MediaAlpha (MAX) risk factors, FY2024 10-K

Risks related to our business and industry

1. 01Supply Partners use our platform to optimize consumer conversions and the yield on their traffic. If Supply Partners are not able to obtain the best yield on their traffic using our platform, they may stop using our platform to make their Consumer Referrals available
2. 02We depend on a small group of Demand and Supply Partners for a substantial portion of our business. Changes in our relationships with these partners may adversely affect our business, financial condition, operating results, cash flows, and prospects
3. 03Our business is highly subject to business cycles and risks related to the property & casualty insurance, health insurance, and life insurance industries
4. 04The FTC Matter could have a material adverse effect on our business
5. 05Our partners may negotiate with us to reduce our platform fees or switch certain transactions from Open Marketplace to Private Marketplace, which could harm our business, financial condition, operating results, cash flows, and prospects
6. 06If we fail to compete effectively against technology companies engaged in digital customer acquisition and other competitors, we could lose partners and our revenue may decline
7. 07If we are unable to develop new offerings, achieve increased partner adoption of those offerings or penetrate new vertical markets, our business, financial condition, operating results, cash flows, and prospects could be materially and adversely affected
8. 08If we fail to manage future growth effectively, our business, financial condition, operating results, cash flows, and prospects could be materially and adversely affected
9. 09Our past growth or the past growth in our verticals or by our competitors may not be indicative of future growth, and our revenue growth rate may decline in the future
10. 10If we are unable to attract, integrate, and retain qualified employees, our ability to develop and successfully grow our business could be harmed
11. 11We may acquire other companies or technologies, which could divert our management’s attention, result in additional dilution to our stockholders, and otherwise disrupt our operations and harm our operating results, financial condition, and prospects
12. 12If the market for digital customer acquisition services fails to continue to develop, our success may be limited, and our revenue may decrease
13. 13Our existing and any future indebtedness could adversely affect our ability to operate our business
14. 14As of December 31, 2024, the aggregate principal amount outstanding under the 2021 Term Loan Facility was $158.5 million and our borrowing capacity under the 2021 Revolving Credit Facility was $45.0 million. In addition, we may in the future decide to incur additional indebtedness
15. 15We maintain cash balances in our bank accounts that exceed the FDIC insurance limitation
16. 16Operating and growing our business may require additional capital, and if capital is not available to us, our business, financial condition, operating results, cash flows, and prospects may suffer
17. 17We have incurred significant net losses in the past and we may not be able to generate sufficient revenue to be profitable over the long term
18. 18If we fail to protect our brand, our ability to expand the use of our platform by Demand and Supply Partners may be adversely affected
19. 19Changes in tax laws or exposure to additional income or other tax liabilities could affect our future profitability
20. 20Taxing authorities may assert that we should have collected or in the future should collect sales and use, gross receipts, value added or similar taxes, and may successfully impose additional obligations on us, and any such assessments or obligations could adversely affect our operating results
21. 21We may from time to time be subject to litigation, which may be extremely costly to defend, could result in substantial judgment or settlement costs or subject us to other remedies
22. 22Sellers, vendors, or their respective affiliates may engage in unauthorized or unlawful acts that could subject us to significant liability or cause us to lose Demand Partners and revenue
23. 23Broad-based pandemics or public health crises, such as the COVID-19 pandemic, have had, and may in the future have, an adverse impact on our business, financial condition, operating results, cash flows, and prospects
24. 24to a dramatic decline in consumers shopping for travel-related products, which has led to a significant decline in our revenue from the travel vertical, and there is uncertainty about whether our business in this vertical will return to pre-pandemic levels and the timing of any such recovery
25. 25Our business could be adversely affected by natural disasters, political crises, economic downturns or other unexpected events

Risks related to information security and privacy, the integrity of our platform, and our intellectual property

1. 26Our business could be materially and adversely affected by a cybersecurity breach or other attack involving our computer systems or those of our partners or third-party service providers
2. 27If we are unable to adequately obtain, maintain, protect or enforce our intellectual property rights, proprietary systems, technology and brand, our ability to compete could be harmed
3. 28We may become subject to intellectual property disputes, which are costly and may subject us to significant liability and increased costs of doing business
4. 29Our business depends on our ability to maintain and improve the technological infrastructure that supports our platform, and any significant disruption in service on our platform could result in a loss of partners, which could harm our business, financial condition, operating results, cash flows, and prospects
5. 30We rely on Amazon Web Services to deliver our platform to our partners, and any disruption of, or interference with, our use of Amazon Web Services could adversely affect our business, financial condition, operating results, cash flows, and prospects
6. 31reputation and may adversely impact the use of our platform. We may not carry sufficient business interruption insurance to compensate us for losses that may occur as a result of any events that cause interruptions in our service
7. 32If the way cookies are used or shared, or if the use or transfer of cookies is restricted by third parties outside of our control or becomes subject to unfavorable legislation or regulation, our ability to develop and provide certain products or services could be affected
8. 33Our use of “open source” software could adversely affect our ability to protect our proprietary software and subject us to possible litigation

