SAP at Globe Series: Procurement to Build Back Better
This Quarterly Report on Form 10-Q contains forward-looking statements within
the meaning of Section 27A of the Securities Act of 1933, as amended, and
Section 21E of the Securities Exchange Act of 1934, as amended. Forward-looking
statements generally relate to future events or our future financial or
operating performance and may include statements concerning, among other things,
our business strategy (including anticipated trends and developments in, and
management plans for, our business and the markets in which we operate),
financial results, the impact of COVID-19 on our business, operations, and the
markets and communities in which we, our clients, and partners operate, results
of operations, revenues, operating expenses, and capital expenditures, sales and
marketing initiatives and competition. In some cases, you can identify
forward-looking statements because they contain words such as "may," "might,"
"will," "should," "expects," "plans," "anticipates," "could," "intends,"
"target," "projects," "contemplates," "believes," "estimates," "predicts,"
"suggests," "potential" or "continue" or the negative of these words or other
similar terms or expressions that concern our expectations, strategy, plans or
intentions. These statements are not guarantees of future performance; they
reflect our current views with respect to future events and are based on
assumptions and are subject to known and unknown risks, uncertainties and other
factors that may cause our actual results, performance or achievements to be
materially different from expectations or results projected or implied by
forward-looking statements.

We discuss many of these risks in our Annual Report on Form 10-K for the year
ended December 31, 2021 in greater detail under the heading "Item 1A. Risk
Factors" and in other filings we make from time to time with the Securities and
Exchange Commission ("SEC"). Also, these forward-looking statements represent
our estimates and assumptions only as of the date of this Quarterly Report on
Form 10-Q, which are inherently subject to change and involve risks and
uncertainties. Unless required by federal securities laws, we assume no
obligation to update any of these forward-looking statements, or to update the
reasons actual results could differ materially from those anticipated, to
reflect circumstances or events that occur after the statements are made. Given
these uncertainties, investors should not place undue reliance on these
forward-looking statements.

Investors should read this Quarterly Report on Form 10-Q and the documents that
we reference in this report and have filed with the SEC, including our Annual
Report on Form 10-K for the year ended December 31, 2021, completely and with
the understanding that our actual future results may be materially different
from what we expect. We qualify all of our forward-looking statements by these
cautionary statements.

References to “Notes” are notes included in our unaudited Condensed Consolidated
Financial Statements appearing elsewhere in this Quarterly Report on Form 10-Q.


Unless otherwise indicated, the terms "AdTheorent," "Company," "we," "us," or
"our" refer to AdTheorent Holding Company, Inc., together with its consolidated
subsidiaries.

Business Overview

Founded in 2012, we are a digital media platform which focuses on
performance-first, privacy-forward methods to execute programmatic digital
advertising campaigns, serving both advertising agency and brand customers.
Without relying on individualized profiles or sensitive personal data for
targeting, we utilize machine learning and advanced data analytics to make
programmatic digital advertising more effective and efficient at scale,
delivering measurable real-world value for advertisers. Our differentiated
advertising capabilities and superior campaign performance, measured by
customer-defined business metrics or KPIs, have helped fuel our customer
adoption and year-after-year growth.

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We use machine learning and advanced data science to organize, analyze and
operationalize non-sensitive data to deliver real-world value for customers.
Central to our ad-targeting and campaign optimization methods, we build custom
machine learning models for each campaign using historic and real-time data to
predict future consumer conversion actions for every digital ad impression. We
have integrations with Ad Exchanges/Supply Side Platforms (SSPs), from which we
are sent ad impression opportunities to evaluate and purchase. We predictively
score all of these ad impression opportunities for the purpose of deciding which
ad impressions will likely drive valuable conversions or engagement activity for
our customers. Our predictive platform scores over one million digital ad
impressions per second and 75 billion to 90 billion digital ad impressions per
day, assigning a "predictive score" to each. Each predictive score is determined
by correlating non-individualized data attributes associated with the particular
impression with data corresponding to previously purchased impressions that
yielded consumer conversion or engagement activity. Such non-individualized
attributes include variables such as publisher, content and URL keywords, device
make, device operating system and other device attributes, ad position,
geographic data, weather, demographic signals, creative type and size, etc. The
"predictive scores" generated by our platform allow us and our advertising
clients to determine which ad impressions are more likely or less likely to
result in client-desired KPIs. Our machine learning models are customized for
every campaign and our platform "learns" over the course of each campaign as it
processes more data related to post media view conversion experience. Based on
these statistical probabilities or "predictive scores," our platform
automatically determines bidding optimizations to drive conversions and
advertiser return on investment ("ROI") or return on advertising spend ("ROAS"),
bidding on less than .001 of the evaluated impressions. Our use of machine
learning and data science helps us to maximize efficiency and performance,
enabling our customers to avoid wasted ad spend related to suboptimal
impressions such as impressions that are predicted to be at a greater risk for
fraud/invalid traffic or impressions with a higher likelihood of being
unviewable, unmeasurable, or not brand safe, among other factors.

Our capabilities extend across the digital ecosystem to identify and engage
digital actors with the highest likelihood of completing customer-desired
actions, including online sales, other online actions, and real-world actions
such as physical location visitation, in-store sales or vertical specific KPI's
such as prescription fills/lift or submitted credit card applications. Our
custom and highly impactful campaign executions encompass popular digital
screens - mobile, desktop, tablet, connected TV ("CTV") - and all digital ad
formats, including display, rich media, video, native and streaming audio. We
actively manage our digital supply to provide advertisers with scale and reach,
while minimizing redundant inventory, waste and other inefficiencies. Our CTV
capability delivers scale and reach supplemented by innovative and industry
recognized machine-learning optimizations towards real-world actions and
value-added measurement services.

