Document_and_Entity_Informatio
Document and Entity Information | 9 Months Ended | |
Sep. 30, 2014 | Oct. 31, 2014 | |
Document and Entity Information | ' | ' |
Entity Registrant Name | 'MOVE INC | ' |
Entity Central Index Key | '0001085770 | ' |
Document Type | '10-Q | ' |
Document Period End Date | 30-Sep-14 | ' |
Amendment Flag | 'false | ' |
Current Fiscal Year End Date | '--12-31 | ' |
Entity Current Reporting Status | 'Yes | ' |
Entity Filer Category | 'Accelerated Filer | ' |
Entity Common Stock, Shares Outstanding | ' | 40,708,242 |
Document Fiscal Year Focus | '2014 | ' |
Document Fiscal Period Focus | 'Q3 | ' |
CONDENSED_CONSOLIDATED_BALANCE
CONDENSED CONSOLIDATED BALANCE SHEETS (USD $) | Sep. 30, 2014 | Dec. 31, 2013 |
In Thousands, unless otherwise specified | ||
Current assets: | ' | ' |
Cash and cash equivalents | $115,188 | $118,679 |
Accounts receivable, net | 11,654 | 11,760 |
Other current assets | 9,659 | 8,203 |
Total current assets | 136,501 | 138,642 |
Property and equipment, net | 28,862 | 23,960 |
Investment in unconsolidated joint venture | 6,455 | 4,596 |
Goodwill, net | 41,630 | 41,630 |
Intangible assets, net | 25,893 | 24,403 |
Other assets | 3,215 | 3,558 |
Total assets | 242,556 | 236,789 |
Current liabilities: | ' | ' |
Accounts payable | 8,078 | 5,912 |
Accrued expenses | 31,659 | 26,929 |
Deferred revenue | 7,090 | 7,783 |
Total current liabilities | 46,827 | 40,624 |
Convertible senior notes | 84,915 | 82,459 |
Other noncurrent liabilities | 6,244 | 4,876 |
Total liabilities | 137,986 | 127,959 |
Commitments and contingencies (see note 14) | ' | ' |
Stockholders' equity: | ' | ' |
Series A convertible preferred stock | ' | ' |
Common stock | 41 | 39 |
Additional paid-in capital | 2,158,458 | 2,142,516 |
Accumulated other comprehensive income | 39 | 138 |
Accumulated deficit | -2,053,968 | -2,033,863 |
Total stockholders' equity | 104,570 | 108,830 |
Total liabilities and stockholders' equity | $242,556 | $236,789 |
CONDENSED_CONSOLIDATED_STATEME
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (USD $) | 3 Months Ended | 9 Months Ended | ||
In Thousands, except Per Share data, unless otherwise specified | Sep. 30, 2014 | Sep. 30, 2013 | Sep. 30, 2014 | Sep. 30, 2013 |
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS | ' | ' | ' | ' |
Revenue | $63,884 | $58,825 | $183,216 | $170,553 |
Costs and operating expenses: | ' | ' | ' | ' |
Cost of revenue | 13,811 | 11,750 | 38,655 | 34,403 |
Sales and marketing | 29,839 | 22,971 | 85,279 | 67,619 |
Product and web site development | 10,223 | 9,894 | 31,692 | 29,323 |
General and administrative | 16,938 | 12,209 | 41,237 | 35,732 |
Amortization of intangible assets | 1,274 | 1,110 | 3,770 | 3,172 |
Total costs and operating expenses | 72,085 | 57,934 | 200,633 | 170,249 |
(Loss) income from operations | -8,201 | 891 | -17,417 | 304 |
Interest expense, net | -1,663 | -917 | -4,877 | -944 |
Earnings of unconsolidated joint venture | 988 | 585 | 2,708 | 1,650 |
Other expense, net | -15 | -46 | -72 | -81 |
(Loss) income before income taxes | -8,891 | 513 | -19,658 | 929 |
Income tax (benefit) expense | -261 | 375 | 447 | 425 |
Net (loss) income | ($8,630) | $138 | ($20,105) | $504 |
Basic net (loss) income per share (in dollars per share) | ($0.22) | $0 | ($0.51) | $0.01 |
Diluted net (loss) income per share (in dollars per share) | ($0.22) | $0 | ($0.51) | $0.01 |
Shares used to calculate basic and diluted (loss) income per share: | ' | ' | ' | ' |
Basic (in shares) | 40,076 | 39,061 | 39,514 | 39,215 |
Diluted (in shares) | 40,076 | 41,482 | 39,514 | 40,913 |
CONDENSED_CONSOLIDATED_STATEME1
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) (USD $) | 3 Months Ended | 9 Months Ended | ||
In Thousands, unless otherwise specified | Sep. 30, 2014 | Sep. 30, 2013 | Sep. 30, 2014 | Sep. 30, 2013 |
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) | ' | ' | ' | ' |
Net (loss) income | ($8,630) | $138 | ($20,105) | $504 |
Other comprehensive (loss) income: | ' | ' | ' | ' |
Foreign currency translation (loss) gain | -87 | 3 | -99 | -59 |
Total other comprehensive (loss) income | -87 | 3 | -99 | -59 |
Total comprehensive (loss) income | ($8,717) | $141 | ($20,204) | $445 |
CONDENSED_CONSOLIDATED_STATEME2
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (USD $) | Common Stock | Additional Paid-in Capital | Accumulated Other Comprehensive Income (loss) | Accumulated Deficit | Total |
In Thousands, unless otherwise specified | |||||
Balance at Dec. 31, 2013 | $39 | $2,142,516 | $138 | ($2,033,863) | $108,830 |
Balance (in shares) at Dec. 31, 2013 | 39,178 | ' | ' | ' | ' |
Increase (Decrease) in Stockholders' Equity | ' | ' | ' | ' | ' |
Net loss | ' | ' | ' | -20,105 | -20,105 |
Other comprehensive loss | ' | ' | -99 | ' | -99 |
Issuance of common stock under exercise of stock options | 1 | 8,030 | ' | ' | 8,031 |
Issuance of common stock under exercise of stock options (in shares) | 1,009 | ' | ' | ' | ' |
Issuance of restricted stock, net of cancellations | 1 | ' | ' | ' | 1 |
Issuance of restricted stock, net of cancellations (in shares) | 497 | ' | ' | ' | ' |
Restricted stock surrendered for employee tax liability | ' | -2,246 | ' | ' | -2,246 |
Restricted stock surrendered for employee tax liability (in shares) | -157 | ' | ' | ' | ' |
Stock-based compensation and charges | ' | 10,158 | ' | ' | 10,158 |
Balance at Sep. 30, 2014 | $41 | $2,158,458 | $39 | ($2,053,968) | $104,570 |
Balance (in shares) at Sep. 30, 2014 | 40,527 | ' | ' | ' | ' |
CONDENSED_CONSOLIDATED_STATEME3
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (USD $) | 9 Months Ended | |
In Thousands, unless otherwise specified | Sep. 30, 2014 | Sep. 30, 2013 |
Cash flows from operating activities: | ' | ' |
Net (loss) income | ($20,105) | $504 |
Adjustments to reconcile net (loss) income to net cash provided by operating activities: | ' | ' |
Depreciation and amortization of property and equipment | 10,147 | 7,680 |
Amortization of intangible assets | 3,770 | 3,172 |
Amortization of debt discount and issuance costs | 2,904 | 516 |
Provision for doubtful accounts | 335 | 445 |
Stock-based compensation and charges | 10,158 | 8,241 |
Earnings of unconsolidated joint venture | -2,708 | -1,650 |
Return on investment in unconsolidated joint venture | 849 | 602 |
Other non-cash items | -46 | -5 |
Changes in operating assets and liabilities: | ' | ' |
Accounts receivable | -229 | -1,180 |
Other assets | -1,164 | -932 |
Accounts payable and accrued expenses | 8,209 | 4,114 |
Deferred revenue | -706 | -722 |
Net cash provided by operating activities | 11,414 | 20,785 |
Cash flows from investing activities: | ' | ' |
Purchases of property and equipment | -15,103 | -8,957 |
Acquisitions, net of cash acquired | ' | -2,250 |
Purchase of intangible assets | -5,010 | ' |
Return of investment in unconsolidated joint venture | ' | 582 |
Other investing activities | 2 | ' |
Net cash used in investing activities | -20,111 | -10,625 |
Cash flows from financing activities: | ' | ' |
Principal payments on loan payable | ' | -19 |
Proceeds from issuance of convertible senior notes, net of issuance costs | ' | 96,608 |
Proceeds from exercise of stock options | 7,452 | 8,216 |
Tax payments related to net share settlements of equity awards | -2,246 | -2,405 |
Repurchase of common stock | ' | -26,010 |
Net cash provided by financing activities | 5,206 | 76,390 |
Change in cash and cash equivalents | -3,491 | 86,550 |
Cash and cash equivalents, beginning of period | 118,679 | 27,122 |
Cash and cash equivalents, end of period | 115,188 | 113,672 |
Supplemental disclosures of cash flow information: | ' | ' |
Cash paid for interest | $2,890 | ' |
Business
Business | 9 Months Ended |
Sep. 30, 2014 | |
Business | ' |
Business | ' |
1. Business | |
Move, Inc. and its subsidiaries (the “Company” or “Move”) operate an online network of web sites for real estate search, finance, moving and home enthusiasts and provide a comprehensive resource for consumers seeking online information and connections regarding real estate. The Company’s flagship consumer web sites include realtor.com®, Move.com and Moving.comTM. The Company also supplies lead management software and marketing services for real estate agents and brokers through its Top Producer®, TigerLead® and FiveStreet products. Through its ListHubTM products, the Company is also an online real estate listing syndicator and provider of advanced performance reporting solutions intended to help drive an effective online advertising program for brokers, real estate franchises, and individual agents. | |
Proposed Acquisition by News Corporation | |
On September 30, 2014, the Company entered into an agreement and plan of merger (“Merger Agreement”) with News Corporation (“Parent”) and Magpie Merger Sub, Inc., an indirect wholly owned subsidiary of Parent (“Merger Sub”), pursuant to which, and on the terms and subject to the conditions thereof, among other things, Merger Sub will commence a tender offer (“Offer”) on or before October 15, 2014 to acquire all of the outstanding shares of common stock of the Company at a purchase price of $21.00 per share in cash, without interest (the “Offer Price”). The Merger Agreement is not subject to a financing condition. | |
The obligation of Merger Sub to purchase the shares of common stock of the Company validly tendered and not withdrawn pursuant to the Offer is subject to the satisfaction or waiver of a number of conditions set forth in the Merger Agreement, including (i) that there shall have been validly tendered and not validly withdrawn a number of shares of common stock of the Company that, when added to the shares of common stock of the Company then owned by Parent and its subsidiaries, equals at least one share more than one half of the total number of shares of common stock of the Company then issued and outstanding, (ii) the expiration or termination of the applicable waiting period (and any extensions thereof) under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (without the imposition of any condition or requiring a remedy that the parties are not required to accept pursuant to the Merger Agreement), (iii) the absence of certain disputes relating to the Operating Agreement between Realtors® Information Network, Inc., a subsidiary of the National Association of REALTORS® (“NAR”), and RealSelect, Inc., a subsidiary of the Company, as amended; and (iv) other customary conditions. Concurrently with the execution of the Merger Agreement, NAR provided the Company with its consent to the transaction. The NAR consent terminates if Move terminates the Merger Agreement due to a superior proposal or if both the Company and Parent announce that the Merger Agreement has been terminated. A copy of the NAR consent is attached hereto as Exhibit 99.1 and is incorporated by reference herein. | |
The Merger Agreement contains certain termination rights in favor of each the Company and Parent including, under certain circumstances, the requirement for the Company to pay to Parent a termination fee of $32,500,000. The Company has also agreed (i) to cease any existing, and not to solicit or initiate any additional, discussions with third parties regarding other proposals to acquire the Company and (ii) to certain restrictions on its ability to respond to such proposals, subject to fulfillment of certain fiduciary requirements of the board of directors of the Company. | |
Following the completion of the Offer and subject to the satisfaction or waiver of certain conditions set forth in the Merger Agreement, Merger Sub will merge with and into the Company, with the Company surviving as an indirect wholly owned subsidiary of Parent, pursuant to the procedure provided for under Section 251(h) of the Delaware General Corporation Law without any stockholder approvals (the “Merger”). At the effective time of the Merger (the “Effective Time”), by virtue of the Merger and without any action on the part of the holders of any shares of common stock of the Company, each outstanding share of common stock of the Company, other than any shares owned by Parent, Merger Sub or any wholly owned subsidiary of Parent or held in the treasury of the Company, or any stockholders who are entitled to and who properly exercise appraisal rights under Delaware law, will be cancelled and converted into the right to receive an amount in cash equal to the Offer Price. | |
