Document and Entity Information
Document and Entity Information - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2015 | Feb. 16, 2016 | Jun. 30, 2015 | |
Document and Entity Information [Abstract] | |||
Entity Registrant Name | Pandora Media, Inc. | ||
Entity Central Index Key | 1,230,276 | ||
Current Fiscal Year End Date | --12-31 | ||
Entity Current Reporting Status | Yes | ||
Entity Filer Category | Large Accelerated Filer | ||
Document Type | 10-K | ||
Document Period End Date | Dec. 31, 2015 | ||
Document Fiscal Year Focus | 2,015 | ||
Document Fiscal Period Focus | FY | ||
Amendment Flag | false | ||
Entity Common Stock, Shares Outstanding | 227,695,644 | ||
Entity Voluntary Filers | No | ||
Entity Well Known Seasoned Issuer | Yes | ||
Entity Public Float | $ 2,887 |
Consolidated Balance Sheets
Consolidated Balance Sheets - USD ($) $ in Thousands | Dec. 31, 2015 | Dec. 31, 2014 |
Current assets | ||
Cash and cash equivalents | $ 334,667 | $ 175,957 |
Short-term investments | 35,844 | 178,631 |
Accounts receivable, net of allowance of $1,218 at December 31, 2014 and $2,165 at December 31, 2015 | 277,075 | 218,437 |
Prepaid expenses and other current assets | 35,920 | 15,389 |
Total current assets | 683,506 | 588,414 |
Long-term investments | 46,369 | 104,243 |
Property and equipment, net | 66,370 | 42,921 |
Goodwill | 303,875 | 0 |
Intangible assets, net | 110,745 | 6,939 |
Other long-term assets | 29,792 | 6,773 |
Total assets | 1,240,657 | 749,290 |
Current liabilities | ||
Accounts payable | 17,897 | 10,825 |
Accrued liabilities | 37,185 | 15,754 |
Accrued royalties | 97,390 | 73,693 |
Deferred revenue | 19,939 | 14,412 |
Accrued compensation | 43,788 | 34,476 |
Other current liabilities | 15,632 | 0 |
Total current liabilities | 231,831 | 149,160 |
Long-term debt, net | 234,577 | 0 |
Other long-term liabilities | 30,862 | 16,773 |
Total liabilities | 497,270 | 165,933 |
Stockholders’ equity | ||
Common stock, $0.0001 par value, 1,000,000,000 shares authorized: 209,071,488 shares issued and outstanding at December 31, 2014 and 224,970,412 at December 31, 2015 | 23 | 21 |
Additional paid-in capital | 1,110,539 | 781,009 |
Accumulated deficit | (366,658) | (196,997) |
Accumulated other comprehensive loss | (517) | (676) |
Total stockholders’ equity | 743,387 | 583,357 |
Total liabilities and stockholders’ equity | $ 1,240,657 | $ 749,290 |
Consolidated Balance Sheets (Pa
Consolidated Balance Sheets (Parenthetical) - USD ($) $ in Thousands | Dec. 31, 2015 | Dec. 31, 2014 |
Statement of Financial Position [Abstract] | ||
Accounts receivable, allowance | $ 2,165 | $ 1,218 |
Common stock, par value (in dollars per share) | $ 0.0001 | $ 0.0001 |
Common stock, shares authorized | 1,000,000,000 | 1,000,000,000 |
Common stock, shares issued | 224,970,412 | 209,071,488 |
Common stock, shares outstanding | 224,970,412 | 209,071,488 |
Consolidated Statements of Oper
Consolidated Statements of Operations - USD ($) shares in Thousands, $ in Thousands | 11 Months Ended | 12 Months Ended | |
Dec. 31, 2013 | Dec. 31, 2015 | Dec. 31, 2014 | |
Revenue | |||
Advertising | $ 489,340 | $ 933,305 | $ 732,338 |
Subscription and other | 110,893 | 220,571 | 188,464 |
Ticketing service | 0 | 10,167 | 0 |
Total revenue | 600,233 | 1,164,043 | 920,802 |
Cost of revenue | |||
Cost of revenue—Content acquisition costs | 314,866 | 610,362 | 446,377 |
Cost of revenue—Other | 42,217 | 79,858 | 61,627 |
Cost of revenue—Ticketing service | 0 | 7,121 | 0 |
Total cost of revenue | 357,083 | 697,341 | 508,004 |
Gross profit | 243,150 | 466,702 | 412,798 |
Operating expenses | |||
Product development | 31,294 | 84,581 | 53,153 |
Sales and marketing | 169,005 | 398,169 | 277,330 |
General and administrative | 69,300 | 153,943 | 112,443 |
Total operating expenses | 269,599 | 636,693 | 442,926 |
Income (loss) from operations | (26,449) | (169,991) | (30,128) |
Other income (expense), net | (474) | (1,220) | 306 |
Loss before benefit from (provision for) income taxes | (26,923) | (171,211) | (29,822) |
Benefit from (provision for) income taxes | (94) | 1,550 | (584) |
Net loss | $ (27,017) | $ (169,661) | $ (30,406) |
Weighted-average common shares outstanding used in computing basic and diluted net loss per share (in shares) | 180,968 | 213,790 | 205,273 |
Net loss per share, basic and diluted (in dollars per share) | $ (0.15) | $ (0.79) | $ (0.15) |
Consolidated Statements of Comp
Consolidated Statements of Comprehensive Loss - USD ($) $ in Thousands | 11 Months Ended | 12 Months Ended | |
Dec. 31, 2013 | Dec. 31, 2015 | Dec. 31, 2014 | |
Statement of Comprehensive Income [Abstract] | |||
Net loss | $ (27,017) | $ (169,661) | $ (30,406) |
Change in foreign currency translation adjustment | (42) | 53 | (184) |
Change in net unrealized losses on marketable securities | (253) | 106 | (191) |
Other comprehensive income (loss) | (295) | 159 | (375) |
Total comprehensive loss | $ (27,312) | $ (169,502) | $ (30,781) |
Consolidated Statements of Stoc
Consolidated Statements of Stockholders' Equity - USD ($) $ in Thousands | Total | Common Stock | Additional Paid-in Capital | Accumulated Other Comprehensive Loss | Accumulated Deficit |
Beginning balance at Jan. 31, 2013 | $ 98,989 | $ 17 | $ 238,552 | $ (6) | $ (139,574) |
Beginning balance (in 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 | 0 | ||||
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 income (loss) | (295) | (295) | |||
Ending balance at Dec. 31, 2013 | 508,231 | $ 20 | 675,103 | (301) | (166,591) |
Ending balance (in 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 | 0 | ||||
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 | ||||
Excess tax benefit from stock-based awards | 348 | 348 | |||
Components of comprehensive loss: | |||||
Net loss | (30,406) | (30,406) | |||
Other comprehensive income (loss) | (375) | (375) | |||
Ending balance at Dec. 31, 2014 | 583,357 | $ 21 | 781,009 | (676) | (196,997) |
Ending balance (in shares) at Dec. 31, 2014 | 209,071,488 | ||||
Increase (Decrease) in Stockholders' Equity | |||||
Issuance of common stock upon exercise of stock options | 5,156 | 5,156 | |||
Issuance of common stock upon exercise of stock options (in shares) | 1,077,797 | ||||
Issuance of common stock related to acquisitions | 148,490 | $ 2 | 148,488 | ||
Issuance of common stock related to acquisitions (in shares) | 10,246,616 | ||||
Stock-based compensation | 111,645 | 111,645 | |||
Vesting of restricted stock units | 0 | ||||
Vesting of restricted stock units (in shares) | 4,184,415 | ||||
Share cancellations to satisfy tax withholding on vesting of restricted stock units | (2,540) | (2,540) | |||
Share cancellations to satisfy tax withholding on vesting of restricted stock units (in shares) | (148,302) | ||||
Stock issued under employee stock purchase plan | $ 6,973 | 6,973 | |||
Stock issued under employee stock purchase plan (in shares) | 538,398 | 538,398 | |||
Equity component of convertible note issuance, net of issuance costs | $ 102,968 | 102,968 | |||
Purchase of capped call | (43,160) | (43,160) | |||
Components of comprehensive loss: | |||||
Net loss | (169,661) | (169,661) | |||
Other comprehensive income (loss) | 159 | 159 | |||
Ending balance at Dec. 31, 2015 | $ 743,387 | $ 23 | $ 1,110,539 | $ (517) | $ (366,658) |
Ending balance (in shares) at Dec. 31, 2015 | 224,970,412 |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows - USD ($) $ in Thousands | 11 Months Ended | 12 Months Ended | |
Dec. 31, 2013 | Dec. 31, 2015 | Dec. 31, 2014 | |
Operating activities | |||
Net loss | $ (27,017) | $ (169,661) | $ (30,406) |
Adjustments to reconcile net loss to net cash provided by (used in) operating activities | |||
Depreciation and amortization | 10,112 | 24,458 | 15,431 |
Stock-based compensation | 40,041 | 111,645 | 87,055 |
Amortization of premium on investments | 237 | 1,911 | 2,833 |
Excess tax benefit from stock-based awards | 0 | 0 | (348) |
Amortization of debt discount | 0 | 1,084 | 0 |
Other operating activities | 220 | 2,134 | 1,366 |
Changes in assets and liabilities | |||
Accounts receivable | (60,613) | (55,904) | (55,478) |
Prepaid expenses and other assets | (7,891) | (18,918) | (9,219) |
Accounts payable, accrued and other current liabilities | 11,745 | 18,080 | 4,830 |
Accrued royalties | 13,027 | 23,736 | 7,608 |
Accrued compensation | (3,393) | 7,378 | 13,736 |
Other long-term liabilities | 5,607 | 6,005 | 7,690 |
Deferred revenue | 13,384 | 4,946 | (28,238) |
Reimbursement of cost of leasehold improvements | 1,555 | 1,024 | 4,169 |
Net cash provided by (used in) operating activities | (2,986) | (42,082) | 21,029 |
Investing activities | |||
Purchases of property and equipment | (21,180) | (32,074) | (30,039) |
Purchases of patents | (8,000) | 0 | 0 |
Purchases of investments | (224,549) | (140,980) | (340,679) |
Proceeds from maturities of investments | 42,210 | 228,998 | 258,518 |
Proceeds from sale of investments | 0 | 111,356 | 0 |
Payments related to acquisitions, net of cash acquired | (400) | (269,566) | 0 |
Net cash used in investing activities | (211,919) | (102,266) | (112,200) |
Financing activities | |||
Proceeds from issuance of convertible notes | 0 | 345,000 | 0 |
Payments for purchase of capped call | 0 | (43,160) | 0 |
Payment of debt issuance costs | (450) | (8,909) | 0 |
Borrowings under debt arrangements | 10,000 | 0 | 0 |
Repayments of debt | (10,000) | 0 | 0 |
Proceeds from follow-on offering, net of issuance costs | 378,654 | 0 | 0 |
Proceeds from exercise of stock options | 17,273 | 5,192 | 16,894 |
Tax payments from net share settlements of restricted stock units | (480) | (2,540) | (2,019) |
Excess tax benefit from stock-based awards | 0 | 0 | 348 |
Proceeds from employee stock purchase plan | 0 | 7,552 | 6,438 |
Net cash provided by financing activities | 394,997 | 303,135 | 21,661 |
Effect of exchange rate changes on cash and cash equivalents | (62) | (77) | (288) |
Net increase (decrease) in cash and cash equivalents | 180,030 | 158,710 | (69,798) |
Cash and cash equivalents at beginning of period | 65,725 | 175,957 | 245,755 |
Cash and cash equivalents at end of period | 245,755 | 334,667 | 175,957 |
Supplemental disclosures of cash flow information | |||
Cash paid during the period for income taxes | 26 | 389 | 164 |
Cash paid during the period for interest | 18 | 351 | 314 |
Purchases of property and equipment recorded in accounts payable and accrued liabilities | 7,910 | 5,890 | 751 |
Fair value of shares issued related to the acquisition of a business | $ 0 | $ 146,855 | $ 0 |
Description of Business and Bas
Description of Business and Basis of Presentation | 12 Months Ended |
