Document and Entity Information
Document and Entity Information - shares | 6 Months Ended | |
Jun. 30, 2018 | Jul. 24, 2018 | |
Document And Entity Information [Abstract] | ||
Document Type | 10-Q | |
Amendment Flag | false | |
Document Period End Date | Jun. 30, 2018 | |
Document Fiscal Year Focus | 2,018 | |
Document Fiscal Period Focus | Q2 | |
Entity Registrant Name | CHANNELADVISOR CORP | |
Entity Central Index Key | 1,169,652 | |
Current Fiscal Year End Date | --12-31 | |
Entity Filer Category | Accelerated Filer | |
Entity Common Stock, Shares Outstanding | 27,282,599 |
CONDENSED CONSOLIDATED BALANCE
CONDENSED CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands | Jun. 30, 2018 | Dec. 31, 2017 |
Current assets: | ||
Cash and cash equivalents | $ 50,912 | $ 53,422 |
Accounts receivable, net of allowance of $607 and $609 as of June 30, 2018 and December 31, 2017, respectively | 21,210 | 27,452 |
Prepaid expenses and other current assets | 14,384 | 16,462 |
Total current assets | 86,506 | 97,336 |
Property and equipment, net | 12,871 | 10,877 |
Goodwill | 23,486 | 23,486 |
Intangible assets, net | 2,198 | 2,503 |
Deferred contract costs, net of current portion | 9,235 | 0 |
Long-term deferred tax assets, net | 4,792 | 5,550 |
Other assets | 1,342 | 759 |
Total assets | 140,430 | 140,511 |
Current liabilities: | ||
Accounts payable | 4,892 | 7,243 |
Accrued expenses | 12,022 | 12,611 |
Deferred revenue | 26,023 | 27,143 |
Other current liabilities | 4,410 | 4,477 |
Total current liabilities | 47,347 | 51,474 |
Long-term capital leases, net of current portion | 1,555 | 641 |
Lease incentive obligation | 2,541 | 3,328 |
Other long-term liabilities | 2,561 | 3,157 |
Total liabilities | 54,004 | 58,600 |
Commitments and contingencies | ||
Stockholders' equity: | ||
Preferred stock, $0.001 par value, 5,000,000 shares authorized, no shares issued and outstanding as of June 30, 2018 and December 31, 2017 | 0 | 0 |
Common stock, $0.001 par value, 100,000,000 shares authorized, 27,278,649 and 26,601,626 shares issued and outstanding as of June 30, 2018 and December 31, 2017, respectively | 27 | 27 |
Additional paid-in capital | 266,222 | 262,805 |
Accumulated other comprehensive loss | (1,271) | (789) |
Accumulated deficit | (178,552) | (180,132) |
Total stockholders' equity | 86,426 | 81,911 |
Total liabilities and stockholders' equity | $ 140,430 | $ 140,511 |
CONDENSED CONSOLIDATED BALANCE3
CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) $ in Thousands | Jun. 30, 2018 | Dec. 31, 2017 |
Current assets: | ||
Allowance for doubtful accounts receivable, current | $ 607 | $ 609 |
Stockholders' equity: | ||
Preferred stock, par value (in dollars per share) | $ 0.001 | $ 0.001 |
Preferred stock, shares authorized (in shares) | 5,000,000 | 5,000,000 |
Preferred stock, shares issued (in shares) | 0 | 0 |
Preferred stock, shares outstanding (in shares) | 0 | 0 |
Common stock, par value (in dollars per share) | $ 0.001 | $ 0.001 |
Common stock, shares authorized (in shares) | 100,000,000 | 100,000,000 |
Common stock, shares issued (in shares) | 27,278,649 | 26,601,626 |
Common stock, shares outstanding (in shares) | 27,278,649 | 26,601,626 |
UNAUDITED CONDENSED CONSOLIDATE
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | |||
Jun. 30, 2018 | Jun. 30, 2017 | Jun. 30, 2018 | Jun. 30, 2017 | ||
Income Statement [Abstract] | |||||
Revenue | $ 32,660 | $ 30,004 | $ 64,105 | $ 58,333 | |
Cost of revenue | [1] | 6,975 | 7,144 | 14,328 | 14,840 |
Gross profit | 25,685 | 22,860 | 49,777 | 43,493 | |
Operating expenses: | |||||
Sales and marketing | [1] | 15,974 | 15,003 | 30,864 | 30,188 |
Research and development | 5,737 | 5,147 | 11,639 | 10,118 | |
General and administrative | 6,708 | 6,678 | 13,159 | 15,208 | |
Total operating expenses | 28,419 | 26,828 | 55,662 | 55,514 | |
Loss from operations | (2,734) | (3,968) | (5,885) | (12,021) | |
Other income (expense): | |||||
Interest income (expense), net | 106 | 54 | 231 | 82 | |
Other income (expense), net | (1) | 13 | (20) | 70 | |
Total other income (expense) | 105 | 67 | 211 | 152 | |
Loss before income taxes | (2,629) | (3,901) | (5,674) | (11,869) | |
Income tax expense | 135 | 84 | 247 | 172 | |
Net loss | $ (2,764) | $ (3,985) | $ (5,921) | $ (12,041) | |
Net loss per share: | |||||
Basic and diluted (in dollars per share) | $ (0.10) | $ (0.15) | $ (0.22) | $ (0.46) | |
Weighted average common shares outstanding: | |||||
Basic and diluted (in shares) | 27,180,435 | 26,380,031 | 26,961,102 | 26,219,348 | |
[1] | Certain prior period amounts have been reclassified to conform to current period presentation. These reclassifications had no impact on reported operating loss or net loss for the period. Refer to Note 2, "Significant Accounting Policies," for further detail. |
UNAUDITED CONDENSED CONSOLIDAT5
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2018 | Jun. 30, 2017 | Jun. 30, 2018 | Jun. 30, 2017 | |
Statement of Comprehensive Income [Abstract] | ||||
Net loss | $ (2,764) | $ (3,985) | $ (5,921) | $ (12,041) |
Other comprehensive income (loss): | ||||
Foreign currency translation adjustments | (591) | 325 | (482) | 535 |
Total comprehensive loss | $ (3,355) | $ (3,660) | $ (6,403) | $ (11,506) |
UNAUDITED CONDENSED CONSOLIDAT6
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands | 6 Months Ended | |
Jun. 30, 2018 | Jun. 30, 2017 | |
Cash flows from operating activities | ||
Net loss | $ (5,921) | $ (12,041) |
Adjustments to reconcile net loss to cash and cash equivalents provided by (used in) operating activities: | ||
Depreciation and amortization | 2,959 | 3,436 |
Bad debt expense | 532 | 113 |
Stock-based compensation expense | 5,049 | 6,292 |
Deferred income taxes | 190 | 155 |
Other items, net | (390) | (434) |
Changes in assets and liabilities, net of effects from acquisition: | ||
Accounts receivable | 5,550 | (2,157) |
Prepaid expenses and other assets | 4,373 | 1,193 |
Deferred contract costs | (3,586) | 0 |
Accounts payable and accrued expenses | (5,398) | 276 |
Deferred revenue | (2,326) | 3,070 |
Cash and cash equivalents provided by (used in) operating activities | 1,032 | (97) |
Cash flows from investing activities | ||
Purchases of property and equipment | (656) | (543) |
Payment of internal-use software development costs | (290) | (159) |
Acquisition, net of cash acquired | 0 | (2,177) |
Cash and cash equivalents used in investing activities | (946) | (2,879) |
Cash flows from financing activities | ||
Repayment of capital leases | (1,837) | (2,439) |
Proceeds from exercise of stock options | 1,004 | 339 |
Payment of statutory tax withholding related to net-share settlement of restricted stock units | (1,569) | (2,494) |
Cash and cash equivalents used in financing activities | (2,402) | (4,594) |
Effect of currency exchange rate changes on cash and cash equivalents | (194) | 29 |
Net decrease in cash and cash equivalents | (2,510) | (7,541) |
Cash and cash equivalents, beginning of period | 53,422 | 65,420 |
Cash and cash equivalents, end of period | 50,912 | 57,879 |
Supplemental disclosure of cash flow information | ||
Cash paid for interest | 19 | 93 |
Cash paid for income taxes, net | 58 | 144 |
Supplemental disclosure of noncash investing and financing activities | ||
Accrued statutory tax withholding related to net-share settlement of restricted stock units | 1,067 | 0 |
Accrued capital expenditures | 77 | 557 |
Capital lease obligations entered into for the purchase of fixed assets | $ 4,217 | $ 567 |
Description of the Business
Description of the Business | 6 Months Ended |
Jun. 30, 2018 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
DESCRIPTION OF THE BUSINESS | DESCRIPTION OF THE BUSINESS ChannelAdvisor Corporation ("ChannelAdvisor" or the "Company") was incorporated in the state of Delaware and capitalized in June 2001. The Company began operations in July 2001. ChannelAdvisor is a provider of software-as-a-service, or SaaS, solutions and its mission is to connect and optimize the world's commerce. ChannelAdvisor's e-commerce cloud platform helps retailers and brands worldwide improve their online performance by expanding sales channels, connecting with consumers around the world, optimizing their operations for peak performance and providing actionable analytics to improve competitiveness. The Company is headquartered in Morrisville, North Carolina and maintains sales, service, support and research and development offices in various domestic and international locations. Please refer to the Company's website at www.channeladvisor.com for a complete list of its domestic and international office locations. |
Significant Accounting Policies
Significant Accounting Policies | 6 Months Ended |
Jun. 30, 2018 | |
Accounting Policies [Abstract] | |