Pursuant to the Merger Agreement, among other obligations of the Company, (a) (w) the Company shall perform all of its pre-closing obligations under the certain 2.75% Convertible Senior Notes due 2018 (the “2018 Notes”), and shall give notice of the transactions contemplated under the Merger Agreement in accordance with the requirements therein, (x) on or prior to September 30, 2014, the Company shall provide the notice required by indenture agreement related to the 2018 Notes, (y) the Company shall elect cash settlement as the sole settlement method for any conversion of 2018 Notes, in each case prior to the applicable deadline therefor, (z) comply with the payment and other pre-closing obligations related to any conversion of 2018 Notes pursuant to the indenture agreement related to the 2018 Notes in order to validly effectuate the cash settlement thereof; (b) during the period between the completion of the Offer and the consummation of the Merger, the Company shall (w) elect to redeem the series A preferred stock of the Company as of such time, (x) provide written notice thereof to NAR, (y) redeem the series A preferred stock of the Company, and (z) pay, or make available for payment, to NAR the redemption price therefor; and (c) in the event that any holder of a Company stock option exercises such option between the completion of the Offer and the consummation of the Merger, the Company shall take all actions necessary to cash settle such Company option in an amount of cash equal to (x) the excess, if any, of the fair market value of a share (as determined in accordance with the applicable Company stock plan) on the date of exercise over the exercise price per share of such Company option, multiplied by (y) the number of shares covered by such Company stock option, with payment subject to applicable tax withholding and paid without interest. | |
In addition, pursuant to the Merger Agreement: (i) at the Effective Time, each outstanding Company stock option (whether vested or unvested), will be assumed by Parent in accordance with the Merger Agreement (each, an “Adjusted Option”), and each Adjusted Option shall continue to have and be subject to the same terms and conditions as were applicable to the corresponding Company stock option immediately prior to the Effective Time, except that (x) each Adjusted Option will be exercisable for that number of shares of Parent common stock (rounded down to the nearest whole share) equal to the product of (A) the number of shares of Company common stock subject to the Company stock option immediately prior to the Effective Time and (B) the Equity Award Exchange Ratio provided under the Merger Agreement (the “Equity Award Exchange Ratio”) and (y) the per share exercise price for the shares of Parent common stock issuable upon exercise of each such Adjusted Option will be equal to the quotient of (A) the per share exercise price of the Company stock option and (B) the Equity Award Exchange Ratio, rounded up to the nearest whole cent; (ii) at the Effective Time, each outstanding Company restricted stock unit (whether vested or unvested) will be assumed by Parent in accordance with the Merger Agreement (each, an “Adjusted RSU”), and each Adjusted RSU shall continue to have, and be subject to, the same terms and conditions as were applicable to the corresponding Company restricted stock unit immediately prior to the Effective Time, except that each Adjusted RSU will be converted into the right to receive a number of whole shares of Parent common stock (rounded to the nearest whole share) equal to the number of shares of Company common stock to which the Company restricted stock unit related immediately prior to the Effective Time, multiplied by the Equity Award Exchange Ratio; (iii) at the Effective Time, each Company restricted stock award that is not held by a non-employee director of the Company and that is outstanding as of immediately prior to the Effective Time, shall be assumed by Parent in accordance with the Merger Agreement (each, an “Adjusted RSA”), and each Adjusted RSA will continue to have, and be subject to, the same terms and conditions as were applicable to the corresponding Company restricted stock award immediately prior to the Effective Time, except that each Adjusted RSA will be converted into the right to retain a number of whole shares of Parent common stock (rounded to the nearest whole share) equal to the number of shares of Company common stock to which the Company restricted stock award related immediately prior to the Effective Time, multiplied by the Equity Award Exchange Ratio; and (iv) at the Effective Time, each Company restricted stock award that is outstanding as of immediately prior to the Effective Time and held by a non-employee director of the Company immediately prior to the Effective Time will vest and be cancelled and converted into the right to receive the Offer Price (the “Merger Consideration”), less any applicable taxes. Notwithstanding the treatment of Company stock options described above, Parent will have the right to decide, not later than 12 business days before the scheduled closing of the Merger, that each Company stock option that is outstanding and unexercised as of immediately prior to the Effective Time and held by any person whose employment or service terminated prior to the Effective Time will not be assumed, and will instead be cancelled and converted into the right to receive a cash payment equal to the product of (x) the excess, if any, of the Merger Consideration over the exercise price per share of such non-assumed Company stock option, multiplied by (y) the number of shares covered by such non-assumed Company stock option, less applicable tax withholding and without interest. To the extent that the exercise price per share of any such non-assumed Company stock option is equal to or greater than the Merger Consideration, each such non-assumed Company stock option will be cancelled and the holder thereof will not receive any payment therefor. | |
The Merger Agreement contains customary representations, warranties and covenants, including covenants obligating the Company to continue to conduct its business in the ordinary course and to cooperate in seeking regulatory approvals. | |
The board of directors of the Company has unanimously (i) determined that the Merger Agreement and the transactions contemplated thereby are advisable and fair to, and in the best interests of, the Company’s stockholders, (ii) approved and declared advisable the Merger Agreement and the transactions contemplated thereby and (iii) resolved to recommend acceptance of the Offer by the Company’s stockholders. The board of directors of Parent has also unanimously approved the transaction. The Company expects to complete the Merger by the end of calendar year 2014, subject to the satisfaction of the closing conditions. | |
The foregoing description of the Merger Agreement is not complete and is qualified in its entirety by reference to the Merger Agreement, which is attached to this Quarterly Report on Form 10-Q as Exhibit 2.1 and incorporated herein by reference. The Merger Agreement and the foregoing description of the agreement have been included to provide investors and stockholders with information regarding the terms of the agreement. They are not intended to provide any other factual information about the Company. The representations, warranties and covenants contained in the Merger Agreement were made only as of specified dates for the purposes of such agreement, were solely for the benefit of the parties to such agreement and may be subject to qualifications and limitations agreed upon by such parties. In particular, in reviewing the representations, warranties and covenants contained in the Merger Agreement and discussed in the foregoing description, it is important to bear in mind that such representations, warranties and covenants were negotiated with the principal purpose of allocating risk between the parties, rather than establishing matters as facts. Such representations, warranties and covenants may also be subject to a contractual standard of materiality different from those generally applicable to stockholders and reports and documents filed with the U.S. Securities and Exchange Commission (the “SEC”), and are also qualified in important part by a confidential disclosure letter delivered by the Company to Parent in connection with the Merger Agreement. Investors and stockholders are not third-party beneficiaries under the Merger Agreement. Accordingly, investors and stockholders should not rely on such representations, warranties and covenants as characterizations of the actual state of facts or circumstances described therein. Information concerning the subject matter of such representations, warranties and covenants may change after the date of the Merger Agreement, which subsequent information may or may not be fully reflected in the parties’ public disclosures. | |
Parent and Merger Sub commenced the Offer on October 15, 2014. Parent and Move each filed a Premerger Notification and Report Form under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the “HSR Act”), with the Federal Trade Commission (“FTC”) and the Antitrust Division of the Department of Justice (the “Antitrust Division”) in connection with the purchase of shares in the Offer on October 15, 2014. The required waiting period with respect to the Offer expired at 11:59 p.m., New York City time, on October 30, 2014, without any action having been taken by the FTC or the Antitrust Division. Accordingly, the condition to the Offer relating to the expiration or termination of the waiting period under the HSR Act has been satisfied. Additional information regarding the Merger, the Offer, and related matters, may be found in the Solicitation/Recommendation Statement on 14D-9, as amended, and the Tender Offer Statement on Schedule TO, as amended, as filed by the Company and Parent, respectively, with the SEC. | |
Summary_of_Significant_Account
Summary of Significant Accounting Policies | 9 Months Ended |
Sep. 30, 2014 | |
Summary of Significant Accounting Policies | ' |
Summary of Significant Accounting Policies | ' |
2. Summary of Significant Accounting Policies | |
Basis of Presentation | |
The Company’s unaudited Condensed Consolidated Financial Statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”), including those for interim financial information, and with the instructions for Form 10-Q and Article 10 of Regulation S-X issued by the United States Securities and Exchange Commission (“SEC”). Accordingly, they do not include all of the information and note disclosures required by U.S. GAAP for complete financial statements. These statements are unaudited and, in the opinion of management, all adjustments (which include only normal recurring adjustments) considered necessary for a fair presentation have been included. These unaudited Condensed Consolidated Financial Statements should be read in conjunction with the audited financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2013 (the “Annual Report”), which was filed with the SEC on February 18, 2014. The results of operations for the three and nine months ended September 30, 2014, are not necessarily indicative of the operating results expected for the full year ending December 31, 2014. | |
Principles of Consolidation | |
The accompanying financial statements are consolidated and include the financial statements of Move and its majority-owned subsidiaries. All significant intercompany balances and transactions have been eliminated in consolidation. Investments in private entities where the Company holds a 50% or less ownership interest and does not exercise control are accounted for using the equity method of accounting. The investment balance is included in “Investment in unconsolidated joint venture” within the Consolidated Balance Sheets and the Company’s share of the investees’ results of operations is included in “Earnings of unconsolidated joint venture” within the Consolidated Statements of Operations. Investments in private entities where the Company holds an ownership interest of less than 20% and does not have significant influence over the entity are accounted for on the cost basis of accounting. | |
The Company has evaluated all subsequent events through the date the financial statements were issued. | |
Reclassification | |
The Company reclassified certain prior year amounts to conform to its presentation within the Consolidated Statements of Operations for the year ended December 31, 2013. Specifically, effective October 1, 2013, the Company elected to change the presentation of certain lead acquisition costs and to reclassify these costs from “Cost of revenue” to “Sales and marketing” within its Consolidated Statements of Operations in order to be more consistent with certain of its peers and to combine all traffic acquisition costs that are not considered directly related to the fulfillment of products into “Sales and marketing.” This had the effect of decreasing “Cost of revenue” and increasing “Sales and marketing” expense by $2.0 million and $5.9 million, or 3% of revenue, for the three and nine months ended September 30, 2013, respectively. Based on a review of U.S. GAAP, management has concluded that this reclassification is not a change in accounting principle nor is it a correction of an error in previously issued financial statements. | |
