DoubleVerify Holdings, Inc.: Form 10-Q for the period ended Jun 30, 2025

The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our interim Condensed Consolidated Financial Statements and related notes appearing elsewhere in this Quarterly Report and our audited financial statements and notes contained in our Annual Report on Form 10-K for the year ended December 31, 2024. In addition to our historical condensed consolidated financial information, the following discussion contains forward-looking statements that reflect our plans, estimates, and beliefs. Our actual results could differ materially from those discussed in the forward-looking statements. Factors that could cause or contribute to these differences include those discussed in our Annual Report on Form 10-K for the year ended December 31, 2024 and elsewhere in this Quarterly Report, including under the heading “Special Note Regarding Forward-Looking Statements.”

Company Overview

We are one of the industry’s leading media effectiveness platforms that leverages AI to drive superior outcomes for global brands. By creating more effective, transparent ad transactions, we make the digital advertising ecosystem stronger, safer and more secure, thereby preserving the fair value exchange between buyers and sellers of digital media.

Our software platform is integrated across the entire digital advertising ecosystem, including programmatic platforms, social media channels, and digital publishers. We deliver unique data analytics through our customer interface, DV Pinnacle, to provide detailed insights into our customers’ media performance on both direct and programmatic media buying platforms and across all key digital media channels, formats, and devices. In 2024, our coverage spanned 110 countries where our customers activate our solutions. Our customers include many of the largest global advertisers and digital ad platforms and publishers. We provide a consistent, cross-platform measurement standard across all major forms of digital media, making it easier for advertisers and supply-side customers to benchmark performance across all of their digital ads and optimize business outcomes in real-time.

We derive revenue primarily from our advertiser customers based on the volume of media transactions, or ads, that our software platform measures (“Media Transactions Measured”). Advertisers utilize the DV Authentic Ad, our definitive metric of digital media quality, to evaluate the existence of fraud, brand safety, viewability and geography for each digital ad. Advertisers pay us an analysis fee (“Measured Transaction Fee”) per thousand impressions based on the volume of Media Transactions Measured on their behalf. The price of most of our solutions is fixed. On platforms that charge based on percent of media spend, our pricing includes caps which effectively mirror our standard fixed fees. We maintain an expansive set of direct integrations across the entire digital advertising ecosystem, including with leading programmatic, CTV, and social platforms, which enable us to deliver our metrics to the platforms where our customers buy ads. Further, our solutions are not reliant on any single source of impressions and we can service our customers as their digital advertising needs change.

We generate revenue from supply-side customers based on monthly or annual contracts with minimum guarantees and tiered pricing when guarantees are met.

Components of Our Results of Operations

We manage our business operations and report our financial results in a single segment.

Revenue

Our customers use our solutions to measure the effectiveness of their digital advertisements. We generate revenue from our advertising customers based primarily on the volume of Media Transactions Measured on our software platform, and for supply-side customers, based on contracts with minimum guarantees or contracts that have tiered pricing after minimum guarantees are achieved. Our existing customer base has remained largely stable, and our gross revenue retention rate was over 95% for the three months ended June 30, 2025. We define our gross revenue retention rate as the total prior period revenue earned from advertiser customers, less the portion of prior period revenue attributable to lost advertiser customers, divided by the total prior period revenue from advertiser customers, excluding a portion of our revenues that cannot be allocated to specific advertiser customers.

For each of the three months ended June 30, 2025 and June 30, 2024, we generated 91% of our revenue from advertiser customers. For each of the six months ended June 30, 2025 and June 30, 2024, we generated 91% of our revenue from advertiser customers. Advertisers can purchase our solutions through programmatic and social media platforms to evaluate the quality of ad inventories before they are purchased, which we track as Activation revenue. Advertisers can also purchase our solutions to measure the quality and performance of ads after they are purchased directly or programmatically from digital properties, including publishers and social media platforms, which we track as Measurement revenue. We generate the majority of our revenue from advertisers by charging a Measured Transaction Fee based on the volume of Media Transactions Measured on behalf of our customers. We recognize revenue from advertisers in the period in which we provide our measurement and activation solutions.

