Document_and_Entity_Informatio
Document and Entity Information (USD $) | 12 Months Ended | ||
In Millions, except Share data, unless otherwise specified | Dec. 31, 2014 | Feb. 06, 2015 | Jun. 30, 2014 |
Document and Entity Information [Abstract] | |||
Entity Registrant Name | Pandora Media, Inc. | ||
Entity Central Index Key | 1230276 | ||
Current Fiscal Year End Date | -19 | ||
Entity Current Reporting Status | Yes | ||
Entity Filer Category | Large Accelerated Filer | ||
Document Type | 10-K | ||
Document Period End Date | 31-Dec-14 | ||
Document Fiscal Year Focus | 2014 | ||
Document Fiscal Period Focus | FY | ||
Amendment Flag | FALSE | ||
Entity Common Stock, Shares Outstanding | 209,120,360 | ||
Entity Voluntary Filers | No | ||
Entity Well Known Seasoned Issuer | Yes | ||
Entity Public Float | $4,656 |
Consolidated_Balance_Sheets
Consolidated Balance Sheets (USD $) | Dec. 31, 2014 | Dec. 31, 2013 |
In Thousands, unless otherwise specified | ||
Current assets | ||
Cash and cash equivalents | $175,957 | $245,755 |
Short-term investments | 178,631 | 98,662 |
Accounts receivable, net of allowance of $1,272 at December 31, 2013 and $1,218 at December 31, 2014 | 218,437 | 164,023 |
Prepaid expenses and other current assets | 15,389 | 10,343 |
Total current assets | 588,414 | 518,783 |
Long-term investments | 104,243 | 105,686 |
Property and equipment, net | 42,921 | 35,151 |
Other long-term assets | 13,712 | 13,715 |
Total assets | 749,290 | 673,335 |
Current liabilities | ||
Accounts payable | 10,825 | 14,413 |
Accrued liabilities | 15,754 | 14,881 |
Accrued royalties | 73,693 | 66,110 |
Deferred revenue | 14,412 | 42,650 |
Accrued compensation | 34,476 | 17,952 |
Total current liabilities | 149,160 | 156,006 |
Other long-term liabilities | 16,773 | 9,098 |
Total liabilities | 165,933 | 165,104 |
Stockholders’ equity | ||
Common stock, $0.0001 par value, 1,000,000,000 shares authorized: 195,395,940 shares issued and outstanding at December 31, 2013 and 209,071,488 at December 31, 2014 | 21 | 20 |
Additional paid-in capital | 781,009 | 675,103 |
Accumulated deficit | -196,997 | -166,591 |
Accumulated other comprehensive loss | -676 | -301 |
Total stockholders’ equity | 583,357 | 508,231 |
Total liabilities and stockholders’ equity | $749,290 | $673,335 |
Consolidated_Balance_Sheets_Pa
Consolidated Balance Sheets (Parenthetical) (USD $) | Dec. 31, 2014 | Dec. 31, 2013 |
In Thousands, except Share data, unless otherwise specified | ||
Statement of Financial Position [Abstract] | ||
Accounts receivable, allowance | $1,218 | $1,272 |
Common stock, par value (in dollars per share) | $0.00 | $0.00 |
Common stock, shares authorized (in shares) | 1,000,000,000 | 1,000,000,000 |
Common stock, shares issued (in shares) | 209,071,488 | 195,395,940 |
Common stock, shares outstanding (in shares) | 209,071,488 | 195,395,940 |
Consolidated_Statements_of_Ope
Consolidated Statements of Operations (USD $) | 11 Months Ended | 12 Months Ended | ||
In Thousands, except Per Share data, unless otherwise specified | Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2014 | Jan. 31, 2013 |
Revenue | ||||
Advertising | $489,340 | $343,318 | $732,338 | $375,218 |
Subscription and other | 110,893 | 46,166 | 188,464 | 51,927 |
Total revenue | 600,233 | 389,484 | 920,802 | 427,145 |
Cost of revenue | ||||
Cost of revenue—Content acquisition costs | 314,866 | 230,731 | 446,377 | 258,748 |
Cost of revenue—Other | 42,217 | 28,988 | 61,627 | 32,282 |
Total cost of revenue | 357,083 | 259,719 | 508,004 | 291,030 |
Gross profit | 243,150 | 129,765 | 412,798 | 136,115 |
Operating expenses | ||||
Product development | 31,294 | 16,901 | 53,153 | 18,901 |
Sales and marketing | 169,005 | 94,212 | 277,330 | 107,373 |
General and administrative | 69,300 | 42,716 | 112,443 | 47,543 |
Total operating expenses | 269,599 | 153,829 | 442,926 | 173,817 |
Loss from operations | -26,449 | -24,064 | -30,128 | -37,702 |
Other income (expense), net | -474 | -401 | 306 | -441 |
Loss before provision for (benefit from) income taxes | -26,923 | -24,465 | -29,822 | -38,143 |
Provision for (benefit from) income taxes | -94 | 3 | -584 | -5 |
Net loss | ($27,017) | ($24,462) | ($30,406) | ($38,148) |
Weighted-average common shares outstanding used in computing basic and diluted net loss per share (in shares) | 180,968 | 167,956 | 205,273 | 168,294 |
Net loss per share, basic and diluted (in dollars per share) | ($0.15) | ($0.15) | ($0.15) | ($0.23) |
Consolidated_Statements_of_Com
Consolidated Statements of Comprehensive Loss (USD $) | 11 Months Ended | 12 Months Ended | |
In Thousands, unless otherwise specified | Dec. 31, 2013 | Dec. 31, 2014 | Jan. 31, 2013 |
Statement of Comprehensive Income [Abstract] | |||
Net loss | ($27,017) | ($30,406) | ($38,148) |
Change in foreign currency translation adjustment | -42 | -184 | -3 |
Change in net unrealized losses on marketable securities | -253 | -191 | 2 |
Other comprehensive loss | -295 | -375 | -1 |
Total comprehensive loss | ($27,312) | ($30,781) | ($38,149) |
Consolidated_Statements_of_Sto
Consolidated Statements of Stockholders' Equity (USD $) | Total | Common Stock | Additional Paid-in Capital | Accumulated Other Comprehensive Loss | Accumulated Deficit |
In Thousands, except Share data, unless otherwise specified | |||||
Balances at Jan. 31, 2012 | $104,540 | $16 | $205,955 | ($5) | ($101,426) |
Balances (in shares) at Jan. 31, 2012 | 163,569,361 | ||||
Increase (Decrease) in Stockholders' Equity | |||||
Issuance of common stock upon exercise of stock options | 7,306 | 1 | 7,305 | ||
Issuance of common stock upon exercise of stock options (in shares) | 8,408,842 | ||||
Stock-based compensation | 25,500 | 25,500 | |||
Vesting of restricted stock units (in shares) | 400,112 | ||||
Share cancellations to satisfy tax withholding on vesting of restricted stock units | -208 | -208 | |||
Share cancellations to satisfy tax withholding on vesting of restricted stock units (in shares) | -18,340 | ||||
Issuance of common stock in connection with preferred stock warrant exercise (in shares) | 146,076 | ||||
Components of comprehensive loss: | |||||
Net loss | -38,148 | -38,148 | |||
Other comprehensive loss | -1 | -1 | |||
Balances at Jan. 31, 2013 | 98,989 | 17 | 238,552 | -6 | -139,574 |
Balances, shares at Jan. 31, 2013 | 172,506,051 | ||||
Increase (Decrease) in Stockholders' Equity | |||||
Issuance of common stock upon exercise of stock options | 18,356 | 1 | 18,355 | ||
Issuance of common stock upon exercise of stock options (in shares) | 5,659,377 | ||||
Issuance of common stock in connection with secondary offering, net issuance costs | 378,637 | 2 | 378,635 | ||
Issuance of common stock in connection with secondary offering, net issuance costs (in shares) | 15,730,000 | ||||
Stock-based compensation | 40,041 | 40,041 | |||
Vesting of restricted stock units (in shares) | 1,520,516 | ||||
Share cancellations to satisfy tax withholding on vesting of restricted stock units | -480 | -480 | |||
Share cancellations to satisfy tax withholding on vesting of restricted stock units (in shares) | -20,004 | ||||
Components of comprehensive loss: | |||||
Net loss | -27,017 | -27,017 | |||
Other comprehensive loss | -295 | -295 | |||
Balances at Dec. 31, 2013 | 508,231 | 20 | 675,103 | -301 | -166,591 |
Balances, shares at Dec. 31, 2013 | 195,395,940 | ||||
Increase (Decrease) in Stockholders' Equity | |||||
Issuance of common stock upon exercise of stock options | 17,116 | 1 | 17,115 | ||
Issuance of common stock upon exercise of stock options (in shares) | 10,437,509 | ||||
Stock-based compensation | 87,055 | 87,055 | |||
Vesting of restricted stock units (in shares) | 3,169,456 | ||||
Share cancellations to satisfy tax withholding on vesting of restricted stock units | -2,019 | -2,019 | |||
Share cancellations to satisfy tax withholding on vesting of restricted stock units (in shares) | -73,682 | ||||
Stock issued under employee stock purchase plan | 3,407 | 3,407 | |||
Stock issued under employee stock purchase plan (in shares) | 142,265 | 142,265 | |||
Excess tax benefit from stock-based awards | 348 | 348 | |||
Components of comprehensive loss: | |||||
Net loss | -30,406 | -30,406 | |||
Other comprehensive loss | -375 | -375 | |||
Balances at Dec. 31, 2014 | $583,357 | $21 | $781,009 | ($676) | ($196,997) |
Balances, shares at Dec. 31, 2014 | 209,071,488 |
Consolidated_Statements_of_Cas
Consolidated Statements of Cash Flows (USD $) | 11 Months Ended | 12 Months Ended | ||
In Thousands, unless otherwise specified | Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2014 | Jan. 31, 2013 |
Operating activities | ||||
Net loss | ($27,017) | ($24,462) | ($30,406) | ($38,148) |
Adjustments to reconcile net loss to net cash provided by (used in) operating activities | ||||
Depreciation and amortization | 10,112 | 6,406 | 15,431 | 7,076 |
Loss on retirement of fixed assets | 0 | 23 | 105 | 23 |
Stock-based compensation | 40,041 | 23,283 | 87,055 | 25,500 |
Amortization of premium on investments | 237 | 329 | 2,833 | 360 |
Amortization of debt issuance costs | 220 | 242 | 197 | 264 |
Excess tax benefit from stock-based awards | 0 | 0 | -348 | 0 |
Changes in assets and liabilities | ||||
Accounts receivable | -60,613 | -43,487 | -54,414 | -36,672 |
Prepaid expenses and other assets | -7,891 | -2,189 | -9,219 | -3,752 |
Accounts payable and accrued liabilities | 17,352 | 10,419 | 12,520 | 4,963 |
Accrued royalties | 13,027 | 17,525 | 7,608 | 19,261 |
Accrued compensation | -3,393 | 2,085 | 13,736 | 9,598 |
Deferred revenue | 13,384 | 10,285 | -28,238 | 10,034 |
Reimbursement of cost of leasehold improvements | 1,555 | 1,243 | 4,169 | 1,243 |
Net cash provided by (used in) operating activities | -2,986 | 1,702 | 21,029 | -250 |
Investing activities | ||||
Purchases of property and equipment | -21,180 | -11,809 | -30,039 | -7,580 |
Purchases of patents | -8,000 | 0 | 0 | 0 |
Purchases of investments | -224,549 | -59,559 | -340,679 | -65,168 |
Proceeds from maturities of investments | 42,210 | 79,603 | 258,518 | 87,933 |
Payments related to acquisition | -400 | 0 | 0 | 0 |
Net cash provided by (used in) investing activities | -211,919 | 8,235 | -112,200 | 15,185 |
Financing activities | ||||
Borrowings under debt arrangements | 10,000 | 0 | 0 | 0 |
Repayments of debt | -10,000 | 0 | 0 | 0 |
Payment of debt issuance costs in connection with the debt refinancing | -450 | 0 | 0 | 0 |
Proceeds from follow-on offering, net of issuance costs | 378,654 | 0 | 0 | 0 |
Proceeds from exercise of stock options | 17,273 | 5,877 | 16,894 | 6,669 |
Tax payments from net share settlements of restricted stock units | -480 | 0 | -2,019 | 0 |
Excess tax benefit from stock-based awards | 0 | 0 | 348 | 0 |
Proceeds from employee stock purchase plan | 0 | 0 | 6,438 | 0 |
Net cash provided by financing activities | 394,997 | 5,877 | 21,661 | 6,669 |
Effect of exchange rate changes on cash and cash equivalents | -62 | -1 | -288 | -5 |
Net increase (decrease) in cash and cash equivalents | 180,030 | 15,813 | -69,798 | 21,599 |
Cash and cash equivalents at beginning of period | 65,725 | 44,126 | 245,755 | 44,126 |
Cash and cash equivalents at end of period | 245,755 | 59,939 | 175,957 | 65,725 |
Supplemental disclosures of cash flow information | ||||
Cash paid during the period for income taxes | 26 | 0 | 164 | 0 |
Cash paid during the period for interest | 18 | 283 | 314 | 289 |
Purchases of property and equipment recorded in accounts payable and accrued liabilities | $7,910 | $726 | $751 | $1,952 |
Description_of_Business_and_Ba
Description of Business and Basis of Presentation | 12 Months Ended |
Dec. 31, 2014 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Description of Business and Basis of Presentation | Description of Business and Basis of Presentation |
Pandora Media, Inc. provides an internet radio service offering a personalized experience for each listener wherever and whenever they want to listen to radio on a wide range of smartphones, tablets, computers and car audio systems, as well as a range of other internet-connected devices. We have pioneered a new form of radio—one that uses intrinsic qualities of music to initially create stations and then adapts playlists in real-time based on the individual feedback of each listener. We generate a majority of our revenue by offering local and national advertisers an opportunity to deliver targeted messages to our listeners using a combination of audio, display and video advertisements. We also generate revenue by offering a paid subscription service which we call Pandora One. We were incorporated as a California corporation in January 2000 and reincorporated as a Delaware corporation in December 2010. Our principal operations are located in the United States; we also operate in Australia and New Zealand. | |
As used herein, “Pandora,” “we,” “our,” the “Company” and similar terms include Pandora Media, Inc. and its subsidiaries, unless the context indicates otherwise. | |
Basis of Presentation | |
The consolidated financial statements and accompanying notes have been prepared in accordance with United States generally accepted accounting principles ("U.S. GAAP") and include the accounts of Pandora and our wholly-owned subsidiaries. All intercompany balances and transactions have been eliminated in consolidation. | |
Certain changes in presentation have been made to conform the prior period presentation to current period reporting. Our statements of operations now include the presentation of gross profit, which is calculated as total revenue less cost of revenue. In addition, we have reclassified certain software license fees, facilities-related expenses and depreciation expenses among the general and administrative, cost of revenue—other, sales and marketing and product development lines in our consolidated statements of operations. Furthermore, we have reclassified certain compensation-related amounts from the accrued liabilities line item to the accrued compensation line item of our consolidated balance sheets and our consolidated statements of cash flows. | |
Use of Estimates | |
The preparation of financial statements in conformity with U.S. GAAP requires management to make certain estimates, judgments and assumptions that affect the reported amounts of assets and liabilities and the related disclosures at the date of the financial statements, as well as the reported amounts of revenue and expenses during the periods presented. Estimates are used in several areas including, but not limited to determining accrued royalties, selling prices for elements sold in multiple-element arrangements, the allowance for doubtful accounts, the fair market value of stock options and the impact of forfeitures on stock-based compensation, the provision for (benefit from) income taxes and the subscription return reserve. To the extent there are material differences between these estimates, judgments, or assumptions and actual results, our financial statements could be affected. In many cases, the accounting treatment of a particular transaction is specifically dictated by U.S. GAAP and does not require management’s judgment in its application. There are also areas in which management’s judgment in selecting among available alternatives would not produce a materially different result. | |
Segments | |
Pandora operates in one segment. Our chief operating decision maker (the "CODM"), our Chief Executive Officer, manages our operations on a consolidated basis for purposes of allocating resources. When evaluating our financial performance, the CODM reviews separate revenue information for our advertising, subscription and other offerings, while all other financial information is reviewed on a consolidated basis. | |
Fiscal year | |
We changed our fiscal year from the twelve months ending January 31 to the calendar twelve months ending December 31, effective beginning with the year ended December 31, 2013. As a result of this change, our prior fiscal year was an eleven-month transition period ended on December 31, 2013. In these consolidated statements, including the notes thereto, the current year financial results ended December 31, 2014 are for a twelve-month period. Audited results for the periods ended December 31, 2013 and January 31, 2013 are for an eleven-month period and a twelve-month period. In addition, the accompanying consolidated statements of operations and consolidated statements of cash flows include unaudited comparative amounts for the eleven-month period ended December 31, 2012. These unaudited consolidated financial statements have been prepared in accordance with U.S. GAAP. In our opinion, the unaudited consolidated financial statements include all adjustments of a normal recurring nature necessary for the fair presentation of our results of operations and our cash flows for the eleven months ended December 31, 2012. | |
All references herein to a fiscal year prior to December 31, 2013 refer to the twelve months ended January 31 of such year, and references to the first, second, third and fourth fiscal quarters ended prior to November 1, 2013 refer to the three months ended April 30, July 31, October 31 and January 31, respectively. | |
All references herein to a fiscal year subsequent to December 31, 2013 refer to the twelve months ended December 31 of such year, and references to the first, second, third and fourth fiscal quarters ended subsequent to November 1, 2013 refer to the three months ended March 31, June 30, September 30 and December 31, respectively. |
Summary_of_Significant_Account
Summary of Significant Accounting Policies | 12 Months Ended |
Dec. 31, 2014 | |
Accounting Policies [Abstract] | |
Summary of Significant Accounting Policies | Summary of Significant Accounting Policies |
Revenue Recognition | |
We recognize revenue when four basic criteria are met: (1) persuasive evidence exists of an arrangement with the customer reflecting the terms and conditions under which the products or services will be provided; (2) delivery has occurred or services have been provided; (3) the fee is fixed or determinable; and (4) collection is reasonably assured. We consider a signed agreement, a binding insertion order or other similar documentation to be persuasive evidence of an arrangement. Collectability is assessed based on a number of factors, including transaction history and the creditworthiness of a customer. If it is determined that collection is not reasonably assured, revenue is not recognized until collection becomes reasonably assured, which is generally upon receipt of cash. We record cash received in advance of revenue recognition as deferred revenue. | |
Advertising revenue. We generate advertising revenue primarily from audio, display and video advertising. We generate the majority of our advertising revenue through the delivery of advertising impressions sold on a cost per thousand, or CPM, basis. In determining whether an arrangement exists, we ensure that a binding arrangement, such as an insertion order or a fully executed customer-specific agreement, is in place. We generally recognize revenue based on delivery information from our campaign trafficking systems. | |
We also generate advertising revenue pursuant to arrangements with advertising agencies and brokers. Under these arrangements, we provide the agencies and brokers the ability to sell advertising inventory on our service directly to advertisers. We report this revenue net of amounts due to agencies and brokers because we are not the primary obligor under these arrangements, we do not set the pricing and do not establish or maintain the relationship with the advertisers. | |
Subscription and other revenue. Subscription and other revenue is generated primarily through the sale of a premium version of the Pandora service which currently includes advertisement-free access and higher audio quality on supported devices. We offer both an annual and a monthly subscription option. Subscription revenue derived from direct sales to listeners is recognized on a straight-line basis over the duration of the subscription period. Subscription revenue derived from sales through some mobile operating systems may be subject to refund or cancellation terms which may affect the timing or amount of the subscription revenue recognition. When refund rights exist, we recognize revenue when services have been provided and the rights lapse or when we have developed sufficient transaction history to estimate a reserve. | |
We were required to defer revenue for certain subscriptions purchased through mobile app stores that contained refund rights until the refund rights lapsed or until we developed sufficient operating history to estimate a return reserve. As of December 31, 2013, we had deferred all revenue related to these mobile subscriptions subject to refund rights totaling approximately $14.2 million, as we did not have sufficient history to estimate a return reserve. Beginning in January 2014, we had sufficient historic transactional information which enabled us to estimate future returns. Accordingly, in January 2014, we began recording revenue related to these mobile subscriptions net of estimated returns. This change resulted in a one-time increase in subscription revenue in the three months ended March 31, 2014 of approximately $14.2 million, as the previously deferred revenue was recognized. As of December 31, 2014, the deferred revenue related to the return reserve was not significant. | |
Multiple-element arrangements. We enter into arrangements with customers to sell advertising packages that include different media placements or ad services that are delivered at the same time, or within close proximity of one another. We recognize the relative fair value of the media placements or ad services as they are delivered assuming all other revenue recognition criteria are met. | |
We allocate arrangement consideration in multiple-deliverable revenue arrangements at the inception of an arrangement to all deliverables or those packages in which all components of the package are delivered at the same time, based on the relative selling price method in accordance with the selling price hierarchy, which includes: (1) vendor-specific objective evidence ("VSOE") if available; (2) third-party evidence ("TPE") if VSOE is not available; and (3) best estimate of selling price ("BESP") if neither VSOE nor TPE is available. | |
VSOE. We determine VSOE based on our historical pricing and discounting practices for the specific product or service when sold separately. In determining VSOE, we require that a substantial majority of the selling prices for these services fall within a reasonably narrow pricing range. We have not historically priced our advertising products within a narrow range. As a result, we have not been able to establish VSOE for any of our advertising products. | |
TPE. When VSOE cannot be established for deliverables in multiple element arrangements, we apply judgment with respect to whether it can establish a selling price based on TPE. TPE is determined based on competitor prices for similar deliverables when sold separately. Generally, our go-to-market strategy differs from that of our peers and our offerings contain a significant level of differentiation such that the comparable pricing of services cannot be obtained. Furthermore, we are unable to reliably determine what similar competitor services' selling prices are on a stand-alone basis. As a result, we have not been able to establish selling price based on TPE. | |
BESP. When we are unable to establish selling price using VSOE or TPE, we use BESP in our allocation of arrangement consideration. The objective of BESP is to determine the price at which we would transact a sale if the service were sold on a stand-alone basis. BESP is generally used to allocate the selling price to deliverables in our multiple element arrangements. We determine BESP for deliverables by considering multiple factors including, but not limited to, prices we charge for similar offerings, market conditions, competitive landscape and pricing practices. We limit the amount of allocable arrangement consideration to amounts that are fixed or determinable and that are not contingent on future performance or future deliverables. We regularly review BESP. Changes in assumptions or judgments or changes to the elements in the arrangement may cause an increase or decrease in the amount of revenue that we report in a particular period. | |
Concentration of Credit Risk | |