Dec. 31, 2015 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Description of Business and Basis of Presentation | Description of Business and Basis of Presentation Pandora Pandora is the world’s most powerful music discovery platform, offering a personalized experience for each of our listeners wherever and whenever they want to listen to music - whether through earbuds, car speakers or live on stage. Our vision is to be the definitive source of music discovery and enjoyment for billions. The majority of our listener hours occur on mobile devices, with the majority of our revenue generated from advertising on these devices. We offer both local and national advertisers the opportunity to deliver targeted messages to our listeners using a combination of audio, display and video advertisements. We also generate revenue by offering an advertising-free 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, and we also operate in Australia, New Zealand and Canada. Ticketfly We completed the acquisition of Ticketfly on October 31, 2015. Ticketfly is a leading live events technology company that provides ticketing and marketing software and services for venues and event promoters across North America. Ticketfly's ticketing, digital marketing and analytics software helps promoters book talent, sell tickets and drive in-venue revenue, while Ticketfly's consumer tools help fans find and purchase tickets to events. Ticketfly’s revenue primarily consists of service and merchant processing fees from ticketing operations. 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. We have reclassified goodwill and intangible assets from the other long-term assets line item to the goodwill and intangible assets, net line items in our consolidated balance sheets. We have also reclassified certain non-cash amounts from the amortization of debt issuance costs and the change in accounts receivable line items to the other operating activities line item in our consolidated statements of cash flows. Additionally, we have reclassified certain non-cash amounts from the purchases of property and equipment line item to the prepaid expenses and other assets line item of our consolidated statements of cash flows. Lastly, we have reclassified certain amounts from the accounts payable, accrued and other current liabilities line item to the long-term liabilities line item of 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 value of stock options, market stock units ("MSUs") and the Employee Stock Purchase Plan ("ESPP"), the impact of forfeitures on stock-based compensation, the provision for (benefit from) income taxes, the subscription return reserve, the fair value of convertible debt, the fair value of acquired property and equipment, intangible assets and goodwill and the useful lives of acquired intangible assets. 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 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, ticketing and other offerings, while all other financial information is reviewed on a consolidated basis. There are no segment managers who are held accountable by the CODM, or anyone else, for operations, operating results, and planning for levels or components below the consolidated unit level. Accordingly, we have determined that we have a single reportable segment and operating unit structure. 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, the period ended December 31, 2013 was shortened from twelve months to an eleven-month transition period. In these consolidated financial statements, including the notes thereto, the most recent financial results for the years ended December 31, 2014 and 2015 are for twelve -month periods. |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 12 Months Ended |
Dec. 31, 2015 | |
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. Gross versus net revenue recognition. We report revenue on a gross or net basis based on management’s assessment of whether we act as a principal or agent in the transaction. To the extent we act as the principal, revenue is reported on a gross basis. The determination of whether we act as a principal or an agent in a transaction is based on an evaluation of whether we have the substantial risks and rewards of ownership under the terms of an arrangement. 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 nor do we establish or maintain the relationships 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 and 2015 , 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. 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. 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. 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. Ticketing service revenue. Ticketing service revenue is generated primarily from service and merchant processing fees generated on ticket sales through the Ticketfly platform. Ticketfly sells tickets to fans for events on behalf of clients and charges a fee per ticket, which generally increases as the face value of the ticket increases, or a percentage of the total convenience charge and order processing fee, for its services at the time the ticket for an event is sold. Ticketing service revenue is recorded net of the face value of the ticket at the time of the sale, as Ticketfly generally acts as the agent in these transactions. 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 eleven months ended December 31, 2013 and the twelve months ended December 31, 2014 and 2015 were $0.4 million , $1.1 million and $1.1 million , respectively. For the eleven months ended December 31, 2013 , the twelve months ended December 31, 2014 and 2015 , we had no customers that accounted for 10% or more of total revenue. As of December 31, 2014 and 2015 , 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. Accounts receivable amounts that are deemed uncollectable are charged against the allowance for doubtful accounts when identified. 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. If we reduce the estimated useful life assumption for any asset, the remaining unamortized balance would be amortized or depreciated over the revised estimated useful life. 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, 2014 and 2015 , we had approximately $2.8 million and $6.3 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. Ticketing Contract Advances Ticketing contract advances, which are either recoupable or non-recoupable, represent amounts paid in advance to clients pursuant to ticketing agreements. These amounts are reflected in prepaid expenses and other current assets if the amount is expected to be recouped or recognized over a period of twelve months or less or in other long-term assets if the amount is expected to be recouped or recognized over a period of more than twelve months. Recoupable ticketing contract advances are generally recoupable against future royalties earned by clients, based on the contract terms, over the lives of their contracts which typically range between three and five years. Non-recoupable ticketing contract advances are fixed incentives paid by Ticketfly to secure exclusive rights with certain clients and are amortized to sales and marketing expense over the life of the contract on a straight-line basis. Amortization expense for the two months ended December 31, 2015 was $0.7 million . We maintain an allowance for doubtful accounts to reserve for recoupable ticketing contract advances that we potentially do not expect to recoup. Our allowance is based on historical loss patterns, the aging of balances and known factors about customers’ current financial conditions. Business Combinations, Goodwill and Intangible Assets, net We allocate the fair value of purchase consideration to the tangible assets acquired, liabilities assumed and intangible assets acquired based on their estimated fair values. The excess of the fair value of purchase consideration over the fair values of these identifiable assets and liabilities is recorded as goodwill. Such valuations require management to make significant estimates and assumptions, especially with respect to intangible assets. Significant estimates in valuing certain intangible assets include, but are not limited to, future expected cash flows from acquired users, acquired technology, and trade names from a market participant perspective, useful lives and discount rates. Management’s estimates of fair value are based upon assumptions believed to be reasonable, but which are inherently uncertain and unpredictable and, as a result, actual results may differ from estimates. During the measurement period, which is one year from the acquisition date, we may record adjustments to the assets acquired and liabilities assumed, with the corresponding offset to goodwill. Upon the conclusion of the measurement period, any subsequent adjustments are recorded to earnings. We review goodwill for impairment at least annually or more frequently if events or changes in circumstances would more likely than not reduce the fair value of our single reporting unit below its carrying value. We evaluate indefinite-lived intangible assets for impairment annually or more frequently if events or changes in circumstances indicate that it is more likely than not that the asset is impaired. As of December 31, 2015 , no impairment of goodwill or indefinite-lived intangible assets has been identified. Acquired finite-lived intangible assets are amortized over the estimated useful lives of the assets, which range from two to eleven years. Acquired finite-lived intangible assets consist primarily of patents, customer relationships, developed technology and trade names resulting from business combinations. We evaluate the recoverability of our intangible assets for potential impairment whenever events or circumstances indicate that the carrying amount of such assets 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 such review indicates that the carrying amount of intangible assets is not recoverable, the carrying amount of such assets is reduced to the fair value. In addition to the recoverability assessment, we routinely review the remaining estimated useful lives of finite-lived intangible assets. If we reduce the estimated useful life assumption for any asset, the remaining unamortized balance would be amortized over the revised estimated useful life. We record the amortization of intangible assets to the financial statement line item in our consolidated statement of operations that the asset directly relates to. To the extent that purchased intangibles are used in revenue generating activities, we record the amortization of these intangible assets to cost of revenue. 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. Stock-Based Compensation — MSUs We implemented a market stock unit program in March 2015 for certain key executives. Specifically, MSUs measure Pandora’s total stockholder return (“TSR”) performance against that of the Russell 2000 Index across three performance periods. We have determined the grant-date fair value of the MSUs using a Monte Carlo simulation performed by a third-party valuation specialist. The Monte Carlo simulation model utilizes multiple input variables to estimate the probability that market conditions will be achieved. These variables include our expected stock price volatility over the expected term of the award, actual and projected employee stock option exercise behaviors and the risk-free interest rate for the expected term of the award. The variables used in these models are reviewed on an annual basis and adjusted, as needed. We recognize stock-based compensation for the MSUs over the requisite service period using the accelerated attribution method. 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 certain royalty arrangements, we accrue for estimated royalties based on the available facts and circumstances and adjust these estimates as more information becomes available. Cost of Revenue — Ticketing Service Cost of revenue—ticketing service consists primarily of ticketing revenue share costs, credit card fees and intangible amortization expense. The majority of the cost is related to revenue share costs which consist of royalties paid to clients for their share of convenience and order processing fees. Payments to clients are recorded as an expense to the extent that the fair value of the identifiable benefit received in the exchange exceeds the amount of the payment to the client. Intangible amortization expense is related to amortization of developed technology. Cost of Revenue — Other Cost of revenue—other consists primarily of ad and music serving costs, employee-related and facilities and equipment costs and other costs of ad sales. Ad and music 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 music 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, facilities and equipment costs, including salaries and benefits related to employees in software engineering, music analysis and product management departments, 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 and facilities and equipment costs, including salaries, commissions and benefits related to employees in sales, sales support, marketing, advertising and music maker group 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, advertising, direct response and search engine marketing costs, public relations expenses, costs related to music events, agency platform and media measurement expenses, infrastructure costs and amortization expense related to acquired intangible assets. We expense the costs of producing advertisements as they are incurred and expense the cost of communicating advertisements at the time the advertisement airs or the event occurs, in each case as sales and marketing expense within the accompanying consolidated statements of operations. During the eleven months ended December 31, 2013 and the twelve months ended December 31, 2014 and 2015 , we recorded advertising expenses of $4.2 million , $10.4 million and $35.1 million , respectively. General and Administrative General and administrative consists primarily of employee-related and facilities and equipment 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, infrastructure costs and credit card fees. Provision for (Benefit from) Income Taxes Our provision for (benefit from) income taxes is computed 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, restricted stock units and market 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 November 20, 2015, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update No. 2015-17, Income Taxes (Subtopic 740): Balance Sheet Classification of Deferred Taxes ("ASU 2015-17"). ASU 2015-17 requires all deferred tax assets and liabilities, and any related valuation allowance, to be classified as non-current on the balance sheet. The classification change for all deferred taxes as non-current simplifies entities’ processes as it eliminates the need to separately identify the net current and net non-current deferred tax asset or liability in each jurisdiction and allocate valuation allowances. The guidance is effective for fiscal years beginning after December 15, 2016, although early adoption is permitted. We have elected to early adopt this standard prospectively in the year ended December 31, 2015. The adoption of this guidance did not have a material effect on our consolidated financial statements. Prior periods in our Consolidated Financial Statements were not retrospectively adjusted. In September 2015, the FASB issued Accounting Standards Update No. 2015-16, Business Combinations ("ASU 2015-16"). ASU 2015-16 eliminates the requirement for an acquirer in a business combination to account for measurement-period adjustments retrospectively. Rather, the acquirer must recognize adjustments during the period in which the amounts are determined, including the effect on earnings of any amounts that would have been recorded in previous periods. The guidance is effective for fiscal years beginning after December 15, 2015, although early adoption is permitted. We early adopted this standard in the year ended December 31, 2015. The adoption of this guidance did not have a material effect on our consolidated financial statements, as there were no measurement period adjustments. In April 2015, The FASB issued Accounting Standards Update No. 2015-03, Interest - Imputation of Interest (Subtopic 835-30) ("ASU 2015-03"). ASU 2015-03 requires that debt issuance costs related to a recognized debt liability be presented in the balance sheet as a direct deduction from the corresponding debt liability, consistent with the presentation of a debt discount. The guidance is effective for fiscal years beginning after December 15, 2015, although early adoption is permitted. We early adopted this standard in the year ended December 31, 2015. This resulted in a $5.9 million and $2.6 million reduction to our convertible senior notes and equity at December 31, 2015 related to issuance costs paid, which will be accreted to interest expense over the term of the notes. In May 2014, the 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. In August 2015, the FASB issued ASU No. 2015-14, Revenue from Contracts with Customers (Topic 606): Deferral of the Effective Date , which delays the effective date of ASU 2014-09 by one year. The FASB also agreed to allow entities to choose to adopt the standard as of the original effective date. As such, the updated standard will be effective for us in the first quarter of 2018, with the option to adopt it in the first quarter of 2017. 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. |
Composition of Certain Financia
Composition of Certain Financial Statement Captions | 12 Months Ended |
Dec. 31, 2015 | |
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, 2014 2015 (in thousands) Cash and cash equivalents Cash $ 72,487 $ 104,361 Money market funds 89,113 180,021 Commercial paper 9,349 31,089 Corporate debt securities 5,008 2,000 U.S. government and government agency debt securities — 17,196 Total cash and cash equivalents $ 175,957 $ 334,667 Short-term investments Commercial paper $ 45,443 $ 4,792 Corporate debt securities 128,691 31,052 U.S. government and government agency debt securities 4,497 — Total short-term investments $ 178,631 $ 35,844 Long-term investments Corporate debt securities $ 100,998 $ 46,369 U.S. government and government agency debt securities 3,245 — Total long-term investments $ 104,243 $ 46,369 Total cash, cash equivalents and investments $ 458,831 $ 416,880 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, 2014 and 2015 . As of December 31, 2014 Adjusted Cost Unrealized Gains Unrealized Losses Fair 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 As of December 31, 2015 Adjusted Cost Unrealized Gains Unrealized Losses Fair Value (in thousands) Cash equivalents and marketable securities Money market funds $ 180,021 $ — $ — $ 180,021 Commercial paper 35,881 — — 35,881 Corporate debt securities 79,760 8 (347 ) 79,421 U.S. government and government agency debt securities 17,198 — (2 ) 17,196 Total cash equivalents and marketable securities $ 312,860 $ 8 $ (349 ) $ 312,519 The following tables present available-for-sale investments by contractual maturity date as of December 31, 2014 and 2015 : As of December 31, 2014 Adjusted Cost Fair Value (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 As of December 31, 2015 Adjusted Cost Fair Value (in thousands) Due in one year or less $ 266,205 $ 266,150 Due after one year through three years 46,655 46,369 Total $ 312,860 $ 312,519 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, 2014 and 2015 : 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 (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 ) As of December 31, 2015 Twelve Months or Less More than Twelve Months Total Fair Gross Unrealized Losses Fair Gross Unrealized Losses Fair Gross Unrealized Losses (in thousands) Money market funds $ — $ — $ — $ — $ — $ — Commercial paper — — — — — — Corporate debt securities 64,804 (293 ) 8,531 (54 ) 73,335 (347 ) U.S. government and government agency debt securities 16,241 (2 ) — — 16,241 (2 ) Total $ 81,045 $ (295 ) $ 8,531 $ (54 ) $ 89,576 $ (349 ) 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, 2015 were primarily a result of unfavorable changes in interest rates subsequent to the initial purchase of these securities. As of December 31, 2015 , we owned 71 securities that were in an unrealized loss position. Based on our cash flow needs, we may be required to sell a portion of these securities prior to maturity. However, we expect to recover the full carrying value of these securities. As a result, no portion of the unrealized losses at December 31, 2015 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, 2015 , we did no t recognize any impairment charges. During the twelve months ended December 31, 2015 , proceeds from the sale of available-for-sale securities were $111.4 million . We did no t recognize a realized gain or loss in connection with these sales. Accounts Receivable, net Accounts receivable, net consisted of the following as of December 31, 2014 and 2015 : As of December 31, 2014 2015 (in thousands) Accounts receivable, net Accounts receivable $ 219,655 $ 279,240 Allowance for doubtful accounts (1,218 ) (2,165 ) Total accounts receivable, net $ 218,437 $ 277,075 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 eleven months ended December 31, 2013 , the twelve months ended December 31, 2014 and the twelve months ended December 31, 2015 : Allowance for Doubtful Accounts Balance at Beginning of Period Additions Write-offs, Net of Recoveries Balance at End of Period (in thousands) 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 For the twelve months ended December 31, 2015 $ 1,218 2,085 (1,138 ) $ 2,165 Prepaid and Other Current Assets Prepaid and other current assets consisted of the following as of December 31, 2014 and 2015 : As of December 31, 2014 2015 (in thousands) Prepaid and other current assets Other current assets $ 8,520 $ 15,821 Prepaid expenses 6,169 13,908 Ticketing contract advance - short term, net — 4,092 Prepaid royalties 700 2,099 Total prepaid and other current assets $ 15,389 $ 35,920 Other current assets consists primarily of $12.9 million in receivables for the reimbursement of costs of leasehold improvements in connection with our operating leases. Other Long-Term Assets Other long-term assets consisted of the following as of December 31, 2014 and 2015 : As of December 31, 2014 2015 (in thousands) Other long-term assets Other $ 1,826 $ 10,929 Ticketing contract advance - long-term — 9,824 Long-term security deposits 4,947 9,039 Total other long-term assets $ 6,773 $ 29,792 Property and Equipment, net Property and equipment, net consisted of the following as of December 31, 2014 and 2015 : As of December 31, 2014 2015 (in thousands) Property and equipment, net Servers, computers and other related equipment $ 39,890 $ 57,309 Leasehold improvements 25,893 35,947 Office furniture and equipment 2,721 5,470 Construction in progress 5,075 12,550 Software developed for internal use 4,519 10,239 Total property and equipment $ 78,098 $ 121,515 Less accumulated depreciation and amortization (35,177 ) (55,145 ) Total property and equipment, net $ 42,921 $ 66,370 Depreciation expenses totaled $9.7 million , $14.7 million and $20.4 million for the eleven months ended December 31, 2013 and the twelve months ended December 31, 2014 and 2015 , respectively. There were no material write-offs during the eleven months ended December 31, 2013 or the twelve months ended December 31, 2014 or 2015 . Software developed for internal use generally has an expected useful life of three years from the date placed in service. As of December 31, 2014 and 2015 the net carrying amount was $2.8 million and $6.3 million , including accumulated amortization of $1.7 million and $4.0 million . Amortization expense for the eleven months ended December 31, 2013 , the twelve months ended December 31, 2014 and the twelve months ended December 31, 2015 was $0.6 million , $1.1 million and $2.2 million , respectively. Other Current Liabilities Other current liabilities consisted of the following as of December 31, 2014 and 2015 : As of December 31, 2014 2015 (in thousands) Other current liabilities Ticketing amounts due to clients $ — $ 13,104 Other — 2,528 Total other current liabilities $ — $ 15,632 Ticketing amounts due to clients consists of the face value of tickets sold and the revenue share costs related to tickets sold on the Ticketfly ticketing platform that are owed to clients. The face value of tickets sold on the Ticketfly ticketing platform is collected by Ticketfly and remitted to clients. Revenue share costs owed to clients related to tickets sold on the Ticketfly ticketing platform consist of fees paid to clients for their share of convenience and order processing fees. Other Long-Term Liabilities Other long-term liabilities consisted of the following as of December 31, 2014 and 2015 : As of December 31, 2014 2015 (in thousands) Other long-term liabilities Long-term deferred rent $ 15,068 $ 23,662 Other 1,705 7,200 Total other long-term liabilities $ 16,773 $ 30,862 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, 2015 | |
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, 2014 and 2015 : As of December 31, 2014 Fair Value Measurement Using Quoted Prices in Active Markets for Identical Instruments (Level 1) Significant Other Observable Inputs (Level 2) Total (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 As of December 31, 2015 Fair Value Measurement Using Quoted Prices in Active Markets for Identical Instruments (Level 1) Significant Other Observable Inputs (Level 2) Total (in thousands) Assets Money market funds $ 180,021 $ — $ 180,021 Commercial paper — 35,881 35,881 Corporate debt securities — 79,421 79,421 U.S. government and government agency debt securities — 17,196 17,196 Total assets measured at fair value $ 180,021 $ 132,498 $ 312,519 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, 2014 and 2015 , we held no Level 3 assets or liabilities. |
Business Combinations
Business Combinations | 12 Months Ended |
Dec. 31, 2015 | |
Business Combinations [Abstract] | |
