View:
United States securities and exchange commission logo
April 15, 2021
Joseph Pergola
Chief Financial Officer
Integral Ad Science Holding LLC
95 Morton St., 8th Floor
New York, NY 10014
Re: Integral Ad Science
Holding LLC
Amendment No. 1 to
Draft Registration Statement on Form S-1
Submitted April 1,
2021
CIK No. 0001842718
Dear Mr. Pergola:
We have reviewed your amended draft registration statement and
have the following
comments. In some of our comments, we may ask you to provide us with
information so we
may better understand your disclosure.
Please respond to this letter by providing the requested
information and either submitting
an amended draft registration statement or publicly filing your
registration statement on
EDGAR. If you do not believe our comments apply to your facts and
circumstances or do not
believe an amendment is appropriate, please tell us why in your
response.
After reviewing the information you provide in response to these
comments and your
amended draft registration statement or filed registration statement, we
may have additional
comments. Unless we note otherwise, our references to prior comments are
to comments in our
March 11, 2021 letter.
Amendment No. 1 to Draft Registration Statement on Form S-1
Prospectus Summary
Our Strengths, page 6
1. Where you discuss CAGR
for your top 100 customers based on average revenue per
customer, to provide
context to this disclosure, please also disclose the percentage of total
revenue attributable to
such customers.
Joseph Pergola
FirstName
Integral AdLastNameJoseph
Science Holding Pergola
LLC
Comapany
April NameIntegral Ad Science Holding LLC
15, 2021
April 215, 2021 Page 2
Page
FirstName LastName
2. We note your disclosure that Google, Facebook, and Amazon account for
the majority of
digital advertising budgets and rely upon your solutions for
independent verification,
measurement, optimization, and insights required by your advertising
customers. Please
revise to clarify the distinction between your partners and customers.
Also, please
disclose, if true, that while these partners may rely upon your
services, you historically
have not generated significant revenues directly from such partners.
Summary Consolidated Financial Data, page 15
3. We note your response to prior comment 17 in which you state that
based on the vesting
conditions associated with your 2018 Unit Option Plan, no pro forma
impact has been
recognized because the vesting conditions are not expected to be met.
However, your
revised disclosures indicate that you expect to replace these options
at IPO with awards
that do not have the repurchase feature and that you expect to
recognize compensation
expense for your time-based service options at the time of this
offering. As such, please
revise your pro forma earnings per share to include such costs in the
numerator. Also, to
the extent you will recognize any compensation costs related to the
return target options or
LTIP upon effectiveness, include those costs as well. Refer to Article
11-01(a)(8) of
Regulation S-X.
Risk Factors
We rely on integrations with advertising platforms, DSPs, proprietary platforms
and ad servers,
over which we exercise very little control, page 22
4. Please refer to prior comment 23. As loss of integration with one or
more of
your advertising platforms, DSPs, proprietary platforms and ad servers
may materially
impact your ability to generate revenues, please quantify the
percentage of revenue
attributable to each. If one of these entities provides a material
source of revenue, such as
Facebook, YouTube, etc. please provide this percentage for each entity
with which you
have a material arrangement.
Management's Discussion and Analysis of Financial Condition and Results of
Operations, page
77
5. We note your response to prior comment 5. The consent of Frost &
Sullivan filed as
Exhibit 23.3 does not expressly state that Frost & Sullivan consents
to the statement that
the company is a leader in global market share by revenue. Please
refer to Rule 436(a) of
the Securities Act and refile the consent with the proper
representation.
6. We note your response to prior comment 7 and your revision to the net
revenue retention
metric and disclosure. Given your focus on customer retention and
expansion, please
include a discussion of the factors that contributed to the decrease
in this metric between
the reported periods.
Joseph Pergola
FirstName
Integral AdLastNameJoseph
Science Holding Pergola
LLC
Comapany
April NameIntegral Ad Science Holding LLC
15, 2021
April 315, 2021 Page 3
Page
FirstName LastName
7. Your disclosure indicates that the recruitment of large customers is
critical to your long-
term success and you state on page 79 that you have historically
increased your number of
large customers. However, we note that the total number of large
customers decreased
during the reported periods. Please disclose the reason for such
decrease and to the extent
you anticipate this trend continuing, discuss the impact it may have
on your long-term
success.
8. We note your response and revised disclosures to prior comment 8.
Please tell us whether
average revenue per large customer is used to manage operations or
make strategic
decisions and if so, explain why this key business metric was removed
from your
disclosure. In this regard, you continue to disclose that historically
your revenue has been
driven primarily by a subset of large customers and that the
recruitment and cultivation of
large customers is critical to your long term success. Refer to SEC
Release No. 33-10751.
Results of Operations, page 81
9. You state that the increase in revenue was due primarily to an
increase in programmatic
revenue and you refer to significant growth in such revenue in your
cost of revenue
discussion. Please tell us the amount of revenue generated from each
of your
programmatic and direct advertising services as well as your publisher
solutions arrangements for each period presented. Also, tell us your
consideration to
include a discussion of such breakdown in MD&A or explain why you do
not believe this
information is material to investors.
Critical Accounting Policies and Estimates
Equity-Based Compensation, page 89
10. We note your revised disclosure in response to prior comment 19.
Please revise to also
disclose the change in terms for your target return options, as well
as the expected
compensation cost to be recognized at IPO, similar to your time based
service option
disclosure. In addition, tell us whether the LTIP awards will also be
modified and if so,
revise to include a discussion of the modifications and expected
expense at IPO for those
awards as well.
Consolidated Financial Statements
Note 2. Summary of Significant Accounting Policies
(r) Equity-based compensation, page F-13
11. We note your disclosure revisions in response to prior comment 18. The
fair values
disclosed appear to be the fair value of the options as disclosed in
Note 12. Please revise
to disclose the fair value of the underlying units (or a range of
values) for each period
presented as previously requested as this appears to be an assumption
requiring significant
judgment. Refer to ASC 718-10-50-2(f)(2). Alternatively, tell us why
you believe such
disclosure is not required.
Joseph Pergola
Integral Ad Science Holding LLC
April 15, 2021
Page 4
You may contact Rebekah Lindsey, Senior Staff Accountant, at (202)
551-3303
or Kathleen Collins, Accounting Branch Chief, at (202) 551-3499 if you have
questions
regarding comments on the financial statements and related matters. Please
contact Alexandra
Barone, Staff Attorney, at (202) 551-8816 or Jan Woo, Legal Branch Chief, at
(202) 551-3453
with any other questions.
Sincerely,
FirstName LastNameJoseph Pergola
Division of
Corporation Finance
Comapany NameIntegral Ad Science Holding LLC
Office of Technology
April 15, 2021 Page 4
cc: Robert E. Goedert
FirstName LastName