Commencing in the fourth quarter of 2013, the Company eliminated the presentation of gross profit in its Consolidated Statements of Operations as it is not an important metric for the Company or the industry. The Company reports “Cost of revenue” as a separate line item within “Costs and operating expenses” in the Consolidated Statements of Operations. | |
Advertising Costs | |
Prior to the second quarter of 2014, the Company’s advertising costs consisted primarily of expenses associated with online advertising, email campaigns, media buys, other trade advertising and agency fees, and were expensed as incurred. In the second quarter of 2014, the Company launched a national level media campaign in connection with its brand marketing efforts. In contrast to the Company’s past advertising activities, this campaign included the production of several commercials which would be aired on national television over a twelve-month period. This is the first time the Company has incurred material production costs. Commencing with the second quarter of 2014, the Company capitalizes production costs associated with commercials and expenses them the first time the commercial is first publicly shown. All other advertising costs will continue to be expensed as incurred. At September 30, 2014, the Company had $0.2 million in capitalized production costs associated with commercials that had not yet been publicly shown. These costs are recorded in “Other current assets” within the unaudited Condensed Consolidated Balance Sheets. | |
New_Accounting_Standards
New Accounting Standards | 9 Months Ended |
Sep. 30, 2014 | |
New Accounting Standards | ' |
New Accounting Standards | ' |
3. New Accounting Standards | |
In May 2014, the FASB issued Accounting Standards Update No. 2014-09 (“ASU 2014-09”), “Revenue from Contracts with Customers.” The amendments in ASU 2014-09 are intended to establish principles for reporting useful information to users of financial statements about the nature, amount, timing and uncertainty of revenues and cash flows arising from the entity’s contracts with customers. An entity will be required to recognize revenue to depict the transfer of promised goods and services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. Public entities are required to apply the amendments on either a full- or modified-retrospective basis for annual reporting periods beginning after December 15, 2016 and for interim periods within those annual periods. Early adoption is not permitted. The Company is currently evaluating the impact of the adoption of ASU 2014-09 on its consolidated financial statements. | |
A variety of proposed or otherwise potential accounting standards are currently under evaluation by the various standard setting organizations and regulatory agencies. Due to the tentative and preliminary nature of those proposed standards, management has not determined whether implementation of such proposed standards would have a material impact to the Company’s consolidated financial statements. | |
Segment_Information_and_Revenu
Segment Information and Revenues by Product Category | 9 Months Ended | |||||||||||||
Sep. 30, 2014 | ||||||||||||||
Segment Information and Revenues by Product Category | ' | |||||||||||||
Segment Information and Revenues by Product Category | ' | |||||||||||||
4. Segment Information and Revenues by Product Category | ||||||||||||||
Segment reporting requires the use of the management approach in determining reportable operating segments. The management approach considers the internal organization and reporting used by the Company’s chief operating decision maker (“CODM”) for making operating decisions and assessing performance. The Company is aligned functionally with the management team, which is focused on and incentivized around the total company performance. The CODM is provided with reports that show the Company’s results on a consolidated basis with additional expenditure information by functional area, but there is no additional financial information provided at any further segment level. Based on this, the Company has determined that only one reportable segment exists. | ||||||||||||||
Within that single reporting segment, the Company categorizes its products and services into two groups: (i) Consumer Advertising and (ii) Software and Services. The Company’s Consumer Advertising products are focused on providing real estate consumers with the information, tools and professional expertise they need to make informed home buying, selling, financing and renting decisions through its operation of realtor.com® and other consumer-facing web sites. The Company’s Software and Services products are committed to delivering valuable connections to real estate professionals by providing them with advertising systems, productivity and lead management tools, and reporting with the goal of helping to make them more successful. | ||||||||||||||
The following table summarizes the Company’s revenues by product category within its single reporting segment (in thousands): | ||||||||||||||
Three Months Ended | Nine Months Ended | |||||||||||||
September 30, | September 30, | |||||||||||||
2014 | 2013 | 2014 | 2013 | |||||||||||
Revenue | ||||||||||||||
Consumer advertising | $ | 49,662 | $ | 45,630 | $ | 141,842 | $ | 132,348 | ||||||
Software and services | 14,222 | 13,195 | 41,374 | 38,205 | ||||||||||
Total revenue | $ | 63,884 | $ | 58,825 | $ | 183,216 | $ | 170,553 | ||||||
Investments_in_Unconsolidated_
Investments in Unconsolidated Joint Ventures | 9 Months Ended | |||||||||||||
Sep. 30, 2014 | ||||||||||||||
Investment in Unconsolidated Joint Venture | ' | |||||||||||||
Investment in Unconsolidated Joint Venture | ' | |||||||||||||
5. Investment in Unconsolidated Joint Venture | ||||||||||||||
As of September 30, 2014 and December 31, 2013, the Company’s interest in its unconsolidated joint venture, Builders Digital Experience, LLC (“BDX”), amounted to $6.5 million and $4.6 million, respectively, which was recorded in “Investment in unconsolidated joint venture” within the unaudited Condensed Consolidated Balance Sheets. | ||||||||||||||
The Company’s proportionate share of earnings resulting from its investment in its unconsolidated joint venture was $1.0 million and $0.6 million for the three months ended September 30, 2014 and 2013, respectively, and $2.7 million and $1.7 million for the nine months ended September 30, 2014 and 2013, respectively, and was included in “Earnings of unconsolidated joint venture” within the unaudited Condensed Consolidated Statements of Operations. The Company records its proportionate share of earnings one month in arrears. | ||||||||||||||
Summarized financial statement information for BDX follows (in thousands): | ||||||||||||||
Three Months Ended | Nine Months Ended | |||||||||||||
August 31, | August 31, | |||||||||||||
2014 | 2013 | 2014 | 2013 | |||||||||||
Revenue | $ | 6,525 | $ | 5,317 | $ | 18,509 | $ | 14,902 | ||||||
Cost of revenue | 1,087 | 889 | 3,059 | 2,467 | ||||||||||
Gross profit | 5,438 | 4,428 | 15,450 | 12,435 | ||||||||||
Total operating expenses | 3,423 | 3,218 | 9,950 | 9,000 | ||||||||||
Income before income taxes | 2,015 | 1,210 | 5,500 | 3,435 | ||||||||||
Income tax expense | 40 | 40 | 85 | 135 | ||||||||||
Net income | $ | 1,975 | $ | 1,170 | $ | 5,415 | $ | 3,300 | ||||||
The Company received cash distributions of $0.8 million and $1.2 million from BDX during the nine months ended September 30, 2014 and 2013, respectively. | ||||||||||||||
Convertible_Senior_Notes
Convertible Senior Notes | 9 Months Ended | |||||||||||||
Sep. 30, 2014 | ||||||||||||||
Convertible Senior Notes | ' | |||||||||||||
Convertible Senior Notes | ' | |||||||||||||
6. Convertible Senior Notes | ||||||||||||||
In August 2013, the Company issued 2.75% convertible senior notes due September 1, 2018 (the “Notes”) in the principal amount of $100.0 million. Interest is payable in cash in arrears at a fixed rate of 2.75% on March 1 and September 1 of each year, beginning on March 1, 2014. The Notes mature on September 1, 2018 unless repurchased or converted in accordance with their terms prior to such date. The Company cannot redeem the Notes prior to maturity. | ||||||||||||||
The terms of the Notes are governed by an indenture by and between the Company and U.S. Bank National Association, as Trustee (the “Indenture”). The Notes are unsecured, unsubordinated obligations and do not contain any financial covenants or any restrictions pertaining to the payment of dividends, the incurrence of senior debt or other indebtedness, or the issuance or repurchase of securities by the Company. Upon conversion, holders of the Notes will receive cash, shares of the Company’s common stock or a combination of cash and shares of the Company’s common stock, at the Company’s election. | ||||||||||||||
For the Notes, the initial conversion rate is 53.2907 shares of common stock per $1,000 principal amount, which is equal to an initial conversion price of approximately $18.77 per share of common stock, subject to adjustment. Prior to the close of business on June 1, 2018, the conversion is subject to the satisfaction of certain conditions as described below. | ||||||||||||||
Holders of the Notes who convert their notes in connection with certain corporate events that constitute a make-whole fundamental change (as set forth in the Indenture) are, under certain circumstances, entitled to an increase in the conversion rate. Additionally, in the event of a corporate event that constitutes a fundamental change (as set forth in the Indenture), holders of the Notes may require us to repurchase all or a portion of their notes at a price equal to 100% of the principal amount of their notes, plus any accrued and unpaid interest. | ||||||||||||||
Holders of the Notes may convert all or a portion of their notes prior to the close of business on June 1, 2018, in multiples of $1,000 principal amount, only under the following circumstances: | ||||||||||||||
· | during any fiscal quarter commencing after the quarter ending on December 31, 2013, if the last reported sale price of the Company’s common stock for at least twenty trading days during a period of thirty consecutive trading days ending on the last trading day of the immediately preceding calendar quarter is greater than or equal to 130% of the conversion price of the respective notes on each applicable trading day; | |||||||||||||
· | during the five business day period after any five consecutive trading day period in which the trading price per $1,000 principal amount of the respective notes for each day of that five day consecutive trading day period was less than 98% of the product of the last reported sale price of the Company’s common stock and the conversion rate of the respective notes on such trading day; or | |||||||||||||
· | upon the occurrence of specified corporate events as noted in the Indenture. | |||||||||||||
In accounting for the issuance of the Notes, the Company separated the Notes into liability and equity components. The carrying amount of the liability component was calculated by measuring the fair value of similar liabilities that do not have an associated convertible feature. The carrying amount of the equity component, representing the conversion option, was determined by deducting the fair value of the liability component from the principal amount of the Notes. This difference represents a debt discount that is amortized to interest expense over the term of the Notes. The equity component is not remeasured as long as it continues to meet the conditions for equity classification. | ||||||||||||||
In accounting for the direct transaction costs (the “issuance costs”) related to the Notes, the Company allocated the total amount of issuance costs incurred to the liability and equity components based on their relative values. Issuance costs, including fees paid to underwriters who acted as intermediaries in the placement of the Notes, attributable to the liability component are included within “Other assets” in the unaudited Condensed Consolidated Balance Sheets and are being amortized to interest expense over the term of the Notes, and the issuance costs attributable to the equity component were netted with the equity component and included within “Additional paid-in capital” in the unaudited Condensed Consolidated Balance Sheets. The Company recorded issuance costs of $2.8 million and $0.6 million to the liability component and equity component, respectively. Interest cost related to the amortization expense of the issuance costs associated with the liability component was $0.1 million and $0.4 million in the three and nine months ended September 30, 2014, respectively. | ||||||||||||||