Business Combinations | Business Combinations Ticketfly On October 31, 2015, we completed the acquisition of Ticketfly, a leading live events technology company that provides ticketing and marketing software and services for venues and event promoters across North America, for an aggregate purchase price of $335.3 million of common stock and cash, including 11,193,847 shares of the Company’s common stock and approximately $191.5 million in cash paid by the Company. In addition to the purchase price, unvested options and unvested RSUs of Ticketfly held by Ticketfly employees were converted into unvested options to acquire our common stock and our unvested RSUs. Upon acquisition, Ticketfly became a wholly owned subsidiary of Pandora. The acquisition was accounted for as a business combination, and the financial results of Ticketfly are included in our consolidated financial statements from the date of acquisition. The following table summarizes the components of the purchase consideration transferred based on the closing price of $12.18 per share of our common stock as of the acquisition date: (in thousands) Cash paid by Pandora $ 191,479 Cash paid by Ticketfly to option holders 7,238 Common stock (11,193,847 shares at $12.18 per share) issued by Pandora to selling shareholders 136,342 Fair value of stock options and restricted stock units assumed 10,514 Less: purchase price adjustments (6,995 ) Less: post-combination compensation expense (3,235 ) Purchase consideration $ 335,343 The $3.2 million of post-combination compensation expense (approximately 0.2 million shares of common stock and $1.9 million in cash) is subject to continuous employment and will be recognized over the required service period of up to three years. The following table summarizes the estimated fair values of assets acquired and liabilities assumed as of the date of acquisition: (in thousands) Current assets $ 39,809 Long-term assets 15,982 Current liabilities (21,853 ) Long-term liabilities (6,298 ) Deferred tax liability (1,738 ) Intangible assets 76,800 Goodwill 232,641 Total $ 335,343 The fair value of assets acquired and liabilities assumed from our acquisition of Ticketfly was based on a preliminary valuation and our estimates and assumptions are subject to change. We will recognize any subsequent adjustments to the purchase price prospectively in the period in which the adjustments are determined. A portion of the purchase price is held in escrow and may be recovered from this escrow amount. The primary areas of the purchase accounting that are not yet finalized are estimated liabilities for taxes and other liabilities totaling $7.0 million . We have recorded a receivable in the amount of $7.0 million related to these liabilities, as we expect to recover any amounts required to be paid by us from the escrow amount. The following unaudited pro forma information presents the combined results of operations as if the acquisition had been completed on January 1, 2014, the beginning of the comparable prior annual reporting period. The unaudited pro forma results include: (i) amortization associated with preliminary estimates for the acquired intangible assets; (ii) recognition of the post-combination compensation expense; and (iii) share-based compensation expense related to the RSUs and options granted to Ticketfly employees. The unaudited pro forma results do not reflect any cost saving synergies from operating efficiencies or the effect of the incremental costs incurred in integrating the two companies. Accordingly, these unaudited pro forma results are presented for informational purpose only and are not necessarily indicative of what the actual results of operations of the combined company would have been if the acquisition had occurred at the beginning of the period presented, nor are they indicative of future results of operations: Twelve Months Ended 2014 2015 (in thousands) Revenue $ 975,712 $ 1,222,452 Net loss $ (58,195 ) $ (210,111 ) Rdio, Inc. ("Rdio") On December 23, 2015, we completed the acquisition of technology and intellectual property from Rdio for $77.5 million , which includes $2.5 million in additional purchase consideration transferred prior to the closing of the acquisition. In November 2015, Rdio sought protection in the United States Bankruptcy Court for the Northern District of California and began to wind down its business. Our acquisition of technology and employees from Rdio was subject to the approval of the Court, which was obtained on December 22, 2015. Goodwill generated from the assets acquired is primarily attributable to expected synergies that will allow us to broaden our subscription business and roll out a multi-tier product offering. We have accounted for this acquisition as a business combination, and the financial results of Rdio are included in our consolidated financial statements from the date of acquisition. As a result of the sale of assets, Rdio discontinued its service as of December 22, 2015. Other acquisitions During the year ended December 31, 2015 , we completed the acquisitions of Next Big Sound ("NBS") and KXMZ-FM ("KXMZ"). These acquisitions were not material to our consolidated financial statements, either individually or in the aggregate. We have included the financial results of Ticketfly, Rdio, NBS and KXMZ in our consolidated financial statements from their respective dates of acquisition. Pro forma results of operations related to our acquisitions, other than Ticketfly, during the year ended December 31, 2015 have not been presented because they are not material to our consolidated statements of operations, either individually or in the aggregate. The fair value of assets acquired and liabilities assumed from our acquisitions were based on a preliminary valuation and our estimates and assumptions are subject to change within the measurement period. Measurement period adjustments that we determine to be material will be applied to the period in which the amounts are determined in our consolidated financial statements. The following table summarizes the allocation of estimated fair values of the net assets acquired during the year ended December 31, 2015 , including the related estimated useful lives, where applicable: Ticketfly Rdio Other Estimated fair value Estimated useful life in years Estimated fair value Estimated useful life in years Estimated fair value Estimated useful life in years (in thousands, except for estimated useful life) Intangible assets: Customer relationships - clients $ 37,300 8 $ — $ — Developed technology 28,100 5 26,400 2-5 1,550 4 Tradename 10,400 8 1,000 3 320 2 Customer relationships - users 1,000 2 — 940 2 FCC license - broadcast radio — — 193 Tangible assets acquired, net 27,640 1,969 (490 ) Deferred tax liabilities (1,738 ) — (49 ) Net assets acquired $ 102,702 $ 29,369 $ 2,464 Goodwill 232,641 48,131 23,103 Total fair value consideration $ 335,343 $ 77,500 $ 25,567 Goodwill generated from the Ticketfly acquisition is primarily attributable to expected synergies from future growth and strategic advantages in the ticketing industry. Goodwill generated from Rdio is primarily attributable to expected synergies from future growth and strategic advantages in the online streaming music industry. Goodwill generated from all other business acquisitions during the year ended December 31, 2015 is primarily attributed to expected synergies from future growth and, also for NBS, the potential to expand our Artist Marketing Platform ("AMP"). Goodwill generated during the period related to Ticketfly and NBS is not deductible for tax purposes and goodwill generated during the period related to Rdio and KXMZ is deductible for tax purposes. |
Goodwill and Other Intangible A
Goodwill and Other Intangible Assets | 12 Months Ended |
Dec. 31, 2015 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Goodwill and Other Intangible Assets | Goodwill and Other Intangible Assets The changes in the carrying amount of goodwill for the twelve months ended December 31, 2015 are as follows: Goodwill (in thousands) Balance as of December 31, 2014 $ — Goodwill resulting from business combinations 303,875 Balance as of December 31, 2015 $ 303,875 The following summarizes information regarding the gross carrying amounts and accumulated amortization of intangibles: As of December 31, 2014 As of December 31, 2015 Weighted average remaining useful lives (in years) Gross Carrying Amount Accumulated Amortization Net Carrying Value Gross Carrying Amount Accumulated Amortization Net Carrying Value (in thousands) Finite-lived intangible assets Patents 8.5 $ 8,030 $ (1,091 ) $ 6,939 $ 8,030 $ (1,824 ) $ 6,206 Developed technology 4.7 — — — 56,050 (1,265 ) 54,785 Customer relationships - clients 7.8 — — — 37,300 (777 ) 36,523 Customer relationships - users 1.7 — — — 1,940 (318 ) 1,622 Trade names 7.3 — — — 11,720 (304 ) 11,416 Total finite-lived intangible assets 6.2 $ 8,030 $ (1,091 ) $ 6,939 $ 115,040 $ (4,488 ) $ 110,552 Indefinite-lived intangible assets FCC license - broadcast radio $ — $ — $ — $ 193 $ — $ 193 Total intangible assets $ 8,030 $ (1,091 ) $ 6,939 $ 115,233 $ (4,488 ) $ 110,745 Amortization expense of intangible assets was $0.4 million , $0.7 million and $3.4 million for the eleven months ended December 31, 2013 and the twelve months ended December 31, 2014 and 2015 , respectively. The following is a schedule of future amortization expense related to finite-lived intangible assets as of December 31, 2015 . As of (in thousands) 2016 $ 20,437 2017 20,002 2018 17,649 2019 17,129 2020 15,896 Thereafter 19,439 Total future amortization expense $ 110,552 |
Debt Instruments
Debt Instruments | 12 Months Ended |
Dec. 31, 2015 | |
Debt Disclosure [Abstract] | |
Debt Instruments | Debt Instruments Long-term debt, net consisted of the following: As of December 31, 2014 2015 (in thousands) 1.75% convertible senior notes due 2020 $ — $ 345,000 Unamortized discount on convertible senior notes — (110,423 ) Long-term debt, net $ — $ 234,577 Convertible Debt Offering On December 9, 2015, we completed an unregistered Rule 144A offering for the issuance of $345.0 million aggregate principal amount of our 1.75% Convertible Senior Notes due 2020 (the “Notes”). In connection with the issuance of the Notes, we entered into capped call transactions with the initial purchaser of the Notes and an additional financial institution (“capped call transactions”). The net proceeds from the sale of the Notes were approximately $336.5 million , after deducting the initial purchasers' fees and other estimated expenses. We used approximately $43.2 million of the net proceeds to pay the cost of the capped call transactions. The Notes are unsecured, senior obligations of Pandora, and interest is payable semi-annually at a rate of 1.75% per annum. The Notes will mature on December 1, 2020, unless earlier repurchased or redeemed by Pandora or converted in accordance with their terms prior to such date. Prior to July 1, 2020, the Notes are convertible at the option of holders only upon the occurrence of specified events or during certain periods; thereafter, until the second scheduled trading day prior to maturity, the Notes will be convertible at the option of holders at any time. The conversion rate for the Notes is initially 60.9050 shares of common stock per $1,000 principal amount of the Notes, which is equivalent to an initial conversion price of approximately $16.42 per share of our common stock, and is subject to adjustment in certain circumstances. We will not have the right to redeem the Notes prior to December 5, 2018. We may redeem all or any portion of the Notes for cash at our option on or after December 5, 2018 if the last reported sale price of our common stock is at least 130% of the conversion price then in effect for at least 20 trading days, whether or not consecutive, during any 30 consecutive trading day period, including the last trading day of such period, ending on, and including, any of the five trading days immediately preceding the date on which we provide notice of redemption. Any optional redemption of the Notes will be at a redemption price equal to 100% of the principal amount of the Notes to be redeemed, plus accrued and unpaid interest to, but excluding, the redemption date. The maximum number of shares of common stock the Notes are convertible into is approximately 27.3 million , and is subject to adjustment under certain circumstances. The Notes will be convertible at the option of holders only under the following circumstances: • Prior to the close of business on the business day immediately preceding July 1, 2020, during any calendar quarter commencing after the calendar quarter ending on March 31, 2016 (and only during such calendar quarter), if the last reported sale price of our common stock for at least 20 trading days (whether or not consecutive), during a period of 30 consecutive trading days ending on the last trading day of the immediately