Our platform and machine learning-based targeting provide privacy advantages
that are lacking from alternatives which rely on individual user profiles or
cookies employing a "one-to-one" approach to digital ad targeting. Our targeting
approach is statistical, not individualized, and as a result we do not need to
compile or maintain user profiles, and we do not rely on cookies or user
profiles for targeting. Our solution-set is especially valuable to regulated
customers, such as financial institutions and pharmaceutical companies, and
other privacy-forward advertisers who desire efficient and effective digital
ad-targeting without individualized or personal targeting data. We adhere to
data usage protocols and model governance processes which help to ensure that
each customer's data is safeguarded and used only for that customer's benefit,
and we take a consultative and collaborative approach to data use best practices
with all of our customers.

Supplementing our core machine learning-powered platform capabilities, we offer
customized vertical solutions to address the needs of advertisers in specialized
industries. These specialized solutions feature vertical-specific capabilities
related to targeting, measurement and audience validation. Our Pharmaceutical
and Healthcare offering ("AdTheorent Health", formerly AdTheorentRx), harnesses
the power of machine learning to drive superior performance on campaigns
targeting both healthcare providers and patients, leveraging HIPAA-compliant
methods and targeting practices that comply with Network Advertising Initiative
Code and other self-regulatory standards. Our Banking, Financial Services and
Insurance ("BFSI") solutions drive real-world performance within the context of
regulatory requirements and data use best practices intended to prevent
discrimination and the use of "prohibited basis variables" in the promotion of
federally regulated credit-extension products. We have created additional
industry-tailored offerings to address the unique challenges and opportunities
in a growing range of verticals, including retail; automotive;
government/education/nonprofit; consumer packaged goods; dining, also referred
to as quick service restaurants; and entertainment.

Factors Affecting Our Performance

Growth of the Programmatic Advertising Market


Our operating results and prospects will be impacted by the overall continued
adoption of programmatic advertising by inventory owners and content providers,
as well as advertisers and the agencies that represent them. Programmatic
advertising has grown rapidly in recent years, and any acceleration, or slowing,
of this growth, due to macro-economic factors or otherwise, would affect our
operating and financial performance. In addition, even if the programmatic
advertising market

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continues to grow at its current rate, our ability to successfully position
ourself within the market will impact the future growth of the business.

Investment in Platform and Solutions to Provide Continued Differentiation in
Evolving Market


We believe that the capabilities and differentiation offered by our platform and
solutions have been critical to our historical growth. Continued innovation in
an evolving programmatic marketplace will be an important driver of our future
growth. We anticipate that operating expenses will increase in the foreseeable
future as the Company invests in platform operations and technology, data
science and machine learning capabilities and data infrastructure and tools to
enhance our custom solutions and value-added offerings. We believe that these
investments will contribute to our long-term growth, although they may have a
negative impact on profitability in the near-term.

Growth in and Retention of Customer Spend


We are making incremental investments in sales and marketing to acquire new
customers and increase existing customers' usage of our platform and solutions.
We believe that there is significant room for growth within our existing
customers, which include many large global brands and advertising agencies.
Future revenue and profitability growth depends upon our ability to cost
effectively on-board new customers and our on-going ability to retain and scale
existing customers.

Our growth may continue to be impacted in the second half of 2022 by
macroeconomic factors beyond our control such as inflation, rising interest
rates, pandemic related factors, global geopolitical uncertainties, among other
things, as well as anticipated further year-over-year declines in our
acquisition of new customers.

Ability to Continue to Access High Performing Media Inventory in Existing and
Emerging Channels


Our ability to deliver upon clients' targeted key performance indicators is
reliant upon our ability to access high quality media inventory across multiple
advertising channels at scale. Our future growth will depend on our ability to
maintain and grow spend on existing and emerging channels, including advertising
on display, rich media, native, video and audio ad formats across mobile,
desktop and CTV formats.

Development of International Markets


Although almost all of our historic revenue is attributable to campaigns and
operations in the United States and Canada, we are exploring opportunities to
serve new international markets, including serving the global needs of existing
customers. We believe that the global opportunity for programmatic advertising
is significant and should continue to expand as publishers and advertisers
outside the United States and Canada increasingly seek to adopt the benefits
that programmatic advertising provides. We believe that our privacy-forward
approach to ad targeting and data usage will provide desired differentiation and
value in highly and increasingly regulated markets such as the EU, which is
subject to the "General Data Protection Regulation ("GDPR"). Our ability to
efficiently expand into new markets will affect our operating results.

Managing Seasonality


The global advertising industry experiences seasonal trends that affect the vast
majority of participants in the digital advertising ecosystem. Most notably,
advertisers have historically spent relatively more in the fourth quarter of the
calendar year to coincide with the holiday shopping season, and relatively less
in the first quarter. In addition to the impact on revenue, seasonal demand for
advertising inventory also has a corresponding impact on media costs that
increase or decrease with seasonal demand, which impacts profitability. We
expect seasonality trends to continue, and our ability to manage resources in
anticipation of these trends could affect operating results.

Key Business Metric

To analyze our business performance, determine financial forecasts and help
develop long-term strategic plans, we review the following key business metric:

Active Customers


We track active customers, which are defined as our customers who spent over
$5,000 during the previous twelve months. We monitor active customers to help
understand our revenue performance. Additionally, monitoring active customers

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helps us understand the nature and extent to which the active customer base is
growing, which assists management in establishing operational goals.


The number of active customers as of June 30, 2022 was 331 and as of June 30,
2021 was 287, increasing by 44 customers, or 15%, respectively, year over year.
The number of active customers as of December 31, 2021 was 309, for a year to
date increase of 22 customers, or 7%.

