Document and Entity Information
Document and Entity Information - shares | 9 Months Ended | |
Sep. 30, 2016 | Oct. 31, 2016 | |
Document and Entity Information [Abstract] | ||
Entity Registrant Name | STAMPS.COM INC | |
Entity Central Index Key | 1,082,923 | |
Current Fiscal Year End Date | --12-31 | |
Entity Well-known Seasoned Issuer | No | |
Entity Voluntary Filers | No | |
Entity Current Reporting Status | Yes | |
Entity Filer Category | Large Accelerated Filer | |
Entity Common Stock, Shares Outstanding | 17,052,401 | |
Document Fiscal Year Focus | 2,016 | |
Document Fiscal Period Focus | Q3 | |
Document Type | 10-Q | |
Amendment Flag | false | |
Document Period End Date | Sep. 30, 2016 |
CONSOLIDATED BALANCE SHEETS (un
CONSOLIDATED BALANCE SHEETS (unaudited) - USD ($) $ in Thousands | Sep. 30, 2016 | Dec. 31, 2015 |
Current assets: | ||
Cash and cash equivalents | $ 81,144 | $ 65,126 |
Short-term investments | 3,029 | 8,553 |
Accounts receivable, net | 60,089 | 55,052 |
Other current assets | 9,595 | 8,345 |
Total current assets | 153,857 | 137,076 |
Property and equipment, net | 32,032 | 31,707 |
Goodwill | 239,532 | 197,807 |
Intangible assets, net | 101,046 | 95,950 |
Long-term investments | 0 | 1,529 |
Deferred income taxes, net | 38,841 | 57,224 |
Other assets | 7,829 | 7,321 |
Total assets | 573,137 | 528,614 |
Current liabilities: | ||
Accounts payable and accrued expenses | 70,710 | 60,816 |
Deferred revenue | 6,175 | 4,000 |
Current portion of debt, net of debt issuance costs | 5,814 | 4,267 |
Contingent consideration | 0 | 63,209 |
Total current liabilities | 82,699 | 132,292 |
Long-term debt, net of debt issuance costs | 142,993 | 157,353 |
Total liabilities | 225,692 | 289,645 |
Commitments and contingencies | ||
Stockholders' equity: | ||
Common stock, $.001 par value per share Authorized shares: 47,500 in 2016 and 2015 Issued shares: 30,425 in 2016 and 29,463 in 2015 Outstanding shares: 17,131 in 2016 and 16,697 in 2015 | 53 | 52 |
Additional paid-in capital | 825,941 | 716,253 |
Treasury stock, at cost, 13,294 shares in 2016 and 12,766 in 2015 | (219,821) | (172,410) |
Accumulated deficit | (258,743) | (304,944) |
Accumulated other comprehensive income | 15 | 18 |
Total stockholders' equity | 347,445 | 238,969 |
Total liabilities and stockholders' equity | $ 573,137 | $ 528,614 |
CONSOLIDATED BALANCE SHEETS (u3
CONSOLIDATED BALANCE SHEETS (unaudited) (Parenthetical) - $ / shares shares in Thousands | Sep. 30, 2016 | Dec. 31, 2015 |
Stockholders' equity | ||
Common stock, par value (in dollars per share) | $ 0.001 | $ 0.001 |
Common stock, shares authorized (in shares) | 47,500 | 47,500 |
Common stock, shares issued (in shares) | 30,425 | 29,463 |
Common stock, shares outstanding (in shares) | 17,131 | 16,697 |
Treasury stock, shares (in shares) | 13,294 | 12,766 |
CONSOLIDATED STATEMENTS OF OPER
CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) - USD ($) shares in Thousands, $ in Thousands | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2016 | Sep. 30, 2015 | Sep. 30, 2016 | Sep. 30, 2015 | ||
Revenues: | |||||
Service | $ 78,871 | $ 42,470 | $ 220,567 | $ 118,497 | |
Product | 4,703 | 4,193 | 15,109 | 13,206 | |
Insurance | 4,050 | 2,513 | 12,643 | 7,806 | |
Customized postage | 4,912 | 2,484 | 10,016 | 4,545 | |
Other | 23 | 9 | 74 | 27 | |
Total revenues | 92,559 | 51,669 | 258,409 | 144,081 | |
Cost of revenues (exclusive of amortization of intangible assets, which is included in general and administrative expense): | |||||
Service | 9,903 | 6,809 | 28,054 | 19,775 | |
Product | 1,579 | 1,364 | 5,019 | 4,400 | |
Insurance | 1,291 | 896 | 3,920 | 2,746 | |
Customized postage | 3,954 | 2,120 | 8,076 | 3,831 | |
Total cost of revenues | 16,727 | 11,189 | 45,069 | 30,752 | |
Gross profit | 75,832 | 40,480 | 213,340 | 113,329 | |
Operating expenses: | |||||
Sales and marketing | 18,229 | 11,341 | 59,708 | 37,898 | |
Research and development | 9,111 | 4,758 | 25,579 | 13,720 | |
General and administrative | 16,901 | 9,470 | 49,276 | 30,004 | |
Contingent consideration charges | 0 | 1,920 | 0 | 26,027 | |
Litigation settlement | 0 | 0 | 0 | 10,000 | |
Total operating expenses | 44,241 | 27,489 | 134,563 | 117,649 | |
Income (loss) from operations | 31,591 | 12,991 | 78,777 | (4,320) | |
Interest expense | (828) | 0 | (2,648) | 0 | |
Interest and other income (loss), net | 24 | 48 | 98 | 103 | |
Income (loss) before income taxes | 30,787 | 13,039 | 76,227 | (4,217) | |
Income tax expense (benefit) | 12,115 | 5,765 | 30,026 | (90) | |
Net income (loss) | $ 18,672 | $ 7,274 | $ 46,201 | $ (4,127) | |
Net income (loss) per share | |||||
Basic (in dollars per share) | $ 1.08 | $ 0.44 | $ 2.67 | $ (0.25) | |
Diluted (in dollars per share) | $ 1.03 | $ 0.42 | $ 2.52 | $ (0.25) | |
Weighted average shares outstanding: | |||||
Basic (in shares) | 17,218 | 16,538 | 17,319 | 16,367 | |
Diluted (in shares) | 18,120 | 17,517 | 18,325 | 16,367 | [1] |
[1] | Common equivalent shares are excluded from the diluted loss per share calculation as their effect is anti-dilutive. |
CONSOLIDATED STATEMENTS OF COMP
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) (Unaudited) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2016 | Sep. 30, 2015 | Sep. 30, 2016 | Sep. 30, 2015 | |
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) (Unaudited) [Abstract] | ||||
Net income (loss) | $ 18,672 | $ 7,274 | $ 46,201 | $ (4,127) |
Other comprehensive loss, net of tax: | ||||
Unrealized loss on investments | (7) | (1) | (3) | (15) |
Comprehensive income (loss) | $ 18,665 | $ 7,273 | $ 46,198 | $ (4,142) |
CONSOLIDATED STATEMENTS OF CASH
CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) - USD ($) $ in Thousands | 9 Months Ended | |
Sep. 30, 2016 | Sep. 30, 2015 | |
Operating activities: | ||
Net income (loss) | $ 46,201 | $ (4,127) |
Adjustments to reconcile net income (loss) to net cash provided by operating activities: | ||
Depreciation and amortization | 13,922 | 5,169 |
Stock-based compensation expense | 24,755 | 9,104 |
Deferred income tax expense (benefit) | 26,724 | (872) |
Stock option windfall tax benefit | (9,771) | 0 |
Accretion of debt issuance costs | 279 | 0 |
Contingent consideration | 0 | 26,027 |
Changes in operating assets and liabilities, net of assets and liabilities acquired: | ||
Accounts receivable | (3,843) | (2,970) |
Other current assets | (1,275) | (1,934) |
Other assets | (508) | (767) |
Deferred revenue | 2,122 | 162 |
Accounts payable and accrued expenses | 5,350 | 5,171 |
Net cash provided by operating activities | 103,956 | 34,963 |
Investing activities: | ||
Sale of short-term investments | 6,988 | 3,918 |
Purchase of short-term investments | 0 | (977) |
Sale of long-term investments | 77 | 1,064 |
Purchase of long-term investments | (15) | 0 |
Acquisition of Endicia | (573) | 0 |
Acquisition of ShippingEasy, net of cash acquired | (55,447) | 0 |
Acquisition of property and equipment | (2,903) | (1,652) |
Net cash (used in) provided by investing activities | (51,873) | 2,353 |
Financing activities: | ||
Proceeds from short term financing obligation, net of repayments | 2,713 | 1,815 |
Principal payments on term loan | (3,092) | 0 |
Payment on revolving credit facility | (10,000) | 0 |
Proceeds from exercise of stock options | 9,773 | 7,940 |
Issuance of common stock under Employee Stock Purchase Plan | 2,181 | 1,555 |
Repurchase of common stock | (47,411) | 0 |
Stock option windfall tax benefit | 9,771 | 0 |
Net cash (used in) provided by financing activities | (36,065) | 11,310 |
Net increase in cash and cash equivalents | 16,018 | 48,626 |
Cash and cash equivalents at beginning of period | 65,126 | 40,933 |
Cash and cash equivalents at end of period | 81,144 | 89,559 |
Supplemental Information: | ||
Capital expenditures accrued but not paid at period end | 122 | 6 |
Tenant improvement allowance | 676 | 0 |
Income taxes paid | 2,723 | 835 |
Issuance of 2015 and 2014 earn-out shares (see Note -2 "Acquisitions") | 63,209 | 9,225 |
Non cash adjustment of purchase price for Endicia acquisition | $ 372 | $ 0 |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 9 Months Ended |
Sep. 30, 2016 | |
Summary of Significant Accounting Policies [Abstract] | |
Summary of Significant Accounting Policies | 1. Summary of Significant Accounting Policies Basis of Presentation We prepared the consolidated financial statements included herein pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”). Certain information and footnote disclosures normally included in financial statements prepared in accordance with United States (“U.S.”) generally accepted accounting principles (“GAAP”) have been condensed or omitted pursuant to such rules and regulations. We believe that the disclosures are adequate to make the information presented not misleading. We recommend that these financial statements be read in conjunction with the audited financial statements and the notes thereto included in our latest annual report on Form 10-K for the fiscal year ended December 31, 2015, filed with the SEC on February 29, 2016. In our opinion, these unaudited financial statements contain all adjustments (consisting of normal recurring adjustments) necessary to present fairly our financial position as of September 30, 2016, our results of operations for the three and nine months ended September 30, 2016 and our cash flows for the nine months ended September 30, 2016. The results of operations for the interim period are not necessarily indicative of the results that may be expected for the year ending December 31, 2016. Principles of Consolidation The consolidated financial statements include the accounts of Stamps.com Inc., Auctane LLC, Interapptive, Inc., PSI Systems Inc., ShippingEasy Group, Inc., and PhotoStamps Inc. In June 2014, we completed our acquisition of 100% of the outstanding equity of Auctane LLC, the Texas limited liability company that operates ShipStation (“Auctane LLC” or “ShipStation”) in a cash and contingent stock transaction. ShipStation, based in Austin, Texas, offers monthly subscription based e-commerce shipping software primarily under the brands ShipStation and Auctane. In August 2014, we completed our acquisition of 100% of the outstanding equity of Interapptive, Inc., a Missouri corporation, that operates ShipWorks (“Interapptive, Inc.” or “ShipWorks”) in a cash transaction. ShipWorks, based in St. Louis, Missouri, offers monthly subscription based e-commerce shipping software. In November 2015, we completed our acquisition of 100% of the outstanding shares of PSI Systems, Inc. (“Endicia”). Endicia, based in Palo Alto, California, is a leading provider of high volume shipping technologies and solutions for shipping with the United States Postal Service (“USPS”). In July 2016, we completed our acquisition of 100% of the outstanding shares of ShippingEasy Group, Inc. (“ShippingEasy”). ShippingEasy, based in Austin, Texas, offers web-based multi-carrier shipping software that allows online retailers and e-commerce merchants to organize, process, fulfill and ship their orders quickly and easily. See Note 2– “Acquisitions” Because 100% of the voting control of Auctane LLC, Interapptive, Inc. PSI Systems, Inc., and ShippingEasy Group, Inc. is held by us, we have consolidated ShipStation, ShipWorks, Endicia and ShippingEasy from the date we obtained control in the accompanying consolidated financial statements. Similarly, due to our 100% control of PhotoStamps, Inc., PhotoStamps Inc. is also consolidated in the accompanying consolidated financial statements from the date of its inception. All significant intercompany accounts and transactions have been eliminated. Use of Estimates and Risk Management The preparation of financial statements in conformity with U.S. GAAP requires us to make estimates and assumptions that affect the amounts reported in the financial statements and the accompanying notes. Actual results could differ from those estimates, and such differences may be material to the financial statements. Examples include estimates of loss contingencies, promotional coupon redemptions, the number of PhotoStamps retail boxes that will not be redeemed, realizability of deferred income taxes, the estimates and assumptions used to calculate stock-based compensation, the estimates and assumptions used to calculate the allocation of the purchase price related to our acquisitions, including related contingent consideration, and estimates regarding the useful lives of our building, patents and other amortizable intangible assets, and goodwill. Contingencies and Litigation We are subject to various routine litigation matters as a claimant and a defendant. We record any amounts recovered in these matters when received. We establish loss provisions for claims against us when the loss is both probable and can be reasonably estimated. If either or both of the criteria are not met, we assess whether there is at least a reasonable possibility that a loss, or additional losses, may have been incurred. If there is a reasonable possibility that a loss or additional loss may have been incurred for such proceedings, we disclose the estimate of the amount of loss or possible range of loss, or disclose that an estimate of loss cannot be made, as applicable. Fair Value of Financial Instruments Carrying amounts of certain of our financial instruments, including cash, cash equivalents, accounts receivable and accounts payable, approximate fair value due to their short maturities. The fair values of investments are determined using quoted market prices for those securities or similar financial instruments. The fair value of our debt approximates book value. In 2015 the fair value of the contingent consideration related to our acquisition of ShipStation was determined based on a probability weighted method, which incorporated management’s forecasts of financial measures related to ShipStation and the likelihood of the financial measure targets related to such acquisition being achieved using a series of options that replicated the pay-off structure of the earn-out, and the value of each of these options was determined using the Black-Scholes-Merton option pricing framework. Changes in the fair value of the contingent consideration obligations resulted from changes in the assumed timing and amount of revenue and expense estimates, changes in the probability of payment scenarios, changes in stock values, as well as changes in capital market conditions, which impacted the discount rate used in the fair valuation. Significant judgment was employed in determining the appropriateness of these assumptions as of the acquisition date and for each subsequent reporting period during 2015. See Note 2 – “Acquisitions” Property and Equipment We account for property and equipment at cost less accumulated depreciation and amortization. We compute depreciation using the straight-line method over the estimated useful life of the asset, generally three to five years for furniture, fixtures and equipment and ten to forty years for building and building improvements. We have a policy of capitalizing expenditures that materially increase assets’ useful lives and charging ordinary maintenance and repairs to operations as incurred. When property or equipment is disposed of, the cost and related accumulated depreciation and amortization are removed, and any gain or loss is included in operations. Business Combinations The acquisition method of accounting is used for business combinations. The results of operations of acquired businesses are included in our consolidated financial statements prospectively from the date of acquisition. The fair value of purchase consideration is allocated to the assets acquired and liabilities assumed from the acquired entity and is generally based on their fair value at the acquisition date. The excess of the fair value of purchase consideration over the fair value of the assets acquired and liabilities assumed is recorded as goodwill. Historically the primary items that have generated goodwill include anticipated synergies between the acquired business and the Company and the acquired assembled workforce, neither of which qualifies for recognition as an intangible asset. Acquisition-related expenses are recognized in our consolidated financial statements as incurred. Goodwill Goodwill represents the excess of the fair value of consideration given over the fair value of the tangible assets, identifiable