For each of the three months ended June 30, 2025 and June 30, 2024, we generated 9% of our revenue from supply-side customers who use our data analytics to validate the quality of their ad inventory and provide data to their customers to facilitate targeting and purchasing of digital ads, which we refer to as Supply-side revenue. For the each of the six months ended June 30, 2025 and June 30, 2024, Supply-side revenue comprised 9% of our revenue. We generate revenue for certain supply-side arrangements that include minimum guaranteed fees that reset monthly and are recognized on a straight-line basis over the access period, which is usually twelve months. For contracts that contain overages, once the minimum guaranteed amount is achieved, overages are recognized as earned over time based on a tiered pricing structure.

The following table disaggregates revenue between advertiser customers, where revenue is primarily generated based on the number of ads measured and purchased for Activation or measured for Measurement, and Supply-side, where revenue is generated based on contracts with minimum guarantees or contracts that contain overages after minimum guarantees are achieved.

(In Thousands)

(In Thousands)

Operating Expenses

Our operating expenses consist of the following categories:

Cost of revenue. Cost of revenue consists primarily of costs from revenue-sharing arrangements with our partners, platform hosting fees, data center costs, software and other technology expenses, other costs directly associated with data infrastructure, and personnel costs, including salaries, bonuses, stock-based compensation and benefits, directly associated with the support and delivery of our software platform and data solutions.

Product development. Product development expenses consist primarily of personnel costs, including salaries, bonuses, stock-based compensation and benefits, third party vendors and outsourced engineering services, and allocated overhead. Overhead costs such as information technology infrastructure, rent and occupancy charges are allocated based on headcount. Product development expenses are expensed as incurred, except to the extent that such costs are associated with software development that qualifies for capitalization, which are then recorded as capitalized software development costs included in Property, plant and equipment, net on our Condensed Consolidated Balance Sheets. Capitalized software development costs are amortized to depreciation and amortization.

Sales, marketing, and customer support. Sales, marketing, and customer support expenses consist primarily of personnel costs directly associated with sales, marketing, and customer support departments, including salaries, bonuses, commissions, stock-based compensation and benefits, and allocated overhead. Overhead costs such as information technology infrastructure, rent and occupancy charges are allocated based on headcount. Sales and marketing expense also includes costs for promotional marketing activities, advertising costs, and attendance at events and trade shows. Sales commissions are expensed as incurred.

General and administrative. General and administrative expenses consist primarily of personnel expenses associated with our executive, finance, legal, human resources and other administrative employees. General and administrative expenses also include professional fees for external accounting, legal, investor relations and other consulting services, expenses to operate as a public company, including costs to comply with rules and regulations applicable to companies listed on a U.S. securities exchange, costs related to compliance and reporting obligations pursuant to the rules and regulations of the SEC, other overhead expenses including insurance, as well as third party costs related to acquisitions.

Interest expense. Interest expense consists primarily of the amortization of debt issuance costs, commitment fees associated with the unused portion of the New Revolving Credit Facility and Prior Revolving Credit Facility and interest on finance leases. The New Revolving Credit Facility bears interest at an option of SOFR or ABR plus an applicable margin per annum. See “Liquidity and Capital Resources—Debt Obligations.”

Other income, net. Other income, net consists primarily of interest earned on interest-bearing monetary assets and gains and losses on foreign currency transactions.

Results of Operations

Comparison of the Three and Six Months Ended June 30, 2025 and June 30, 2024

The following table shows our Condensed Consolidated Results of Operations:

(In Thousands)

(In Thousands)

The following table sets forth our Condensed Consolidated Results of Operations for the specified periods as a percentage of our revenue for those periods presented:

Note: Percentages may not sum due to rounding.

Revenue

Total revenue increased by $33.1 million, or 21%, from $155.9 million in the three months ended June 30, 2024 to $189.0 million in the three months ended June 30, 2025. Total revenue increased by $57.4 million, or 19%, from $296.7 million in the six months ended June 30, 2024 to $354.1 million in the six months ended June 30, 2025.

Total Advertiser revenue increased by $29.6 million, or 21%, in the three months ended June 30, 2025 as compared to the same period in 2024. The growth was driven primarily by a 19% increase in Media Transactions Measured, partially offset by a 1% decline in Measured Transaction Fees, excluding the impact of an introductory fixed fee deal for one large customer. For the six-months ended June 30, 2025, total Advertiser revenue increased by $49.6 million, or 18%, compared to the same period in 2024, primarily due to a 20% increase in Media Transactions Measured, partially offset by a 3% decline in Measured Transaction Fees, excluding the impact of an introductory fixed fee deal for one large customer.

