View:
United States securities and exchange commission logo
March 11, 2021
Joseph Pergola
Chief Financial Officer
Integral Ad Science Holding Corp.
95 Morton St., 8th Floor
New York, NY 10014
Re: Integral Ad Science
Holding Corp.
Draft Registration
Statement on Form S-1
Submitted February
12, 2021
CIK No. 0001842718
Dear Mr. Pergola:
We have reviewed your 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.
Draft Registration Statement on Form S-1 filed February 12, 2021
Prospectus Summary
Our Sponsor, page 8
1. Please include a
summary of the material terms of the director nomination agreement that
provides Vista the
right to designate all of the nominees for election to your board of
directors for so long
as Vista beneficially owns 40% or more of the total number of shares
of your common stock.
Please file the agreement as an exhibit.
Summary Consolidated Financial Data, page 13
2. Please revise here, and
in the Selected Consolidated Financial Data, to present the most
directly comparable
GAAP measure to your non-GAAP measure of Adjusted EBITDA
Joseph Pergola
FirstName
Integral AdLastNameJoseph
Science Holding Pergola
Corp.
Comapany
March NameIntegral Ad Science Holding Corp.
11, 2021
March2 11, 2021 Page 2
Page
FirstName LastName
margin with equal or greater prominence. Refer to Question 102.10 of
the non-GAAP
C&DIs.
Risks Related to Being a Public Company
We have identified material weaknesses..., page 46
3. Please revise to clarify what remains to be completed in your
remediation plan, if
anything. Also, if the material weakness has not been fully
remediated, revise to disclose
your estimate of how long it will take to complete your plan and
disclose any material
costs you have, or expect to be, incurred.
We are an "emerging growth company" and we expect to elect to comply..., page
47
4. Please revise to state that because of your election to take advantage
of the extended
transition provisions for complying with new or revised accounting
standards, your
financial statements may not be comparable to companies that comply
with public
company effective dates.
Management s Discussion and Analysis of Financial Condition and Results of
Operations, page
73
5. Please disclose the basis for your claim that you are a leading
digital advertising
verification company. Please clarify whether the basis for your
leadership is supported by
quantitative criteria such as market share by revenues or similar
measures.
Key Factors Affecting Our Performance, page 75
6. Please revise to disclose your customer churn for your top 100
customers for all periods
presented. Also, disclose the percentage of revenue generated from
these customers and to
the extent such customers do not account for a significant majority of
your revenue, revise
to also provide churn for your remaining customer base.
Key Business Metrics, page 77
7. Please revise the net revenue retention disclosures to provide the
percentage of revenue
generated by your large customers for each period presented. Also,
disclose the net
revenue retention rate for your other customers to provide context to
this disclosure or tell
us how you concluded such disclosure was not necessary. In this
regard, we note that
increasing sales to your existing customer base is a key factor
affecting your
performance. Refer to Release No. 33-10751.
8. Please clarify your reference to total "net revenue" in the
calculation of average revenue
per large customer. Specifically address whether such amount
represents GAAP revenue
or explain.
9. You disclose that acquiring new customers, increasing market share and
expanding
Joseph Pergola
FirstName
Integral AdLastNameJoseph
Science Holding Pergola
Corp.
Comapany
March NameIntegral Ad Science Holding Corp.
11, 2021
March3 11, 2021 Page 3
Page
FirstName LastName
operations internationally are key factors affecting your performance.
Please tell us any
metrics or other information you use to evaluate your success in these
areas and how
you considered the need to disclose such information. Refer to Release
No. 33-10751.
Results of Operations, page 81
10. To better illustrate the impact of pricing and volume changes on your
revenue, please
revise to provide the total number of impressions delivered during the
reported periods,
the average cost per impression or percentage changes in each. Also,
if material, disclose
the reasons underlying changes in these factors during the reported
periods. Refer to
section III.B.4 of Release No. 33-8350.