The Notes consisted of the following (in thousands): | ||||||||||||||
September 30, 2014 | December 31, 2013 | |||||||||||||
Principal amounts: | ||||||||||||||
Principal | $ | 100,000 | $ | 100,000 | ||||||||||
Unamortized debt discount(1) | (15,085 | ) | (17,541 | ) | ||||||||||
Net carrying amount | $ | 84,915 | $ | 82,459 | ||||||||||
Carrying amount of the equity component(2) | $ | 18,137 | $ | 18,137 | ||||||||||
(1)Included in the unaudited Condensed Consolidated Balance Sheets within “Convertible senior notes,” and is amortized over the remaining life of the Notes on an effective interest rate basis. | ||||||||||||||
(2)Included in the unaudited Condensed Consolidated Balance Sheets within “Additional paid-in capital,” net of $0.6 million in issuance costs. | ||||||||||||||
As of September 30, 2014, the remaining life of the Notes was 47 months. The Company applies the treasury stock method to determine the potential dilutive effect of the Notes on net income per share as a result of the Company’s intent and stated policy to settle the principal amount of the Notes in cash. | ||||||||||||||
The following table sets forth total interest expense recognized and the effective interest rate related to the Notes (in thousands, except effective interest rate): | ||||||||||||||
Three Months Ended | Nine Months Ended | |||||||||||||
September 30 | September 30 | |||||||||||||
2014 | 2013 | 2014 | 2013 | |||||||||||
Contractual interest expense | $ | 688 | $ | 390 | $ | 2,047 | $ | 390 | ||||||
Interest cost related to amortization of debt issuance costs | 128 | 70 | 381 | 70 | ||||||||||
Interest cost related to amortization of the debt discount | 827 | 446 | 2,456 | 446 | ||||||||||
Effective interest rate of the liability component | 7.9 | % | 7.9 | % | 7.9 | % | 7.9 | % | ||||||
The initial net proceeds from the sale of the Notes were $96.6 million after deducting the issuance costs paid by the Company. In connection with the sale of the Notes, the Company purchased 1,798,561 shares of its outstanding common stock in privately negotiated transactions for an aggregate purchase price of $25.0 million. | ||||||||||||||
Fair_Value_Measurements
Fair Value Measurements | 9 Months Ended | |||||||||||||
Sep. 30, 2014 | ||||||||||||||
Fair Value Measurements | ' | |||||||||||||
Fair Value Measurements | ' | |||||||||||||
7. Fair Value Measurements | ||||||||||||||
The Company defines fair value as the price that would be received to sell an asset or paid to transfer a liability (an exit price) in an orderly transaction between market participants at the reporting date. The methodology establishes consistency and comparability by providing a fair value hierarchy that prioritizes the inputs to valuation techniques into three broad levels, which are described below: | ||||||||||||||
· | Level 1 inputs are quoted market prices in active markets for identical assets or liabilities (these are observable market inputs). | |||||||||||||
· | Level 2 inputs are inputs other than quoted prices included within Level 1 that are observable for the asset or liability (includes quoted market prices for similar assets or identical or similar assets in markets in which there are few transactions, prices that are not current or prices that vary substantially). | |||||||||||||
· | Level 3 inputs are unobservable inputs that reflect the entity’s own assumptions in pricing the asset or liability (used when little or no market data is available). | |||||||||||||
As of September 30, 2014 and December 31, 2013, the Company’s cash and cash equivalent balances were held in unrestricted demand deposit accounts or invested in U.S. treasury bills with original maturity dates of three months or less for which fair value is determined using quoted market prices. As of December 31, 2013, the cash equivalent balances invested in U.S. treasury bills were valued at $40.0 million and are classified as level 1 in the fair value hierarchy. | ||||||||||||||
Certain assets and liabilities are measured at fair value on a non-recurring basis. That is, such assets and liabilities are not measured at fair value on an ongoing basis, but are subject to fair value adjustments in certain circumstances (e.g. when there is evidence of impairment). At September 30, 2014 and December 31, 2013, the Company had no significant non-financial assets or liabilities that had been adjusted to fair value subsequent to initial recognition. | ||||||||||||||
The carrying amounts and estimated fair values of financial instruments not recorded at fair value were as follows (in thousands): | ||||||||||||||
September 30, 2014 | December 31, 2013 | |||||||||||||
Carrying | Estimated Fair | Carrying | Estimated Fair | |||||||||||
Amount | Value(1) | Amount | Value(1) | |||||||||||
Convertible senior notes | $ | 84,915 | $ | 127,440 | $ | 82,459 | $ | 112,875 | ||||||
(1)The fair value of the Notes is inclusive of the conversion feature, which was originally allocated for reporting purposes at $18.8 million, and is included in the unaudited Condensed Consolidated Balance Sheets within “Additional paid-in capital.” | ||||||||||||||
The estimated fair value of the Notes, which are classified as level 2 financial instruments, was determined based on the quoted bid price of the Notes in an over-the-counter secondary market on September 30, 2014 and December 31, 2013. | ||||||||||||||
Goodwill_and_Other_Intangible_
Goodwill and Other Intangible Assets | 9 Months Ended | |||||||||||||
Sep. 30, 2014 | ||||||||||||||
Goodwill and Other Intangible Assets | ' | |||||||||||||
Goodwill and Other Intangible Assets | ' | |||||||||||||
8. Goodwill and Other Intangible Assets | ||||||||||||||
Goodwill totaled $41.6 million at September 30, 2014 and December 31, 2013, with no accumulated impairment losses. The Company also had both indefinite- and definite-lived intangible assets at those dates. Indefinite-lived intangible assets consist of domain names, trade names and trademarks used to market products for the foreseeable future and do not have any known useful life limitations due to legal, contractual, regulatory, economic or other factors. Definite-lived intangible assets consist of certain trade names, trademarks, brand names, domain names, content syndication agreements, purchased technology, customer contracts and related customer relationships, non-contractual customer relationships, other miscellaneous agreements and web site content. The definite-lived intangible assets are amortized over the expected period of benefit. There are no expected residual values related to these intangible assets. | ||||||||||||||
Intangible assets by category were as follows (in thousands): | ||||||||||||||
September 30, 2014 | December 31, 2013 | |||||||||||||
Gross | Accumulated | Gross | Accumulated | |||||||||||
Amount | Amortization | Amount | Amortization | |||||||||||
Trade names, trademarks, brand names, and domain names | $ | 1,540 | $ | 810 | $ | 1,530 | $ | 657 | ||||||
Content syndication agreements | 8,800 | 3,169 | 3,800 | 2,491 | ||||||||||
Purchased technology | 11,900 | 4,995 | 11,800 | 3,605 | ||||||||||
Customer relationships | 8,630 | 2,899 | 8,630 | 2,014 | ||||||||||
Other | 3,583 | 3,317 | 3,583 | 2,803 | ||||||||||
Total definite-lived intangible assets | 34,453 | 15,190 | 29,343 | 11,570 | ||||||||||
Trade names and trademarks | 6,630 | — | 6,630 | — | ||||||||||
Total indefinite-lived intangible assets | 6,630 | — | 6,630 | — | ||||||||||
Total intangible assets | $ | 41,083 | $ | 15,190 | $ | 35,973 | $ | 11,570 | ||||||
In August 2014, the Company entered into an agreement with Yardi Canada, Ltd. (“Yardi”) whereby the Company purchased content syndication agreements from Yardi’s Point2 business for a purchase price of $5.0 million in cash. | ||||||||||||||
Amortization expense for the Company’s intangible assets was $1.3 million and $1.1 million for the three months ended September 30, 2014 and 2013, respectively, and $3.7 million and $3.2 million for the nine months ended September 30, 2014 and 2013, respectively. Amortization expense for the next five years is estimated to be as follows (in thousands): | ||||||||||||||
Years Ended December 31, | ||||||||||||||
2014 (remaining 3 months) | $ | 1,339 | ||||||||||||
2015 | 4,990 | |||||||||||||
2016 | 3,843 | |||||||||||||
2017 | 3,754 | |||||||||||||
2018 | 3,076 | |||||||||||||
StockBased_Compensation_and_Ch
Stock-Based Compensation and Charges | 9 Months Ended | |||||||||||||
Sep. 30, 2014 | ||||||||||||||
Stock-Based Compensation and Charges | ' | |||||||||||||
Stock-Based Compensation and Charges | ' | |||||||||||||
9. Stock-Based Compensation and Charges | ||||||||||||||
The following chart summarizes the stock-based compensation and charges associated with stock option, restricted stock and restricted stock unit grants to employees and non-employees, that have been included in the following financial statement captions for each of the periods presented (in thousands): | ||||||||||||||
Three Months Ended | Nine Months Ended | |||||||||||||
September 30, | September 30, | |||||||||||||
2014 | 2013 | 2014 | 2013 | |||||||||||
Cost of revenue | $ | 114 | $ | 74 | $ | 337 | $ | 261 | ||||||
Sales and marketing | 1,223 | 648 | 2,599 | 1,746 | ||||||||||
Product and web site development | 862 | 723 | 3,677 | 2,050 | ||||||||||
General and administrative | 1,251 | 1,297 | 3,545 | 4,184 | ||||||||||
Total stock-based compensation and charges | $ | 3,450 | $ | 2,742 | $ | 10,158 | $ | 8,241 | ||||||
Stock Option Awards | ||||||||||||||
The fair value of stock option awards was estimated on the date of grant using a Black-Scholes option valuation model that used the ranges of assumptions in the following table. The risk-free interest rates are based upon U.S. Treasury zero-coupon bonds for the periods during which the options were granted. The expected term of stock options granted represents the weighted-average period that the stock options are expected to remain outstanding. The Company has not declared and does not expect to declare dividends on its common stock; accordingly, the dividend yield for valuation purposes is assumed to be zero. The Company bases its computation of expected volatility upon a combination of historical and market-based implied volatility. | ||||||||||||||
Three Months Ended | Nine Months Ended | |||||||||||||
September 30, | September 30, | |||||||||||||
2014 | 2013 | 2014 | 2013 | |||||||||||
Risk-free interest rates | 1.76 | % | 1.38 | % | 1.48%-1.76% | 0.69%-1.41% | ||||||||
Expected term (in years) | 5.85 | 5.85 | 5.85 | 5.85 | ||||||||||
Dividend yield | 0 | % | 0 | % | 0% | 0% | ||||||||
Expected volatility | 55 | % | 70 | % | 55%-65% | 70%-75% | ||||||||
During the nine months ended September 30, 2014, the Company granted 789,675 stock options with a weighted-average grant date fair value of $7.68 per share. During the nine months ended September 30, 2013, the Company granted 919,300 stock options with a weighted-average grant date fair value of $6.26 per share. The total cost recognized related to stock option awards was $1.3 million and $1.1 million for the three months ended September 30, 2014 and 2013, respectively. For the nine months ended September 30, 2014 and 2013, the total cost recognized related to stock option awards was $4.1 million and $3.4 million, respectively. | ||||||||||||||
As of September 30, 2014, there were 4,089,467 stock options outstanding, and the weighted-average exercise price of those outstanding options was $10.24 per share. | ||||||||||||||
Restricted Stock Awards | ||||||||||||||
The Company grants restricted stock awards to the non-employee members of its Board of Directors as remuneration for serving on its Board (except for any director who is entitled to a seat on the Board of Directors on a contractual basis or has waived remuneration as a director). The Company granted 53,608 and 45,959 shares of restricted stock with a grant date fair value of $0.7 million and $0.5 million to the non-employee members of its Board of Directors during the nine months ended September 30, 2014 and 2013, respectively. The total cost recognized for restricted stock awards granted to members of its Board of Directors was $0.2 million and $0.1 million for the three months ended September 30, 2014 and 2013, respectively, and $0.4 million and $0.3 million for the nine months ended September 30, 2014 and 2013, respectively. | ||||||||||||||
The Company also grants restricted stock awards to certain executives and key employees. Generally, these shares, subject to certain terms and restrictions, vest in equal annual installments over the four-year period following the grant date. The Company made no restricted stock award grants to the executives and key employees during the nine months ended September 30, 2014 and 2013. The total cost recognized for restricted stock awards granted to employees was $0.1 million and $0.2 million for the three months ended September 30, 2014 and 2013, respectively, and $0.8 million and $0.6 million for the nine months ended September 30, 2014 and 2013, respectively. | ||||||||||||||