Activation revenue increased by $21.5 million, or 25%, in the three months ended June 30, 2025, as compared to the same period in 2024. The increase was driven primarily by greater adoption of Authentic Brand Suitability, core programmatic solutions, and Scibids Technology SAS (“Scibids”). For the six months ended June 30, 2025, Activation revenue increased by $37.3 million, or 22%, compared to the same period in 2024, driven by the same factors.

Measurement revenue increased $8.1 million, or 15%, in the three months ended June 30, 2025, as compared to the same period in 2024, driven primarily by greater adoption of our social, open web and CTV solutions, as well as the addition of Rockerbox, Inc. (“Rockerbox”). For the six months ended June 30, 2025, Measurement revenue increased by $12.2 million, or 12%, compared to the same period in 2024, driven by the same factors.

Supply-side revenue increased $3.6 million, or 26%, in the three months ended June 30, 2025, as compared to the same period in 2024, driven primarily by growth from both existing and new platform customers, as well as the addition of new publisher customers. For the six months ended June 30, 2025, Supply-side revenue increased by $7.8 million, or 30%, compared to the same period in 2024, driven by the same factors.

Cost of Revenue (exclusive of depreciation and amortization shown below)

Cost of revenue increased by $7.0 million, or 27%, from $26.1 million in the three months ended June 30, 2024 to $33.1 million in the three months ended June 30, 2025. The increase was due primarily to growth in Activation revenue which led to increased partner costs from revenue-sharing arrangements, as well as continued investment in cloud services to provide the scale and flexibility necessary to support future growth. Cost of revenue increased by $11.4 million, or 22%, from $52.7 million in the six months ended June 30, 2024, to $64.1 million in the six months ended June 30, 2025, driven by the same factors.

Product Development Expenses

Product development expenses increased by $7.4 million, or 19%, from $39.8 million in the three months ended June 30, 2024 to $47.2 million in the three months ended June 30, 2025. The increase was due primarily to an increase in personnel costs, including stock-based compensation, of $6.4 million and an increase in third party software costs and outsourced consulting and engineering services of $0.3 million to support our product development efforts. Product development expenses increased by $15.7 million, or 21%, from $76.2 million in the six months ended June 30, 2024 to $91.9 million in the six months ended June 30, 2025. The increase was due primarily to an increase in personnel costs, including stock-based compensation, of $12.5 million and an increase in third party software costs and outsourced consulting and engineering services of $2.0 million to support our product development efforts.

Sales, Marketing and Customer Support Expenses

Sales, marketing and customer support expenses increased by $6.0 million, or 13%, from $44.9 million in the three months ended June 30, 2024 to $50.9 million in the three months ended June 30, 2025. The increase was due primarily to an increase in personnel costs, including stock-based compensation and sales commissions, of $5.6 million, and an increase in third party professional fees to support marketing and sales activities of $0.5 million. Sales, marketing and customer support expenses increased by $11.8 million, or 14%, from $82.7 million in the six months ended June 30, 2024 to $94.6 million in the six months ended June 30, 2025. The increase was due primarily to an increase in personnel costs, including stock-based compensation and sales commissions, of $10.7 million, and an increase in third party professional fees to support marketing and sales activities of $0.8 million.

General and Administrative Expenses

General and administrative expenses increased by $6.5 million, or 28%, from $23.1 million in the three months ended June 30, 2024 to $29.6 million in the three months ended June 30, 2025. The increase was due primarily to a $2.5 million increase in personnel costs, including stock-based compensation, a $2.3 million increase in third party professional fees, $1.1 million in third party legal fees related to litigation and regulatory matters outside of the ordinary course, and $0.5 million of third party professional services costs related to the acquisition of Rockerbox and our broader acquisition strategy. General and administrative expenses increased by $11.0 million, or 24%, from $45.1 million in the six months ended June 30, 2024 to $56.1 million in the six months ended June 30, 2025. The increase was largely attributable to a $4.9 million increase in personnel costs, including stock-based compensation, a $3.3 million increase in third party professional fees, $1.7 million of third party professional services related to the acquisition of Rockerbox and our broader acquisition strategy, and $1.1 million of third party legal fees related to litigation and regulatory matters outside of the ordinary course.