11. Please quantify the impact of each material factor you discuss to
provide readers with
better insight into the underlying reasons for the changes in your
results between reported
periods. Where a material change is attributable to two or more
factors, including any
offsetting factors, please provide quantification of the contribution
of each identified
factor. Refer to Item 303(a)(3) of Regulation S-K and Section III.D of
SEC Release No.
33-6835.
Critical Accounting Policies, page 85
12. To provide an indication of the level of judgment present in your
revenue policies, please
revise to disclose the percentage of revenue generated from
usage-based contracts with no
substantive minimum commitments.
13. Please tell us why you have not included a discussion of the judgments
involved in
determining the value of your units for calculating equity based
compensation. Refer to
Section V of SEC Release No. 33-8350.
Management, page 104
14. Please list the names and ages of the company s directors and/or
director nominees, as
well as the positions and offices held by such persons. Refer to Item
401 of Regulation S-
K.
Principal Shareholders, page 119
15. Please disclose the natural person or persons who exercise the voting
and/or dispositive
powers with respect to the securities owned by Atlas Venture Fund
VIII, L.P.
Consolidated Financial Statements
Note 2. Summary of significant accounting policies
(n)_Revenue Recognition, page F-11
16. Please disclose how often you invoice customers and when payment is
typically due.
Please also clarify whether you provide a right of refund to your
customers. Refer to ASC
606-10-50-12.
Joseph Pergola
Integral Ad Science Holding Corp.
March 11, 2021
Page 4
Note 12. Equity-based compensation, page F-24
17. Please disclose the nature of the liquidity and exit event vesting
provisions for the Long-
Term Incentive Payment (LTIP) and Return Target Option awards. Also,
describe for us
the equity return multiple and unitholder return threshold criteria
that must be met in order
for these awards to vest. Clarify how many of your options and LTIPs
would be vested if
such provisions were met along with the related compensation cost that
would be
recognized. Lastly, tell us your consideration to include any expense
incurred upon
effectiveness of the IPO for these awards in your pro forma earnings
per share and balance
sheet disclosures in the forepart of the filing.
18. Please disclose the fair value of the underlying units (or a range of
values) for each period
presented as this appears to be a significant assumption used in
determining the grant date
fair value of your LTIP and option awards. Refer to ASC
718-10-50-2(f)(2).
19. Please provide us with a breakdown of all equity-based compensation
awards granted
during the year ended December 31, 2020 and to date in fiscal 2021,
and include the fair
value of the underlying units at the date of such grants. To the
extent there were any
significant fluctuations in the fair values from period-to-period,
describe for us the factors
that contributed to these fluctuations, including any intervening
events within the
company or changes in your valuation assumptions or methodology,
underlying units used
to value such awards.
Exhibits
20. Please file a consent for the third-party strategy consulting firm
that provided the 2021
market study. Refer to Rule 436 of the Securities Act.
21. Please file the executive employment agreements as well as all
material leases as exhibits
to the registration statement. Refer to Item 601(b)(10) of Regulation
S-K.
General
22. Please supplementally provide us with copies of all written
communications, as defined in
Rule 405 under the Securities Act, that you, or anyone authorized to
do so on your behalf,
present to potential investors in reliance on Section 5(d) of the
Securities Act, whether or
not they retain copies of the communication.
23. You state that you have contracts with DSPs and proprietary platforms,
such as Google,
Facebook, Amazon and The Trade Desk, and that termination of these
contracts would
materially affect your revenue and results of operations. Please provide
the material terms
FirstName LastNameJoseph Pergola
of your agreements with these companies, including the revenue-sharing
arrangements. To
Comapany NameIntegral
the extent material,Ad Science
disclose theHolding Corp.
percentage of total revenue
attributable to each of the
agreements for
March 11, 2021 Page 4 all periods presented.
FirstName LastName
Joseph Pergola
FirstName
Integral AdLastNameJoseph
Science Holding Pergola
Corp.
Comapany
March NameIntegral Ad Science Holding Corp.
11, 2021
March5 11, 2021 Page 5
Page
FirstName LastName
You may contact Rebekah Lindsey, 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,
Division of
Corporation Finance
Office of Technology
cc: Robert E. Goedert