intangible assets and liabilities assumed in a business combination. We are required to test goodwill for impairment annually and whenever events or circumstances indicate the fair value of a reporting unit may be below its carrying value. Goodwill is reviewed for impairment annually on October 1. A reporting unit is the operating segment or a business that is one level below that operating segment. Reporting units are aggregated as a single reporting unit if they have similar economic characteristics. As of September 30, 2016, we are not aware of any indicators of impairment that would require an impairment analysis other than our annual impairment analysis. Trademarks, Patents and Intangible Assets Acquired trademarks, patents and other intangibles include both amortizable and non-amortizable assets and are included in intangible assets, net in the accompanying consolidated balance sheets. Intangible assets are carried at cost less accumulated amortization. Cost associated with internally developed intangible assets is typically expensed as incurred as research and development costs. Amortization of amortizable intangible assets is calculated on a straight-line basis, which is consistent with expected future cash flows. Impairment of Long-Lived Assets and Intangible Assets Long-lived assets including intangible assets with finite useful lives are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to future net cash flows expected to be generated by the asset. If such assets are considered to be impaired, the impairment to be recognized is measured by the amount by which the carrying amount of the assets exceeds the fair value of the assets. Assets to be disposed of are reported at the lower of the carrying amount or fair value less costs to sell. Intangible assets that have indefinite useful lives are not amortized but, instead, tested at least annually for impairment while intangible assets that have finite useful lives continue to be amortized over their respective useful lives. Deferred Revenue Our deferred revenue relates mainly to service revenue and PhotoStamps retail boxes. Deferred revenue related to our service revenue generally arises due to the timing of payment versus the provision of services for certain customers billed in advance. We previously sold PhotoStamps retail boxes to our customers through our website and selected third parties. Proceeds from the sale of our PhotoStamps retail boxes were initially recorded as a liability when received. We recorded the liability for outstanding PhotoStamps retail boxes in deferred revenue. We no longer sell PhotoStamps retail boxes. Revenue Recognition We recognize revenue from product sales or services rendered, as well as commissions from advertising or sale of products by third party vendors to our customer base when the following four revenue recognition criteria are met: persuasive evidence of an arrangement exists, delivery has occurred or services have been rendered, the selling price is fixed or determinable, and collectability is reasonably assured. Service revenue is primarily derived from monthly service fees and transaction related revenues from our USPS mailing and shipping services, our multi-carrier shipping services and our mailing and shipping integrations, and is recognized in the period that services are provided. Product sales, net of return allowances, are recorded when the products are shipped and title passes to customers. Sales of items, including customized postage, sold to customers are made pursuant to a sales contract that provides for transfer of both title and risk of loss upon our delivery to the carrier. Return allowances for expected product returns, which reduce product revenue, are estimated using historical experience. Commissions from the advertising or sale of products by a third party vendor to our customer base are recognized when the revenue is earned and collection is deemed probable. Customers purchase postage through our mailing and shipping solutions. If the postage purchase funds are transferred directly from the customers to the USPS, we do not recognize revenue for this postage, as it is purchased by our customers directly from the USPS. Customized postage revenue, which includes the face value of postage, from the sale of PhotoStamps and PictureItPostage sheets and rolls is made pursuant to a sales contract that provides for transfer of both title and risk of loss upon our delivery to the carrier and revenue is recognized at that time. Sale of PhotoStamps retail boxes are initially recorded as deferred revenue. PhotoStamps revenue related to the sale of these PhotoStamps retail boxes is subsequently recognized when either: 1) the PhotoStamps retail box is redeemed; or 2) the likelihood of the PhotoStamps retail box being redeemed is deemed remote (“breakage”) and there is no legal obligation to remit the value of the unredeemed PhotoStamps retail boxes. On a limited basis, we allow third parties to offer products and promotions to our customer base. These arrangements generally provide payment in the form of a flat fee or revenue sharing arrangements where we receive payment upon customers accessing third party products and services. During the three and nine months ended September 30, 2016 and 2015 revenue from such advertising arrangements was not significant. We provide our customers with the opportunity to purchase parcel insurance directly through our solutions. Insurance revenue represents the gross amount charged to the customer for purchasing insurance and the related cost represents the amount paid to our insurance brokers. We recognize revenue on insurance purchases upon the ship date of the insured package. PhotoStamps Retail Boxes We previously sold PhotoStamps retail boxes that are redeemable for PhotoStamps on our website. The PhotoStamps retail boxes were sold through various third party retail partners. We no longer sell PhotoStamps retail boxes. Our PhotoStamps retail boxes are not subject to administrative fees on unredeemed boxes and have no expiration date. PhotoStamps retail box sales were recorded as deferred revenue. We concluded that sufficient company-specific historical evidence existed to determine the period of time after which the likelihood of the PhotoStamps retail boxes being redeemed was remote. Based on our analysis of the redemption data, we estimate that period of time to be 60 months after the sale of our PhotoStamps retail boxes. We recognize breakage revenue related to our PhotoStamps retail boxes utilizing the redemption recognition method. Under the redemption recognition method, we recognize breakage revenue from unredeemed retail boxes in proportion to the revenue recognized from the retail boxes that have been redeemed. Revenue from our PhotoStamps retail boxes is included in Customized postage revenue. PhotoStamps retail box breakage revenue was not significant during the three and nine months ended September 30, 2016 and 2015. Income Taxes We account for income taxes in accordance with Financial Accounting Standards Board (“FASB”) ASC Topic No. 740, Income Taxes (“ASC 740”), which requires that deferred tax assets and liabilities be recognized using enacted tax rates for the effect of temporary differences between the book and tax basis of recorded assets and liabilities. ASC 740 also requires that deferred tax assets be reduced by a valuation allowance if it is more likely than not that some or all of the net deferred tax assets will not be realized. We record a valuation allowance to reduce our gross deferred tax assets, which are primarily comprised of U.S. Federal and State tax loss carry-forwards, to the amount that is more likely than not (a likelihood of more than 50 percent) to be realized. In order for us to realize our deferred tax assets, we must be able to generate sufficient taxable income. We evaluate the appropriateness of our deferred tax assets and related valuation allowance in accordance with ASC 740 based on all available positive and negative evidence. As of September 30, 2016 and December 31, 2015 we do not have any valuation allowance recorded to reduce our gross deferred tax assets as we believe we have met the more likely than not threshold and we will realize our tax loss carry-forwards in the foreseeable future. Short-Term Financing Obligation We utilize short-term financing, which is separate from our debt, to fund certain company operations. Short-term financing is included in accrued expenses. As of September 30, 2016 we had $16 million in short-term financing obligations and $120 million of unused credit. As of December 31, 2015 we had $13.3 million in short-term financing obligations and $34.2 million of unused credit. Recent Accounting Pronouncements In May 2014, the FASB issued Accounting Standards Update No. 2014-09, Revenue from Contracts with Customers ("ASU 2014-09") an updated standard on revenue recognition. This ASU will supersede the revenue recognition requirements in Accounting Standards Codification Topic 605, Revenue Recognition, and most industry-specific guidance. ASU 2014-09 provides enhancements to the quality and consistency of how revenue is reported while also improving comparability in the financial statements of companies reporting using US GAAP and International Financial Reporting Standards. The core principle of the new standard is for companies to recognize revenue to depict the transfer of goods or services to customers in amounts that reflect the consideration to which the company expects to be entitled in exchange for those goods or services. In doing so the companies may be required to use more judgment and make more estimates than under current authoritative guidance. ASU 2014-09 will be effective for the Company in the first quarter of fiscal 2018 and may be applied on a full retrospective or modified retrospective approach. The Company is currently evaluating the impact the adoption of this standard will have on its consolidated financial statements. In April 2015, the FASB issued guidance to help entities evaluate whether fees paid in a cloud computing arrangement include a software license. Pursuant to this guidance, when a cloud computing arrangement includes a software license, the customer accounts for the software license element of the arrangement consistent with the acquisition of other software licenses. When a cloud computing arrangement does not include a software license element, the customer accounts for the arrangement as a service contract. The prospective adoption of this guidance on January 1, 2016 did not have a material effect on the Consolidated Financial Statements. In November 2015, the FASB issued guidance that requires deferred tax assets and liabilities to be presented as noncurrent in a classified statement of financial position. The guidance is effective beginning January 1, 2017, with early adoption permitted. The guidance can be applied prospectively or retrospectively. The Company elected to early adopt the requirements and apply them retrospectively as of December 31, 2015. In February 2016, the FASB issued a new accounting standard for leases. The new standard generally requires the recognition of financing and operating lease liabilities and corresponding right-of-use assets on the balance sheet. For financing leases, a lessee recognizes amortization of the right-of-use asset as an operating expense over the lease term separately from interest on the lease liability. For operating leases, a lessee recognizes its total lease expense as an operating expense over the lease term. The amendments are effective for the Company in the first quarter of 2019 using a modified retrospective approach with early adoption permitted. The Company is currently evaluating the impact the adoption of this standard will have on its consolidated financial statements. In March 2016, the FASB simplified certain areas of accounting for stock-based compensation, including accounting for the income tax consequences of stock-based compensation, determining the classification of awards as either equity or liabilities, classifying certain items within the statement of cash flows and introducing an accounting policy election to account for forfeitures of non-vested awards as they occur. The simplified guidance is effective for the Company in the first quarter of 2017. Depending on the area simplified, the guidance is effective either prospectively, retrospectively or using a modified retrospective approach. Early adoption is permitted. The Company is evaluating the effect of adoption on its Consolidated Financial Statements. Subsequent Events We are not aware of any material subsequent events or transactions that have occurred that would require recognition in the financial statements or disclosure in the notes to the financial statements. |
Acquisitions
Acquisitions | 9 Months Ended |
Sep. 30, 2016 | |
Acquisitions [Abstract] | |
Acquisitions | 2. Acquisitions We have accounted for all of our acquisitions under the acquisition method of accounting in accordance with the provisions of FASB ASC Topic No. 805 Business Combinations (“ASC 805”). ShippingEasy Acquisition On July 1, 2016, we completed our acquisition of ShippingEasy Group, Inc. (“ShippingEasy”) when our wholly owned subsidiary was merged with and into ShippingEasy, resulting in our 100% ownership of ShippingEasy. The merger agreement provided for us to pay $55.0 million in aggregate merger consideration to the former owners of ShippingEasy, payable in cash. The purchase price was subject to adjustments for changes in ShippingEasy’s net working capital. The net purchase price including adjustments for net working capital totaled approximately $55.4 million and was funded from current cash and investment balances. In connection with the acquisition, we issued performance based inducement equity awards to each of the General Manager and Chief Technology Officer of ShippingEasy. These inducement awards cover an aggregate of up to 43,567 common shares each if earnings targets for ShippingEasy are achieved over a two and one-half year period beginning July 1, 2016. The two and one-half year period is divided into three phases consisting of the six months ended December 31, 2016 and each of the twelve months ended December 31, 2017 and 2018. The awards are subject to proration if at least 75% of the applicable target is achieved and are subject to forfeiture or acceleration based on changes in employment circumstances over the performance period. The stock-based compensation expense associated with the performance based inducement equity award will be recognized ratably over each phase based on the estimated probable achievement of each financial target. The awards are a material inducement to the General Manager and Chief Technology Officer entering into employment agreements with Stamps.com in connection with the acquisition of ShippingEasy. We determined the achievement of 100% of the earnings target for the six months ended December 31, 2016 is probable, therefore, we recognized approximately $946,000 of stock-based compensation expense for these inducement equity awards during the three months ended September 30, 2016. The $946,000 stock-based compensation expense recognized represents 50% of the total performance based inducement equity award for the first phase. We also issued inducement stock option grants for an aggregate of approximately 62,000 shares of Stamps.com common stock to 48 new employees in connection with our acquisition of ShippingEasy. Each option vests 25% on the one year anniversary of the July 1, 2016 grant date with the remaining 75% vesting in approximately equal monthly increments over the immediately succeeding thirty-nine months provided that the option holder is still employed by the Company on the vesting dates. The stock options have a ten year term and an exercise price equal to the closing price of Stamps.com common stock on the grant date of July 1, 2016. The stock options were granted as inducements material to the new employees entering into employment with Stamps.com in connection with the acquisition of ShippingEasy. The related stock-based compensation expense we recognized during the three months ended September 30, 2016 was not material. The total net purchase price for the ShippingEasy acquisition is allocated to the assets acquired and the liabilities assumed based on their fair values. We have made significant