Depreciation and Amortization

Depreciation and amortization increased by $3.7 million, or 34%, from $11.0 million in the three months ended June 30, 2024, to $14.7 million in the three months ended June 30, 2025. The increase was due primarily to an increase in capitalized software development costs. Depreciation and amortization increased by $5.2 million, or 23%, from $21.9 million in the six months ended June 30, 2024, to $27.1 million in the six months ended June 30, 2025 driven by the same factors.

Interest Expense

Interest expense increased by $0.2 million, from $0.2 million in the three months ended June 30, 2024, to $0.4 million in the three months ended June 30, 2025. Interest expense increased by $0.4 million, from $0.5 million in the six months ended June 30, 2024, to $0.9 million in the six months ended June 30, 2025.

Other Income, Net

Other income, net was materially unchanged at $2.1 million in the three months ended June 30, 2025, and in the three months ended June 30, 2024. Other income, net increased by $0.9 million, from income of $4.3 million in the six months ended June 30, 2024 to income of $5.3 million in the six months ended June 30, 2025. The increase was due primarily to gains from changes in foreign exchange rates, partially offset by a decrease in interest earned on interest-bearing monetary assets.

Income Tax Expense

Income tax expense increased by $1.0 million from $5.4 million in the three months ended June 30, 2024, to $6.5 million in the three months ended June 30, 2025. The increase was due primarily to an increase in unfavorable permanent tax adjustments, including non-deductible executive compensation and stock-based compensation. Income tax expense increased by $6.4 million from $7.2 million in the six months ended June 30, 2024, to $13.6 million in the six months ended June 30, 2025, driven by the same factors.

Adjusted EBITDA

In addition to our results determined in accordance with GAAP, management believes that certain non-GAAP financial measures, including Adjusted EBITDA and Adjusted EBITDA Margin, are useful in evaluating our business. We calculate Adjusted EBITDA Margin as Adjusted EBITDA divided by total revenue. The following table presents a reconciliation of Adjusted EBITDA, a non-GAAP financial measure, to the most directly comparable financial measure prepared in accordance with GAAP.

(In Thousands)

(In Thousands)

(a) M &A and restructuring costs for the three and six months ended June 30, 2025 consist of third party professional service costs related to the acquisition of Rockerbox and to our broader acquisition strategy. M&A and restructuring recoveries for the three months ended June 30, 2024 consist of transaction costs related to the acquisition of Scibids.

(b) Offering and secondary offering costs for the three and six months ended June 30, 2024 consist of third party costs incurred for underwritten secondary public offerings by certain stockholders of the Company.

(c) Other costs for the three and six months ended June 30, 2025 consist of expenses incurred with respect to litigation and regulatory matters outside of the ordinary course and costs related to the early termination of an office lease.

(d) Other income for the three and six months ended June 30, 2025 and June 30, 2024 consist of interest income earned on interest-bearing monetary assets, and the impact of changes in foreign currency exchange rates.

We use Adjusted EBITDA and Adjusted EBITDA Margin as measures of operational efficiency to understand and evaluate our core business operations. We believe that these non-GAAP financial measures are useful to investors for period to period comparisons of our core business and for understanding and evaluating trends in operating results on a consistent basis by excluding items that we do not believe are indicative of our core operating performance.

These non-GAAP financial measures have limitations as analytical tools and should not be considered in isolation or as substitutes for an analysis of our results as reported under GAAP. Some of the limitations of these measures are:

• they do not reflect changes in, or cash requirements for, working capital needs;
• Adjusted EBITDA does not reflect capital expenditures or future requirements for capital expenditures or contractual commitments;
• they do not reflect income tax expense or the cash requirements to pay income taxes;
• they do not reflect interest expense or the cash requirements necessary to service interest or principal debt payments; and
• although depreciation and amortization are non-cash charges related mainly to intangible assets, certain assets being depreciated and amortized will have to be replaced in the future, and Adjusted EBITDA does not reflect any cash requirements for such replacements.

In addition, other companies in our industry may calculate these non-GAAP financial measures differently, therefore limiting their usefulness as a comparative measure. You should compensate for these limitations by relying primarily on our GAAP results and using the non-GAAP financial measures only supplementally.

Liquidity and Capital Resources

Our operations are financed primarily through cash generated from operations. As of June 30, 2025, we had cash and cash equivalents of $211.8 million and net working capital, consisting of current assets (excluding cash and cash equivalents) less current liabilities, of $145.7 million.