Results of Operations


The period-to-period comparisons of our results of operations have been prepared
using the historical periods included in our Condensed Consolidated Financial
Statements. The following discussion should be read in conjunction with the
Condensed Consolidated Financial Statements and related notes included elsewhere
in this document as well as the Consolidated Financial Statements within our
Annual Report on Form 10-K for the year ended December 31, 2021, as filed with
the SEC, for additional information regarding the components of our results of
operations and our accounting policies.

Three and Six Months Ended June 30, 2022 Compared to Three and Six Months Ended
June 30, 2021

The following table summarizes our historical results of operation for the
periods presented:


                                       Three Months Ended                                       Six Months Ended
                             June 30, 2022               June 30, 2021               June 30, 2022               June 30, 2021
(amounts in US
Dollars)                     (in thousands, except for percentages)                  (in thousands, except for percentages)
Revenue                $    42,476          100.0 %   $ 39,867       100.0 %   $    76,717          100.0 %   $ 70,834       100.0 %
Operating expenses:
Platform operations         20,854           49.1 %     18,263        45.8 %        38,626           50.3 %     33,151        46.8 %
Sales and marketing         11,083           26.1 %      8,422        21.1 %        21,413           27.9 %     16,480        23.3 %
Technology and
development                  4,153            9.8 %      2,670         6.7 %         8,438           11.0 %      5,133         7.2 %
General and
administrative               5,103           12.0 %      7,977        20.0 %        10,704           14.0 %     10,114        14.3 %
Total operating
expenses                    41,193           97.0 %     37,332        93.6 %        79,181          103.2 %     64,878        91.6 %
Income (loss) from
operations                   1,283            3.0 %      2,535         6.4 %        (2,464 )         -3.2 %      5,956         8.4 %
Interest expense,
net                            (47 )         -0.1 %       (610 )      -1.5 %          (156 )         -0.2 %     (1,210 )      -1.7 %
Gain on change in
fair value of
Seller's Earn-Out           37,419           88.1 %          -         0.0 %        12,763           16.6 %          -         0.0 %
Gain on change in
fair value of
warrants                    18,523           43.6 %          -         0.0 %         2,587            3.4 %          -         0.0 %
Gain on
deconsolidation of
SymetryML                        -            0.0 %          -         0.0 %         1,939            2.5 %          -         0.0 %
Loss on change in
fair value of SAFE
Notes                            -            0.0 %          -         0.0 %          (788 )         -1.0 %          -         0.0 %
Loss on fair value
of investment in
SymetryML Holdings             (10 )          0.0 %          -         0.0 %           (10 )          0.0 %          -         0.0 %
Other (expense)
income, net                     (1 )          0.0 %         20         0.1 %           (19 )          0.0 %         20         0.0 %
Total other income
(expense), net              55,884          131.6 %       (590 )      -1.5 %        16,316           21.3 %     (1,190 )      -1.7 %
Income from
operations before
income taxes                57,167          134.6 %      1,945         4.9 %        13,852           18.1 %      4,766         6.7 %
Benefit (provision)
for income taxes               610            1.4 %       (584 )      -1.5 %         1,635            2.1 %     (1,572 )      -2.2 %
Net income             $    57,777          136.0 %   $  1,361         3.4 %   $    15,487           20.2 %   $  3,194         4.5 %




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Revenue
                                                         Change
                                2022       2021        $          %
Three Months Ended June 30,   $ 42,476   $ 39,867   $ 2,609       6.5 %
Six Months Ended June 30,     $ 76,717   $ 70,834   $ 5,883       8.3 %


Total revenue for the three months ended June 30, 2022 and 2021 was $42.5
million and $39.9 million, respectively, an increase of $2.6 million, or 6.5%.
The largest drivers of the growth were in the healthcare/pharmaceutical, retail,
travel, and software/websites verticals, which collectively increased $5.6
million, or 32.7%, The offsetting decrease to revenue was primarily due to
decreases in the government/education/nonprofit, BFSI (impacted by the
automotive finance and insurance), and industry/agriculture verticals with a
collective decrease of $3.0 million, or 20.0%. Overall, the increase was driven
by continued increased CTV revenue which grew $2.1 million, or 107%.

Total revenue for the six months ended June 30, 2022 and 2021 was $76.7 million
and $70.8 million, respectively, an increase of $5.9 million, or 8.3%. The
largest drivers of the growth were in the healthcare/pharmaceutical, retail,
software/websites, consumer packaged goods and travel verticals, which
collectively increased $8.2 million, or 24.0%, The offsetting decrease to
revenue was primarily due to decreases in government/education/nonprofit, and
industry/agriculture verticals with a collective decrease of $1.9 million, or
15.3%. Overall, the increase was driven by continued increased CTV revenue which
grew $2.8 million, or 76%.

Operating expenses

                                                          Change
                                2022       2021        $           %

Three Months Ended June 30, $ 41,193 $ 37,332 $ 3,861 10.3 %
Six Months Ended June 30, $ 79,181 $ 64,878 $ 14,303 22.0 %



Operating expenses for the three months ended June 30, 2022 and 2021 were $41.2
million and $37.3 million respectively with the increase of $3.9 million, or
10.3% and operating expenses for the six months ended June 30, 2022 and 2021
were $79.2 million and $64.9 million respectively with the increase of $14.3
million, or 22.0%. Refer to the discussion below for further details of these
variances.