Risks related to laws and regulation

1. 34Our business is subject to a variety of laws and regulations, both in the U.S. and internationally, many of which are evolving
2. 35Laws and regulations regulating insurance activities are complex and could negatively affect us and/or our Supply and Demand Partners, which could in turn have a material and adverse effect on our business, may reduce our profitability and potentially limit our growth
3. 36Changes and developments in the regulation of the healthcare industry could adversely affect our business, financial condition, operating results, cash flows, and prospects
4. 37Changes in laws or regulations relating to privacy, data protection or the protection or transfer of personal data could materially and adversely affect our business, financial condition, operating results, cash flows, and prospects
5. 38Our and our partners’ communications with potential and existing consumers are subject to laws regulating telephone and email marketing practices

Risks related to being a public company

1. 39Our operating results or other operating metrics may fluctuate significantly on a quarterly and annual basis and may not meet expectations of research analysts, which could cause the trading price of our Class A common stock to decline
2. 40cease to cover our Class A common stock, we could lose visibility in the market for our Class A common stock, which in turn could cause our stock price to decline
3. 41We are required to make significant estimates and assumptions in the preparation of our financial statements. These estimates and assumptions may not be accurate and are subject to change
4. 42The obligations associated with being a public company require significant resources and management attention, which has increased and will increase our costs of operations and may divert focus from our business operations

Risks related to internal control on financial reporting

1. 43We may identify material weaknesses in the future or otherwise fail to maintain an effective internal control over financial reporting and may not be able to accurately or timely report our financial condition or results of operations, which may adversely affect our business
2. 44A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of our financial statements will not be prevented or detected on a timely basis

Risks related to our Class A common stock

1. 45The market price of our Class A common stock may be subject to substantial fluctuations, which may make it difficult for you to sell your shares at the volume, price and times desired
2. 46Our issuance of additional capital stock in connection with financings, acquisitions, investments, our equity incentive plans or otherwise would dilute all other stockholders
3. 47We do not intend to pay dividends in the foreseeable future
4. 48Sales of a substantial number of shares of our Class A common stock by our pre-IPO stockholders in the public market, or the perception that such sales may occur, could cause the price of our Class A common stock to fall
5. 49with an equal number of shares of our Class B common stock). The perception in the public market that our pre-IPO stockholders might sell shares of Class A common stock could also depress our market price
6. 50Certain provisions in our amended and restated certificate of incorporation, our amended and restated bylaws, our stockholders’ agreement and of Delaware law may prevent or delay an acquisition of MediaAlpha, Inc., which could decrease the trading price of our Class A common stock
7. 51Our amended and restated certificate of incorporation and stockholders’ agreement contain provisions renouncing our interest and expectation to participate in certain corporate governance opportunities identified by or presented to certain of our existing investors
8. 52Our amended and restated certificate of incorporation contains exclusive forum provisions that may discourage lawsuits against us and our directors and officers
9. 53Our amended and restated bylaws provide that, if a claiming party brings certain actions against us and is not successful on the merits, then it will be obligated to pay our litigation costs, which could have the effect of discouraging litigation, including claims brought by our stockholders
10. 54Different interests among our investors or between our investors and us, including with respect to related party transactions, could prevent us from achieving our business goals
11. 55We are no longer a “controlled company” within the meaning of the NYSE rules. However, we may continue to rely on exemptions from certain corporate governance requirements during a one-year transition period

Risks related to our structure

1. 56We are a holding company and our only material asset is our indirect interest in QLH and, accordingly, we are dependent upon distributions from QLH to pay taxes and other expenses
2. 57We are required to pay Insignia, the Senior Executives, and White Mountains for certain tax benefits we may claim in the future
3. 58In certain cases, payments by us under the tax receivables agreement may be accelerated or significantly exceed the tax benefits we realize in respect of the tax attributes subject to the tax receivables agreement