dms-20240331
00017251342024Q112/31FALSE0.06670.06672525252525252525P2Yxbrli:sharesiso4217:USDiso4217:USDxbrli:sharesxbrli:puredms:segementdms:periodutr:Ddms:location00017251342024-01-012024-03-310001725134us-gaap:CommonClassAMember2024-05-130001725134us-gaap:CommonClassBMember2024-05-130001725134dms:RedeemableWarrantsToAcquireClassACommonStockMember2024-05-1300017251342024-03-3100017251342023-12-310001725134us-gaap:PreferredStockMemberus-gaap:SeriesAPreferredStockMember2024-03-310001725134us-gaap:PreferredStockMemberus-gaap:SeriesBPreferredStockMember2024-03-310001725134us-gaap:CommonClassAMember2024-03-310001725134us-gaap:CommonClassAMember2023-12-310001725134us-gaap:CommonClassBMember2024-03-310001725134us-gaap:CommonClassBMember2023-12-310001725134us-gaap:CommonClassCMember2024-03-310001725134us-gaap:CommonClassCMember2023-12-3100017251342023-01-012023-03-310001725134us-gaap:PreferredStockMember2023-12-310001725134us-gaap:CommonClassAMemberus-gaap:CommonStockMember2023-12-310001725134us-gaap:CommonClassBMemberus-gaap:CommonStockMember2023-12-310001725134us-gaap:AdditionalPaidInCapitalMember2023-12-310001725134us-gaap:TreasuryStockCommonMember2023-12-310001725134us-gaap:RetainedEarningsMember2023-12-310001725134us-gaap:ParentMember2023-12-310001725134us-gaap:NoncontrollingInterestMember2023-12-310001725134us-gaap:RetainedEarningsMember2024-01-012024-03-310001725134us-gaap:ParentMember2024-01-012024-03-310001725134us-gaap:NoncontrollingInterestMember2024-01-012024-03-310001725134us-gaap:AdditionalPaidInCapitalMember2024-01-012024-03-310001725134us-gaap:PreferredStockMemberus-gaap:SeriesAPreferredStockMember2024-01-012024-03-310001725134us-gaap:RetainedEarningsMemberus-gaap:SeriesAPreferredStockMember2024-01-012024-03-310001725134us-gaap:ParentMemberus-gaap:SeriesAPreferredStockMember2024-01-012024-03-310001725134us-gaap:SeriesAPreferredStockMember2024-01-012024-03-310001725134us-gaap:PreferredStockMemberus-gaap:SeriesBPreferredStockMember2024-01-012024-03-310001725134us-gaap:RetainedEarningsMemberus-gaap:SeriesBPreferredStockMember2024-01-012024-03-310001725134us-gaap:ParentMemberus-gaap:SeriesBPreferredStockMember2024-01-012024-03-310001725134us-gaap:SeriesBPreferredStockMember2024-01-012024-03-310001725134us-gaap:PreferredStockMember2024-03-310001725134us-gaap:CommonClassAMemberus-gaap:CommonStockMember2024-03-310001725134us-gaap:CommonClassBMemberus-gaap:CommonStockMember2024-03-310001725134us-gaap:AdditionalPaidInCapitalMember2024-03-310001725134us-gaap:TreasuryStockCommonMember2024-03-310001725134us-gaap:RetainedEarningsMember2024-03-310001725134us-gaap:ParentMember2024-03-310001725134us-gaap:NoncontrollingInterestMember2024-03-310001725134us-gaap:PreferredStockMember2022-12-310001725134us-gaap:CommonClassAMemberus-gaap:CommonStockMember2022-12-310001725134us-gaap:CommonClassBMemberus-gaap:CommonStockMember2022-12-310001725134us-gaap:AdditionalPaidInCapitalMember2022-12-310001725134us-gaap:TreasuryStockCommonMember2022-12-310001725134us-gaap:RetainedEarningsMember2022-12-310001725134us-gaap:ParentMember2022-12-310001725134us-gaap:NoncontrollingInterestMember2022-12-3100017251342022-12-310001725134us-gaap:RetainedEarningsMember2023-01-012023-03-310001725134us-gaap:ParentMember2023-01-012023-03-310001725134us-gaap:NoncontrollingInterestMember2023-01-012023-03-310001725134us-gaap:AdditionalPaidInCapitalMember2023-01-012023-03-310001725134us-gaap:PreferredStockMemberus-gaap:SeriesAPreferredStockMember2023-01-012023-03-310001725134us-gaap:PreferredStockMemberus-gaap:SeriesBPreferredStockMember2023-01-012023-03-310001725134us-gaap:PreferredStockMember2023-03-310001725134us-gaap:CommonClassAMemberus-gaap:CommonStockMember2023-03-310001725134us-gaap:CommonClassBMemberus-gaap:CommonStockMember2023-03-310001725134us-gaap:AdditionalPaidInCapitalMember2023-03-310001725134us-gaap:TreasuryStockCommonMember2023-03-310001725134us-gaap:RetainedEarningsMember2023-03-310001725134us-gaap:ParentMember2023-03-310001725134us-gaap:NoncontrollingInterestMember2023-03-3100017251342023-03-310001725134dms:DMSHMemberdms:DMSHMember2024-03-310001725134dms:DMSHMemberdms:SellersMember2024-03-310001725134dms:DMSHMemberdms:SellersMember2023-12-3100017251342023-08-282023-08-280001725134dms:CustomerAcquisitionMemberdms:BrandDirectMemberus-gaap:OperatingSegmentsMember2024-01-012024-03-310001725134dms:CustomerAcquisitionMemberdms:MarketplaceMemberus-gaap:OperatingSegmentsMember2024-01-012024-03-310001725134dms:TechnologySolutionsMemberdms:CustomerAcquisitionMemberus-gaap:OperatingSegmentsMember2024-01-012024-03-310001725134dms:CustomerAcquisitionMemberus-gaap:CorporateNonSegmentMember2024-01-012024-03-310001725134dms:CustomerAcquisitionMember2024-01-012024-03-310001725134dms:BrandDirectMemberus-gaap:OperatingSegmentsMemberdms:AgencyManagedServicesMember2024-01-012024-03-310001725134dms:MarketplaceMemberus-gaap:OperatingSegmentsMemberdms:AgencyManagedServicesMember2024-01-012024-03-310001725134dms:TechnologySolutionsMemberus-gaap:OperatingSegmentsMemberdms:AgencyManagedServicesMember2024-01-012024-03-310001725134dms:AgencyManagedServicesMemberus-gaap:CorporateNonSegmentMember2024-01-012024-03-310001725134dms:AgencyManagedServicesMember2024-01-012024-03-310001725134us-gaap:ServiceMemberdms:BrandDirectMemberus-gaap:OperatingSegmentsMember2024-01-012024-03-310001725134us-gaap:ServiceMemberdms:MarketplaceMemberus-gaap:OperatingSegmentsMember2024-01-012024-03-310001725134us-gaap:ServiceMemberdms:TechnologySolutionsMemberus-gaap:OperatingSegmentsMember2024-01-012024-03-310001725134us-gaap:ServiceMemberus-gaap:CorporateNonSegmentMember2024-01-012024-03-310001725134us-gaap:ServiceMember2024-01-012024-03-310001725134dms:BrandDirectMemberus-gaap:OperatingSegmentsMember2024-01-012024-03-310001725134dms:MarketplaceMemberus-gaap:OperatingSegmentsMember2024-01-012024-03-310001725134dms:TechnologySolutionsMemberus-gaap:OperatingSegmentsMember2024-01-012024-03-310001725134us-gaap:CorporateNonSegmentMember2024-01-012024-03-310001725134dms:CustomerAcquisitionMemberdms:BrandDirectMemberus-gaap:OperatingSegmentsMember2023-01-012023-03-310001725134dms:CustomerAcquisitionMemberdms:MarketplaceMemberus-gaap:OperatingSegmentsMember2023-01-012023-03-310001725134dms:TechnologySolutionsMemberdms:CustomerAcquisitionMemberus-gaap:OperatingSegmentsMember2023-01-012023-03-310001725134dms:CustomerAcquisitionMemberus-gaap:CorporateNonSegmentMember2023-01-012023-03-310001725134dms:CustomerAcquisitionMember2023-01-012023-03-310001725134dms:BrandDirectMemberus-gaap:OperatingSegmentsMemberdms:AgencyManagedServicesMember2023-01-012023-03-310001725134dms:MarketplaceMemberus-gaap:OperatingSegmentsMemberdms:AgencyManagedServicesMember2023-01-012023-03-310001725134dms:TechnologySolutionsMemberus-gaap:OperatingSegmentsMemberdms:AgencyManagedServicesMember2023-01-012023-03-310001725134dms:AgencyManagedServicesMemberus-gaap:CorporateNonSegmentMember2023-01-012023-03-310001725134dms:AgencyManagedServicesMember2023-01-012023-03-310001725134us-gaap:ServiceMemberdms:BrandDirectMemberus-gaap:OperatingSegmentsMember2023-01-012023-03-310001725134us-gaap:ServiceMemberdms:MarketplaceMemberus-gaap:OperatingSegmentsMember2023-01-012023-03-310001725134us-gaap:ServiceMemberdms:TechnologySolutionsMemberus-gaap:OperatingSegmentsMember2023-01-012023-03-310001725134us-gaap:ServiceMemberus-gaap:CorporateNonSegmentMember2023-01-012023-03-310001725134us-gaap:ServiceMember2023-01-012023-03-310001725134dms:BrandDirectMemberus-gaap:OperatingSegmentsMember2023-01-012023-03-310001725134dms:MarketplaceMemberus-gaap:OperatingSegmentsMember2023-01-012023-03-310001725134dms:TechnologySolutionsMemberus-gaap:OperatingSegmentsMember2023-01-012023-03-310001725134us-gaap:CorporateNonSegmentMember2023-01-012023-03-310001725134srt:EuropeMember2024-01-012024-03-310001725134srt:EuropeMember2023-01-012023-03-310001725134dms:OtherCountriesMember2024-01-012024-03-310001725134dms:OtherCountriesMember2023-01-012023-03-310001725134us-gaap:CustomerConcentrationRiskMemberus-gaap:RevenueFromContractWithCustomerProductAndServiceBenchmarkMemberdms:Customer1Member2024-01-012024-03-310001725134us-gaap:CustomerConcentrationRiskMemberus-gaap:RevenueFromContractWithCustomerProductAndServiceBenchmarkMemberdms:Customer1Member2023-01-012023-03-310001725134dms:BrandDirectMemberus-gaap:OperatingSegmentsMember2022-12-310001725134dms:MarketplaceMemberus-gaap:OperatingSegmentsMember2022-12-310001725134dms:TechnologySolutionsMemberus-gaap:OperatingSegmentsMember2022-12-310001725134dms:BrandDirectMemberus-gaap:OperatingSegmentsMember2023-12-310001725134dms:MarketplaceMemberus-gaap:OperatingSegmentsMember2023-12-310001725134dms:TechnologySolutionsMemberus-gaap:OperatingSegmentsMember2023-12-310001725134dms:BrandDirectMemberus-gaap:OperatingSegmentsMember2024-03-310001725134dms:MarketplaceMemberus-gaap:OperatingSegmentsMember2024-03-310001725134dms:TechnologySolutionsMemberus-gaap:OperatingSegmentsMember2024-03-310001725134dms:MarketplaceMember2023-12-310001725134dms:MarketplaceMember2024-03-310001725134us-gaap:TechnologyBasedIntangibleAssetsMembersrt:MinimumMember2023-12-310001725134us-gaap:TechnologyBasedIntangibleAssetsMembersrt:MinimumMember2024-03-310001725134us-gaap:TechnologyBasedIntangibleAssetsMembersrt:MaximumMember2024-03-310001725134us-gaap:TechnologyBasedIntangibleAssetsMembersrt:MaximumMember2023-12-310001725134us-gaap:TechnologyBasedIntangibleAssetsMember2024-03-310001725134us-gaap:TechnologyBasedIntangibleAssetsMember2023-12-310001725134srt:MinimumMemberus-gaap:CustomerRelationshipsMember2023-12-310001725134srt:MinimumMemberus-gaap:CustomerRelationshipsMember2024-03-310001725134srt:MaximumMemberus-gaap:CustomerRelationshipsMember2024-03-310001725134srt:MaximumMemberus-gaap:CustomerRelationshipsMember2023-12-310001725134us-gaap:CustomerRelationshipsMember2024-03-310001725134us-gaap:CustomerRelationshipsMember2023-12-310001725134srt:MinimumMemberus-gaap:TradeNamesMember2023-12-310001725134srt:MinimumMemberus-gaap:TradeNamesMember2024-03-310001725134srt:MaximumMemberus-gaap:TradeNamesMember2024-03-310001