Financial instruments that potentially subject us to concentrations of credit risk consist principally of cash and cash equivalents, investments and trade accounts receivable. We maintain cash and cash equivalents with domestic financial institutions of high credit quality. We perform periodic evaluations of the relative credit standing of such institutions. | |
We perform ongoing credit evaluations of customers to assess the probability of accounts receivable collection based on a number of factors, including past transaction experience with the customer, evaluation of their credit history, and review of the invoicing terms of the contract. We generally do not require collateral. We maintain reserves for potential credit losses on customer accounts when deemed necessary. Actual credit losses during the twelve months ended January 31, 2013, the eleven months ended December 31, 2013 and the twelve months ended December 31, 2014 were $0.5 million, $0.4 million and $1.1 million, respectively. | |
For the twelve months ended January 31, 2013, the eleven months ended December 31, 2013 and the twelve months ended December 31, 2014, we had no customers that accounted for 10% or more of total revenue. As of December 31, 2013 and 2014, there were no customers that accounted for 10% or more of our total accounts receivable. | |
Cash, Cash Equivalents and Investments | |
We classify our highly liquid investments with maturities of three months or less at the date of purchase as cash equivalents. Our investments consist of commercial paper, corporate debt securities and U.S. government and government agency debt securities. These investments are classified as available-for-sale securities and are carried at fair value with the unrealized gains and losses reported as a component of stockholders' equity. Management determines the appropriate classification of our investments at the time of purchase and reevaluates the available-for-sale designations as of each balance sheet date. We classify our investments as either short-term or long-term based on each instrument's underlying contractual maturity date. Investments with maturities of twelve months or less are classified as short-term and those with maturities greater than twelve months are classified as long-term. The cost basis for investments sold is based upon the specific identification method. | |
Accounts Receivable and Allowance for Doubtful Accounts | |
Accounts receivable are recorded net of an allowance for doubtful accounts. Our allowance for doubtful accounts is based upon historical loss patterns, the number of days that billings are past due and an evaluation of the potential risk of loss associated with delinquent accounts. We also consider any changes to the financial condition of our customers and any other external market factors that could impact the collectability of our receivables in the determination of our allowance for doubtful accounts. | |
Property and Equipment, net | |
Property and equipment is recorded at cost, less accumulated depreciation and amortization. Depreciation is computed using the straight-line method based on the estimated useful lives of the assets, which typically range from three to five years. Leasehold improvements are amortized over the shorter of the lease term or expected useful lives of the improvements. | |
Property and equipment is reviewed for impairment whenever events or changes in circumstances indicate the carrying amount of an asset may not be recoverable. Recoverability of these assets is measured by a comparison of the carrying amounts to the future undiscounted cash flows the assets are expected to generate. If property and equipment are considered to be impaired, the impairment to be recognized equals the amount by which the carrying value of the asset exceeds its fair market value. | |
Costs incurred to develop software for internal use are required to be capitalized and amortized over the estimated useful life of the asset if certain criteria are met. Costs related to preliminary project activities and post implementation activities are expensed as incurred. We evaluate the costs incurred during the application development stage of website development to determine whether the costs meet the criteria for capitalization. As of December 31, 2013 and 2014, we had approximately $1.5 million and $2.8 million of capitalized internal use software and website development costs, net of accumulated amortization. These costs are being amortized over their three-year estimated useful lives. Internal use software and website development costs are included in property and equipment. | |
Stock-Based Compensation—Restricted Stock Units and Stock Options | |
Stock-based awards granted to employees, including grants of restricted stock units (“RSUs”) and stock options, are recognized as expense in our statements of operations based on their grant date fair value. We recognize stock-based compensation expense on a straight-line basis over the service period of the award, which is generally four years. We estimate the fair value of RSUs at our stock price on the grant date. We generally estimate the grant date fair value of stock options using the Black-Scholes option-pricing model. The Black-Scholes option-pricing model is affected by our stock price on the date of grant, the expected stock price volatility over the expected term of the award, which is based on projected employee stock option exercise behaviors, the risk-free interest rate for the expected term of the award and expected dividends. | |
Stock-based compensation expense is recorded net of estimated forfeitures in the statement of operations for only those stock-based awards that we expect to vest. We estimate the forfeiture rate based on historical forfeitures of equity awards and adjust the rate to reflect changes in facts and circumstances, if any. We revise our estimated forfeiture rate if actual forfeitures differ from our initial estimates. | |
We have elected to use the "with and without" approach as described in Accounting Standards Codification 740 - Income Taxes in determining the order in which tax attributes are utilized. As a result, we will only recognize a tax benefit from stock-based awards in additional paid-in capital if an incremental tax benefit is realized after all other tax attributes currently available to us have been utilized. In addition, we have elected to account for the indirect effects of stock-based awards on other tax attributes, such as the research tax credit, through the statement of operations. | |
Stock-Based Compensation—Employee Stock Purchase Plan | |
In December 2013, our board of directors approved the Employee Stock Purchase Plan (“ESPP”), which was approved by our stockholders at the annual meeting in June 2014. We estimate the fair value of shares to be issued under the ESPP on the first day of the offering period using the Black-Scholes valuation model. The determination of the fair value is affected by our stock price on the first date of the offering period, as well as other assumptions including the risk-free interest rate, the estimated volatility of our stock price over the term of the offering period, the expected term of the offering period and the expected dividend rate. Stock-based compensation expense related to the ESPP is recognized on a straight-line basis over the offering period, net of estimated forfeitures. | |
Cost of Revenue—Content Acquisition Costs | |
Cost of revenue—content acquisition costs principally consist of royalties paid for streaming music or other content to our listeners. Royalties are currently calculated using negotiated rates documented in agreements. The majority of our royalties are payable based on a fee per public performance of a sound recording, while in other cases our royalties are payable based on a percentage of our revenue or a formula that involves a combination of per performance and revenue metrics. For royalty arrangements under negotiation, we accrue for estimated royalties based on the available facts and circumstances and adjust these estimates as more information becomes available. | |
Cost of Revenue—Other | |
Cost of revenue—other consists primarily of hosting and ad serving costs, employee-related costs and other costs of ad sales. Hosting and ad serving costs consist of content streaming, maintaining our internet radio service and creating and serving advertisements through third-party ad servers. We make payments to third-party ad servers for the period the advertising impressions are delivered or click-through actions occur, and accordingly, we record this as a cost of revenue in the related period. Employee-related costs include salaries and benefits associated with supporting hosting and ad serving functions. Other costs of ad sales include costs related to music events that are sold as part of advertising arrangements. | |
Product Development | |
Product development consists primarily of employee-related costs, including salaries and benefits related to employees in software engineering, music analysis and product management departments, facilities-related expenses, information technology and costs associated with supporting consumer connected-device manufacturers in implementing our service in their products. We incur product development expenses primarily for improvements to our website and the Pandora app, development of new advertising products and development and enhancement of our personalized station generating system. We have generally expensed product development as incurred. | |
Certain website development and internal use software development costs are capitalized when specific criteria are met. In such cases, the capitalized amounts are amortized over the useful life of the related application once the application is placed in service. | |
Sales and Marketing | |
Sales and marketing consists primarily of employee-related costs, including salaries, commissions and benefits related to employees in sales, sales support and marketing departments. In addition, sales and marketing expenses include transaction processing commissions on subscription purchases through mobile app stores, external sales and marketing expenses such as brand marketing and customer acquisition costs, public relations expenses, costs related to music events, agency platform and media measurement expenses, facilities-related expenses and infrastructure costs. | |
General and Administrative | |
General and administrative consists primarily of employee-related costs, including salaries and benefits for finance, accounting, legal, internal information technology and other administrative personnel. In addition, general and administrative expenses include professional services costs for outside legal and accounting services, facilities-related expenses, infrastructure costs and credit card fees. | |
Provision for (Benefit from) Income Taxes | |
We account for our provision for (benefit from) income taxes using the asset and liability method, under which deferred tax assets and liabilities are determined based on the difference between the financial statement and tax bases of assets and liabilities using enacted statutory income tax rates in effect for the year in which the differences are expected to affect taxable income. Valuation allowances are established when necessary to reduce net deferred tax assets to the amount expected to be realized. | |
We recognize a tax benefit from an uncertain tax position only if it is more likely than not that the tax position will be sustained on examination by the taxing authorities, based on the technical merits of the position. The tax benefits recognized in the financial statements from such positions are then measured based on the largest benefit that has a greater than 50% likelihood of being realized upon settlement. We will recognize interest and penalties related to unrecognized tax benefits in the provision for (benefit from) income taxes in the accompanying statement of operations. | |
We calculate the current and deferred income tax provision based on estimates and assumptions that could differ from the actual results reflected in income tax returns filed in subsequent years. Adjustments based on filed income tax returns are recorded when identified. The amount of income taxes paid is subject to examination by U.S. federal, state and international tax authorities. The estimate of the potential outcome of any uncertain tax issue is subject to management's assessment of relevant risks, facts and circumstances existing at that time. To the extent that the assessment of such tax positions change, the change in estimate is recorded in the period in which the determination is made. | |
Net Loss Per Share | |
Basic net loss per share is computed by dividing the net loss by the weighted-average number of shares of common stock outstanding during the period. Diluted net loss per share is computed by giving effect to all potential shares of common stock, including stock options and restricted stock units, to the extent dilutive. Basic and diluted net loss per share were the same for each period presented as the inclusion of all potential common shares outstanding would have been anti-dilutive. | |
Recently Issued Accounting Standards | |
In May 2014, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update No. 2014-9, Revenue from Contracts with Customers (Topic 606) (“ASU 2014-9”). ASU 2014-9 outlines a single comprehensive model for entities to use in accounting for revenue. Under the guidance, revenue is recognized when a company transfers promised goods or services to customers in an amount that reflects the consideration to which the company expects to be entitled in exchange for those goods or services. The standard is effective for public entities with annual and interim reporting periods beginning after December 15, 2016. Entities have the option of using either a full retrospective or a modified retrospective approach to adopt the guidance. We are currently evaluating implementation methods and the effect that implementation of this standard will have on our consolidated financial statements upon adoption. | |
In August 2014, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update No. 2014-15, Going Concern (Subtopic 205-40) (“ASU 2014-15”). ASU 2014-15 requires management of all entities to evaluate whether there are conditions and events that raise substantial doubt about the entity’s ability to continue as a going concern within one year after the financial statements are issued (or available to be issued when applicable). The guidance is effective for fiscal years beginning after December 15, 2016 and for interim periods within that fiscal year. We do not expect the adoption of this guidance to have a material effect on our consolidated financial statements. |
Composition_of_Certain_Financi
Composition of Certain Financial Statement Captions | 12 Months Ended | |||||||||||||||||||||||
Dec. 31, 2014 | ||||||||||||||||||||||||
Composition of Certain Financial Statement Captions | ||||||||||||||||||||||||
Composition of Certain Financial Statement Captions | Composition of Certain Financial Statement Captions | |||||||||||||||||||||||
Cash, Cash Equivalents and Investments | ||||||||||||||||||||||||
Cash, cash equivalents and investments consisted of the following: | ||||||||||||||||||||||||
As of December 31, | ||||||||||||||||||||||||
2013 | 2014 | |||||||||||||||||||||||
(in thousands) | ||||||||||||||||||||||||
Cash and cash equivalents | ||||||||||||||||||||||||
Cash | $ | 89,176 | $ | 72,487 | ||||||||||||||||||||
Money market funds | 98,437 | 89,113 | ||||||||||||||||||||||
Commercial paper | 54,247 | 9,349 | ||||||||||||||||||||||
Corporate debt securities | 3,895 | 5,008 | ||||||||||||||||||||||
Total cash and cash equivalents | $ | 245,755 | $ | 175,957 | ||||||||||||||||||||
Short-term investments | ||||||||||||||||||||||||
Commercial paper | $ | 47,526 | $ | 45,443 | ||||||||||||||||||||
Corporate debt securities | 50,436 | 128,691 | ||||||||||||||||||||||
U.S. government and government agency debt securities | 700 | 4,497 | ||||||||||||||||||||||
Total short-term investments | $ | 98,662 | $ | 178,631 | ||||||||||||||||||||
Long-term investments | ||||||||||||||||||||||||
Corporate debt securities | $ | 100,690 | $ | 100,998 | ||||||||||||||||||||
U.S. government and government agency debt securities | 4,996 | 3,245 | ||||||||||||||||||||||
Total long-term investments | $ | 105,686 | $ | 104,243 | ||||||||||||||||||||
Total cash, cash equivalents and investments | $ | 450,103 | $ | 458,831 | ||||||||||||||||||||
Our short-term investments have maturities of twelve months or less and are classified as available-for-sale. Our long-term investments have maturities of greater than twelve months and are classified as available-for-sale. | ||||||||||||||||||||||||
The following tables summarizes our available-for-sale securities’ adjusted cost, gross unrealized gains, gross unrealized losses and fair value by significant investment category as of December 31, 2013 and 2014. | ||||||||||||||||||||||||
As of December 31, 2013 | ||||||||||||||||||||||||
Adjusted | Unrealized | Unrealized | Fair | |||||||||||||||||||||
Cost | Gains | Losses | Value | |||||||||||||||||||||
(in thousands) | ||||||||||||||||||||||||
Cash equivalents and marketable securities | ||||||||||||||||||||||||
Money market funds | $ | 98,437 | $ | — | $ | — | $ | 98,437 | ||||||||||||||||
Commercial paper | 101,773 | — | — | 101,773 | ||||||||||||||||||||
Corporate debt securities | 155,273 | 6 | (258 | ) | 155,021 | |||||||||||||||||||
U.S. government and government agency debt securities | 5,700 | — | (4 | ) | 5,696 | |||||||||||||||||||
Total cash equivalents and marketable securities | $ | 361,183 | $ | 6 | $ | (262 | ) | $ | 360,927 | |||||||||||||||
As of December 31, 2014 | ||||||||||||||||||||||||
Adjusted | Unrealized | Unrealized | Fair | |||||||||||||||||||||
Cost | Gains | Losses | Value | |||||||||||||||||||||
(in thousands) | ||||||||||||||||||||||||
Cash equivalents and marketable securities | ||||||||||||||||||||||||
Money market funds | $ | 89,113 | $ | — | $ | — | $ | 89,113 | ||||||||||||||||
Commercial paper | 54,792 | — | — | 54,792 | ||||||||||||||||||||
Corporate debt securities | 235,135 | 6 | (444 | ) | 234,697 | |||||||||||||||||||
U.S. government and government agency debt securities | 7,751 | — | (9 | ) | 7,742 | |||||||||||||||||||
Total cash equivalents and marketable securities | $ | 386,791 | $ | 6 | $ | (453 | ) | $ | 386,344 | |||||||||||||||
The following tables present available-for-sale investments by contractual maturity date as of December 31, 2013 and 2014. | ||||||||||||||||||||||||
As of December 31, 2013 | ||||||||||||||||||||||||
Adjusted | Fair Value | |||||||||||||||||||||||
Cost | ||||||||||||||||||||||||
(in thousands) | ||||||||||||||||||||||||
Due in one year or less | $ | 255,278 | $ | 255,241 | ||||||||||||||||||||
Due after one year through three years | 105,905 | 105,686 | ||||||||||||||||||||||
Total | $ | 361,183 | $ | 360,927 | ||||||||||||||||||||
As of December 31, 2014 | ||||||||||||||||||||||||
Adjusted | Fair Value | |||||||||||||||||||||||
Cost | ||||||||||||||||||||||||
(in thousands) | ||||||||||||||||||||||||
Due in one year or less | $ | 282,206 | $ | 282,101 | ||||||||||||||||||||
Due after one year through three years | 104,585 | 104,243 | ||||||||||||||||||||||
Total | $ | 386,791 | $ | 386,344 | ||||||||||||||||||||
The following tables summarize our available-for-sale securities’ fair value and gross unrealized losses aggregated by investment category and length of time that the individual securities have been in a continuous unrealized loss position as of December 31, 2013 and 2014. | ||||||||||||||||||||||||
As of December 31, 2013 | ||||||||||||||||||||||||
Twelve Months or Less | More than Twelve Months | Total | ||||||||||||||||||||||
Fair | Gross Unrealized Losses | Fair | Gross Unrealized Losses | Fair | Gross Unrealized Losses | |||||||||||||||||||
Value | Value | Value | ||||||||||||||||||||||
(in thousands) | ||||||||||||||||||||||||
Money market funds | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | ||||||||||||
Commercial paper | — | — | — | — | — | — | ||||||||||||||||||
Corporate debt securities | 130,308 | (258 | ) | — | — | 130,308 | (258 | ) | ||||||||||||||||
U.S. government and government agency debt securities | 5,697 | (4 | ) | — | — | 5,697 | (4 | ) | ||||||||||||||||
Total | $ | 136,005 | $ | (262 | ) | $ | — | $ | — | $ | 136,005 | $ | (262 | ) | ||||||||||
As of December 31, 2014 | ||||||||||||||||||||||||
Twelve Months or Less | More than Twelve Months | Total | ||||||||||||||||||||||
Fair | Gross Unrealized Losses | Fair | Gross Unrealized Losses | Fair | Gross Unrealized Losses | |||||||||||||||||||
Value | Value | Value | ||||||||||||||||||||||
(in thousands) | ||||||||||||||||||||||||
Money market funds | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | ||||||||||||
Commercial paper | — | — | — | — | — | — | ||||||||||||||||||
Corporate debt securities | 192,699 | (422 | ) | 12,148 | (22 | ) | 204,847 | (444 | ) | |||||||||||||||
U.S. government and government agency debt securities | 5,240 | (9 | ) | — | — | 5,240 | (9 | ) | ||||||||||||||||
Total | $ | 197,939 | $ | (431 | ) | $ | 12,148 | $ | (22 | ) | $ | 210,087 | $ | (453 | ) | |||||||||
Our investment policy requires investments to be investment grade, primarily rated “A1” by Standard & Poor’s or “P1” by Moody’s or better for short-term investments and rated “A” by Standard & Poor’s or “A2” by Moody’s or better for long-term investments, with the objective of minimizing the potential risk of principal loss. In addition, the investment policy limits the amount of credit exposure to any one issuer. | ||||||||||||||||||||||||
The unrealized losses on our available-for-sale securities as of December 31, 2014 were primarily a result of unfavorable changes in interest rates subsequent to the initial purchase of these securities. As of December 31, 2014, we owned 151 securities that were in an unrealized loss position. We do not intend nor expect to need to sell these securities before recovering the associated unrealized losses. We expect to recover the full carrying value of these securities. As a result, no portion of the unrealized losses at December 31, 2014 is deemed to be other-than-temporary and the unrealized losses are not deemed to be credit losses. When evaluating the investments for other-than-temporary impairment, we review factors such as the length of time and extent to which fair value has been below cost basis, the financial condition of the issuer and any changes thereto, and our intent to sell, or whether it is more likely than not we will be required to sell, the investment before recovery of the investment’s amortized cost basis. During the twelve months ended months ended December 31, 2014, we did not recognize any impairment charges. | ||||||||||||||||||||||||
Accounts Receivable | ||||||||||||||||||||||||
As of December 31, | ||||||||||||||||||||||||
2013 | 2014 | |||||||||||||||||||||||
(in thousands) | ||||||||||||||||||||||||
Accounts receivable, net | ||||||||||||||||||||||||
Accounts receivable | $ | 165,295 | $ | 219,655 | ||||||||||||||||||||
Allowance for doubtful accounts | (1,272 | ) | (1,218 | ) | ||||||||||||||||||||
Total accounts receivable, net | $ | 164,023 | $ | 218,437 | ||||||||||||||||||||
The following table summarizes our beginning allowance for doubtful accounts balance for each period, additions, write-offs net of recoveries and the balance at the end of each period for the twelve months ended January 31, 2013, the eleven months ended December 31, 2013 and the twelve months ended December 31, 2014: | ||||||||||||||||||||||||
Allowance for Doubtful Accounts | Balance at Beginning of Period | Additions | Write-offs, Net of Recoveries | Balance at End of Period | ||||||||||||||||||||
(in thousands) | ||||||||||||||||||||||||
For the twelve months ended January 31, 2013 | $ | 590 | 659 | (488 | ) | $ | 761 | |||||||||||||||||
For the eleven months ended December 31, 2013 | $ | 761 | 948 | (437 | ) | $ | 1,272 | |||||||||||||||||
For the twelve months ended December 31, 2014 | $ | 1,272 | 1,064 | (1,118 | ) | $ | 1,218 | |||||||||||||||||
Property and Equipment, net | ||||||||||||||||||||||||
As of December 31, | ||||||||||||||||||||||||
2013 | 2014 | |||||||||||||||||||||||
(in thousands) | ||||||||||||||||||||||||