SIGNIFICANT ACCOUNTING POLICIES | SIGNIFICANT ACCOUNTING POLICIES Principles of Consolidation The accompanying condensed consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries. All intercompany accounts and transactions have been eliminated in consolidation. Interim Condensed Consolidated Financial Information The accompanying condensed consolidated financial statements and footnotes have been prepared in accordance with generally accepted accounting principles in the United States of America ("U.S. GAAP") as contained in the Financial Accounting Standards Board ("FASB") Accounting Standards Codification ("ASC") for interim financial information. In the opinion of management, the interim financial information includes all adjustments of a normal recurring nature necessary for a fair presentation of financial position, the results of operations, comprehensive loss and cash flows. The results of operations for the three and six months ended June 30, 2018 are not necessarily indicative of the results for the full year or the results for any future periods. These unaudited interim financial statements should be read in conjunction with the audited financial statements and related footnotes for the year ended December 31, 2017 ("fiscal 2017 "), which are included in the Company's Annual Report on Form 10-K for fiscal 2017 . Except for the adoption of Accounting Standards Update ("ASU") 2014-09, Revenue from Contracts from Customers (Topic 606) ("ASC 606"), there have been no material changes to the Company's significant accounting policies from those described in the footnotes to the audited financial statements contained in the Company's Annual Report on Form 10-K for fiscal 2017 . Refer to Note 6, "Revenue from Contracts with Customers" for a description of changes to the Company's revenue recognition and contract costs accounting policies as a result of the adoption of ASC 606. Reclassification Certain prior period amounts included in the unaudited condensed consolidated statements of operations have been reclassified to conform to the current period's presentation. The Company has revised the classification of certain employee-related and other operating expenses to better align the income statement line items with departmental responsibilities and the management of operations. These reclassifications had no effect on the Company's reported operating loss or net loss for the three and six months ended June 30, 2017 . The table below summarizes the financial statement line items impacted by these reclassifications (in thousands): Three Months Ended June 30, 2017 As Previously Reported Reclassification As Reclassified Cost of revenue $ 6,520 $ 624 $ 7,144 Gross profit 23,484 (624 ) 22,860 Sales and marketing 15,627 (624 ) 15,003 Total operating expenses 27,452 (624 ) 26,828 Six Months Ended June 30, 2017 As Previously Reported Reclassification As Reclassified Cost of revenue $ 13,362 $ 1,478 $ 14,840 Gross profit 44,971 (1,478 ) 43,493 Sales and marketing 31,666 (1,478 ) 30,188 Total operating expenses 56,992 (1,478 ) 55,514 Recent Accounting Pronouncements Standard Description Effect on the Financial Statements or Other Significant Matters Standards that the Company has not yet adopted Leases: ASU 2016-02, Leases (Topic 842) Effective date: January 1, 2019 This standard requires that lessees recognize assets and liabilities for leases with lease terms greater than twelve months in the statement of financial position. This standard also requires improved disclosures to help users of financial statements better understand the amount, timing and uncertainty of cash flows arising from leases. The Company formed a project team and developed a plan to prepare for the adoption of this standard by its effective date. The project team has performed a business impact assessment, has identified a population of leases and has performed an analysis on its lease population using an expected incremental borrowing rate to assess its adoption of the ASU. The project team has assessed service agreements for potentially embedded leases and has identified leases it considers short term in duration. Based upon the project team's analysis, the Company expects to elect the package of three practical expedients, as well as the practical expedient to apply hindsight in determining lease terms. The Company continues to evaluate transition methods and the impact that ASU 2016-02 will have on internal controls over financial reporting and its consolidated financial statements. Financial Instruments: ASU 2016-13, Financial Instruments - Credit Losses (Topic 326) Effective date: January 1, 2020 This standard replaces the incurred loss impairment methodology in current U.S. GAAP with a methodology that reflects expected credit losses. The update is intended to provide financial statement users with more useful information about expected credit losses. The Company is currently evaluating the impact the adoption of this standard will have on its consolidated financial statements. Standard Description Effect on the Financial Statements or Other Significant Matters Standards that the Company has recently adopted Cash Flow: ASU 2016-18, Restricted Cash This standard requires that entities show the changes in the total of cash, cash equivalents and restricted cash in the statement of cash flows. Transfers between cash, cash equivalents and restricted cash should not be presented as cash flow activities on the statement of cash flows. The Company adopted this standard effective January 1, 2018. The adoption did not have a material impact on its consolidated financial statements. Revenue Recognition: ASU 2014-09, Revenue from Contracts with Customers (Topic 606) This standard replaces existing revenue recognition standards and provides that an entity should recognize revenue to depict the transfer of promised goods or 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. ASU 2014-09 also requires enhanced disclosures to help users of financial statements better understand the nature, amount, timing, and uncertainty of revenue that is recognized. Entities have the option of using either a full retrospective or modified retrospective approach for the adoption of the standard. The Company adopted this standard effective January 1, 2018 using the modified retrospective transition method. Refer to Note 6, "Revenue from Contracts with Customers," for additional information regarding the impact of adoption and revenue recognition under ASC 606 on the Company's consolidated financial statements. The Company has reviewed new accounting pronouncements that were issued during the six months ended June 30, 2018 and does not believe that these pronouncements are applicable to the Company, or that they will have a material impact on its financial position or results of operations. Use of Estimates The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the amounts reported in the condensed consolidated financial statements and accompanying notes. Actual results could differ from those estimates. On an ongoing basis, the Company evaluates its estimates, including those related to the accounts receivable allowance, the useful lives of long-lived assets and other intangible assets, income taxes, assumptions used for purposes of determining stock-based compensation, and revenue recognition, including standalone selling prices for contracts with multiple performance obligations and the expected period of benefit for deferred contract costs, among others. Estimates and assumptions are also required to value assets acquired and liabilities assumed in conjunction with business combinations. The Company bases its estimates on historical experience and on various other assumptions that it believes to be reasonable, the results of which form the basis for making judgments about the carrying value of assets and liabilities. |
Stockholders' Equity
Stockholders' Equity | 6 Months Ended |
Jun. 30, 2018 | |
Stockholders' Equity Attributable to Parent [Abstract] | |
STOCKHOLDERS' EQUITY | STOCKHOLDERS' EQUITY The following table summarizes the stockholders' equity activity for the six months ended June 30, 2018 (in thousands): Balance as of December 31, 2017 $ 81,911 Cumulative effect of accounting change (1) 7,501 Exercise of stock options and vesting of restricted stock units 1,004 Stock-based compensation expense 5,049 Statutory tax withholding related to net-share settlement of restricted stock units (2,636 ) Net loss (5,921 ) Foreign currency translation adjustments (482 ) Balance as of June 30, 2018 $ 86,426 (1) Refer to Note 6, "Revenue from Contracts with Customers," for additional information regarding the effect of the adoption of ASC 606 and adjustments to accumulated deficit upon adoption. |
Goodwill and Intangible Assets
Goodwill and Intangible Assets | 6 Months Ended |
Jun. 30, 2018 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
GOODWILL AND INTANGIBLE ASSETS | GOODWILL AND INTANGIBLE ASSETS The Company has acquired intangible assets in connection with its business acquisitions. These assets were recorded at their estimated fair values at the acquisition date and are being amortized over their respective estimated useful lives using the straight-line method. The estimated useful lives and amortization methodology used in computing amortization are as follows: Estimated Useful Life Amortization Methodology Customer relationships 7 years Straight-line Acquired technology 7 years Straight-line Amortization expense associated with the Company's intangible assets was $0.2 million for each of the three months ended June 30, 2018 and 2017 , and $0.3 million for each of the six months ended June 30, 2018 and 2017 . There were no changes to the Company's goodwill during the six months ended June 30, 2018 . |
Commitments
Commitments | 6 Months Ended |
Jun. 30, 2018 | |
Commitments and Contingencies Disclosure [Abstract] | |
COMMITMENTS | COMMITMENTS Sales Tax During the first quarter of 2017, the Company completed its analysis with regard to potential unpaid sales tax obligations. Based on the results of this analysis, the Company made the decision to enter into voluntary disclosure agreements ("VDAs") with certain jurisdictions to reduce the Company's potential sales tax liability. VDAs generally provide for a maximum look-back period, a waiver of penalties and, at times, interest as well as payment arrangements. The Company's estimated aggregate VDA liability of $2.5 million was recorded as a one-time charge in general and administrative expense in the accompanying condensed consolidated statements of operations for the six months ended June 30, 2017 . This amount represented the Company's estimate of its potential unpaid sales tax liability through the anticipated look-back periods including interest, where applicable, in all jurisdictions in which the Company has entered into VDAs. During the third quarter of 2017, one jurisdiction rejected the Company's VDA application and conducted a sales tax audit, which was completed in May 2018. Through June 30, 2018 , the Company has paid an aggregate of $2.5 million under the terms of the VDA agreements and to settle the sales tax audit. The Company has no other unresolved VDA applications or ongoing sales tax audits as of June 30, 2018. |