725134srt:MaximumMemberus-gaap:TradeNamesMember2023-12-310001725134us-gaap:TradeNamesMember2024-03-310001725134us-gaap:TradeNamesMember2023-12-310001725134us-gaap:NoncompeteAgreementsMembersrt:MinimumMember2024-03-310001725134us-gaap:NoncompeteAgreementsMembersrt:MinimumMember2023-12-310001725134srt:MaximumMemberus-gaap:NoncompeteAgreementsMember2023-12-310001725134srt:MaximumMemberus-gaap:NoncompeteAgreementsMember2024-03-310001725134us-gaap:NoncompeteAgreementsMember2024-03-310001725134us-gaap:NoncompeteAgreementsMember2023-12-310001725134us-gaap:TechnologyBasedIntangibleAssetsMember2024-01-012024-03-310001725134us-gaap:CustomerRelationshipsMember2024-01-012024-03-310001725134us-gaap:TradeNamesMember2024-01-012024-03-310001725134us-gaap:NoncompeteAgreementsMember2024-01-012024-03-310001725134dms:ClickDealerMember2023-03-302023-03-300001725134dms:ClickDealerMember2023-03-300001725134dms:ClickDealerMember2023-07-032023-07-0300017251342023-03-300001725134us-gaap:SubsequentEventMemberdms:ClickDealerMember2024-04-242024-04-240001725134us-gaap:CommonClassAMemberdms:ClickDealerMember2023-03-300001725134dms:AimtellIncPushProsIncAndAramisInteractiveLLCMember2021-02-012021-02-010001725134dms:AimtellIncPushProsIncAndAramisInteractiveLLCMember2021-02-010001725134dms:ClickDealerMember2024-03-310001725134us-gaap:TechnologyBasedIntangibleAssetsMembersrt:MinimumMember2024-01-012024-03-310001725134us-gaap:TechnologyBasedIntangibleAssetsMembersrt:MaximumMember2024-01-012024-03-310001725134us-gaap:TechnologyBasedIntangibleAssetsMemberdms:ClickDealerMember2024-03-310001725134srt:MinimumMemberus-gaap:CustomerRelationshipsMember2023-01-012023-03-310001725134srt:MaximumMemberus-gaap:CustomerRelationshipsMember2023-01-012023-03-310001725134us-gaap:CustomerRelationshipsMemberdms:ClickDealerMember2024-03-310001725134srt:MinimumMemberus-gaap:TradeNamesMember2023-01-012023-03-310001725134srt:MaximumMemberus-gaap:TradeNamesMember2023-01-012023-03-310001725134us-gaap:TradeNamesMemberdms:ClickDealerMember2024-03-310001725134us-gaap:TechnologyBasedIntangibleAssetsMemberdms:ClickDealerMember2024-01-012024-03-310001725134us-gaap:CustomerRelationshipsMemberdms:ClickDealerMember2024-01-012024-03-310001725134us-gaap:TradeNamesMemberdms:ClickDealerMember2024-01-012024-03-310001725134dms:ClickDealerMember2024-01-012024-03-310001725134dms:DMSMember2023-01-012023-03-310001725134dms:ClickDealerMember2023-01-012023-03-310001725134dms:TermLoanMember2024-03-310001725134dms:TermLoanMember2023-12-310001725134us-gaap:RevolvingCreditFacilityMember2024-03-310001725134us-gaap:RevolvingCreditFacilityMember2023-12-310001725134us-gaap:LineOfCreditMemberdms:SeniorSecuredCreditFacilityMember2021-05-250001725134us-gaap:LineOfCreditMemberus-gaap:SecuredDebtMemberdms:SeniorSecuredCreditFacilityMember2021-05-250001725134us-gaap:RevolvingCreditFacilityMemberus-gaap:LineOfCreditMemberdms:SeniorSecuredCreditFacilityMember2021-05-250001725134us-gaap:LineOfCreditMemberus-gaap:SecuredDebtMemberdms:LondonInterbankOfferedRateLIBOR1Memberdms:SeniorSecuredCreditFacilityMember2021-05-252021-05-250001725134us-gaap:LineOfCreditMemberus-gaap:SecuredDebtMemberus-gaap:BaseRateMemberdms:SeniorSecuredCreditFacilityMember2021-05-252021-05-250001725134us-gaap:LineOfCreditMemberus-gaap:SecuredDebtMemberdms:LondonInterbankOfferedRateLIBOR1Memberdms:SeniorSecuredCreditFacilityMember2021-05-252023-07-030001725134us-gaap:RevolvingCreditFacilityMemberus-gaap:LineOfCreditMemberdms:LondonInterbankOfferedRateLIBOR1Memberdms:SeniorSecuredCreditFacilityMember2021-05-252021-05-250001725134us-gaap:RevolvingCreditFacilityMemberus-gaap:LineOfCreditMemberus-gaap:FederalFundsEffectiveSwapRateMemberdms:SeniorSecuredCreditFacilityMember2021-05-252021-05-250001725134us-gaap:RevolvingCreditFacilityMemberus-gaap:LineOfCreditMemberus-gaap:BaseRateMemberdms:SeniorSecuredCreditFacilityMember2024-03-310001725134us-gaap:RevolvingCreditFacilityMemberus-gaap:LineOfCreditMemberus-gaap:BaseRateMemberdms:SeniorSecuredCreditFacilityMember2021-05-252021-05-250001725134us-gaap:RevolvingCreditFacilityMemberus-gaap:LineOfCreditMemberdms:SeniorSecuredCreditFacilityMember2021-05-252021-05-250001725134us-gaap:LineOfCreditMemberus-gaap:RevolvingCreditFacilityMember2023-05-242023-05-240001725134us-gaap:LineOfCreditMemberus-gaap:SecuredDebtMemberdms:SeniorSecuredCreditFacilityMemberdms:SecuredOvernightFinancingRateMember2023-07-032023-07-030001725134us-gaap:RevolvingCreditFacilityMemberus-gaap:LineOfCreditMemberdms:SeniorSecuredCreditFacilityMemberdms:SecuredOvernightFinancingRateMember2023-07-032023-07-030001725134us-gaap:LineOfCreditMemberdms:PIKOptionExercisedMemberdms:SeniorSecuredCreditFacilityMemberdms:SecuredOvernightFinancingRateMember2023-08-162023-08-160001725134us-gaap:LineOfCreditMemberdms:InterestIsPaidInCashDuringPIKPeriodMemberdms:SeniorSecuredCreditFacilityMemberdms:SecuredOvernightFinancingRateMember2023-08-162023-08-160001725134us-gaap:LineOfCreditMemberdms:AfterPIKPeriodMemberdms:SeniorSecuredCreditFacilityMemberdms:SecuredOvernightFinancingRateMember2023-08-162023-08-160001725134us-gaap:LineOfCreditMemberdms:CreditRatingOfB3AndBMemberdms:SeniorSecuredCreditFacilityMemberdms:SecuredOvernightFinancingRateMember2023-08-162023-08-160001725134us-gaap:LineOfCreditMemberdms:SeniorSecuredCreditFacilityMemberdms:January12025ThroughJune302025Member2023-08-162023-08-160001725134us-gaap:LineOfCreditMemberdms:July12025ThroughDecember312025Memberdms:SeniorSecuredCreditFacilityMember2023-08-162023-08-160001725134us-gaap:LineOfCreditMemberdms:CalendarYear2026UntilMaturityMemberdms:SeniorSecuredCreditFacilityMember2023-08-162023-08-160001725134us-gaap:LineOfCreditMemberdms:SeniorSecuredCreditFacilityMemberdms:FirstQuarter2024Member2023-08-160001725134us-gaap:LineOfCreditMemberdms:SecondQuarter2024Memberdms:SeniorSecuredCreditFacilityMember2023-08-160001725134us-gaap:LineOfCreditMemberdms:FourthQuarterOf2025AndUntilMaturityMemberdms:SeniorSecuredCreditFacilityMember2023-08-160001725134us-gaap:LineOfCreditMemberdms:RemainderOf2023Memberdms:SeniorSecuredCreditFacilityMember2023-08-160001725134us-gaap:LineOfCreditMemberdms:After2023Memberdms:SeniorSecuredCreditFacilityMember2023-08-160001725134us-gaap:RevolvingCreditFacilityMemberus-gaap:LineOfCreditMemberdms:SeniorSecuredCreditFacilityMember2023-08-162023-08-160001725134us-gaap:LineOfCreditMemberus-gaap:SecuredDebtMemberdms:SeniorSecuredCreditFacilityMember2023-08-160001725134us-gaap:LineOfCreditMemberus-gaap:SecuredDebtMemberdms:SeniorSecuredCreditFacilityMember2024-03-310001725134us-gaap:LineOfCreditMemberus-gaap:SecuredDebtMemberdms:SeniorSecuredCreditFacilityMember2023-12-310001725134us-gaap:RevolvingCreditFacilityMemberus-gaap:LineOfCreditMemberdms:SeniorSecuredCreditFacilityMember2023-08-160001725134us-gaap:RevolvingCreditFacilityMemberus-gaap:LineOfCreditMemberdms:SeniorSecuredCreditFacilityMember2024-03-310001725134us-gaap:RevolvingCreditFacilityMemberus-gaap:LineOfCreditMemberdms:SeniorSecuredCreditFacilityMember2023-12-310001725134us-gaap:LineOfCreditMemberus-gaap:SecuredDebtMemberdms:SeniorSecuredCreditFacilityMember2024-01-012024-03-310001725134us-gaap:RevolvingCreditFacilityMemberus-gaap:LineOfCreditMemberdms:SeniorSecuredCreditFacilityMember2024-01-012024-03-310001725134us-gaap:LineOfCreditMemberus-gaap:SecuredDebtMemberdms:SeniorSecuredCreditFacilityMember2023-01-012023-12-310001725134us-gaap:RevolvingCreditFacilityMemberus-gaap:LineOfCreditMemberdms:SeniorSecuredCreditFacilityMember2023-01-012023-12-310001725134us-gaap:RevolvingCreditFacilityMemberus-gaap:LineOfCreditMemberdms:TrancheATermLoanCommitmentsMemberus-gaap:SubsequentEventMember2024-04-170001725134us-gaap:RevolvingCreditFacilityMemberus-gaap:LineOfCreditMemberdms:SeniorSecuredCreditFacilityMemberus-gaap:SubsequentEventMember2024-04-160001725134us-gaap:RevolvingCreditFacilityMemberus-gaap:LineOfCreditMemberdms:SeniorSecuredCreditFacilityMemberus-gaap:SubsequentEventMember2024-04-170001725134us-gaap:LineOfCreditMemberus-gaap:RevolvingCreditFacilityMembersrt:MinimumMemberdms:SeniorSecuredCreditFacilityMemberus-gaap:SubsequentEventMember2024-04-170001725134us-gaap:LineOfCreditMemberus-gaap:DebtInstrumentRedemptionPeriodOneMemberus-gaap:SubsequentEventMember2024-04-172024-04-170001725134us-gaap:LineOfCreditMemberus-gaap:DebtInstrumentRedemptionPeriodTwoMemberus-gaap:SubsequentEventMember2024-04-172024-04-170001725134us-gaap:LineOfCreditMemberus-gaap:DebtInstrumentRedemptionPeriodThreeMemberus-gaap:SubsequentEventMember2024-04-172024-04-170001725134us-gaap:LineOfCreditMemberus-gaap:RevolvingCreditFacilityMembersrt:MinimumMemberdms:SeniorSecuredCreditFacilityMemberus-gaap:SubsequentEventMember2024-04-172024-04-170001725134us-gaap:SeriesAPreferredStockMember2023-03-292023-03-290001725134us-gaap:SeriesBPreferredStockMember2023-03-292023-03-2900017251342023-03-290001725134us-gaap:ConvertibleDebtMemberdms:ConvertibleDebentureMember2023-03-290001725134us-gaap:CommonClassAMember2023-03-292023-03-290001725134us-gaap:CommonClassAMember2023-03-290001725134dms:SeriesAAndBPreferredWarrantsMember2023-03-292023-03-2900017251342023-03-292023-03-290001725134dms:SeriesAAndBPreferredWarrantsMemberdms:MeasurementInputFairValuePricePerShareMember2024-03-310001725134dms:SeriesAAndBPreferredWarrantsMemberus-gaap:MeasurementInputSharePriceMember2024-03-310001725134dms:SeriesAAndBPreferredWarrantsMemberdms:MeasurementInputRemainingLifeInYearsMember2024-03-310001725134dms:SeriesAAndBPreferredWarrantsMemberus-gaap:MeasurementInputPriceVolatilityMember2024-03-310001725134dms:SeriesAAndBPreferredWarrantsMemberus-gaap:MeasurementInputExpectedDividendRateMember2024-03-310001725134dms:SeriesAAndBPreferredWarrantsMemberus-gaap:MeasurementInputRiskFreeInterestRateMember2024-03-310001725134us-gaap:CommonClassAMember2024-03-310001725134dms:PrivatePlacementWarrantsMember2024-03-310001725134us-gaap:CommonClassAMemberdms:PrivatePlacementWarrantsMember2024-03-310001725134dms:MeasurementInputRevenueVolatilityMemberdms:ClickDealerMember2024-03-310001725134dms:MeasurementInputIterationActualMemberdms:ClickDealerMember2024-03-310001725134us-gaap:MeasurementInputDiscountRateMemberdms:ClickDealerMember2024-03-310001725134us-gaap:MeasurementInputEntityCreditRiskMemberdms:ClickDealerMember2024-03-310001725134dms:MeasurementInputDaysGapFromPeriodEndToPaymentMemberdms:ClickDealerMember2024-03-310001725134us-gaap:FairValueMeasurementsRecurringMemberus-gaap:FairValueInputsLevel1Memberdms:PrivatePlacementWarrantsMember2024-03-310001725134us-gaap:FairValueMeasurementsRecurringMemberus-gaap:FairValueInputsLevel2Memberdms:PrivatePlacementWarrantsMember2024-03-310001725134us-gaap:FairValueMeasurementsRecurringMemberus-gaap:FairValueInputsLevel3Memberdms:PrivatePlacementWarrantsMember2024-03-310001725134us-gaap:FairValueMeasurementsRecurringMemberdms:PrivatePlacementWarrantsMember2024-03-310001725134dms:SeriesAAndBPreferredWarrantsMemberus-gaap:FairValueMeasurementsRecurringMemberus-gaap:FairValueInputsLevel1Member2024-03-310001725134dms:SeriesAAndBPreferredWarrantsMemberus-gaap:FairValueMeasurementsRecurringMemberus-gaap:FairValueInputsLevel2Member2024-03-310001725134dms:SeriesAAndBPreferredWarrantsMemberus-gaap:FairValueMeasurementsRecurringMemberus-gaap:FairValueInputsLevel3Member2024-03-310001725134dms:SeriesAAndBPreferredWarrantsMemberus-gaap:FairValueMeasurementsRecurringMember2024-03-310001725134us-gaap:FairValueMeasurementsRecurringMemberus-gaap:FairValueInputsLevel1Memberdms:AramisMember2024-03-310001725134us-gaap:FairValueMeasurementsRecurringMemberus-gaap:FairValueInputsLevel2Memberdms:AramisMember2024-03-310001725134us-gaap:FairValueMeasurementsRecurringMemberus-gaap:FairValueInputsLevel3Memberdms:AramisMember2024-03-310001725134us-gaap:FairValueMeasurementsRecurringMemberdms:AramisMember2024-03-310001725134us-gaap:FairValueMeasurementsRecurringMemberus-gaap:FairValueInputsLevel1Memberdms:ClickDealerMember2024-03-310001725134us-gaap:FairValueMeasurementsRecurringMemberus-gaap:FairValueInputsLevel2Memberdms:ClickDealerMember2024-03-310001725134us-gaap:FairValueMeasurementsRecurringMemberus-gaap:FairValueInputsLevel3Memberdms:ClickDealerMember2024-03-310001725134us-gaap:FairValueMeasurementsRecurringMemberdms:ClickDealerMember2024-03-310001725134us-gaap:FairValueMeasurementsRecurringMemberus-gaap:FairValueInputsLevel1Member2024-03-310001725134us-gaap:FairValueMeasurementsRecurringMemberus-gaap:FairValueInputsLevel2Member2024-03-310001725134us-gaap:FairValueMeasurementsRecurringMemberus-gaap:FairValueInputsLevel3Member2024-03-310001725134us-gaap:FairValueMeasurementsRecurringMember2024-03-310001725134us-gaap:FairValueMeasurementsRecurringMemberus-gaap:FairValueInputsLevel1Memberdms:PrivatePlacementWarrantsMember2023-03-310001725134us-gaap:FairValueMeasurementsRecurringMemberus-gaap:FairValueInputsLevel2Memberdms:PrivatePlacementWarrantsMember2023-03-310001725134us-gaap:FairValueMeasurementsRecurringMemberus-gaap:FairValueInputsLevel3Memberdms:PrivatePlacementWarrantsMember2023-03-310001725134us-gaap:FairValueMeasurementsRecurringMemberdms:PrivatePlacementWarrantsMember2023-03-310001725134dms:SeriesAAndBPreferredWarrantsMemberus-gaap:FairValueMeasurementsRecurringMemberus-gaap:FairValueInputsLevel1Member2023-03-310001725134dms:SeriesAAndBPreferredWarrantsMemberus-gaap:FairValueMeasurementsRecurringMemberus-gaap:FairValueInputsLevel2Member2023-03-310001725134dms:SeriesAAndBPreferredWarrantsMemberus-gaap:FairValueMeasurementsRecurringMemberus-gaap:FairValueInputsLevel3Member2023-03-310001725134dms:SeriesAAndBPreferredWarrantsMemberus-gaap:FairValueMeasurementsRecurringMember2023-03-310001725134us-gaap:FairValueMeasurementsRecurringMemberus-gaap:FairValueInputsLevel1Memberdms:AramisMember2023-03-310001725134us-gaap:FairValueMeasurementsRecurringMemberus-gaap:FairValueInputsLevel2Memberdms:AramisMember2023-03-310001725134us-gaap:FairValueMeasurementsRecurringMemberus-gaap:FairValueInputsLevel3Memberdms:AramisMember2023-03-310001725134us-gaap:FairValueMeasurementsRecurringMemberdms:AramisMember2023-03-310001725134us-gaap:FairValueMeasurementsRecurringMemberdms:TraverseDataIncMemberus-gaap:FairValueInputsLevel1Member2023-03-310001725134us-gaap:FairValueMeasurementsRecurringMemberdms:TraverseDataIncMemberus-gaap:FairValueInputsLevel2Member2023-03-310001725134us-gaap:FairValueMeasurementsRecurringMemberdms:TraverseDataIncMemberus-gaap:FairValueInputsLevel3Member2023-03-310001725134us-gaap:FairValueMeasurementsRecurringMemberdms:TraverseDataIncMember2023-03-310001725134us-gaap:FairValueMeasurementsRecurringMemberus-gaap:FairValueInputsLevel1Memberdms:ClickDealerMember2023-03-310001725134us-gaap:FairValueMeasurementsRecurringMemberus-gaap:FairValueInputsLevel2Memberdms:ClickDealerMember2023-03-310001725134us-gaap:FairValueMeasurementsRecurringMemberus-gaap:FairValueInputsLevel3Memberdms:ClickDealerMember2023-03-310001725134us-gaap:FairValueMeasurementsRecurringMemberdms:ClickDealerMember2023-03-310001725134us-gaap:FairValueMeasurementsRecurringMemberus-gaap:FairValueInputsLevel1Member2023-03-310001725134us-gaap:FairValueMeasurementsRecurringMemberus-gaap:FairValueInputsLevel2Member2023-03-310001725134us-gaap:FairValueMeasurementsRecurringMemberus-gaap:FairValueInputsLevel3Member2023-03-310001725134us-gaap:FairValueMeasurementsRecurringMember2023-03-310001725134dms:PrivatePlacementWarrantsMember2023-12-310001725134dms:SeriesAAndBPreferredWarrantsMember2023-12-310001725134dms:ContingentConsiderationMember2023-12-310001725134dms:PrivatePlacementWarrantsMember2024-01-012024-03-310001725134dms:SeriesAAndBPreferredWarrantsMember2024-01-012024-03-310001725134dms:ContingentConsiderationMember2024-01-012024-03-310001725134dms:SeriesAAndBPreferredWarrantsMember2024-03-310001725134dms:ContingentConsiderationMember2024-03-310001725134dms:PrivatePlacementWarrantsMember2022-12-310001725134dms:SeriesAAndBPreferredWarrantsMember2022-12-310001725134dms:ContingentConsiderationMember2022-12-310001725134dms:PrivatePlacementWarrantsMember2023-01-012023-03-310001725134dms:SeriesAAndBPreferredWarrantsMember2023-01-012023-03-310001725134dms:ContingentConsiderationMember2023-01-012023-03-310001725134dms:PrivatePlacementWarrantsMember2023-03-310001725134dms:SeriesAAndBPreferredWarrantsMember2023-03-310001725134dms:ContingentConsiderationMember2023-03-310001725134dms:ClairvestMemberus-gaap:SubsequentEventMembersrt:ConsolidationEliminationsMember2024-04-122024-04-120001725134dms:PrismDataMembersrt:ConsolidationEliminationsMember2023-07-032023-07-030001725134dms:PrismDataMembersrt:ConsolidationEliminationsMember2023-11-172023-11-170001725134us-gaap:CommonClassAMember2023-08-270001725134us-gaap:CommonClassAMember2023-08-282023-08-280001725134us-gaap:CommonClassAMember2023-08-280001725134us-gaap:CommonClassBMember2023-08-270001725134us-gaap:CommonClassBMember2023-08-282023-08-280001725134us-gaap:CommonClassBMember2023-08-280001725134us-gaap:CommonClassAMemberdms:SeriesAWarrantMember2023-03-290001725134us-gaap:CommonClassAMemberdms:SeriesBWarrantMember2023-03-2900017251342023-06-1500017251342023-06-152023-06-150001725134us-gaap:SeriesAPreferredStockMember2023-06-150001725134us-gaap:PreferredStockMember2024-01-012024-03-310001725134dms:SeriesACertificateOfDesignationMember2024-03-310001725134dms:SeriesACertificateOfDesignationMember2024-01-012024-03-310001725134dms:A2020OmnibusIncentivePlanMember2020-07-150001725134us-gaap:RestrictedStockUnitsRSUMember2024-01-012024-03-310001725134us-gaap:RestrictedStockUnitsRSUMember2022-04-122022-04-120001725134us-gaap:PerformanceSharesMember2022-04-122022-04-120001725134dms:TimeBasedRestrictedStockUnitsMember2022-04-122022-04-120001725134us-gaap:RestrictedStockUnitsRSUMemberus-gaap:ShareBasedCompensationAwardTrancheOneMember2024-01-012024-03-310001725134dms:TimeBasedRestrictedStockUnitsMemberus-gaap:ShareBasedCompensationAwardTrancheOneMember2024-01-012024-03-310001725134us-gaap:ShareBasedCompensationAwardTrancheTwoMemberus-gaap:RestrictedStockUnitsRSUMember2024-01-012024-03-310001725134dms:TimeBasedRestrictedStockUnitsMemberus-gaap:ShareBasedCompensationAwardTrancheTwoMember2024-01-012024-03-310001725134us-gaap:ShareBasedCompensationAwardTrancheThreeMemberus-gaap:RestrictedStockUnitsRSUMember2024-01-012024-03-310001725134dms:TimeBasedRestrictedStockUnitsMemberus-gaap:ShareBasedCompensationAwardTrancheThreeMember2024-01-012024-03-310001725134dms:ShareBasedPaymentArrangementTrancheFourMemberus-gaap:RestrictedStockUnitsRSUMember2024-01-012024-03-310001725134dms:ShareBasedPaymentArrangementTrancheFourMemberdms:TimeBasedRestrictedStockUnitsMember2024-01-012024-03-310001725134us-gaap:CommonClassBMember2024-01-012024-03-310001725134us-gaap:SeriesAPreferredStockMember2024-01-012024-03-310001725134us-gaap:SeriesBPreferredStockMember2024-01-012024-03-310001725134dms:PrivateWarrantMember2024-01-012024-03-310001725134dms:PublicWarrantMember2024-01-012024-03-310001725134dms:PreferredWarrantMember2024-01-012024-03-310001725134us-gaap:EmployeeStockOptionMember2024-01-012024-03-310001725134us-gaap:RestrictedStockUnitsRSUMember2024-01-012024-03-310001725134us-gaap:CommonClassBMemberus-gaap:CommonStockMemberdms:ChangeInPercentCalculationMember2023-03-310001725134dms:PrivateWarrantMember2023-01-012023-03-310001725134dms:PublicWarrantMember2023-01-012023-03-310001725134us-gaap:EmployeeStockOptionMember2023-01-012023-03-310001725134us-gaap:RestrictedStockUnitsRSUMember2023-01-012023-03-310001725134us-gaap:PerformanceSharesMember2023-01-012023-03-31
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 2024
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from  _________ to __________
_______________________________________
https://cdn.kscope.io/cbf8842ff7811005c330b2859adb7aed-DMS-Logo-original.jpg
Digital Media Solutions, Inc.
(Exact name of Registrant as specified in its charter)
_______________________________________
Delaware
001-38393
98-1399727
(State of incorporation)
(Commission File Number)
(I.R.S. Employer Identification No.)
4800 140th Avenue N.Suite 101, ClearwaterFlorida
33762
(Address of Principal Executive Offices)
(Zip Code)
Registrant's telephone number, including area code: (877) 236-8632