preceding calendar quarter is greater than or equal to 130% of the conversion price on each applicable trading day; • Prior to the close of business on the business day immediately preceding July 1, 2020, during the five business day period after any ten consecutive trading day period (the “measurement period”) in which the trading price per $1,000 principal amount of Notes for each trading day of the measurement period was less than 98% of the product of the last reported sale price of our common stock and the conversion rate on each such trading day; • Prior to the business day immediately preceding July 1, 2020, upon the occurrence of specified corporate events; or • At any time on or after July 1, 2020 until the close of business on the second scheduled trading day immediately preceding the December 1, 2020 maturity date. Upon the occurrence of a make-whole fundamental change or if we call all or any portion of the Notes for redemption prior to July 1, 2020, we will, in certain circumstances, increase the conversion rate by a number of additional shares for a holder that elects to convert its Notes in connection with such make-whole fundamental change or during the related redemption period. The Notes were separated into debt and equity components and assigned a fair value. The value assigned to the debt component is the estimated fair value as of the issuance date of similar debt without the conversion feature. The difference between the cash proceeds and this estimated fair value represents the value which has been assigned to the equity component and recorded as a debt discount. The debt discount is being amortized using the effective interest method over the period from the date of issuance through the December 1, 2020 maturity date. The initial debt component of the Notes was valued at $233.5 million , based on the contractual cash flows discounted at an appropriate market rate for non-convertible debt at the date of issuance. The carrying value of the permanent equity component reported in additional paid-in-capital was initially valued at $103.0 million , which is net of $2.6 million of fees and expenses allocated to the equity component. The following table outlines the effective interest rate, contractually stated interest expense and costs related to the amortization of the discount for the Notes: Twelve Months Ended 2015 (in thousands except for effective interest rate) Effective interest rate 10.18 % Contractually stated interest expense $ 369 Amortization of discount $ 1,084 The capped call transactions are expected generally to reduce the potential dilution to our common stock and/or offset the cash payments we would be required to make in excess of the principal amount of the converted Notes in the event that the market price of our common stock, as measured under the terms of the capped call transaction, is greater than the strike price of the capped call transaction, with such reduction and/or offset subject to a cap based on the cap price of the capped call transactions. The strike price of the capped call transactions corresponds to the initial conversion price of the Notes and is subject to certain adjustments under the terms of the capped call transactions. The capped call transactions have an initial cap price of $25.26 per share and are subject to certain adjustments under the terms of the capped call transactions. The capped call transactions have been included as a net reduction to additional paid-in capital within stockholders’ equity. Credit Facility In May 2011, we entered into a credit facility and in December 2015, we amended this credit facility to increase the aggregate commitment amount to $120.0 million , with a maturity date of September 12, 2018. The amendment further increased the minimum liquidity financial covenant requirement from $5.0 million to $10.0 million at any time. The credit facility interest rate on US borrowings is based on an alternate base rate plus 1.00% - 1.25% and Eurocurrency borrowings are based on the LIBO rate plus 2.00% - 2.25% , both of which are per annum rates based on outstanding borrowings. The non-usage fee is 0.375% per annum. The available letters of credit under the amended credit facility is $15.0 million , and the annual charge for outstanding letters of credit is 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. 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 of December 31, 2014 and 2015 , we had no outstanding borrowings, $1.1 million in letters of credit outstanding and $58.9 million and $118.9 million of available borrowing capacity under the credit facility. Total debt issuance costs associated with the 2015 credit facility amendment were $0.4 million , which will be amortized as interest expense over the four -year remaining term of credit facility agreement. For eleven months ended December 31, 2013 and the twelve months ended December 31, 2014 and 2015 , $0.2 million , $0.2 million and $0.2 million of debt issuance costs, respectively, were amortized and included in interest expense. |
Commitments and Contingencies
Commitments and Contingencies | 12 Months Ended |
Dec. 31, 2015 | |
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, 2015 : As of December 31, 2015 Future Minimum Lease Payments Future Minimum Sublease Income (in thousands) 2016 $ 19,044 $ 1,246 2017 23,219 1,277 2018 22,722 541 2019 22,148 — 2020 19,599 — Thereafter 55,902 — Total $ 162,634 $ 3,064 We conduct our operations using leased office facilities in various locations. We lease office space under arrangements expiring through 2025. Rent expenses for eleven months ended December 31, 2013 , the twelve months ended December 31, 2014 and the twelve months ended December 31, 2015 were $5.7 million , $8.6 million and $12.2 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, 2014 and 2015 deferred rent was $15.3 million and $23.9 million . Purchase Obligations As of December 31, 2015 , we had various non-cancelable minimum payments of $153.3 million , primarily in connection with the publishing agreements signed in 2015, of which $124.0 million is recoupable against future royalty payments and $29.3 million of which is not recoupable against future royalty payments, through 2018. 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. RMLC ("Radio Music Licensing Committee") In June 2013, we entered into an agreement to purchase the assets of KXMZ-FM and in June 2015 the Federal Communications Commission ("FCC") approved the transfer of the FCC licenses and the acquisition was completed. The agreement to purchase the assets of KXMZ allowed us to qualify for the RMLC royalty rate of 1.7% of revenue for a license to the ASCAP and BMI repertoires, before certain deductions, beginning in June 2013. As a result, we recorded cost of revenue - content acquisition costs at the RMLC royalty rate starting in June 2013, rather than the rate that was set in rate court proceedings in March 2014 for ASCAP and in May 2015 for BMI. In September 2015, despite confidence in our legal position that we were entitled to the RMLC royalty rate starting in June 2013, and as part of our strategy to strengthen our partnership with the music industry, management decided to forgo the application of the RMLC royalty rate from June 2013 through September 2015. As a result, cost of revenue - content acquisition costs increased by $28.2 million in the twelve months ended December 31, 2015 , of which $23.9 million was related to a one-time cumulative charge to cost of revenue - content acquisition costs related to spins played from June 2013 through September 30, 2015 in order to align the cumulative cost of revenue - content acquisition costs to the amounts previously paid at the rates that were set in the rate court proceedings in March 2014 for ASCAP and May 2015 for BMI. We recorded cost of revenue - content acquisition costs for the performing rights organizations at the rates established by the rate courts for the three months ended December 31, 2015, and we intend to record such costs at the rates established by our direct licensing agreements beginning in 2016. 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 claimed common law copyright infringement and unfair competition arising from allegations that Pandora owed royalties for the public performance of sound recordings recorded prior to February 15, 1972. In October 2015, the parties reached an agreement ("pre-1972 settlement") whereby we agreed to pay the plaintiffs a total of $90 million . The settlement resolves all past claims as to our use of pre-1972 recordings owned or controlled by the plaintiffs and enables us, without any additional payment, to reproduce, perform and broadcast such recordings in the United States through December 31, 2016. This agreement was approved by our board of directors and executed on October 21, 2015. Pursuant to this settlement, we paid the plaintiffs $60 million in October 2015 and the plaintiffs dismissed the case with prejudice. As a result, cost of revenue - content acquisition costs increased by $65.4 million in the twelve months ended December 31, 2015 , of which $57.9 million was related to a one-time cumulative charge to cost of revenue - content acquisition costs related to pre-1972 spins played through September 30, 2015. The remaining charge of $24.6 million will be recorded in cost of revenue - content acquisition costs over the future service period of January 1, 2016 through December 31, 2016 based on expected streaming of pre-1972 recordings over the period. The pre-72 settlement further requires that we make four additional installment payments of $7.5 million each. The first was paid in 2015, and the remaining three installments will be paid on or before April 1, 2016, July 1, 2016 and October 1, 2016. On October 2, 2014, Flo & Eddie Inc. filed a class action 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 the complaint pursuant to California’s Anti-Strategic Lawsuit Against Public Participation (“Anti-SLAPP”) statute. This motion was denied, and we have appealed the ruling to the Ninth Circuit Court of Appeals. As a result, the district court litigation has been stayed pending the Ninth Circuit's review. On September 14, 2015, Arthur and Barbara Sheridan, et al filed a class action suit against Pandora Media, Inc. in the federal district court for the Northern District of California. The complaint alleges common law misappropriation, unfair competition, conversion, unjust enrichment and violation of California rights of publicity arising from allegations that we owe royalties for the public performance of sound recordings recorded prior to February 15, 1972. On October 28, 2015, the Court granted the parties’ stipulation to stay the district court action pending the Ninth Circuit’s review of Pandora’s appeal in Flo & Eddie et al. v. Pandora Media, Inc., which involves similar allegations. On September 16, 2015, Arthur and Barbara Sheridan, et al filed a second class action suit against Pandora Media, Inc. in the federal district court for the Southern District of New York. The complaint alleges common law copyright infringement, violation of New York right of publicity, unfair competition and unjust enrichment arising from allegations that we owe royalties for the public performance of sound recordings recorded prior to February 15, 1972. On October 28, 2015 the Court granted the parties’ stipulation to stay the district court action pending the Second Circuit’s review of Sirius XM’s appeal in the Flo & Eddie et al. v. Sirius XM matter, which involves similar allegations. On October 17, 2015, Arthur and Barbara Sheridan, et al filed a third class action suit against us in the federal district court for the Northern District of Illinois (“Third Class Action Suit”). The complaint alleges common law copyright infringement, violation of the Illinois Uniform Deceptive Trade Practices Act, conversion, and unjust enrichment arising from allegations that we owe royalties for the public performance of sound recordings recorded prior to February 15, 1972. On December 29, 2015, Pandora filed a motion to dismiss and motion to stay the case pending the Second Circuit’s decision. The motion to stay was denied, and the motion to dismiss remains pending. On October 19, 2015, Arthur and Barbara Sheridan, et al filed a fourth class action suit against us in the federal district court for the District of New Jersey (“Fourth Class Action Suit”). The complaint alleges common law copyright infringement, unfair competition and unjust enrichment arising from allegations that we owe royalties for the public performance of sound recordings recorded prior to February 15, 1972. Pandora’s response to the complaint was due on December 29, 2015. On December 29, 2015, Pandora filed a motion to dismiss and motion to stay the case pending the Second Circuit’s decision. Both motions remain pending. On February 8, 2016, Ponderosa Twins Plus One et al filed a class action suit against Pandora Media, Inc. in the federal district court for the Southern District of New York. The complaint alleges common law copyright infringement, misappropriation, unfair competition and unjust enrichment arising from allegations that we owe royalties for the public performance of sound recordings recorded prior to February 15, 1972. We are currently preparing our response to these allegations. The outcome of any litigation is inherently uncertain. Except as noted above, including with respect to the $90 million settlement for UMG Recordings, Inc. et al v. Pandora Media Inc. in the Supreme Court of the State of New York, we do not believe it is probable that the final outcome of the matters discussed above will, 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 current and past royalty rates that are materially less favorable than rates we currently pay or have paid in the past. 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, 2015 | |