Platform operations
                                                          Change
                                2022       2021        $          %

Three Months Ended June 30, $ 20,854 $ 18,263 $ 2,591 14.2 %
Six Months Ended June 30, $ 38,626 $ 33,151 $ 5,475 16.5 %



Platform operations expenses for the three months ended June 30, 2022 and 2021
were $20.9 million and $18.3 million, respectively. The increase of $2.6 million
or 14.2%, was mainly attributable to revenue driven traffic acquisition costs
which increased approximately $0.9 million, or 6.9%. An increase in equity-based
compensation of $0.6 million contributed to employee expenses allocated to
platform operations. Hiring-driven increases in allocated costs of our personnel
responsible for monitoring campaign performance of $0.5 million and
volume-driven increases in hosting expense of approximately $0.4 million
contributed to the increase.

Platform operations expenses for the six months ended June 30, 2022 and 2021
were $38.6 million and $33.2 million, respectively. The increase of $5.5 million
or 16.5%, was mainly attributable to revenue driven traffic acquisition costs
which increased approximately $2.0 million, or 8.6%. Hiring-driven increases in
allocated costs of our personnel responsible for monitoring campaign performance
of $1.1 million and volume-driven increases in hosting expense of approximately
$0.9 million contributed to the increase. An increase in equity-based
compensation of $0.9 million contributed to employee expenses allocated to
platform operations.

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Sales and marketing

                                                          Change
                                2022       2021        $          %

Three Months Ended June 30, $ 11,083 $ 8,422 $ 2,661 31.6 %
Six Months Ended June 30, $ 21,413 $ 16,480 $ 4,933 29.9 %



Sales and marketing expenses for the three months ended June 30, 2022 and
2021were $11.1 million and $8.4 million respectively. The increase of $2.7
million or 31.6%, was primarily due to a $1.3 increase in equity-based
compensation allocated to sales and marketing, a $1.0 million increase in
employee expenses related to hiring for the sales and customer support teams,
and an increase of $0.4 million for travel-related expenses as sales personnel
continue to resume more traditional business travel routines.

Sales and marketing expenses for the six months ended June 30, 2022 and 2021
were $21.4 million and $16.5 million respectively. The increase of $4.9 million
or 29.9%, was primarily due to a $2.1 million increase in employee expenses
related to hiring for the sales and customer support teams, $1.9 increase in
equity-based compensation allocated to sales and marketing and an increase of
$0.8 million for travel-related expenses as sales personnel continue to resume
more traditional business travel routines.

Technology and development
                                                        Change
                               2022      2021        $          %
Three Months Ended June 30,   $ 4,153   $ 2,670   $ 1,483       55.5 %
Six Months Ended June 30,     $ 8,438   $ 5,133   $ 3,305       64.4 %


Technology and development expenses for the three months ended June 30, 2022 and
2021 were $4.2 million and $2.7 million, respectively. The increase of $1.5
million or 55.5%, was mainly due to $1.0 million of incremental software expense
incurred in the three months ended June 30, 2022, an increase of $0.6 million
hiring and employee related costs to support research and product development,
and an increase of $0.6 million in equity-based compensation allocated to
technology and development. The increase was offset by a decrease of $0.6
million in technology and development expenses related to the deconsolidation of
SymetryML Holdings on March 31, 2022.

Technology and development expenses for the six months ended June 30, 2022 and
2021 were $8.4 million and $5.1 million respectively. The increase of $3.3
million or 64.4%, was mainly due to $2.0 million of incremental software expense
incurred in the six months ended June 30, 2022, a $1.2 million increase in
hiring and employee related costs to support research and product development,
and an increase of $1.0 million in equity-based compensation allocated to
technology and development. The increase was offset by a decrease of $0.8
million in technology and development expenses related to the deconsolidation of
SymetryML Holdings on March 31, 2022.

For further information on the deconsolidation of SymetryML Holdings, refer to
Note 18 – SymetryML and SymetryML Holdings of our Condensed Consolidated
Financial Statements, included elsewhere in this Form 10-Q.

General and administrative
                                                          Change
                                2022       2021        $           %
Three Months Ended June 30,   $  5,103   $  7,977   $ (2,874 )     36.0 %
Six Months Ended June 30,     $ 10,704   $ 10,114   $    590        5.8 %


General and administrative expenses for the three months ended June 30, 2022 and
2021 were $5.1 million and $8.0 million, respectively. The decrease of $2.9
million or 36.0%, was primarily due to a one-time lease termination fee of
approximately $4.2 million expensed in the three months ended June 30, 2021 for
terminating our primary New York City headquarters office lease as we negotiated
a more cost-effective lease in the same building to reduce future rent
obligations. Additionally, professional service expenses decreased $1.6 million
due to prior year incurred costs related to public company readiness, including
elevated legal and consulting costs. The decrease was offset by an increase in
equity-based compensation allocated to general and administrative of $1.2
million and an increase in insurance expense of $0.8 million in the three months

                                       27
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ended June 30, 2022, mainly driven by directors and officers insurance incurred,
and an increase of $0.4 million in employee expenses related to hiring for the
general and administrative teams.

General and administrative expenses for the six months ended June 30, 2022 and
2021 were $10.7 million and $10.1 million respectively. The increase of $0.6
million, or 5.8%, was primarily due to a $1.8 million increase in equity-based
compensation allocated to general and administrative, a $1.6 million increase in
insurance expense mainly driven by directors and officers insurance incurred in
the six months ended June 30, 2022, a $0.6 million increase in employee expenses
related to hiring for the general and administrative teams, $0.3 million
increase in public filings and registration related fees, and a $0.2 million
increase in franchise taxes. These increases were offset by a one-time lease
termination fee of approximately $4.2 million expensed in the three months ended
June 30, 2021 for terminating our primary New York City headquarters office
lease as we negotiated a more cost-effective lease in the same building to
reduce future rent obligations.

