of pharmacies filling prescriptions. We recognize revenue for our estimated fee due from the
customers at a point in time when a prescription is filled.
In addition, the amount of consideration for which we are entitled may be adjusted in the event that a fill is determined
ineligible, or based upon other adjustments allowed under the contracts with customers. We estimate the amount expected
to be entitled to using the expected value method based on historical experience of the number of prescriptions filled,
ineligible fills and applicable rates. We generally receive payment from our customers within thirty days of the month end in
which the prescriptions were filled. However, portions of payments may not be received for up to one year to the extent of
adjustments for ineligible fills.
We periodically offer incentives to consumers for our prescription transactions offering, principally in the form of
discounts to a limited number of consumers on a limited number of prescription drugs for a limited time ("limited marketing
promotions") that reduce prices on prescription drugs to acquire, re-engage, or generally increase consumer utilization of our
platform. None of our contracts with customers require us to provide discounts to consumers. Consumer discounts on
prescription drugs where our customers are the partner pharmacies are recognized as a reduction of revenue. For consumer
discounts on prescription drugs where our customers are the PBMs, we evaluate whether such discounts represent
payments to a customer, which are recognized as a reduction of revenue if no distinct benefit is received, or, whether the
discounts relate to limited marketing promotions, which are recognized as sales and marketing expenses. We consider
various factors including whether the discounts are made available for a limited time on a limited number of prescription
drugs, consumer eligibility requirements, whether discounts are targeted towards consumer transactions with specific
partner pharmacies or PBMs, and whether there is involvement or reasonable expectations of our customers with regards to
the discounts.
All our consumer incentives are recognized at the time the prescription is filled. In December 2023, we implemented a
change in some aspects of our consumer incentives program whereby the incentives are no longer limited marketing
promotions and we believe our customers can now reasonably expect to benefit from these incentives. As a result, all
consumer discounts subsequent to this change were recognized as a reduction of prescription transactions revenue.
Consumer incentives recognized as a reduction of revenue were $11.5 million in 2024, $8.8 million in 2023, and nil in 2022.
Consumer incentives recognized as sales and marketing expenses were not material in 2024, $27.3 million in 2023, and
$24.7 million in 2022.
Subscription Revenue
Subscription revenue is generated from consumers that are subscribed to either of our subscription offerings
("subscribers"), GoodRx Gold (“Gold”) and Kroger Rx Savings Club powered by GoodRx (“Kroger Savings”).
Under Gold, subscribers pay an upfront fee to purchase a monthly or annual subscription that provides access to lower
prices for prescriptions and telehealth visits. Subscribers can cancel the Gold subscription at any time. Monthly Gold
subscription fees are generally nonrefundable while annual Gold subscription fees are generally nonrefundable to the
subscriber after the first two weeks. We recognize revenue for Gold on a straight-line basis over the subscription period.
Under Kroger Savings, subscribers paid an annual upfront fee, a portion of which we shared with Kroger, for a
subscription that provided access to lower prices on prescriptions at Kroger pharmacies. Subscribers were able to enroll in
Kroger Savings through July 1, 2023 and the offering sunset in July 2024. Kroger Savings subscription fees were generally
nonrefundable to the subscriber after the first thirty days unless we canceled the subscription, in which case the subscriber
was entitled to a pro rata refund. We recognized revenue for Kroger Savings on a straight-line basis over the subscription
period, net of the fee shared with Kroger.
Pharma Manufacturer Solutions Revenue
Pharma manufacturer solutions revenue consists primarily of advertisements purchased by pharma manufacturers and
other customers that appear on our apps and websites. Revenue for advertisements based on a fixed fee for a specified
period of time is recognized ratably over the term of the arrangement. Customers may also purchase advertisements where
we charge fees on a cost-per-click basis, advertisements placed in our direct mailers, or other content used in advertising.
Revenue for these arrangements is recognized at a point in time when the advertisements are clicked, when the direct
mailers are shipped or when other content used in advertising is delivered, respectively.
Pharma manufacturers can also integrate their affordability solutions, such as co-pay cards, patient assistance
programs, including point-of-sale discount programs, and other savings options onto our platform so that consumers can
access certain medications. Our performance obligation is to connect consumers with our customers. We receive a fixed or
variable fee per transaction when consumers purchase a medication. Revenue is recognized at a point in time when the
prescription is filled.
In addition, pharma manufacturer solutions revenue in 2023 and 2022 included fees generated when pharmacies filled
prescriptions for products sold by pharma manufacturers via our pharmacy services solution acquired through our
acquisition of vitaCare Prescription Services, Inc. ("vitaCare"). We were entitled to a fixed fee per prescription from the
pharma manufacturer for each of their patients assisted by us. Revenue for these arrangements was recognized at a point in
time when the prescriptions were processed and filled through our pharmacy services solution. In 2023, we de-prioritized
certain solutions under our pharma manufacturer solutions offering, which, among others, included solutions supported by
vitaCare. See "Note 17. Restructuring" for additional information.
We generally invoice customers in advance, in the month after the services are rendered, or in accordance with other
specific contractual provisions. Payments are due generally within thirty to ninety days of invoice but may extend up to
twelve months for a limited number of contracts.
