Quarterly report pursuant to Section 13 or 15(d)

Restatement of Condensed Consolidated Financial Statements

v3.22.1
Restatement of Condensed Consolidated Financial Statements
 3 Months Ended
Jun. 30, 2021
Accounting Changes and Error Corrections [Abstract]  
Restatement of Condensed Consolidated Financial Statements Restatement of Condensed Consolidated Financial Statements
On May 11, 2022, management and the Audit Committee of the Board of Directors of the Company concluded (a) the Company will restate its financial statements for the three months ended June 30, 2021, the three and six months ended September 30, 2021, and the three and nine months ended December 31, 2021 (the “Relevant Periods”), and (b) the Company’s previously issued unaudited interim condensed consolidated financial statements for the Relevant Periods included in its Quarterly Reports on Form 10-Q for the Relevant Periods, as originally filed with the Securities and Exchange Commission on August 9, 2021, November 2, 2021, and February 8, 2022, respectively, should no longer be relied upon.
In connection with the integration of the Company’s recently acquired businesses (AdColony Holding AS and Fyber N.V. (the “Acquired Companies”)), management performed a review of the presentation of revenue and license fees and revenue share expense based on accounting guidance for revenue recognition, including considerations of principal and agent (or “gross and net”) presentation. After a detailed review of the Acquired Companies' product lines and related contracts with customers and publishers, the Company concluded each Acquired Company acts as an agent in certain of their respective product lines and, as a result, revenue for those product lines should be reported net of license fees and revenue share expense. Previously, all revenue of the Acquired Companies, which are reported as separate segments referred to as In App Media – AdColony ("IAM-A") and In App Media – Fyber ("IAM-F"), were reported on a gross basis. The Company’s legacy business, which is reported in a separate segment referred to as On Device Media, is not impacted by the change described above and it's revenue continues to be reported on a gross basis. Further, the acquisitions of the Acquired Companies were completed during the three-month period ended June 30, 2021, and, as a result, there is no impact to the fiscal year ended March 31, 2021.
In addition, management determined certain hosting costs for the Acquired Companies reported as product development expenses should be reclassified as other direct costs of revenue and general and administrative expenses.
The corrections have the effect of:
1.Decreasing both net revenue and license fees and revenue share in a like amount on the condensed consolidated statements of operations and comprehensive income / (loss) for the three months ended June 30, 2021;
2.Increasing other direct costs of revenue and general and administrative expenses and decreasing product development expenses in a like amount on the condensed consolidated statements of operations and comprehensive income / (loss) for the three months ended June 30, 2021.
These corrections do not relate to or have any impact on the Company’s operating performance, income from operations, net income / (loss), or cash flows, and the financial position and liquidity of the Company remain unchanged.
The following table summarizes the impact of the restatements on select unaudited condensed consolidated statements of operations and comprehensive income / (loss) line items:
Three months ended June 30, 2021
Reported Adjustment Restated
Net revenues $ 212,615 $ (54,540) $ 158,075
Costs of revenues and operating expenses
License fees and revenue share 138,348 (54,540) 83,808
Other direct costs of revenues 2,533 1,935 4,468
Product development 15,547 (2,623) 12,924
Sales and marketing 13,736 — 13,736
General and administrative 23,296 688 23,984
Restructuring and impairment costs 10 — 10
Total costs of revenues and operating expenses 193,470 138,930
Income from operations $ 19,145 $ 19,145