Income Tax Disclosure [Abstract] | |
Provision for Income Taxes | Provision for Income Taxes Loss before provision for income taxes by jurisdiction consists of the following: Eleven Months Ended Twelve Months Ended December 31, 2013 2014 2015 (in thousands) Jurisdiction Domestic $ (24,005 ) $ (24,230 ) $ (163,460 ) Foreign (2,918 ) (5,592 ) (7,751 ) Loss before provision for income taxes $ (26,923 ) $ (29,822 ) $ (171,211 ) The provision for income taxes consists of the following: Eleven Months Ended Twelve Months Ended December 31, 2013 2014 2015 (in thousands) Current Federal $ — $ — $ — State and local 7 353 9 International 87 231 214 Total current income tax expense $ 94 $ 584 $ 223 Deferred Federal (10,166 ) (9,996 ) (17,943 ) State and local (2,027 ) (6,238 ) (2,174 ) Valuation allowance 12,193 16,234 18,344 Total deferred income tax expense (benefit) $ — $ — $ (1,773 ) Total provision for (benefit from) income taxes $ 94 $ 584 $ (1,550 ) The provision for income taxes decreased by $2.1 million during the twelve months ended December 31, 2015 as a result of benefits recognized from the valuation allowance release through acquisition accounting 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: Eleven Months Ended Twelve Months Ended December 31, 2013 2014 2015 U.S. federal taxes at statutory rate 34 % 34 % 34 % State taxes, net of federal benefit — (1 ) — Permanent differences 5 4 3 Foreign rate differential (4 ) (7 ) (1 ) Federal and state credits, net of reserve 8 11 2 Impact of acquired DTAs and DTLs — — 1 Change in valuation allowance (46 ) (55 ) (33 ) Change in rate — 6 (1 ) Deferred adjustments 3 6 (4 ) Effective tax rate — % (2 )% 1 % The major components of deferred tax assets and liabilities consist of the following: As of December 31, 2014 2015 (in thousands) Deferred tax assets Net operating loss carryforwards $ 27,487 $ 91,658 Tax credit carryforwards 10,839 14,204 Allowances and other 13,832 21,802 Stock options 24,215 29,927 Depreciation and amortization 255 — Total deferred tax assets $ 76,628 $ 157,591 Valuation allowance (73,983 ) (92,772 ) Total deferred tax assets, net of valuation allowance $ 2,645 $ 64,819 Deferred tax liabilities Convertible debt — (37,580 ) Depreciation and amortization (2,645 ) (27,252 ) Total deferred tax liabilities $ (2,645 ) $ (64,832 ) Net deferred tax assets (liabilities) $ — $ (13 ) During the year ended December 31, 2015, we released $1.8 million of our valuation allowance as a result of acquisitions. Deferred tax liabilities were established for the book-tax basis difference related to acquired intangible assets. The net deferred tax liabilities provided an additional source of income to support the realizability of pre-existing deferred tax assets. At December 31, 2015 , we had federal net operating loss carryforwards of approximately $613.0 million and tax credit carryforwards of approximately $9.7 million . If realized, approximately $377.0 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, 2015 , we had state net operating loss carryforwards of approximately $480.0 million which expire in years beginning in 2016. In addition, we had state tax credit carryforwards of approximately $10.7 million that do not expire and approximately $4.9 million of credits that will expire beginning in 2024 . At December 31, 2015 , we had foreign net operating loss carryforwards of approximately $4.3 million which expire in years beginning in 2033 . Included in the net operating loss carryforward amounts above are approximately $67.6 million of federal, $42.9 million of state and $4.3 million of foreign net operating loss carryforwards related to acquisitions. 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 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 utilized. During the twelve months ended December 31, 2015 , our valuation allowance increased by $18.8 million . At December 31, 2014 and 2015 , 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, 2014 and 2015 we have unrecognized tax benefits of approximately $5.8 million and $6.9 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: Twelve Months Ended 2014 2015 (in thousands) Beginning balance $ 5,220 $ 5,793 Increases related to tax positions taken during a prior year 1,161 — Decreases related to tax positions taken during a prior year (1,924 ) (74 ) Increases related to tax positions taken during the current year 1,336 1,145 Ending balance $ 5,793 $ 6,864 The total unrecognized tax benefits, if recognized, would not affect the Company’s 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 no t have such interest, penalties or tax benefits during the eleven months ended December 31, 2013 and the twelve months ended December 31, 2014 and 2015 . We file income tax returns in the United States, California, other states and international jurisdictions. Tax years 2000 to 2015 remain subject to examination for U.S. federal, state and international purposes. All net operating loss and tax credits generated to date are subject to adjustment for U.S. federal and state purposes. We are not currently under examination in federal, state or international jurisdictions. |
Stock-based Compensation Plans
Stock-based Compensation Plans and Awards | 12 Months Ended |
Dec. 31, 2015 | |
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. In December 2013, our board of directors approved the 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 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. Shares available for grant as of December 31, 2015 and the activity during the twelve months ended December 31, 2015 are as follows: Shares Available for Grant Equity Awards ESPP Total Balance as of December 31, 2014 14,326,460 3,857,735 18,184,195 Additional shares authorized 8,323,469 — 8,323,469 Ticketfly shares authorized 3,215,223 — 3,215,223 Options granted (2,940,736 ) — (2,940,736 ) Restricted stock granted (11,678,792 ) — (11,678,792 ) Market stock units granted (776,000 ) — (776,000 ) ESPP shares issued — (538,398 ) (538,398 ) Options forfeited 7,709 — 7,709 Restricted stock forfeited 1,245,994 — 1,245,994 Balance as of December 31, 2015 11,723,327 3,319,337 15,042,664 Employee Stock Purchase Plan ("ESPP") 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 2014 2015 Expected life (in years) 0.5 0.5 Risk-free interest rate 0.06 % 0.12 % Expected volatility 42 % 52 % Expected dividend yield 0 % 0 % During the twelve months ended December 31, 2014 and 2015 , we withheld $6.4 million and $7.6 million in contributions from employees and recognized $2.1 million and $3.3 million of stock-based compensation expense related to the ESPP. In the twelve months ended December 31, 2014 and 2015 , 149,378 and 538,398 shares of common stock were issued under the ESPP at a weighted average purchase price of $23.95 and $17.80 . There was no stock-based compensation expense related to the ESPP or shares of common stock issued under the ESPP in the eleven months ended December 31, 2013 . Stock Options Stock option activity during the twelve months ended December 31, 2015 was as follows: Options Outstanding Outstanding Weighted-Average Exercise Price Weighted-Average Remaining Contractual Term (in years) Aggregate Intrinsic Value (1) (in thousands, except share and per share data) Balance as of December 31, 2014 10,980,256 $ 7.91 1.08 $ 120,033 Granted 2,940,736 3.44 Exercised (1,077,797 ) 4.78 Forfeited (27,304 ) 6.09 Balance as of December 31, 2015 12,815,891 7.15 1.09 101,151 Vested and exercisable as of December 31, 2015 9,292,855 5.74 0.57 81,541 Expected to vest as of December 31, 2015 (2) 3,259,020 $ 10.81 2.47 $ 18,156 (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 $17.83 and $13.41 as of December 31, 2014 and 2015. (2)Options expected to vest reflect an estimated forfeiture rate. The per-share fair value of stock options granted during the eleven months ended December 31, 2013 , the twelve months ended December 31, 2014 and the twelve months ended December 31, 2015 was determined on the grant date using the Black-Scholes option pricing model with the following assumptions: Eleven Months Ended Twelve Months Ended 2013 2014 2015 Expected life (in years) 5.99 - 6.32 6.08 6.08 Risk-free interest rate 1.00% - 2.04% 1.71% - 1.93% 1.75% - 1.92% Expected volatility 58% - 59% 58% - 59% 49% - 50% 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 eleven months ended December 31, 2013 , the twelve months ended December 31, 2014 and the twelve months ended December 31, 2015 , we recorded stock-based compensation expense related to stock options of approximately $10.6 million , $14.7 million and $10.7 million , respectively. As of December 31, 2015 , there was $32.2 million of unrecognized compensation cost related to outstanding employee stock options. This amount is expected to be recognized over a weighted-average period of 2.47 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 eleven months ended December 31, 2013 , the twelve months ended December 31, 2014 and the twelve months ended December 31, 2015 was $9.34 , $19.74 and $9.08 per share, respectively. The total grant date fair value of stock options vested during the eleven months ended December 31, 2013 , the twelve months ended December 31, 2014 and the twelve months ended December 31, 2015 was $9.1 million , $16.0 million and $17.6 million , respectively. The aggregate intrinsic value of stock options exercised during the eleven months ended December 31, 2013 , the twelve months ended December 31, 2014 and the twelve months ended December 31, 2015 was $93.8 million , $169.2 million and $9.5 million , respectively. The total fair value of options vested during the eleven months ended December 31, 2013 , the twelve months ended December 31, 2014 and the twelve months ended December 31, 2015 was $9.4 million , $16.5 million and $17.6 million , respectively. 