Other Revenue
Other revenue consists principally of telehealth revenue. Telehealth revenue consists of revenues generated from
consumers who complete a telehealth visit with a member of our network of qualified medical professionals. Consumers pay
a fee per telehealth visit and we recognize the fee as revenue at a point in time when the visit is complete.
Cost of Revenue
Cost of revenue consists primarily of costs related to outsourced consumer support; healthcare provider costs;
personnel costs, including salaries, benefits, bonuses and stock-based compensation expense, for our consumer support
employees; hosting costs; merchant account fees; processing fees; allocated overhead; and as applicable, fulfillment costs
for certain solutions provided to customers under our pharma manufacturer solutions offering. Cost of revenue excludes
depreciation and amortization of capitalized software development costs, developed technology, and other hosting and data
infrastructure equipment used to operate our platform, which are included in depreciation and amortization in the
consolidated statements of operations.
Product Development and Technology
Costs related to the development of products are charged to product development and technology expense as incurred.
Product development and technology expense consists primarily of personnel costs, including salaries, benefits, bonuses
and stock-based compensation expense, for employees involved in product development activities; costs related to third-
party services and contractors associated with product development, information technology and software-related costs; and
allocated overhead. Product development and technology costs also include, as applicable, losses from the disposal of
capitalized development costs related to internal-use software that are not yet ready for their intended use.
Sales and Marketing
Sales and marketing costs consist primarily of advertising, marketing and promotional expenses for consumer
acquisition and retention including certain consumer discounts that are expensed as incurred. Production costs are
expensed as of the first date the advertisement takes place. Advertising costs were $211.4 million, $198.8 million and $226.3
million for the years ended December 31, 2024, 2023 and 2022, respectively.
Sales and marketing expenses also include personnel costs, including salaries, benefits, bonuses, stock-based
compensation expense and sales commissions, for sales and marketing employees; costs related to third-party services and
contractors; marketing software-related costs; and allocated overhead. Sales commissions are expensed as incurred.
General and Administrative
General and administrative costs are expensed as incurred and primarily include personnel costs, including salaries,
benefits, bonuses and stock-based compensation expense, for executive, finance, accounting, legal, and human resources
functions; as well as professional fees; occupancy costs; other general overhead costs; and as applicable, change in fair
value of contingent consideration, loss on operating lease assets, gain on sale of business, and legal settlement charges,
net of insurance recoveries.
Depreciation and Amortization
Our depreciation and amortization expenses include depreciation of property and equipment, and amortization of
capitalized internal-use software costs and intangible assets.
Fair Value of Financial Instruments
Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly
transaction between market participants at the measurement date (exit price). The inputs used to measure fair value are
classified into the following hierarchy:
Level 1
Unadjusted quoted prices in active markets for identical assets or liabilities;
Level 2
Unadjusted quoted prices in active markets for similar assets or liabilities, or unadjusted quoted prices for
identical or similar assets or liabilities in markets that are not active, or inputs that are derived principally
from or corroborated by observable market data by correlation or other means, or inputs other than quoted
prices that are observable for the asset or liability; and
Level 3
Unobservable inputs for the asset or liability based on management’s assumptions.
When determining the fair value measurements for assets and liabilities which are required to be measured at fair
value, we consider the principal or most advantageous market in which to transact and the market-based risk. Goodwill,
intangible assets and other long-lived assets, and equity investments are measured at fair value on a nonrecurring basis,
only if impaired. The carrying amounts reported in the consolidated financial statements approximate the fair value for
accounts receivable, accounts payable, and accrued liabilities, due to their short-term nature. The estimated fair value of our
debt, which is based on inputs categorized as Level 2 in the fair value hierarchy, approximated its carrying value as of
December 31, 2024 and 2023.
Stock-Based Compensation
Compensation cost is allocated to cost of revenue, product development and technology, sales and marketing, and
general and administrative expenses in the consolidated statements of operations for stock options and restricted stock units
(“RSUs”) based on the fair value of these awards at the date of grant. For awards that vest based on continued service,
stock-based compensation cost is recognized on a straight-line basis over the requisite service period, which is generally the
vesting period of the awards. For awards with performance vesting conditions, stock-based compensation cost is recognized
on a graded vesting basis over the requisite service period when it is probable the performance condition will be achieved,
with a cumulative adjustment for the portion of the service period that occurred for the period prior to the performance
condition becoming probable of being achieved. The requisite service period for awards with service and performance
conditions is the longer of the service period or the performance period. The grant date fair value of stock options that
contain service or performance conditions is estimated using the Black-Scholes option-pricing model and the grant date fair
value of RSUs that contain service or performance conditions is estimated based on the fair value of our common stock.
Forfeitures are recognized when they occur.
Determining the fair value of stock-based awards requires judgment. The Black-Scholes option-pricing model is used to
estimate the fair value of stock options, while the fair value of our common stock at the date of grant is used to measure the
fair value of RSUs. The assumptions used in the Black-Scholes option-pricing model requires the input of subjective
assumptions and are as follows:
•The fair value of common stock is determined on the grant date using the closing price of our Class A common
stock.