Revenue from Contracts with Cus
Revenue from Contracts with Customers | 6 Months Ended |
Jun. 30, 2018 | |
Revenue from Contract with Customer [Abstract] | |
REVENUE FROM CONTRACTS WITH CUSTOMERS | REVENUE FROM CONTRACTS WITH CUSTOMERS Financial Statement Impact of Adopting ASC 606, "Revenue from Contracts with Customers" On January 1, 2018, the Company adopted ASC 606 using the modified retrospective transition method and applied this method to all contracts that were not complete as of the date of adoption. The reported results as of June 30, 2018 and for the three and six months ended June 30, 2018 in the accompanying unaudited condensed consolidated financial statements are presented under ASC 606, while prior period results have not been adjusted and are reported in accordance with historical accounting guidance in effect for those periods. The most significant impacts of this standard relate to the timing of revenue recognition of fixed fees under the Company’s contracts, as well as the accounting for costs to obtain contracts. Under ASC 606, for the Company's managed-service contracts, revenue recognition for subscription and implementation fees begins on the launch date and is recognized over time through the term of the contract. Before the adoption of this standard, the Company deferred the recognition of revenue until the completion of the implementation services, at which point the Company recognized a cumulative catch-up adjustment equal to the revenue earned during the implementation period that had been deferred. The Company then recognized the remaining balance of the fixed fees ratably over the remaining term of the contract. Additionally, under ASC 606, the Company now defers recognition of expense for sales commissions and a portion of other incentive compensation ("contract costs"). These contract costs are amortized to expense over the expected period of benefit. Before the adoption of ASC 606, the Company expensed these contract costs as incurred. The adoption of ASC 606 under the modified retrospective transition method resulted in a net adjustment reducing the accumulated deficit by $7.5 million at January 1, 2018. The adjustment consisted of $8.7 million related to the deferral of contract costs that were historically expensed as incurred, $(0.6) million related to the timing of revenue recognition for managed-service contracts, and $(0.6) million related to the tax impact of the contract costs and revenue adjustments. Revenue Recognition In accordance with ASC 606, revenue is recognized when a customer obtains control of promised services, in an amount that reflects the consideration the Company expects to be entitled to receive in exchange for those services. In determining the amount of revenue to be recognized, the Company performs the following steps: (i) identification of the contract with a customer; (ii) identification of the promised services in the contract and determination of whether the promised services are performance obligations, including whether they are distinct in the context of the contract; (iii) determination of the transaction price; (iv) allocation of the transaction price to the performance obligations based on estimated selling prices; and (v) recognition of revenue when (or as) the Company satisfies each performance obligation. Disaggregation of Revenue The Company derives the majority of its revenue from subscription fees paid for access to and usage of its SaaS solutions for a specified period of time, typically one year. A portion of the subscription fee is typically fixed and is based on a specified minimum amount of gross merchandise value ("GMV") or advertising spend that a customer expects to process through the Company's platform over the contract term. The remaining portion of the subscription fee is variable and is based on a specified percentage of GMV or advertising spend processed through the Company's platform in excess of the customer's specified minimum GMV or advertising spend amount. In addition to subscription fees, contracts with customers may include implementation fees for launch assistance and training. Fixed subscription and implementation fees are billed in advance of the subscription term and are due in accordance with contract terms, which generally provide for payment within 30 days . Variable fees are subject to the same payment terms, although they are generally billed the month after they are incurred. The Company also generates revenue from its solutions that allow brands to direct potential consumers from their websites and digital marketing campaigns to authorized resellers. These contracts are generally one year in duration. The Company’s contractual arrangements include performance, termination and cancellation provisions, but do not provide for refunds. Customers do not have the contractual right to take possession of the Company’s software at any time. Sales taxes collected from customers and remitted to government authorities are excluded from revenue. The following table summarizes revenue disaggregation by product for the three and six months ended June 30, 2018 and 2017 (in thousands): Three Months Ended June 30, Six Months Ended June 30, 2018 2017 (1) 2018 2017 (1) Marketplaces $ 23,811 $ 22,972 $ 47,799 $ 45,061 Digital Marketing 4,505 4,321 8,850 8,518 Other 4,344 2,711 7,456 4,754 $ 32,660 $ 30,004 $ 64,105 $ 58,333 (1) As noted above, prior periods have not been adjusted for the adoption of ASC 606 and are presented in accordance with historical accounting guidance in effect for those periods. Marketplaces and Digital Marketing - The Company's Marketplaces module connects customers to third-party e-commerce marketplaces and provides access to advertising programs and advanced competitive features on major marketplaces. The Company's Digital Marketing module allows customers to create and optimize advertisements on multiple online shopping channels. Customers may subscribe to each of these modules on a self-service or managed-service basis. Self-service subscriptions allow the customer to manage their own activity on the platform. Launch services are also available, although they are not required for the customer to access the platform. Revenue from self-service subscriptions, including fixed subscription fees and fees associated with any elected launch services, is recognized ratably over the subscription term, which is typically one year, beginning on the date the customer has access to the platform. Managed-service subscriptions offer the customer an outsourced, managed platform experience. Implementation services are included with managed-service subscriptions and are necessary to launch on the platform. Revenue from managed-service subscriptions, including fixed subscription fees and fees associated with implementation services, is recognized ratably over the subscription term, which is typically one year , beginning once implementation services are complete. As noted above, customers incur variable fees when the GMV processed through Marketplaces, or the GMV or advertising spend processed through Digital Marketing, exceeds the GMV or advertising spend included in their subscriptions. In general, revenue from variable fees is recognized in the period in which the related GMV or advertising spend is processed through the platform. Other - Other product offerings include the Company's Where to Buy and Product Intelligence solutions, which provide current information on resellers and product availability and insights on product assortment, gaps, and pricing trends. These solutions are only available on a managed-service basis and include implementation services. The Company also enters into integration agreements with certain marketplaces or channels under which the partner engages the Company to integrate the platform with their marketplace or channel. Revenue from these product offerings is recognized ratably over the subscription term beginning on the date the implementation or integration is complete. Contracts with Multiple Performance Obligations Customers may elect to purchase a subscription to multiple modules, multiple modules with multiple service levels, or, for certain of the Company's solutions, multiple brands or geographies. The Company evaluates such contracts to determine whether the services to be provided are distinct and accordingly, should be accounted for as separate performance obligations. If the Company determines that a contract has multiple performance obligations, the transaction price, which is the total price of the contract, is allocated to each performance obligation based on a relative standalone selling price method. The Company estimates standalone selling price based on observable prices in past transactions for which the product offering subject to the performance obligation has been sold separately. As the performance obligations are satisfied, revenue is recognized as discussed above in the product descriptions. Transaction Price Allocated to Future Performance Obligations ASC 606 provides certain practical expedients that limit the required disclosure of the aggregate amount of transaction price that is allocated to performance obligations that have not yet been satisfied. As the Company typically enters into contracts with customers for a twelve -month subscription term, substantially all of its performance obligations that have not yet been satisfied as of June 30, 2018 are part of a contract that has an original expected duration of one year or less. For contracts with an original expected duration of greater than one year, for which the