Interest expense
                                                        Change
                               2022      2021        $          %
Three Months Ended June 30,   $  (47 ) $   (610 ) $   563       92.3 %
Six Months Ended June 30,     $ (156 ) $ (1,210 ) $ 1,054       87.1 %


Total Interest expense, net for the three months ended June 30, 2022 and 2021
was $0.0 million and $0.6 million, respectively, a decrease of $0.6 million, or
92.3% and for the six months ended June 30, 2022 and 2021 was $0.2 million and
$1.2 million, respectively, a decrease of $1.1 million, or 87.1%. The decrease
in each comparative period is a direct result of a reduction in loan principal
balance.

Gain on change in fair value of Seller’s Earn-Out

                                                     Change
                                2022     2021       $         %

Three Months Ended June 30, $ 37,419 $ – $ 37,419 **
Six Months Ended June 30, $ 12,763 $ – $ 12,763 **



For the three months ended June 30, 2022, the Seller's Earn-Out liability had a
decrease in fair value of $37.4 million resulting in a gain of this amount. The
decrease in fair value was primarily a result of the decrease in our stock price
from March 31, 2021 to June 30, 2022.

For the six months ended June 30, 2022, the Seller's Earn-Out liability had a
decrease in fair value of $12.8 million resulting in a gain for this amount. The
decrease in fair value was primarily a result of the decrease in our stock price
from December 31, 2021 to June 30, 2022.

The Seller's Earn-Out was a result of the Business Combination on December 22,
2021, as detailed in Note 3 - Business Combination included in our Annual Report
on Form 10-K for the year ended December 31, 2021.

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Gain on change in fair value of warrants

                                                     Change
                                2022     2021       $         %

Three Months Ended June 30, $ 18,523 $ – $ 18,523 **
Six Months Ended June 30, $ 2,587 $ – $ 2,587 **



For the three months ended June 30, 2022, the warrants liability had a decrease
in fair value of $18.5 million, resulting in a gain for this amount. The
decrease in fair value was primarily a result of the decrease in our stock price
from March 31, 2021 to June 30, 2022.

For the six months ended June 30, 2022, the warrants liability had a decrease in
fair value of $2.6 million, resulting in a gain for this amount. The decrease in
fair value was primarily a result of the decrease in our stock price from
December 31, 2021 to June 30, 2022.

The warrants were assumed by the Company in connection with the Business
Combination on December 22, 2021, as detailed in Note 3 – Business Combination
included in our Annual Report on Form 10-K for the year ended December 31, 2021.

Benefit (provision) for income taxes

                                                          Change
                               2022       2021        $           %
Three Months Ended June 30,   $   610   $   (584 ) $ 1,194       -204.5 %
Six Months Ended June 30,     $ 1,635   $ (1,572 ) $ 3,207       -204.0 %


Benefit (provision) for income taxes for the three months ended June 30, 2022
and 2021 was $0.6 million and ($0.6) million, respectively, a change of $1.2
million.

Benefit (provision) for income taxes for the six months ended June 30, 2022 and
2021 was $0.6 million and ($1.6) million respectively, a change of $3.2 million.
The AETR for the six months ended June 30, 2022 and 2021 was 41.1% and 33.0%,
respectively.

The AETR for the six months ended June 30, 2022 was more than the statutory rate
of 21% primarily due to state and local income taxes, meals and entertainment,
and executive equity-based compensation not deductible for tax purposes.
Additionally, we did not include any fair value adjustments not reasonably
estimable for the full year in the calculation of our AETR, such as the Seller's
Earn-out and warrant liabilities as we cannot project the full-year impact of
these specific items.

Non-GAAP Financial Information


We calculate and monitor certain non-GAAP financial measures to help set
budgets, establish operational goals, analyze financial results and performance,
and make strategic decisions. We also believe that the presentation of these
non-GAAP financial measures provides an additional tool for investors to use in
comparing our results of operations over multiple periods. However, the non-GAAP
financial measures may not be comparable to similarly titled measures reported
by other companies due to differences in the way that these measures are
calculated. The non-GAAP financial measures presented should not be considered
as the sole measure of our performance, and should not be considered in
isolation from, or a substitute for, comparable financial measures calculated in
accordance with generally with accepted accounting principles in the United
States ("GAAP").

The information in the table below sets forth the non-GAAP financial measures
that we monitor. Because of the limitations associated with these non-GAAP
financial measures, "Adjusted Gross Profit," "EBITDA," "Adjusted EBITDA,"
"Adjusted Gross Profit as a % of Revenue" and "Adjusted EBITDA as a percent of
Adjusted Gross Profit" should not be considered in isolation or as a substitute
for performance measures calculated in accordance with GAAP. We compensate for
these limitations by relying primarily on our GAAP results and using non-GAAP
measures on a supplemental basis. You should review the reconciliation of the
non-GAAP financial measures below and not rely on any single financial measure
to evaluate our business.

Adjusted Gross Profit

Adjusted Gross Profit is a non-GAAP profitability measure. Adjusted Gross Profit
is a non-GAAP financial measure of campaign profitability, monitored by
management and the Board, used to evaluate our operating performance and trends,
develop short- and long-term operational plans, and make strategic decisions
regarding the allocation of capital. We believe

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this measure provides a useful period to period comparison of campaign
profitability and is useful information to investors and the market in
understanding and evaluating our operating results in the same manner as our
management and Board. Gross profit is the most comparable GAAP measurement,
which is calculated as revenue less platform operations costs. In calculating
Adjusted Gross Profit, we add back other platform operations costs, which
consist of amortization expense related to capitalized software, depreciation
expense, allocated costs of personnel which set up and monitor campaign
performance, and platform hosting, license, and maintenance costs, to gross
profit.