As of September 30, 2014, there were 203,893 shares of non-vested restricted stock outstanding that were granted pursuant to restricted stock awards with an aggregate grant date fair value of $2.0 million. | ||||||||||||||
Restricted Stock Units | ||||||||||||||
The Company also grants restricted stock units. Generally, these restricted stock units, subject to certain terms and restrictions, vest in equal annual installments over the four-year period following the grant date, resulting in the issuance, on a one-for-one basis, of shares of our common stock after the vesting date. During the nine months ended September 30, 2014, the Company granted 868,250 restricted stock units with a grant date fair value of $11.5 million, which is being amortized over the four-year vesting period. During the nine months ended September 30, 2013, the Company granted 939,386 restricted stock units with a grant date fair value of $9.8 million, which is being amortized over the vesting period. The total cost recognized for restricted stock units was $1.8 million and $1.3 million for the three months ended September 30, 2014 and 2013, respectively, and $4.8 million and $3.8 million for the nine months ended September 30, 2014 and 2013, respectively. | ||||||||||||||
As of September 30, 2014, there were 1,734,283 non-vested restricted stock units outstanding with an aggregate grant date fair value of $20.1 million. | ||||||||||||||
Common_Stock_Repurchases
Common Stock Repurchases | 9 Months Ended |
Sep. 30, 2014 | |
Common Stock Repurchases | ' |
Common Stock Repurchases | ' |
10. Common Stock Repurchases | |
In March 2013, the Company’s Board of Directors authorized a stock repurchase program (the “Program”). The Program authorizes, in one or more transactions taking place during a two-year period commencing May 2, 2013, the repurchase of the Company’s outstanding common stock utilizing surplus cash in an amount of up to $20 million. Under the Program, the Company is authorized to repurchase shares of its common stock in the open market or in privately negotiated transactions. The timing and amount of any repurchase transaction under the Program is dependent upon market conditions, corporate considerations, and regulatory requirements. Shares repurchased under the Program will be retired to constitute authorized but unissued shares of the Company’s common stock. As of September 30, 2014, the Company has repurchased 84,054 shares of its outstanding common stock in the open market for $1.0 million since the inception of the Program. There were no shares repurchased during the nine months ended September 30, 2014. | |
Net_Income_Loss_Per_Share
Net Income (Loss) Per Share | 9 Months Ended | |||||||||||||
Sep. 30, 2014 | ||||||||||||||
Net Income (Loss) Per Share | ' | |||||||||||||
Net Income (Loss) Per Share | ' | |||||||||||||
11. Net Income (Loss) Per Share | ||||||||||||||
Basic net income (loss) per share is computed by dividing the net income (loss) for the period by the weighted-average number of common shares outstanding. Diluted net income per share is computed by giving effect to all potential weighted-average dilutive common stock, including stock options, restricted stock, restricted stock units and convertible senior notes. The dilutive effect of outstanding stock options, restricted stock and restricted stock units, and the convertible senior notes is reflected in diluted net income per share by application of the treasury stock method. Shares associated with stock options, restricted stock, restricted stock units and convertible senior notes are not included to the extent they are antidilutive. | ||||||||||||||
The following table sets forth the computation of basic and diluted net income (loss) per share for the periods indicated (in thousands, except per share amounts): | ||||||||||||||
Three Months Ended | Nine Months Ended | |||||||||||||
September 30, | September 30, | |||||||||||||
2014 | 2013 | 2014 | 2013 | |||||||||||
Numerator: | ||||||||||||||
Net (loss) income | $ | (8,630 | ) | $ | 138 | $ | (20,105 | ) | $ | 504 | ||||
Denominator: | ||||||||||||||
Basic weighted-average shares outstanding | 40,076 | 39,061 | 39,514 | 39,215 | ||||||||||
Add: dilutive effect of options and restricted stock | — | 2,421 | — | 1,698 | ||||||||||
Fully diluted weighted-average shares outstanding | 40,076 | 41,482 | 39,514 | 40,913 | ||||||||||
Basic net (loss) income per share | $ | (0.22 | ) | $ | 0 | $ | (0.51 | ) | $ | 0.01 | ||||
Diluted net (loss) income per share | $ | (0.22 | ) | $ | 0 | $ | (0.51 | ) | $ | 0.01 | ||||
For the three and nine months ended September 30, 2014, the denominator in the above computation of diluted net loss per share excludes stock options, restricted stock units and non-vested restricted stock awards totaling 6,027,643 as their effect would be antidilutive due to the Company’s net loss for those periods. For the three and nine months ended September 30, 2013, the denominator in the above calculation of diluted net income per share excludes “out-of-the-money” stock options of 794,721 and 951,621, respectively, as their effect would be antidilutive. | ||||||||||||||
The Notes did not have a dilutive effect in the above calculation of diluted net loss per share for the three and nine months ended September 30, 2014 or 2013. | ||||||||||||||
RelatedParty_Transactions
Related-Party Transactions | 9 Months Ended |
Sep. 30, 2014 | |
Related-Party Transactions | ' |
Related-Party Transactions | ' |
12. Related-Party Transactions | |
The Company makes payments to the National Association of Realtors® (“NAR”) required under its operating agreement with the NAR and under certain other advertising agreements. Total amounts paid under these agreements were $0.5 million for the three months ended September 30, 2014 and 2013, and $1.5 million for the nine months ended September 30, 2014 and 2013. As of September 30, 2014 and December 31, 2013, the Company had balances due to the NAR of $0.5 million, which are included in “Accounts payable” within the unaudited Condensed Consolidated Balance Sheets. | |
Income_Taxes
Income Taxes | 9 Months Ended |
Sep. 30, 2014 | |
Income Taxes | ' |
Income Taxes | ' |
13. Income Taxes | |
As a result of historical net operating losses (“NOLs”), the Company currently provides a full valuation allowance against its net deferred tax assets. For the three and nine months ended September 30, 2014 and 2013, income tax (benefit) expense included state income taxes and a deferred tax provision related to amortization of certain indefinite-lived intangible assets. For the three and nine months ended September 30, 2014, income tax (benefit) expense was computed at the estimated annual effective rate based on the total estimated annual tax provision. For the three and nine months ended September 30, 2013, income tax expense was computed at the year-to-date actual effective tax rate. | |
During the three and nine months ended September 30, 2014 and 2013, income tax (benefit) expense differed from the income tax expense expected at the statutory rate primarily due to the valuation allowance recorded against the deferred tax benefits generated from net operating losses incurred, certain non-deductible items, state income taxes, and a deferred tax provision related to amortization of certain indefinite-lived intangible assets. Based on management’s assessment, the Company has placed a valuation reserve against its remaining deferred tax assets due to the likelihood that the Company may not generate sufficient taxable income during the carryforward period to utilize the NOLs. Management regularly reviews the Company’s net deferred tax valuation allowance to determine if available evidence continues to support the Company’s position that it is more likely than not (likelihood of more than 50%) that a portion of or the entire deferred tax asset will not be realized in the future. As of September 30, 2014, due to the Company’s recent history of losses, management could not conclude that it is more likely than not that the deferred tax assets will be realized. As a result, the Company will continue to maintain a full valuation allowance against its remaining deferred tax assets. The Company will continue to assess its position in future periods to determine if it is appropriate to reduce a portion of its valuation allowance in the future. | |
The Company’s policy is to recognize interest and penalties related to uncertain tax positions in income tax expense. The Company does not have any interest or penalties related to uncertain tax positions in income tax expense for the three and nine months ended September 30, 2014 and 2013. The tax years 1993 to 2013 remain open to examination by the major taxing jurisdictions to which the Company is subject. | |
Commitments_and_Contingencies
Commitments and Contingencies | 9 Months Ended |
Sep. 30, 2014 | |
Commitments and Contingencies | ' |
Commitments and Contingencies | ' |
14. Commitments and Contingencies | |
Legal Proceedings | |
The Company is currently involved in certain legal proceedings, as discussed within the section “Legal Proceedings” in Note 21, “Commitments and Contingencies” within our Consolidated Financial Statements contained in Item 8 in the Annual Report, and below in this Note 14. From time to time, the Company is a party to various other litigation and administrative proceedings relating to claims arising from its operations in the ordinary course of business. However, as of the date of this Quarterly Report on Form 10-Q, and except as disclosed below, there have been no material developments in the legal proceedings disclosed in the Annual Report, and the Company is not a party to any other litigation or administrative proceedings that management believes will have a material adverse effect on the Company’s business, results of operations, financial condition or cash flows. | |
On February 28, 2007, in a patent infringement action against a real estate agent, Diane Sarkisian, pending in the U.S. District Court for the Eastern District of Pennsylvania (the “Sarkisian case”), Real Estate Alliance, Limited (“REAL”) moved to certify two classes of defendants: subscribers and members of the multiple listing service of which Sarkisian was a member, and customers of the Company who had purchased enhanced listings from the Company. The U.S. District Court in the Sarkisian case denied REAL’s motion to certify the classes on September 24, 2007. On March 25, 2008, the U.S. District Court in the Sarkisian case stayed that case, and denied without prejudice all pending motions, pending the U.S. District Court of California’s determination in the Move California Action (see below) of whether the Company’s web sites infringe the REAL patents. | |
On April 3, 2007, in response to REAL’s attempt to certify our customers as a class of defendants in the Sarkisian case, the Company filed a complaint in the U.S. District Court for the Central District of California (the “District Court”) against REAL and its licensing agent (the “Move California Action”) seeking a declaratory judgment that the Company does not infringe U.S. Patent Nos. 4,870,576 and 5,032,989 (the “REAL patents”), that the REAL patents are invalid and/or unenforceable, and alleging several business torts and unfair competition. On August 8, 2007, REAL denied the Company’s allegations, and asserted counterclaims against the Company for infringement of the REAL patents seeking compensatory damages, punitive damages, treble damages, costs, expenses, reasonable attorneys’ fees and pre- and post-judgment interest. On March 11, 2008, REAL filed a separate suit in the District Court (the “REAL California Action”) alleging infringement of the REAL patents against the NAR and the National Association of Home Builders (the “NAHB”) as individual defendants, as well as various brokers including RE/Max International (“RE/Max”), agents, MLSs, new home builders, rental property owners, and technology companies. The Company is not named as a defendant in the REAL California Action; however, the Company is defending the NAR, the NAHB and RE/Max. On July 29, 2008, the Move California Action was transferred to the same judge in the REAL California Action and in September 2008, the District Court coordinated both cases and issued an order dividing the issues into two phases. Phase 1 addresses issues of patent validity and enforceability, whether Move web sites infringe, possible damages, and liability of Move, the NAR and the NAHB. Phase 2 will address REAL’s infringement claims related to the web sites owned or operated by the remaining defendants and whether those defendants infringe the REAL patents by using the Move web sites. The District Court has stayed Phase 2 pending resolution of the issues in Phase 1. | |