We believe existing cash and cash generated from operations, together with the $200.0 million undrawn balance under the New Revolving Credit Facility as of June 30, 2025, will be sufficient to meet future working capital requirements and fund capital expenditures, share repurchase programs and acquisitions on a short-term and long-term basis.

Our total future capital requirements and the adequacy of available funds will depend on many factors, including those discussed above as well as the risks and uncertainties set forth under “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2024.

Debt Obligations

On August 12, 2024, the Company entered into the Credit Agreement providing for the New Revolving Credit Facility with available borrowings of $200.0 million, which matures on the Revolving Termination Date. Subject to certain terms and conditions, the Company is entitled to request incremental facilities (including term, revolving and/or letter of credit facilities). The New Revolving Credit Facility replaces in full the Company’s Prior Revolving Credit Facility.

All obligations under the New Revolving Credit Facility are guaranteed by the Company pursuant to the Guarantee Agreement. The New Revolving Credit Facility contains customary affirmative and negative covenants, including restrictions on, among other things: paying dividends or purchasing, redeeming or retiring capital stock; granting liens; incurring or guaranteeing additional debt; making investments and acquisitions; entering into transactions with affiliates; entering into any merger, consolidation or amalgamation or disposing of all or substantially all property or business; and disposing of property, including issuing capital stock.

The New Revolving Credit Facility also requires us to remain in compliance with certain financial ratios. The Borrower was in compliance with all covenants under the New Revolving Credit Facility as of June 30, 2025.

As of June 30, 2025, there was no outstanding debt under the New Revolving Credit Facility.

For more information about the New Revolving Credit Facility, see Note 9 to our Condensed Consolidated Financial Statements.

Repurchase Programs

On May 16, 2024, the Company announced that its Board of Directors authorized the repurchase of up to $150.0 million of the Company’s outstanding common stock (the “Repurchase Program”). On November 6, 2024, the Company announced that the Board authorized the repurchase of up to an additional $200.0 million of the Company’s outstanding common stock (the “New Repurchase Program”). Both programs allow the Company to repurchase for cash from time to time shares of its common stock through open market purchases pursuant to Rule 10b-18 and/or Rule 10b5-1 plans, in compliance with applicable securities laws and other legal requirements. Neither program obligates the Company to repurchase any specific number of shares, has no time limit, and may be modified, suspended, or discontinued at any time at the Company’s discretion.

Repurchases under the Repurchase Program commenced in June 2024. During the year ended December 31, 2024, the Company repurchased 6.8 million shares of its common stock for an aggregate repurchase amount of $128.0 million under the Repurchase Program. In January 2025, the Company repurchased an additional 1.1 million shares for $22.2 million, utilizing the remaining authorization under the Repurchase Program.

Repurchases under the New Repurchase Program commenced in March 2025. In March 2025, the Company repurchased 4.0 million shares of its common stock for an aggregate repurchase amount of $60.0 million under the New Repurchase Program.

During the three months ended March 31, 2025, the Company repurchased a total of 5.2 million shares of its common stock for an aggregate repurchase amount of $82.2 million under both repurchase programs. During the three months ended June 30, 2025, the Company did not repurchase any shares of its common stock. As of June 30, 2025, $140.0 million remained available and authorized for repurchase under the New Repurchase Program.

Cash Flows

The following table summarizes our cash flows for the periods indicated:

(In Thousands)

Operating Activities

Our cash flows from operating activities are primarily influenced by growth in our operations and by changes in our working capital. In particular, trade receivables increase in conjunction with our rapid growth in sales and decrease based on timing of cash receipts from our customers. The timing of payments of trade payables also impacts our cash flows from operating activities. We typically pay suppliers in advance of collections from our customers. Our collection and payment cycles can vary from period to period.

For the six months ended June 30, 2025, cash provided by operating activities was $87.3 million, attributable to net income of $11.1 million, adjusted for non-cash charges of $84.3 million and $8.1 million use of cash from changes in operating assets and liabilities. Non-cash charges primarily consisted of $27.1 million in depreciation and amortization and $51.3 million in stock-based compensation. The main drivers of the changes in operating assets and liabilities were a $41.0 million decrease in trade receivables, offset by an increase in prepaid expenses and other assets of $32.8 million due mainly to increases in prepayments, and a $16.3 million decrease in trade payables, accrued expenses and other liabilities primarily related to the timing of income tax payments.