The following table presents the calculation of gross profit and reconciliation
of gross profit to Adjusted Gross Profit for the three and six months ended June
30, 2022 and 2021.

                                                    Three Months Ended June 

30, Six Months Ended June 30,

                                                    2022               2021             2022             2021
(amounts in US Dollars)                                                    (in thousands)
Revenue                                         $     42,476       $     39,867     $     76,717       $  70,834
Less: Platform operations                             20,854             18,263           38,626          33,151
Gross Profit                                          21,622             21,604           38,091          37,683
Add back: Other platform operations                    6,724              5,048           13,240           9,767
Adjusted Gross Profit (1)                       $     28,346       $     26,652     $     51,331       $  47,450


EBITDA and Adjusted EBITDA

EBITDA is a non-GAAP financial measure defined by us as net income (loss),
before interest expense, net, depreciation, amortization and income tax expense.
Adjusted EBITDA is defined as EBITDA before stock compensation expense, Business
Combination transaction costs, management fees, non-core operations and other
potential non-recurring items.

Collectively these non-GAAP financial measures are key profitability measures
used by our management and Board to understand and evaluate our operating
performance and trends, develop short-and long-term operational plans and make
strategic decisions regarding the allocation of capital. We believe that these
measures can provide useful period-to-period comparisons of campaign
profitability. Accordingly, we believe that these measures provide useful
information to investors and the market in understanding and evaluating our
operating results in the same manner as our management and the Board.

                                             Three Months Ended June 30,    

Six Months Ended June 30,

                                             2022                2021              2022               2021
(amounts in US Dollars)                                             (in thousands)
Net income                               $      57,777       $      1,361     $       15,487       $     3,194
Interest expense, net                               47                610     $          156       $     1,210
Tax (benefit) expense                             (610 )              584             (1,635 )           1,572
Depreciation and amortization                    1,954              2,122     $        4,042             4,224
EBITDA (1)                               $      59,168       $      4,677     $       18,050       $    10,200
Equity based compensation                        3,856                108     $        5,844       $       272
Seller's Earn-Out equity-based
compensation                                       499                  -     $          991       $         -
Transaction costs (2)                             (271 )            2,197     $         (131 )     $     2,438
Gain on change in fair value of
Seller's Earn-Out (3)                          (37,419 )                -            (12,763 )               -
Gain on change in fair value of
warrants (4)                                   (18,523 )                -             (2,587 )               -
Gain on deconsolidation of SymetryML
(5)                                                  -                  -             (1,939 )               -
Loss on change in fair value of SAFE
Notes (6)                                            -                  -                788                 -
Loss on fair value of investment in
SymetryML Holdings                                  10                  -                 10                 -
Management fees (7)                                  -                218     $            -       $       435
Lease termination fee                                -              4,243     $            -       $     4,243
Non-core operations (8)                              -                595     $          351       $     1,194
Adjusted EBITDA (1)                      $       7,320       $     12,038     $        8,614       $    18,782




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Adjusted EBITDA as a Percentage of Adjusted Gross Profit and Adjusted Gross
Profit as a Percentage of Revenue


                                               Three Months Ended June 30,             Six Months Ended June 30,
                                                2022                 2021              2022                2021
(amounts in US Dollars)                                     (in thousands, except for percentages)
Gross Profit                               $       21,622       $       21,604     $      38,091       $      37,683
Net (loss) income                          $       57,777       $        1,361     $      15,487       $       3,194
Net income as a % of Gross Profit                   267.2 %                6.3 %            40.7 %               8.5 %
Adjusted Gross Profit (1)                  $       28,346       $       26,652     $      51,331       $      47,450
Adjusted EBITDA (1)                        $        7,320       $       12,038     $       8,614       $      18,782
Adjusted EBITDA as a % of Adjusted Gross
Profit (1)                                           25.8 %               45.2 %            16.8 %              39.6 %
Gross Profit                               $       21,622       $       21,604     $      38,091       $      37,683
Revenue                                    $       42,476       $       39,867     $      76,717       $      70,834
Gross Profit as a % of Revenue                       50.9 %               54.2 %            49.7 %              53.2 %
Revenue                                    $       42,476       $       39,867     $      76,717       $      70,834
Adjusted Gross Profit (1)                  $       28,346       $       26,652     $      51,331       $      47,450
Adjusted Gross Profit as a % of Revenue
(1)                                                  66.7 %               66.9 %            66.9 %              67.0 %