On November 25, 2009, the District Court entered its claim construction order in the Move California Action. On January 27, 2010, upon joint request of the parties, the District Court entered judgment of non-infringement of the patent. In July 2010, REAL appealed the District Court’s claim construction with the Federal Circuit Court of Appeals (the “Circuit Court”). On March 22, 2011, the Circuit Court concluded that the District Court erred in certain of its claim construction and vacated and remanded the case for further proceedings. | |
On October 18, 2011, the parties filed a Joint Brief on Summary Judgment Motions, each side putting forth its arguments requesting the District Court to enter summary judgment in its favor. On January 26, 2012, the District Court entered an order granting the Company’s motion for summary judgment on the Company’s claim of non-infringement of the patent. On March 27, 2012, REAL appealed the District Court’s summary judgment order. On March 4, 2013, the Circuit Court issued its opinion affirming the District Court’s ruling of no direct infringement of the patent by the Company, but remanded the case to the District Court for a determination of induced infringement under the standard set forth in Akamai Technologies, Inc. v. Limelight Network, Inc., 692 F.3d 1301 (Fed. Cir. 2012) (S.Ct. Cert. No. 12-960). The Company filed a motion for rehearing to the Circuit Court on May 3, 2013. On June 12, 2013, the Circuit Court denied the Company’s motion and remanded the case to the District Court. On January 10, 2014, the U. S. Supreme Court granted writ of certiorari in the Akamai case on the issue of whether the Circuit Court erred in holding that a defendant may be held liable for inducing patent infringement in the absence of a finding of direct infringement. On February 3, 2014, the District Court entered an order staying the case pending the U.S. Supreme Court decision in the Akamai case. | |
On June 2, 2014, the U.S. Supreme Court reversed the Circuit Court’s decision in Akamai, holding that an entity cannot be liable for induced infringement when no one is liable for direct infringement. On June 23, 2014, based on the U.S. Supreme Court’s reversal of Akamai, the District Court reinstated its grant of summary judgment of non-infringement and entered final judgment in favor of the Company. On July 21, 2014, REAL filed a notice of appeal of the District Court’s final judgment. | |
The Company intends to vigorously defend all claims. At this time, however, the Company is unable to express an opinion on the outcome of these cases. | |
In March 2010, Smarter Agent, LLC (“Smarter Agent”) filed suit against Move, Inc., against the Company’s affiliate, RealSelect, Inc. (“RealSelect”), and also against other co-defendants Boopsie, Inc., Classified Ventures, LLC, Hotpads, Inc., IDX, Inc., Multifamily Technology Solutions, Inc., D/B/A MyNewPlace, Primedia, Inc., Consumer Source, Inc., Trsoft, Inc., D/B/A PlanetRE, Trulia, Inc., Zillow, Inc., and ZipRealty, Inc. in the U.S. District Court for the District of Delaware (the “Court”). The complaint alleges that the Company and RealSelect, Inc. infringe U.S. Patents 6,385,541; 6,496,776; and 7,072,665 (“Patents in Suit”) by offering an iPhone application for the realtor.com® web site and requested an unspecified amount of damages (including enhanced damages for willful infringement and attorneys’ fees) and an injunction. On August 31, 2010, co-defendants Boopsie, Inc., Classified Ventures, LLC, Hotpads, Inc., IDX, Inc., Multifamily Technology Solutions, Inc., Primedia, Inc., Consumer Source, Inc., Trsoft, Inc., Trulia, Inc., Zillow, Inc., and ZipRealty, Inc., filed requests for interpartes reexamination of the Patents in Suit with the U.S. Patent and Trademark Office (“PTO”). On September 30, 2010, the Company filed an answer and counter claims on behalf of Move and RealSelect. On October 22, 2010, SmarterAgent filed its answer to such counter claims. The PTO accepted the Patents in Suit for re-examination and on December 21, 2010, issued an initial office action rejecting all claims in the Patents in Suit. Smarter Agent appealed the PTO’s rejection to the Patent Trial and Appeals Board. On March 2, 2011, all parties agreed to stipulate to stay the lawsuit pending the completion of all re-examination proceedings at the PTO and on March 7, 2011, the Court so ordered the stay as requested. The Company intends to vigorously defend all claims. At this time, however, the Company is unable to express an opinion on the outcome of this case. | |
On October 24, 2014, Jamie Suprina filed a purported class action lawsuit on behalf of Move stockholders in the Superior Court of the State of California in the County of Santa Clara against Move’s directors alleging, among other things, that the Move directors breached their fiduciary duties by allegedly agreeing to sell Move at an unfair and inadequate price and by allegedly failing to take steps to maximize the sales price of Move. The plaintiff further alleges that Move has failed to make adequate disclosures relating to the financial projections and analysis and the background of the proposed transaction. The complaint seeks to enjoin the merger and other equitable relief. The plaintiff also seeks attorneys’ and expert fees. Each of Move and the directors believe that the plaintiff’s purported claims against the directors lack merit and each of them intends to contest the respective claims against them vigorously. | |
Contingencies | |
From time to time, the Company is subject to a variety of threats or claims, other than formal litigation or legal proceedings, which arise in the ordinary course of business and relate to commercial, intellectual property, employment and other matters. However, as of the date of this Form 10-Q, and except as disclosed herein, or in the Annual Report, the Company does not believe such threats or claims will have a material adverse effect upon its business, results of operations, financial condition or cash flows, although the Company can offer no assurance as to the ultimate outcome of any such matters. | |
Summary_of_Significant_Account1
Summary of Significant Accounting Policies (Policies) | 9 Months Ended |
Sep. 30, 2014 | |
Summary of Significant Accounting Policies | ' |
Basis of Presentation | ' |
Basis of Presentation | |
The Company’s unaudited Condensed Consolidated Financial Statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”), including those for interim financial information, and with the instructions for Form 10-Q and Article 10 of Regulation S-X issued by the United States Securities and Exchange Commission (“SEC”). Accordingly, they do not include all of the information and note disclosures required by U.S. GAAP for complete financial statements. These statements are unaudited and, in the opinion of management, all adjustments (which include only normal recurring adjustments) considered necessary for a fair presentation have been included. These unaudited Condensed Consolidated Financial Statements should be read in conjunction with the audited financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2013 (the “Annual Report”), which was filed with the SEC on February 18, 2014. The results of operations for the three and nine months ended September 30, 2014, are not necessarily indicative of the operating results expected for the full year ending December 31, 2014. | |
Principles of Consolidation | ' |
Principles of Consolidation | |
The accompanying financial statements are consolidated and include the financial statements of Move and its majority-owned subsidiaries. All significant intercompany balances and transactions have been eliminated in consolidation. Investments in private entities where the Company holds a 50% or less ownership interest and does not exercise control are accounted for using the equity method of accounting. The investment balance is included in “Investment in unconsolidated joint venture” within the Consolidated Balance Sheets and the Company’s share of the investees’ results of operations is included in “Earnings of unconsolidated joint venture” within the Consolidated Statements of Operations. Investments in private entities where the Company holds an ownership interest of less than 20% and does not have significant influence over the entity are accounted for on the cost basis of accounting. | |
The Company has evaluated all subsequent events through the date the financial statements were issued. | |
Reclassification | ' |
Reclassification | |
The Company reclassified certain prior year amounts to conform to its presentation within the Consolidated Statements of Operations for the year ended December 31, 2013. Specifically, effective October 1, 2013, the Company elected to change the presentation of certain lead acquisition costs and to reclassify these costs from “Cost of revenue” to “Sales and marketing” within its Consolidated Statements of Operations in order to be more consistent with certain of its peers and to combine all traffic acquisition costs that are not considered directly related to the fulfillment of products into “Sales and marketing.” This had the effect of decreasing “Cost of revenue” and increasing “Sales and marketing” expense by $2.0 million and $5.9 million, or 3% of revenue, for the three and nine months ended September 30, 2013, respectively. Based on a review of U.S. GAAP, management has concluded that this reclassification is not a change in accounting principle nor is it a correction of an error in previously issued financial statements. | |
Commencing in the fourth quarter of 2013, the Company eliminated the presentation of gross profit in its Consolidated Statements of Operations as it is not an important metric for the Company or the industry. The Company reports “Cost of revenue” as a separate line item within “Costs and operating expenses” in the Consolidated Statements of Operations. | |
Advertising Costs | ' |
Advertising Costs | |
Prior to the second quarter of 2014, the Company’s advertising costs consisted primarily of expenses associated with online advertising, email campaigns, media buys, other trade advertising and agency fees, and were expensed as incurred. In the second quarter of 2014, the Company launched a national level media campaign in connection with its brand marketing efforts. In contrast to the Company’s past advertising activities, this campaign included the production of several commercials which would be aired on national television over a twelve-month period. This is the first time the Company has incurred material production costs. Commencing with the second quarter of 2014, the Company capitalizes production costs associated with commercials and expenses them the first time the commercial is first publicly shown. All other advertising costs will continue to be expensed as incurred. At September 30, 2014, the Company had $0.2 million in capitalized production costs associated with commercials that had not yet been publicly shown. These costs are recorded in “Other current assets” within the unaudited Condensed Consolidated Balance Sheets. | |
Segment_Information_and_Revenu1
Segment Information and Revenues by Product Category (Tables) | 9 Months Ended | |||||||||||||
Sep. 30, 2014 | ||||||||||||||
Segment Information and Revenues by Product Category | ' | |||||||||||||
Summary of the Company's revenues by product category within its single reportable operating segment | ' | |||||||||||||
The following table summarizes the Company’s revenues by product category within its single reporting segment (in thousands): | ||||||||||||||
Three Months Ended | Nine Months Ended | |||||||||||||
September 30, | September 30, | |||||||||||||
2014 | 2013 | 2014 | 2013 | |||||||||||
Revenue | ||||||||||||||
Consumer advertising | $ | 49,662 | $ | 45,630 | $ | 141,842 | $ | 132,348 | ||||||
Software and services | 14,222 | 13,195 | 41,374 | 38,205 | ||||||||||
Total revenue | $ | 63,884 | $ | 58,825 | $ | 183,216 | $ | 170,553 | ||||||
Investments_in_Unconsolidated_1
Investments in Unconsolidated Joint Ventures (Tables) | 9 Months Ended | |||||||||||||
Sep. 30, 2014 | ||||||||||||||
Investment in Unconsolidated Joint Venture | ' | |||||||||||||
Summary of financial statement information for BDX | ' | |||||||||||||
Summarized financial statement information for BDX follows (in thousands): | ||||||||||||||
Three Months Ended | Nine Months Ended | |||||||||||||
August 31, | August 31, | |||||||||||||
2014 | 2013 | 2014 | 2013 | |||||||||||