(Former Name or Former Address, if Changed Since Last Report)
_______________________________________

Securities registered pursuant to Section 12(b) of the Act:
None

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 ☒ No ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted 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 such files). Yes ☒ 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.
Large accelerated filerAccelerated filer
Non-accelerated filerSmaller reporting company
Emerging growth company
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
As of May 13, 2024, 4,442,103 shares of the registrant’s Class A common stock; no shares of the registrant’s Class B common stock, par value $0.0001 per share; and 28,443,522 warrants to purchase one-fifteenth share of the registrant’s Class A Common Stock, were issued and outstanding.



Digital Media Solutions, Inc.
Table of Contents
Page No.
Item 1.
Item 2.
Item 3.
Item 4.
Item 1.
Item 1A.
Item 2.
Item 3.
Item 4.
Item 5.
Item 6.


2

Cautionary Note Regarding Forward-Looking Statements

References in this document to the “Registrant,” “DMS Inc.,” “DMS,” the “Company,” “we,” “management,” “us” or “our” refers to Digital Media Solutions, Inc. and its consolidated subsidiaries, except where the context otherwise requires or indicates.

This Quarterly Report, particularly Part I. Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”) and Part II. Item 1A. Risk Factors, and the documents we incorporate into this Quarterly Report contain certain statements that are, or may be deemed to be, forward-looking statements within the meaning of that term in Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and are made in reliance upon the protections provided by such acts for forward-looking statements and the Private Securities Litigation Reform Act of 1995. These forward-looking statements are often identified by words such as “expect,” “estimate,” “project,” “budget,” “forecast,” “anticipate,” “intend,” “plan,” “may,” “will,” “could,” “should,” “believes,” “assume,” “likely,” “predicts,” “potential,” “continue,” and similar expressions. These forward-looking statements include, without limitation, our expectations with respect to our future performance and our ability to implement its strategy, and are based on the beliefs and expectations of our management team from the information available at the time such statements are made. These forward-looking statements involve a number of judgments, risks and uncertainties that could cause the actual results to differ materially from the expected results. Most of these factors are outside our control and are difficult to predict. Factors that may cause such differences include, but are not limited to:

financial and business performance, including business metrics and potential liquidity;
changes to our strategy, future operations, financial position, estimated revenues and losses, projected costs, prospects and plans, including related to our strategic review process and the potential sale of all or part of our business;
ability to attain the expected financial benefits from the ClickDealer transaction;
any impacts to the ClickDealer business from our acquisition thereof,
ability to successfully recover should DMS experience a disaster or other business continuity problem from a hurricane, flood, earthquake, terrorist attack, pandemic, security breach, cyber attack, data breach, power loss, telecommunications failure or other natural or man-made event;
ability to manage our international expansion as a result of the ClickDealer acquisition, including operations in the Ukraine;
the Company’s exposure to potential criminal sanctions or civil penalties for noncompliance with foreign and U.S. laws and regulations that are applicable in the domestic and international jurisdictions in which it operates, including sanctions laws relating to countries such as Iran, Russia, Sudan, Syria and Venezuela, anti-corruption laws such as the U.S. Foreign Corrupt Practices Act and the U.K. Bribery Act of 2010, and local laws prohibiting corrupt payments to government officials, as well as import and export restrictions;
changes in client demand for our services and our ability to adapt to such changes;
the entry of new competitors in the market;
the ability to maintain and attract consumers and advertisers in the face of changing economic or competitive conditions;
the ability to maintain, grow and protect the data DMS obtains from consumers and advertisers, and to ensure compliance with data privacy regulations in newly entered markets;
the performance of DMS’s technology infrastructure;
ability to protect DMS’s intellectual property rights;
ability to successfully source, complete and integrate acquisitions;
ability to improve and maintain adequate internal controls over financial and management systems, and remediate material weaknesses therein, including relating to revenue and the impairment of goodwill and intangible assets;
the continuously evolving laws and regulations applicable to our business in the United States and around the world and our ability to maintain compliance therewith;
our substantial levels of indebtedness;
our ability to maintain adequate operational and financial resources or raise additional capital or generate sufficient cash flows, including our ability to service our debt obligations under our senior secured credit facility, entered into on May 25, 2021 (as amended from time to time, the “Credit Facility”);
our ability to comply with the covenants in our Credit Facility and our obligations to the holders of our Series A convertible redeemable Preferred Stock (“Series A Preferred Stock”) and Series B convertible redeemable Preferred Stock (“Series B Preferred Stock,” collectively the “Preferred Stock”);
volatility in the trading price of our common stock and our Public Warrants and fluctuations in value of our Private Placement Warrants and the Preferred Warrants (collectively, the “Warrants”); and
other risks and uncertainties indicated from time to time in DMS’s filings with the U.S. Securities and Exchange Commission (“SEC”), including those under “Risk Factors” in DMS’s Annual Report on Form 10-K for the year ended December 31, 2023, filed on April 18, 2024 (“2023 Form 10-K”) and its subsequent filing with the SEC.

3

There may be additional risks that we consider immaterial or which are unknown, and it is not possible to predict or identify all such risks.

DMS cautions that the foregoing list of factors is not exclusive. DMS cautions readers not to place undue reliance upon any forward-looking statements, which speak only as of the date made. DMS does not undertake or accept any obligation or undertaking to release publicly any updates or revisions to any forward-looking statements to reflect any change in its expectations or any change in events, conditions or circumstances on which any such statement is based.

These forward-looking statements are based on information available as of the date of this Quarterly Report, and current expectations, forecasts and assumptions. Our forward-looking statements do not reflect the potential impact of any future acquisitions, mergers, dispositions, joint ventures, investments or similar transactions.

4

PART I - FINANCIAL INFORMATION
Item 1. Financial Statements

DIGITAL MEDIA SOLUTIONS, INC.
Consolidated Balance Sheets
(in thousands, except per share data)
March 31, 2024December 31, 2023
(unaudited)
Assets
Current assets:
Cash and cash equivalents$14,181 $18,466 
Restricted cash
505 502 
Accounts receivable, net of allowances of $3,732 and $4,172, respectively
32,397 35,322 
Contract assets - current, net5,613 6,467 
Prepaid and other current assets2,980 2,908 
Income tax receivable2,064 2,133 
Total current assets57,740 65,798 
Property and equipment, net14,454 15,390 
Operating lease right-of-use assets, net692 862 
Goodwill32,849 32,849 
Intangible assets, net28,071 29,441 
Contract assets - non-current, net
1,015 1,632 
Other assets1,197 1,315 
Total assets$136,018 $147,287 
Liabilities, Preferred Stock and Stockholders' Deficit
Current liabilities:
Accounts payable$42,331 $41,235 
Accrued expenses and other current liabilities10,568 10,548 
Current portion of long-term debt2,750 2,750 
Tax Receivable Agreement liability164 164 
Operating lease liabilities - current1,812 1,812 
Contingent consideration payable - current1,000 1,000 
Total current liabilities58,625 57,509 
Long-term debt299,119 286,353 
Deferred tax liabilities284 314 
Operating lease liabilities - non-current
187 532 
Warrant liabilities1,016 82 
Contingent consideration payable - non-current495 512 
Total liabilities359,726 345,302 
Preferred stock, $0.0001 par value, 100,000 shares authorized; 80 Series A and 60 Series B convertible redeemable issued and outstanding, respectively, at March 31, 2024
16,802 16,646 
Stockholders' deficit:
Class A common stock, $0.0001 par value, 500,000 shares authorized; 4,287 issued and outstanding at March 31, 2024
4 4 
Class B convertible common stock, $0.0001 par value, 60,000 shares authorized; 1,672 issued and 151 outstanding, respectively, at March 31, 2024
3 3 
Class C convertible common stock, $0.0001 par value, 40,000 authorized; none issued and outstanding at March 31, 2024
  
Additional paid-in capital(79,298)(80,523)
Treasury stock, at cost, 7 and 7 shares, respectively
(235)(235)
Cumulative deficit(151,773)(126,230)
Total stockholders' deficit(231,299)(206,981)
Non-controlling interest (9,211)(7,680)
Total deficit(240,510)(214,661)
Total liabilities, preferred stock and stockholders' deficit$136,018 $147,287 

The accompanying condensed notes are an integral part of the unaudited consolidated financial statements.
1

DIGITAL MEDIA SOLUTIONS, INC.
Consolidated Statements of Operations
(Unaudited)
(in thousands, except per share data)

Three Months Ended March 31,
20242023
Net revenue$70,709 $90,313 
Cost of revenue (exclusive of depreciation and amortization)56,407 68,042 
Salaries and related costs10,957 12,226 
General and administrative expenses11,402 12,856 
Depreciation and amortization3,726 5,082 
Acquisition costs 2,345 
Change in fair value of contingent consideration liabilities(17)13 
Loss from operations(11,766)(10,251)
Interest expense, net13,488 6,699 
Change in fair value of warrant liabilities934 3,764 
Other (1)
40  
Net loss before income taxes(26,228)(20,714)
Income tax expense (benefit)50 (13)
Net loss(26,278)(20,701)
Net loss attributable to non-controlling interest(891)(8,103)
Net loss attributable to Digital Media Solutions, Inc.$(25,387)$(12,598)
Weighted-average Class A common shares outstanding – basic & diluted4,287 2,695 
Loss per share attributable to Digital Media Solutions, Inc.:
Basic and diluted – per Class A common shares $(5.96)$(4.67)
____________________
(1)Represents Foreign exchange loss (gain).

The accompanying condensed notes are an integral part of the unaudited consolidated financial statements.
2

DIGITAL MEDIA SOLUTIONS, INC.
Consolidated Statements of Changes in Preferred Stock and Stockholders’ Deficit
(Unaudited)
(in thousands, except share data)

Preferred Stock (1)
Class A
Common Stock
Class B
Common Stock
Additional Paid-in CapitalTreasury StockCumulative DeficitTotal
Stockholders' Deficit
Non-
controlling
Interest
Total Deficit
SharesAmountShares AmountSharesAmount
Balance, December 31, 2023140 $16,646 4,287 $4 151 $3 $(80,523)$(235)$(126,230)$(206,981)$(7,680)$(214,661)
Net loss— — — — — — — — (25,387)(25,387)(891)(26,278)
Stock-based compensation— — — — — — 585 — — 585 — 585 
Series A preferred stock dividends (2)
— 89 — — — — — — (89)(89)— (89)
Series B preferred stock dividends (2)
— 67 — — — — — — (67)(67)— (67)
Impact of transactions affecting non-controlling interest (3)
— — — — — — 640 — — 640 (640) 
Balance, March 31, 2024140 $16,802 4,287 $4 151 $3 $(79,298)$(235)$(151,773)$(231,299)$(9,211)$(240,510)
____________________
(1)See Note 8. Fair Value Measurements and Note 9. Equity.
(2)Represents Series A and Series B preferred stock dividends, which have not been paid.
(3)The carrying amount of non-controlling interest was adjusted to reflect the change in ownership interest caused by shares issued in connection with the shares issued under the 2020 Omnibus Incentive Plan.

The accompanying condensed notes are an integral part of the unaudited consolidated financial statements.



3

DIGITAL MEDIA SOLUTIONS, INC.
Consolidated Statements of Changes in Preferred Stock and Stockholders’ Deficit
(Unaudited)
(in thousands, except share data)

Preferred Stock (1)
Class A
Common Stock
Class B
Common Stock
Additional Paid-in CapitalTreasury StockCumulative DeficitTotal
Stockholders' Deficit
Non-
controlling
Interest
Total Deficit
SharesAmountShares AmountSharesAmount
Balance, December 31, 2022 $ 2,695 $4 1,713 $3 $(14,054)$(181)$(32,896)$(47,124)$(36,823)$(83,947)
Net loss— — — — — — — — (12,598)(12,598)(8,103)(20,701)
Stock-based compensation— — — — — — 1,379 — — 1,379 — 1,379 
Series A convertible redeemable preferred stock80 2,853 — — — — — — — — — — 
Series B convertible redeemable preferred stock60 2,140 — — — — — — — — — — 
Impact of transactions affecting non-controlling interest (2)
— — — — — — (3,939)— — (3,939)3,939  
Balance, March 31, 2023140 $4,993 2,695 $4 1,713 $3 $(16,614)$(181)$(45,494)$(62,282)$(40,987)$(103,269)
____________________
(1)See Note 8. Fair Value Measurements and Note 9. Equity.
(2)The carrying amount of non-controlling interest was adjusted to reflect the change in ownership interest caused by shares issued in connection with the shares issued under the 2020 Omnibus Incentive Plan.