Property and equipment | ||||||||||||||||||||||||
Servers, computers and other related equipment | $ | 27,361 | $ | 39,890 | ||||||||||||||||||||
Leasehold improvements | 11,314 | 25,893 | ||||||||||||||||||||||
Office furniture and equipment | 2,248 | 2,721 | ||||||||||||||||||||||
Construction in progress | 13,575 | 5,075 | ||||||||||||||||||||||
Software developed for internal use | 2,173 | 4,519 | ||||||||||||||||||||||
Total property and equipment | $ | 56,671 | $ | 78,098 | ||||||||||||||||||||
Less accumulated depreciation and amortization | (21,520 | ) | (35,177 | ) | ||||||||||||||||||||
Total property and equipment, net | $ | 35,151 | $ | 42,921 | ||||||||||||||||||||
Depreciation expenses totaled $7.1 million, $9.7 million and $14.7 million for the twelve months ended January 31, 2013, the eleven months ended December 31, 2013 and the twelve months ended December 31, 2014, respectively. There were no material write-offs during the twelve months ended January 31, 2013, the eleven months ended December 31, 2013 or the twelve months ended December 31, 2014. | ||||||||||||||||||||||||
Software developed for internal use generally has an expected useful life of three years from the date placed in service. As of December 31, 2013 and 2014 the net carrying amount was $1.5 million and $2.8 million, including accumulated amortization of $0.7 million and $1.7 million. Amortization expense for the twelve months ended January 31, 2013, the eleven months ended December 31, 2013 and the twelve months ended December 31, 2014 was $0.1 million, $0.6 million and $1.1 million, respectively. | ||||||||||||||||||||||||
Other Long-Term Liabilities | ||||||||||||||||||||||||
Other long-term liabilities consisted of the following as of December 31, 2014: | ||||||||||||||||||||||||
As of December 31, | ||||||||||||||||||||||||
2013 | 2014 | |||||||||||||||||||||||
(in thousands) | ||||||||||||||||||||||||
Other long-term liabilities | ||||||||||||||||||||||||
Long-term deferred rent | $ | 8,352 | $ | 15,068 | ||||||||||||||||||||
Other | 746 | 1,705 | ||||||||||||||||||||||
Total other long-term liabilities | $ | 9,098 | $ | 16,773 | ||||||||||||||||||||
For operating leases that include escalation clauses over the term of the lease, tenant improvement reimbursements and rent abatement periods, we recognize rent expense on a straight-line basis over the lease term including expected renewal periods. The difference between rent expense and rent payments is recorded as deferred rent. |
Fair_Value
Fair Value | 12 Months Ended | |||||||||||
Dec. 31, 2014 | ||||||||||||
Fair Value Disclosures [Abstract] | ||||||||||||
Fair Value | Fair Value | |||||||||||
We record cash equivalents and investments at fair value. Fair value is an exit price, representing the amount that would be received from the sale of an asset or paid to transfer a liability in an orderly transaction between market participants. As such, fair value is a market-based measurement that should be determined based on assumptions that market participants would use in pricing an asset or liability. Fair value measurements are required to be disclosed by level within the following fair value hierarchy: | ||||||||||||
Level 1 — Inputs are unadjusted, quoted prices in active markets for identical assets or liabilities at the measurement date. | ||||||||||||
Level 2 — Inputs (other than quoted prices included in Level 1) are either directly or indirectly observable for the asset or liability through correlation with market data at the measurement date and for the duration of the instrument’s anticipated life. | ||||||||||||
Level 3 — Inputs lack observable market data to corroborate management’s estimate of what market participants would use in pricing the asset or liability at the measurement date. Consideration is given to the risk inherent in the valuation technique and the risk inherent in the inputs to the model. | ||||||||||||
When determining fair value, whenever possible we use observable market data and rely on unobservable inputs only when observable market data is not available. | ||||||||||||
The fair value of these financial assets and liabilities was determined using the following inputs at December 31, 2013 and 2014: | ||||||||||||
As of December 31, 2013 | ||||||||||||
Fair Value Measurement Using | ||||||||||||
Quoted Prices in | Significant Other | Total | ||||||||||
Active Markets | Observable | |||||||||||
for Identical | Inputs | |||||||||||
Instruments (Level 1) | (Level 2) | |||||||||||
(in thousands) | ||||||||||||
Assets | ||||||||||||
Money market funds | $ | 98,437 | $ | — | $ | 98,437 | ||||||
Commercial paper | — | 101,773 | 101,773 | |||||||||
Corporate debt securities | — | 155,021 | 155,021 | |||||||||
U.S. government and government agency debt securities | — | 5,696 | 5,696 | |||||||||
Total assets measured at fair value | $ | 98,437 | $ | 262,490 | $ | 360,927 | ||||||
As of December 31, 2014 | ||||||||||||
Fair Value Measurement Using | ||||||||||||
Quoted Prices in | Significant Other | Total | ||||||||||
Active Markets | Observable | |||||||||||
for Identical | Inputs | |||||||||||
Instruments (Level 1) | (Level 2) | |||||||||||
(in thousands) | ||||||||||||
Assets | ||||||||||||
Money market funds | $ | 89,113 | $ | — | $ | 89,113 | ||||||
Commercial paper | — | 54,792 | 54,792 | |||||||||
Corporate debt securities | — | 234,697 | 234,697 | |||||||||
U.S. government and government agency debt securities | — | 7,742 | 7,742 | |||||||||
Total assets measured at fair value | $ | 89,113 | $ | 297,231 | $ | 386,344 | ||||||
Our money market funds are classified as Level 1 within the fair value hierarchy because they are valued primarily using quoted market prices. Our other cash equivalents and investments are classified as Level 2 within the fair value hierarchy because they are valued using professional pricing sources for identical or comparable instruments, rather than direct observations of quoted prices in active markets. As of December 31, 2013 and 2014, we held no Level 3 assets or liabilities. |
Other_LongTerm_Assets
Other Long-Term Assets | 12 Months Ended | |||||||
Dec. 31, 2014 | ||||||||
Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract] | ||||||||
Other Long-Term Assets | Other Long-Term Assets | |||||||
As of December 31, | ||||||||
2013 | 2014 | |||||||
(in thousands) | ||||||||
Other long-term assets | ||||||||
Patents, net of amortization | $ | 7,636 | $ | 6,939 | ||||
Long-term security deposits | 4,736 | 4,947 | ||||||
Other | 1,343 | 1,826 | ||||||
Total other long-term assets | $ | 13,715 | $ | 13,712 | ||||
Patents | ||||||||
In June 2013, we purchased certain internet radio-related patents from Yahoo! Inc. for $8.0 million in cash. We intend to hold these patents as part of our strategy to protect and defend Pandora from patent-related litigation. These patents are being amortized over the estimated useful life of the patents of eleven years. As of December 31, 2013 and 2014, the net carrying amount of these patents was $7.6 million and $6.9 million, including accumulated amortization of $0.4 million and $1.1 million. Amortization expense for the eleven months ended December 31, 2013 and the twelve months ended December 31, 2014 was $0.4 million and $0.7 million. | ||||||||
The following is a schedule of future amortization expense related to patents as of December 31, 2014: | ||||||||
As of | ||||||||
December 31, | ||||||||
2014 | ||||||||
(in thousands) | ||||||||
2015 | $ | 733 | ||||||
2016 | 733 | |||||||
2017 | 733 | |||||||
2018 | 733 | |||||||
2019 | 733 | |||||||
Thereafter | 3,275 | |||||||
Total future amortization expense | $ | 6,940 | ||||||
Restricted Cash | ||||||||
As part of our original May 2011 credit facility, we had entered into a cash collateral agreement in connection with the issuance of letters of credit that were used to satisfy deposit requirements under facility leases, refer to Note 8 “Debt Instruments” for more information. In September 2013, we amended the credit facility and terminated the cash collateral agreement. As a result, our outstanding letters of credit no longer required cash collateral and all cash collateral that was considered restricted cash was returned to us in September 2013. | ||||||||
Pending Acquisition | ||||||||
In June 2013, we entered into a local marketing agreement to program KXMZ-FM, a Rapid City, South Dakota-area terrestrial radio station. In addition, we entered into an agreement to purchase the assets of KXMZ-FM for a total purchase price of approximately $0.6 million in cash, subject to certain closing conditions. As of December 31, 2014, we have paid $0.4 million of the purchase price, which is included in the other long-term assets line item of our balance sheets. | ||||||||
The completion of the KXMZ-FM acquisition is subject to various closing conditions, which include, but are not limited to, regulatory approval by the Federal Communications Commission. Upon completion of these conditions, we expect to account for this acquisition as a business combination. |
Commitments_and_Contingencies
Commitments and Contingencies | 12 Months Ended | |||||||
Dec. 31, 2014 | ||||||||
Commitments and Contingencies Disclosure [Abstract] | ||||||||
Commitments and Contingencies | Commitments and Contingencies | |||||||
Leases | ||||||||
The following is a schedule of future minimum lease payments and future minimum sublease income under noncancelable operating leases as of December 31, 2014: | ||||||||
As of December 31, 2014 | ||||||||
Future Minimum Lease Payments | Future Minimum Sublease Income | |||||||
(in thousands) | ||||||||
2015 | $ | 11,130 | $ | 1,216 | ||||
2016 | 11,092 | 1,246 | ||||||
2017 | 10,956 | 1,277 | ||||||
2018 | 10,256 | 541 | ||||||
2019 | 8,863 | — | ||||||
Thereafter | 20,540 | — | ||||||
Total | $ | 72,837 | $ | 4,280 | ||||
We conduct our operations using leased office facilities in various locations. We lease office space under arrangements expiring through 2024. Rent expenses for twelve months ended January 31, 2013, the eleven months ended December 31, 2013 and the twelve months ended December 31, 2014 were $3.2 million, $5.7 million and $8.6 million, respectively. | ||||||||
For operating leases that include escalation clauses over the term of the lease, tenant improvement reimbursements and rent abatement periods, we recognize rent expense on a straight-line basis over the lease term including expected renewal periods. The difference between rent expense and rent payments is recorded as deferred rent in current and long-term liabilities. As of December 31, 2013 and 2014 deferred rent was $9.4 million and $15.3 million. | ||||||||
Purchase Obligation | ||||||||
As of December 31, 2014, we had a non-cancelable royalty-related contractual obligation, which is recoupable against future royalty payments in the amount of $5.0 million and a non-cancelable royalty-related contractual obligation, which is not recoupable against future royalty payments in the amount of $5.0 million. | ||||||||
Legal Proceedings | ||||||||
We have been in the past, and continue to be, a party to various legal proceedings, which have consumed, and may continue to consume, financial and managerial resources. We record a liability when we believe that it is both probable that a loss has been incurred and the amount can be reasonably estimated. Our management periodically evaluates developments that could affect the amount, if any, of liability that we have previously accrued and make adjustments as appropriate. Determining both the likelihood and the estimated amount of a loss requires significant judgment, and management’s judgment may be incorrect. We do not believe the ultimate resolution of any pending legal matters is likely to have a material adverse effect on our business, financial position, results of operations or cash flows. | ||||||||
PRO rate-setting litigation | ||||||||
On November 5, 2012, we filed a petition in the rate court established by the consent decree between the American Society of Composers, Authors and Publishers (“ASCAP”) and the U.S. Department of Justice in the U.S. District Court for the Southern District of New York for the determination of reasonable license fees and terms for the ASCAP consent decree license applicable to the period January 1, 2011 through December 31, 2015. On June 11, 2013 we filed a motion for partial summary judgment seeking a determination that as a matter of law the publishers alleged to have withdrawn certain rights of public performance by digital audio transmission from the scope of grant of rights ASCAP could license on behalf of such publishers subsequent to the date of our request for a license from ASCAP were not valid as to our ASCAP consent decree license. On September 17, 2013, our motion for partial summary judgment was granted, alleviating the need to negotiate direct licenses for such purportedly withdrawn performance rights. A trial to determine the royalty rates we will pay ASCAP concluded in February 2014 and the court issued its opinion in March 2014. On April 14, 2014, ASCAP, Sony/ATV, EMI Music Publishing, and Universal Publishing Group filed notices of appeal of the District Court’s decision with the Second Circuit Court of Appeals. Oral arguments have been scheduled for March 19, 2015. | ||||||||
On June 13, 2013, Broadcast Music, Inc. (“BMI”) filed a petition in the rate court established by the consent decree between BMI and the U.S. Department of Justice in the U.S. District Court for the Southern District of New York for the determination of reasonable fees and terms for the BMI consent decree license applicable to the period January 1, 2013 through December 31, 2014. We filed our response on July 19, 2013. On November 1, 2013, we filed a motion for partial summary judgment seeking a determination that as a matter of law the publishers alleged to have withdrawn certain rights of public performance by digital audio transmission from the scope of grant of rights BMI could license on behalf of such publishers subsequent to the date of our request for a license from BMI were not valid as to our BMI consent decree license. On December 18, 2013, our motion for summary judgment was denied based on the Court’s determination that an attempted partial withdrawal, although inconsistent with BMI’s obligations under its consent decree, would result in a publisher’s complete withdrawal from BMI. This rate proceeding commenced on February 10, 2015. | ||||||||
Pre-1972 copyright litigation | ||||||||
On April 17, 2014, UMG Recordings, Inc., Sony Music Entertainment, Capitol Records, LLC, Warner Music Group Corp., and ABKCO Music and Records, Inc. filed suit against Pandora Media Inc. in the Supreme Court of the State of New York. The complaint claims common law copyright infringement and unfair competition arising from allegations that Pandora owes royalties for the public performance of sound recordings recorded prior to February 15, 1972. | ||||||||
On October 2, 2014, Flo & Eddie Inc. filed suit against Pandora Media Inc. in the federal district court for the Central District of California. The complaint alleges misappropriation and conversion in connection with the public performance of sound recordings recorded prior to February 15, 1972. On December 19, 2014, Pandora filed a motion to strike Plaintiffs’ complaint in the Flo & Eddie case pursuant to California’s Anti-Strategic Lawsuit Against Public Participation (“Anti-SLAPP”) statute. This motion is currently pending before the Court. | ||||||||
The outcome of any litigation is inherently uncertain. Based on our current knowledge we believe that the final outcome of the matters discussed above will not likely, individually or in the aggregate, have a material adverse effect on our business, financial position, results of operations or cash flows; however, in light of the uncertainties involved in such matters, there can be no assurance that the outcome of each case or the costs of litigation, regardless of outcome, will not have a material adverse effect on our business. In particular, rate court proceedings could take years to complete, could be very costly and may result in royalty rates that are materially less favorable than rates we currently pay. | ||||||||
Indemnification Agreements, Guarantees and Contingencies | ||||||||
In the ordinary course of business, we are party to certain contractual agreements under which we may provide indemnifications of varying scope, terms and duration to customers, vendors, lessors, business partners and other parties with respect to certain matters, including, but not limited to, losses arising out of breach of such agreements, services to be provided by us or from intellectual property infringement claims made by third parties. In addition, we have entered into indemnification agreements with directors and certain officers and employees that will require us, among other things, to indemnify them against certain liabilities that may arise by reason of their status or service as directors, officers or employees. Such indemnification provisions are accounted for in accordance with guarantor’s accounting and disclosure requirements for guarantees, including indirect guarantees of indebtedness of others. To date, we have not incurred, do not anticipate incurring and therefore have not accrued for, any costs related to such indemnification provisions. | ||||||||
While the outcome of these matters cannot be predicted with certainty, we do not believe that the outcome of any claims under indemnification arrangements will have a material adverse effect on our consolidated financial position, results of operations or cash flows. |
Provision_for_Income_Taxes
Provision for Income Taxes | 12 Months Ended | |||||||||||
Dec. 31, 2014 | ||||||||||||
Income Tax Disclosure [Abstract] | ||||||||||||
Provision for Income Taxes | Provision for Income Taxes | |||||||||||
Loss before provision for income taxes by jurisdiction consists of the following: | ||||||||||||
Twelve months ended | Eleven months ended | Twelve months ended | ||||||||||
January 31, | December 31, | December 31, | ||||||||||
2013 | 2013 | 2014 | ||||||||||
(in thousands) | ||||||||||||
Jurisdiction | ||||||||||||
Domestic | $ | (39,891 | ) | $ | (24,005 | ) | $ | (24,230 | ) | |||
Foreign | 1,748 | (2,918 | ) | (5,592 | ) | |||||||
Loss before provision for income taxes | $ | (38,143 | ) | $ | (26,923 | ) | $ | (29,822 | ) | |||
The provision for income taxes consists of the following: | ||||||||||||
Twelve months ended | Eleven months ended | Twelve months ended | ||||||||||
January 31, | December 31, | December 31, | ||||||||||
2013 | 2013 | 2014 | ||||||||||
(in thousands) | ||||||||||||
Current | ||||||||||||
Federal | $ | — | $ | — | $ | — | ||||||
State and local | (4 | ) | 7 | 353 | ||||||||
International | 9 | 87 | 231 | |||||||||
Total current income tax expense | $ | 5 | $ | 94 | $ | 584 | ||||||
Deferred | ||||||||||||
Federal | (10,098 | ) | (10,166 | ) | (9,996 | ) | ||||||
State and local | (1,573 | ) | (2,027 | ) | (6,238 | ) | ||||||
Valuation allowance | 11,671 | 12,193 | 16,234 | |||||||||
Total deferred income tax expense | $ | — | $ | — | $ | — | ||||||
Total provision for income taxes | $ | 5 | $ | 94 | $ | 584 | ||||||
The provision for income taxes increased by $0.5 million during the twelve months ended December 31, 2014 as a result of an increase in foreign income taxes and state income taxes computed without the benefit of stock options. | ||||||||||||
The following table presents a reconciliation of the statutory federal rate and our effective tax rate: | ||||||||||||
Twelve months ended | Eleven months ended | Twelve months ended | ||||||||||
January 31, | December 31, | December 31, | ||||||||||
2013 | 2013 | 2014 | ||||||||||
U.S. federal taxes at statutory rate | 34 | % | 34 | % | 34 | % | ||||||
State taxes, net of federal benefit | — | — | (1 | ) | ||||||||
Permanent differences | (2 | ) | 5 | 4 | ||||||||
Foreign rate differential | (2 | ) | (4 | ) | (7 | ) | ||||||
Federal and state credits, net of reserve | 2 | 8 | 11 | |||||||||
Change in valuation allowance | (30 | ) | (46 | ) | (55 | ) | ||||||
Change in rate | (2 | ) | — | 6 | ||||||||
Deferred adjustments | — | 3 | 6 | |||||||||
Effective tax rate | — | % | — | % | (2 | )% | ||||||
The major components of deferred tax assets and liabilities consist of the following: | ||||||||||||
As of December 31, | ||||||||||||
2013 | 2014 | |||||||||||
(in thousands) | ||||||||||||
Deferred tax assets | ||||||||||||
Net operating loss carryforwards | $ | 34,525 | $ | 27,487 | ||||||||
Tax credit carryforwards | 5,745 | 10,839 | ||||||||||
Allowances and other | 7,037 | 13,832 | ||||||||||
Stock options | 10,159 | 24,215 | ||||||||||
Depreciation and amortization | 323 | 255 | ||||||||||
Total deferred tax assets | $ | 57,789 | $ | 76,628 | ||||||||
Deferred tax liabilities | ||||||||||||
Depreciation and amortization | (41 | ) | (2,645 | ) | ||||||||
Total deferred tax liabilities | $ | (41 | ) | $ | (2,645 | ) | ||||||
Valuation allowance | (57,748 | ) | (73,983 | ) | ||||||||
Net deferred tax assets | $ | — | $ | — | ||||||||
At December 31, 2014, we had federal net operating loss carryforwards of approximately $447.0 million and tax credit carryforwards of approximately $7.9 million. If realized, approximately $378.0 million of the net operating loss carryforwards will be recognized as a benefit through additional paid in capital. The federal net operating losses and tax credits expire in years beginning in 2021. At December 31, 2014, we had state net operating loss carryforwards of approximately $496.0 million which expire in years beginning in 2015. In addition, we had state tax credit carryforwards of approximately $8.3 million that do not expire and approximately $3.7 million of credits that will expire beginning in 2024. | ||||||||||||
Under Section 382 and 383 of the Internal Revenue Code of 1986, as amended, or the Code, if a corporation undergoes an "ownership change," the corporation's ability to use its pre-change net operating loss carryforwards and other pre-change tax attributes, such as research tax credits, to offset its post-change income may be limited. In general, an "ownership change" will occur if there is a cumulative change in our ownership by "5-percent shareholders" that exceeds 50 percentage points over a rolling three-year period. Similar rules may apply under state tax laws. Utilization of our net operating loss and tax credit carryforwards may be subject to annual limitations due to ownership changes. Such annual limitations could result in the expiration of our net operating loss and tax credit carryforwards before they are utilized. | ||||||||||||
During the twelve months ended December 31, 2014, our valuation allowance increased by $16.2 million. At December 31, 2013 and 2014, we maintained a full valuation allowance on our net deferred tax assets. The valuation allowance was determined in accordance with the provisions of Accounting Standards Codification 740 - Income Taxes, which requires an assessment of both positive and negative evidence when determining whether it is more likely than not that deferred tax assets are recoverable. Such assessment is required on a jurisdiction by jurisdiction basis. Our history of cumulative losses, along with expected future U.S. losses required that a full valuation allowance be recorded against all net deferred tax assets. We intend to maintain a full valuation allowance on net deferred tax assets until sufficient positive evidence exists to support reversal of the valuation allowance. | ||||||||||||
At December 31, 2013 and 2014 we have unrecognized tax benefits of approximately $5.2 million and $5.8 million. The increase in our unrecognized tax benefits was primarily attributable to current year activities. A reconciliation of the beginning and ending amounts of unrecognized tax benefits (excluding interest and penalties) is as follows: | ||||||||||||
Eleven months ended | Twelve months ended | |||||||||||
December 31, | December 31, | |||||||||||
2013 | 2014 | |||||||||||
(in thousands) | ||||||||||||
Beginning balance | $ | 2,633 | $ | 5,220 | ||||||||
Increases related to tax positions taken during a prior year | 108 | 1,161 | ||||||||||
Decreases related to tax positions taken during a prior year | — | (1,924 | ) | |||||||||
Increases related to tax positions taken during the current year | 2,479 | 1,336 | ||||||||||