estimates and assumptions in determining the allocation of the purchase price. The preliminary allocation of purchase consideration is subject to change based on finalizing the deferred tax liability and the valuation of the intangible assets as of the date of acquisition. The following table is the allocation of the preliminary purchase price (in thousands, except years): Fair Value Fair Value Useful Life (In Years) Weighted Average Estimated Useful Life (In Years) Trade accounts receivable $ 1,194 Other assets 76 Property and equipment 40 Goodwill 40,780 Identifiable intangible assets: Trade name $ 1,304 8 Developed technology 6,948 5 Customer relationship 6,316 5 Non-compete agreements 1,111 3 to 5 Total identifiable intangible assets 15,679 5 Accrued expenses and other liabilities (707 ) Deferred revenue (185 ) Deferred tax liability (1,430 ) Total purchase price $ 55,447 Goodwill represents the excess of the fair value of consideration given over the fair value of the tangible assets, identifiable intangible assets and liabilities assumed in a business combination and the potential synergy of combining the operations of Stamps.com and ShippingEasy. Such synergies include estimated cost reductions and enhanced sales which are expected to drive increased volume. The identified intangible assets consist of trade names, developed technology, non-compete agreements and customer relationships. The estimated fair values of the trademark and developed technology were determined using the “relief from royalty” method. The estimated fair value of the non-compete agreements was determined using the “with and without” method. The estimated fair value of customer relationship was determined using the “excess earnings” method. The rate utilized to discount net cash flows to their present values was approximately 23% and was determined after consideration of the overall enterprise rate of return and the relative risk and importance of the assets to the generation of future cash flows. Trademark, developed technology, non-compete and customer relationship is amortized on a straight-line basis over their estimated useful lives. The amortization of acquired intangibles will be approximately $761,000 per quarter for the remaining estimated useful lives. The intangible assets and goodwill recorded in this acquisition are not deductible for tax purposes. For the three and nine months ended September 30, 2016, the Company incurred approximately $111,000 and $604,000, respectively in acquisition expenses. These costs are included in general and administrative expense on our Consolidated Statements of Operations. Pro-Forma Financial Information (unaudited) The pro-forma information presented is for illustrative purposes only and is not necessarily indicative of the results of operations that would have been realized if the acquisition had been completed on the date indicated, nor is it indicative of future operating results. The pro-forma financial information does not include any adjustments for anticipated operating efficiencies or cost savings. The following table presents the pro-forma financial information (in thousands, except per share amounts) and assumes the acquisition of ShippingEasy occurred on January 1, 2015: Three Months Ended September 30, Nine Months Ended September 30, 2016 2015 2016 2015 Revenues $ 92,559 $ 53,133 $ 264,664 $ 147,517 Income from operations 31,702 12,143 80,137 (7,580 ) Net income 18,744 6,705 46,846 (6,192 ) Basic earnings per share $ 1.09 $ 0.41 $ 2.70 $ (0.38 ) Diluted earnings per share $ 1.03 $ 0.38 $ 2.56 $ (0.38 ) Endicia Acquisition On March 22, 2015 we entered into a Stock Purchase Agreement (the “Stock Purchase Agreement”) with Endicia, and Newell Rubbermaid Inc., a Delaware corporation (“Newell”). The Stock Purchase Agreement provided for our purchase of all of the issued and outstanding shares of common stock of Endicia from a wholly owned indirect subsidiary of Newell for an aggregate purchase price of $215 million in cash (the “Transaction”). The purchase price was subject to adjustment for changes in Endicia’s net working capital as of the date of the closing of the Transaction and certain transaction expenses and closing cash adjustments. After receiving regulatory clearance, we closed the Transaction on November 18, 2015. As part of the funding of our acquisition of Endicia, we entered into a credit agreement with a group of banks on November 18, 2015, which provided for a term loan of $82.5 million and a revolving credit facility with a maximum borrowing of $82.5 million (collectively, the “Credit Agreement”) to fund our acquisition of Endicia. The Credit Agreement is secured by substantially all of our assets. We funded our acquisition with cash of $56.5 million and debt from our Credit Agreement of $164.5 million, totaling $221.0 million. The $221.0 million consists of the following: 1) purchase price of $214.2 million; 2) $1.5 million of debt issuance costs; and 3) the transfer of Endicia’s ending cash balance on November 17, 2015 of $5.3 million. Total debt issuance costs of $1.8 million, which includes $300,000 of costs incurred prior to closing, were recorded as debt discount and are being accreted as interest expense over the life of the Credit Agreement. Our Credit Agreement matures on November 18, 2020. As of September 30, 2016 our outstanding debt under the Credit Agreement, gross of debt issuance costs, was approximately $78.4 million under the term loan and approximately $72.0 million under the revolving credit facility. Because we have a letter of credit of approximately $510,000 relating to a facility lease, we have approximately $10.0 million of available and unused borrowings under the revolving credit facility as of September 30, 2016. During the first quarter of 2016, we adjusted the purchase price of Endicia and related goodwill by approximately $945,000 due to certain acquisition date balance sheet adjustments and the settlement of net working capital with Newell. The total estimated purchase price of the acquired company is allocated to the assets acquired and the liabilities assumed based on their fair values. We have made significant estimates and assumptions in determining the allocation of the purchase price. The following table sets forth the final allocation of the purchase price (in thousands, except years): Fair Value Fair Value Useful Life (In Years) Weighted Average Estimated Useful Life (In Years) Trade accounts receivable $ 10,247 Other assets 771 Property and equipment 2,798 Goodwill 131,860 Identifiable intangible assets: Trade name $ 10,900 Indefinite Developed technology 26,100 9 Customer relationship 43,200 6 Total identifiable intangible assets 80,200 7 Accrued expenses and other liabilities (10,212 ) Deferred revenue (926 ) Total purchase price $ 214,738 Goodwill represents the excess of the fair value of consideration given over the fair value of the tangible assets, identifiable intangible assets and liabilities assumed in a business combination and the potential synergy of combining the operations of Stamps.com and Endicia. Such synergies include estimated cost reductions and enhanced sales and customer support which are expected to drive increased volume. The entire amount of goodwill recorded in this acquisition is being deducted for tax purposes ratably over a 15 year period. The identified intangible assets consist of trade name, developed technology and customer relationships. The estimated fair values of the trade name and developed technology were determined using the “relief from royalty” method. The estimated fair value of customer relationship was determined using the “excess earnings” method. The rate utilized to discount net cash flows to their present values was approximately 20% and was determined after consideration of the overall enterprise rate of return and the relative risk and importance of the assets to the generation of future cash flows. Developed technology and customer relationship is being amortized on a straight-line basis over their estimated useful lives. The amortization of acquired intangibles is being approximately $2.5 million per quarter for the remaining estimated useful lives. ShipWorks Acquisition On August 29, 2014, we acquired 100% of the outstanding equity of Interapptive Inc., which operates ShipWorks, in a cash transaction. ShipWorks, based in St. Louis, Missouri, offers monthly subscription based e-commerce shipping software that provides simple, powerful and easy to use solutions for online sellers. ShipWorks solutions integrate with over 50 popular online sales and marketplace systems including eBay, PayPal, Amazon, Yahoo! and others. ShipWorks offers multi-carrier shipping options and features including sending email notifications to buyers, updating online order status, generating reports and many more. During the fourth quarter of 2014, we adjusted the purchase price of ShipWorks by approximately $69,000. The total purchase price for ShipWorks was approximately $22.1 million and was comprised of the following (in thousands): Fair Value Cash consideration $ 21,952 Deferred consideration 181 Total purchase price $ 22,133 The total purchase price of the acquired company was allocated to the assets acquired and the liabilities assumed based on their fair values. We have made significant estimates and assumptions in determining the allocation of the purchase price. The following table sets forth the final allocation of the purchase price (in thousands, except years): Fair Value Fair Value Useful Life (In Years) Weighted Average Estimated Useful Life (In Years) Cash and cash equivalents $ 803 Trade accounts receivable 353 Other assets 21 Property and equipment 1,091 Goodwill 16,349 Identifiable intangible assets: Trademark $ 200 6 Developed technology 1,700 7 Non-compete agreement 700 4 Customer relationship 2,300 6 Total identifiable intangible assets 4,900 6 Accrued expenses and other liabilities (1,119 ) Deferred revenue (265 ) Total purchase price $ 22,133 Goodwill represents the excess of the fair value of consideration given over the fair value of the tangible assets, identifiable intangible assets and liabilities assumed in a business combination and the potential synergy of combining the operations of Stamps.com and ShipWorks. The entire amount of goodwill recorded in this acquisition is being deducted for tax purposes ratably over a 15 year period. The identified intangible assets consist of trademarks, developed technology, non-compete agreements and customer relationships. The estimated fair values of the trademark and developed technology were determined using the “relief from royalty” method. The estimated fair value of the non-compete was determined using the “with and without” method. The estimated fair value of customer relationship was determined using the “excess earnings” method. The rate utilized to discount net cash flows to their present values was approximately 13% and was determined after consideration of the overall enterprise rate of return and the relative risk and importance of the assets to the generation of future cash flows. Trademark, developed technology, non-compete and customer relationship is amortized on a straight-line basis over their estimated useful lives. The amortization of acquired intangibles is approximately $200,000 per quarter for the remaining estimated useful lives. ShipStation Acquisition and Contingent Consideration On June 10, 2014, we acquired 100% of the outstanding equity of Auctane LLC, which operates ShipStation, in a cash and contingent stock transaction. ShipStation, based in Austin, Texas, offers monthly subscription based e-commerce shipping software primarily under the brands ShipStation and Auctane. ShipStation is a leading web-based shipping software solution that allows online retailers and e-commerce merchants to organize, process, fulfill and ship their orders quickly and easily. ShipStation supports automatic order importing from over 50 shopping carts and marketplaces, including eBay, Amazon, Shopify, BigCommerce, Volusion, Squarespace and others. ShipStation offers multi-carrier shipping options, and automation features like custom hierarchical rules and product profiles that allow customers to easily and automatically optimize their shipping. Using ShipStation, an online retailer or e-commerce merchant can ship their orders from wherever they sell and however they ship. The total purchase price for ShipStation was approximately $66.2 million and was comprised of the following (in thousands, except shares): Fair Value Cash consideration $ 50,000 Fair value of performance linked earn-out of up to 768,900 shares of Stamps.com common stock (contingent consideration) 16,242 Total purchase price $ 66,242 The performance linked earn-out payment of Stamps.com shares (or contingent consideration) to former equity members of Auctane LLC was based on the achievement of certain financial measures within a future time period. There were two periods in which the earn-out payment was calculated. The first earn-out period was based on the achievement of certain financial measures during the nine months ended December 31, 2014. The second earn-out period was based on the achievement of certain financial measures during the twelve months ended December 31, 2015. The range of Stamps.com shares available for the performance linked earn-out for both periods was between 576,675 to 768,900 shares provided that a minimum threshold for the financial measures was achieved. The first earn-out payment totaled 192,225 shares and was made in the first quarter of 2015. The second earn-out payment totaled 576,675 shares and was made in the first quarter of 2016. The fair value of the contingent consideration was determined at the acquisition date based on a probability weighted method, which incorporated management’s forecasts of financial measures and the likelihood of the financial measure targets being achieved using a series of options that replicate the pay-off structure of the earn-out, and the value of each of these options was determined using the Black-Scholes-Merton option pricing framework. The total purchase price of the acquired company was allocated to the assets acquired and the liabilities assumed based on their fair values. We have made significant estimates and assumptions in determining the allocation of the purchase price. The following table sets forth the final allocation of the purchase price (in thousands, except years): Fair Value Fair Value Useful Life (In Years) Weighted Average Estimated Useful Life (In Years) Cash and cash equivalents $ 1,117 Trade accounts receivable 254 Other assets 39 Property and equipment 187 Goodwill 50,544 Identifiable intangible assets: Trademark $ 500 4 Developed technology 5,300 8 Non-compete agreement 400 4 Customer relationship 9,000 8 Total identifiable intangible assets 15,200 8 Accrued expenses and other liabilities (835 ) Deferred revenue (264 ) Total purchase price $ 66,242 Goodwill represents the excess of the fair value of consideration given over the fair value of the tangible assets, identifiable intangible assets and liabilities assumed in a business combination and the potential synergy of combining the operations of Stamps.com and ShipStation. The entire amount of goodwill recorded in this acquisition is being deducted for tax purposes ratably over a 15 year period. The identified intangible assets consist of trademarks, developed technology, non-compete agreements and customer relationships. The estimated fair values of the trademark and developed technology were determined using the “relief from royalty” method. The estimated fair value of the non-compete was determined using the “with and without” method. The estimated fair value of customer relationship was determined using the “excess earnings” method. The rate utilized to discount net cash flows to their present values was approximately 15% and was determined after consideration of the overall enterprise rate of return and the relative risk and importance of the assets to the generation of future cash flows. Trademark, developed technology, non-compete and customer relationship is amortized on a straight-line basis over their estimated useful lives. The amortization of acquired intangibles is approximately $500,000 per quarter for the remaining estimated useful lives. Under ASC 805, we are required to re-measure the fair value of the contingent consideration at each reporting period. During the 2015 periods, the fair value of the contingent consideration was determined based on a probability weighted method, which incorporated management’s forecasts of financial measures and the likelihood of the financial measure targets being achieved using a series of options that replicate the pay-off structure of the earn-out, and the value of each of these options was determined using the Black-Scholes-Merton option pricing framework. Increases or decreases in the fair value of the contingent consideration can result from changes in the assumed timing and amount of revenue and expense estimates, changes in the probability of payment scenarios, changes in stock values, as well as changes in capital market conditions, which impact the discount rate used in the fair valuation. Significant judgment was employed in determining the appropriateness of these assumptions as of the acquisition date and for each subsequent reporting period. We recognized $13.6 million and $24.1 million of contingent consideration charges during the three and nine months ended September 30, 2015, respectively. As of December 31, 2015, the fair value of the contingent consideration was calculated by multiplying the expected earn-out shares to be distributed by our stock price at December 31, 2015. The fair value of the contingent consideration for the ShipStation acquisition was $63.2 million as of December 31, 2015, the final measurement date. No increases or decreases to the fair value of the contingent consideration were made following December 31, 2015 and prior to the second and final earn-out payment in the first quarter of 2016. |