The accompanying condensed notes are an integral part of the unaudited consolidated financial statements.
4

DIGITAL MEDIA SOLUTIONS, INC.
Consolidated Statements of Cash Flows
(Unaudited)
(in thousands)
Three Months Ended March 31,
20242023
Cash flows from operating activities
Net loss$(26,278)$(20,701)
Adjustments to reconcile net loss to net cash used in operating activities
Allowance for credit losses - Accounts receivable, net796 563 
Depreciation and amortization3,726 5,082 
Amortization of right-of-use assets183 242 
Stock-based compensation, net of amounts capitalized232 1,258 
Interest expense paid-in-kind
12,375  
Amortization of debt issuance costs1,122 390 
Deferred income tax (benefit) provision, net(30)550 
Change in fair value of contingent consideration(17)13 
Change in fair value of warrant liabilities934 3,764 
Loss from preferred warrants issuance 553 
Change in income tax receivable and payable69 (570)
Change in accounts receivable2,129 (1,371)
Change in contract assets
1,471  
Change in prepaid expenses and other current assets3 (657)
Change in operating right-of-use assets(13) 
Change in accounts payable and accrued expenses1,203 6,638 
Change in operating lease liabilities(345)(537)
Net cash used in operating activities(2,440)(4,783)
Cash flows from investing activities
Additions to property and equipment(1,154)(1,215)
Acquisition of business, net of cash acquired (35,320)
Net cash used in investing activities(1,154)(36,535)
Cash flows from financing activities
Payments of long-term debt and notes payable(563)(562)
Payments of borrowings on revolving credit facilities(125) 
Proceeds from preferred shares and warrants issuance, net 13,107 
Net cash (used in) provided by financing activities(688)12,545 
Net change in cash and cash equivalents and restricted cash(4,282)(28,773)
Cash and cash equivalents and restricted cash, beginning of period18,968 48,839 
Cash and cash equivalents and restricted cash, end of period$14,686 $20,066 
Supplemental Disclosure of Cash Flow Information
Cash Paid During the Period For
Interest$ $6,349 
Income taxes 7 
Non-Cash Transactions:
Contingent and deferred acquisition consideration$ $2,457 
Stock-based compensation capitalized in property and equipment353 121 
Capital expenditures included in accounts payable87 176 
Accretion and Dividends - Preferred Series A and B
156  
Interest paid-in-kind
12,375  

The accompanying condensed notes are an integral part of the unaudited consolidated financial statements.
5

DIGITAL MEDIA SOLUTIONS, INC.
Condensed Notes to Consolidated Financial Statements
(Unaudited)
Note 1. Business, Basis of Presentation and Summary of Significant Accounting Policies

Business
Digital Media Solutions, Inc. (“DMS Inc.”) is a digital performance marketing company offering a diversified lead and software delivery platform that drives high value and high intent leads to its customers. As used in this Quarterly Report, the “Company” refers to DMS Inc. and its consolidated subsidiaries, (including its wholly-owned subsidiary, CEP V DMS US Blocker Company, a Delaware corporation (“Blocker”)). The Company is headquartered in Clearwater, Florida. The Company generates revenue in North America and internationally, with the majority of the revenue in the United States.

Basis of Presentation
These consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) and applicable rules and regulations of the U.S. Securities and Exchange Commission (“SEC”) regarding interim financial reporting. Accordingly, they do not include all of the information and notes required by GAAP for annual financial statements. In the opinion of management, all adjustments consisting of normal and recurring entries considered necessary for a fair presentation of the results for the interim periods presented have been included. All significant intercompany balances and transactions have been eliminated. The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect reported amounts in the financial statements and accompanying notes. These estimates are based on information available as of the date of the unaudited consolidated financial statements; therefore, actual results could differ from those estimates. Interim results are not necessarily indicative of the results for a full year.

Business Combination
On July 15, 2020, Digital Media Solutions Holding (“DMSH”) consummated the Business Combination with Leo Holdings Corp. (“Leo”) pursuant to the Business Combination Agreement (“Business Combination”). Pursuant to the Business Combination, DMS Inc. has acquired, directly and through its acquisition of the equity of Blocker, approximately 96.6% of the membership interest in DMSH, while Prism Data, LLC, a Delaware limited liability company (“Prism”), CEP V-A DMS AIV Limited Partnership, a Delaware limited partnership (“Clairvest Direct Seller”) and related entities (the “Sellers”) have retained approximately 3.4% of the membership interest in DMSH (“non-controlling interests”). For additional information, see Note 2. Business Combination in the Notes to Consolidated Financial Statements in our 2023 Form 10-K.

Non-controlling Interest
The non-controlling interest represents the membership interest in DMSH held by holders other than the Company. As of March 31, 2024, the Prism, Clairvest Direct Sellers and SmarterChaos combined ownership percentage in DMSH was 3.4% and as of December 31, 2023 it was 3.4%. For additional information see Note 9. Equity.
Principles of Consolidation
The Company consists of DMS Inc. and its wholly-owned subsidiary, Blocker. The Company consolidates the assets, liabilities and operating results of DMSH and its wholly-owned subsidiaries. All intercompany transactions and balances have been eliminated in consolidation. The results of operations attributable to the non-controlling interests are included in the Company’s consolidated statements of operations, and the non-controlling interests are reported as a separate component of equity.

Reverse Stock Split
On August 28, 2023, the Company effected a reverse stock split (the “Reverse Stock Split”) of the Company’s Class A Common Stock and Class B Common Stock at a ratio of 1-for-15. All historical share amounts disclosed in this quarterly report on Form 10-Q have been retroactively restated to reflect the Reverse Stock Split. No fractional shares were issued as a result of the Reverse Stock Split, as fractional shares of Common Stock were rounded up to the nearest whole share. See Note 9. Equity for additional information.

Use of Estimates
The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported as separate financial statement line items in the consolidated financial statements. Actual results could differ from those estimates. Management regularly makes estimates and assumptions that are inherent in the preparation of the consolidated financial statements including, but not limited to, the fair value of preferred warrants, private placement warrants, the allowance for credit losses, stock-based compensation, fair value of intangibles acquired in business combinations, loss contingencies, contingent consideration liabilities, asset impairments, variable consideration for commission and bonus revenue, and deferred taxes and amounts associated with the Tax Receivable Agreement.

6

Significant Accounting Policies
There have been no material changes to our significant accounting policies as compared to the significant accounting policies described in Note 1. Business, Basis of Presentation and Summary of Significant Accounting Policies in our 2023 Form 10-K.

New Accounting Standards

Accounting Standards Not Yet Adopted
In November 2023, the FASB issued ASU No. 2023-07, Segment Reporting (Topic 280) Improvements To Reportable Segment Disclosures, which requires additional disclosures about a public entity’s reportable segments and addresses requests from investors and other allocators of capital for additional, more detailed information about a reportable segment’s expenses. The Company will adopt this ASU for the annual period beginning on January 1, 2024 and for interim periods beginning on January 1, 2025, and is still evaluating its impact on the Consolidated Financial Statements.

In December 2023, the FASB issued ASU No. 2023-09, Income Taxes (Topic 740) Improvements To Income Tax Disclosures, which requires additional disclosures of income tax components that affect the rate reconciliation and income taxes paid, broken out by the applicable taxing jurisdictions. The Company expects to adopt this ASU for the annual period beginning on January 1, 2025, and does not expect a material impact on the Consolidated Financial Statements.

Note 2. Revenue

The Company derives revenue primarily through the delivery of various types of services, including: customer acquisition, managed services and software as a service (“SaaS”). The Company recognizes revenue when the promised goods or services are transferred to customers in an amount that reflects the consideration to which the Company expects to be entitled in exchange for those services. The Company has elected the practical expedient to not disclose the value of unsatisfied performance obligations for (i) contracts with an original expected length of one year or less and (ii) contracts for which revenue is recognized in the amount to which the Company has the right to invoice for services performed.

The Company has organized its operations into three reportable segments: Brand Direct, Marketplace and Technology Solutions. The Brand Direct reportable segment consists of services delivered against our customer’s brand, while the Marketplace reportable segment includes services delivered directly against the DMS brand. In the Technology Solutions reportable segment, services offered by the Company include software services and digital media services that are managed on behalf of the customer. Corporate and other represents other business activities and includes eliminating entries. Management uses these segments to evaluate the performance of its businesses and to assess its financial results and forecasts.

Disaggregation of Revenue
The following tables presents the disaggregation of revenue by reportable segment and type of service (in thousands):

Three Months Ended March 31, 2024
Brand DirectMarketplaceTechnology Solutions
Intercompany Eliminations
Total
Net revenue:
Customer acquisition$41,224 $38,811 $ $(11,921)$68,114 
Managed services805  412  1,217 
Software services  1,378  1,378 
Total Net revenue$42,029 $38,811 $1,790 $(11,921)$70,709 

Three Months Ended March 31, 2023
Brand
Direct
MarketplaceTechnology Solutions
Intercompany Eliminations
Total
Net revenue:
Customer acquisition$54,020 $37,288 $ $(4,714)$86,594 
Managed services1,383  753  2,136 
Software services  1,583  1,583 
Total Net revenue$55,403 $37,288 $2,336 $(4,714)$90,313 

7

The Company generated revenue outside the United States through its 2023 ClickDealer acquisition. The following table represents these revenues by region (in thousands):

Three Months Ended March 31,
20242023
Europe$5,361 $ 
Other International
1,710  

For the three months ended March 31, 2024 and 2023, one advertising customer within the Marketplace segment accounted for approximately 15.8% and 16.6% of our total revenue, respectively.

Accounts Receivable, net
Accounts receivable are recorded at the invoiced amount and do not bear interest. The Allowance for credit losses is the Company’s best estimate of the amount of probable credit losses in the Company’s existing accounts receivable. The Company determines the allowance based on historical write-off experience, delinquency trends and current credit conditions. The Company reviews its Allowance for credit losses monthly. Past due balances over 90 days and over a specified amount are reviewed individually for collectability. All other balances are reviewed on a pooled basis. Account balances are charged off against the allowance after all means of collection have been exhausted and the potential for recovery is considered remote. The Company does not have any off-balance sheet credit exposure related to its customers.

The activity in the Allowance for credit losses related to accounts receivable is as follows (in thousands):

Balance, December 31, 2023$4,172 
Additions charged to expense796 
Deductions/write-offs(1,236)
Balance, March 31, 2024$3,732 

For the three months ended March 31, 2024 and 2023, bad debt expense was $0.8 million. and $0.6 million, respectively.

Contract balances

Contract Assets
The Company’s contract assets primarily result from the estimated variable consideration for commissions to be received from insurance distributors for performance obligations that have been satisfied. In addition, other contract assets with clients where the performance obligations have been satisfied in advance of the contractual terms with the customer are also recorded as contract assets. The Company recognizes revenue when the performance obligation is met and the contract asset is recorded within the consolidated balance sheets as current assets and long term assets, where applicable. Related to commission revenue, the Company collects the consideration payments in equal installments over the lifetime-value (“LTV”) of the underlying insurance policy, beginning collections on or after 90 days after the policy becomes effective, which can be up to several months after the Company’s performance obligation is met. From time to time, the Company may also record bonuses based on certain criteria set forth by the insurance distributor.

The balances for contract assets are as follows (in thousands):

March 31, 2024December 31, 2023
Contract assets - current, net$5,613 $6,467 
Contract assets - non-current, net1,015 1,632 
Total Contract assets
$6,628 $8,099 


8

The activity in contract assets is as follows (in thousands):

Balance, December 31, 2023$8,099 
Revenue from Contract Assets
5,624 
Change in Variable Consideration - Prior Period
(4,127)
Cash Receipts
(2,968)
Balance, March 31, 2024$6,628 

During the three months ended March 31, 2024, the Company observed a higher than estimated decline in policy retention rates for certain prior period cohorts. Management’s evaluation of the retention trends triggered a change in the estimated variable consideration for commissions and bonuses, resulting in a net adjustment to revenue of $4.1 million during the three months ended March 31, 2024. Management will continue to monitor the policy retention rates as compared to forecasts and other market factors and evaluate whether any addition or reduction adjustment to revenue shall be recorded as the Company continues to assess its LTV models in future periods.

Allowance for credit losses related to contract assets was $2.3 million as of March 31, 2024 and December 31, 2023, respectively. For the three months ended March 31, 2024 and 2023, there was no bad debt expense related to contract assets, respectively.

Contract Liabilities
The Company’s contract liabilities result from payments received from clients in advance of revenue recognition as they precede the Company’s satisfaction of the associated performance obligation. If a customer pays consideration before the Company’s performance obligations are satisfied, such amounts are classified as deferred revenue and recorded within Accrued expenses and other current liabilities on the consolidated balance sheets. As of March 31, 2024 and December 31, 2023, the balance of deferred revenue was $0.8 million and $1.0 million, respectively. We expect the majority of the deferred revenue balance at March 31, 2024 to be recognized as revenue during the following quarter.