Ending balance | $ | 5,220 | $ | 5,793 | ||||||||
The total unrecognized tax benefits, if recognized, would not affect our effective tax rate as the tax benefit would increase a deferred tax asset, which is currently offset with a full valuation allowance. We do not anticipate that the amount of existing unrecognized tax benefits will significantly increase or decrease within the next twelve months. Accrued interest and penalties related to unrecognized tax benefits are recorded in the provision for income taxes. We did not have such interest, penalties or tax benefits during the twelve months ended January 31, 2013, the eleven months ended December 31, 2013 or the twelve months ended December 31, 2014. | ||||||||||||
We file income tax returns in the United States, California, other states and international jurisdictions. Tax years 2000 to 2014 remain subject to examination for U.S. federal, state and international purposes. All net operating losses and tax credits generated to date are subject to adjustment for U.S. federal and state purposes. We are not currently under examination in any federal, state or international jurisdictions. |
Debt_Instruments
Debt Instruments | 12 Months Ended |
Dec. 31, 2014 | |
Debt Disclosure [Abstract] | |
Debt Instruments | Debt Instruments |
In May 2011, we entered into a $30.0 million credit facility with a syndicate of financial institutions. At our option, drawn amounts under the credit facility bore an interest rate of either an adjusted London Interbank Offered Rate, or LIBOR, plus 2.75% - 3.00% or an alternate base rate plus 1.75% - 2.00%, both of which were per annum rates based on outstanding borrowings. Adjusted LIBOR is LIBOR for a particular interest period multiplied by the statutory reserve rate. The alternate base rate is the greatest of the prime rate, the federal funds effective rate plus 0.5% and adjusted LIBOR plus 1%. In addition, the credit facility included a non-usage charge on the available balance of 0.5% - 0.625% per annum based on outstanding borrowings. Under the credit facility, we could request the issuance of up to $5.0 million in letters of credit by the financial institutions. The annual charge for any outstanding letters of credit was 2.75% - 3.00% per annum based on outstanding borrowings. | |
In September 2013, we amended this credit facility. The amendment increased the aggregate commitment amount from $30.0 million to $60.0 million and extended the maturity date from May 12, 2015 to September 12, 2018. The amendment further decreased the interest rate on borrowings by 0.75% to either LIBOR plus 2.00% - 2.25% or an alternate base rate plus 1.00% - 1.25%, both of which are per annum rates based on outstanding borrowings. In addition, the amendment decreased the non-usage fee to 0.375% per annum. The amount of available letters of credit under the amended credit facility was increased from $5.0 million to $15.0 million, and the annual charge for outstanding letters of credit was reduced by 0.75% to 2.00% - 2.25% per annum based on outstanding borrowings. | |
The amount of borrowings available under the credit facility at any time is based on our monthly accounts receivable balance at such time and the amounts borrowed are collateralized by our personal property, including such accounts receivable but excluding intellectual property. The credit facility contains customary events of default, conditions to borrowing and covenants, including restrictions on our ability to dispose of assets, make acquisitions, incur debt, incur liens and make distributions to stockholders. The credit facility also includes a financial covenant requiring the maintenance of minimum liquidity of at least $5.0 million. During the continuance of an event of a default, the lenders may accelerate amounts outstanding, terminate the credit facility and foreclose on all collateral. | |
As part of the original credit facility, we had entered into a cash collateral agreement in connection with the issuance of letters of credit that were used to satisfy deposit requirements under facility leases. Under the amended credit facility, the cash collateral agreement was terminated and, as a result, letters of credit no longer require cash collateral. In connection with the termination of the cash collateral agreement, all cash collateral that was considered restricted cash was returned to us in September 2013. | |
In July 2013, we borrowed approximately $10.0 million from the credit facility to enhance our working capital position. This amount was paid off in full in August 2013. As of December 31, 2013 and 2014, we had no outstanding borrowings, $1.1 million in letters of credit outstanding and $58.9 million of available borrowing capacity under the credit facility. | |
Total debt issuance costs associated with the May 2011 credit facility were $1.0 million, which were amortized as interest expense over the four-year term of the May 2011 credit facility agreement. As part of the amendment, the amortization period for the remaining unamortized costs incurred in connection with the May 2011 credit facility was adjusted to reflect the amended term of the credit facility. We further incurred $0.5 million in debt issuance costs in connection with the amendment, which are being amortized over the term of the amended credit facility. For twelve months ended January 31, 2013, the eleven months ended December 31, 2013 and the twelve months ended December 31, 2014, $0.3 million, $0.2 million and $0.2 million of debt issuance costs, respectively, were amortized and included in interest expense. |
Stockbased_Compensation_Plans_
Stock-based Compensation Plans and Awards | 12 Months Ended | ||||||||||||
Dec. 31, 2014 | |||||||||||||
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |||||||||||||
Stock-based Compensation Plans and Awards | Stock-based Compensation Plans and Awards | ||||||||||||
Stock Compensation Plans | |||||||||||||
In 2000, our board of directors adopted the 2000 Stock Incentive Plan, as amended (the "2000 Plan"). In 2004, our board of directors adopted the 2004 Stock Option Plan (the "2004 Plan"), which replaced the 2000 Plan and provided for the issuance of incentive and non-statutory stock options to employees and other service providers of Pandora. In 2011, our board of directors adopted the Pandora Media, Inc. 2011 Equity Incentive Plan (the "2011 Plan" and, together with the 2000 Plan and the 2004 Plan, the "Plans"), which replaced the 2004 Plan. The Plans are administered by the compensation committee of our board of directors (the "Plan Administrator"). | |||||||||||||
The 2011 Plan provides for the issuance of stock options, restricted stock units and other stock-based awards. Shares of common stock reserved for issuance under the 2011 Plan include 12,000,000 shares of common stock reserved for issuance under the 2011 Plan and 1,506,424 shares of common stock previously reserved but unissued under the 2004 Plan as of June 14, 2011. To the extent awards outstanding as of June 14, 2011 under the 2004 Plan expire or terminate for any reason prior to exercise or would otherwise return to the share reserve under the 2004 Plan, the shares of common stock subject to such awards will instead be available for future issuance under the 2011 Plan. Each year, the number of shares in the reserve under the Plan may be increased by the lesser of 10,000,000 shares, 4.0% of the outstanding shares of common stock on the last day of the prior fiscal year or another amount determined by our board of directors. The 2011 Plan is scheduled to terminate in 2021, unless our board of directors determines otherwise. | |||||||||||||
Under the 2011 Plan, the Plan Administrator determines various terms and conditions of awards including option expiration dates (no more than ten years from the date of grant), vesting terms (generally over a four-year period) and payment terms. For stock option grants the exercise price is determined by the Plan Administrator, but generally may not be less than the fair market value of the common stock on the date of grant. | |||||||||||||
Shares available for grant as of December 31, 2014 and the activity during the twelve months ended December 31, 2014 are as follows: | |||||||||||||
Shares Available for Grant | |||||||||||||
Equity Awards | ESPP | Total | |||||||||||
Balance as of December 31, 2013 | 9,048,200 | — | 9,048,200 | ||||||||||
Additional shares authorized | 7,815,837 | 4,000,000 | 11,815,837 | ||||||||||
Options granted | (349,500 | ) | — | (349,500 | ) | ||||||||
Restricted stock granted | (4,909,360 | ) | — | (4,909,360 | ) | ||||||||
ESPP shares issued | — | (142,265 | ) | (142,265 | ) | ||||||||
Options forfeited | 1,639,935 | — | 1,639,935 | ||||||||||
Restricted stock forfeited | 1,081,348 | — | 1,081,348 | ||||||||||
Balance as of December 31, 2014 | 14,326,460 | 3,857,735 | 18,184,195 | ||||||||||
Employee Stock Purchase Plan | |||||||||||||
In December 2013, our board of directors approved the Employee Stock Purchase Plan (“ESPP”), which was approved by our stockholders at the annual meeting in June 2014. The ESPP allows eligible employees to purchase shares of our common stock through payroll deductions of up to 15% of their eligible compensation, subject to a maximum of $25,000 per calendar year. Shares reserved for issuance under the ESPP include 4,000,000 shares of common stock. The ESPP provides for six- month offering periods, commencing in February and August of each year. At the end of each offering period employees are able to purchase shares at 85% of the lower of the fair market value of our common stock on the first trading day of the offering period or on the last day of the offering period. | |||||||||||||
We estimate the fair value of shares to be issued under the ESPP on the first day of the offering period using the Black-Scholes valuation model. The determination of the fair value is affected by our stock price on the first date of the offering period, as well as other assumptions including the risk-free interest rate, the estimated volatility of our stock price over the term of the offering period, the expected term of the offering period and the expected dividend rate. Stock-based compensation expense related to the ESPP is recognized on a straight-line basis over the offering period, net of estimated forfeitures. | |||||||||||||
The per-share fair value of shares to be granted under the ESPP is determined on the first day of the offering period using the Black-Scholes option pricing model using the following assumptions: | |||||||||||||
Twelve months ended | |||||||||||||
December 31, | |||||||||||||
2014 | |||||||||||||
Expected life (in years) | 0.5 | ||||||||||||
Risk-free interest rate | 0.06 | % | |||||||||||
Expected volatility | 42 | % | |||||||||||
Expected dividend yield | 0 | % | |||||||||||
During the twelve months ended December 31, 2014, we recognized $2.1 million of stock-based compensation expense related to the ESPP. In the twelve months ended December 31, 2014, 149,378 shares of common stock were issued under the ESPP at a purchase price of $23.95, which represents 85% of our stock price on the date of purchase of $28.17. There were no stock-based compensation expense related to the ESPP or shares of common stock issued under the ESPP in the twelve months ended January 31, 2013 or the eleven months ended December 31, 2013. | |||||||||||||
Stock Options | |||||||||||||
Stock option activity during the twelve months ended December 31, 2014 was as follows: | |||||||||||||
Options Outstanding | |||||||||||||
Outstanding | Weighted-Average Exercise Price | Weighted-Average Remaining Contractual Term (in years) | Aggregate Intrinsic Value (1) | ||||||||||
Stock Options | |||||||||||||
(in thousands, except share and per share data) | |||||||||||||
Balance as of December 31, 2013 | 22,708,200 | $ | 4.85 | 5.76 | $ | 493,866 | |||||||
Granted | 349,500 | 35.61 | |||||||||||
Exercised | (10,437,509 | ) | 1.62 | ||||||||||
Forfeited | (1,639,935 | ) | 11.49 | ||||||||||
Balance as of December 31, 2014 | 10,980,256 | 7.91 | 1.08 | 120,033 | |||||||||
Exercisable as of December 31, 2014 | 7,958,775 | 4.39 | 0.4 | 108,296 | |||||||||
Expected to vest as of December 31, 2014 (2) | 2,719,853 | $ | 17.05 | 2.82 | $ | 10,822 | |||||||
(1)Amounts represent the difference between the exercise price and the fair value of common stock at each period end for all in the money options outstanding based on the fair value per share of common stock of $26.60 and $17.83 as of December 31, 2013 and 2014. | |||||||||||||
(2)Options expected to vest reflect an estimated forfeiture rate. | |||||||||||||
The per-share fair value of stock options granted during the twelve months ended January 31, 2013, the eleven months ended December 31, 2013 and the twelve months ended December 31, 2014 was determined on the grant date using the Black-Scholes option pricing model with the following assumptions: | |||||||||||||
Twelve months ended | Eleven months ended | Twelve months ended | |||||||||||
January 31, | December 31, | December 31, | |||||||||||
2013 | 2013 | 2014 | |||||||||||
Expected life (in years) | 6.02 - 6.67 | 5.99 - 6.32 | 6.08 | ||||||||||
Risk-free interest rate | 0.99% - 1.52% | 1.00% - 2.04% | 1.71% - 1.93% | ||||||||||
Expected volatility | 56% - 57% | 58% - 59% | 58% - 59% | ||||||||||
Expected dividend yield | 0 | % | 0 | % | 0 | % | |||||||
The expected term of stock options granted represents the weighted average period that the stock options are expected to remain outstanding. We determined the expected term assumption based on our historical exercise behavior combined with estimates of the post-vesting holding period. Expected volatility is based on historical volatility of peer companies in our industry that have similar vesting and contractual terms. The risk free interest rate is based on the implied yield currently available on U.S. Treasury issues with terms approximately equal to the expected life of the option. We currently have no history or expectation of paying cash dividends on our common stock. | |||||||||||||
During the twelve months ended January 31, 2013, the eleven months ended December 31, 2013 and the twelve months ended December 31, 2014, we recorded stock-based compensation expense related to stock options of approximately $14.9 million, $10.6 million and $14.7 million, respectively. | |||||||||||||
As of December 31, 2014, there was $26.7 million of unrecognized compensation cost related to outstanding employee stock options. This amount is expected to be recognized over a weighted-average period of 2.86 years. To the extent the actual forfeiture rate differs from our estimates, stock-based compensation related to these awards could differ from our expectations. | |||||||||||||
The weighted-average fair value of stock option grants made during the twelve months ended January 31, 2013, the eleven months ended December 31, 2013 and the twelve months ended December 31, 2014 was $5.91, $9.34 and $19.74 per share, respectively. | |||||||||||||
The total grant date fair value of stock options vested during the twelve months ended January 31, 2013, the eleven months ended December 31, 2013 and the twelve months ended December 31, 2014 was $13.0 million, $9.1 million and $16.0 million, respectively. | |||||||||||||
The aggregate intrinsic value of stock options exercised during the twelve months ended January 31, 2013, the eleven months ended December 31, 2013 and the twelve months ended December 31, 2014 was $84.9 million, $93.8 million and $169.2 million, respectively. The total fair value of options vested during the twelve months ended January 31, 2013, the eleven months ended December 31, 2013 and the twelve months ended December 31, 2014 was $13.1 million, $9.4 million and $16.5 million, respectively. | |||||||||||||
Stock option awards with both a service period and a market condition | |||||||||||||
In March 2012, Mr. Joseph Kennedy, the Company’s former Chief Executive Officer, was granted non-statutory stock options to purchase 800,000 shares of common stock with an exercise price of $10.63 per share. This award included both a service period and a market vesting condition that stipulated that the award would vest if the 60-day trailing volume weighted average price of our common stock exceeded $21.00 per share, or if there was a sale of the Company for at least $21.00 per share, in each case prior to July 2017. Upon the market condition being met, the award would vest ratably over four years, beginning in July 2013, subject to severance and change of control acceleration. | |||||||||||||
We used a Monte Carlo simulation to value the award due to the market vesting condition. The following assumptions were used to value the award using the Monte Carlo simulation: ten-year term, risk-free interest rate of 2.33%, expected volatility of 70% and a beginning stock price of $10.63. The grant-date fair value for the award was $6.08 per share. | |||||||||||||
In March 2013, we announced that we would begin a process to identify a successor to Mr. Kennedy as CEO, which prompted us to re-evaluate certain estimates and assumptions related to the stock-based compensation expense associated with his awards. As a result of this re-evaluation, we reduced stock-based compensation expense by $1.7 million during the three months ended April 30, 2013, primarily related to the award with both a service period and a market condition. In September 2013, the market condition for Mr. Kennedy’s awards was met and the shares became exercisable as if they had been vesting ratably over four years from July 2013. In the eleven months ended December 31, 2013, we recorded $0.6 million in additional stock-based compensation expense in connection with these awards. | |||||||||||||
Restricted Stock Units | |||||||||||||
The fair value of the restricted stock units is expensed ratably over the vesting period. RSUs vest annually on a cliff basis over the service period, which is generally four years. During the twelve months ended January 31, 2013, the eleven months ended December 31, 2013 and the twelve months ended December 31, 2014, we recorded stock-based compensation expense related to restricted stock units of approximately $10.4 million, $28.9 million and $69.9 million, respectively. As of December 31, 2014, total compensation cost not yet recognized of approximately $197.3 million related to non-vested restricted stock units, is expected to be recognized over a weighted average period of 2.60 years. | |||||||||||||
The following table summarizes the activities for our RSUs for the twelve months ended December 31, 2014: | |||||||||||||
Number of RSUs | Weighted-Average Grant Date Fair Value | ||||||||||||
Unvested as of December 31, 2013 | 10,365,512 | $ | 14.31 | ||||||||||
Granted | 4,909,360 | 32.29 | |||||||||||
Vested | (3,169,456 | ) | 13.85 | ||||||||||
Forfeited | (1,081,348 | ) | 19.06 | ||||||||||
Unvested as of December 31, 2014 | 11,024,068 | 21.99 | |||||||||||
Expected to vest as of December 31, 2014 (1) | 9,914,453 | $ | 21.88 | ||||||||||
(1) RSUs expected to vest reflect an estimated forfeiture rate. | |||||||||||||
Stock-based Compensation Expense | |||||||||||||
Stock-based compensation expense related to all employee and non-employee stock-based awards was as follows: | |||||||||||||
Twelve months ended | Eleven months ended | Twelve months ended | |||||||||||
January 31, | December 31, | December 31, | |||||||||||
2013 | 2013 | 2014 | |||||||||||
(in thousands) | |||||||||||||
Stock-based compensation expense | |||||||||||||
Cost of revenue—Other | $ | 1,214 | $ | 1,946 | $ | 4,414 | |||||||
Product development | 4,530 | 8,802 | 17,546 | ||||||||||
Sales and marketing | 12,294 | 20,222 | 42,165 | ||||||||||
General and administrative | 7,462 | 9,071 | 22,930 | ||||||||||
Total stock-based compensation expense | $ | 25,500 | $ | 40,041 | $ | 87,055 | |||||||
During the eleven months ended December 31, 2013 and the twelve months ended December 31, 2014, we capitalized $0.7 million and $1.3 million of stock-based compensation as internal use software and website development costs. There was no capitalized stock-based compensation in the twelve months ended January 31, 2013. |
Common_Stock_and_Net_Loss_Per_
Common Stock and Net Loss Per Share | 12 Months Ended | |||||||||||
Dec. 31, 2014 | ||||||||||||
Earnings Per Share [Abstract] | ||||||||||||
Common Stock and Net Loss Per Share | Common Stock and Net Loss per Share | |||||||||||
Each share of common stock has the right to one vote per share. The holders of common stock are also entitled to receive dividends as and when declared by our board of directors, whenever funds are legally available. | ||||||||||||
Follow-on Public Offering | ||||||||||||
In September 2013, we completed a follow-on public equity offering in which we sold an aggregate of 15,730,000 shares of our common stock, inclusive of 2,730,000 shares sold pursuant to the exercise by the underwriters of an option to purchase additional shares, at a public offering price of $25.00 per share. In addition, another 5,200,000 shares were sold by certain selling stockholders. We received aggregate net proceeds of $378.7 million, after deducting underwriting discounts and commissions and offering expenses from sales of our shares in the offering. We did not receive any of the proceeds from the sales of shares by the selling stockholders. | ||||||||||||
Net Loss per Share | ||||||||||||
Basic net loss per share is computed by dividing the net loss by the weighted-average number of shares of common stock outstanding during the period. | ||||||||||||
Diluted net loss per share is computed by giving effect to all potential shares of common stock, including stock options and restricted stock units, to the extent dilutive. Basic and diluted net loss per share were the same for the twelve months ended January 31, 2013, the eleven months ended December 31, 2013 and the twelve months ended December 31, 2014, as the inclusion of all potential common shares outstanding would have been anti-dilutive. | ||||||||||||
The following table sets forth the computation of historical basic and diluted net loss per share: | ||||||||||||
Twelve months ended | Eleven months ended | Twelve months ended | ||||||||||
January 31, | December 31, | December 31, | ||||||||||
2013 | 2013 | 2014 | ||||||||||
(in thousands except per share amounts) | ||||||||||||
Numerator | ||||||||||||
Net loss | $ | (38,148 | ) | $ | (27,017 | ) | $ | (30,406 | ) | |||
Denominator | ||||||||||||
Weighted-average common shares outstanding used in computing basic and diluted net loss per share | 168,294 | 180,968 | 205,273 | |||||||||
Net loss per share, basic and diluted | $ | (0.23 | ) | $ | (0.15 | ) | $ | (0.15 | ) | |||
The following potential common shares outstanding were excluded from the computation of diluted net loss per share because including them would have been anti-dilutive: | ||||||||||||
As of January 31, 2013 | As of December 31, 2013 | As of December 31, 2014 | ||||||||||
(in thousands) | ||||||||||||
Options to purchase common stock | 26,103 | 22,708 | 10,980 | |||||||||
Restricted stock units | 5,512 | 10,366 | 11,024 | |||||||||
Total common stock equivalents | 31,615 | 33,074 | 22,004 | |||||||||
Selected_Quarterly_Financial_D
Selected Quarterly Financial Data (unaudited) | 12 Months Ended | |||||||||||||||||||||||||||||||
Dec. 31, 2014 | ||||||||||||||||||||||||||||||||
Quarterly Financial Information Disclosure [Abstract] | ||||||||||||||||||||||||||||||||
Selected Quarterly Financial Data (unaudited) | Selected Quarterly Financial Data (unaudited) | |||||||||||||||||||||||||||||||
Three months ended | Two months ended | Three months ended | ||||||||||||||||||||||||||||||
April 30, | July 31, | October 31, | December 31, | March 31, | June 30, | September 30, | December 31, | |||||||||||||||||||||||||
2013 | 2013 | 2013 | 2013 (1) | 2014 | 2014 | 2014 | 2014 | |||||||||||||||||||||||||
(in thousands, except per share data) | ||||||||||||||||||||||||||||||||
Total revenue | $ | 125,510 | $ | 157,355 | $ | 180,376 | $ | 136,992 | $ | 194,315 | $ | 218,894 | $ | 239,593 | $ | 268,000 | ||||||||||||||||
Cost of revenue | ||||||||||||||||||||||||||||||||
Cost of Revenue—Content acquisition costs | 82,853 | 81,880 | 86,989 | 63,144 | 108,275 | 111,461 | 111,315 | 115,326 | ||||||||||||||||||||||||
Cost of revenue—Other | 9,845 | 11,141 | 12,532 | 8,699 | 14,979 | 13,989 | 15,453 | 17,206 | ||||||||||||||||||||||||