Commitments and Contingencies
Commitments and Contingencies | 9 Months Ended |
Sep. 30, 2016 | |
Commitments and Contingencies [Abstract] | |
Commitments and Contingencies | 3. Commitments and Contingencies Legal Proceedings We are subject to various routine legal proceedings and claims incidental to our business, and we do not believe that these proceedings and claims would reasonably be expected to have a material adverse effect on our financial position, results of operations or cash flows. Although management at present believes that the ultimate outcome of the various routine proceedings, individually and in the aggregate, will not materially harm our financial position, results of operations, cash flows, or overall trends, legal proceedings are subject to inherent uncertainties, and unfavorable rulings or other events could occur. An unfavorable outcome for an amount in excess of management’s present expectations may result in a material adverse impact on our business, results of operations, financial position, and overall trends. Commitments The following table is a schedule of our significant contractual obligations and commercial commitments (other than debt commitments), which consist only of future minimum lease payments under operating leases as of September 30, 2016 (in thousands): Twelve Month Period Ending September 30, Operating Lease Obligation 2017 $ 3,845 2018 3,985 2019 1,626 2020 1,389 2021 1,204 Thereafter 198 Total $ 12,247 |
Net Income (loss) per Share
Net Income (loss) per Share | 9 Months Ended |
Sep. 30, 2016 | |
Net Income (loss) per Share [Abstract] | |
Net Income (loss) per Share | 4. Net Income (loss) per Share Net income (loss) per share represents net income (loss) attributable to common stockholders divided by the weighted average number of common shares outstanding during a reporting period. The diluted net income (loss) per share reflects the potential dilution that could occur if securities or other contracts to issue common stock, including stock options (commonly and hereafter referred to as “common stock equivalents”), were exercised or converted into common stock. Diluted net income per share is calculated by dividing net income during a reporting period by the sum of the weighted average number of common shares outstanding plus common stock equivalents for the period. The following table reconciles share amounts utilized to calculate basic and diluted net income (loss) per share (in thousands, except per share data): Three Months Ended September 30, Nine Months Ended September 30, 2016 2015 2016 2015 Net income (loss) $ 18,672 $ 7,274 $ 46,201 $ (4,127 ) Basic - weighted average common shares 17,218 16,538 17,319 16,367 Diluted effect of common stock equivalents 902 979 1,006 — (1) Diluted - weighted average common shares 18,120 17,517 18,325 16,367 Earnings (loss) per share: Basic $ 1.08 $ 0.44 $ 2.67 $ (0.25 ) Diluted $ 1.03 $ 0.42 $ 2.52 $ (0.25 ) (1) Common equivalent shares are excluded from the diluted net loss per share calculation as their effect is anti-dilutive. The calculation of dilutive shares excludes the effect of the following options that are considered anti-dilutive (in thousands): Three Months Ended September 30, Nine Months Ended September 30, 2016 2015 2016 2015 Anti-dilutive stock options 514 64 269 2,990 |
Stock-Based Employee Compensati
Stock-Based Employee Compensation | 9 Months Ended |
Sep. 30, 2016 | |
Stock-Based Employee Compensation [Abstract] | |
Stock-Based Employee Compensation | 5. Stock-Based Employee Compensation We estimate the fair value of share-based payment awards on the date of grant using an option-pricing model and recognize stock-based compensation expense during each period based on the value of that portion of share-based payment awards that is ultimately expected to vest during the period, reduced for estimated forfeitures. We estimate forfeitures at the time of grant based on historical data and revise, if necessary, in subsequent periods if actual forfeitures differ from those estimates. Compensation expense recognized for all employee stock options granted is recognized using the straight-line method over their respective vesting periods of up to five years. Starting in the third quarter of 2016, our stock-based compensation expense included performance based inducement equity awards relating to the ShippingEasy acquisition as described in Note 2 - Acquisitions The following table sets forth the stock-based compensation expense that we recognized for the periods indicated (in thousands): Three Months Ended September 30, Nine Months Ended September 30, 2016 2015 2016 2015 Stock-based compensation expense relating to: Employee and director stock options $ 8,525 $ 2,899 $ 23,960 $ 8,701 Employee stock purchases 297 162 795 403 Total stock-based compensation expense $ 8,822 $ 3,061 $ 24,755 $ 9,104 Stock-based compensation expense relating to: Cost of revenues $ 476 $ 221 $ 1,351 $ 589 Sales and marketing 1,734 766 5,322 2,341 Research and development 1,916 641 4,696 1,806 General and administrative 4,696 1,433 13,386 4,368 Total stock-based compensation expense $ 8,822 $ 3,061 $ 24,755 $ 9,104 We use the Black-Scholes-Merton option valuation model to estimate the fair value of share-based payment awards on the date of grant, which requires us to make a number of highly complex and subjective assumptions, including stock price volatility, expected term, risk-free interest rates and projected employee stock option exercise behaviors. In the case of options we grant, our assumption of expected volatility is based on the historical volatility of our stock price over the term equal to the expected life of the options. We base the risk-free interest rate on U.S. Treasury zero-coupon issues with a remaining term equal to the expected life of the options assumed at the date of grant. The estimated expected life represents the weighted-average period the stock options are expected to remain outstanding, determined based on an analysis of historical exercise behavior. The following are the weighted average assumptions used in the Black-Scholes valuation model for the periods indicated: Three Months Ended September 30, Nine Months Ended September 30, 2016 2015 2016 2015 Expected dividend yield — — — — Risk-free interest rate 1.0 % 1.0 % 1.0 % 1.0 % Expected volatility 47 % 46 % 48 % 46 % Expected life (in years) 3.4 3.4 3.4 3.4 Expected forfeiture rate 6 % 6 % 6 % 6 % |
Goodwill and Intangible Assets
Goodwill and Intangible Assets | 9 Months Ended |
Sep. 30, 2016 | |
Goodwill and Intangible Assets [Abstract] | |
Goodwill and Intangible Assets | 6. Goodwill and Intangible Assets Goodwill represents the excess of the fair value of consideration given over the fair value of the tangible assets, identifiable intangible assets and liabilities assumed in a business combination. The following table summarizes goodwill as of December 31, 2015 and September 30, 2016 (in thousands): 2016 Goodwill balance at December 31, 2015 $ 197,807 Purchase price adjustment (see Note 2– “Acquisitions” 945 Acquisition of ShippingEasy (see Note 2– “Acquisitions” 40,780 Goodwill balance at September 30, 2016 $ 239,532 Goodwill is reviewed for impairment annually on October 1 st We have amortizable and non-amortizable intangible assets consisting of patents, trademarks, trade names, lease-in-place intangible assets, developed technology, non-compete agreements and customer relationships totaling approximately $125.4 million and $109.7 million in gross carrying amount as of September 30, 2016 and December 31, 2015, respectively. Non-amortizable assets of $11.4 million consist primarily of trade name relating to the Endicia acquisition. The following table summarizes our amortizable intangible assets as of September 30, 2016 (in thousands): Gross Carrying Amount Accumulated Amortization Net Carrying Amount Patents and Others $ 8,889 $ 8,763 $ 126 Customer Relationships 60,816 9,696 51,120 Technology 40,048 4,801 35,247 Non-Compete 2,211 652 1,559 Trademark 2,004 398 1,606 Total amortizable intangible assets at September 30, 2016 $ 113,968 $ 24,310 $ 89,658 We recorded amortization of intangible assets totaling approximately $10.5 million and $2.3 million for the nine months ended September 30, 2016 and 2015, respectively, which is included in general and administrative expense in our accompanying consolidated statements of operations. As of September 30, 2016, the remaining weighted average amortization period for our amortizable intangible assets is approximately 5.8 years. Our estimated amortization expense for the next five years and thereafter is as follows (in thousands): Twelve Month Period Ending September 30, Estimated Amortization Expense 2017 $ 16,038 2018 15,964 2019 15,623 2020 15,545 2021 14,422 Thereafter 12,066 Total $ 89,658 |
Income Taxes
Income Taxes | 9 Months Ended |
Sep. 30, 2016 | |
Income Taxes [Abstract] | |
Income Taxes | 7. Income Taxes Our income tax expense was $12.1 million and $30 million for the three and nine months ended September 30, 2016, respectively. Our tax expense was primarily attributable to our pre-tax income resulting in current tax expense consisting of federal alternative minimum tax and various state taxes and our deferred income tax expense for the utilization of net operating losses and other temporary differences. We had income tax expense of $5.8 million and income tax benefit of $90,000 during the three and nine months ended September 30, 2015, respectively. Our income tax expense and tax benefit during the three and nine months ended September 30, 2015, respectively, were primarily attributable to our pre-tax income and pre-tax losses during those periods including deferred income taxes. Our effective tax rate differs from statutory federal rate as a result of several factors including non-temporary differences and state and local income taxes. We evaluated the appropriateness of our deferred tax assets and related valuation allowance in accordance with ASC 740 based on all available positive and negative evidence. As of September 30, 2016 and December 31, 2015, we do not have any valuation allowance against our deferred tax assets. |
Fair Value Measurements
Fair Value Measurements | 9 Months Ended |
Sep. 30, 2016 | |
Fair Value Measurements [Abstract] | |
Fair Value Measurements | 8. Fair Value Measurements Financial assets measured at fair value on a recurring basis are classified in one of the three following categories, which are described below: Level 1 - Valuations based on unadjusted quoted prices for identical assets in an active market Level 2 - Valuations based on quoted prices in markets where trading occurs infrequently or whose values are based on quoted prices of instruments with similar attributes in active markets Level 3 - Valuations based on inputs that are unobservable and involve management judgment and our own assumptions about market participants and pricing The following table summarizes our financial assets measured at fair value on a recurring basis as of September 30, 2016 and December 31, 2015 (in thousands): Fair Value Measurement at Reporting Date Using Description September 30, 2016 Quoted Prices in Active Markets for Identical Assets (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) Cash equivalents $ 81,144 $ 81,144 $ — $ — Available-for-sale debt securities 3,029 — 3,029 — Total $ 84,173 $ 81,144 $ 3,029 $ — Fair Value Measurement at Reporting Date Using Description December 31, 2015 Quoted Prices in Active Markets for Identical Assets (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) Cash equivalents $ 65,126 $ 65,126 $ — $ — Available-for-sale debt securities 10,082 — 10,082 — Total $ 75,208 $ 65,126 $ 10,082 $ — The fair value of our available-for-sale debt securities included in the Level 2 category is based on the market values obtained from an independent pricing service that were evaluated using pricing models that vary by asset class and may incorporate available trade, bid and other market information and price quotes from well-established independent pricing vendors and broker-dealers. As of December 31, 2015 we had $63.2 million of contingent consideration relating to our acquisition of ShipStation that was required to be measured at fair value using quoted prices in active markets (level 1) because the contingencies had been resolved as of that date. As of September 30, 2016, we had no contingent consideration. The following table summarizes our contingent consideration measured at fair value on a recurring basis (in thousands): Fair Value Measurement at Reporting Date Using Description December 31, 2015 Quoted Prices in Active Markets for Identical Assets (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) Contingent consideration – current $ 63,209 $ 63,209 $ — $ — |
Cash, Cash Equivalents and Inve
Cash, Cash Equivalents and Investments | 9 Months Ended |
Sep. 30, 2016 | |
Cash, Cash Equivalents and Investments [Abstract] | |
Cash, Cash Equivalents and Investments | 9. Cash, Cash Equivalents and Investments Our cash equivalents and investments consist of money market, U.S. government obligations, asset-backed securities, and public corporate debt securities at September 30, 2016 and December 31, 2015. We consider all highly liquid investments with an original or remaining maturity of three months or less at the date of purchase to be cash equivalents. All of our investments are classified as available for sale and are recorded at market value using the specific identification method. Realized gains and losses are reflected in other income, net using the specific identification method. There was no material realized gain or loss with respect to our investments during the three and nine months ended September 30, 2016. Unrealized gains and losses are included as a separate component of stockholders' equity. We do not intend to sell investments with an amortized cost basis exceeding fair value and it is not likely that we will be required to sell the investments before recovery of their amortized cost bases. We have 3 securities with a total fair value of $27,000 that have unrealized losses of approximately $2,000 as of September 30, 2016. On at least a quarterly basis, we evaluate our available for sale securities, and record an “other-than-temporary impairment” (“OTTI”) if we believe their fair value is less than historical cost and it is probable that we will not collect all contractual cash flows. We did not record any OTTI during the three and nine months ended September 30, 2016, after evaluating a number of factors including, but not limited to: · How much fair value has declined below amortized cost · The financial condition of the issuers · Significant rating agency changes on the issuer · Our intent and ability to hold the security for a period of time sufficient to allow for any anticipated recovery in fair value The following tables summarize our cash, cash equivalents and investments as of September 30, 2016 and December 31, 2015 (in thousands): September 30, 2016 Cost or Amortized Cost Gross Unrealized Gains Gross Unrealized Losses Estimated Fair Value Cash and cash equivalents: Cash $ 77,726 — — $ 77,726 Money market 3,418 — — 3,418 Total cash and cash equivalents 81,144 — — 81,144 Short-term investments: Corporate bonds and asset backed securities 3,014 18 (3 ) 3,029 Total short-term investments 3,014 18 (3 ) 3,029 Long-term investments: Corporate bonds and asset backed securities — — — — Total long-term investments — — — — Cash, cash equivalents and investments $ 84,158 18 (3 ) $ 84,173 December 31, 2015 Cost or Amortized Cost Gross Unrealized Gains Gross Unrealized Losses Estimated Fair Value Cash and cash equivalents: Cash $ 63,593 — — $ 63,593 Money market 1,533 — — 1,533 Total cash and cash equivalents 65,126 — — 65,126 Short-term investments: Corporate bonds and asset backed securities 8,549 7 (3 ) 8,553 Total short-term investments 8,549 7 (3 ) 8,553 Long-term investments: Corporate bonds and asset backed securities 1,515 17 (3 ) 1,529 Total long-term investments 1,515 17 (3 ) 1,529 Cash, cash equivalents and investments $ 75,190 24 (6 ) $ 75,208 The following table summarizes contractual maturities of our marketable fixed-income securities as of September 30, 2016 (in thousands): Amortized Cost Estimated Fair Value Due within one year $ 3,014 $ 3,029 Due after one year — — Total $ 3,014 $ 3,029 |