When there is a delay between the completion of our performance obligations and when a customer is invoiced, revenue is recognized and recorded as unbilled revenue (i.e. contract assets) within Accounts receivable, net on the consolidated balance sheets.

Note 3. Reportable Segments

The Company’s operating segments are determined based on the financial information reviewed by its chief operating decision maker (“CODM”), and the basis upon which management makes resource allocation decisions and assesses the performance of the Company’s segments. The Company evaluates the operating performance of its segments based on financial measures such as Net revenue, Cost of revenue, and Gross profit. Given the nature of the digital marketing solutions business, the amount of assets does not provide meaningful insight into the operating performance of the Company. As a result, the amount of the Company’s assets is not subject to segment allocation and total assets is not included within the disclosure of the Company’s segment financial information.

9

The following tables are a reconciliation of the operations of our segments to loss from operations (in thousands):

Three Months Ended March 31,
20242023
Net revenue$70,709 $90,313 
Brand Direct42,029 55,403 
Marketplace38,811 37,288 
Technology Solutions1,790 2,336 
Intercompany eliminations(11,921)(4,714)
Cost of revenue (exclusive of depreciation and amortization)56,407 68,042 
Brand Direct36,328 42,816 
Marketplace31,743 29,338 
Technology Solutions257 602 
Intercompany eliminations(11,921)(4,714)
Gross profit (exclusive of depreciation and amortization)14,302 22,271 
Brand Direct5,701 12,587 
Marketplace7,068 7,950 
Technology Solutions1,533 1,734 
Salaries and related costs10,957 12,226 
General and administrative expenses11,402 12,856 
Depreciation and amortization3,726 5,082 
Acquisition costs 2,345 
Change in fair value of contingent consideration liabilities(17)13 
Loss from operations$(11,766)$(10,251)

Note 4. Goodwill and Intangible Assets

Goodwill

Changes in the carrying value of Goodwill, by reporting segment, were as follows (in thousands):

Brand DirectMarketplaceTechnology SolutionsTotal
Balance, January 1, 2023$18,321 $54,554 $4,363 $77,238 
Additions (Note 5)2,308 2,693  5,001 
Impairment of goodwill(15,595)(33,795) (49,390)
Balance, December 31, 2023$5,034 $23,452 $4,363 $32,849 
Additions    
Balance, March 31, 2024$5,034 $23,452 $4,363 $32,849 

The carrying amount of Goodwill for the Marketplace segment had accumulated impairment of $33.8 million as of March 31, 2024 and December 31, 2023, respectively. The carrying amount of Goodwill for the Brand Direct segment had accumulated impairment of $15.6 million as of March 31, 2024 and December 31, 2023, respectively.

10

Intangible assets, net

Finite-lived Intangible assets, net consisted of the following (in thousands):

March 31, 2024December 31, 2023
Amortization
Period (Years)
GrossImpairmentAccumulated
Amortization
NetGrossImpairmentAccumulated
Amortization
Net
Technology
4 to 7
$59,095 $(7,210)$(44,333)$7,552 $59,095 $(7,210)$(43,752)$8,133 
Customer relationships
4 to 15
71,323 (27,125)(27,142)17,056 71,323 (27,125)(26,510)17,688 
Brand
1 to 7
14,880 (3,979)(7,438)3,463 14,880 (3,979)(7,283)3,618 
Non-competition agreements
1 to 3
1,898  (1,898) 1,898  (1,896)2 
Total$147,196 $(38,314)$(80,811)$28,071 $147,196 $(38,314)$(79,441)$29,441 

The weighted average amortization period for intangible assets is 8 years in total, and by category is 6 years for technology, 10 years for customer relationships, 6 years for brand, 3 years for non-competition agreements.

As of March 31, 2024, the amortization expense relating to intangible assets subject to amortization for each of the next five years and thereafter is estimated to be as follows (in thousands):

20242025202620272028Thereafter
Amortization expense$4,104 $4,040 $3,642 $3,027 $2,535 $10,723 

Amortization expense for finite-lived intangible assets is recorded on an straight-line basis. Amortization expense related to finite-lived intangible assets was $1.4 million and $2.9 million for the three months ended March 31, 2024 and 2023, respectively.

Impairment analysis
Related to goodwill impairment, the Company considered if an event occurred or circumstances changed that would more likely than not reduce the fair value of a reporting unit below its carrying amount during three months ended March 31, 2024, noting that there were no indicators of impairment under ASC 350-20, Goodwill. Related to impairment of finite-lived assets, the Company considered whether any event occurred or circumstances changed that would be indicative of impairment triggering events under ASC 360-10, Impairment and Disposal of Long-Lived Assets for certain asset groups during the three months ended March 31, 2024, noting no indicators of impairment. Accordingly, for the three months ended March 31, 2024 and 2023, respectively, there was no impairment to intangible assets.

Note 5. Acquisitions

ClickDealer
On March 30, 2023, the Company completed a transaction to acquire the HomeQuote.io home services marketplace from Customer Direct Group, along with the supporting media and technology assets of the ClickDealer international ad network, (“ClickDealer”). ClickDealer’s international performance ad network and the HomeQuote.io marketplace connects consumers with brands within the home improvement and related home services sector.

The Company paid cash consideration of $31.8 million, including $0.3 million estimated net working capital adjustment, upon closing of the transaction, with an additional $3.5 million in holdbacks, subject to certain criteria. Accounting for the acquisition was completed on March 30, 2024. Goodwill is expected to be deductible for tax purposes.

Through August 22, 2023, after the successful completion of the first and second tranche in criteria were met, $1.5 million of the holdback was paid to the Sellers in cash, including the true-up to the net working capital adjustment. The final net working capital adjustment was $0.6 million. On April 24, 2024, after the successful completion of the third tranche in criteria was met, the Company paid $1 million of the holdback to the Sellers in cash. The remaining holdback of $1.0 million is expected to be released within 24 months of the closing date, subject to certain criteria.

The acquisition transaction also included up to $10.0 million in contingent consideration, subject to the achievement of certain revenue and net margin based milestones in two subsequent one-year measurement periods, payable in cash or, if mutually agreed to by the Company and the Seller, in Class A Common Stock. The contingent consideration for the first year
11

measurement period of the ClickDealer acquisition finalized on February 29, 2024, the end of the first earnout period, resulting in none of the metrics being met, thus no contingent consideration is to be paid to the sellers for the first measurement period.

Aimtell, Aramis and PushPros
On February 1, 2021, the Company acquired Aimtell, Inc. (“Aimtell”), PushPros, Inc. (“PushPros”) and Aramis Interactive (“Aramis”, and together with Aimtell and PushPros, “AAP”). Aimtell and PushPros are leading providers of technology-enabled digital performance advertising solutions that connect consumers and advertisers within the home, auto, health and life insurance verticals. Aramis is a network of owned-and-operated websites that leverages the Aimtell and PushPros technologies and relationships.

The Company paid consideration of $20.0 million upon closing of the transaction, consisting of $5.0 million in cash and approximately 86.0 thousand shares of Class A Common Stock valued at $15.0 million. The transaction also included up to $15.0 million in contingent consideration to be earned over the three years following the acquisition, subject to the achievement of certain milestones. The contingent consideration can be paid in cash or Class A Common Stock at the election of the Company. Accounting for the acquisition was completed on March 31, 2022.

The contingent consideration for the Aramis acquisition was finalized on December 31, 2022, the end of the earnout period, and became payable during the fourth quarter of 2023, in the form of cash or Class A Common Stock, at the election of the Company. The timing of payment of the Aramis earnout remains subject to resolution of certain outstanding indemnity issues relating to the acquisition.

The contingent consideration for the Aimtell and PushPros acquisition finalized on December 31, 2023, the end of the earnout period, resulting in none of the metrics being met, thus no contingent consideration is to be paid to the sellers.

Acquisitions’ Fair Value Measurement and Pro Forma Information

The acquisition date fair value of assets acquired and liabilities assumed from the ClickDealer acquisition consist of the following (in thousands, except expected useful lives):

Expected Useful Life (Years)
ClickDealer
2023
Cash$ 
Goodwill5,001 
Technology
4 to 7
4,780 
Customer relationships
4 to 12
21,900 
Accounts receivable6,959 
Brand
1 to 7
2,710 
Accounts payable(3,561)
Other assets acquired and liabilities assumed, net (1)
167 
   Net assets and liabilities acquired$37,956 
____________________
(1)Other assets acquired and liabilities assumed, net includes prepaid expenses and other current assets, partially offset by other current liabilities (e.g., Travel and expense payables, payroll liabilities, tax liabilities, and transition services payable).

The weighted average amortization period for ClickDealer acquisition technology is 7 years, customer relationships is 12 years and brand is 5 years. In total, the weighted average amortization period for ClickDealer is 10 years.

Pro Forma Information
The following unaudited pro forma financial information represents the consolidated financial information as if the acquisitions had been included in our consolidated results beginning on the first day of the fiscal year prior to their respective acquisition dates. Pro forma financial information is presented in the table below (in thousands):

Three Months Ended March 31, 2023
(unaudited)
DMSClickDealerPro Forma
Net revenue$90,313 $19,865 $110,178 
Net income (loss) from operations
$(10,251)$1,704 $(8,547)
12


The pro forma results do not reflect any cost savings, operating synergies or revenue enhancements that the combined company may achieve as a result of the acquisitions; the costs to combine the companies’ operations; or the costs necessary to achieve these costs savings, operating synergies and revenue enhancements. The pro forma results do not necessarily reflect the actual results of operations of the combined companies under our ownership and operation.

Note 6. Debt

The following table presents the components of outstanding debt (in thousands):

March 31, 2024December 31, 2023
Term loan$252,452 $242,927 
Revolving credit facility57,253 55,091 
Total debt309,705 298,018 
Less: Unamortized debt issuance costs (1)
(7,836)(8,915)
Debt, net301,869 289,103 
Less: Current portion of long-term debt(2,750)(2,750)
Long-term debt$299,119 $286,353 
____________________
(1)Includes net debt issuance discount, amendment’s administrative fees and other costs.

On May 25, 2021, Digital Media Solutions, LLC (“DMS LLC”), as borrower, and DMSH, each of which is a subsidiary of DMS, entered into a five-year $275 million senior secured credit facility (the “Credit Facility”), with a syndicate of lenders (“Lenders”), arranged by Truist Bank and Fifth Third Bank, as joint lead arrangers, and Truist Bank, as administrative agent. The Credit Facility is guaranteed by, and secured by substantially all of the assets of, DMS LLC, DMSH LLC and their
material subsidiaries, subject to customary exceptions. Pursuant to the Credit Facility, the Lenders provided DMS LLC with senior secured term loans consisting of a senior secured term loan with an aggregate principal amount of $225 million (the “Term Loan”) and a $50 million senior secured revolving credit facility (the “Revolving Facility”).

The Term Loan, which was issued at an original issue discount of 1.80% or $4.2 million, is subject to payment of 1.0% of the original aggregate principal amount per annum paid quarterly, with a bullet payment at maturity. The Term Loan will mature, and the revolving credit commitments under the Revolving Facility will terminate, on May 25, 2026, when any outstanding balances will become due. Under the original agreement, the Term Loan would bear interest at our option, at either (i) adjusted LIBOR plus 5.00% or (ii) the Base Rate plus 4.00%. From May 25, 2021 to July 3, 2023 our interest rate was based on LIBOR plus 5.00%.

Under the original agreement, borrowings under the Revolving Facility would bear interest, at our option, at either (i) adjusted LIBOR plus 4.25% or (ii) a base rate which is equal to the highest of (a) the administrative agent’s prime rate, (b) the federal funds rate, as in effect from time to time, plus 0.50%, (c) one-month LIBOR plus 1.00%, and (d) 1.75% (the “Base Rate”), plus 3.25%. DMS LLC pays a 0.50% per annum commitment fee in arrears on the undrawn portion of the revolving commitments. From May 25, 2021 to July 3, 2023, our interest rate was based on LIBOR plus 5.00% . The Company drew $10.0 million on May 24, 2023.

On July 3, 2023, the Term Loan and Revolving Facility were amended to transition LIBOR to the Term Secured Overnight Financing Rate (SOFR) as the basis for establishing the interest rate applicable to borrowings under the agreements. The interest rate is based on SOFR Benckmark Replacement plus 5.00% for the Term Loan and SOFR Benckmark Replacement plus 4.25% for Revolving Facility.