practical expedient does not apply, the aggregate transaction price allocated to the unsatisfied performance obligations was $21.9 million as of June 30, 2018 , of which $13.7 million is expected to be recognized as revenue over the next twelve months . Deferred Revenue Deferred revenue represents the unearned portion of subscription and implementation fees. Deferred revenue is recorded when cash payments are received in advance of performance. Deferred amounts are generally recognized within one year. Deferred revenue is included in the accompanying condensed consolidated balance sheets under "Total current liabilities," net of any long-term portion that is included in "Other long-term liabilities." The following table summarizes deferred revenue activity for the six months ended June 30, 2018 (in thousands): As of January 1, 2018 (adjusted) Net Additions Revenue recognized As of June 30, 2018 Deferred revenue $ 28,982 61,470 (64,105 ) $ 26,347 Of the $64.1 million of revenue recognized in the six months ended June 30, 2018 , $20.5 million was included in deferred revenue at January 1, 2018. Costs to Obtain Contracts In accordance with ASC 606, the Company now capitalizes sales commissions and a portion of other incentive compensation costs that are directly related to obtaining customer contracts and that would not have been incurred if the contract had not been obtained. These costs are included in the accompanying condensed consolidated balance sheets and are classified as "Prepaid expenses and other current assets," net of any long-term portion that is included in "Deferred contract costs, net of current portion." Deferred contract costs are amortized to sales and marketing expense over the expected period of benefit, which the Company has determined to be five years based on the estimated customer relationship period. The following table summarizes deferred contract cost activity for the six months ended June 30, 2018 (in thousands): As of January 1, 2018 (adjusted) Additions Amortized costs (1) As of June 30, 2018 Deferred contract costs $ 8,721 4,882 (1,445 ) $ 12,158 (1) Includes contract costs amortized to sales and marketing expense during the period and the impact from foreign currency exchange rate fluctuations. Financial Statement Impact The following tables compare financial statement line items from the reported condensed consolidated balance sheet, condensed consolidated statement of operations and condensed consolidated statement of cash flows, as of and for the three and six months ended June 30, 2018 , to the pro forma amounts, which are the amounts that would have been reported prior to the adoption of ASC 606 (in thousands): Balance Sheet - select financial statement line items impacted by the adoption of ASC 606 As of June 30, 2018 As Reported Pro Forma Prepaid expenses and other current assets $ 14,384 $ 11,461 Total current assets 86,506 83,583 Deferred contract costs, net of current portion 9,235 — Long-term deferred tax assets, net 4,792 5,450 Total assets 140,430 128,930 Deferred revenue 26,023 25,652 Total current liabilities 47,347 46,976 Other long-term liabilities 2,561 2,447 Total liabilities 54,004 53,519 Accumulated other comprehensive loss (1,271 ) (1,091 ) Accumulated deficit (178,552 ) (189,747 ) Total liabilities and stockholders' equity $ 140,430 $ 128,930 Statement of Operations - select financial statement line items impacted by the adoption of ASC 606 Three Months Ended June 30, 2018 Six Months Ended June 30, 2018 As Reported Pro Forma As Reported Pro Forma Revenue $ 32,660 $ 32,362 $ 64,105 $ 63,774 Gross profit 25,685 25,387 49,777 49,446 Sales and marketing 15,974 17,469 30,864 34,301 Total operating expenses 28,419 29,914 55,662 59,099 Loss from operations (2,734 ) (4,527 ) (5,885 ) (9,653 ) Other income (expense), net (1 ) (150 ) (20 ) (169 ) Total other income (expense) 105 (44 ) 211 62 Loss before income taxes (2,629 ) (4,571 ) (5,674 ) (9,591 ) Income tax expense 135 13 247 24 Net loss (2,764 ) (4,584 ) (5,921 ) (9,615 ) Net loss per share, basic and diluted $ (0.10 ) $ (0.17 ) $ (0.22 ) $ (0.36 ) Statement of Cash Flows - select financial statement line items impacted by the adoption of ASC 606 Six Months Ended June 30, 2018 As Reported Pro Forma Net loss $ (5,921 ) $ (9,615 ) Deferred income taxes 190 (33 ) Changes in assets and liabilities: Deferred contract costs (3,586 ) — Deferred revenue (2,326 ) (1,995 ) Cash and cash equivalents provided by operating activities $ 1,032 $ 1,032 |
Stock-Based Compensation
Stock-Based Compensation | 6 Months Ended |
Jun. 30, 2018 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |
STOCK-BASED COMPENSATION | STOCK-BASED COMPENSATION The Company recognizes stock-based compensation expense using the accelerated attribution method, net of estimated forfeitures, in which compensation cost for each vesting tranche in an award is recognized ratably from the service inception date to the vesting date for that tranche. Stock-based compensation expense is included in the following line items in the accompanying condensed consolidated statements of operations for the three and six months ended June 30, 2018 and 2017 (in thousands): Three Months Ended June 30, Six Months Ended June 30, 2018 2017 2018 2017 Cost of revenue (1) $ 92 $ 239 $ 309 $ 566 Sales and marketing (1) 728 1,172 1,480 1,918 Research and development 355 503 1,004 1,071 General and administrative 1,141 1,454 2,256 2,737 $ 2,316 $ 3,368 $ 5,049 $ 6,292 (1) Certain prior period amounts have been reclassified to conform to current period presentation. These reclassifications had no impact on the Company's reported operating loss or net loss for the period. Refer to Note 2, "Significant Accounting Policies," for further detail. During the six months ended June 30, 2018 , the Company granted the following share-based awards: Number of Shares Underlying Grant Weighted Average Grant Date Fair Value Stock options 362,415 $ 5.98 Restricted stock units ("RSUs") 866,121 $ 13.95 Total share-based awards 1,228,536 $ 11.60 |
Net Loss Per Share
Net Loss Per Share | 6 Months Ended |
Jun. 30, 2018 | |
Earnings Per Share [Abstract] | |
NET LOSS PER SHARE | NET LOSS PER SHARE Diluted net loss per share is the same as basic net loss per share for all periods presented because the effects of potentially dilutive items were anti-dilutive given the Company's net loss. The following securities have been excluded from the calculation of weighted average common shares outstanding because the effect is anti-dilutive for the three and six months ended June 30, 2018 and 2017 : Three and Six Months Ended June 30, 2018 2017 Stock options 2,307,949 2,196,719 RSUs 2,333,294 2,616,117 |
Income Taxes
Income Taxes | 6 Months Ended |
Jun. 30, 2018 | |
Income Tax Disclosure [Abstract] | |
INCOME TAXES | INCOME TAXES At the end of each interim reporting period, the Company estimates its effective income tax rate expected to be applicable for the full year. This estimate is used to determine the income tax provision or benefit on a year-to-date basis and may change in subsequent interim periods. The Company's effective tax rate was (5.1)% and (2.2)% for the three months ended June 30, 2018 and 2017 , respectively, and (4.4)% and (1.4)% for the six months ended June 30, 2018 and 2017 , respectively. The tax expense for each of the periods was based on state, local and foreign taxes. The Company’s effective tax rate for these periods is lower than the U.S. federal statutory rate of 21% for the three and six months ended June 30, 2018 and 34% for the three and six months ended June 30, 2017 primarily due to operating losses which are subject to a valuation allowance. The Company cannot recognize the tax benefit of operating loss carryforwards generated in certain jurisdictions due to uncertainties relating to future taxable income in those jurisdictions in terms of both its timing and its sufficiency, which would enable the Company to realize the benefits of those carryforwards. The change in the effective tax rate for the three and six months ended June 30, 2018 compared with the same periods in the prior year is primarily due to the Company's adoption of ASC 606 which resulted in increased income in certain of the Company's foreign subsidiaries. The Tax Cuts and Jobs Act of 2017 ("Tax Act"), which went into effect on December 22, 2017, significantly revises the Internal Revenue Code of 1986, as amended ("IRC"). The Tax Act is complex and it will take time to assess the implications thoroughly. The Company is currently evaluating the Tax Act with its professional advisors and has included the effects of the following changes enacted in the Tax Act in this report: • For the financial statements included in the Company's Annual Report on Form 10-K for fiscal 2017, the Company reduced its expected U.S. federal corporate income tax rate used to measure its deferred tax assets and liabilities to the newly enacted rate of 21% from 34%, which had been used in the calculation of the Company's income tax expense for the three and six months ended June 30, 2017. The U.S. federal corporate income tax rate of 21% was used in the calculation of the Company's income tax expense for the three and six months ended June 30, 2018 . • The Company incorporated the newly enacted rules in the Tax Act relating to net operating loss carryforwards. The new rules allow for an indefinite carryforward of unused net operating losses generated in years ending after December 31, 2017. The Company does not generally consider deferred tax liabilities on indefinite-lived assets as a source of future taxable income available to be able to realize deferred tax assets. However, the Company considers the deferred tax liability associated with the indefinite-lived intangible asset as a source of future taxable income available to realize the benefit of deferred tax assets recorded for