•Expected volatility is based on a blended approach that utilizes our historical and implied volatility for periods in
which we have sufficient information and the historical and implied volatility of a publicly traded peer group
based on daily price observations over a period equivalent to the expected term of the stock option grants.
•The expected term is based on historical and estimates of future exercise behavior. For stock options
considered to be “plain vanilla” options, the expected term is based on the simplified method, as our historical
share option exercise experience does not provide a reasonable basis upon which to estimate the expected
term. Substantially all of our stock options granted are considered to be "plain vanilla" options.
•The risk-free interest rate is based on the U.S. Treasury yield of treasury bonds with a maturity that
approximates the expected term of the options.
•The dividend yield is based on our current expectations of dividend payouts.
The assumptions used in our Black-Scholes option-pricing model represent management’s best estimates. These
estimates involve inherent uncertainties and the application of management’s judgment. If factors change and different
assumptions are used, our stock-based compensation could be materially different in the future.
Basic and Diluted Earnings (Loss) Per Share
We have two classes of common stock, Class A and Class B. Basic and diluted earnings (loss) per share attributable to
common stockholders of our Class A and Class B common stock are the same because they are entitled to the same
liquidation and dividend rights.
We compute earnings (loss) per share using the two-class method required for participating securities. The two-class
method requires net income to be allocated between common stock and participating securities based upon their respective
rights to receive dividends as if all income for the period had been distributed. In periods where we have net losses, losses
are not allocated to participating securities as they are not required to fund the losses.
Basic earnings (loss) per share is computed by dividing net income or loss attributable to common stockholders by the
weighted average number of common shares outstanding during the period. Weighted average number of common shares
outstanding includes contingently issuable shares where there is no circumstance under which those shares would not be
issued.
We compute diluted earnings or loss per share under a two-class method. For periods when we have net income, net
income is reallocated between common stock, potential common stock and participating securities. Stock-based awards that
contain vesting provisions contingent on achievement of performance or market conditions are included in the computation
of diluted earnings per share, if dilutive, from the beginning of the period or date of issuance if later, if all necessary
conditions to vest have been satisfied during the period. If all conditions have not been met by the end of the period, dilutive
earnings per share includes the number of shares that would be issuable if the end of the period were the end of the
contingency period. Potential common stock principally includes stock options, RSUs and common stock resulting from early
exercise of stock options computed using the treasury stock method. For periods where we have net losses, diluted loss per
share is the same as basic loss per share, because potentially dilutive shares are excluded from the computation of loss per
share as their effect is anti-dilutive.
Recent Accounting Pronouncements
Recently Adopted Accounting Pronouncement
In November 2023, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU")
2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures. The ASU expands public
entities’ segment disclosures by updating qualitative and quantitative reportable segment disclosure requirements, including
disclosures about significant segment expenses that are regularly provided to the CODM and increased interim disclosure
requirements, among others. This ASU applies to all public entities that are required to report segment information in
accordance with ASC 280, and is effective for fiscal years beginning after December 15, 2023 and is effective for interim
periods within fiscal years beginning after December 15, 2024. Early adoption of this ASU is permitted. We adopted this ASU
effective for the year ended December 31, 2024, which resulted in additional qualitative disclosures that can be found under
the heading "Segment Reporting and Geographic Information" within "Note 2. Summary of Significant Accounting Policies."
Recently Issued Accounting Pronouncements - Not Yet Adopted
In November 2024, the FASB issued ASU 2024-03, Income Statement - Reporting Comprehensive Income - Expense
Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses, which is intended to improve
the disclosures of expenses by providing more detailed information about the types of expenses in commonly presented
expense captions. This ASU requires entities to disclose the amounts of purchases of inventory, employee compensation,
depreciation and intangible asset amortization included in each relevant expense caption; as well as a qualitative description
of the amounts remaining in relevant expense captions that are not separately disaggregated quantitatively. This ASU also
requires disclosure of the total amount of selling expense and, in annual reporting periods, an entity’s definition of selling
expenses. In January 2025, the FASB issued ASU 2025-01 which clarified the effective date of this ASU. This ASU applies
to all public entities and will be effective for annual reporting periods beginning after December 15, 2026, and for interim
periods within annual reporting periods beginning after December 15, 2027. Early adoption of this ASU is permitted. This
ASU should be applied either prospectively to financial statements issued for reporting periods after the effective date of this
ASU or retrospectively to any or all prior periods presented in the financial statements. We are currently evaluating the
impact of the adoption of this ASU on our consolidated financial statement disclosures.
In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax
Disclosures. This ASU is intended to enhance the transparency and decision usefulness of income tax disclosures. The
amendments in this ASU address investor requests for enhanced income tax information primarily through changes to the
rate reconciliation and income taxes paid information. This ASU applies to all public entities and will be effective for fiscal
years beginning after December 15, 2024, and for interim periods for fiscal years beginning after December 15, 2025. Early
adoption of this ASU is permitted. We are currently evaluating the impact of the adoption of this ASU on our consolidated
financial statement disclosures.