Summary of Significant Accoun16
Summary of Significant Accounting Policies (Policies) | 9 Months Ended |
Sep. 30, 2016 | |
Summary of Significant Accounting Policies [Abstract] | |
Basis of Presentation | Basis of Presentation We prepared the consolidated financial statements included herein pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”). Certain information and footnote disclosures normally included in financial statements prepared in accordance with United States (“U.S.”) generally accepted accounting principles (“GAAP”) have been condensed or omitted pursuant to such rules and regulations. We believe that the disclosures are adequate to make the information presented not misleading. We recommend that these financial statements be read in conjunction with the audited financial statements and the notes thereto included in our latest annual report on Form 10-K for the fiscal year ended December 31, 2015, filed with the SEC on February 29, 2016. In our opinion, these unaudited financial statements contain all adjustments (consisting of normal recurring adjustments) necessary to present fairly our financial position as of September 30, 2016, our results of operations for the three and nine months ended September 30, 2016 and our cash flows for the nine months ended September 30, 2016. The results of operations for the interim period are not necessarily indicative of the results that may be expected for the year ending December 31, 2016. |
Principles of Consolidation | Principles of Consolidation The consolidated financial statements include the accounts of Stamps.com Inc., Auctane LLC, Interapptive, Inc., PSI Systems Inc., ShippingEasy Group, Inc., and PhotoStamps Inc. In June 2014, we completed our acquisition of 100% of the outstanding equity of Auctane LLC, the Texas limited liability company that operates ShipStation (“Auctane LLC” or “ShipStation”) in a cash and contingent stock transaction. ShipStation, based in Austin, Texas, offers monthly subscription based e-commerce shipping software primarily under the brands ShipStation and Auctane. In August 2014, we completed our acquisition of 100% of the outstanding equity of Interapptive, Inc., a Missouri corporation, that operates ShipWorks (“Interapptive, Inc.” or “ShipWorks”) in a cash transaction. ShipWorks, based in St. Louis, Missouri, offers monthly subscription based e-commerce shipping software. In November 2015, we completed our acquisition of 100% of the outstanding shares of PSI Systems, Inc. (“Endicia”). Endicia, based in Palo Alto, California, is a leading provider of high volume shipping technologies and solutions for shipping with the United States Postal Service (“USPS”). In July 2016, we completed our acquisition of 100% of the outstanding shares of ShippingEasy Group, Inc. (“ShippingEasy”). ShippingEasy, based in Austin, Texas, offers web-based multi-carrier shipping software that allows online retailers and e-commerce merchants to organize, process, fulfill and ship their orders quickly and easily. See Note 2– “Acquisitions” Because 100% of the voting control of Auctane LLC, Interapptive, Inc. PSI Systems, Inc., and ShippingEasy Group, Inc. is held by us, we have consolidated ShipStation, ShipWorks, Endicia and ShippingEasy from the date we obtained control in the accompanying consolidated financial statements. Similarly, due to our 100% control of PhotoStamps, Inc., PhotoStamps Inc. is also consolidated in the accompanying consolidated financial statements from the date of its inception. All significant intercompany accounts and transactions have been eliminated. |
Use of Estimates and Risk Management | Use of Estimates and Risk Management The preparation of financial statements in conformity with U.S. GAAP requires us to make estimates and assumptions that affect the amounts reported in the financial statements and the accompanying notes. Actual results could differ from those estimates, and such differences may be material to the financial statements. Examples include estimates of loss contingencies, promotional coupon redemptions, the number of PhotoStamps retail boxes that will not be redeemed, realizability of deferred income taxes, the estimates and assumptions used to calculate stock-based compensation, the estimates and assumptions used to calculate the allocation of the purchase price related to our acquisitions, including related contingent consideration, and estimates regarding the useful lives of our building, patents and other amortizable intangible assets, and goodwill. |
Contingencies and Litigation | Contingencies and Litigation We are subject to various routine litigation matters as a claimant and a defendant. We record any amounts recovered in these matters when received. We establish loss provisions for claims against us when the loss is both probable and can be reasonably estimated. If either or both of the criteria are not met, we assess whether there is at least a reasonable possibility that a loss, or additional losses, may have been incurred. If there is a reasonable possibility that a loss or additional loss may have been incurred for such proceedings, we disclose the estimate of the amount of loss or possible range of loss, or disclose that an estimate of loss cannot be made, as applicable. |
Fair Value of Financial Instruments | Fair Value of Financial Instruments Carrying amounts of certain of our financial instruments, including cash, cash equivalents, accounts receivable and accounts payable, approximate fair value due to their short maturities. The fair values of investments are determined using quoted market prices for those securities or similar financial instruments. The fair value of our debt approximates book value. In 2015 the fair value of the contingent consideration related to our acquisition of ShipStation was determined based on a probability weighted method, which incorporated management’s forecasts of financial measures related to ShipStation and the likelihood of the financial measure targets related to such acquisition being achieved using a series of options that replicated the pay-off structure of the earn-out, and the value of each of these options was determined using the Black-Scholes-Merton option pricing framework. Changes in the fair value of the contingent consideration obligations resulted from changes in the assumed timing and amount of revenue and expense estimates, changes in the probability of payment scenarios, changes in stock values, as well as changes in capital market conditions, which impacted the discount rate used in the fair valuation. Significant judgment was employed in determining the appropriateness of these assumptions as of the acquisition date and for each subsequent reporting period during 2015. See Note 2 – “Acquisitions” |
Property and Equipment | Property and Equipment We account for property and equipment at cost less accumulated depreciation and amortization. We compute depreciation using the straight-line method over the estimated useful life of the asset, generally three to five years for furniture, fixtures and equipment and ten to forty years for building and building improvements. We have a policy of capitalizing expenditures that materially increase assets’ useful lives and charging ordinary maintenance and repairs to operations as incurred. When property or equipment is disposed of, the cost and related accumulated depreciation and amortization are removed, and any gain or loss is included in operations. |
Business Combinations | Business Combinations The acquisition method of accounting is used for business combinations. The results of operations of acquired businesses are included in our consolidated financial statements prospectively from the date of acquisition. The fair value of purchase consideration is allocated to the assets acquired and liabilities assumed from the acquired entity and is generally based on their fair value at the acquisition date. The excess of the fair value of purchase consideration over the fair value of the assets acquired and liabilities assumed is recorded as goodwill. Historically the primary items that have generated goodwill include anticipated synergies between the acquired business and the Company and the acquired assembled workforce, neither of which qualifies for recognition as an intangible asset. Acquisition-related expenses are recognized in our consolidated financial statements as incurred. |
Goodwill | Goodwill Goodwill represents the excess of the fair value of consideration given over the fair value of the tangible assets, identifiable intangible assets and liabilities assumed in a business combination. We are required to test goodwill for impairment annually and whenever events or circumstances indicate the fair value of a reporting unit may be below its carrying value. Goodwill is reviewed for impairment annually on October 1. A reporting unit is the operating segment or a business that is one level below that operating segment. Reporting units are aggregated as a single reporting unit if they have similar economic characteristics. As of September 30, 2016, we are not aware of any indicators of impairment that would require an impairment analysis other than our annual impairment analysis. |
Trademarks, Patents and Intangible Assets | Trademarks, Patents and Intangible Assets Acquired trademarks, patents and other intangibles include both amortizable and non-amortizable assets and are included in intangible assets, net in the accompanying consolidated balance sheets. Intangible assets are carried at cost less accumulated amortization. Cost associated with internally developed intangible assets is typically expensed as incurred as research and development costs. Amortization of amortizable intangible assets is calculated on a straight-line basis, which is consistent with expected future cash flows. |
Impairment of Long-Lived Assets and Intangible Assets | Impairment of Long-Lived Assets and Intangible Assets Long-lived assets including intangible assets with finite useful lives are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to future net cash flows expected to be generated by the asset. If such assets are considered to be impaired, the impairment to be recognized is measured by the amount by which the carrying amount of the assets exceeds the fair value of the assets. Assets to be disposed of are reported at the lower of the carrying amount or fair value less costs to sell. Intangible assets that have indefinite useful lives are not amortized but, instead, tested at least annually for impairment while intangible assets that have finite useful lives continue to be amortized over their respective useful lives. |
Deferred Revenue | Deferred Revenue Our deferred revenue relates mainly to service revenue and PhotoStamps retail boxes. Deferred revenue related to our service revenue generally arises due to the timing of payment versus the provision of services for certain customers billed in advance. We previously sold PhotoStamps retail boxes to our customers through our website and selected third parties. Proceeds from the sale of our PhotoStamps retail boxes were initially recorded as a liability when received. We recorded the liability for outstanding PhotoStamps retail boxes in deferred revenue. We no longer sell PhotoStamps retail boxes. |
Revenue Recognition | Revenue Recognition We recognize revenue from product sales or services rendered, as well as commissions from advertising or sale of products by third party vendors to our customer base when the following four revenue recognition criteria are met: persuasive evidence of an arrangement exists, delivery has occurred or services have been rendered, the selling price is fixed or determinable, and collectability is reasonably assured. Service revenue is primarily derived from monthly service fees and transaction related revenues from our USPS mailing and shipping services, our multi-carrier shipping services and our mailing and shipping integrations, and is recognized in the period that services are provided. Product sales, net of return allowances, are recorded when the products are shipped and title passes to customers. Sales of items, including customized postage, sold to customers are made pursuant to a sales contract that provides for transfer of both title and risk of loss upon our delivery to the carrier. Return allowances for expected product returns, which reduce product revenue, are estimated using historical experience. Commissions from the advertising or sale of products by a third party vendor to our customer base are recognized when the revenue is earned and collection is deemed probable. Customers purchase postage through our mailing and shipping solutions. If the postage purchase funds are transferred directly from the customers to the USPS, we do not recognize revenue for this postage, as it is purchased by our customers directly from the USPS. Customized postage revenue, which includes the face value of postage, from the sale of PhotoStamps and PictureItPostage sheets and rolls is made pursuant to a sales contract that provides for transfer of both title and risk of loss upon our delivery to the carrier and revenue is recognized at that time. Sale of PhotoStamps retail boxes are initially recorded as deferred revenue. PhotoStamps revenue related to the sale of these PhotoStamps retail boxes is subsequently recognized when either: 1) the PhotoStamps retail box is redeemed; or 2) the likelihood of the PhotoStamps retail box being redeemed is deemed remote (“breakage”) and there is no legal obligation to remit the value of the unredeemed PhotoStamps retail boxes. On a limited basis, we allow third parties to offer products and promotions to our customer base. These arrangements generally provide payment in the form of a flat fee or revenue sharing arrangements where we receive payment upon customers accessing third party products and services. During the three and nine months ended September 30, 2016 and 2015 revenue from such advertising arrangements was not significant. We provide our customers with the opportunity to purchase parcel insurance directly through our solutions. Insurance revenue represents the gross amount charged to the customer for purchasing insurance and the related cost represents the amount paid to our insurance brokers. We recognize revenue on insurance purchases upon the ship date of the insured package. |