indefinite-lived tax attributes. For net operating losses generated in periods starting after December 31, 2017, the Company has begun to record the tax benefit of the deferred tax asset up to the amount of the deferred tax liability on the indefinite-lived asset. This resulted in a $0.1 million reduction in the Company's income tax expense for the six months ended June 30, 2018 . Any amount of the deferred tax asset recorded in excess of the deferred tax liability is expected to be offset by a valuation allowance. Other provisions of the Tax Act might have a significant impact on the Company, such as the repeal of the alternative minimum tax, the new requirement to capitalize research and experimentation expenses, and the creation of the base erosion anti-abuse tax, the global intangible low taxed income inclusion and the foreign derived intangible income deduction. However, based on its current estimates, the Company does not expect that these or the other changes enacted as part of the Tax Act will have a material impact on its financial results as of and for the year ending December 31, 2018. However, new developments such as changes in the Company’s operations or the issuance of additional guidance from the Internal Revenue Service ("IRS") could result in changes to the Company’s analysis and estimates. In addition, it is uncertain if and to what extent various states will conform to the Tax Act. On December 22, 2017, SEC Staff Accounting Bulletin No. 118 ("SAB 118") was issued to address the application of U.S. GAAP in situations in which a registrant does not have the necessary information available, prepared or analyzed (including computations) in reasonable detail to complete the accounting for certain income tax effects of the Tax Act. In accordance with SAB 118, the Company reduced its net deferred tax assets by $16.6 million to account for the decrease in the U.S. federal tax rate, made a de minimis reduction in its end of year deferred tax asset to account for the changes to IRC Section 162(m), and included a reasonable estimate of the impact of revenue recognition in conjunction with the new IRC Section 451(c); such adjustments were provisional and reflect the Company's reasonable estimates at December 31, 2017 and June 30, 2018 . Additional work is necessary for a more detailed analysis of the impacts of the Tax Act. Any subsequent adjustment to these amounts will be recorded to current tax expense in the quarter of 2018 in which the analysis is complete. |
Segment and Geographic Informat
Segment and Geographic Information | 6 Months Ended |
Jun. 30, 2018 | |
Segment Reporting [Abstract] | |
SEGMENT AND GEOGRAPHIC INFORMATION | SEGMENT AND GEOGRAPHIC INFORMATION Operating segments are defined as components of an enterprise for which discrete financial information is available that is evaluated regularly by the chief operating decision maker ("CODM") for purposes of allocating resources and evaluating financial performance. The Company’s CODM reviews financial information presented on a consolidated basis for purposes of allocating resources and evaluating financial performance. As such, the Company’s operations constitute a single operating segment and one reportable segment. Substantially all assets were held in the United States during the six months ended June 30, 2018 and the year ended December 31, 2017 . The table below summarizes revenue by geography for the three and six months ended June 30, 2018 and 2017 (in thousands). The Company categorizes domestic and international revenue from customers based on their billing address. Three Months Ended June 30, Six Months Ended June 30, 2018 2017 2018 2017 Domestic $ 25,076 $ 23,691 $ 49,537 $ 46,198 International 7,584 6,313 14,568 12,135 Total revenue $ 32,660 $ 30,004 $ 64,105 $ 58,333 |
Significant Accounting Polici17
Significant Accounting Policies (Policies) | 6 Months Ended |
Jun. 30, 2018 | |
Accounting Policies [Abstract] | |
Principles of Consolidation | The accompanying condensed consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries. All intercompany accounts and transactions have been eliminated in consolidation. |
Interim Condensed Consolidated Financial Information | The accompanying condensed consolidated financial statements and footnotes have been prepared in accordance with generally accepted accounting principles in the United States of America ("U.S. GAAP") as contained in the Financial Accounting Standards Board ("FASB") Accounting Standards Codification ("ASC") for interim financial information. In the opinion of management, the interim financial information includes all adjustments of a normal recurring nature necessary for a fair presentation of financial position, the results of operations, comprehensive loss and cash flows. The results of operations for the three and six months ended June 30, 2018 are not necessarily indicative of the results for the full year or the results for any future periods. These unaudited interim financial statements should be read in conjunction with the audited financial statements and related footnotes for the year ended December 31, 2017 ("fiscal 2017 "), which are included in the Company's Annual Report on Form 10-K for fiscal 2017 . Except for the adoption of Accounting Standards Update ("ASU") 2014-09, Revenue from Contracts from Customers (Topic 606) ("ASC 606"), there have been no material changes to the Company's significant accounting policies from those described in the footnotes to the audited financial statements contained in the Company's Annual Report on Form 10-K for fiscal 2017 . |
Recent Accounting Pronouncements | Standard Description Effect on the Financial Statements or Other Significant Matters Standards that the Company has not yet adopted Leases: ASU 2016-02, Leases (Topic 842) Effective date: January 1, 2019 This standard requires that lessees recognize assets and liabilities for leases with lease terms greater than twelve months in the statement of financial position. This standard also requires improved disclosures to help users of financial statements better understand the amount, timing and uncertainty of cash flows arising from leases. The Company formed a project team and developed a plan to prepare for the adoption of this standard by its effective date. The project team has performed a business impact assessment, has identified a population of leases and has performed an analysis on its lease population using an expected incremental borrowing rate to assess its adoption of the ASU. The project team has assessed service agreements for potentially embedded leases and has identified leases it considers short term in duration. Based upon the project team's analysis, the Company expects to elect the package of three practical expedients, as well as the practical expedient to apply hindsight in determining lease terms. The Company continues to evaluate transition methods and the impact that ASU 2016-02 will have on internal controls over financial reporting and its consolidated financial statements. Financial Instruments: ASU 2016-13, Financial Instruments - Credit Losses (Topic 326) Effective date: January 1, 2020 This standard replaces the incurred loss impairment methodology in current U.S. GAAP with a methodology that reflects expected credit losses. The update is intended to provide financial statement users with more useful information about expected credit losses. The Company is currently evaluating the impact the adoption of this standard will have on its consolidated financial statements. Standard Description Effect on the Financial Statements or Other Significant Matters Standards that the Company has recently adopted Cash Flow: ASU 2016-18, Restricted Cash This standard requires that entities show the changes in the total of cash, cash equivalents and restricted cash in the statement of cash flows. Transfers between cash, cash equivalents and restricted cash should not be presented as cash flow activities on the statement of cash flows. The Company adopted this standard effective January 1, 2018. The adoption did not have a material impact on its consolidated financial statements. Revenue Recognition: ASU 2014-09, Revenue from Contracts with Customers (Topic 606) This standard replaces existing revenue recognition standards and provides that an entity should recognize revenue to depict the transfer of promised goods or 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. ASU 2014-09 also requires enhanced disclosures to help users of financial statements better understand the nature, amount, timing, and uncertainty of revenue that is recognized. Entities have the option of using either a full retrospective or modified retrospective approach for the adoption of the standard. The Company adopted this standard effective January 1, 2018 using the modified retrospective transition method. Refer to Note 6, "Revenue from Contracts with Customers," for additional information regarding the impact of adoption and revenue recognition under ASC 606 on the Company's consolidated financial statements. |
Use of Estimates | The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the amounts reported in the condensed consolidated financial statements and accompanying notes. Actual results could differ from those estimates. On an ongoing basis, the Company evaluates its estimates, including those related to the accounts receivable allowance, the useful lives of long-lived assets and other intangible assets, income taxes, assumptions used for purposes of determining stock-based compensation, and revenue recognition, including standalone selling prices for contracts with multiple performance obligations and the expected period of benefit for deferred contract costs, among others. Estimates and assumptions are also required to value assets acquired and liabilities assumed in conjunction with business combinations. The Company bases its estimates on historical experience and on various other assumptions that it believes to be reasonable, the results of which form the basis for making judgments about the carrying value of assets and liabilities. |