Total cost of revenue | 92,698 | 93,021 | 99,521 | 71,843 | 123,254 | 125,450 | 126,768 | 132,532 | ||||||||||||||||||||||||
Gross profit | 32,812 | 64,334 | 80,855 | 65,149 | 71,061 | 93,444 | 112,825 | 135,468 | ||||||||||||||||||||||||
Operating expenses | ||||||||||||||||||||||||||||||||
Product development | 7,312 | 8,301 | 9,244 | 6,437 | 11,831 | 13,076 | 13,381 | 14,865 | ||||||||||||||||||||||||
Sales and marketing | 40,075 | 45,606 | 50,285 | 33,039 | 61,864 | 66,232 | 72,320 | 76,914 | ||||||||||||||||||||||||
General and administrative | 13,872 | 18,061 | 22,823 | 14,544 | 26,361 | 25,865 | 29,143 | 31,074 | ||||||||||||||||||||||||
Total operating expenses | 61,259 | 71,968 | 82,352 | 54,020 | 100,056 | 105,173 | 114,844 | 122,853 | ||||||||||||||||||||||||
Income (loss) from operations | (28,447 | ) | (7,634 | ) | (1,497 | ) | 11,129 | (28,995 | ) | (11,729 | ) | (2,019 | ) | 12,615 | ||||||||||||||||||
Net income (loss) attributable to common stockholders | (28,587 | ) | (7,787 | ) | (1,700 | ) | 11,057 | (28,931 | ) | (11,728 | ) | (2,025 | ) | 12,278 | ||||||||||||||||||
Net income (loss) per share, basic | (0.16 | ) | (0.04 | ) | (0.01 | ) | 0.06 | (0.14 | ) | (0.06 | ) | (0.01 | ) | 0.06 | ||||||||||||||||||
Net income (loss) per share, diluted | $ | (0.16 | ) | $ | (0.04 | ) | $ | (0.01 | ) | $ | 0.05 | $ | (0.14 | ) | $ | (0.06 | ) | $ | (0.01 | ) | $ | 0.06 | ||||||||||
(1) We changed our fiscal year from the twelve months ending January 31 to the calendar twelve months ending December 31, effective beginning with the year ended December 31, 2013. Therefore, for financial reporting purposes our fourth quarter of the prior fiscal year was shortened from the three months ended January 31 to the two months ended December 31. |
Subsequent_Event
Subsequent Event | 12 Months Ended |
Dec. 31, 2014 | |
Subsequent Events [Abstract] | |
Subsequent Event | Subsequent Event |
Subsequent to December 31, 2014, we entered into a sublease agreement to increase our leased space at our corporate headquarters in Oakland, California. This agreement is expected to result in an additional operating lease obligation of approximately $7.6 million through 2020. |
Summary_of_Significant_Account1
Summary of Significant Accounting Policies (Policies) | 12 Months Ended |
Dec. 31, 2014 | |
Accounting Policies [Abstract] | |
Basis of Presentation | Basis of Presentation |
The consolidated financial statements and accompanying notes have been prepared in accordance with United States generally accepted accounting principles ("U.S. GAAP") and include the accounts of Pandora and our wholly-owned subsidiaries. All intercompany balances and transactions have been eliminated in consolidation. | |
Certain changes in presentation have been made to conform the prior period presentation to current period reporting. Our statements of operations now include the presentation of gross profit, which is calculated as total revenue less cost of revenue. In addition, we have reclassified certain software license fees, facilities-related expenses and depreciation expenses among the general and administrative, cost of revenue—other, sales and marketing and product development lines in our consolidated statements of operations. Furthermore, we have reclassified certain compensation-related amounts from the accrued liabilities line item to the accrued compensation line item of our consolidated balance sheets and our consolidated statements of cash flows. | |
Use of Estimates | Use of Estimates |
The preparation of financial statements in conformity with U.S. GAAP requires management to make certain estimates, judgments and assumptions that affect the reported amounts of assets and liabilities and the related disclosures at the date of the financial statements, as well as the reported amounts of revenue and expenses during the periods presented. Estimates are used in several areas including, but not limited to determining accrued royalties, selling prices for elements sold in multiple-element arrangements, the allowance for doubtful accounts, the fair market value of stock options and the impact of forfeitures on stock-based compensation, the provision for (benefit from) income taxes and the subscription return reserve. To the extent there are material differences between these estimates, judgments, or assumptions and actual results, our financial statements could be affected. In many cases, the accounting treatment of a particular transaction is specifically dictated by U.S. GAAP and does not require management’s judgment in its application. There are also areas in which management’s judgment in selecting among available alternatives would not produce a materially different result. | |
Segments | Segments |
Pandora operates in one segment. Our chief operating decision maker (the "CODM"), our Chief Executive Officer, manages our operations on a consolidated basis for purposes of allocating resources. When evaluating our financial performance, the CODM reviews separate revenue information for our advertising, subscription and other offerings, while all other financial information is reviewed on a consolidated basis. | |
Fiscal Year | Fiscal year |
We changed our fiscal year from the twelve months ending January 31 to the calendar twelve months ending December 31, effective beginning with the year ended December 31, 2013. As a result of this change, our prior fiscal year was an eleven-month transition period ended on December 31, 2013. In these consolidated statements, including the notes thereto, the current year financial results ended December 31, 2014 are for a twelve-month period. Audited results for the periods ended December 31, 2013 and January 31, 2013 are for an eleven-month period and a twelve-month period. In addition, the accompanying consolidated statements of operations and consolidated statements of cash flows include unaudited comparative amounts for the eleven-month period ended December 31, 2012. These unaudited consolidated financial statements have been prepared in accordance with U.S. GAAP. In our opinion, the unaudited consolidated financial statements include all adjustments of a normal recurring nature necessary for the fair presentation of our results of operations and our cash flows for the eleven months ended December 31, 2012. | |
All references herein to a fiscal year prior to December 31, 2013 refer to the twelve months ended January 31 of such year, and references to the first, second, third and fourth fiscal quarters ended prior to November 1, 2013 refer to the three months ended April 30, July 31, October 31 and January 31, respectively. | |
All references herein to a fiscal year subsequent to December 31, 2013 refer to the twelve months ended December 31 of such year, and references to the first, second, third and fourth fiscal quarters ended subsequent to November 1, 2013 refer to the three months ended March 31, June 30, September 30 and December 31, respectively. | |
Revenue Recognition | Revenue Recognition |
We recognize revenue when four basic criteria are met: (1) persuasive evidence exists of an arrangement with the customer reflecting the terms and conditions under which the products or services will be provided; (2) delivery has occurred or services have been provided; (3) the fee is fixed or determinable; and (4) collection is reasonably assured. We consider a signed agreement, a binding insertion order or other similar documentation to be persuasive evidence of an arrangement. Collectability is assessed based on a number of factors, including transaction history and the creditworthiness of a customer. If it is determined that collection is not reasonably assured, revenue is not recognized until collection becomes reasonably assured, which is generally upon receipt of cash. We record cash received in advance of revenue recognition as deferred revenue. | |
Advertising revenue. We generate advertising revenue primarily from audio, display and video advertising. We generate the majority of our advertising revenue through the delivery of advertising impressions sold on a cost per thousand, or CPM, basis. In determining whether an arrangement exists, we ensure that a binding arrangement, such as an insertion order or a fully executed customer-specific agreement, is in place. We generally recognize revenue based on delivery information from our campaign trafficking systems. | |
We also generate advertising revenue pursuant to arrangements with advertising agencies and brokers. Under these arrangements, we provide the agencies and brokers the ability to sell advertising inventory on our service directly to advertisers. We report this revenue net of amounts due to agencies and brokers because we are not the primary obligor under these arrangements, we do not set the pricing and do not establish or maintain the relationship with the advertisers. | |
Subscription and other revenue. Subscription and other revenue is generated primarily through the sale of a premium version of the Pandora service which currently includes advertisement-free access and higher audio quality on supported devices. We offer both an annual and a monthly subscription option. Subscription revenue derived from direct sales to listeners is recognized on a straight-line basis over the duration of the subscription period. Subscription revenue derived from sales through some mobile operating systems may be subject to refund or cancellation terms which may affect the timing or amount of the subscription revenue recognition. When refund rights exist, we recognize revenue when services have been provided and the rights lapse or when we have developed sufficient transaction history to estimate a reserve. | |
We were required to defer revenue for certain subscriptions purchased through mobile app stores that contained refund rights until the refund rights lapsed or until we developed sufficient operating history to estimate a return reserve. As of December 31, 2013, we had deferred all revenue related to these mobile subscriptions subject to refund rights totaling approximately $14.2 million, as we did not have sufficient history to estimate a return reserve. Beginning in January 2014, we had sufficient historic transactional information which enabled us to estimate future returns. Accordingly, in January 2014, we began recording revenue related to these mobile subscriptions net of estimated returns. This change resulted in a one-time increase in subscription revenue in the three months ended March 31, 2014 of approximately $14.2 million, as the previously deferred revenue was recognized. As of December 31, 2014, the deferred revenue related to the return reserve was not significant. | |
Multiple-element arrangements. We enter into arrangements with customers to sell advertising packages that include different media placements or ad services that are delivered at the same time, or within close proximity of one another. We recognize the relative fair value of the media placements or ad services as they are delivered assuming all other revenue recognition criteria are met. | |
We allocate arrangement consideration in multiple-deliverable revenue arrangements at the inception of an arrangement to all deliverables or those packages in which all components of the package are delivered at the same time, based on the relative selling price method in accordance with the selling price hierarchy, which includes: (1) vendor-specific objective evidence ("VSOE") if available; (2) third-party evidence ("TPE") if VSOE is not available; and (3) best estimate of selling price ("BESP") if neither VSOE nor TPE is available. | |
VSOE. We determine VSOE based on our historical pricing and discounting practices for the specific product or service when sold separately. In determining VSOE, we require that a substantial majority of the selling prices for these services fall within a reasonably narrow pricing range. We have not historically priced our advertising products within a narrow range. As a result, we have not been able to establish VSOE for any of our advertising products. | |
TPE. When VSOE cannot be established for deliverables in multiple element arrangements, we apply judgment with respect to whether it can establish a selling price based on TPE. TPE is determined based on competitor prices for similar deliverables when sold separately. Generally, our go-to-market strategy differs from that of our peers and our offerings contain a significant level of differentiation such that the comparable pricing of services cannot be obtained. Furthermore, we are unable to reliably determine what similar competitor services' selling prices are on a stand-alone basis. As a result, we have not been able to establish selling price based on TPE. | |
BESP. When we are unable to establish selling price using VSOE or TPE, we use BESP in our allocation of arrangement consideration. The objective of BESP is to determine the price at which we would transact a sale if the service were sold on a stand-alone basis. BESP is generally used to allocate the selling price to deliverables in our multiple element arrangements. We determine BESP for deliverables by considering multiple factors including, but not limited to, prices we charge for similar offerings, market conditions, competitive landscape and pricing practices. We limit the amount of allocable arrangement consideration to amounts that are fixed or determinable and that are not contingent on future performance or future deliverables. We regularly review BESP. Changes in assumptions or judgments or changes to the elements in the arrangement may cause an increase or decrease in the amount of revenue that we report in a particular period. | |
Concentration of Credit Risk | Concentration of Credit Risk |
Financial instruments that potentially subject us to concentrations of credit risk consist principally of cash and cash equivalents, investments and trade accounts receivable. We maintain cash and cash equivalents with domestic financial institutions of high credit quality. We perform periodic evaluations of the relative credit standing of such institutions. | |
We perform ongoing credit evaluations of customers to assess the probability of accounts receivable collection based on a number of factors, including past transaction experience with the customer, evaluation of their credit history, and review of the invoicing terms of the contract. We generally do not require collateral. We maintain reserves for potential credit losses on customer accounts when deemed necessary. Actual credit losses during the twelve months ended January 31, 2013, the eleven months ended December 31, 2013 and the twelve months ended December 31, 2014 were $0.5 million, $0.4 million and $1.1 million, respectively. | |
For the twelve months ended January 31, 2013, the eleven months ended December 31, 2013 and the twelve months ended December 31, 2014, we had no customers that accounted for 10% or more of total revenue. As of December 31, 2013 and 2014, there were no customers that accounted for 10% or more of our total accounts receivable. | |
Cash, Cash Equivalents and Investments | Cash, Cash Equivalents and Investments |
We classify our highly liquid investments with maturities of three months or less at the date of purchase as cash equivalents. Our investments consist of commercial paper, corporate debt securities and U.S. government and government agency debt securities. These investments are classified as available-for-sale securities and are carried at fair value with the unrealized gains and losses reported as a component of stockholders' equity. Management determines the appropriate classification of our investments at the time of purchase and reevaluates the available-for-sale designations as of each balance sheet date. We classify our investments as either short-term or long-term based on each instrument's underlying contractual maturity date. Investments with maturities of twelve months or less are classified as short-term and those with maturities greater than twelve months are classified as long-term. The cost basis for investments sold is based upon the specific identification method. | |
Accounts Receivable and Allowance for Doubtful Accounts | Accounts Receivable and Allowance for Doubtful Accounts |
Accounts receivable are recorded net of an allowance for doubtful accounts. Our allowance for doubtful accounts is based upon historical loss patterns, the number of days that billings are past due and an evaluation of the potential risk of loss associated with delinquent accounts. We also consider any changes to the financial condition of our customers and any other external market factors that could impact the collectability of our receivables in the determination of our allowance for doubtful accounts. | |
Property and Equipment, net | Property and Equipment, net |
Property and equipment is recorded at cost, less accumulated depreciation and amortization. Depreciation is computed using the straight-line method based on the estimated useful lives of the assets, which typically range from three to five years. Leasehold improvements are amortized over the shorter of the lease term or expected useful lives of the improvements. | |
Property and equipment is reviewed for impairment whenever events or changes in circumstances indicate the carrying amount of an asset may not be recoverable. Recoverability of these assets is measured by a comparison of the carrying amounts to the future undiscounted cash flows the assets are expected to generate. If property and equipment are considered to be impaired, the impairment to be recognized equals the amount by which the carrying value of the asset exceeds its fair market value. | |
Costs incurred to develop software for internal use are required to be capitalized and amortized over the estimated useful life of the asset if certain criteria are met. Costs related to preliminary project activities and post implementation activities are expensed as incurred. We evaluate the costs incurred during the application development stage of website development to determine whether the costs meet the criteria for capitalization. As of December 31, 2013 and 2014, we had approximately $1.5 million and $2.8 million of capitalized internal use software and website development costs, net of accumulated amortization. These costs are being amortized over their three-year estimated useful lives. Internal use software and website development costs are included in property and equipment. | |
Stock-Based Compensation | Stock-Based Compensation—Restricted Stock Units and Stock Options |
Stock-based awards granted to employees, including grants of restricted stock units (“RSUs”) and stock options, are recognized as expense in our statements of operations based on their grant date fair value. We recognize stock-based compensation expense on a straight-line basis over the service period of the award, which is generally four years. We estimate the fair value of RSUs at our stock price on the grant date. We generally estimate the grant date fair value of stock options using the Black-Scholes option-pricing model. The Black-Scholes option-pricing model is affected by our stock price on the date of grant, the expected stock price volatility over the expected term of the award, which is based on projected employee stock option exercise behaviors, the risk-free interest rate for the expected term of the award and expected dividends. | |
Stock-based compensation expense is recorded net of estimated forfeitures in the statement of operations for only those stock-based awards that we expect to vest. We estimate the forfeiture rate based on historical forfeitures of equity awards and adjust the rate to reflect changes in facts and circumstances, if any. We revise our estimated forfeiture rate if actual forfeitures differ from our initial estimates. | |
We have elected to use the "with and without" approach as described in Accounting Standards Codification 740 - Income Taxes in determining the order in which tax attributes are utilized. As a result, we will only recognize a tax benefit from stock-based awards in additional paid-in capital if an incremental tax benefit is realized after all other tax attributes currently available to us have been utilized. In addition, we have elected to account for the indirect effects of stock-based awards on other tax attributes, such as the research tax credit, through the statement of operations. | |
Stock-Based Compensation—Employee Stock Purchase Plan | |
In December 2013, our board of directors approved the Employee Stock Purchase Plan (“ESPP”), which was approved by our stockholders at the annual meeting in June 2014. We estimate the fair value of shares to be issued under the ESPP on the first day of the offering period using the Black-Scholes valuation model. The determination of the fair value is affected by our stock price on the first date of the offering period, as well as other assumptions including the risk-free interest rate, the estimated volatility of our stock price over the term of the offering period, the expected term of the offering period and the expected dividend rate. Stock-based compensation expense related to the ESPP is recognized on a straight-line basis over the offering period, net of estimated forfeitures. | |
Cost of Revenue-Content Acquisition Costs | Cost of Revenue—Content Acquisition Costs |
Cost of revenue—content acquisition costs principally consist of royalties paid for streaming music or other content to our listeners. Royalties are currently calculated using negotiated rates documented in agreements. The majority of our royalties are payable based on a fee per public performance of a sound recording, while in other cases our royalties are payable based on a percentage of our revenue or a formula that involves a combination of per performance and revenue metrics. For royalty arrangements under negotiation, we accrue for estimated royalties based on the available facts and circumstances and adjust these estimates as more information becomes available. | |
Cost of Revenue-Other | Cost of Revenue—Other |
Cost of revenue—other consists primarily of hosting and ad serving costs, employee-related costs and other costs of ad sales. Hosting and ad serving costs consist of content streaming, maintaining our internet radio service and creating and serving advertisements through third-party ad servers. We make payments to third-party ad servers for the period the advertising impressions are delivered or click-through actions occur, and accordingly, we record this as a cost of revenue in the related period. Employee-related costs include salaries and benefits associated with supporting hosting and ad serving functions. Other costs of ad sales include costs related to music events that are sold as part of advertising arrangements. | |
Product Development | Product Development |
Product development consists primarily of employee-related costs, including salaries and benefits related to employees in software engineering, music analysis and product management departments, facilities-related expenses, information technology and costs associated with supporting consumer connected-device manufacturers in implementing our service in their products. We incur product development expenses primarily for improvements to our website and the Pandora app, development of new advertising products and development and enhancement of our personalized station generating system. We have generally expensed product development as incurred. | |
Certain website development and internal use software development costs are capitalized when specific criteria are met. In such cases, the capitalized amounts are amortized over the useful life of the related application once the application is placed in service. | |
Sales and Marketing | Sales and Marketing |
Sales and marketing consists primarily of employee-related costs, including salaries, commissions and benefits related to employees in sales, sales support and marketing departments. In addition, sales and marketing expenses include transaction processing commissions on subscription purchases through mobile app stores, external sales and marketing expenses such as brand marketing and customer acquisition costs, public relations expenses, costs related to music events, agency platform and media measurement expenses, facilities-related expenses and infrastructure costs. | |