PhotoStamps Retail Boxes | PhotoStamps Retail Boxes We previously sold PhotoStamps retail boxes that are redeemable for PhotoStamps on our website. The PhotoStamps retail boxes were sold through various third party retail partners. We no longer sell PhotoStamps retail boxes. Our PhotoStamps retail boxes are not subject to administrative fees on unredeemed boxes and have no expiration date. PhotoStamps retail box sales were recorded as deferred revenue. We concluded that sufficient company-specific historical evidence existed to determine the period of time after which the likelihood of the PhotoStamps retail boxes being redeemed was remote. Based on our analysis of the redemption data, we estimate that period of time to be 60 months after the sale of our PhotoStamps retail boxes. We recognize breakage revenue related to our PhotoStamps retail boxes utilizing the redemption recognition method. Under the redemption recognition method, we recognize breakage revenue from unredeemed retail boxes in proportion to the revenue recognized from the retail boxes that have been redeemed. Revenue from our PhotoStamps retail boxes is included in Customized postage revenue. PhotoStamps retail box breakage revenue was not significant during the three and nine months ended September 30, 2016 and 2015. |
Income Taxes | Income Taxes We account for income taxes in accordance with Financial Accounting Standards Board (“FASB”) ASC Topic No. 740, Income Taxes (“ASC 740”), which requires that deferred tax assets and liabilities be recognized using enacted tax rates for the effect of temporary differences between the book and tax basis of recorded assets and liabilities. ASC 740 also requires that deferred tax assets be reduced by a valuation allowance if it is more likely than not that some or all of the net deferred tax assets will not be realized. We record a valuation allowance to reduce our gross deferred tax assets, which are primarily comprised of U.S. Federal and State tax loss carry-forwards, to the amount that is more likely than not (a likelihood of more than 50 percent) to be realized. In order for us to realize our deferred tax assets, we must be able to generate sufficient taxable income. We evaluate the appropriateness of our deferred tax assets and related valuation allowance in accordance with ASC 740 based on all available positive and negative evidence. As of September 30, 2016 and December 31, 2015 we do not have any valuation allowance recorded to reduce our gross deferred tax assets as we believe we have met the more likely than not threshold and we will realize our tax loss carry-forwards in the foreseeable future. |
Short-Term Financing Obligation | Short-Term Financing Obligation We utilize short-term financing, which is separate from our debt, to fund certain company operations. Short-term financing is included in accrued expenses. As of September 30, 2016 we had $16 million in short-term financing obligations and $120 million of unused credit. As of December 31, 2015 we had $13.3 million in short-term financing obligations and $34.2 million of unused credit. |
Recent Accounting Pronouncements | Recent Accounting Pronouncements In May 2014, the FASB issued Accounting Standards Update No. 2014-09, Revenue from Contracts with Customers ("ASU 2014-09") an updated standard on revenue recognition. This ASU will supersede the revenue recognition requirements in Accounting Standards Codification Topic 605, Revenue Recognition, and most industry-specific guidance. ASU 2014-09 provides enhancements to the quality and consistency of how revenue is reported while also improving comparability in the financial statements of companies reporting using US GAAP and International Financial Reporting Standards. The core principle of the new standard is for companies to recognize revenue to depict the transfer of goods or services to customers in amounts that reflect the consideration to which the company expects to be entitled in exchange for those goods or services. In doing so the companies may be required to use more judgment and make more estimates than under current authoritative guidance. ASU 2014-09 will be effective for the Company in the first quarter of fiscal 2018 and may be applied on a full retrospective or modified retrospective approach. The Company is currently evaluating the impact the adoption of this standard will have on its consolidated financial statements. In April 2015, the FASB issued guidance to help entities evaluate whether fees paid in a cloud computing arrangement include a software license. Pursuant to this guidance, when a cloud computing arrangement includes a software license, the customer accounts for the software license element of the arrangement consistent with the acquisition of other software licenses. When a cloud computing arrangement does not include a software license element, the customer accounts for the arrangement as a service contract. The prospective adoption of this guidance on January 1, 2016 did not have a material effect on the Consolidated Financial Statements. In November 2015, the FASB issued guidance that requires deferred tax assets and liabilities to be presented as noncurrent in a classified statement of financial position. The guidance is effective beginning January 1, 2017, with early adoption permitted. The guidance can be applied prospectively or retrospectively. The Company elected to early adopt the requirements and apply them retrospectively as of December 31, 2015. In February 2016, the FASB issued a new accounting standard for leases. The new standard generally requires the recognition of financing and operating lease liabilities and corresponding right-of-use assets on the balance sheet. For financing leases, a lessee recognizes amortization of the right-of-use asset as an operating expense over the lease term separately from interest on the lease liability. For operating leases, a lessee recognizes its total lease expense as an operating expense over the lease term. The amendments are effective for the Company in the first quarter of 2019 using a modified retrospective approach with early adoption permitted. The Company is currently evaluating the impact the adoption of this standard will have on its consolidated financial statements. In March 2016, the FASB simplified certain areas of accounting for stock-based compensation, including accounting for the income tax consequences of stock-based compensation, determining the classification of awards as either equity or liabilities, classifying certain items within the statement of cash flows and introducing an accounting policy election to account for forfeitures of non-vested awards as they occur. The simplified guidance is effective for the Company in the first quarter of 2017. Depending on the area simplified, the guidance is effective either prospectively, retrospectively or using a modified retrospective approach. Early adoption is permitted. The Company is evaluating the effect of adoption on its Consolidated Financial Statements. |
Subsequent Events | Subsequent Events We are not aware of any material subsequent events or transactions that have occurred that would require recognition in the financial statements or disclosure in the notes to the financial statements. |
Acquisitions (Tables)
Acquisitions (Tables) | 9 Months Ended |
Sep. 30, 2016 | |
ShippingEasy [Member] | |
Business Acquisition [Line Items] | |
Allocation of the purchase price | The following table is the allocation of the preliminary purchase price (in thousands, except years): Fair Value Fair Value Useful Life (In Years) Weighted Average Estimated Useful Life (In Years) Trade accounts receivable $ 1,194 Other assets 76 Property and equipment 40 Goodwill 40,780 Identifiable intangible assets: Trade name $ 1,304 8 Developed technology 6,948 5 Customer relationship 6,316 5 Non-compete agreements 1,111 3 to 5 Total identifiable intangible assets 15,679 5 Accrued expenses and other liabilities (707 ) Deferred revenue (185 ) Deferred tax liability (1,430 ) Total purchase price $ 55,447 |
Pro forma financial information | The following table presents the pro-forma financial information (in thousands, except per share amounts) and assumes the acquisition of ShippingEasy occurred on January 1, 2015: Three Months Ended September 30, Nine Months Ended September 30, 2016 2015 2016 2015 Revenues $ 92,559 $ 53,133 $ 264,664 $ 147,517 Income from operations 31,702 12,143 80,137 (7,580 ) Net income 18,744 6,705 46,846 (6,192 ) Basic earnings per share $ 1.09 $ 0.41 $ 2.70 $ (0.38 ) Diluted earnings per share $ 1.03 $ 0.38 $ 2.56 $ (0.38 ) |
Endicia [Member] | |
Business Acquisition [Line Items] | |
Allocation of the purchase price | The following table sets forth the final allocation of the purchase price (in thousands, except years): Fair Value Fair Value Useful Life (In Years) Weighted Average Estimated Useful Life (In Years) Trade accounts receivable $ 10,247 Other assets 771 Property and equipment 2,798 Goodwill 131,860 Identifiable intangible assets: Trade name $ 10,900 Indefinite Developed technology 26,100 9 Customer relationship 43,200 6 Total identifiable intangible assets 80,200 7 Accrued expenses and other liabilities (10,212 ) Deferred revenue (926 ) Total purchase price $ 214,738 |
ShipWorks [Member] | |
Business Acquisition [Line Items] | |
Schedule of purchase price | The total purchase price for ShipWorks was approximately $22.1 million and was comprised of the following (in thousands): Fair Value Cash consideration $ 21,952 Deferred consideration 181 Total purchase price $ 22,133 |
Allocation of the purchase price | The following table sets forth the final allocation of the purchase price (in thousands, except years): Fair Value Fair Value Useful Life (In Years) Weighted Average Estimated Useful Life (In Years) Cash and cash equivalents $ 803 Trade accounts receivable 353 Other assets 21 Property and equipment 1,091 Goodwill 16,349 Identifiable intangible assets: Trademark $ 200 6 Developed technology 1,700 7 Non-compete agreement 700 4 Customer relationship 2,300 6 Total identifiable intangible assets 4,900 6 Accrued expenses and other liabilities (1,119 ) Deferred revenue (265 ) Total purchase price $ 22,133 |
ShipStation [Member] | |
Business Acquisition [Line Items] | |
Schedule of purchase price | The total purchase price for ShipStation was approximately $66.2 million and was comprised of the following (in thousands, except shares): Fair Value Cash consideration $ 50,000 Fair value of performance linked earn-out of up to 768,900 shares of Stamps.com common stock (contingent consideration) 16,242 Total purchase price $ 66,242 |
Allocation of the purchase price | The following table sets forth the final allocation of the purchase price (in thousands, except years): Fair Value Fair Value Useful Life (In Years) Weighted Average Estimated Useful Life (In Years) Cash and cash equivalents $ 1,117 Trade accounts receivable 254 Other assets 39 Property and equipment 187 Goodwill 50,544 Identifiable intangible assets: Trademark $ 500 4 Developed technology 5,300 8 Non-compete agreement 400 4 Customer relationship 9,000 8 Total identifiable intangible assets 15,200 8 Accrued expenses and other liabilities (835 ) Deferred revenue (264 ) Total purchase price $ 66,242 |
Commitments and Contingencies (
Commitments and Contingencies (Tables) | 9 Months Ended |
Sep. 30, 2016 | |
Commitments and Contingencies [Abstract] | |
Future minimum lease payment under operating leases | The following table is a schedule of our significant contractual obligations and commercial commitments (other than debt commitments), which consist only of future minimum lease payments under operating leases as of September 30, 2016 (in thousands): Twelve Month Period Ending September 30, Operating Lease Obligation 2017 $ 3,845 2018 3,985 2019 1,626 2020 1,389 2021 1,204 Thereafter 198 Total $ 12,247 |
Net Income (loss) per Share (Ta
Net Income (loss) per Share (Tables) | 9 Months Ended |
Sep. 30, 2016 | |
Net Income (loss) per Share [Abstract] | |
Calculation of basic and diluted net income (loss) per share | The following table reconciles share amounts utilized to calculate basic and diluted net income (loss) per share (in thousands, except per share data): Three Months Ended September 30, Nine Months Ended September 30, 2016 2015 2016 2015 Net income (loss) $ 18,672 $ 7,274 $ 46,201 $ (4,127 ) Basic - weighted average common shares 17,218 16,538 17,319 16,367 Diluted effect of common stock equivalents 902 979 1,006 — (1) Diluted - weighted average common shares 18,120 17,517 18,325 16,367 Earnings (loss) per share: Basic $ 1.08 $ 0.44 $ 2.67 $ (0.25 ) Diluted $ 1.03 $ 0.42 $ 2.52 $ (0.25 ) (1) Common equivalent shares are excluded from the diluted net loss per share calculation as their effect is anti-dilutive. |
Anti-dilutive securities excluded from computation of earnings per share | The calculation of dilutive shares excludes the effect of the following options that are considered anti-dilutive (in thousands): Three Months Ended September 30, Nine Months Ended September 30, 2016 2015 2016 2015 Anti-dilutive stock options 514 64 269 2,990 |
Stock-Based Employee Compensa20
Stock-Based Employee Compensation (Tables) | 9 Months Ended |
Sep. 30, 2016 | |
Stock-Based Employee Compensation [Abstract] | |
Stock-based compensation expense | The following table sets forth the stock-based compensation expense that we recognized for the periods indicated (in thousands): Three Months Ended September 30, Nine Months Ended September 30, 2016 2015 2016 2015 Stock-based compensation expense relating to: Employee and director stock options $ 8,525 $ 2,899 $ 23,960 $ 8,701 Employee stock purchases 297 162 795 403 Total stock-based compensation expense $ 8,822 $ 3,061 $ 24,755 $ 9,104 Stock-based compensation expense relating to: Cost of revenues $ 476 $ 221 $ 1,351 $ 589 Sales and marketing 1,734 766 5,322 2,341 Research and development 1,916 641 4,696 1,806 General and administrative 4,696 1,433 13,386 4,368 Total stock-based compensation expense $ 8,822 $ 3,061 $ 24,755 $ 9,104 |
Weighted average assumptions used in Black-Scholes valuation model | The following are the weighted average assumptions used in the Black-Scholes valuation model for the periods indicated: Three Months Ended September 30, Nine Months Ended September 30, 2016 2015 2016 2015 Expected dividend yield — — — — Risk-free interest rate 1.0 % 1.0 % 1.0 % 1.0 % Expected volatility 47 % 46 % 48 % 46 % Expected life (in years) 3.4 3.4 3.4 3.4 Expected forfeiture rate 6 % 6 % 6 % 6 % |
Goodwill and Intangible Assets
Goodwill and Intangible Assets (Tables) | 9 Months Ended |
Sep. 30, 2016 | |
Goodwill and Intangible Assets [Abstract] | |
Schedule of goodwill | The following table summarizes goodwill as of December 31, 2015 and September 30, 2016 (in thousands): 2016 Goodwill balance at December 31, 2015 $ 197,807 Purchase price adjustment (see Note 2– “Acquisitions” 945 Acquisition of ShippingEasy (see Note 2– “Acquisitions” 40,780 Goodwill balance at September 30, 2016 $ 239,532 |
Schedule of acquired intangible assets | The following table summarizes our amortizable intangible assets as of September 30, 2016 (in thousands): Gross Carrying Amount Accumulated Amortization Net Carrying Amount Patents and Others $ 8,889 $ 8,763 $ 126 Customer Relationships 60,816 9,696 51,120 Technology 40,048 4,801 35,247 Non-Compete 2,211 652 1,559 Trademark 2,004 398 1,606 Total amortizable intangible assets at September 30, 2016 $ 113,968 $ 24,310 $ 89,658 |
Schedule of future amortization expense | Our estimated amortization expense for the next five years and thereafter is as follows (in thousands): Twelve Month Period Ending September 30, Estimated Amortization Expense 2017 $ 16,038 2018 15,964 2019 15,623 2020 15,545 2021 14,422 Thereafter 12,066 Total $ 89,658 |
Fair Value Measurements (Tables
Fair Value Measurements (Tables) | 9 Months Ended |
Sep. 30, 2016 | |
Fair Value Measurements [Abstract] | |
Financial assets measured at fair value on a recurring basis | The following table summarizes our financial assets measured at fair value on a recurring basis as of September 30, 2016 and December 31, 2015 (in thousands): Fair Value Measurement at Reporting Date Using Description September 30, 2016 Quoted Prices in Active Markets for Identical Assets (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) Cash equivalents $ 81,144 $ 81,144 $ — $ — Available-for-sale debt securities 3,029 — 3,029 — Total $ 84,173 $ 81,144 $ 3,029 $ — Fair Value Measurement at Reporting Date Using Description December 31, 2015 Quoted Prices in Active Markets for Identical Assets (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) Cash equivalents $ 65,126 $ 65,126 $ — $ — Available-for-sale debt securities 10,082 — 10,082 — Total $ 75,208 $ 65,126 $ 10,082 $ — |