Revenue Recognition | In accordance with ASC 606, revenue is recognized when a customer obtains control of promised services, in an amount that reflects the consideration the Company expects to be entitled to receive in exchange for those services. In determining the amount of revenue to be recognized, the Company performs the following steps: (i) identification of the contract with a customer; (ii) identification of the promised services in the contract and determination of whether the promised services are performance obligations, including whether they are distinct in the context of the contract; (iii) determination of the transaction price; (iv) allocation of the transaction price to the performance obligations based on estimated selling prices; and (v) recognition of revenue when (or as) the Company satisfies each performance obligation. |
Deferred Revenue | Deferred revenue represents the unearned portion of subscription and implementation fees. Deferred revenue is recorded when cash payments are received in advance of performance. Deferred amounts are generally recognized within one year. Deferred revenue is included in the accompanying condensed consolidated balance sheets under "Total current liabilities," net of any long-term portion that is included in "Other long-term liabilities." |
Costs to Obtain Contracts | In accordance with ASC 606, the Company now capitalizes sales commissions and a portion of other incentive compensation costs that are directly related to obtaining customer contracts and that would not have been incurred if the contract had not been obtained. These costs are included in the accompanying condensed consolidated balance sheets and are classified as "Prepaid expenses and other current assets," net of any long-term portion that is included in "Deferred contract costs, net of current portion." Deferred contract costs are amortized to sales and marketing expense over the expected period of benefit, which the Company has determined to be five years based on the estimated customer relationship period. |
Stock-Based Compensation | The Company recognizes stock-based compensation expense using the accelerated attribution method, net of estimated forfeitures, in which compensation cost for each vesting tranche in an award is recognized ratably from the service inception date to the vesting date for that tranche. |
Earnings Per Share | Diluted net loss per share is the same as basic net loss per share for all periods presented because the effects of potentially dilutive items were anti-dilutive given the Company's net loss. |
Income Taxes | At the end of each interim reporting period, the Company estimates its effective income tax rate expected to be applicable for the full year. This estimate is used to determine the income tax provision or benefit on a year-to-date basis and may change in subsequent interim periods. |
Significant Accounting Polici18
Significant Accounting Policies (Tables) | 6 Months Ended |
Jun. 30, 2018 | |
Accounting Policies [Abstract] | |
Schedule of Reclassifications | The table below summarizes the financial statement line items impacted by these reclassifications (in thousands): Three Months Ended June 30, 2017 As Previously Reported Reclassification As Reclassified Cost of revenue $ 6,520 $ 624 $ 7,144 Gross profit 23,484 (624 ) 22,860 Sales and marketing 15,627 (624 ) 15,003 Total operating expenses 27,452 (624 ) 26,828 Six Months Ended June 30, 2017 As Previously Reported Reclassification As Reclassified Cost of revenue $ 13,362 $ 1,478 $ 14,840 Gross profit 44,971 (1,478 ) 43,493 Sales and marketing 31,666 (1,478 ) 30,188 Total operating expenses 56,992 (1,478 ) 55,514 |
Schedule of New Accounting Pronouncements and Changes in Accounting Principles | Standard Description Effect on the Financial Statements or Other Significant Matters Standards that the Company has not yet adopted Leases: ASU 2016-02, Leases (Topic 842) Effective date: January 1, 2019 This standard requires that lessees recognize assets and liabilities for leases with lease terms greater than twelve months in the statement of financial position. This standard also requires improved disclosures to help users of financial statements better understand the amount, timing and uncertainty of cash flows arising from leases. The Company formed a project team and developed a plan to prepare for the adoption of this standard by its effective date. The project team has performed a business impact assessment, has identified a population of leases and has performed an analysis on its lease population using an expected incremental borrowing rate to assess its adoption of the ASU. The project team has assessed service agreements for potentially embedded leases and has identified leases it considers short term in duration. Based upon the project team's analysis, the Company expects to elect the package of three practical expedients, as well as the practical expedient to apply hindsight in determining lease terms. The Company continues to evaluate transition methods and the impact that ASU 2016-02 will have on internal controls over financial reporting and its consolidated financial statements. Financial Instruments: ASU 2016-13, Financial Instruments - Credit Losses (Topic 326) Effective date: January 1, 2020 This standard replaces the incurred loss impairment methodology in current U.S. GAAP with a methodology that reflects expected credit losses. The update is intended to provide financial statement users with more useful information about expected credit losses. The Company is currently evaluating the impact the adoption of this standard will have on its consolidated financial statements. Standard Description Effect on the Financial Statements or Other Significant Matters Standards that the Company has recently adopted Cash Flow: ASU 2016-18, Restricted Cash This standard requires that entities show the changes in the total of cash, cash equivalents and restricted cash in the statement of cash flows. Transfers between cash, cash equivalents and restricted cash should not be presented as cash flow activities on the statement of cash flows. The Company adopted this standard effective January 1, 2018. The adoption did not have a material impact on its consolidated financial statements. Revenue Recognition: ASU 2014-09, Revenue from Contracts with Customers (Topic 606) This standard replaces existing revenue recognition standards and provides that an entity should recognize revenue to depict the transfer of promised goods or 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. ASU 2014-09 also requires enhanced disclosures to help users of financial statements better understand the nature, amount, timing, and uncertainty of revenue that is recognized. Entities have the option of using either a full retrospective or modified retrospective approach for the adoption of the standard. The Company adopted this standard effective January 1, 2018 using the modified retrospective transition method. Refer to Note 6, "Revenue from Contracts with Customers," for additional information regarding the impact of adoption and revenue recognition under ASC 606 on the Company's consolidated financial statements. |
Stockholders' Equity (Tables)
Stockholders' Equity (Tables) | 6 Months Ended |
Jun. 30, 2018 | |
Stockholders' Equity Attributable to Parent [Abstract] | |
Schedule of Stockholders Equity | The following table summarizes the stockholders' equity activity for the six months ended June 30, 2018 (in thousands): Balance as of December 31, 2017 $ 81,911 Cumulative effect of accounting change (1) 7,501 Exercise of stock options and vesting of restricted stock units 1,004 Stock-based compensation expense 5,049 Statutory tax withholding related to net-share settlement of restricted stock units (2,636 ) Net loss (5,921 ) Foreign currency translation adjustments (482 ) Balance as of June 30, 2018 $ 86,426 (1) Refer to Note 6, "Revenue from Contracts with Customers," for additional information regarding the effect of the adoption of ASC 606 and adjustments to accumulated deficit upon adoption. |
Goodwill and Intangible Assets
Goodwill and Intangible Assets (Tables) | 6 Months Ended |
Jun. 30, 2018 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Schedule of Finite-Lived Intangible Assets | The estimated useful lives and amortization methodology used in computing amortization are as follows: Estimated Useful Life Amortization Methodology Customer relationships 7 years Straight-line Acquired technology 7 years Straight-line |
Revenue from Contracts with C21
Revenue from Contracts with Customers (Tables) | 6 Months Ended |
Jun. 30, 2018 | |
Revenue from Contract with Customer [Abstract] | |
Disaggregation of Revenue | The following table summarizes revenue disaggregation by product for the three and six months ended June 30, 2018 and 2017 (in thousands): Three Months Ended June 30, Six Months Ended June 30, 2018 2017 (1) 2018 2017 (1) Marketplaces $ 23,811 $ 22,972 $ 47,799 $ 45,061 Digital Marketing 4,505 4,321 8,850 8,518 Other 4,344 2,711 7,456 4,754 $ 32,660 $ 30,004 $ 64,105 $ 58,333 (1) As noted above, prior periods have not been adjusted for the adoption of ASC 606 and are presented in accordance with historical accounting guidance in effect for those periods. |
Deferred Revenue | The following table summarizes deferred revenue activity for the six months ended June 30, 2018 (in thousands): As of January 1, 2018 (adjusted) Net Additions Revenue recognized As of June 30, 2018 Deferred revenue $ 28,982 61,470 (64,105 ) $ 26,347 |