On August 16, 2023, DMS LLC and DMSH LLC, along with certain subsidiaries of the Company, entered into a first amendment to the Credit Facility (the “First Amendment”) with Truist Bank and the other lenders party thereto (the “Lenders”), which, among other things, modified the Credit Facility as follows:
a.allows for the payment-in-kind (“PIK”) of the quarterly interest payments due and payable on September 30, 2023 and each of the following three quarters, with all PIK interest required to be repaid no later than December 31, 2025;
b.provides that (a) if the borrower exercises the PIK option, the interest rate will be equal to SOFR+11%; (b) if interest is paid in cash during the PIK period, the rate will be equal to SOFR+8%; and (c) following the PIK period, the interest rate will be equal to SOFR+8%; provided that if the Company (1) achieves the credit rating of B3 by Moody’s and B- by S&P, and (2) has repaid the aggregate capitalized PIK interest, the interest rate will be SOFR + 6.0%;
13

c.if any loans under the Credit Facility remain outstanding on or after January 1, 2025, back-end PIK interest will accrue as follows: 5% for the period from January 1, 2025 through June 30, 2025; 7.5% for the period from July 1, 2025 through December 31, 2025; and 10% in calendar year 2026 until maturity;
d.eliminates the total net leverage ratio covenant for the remainder of 2023, inclusive of the second quarter of 2023, and sets the total net leverage ratio of DMSH LLC and its restricted subsidiaries starting at 15.6x and 10.6x for the first and second quarters of 2024, respectively, and varying for every quarter thereafter, down to 6.9x for the fourth quarter of 2025 and until maturity;
e.eliminates the right of the Borrower to undertake an equity cure to cure any breach of the total net leverage ratio covenant;
f.establishes a minimum liquidity covenant of $9 million for the remainder of 2023 excluding December 31, 2023, and $10 million from December 31, 2023 and thereafter until maturity (subject to the Company’s ability to exercise an equity cure solely with respect to the liquidity covenant);
g.modifies in certain respects the affirmative and negative covenants and the events of default in the Credit Facility, including subjecting non ordinary course investments and restricted distributions to consent of the requisite Lenders; and
h.establishes a minimum payment for the revolver of 1.0% per annum of the original aggregate principal amount of the Revolving Facility outstanding as of the First Amendment’s effective date, paid quarterly.

The First Amendment, as it relates to the Term Loan, was accounted for as a modification for accounting purposes. As such, $6.3 million in fees due to the Lenders was paid-in-kind and capitalized as additional debt issuance costs. These costs, plus the initial $4.2 million debt discount and $3.5 million debt issuance cost related to the Term Loan are being amortized over the term of the loan using the effective interest method. As of March 31, 2024, the Term Loan debt discount and debt issuance cost classified as debt had a remaining unamortized balance of $1.8 million and $6.1 million, respectively. As of December 31, 2023, the Term Loan debt discount and debt issuance cost classified as debt had a remaining unamortized balance of $2.1 million and $6.8 million, respectively.

In addition, the First Amendment added $0.8 million in lender fees to the Revolving Facility’s debt issuance costs. At March 31, 2024 and December 31, 2023, unamortized debt issuance costs of $1.0 million and $1.1 million, respectively, from the Revolving Facility are classified as Other assets within the consolidated balance sheets.

For the quarter ended March 31, 2024 and the year ended December 31, 2023 , the Company elected to exercise its available PIK elections. Accordingly, $10.1 million and $2.3 million of PIK interest expense was added to the outstanding principal balance of the Term Loan and the Revolving Facility, respectively, for the quarter ended March 31, 2024, and $19.1 million and $4.3 million of PIK interest expense was added to the outstanding principal balance of the Term Loan and the Revolving Facility, respectively, for the year ended December 31, 2023. As of March 31, 2024, the total outstanding balance of the Term Loan and the Revolving Facility is $252.5 million and $57.3 million, respectively. For the three months ended March 31, 2024, the effective interest rate was 16.5% for the Term Loan. The effective interest rate related to the Revolving Facility was 16.4% for the three months ended March 31, 2024.

As of March 31, 2024, the Company was in breach of the net leverage ratio covenant under its Credit Facility, which it cured as of April 17, 2024, when DMS, LLC, DMSH LLC and certain of the Company’s subsidiaries entered into a second amendment and waiver (the “Second Amendment”) to its existing Credit Facility with a syndicate of lenders, arranged by Truist Bank and Fifth Third Bank, as joint lead arrangers, and Truist Bank, as administrative agent and collateral agent. The Second Amendment introduced new Tranche A term loan commitments in the amount of $22 million with a maturity date of February 25, 2026, increasing our total borrowing capacity under the Credit Facility from $275 million to $297 million. The Second Amendment allows the Company to PIK the quarterly interest payments due and payable for the quarter ended March 31, 2024 and each of the following quarters up to and including the quarter ending on March 31, 2025; and waives compliance with the net leverage ratio covenant through June 30, 2025.

The Second Amendment also includes certain limited waivers related to prior defaults and events of default under the Credit Facility, amends certain negative and affirmative covenants applicable to us and adds certain additional covenants. In accordance with the Second Amendment, we are required to maintain a minimum aggregate amount of unrestricted and uncommitted cash and cash equivalents held in U.S. dollars during the period of time from and after the Second Amendment effective date of at least $5 million. Further, we have agreed to a variance test in which (i) the Company disbursements during a variance testing period shall not be more than 15% in excess of the amount reflected in the corresponding period in the Credit Facility’s loan parties’ projected cash flows prepared in consultation with a financial advisor (the “Cash Flow Forecast”) or (ii) the Company’s aggregate net cash receipts, (a) during the two week period after the Second Amendment effective date, will not be less than 80%, for the trailing two week period, of the aggregate cash receipts forecasted in the Cash Flow Forecast applicable during such testing period, (b) during the three week period after the Second Amendment effective date, will not be less than 82.5%, for the trailing three week period of the aggregate cash receipts forecasted in the Cash Flow Forecast applicable during such testing period and (c) during the four week period after the Second Amendment effective date and
14

thereafter, will not be less than 85% for the trailing four week period of the aggregate cash receipts forecasted in the Cash Flow Forecast applicable during such testing period.

In connection with the Second Amendment, the Company must pay a 8.0% commitment fee, which shall be fully earned on the initial funding disbursement date and payable as PIK interest on the Second Amendment effective date. Further, under the terms of the Second Amendment, the Company has agreed to promptly commence a strategic review and marketing process for a sale of all or substantially all of our assets, which is subject to certain milestones.

As noted above, the Credit Facility is conditioned upon the Company’s compliance with specified covenants, including certain reporting covenants and financial covenants that, in addition to other items, require the Company to maintain a maximum net leverage ratio. As of March 31, 2024, compliance with the net leverage ratio covenant was waived in connection with entry into the First Amendment. As of December 31, 2023, the Company was in breach of the net leverage ratio, which it cured on March 30, 2023 through the funds received in connection with the issuance of Series A and Series B convertible Preferred stock and Warrants. As of March 31, 2024, the Company was in compliance with the Credit Facility’s minimum liquidity covenant.

Debt Maturity Schedule

The remaining scheduled maturities of our total debt are estimated as follows at March 31, 2024 (in thousands):

2024$2,063 
202526,233 
2026281,409 
Total debt$309,705 

Note 7. Leases

The following table summarizes the maturities of undiscounted cash flows of operating lease liabilities reconciled to total lease liability as of March 31, 2024 (in thousands):

Lease Amounts
20241,561 
2025469 
Total2,030 
Less: Imputed interest(31)
Present value of operating lease liabilities$1,999 

As of March 31, 2024, the operating lease weighted average remaining lease term is 1.0 years and the operating lease weighted average remaining discount rate is 3.36%.

The discount rate for each lease represents the incremental borrowing rate that the Company would incur at commencement of the lease to borrow on a collateralized basis over a similar term and amount equal to lease payments in a similar economic environment.

The following table represents the Company’s aggregate lease costs, by lease classification (in thousands):

Three Months Ended March 31,
CategoryStatement of Operations Location20242023
Operating lease costsGeneral and administrative expenses$217 $284 
Short-term lease costsGeneral and administrative expenses95153
Sub-lease incomeGeneral and administrative expenses(90)(179)
Total lease costs, net$222 $258 

The cash paid for amounts included in the measurement of operating leases was $345.0 thousand and $537.0 thousand for the three months ended March 31, 2024 and 2023, respectively.

15

Note 8. Fair Value Measurements

The Company utilizes fair value measurements to record fair value adjustments to certain assets and liabilities and to determine fair value disclosures. The carrying amounts of our cash and cash equivalents, accounts receivable, income taxes receivable, accounts payable, accrued expenses and income taxes payable, approximate fair value because of the short-term maturity of those instruments.

Preferred Warrants
On March 29, 2023, the Company completed a securities purchase agreement (the “SPA”) with certain investors to purchase 80,000 shares of Series A convertible redeemable Preferred Stock (“Series A Preferred Stock”) and 60,000 shares of Series B convertible redeemable Preferred Stock (“Series B Preferred Stock”) for an aggregate purchase price of $14.0 million (the “Preferred Offering”), including $6.0 million of related party participation. The Company also issued the purchasers in the Preferred Offering warrants to acquire 963 thousand shares of Class A Common Stock (“Preferred Warrants”).

The Preferred Warrants are exercisable for shares of the Company’s Class A Common Stock at any time at the option of the holder and expire five years from the date of issuance. The Preferred Warrants are exercisable on a cashless basis or for cash at an exercise price of $9.6795 per share of Class A Common Stock. The exercise price of the Preferred Warrants is subject to appropriate adjustment in the event of stock dividends, stock splits, subdivisions, combinations, reclassifications, or similar events affecting the Company’s Common Stock. The Preferred Warrants contain a put feature providing the right to the holder for a net cash settlement in the event of a fundamental transaction, which is defined as instances where the Company (i) effects any merger or consolidation of the Company, (ii) effects any sale, lease, license, assignment, transfer, conveyance, or other disposition of all or substantially all of its assets in one or a series of related transactions, (iii) completes any purchase offer, tender offer, or exchange offer that has been accepted by the holders of at least 50% of the outstanding Class A Common Stock, (iv) effects any reclassification, reorganization, or recapitalization of the Class A Common Stock or any compulsory share exchange pursuant to which the Class A Common Stock is effectively converted into or exchanged for other securities, cash or property, or (v) consummates a stock or share purchase agreement or other business combination in which more than 50% of the outstanding shares of Class A Common Stock is acquired. Under such a fundamental transaction, the holder can require the Company to purchase any unexercised warrant shares at the pro-rata share of the sales price or calculated value less the exercise price of the Warrant share.

Due to the tender offer provision, the Preferred Warrants are classified as a derivative liability measured at fair value, with changes in fair value reported each period in earnings. The fair value of the warrant is estimated using the Black-Scholes-Merton pricing model. The fair value of the Preferred Warrants of approximately $8.7 million was estimated at the date of issuance using the following weighted average assumptions. Transaction costs incurred attributable to the issuance of the Preferred Warrants were part of the preferred shares issuance costs that were $0.9 million.

The fair value of the derivative Preferred Warrants is considered a Level 3 valuation and is determined using the Black-Scholes-Merton valuation model. The change in the value of the derivative Preferred Warrants are included in the accompanying consolidated statements of operations as Change in fair value of warrant liabilities.

The significant assumptions were as follows:

March 31, 2024
Preferred Warrants Fair Value Per Share$1.03 
Preferred Warrant valuation inputs:
Stock price - DMS Inc. Class A Common Stock$1.29 
Remaining contractual term in years4.00
Estimated volatility170.0 %
Dividend yield0.0 %
Risk free interest rate4.26 %

Private Placement Warrants
Each Company Private Placement Warrant entitles the registered holder to purchase one share of Class A Common Stock at a price of $172.50 per share, subject to adjustment. Pursuant to the warrant agreement, a warrant holder may exercise its warrants only for a whole number of shares of Class A Common Stock. This means only a whole warrant may be exercised at a given time by a warrant holder. The warrants will expire five years after the Business Combination, or earlier upon redemption or liquidation.

The Company may call the Company Private Placement Warrants for redemption as follows: (1) in whole and not in part; (2) at a price of $0.01 per warrant; (3) upon a minimum of 30 days’ prior written notice of redemption; and (4) only if the last reported closing price of the Class A Common Stock equals or exceeds $270.00 per share for any 20 trading days within a 30-
16

trading day period ending on the third trading day prior to the date on which the Company sends the notice of redemption to the warrant holders.

If the Company calls the Company Private Placement Warrants for redemption, management will have the option to require all holders that wish to exercise the Company Public Warrants to do so on a “cashless basis.”

The exercise price and number of Class A Common Stock issuable upon exercise of the warrants may be adjusted in certain circumstances including in the event of a share dividend, recapitalization, reorganization, merger or consolidation. However, the warrants will not be adjusted for issuances of Class A Common Stock at a price below its exercise price. Additionally, in no event will the Company be required to net cash settle the warrant shares.