General and Administrative | General and Administrative |
General and administrative consists primarily of employee-related costs, including salaries and benefits for finance, accounting, legal, internal information technology and other administrative personnel. In addition, general and administrative expenses include professional services costs for outside legal and accounting services, facilities-related expenses, infrastructure costs and credit card fees. | |
Provision for (Benefit from) Income Taxes | Provision for (Benefit from) Income Taxes |
We account for our provision for (benefit from) income taxes using the asset and liability method, under which deferred tax assets and liabilities are determined based on the difference between the financial statement and tax bases of assets and liabilities using enacted statutory income tax rates in effect for the year in which the differences are expected to affect taxable income. Valuation allowances are established when necessary to reduce net deferred tax assets to the amount expected to be realized. | |
We recognize a tax benefit from an uncertain tax position only if it is more likely than not that the tax position will be sustained on examination by the taxing authorities, based on the technical merits of the position. The tax benefits recognized in the financial statements from such positions are then measured based on the largest benefit that has a greater than 50% likelihood of being realized upon settlement. We will recognize interest and penalties related to unrecognized tax benefits in the provision for (benefit from) income taxes in the accompanying statement of operations. | |
We calculate the current and deferred income tax provision based on estimates and assumptions that could differ from the actual results reflected in income tax returns filed in subsequent years. Adjustments based on filed income tax returns are recorded when identified. The amount of income taxes paid is subject to examination by U.S. federal, state and international tax authorities. The estimate of the potential outcome of any uncertain tax issue is subject to management's assessment of relevant risks, facts and circumstances existing at that time. To the extent that the assessment of such tax positions change, the change in estimate is recorded in the period in which the determination is made. | |
Net Loss Per Share | Net Loss Per Share |
Basic net loss per share is computed by dividing the net loss by the weighted-average number of shares of common stock outstanding during the period. Diluted net loss per share is computed by giving effect to all potential shares of common stock, including stock options and restricted stock units, to the extent dilutive. Basic and diluted net loss per share were the same for each period presented as the inclusion of all potential common shares outstanding would have been anti-dilutive. | |
Recently Issued Accounting Standards | Recently Issued Accounting Standards |
In May 2014, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update No. 2014-9, Revenue from Contracts with Customers (Topic 606) (“ASU 2014-9”). ASU 2014-9 outlines a single comprehensive model for entities to use in accounting for revenue. Under the guidance, revenue is recognized when a company transfers promised goods or services to customers in an amount that reflects the consideration to which the company expects to be entitled in exchange for those goods or services. The standard is effective for public entities with annual and interim reporting periods beginning after December 15, 2016. Entities have the option of using either a full retrospective or a modified retrospective approach to adopt the guidance. We are currently evaluating implementation methods and the effect that implementation of this standard will have on our consolidated financial statements upon adoption. | |
In August 2014, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update No. 2014-15, Going Concern (Subtopic 205-40) (“ASU 2014-15”). ASU 2014-15 requires management of all entities to evaluate whether there are conditions and events that raise substantial doubt about the entity’s ability to continue as a going concern within one year after the financial statements are issued (or available to be issued when applicable). The guidance is effective for fiscal years beginning after December 15, 2016 and for interim periods within that fiscal year. We do not expect the adoption of this guidance to have a material effect on our consolidated financial statements. |
Composition_of_Certain_Financi1
Composition of Certain Financial Statement Captions (Tables) | 12 Months Ended | |||||||||||||||||||||||
Dec. 31, 2014 | ||||||||||||||||||||||||
Composition of Certain Financial Statement Captions | ||||||||||||||||||||||||
Schedule of cash, cash equivalents and investments | Cash, cash equivalents and investments consisted of the following: | |||||||||||||||||||||||
As of December 31, | ||||||||||||||||||||||||
2013 | 2014 | |||||||||||||||||||||||
(in thousands) | ||||||||||||||||||||||||
Cash and cash equivalents | ||||||||||||||||||||||||
Cash | $ | 89,176 | $ | 72,487 | ||||||||||||||||||||
Money market funds | 98,437 | 89,113 | ||||||||||||||||||||||
Commercial paper | 54,247 | 9,349 | ||||||||||||||||||||||
Corporate debt securities | 3,895 | 5,008 | ||||||||||||||||||||||
Total cash and cash equivalents | $ | 245,755 | $ | 175,957 | ||||||||||||||||||||
Short-term investments | ||||||||||||||||||||||||
Commercial paper | $ | 47,526 | $ | 45,443 | ||||||||||||||||||||
Corporate debt securities | 50,436 | 128,691 | ||||||||||||||||||||||
U.S. government and government agency debt securities | 700 | 4,497 | ||||||||||||||||||||||
Total short-term investments | $ | 98,662 | $ | 178,631 | ||||||||||||||||||||
Long-term investments | ||||||||||||||||||||||||
Corporate debt securities | $ | 100,690 | $ | 100,998 | ||||||||||||||||||||
U.S. government and government agency debt securities | 4,996 | 3,245 | ||||||||||||||||||||||
Total long-term investments | $ | 105,686 | $ | 104,243 | ||||||||||||||||||||
Total cash, cash equivalents and investments | $ | 450,103 | $ | 458,831 | ||||||||||||||||||||
Summary of available-for-sale securities' adjusted cost, gross unrealized gains, gross unrealized losses and fair value by significant investment category | The following tables summarizes our available-for-sale securities’ adjusted cost, gross unrealized gains, gross unrealized losses and fair value by significant investment category as of December 31, 2013 and 2014. | |||||||||||||||||||||||
As of December 31, 2013 | ||||||||||||||||||||||||
Adjusted | Unrealized | Unrealized | Fair | |||||||||||||||||||||
Cost | Gains | Losses | Value | |||||||||||||||||||||
(in thousands) | ||||||||||||||||||||||||
Cash equivalents and marketable securities | ||||||||||||||||||||||||
Money market funds | $ | 98,437 | $ | — | $ | — | $ | 98,437 | ||||||||||||||||
Commercial paper | 101,773 | — | — | 101,773 | ||||||||||||||||||||
Corporate debt securities | 155,273 | 6 | (258 | ) | 155,021 | |||||||||||||||||||
U.S. government and government agency debt securities | 5,700 | — | (4 | ) | 5,696 | |||||||||||||||||||
Total cash equivalents and marketable securities | $ | 361,183 | $ | 6 | $ | (262 | ) | $ | 360,927 | |||||||||||||||
As of December 31, 2014 | ||||||||||||||||||||||||
Adjusted | Unrealized | Unrealized | Fair | |||||||||||||||||||||
Cost | Gains | Losses | Value | |||||||||||||||||||||
(in thousands) | ||||||||||||||||||||||||
Cash equivalents and marketable securities | ||||||||||||||||||||||||
Money market funds | $ | 89,113 | $ | — | $ | — | $ | 89,113 | ||||||||||||||||
Commercial paper | 54,792 | — | — | 54,792 | ||||||||||||||||||||
Corporate debt securities | 235,135 | 6 | (444 | ) | 234,697 | |||||||||||||||||||
U.S. government and government agency debt securities | 7,751 | — | (9 | ) | 7,742 | |||||||||||||||||||
Total cash equivalents and marketable securities | $ | 386,791 | $ | 6 | $ | (453 | ) | $ | 386,344 | |||||||||||||||
Schedule of available-for-sale investments by contractual maturity date | The following tables present available-for-sale investments by contractual maturity date as of December 31, 2013 and 2014. | |||||||||||||||||||||||
As of December 31, 2013 | ||||||||||||||||||||||||
Adjusted | Fair Value | |||||||||||||||||||||||
Cost | ||||||||||||||||||||||||
(in thousands) | ||||||||||||||||||||||||
Due in one year or less | $ | 255,278 | $ | 255,241 | ||||||||||||||||||||
Due after one year through three years | 105,905 | 105,686 | ||||||||||||||||||||||
Total | $ | 361,183 | $ | 360,927 | ||||||||||||||||||||
As of December 31, 2014 | ||||||||||||||||||||||||
Adjusted | Fair Value | |||||||||||||||||||||||
Cost | ||||||||||||||||||||||||
(in thousands) | ||||||||||||||||||||||||
Due in one year or less | $ | 282,206 | $ | 282,101 | ||||||||||||||||||||
Due after one year through three years | 104,585 | 104,243 | ||||||||||||||||||||||
Total | $ | 386,791 | $ | 386,344 | ||||||||||||||||||||
Summary of available-for-sale securities' fair value and gross unrealized losses | The following tables summarize our available-for-sale securities’ fair value and gross unrealized losses aggregated by investment category and length of time that the individual securities have been in a continuous unrealized loss position as of December 31, 2013 and 2014. | |||||||||||||||||||||||
As of December 31, 2013 | ||||||||||||||||||||||||
Twelve Months or Less | More than Twelve Months | Total | ||||||||||||||||||||||
Fair | Gross Unrealized Losses | Fair | Gross Unrealized Losses | Fair | Gross Unrealized Losses | |||||||||||||||||||
Value | Value | Value | ||||||||||||||||||||||
(in thousands) | ||||||||||||||||||||||||
Money market funds | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | ||||||||||||
Commercial paper | — | — | — | — | — | — | ||||||||||||||||||
Corporate debt securities | 130,308 | (258 | ) | — | — | 130,308 | (258 | ) | ||||||||||||||||
U.S. government and government agency debt securities | 5,697 | (4 | ) | — | — | 5,697 | (4 | ) | ||||||||||||||||
Total | $ | 136,005 | $ | (262 | ) | $ | — | $ | — | $ | 136,005 | $ | (262 | ) | ||||||||||
As of December 31, 2014 | ||||||||||||||||||||||||
Twelve Months or Less | More than Twelve Months | Total | ||||||||||||||||||||||
Fair | Gross Unrealized Losses | Fair | Gross Unrealized Losses | Fair | Gross Unrealized Losses | |||||||||||||||||||
Value | Value | Value | ||||||||||||||||||||||
(in thousands) | ||||||||||||||||||||||||
Money market funds | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | ||||||||||||
Commercial paper | — | — | — | — | — | — | ||||||||||||||||||
Corporate debt securities | 192,699 | (422 | ) | 12,148 | (22 | ) | 204,847 | (444 | ) | |||||||||||||||
U.S. government and government agency debt securities | 5,240 | (9 | ) | — | — | 5,240 | (9 | ) | ||||||||||||||||
Total | $ | 197,939 | $ | (431 | ) | $ | 12,148 | $ | (22 | ) | $ | 210,087 | $ | (453 | ) | |||||||||
Schedule of accounts receivable, net | Accounts Receivable | |||||||||||||||||||||||
As of December 31, | ||||||||||||||||||||||||
2013 | 2014 | |||||||||||||||||||||||
(in thousands) | ||||||||||||||||||||||||
Accounts receivable, net | ||||||||||||||||||||||||
Accounts receivable | $ | 165,295 | $ | 219,655 | ||||||||||||||||||||
Allowance for doubtful accounts | (1,272 | ) | (1,218 | ) | ||||||||||||||||||||
Total accounts receivable, net | $ | 164,023 | $ | 218,437 | ||||||||||||||||||||
Schedule of allowance for doubtful accounts | The following table summarizes our beginning allowance for doubtful accounts balance for each period, additions, write-offs net of recoveries and the balance at the end of each period for the twelve months ended January 31, 2013, the eleven months ended December 31, 2013 and the twelve months ended December 31, 2014: | |||||||||||||||||||||||
Allowance for Doubtful Accounts | Balance at Beginning of Period | Additions | Write-offs, Net of Recoveries | Balance at End of Period | ||||||||||||||||||||
(in thousands) | ||||||||||||||||||||||||
For the twelve months ended January 31, 2013 | $ | 590 | 659 | (488 | ) | $ | 761 | |||||||||||||||||
For the eleven months ended December 31, 2013 | $ | 761 | 948 | (437 | ) | $ | 1,272 | |||||||||||||||||
For the twelve months ended December 31, 2014 | $ | 1,272 | 1,064 | (1,118 | ) | $ | 1,218 | |||||||||||||||||
Schedule of property and equipment | Property and Equipment, net | |||||||||||||||||||||||
As of December 31, | ||||||||||||||||||||||||
2013 | 2014 | |||||||||||||||||||||||
(in thousands) | ||||||||||||||||||||||||
Property and equipment | ||||||||||||||||||||||||
Servers, computers and other related equipment | $ | 27,361 | $ | 39,890 | ||||||||||||||||||||
Leasehold improvements | 11,314 | 25,893 | ||||||||||||||||||||||
Office furniture and equipment | 2,248 | 2,721 | ||||||||||||||||||||||
Construction in progress | 13,575 | 5,075 | ||||||||||||||||||||||
Software developed for internal use | 2,173 | 4,519 | ||||||||||||||||||||||
Total property and equipment | $ | 56,671 | $ | 78,098 | ||||||||||||||||||||
Less accumulated depreciation and amortization | (21,520 | ) | (35,177 | ) | ||||||||||||||||||||
Total property and equipment, net | $ | 35,151 | $ | 42,921 | ||||||||||||||||||||
Schedule of other long-term liabilities | Other long-term liabilities consisted of the following as of December 31, 2014: | |||||||||||||||||||||||
As of December 31, | ||||||||||||||||||||||||
2013 | 2014 | |||||||||||||||||||||||
(in thousands) | ||||||||||||||||||||||||
Other long-term liabilities | ||||||||||||||||||||||||
Long-term deferred rent | $ | 8,352 | $ | 15,068 | ||||||||||||||||||||
Other | 746 | 1,705 | ||||||||||||||||||||||
Total other long-term liabilities | $ | 9,098 | $ | 16,773 | ||||||||||||||||||||
Fair_Value_Tables
Fair Value (Tables) | 12 Months Ended | |||||||||||
Dec. 31, 2014 | ||||||||||||
Fair Value Disclosures [Abstract] | ||||||||||||
Schedule of fair value of financial assets and liabilities | The fair value of these financial assets and liabilities was determined using the following inputs at December 31, 2013 and 2014: | |||||||||||
As of December 31, 2013 | ||||||||||||
Fair Value Measurement Using | ||||||||||||
Quoted Prices in | Significant Other | Total | ||||||||||
Active Markets | Observable | |||||||||||
for Identical | Inputs | |||||||||||
Instruments (Level 1) | (Level 2) | |||||||||||
(in thousands) | ||||||||||||
Assets | ||||||||||||
Money market funds | $ | 98,437 | $ | — | $ | 98,437 | ||||||
Commercial paper | — | 101,773 | 101,773 | |||||||||
Corporate debt securities | — | 155,021 | 155,021 | |||||||||
U.S. government and government agency debt securities | — | 5,696 | 5,696 | |||||||||
Total assets measured at fair value | $ | 98,437 | $ | 262,490 | $ | 360,927 | ||||||
As of December 31, 2014 | ||||||||||||
Fair Value Measurement Using | ||||||||||||
Quoted Prices in | Significant Other | Total | ||||||||||
Active Markets | Observable | |||||||||||
for Identical | Inputs | |||||||||||
Instruments (Level 1) | (Level 2) | |||||||||||
(in thousands) | ||||||||||||
Assets | ||||||||||||
Money market funds | $ | 89,113 | $ | — | $ | 89,113 | ||||||
Commercial paper | — | 54,792 | 54,792 | |||||||||
Corporate debt securities | — | 234,697 | 234,697 | |||||||||
U.S. government and government agency debt securities | — | 7,742 | 7,742 | |||||||||
Total assets measured at fair value | $ | 89,113 | $ | 297,231 | $ | 386,344 | ||||||
Other_LongTerm_Assets_Tables
Other Long-Term Assets (Tables) | 12 Months Ended | |||||||
Dec. 31, 2014 | ||||||||
Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract] | ||||||||
Schedule of other long-term assets | ||||||||
As of December 31, | ||||||||
2013 | 2014 | |||||||
(in thousands) | ||||||||
Other long-term assets | ||||||||
Patents, net of amortization | $ | 7,636 | $ | 6,939 | ||||
Long-term security deposits | 4,736 | 4,947 | ||||||
Other | 1,343 | 1,826 | ||||||
Total other long-term assets | $ | 13,715 | $ | 13,712 | ||||
Schedule of future amortization expense related to patents | The following is a schedule of future amortization expense related to patents as of December 31, 2014: | |||||||
As of | ||||||||
December 31, | ||||||||
2014 | ||||||||
(in thousands) | ||||||||
2015 | $ | 733 | ||||||
2016 | 733 | |||||||
2017 | 733 | |||||||
2018 | 733 | |||||||
2019 | 733 | |||||||
Thereafter | 3,275 | |||||||
Total future amortization expense | $ | 6,940 | ||||||
Commitments_and_Contingencies_
Commitments and Contingencies (Tables) | 12 Months Ended | |||||||
Dec. 31, 2014 | ||||||||
Commitments and Contingencies Disclosure [Abstract] | ||||||||
Schedule of future minimum lease payments under operating leases | The following is a schedule of future minimum lease payments and future minimum sublease income under noncancelable operating leases as of December 31, 2014: | |||||||
As of December 31, 2014 | ||||||||
Future Minimum Lease Payments | Future Minimum Sublease Income | |||||||
(in thousands) | ||||||||
2015 | $ | 11,130 | $ | 1,216 | ||||
2016 | 11,092 | 1,246 | ||||||
2017 | 10,956 | 1,277 | ||||||
2018 | 10,256 | 541 | ||||||
2019 | 8,863 | — | ||||||
Thereafter | 20,540 | — | ||||||
Total | $ | 72,837 | $ | 4,280 | ||||
Provision_for_Income_Taxes_Tab
Provision for Income Taxes (Tables) | 12 Months Ended | |||||||||||
Dec. 31, 2014 | ||||||||||||
Income Tax Disclosure [Abstract] | ||||||||||||
Schedule of loss before income taxes by jurisdiction | Loss before provision for income taxes by jurisdiction consists of the following: | |||||||||||
Twelve months ended | Eleven months ended | Twelve months ended | ||||||||||
January 31, | December 31, | December 31, | ||||||||||
2013 | 2013 | 2014 | ||||||||||
(in thousands) | ||||||||||||
Jurisdiction | ||||||||||||
Domestic | $ | (39,891 | ) | $ | (24,005 | ) | $ | (24,230 | ) | |||
Foreign | 1,748 | (2,918 | ) | (5,592 | ) | |||||||
Loss before provision for income taxes | $ | (38,143 | ) | $ | (26,923 | ) | $ | (29,822 | ) | |||
Schedule of provision for income tax expense | The provision for income taxes consists of the following: | |||||||||||
Twelve months ended | Eleven months ended | Twelve months ended | ||||||||||
January 31, | December 31, | December 31, | ||||||||||
2013 | 2013 | 2014 | ||||||||||
(in thousands) | ||||||||||||
Current | ||||||||||||
Federal | $ | — | $ | — | $ | — | ||||||
State and local | (4 | ) | 7 | 353 | ||||||||
International | 9 | 87 | 231 | |||||||||
Total current income tax expense | $ | 5 | $ | 94 | $ | 584 | ||||||
Deferred | ||||||||||||
Federal | (10,098 | ) | (10,166 | ) | (9,996 | ) | ||||||
State and local | (1,573 | ) | (2,027 | ) | (6,238 | ) | ||||||
Valuation allowance | 11,671 | 12,193 | 16,234 | |||||||||
Total deferred income tax expense | $ | — | $ | — | $ | — | ||||||
Total provision for income taxes | $ | 5 | $ | 94 | $ | 584 | ||||||
Schedule of reconciliation of the statutory federal rate and effective tax rate | The following table presents a reconciliation of the statutory federal rate and our effective tax rate: | |||||||||||
Twelve months ended | Eleven months ended | Twelve months ended | ||||||||||
January 31, | December 31, | December 31, | ||||||||||
2013 | 2013 | 2014 | ||||||||||
U.S. federal taxes at statutory rate | 34 | % | 34 | % | 34 | % | ||||||
State taxes, net of federal benefit | — | — | (1 | ) | ||||||||
Permanent differences | (2 | ) | 5 | 4 | ||||||||
Foreign rate differential | (2 | ) | (4 | ) | (7 | ) | ||||||
Federal and state credits, net of reserve | 2 | 8 | 11 | |||||||||
Change in valuation allowance | (30 | ) | (46 | ) | (55 | ) | ||||||
Change in rate | (2 | ) | — | 6 | ||||||||
Deferred adjustments | — | 3 | 6 | |||||||||
Effective tax rate | — | % | — | % | (2 | )% | ||||||
Schedule of major components of deferred tax assets and liabilities | The major components of deferred tax assets and liabilities consist of the following: | |||||||||||
As of December 31, | ||||||||||||
2013 | 2014 | |||||||||||
(in thousands) | ||||||||||||
Deferred tax assets | ||||||||||||
Net operating loss carryforwards | $ | 34,525 | $ | 27,487 | ||||||||
Tax credit carryforwards | 5,745 | 10,839 | ||||||||||
Allowances and other | 7,037 | 13,832 | ||||||||||
Stock options | 10,159 | 24,215 | ||||||||||
Depreciation and amortization | 323 | 255 | ||||||||||
Total deferred tax assets | $ | 57,789 | $ | 76,628 | ||||||||
Deferred tax liabilities | ||||||||||||
Depreciation and amortization | (41 | ) | (2,645 | ) | ||||||||
Total deferred tax liabilities | $ | (41 | ) | $ | (2,645 | ) | ||||||
Valuation allowance | (57,748 | ) | (73,983 | ) | ||||||||
Net deferred tax assets | $ | — | $ | — | ||||||||
Schedule of reconciliation of beginning and ending amounts of unrecognized tax benefits | A reconciliation of the beginning and ending amounts of unrecognized tax benefits (excluding interest and penalties) is as follows: | |||||||||||
Eleven months ended | Twelve months ended | |||||||||||
December 31, | December 31, | |||||||||||
2013 | 2014 | |||||||||||
(in thousands) | ||||||||||||
Beginning balance | $ | 2,633 | $ | 5,220 | ||||||||
Increases related to tax positions taken during a prior year | 108 | 1,161 | ||||||||||
Decreases related to tax positions taken during a prior year | — | (1,924 | ) | |||||||||
Increases related to tax positions taken during the current year | 2,479 | 1,336 | ||||||||||
Ending balance | $ | 5,220 | $ | 5,793 | ||||||||
Stockbased_Compensation_Plans_1
Stock-based Compensation Plans and Awards (Tables) | 12 Months Ended | ||||||||||||
Dec. 31, 2014 | |||||||||||||
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |||||||||||||
Schedule of shares available for grant and activity | Shares available for grant as of December 31, 2014 and the activity during the twelve months ended December 31, 2014 are as follows: | ||||||||||||
Shares Available for Grant | |||||||||||||
Equity Awards | ESPP | Total | |||||||||||
Balance as of December 31, 2013 | 9,048,200 | — | 9,048,200 | ||||||||||
Additional shares authorized | 7,815,837 | 4,000,000 | 11,815,837 | ||||||||||
Options granted | (349,500 | ) | — | (349,500 | ) | ||||||||
Restricted stock granted | (4,909,360 | ) | — | (4,909,360 | ) | ||||||||
ESPP shares issued | — | (142,265 | ) | (142,265 | ) | ||||||||
Options forfeited | 1,639,935 | — | 1,639,935 | ||||||||||
Restricted stock forfeited | 1,081,348 | — | 1,081,348 | ||||||||||
Balance as of December 31, 2014 | 14,326,460 | 3,857,735 | 18,184,195 | ||||||||||
Schedule of assumptions used for determining the per-share fair value of shares granted under the ESPP | The per-share fair value of shares to be granted under the ESPP is determined on the first day of the offering period using the Black-Scholes option pricing model using the following assumptions: | ||||||||||||
Twelve months ended | |||||||||||||
December 31, | |||||||||||||
2014 | |||||||||||||
Expected life (in years) | 0.5 | ||||||||||||
Risk-free interest rate | 0.06 | % | |||||||||||
Expected volatility | 42 | % | |||||||||||
Expected dividend yield | 0 | % | |||||||||||
Schedule of stock option activity | Stock option activity during the twelve months ended December 31, 2014 was as follows: | ||||||||||||
Options Outstanding | |||||||||||||
Outstanding | Weighted-Average Exercise Price | Weighted-Average Remaining Contractual Term (in years) | Aggregate Intrinsic Value (1) | ||||||||||
Stock Options | |||||||||||||
(in thousands, except share and per share data) | |||||||||||||
Balance as of December 31, 2013 | 22,708,200 | $ | 4.85 | 5.76 | $ | 493,866 | |||||||
Granted | 349,500 | 35.61 | |||||||||||
Exercised | (10,437,509 | ) | 1.62 | ||||||||||
Forfeited | (1,639,935 | ) | 11.49 | ||||||||||
Balance as of December 31, 2014 | 10,980,256 | 7.91 | 1.08 | 120,033 | |||||||||
Exercisable as of December 31, 2014 | 7,958,775 | 4.39 | 0.4 | 108,296 | |||||||||
Expected to vest as of December 31, 2014 (2) | 2,719,853 | $ | 17.05 | 2.82 | $ | 10,822 | |||||||
(1)Amounts represent the difference between the exercise price and the fair value of common stock at each period end for all in the money options outstanding based on the fair value per share of common stock of $26.60 and $17.83 as of December 31, 2013 and 2014. | |||||||||||||
(2)Options expected to vest reflect an estimated forfeiture rate. | |||||||||||||