Deferred Contract Costs | The following table summarizes deferred contract cost activity for the six months ended June 30, 2018 (in thousands): As of January 1, 2018 (adjusted) Additions Amortized costs (1) As of June 30, 2018 Deferred contract costs $ 8,721 4,882 (1,445 ) $ 12,158 |
Financial Statement Impact | The following tables compare financial statement line items from the reported condensed consolidated balance sheet, condensed consolidated statement of operations and condensed consolidated statement of cash flows, as of and for the three and six months ended June 30, 2018 , to the pro forma amounts, which are the amounts that would have been reported prior to the adoption of ASC 606 (in thousands): Balance Sheet - select financial statement line items impacted by the adoption of ASC 606 As of June 30, 2018 As Reported Pro Forma Prepaid expenses and other current assets $ 14,384 $ 11,461 Total current assets 86,506 83,583 Deferred contract costs, net of current portion 9,235 — Long-term deferred tax assets, net 4,792 5,450 Total assets 140,430 128,930 Deferred revenue 26,023 25,652 Total current liabilities 47,347 46,976 Other long-term liabilities 2,561 2,447 Total liabilities 54,004 53,519 Accumulated other comprehensive loss (1,271 ) (1,091 ) Accumulated deficit (178,552 ) (189,747 ) Total liabilities and stockholders' equity $ 140,430 $ 128,930 Statement of Operations - select financial statement line items impacted by the adoption of ASC 606 Three Months Ended June 30, 2018 Six Months Ended June 30, 2018 As Reported Pro Forma As Reported Pro Forma Revenue $ 32,660 $ 32,362 $ 64,105 $ 63,774 Gross profit 25,685 25,387 49,777 49,446 Sales and marketing 15,974 17,469 30,864 34,301 Total operating expenses 28,419 29,914 55,662 59,099 Loss from operations (2,734 ) (4,527 ) (5,885 ) (9,653 ) Other income (expense), net (1 ) (150 ) (20 ) (169 ) Total other income (expense) 105 (44 ) 211 62 Loss before income taxes (2,629 ) (4,571 ) (5,674 ) (9,591 ) Income tax expense 135 13 247 24 Net loss (2,764 ) (4,584 ) (5,921 ) (9,615 ) Net loss per share, basic and diluted $ (0.10 ) $ (0.17 ) $ (0.22 ) $ (0.36 ) Statement of Cash Flows - select financial statement line items impacted by the adoption of ASC 606 Six Months Ended June 30, 2018 As Reported Pro Forma Net loss $ (5,921 ) $ (9,615 ) Deferred income taxes 190 (33 ) Changes in assets and liabilities: Deferred contract costs (3,586 ) — Deferred revenue (2,326 ) (1,995 ) Cash and cash equivalents provided by operating activities $ 1,032 $ 1,032 |
Stock-Based Compensation (Table
Stock-Based Compensation (Tables) | 6 Months Ended |
Jun. 30, 2018 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |
Summary of Stock-Based Compensation Expense | Stock-based compensation expense is included in the following line items in the accompanying condensed consolidated statements of operations for the three and six months ended June 30, 2018 and 2017 (in thousands): Three Months Ended June 30, Six Months Ended June 30, 2018 2017 2018 2017 Cost of revenue (1) $ 92 $ 239 $ 309 $ 566 Sales and marketing (1) 728 1,172 1,480 1,918 Research and development 355 503 1,004 1,071 General and administrative 1,141 1,454 2,256 2,737 $ 2,316 $ 3,368 $ 5,049 $ 6,292 (1) Certain prior period amounts have been reclassified to conform to current period presentation. These reclassifications had no impact on the Company's reported operating loss or net loss for the period. Refer to Note 2, "Significant Accounting Policies," for further detail. |
Summary of Awards Granted in Period | During the six months ended June 30, 2018 , the Company granted the following share-based awards: Number of Shares Underlying Grant Weighted Average Grant Date Fair Value Stock options 362,415 $ 5.98 Restricted stock units ("RSUs") 866,121 $ 13.95 Total share-based awards 1,228,536 $ 11.60 |
Net Loss Per Share (Tables)
Net Loss Per Share (Tables) | 6 Months Ended |
Jun. 30, 2018 | |
Earnings Per Share [Abstract] | |
Schedule of Securities Excluded from Calculation of Weighted Average Common Shares Outstanding | The following securities have been excluded from the calculation of weighted average common shares outstanding because the effect is anti-dilutive for the three and six months ended June 30, 2018 and 2017 : Three and Six Months Ended June 30, 2018 2017 Stock options 2,307,949 2,196,719 RSUs 2,333,294 2,616,117 |
Segment and Geographic Inform24
Segment and Geographic Information (Tables) | 6 Months Ended |
Jun. 30, 2018 | |
Segment Reporting [Abstract] | |
Summary of Revenue by Geography | The table below summarizes revenue by geography for the three and six months ended June 30, 2018 and 2017 (in thousands). The Company categorizes domestic and international revenue from customers based on their billing address. Three Months Ended June 30, Six Months Ended June 30, 2018 2017 2018 2017 Domestic $ 25,076 $ 23,691 $ 49,537 $ 46,198 International 7,584 6,313 14,568 12,135 Total revenue $ 32,660 $ 30,004 $ 64,105 $ 58,333 |
Significant Accounting Polici25
Significant Accounting Policies (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | |||
Jun. 30, 2018 | Jun. 30, 2017 | Jun. 30, 2018 | Jun. 30, 2017 | ||
Error Corrections and Prior Period Adjustments Restatement [Line Items] | |||||
Cost of revenue | [1] | $ 6,975 | $ 7,144 | $ 14,328 | $ 14,840 |
Gross profit | 25,685 | 22,860 | 49,777 | 43,493 | |
Sales and marketing | [1] | 15,974 | 15,003 | 30,864 | 30,188 |
Total operating expenses | $ 28,419 | 26,828 | $ 55,662 | 55,514 | |
As Previously Reported | |||||
Error Corrections and Prior Period Adjustments Restatement [Line Items] | |||||
Cost of revenue | 6,520 | 13,362 | |||
Gross profit | 23,484 | 44,971 | |||
Sales and marketing | 15,627 | 31,666 | |||
Total operating expenses | 27,452 | 56,992 | |||
Reclassification | |||||
Error Corrections and Prior Period Adjustments Restatement [Line Items] | |||||
Cost of revenue | 624 | 1,478 | |||
Gross profit | (624) | (1,478) | |||
Sales and marketing | (624) | (1,478) | |||
Total operating expenses | $ (624) | $ (1,478) | |||
[1] | Certain prior period amounts have been reclassified to conform to current period presentation. These reclassifications had no impact on reported operating loss or net loss for the period. Refer to Note 2, "Significant Accounting Policies," for further detail. |
Stockholders' Equity (Detail)
Stockholders' Equity (Detail) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | |||
Jun. 30, 2018 | Jun. 30, 2017 | Jun. 30, 2018 | Jun. 30, 2017 | Jan. 01, 2018 | |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||
Balance as of December 31, 2017 | $ 81,911 | ||||
Exercise of stock options and vesting of restricted stock units | 1,004 | ||||
Stock-based compensation expense | 5,049 | ||||
Statutory tax withholding related to net-share settlement of restricted stock units | (2,636) | ||||
Net loss | $ (2,764) | $ (3,985) | (5,921) | $ (12,041) | |
Foreign currency translation adjustments | (591) | $ 325 | (482) | $ 535 | |
Balance as of June 30, 2018 | $ 86,426 | $ 86,426 | |||
Cumulative effect of accounting change | $ 7,501 |
Goodwill and Intangible Asset27
Goodwill and Intangible Assets - Estimated Useful Lives and Amortization Methodology (Detail) | 6 Months Ended |
Jun. 30, 2018 | |
Customer relationships | |
Finite-Lived Intangible Assets [Line Items] | |
Estimated useful life of intangible asset (in years) | 7 years |
Acquired technology | |
Finite-Lived Intangible Assets [Line Items] | |
Estimated useful life of intangible asset (in years) | 7 years |
Goodwill and Intangible Asset28
Goodwill and Intangible Assets - Additional Information (Detail) - USD ($) | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2018 | Jun. 30, 2017 | Jun. 30, 2018 | Jun. 30, 2017 | |
Goodwill and Intangible Assets Disclosure [Abstract] | ||||
Amortization of Intangible Assets | $ 200,000 | $ 200,000 | $ 300,000 | $ 300,000 |
Change in goodwill | $ 0 |
Commitments (Detail)
Commitments (Detail) - Sales Tax Obligations - USD ($) $ in Millions | 6 Months Ended | |
Jun. 30, 2018 | Jun. 30, 2017 | |
Loss Contingencies [Line Items] | ||
VDA liability for sales taxes | $ 2.5 | |
VDA liability for sales taxes, payments | $ 2.5 |
Revenue from Contracts with C30
Revenue from Contracts with Customers - Disaggregation of Revenue (Detail) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2018 | Jun. 30, 2017 | Jun. 30, 2018 | Jun. 30, 2017 | |
Disaggregation of Revenue [Line Items] | ||||
Revenue | $ 32,660 | $ 30,004 | $ 64,105 | $ 58,333 |
Marketplaces | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenue | 23,811 | 22,972 | 47,799 | 45,061 |
Digital Marketing | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenue | 4,505 | 4,321 | 8,850 | 8,518 |
Other | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenue | $ 4,344 | $ 2,711 | $ 7,456 | $ 4,754 |
Revenue from Contracts with C31
Revenue from Contracts with Customers - Additional Information (Detail) - USD ($) $ in Thousands | Jan. 01, 2018 | Jun. 30, 2018 | Jun. 30, 2018 | Jun. 30, 2017 |
Revenue, Initial Application Period Cumulative Effect Transition [Line Items] | ||||
Cumulative effect of accounting change | $ 7,501 | |||
Deferred contract costs | $ 3,586 | $ 0 | ||
Deferred revenue | (2,326) | 3,070 | ||
Deferred income taxes | $ 190 | $ 155 | ||
Payment period | 30 days | |||
Contract period | 12 months | |||
Revenue | $ 64,105 | $ 64,100 | ||
Revenue recognized | $ 20,500 | |||
Capitalized contract cost, amortization period | P5Y | |||
Digital Marketing | ||||
Revenue, Initial Application Period Cumulative Effect Transition [Line Items] | ||||
Contract period | 1 year | |||
Revenue recognition period | 1 year | |||
Marketplaces | ||||
Revenue, Initial Application Period Cumulative Effect Transition [Line Items] | ||||
Revenue recognition period | 1 year | |||
Accounting Standards Update 2014-09 | ||||
Revenue, Initial Application Period Cumulative Effect Transition [Line Items] | ||||
Deferred contract costs | 8,700 | |||