We record the fair value of the Private Placement Warrants as a liability in our consolidated balance sheets as of March 31, 2024 and 2023, respectively. The fair value of the Private Placement Warrants is considered a Level 3 valuation and is determined using the Black-Scholes-Merton valuation model. Changes in fair value of the Private Placement Warrants are presented under Change in fair value of warrant liabilities on the consolidated statements of operations. As of March 31, 2024, the Company has approximately 4 million Private Placement Warrants outstanding (convertible into 267 thousand Class A Common Stock), the total value of which is not material to the financial statements.

Contingent consideration payable related to acquisitions
The contingent consideration for the Aramis acquisition was finalized on December 31, 2022, the end of the earnout period, and became payable during the fourth quarter of 2023, in the form of cash or Class A Common Stock, at the election of the Company. The timing of payment of the Aramis earnout remains subject to resolution of certain outstanding indemnity issues relating to the acquisition (see Note 5. Acquisitions).

The fair value of the contingent consideration payable for the ClickDealer acquisition (described in Note 5. Acquisitions) was determined using a Monte Carlo fair value analysis, based on estimated performance and the probability of achieving certain targets. As certain inputs are not observable in the market, the contingent consideration is classified as a Level 3 instrument. Changes in fair value of contingent consideration are presented under Change in fair value of contingent consideration liabilities on the consolidated statements of operations. The contingent consideration for the first year measurement period of the ClickDealer acquisition finalized on February 29, 2024, the end of the first earnout period, resulting in none of the metrics being met, thus no contingent consideration is to be paid to the sellers for the first measurement period.

The following table presents the contingent consideration assumptions as of March 31, 2024:

ClickDealer
Revenue Volatility50 %
Iteration (actual)100,000 
Risk Adjustment Discount Rate25.50 %
Risk free / Credit risk12.50 %
Days from period end to payment90

The following table presents assets and liabilities measured at fair value on a recurrent basis (in thousands):

March 31, 2024
CategoryBalance Sheet LocationLevel 1Level 2Level 3Total
Liabilities:
Private placement warrants - Class B common stockWarrant liabilities$ $ $24 $24 
Preferred warrants - Series A & B preferred stock
Warrant liabilities  992 992 
Contingent consideration - AramisContingent consideration payable - current  1,000 1,000 
Contingent consideration - ClickDealerContingent consideration payable - non-current  495 495 
Total$ $ $2,511 $2,511 

17

March 31, 2023
CategoryBalance Sheet LocationLevel 1Level 2Level 3Total
Liabilities:
Private placement warrants - Class B common stockWarrant liabilities$ $ $320 $320 
Preferred warrants - Series A & B preferred stockWarrant liabilities  12,711 12,711 
Contingent consideration - AramisContingent consideration payable - current  1,000 1,000 
Contingent consideration - TraverseContingent consideration payable - current  466 466 
Contingent consideration - ClickDealerContingent consideration payable - non-current  2,457 2,457 
Total$ $ $16,954 $16,954 

The following tables represent the change in the warrant liability and contingent consideration (in thousands):

Private Placement Warrants
Preferred Warrants
Contingent Consideration
Balance, January 1, 2024$24 $58 $1,512 
Changes in fair value 934 (17)
Balance, March 31, 2024$24 $992 1,495 

Private Placement Warrants
Preferred Warrants
Contingent Consideration
Balance, January 1, 2023$600 $ $1,453 
Additions 8,667 2,457 
Changes in fair value(280)4,044 13 
Balance, March 31, 2023$320 $12,711 $3,923 

Note 9. Equity

Class B Common Stock and DMSH Units Redemptions

On April 12, 2024, Clairvest redeemed approximately 151.2 thousand Class B Common Stock, effectively converting all of its remaining non-controlling interest held in DMSH Units into Class A Common Stock in DMS Inc. Consequently, there were no shares of the Company's Class B Common Stock outstanding after this redemption.

On July 3, 2023 and November 17, 2023, Prism redeemed approximately 41.2 thousand and 1,520.9 thousand Class B Common Stock, respectively, effectively converting all of its remaining non-controlling interest held in DMSH Units into Class A Common Stock in DMS Inc.

For additional information, see Note 2. Business Combination in the Notes to Consolidated Financial Statements in our 2023 Form 10-K.

Common Stock Reverse Stock Split

On August 28, 2023, Digital Media Solutions, Inc. filed an amendment to its certificate of incorporation in the State of Delaware (the "Amendment"), which provides that, after the market close on August 28, 2023 (the "Reverse Split Effective Time"), every fifteen shares of our issued and outstanding Class A Common Stock and Class B Common Stock will automatically be combined into one issued and outstanding share of Class A Common Stock and Class B Common Stock, respectively, without any change in the par value per share (the “Reverse Stock Split”). Earlier, on April 28, 2023, a majority of our shareholders approved a reverse stock split subject to the board of directors determining the final ratio. The Company’s Class A Common Stock began trading on a split-adjusted basis at the market open on August 29, 2023. The Company’s common stock and warrants trade on the Over-The-Counter Market under the symbols “DMSL” and “DMSIW”, respectively.

At the Reverse Stock Split Effective Time, every 15 issued and outstanding shares of the Company’s Class A Common Stock and Class B Common Stock were converted automatically into one share of the Company’s Class A Common Stock and Class B Common Stock, respectively, without any change in the par value per share. The Reverse Stock Split reduced the number of
18

shares of Class A Common Stock issued and outstanding from approximately 41.0 million to approximately 2.7 million and Class B Common Stock issued and outstanding from approximately 25.1 million to approximately 1.7 million.

No fractional shares were issued in connection with the Reverse Stock Split. Shareholders who otherwise would have been entitled to receive a fractional share instead became entitled to receive one whole share of common stock in lieu of such fractional share.

Preferred Stock

On March 29, 2023, the Company entered into a Securities Purchase Agreement with certain investors, pursuant to which the Company sold (i) 80,000 shares of Series A Preferred Stock accompanied with warrants to purchase 550,268 Class A Common Stock (“Series A Warrant”) and (ii) 60,000 shares of Series B Preferred Stock accompanied with warrants to purchase 412,701 shares of Class A Common Stock (“Series B Warrants”). One share of Series A Preferred Stock with the accompanying warrants (“Series A Unit”) and one share of Series B Preferred Stock with the accompanying warrants (“Series B Unit”) were sold at $100 per unit.

The Company measures the Preferred Stock at its maximum redemption value plus dividends not currently declared or paid but which will be payable upon redemption. On June 15, 2023 the Company remeasured the Preferred Stock following the accretion method, which resulted in the Preferred Stock being measured at its maximum redemption value of $16.3 million and accretion of $11.3 million, included in Cumulative Deficit on the consolidated balance sheets as of March 31, 2024.

For additional information, see Note 11. Equity in the Notes to Consolidated Financial Statements in our 2023 Form 10-K.

Redemptions
On June 15, 2023, the Company received notice from the holders of all of the Company’s outstanding Series A Preferred Stock that each holder has elected to have the Company redeem for cash the Series A Preferred Stock held by such holder pursuant to Section 9(b) of the Certificate of Designation of Preferences, Rights and Limitations of the Series A Preferred Stock of the Company (the “Series A Certificate of Designation”).

Section 9(b) of the Series A Certificate of Designation gives holders of Series A Preferred Stock the right to require the Company to redeem for cash the Series A Preferred Stock for cash at any time on or after June 15, 2023 at the “Corporation’s Mandatory Redemption Price” (as such term is defined in the Series A Certificate of Designation). The aggregate Corporation’s Mandatory Redemption Price for all of the outstanding Series A Preferred Stock is approximately $9.3 million.

On June 16, 2023, the Board determined that the Company was not legally permitted under applicable Delaware law to effect a redemption for cash of any Series A Preferred Stock. As a result and in accordance with the Securities Purchase Agreement, the Company accrued dividends payable of $156.0 thousand to the Series A Preferred Stockholders, for the quarter ended March 31, 2024, included in Cumulative Deficit on the consolidated balance sheets, as of March 31, 2024. Total accrued dividend to Series A and B Preferred Stockholders was $624.0 thousand, as of March 31, 2024.

Relatedly, Section 9(a) of the Series A Certificate of Designation and the Certificate of Designation of Preferences, Rights and Limitations of the Series B Preferred Stock (the “Series B Certificate of Designation” and together with the Series A Certificate of Designation, the “Certificates of Designation”) provide for the Company to redeem 1/10th of the outstanding Series A Preferred Stock and Series B Preferred Stock, respectively, for cash or shares of the Company’s Class A common stock on a monthly basis beginning on June 30, 2023 at the “Corporation’s Mandatory Redemption Price.” Pursuant to the terms of the Certificates of Designation, the Company was not permitted to elect payment in common stock because the Company’s common stock has not traded above the “Floor Price” ($7.26) for 20 trading days prior to redemption, as required by the Certificates of Designation. With respect to each monthly redemption date, the Board determined that the redemption was not permitted under the Certificates of Designation or applicable Delaware law. As a result, the Company did not redeem any shares of Series A or Series B Preferred Stock during the year ended December 31, 2023 and the three months ended March 31, 2024, respectively.

Note 10. Employee and Director Incentive Plans

2020 Omnibus Incentive Plan

On July 15, 2020, Leo’s shareholders approved the 2020 Omnibus Incentive Plan (the “2020 Plan”). The 2020 Plan allows for the issuance and repurchase of stock options, stock appreciation rights, stock awards (including restricted stock awards (“RSAs”) and Restricted Stock Units (“RSUs”)) and other stock-based awards. Directors, officers and employees, as well as others performing independent consulting or advisory services for the Company or its affiliates, are eligible for grants under the 2020 Plan. The aggregate number of shares reserved under the 2020 Plan is approximately 0.8 million. The 2020 Plan
19

terminates on June 24, 2030. The related costs were approximately $0.2 million for the three months ended March 31, 2024, and $1.3 million for the three months ended March 31, 2023, and are included in Salaries and related costs within the consolidated statements of operations. Fair value of stock-based compensation is based on the closing trading price of the Company’s stock on the grant date.

Restricted Stock Units

For the three months ended March 31, 2024, there were no new RSU awards. During the three months ended March 31, 2024, 29.3 thousand RSUs were forfeited.

On April 12, 2022, the Board voted to award 50.8 thousand RSUs consisting of 25.4 thousand performance-based vesting RSUs (“PRSUs”) and 25.4 thousand time-based vesting RSUs (“TRSUs”) to certain employees of the Company under the 2020 Plan. The PRSUs vest one-fourth each year based on four years of continuous service starting with January 1, 2022 through January 1, 2026. The TRSUs vest one-fourth each years based on four years continuous service starting April 12, 2022 and ending April 12, 2026.Vesting of the PRSUs were also subject to certain performance metrics of the Company, which the Company evaluates on a quarterly basis. During three months ended March 31, 2024, it was determined that the performance metric was not met for the PRSU’s, and accordingly the awards are no longer subject to amortization. The resulting reversal of compensation expense was not material to the financial statements. The fair value of stock-based compensation is based on the closing trading price of the Company’s stock on the grant date. The TRSU’s related stock-based compensation expense is recognized on a straight-line basis over the vesting period. The PRSU awards’ expense is recognized on an accelerated basis over the vesting period.

Note 11. Income Taxes

As of December 31, 2023, the Company consists of DMS Inc. and its wholly-owned subsidiary, Blocker, which owns 96.6% of equity interests in DMSH. DMSH is treated as a partnership for purposes of U.S. federal and certain state and local income tax. As a U.S. partnership, generally DMSH will not be subject to corporate income taxes (except with respect to UE and Traverse, as described below). Instead, each of the ultimate partners (including DMS Inc.) are taxed on their proportionate share of DMSH taxable income.

While the Company consolidates DMSH for financial reporting purposes, the Company will only be taxed on its allocable share of future earnings (i.e. those earnings not attributed to the non-controlling interests, which continue to be taxed on their own allocable share of future earnings of DMSH). The Company’s Income tax expense (benefit) is attributable to the allocable share of earnings from DMSH, the activities of UE and Traverse, wholly-owned U.S. corporate subsidiaries of DMSH, which is subject to U.S. federal and state and local income taxes and the activities of ClickDealer, a wholly-owned foreign corporate subsidiary of DMSH, which is subject to Netherlands, Ukraine and United Kingdom income taxes. The income tax burden on the earnings allocated to the non-controlling interests is not reported by the Company in its consolidated financial statements under GAAP. As a result, the Company’s effective tax rate is expected to differ from the statutory rate.

The Company’s tax provision or benefit from income taxes for interim periods is determined using an estimate of its annual effective tax rate, adjusted for discrete items, if any. Each quarter the Company updates its estimate of the annual effective tax rate and makes a year-to-date adjustment to the provision. The Company recorded income tax expense of $0.1 million for the three months ended March 31, 2024. The effective tax rate for the three months ended March 31, 2024 was