Schedule of assumptions used for estimating the per-share fair value of stock options | The per-share fair value of stock options granted during the twelve months ended January 31, 2013, the eleven months ended December 31, 2013 and the twelve months ended December 31, 2014 was determined on the grant date using the Black-Scholes option pricing model with the following assumptions: | ||||||||||||
Twelve months ended | Eleven months ended | Twelve months ended | |||||||||||
January 31, | December 31, | December 31, | |||||||||||
2013 | 2013 | 2014 | |||||||||||
Expected life (in years) | 6.02 - 6.67 | 5.99 - 6.32 | 6.08 | ||||||||||
Risk-free interest rate | 0.99% - 1.52% | 1.00% - 2.04% | 1.71% - 1.93% | ||||||||||
Expected volatility | 56% - 57% | 58% - 59% | 58% - 59% | ||||||||||
Expected dividend yield | 0 | % | 0 | % | 0 | % | |||||||
Schedule of activities for RSUs | The following table summarizes the activities for our RSUs for the twelve months ended December 31, 2014: | ||||||||||||
Number of RSUs | Weighted-Average Grant Date Fair Value | ||||||||||||
Unvested as of December 31, 2013 | 10,365,512 | $ | 14.31 | ||||||||||
Granted | 4,909,360 | 32.29 | |||||||||||
Vested | (3,169,456 | ) | 13.85 | ||||||||||
Forfeited | (1,081,348 | ) | 19.06 | ||||||||||
Unvested as of December 31, 2014 | 11,024,068 | 21.99 | |||||||||||
Expected to vest as of December 31, 2014 (1) | 9,914,453 | $ | 21.88 | ||||||||||
(1) RSUs expected to vest reflect an estimated forfeiture rate. | |||||||||||||
Schedule of stock-based compensation expenses related to all employee and non-employee stock-based awards | Stock-based compensation expense related to all employee and non-employee stock-based awards was as follows: | ||||||||||||
Twelve months ended | Eleven months ended | Twelve months ended | |||||||||||
January 31, | December 31, | December 31, | |||||||||||
2013 | 2013 | 2014 | |||||||||||
(in thousands) | |||||||||||||
Stock-based compensation expense | |||||||||||||
Cost of revenue—Other | $ | 1,214 | $ | 1,946 | $ | 4,414 | |||||||
Product development | 4,530 | 8,802 | 17,546 | ||||||||||
Sales and marketing | 12,294 | 20,222 | 42,165 | ||||||||||
General and administrative | 7,462 | 9,071 | 22,930 | ||||||||||
Total stock-based compensation expense | $ | 25,500 | $ | 40,041 | $ | 87,055 | |||||||
Common_Stock_and_Net_Loss_Per_1
Common Stock and Net Loss Per Share (Tables) | 12 Months Ended | |||||||||||
Dec. 31, 2014 | ||||||||||||
Earnings Per Share [Abstract] | ||||||||||||
Schedule of the computation of historical basic and diluted net loss per share | The following table sets forth the computation of historical basic and diluted net loss per share: | |||||||||||
Twelve months ended | Eleven months ended | Twelve months ended | ||||||||||
January 31, | December 31, | December 31, | ||||||||||
2013 | 2013 | 2014 | ||||||||||
(in thousands except per share amounts) | ||||||||||||
Numerator | ||||||||||||
Net loss | $ | (38,148 | ) | $ | (27,017 | ) | $ | (30,406 | ) | |||
Denominator | ||||||||||||
Weighted-average common shares outstanding used in computing basic and diluted net loss per share | 168,294 | 180,968 | 205,273 | |||||||||
Net loss per share, basic and diluted | $ | (0.23 | ) | $ | (0.15 | ) | $ | (0.15 | ) | |||
Schedule of potential common shares that were excluded from the computation of diluted net loss per share | The following potential common shares outstanding were excluded from the computation of diluted net loss per share because including them would have been anti-dilutive: | |||||||||||
As of January 31, 2013 | As of December 31, 2013 | As of December 31, 2014 | ||||||||||
(in thousands) | ||||||||||||
Options to purchase common stock | 26,103 | 22,708 | 10,980 | |||||||||
Restricted stock units | 5,512 | 10,366 | 11,024 | |||||||||
Total common stock equivalents | 31,615 | 33,074 | 22,004 | |||||||||
Selected_Quarterly_Financial_D1
Selected Quarterly Financial Data (unaudited) (Tables) | 12 Months Ended | |||||||||||||||||||||||||||||||
Dec. 31, 2014 | ||||||||||||||||||||||||||||||||
Quarterly Financial Information Disclosure [Abstract] | ||||||||||||||||||||||||||||||||
Schedule of selected quarterly financial data (unaudited) | ||||||||||||||||||||||||||||||||
Three months ended | Two months ended | Three months ended | ||||||||||||||||||||||||||||||
April 30, | July 31, | October 31, | December 31, | March 31, | June 30, | September 30, | December 31, | |||||||||||||||||||||||||
2013 | 2013 | 2013 | 2013 (1) | 2014 | 2014 | 2014 | 2014 | |||||||||||||||||||||||||
(in thousands, except per share data) | ||||||||||||||||||||||||||||||||
Total revenue | $ | 125,510 | $ | 157,355 | $ | 180,376 | $ | 136,992 | $ | 194,315 | $ | 218,894 | $ | 239,593 | $ | 268,000 | ||||||||||||||||
Cost of revenue | ||||||||||||||||||||||||||||||||
Cost of Revenue—Content acquisition costs | 82,853 | 81,880 | 86,989 | 63,144 | 108,275 | 111,461 | 111,315 | 115,326 | ||||||||||||||||||||||||
Cost of revenue—Other | 9,845 | 11,141 | 12,532 | 8,699 | 14,979 | 13,989 | 15,453 | 17,206 | ||||||||||||||||||||||||
Total cost of revenue | 92,698 | 93,021 | 99,521 | 71,843 | 123,254 | 125,450 | 126,768 | 132,532 | ||||||||||||||||||||||||
Gross profit | 32,812 | 64,334 | 80,855 | 65,149 | 71,061 | 93,444 | 112,825 | 135,468 | ||||||||||||||||||||||||
Operating expenses | ||||||||||||||||||||||||||||||||
Product development | 7,312 | 8,301 | 9,244 | 6,437 | 11,831 | 13,076 | 13,381 | 14,865 | ||||||||||||||||||||||||
Sales and marketing | 40,075 | 45,606 | 50,285 | 33,039 | 61,864 | 66,232 | 72,320 | 76,914 | ||||||||||||||||||||||||
General and administrative | 13,872 | 18,061 | 22,823 | 14,544 | 26,361 | 25,865 | 29,143 | 31,074 | ||||||||||||||||||||||||
Total operating expenses | 61,259 | 71,968 | 82,352 | 54,020 | 100,056 | 105,173 | 114,844 | 122,853 | ||||||||||||||||||||||||
Income (loss) from operations | (28,447 | ) | (7,634 | ) | (1,497 | ) | 11,129 | (28,995 | ) | (11,729 | ) | (2,019 | ) | 12,615 | ||||||||||||||||||
Net income (loss) attributable to common stockholders | (28,587 | ) | (7,787 | ) | (1,700 | ) | 11,057 | (28,931 | ) | (11,728 | ) | (2,025 | ) | 12,278 | ||||||||||||||||||
Net income (loss) per share, basic | (0.16 | ) | (0.04 | ) | (0.01 | ) | 0.06 | (0.14 | ) | (0.06 | ) | (0.01 | ) | 0.06 | ||||||||||||||||||
Net income (loss) per share, diluted | $ | (0.16 | ) | $ | (0.04 | ) | $ | (0.01 | ) | $ | 0.05 | $ | (0.14 | ) | $ | (0.06 | ) | $ | (0.01 | ) | $ | 0.06 | ||||||||||
(1) We changed our fiscal year from the twelve months ending January 31 to the calendar twelve months ending December 31, effective beginning with the year ended December 31, 2013. Therefore, for financial reporting purposes our fourth quarter of the prior fiscal year was shortened from the three months ended January 31 to the two months ended December 31. |
Description_of_Business_and_Ba1
Description of Business and Basis of Presentation - Narrative (Details) | 11 Months Ended | 12 Months Ended |
Dec. 31, 2013 | Dec. 31, 2014 | |
segment | ||
Segments | ||
Number of operating segments | 1 | |
Fiscal year | ||
Current fiscal year transition period | 11 months | |
Corresponding fiscal year period | 12 months |
Summary_of_Significant_Account2
Summary of Significant Accounting Policies - Narrative (Details) (USD $) | 3 Months Ended | 11 Months Ended | 12 Months Ended | |
Mar. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2014 | Jan. 31, 2013 | |
Revenue Recognition | ||||
Deferred revenue related to in-app mobile subscriptions subject to refund rights | $14,200,000 | |||
Increase related to in-app subscription revenue | 14,200,000 | |||
Concentration Risk [Line Items] | ||||
Actual credit losses | 400,000 | 1,100,000 | 500,000 | |
Property, Plant and Equipment [Line Items] | ||||
Capitalized cost, net of amortization, related to internal use software and website development costs | 700,000 | 1,300,000 | 0 | |
Stock-Based Compensation | ||||
Service period over which company recognizes stock-based compensation | 4 years | |||
Internal use software and website development | ||||
Property, Plant and Equipment [Line Items] | ||||
Estimated useful lives of assets | 3 years | |||
Capitalized cost, net of amortization, related to internal use software and website development costs | $1,500,000 | $2,800,000 | ||
Minimum | ||||
Property, Plant and Equipment [Line Items] | ||||
Estimated useful lives of assets | 3 years | |||
Maximum | ||||
Property, Plant and Equipment [Line Items] | ||||
Estimated useful lives of assets | 5 years | |||
Revenue | Customer concentration risk | ||||
Concentration Risk [Line Items] | ||||
Number of major customers representing 10% or more of total revenue/total accounts receivable | 0 | 0 | 0 | |
Accounts receivable | Customer concentration risk | ||||
Concentration Risk [Line Items] | ||||
Number of major customers representing 10% or more of total revenue/total accounts receivable | 0 | 0 |
Composition_of_Certain_Financi2
Composition of Certain Financial Statement Captions - Schedule of cash, cash equivalents and investments (Details) (USD $) | Dec. 31, 2014 | Dec. 31, 2013 |
In Thousands, unless otherwise specified | ||
Cash, Cash Equivalents and Investments | ||
Total cash and cash equivalents | $175,957 | $245,755 |
Total short-term investments | 178,631 | 98,662 |
Total long-term investments | 104,243 | 105,686 |
Total cash, cash equivalents and investments | 458,831 | 450,103 |
Cash | ||
Cash, Cash Equivalents and Investments | ||
Total cash and cash equivalents | 72,487 | 89,176 |
Money market funds | ||
Cash, Cash Equivalents and Investments | ||
Total cash and cash equivalents | 89,113 | 98,437 |
Commercial paper | ||
Cash, Cash Equivalents and Investments | ||
Total cash and cash equivalents | 9,349 | 54,247 |
Total short-term investments | 45,443 | 47,526 |
Corporate debt securities | ||
Cash, Cash Equivalents and Investments | ||
Total cash and cash equivalents | 5,008 | 3,895 |
Total short-term investments | 128,691 | 50,436 |
Total long-term investments | 100,998 | 100,690 |
U.S. government and government agency debt securities | ||
Cash, Cash Equivalents and Investments | ||
Total short-term investments | 4,497 | 700 |
Total long-term investments | $3,245 | $4,996 |
Composition_of_Certain_Financi3
Composition of Certain Financial Statement Captions - Summary of available-for-sale securities' adjusted cost, gross unrealized gains, gross unrealized losses and fair value by significant investment category (Details) (USD $) | Dec. 31, 2014 | Dec. 31, 2013 |
In Thousands, unless otherwise specified | ||
Schedule of Available-for-sale Securities [Line Items] | ||
Available-for-sale Securities, Amortized Cost Basis | $386,791 | $361,183 |
Unrealized Gains | 6 | 6 |
Unrealized Losses | -453 | -262 |
Available-for-sale Securities | 386,344 | 360,927 |
Money market funds | ||
Schedule of Available-for-sale Securities [Line Items] | ||
Available-for-sale Securities, Amortized Cost Basis | 89,113 | 98,437 |
Unrealized Gains | 0 | 0 |
Unrealized Losses | 0 | 0 |
Available-for-sale Securities | 89,113 | 98,437 |
Commercial paper | ||
Schedule of Available-for-sale Securities [Line Items] | ||
Available-for-sale Securities, Amortized Cost Basis | 54,792 | 101,773 |
Unrealized Gains | 0 | 0 |
Unrealized Losses | 0 | 0 |
Available-for-sale Securities | 54,792 | 101,773 |
Corporate debt securities | ||
Schedule of Available-for-sale Securities [Line Items] | ||
Available-for-sale Securities, Amortized Cost Basis | 235,135 | 155,273 |
Unrealized Gains | 6 | 6 |
Unrealized Losses | -444 | -258 |
Available-for-sale Securities | 234,697 | 155,021 |
U.S. government and government agency debt securities | ||
Schedule of Available-for-sale Securities [Line Items] | ||
Available-for-sale Securities, Amortized Cost Basis | 7,751 | 5,700 |
Unrealized Gains | 0 | 0 |
Unrealized Losses | -9 | -4 |
Available-for-sale Securities | $7,742 | $5,696 |
Composition_of_Certain_Financi4
Composition of Certain Financial Statement Captions - Schedule of available-for-sale investments by contractual maturity date (Details) (USD $) | Dec. 31, 2014 | Dec. 31, 2013 |
In Thousands, unless otherwise specified | ||
Adjusted Cost | ||
Due in one year or less | $282,206 | $255,278 |
Due after one year through three years | 104,585 | 105,905 |
Total | 386,791 | 361,183 |
Fair Value | ||
Due in one year or less | 282,101 | 255,241 |
Due after one year through three years | 104,243 | 105,686 |
Total | $386,344 | $360,927 |
Composition_of_Certain_Financi5
Composition of Certain Financial Statement Captions - Summary of available-for-sale securities' fair value and gross unrealized losses (Details) (USD $) | Dec. 31, 2014 | Dec. 31, 2013 |
In Thousands, unless otherwise specified | ||
Schedule of Available-for-sale Securities [Line Items] | ||
Available-for-sale securities, continuous unrealized loss position, twelve months or less, fair value | $197,939 | $136,005 |
Available-for-sale securities, continuous unrealized loss position, twelve months or less, gross unrealized loss | -431 | -262 |
Available-for-sale securities, continuous unrealized loss position, twelve months or longer, fair value | 12,148 | 0 |
Available-for-sale securities, continuous unrealized loss position, twelve months or longer, gross unrealized loss | -22 | 0 |
Available-for-sale securities, continuous unrealized loss position, fair value | 210,087 | 136,005 |
Available-for-sale securities, continuous unrealized loss position, gross unrealized loss | -453 | -262 |
Corporate debt securities | ||
Schedule of Available-for-sale Securities [Line Items] | ||
Available-for-sale securities, continuous unrealized loss position, twelve months or less, fair value | 192,699 | 130,308 |
Available-for-sale securities, continuous unrealized loss position, twelve months or less, gross unrealized loss | -422 | -258 |
Available-for-sale securities, continuous unrealized loss position, twelve months or longer, fair value | 12,148 | 0 |
Available-for-sale securities, continuous unrealized loss position, twelve months or longer, gross unrealized loss | -22 | 0 |
Available-for-sale securities, continuous unrealized loss position, fair value | 204,847 | 130,308 |
Available-for-sale securities, continuous unrealized loss position, gross unrealized loss | -444 | -258 |
U.S. government and government agency debt securities | ||
Schedule of Available-for-sale Securities [Line Items] | ||
Available-for-sale securities, continuous unrealized loss position, twelve months or less, fair value | 5,240 | 5,697 |
Available-for-sale securities, continuous unrealized loss position, twelve months or less, gross unrealized loss | -9 | -4 |
Available-for-sale securities, continuous unrealized loss position, twelve months or longer, fair value | 0 | 0 |
Available-for-sale securities, continuous unrealized loss position, twelve months or longer, gross unrealized loss | 0 | 0 |
Available-for-sale securities, continuous unrealized loss position, fair value | 5,240 | 5,697 |
Available-for-sale securities, continuous unrealized loss position, gross unrealized loss | ($9) | ($4) |
Composition_of_Certain_Financi6
Composition of Certain Financial Statement Captions - Narrative (Details) (USD $) | 3 Months Ended | 11 Months Ended | 12 Months Ended | |
Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2014 | Jan. 31, 2013 | |
security | security | |||
Cash, Cash Equivalents and Investments | ||||
Number of owned securities that were in an unrealized loss position | 151 | 151 | ||
Unrealized losses deemed to be other-than-temporary | $0 | $0 | ||
Property, Plant and Equipment [Line Items] | ||||
Depreciation | 9,700,000 | 14,700,000 | 7,100,000 | |
Capitalized cost related to internal use software and website development costs | 1,300,000 | 700,000 | 1,300,000 | 0 |
Accumulated amortization | 35,177,000 | 21,520,000 | 35,177,000 | |
Software developed for internal use | ||||
Property, Plant and Equipment [Line Items] | ||||
Expected useful lives | 3 years | |||
Capitalized cost related to internal use software and website development costs | 2,800,000 | 1,500,000 | 2,800,000 | |
Accumulated amortization | 1,700,000 | 700,000 | 1,700,000 | |
Amortization expense | $600,000 | $1,100,000 | $100,000 |
Composition_of_Certain_Financi7
Composition of Certain Financial Statement Captions - Schedule of accounts receivable, net (Details) (USD $) | Dec. 31, 2014 | Dec. 31, 2013 | Jan. 31, 2013 | Jan. 31, 2012 |
In Thousands, unless otherwise specified | ||||
Accounts receivable, net | ||||
Accounts receivable | $219,655 | $165,295 | ||
Allowance for doubtful accounts | -1,218 | -1,272 | -761 | -590 |
Total accounts receivable, net | $218,437 | $164,023 |
Composition_of_Certain_Financi8
Composition of Certain Financial Statement Captions - Schedule of allowance for doubtful accounts (Details) (USD $) | 11 Months Ended | 12 Months Ended | |
In Thousands, unless otherwise specified | Dec. 31, 2013 | Dec. 31, 2014 | Jan. 31, 2013 |
Allowance for Doubtful Accounts | |||
Balance at Beginning of Period | $761 | $1,272 | $590 |
Additions | 948 | 1,064 | 659 |
Write-offs, Net of Recoveries | -437 | -1,118 | -488 |
Balance at End of Period | $1,272 | $1,218 | $761 |
Composition_of_Certain_Financi9
Composition of Certain Financial Statement Captions - Schedule of property and equipment (Details) (USD $) | Dec. 31, 2014 | Dec. 31, 2013 |
In Thousands, unless otherwise specified | ||
Property, Plant and Equipment [Line Items] | ||
Total property and equipment | $78,098 | $56,671 |
Less accumulated depreciation and amortization | -35,177 | -21,520 |
Total property and equipment, net | 42,921 | 35,151 |
Servers, computers and other related equipment | ||
Property, Plant and Equipment [Line Items] | ||
Total property and equipment | 39,890 | 27,361 |
Leasehold improvements | ||
Property, Plant and Equipment [Line Items] | ||
Total property and equipment | 25,893 | 11,314 |
Office furniture and equipment | ||
Property, Plant and Equipment [Line Items] | ||
Total property and equipment | 2,721 | 2,248 |
Construction in progress | ||
Property, Plant and Equipment [Line Items] | ||
Total property and equipment | 5,075 | 13,575 |
Software developed for internal use | ||
Property, Plant and Equipment [Line Items] | ||
Total property and equipment | 4,519 | 2,173 |
Less accumulated depreciation and amortization | ($1,700) | ($700) |
Recovered_Sheet1
Composition of Certain Financial Statement Captions - Schedule of other long-term liabilities (Details) (USD $) | Dec. 31, 2014 | Dec. 31, 2013 |
In Thousands, unless otherwise specified | ||
Other long-term liabilities | ||
Long-term deferred rent | $15,068 | $8,352 |
Other | 1,705 | 746 |
Total other long-term liabilities | $16,773 | $9,098 |
Fair_Value_Schedule_of_fair_va
Fair Value - Schedule of fair value of financial assets and liabilities (Details) (USD $) | Dec. 31, 2014 | Dec. 31, 2013 |
In Thousands, unless otherwise specified | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Available-for-sale Securities | $386,344 | $360,927 |
Money market funds | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Cash equivalents | 89,113 | 98,437 |
Available-for-sale Securities | 89,113 | 98,437 |
Commercial paper | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Cash equivalents | 54,792 | 101,773 |
Available-for-sale Securities | 54,792 | 101,773 |
Corporate debt securities | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Available-for-sale Securities | 234,697 | 155,021 |
U.S. government and government agency debt securities | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Available-for-sale Securities | 7,742 | 5,696 |
Quoted Prices in Active Markets for Identical Instruments (Level 1) | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Available-for-sale Securities | 89,113 | 98,437 |
Quoted Prices in Active Markets for Identical Instruments (Level 1) | Money market funds | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Cash equivalents | 89,113 | 98,437 |
Quoted Prices in Active Markets for Identical Instruments (Level 1) | Commercial paper | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Cash equivalents | 0 | 0 |
Quoted Prices in Active Markets for Identical Instruments (Level 1) | Corporate debt securities | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Available-for-sale Securities | 0 | 0 |
Quoted Prices in Active Markets for Identical Instruments (Level 1) | U.S. government and government agency debt securities | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Available-for-sale Securities | 0 | 0 |
Significant Other Observable Inputs (Level 2) | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Available-for-sale Securities | 297,231 | 262,490 |
Significant Other Observable Inputs (Level 2) | Money market funds | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Cash equivalents | 0 | 0 |
Significant Other Observable Inputs (Level 2) | Commercial paper | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Cash equivalents | 54,792 | 101,773 |
Significant Other Observable Inputs (Level 2) | Corporate debt securities | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Available-for-sale Securities | 234,697 | 155,021 |
Significant Other Observable Inputs (Level 2) | U.S. government and government agency debt securities | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Available-for-sale Securities | $7,742 | $5,696 |
Fair_Value_Narrative_Details
Fair Value - Narrative (Details) (Fair Value, Inputs, Level 3, USD $) | Dec. 31, 2014 | Dec. 31, 2013 |
In Thousands, unless otherwise specified | ||
Fair Value, Inputs, Level 3 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Assets measured at fair value | $0 | $0 |
Liabilities measured at fair value | $0 | $0 |
Other_LongTerm_Assets_Schedule
Other Long-Term Assets - Schedule of other long-term assets (Details) (USD $) | Dec. 31, 2014 | Dec. 31, 2013 |
In Thousands, unless otherwise specified | ||
Other long-term assets | ||
Patents, net of amortization | $6,939 | $7,636 |
Long-term security deposits | 4,947 | 4,736 |
Other | 1,826 | 1,343 |
Total other long-term assets | $13,712 | $13,715 |
Other_LongTerm_Assets_Narrativ
Other Long-Term Assets - Narrative (Details) (USD $) | 11 Months Ended | 12 Months Ended | 1 Months Ended | ||
Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2014 | Jan. 31, 2013 | Jun. 30, 2013 | |
Schedule of Other Assets [Line Items] | |||||
Patents, net of amortization | $7,636,000 | $6,939,000 | |||
Patents, accumulated amortization | 400,000 | 1,100,000 | |||
Patents, amortization expense | 400,000 | 700,000 | |||
Purchase price of assets of KXMZ-FM paid in cash | 400,000 | 0 | 0 | 0 | |
KXMZ-FM | |||||
Schedule of Other Assets [Line Items] | |||||
Purchase price of assets of KXMZ-FM | 600,000 | ||||
Purchase price of assets of KXMZ-FM paid in cash | 400,000 | ||||
Yahoo! Inc. | Patents | |||||
Schedule of Other Assets [Line Items] | |||||
Finite-lived intangible assets acquired | $8,000,000 | ||||
Finite-lived intangible asset, useful life | 11 years |
Other_LongTerm_Assets_Schedule1
Other Long-Term Assets - Schedule of future amortization expense related to patents (Details) (USD $) | Dec. 31, 2014 |
In Thousands, unless otherwise specified | |
Finite-Lived Intangible Assets, Net, Amortization Expense, Fiscal Year Maturity [Abstract] | |
2015 | $733 |
2016 | 733 |
2017 | 733 |
2018 | 733 |
2019 | 733 |
Thereafter | 3,275 |
Total future amortization expense | $6,940 |
Commitments_and_Contingencies_1
Commitments and Contingencies - Schedule of future minimum lease payments under operating leases (Details) (USD $) | Dec. 31, 2014 |
In Thousands, unless otherwise specified | |
Future Minimum Lease Payments | |
2015 | $11,130 |
2016 | 11,092 |
2017 | 10,956 |
2018 | 10,256 |
2019 | 8,863 |
Thereafter | 20,540 |
Total | 72,837 |
Future Minimum Sublease Income | |
2015 | 1,216 |
2016 | 1,246 |
2017 | 1,277 |
2018 | 541 |
2019 | 0 |
Thereafter | 0 |
Total | $4,280 |
Commitments_and_Contingencies_2
Commitments and Contingencies - Narrative (Details) (USD $) | 11 Months Ended | 12 Months Ended | |
In Millions, unless otherwise specified | Dec. 31, 2013 | Dec. 31, 2014 | Jan. 31, 2013 |
Commitments and Contingencies Disclosure [Abstract] | |||
Rent expenses | $5.70 | $8.60 | $3.20 |
Deferred rent | 9.4 | 15.3 | |
Non-cancelable royalty related contractual obligation, recoupable against future royalty payments | 5 | ||
Non-cancelable royalty related contractual obligation, not recoupable against future royalty payments | $5 |
Provision_for_Income_Taxes_Sch
Provision for Income Taxes - Schedule of loss before income taxes by jurisdiction (Details) (USD $) | 11 Months Ended | 12 Months Ended | ||