For the six months ended June 30, 2024, cash provided by operating activities was $67.7 million, attributable to net income of $14.6 million, adjusted for non-cash charges of $60.9 million and $7.9 million use of cash from changes in operating assets and liabilities. Non-cash charges primarily consisted of $21.9 million in depreciation and amortization and $45.0 million in stock-based compensation, offset by $11.5 million in deferred taxes. The main drivers of the changes in operating assets and liabilities were a $0.8 million increase in trade receivables, prepaid expenses and other assets due mainly to increases in prepayments, and a $7.1 million decrease in trade payables, accrued expenses and other liabilities primarily related to the timing of income tax payments.

Investing Activities

For the six months ended June 30, 2025, cash used in investing activities was $86.7 million, including $82.6 million attributable to the acquisition of Rockerbox, $15.8 million attributable to purchases of property, plant and equipment, and capitalized software development costs, partially offset by $12.7 million attributable to proceeds from maturities of short-term financial instruments. For the six months ended June 30, 2024, cash used in investing activities was $95.5 million, including $81.9 million attributable to investments in short-term financial instruments and $13.6 million attributable to purchases of property, plant and equipment, and capitalized software development costs.

Financing Activities

For the six months ended June 30, 2025, cash used in financing activities of $86.0 million was due primarily to $82.2 million related to shares repurchased under the Repurchase Program and New Repurchase Program and $3.7 million related to shares repurchased for settlement of employee tax withholding. For the six months ended June 30, 2024, cash used in financing activities of $24.6 million was primarily due to $25.0 million related to shares repurchased under the Repurchase Program.

Critical Accounting Policies and Estimates

Management’s discussion and analysis of our financial condition and results of operations is based on our Condensed Consolidated Financial Statements, which have been prepared in accordance with GAAP. The preparation of these financial statements requires us to make estimates and assumptions for the reported amounts of assets and liabilities and related disclosures at the dates of the financial statements, and revenue and expenses during the reporting periods. Our estimates are based on our historical experience and on various other factors that we believe are reasonable for making judgments about the carrying value of assets and liabilities that are not readily apparent from other sources. We evaluate these estimates on an ongoing basis. Actual results may differ from these estimates under different assumptions or conditions, and any such differences may be material.

Some of the judgments that management makes in applying its accounting estimates in these areas are discussed in Note 2 to our audited Consolidated Financial Statements appearing in our Annual Report on Form 10-K for the year ended December 31, 2024. Since the date of our most recent Annual Report on Form 10-K, there have been no material changes to our critical accounting policies and estimates.

Market risks at June 30, 2025 have not materially changed from those discussed in the Annual Report on Form 10-K for the year ended December 31, 2024 under the heading “Quantitative and Qualitative Disclosures about Market Risk.”

Evaluation of Disclosure Controls and Procedures

Management, with the participation of our Chief Executive Officer and Chief Financial Officer, evaluated the effectiveness of our disclosure controls and procedures, as defined in Rule 13a-15(e) and 15d-15(e) under the Exchange Act, as of June 30, 2025. Our disclosure controls and procedures are designed to provide reasonable assurance that information required to be disclosed in the reports we file or submit under the Exchange Act is recorded, processed, summarized, and reported as and when required, and that such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, to allow timely decisions regarding its required disclosure. Based on this evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were effective as of June 30, 2025.

Changes in Internal Control over Financial Reporting

There have been no changes in our internal control over financial reporting during the quarter ended June 30, 2025 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

Limitations on the Effectiveness of Controls and Procedures

Management recognizes that a control system, no matter how well designed and implemented, can provide only reasonable, not absolute, assurance that the control system’s objectives will be met. Further, the design of a control system must reflect the fact that there are resource constraints and the benefits of controls must be considered relative to their costs. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud or error, if any, have been detected. The inherent limitations include the realities that judgments in decision-making can be faulty and that breakdowns can occur because of simple errors or mistakes. Additionally, controls can also be circumvented by the individual acts of some persons, by collusion of two or more people, or by management override of the controls. The design of any system of controls also is based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goal under all potential future conditions. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions or that the degree of compliance with the policies or procedures may deteriorate. Because of the inherent limitations in a cost-effective control system, misstatements due to error or fraud may occur and not be detected.

There have been no material changes to the risk factors described in the section titled “Risk Factors” in the Annual Report on Form 10-K for the year ended December 31, 2024.