Revenue | $ | 6,525 | $ | 5,317 | $ | 18,509 | $ | 14,902 | ||||||
Cost of revenue | 1,087 | 889 | 3,059 | 2,467 | ||||||||||
Gross profit | 5,438 | 4,428 | 15,450 | 12,435 | ||||||||||
Total operating expenses | 3,423 | 3,218 | 9,950 | 9,000 | ||||||||||
Income before income taxes | 2,015 | 1,210 | 5,500 | 3,435 | ||||||||||
Income tax expense | 40 | 40 | 85 | 135 | ||||||||||
Net income | $ | 1,975 | $ | 1,170 | $ | 5,415 | $ | 3,300 | ||||||
Convertible_Senior_Notes_Table
Convertible Senior Notes (Tables) | 9 Months Ended | |||||||||||||
Sep. 30, 2014 | ||||||||||||||
Convertible Senior Notes | ' | |||||||||||||
Schedule of components of Notes | ' | |||||||||||||
The Notes consisted of the following (in thousands): | ||||||||||||||
September 30, 2014 | December 31, 2013 | |||||||||||||
Principal amounts: | ||||||||||||||
Principal | $ | 100,000 | $ | 100,000 | ||||||||||
Unamortized debt discount(1) | (15,085 | ) | (17,541 | ) | ||||||||||
Net carrying amount | $ | 84,915 | $ | 82,459 | ||||||||||
Carrying amount of the equity component(2) | $ | 18,137 | $ | 18,137 | ||||||||||
(1)Included in the unaudited Condensed Consolidated Balance Sheets within “Convertible senior notes,” and is amortized over the remaining life of the Notes on an effective interest rate basis. | ||||||||||||||
(2)Included in the unaudited Condensed Consolidated Balance Sheets within “Additional paid-in capital,” net of $0.6 million in issuance costs. | ||||||||||||||
Schedule of total interest expense recognized related to the Notes | ' | |||||||||||||
The following table sets forth total interest expense recognized and the effective interest rate related to the Notes (in thousands, except effective interest rate): | ||||||||||||||
Three Months Ended | Nine Months Ended | |||||||||||||
September 30 | September 30 | |||||||||||||
2014 | 2013 | 2014 | 2013 | |||||||||||
Contractual interest expense | $ | 688 | $ | 390 | $ | 2,047 | $ | 390 | ||||||
Interest cost related to amortization of debt issuance costs | 128 | 70 | 381 | 70 | ||||||||||
Interest cost related to amortization of the debt discount | 827 | 446 | 2,456 | 446 | ||||||||||
Effective interest rate of the liability component | 7.9 | % | 7.9 | % | 7.9 | % | 7.9 | % | ||||||
Fair_Value_Measurements_Tables
Fair Value Measurements (Tables) | 9 Months Ended | |||||||||||||
Sep. 30, 2014 | ||||||||||||||
Fair Value Measurements | ' | |||||||||||||
Schedule of carrying amounts and estimated fair values of financial instruments not recorded at fair value | ' | |||||||||||||
The carrying amounts and estimated fair values of financial instruments not recorded at fair value were as follows (in thousands): | ||||||||||||||
September 30, 2014 | December 31, 2013 | |||||||||||||
Carrying | Estimated Fair | Carrying | Estimated Fair | |||||||||||
Amount | Value(1) | Amount | Value(1) | |||||||||||
Convertible senior notes | $ | 84,915 | $ | 127,440 | $ | 82,459 | $ | 112,875 | ||||||
(1)The fair value of the Notes is inclusive of the conversion feature, which was originally allocated for reporting purposes at $18.8 million, and is included in the unaudited Condensed Consolidated Balance Sheets within “Additional paid-in capital.” | ||||||||||||||
The estimated fair value of the Notes, which are classified as level 2 financial instruments, was determined based on the quoted bid price of the Notes in an over-the-counter secondary market on September 30, 2014 and December 31, 2013. | ||||||||||||||
Goodwill_and_Other_Intangible_1
Goodwill and Other Intangible Assets (Tables) | 9 Months Ended | |||||||||||||
Sep. 30, 2014 | ||||||||||||||
Goodwill and Other Intangible Assets | ' | |||||||||||||
Schedule of intangible assets by category | ' | |||||||||||||
Intangible assets by category were as follows (in thousands): | ||||||||||||||
September 30, 2014 | December 31, 2013 | |||||||||||||
Gross | Accumulated | Gross | Accumulated | |||||||||||
Amount | Amortization | Amount | Amortization | |||||||||||
Trade names, trademarks, brand names, and domain names | $ | 1,540 | $ | 810 | $ | 1,530 | $ | 657 | ||||||
Content syndication agreements | 8,800 | 3,169 | 3,800 | 2,491 | ||||||||||
Purchased technology | 11,900 | 4,995 | 11,800 | 3,605 | ||||||||||
Customer relationships | 8,630 | 2,899 | 8,630 | 2,014 | ||||||||||
Other | 3,583 | 3,317 | 3,583 | 2,803 | ||||||||||
Total definite-lived intangible assets | 34,453 | 15,190 | 29,343 | 11,570 | ||||||||||
Trade names and trademarks | 6,630 | — | 6,630 | — | ||||||||||
Total indefinite-lived intangible assets | 6,630 | — | 6,630 | — | ||||||||||
Total intangible assets | $ | 41,083 | $ | 15,190 | $ | 35,973 | $ | 11,570 | ||||||
Schedule of estimated amortization expense | ' | |||||||||||||
Amortization expense for the next five years is estimated to be as follows (in thousands): | ||||||||||||||
Years Ended December 31, | ||||||||||||||
2014 (remaining 3 months) | $ | 1,339 | ||||||||||||
2015 | 4,990 | |||||||||||||
2016 | 3,843 | |||||||||||||
2017 | 3,754 | |||||||||||||
2018 | 3,076 | |||||||||||||
StockBased_Compensation_and_Ch1
Stock-Based Compensation and Charges (Tables) | 9 Months Ended | |||||||||||||
Sep. 30, 2014 | ||||||||||||||
Stock-Based Compensation and Charges | ' | |||||||||||||
Summary of stock-based compensation and charges, associated with stock option, restricted stock and restricted stock unit grants to employees and nonemployees | ' | |||||||||||||
The following chart summarizes the stock-based compensation and charges associated with stock option, restricted stock and restricted stock unit grants to employees and non-employees, that have been included in the following financial statement captions for each of the periods presented (in thousands): | ||||||||||||||
Three Months Ended | Nine Months Ended | |||||||||||||
September 30, | September 30, | |||||||||||||
2014 | 2013 | 2014 | 2013 | |||||||||||
Cost of revenue | $ | 114 | $ | 74 | $ | 337 | $ | 261 | ||||||
Sales and marketing | 1,223 | 648 | 2,599 | 1,746 | ||||||||||
Product and web site development | 862 | 723 | 3,677 | 2,050 | ||||||||||
General and administrative | 1,251 | 1,297 | 3,545 | 4,184 | ||||||||||
Total stock-based compensation and charges | $ | 3,450 | $ | 2,742 | $ | 10,158 | $ | 8,241 | ||||||
Schedule of Share-based Payment Award, Stock Options, Valuation Assumptions | ' | |||||||||||||
Three Months Ended | Nine Months Ended | |||||||||||||
September 30, | September 30, | |||||||||||||
2014 | 2013 | 2014 | 2013 | |||||||||||
Risk-free interest rates | 1.76 | % | 1.38 | % | 1.48%-1.76% | 0.69%-1.41% | ||||||||
Expected term (in years) | 5.85 | 5.85 | 5.85 | 5.85 | ||||||||||
Dividend yield | 0 | % | 0 | % | 0% | 0% | ||||||||
Expected volatility | 55 | % | 70 | % | 55%-65% | 70%-75% | ||||||||
Net_Income_Loss_Per_Share_Tabl
Net Income (Loss) Per Share (Tables) | 9 Months Ended | |||||||||||||
Sep. 30, 2014 | ||||||||||||||
Net Income (Loss) Per Share | ' | |||||||||||||
Schedule of Calculation of Numerator and Denominator in Earnings Per Share | ' | |||||||||||||
The following table sets forth the computation of basic and diluted net income (loss) per share for the periods indicated (in thousands, except per share amounts): | ||||||||||||||
Three Months Ended | Nine Months Ended | |||||||||||||
September 30, | September 30, | |||||||||||||
2014 | 2013 | 2014 | 2013 | |||||||||||
Numerator: | ||||||||||||||
Net (loss) income | $ | (8,630 | ) | $ | 138 | $ | (20,105 | ) | $ | 504 | ||||
Denominator: | ||||||||||||||
Basic weighted-average shares outstanding | 40,076 | 39,061 | 39,514 | 39,215 | ||||||||||
Add: dilutive effect of options and restricted stock | — | 2,421 | — | 1,698 | ||||||||||
Fully diluted weighted-average shares outstanding | 40,076 | 41,482 | 39,514 | 40,913 | ||||||||||
Basic net (loss) income per share | $ | (0.22 | ) | $ | 0 | $ | (0.51 | ) | $ | 0.01 | ||||
Diluted net (loss) income per share | $ | (0.22 | ) | $ | 0 | $ | (0.51 | ) | $ | 0.01 | ||||
Business_Details
Business (Details) (Merger Sub, USD $) | 9 Months Ended | |
Sep. 30, 2014 | Oct. 15, 2014 | |
Merger Sub | ' | ' |
Offer price (in dollars per share) | ' | $21 |
Termination fee | $32,500,000 | ' |
Summary_of_Significant_Account2
Summary of Significant Accounting Policies (Details) (USD $) | 3 Months Ended | 9 Months Ended | |
In Millions, unless otherwise specified | Sep. 30, 2013 | Sep. 30, 2013 | Sep. 30, 2014 |
Advertising Costs | ' | ' | ' |
Capitalized production costs associated with commercials not yet publicly shown | ' | ' | $0.20 |
Basis Of Presentation | ' | ' | ' |
Certain lead acquisition costs reclassified from cost of revenue to sales and marketing | $2 | $5.90 | ' |
Certain lead acquisition costs reclassified from cost of revenue to sales and marketing, as a percentage of revenue | 3.00% | 3.00% | ' |
Segment_Information_and_Revenu2
Segment Information and Revenues by Product Category (Details) (USD $) | 3 Months Ended | 9 Months Ended | ||
In Thousands, unless otherwise specified | Sep. 30, 2014 | Sep. 30, 2013 | Sep. 30, 2014 | Sep. 30, 2013 |
item | ||||
Segment Information and Revenues by Product Category | ' | ' | ' | ' |
Number of reportable operating segments | ' | ' | 1 | ' |
Categories of products or services | ' | ' | 2 | ' |
Segment information and revenues by product category | ' | ' | ' | ' |
Total revenue | $63,884 | $58,825 | $183,216 | $170,553 |
Consumer Advertising | ' | ' | ' | ' |
Segment information and revenues by product category | ' | ' | ' | ' |
Total revenue | 49,662 | 45,630 | 141,842 | 132,348 |
Software and Services | ' | ' | ' | ' |
Segment information and revenues by product category | ' | ' | ' | ' |
Total revenue | $14,222 | $13,195 | $41,374 | $38,205 |
Investments_in_Unconsolidated_2
Investments in Unconsolidated Joint Ventures (Details) (USD $) | 3 Months Ended | 9 Months Ended | |||||||
Sep. 30, 2014 | Aug. 31, 2014 | Sep. 30, 2013 | Aug. 31, 2013 | Sep. 30, 2014 | Aug. 31, 2014 | Sep. 30, 2013 | Aug. 31, 2013 | Dec. 31, 2013 | |
Investment in unconsolidated joint venture | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Investments in and advance to affiliates, subsidiaries, associates, and joint venture | $6,455,000 | ' | ' | ' | $6,455,000 | ' | ' | ' | $4,596,000 |
Income (loss) from equity method investments | 988,000 | ' | 585,000 | ' | 2,708,000 | ' | 1,650,000 | ' | ' |
Builders Digital Experience, LLC | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Investment in unconsolidated joint venture | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Investments in and advance to affiliates, subsidiaries, associates, and joint venture | 6,500,000 | ' | ' | ' | 6,500,000 | ' | ' | ' | 4,600,000 |
Income (loss) from equity method investments | 1,000,000 | ' | 600,000 | ' | 2,700,000 | ' | 1,700,000 | ' | ' |
Summarized income statement information | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Revenue | ' | 6,525,000 | ' | 5,317,000 | ' | 18,509,000 | ' | 14,902,000 | ' |
Cost of revenue | ' | 1,087,000 | ' | 889,000 | ' | 3,059,000 | ' | 2,467,000 | ' |
Gross profit | ' | 5,438,000 | ' | 4,428,000 | ' | 15,450,000 | ' | 12,435,000 | ' |
Operating expenses | ' | 3,423,000 | ' | 3,218,000 | ' | 9,950,000 | ' | 9,000,000 | ' |
Income before income taxes | ' | 2,015,000 | ' | 1,210,000 | ' | 5,500,000 | ' | 3,435,000 | ' |
Income tax expense | ' | 40,000 | ' | 40,000 | ' | 85,000 | ' | 135,000 | ' |
Net income | ' | 1,975,000 | ' | 1,170,000 | ' | 5,415,000 | ' | 3,300,000 | ' |
Cash distributions from unconsolidated joint venture | ' | ' | ' | ' | $800,000 | ' | $1,200,000 | ' | ' |
Convertible_Senior_Notes_Detai
Convertible Senior Notes (Details) (USD $) | 9 Months Ended | 17 Months Ended | 0 Months Ended | 1 Months Ended | 3 Months Ended | 9 Months Ended | 9 Months Ended | ||||
Sep. 30, 2014 | Sep. 30, 2014 | Dec. 31, 2013 | Aug. 12, 2013 | Aug. 31, 2013 | Sep. 30, 2014 | Sep. 30, 2013 | Sep. 30, 2014 | Sep. 30, 2013 | Dec. 31, 2013 | Sep. 30, 2014 | |
Convertible Debt | Convertible Debt | Convertible Debt | Convertible Debt | Convertible Debt | Convertible Debt | Convertible Debt | Convertible Debt | ||||
item | Maximum | ||||||||||
Convertible Senior Notes | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Debt instrument, stated interest rate (as a percent) | ' | ' | ' | ' | 2.75% | ' | ' | ' | ' | ' | ' |
Principal amount | ' | ' | ' | ' | $100,000,000 | ' | ' | ' | ' | ' | ' |
Initial conversion rate of Notes into common stock (in shares) | ' | ' | ' | ' | ' | ' | ' | 0.0532907 | ' | ' | ' |
Initial conversion price of Notes into common stock (in dollars per share) | ' | ' | ' | ' | ' | $18.77 | ' | $18.77 | ' | ' | ' |
Percentage of principal amount of the notes, plus any accrued and unpaid interest, at which the holder of the Notes may require the entity to repurchase the debt instrument if the entity undergoes certain fundamental changes | ' | ' | ' | ' | ' | ' | ' | 100.00% | ' | ' | ' |