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 eleven months ended December 31, 2013 , the twelve months ended December 31, 2014 and the twelve months ended December 31, 2015 , we recorded stock-based compensation expense related to restricted stock units of approximately $28.9 million , $69.9 million and $96.1 million , respectively. As of December 31, 2015 , total compensation cost not yet recognized of approximately $256.1 million related to non-vested restricted stock units, is expected to be recognized over a weighted average period of 2.75 years. The following table summarizes the activities for our RSUs for the twelve months ended December 31, 2015 : Number of RSUs Weighted-Average Grant Date Fair Value Unvested as of December 31, 2014 11,024,068 $ 21.99 Granted 11,678,792 15.40 Vested (4,184,415 ) 21.06 Forfeited (1,246,360 ) 19.89 Unvested as of December 31, 2015 17,272,085 17.91 Expected to vest as of December 31, 2015 (1) 15,595,029 $ 17.90 (1) RSUs expected to vest reflect an estimated forfeiture rate. MSUs We implemented a market stock unit program in March 2015 for certain key executives. MSUs are earned as a function of Pandora’s TSR performance measured against that of the Russell 2000 Index across three performance periods: • One-third of the target MSUs are eligible to be earned for a performance period that is the first calendar year of the MSU grant (the “One-Year Performance Period”); • One-third of the target MSUs are eligible to be earned for a performance period that is the first two calendar years of the MSU grant (the “Two-Year Performance Period”); and • Any remaining portion of the target MSUs are eligible to be earned for a performance period that is the entire three calendar years of the MSU grant (the “Three-Year Performance Period”). For each performance period, a “performance multiplier” is calculated by comparing Pandora’s TSR for the period to the Russell 2000 Index TSR for the same period, using the average adjusted closing stock price of Pandora stock, and the Russell 2000 Index, for ninety calendar days prior to the beginning of the performance period and the last ninety calendar days of the performance period. In each period, the target number of shares will vest if the Pandora TSR is equal to the Russell 2000 Index TSR. For each percentage point that the Pandora TSR falls below the Russell 2000 Index TSR for the period, the performance multiplier is decreased by three percentage points. The performance multiplier is capped at 100% for the One-Year and Two-Year Performance Periods. However, the full award is eligible for a payout up to 200% of target, less any shares earned in prior periods, in the Three-Year Performance Period. Specifically, for each percentage point that the Pandora TSR exceeds the Russell 2000 Index TSR for the Three-Year Performance Period, the performance multiplier is increased by 2% . As such, the ability to exceed the target number of shares is determined exclusively with respect to Pandora's three-year TSR during the term of the award. We have determined the grant-date fair value of the MSUs using a Monte Carlo simulation performed by a third-party valuation firm. We recognize stock-based compensation for the MSUs over the requisite service period, which is approximately three years, using the accelerated attribution method. During the twelve months ended December 31, 2015 , we granted 776,000 MSUs at a total grant-date fair value of $4.3 million . During the twelve months ended December 31, 2015 , we recorded stock-based compensation expense from MSUs of approximately $1.5 million . As of December 31, 2015 , total compensation cost not yet recognized of approximately $2.8 million related to non-vested MSUs, is expected to be recognized over a weighted average period of 2.13 years. There was no stock-based compensation expense related to MSUs or shares of common stock issued under the MSU plan in the eleven months ended December 31, 2013 and the twelve months ended December 31, 2014 . The following table summarizes the activities for our MSUs for the twelve months ended December 31, 2015 : Number of MSUs Weighted-Average Grant Date Fair Value Unvested as of December 31, 2014 — $ — Granted 776,000 5.60 Vested — — Forfeited — — Unvested as of December 31, 2015 776,000 5.60 Expected to vest as of December 31, 2015 (1) 710,882 $ 5.60 (1) MSUs expected to vest reflect an estimated forfeiture rate. Stock-based Compensation Expense Stock-based compensation expense includes expense related to Ticketfly employees for the two months ended December 31, 2015 . Stock-based compensation expense related to all employee and non-employee stock-based awards was as follows: Eleven Months Ended December 31, Twelve Months Ended 2013 2014 2015 (in thousands) Stock-based compensation expense Cost of revenue—Other $ 1,946 $ 4,414 $ 5,531 Cost of revenue—Ticketing service — — 40 Product development 8,802 17,546 23,671 Sales and marketing 20,222 42,165 52,747 General and administrative 9,071 22,930 29,656 Total stock-based compensation expense $ 40,041 $ 87,055 $ 111,645 During the eleven months ended December 31, 2013 and twelve months ended December 31, 2014 and 2015 , we capitalized $0.7 million , $1.3 million and $2.7 million of stock-based compensation as internal use software and website development costs, respectively. |
Common Stock and Net Loss Per S
Common Stock and Net Loss Per Share | 12 Months Ended |
Dec. 31, 2015 | |
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 eleven months ended December 31, 2013, the twelve months ended December 31, 2014 and the twelve months ended December 31, 2015 , 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: Eleven Months Ended Twelve Months Ended 2013 2014 2015 (in thousands except per share amounts) Numerator Net loss $ (27,017 ) $ (30,406 ) $ (169,661 ) Denominator Weighted-average common shares outstanding used in computing basic and diluted net loss per share 180,968 205,273 213,790 Net loss per share, basic and diluted $ (0.15 ) $ (0.15 ) $ (0.79 ) 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 December 31, 2013 As of December 31, 2014 As of December 31, 2015 (in thousands) Options to purchase common stock 22,708 10,980 12,816 Restricted stock units 10,366 11,024 17,272 Market stock units — — 776 Total common stock equivalents 33,074 22,004 30,864 On December 9, 2015, we completed an offering of our 1.75% convertible senior notes due 2020. Under the treasury stock method, the Notes will generally have a dilutive impact on earnings per share if our average stock price for the period exceeds approximately $16.42 per share of our common stock, the conversion price of the Notes. For the period from the issuance of the offering of the Notes through December 31, 2015, the conversion feature of the Notes was anti-dilutive. In connection with the pricing of the Notes, we entered into capped call transactions which increase the effective conversion price of the Notes, and are designed to reduce potential dilution upon conversion of the Notes. Since the beneficial impact of the capped call is anti-dilutive, it is excluded from the calculation of earnings per share. Refer to Note 7 "Debt Instruments" for further details regarding our Notes. |
Selected Quarterly Financial Da
Selected Quarterly Financial Data (unaudited) | 12 Months Ended |
Dec. 31, 2015 | |
Quarterly Financial Information Disclosure [Abstract] | |
Selected Quarterly Financial Data (unaudited) | Selected Quarterly Financial Data (unaudited) Three months ended March 31, June 30, September 30, December 31, March 31, June 30, September 30, December 31, 2014 2014 2014 2014 2015 2015 2015 2015 (in thousands, except per share data) Total revenue (1) $ 194,315 $ 218,894 $ 239,593 $ 268,000 $ 230,764 $ 285,560 $ 311,562 $ 336,157 Cost of revenue Cost of Revenue—Content acquisition costs 108,275 111,461 111,315 115,326 126,023 130,134 211,272 142,933 Cost of revenue—Other 14,979 13,989 15,453 17,206 16,233 20,043 21,414 22,168 Cost of revenue—Ticketing service (1) — — — — — — — 7,121 Total cost of revenue 123,254 125,450 126,768 132,532 142,256 150,177 232,686 172,222 Gross profit 71,061 93,444 112,825 135,468 88,508 135,383 78,876 163,935 Operating expenses Product development (1) 11,831 13,076 13,381 14,865 15,875 18,742 21,849 28,115 Sales and marketing (1) 61,864 66,232 72,320 76,914 84,274 94,035 107,286 112,574 General and administrative (1) 26,361 25,865 29,143 31,074 36,754 38,812 35,603 42,774 Total operating expenses 100,056 105,173 114,844 122,853 136,903 151,589 164,738 183,463 Income (loss) from operations (28,995 ) (11,729 ) (2,019 ) 12,615 (48,395 ) (16,206 ) (85,862 ) (19,528 ) Net income (loss) (28,931 ) (11,728 ) (2,025 ) 12,278 (48,257 ) (16,065 ) (85,930 ) (19,409 ) Net income (loss) per share, basic (0.14 ) (0.06 ) (0.01 ) 0.06 (0.23 ) (0.08 ) (0.40 ) (0.09 ) Net income (loss) per share, diluted $ (0.14 ) $ (0.06 ) $ (0.01 ) $ 0.06 $ (0.23 ) $ (0.08 ) $ (0.40 ) $ (0.09 ) (1) Includes two months of revenue and expense for Ticketfly from the acquisition date of October 31, 2015 to December 31, 2015. |
Summary of Significant Accoun20
Summary of Significant Accounting Policies (Policies) | 12 Months Ended |
Dec. 31, 2015 | |
Accounting Policies [Abstract] | |
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. |
Consolidation | 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. We have reclassified goodwill and intangible assets from the other long-term assets line item to the goodwill and intangible assets, net line items in our consolidated balance sheets. We have also reclassified certain non-cash amounts from the amortization of debt issuance costs and the change in accounts receivable line items to the other operating activities line item in our consolidated statements of cash flows. Additionally, we have reclassified certain non-cash amounts from the purchases of property and equipment line item to the prepaid expenses and other assets line item of our consolidated statements of cash flows. Lastly, we have reclassified certain amounts from the accounts payable, accrued and other current liabilities line item to the long-term liabilities line item of 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 value of stock options, market stock units ("MSUs") and the Employee Stock Purchase Plan ("ESPP"), the impact of forfeitures on stock-based compensation, the provision for (benefit from) income taxes, the subscription return reserve, the fair value of convertible debt, the fair value of acquired property and equipment, intangible assets and goodwill and the useful lives of acquired intangible assets. 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 | 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, ticketing and other offerings, while all other financial information is reviewed on a consolidated basis. There are no segment managers who are held accountable by the CODM, or anyone else, for operations, operating results, and planning for levels or components below the consolidated unit level. Accordingly, we have determined that we have a single reportable segment and operating unit structure. |
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, the period ended December 31, 2013 was shortened from twelve months to an eleven-month transition period. In these consolidated financial statements, including the notes thereto, the most recent financial results for the years ended December 31, 2014 and 2015 are for twelve -month periods. |
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. Gross versus net revenue recognition. We report revenue on a gross or net basis based on management’s assessment of whether we act as a principal or agent in the transaction. To the extent we act as the principal, revenue is reported on a gross basis. The determination of whether we act as a principal or an agent in a transaction is based on an evaluation of whether we have the substantial risks and rewards of ownership under the terms of an arrangement. 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 nor do we establish or maintain the relationships 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 and 2015 , 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. 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. 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. 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. Ticketing service revenue. Ticketing service revenue is generated primarily from service and merchant processing fees generated on ticket sales through the Ticketfly platform. Ticketfly sells tickets to fans for events on behalf of clients and charges a fee per ticket, which generally increases as the face value of the ticket increases, or a percentage of the total convenience charge and order processing fee, for its services at the time the ticket for an event is sold. Ticketing service revenue is recorded net of the face value of the ticket at the time of the sale, as Ticketfly generally acts as the agent in these transactions. |
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. |
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. Accounts receivable amounts that are deemed uncollectable are charged against the allowance for doubtful accounts when identified. |
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. If we reduce the estimated useful life assumption for any asset, the remaining unamortized balance would be amortized or depreciated over the revised estimated useful life. 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. |