Contingent consideration measured at fair value on a recurring basis | The following table summarizes our contingent consideration measured at fair value on a recurring basis (in thousands): Fair Value Measurement at Reporting Date Using Description December 31, 2015 Quoted Prices in Active Markets for Identical Assets (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) Contingent consideration – current $ 63,209 $ 63,209 $ — $ — |
Cash, Cash Equivalents and In23
Cash, Cash Equivalents and Investments (Tables) | 9 Months Ended |
Sep. 30, 2016 | |
Cash, Cash Equivalents and Investments [Abstract] | |
Summary of cash, cash equivalents and investments | The following tables summarize our cash, cash equivalents and investments as of September 30, 2016 and December 31, 2015 (in thousands): September 30, 2016 Cost or Amortized Cost Gross Unrealized Gains Gross Unrealized Losses Estimated Fair Value Cash and cash equivalents: Cash $ 77,726 — — $ 77,726 Money market 3,418 — — 3,418 Total cash and cash equivalents 81,144 — — 81,144 Short-term investments: Corporate bonds and asset backed securities 3,014 18 (3 ) 3,029 Total short-term investments 3,014 18 (3 ) 3,029 Long-term investments: Corporate bonds and asset backed securities — — — — Total long-term investments — — — — Cash, cash equivalents and investments $ 84,158 18 (3 ) $ 84,173 December 31, 2015 Cost or Amortized Cost Gross Unrealized Gains Gross Unrealized Losses Estimated Fair Value Cash and cash equivalents: Cash $ 63,593 — — $ 63,593 Money market 1,533 — — 1,533 Total cash and cash equivalents 65,126 — — 65,126 Short-term investments: Corporate bonds and asset backed securities 8,549 7 (3 ) 8,553 Total short-term investments 8,549 7 (3 ) 8,553 Long-term investments: Corporate bonds and asset backed securities 1,515 17 (3 ) 1,529 Total long-term investments 1,515 17 (3 ) 1,529 Cash, cash equivalents and investments $ 75,190 24 (6 ) $ 75,208 |
Contractual maturities of marketable fixed-income securities | The following table summarizes contractual maturities of our marketable fixed-income securities as of September 30, 2016 (in thousands): Amortized Cost Estimated Fair Value Due within one year $ 3,014 $ 3,029 Due after one year — — Total $ 3,014 $ 3,029 |
Summary of Significant Accoun24
Summary of Significant Accounting Policies, Principles of Consolidation and Contingent Consideration (Details) | Sep. 30, 2016 | Jul. 02, 2016 | Nov. 30, 2015 | Aug. 29, 2014 | Jun. 10, 2014 |
ShippingEasy [Member] | |||||
Principles of Consolidation [Abstract] | |||||
Percentage of outstanding equity purchased | 100.00% | ||||
ShipStation [Member] | |||||
Principles of Consolidation [Abstract] | |||||
Percentage of outstanding equity purchased | 100.00% | ||||
Percentage of voting control | 100.00% | ||||
ShipWorks [Member] | |||||
Principles of Consolidation [Abstract] | |||||
Percentage of outstanding equity purchased | 100.00% | ||||
Endicia [Member] | |||||
Principles of Consolidation [Abstract] | |||||
Percentage of outstanding equity purchased | 100.00% | ||||
PhotoStamps Inc [Member] | |||||
Principles of Consolidation [Abstract] | |||||
Percentage of voting control | 100.00% |
Summary of Significant Accoun25
Summary of Significant Accounting Policies, Property, Plant and Equipment (Details) | 3 Months Ended |
Sep. 30, 2016 | |
Furniture, Fixtures and Equipment [Member] | Minimum [Member] | |
Property and Equipment [Abstract] | |
Estimated useful life | 3 years |
Furniture, Fixtures and Equipment [Member] | Maximum [Member] | |
Property and Equipment [Abstract] | |
Estimated useful life | 5 years |
Building and Building Improvements [Member] | Minimum [Member] | |
Property and Equipment [Abstract] | |
Estimated useful life | 10 years |
Building and Building Improvements [Member] | Maximum [Member] | |
Property and Equipment [Abstract] | |
Estimated useful life | 40 years |
Summary of Significant Accoun26
Summary of Significant Accounting Policies, Income Taxes through Short-Term Financing Obligation (Details) $ in Millions | 9 Months Ended | |
Sep. 30, 2016USD ($)Criteria | Dec. 31, 2015USD ($) | |
Revenue Recognition [Abstract] | ||
Number of criteria to be met for recognition of revenue | Criteria | 4 | |
PhotoStamps Retail Boxes [Abstract] | ||
Period of redemption of PhotoStamps retail boxes | 60 months | |
Short- Term Financing Obligation [Abstract] | ||
Short-term financing obligation | $ 16 | $ 13.3 |
Unused credits | $ 120 | $ 34.2 |
Acquisitions (Details)
Acquisitions (Details) | Jul. 02, 2016USD ($)Employeesshares | Nov. 18, 2015USD ($) | Mar. 22, 2015USD ($) | Sep. 10, 2014USD ($) | Aug. 29, 2014USD ($)ShoppingCarts | Sep. 30, 2016USD ($)$ / shares | Mar. 31, 2016USD ($)shares | Sep. 30, 2015USD ($)$ / shares | Mar. 31, 2015shares | Dec. 31, 2014USD ($) | Sep. 30, 2016USD ($)$ / shares | Sep. 30, 2015USD ($)$ / shares | Dec. 31, 2014shares | Dec. 31, 2015USD ($)shares | Nov. 30, 2015 | Jun. 10, 2014ShoppingCarts |
Business Acquisition [Line Items] | ||||||||||||||||
Stock-based compensation expense | $ 8,822,000 | $ 3,061,000 | $ 24,755,000 | $ 9,104,000 | ||||||||||||
Purchase price [Abstract] | ||||||||||||||||
Cash consideration | 573,000 | 0 | ||||||||||||||
Debt issuance costs | 111,000 | 604,000 | ||||||||||||||
Goodwill adjustments | 945,000 | |||||||||||||||
Allocation of purchase price [Abstract] | ||||||||||||||||
Goodwill | 239,532,000 | 239,532,000 | $ 197,807,000 | |||||||||||||
Identifiable Intangible Assets, Weighted Average Estimated Useful Life [Abstract] | ||||||||||||||||
Amortization of acquired intangible assets per quarter | $ 10,500,000 | 2,300,000 | ||||||||||||||
Maximum [Member] | ||||||||||||||||
Business Acquisition [Line Items] | ||||||||||||||||
Option vesting period | 5 years | |||||||||||||||
ShippingEasy [Member] | ||||||||||||||||
Business Acquisition [Line Items] | ||||||||||||||||
Percentage of voting interests acquired | 100.00% | |||||||||||||||
Percentage of awards subject to proration | 75.00% | |||||||||||||||
Earnings target percentage | 100.00% | |||||||||||||||
Stock-based compensation expense | $ 946,000 | |||||||||||||||
Stock-based compensation expense, percentage | 50.00% | |||||||||||||||
Shares granted for number of new employees | Employees | 48 | |||||||||||||||
Vesting term | 10 years | |||||||||||||||
Purchase price [Abstract] | ||||||||||||||||
Cash consideration | $ 55,000,000 | |||||||||||||||
Allocation of purchase price [Abstract] | ||||||||||||||||
Trade accounts receivable | 1,194,000 | |||||||||||||||
Other assets | 76,000 | |||||||||||||||
Property and equipment | 40,000 | |||||||||||||||
Goodwill | 40,780,000 | |||||||||||||||
Identifiable intangible assets | 15,679,000 | |||||||||||||||
Accrued expenses and other liabilities | (707,000) | |||||||||||||||
Deferred revenue | (185,000) | |||||||||||||||
Deferred tax liability | (1,430,000) | |||||||||||||||
Total purchase price | $ 55,447,000 | |||||||||||||||
Identifiable Intangible Assets, Weighted Average Estimated Useful Life [Abstract] | ||||||||||||||||
Identifiable intangible assets, weighted average estimated useful life | 5 years | |||||||||||||||
Discount rate of net cash flows to their present values | 23.00% | |||||||||||||||
Amortization of acquired intangible assets per quarter | $ 761,000 | |||||||||||||||
Pro-Forma Financial Information [Abstract] | ||||||||||||||||
Revenues | $ 92,559,000 | 53,133,000 | $ 264,664,000 | 147,517,000 | ||||||||||||
Income from operations | 31,702,000 | 12,143,000 | 80,137,000 | (7,580,000) | ||||||||||||
Net income | $ 18,744,000 | $ 6,705,000 | $ 46,846,000 | $ (6,192,000) | ||||||||||||
Basic earnings per share (in dollars per share) | $ / shares | $ 1.09 | $ 0.41 | $ 2.70 | $ (0.38) | ||||||||||||
Diluted earnings per share (in dollars per share) | $ / shares | $ 1.03 | $ 0.38 | $ 2.56 | $ (0.38) | ||||||||||||
ShippingEasy [Member] | Trademark [Member] | ||||||||||||||||
Allocation of purchase price [Abstract] | ||||||||||||||||
Identifiable intangible assets | 1,304,000 | |||||||||||||||
Identifiable Intangible Assets, Weighted Average Estimated Useful Life [Abstract] | ||||||||||||||||
Identifiable intangible assets, weighted average estimated useful life | 8 years | |||||||||||||||
ShippingEasy [Member] | Developed Technology [Member] | ||||||||||||||||
Allocation of purchase price [Abstract] | ||||||||||||||||
Identifiable intangible assets | 6,948,000 | |||||||||||||||
Identifiable Intangible Assets, Weighted Average Estimated Useful Life [Abstract] | ||||||||||||||||
Identifiable intangible assets, weighted average estimated useful life | 5 years | |||||||||||||||
ShippingEasy [Member] | Non-Compete Agreement [Member] | ||||||||||||||||
Allocation of purchase price [Abstract] | ||||||||||||||||
Identifiable intangible assets | $ 1,111,000 | |||||||||||||||
ShippingEasy [Member] | Non-Compete Agreement [Member] | Minimum [Member] | ||||||||||||||||
Identifiable Intangible Assets, Weighted Average Estimated Useful Life [Abstract] | ||||||||||||||||
Identifiable intangible assets, weighted average estimated useful life | 3 years | |||||||||||||||
ShippingEasy [Member] | Non-Compete Agreement [Member] | Maximum [Member] | ||||||||||||||||
Identifiable Intangible Assets, Weighted Average Estimated Useful Life [Abstract] | ||||||||||||||||
Identifiable intangible assets, weighted average estimated useful life | 5 years | |||||||||||||||
ShippingEasy [Member] | Customer Relationship [Member] | ||||||||||||||||
Allocation of purchase price [Abstract] | ||||||||||||||||
Identifiable intangible assets | $ 6,316,000 | |||||||||||||||
Identifiable Intangible Assets, Weighted Average Estimated Useful Life [Abstract] | ||||||||||||||||
Identifiable intangible assets, weighted average estimated useful life | 5 years | |||||||||||||||
ShippingEasy [Member] | General Manager and Chief Technology Officer [Member] | Maximum [Member] | ||||||||||||||||
Business Acquisition [Line Items] | ||||||||||||||||
Aggregate shares issued (in shares) | shares | 43,567 | |||||||||||||||
ShippingEasy [Member] | New Employee [Member] | ||||||||||||||||
Business Acquisition [Line Items] | ||||||||||||||||
Aggregate shares issued (in shares) | shares | 62,000 | |||||||||||||||
ShippingEasy [Member] | Vesting Option One [Member] | ||||||||||||||||
Business Acquisition [Line Items] | ||||||||||||||||
Percentage of options vesting | 25.00% | |||||||||||||||
Option vesting period | 1 year | |||||||||||||||
ShippingEasy [Member] | Vesting Option Two [Member] | ||||||||||||||||
Business Acquisition [Line Items] | ||||||||||||||||
Percentage of options vesting | 75.00% | |||||||||||||||
Option vesting period | 39 months | |||||||||||||||
Endicia [Member] | ||||||||||||||||
Business Acquisition [Line Items] | ||||||||||||||||
Percentage of voting interests acquired | 100.00% | |||||||||||||||
Purchase price [Abstract] | ||||||||||||||||
Cash consideration | $ 214,200,000 | $ 215,000,000 | ||||||||||||||
Debt issuance costs | 1,500,000 | |||||||||||||||
Debt issuance costs including costs incurred prior to closing | 1,800,000 | |||||||||||||||
Costs incurred prior to closing | 300,000 | |||||||||||||||
Maturity date | Nov. 18, 2020 | |||||||||||||||
Available and unused borrowings under the revolving credit facility | $ 10,000,000 | $ 10,000,000 | ||||||||||||||
Goodwill adjustments | $ 945,000 | |||||||||||||||
Allocation of purchase price [Abstract] | ||||||||||||||||
Cash and cash equivalents | 5,300,000 | |||||||||||||||
Trade accounts receivable | 10,247,000 | |||||||||||||||
Other assets | 771,000 | |||||||||||||||
Property and equipment | 2,798,000 | |||||||||||||||
Goodwill | 131,860,000 | |||||||||||||||
Identifiable intangible assets | 80,200,000 | |||||||||||||||
Accrued expenses and other liabilities | (10,212,000) | |||||||||||||||
Deferred revenue | (926,000) | |||||||||||||||
Total purchase price | $ 214,738,000 | |||||||||||||||
Identifiable Intangible Assets, Weighted Average Estimated Useful Life [Abstract] | ||||||||||||||||
Identifiable intangible assets, weighted average estimated useful life | 7 years | |||||||||||||||
Business acquisition purchase price allocation goodwill tax deductible period | 15 years | |||||||||||||||
Discount rate of net cash flows to their present values | 20.00% | 20.00% | ||||||||||||||
Amortization of acquired intangible assets per quarter | $ 2,500,000 | |||||||||||||||
Fair value of the contingent consideration | 221,000,000 | |||||||||||||||
Endicia [Member] | Trademark [Member] | ||||||||||||||||
Allocation of purchase price [Abstract] | ||||||||||||||||
Identifiable intangible assets | $ 10,900,000 | |||||||||||||||
Endicia [Member] | Developed Technology [Member] | ||||||||||||||||
Allocation of purchase price [Abstract] | ||||||||||||||||
Identifiable intangible assets | $ 26,100,000 | |||||||||||||||
Identifiable Intangible Assets, Weighted Average Estimated Useful Life [Abstract] | ||||||||||||||||
Identifiable intangible assets, weighted average estimated useful life | 9 years | |||||||||||||||
Endicia [Member] | Customer Relationship [Member] | ||||||||||||||||
Allocation of purchase price [Abstract] | ||||||||||||||||
Identifiable intangible assets | $ 43,200,000 | |||||||||||||||
Identifiable Intangible Assets, Weighted Average Estimated Useful Life [Abstract] | ||||||||||||||||
Identifiable intangible assets, weighted average estimated useful life | 6 years | |||||||||||||||
Endicia [Member] | Term Loan Facility [Member] | ||||||||||||||||
Purchase price [Abstract] | ||||||||||||||||
Maximum borrowing capacity | 82,500,000 | |||||||||||||||
Outstanding debt | $ 78,400,000 | 78,400,000 | ||||||||||||||
Endicia [Member] | Revolving Credit Facility [Member] | ||||||||||||||||
Purchase price [Abstract] | ||||||||||||||||
Maximum borrowing capacity | 82,500,000 | |||||||||||||||
Outstanding debt | 72,000,000 | 72,000,000 | ||||||||||||||
Endicia [Member] | Letter of Credit [Member] | ||||||||||||||||
Purchase price [Abstract] | ||||||||||||||||
Outstanding debt | $ 510,000 | $ 510,000 | ||||||||||||||
Endicia [Member] | Credit Agreement [Member] | ||||||||||||||||
Purchase price [Abstract] | ||||||||||||||||
Cash consideration | 56,500,000 | |||||||||||||||
Identifiable Intangible Assets, Weighted Average Estimated Useful Life [Abstract] | ||||||||||||||||
Fair value of the contingent consideration | $ 164,500,000 | |||||||||||||||
ShipStation [Member] | ||||||||||||||||
Business Acquisition [Line Items] | ||||||||||||||||
Percentage of voting interests acquired | 100.00% | |||||||||||||||
Number of automatic order importing carts and marketplace | ShoppingCarts | 50 | |||||||||||||||
Purchase price [Abstract] | ||||||||||||||||
Cash consideration | $ 50,000,000 | |||||||||||||||
Contingent consideration or deferred consideration | 16,242,000 | |||||||||||||||
Total purchase price | 66,242,000 | |||||||||||||||
Shares available for the earn-out payment period (in shares) | shares | 192,225 | |||||||||||||||
Shares available during second earn out period (in shares) | shares | 576,675 | |||||||||||||||
Allocation of purchase price [Abstract] | ||||||||||||||||
Cash and cash equivalents | 1,117,000 | |||||||||||||||
Trade accounts receivable | 254,000 | |||||||||||||||
Other assets | 39,000 | |||||||||||||||
Property and equipment | 187,000 | |||||||||||||||
Goodwill | 50,544,000 | |||||||||||||||
Identifiable intangible assets | 15,200,000 | |||||||||||||||
Accrued expenses and other liabilities | (835,000) | |||||||||||||||
Deferred revenue | (264,000) | |||||||||||||||
Total purchase price | $ 66,242,000 | |||||||||||||||
Identifiable Intangible Assets, Weighted Average Estimated Useful Life [Abstract] | ||||||||||||||||
Identifiable intangible assets, weighted average estimated useful life | 8 years | |||||||||||||||
Business acquisition purchase price allocation goodwill tax deductible period | 15 years | |||||||||||||||
Discount rate of net cash flows to their present values | 15.00% | 15.00% | ||||||||||||||
Amortization of acquired intangible assets per quarter | $ 500,000 | |||||||||||||||
Contingent consideration charge | $ 13,600,000 | $ 24,100,000 | ||||||||||||||
Fair value of the contingent consideration | $ 63,200,000 | |||||||||||||||
ShipStation [Member] | Minimum [Member] | ||||||||||||||||
Purchase price [Abstract] | ||||||||||||||||
Range of acquiree shares available for the performance linked earn-out (in shares) | shares | 576,675 | 576,675 | ||||||||||||||