(1)
We use non-GAAP financial measures to help set budgets, establish operational
goals, analyze financial results and performance, and make strategic decisions.
(2)
Includes incurred transaction-related expenses and costs related to strategic
initiatives in the three and six months ended June 30, 2021 which were suspended
due to the COVID-19 pandemic. In the three and six months ended June 30, 2022,
included professional fees directly related to the Business Combination.
(3)
In connection with the Business Combination, a Seller's Earn-Out liability was
recorded. The gain represents the increase in fair value of the Seller's
Earn-Out in the three and six months ended June 30, 2022.
(4)
In connection with the Business Combination, a liability for warrants was
recorded. The gain represents the increase in fair value of the warrants in the
three and six months ended June 30, 2022.
(5)
On March 31, 2022, we deconsolidated SymetryML which resulted in a gain. Refer
to Note 18 - SymetryML and SymetryML Holdings of our Condensed Consolidated
Financial Statements, included elsewhere in this Form 10-Q, for more
information.
(6)
On March 31, 2022, in connection with the deconsolidation of SymetryML, the SAFE
Notes we performed a valuation of the SAFE notes on that date which resulted in
a loss. Refer to Note 18 - SymetryML and SymetryML Holdings of our Condensed
Consolidated Financial Statements, included elsewhere in this Form 10-Q, for
more information.
(7)
On December 22, 2016, we closed a growth recapitalization transaction with
H.I.G. Capital. The agreements related to fees paid to H.I.G. Capital were
discontinued effective December 22, 2021, the closing date of the Business
Combination.
(8)
Effective as of March 1, 2020, we effectuated a contribution of our SymetryML
department into a new subsidiary, SymetryML, Inc. We periodically raised capital
to fund Symetry operations, by entering into Simple Agreement for Future Equity
Notes ("SAFE Note") with several parties. We viewed SymetryML operations as
non-core, and did not fund future operational expenses incurred in excess of
SAFE Note funding secured. Effective March 31, 2022, we no longer consolidate
SymetryML. Refer to Note 18 - SymetryML and SymetryML Holdings of our Condensed
Consolidated Financial Statements, included elsewhere in this Form 10-Q, for
more information.

Liquidity and Capital Resources

Our business requires substantial amounts of cash for operating activities,
including salaries and wages paid to our employees, development expenses,
general and administrative expenses, and others. As of June 30, 2022, we had
$63.6 million in cash and cash equivalents.


As of June 30, 2022, our working capital was $98.0 million. All amounts
previously drawn on our Revolving Credit Facility, as defined below were re-paid
in January 2022 and we do not anticipate a need to borrow on this facility in
the immediate future. We believe we have sufficient sources of liquidity,
including cash generated from operations as well as the capacity on the
Revolving Credit Facility, to support our operating needs, capital requirements,
and debt service requirements for the next twelve months.

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The accompanying Condensed Consolidated Financial Statements have been prepared
assuming we will continue as a going concern, which contemplates the realization
of assets and satisfaction of liabilities in the normal course of business.

Our purchase commitments per our standard terms and conditions with our
suppliers and vendors are cancellable in whole or in part with or without cause
prior to delivery. If we terminate an order, we will have no liability beyond
payment of any balances owing for goods or services delivered previously.

Silicon Valley Bank Revolver


On September 21, 2017, Legacy AdTheorent, as defined in Note 1 - Description of
Business included in our Annual Report on Form 10-K for the year ended December
31, 2021, entered into a Loan and Security agreement ("Loan and Security
Agreement") with Silicon Valley Bank ("SVB"). The original Loan and Security
Agreement consisted of a revolving line ("SVB Revolver") and letters of credit
("Letters of Credit"). The SVB Revolver is available on demand and accrues
interest at Prime (as defined in the Loan and Security Agreement) plus 2.5% and
interest shall be payable monthly. The borrowing base of the SVB Revolver is
80.0% of the Company's eligible accounts receivable. Upon expiration, all
outstanding principal and interest are due. The collections of our accounts
receivable are applied to the outstanding loan balance daily.

Since the inception of the Loan and Security Agreement, Legacy AdTheorent has
entered into several amendments, primarily to extend the term of the agreement.
On December 22, 2021, we entered into a senior secured credit facilities credit
agreement (the "Senior Secured Agreement") with SVB. The Senior Secured
Agreement allows us to borrow up to $40,000 in a revolving credit facility
("Revolving Credit Facility"), including a $10,000 sub-limit for letters of
credit and a swing line sub-limit of $10,000. The Revolving Credit Facility
commitment termination date is December 22, 2026. We accounted for the Senior
Secured Agreement as a debt modification.

In accordance with the Senior Secured Agreement there are two types of revolving
loan, either a Secured Overnight Financing Rate Loan ("SOFR Loan") loan or an
ABR Alternate Base Rate Loan ("ABR Loan"). The revolving loans may from time to
time be SOFR Loans or ABR Loans, as determined by the Company. Interest shall be
payable quarterly based on the type of loan.

a)

Each SOFR Loan bears interest for each day at a rate per annum equal to Adjusted
Term SOFR, as defined in the Senior Secured Agreement, plus the Applicable
Margin, as defined in the Senior Secured Agreement. The Applicable Margin can
vary between 2.00% and 2.50% based on the leverage ratio of the Company.

b)

Each ABR Loan (including any swingline loan) bears interest at a rate per annum
equal to the highest of the Prime Rate in effect on such day, the Federal Funds
Effective Rate in effect on such day plus 0.50%, and the Adjusted Term SOFR, as
defined in the Senior Secured Agreement, for a one-month tenor in effect on such
day plus 1.00% ("ABR"); plus the Applicable Margin, as defined in the Senior
Secured Agreement. The Applicable Margin can vary between 1.00% and 1.50% based
on the leverage ratio of the Company.

In addition, the Senior Secured Agreement has a commitment fee in relation to
the non-use of available funds ranging from 0.25% to 0.35% per annum based on
the leverage ratio of the Company.

All obligations under the Senior Secured Agreement are secured by a first
priority lien on substantially all assets of the Company.


We are subject to customary representations, warranties, and covenants. The
Senior Secured Agreement requires that the Company meet certain financial and
non-financial covenants which include, but are not limited to, (i) delivering
audited consolidated financial statements to the lender within 90 days after
year-end commencing with the fiscal year ending December 31, 2022 financial
statements, (ii) delivering unaudited quarterly consolidated financial
statements within 45 days after each fiscal quarter, commencing with the
quarterly period ending on March 31, 2022 and (iii) maintaining certain leverage
ratios and liquidity coverage ratios. As of June 30, 2022, we were in full
compliance with the terms of the Senior Secured Agreement.