Number of days within 30 consecutive trading days in which the closing price of the entity's common stock must exceed 130% of the conversion price as a condition for conversion of Notes | ' | ' | ' | ' | ' | ' | ' | 20 | ' | ' | ' |
Number of consecutive trading days during which the closing price of the entity's common stock must exceed 130% of the conversion price for at least 20 days as a condition for conversion of Notes | ' | ' | ' | ' | ' | ' | ' | '30 days | ' | ' | ' |
Percentage of the conversion price that the closing sales price of the entity's common stock must exceed as a condition for conversion of Notes | ' | ' | ' | ' | ' | ' | ' | 130.00% | ' | ' | ' |
Number of consecutive business days immediately after any five consecutive trading day period during the note measurement period | ' | ' | ' | ' | ' | ' | ' | '5 days | ' | ' | ' |
Number of consecutive trading days before five consecutive business days during the note measurement period | ' | ' | ' | ' | ' | ' | ' | '5 days | ' | ' | ' |
Principal amount used for debt instrument conversion ratio | ' | ' | ' | ' | ' | 1,000 | ' | 1,000 | ' | ' | ' |
Percentage of the trading price to the product of the last reported sale price of the entity's common stock and the conversion rate | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 98.00% |
Issuance costs attributable to the liability component | ' | ' | ' | ' | 2,800,000 | ' | ' | ' | ' | ' | ' |
Issuance costs attributable to the equity component | ' | ' | ' | ' | 600,000 | ' | ' | ' | ' | ' | ' |
Interest cost related to the amortization expense of the issuance costs associated with the liability component | ' | ' | ' | ' | ' | 100,000 | ' | 400,000 | ' | ' | ' |
Initial net proceeds | ' | ' | ' | ' | 96,600,000 | ' | ' | ' | ' | ' | ' |
Shares purchased | 0 | 84,054 | ' | 1,798,561 | ' | ' | ' | ' | ' | ' | ' |
Aggregate purchase price | ' | 1,000,000 | ' | 25,000,000 | ' | ' | ' | ' | ' | ' | ' |
Components of Notes | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Principal | ' | ' | ' | ' | ' | 100,000,000 | ' | 100,000,000 | ' | 100,000,000 | ' |
Unamortized debt discount | ' | ' | ' | ' | ' | -15,085,000 | ' | -15,085,000 | ' | -17,541,000 | ' |
Net carrying amount | 84,915,000 | 84,915,000 | 82,459,000 | ' | ' | 84,915,000 | ' | 84,915,000 | ' | 82,459,000 | ' |
Carrying amount of the equity component | ' | ' | ' | ' | ' | 18,137,000 | ' | 18,137,000 | ' | 18,137,000 | ' |
Remaining life | ' | ' | ' | ' | ' | ' | ' | '47 months | ' | ' | ' |
Total interest expense recognized related to the Notes | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Contractual interest expense | ' | ' | ' | ' | ' | 688,000 | 390,000 | 2,047,000 | 390,000 | ' | ' |
Interest cost related to amortization of debt issuance costs | ' | ' | ' | ' | ' | 128,000 | 70,000 | 381,000 | 70,000 | ' | ' |
Interest cost related to amortization of the debt discount | ' | ' | ' | ' | ' | $827,000 | $446,000 | $2,456,000 | $446,000 | ' | ' |
Effective interest rate of the liability component (as a percent) | ' | ' | ' | ' | ' | 7.90% | 7.90% | 7.90% | 7.90% | ' | ' |
Fair_Value_Measurements_Detail
Fair Value Measurements (Details) (USD $) | Sep. 30, 2014 | Dec. 31, 2013 |
Fair Value Measurements | ' | ' |
Original carrying value allocated to the equity component of convertible senior notes | $18,800,000 | ' |
Level 1 | Recurring | US treasury bills | ' | ' |
Fair Value Measurements | ' | ' |
Cash equivalents | ' | 40,000,000 |
Carrying Amount | ' | ' |
Fair Value Measurements | ' | ' |
Convertible senior notes | 84,915,000 | 82,459,000 |
Estimated Fair Value | ' | ' |
Fair Value Measurements | ' | ' |
Convertible senior notes | $127,440,000 | $112,875,000 |
Goodwill_and_Other_Intangible_2
Goodwill and Other Intangible Assets (Details) (USD $) | 3 Months Ended | 9 Months Ended | 1 Months Ended | |||||||||||||||
In Thousands, unless otherwise specified | Sep. 30, 2014 | Sep. 30, 2013 | Sep. 30, 2014 | Sep. 30, 2013 | Dec. 31, 2013 | Sep. 30, 2014 | Dec. 31, 2013 | Sep. 30, 2014 | Dec. 31, 2013 | Aug. 31, 2014 | Sep. 30, 2014 | Dec. 31, 2013 | Sep. 30, 2014 | Dec. 31, 2013 | Sep. 30, 2014 | Dec. 31, 2013 | Sep. 30, 2014 | Dec. 31, 2013 |
Trade names and trademarks | Trade names and trademarks | Trade Names Trademarks Brand Names and Domain Names | Trade Names Trademarks Brand Names and Domain Names | Content Syndication Agreements | Content Syndication Agreements | Content Syndication Agreements | Purchased Technology | Purchased Technology | Customer Relationships | Customer Relationships | Other Intangible Assets | Other Intangible Assets | ||||||
Goodwill and Other Intangible Assets | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Goodwill | $41,630 | ' | $41,630 | ' | $41,630 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Accumulated impairment losses on goodwill | 0 | ' | 0 | ' | 0 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Intangible assets | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Gross Amount | 34,453 | ' | 34,453 | ' | 29,343 | ' | ' | 1,540 | 1,530 | ' | 8,800 | 3,800 | 11,900 | 11,800 | 8,630 | 8,630 | 3,583 | 3,583 |
Indefinite-lived intangible assets | 6,630 | ' | 6,630 | ' | 6,630 | 6,630 | 6,630 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Total intangible assets | 41,083 | ' | 41,083 | ' | 35,973 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Accumulated Amortization | 15,190 | ' | 15,190 | ' | 11,570 | ' | ' | 810 | 657 | ' | 3,169 | 2,491 | 4,995 | 3,605 | 2,899 | 2,014 | 3,317 | 2,803 |
Amortization expense | 1,274 | 1,110 | 3,770 | 3,172 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Agreements purchased | ' | ' | 5,010 | ' | ' | ' | ' | ' | ' | 5,000 | ' | ' | ' | ' | ' | ' | ' | ' |
Amortization expense for the next five years | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
2014 (remaining 3 months) | 1,339 | ' | 1,339 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
2015 | 4,990 | ' | 4,990 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
2016 | 3,843 | ' | 3,843 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
2017 | 3,754 | ' | 3,754 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
2018 | $3,076 | ' | $3,076 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Stock_Based_Compensation_and_C
Stock Based Compensation and Charges (Details) (USD $) | 3 Months Ended | 9 Months Ended | ||
In Thousands, unless otherwise specified | Sep. 30, 2014 | Sep. 30, 2013 | Sep. 30, 2014 | Sep. 30, 2013 |
Stock-based compensation and charges | ' | ' | ' | ' |
Stock-based compensation and charges | $3,450 | $2,742 | $10,158 | $8,241 |
Cost of revenue. | ' | ' | ' | ' |
Stock-based compensation and charges | ' | ' | ' | ' |
Stock-based compensation and charges | 114 | 74 | 337 | 261 |
Selling and marketing | ' | ' | ' | ' |
Stock-based compensation and charges | ' | ' | ' | ' |
Stock-based compensation and charges | 1,223 | 648 | 2,599 | 1,746 |
Product and web site development | ' | ' | ' | ' |
Stock-based compensation and charges | ' | ' | ' | ' |
Stock-based compensation and charges | 862 | 723 | 3,677 | 2,050 |
General and administrative | ' | ' | ' | ' |
Stock-based compensation and charges | ' | ' | ' | ' |
Stock-based compensation and charges | $1,251 | $1,297 | $3,545 | $4,184 |
Stock_Based_Compensation_and_C1
Stock Based Compensation and Charges (Details 2) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2014 | Sep. 30, 2013 | Sep. 30, 2014 | Sep. 30, 2013 | |
Stock-Based Compensation and Charges | ' | ' | ' | ' |
Risk-free interest rates - Minimum (as a percent) | ' | ' | 1.48% | 0.69% |
Risk-free interest rates - Maximum (as a percent) | ' | ' | 1.76% | 1.41% |
Risk-free interest rates (as a percent) | 1.76% | 1.38% | ' | ' |
Expected term | '5 years 10 months 6 days | '5 years 10 months 6 days | '5 years 10 months 6 days | '5 years 10 months 6 days |
Dividend yield (as a percent) | 0.00% | 0.00% | 0.00% | 0.00% |
Expected volatility (as a percent) | 55.00% | 70.00% | ' | ' |
Expected volatility - Minimum (as a percent) | ' | ' | 55.00% | 70.00% |
Expected volatility - Maximum (as a percent) | ' | ' | 65.00% | 75.00% |
Stock_Based_Compensation_and_C2
Stock Based Compensation and Charges (Details 3) (USD $) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2014 | Sep. 30, 2013 | Sep. 30, 2014 | Sep. 30, 2013 | |
Stock-based compensation and charges | ' | ' | ' | ' |
Total cost recognized for awards (in dollars) | $3,450,000 | $2,742,000 | $10,158,000 | $8,241,000 |
Employee and Non Employee Stock Option | ' | ' | ' | ' |
Stock-based compensation and charges | ' | ' | ' | ' |
Granted (in shares) | ' | ' | 789,675 | 919,300 |
Weighted-average grant date fair value of options granted (in dollars per share) | ' | ' | $7.68 | $6.26 |
Total cost recognized for awards (in dollars) | 1,300,000 | 1,100,000 | 4,100,000 | 3,400,000 |
Options outstanding (in shares) | 4,089,467 | ' | 4,089,467 | ' |
Weighted average exercise price of options outstanding (in dollars per share) | $10.24 | ' | $10.24 | ' |
Restricted Stock | ' | ' | ' | ' |
Stock-based compensation and charges | ' | ' | ' | ' |
Nonvested shares outstanding | 203,893 | ' | 203,893 | ' |
Aggregate grant date fair value of nonvested awards (in dollars) | 2,000,000 | ' | 2,000,000 | ' |
Restricted Stock | Executive and Key Employees | ' | ' | ' | ' |
Stock-based compensation and charges | ' | ' | ' | ' |
Total cost recognized for awards (in dollars) | 100,000 | 200,000 | 800,000 | 600,000 |
Granted (in shares) | ' | ' | 0 | 0 |
Vesting period | ' | ' | '4 years | ' |
Restricted Stock | Non Employee Board | ' | ' | ' | ' |
Stock-based compensation and charges | ' | ' | ' | ' |
Total cost recognized for awards (in dollars) | 200,000 | 100,000 | 400,000 | 300,000 |
Granted (in shares) | ' | ' | 53,608 | 45,959 |
Aggregate grant date fair value of nonvested awards (in dollars) | 700,000 | 500,000 | 700,000 | 500,000 |
Time Vested Restricted Stock Units | ' | ' | ' | ' |
Stock-based compensation and charges | ' | ' | ' | ' |
Total cost recognized for awards (in dollars) | 1,800,000 | 1,300,000 | 4,800,000 | 3,800,000 |
Granted (in shares) | ' | ' | 868,250 | 939,386 |
Vesting period | ' | ' | '4 years | ' |
Nonvested shares outstanding | 1,734,283 | ' | 1,734,283 | ' |
Aggregate grant date fair value of nonvested awards (in dollars) | 20,100,000 | ' | 20,100,000 | ' |
Issuance of common stock, ratio | ' | ' | 1 | ' |
Aggregate grant date fair value (in dollars) | ' | ' | $11,500,000 | $9,800,000 |
Common_Stock_Repurchases_Detai
Common Stock Repurchases (Details) (USD $) | 0 Months Ended | 9 Months Ended | 17 Months Ended |
In Millions, except Share data, unless otherwise specified | 2-May-13 | Sep. 30, 2014 | Sep. 30, 2014 |
Common Stock Repurchases | ' | ' | ' |
Stock repurchased and retired during period (in shares) | ' | 0 | 84,054 |
Value of stock repurchased and retired during the period | ' | ' | $1 |
Period during which shares can be repurchased | '2 years | ' | ' |
Maximum surplus cash utilized for repurchase of shares | $20 | ' | ' |
Net_Income_Loss_Per_Share_Deta
Net Income (Loss) Per Share (Details) (USD $) | 3 Months Ended | 9 Months Ended | ||
In Thousands, except Share data, unless otherwise specified | Sep. 30, 2014 | Sep. 30, 2013 | Sep. 30, 2014 | Sep. 30, 2013 |
Numerator: | ' | ' | ' | ' |
Net (loss) income | ($8,630) | $138 | ($20,105) | $504 |
Denominator: | ' | ' | ' | ' |
Basic weighted-average shares outstanding (in shares) | 40,076,000 | 39,061,000 | 39,514,000 | 39,215,000 |
Add: dilutive effect of options and restricted stock (in shares) | ' | 2,421,000 | ' | 1,698,000 |
Fully diluted weighted-average shares outstanding (in shares) | 40,076,000 | 41,482,000 | 39,514,000 | 40,913,000 |
Basic net (loss) income per share (in dollars per share) | ($0.22) | $0 | ($0.51) | $0.01 |
Diluted net income per share applicable to common stockholders (in dollars per share) | ($0.22) | $0 | ($0.51) | $0.01 |
Anti-dilutive shares excluded from the denominator | 6,027,643 | 794,721 | 6,027,643 | 951,621 |
RelatedParty_Transactions_Deta
Related-Party Transactions (Details) (NAR, USD $) | 3 Months Ended | 9 Months Ended | ||||
In Millions, unless otherwise specified | Sep. 30, 2014 | Sep. 30, 2013 | Sep. 30, 2014 | Sep. 30, 2013 | Sep. 30, 2014 | Dec. 31, 2013 |
Accounts Payable | Accounts Payable | |||||
Related-party Transactions | ' | ' | ' | ' | ' | ' |
Payment made to related party | $0.50 | $0.50 | $1.50 | $1.50 | ' | ' |
Amount due to related party | ' | ' | ' | ' | $0.50 | $0.50 |
Commitments_and_Contingencies_
Commitments and Contingencies (Details) (Patent Infringement) | 0 Months Ended | 1 Months Ended |
Feb. 28, 2007 | Sep. 30, 2008 | |
item | item | |
Patent Infringement | ' | ' |
Legal Proceedings | ' | ' |
Number of classes of defendants | 2 | ' |
Number of phases into which case is divided | ' | 2 |