ShipStation [Member] | Maximum [Member] | ||||||||||||||||
Purchase price [Abstract] | ||||||||||||||||
Range of acquiree shares available for the performance linked earn-out (in shares) | shares | 768,900 | 768,900 | ||||||||||||||
ShipStation [Member] | Trademark [Member] | ||||||||||||||||
Allocation of purchase price [Abstract] | ||||||||||||||||
Identifiable intangible assets | $ 500,000 | |||||||||||||||
Identifiable Intangible Assets, Weighted Average Estimated Useful Life [Abstract] | ||||||||||||||||
Identifiable intangible assets, weighted average estimated useful life | 4 years | |||||||||||||||
ShipStation [Member] | Developed Technology [Member] | ||||||||||||||||
Allocation of purchase price [Abstract] | ||||||||||||||||
Identifiable intangible assets | $ 5,300,000 | |||||||||||||||
Identifiable Intangible Assets, Weighted Average Estimated Useful Life [Abstract] | ||||||||||||||||
Identifiable intangible assets, weighted average estimated useful life | 8 years | |||||||||||||||
ShipStation [Member] | Non-Compete Agreement [Member] | ||||||||||||||||
Allocation of purchase price [Abstract] | ||||||||||||||||
Identifiable intangible assets | $ 400,000 | |||||||||||||||
Identifiable Intangible Assets, Weighted Average Estimated Useful Life [Abstract] | ||||||||||||||||
Identifiable intangible assets, weighted average estimated useful life | 4 years | |||||||||||||||
ShipStation [Member] | Customer Relationship [Member] | ||||||||||||||||
Allocation of purchase price [Abstract] | ||||||||||||||||
Identifiable intangible assets | $ 9,000,000 | |||||||||||||||
Identifiable Intangible Assets, Weighted Average Estimated Useful Life [Abstract] | ||||||||||||||||
Identifiable intangible assets, weighted average estimated useful life | 8 years | |||||||||||||||
ShipWorks [Member] | ||||||||||||||||
Business Acquisition [Line Items] | ||||||||||||||||
Percentage of voting interests acquired | 100.00% | |||||||||||||||
Number of automatic order importing carts and marketplace | ShoppingCarts | 50 | |||||||||||||||
Purchase price [Abstract] | ||||||||||||||||
Cash consideration | $ 21,952,000 | |||||||||||||||
Contingent consideration or deferred consideration | 181,000 | |||||||||||||||
Total purchase price | 22,133,000 | |||||||||||||||
Allocation of purchase price [Abstract] | ||||||||||||||||
Cash and cash equivalents | 803,000 | |||||||||||||||
Trade accounts receivable | 353,000 | |||||||||||||||
Other assets | 21,000 | |||||||||||||||
Property and equipment | 1,091,000 | |||||||||||||||
Goodwill | 16,349,000 | |||||||||||||||
Identifiable intangible assets | 4,900,000 | |||||||||||||||
Accrued expenses and other liabilities | (1,119,000) | |||||||||||||||
Deferred revenue | (265,000) | |||||||||||||||
Total purchase price | $ 22,133,000 | |||||||||||||||
Identifiable Intangible Assets, Weighted Average Estimated Useful Life [Abstract] | ||||||||||||||||
Identifiable intangible assets, weighted average estimated useful life | 6 years | |||||||||||||||
Business acquisition purchase price allocation goodwill tax deductible period | 15 years | |||||||||||||||
Discount rate of net cash flows to their present values | 13.00% | 13.00% | ||||||||||||||
Amortization of acquired intangible assets per quarter | $ 200,000 | |||||||||||||||
Adjusted purchase price | $ 69,000 | |||||||||||||||
ShipWorks [Member] | Trademark [Member] | ||||||||||||||||
Allocation of purchase price [Abstract] | ||||||||||||||||
Identifiable intangible assets | $ 200,000 | |||||||||||||||
Identifiable Intangible Assets, Weighted Average Estimated Useful Life [Abstract] | ||||||||||||||||
Identifiable intangible assets, weighted average estimated useful life | 6 years | |||||||||||||||
ShipWorks [Member] | Developed Technology [Member] | ||||||||||||||||
Allocation of purchase price [Abstract] | ||||||||||||||||
Identifiable intangible assets | $ 1,700,000 | |||||||||||||||
Identifiable Intangible Assets, Weighted Average Estimated Useful Life [Abstract] | ||||||||||||||||
Identifiable intangible assets, weighted average estimated useful life | 7 years | |||||||||||||||
ShipWorks [Member] | Non-Compete Agreement [Member] | ||||||||||||||||
Allocation of purchase price [Abstract] | ||||||||||||||||
Identifiable intangible assets | $ 700,000 | |||||||||||||||
Identifiable Intangible Assets, Weighted Average Estimated Useful Life [Abstract] | ||||||||||||||||
Identifiable intangible assets, weighted average estimated useful life | 4 years | |||||||||||||||
ShipWorks [Member] | Customer Relationship [Member] | ||||||||||||||||
Allocation of purchase price [Abstract] | ||||||||||||||||
Identifiable intangible assets | $ 2,300,000 | |||||||||||||||
Identifiable Intangible Assets, Weighted Average Estimated Useful Life [Abstract] | ||||||||||||||||
Identifiable intangible assets, weighted average estimated useful life | 6 years |
Commitments and Contingencies28
Commitments and Contingencies (Details) $ in Thousands | Sep. 30, 2016USD ($) |
Future minimum lease payment under operating leases [Abstract] | |
2,017 | $ 3,845 |
2,018 | 3,985 |
2,019 | 1,626 |
2,020 | 1,389 |
2,021 | 1,204 |
Thereafter | 198 |
Total | $ 12,247 |
Net Income (loss) per Share (De
Net Income (loss) per Share (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2016 | Sep. 30, 2015 | Sep. 30, 2016 | Sep. 30, 2015 | ||
Computation of basic and diluted net income (loss) per share [Abstract] | |||||
Net income (loss) | $ 18,672 | $ 7,274 | $ 46,201 | $ (4,127) | |
Basic - weighted average common shares (in shares) | 17,218 | 16,538 | 17,319 | 16,367 | |
Diluted effect of common stock equivalents (in shares) | 902 | 979 | 1,006 | 0 | [1] |
Diluted - weighted average common shares (in shares) | 18,120 | 17,517 | 18,325 | 16,367 | [2] |
Earnings (loss) per share [Abstract] | |||||
Basic (in dollars per share) | $ 1.08 | $ 0.44 | $ 2.67 | $ (0.25) | |
Diluted (in dollars per share) | $ 1.03 | $ 0.42 | $ 2.52 | $ (0.25) | |
Stock Options [Member] | |||||
Anti-dilutive Shares Excluded from Computation of Diluted Shares [Abstract] | |||||
Anti-dilutive stock options (in shares) | 514 | 64 | 269 | 2,990 | |
[1] | Common equivalent shares are excluded from the diluted net loss per share calculation as their effect is anti-dilutive. | ||||
[2] | Common equivalent shares are excluded from the diluted loss per share calculation as their effect is anti-dilutive. |
Stock-Based Employee Compensa30
Stock-Based Employee Compensation (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2016 | Sep. 30, 2015 | Sep. 30, 2016 | Sep. 30, 2015 | |
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items] | ||||
Stock-based compensation expense | $ 8,822 | $ 3,061 | $ 24,755 | $ 9,104 |
Weighted Average Assumptions used in Black-Scholes Valuation Model [Abstract] | ||||
Expected dividend yield | 0.00% | 0.00% | 0.00% | 0.00% |
Risk-free interest rate | 1.00% | 1.00% | 1.00% | 1.00% |
Expected volatility | 47.00% | 46.00% | 48.00% | 46.00% |
Expected life | 3 years 4 months 24 days | 3 years 4 months 24 days | 3 years 4 months 24 days | 3 years 4 months 24 days |
Expected forfeiture rate | 6.00% | 6.00% | 6.00% | 6.00% |
Employee and Director Stock Options [Member] | ||||
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items] | ||||
Stock-based compensation expense | $ 8,525 | $ 2,899 | $ 23,960 | $ 8,701 |
Employee Stock Purchases [Member] | ||||
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items] | ||||
Stock-based compensation expense | 297 | 162 | 795 | 403 |
Cost of Revenues [Member] | ||||
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items] | ||||
Stock-based compensation expense | 476 | 221 | 1,351 | 589 |
Sales and Marketing [Member] | ||||
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items] | ||||
Stock-based compensation expense | 1,734 | 766 | 5,322 | 2,341 |
Research and Development [Member] | ||||
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items] | ||||
Stock-based compensation expense | 1,916 | 641 | 4,696 | 1,806 |
General and Administrative [Member] | ||||
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items] | ||||
Stock-based compensation expense | $ 4,696 | $ 1,433 | $ 13,386 | $ 4,368 |
Maximum [Member] | ||||
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items] | ||||
Vesting period | 5 years |
Goodwill and Intangible Asset31
Goodwill and Intangible Assets (Details) - USD ($) $ in Thousands | 9 Months Ended | ||
Sep. 30, 2016 | Sep. 30, 2015 | Dec. 31, 2015 | |
Goodwill [Roll Forward] | |||
Goodwill, beginning balance | $ 197,807 | ||
Purchase price adjustment (see Note 2 - "Acquisitions") | 945 | ||
Acquisition of ShippingEasy (see Note 2 - "Acquisitions") | 40,780 | ||
Goodwill balance at September 30, 2016 | 239,532 | ||
Intangible Assets [Abstract] | |||
Amortizable and non-amortizable intangible assets gross carrying amount | 125,400 | $ 109,700 | |
Non-amortizable assets | 11,400 | ||
Gross Carrying Amount | 113,968 | ||
Accumulated Amortization | 24,310 | ||
Total | 89,658 | ||
Amortization of intangible assets | $ 10,500 | $ 2,300 | |
Identifiable intangible assets, weighted average remaining useful life | 5 years 9 months 18 days | ||
Amortization Expense, Fiscal Year Maturity [Abstract] | |||
2,017 | $ 16,038 | ||
2,018 | 15,964 | ||
2,019 | 15,623 | ||
2,020 | 15,545 | ||
2,021 | 14,422 | ||
Thereafter | 12,066 | ||
Total | 89,658 | ||
Patents and Others [Member] | |||
Intangible Assets [Abstract] | |||
Gross Carrying Amount | 8,889 | ||
Accumulated Amortization | 8,763 | ||
Total | 126 | ||
Amortization Expense, Fiscal Year Maturity [Abstract] | |||
Total | 126 | ||
Customer Relationships [Member] | |||
Intangible Assets [Abstract] | |||
Gross Carrying Amount | 60,816 | ||
Accumulated Amortization | 9,696 | ||
Total | 51,120 | ||
Amortization Expense, Fiscal Year Maturity [Abstract] | |||
Total | 51,120 | ||
Technology [Member] | |||
Intangible Assets [Abstract] | |||
Gross Carrying Amount | 40,048 | ||
Accumulated Amortization | 4,801 | ||
Total | 35,247 | ||
Amortization Expense, Fiscal Year Maturity [Abstract] | |||
Total | 35,247 | ||
Non-Compete [Member] | |||
Intangible Assets [Abstract] | |||
Gross Carrying Amount | 2,211 | ||
Accumulated Amortization | 652 | ||
Total | 1,559 | ||
Amortization Expense, Fiscal Year Maturity [Abstract] | |||
Total | 1,559 | ||
Trademark [Member] | |||
Intangible Assets [Abstract] | |||
Gross Carrying Amount | 2,004 | ||
Accumulated Amortization | 398 | ||
Total | 1,606 | ||
Amortization Expense, Fiscal Year Maturity [Abstract] | |||
Total | $ 1,606 |
Income Taxes (Details)
Income Taxes (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2016 | Sep. 30, 2015 | Sep. 30, 2016 | Sep. 30, 2015 | Dec. 31, 2015 | |
Income Taxes [Abstract] | |||||
Income tax expense (benefit) | $ 12,115 | $ 5,765 | $ 30,026 | $ (90) | |
Valuation allowance | $ 0 | $ 0 | $ 0 |
Fair Value Measurements (Detail
Fair Value Measurements (Details) - USD ($) $ in Thousands | Sep. 30, 2016 | Dec. 31, 2015 |
Financial assets measured at fair value on a recurring basis [Abstract] | ||
Available-for-sale debt securities | $ 3,029 | |
Contingent consideration measured at fair value on a recurring basis [Abstract] | ||
Contingent consideration - current | 0 | $ 63,209 |
Recurring [Member] | ||
Financial assets measured at fair value on a recurring basis [Abstract] | ||
Cash equivalents | 81,144 | 65,126 |
Available-for-sale debt securities | 3,029 | 10,082 |
Total | 84,173 | 75,208 |
Contingent consideration measured at fair value on a recurring basis [Abstract] | ||
Contingent consideration - current | 63,209 | |
Recurring [Member] | Quoted Prices in Active Markets for Identical Assets (Level 1) [Member] | ||
Financial assets measured at fair value on a recurring basis [Abstract] | ||
Cash equivalents | 81,144 | 65,126 |
Available-for-sale debt securities | 0 | 0 |
Total | 81,144 | 65,126 |
Contingent consideration measured at fair value on a recurring basis [Abstract] | ||
Contingent consideration - current | 63,209 | |
Recurring [Member] | Significant Other Observable Inputs (Level 2) [Member] | ||
Financial assets measured at fair value on a recurring basis [Abstract] | ||
Cash equivalents | 0 | 0 |
Available-for-sale debt securities | 3,029 | 10,082 |
Total | 3,029 | 10,082 |
Contingent consideration measured at fair value on a recurring basis [Abstract] | ||
Contingent consideration - current | 0 | |
Recurring [Member] | Significant Unobservable Inputs (Level 3) [Member] | ||
Financial assets measured at fair value on a recurring basis [Abstract] | ||
Cash equivalents | 0 | 0 |
Available-for-sale debt securities | 0 | 0 |
Total | $ 0 | 0 |
Contingent consideration measured at fair value on a recurring basis [Abstract] | ||
Contingent consideration - current | $ 0 |
Cash, Cash Equivalents and In34
Cash, Cash Equivalents and Investments (Details) | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2016USD ($)Security | Sep. 30, 2016USD ($)Security | Dec. 31, 2015USD ($) | Sep. 30, 2015USD ($) | Dec. 31, 2014USD ($) | |
Cash, Cash Equivalents and Investments [Abstract] | |||||
Number of securities held | Security | 3 | 3 | |||
Fair value of securities | $ 27,000 | $ 27,000 | |||
Unrealized losses on security held | 2,000 | ||||
Other than temporary impairment | 0 | 0 | |||
Cash and cash equivalents [Abstract] | |||||
Cost or amortized cost | 81,144,000 | 81,144,000 | $ 65,126,000 | $ 89,559,000 | $ 40,933,000 |
Contractual maturities of marketable fixed-income securities [Abstract] | |||||
Due within one year, amortized cost | 3,014,000 | 3,014,000 | |||
Due after one year, amortized cost | 0 | 0 | |||
Total, Amortized Cost | 3,014,000 | 3,014,000 | |||
Due within one year, estimated fair value | 3,029,000 | 3,029,000 | |||
Due after one year, fair value | 0 | 0 | |||
Total, Estimated Fair Value | 3,029,000 | 3,029,000 | |||
Total Cash and Cash Equivalents [Member] | |||||
Cash and cash equivalents [Abstract] | |||||
Cost or amortized cost | 81,144,000 | 81,144,000 | 65,126,000 | ||
Gross unrealized gains | 0 | 0 | 0 | ||
Gross unrealized Losses | 0 | 0 | 0 | ||
Estimated fair value | 81,144,000 | 81,144,000 | 65,126,000 | ||
Total Short-Term Investments [Member] | |||||
Cash and cash equivalents [Abstract] | |||||
Cost or amortized cost | 3,014,000 | 3,014,000 | 8,549,000 | ||
Gross unrealized gains | 18,000 | 18,000 | 7,000 | ||
Gross unrealized Losses | (3,000) | (3,000) | (3,000) | ||
Estimated fair value | 3,029,000 | 3,029,000 | 8,553,000 | ||
Total Long-Term Investments [Member] | |||||
Cash and cash equivalents [Abstract] | |||||
Cost or amortized cost | 0 | 0 | 1,515,000 | ||
Gross unrealized gains | 0 | 0 | 17,000 | ||
Gross unrealized Losses | 0 | 0 | (3,000) | ||
Estimated fair value | 0 | 0 | 1,529,000 | ||
Cash, Cash Equivalents and Investments [Member] | |||||
Cash and cash equivalents [Abstract] | |||||
Cost or amortized cost | 84,158,000 | 84,158,000 | 75,190,000 | ||
Gross unrealized gains | 18,000 | 18,000 | 24,000 | ||
Gross unrealized Losses | (3,000) | (3,000) | (6,000) | ||
Estimated fair value | 84,173,000 | 84,173,000 | 75,208,000 | ||
Cash [Member] | Total Cash and Cash Equivalents [Member] | |||||
Cash and cash equivalents [Abstract] | |||||
Cost or amortized cost | 77,726,000 | 77,726,000 | 63,593,000 | ||
Gross unrealized gains | 0 | 0 | 0 | ||
Gross unrealized Losses | 0 | 0 | 0 | ||
Estimated fair value | 77,726,000 | 77,726,000 | 63,593,000 | ||
Money Market [Member] | Total Cash and Cash Equivalents [Member] | |||||
Cash and cash equivalents [Abstract] | |||||
Cost or amortized cost | 3,418,000 | 3,418,000 | 1,533,000 | ||
Gross unrealized gains | 0 | 0 | 0 | ||
Gross unrealized Losses | 0 | 0 | 0 | ||
Estimated fair value | 3,418,000 | 3,418,000 | 1,533,000 | ||
Corporate Bonds and Asset Backed Securities [Member] | Total Short-Term Investments [Member] | |||||
Cash and cash equivalents [Abstract] | |||||
Cost or amortized cost | 3,014,000 | 3,014,000 | 8,549,000 | ||
Gross unrealized gains | 18,000 | 18,000 | 7,000 | ||
Gross unrealized Losses | (3,000) | (3,000) | (3,000) | ||
Estimated fair value | 3,029,000 | 3,029,000 | 8,553,000 | ||
Corporate Bonds and Asset Backed Securities [Member] | Total Long-Term Investments [Member] | |||||
Cash and cash equivalents [Abstract] | |||||
Cost or amortized cost | 0 | 0 | 1,515,000 | ||
Gross unrealized gains | 0 | 0 | 17,000 | ||
Gross unrealized Losses | 0 | 0 | (3,000) | ||
Estimated fair value | $ 0 | $ 0 | $ 1,529,000 |