As of June 30, 2022, we had one letter of credit for approximately $1.0 million
and no amounts were drawn on the revolving credit facility.

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Cash Flows


Days payable outstanding ("DPO") is calculated by dividing the average accounts
payable for the period presented by the expense activity classified as platform
operations less allocated costs of our personnel and allocated depreciation and
amortization for the periods presented multiplied by the number of days in the
period. We are generally contractually required to pay suppliers of advertising
inventory and data within a negotiated period of time, regardless of whether our
customers pay on time, or at all. While we attempt to negotiate long payment
periods with our suppliers and shorter periods from our customers, it is not
always successful. As a result, our accounts payable are often due on shorter
cycles than our accounts receivables, requiring us to remit payments from our
own funds, and accept the risk of bad debt. Our standard payment terms range
from 30 to 60 days.

Days sales outstanding ("DSO") is calculated by dividing average accounts
receivable for the period by revenue recorded for the period multiplied by the
number of days in the period. Our standard payment terms range from 30 to 60
days. For the periods presented, our DSO has exceeded the standard payment terms
of customers, because like many companies in our industry, we often experience
slow payment by advertising agencies, such that advertising agencies typically
collect payment from their customers before remitting payment to us. We evaluate
the creditworthiness of customers on a regular basis.

Accounts receivable are recorded at the invoiced amount, are unsecured, and do
not bear interest. The allowance for doubtful accounts is based on the best
estimate of the amount of probable credit losses in existing accounts
receivable. We individually review all balances that exceed 90 days from the
invoice date and assesses for provisions for doubtful accounts based on an
assessment of the balance that will not be collected. Factors considered include
the aging of the receivable, historical write off experience, the
creditworthiness of each agency customer, and general economic conditions.
Account balances are charged off against the allowance after all means of
collection have been exhausted and the potential for recovery is remote.

We expect to continue generating strong positive cash flows as we scale our
operations.

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


                                               Six Months Ended June 30,
                                                2022              2021
(amounts in US Dollars)                              (in thousands)

Net cash provided by operating activities $ 3,289 $ 4,219
Net cash used in investing activities $ (1,520 ) $ (1,210 )
Net cash used in financing activities $ (38,234 ) $ (495 )




Operating Activities

Net cash provided by operating activities for the six months ended June 30, 2022
was $3.3 million compared to $4.2 million for the six months ended June 30,
2021
. The decrease of $0.9 million was primarily due to the following:

Increase in cash paid for employee expenses primarily due to the increase in
headcount of $6.1 million.

Increase in cash paid for insurance premiums of $3.2 million primarily related
to being a newly public company.

Increase in cash paid related to campaign costs of $3.2 million.

Increase in cash paid for professional services of $2.3 million related to being
a newly public company including increased audit, consulting, and legal fees.

Increase in cash paid for software costs of $2.0 million.

Increase in cash paid for sales and marketing costs of $1.2 million primarily
due to a one-time marketing event in the 2022 period, as well as an increase in
overall sales and marketing spend.

Increase in cash paid for hosting costs of $1.0 million related to volume driven
increases.

Timing differences of certain payments and collections. DPO decreased 3.6% to 53
days for the six months ended June 30, 2022 from 55 days for the six months
ended June 30, 2021 and DSO increased 5.3% to 100 days for the six months ended
June 30, 2022 from 95 days for the six months ended June 30, 2021.

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Offsetting increases in operating cash included the following:

Cash collected for revenue increased $10.8 million.

Decrease in cash paid for rent and lease termination fees $3.7 million.

Decrease in cash paid for income taxes of $3.6 million.

Decrease in cash paid for interest of $1.2 million.

Investing Activities


Net cash used in investing activities during the six months ended June 30, 2022
was $1.5 million, primarily consisting of capitalized software development costs
of $1.2 million

Net cash used in investing activities during the six months ended June 30, 2021
was $1.2 million, primarily consisting of capitalized software development costs
of $1.1 million.

We expect to continue capitalizing software and purchasing property and
equipment as we expand our operations.

Financing Activities


Net cash used in financing activities during the six months ended June 30, 2022
was $38.2 million, consisting primarily of the re-payment of revolver borrowings
of $39.0 million. We also received proceeds from the SAFE Notes of $0.2 million
and proceeds related to a SymetryML issuance of preferred stock of $0.4 million.

Net cash used in financing activities during the six months ended June 30, 2021
was $0.5 million, consisting of payment of term loan of $1.2 million and
proceeds from SAFE Notes of $0.7 million.

Critical Accounting Policies and Significant Estimates


Our Condensed Consolidated Financial Statements have been prepared in accordance
with GAAP. Preparation of the financial statements requires our management to
make judgments, estimates and assumptions that impact the reported amount of
revenue and expenses, assets and liabilities and the disclosure of contingent
assets and liabilities. We consider an accounting judgment, estimate or
assumption to be critical when (1) the estimate or assumption is complex in
nature or requires a high degree of judgment and (2) the use of different
judgments, estimates and assumptions could have a material impact on our
Condensed Consolidated Financial Statements. We believe that our policies for
revenue recognition, equity-based compensation, software development costs,
goodwill, and long-lived asset recoverability have the greatest potential impact
on our Condensed Consolidated Financial Statements and are therefore considered
our critical accounting policies and estimates.

During the three months ended June 30, 2022, there were no changes in our
critical accounting policies or estimates. See Note 2 - Summary of Significant
Accounting Policies, of the Condensed Consolidated Financial Statements included
elsewhere in this Report and in our Annual Report on Form 10-K for the year
ended December 31, 2021, as filed with the SEC, for additional information
regarding our critical accounting policies.

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