Deferred revenue | (600) | |||
Deferred income taxes | (600) | |||
Retained Earnings | Accounting Standards Update 2014-09 | ||||
Revenue, Initial Application Period Cumulative Effect Transition [Line Items] | ||||
Cumulative effect of accounting change | $ 7,500 |
Revenue from Contracts with C32
Revenue from Contracts with Customers - Transaction Price Allocated to Future Performance Obligations (Detail) $ in Millions | 6 Months Ended |
Jun. 30, 2018USD ($) | |
Revenue from Contract with Customer [Abstract] | |
Contract period | 12 months |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2018-07-01 | |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | |
Remaining performance obligation | $ 13.7 |
Performance obligation period | 12 months |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: (nil) | |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | |
Remaining performance obligation | $ 21.9 |
Performance obligation period |
Revenue from Contracts with C33
Revenue from Contracts with Customers - Deferred Revenue (Detail) - USD ($) $ in Thousands | 6 Months Ended | |
Jun. 30, 2018 | Jun. 30, 2018 | |
Deferred revenue | ||
As of January 1, 2018 (adjusted) | $ 28,982 | |
Net Additions | 61,470 | |
Revenue recognized | (64,105) | $ (64,100) |
As of June 30, 2018 | $ 26,347 | $ 26,347 |
Revenue from Contracts with C34
Revenue from Contracts with Customers - Costs to Obtain Contracts (Detail) $ in Thousands | 6 Months Ended |
Jun. 30, 2018USD ($) | |
Deferred contract costs | |
As of January 1, 2018 (adjusted) | $ 8,721 |
Additions | 4,882 |
Amortized costs (1) | (1,445) |
As of June 30, 2018 | $ 12,158 |
Revenue from Contracts with C35
Revenue from Contracts with Customers - Financial Statement Information (Detail) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 6 Months Ended | ||||
Jun. 30, 2018 | Jun. 30, 2017 | Jun. 30, 2018 | Jun. 30, 2017 | Dec. 31, 2017 | ||
Balance Sheet - select financial statement line items impacted by the adoption of ASC 606 | ||||||
Prepaid expenses and other current assets | $ 14,384 | $ 14,384 | $ 16,462 | |||
Total current assets | 86,506 | 86,506 | 97,336 | |||
Deferred contract costs, net of current portion | 9,235 | 9,235 | 0 | |||
Long-term deferred tax assets, net | 4,792 | 4,792 | 5,550 | |||
Total assets | 140,430 | 140,430 | 140,511 | |||
Deferred revenue | 26,023 | 26,023 | 27,143 | |||
Total current liabilities | 47,347 | 47,347 | 51,474 | |||
Other long-term liabilities | 2,561 | 2,561 | 3,157 | |||
Total liabilities | 54,004 | 54,004 | 58,600 | |||
Accumulated other comprehensive loss | (1,271) | (1,271) | (789) | |||
Accumulated deficit | (178,552) | (178,552) | (180,132) | |||
Total liabilities and stockholders' equity | 140,430 | 140,430 | $ 140,511 | |||
Statement of Operations - select financial statement line items impacted by the adoption of ASC 606 | ||||||
Revenue | 32,660 | $ 30,004 | 64,105 | $ 58,333 | ||
Gross profit | 25,685 | 22,860 | 49,777 | 43,493 | ||
Sales and marketing | [1] | 15,974 | 15,003 | 30,864 | 30,188 | |
Total operating expenses | 28,419 | 26,828 | 55,662 | 55,514 | ||
Loss from operations | (2,734) | (3,968) | (5,885) | (12,021) | ||
Other income (expense), net | (1) | 13 | (20) | 70 | ||
Total other income (expense) | 105 | 67 | 211 | 152 | ||
Loss before income taxes | (2,629) | (3,901) | (5,674) | (11,869) | ||
Income tax expense | 135 | 84 | 247 | 172 | ||
Net loss | $ (2,764) | $ (3,985) | $ (5,921) | $ (12,041) | ||
Basic and diluted (in dollars per share) | $ (0.10) | $ (0.15) | $ (0.22) | $ (0.46) | ||
Statement of Cash Flows - select financial statement line items impacted by the adoption of ASC 606 | ||||||
Deferred income taxes | $ 190 | $ 155 | ||||
Changes in assets and liabilities: | ||||||
Deferred contract costs | (3,586) | 0 | ||||
Deferred revenue | (2,326) | 3,070 | ||||
Cash and cash equivalents provided by operating activities | 1,032 | (97) | ||||
Effect of currency exchange rate changes on cash and cash equivalents | (194) | $ 29 | ||||
Pro Forma | ||||||
Balance Sheet - select financial statement line items impacted by the adoption of ASC 606 | ||||||
Prepaid expenses and other current assets | $ 11,461 | 11,461 | ||||
Total current assets | 83,583 | 83,583 | ||||
Deferred contract costs, net of current portion | 0 | 0 | ||||
Long-term deferred tax assets, net | 5,450 | 5,450 | ||||
Total assets | 128,930 | 128,930 | ||||
Deferred revenue | 25,652 | 25,652 | ||||
Total current liabilities | 46,976 | 46,976 | ||||
Other long-term liabilities | 2,447 | 2,447 | ||||
Total liabilities | 53,519 | 53,519 | ||||
Accumulated other comprehensive loss | (1,091) | (1,091) | ||||
Accumulated deficit | (189,747) | (189,747) | ||||
Total liabilities and stockholders' equity | 128,930 | 128,930 | ||||
Statement of Operations - select financial statement line items impacted by the adoption of ASC 606 | ||||||
Revenue | 32,362 | 63,774 | ||||
Gross profit | 25,387 | 49,446 | ||||
Sales and marketing | 17,469 | 34,301 | ||||
Total operating expenses | 29,914 | 59,099 | ||||
Loss from operations | (4,527) | (9,653) | ||||
Other income (expense), net | (150) | (169) | ||||
Total other income (expense) | (44) | 62 | ||||
Loss before income taxes | (4,571) | (9,591) | ||||
Income tax expense | 13 | 24 | ||||
Net loss | $ (4,584) | $ (9,615) | ||||
Basic and diluted (in dollars per share) | $ (0.17) | $ (0.36) | ||||
Statement of Cash Flows - select financial statement line items impacted by the adoption of ASC 606 | ||||||
Deferred income taxes | $ (33) | |||||
Changes in assets and liabilities: | ||||||
Deferred contract costs | 0 | |||||
Deferred revenue | (1,995) | |||||
Cash and cash equivalents provided by operating activities | $ 1,032 | |||||
[1] | Certain prior period amounts have been reclassified to conform to current period presentation. These reclassifications had no impact on reported operating loss or net loss for the period. Refer to Note 2, "Significant Accounting Policies," for further detail. |
Stock-Based Compensation - Summ
Stock-Based Compensation - Summary of Stock-Based Compensation Expense (Detail) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | |||
Jun. 30, 2018 | Jun. 30, 2017 | Jun. 30, 2018 | Jun. 30, 2017 | ||
Stock-Based Compensation [Line Items] | |||||
Stock-based compensation expense | $ 2,316 | $ 3,368 | $ 5,049 | $ 6,292 | |
Cost of revenue | |||||
Stock-Based Compensation [Line Items] | |||||
Stock-based compensation expense | [1] | 92 | 239 | 309 | 566 |
Sales and marketing | |||||
Stock-Based Compensation [Line Items] | |||||
Stock-based compensation expense | [1] | 728 | 1,172 | 1,480 | 1,918 |
Research and development | |||||
Stock-Based Compensation [Line Items] | |||||
Stock-based compensation expense | 355 | 503 | 1,004 | 1,071 | |
General and administrative | |||||
Stock-Based Compensation [Line Items] | |||||
Stock-based compensation expense | $ 1,141 | $ 1,454 | $ 2,256 | $ 2,737 | |
[1] | Certain prior period amounts have been reclassified to conform to current period presentation. These reclassifications had no impact on reported operating loss or net loss for the period. Refer to Note 2, "Significant Accounting Policies," for further detail. |
Stock-Based Compensation - Gran
Stock-Based Compensation - Grants in Period (Detail) | 6 Months Ended |
Jun. 30, 2018$ / sharesshares | |
Number of Shares Underlying Grant | |
Stock options (in shares) | shares | 362,415 |
Total share-based awards (in shares) | shares | 1,228,536 |
Weighted Average Grant Date Fair Value | |
Stock options (in dollars per share) | $ / shares | $ 5.98 |
Total share-based awards (in dollars per share) | $ / shares | $ 11.60 |
Restricted stock units (RSUs) | |
Number of Shares Underlying Grant | |
Restricted stock units (RSUs) (in shares) | shares | 866,121 |
Weighted Average Grant Date Fair Value | |
Restricted stock units (RSUs) (in dollars per share) | $ / shares | $ 13.95 |
Net Loss Per Share (Detail)
Net Loss Per Share (Detail) - shares | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2018 | Jun. 30, 2017 | Jun. 30, 2018 | Jun. 30, 2017 | |
Stock options | ||||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||||
Antidilutive securities excluded from calculation of weighted average common shares outstanding (in shares) | 2,307,949 | 2,196,719 | 2,307,949 | 2,196,719 |
RSUs | ||||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||||
Antidilutive securities excluded from calculation of weighted average common shares outstanding (in shares) | 2,333,294 | 2,616,117 | 2,333,294 | 2,616,117 |
Income Taxes (Detail)
Income Taxes (Detail) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | 12 Months Ended | ||
Jun. 30, 2018 | Jun. 30, 2017 | Jun. 30, 2018 | Jun. 30, 2017 | Dec. 31, 2017 | |
Income Tax Disclosure [Abstract] | |||||
Effective income tax rate | (5.10%) | (2.20%) | (4.40%) | (1.40%) | |
U.S. federal statutory tax rate | 21.00% | 34.00% | 21.00% | 34.00% | |
Benefit of deferred tax asset, reduction in income tax expense | $ 0 | $ 0.1 | |||
Tax Cuts and Jobs Act of 2017, reduction in net deferred tax assets | $ 16.6 |
Segment and Geographic Inform40
Segment and Geographic Information - Additional Information (Detail) | 6 Months Ended |
Jun. 30, 2018segment | |
Segment Reporting [Abstract] | |
Number of reportable segment | 1 |
Number of operating segment | 1 |
Segment and Geographic Inform41
Segment and Geographic Information - Summary of Revenue by Geography (Detail) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2018 | Jun. 30, 2017 | Jun. 30, 2018 | Jun. 30, 2017 | |
Segment Reporting Information [Line Items] | ||||
Revenue | $ 32,660 | $ 30,004 | $ 64,105 | $ 58,333 |
Domestic | ||||
Segment Reporting Information [Line Items] | ||||
Revenue | 25,076 | 23,691 | 49,537 | 46,198 |
International | ||||
Segment Reporting Information [Line Items] | ||||
Revenue | $ 7,584 | $ 6,313 | $ 14,568 | $ 12,135 |