In Thousands, unless otherwise specified | Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2014 | Jan. 31, 2013 |
Jurisdiction | ||||
Domestic | ($24,005) | ($24,230) | ($39,891) | |
Foreign | -2,918 | -5,592 | 1,748 | |
Loss before provision for (benefit from) income taxes | ($26,923) | ($24,465) | ($29,822) | ($38,143) |
Provision_for_Income_Taxes_Sch1
Provision for Income Taxes - Schedule of provision for income tax expense (Details) (USD $) | 11 Months Ended | 12 Months Ended | ||
In Thousands, unless otherwise specified | Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2014 | Jan. 31, 2013 |
Current | ||||
Federal | $0 | $0 | $0 | |
State and local | 7 | 353 | -4 | |
International | 87 | 231 | 9 | |
Total current income tax expense | 94 | 584 | 5 | |
Deferred | ||||
Federal | -10,166 | -9,996 | -10,098 | |
State and local | -2,027 | -6,238 | -1,573 | |
Valuation allowance | 12,193 | 16,234 | 11,671 | |
Total deferred income tax expense | 0 | 0 | 0 | |
Total provision for income taxes | $94 | ($3) | $584 | $5 |
Provision_for_Income_Taxes_Nar
Provision for Income Taxes - Narrative (Details) (USD $) | 11 Months Ended | 12 Months Ended | |
Dec. 31, 2013 | Dec. 31, 2014 | Jan. 31, 2013 | |
Income Taxes | |||
Increase in income tax provision | $500,000 | ||
Increase in valuation allowance | 16,200,000 | ||
Unrecognized tax benefits | 5,220,000 | 5,793,000 | 2,633,000 |
Income tax, penalties and interest expense | 0 | 0 | 0 |
Federal | |||
Income Taxes | |||
Net operating loss carryforwards | 447,000,000 | ||
Tax credit carryforwards | 7,900,000 | ||
Net operating loss carryforwards recognized through additional paid in capital, if realized | 378,000,000 | ||
State | |||
Income Taxes | |||
Net operating loss carryforwards | 496,000,000 | ||
Tax credit carryforwards that do not expire | 8,300,000 | ||
Tax credit carryforwards that will expire beginning in 2024 | $3,700,000 |
Provision_for_Income_Taxes_Sch2
Provision for Income Taxes - Schedule of reconciliation of the statutory federal rate and effective tax rate (Details) | 11 Months Ended | 12 Months Ended | |
Dec. 31, 2013 | Dec. 31, 2014 | Jan. 31, 2013 | |
Reconciliation of the statutory federal rate and the company's effective tax rate | |||
U.S. federal taxes at statutory rate | 34.00% | 34.00% | 34.00% |
State taxes, net of federal benefit | 0.00% | -1.00% | 0.00% |
Permanent differences | 5.00% | 4.00% | -2.00% |
Foreign rate differential | -4.00% | -7.00% | -2.00% |
Federal and state credits, net of reserve | 8.00% | 11.00% | 2.00% |
Change in valuation allowance | -46.00% | -55.00% | -30.00% |
Change in rate | 0.00% | 6.00% | -2.00% |
Deferred adjustments | 3.00% | 6.00% | 0.00% |
Effective tax rate | 0.00% | -2.00% | 0.00% |
Provision_for_Income_Taxes_Sch3
Provision for Income Taxes - Schedule of major components of deferred tax assets and liabilities (Details) (USD $) | Dec. 31, 2014 | Dec. 31, 2013 |
In Thousands, unless otherwise specified | ||
Deferred tax assets | ||
Net operating loss carryforwards | $27,487 | $34,525 |
Tax credit carryforwards | 10,839 | 5,745 |
Allowances and other | 13,832 | 7,037 |
Stock options | 24,215 | 10,159 |
Depreciation and amortization | 255 | 323 |
Total deferred tax assets | 76,628 | 57,789 |
Deferred tax liabilities | ||
Depreciation and amortization | -2,645 | -41 |
Total deferred tax liabilities | -2,645 | -41 |
Valuation allowance | -73,983 | -57,748 |
Net deferred tax assets | $0 | $0 |
Provision_for_Income_Taxes_Sch4
Provision for Income Taxes - Schedule of reconciliation of beginning and ending amounts of unrecognized tax benefits (Details) (USD $) | 11 Months Ended | 12 Months Ended |
In Thousands, unless otherwise specified | Dec. 31, 2013 | Dec. 31, 2014 |
Reconciliation of Unrecognized Tax Benefits, Excluding Amounts Pertaining to Examined Tax Returns [Roll Forward] | ||
Unrecognized tax benefits, beginning | $2,633 | $5,220 |
Increases related to tax positions taken during a prior year | 108 | 1,161 |
Decreases related to tax positions taken during a prior year | 0 | -1,924 |
Increases related to tax positions taken during the current year | 2,479 | 1,336 |
Unrecognized tax benefits, ending | $5,220 | $5,793 |
Debt_Instruments_Narrative_Det
Debt Instruments - Narrative (Details) (USD $) | 1 Months Ended | 11 Months Ended | 12 Months Ended | |||
Sep. 30, 2013 | Jul. 31, 2013 | 31-May-11 | Dec. 31, 2013 | Dec. 31, 2014 | Jan. 31, 2013 | |
Line of credit | ||||||
Debt Instruments | ||||||
Maximum borrowings available | $60,000,000 | $30,000,000 | ||||
Line of credit facility, unused capacity, commitment fee percentage | 0.38% | |||||
Interest rate, increase (decrease) | 0.75% | |||||
Minimum liquidity requirement | 5,000,000 | |||||
Amount borrowed | 10,000,000 | |||||
Outstanding borrowings | 0 | 0 | ||||
Available borrowing capacity | 58,900,000 | 58,900,000 | ||||
Debt issuance cost | 500,000 | 1,000,000 | ||||
Credit facility term | 4 years | |||||
Amortization of debt issuance costs | 200,000 | 200,000 | 300,000 | |||
Line of credit | Minimum | ||||||
Debt Instruments | ||||||
Line of credit facility, unused capacity, commitment fee percentage | 0.50% | |||||
Line of credit | Maximum | ||||||
Debt Instruments | ||||||
Line of credit facility, unused capacity, commitment fee percentage | 0.63% | |||||
Line of credit | LIBOR | ||||||
Debt Instruments | ||||||
Variable interest rate base | LIBOR | LIBOR | ||||
Line of credit | LIBOR | Minimum | ||||||
Debt Instruments | ||||||
Margin (as a percent) | 2.00% | 2.75% | ||||
Line of credit | LIBOR | Maximum | ||||||
Debt Instruments | ||||||
Margin (as a percent) | 2.25% | 3.00% | ||||
Line of credit | Alternate base rate | ||||||
Debt Instruments | ||||||
Variable interest rate base | alternate base rate | alternate base rate | ||||
Line of credit | Alternate base rate | Minimum | ||||||
Debt Instruments | ||||||
Margin (as a percent) | 1.00% | 1.75% | ||||
Line of credit | Alternate base rate | Maximum | ||||||
Debt Instruments | ||||||
Margin (as a percent) | 1.25% | 2.00% | ||||
Line of credit | Variable rate base, federal funds effective rate | ||||||
Debt Instruments | ||||||
Variable interest rate base | federal funds effective rate | |||||
Margin (as a percent) | 0.50% | |||||
Line of credit | Variable rate base, adjusted LIBOR rate | ||||||
Debt Instruments | ||||||
Variable interest rate base | adjusted LIBOR rate | |||||
Margin (as a percent) | 1.00% | |||||
Letter of credit | ||||||
Debt Instruments | ||||||
Maximum borrowings available | 15,000,000 | 5,000,000 | ||||
Line of credit facility, used capacity commitment fee percentage, increase (decrease) | 0.75% | |||||
Outstanding amount | $1,100,000 | $1,100,000 | ||||
Letter of credit | Minimum | ||||||
Debt Instruments | ||||||
Line of credit facility, used capacity commitment fee percentage | 2.00% | 2.75% | ||||
Letter of credit | Maximum | ||||||
Debt Instruments | ||||||
Line of credit facility, used capacity commitment fee percentage | 2.25% | 3.00% |
Stockbased_Compensation_Plans_2
Stock-based Compensation Plans and Awards - Narrative (Details) (USD $) | 11 Months Ended | 12 Months Ended | 1 Months Ended | 3 Months Ended | 1 Months Ended | |||
Dec. 31, 2013 | Dec. 31, 2014 | Jan. 31, 2013 | Sep. 30, 2013 | Mar. 31, 2012 | Apr. 30, 2013 | Dec. 31, 2013 | Mar. 01, 2012 | |
Stock-based Compensation Plans and Awards | ||||||||
Shares of common stock previously reserved but unissued under the 2004 Plan (in shares) | 9,048,200 | 18,184,195 | 9,048,200 | |||||
Stock-based compensation expense | $40,041,000 | $87,055,000 | $25,500,000 | |||||
ESPP shares issued (in shares) | 142,265 | |||||||
Weighted-average period for recognition of unrecognized compensation | 4 years | |||||||
Unvested restricted shares repurchased (in shares) | 0 | |||||||
Number of shares early exercised (in shares) | 0 | 0 | ||||||
Options granted (in shares) | 349,500 | |||||||
Share price (in dollars per share) | $28.17 | 25 | ||||||
Capitalized cost related to internal use software and website development costs | 700,000 | 1,300,000 | 0 | 700,000 | ||||
Stock options | ||||||||
Stock-based Compensation Plans and Awards | ||||||||
Stock-based compensation expense | 10,600,000 | 14,700,000 | 14,900,000 | |||||
Weighted-average fair value of stock option granted (in dollars per share) | $9.34 | $19.74 | $5.91 | |||||
Total grant date fair value of stock options vested | 9,100,000 | 16,000,000 | 13,000,000 | |||||
Aggregate intrinsic value of options exercised | 93,800,000 | 169,200,000 | 84,900,000 | |||||
Total fair value of options vested | 9,400,000 | 16,500,000 | 13,100,000 | |||||
Options granted (in shares) | 349,500 | |||||||
Common stock exercise price (in dollars per share) | $35.61 | |||||||
Stock option with market and service conditions | Mr. Joseph Kennedy | ||||||||
Stock-based Compensation Plans and Awards | ||||||||
Vesting term | 4 years | 4 years | ||||||
Stock-based compensation expense | 600,000 | -1,700,000 | ||||||
Options granted (in shares) | 800,000 | |||||||
Common stock exercise price (in dollars per share) | $10.63 | |||||||
Period of time that the trailing weighted average stock price must exceed a certain price for the stock award to vest, prior to July, 2017 | 60 days | |||||||
Share price that must be obtained for the stock award to vest prior to July, 2017 (in dollars per share) | $21 | |||||||
Share price, under a sale of the entity, that must be obtained for the stock award to vest prior to July, 2017 (in dollars per share) | $21 | |||||||
Stock option with market and service conditions | Mr. Joseph Kennedy | Monte-Carlo simulation option pricing model | ||||||||
Stock-based Compensation Plans and Awards | ||||||||
Weighted-average fair value of stock option granted (in dollars per share) | $6.08 | |||||||
Expected life used to value non-statutory stock options award using Monte Carlo simulation (in years) | 10 years | |||||||
Risk-free interest rate used to value non-statutory stock options award using Monte Carlo simulation | 2.33% | |||||||
Expected volatility used to value non-statutory stock options award using Monte Carlo simulation | 70.00% | |||||||
Share price (in dollars per share) | $10.63 | |||||||
Employee stock | ||||||||
Stock-based Compensation Plans and Awards | ||||||||
Shares of common stock reserved for the issuance (in shares) | 4,000,000 | 4,000,000 | ||||||
Percentage of payroll deductions of eligible employees to purchase shares of common stock | 15.00% | 15.00% | ||||||
Maximum amount of payroll deductions eligible employees can use per calendar year | 25,000 | |||||||
Exercise price as a percentage of the fair market value of the common stock | 85.00% | 85.00% | ||||||
Stock-based compensation expense | 0 | 2,100,000 | 0 | |||||
ESPP shares issued (in shares) | 0 | 149,378 | 0 | |||||
ESPP purchase price | $23.95 | |||||||
Restricted stock units | ||||||||
Stock-based Compensation Plans and Awards | ||||||||
Vesting term | 4 years | |||||||
Stock-based compensation expense | 28,900,000 | 69,900,000 | 10,400,000 | |||||
Weighted-average period for recognition of unrecognized compensation | 2 years 7 months 7 days | |||||||
Compensation cost not yet recognized | 197,300,000 | |||||||
2011 Plan | ||||||||
Stock-based Compensation Plans and Awards | ||||||||
Shares of common stock reserved for the issuance (in shares) | 12,000,000 | |||||||
Shares of common stock previously reserved but unissued under the 2004 Plan (in shares) | 1,506,424 | |||||||
Annual fixed increase alternative, increase in shares of common stock reserved for issuance (in shares) | 10,000,000 | |||||||
Annual percentage increase alternative, increase in common stock reserved for issuance as a percentage of common stock outstanding | 4.00% | |||||||
Unrecognized compensation cost | $26,700,000 | |||||||
Weighted-average period for recognition of unrecognized compensation | 2 years 10 months 10 days | |||||||
2011 Plan | Stock options | ||||||||
Stock-based Compensation Plans and Awards | ||||||||
Vesting term | 4 years | |||||||
2011 Plan | Stock options | Maximum | ||||||||
Stock-based Compensation Plans and Awards | ||||||||
Expiration term | 10 years |
Stockbased_Compensation_Plans_3
Stock-based Compensation Plans and Awards - Schedule of shares available for grant and activity (Details) | 12 Months Ended |
Dec. 31, 2014 | |
Shares Available for Grant | |
Balance at the beginning of the period (in shares) | 9,048,200 |
Additional shares authorized (in shares) | 11,815,837 |
Options granted (in shares) | -349,500 |
ESPP shares issued (in shares) | -142,265 |
Options forfeited (in shares) | 1,639,935 |
Balance at the end of the period (in shares) | 18,184,195 |
Equity Awards | |
Shares Available for Grant | |
Balance at the beginning of the period (in shares) | 9,048,200 |
Additional shares authorized (in shares) | 7,815,837 |
Options granted (in shares) | -349,500 |
Options forfeited (in shares) | 1,639,935 |
Balance at the end of the period (in shares) | 14,326,460 |
ESPP | |
Shares Available for Grant | |
Additional shares authorized (in shares) | 4,000,000 |
ESPP shares issued (in shares) | -142,265 |
Balance at the end of the period (in shares) | 3,857,735 |
Restricted Stock | |
Shares Available for Grant | |
Restricted stock granted (in shares) | -4,909,360 |
Restricted stock forfeited (in shares) | 1,081,348 |
Restricted Stock | Equity Awards | |
Shares Available for Grant | |
Restricted stock granted (in shares) | -4,909,360 |
Restricted stock forfeited (in shares) | 1,081,348 |
Stockbased_Compensation_Plans_4
Stock-based Compensation Plans and Awards - Schedule of assumptions used for determining the per-share fair value of shares granted under the ESPP (Details) (Black-Scholes option pricing model, Employee stock) | 12 Months Ended |
Dec. 31, 2014 | |
Black-Scholes option pricing model | Employee stock | |
Assumptions used to calculate per-share fair value of stock option at the date of grant | |
Expected life (in years) | 6 months |
Risk-free interest rate | 0.06% |
Expected volatility | 42.00% |
Expected dividend yield | 0.00% |
Stockbased_Compensation_Plans_5
Stock-based Compensation Plans and Awards - Schedule of stock option activity (Details) (USD $) | 11 Months Ended | 12 Months Ended |
In Thousands, except Share data, unless otherwise specified | Dec. 31, 2013 | Dec. 31, 2014 |
Outstanding Stock Options | ||
Granted (in shares) | 349,500 | |
Stock options | ||
Outstanding Stock Options | ||
Balance at the beginning of the period (in shares) | 22,708,200 | |
Granted (in shares) | 349,500 | |
Exercised (in shares) | -10,437,509 | |
Forfeited (in shares) | -1,639,935 | |
Balance at the end of the period (in shares) | 22,708,200 | 10,980,256 |
Exercisable at the end of the period (in shares) | 7,958,775 | |
Expected to vest at the end of the period (in shares) | 2,719,853 | |
Weighted-Average Exercise Price | ||
Balance at the beginning of the period (in dollars per share) | $4.85 | |
Granted (in dollars per share) | $35.61 | |
Exercised (in dollars per share) | $1.62 | |
Forfeited (in dollars per share) | $11.49 | |
Balance at the end of the period (in dollars per share) | $4.85 | $7.91 |
Exercisable at the end of the period (in dollars per share) | $4.39 | |
Expected to vest at the end of the period (in dollars per share) | $17.05 | |
Weighted Average Remaining Contractual Term | ||
Outstanding at the beginning of the period | 5 years 9 months 5 days | 1 year 0 months 29 days |
Outstanding at the end of the period | 5 years 9 months 5 days | 1 year 0 months 29 days |
Exercisable at the end of the period | 0 years 4 months 25 days | |
Expected to vest at the end of the period | 2 years 9 months 26 days | |
Aggregate Intrinsic Value | ||
Aggregate intrinsic value beginning of the period | $493,866 | |
Aggregate intrinsic value end of the period | 493,866 | 120,033 |
Exercisable at the end of the period | 108,296 | |
Expected to vest at the end of the period | $10,822 |
Stockbased_Compensation_Plans_6
Stock-based Compensation Plans and Awards - Schedule of stock option activity - Footnote (Details) (Stock options, USD $) | Dec. 31, 2014 | Dec. 31, 2013 |
Stock options | ||
Stock-based Compensation Plans and Awards | ||
Fair value per share of common stock (in dollars per share) | $17.83 | $26.60 |
Stockbased_Compensation_Plans_7
Stock-based Compensation Plans and Awards - Schedule of assumptions used for estimating the per-share fair value of stock options (Details) (Black-Scholes option pricing model, Stock options) | 11 Months Ended | 12 Months Ended | |
Dec. 31, 2013 | Dec. 31, 2014 | Jan. 31, 2013 | |
Assumptions used to calculate per-share fair value of stock option at the date of grant | |||
Expected life (in years) | 6 years 28 days | ||
Risk-free interest rate, minimum (as a percent) | 1.00% | 1.71% | 0.99% |
Risk-free interest rate, maximum (as a percent) | 2.04% | 1.93% | 1.52% |
Expected volatility, minimum (as a percent) | 58.00% | 58.00% | 56.00% |
Expected volatility, maximum (as a percent) | 59.00% | 59.00% | 57.00% |
Expected dividend yield | 0.00% | 0.00% | 0.00% |
Minimum | |||
Assumptions used to calculate per-share fair value of stock option at the date of grant | |||
Expected life (in years) | 5 years 11 months 27 days | 6 years 7 days | |
Maximum | |||
Assumptions used to calculate per-share fair value of stock option at the date of grant | |||
Expected life (in years) | 6 years 3 months 26 days | 6 years 8 months 1 day |
Stockbased_Compensation_Plans_8
Stock-based Compensation Plans and Awards - Schedule of activities for RSUs (Details) (Restricted stock units, USD $) | 12 Months Ended |
Dec. 31, 2014 | |
Restricted stock units | |
Number of RSUs | |
Unvested at the beginning of the period (in shares) | 10,365,512 |
Granted (in shares) | 4,909,360 |
Vested (in shares) | -3,169,456 |
Forfeited (in shares) | -1,081,348 |
Unvested at the end of the period (in shares) | 11,024,068 |
Expected to vest at end of the period (in shares) | 9,914,453 |
Weighted-Average Grant-Date Fair Value | |
Unvested at the beginning of the period (in dollars per share) | $14.31 |
Granted (in dollars per share) | $32.29 |
Vested (in dollars per share) | $13.85 |
Forfeited (in dollars per share) | $19.06 |
Unvested at the end of the period (in dollars per share) | $21.99 |
Expected to vest at end of the period (in dollars per share) | $21.88 |
Stockbased_Compensation_Plans_9
Stock-based Compensation Plans and Awards - Schedule of stock-based compensation expenses related to all employee and non-employee stock-based awards (Details) (USD $) | 11 Months Ended | 12 Months Ended | |
Dec. 31, 2013 | Dec. 31, 2014 | Jan. 31, 2013 | |
Stock-based Compensation Plans and Awards | |||
Total stock-based compensation expense | $40,041,000 | $87,055,000 | $25,500,000 |
Cost of revenue - Other | |||
Stock-based Compensation Plans and Awards | |||
Total stock-based compensation expense | 1,946,000 | 4,414,000 | 1,214,000 |
Product development | |||
Stock-based Compensation Plans and Awards | |||
Total stock-based compensation expense | 8,802,000 | 17,546,000 | 4,530,000 |
Sales and marketing | |||
Stock-based Compensation Plans and Awards | |||
Total stock-based compensation expense | 20,222,000 | 42,165,000 | 12,294,000 |
General and administrative | |||
Stock-based Compensation Plans and Awards | |||
Total stock-based compensation expense | $9,071,000 | $22,930,000 | $7,462,000 |
Common_Stock_and_Net_Loss_Per_2
Common Stock and Net Loss Per Share - Narrative (Details) (USD $) | 1 Months Ended | 11 Months Ended | 12 Months Ended | ||
In Thousands, except Share data, unless otherwise specified | Sep. 30, 2013 | Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2014 | Jan. 31, 2013 |
vote | |||||
Earnings Per Share [Abstract] | |||||
Number of votes per share holders of common stock are entitled | 1 | ||||
Issuance of common stock in connection with secondary offering (in shares) | 15,730,000 | ||||
Number of shares of common stock sold pursuant to the exercise by the underwriters of an option to purchase additional shares (in shares) | 2,730,000 | ||||
Share price (in dollars per share) | $25 | $28.17 | |||
Public offering of common stock held by selling stockholders (in shares) | 5,200,000 | ||||
Aggregate net proceeds after deducting underwriting discounts and commissions and offering expenses | $378,700 | $378,654 | $0 | $0 | $0 |
Common_Stock_and_Net_Loss_Per_3
Common Stock and Net Loss Per Share - Schedule of the computation of historical basic and diluted net loss per share (Details) (USD $) | 11 Months Ended | 12 Months Ended | ||
In Thousands, except Per Share data, unless otherwise specified | Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2014 | Jan. 31, 2013 |
Numerator | ||||
Net loss | ($27,017) | ($24,462) | ($30,406) | ($38,148) |
Denominator | ||||
Weighted-average common shares outstanding used in computing basic and diluted net loss per share (in shares) | 180,968 | 167,956 | 205,273 | 168,294 |
Net loss per share, basic and diluted (in dollars per share) | ($0.15) | ($0.15) | ($0.15) | ($0.23) |
Common_Stock_and_Net_Loss_Per_4
Common Stock and Net Loss Per Share - Schedule of potential common shares that were excluded from the computation of diluted net loss per share (Details) | 11 Months Ended | 12 Months Ended | |
In Thousands, unless otherwise specified | Dec. 31, 2013 | Dec. 31, 2014 | Jan. 31, 2013 |
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | |||
Total common stock equivalents (in shares) | 33,074 | 22,004 | 31,615 |
Options to purchase common stock | |||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | |||
Total common stock equivalents (in shares) | 22,708 | 10,980 | 26,103 |
Restricted stock units | |||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | |||
Total common stock equivalents (in shares) | 10,366 | 11,024 | 5,512 |
Selected_Quarterly_Financial_D2
Selected Quarterly Financial Data - Selected Quarterly Financial Data (unaudited) (Details) (USD $) | 2 Months Ended | 3 Months Ended | 11 Months Ended | 12 Months Ended | ||||||||
In Thousands, except Per Share data, unless otherwise specified | Dec. 31, 2013 | Dec. 31, 2014 | Sep. 30, 2014 | Jun. 30, 2014 | Mar. 31, 2014 | Oct. 31, 2013 | Jul. 31, 2013 | Apr. 30, 2013 | Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2014 | Jan. 31, 2013 |
Quarterly Financial Information Disclosure [Abstract] | ||||||||||||
Total revenue | $136,992 | $268,000 | $239,593 | $218,894 | $194,315 | $180,376 | $157,355 | $125,510 | $600,233 | $389,484 | $920,802 | $427,145 |
Cost of revenue | ||||||||||||
Cost of Revenue—Content acquisition costs | 63,144 | 115,326 | 111,315 | 111,461 | 108,275 | 86,989 | 81,880 | 82,853 | 314,866 | 230,731 | 446,377 | 258,748 |
Cost of revenue—Other | 8,699 | 17,206 | 15,453 | 13,989 | 14,979 | 12,532 | 11,141 | 9,845 | 42,217 | 28,988 | 61,627 | 32,282 |
Total cost of revenue | 71,843 | 132,532 | 126,768 | 125,450 | 123,254 | 99,521 | 93,021 | 92,698 | 357,083 | 259,719 | 508,004 | 291,030 |
Gross profit | 65,149 | 135,468 | 112,825 | 93,444 | 71,061 | 80,855 | 64,334 | 32,812 | 243,150 | 129,765 | 412,798 | 136,115 |
Operating expenses | ||||||||||||
Product development | 6,437 | 14,865 | 13,381 | 13,076 | 11,831 | 9,244 | 8,301 | 7,312 | 31,294 | 16,901 | 53,153 | 18,901 |
Sales and marketing | 33,039 | 76,914 | 72,320 | 66,232 | 61,864 | 50,285 | 45,606 | 40,075 | 169,005 | 94,212 | 277,330 | 107,373 |
General and administrative | 14,544 | 31,074 | 29,143 | 25,865 | 26,361 | 22,823 | 18,061 | 13,872 | 69,300 | 42,716 | 112,443 | 47,543 |
Total operating expenses | 54,020 | 122,853 | 114,844 | 105,173 | 100,056 | 82,352 | 71,968 | 61,259 | 269,599 | 153,829 | 442,926 | 173,817 |
Loss from operations | 11,129 | 12,615 | -2,019 | -11,729 | -28,995 | -1,497 | -7,634 | -28,447 | -26,449 | -24,064 | -30,128 | -37,702 |
Net income (loss) attributable to common stockholders | $11,057 | $12,278 | ($2,025) | ($11,728) | ($28,931) | ($1,700) | ($7,787) | ($28,587) | ||||
Net income (loss) per share, basic (in dollars per share) | $0.06 | $0.06 | ($0.01) | ($0.06) | ($0.14) | ($0.01) | ($0.04) | ($0.16) | ||||
Net income (loss) per share, diluted (in dollars per share) | $0.05 | $0.06 | ($0.01) | ($0.06) | ($0.14) | ($0.01) | ($0.04) | ($0.16) |
Subsequent_Event_Narrative_Det
Subsequent Event - Narrative (Details) (Subsequent Event, USD $) | 1 Months Ended |
In Millions, unless otherwise specified | Feb. 11, 2015 |
Subsequent Event | |
Subsequent Event | |
Operating lease agreement, additional commitment | $7.60 |