Ticketing Contract Advances | Ticketing contract advances, which are either recoupable or non-recoupable, represent amounts paid in advance to clients pursuant to ticketing agreements. These amounts are reflected in prepaid expenses and other current assets if the amount is expected to be recouped or recognized over a period of twelve months or less or in other long-term assets if the amount is expected to be recouped or recognized over a period of more than twelve months. Recoupable ticketing contract advances are generally recoupable against future royalties earned by clients, based on the contract terms, over the lives of their contracts which typically range between three and five years. Non-recoupable ticketing contract advances are fixed incentives paid by Ticketfly to secure exclusive rights with certain clients and are amortized to sales and marketing expense over the life of the contract on a straight-line basis. Amortization expense for the two months ended December 31, 2015 was $0.7 million . We maintain an allowance for doubtful accounts to reserve for recoupable ticketing contract advances that we potentially do not expect to recoup. Our allowance is based on historical loss patterns, the aging of balances and known factors about customers’ current financial conditions. |
Business Combinations | We allocate the fair value of purchase consideration to the tangible assets acquired, liabilities assumed and intangible assets acquired based on their estimated fair values. The excess of the fair value of purchase consideration over the fair values of these identifiable assets and liabilities is recorded as goodwill. Such valuations require management to make significant estimates and assumptions, especially with respect to intangible assets. Significant estimates in valuing certain intangible assets include, but are not limited to, future expected cash flows from acquired users, acquired technology, and trade names from a market participant perspective, useful lives and discount rates. Management’s estimates of fair value are based upon assumptions believed to be reasonable, but which are inherently uncertain and unpredictable and, as a result, actual results may differ from estimates. During the measurement period, which is one year from the acquisition date, we may record adjustments to the assets acquired and liabilities assumed, with the corresponding offset to goodwill. Upon the conclusion of the measurement period, any subsequent adjustments are recorded to earnings. |
Goodwill and Intangible Assets, net | We review goodwill for impairment at least annually or more frequently if events or changes in circumstances would more likely than not reduce the fair value of our single reporting unit below its carrying value. We evaluate indefinite-lived intangible assets for impairment annually or more frequently if events or changes in circumstances indicate that it is more likely than not that the asset is impaired. As of December 31, 2015 , no impairment of goodwill or indefinite-lived intangible assets has been identified. Acquired finite-lived intangible assets are amortized over the estimated useful lives of the assets, which range from two to eleven years. Acquired finite-lived intangible assets consist primarily of patents, customer relationships, developed technology and trade names resulting from business combinations. We evaluate the recoverability of our intangible assets for potential impairment whenever events or circumstances indicate that the carrying amount of such assets 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 such review indicates that the carrying amount of intangible assets is not recoverable, the carrying amount of such assets is reduced to the fair value. In addition to the recoverability assessment, we routinely review the remaining estimated useful lives of finite-lived intangible assets. If we reduce the estimated useful life assumption for any asset, the remaining unamortized balance would be amortized over the revised estimated useful life. We record the amortization of intangible assets to the financial statement line item in our consolidated statement of operations that the asset directly relates to. To the extent that purchased intangibles are used in revenue generating activities, we record the amortization of these intangible assets to cost of revenue. |
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. Stock-Based Compensation — MSUs We implemented a market stock unit program in March 2015 for certain key executives. Specifically, MSUs measure Pandora’s total stockholder return (“TSR”) performance against that of the Russell 2000 Index across three performance periods. We have determined the grant-date fair value of the MSUs using a Monte Carlo simulation performed by a third-party valuation specialist. The Monte Carlo simulation model utilizes multiple input variables to estimate the probability that market conditions will be achieved. These variables include our expected stock price volatility over the expected term of the award, actual and projected employee stock option exercise behaviors and the risk-free interest rate for the expected term of the award. The variables used in these models are reviewed on an annual basis and adjusted, as needed. We recognize stock-based compensation for the MSUs over the requisite service period using the accelerated attribution method. |
Cost of Revenue | 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 certain royalty arrangements, we accrue for estimated royalties based on the available facts and circumstances and adjust these estimates as more information becomes available. Cost of Revenue — Ticketing Service Cost of revenue—ticketing service consists primarily of ticketing revenue share costs, credit card fees and intangible amortization expense. The majority of the cost is related to revenue share costs which consist of royalties paid to clients for their share of convenience and order processing fees. Payments to clients are recorded as an expense to the extent that the fair value of the identifiable benefit received in the exchange exceeds the amount of the payment to the client. Intangible amortization expense is related to amortization of developed technology. Cost of Revenue — Other Cost of revenue—other consists primarily of ad and music serving costs, employee-related and facilities and equipment costs and other costs of ad sales. Ad and music 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 music 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, facilities and equipment costs, including salaries and benefits related to employees in software engineering, music analysis and product management departments, 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 and facilities and equipment costs, including salaries, commissions and benefits related to employees in sales, sales support, marketing, advertising and music maker group 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, advertising, direct response and search engine marketing costs, public relations expenses, costs related to music events, agency platform and media measurement expenses, infrastructure costs and amortization expense related to acquired intangible assets. We expense the costs of producing advertisements as they are incurred and expense the cost of communicating advertisements at the time the advertisement airs or the event occurs, in each case as sales and marketing expense within the accompanying consolidated statements of operations. |
General and Administrative | General and administrative consists primarily of employee-related and facilities and equipment 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, infrastructure costs and credit card fees. |
Provision for (Benefit from) Income Taxes | Our provision for (benefit from) income taxes is computed 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, restricted stock units and market 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 November 20, 2015, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update No. 2015-17, Income Taxes (Subtopic 740): Balance Sheet Classification of Deferred Taxes ("ASU 2015-17"). ASU 2015-17 requires all deferred tax assets and liabilities, and any related valuation allowance, to be classified as non-current on the balance sheet. The classification change for all deferred taxes as non-current simplifies entities’ processes as it eliminates the need to separately identify the net current and net non-current deferred tax asset or liability in each jurisdiction and allocate valuation allowances. The guidance is effective for fiscal years beginning after December 15, 2016, although early adoption is permitted. We have elected to early adopt this standard prospectively in the year ended December 31, 2015. The adoption of this guidance did not have a material effect on our consolidated financial statements. Prior periods in our Consolidated Financial Statements were not retrospectively adjusted. In September 2015, the FASB issued Accounting Standards Update No. 2015-16, Business Combinations ("ASU 2015-16"). ASU 2015-16 eliminates the requirement for an acquirer in a business combination to account for measurement-period adjustments retrospectively. Rather, the acquirer must recognize adjustments during the period in which the amounts are determined, including the effect on earnings of any amounts that would have been recorded in previous periods. The guidance is effective for fiscal years beginning after December 15, 2015, although early adoption is permitted. We early adopted this standard in the year ended December 31, 2015. The adoption of this guidance did not have a material effect on our consolidated financial statements, as there were no measurement period adjustments. In April 2015, The FASB issued Accounting Standards Update No. 2015-03, Interest - Imputation of Interest (Subtopic 835-30) ("ASU 2015-03"). ASU 2015-03 requires that debt issuance costs related to a recognized debt liability be presented in the balance sheet as a direct deduction from the corresponding debt liability, consistent with the presentation of a debt discount. The guidance is effective for fiscal years beginning after December 15, 2015, although early adoption is permitted. We early adopted this standard in the year ended December 31, 2015. This resulted in a $5.9 million and $2.6 million reduction to our convertible senior notes and equity at December 31, 2015 related to issuance costs paid, which will be accreted to interest expense over the term of the notes. In May 2014, the 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. In August 2015, the FASB issued ASU No. 2015-14, Revenue from Contracts with Customers (Topic 606): Deferral of the Effective Date , which delays the effective date of ASU 2014-09 by one year. The FASB also agreed to allow entities to choose to adopt the standard as of the original effective date. As such, the updated standard will be effective for us in the first quarter of 2018, with the option to adopt it in the first quarter of 2017. 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. |
Commitments and Contingencies | 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. |
Composition of Certain Financ21
Composition of Certain Financial Statement Captions (Tables) | 12 Months Ended |
Dec. 31, 2015 | |
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, 2014 2015 (in thousands) Cash and cash equivalents Cash $ 72,487 $ 104,361 Money market funds 89,113 180,021 Commercial paper 9,349 31,089 Corporate debt securities 5,008 2,000 U.S. government and government agency debt securities — 17,196 Total cash and cash equivalents $ 175,957 $ 334,667 Short-term investments Commercial paper $ 45,443 $ 4,792 Corporate debt securities 128,691 31,052 U.S. government and government agency debt securities 4,497 — Total short-term investments $ 178,631 $ 35,844 Long-term investments Corporate debt securities $ 100,998 $ 46,369 U.S. government and government agency debt securities 3,245 — Total long-term investments $ 104,243 $ 46,369 Total cash, cash equivalents and investments $ 458,831 $ 416,880 |
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, 2014 and 2015 . As of December 31, 2014 Adjusted Cost Unrealized Gains Unrealized Losses Fair 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 As of December 31, 2015 Adjusted Cost Unrealized Gains Unrealized Losses Fair Value (in thousands) Cash equivalents and marketable securities Money market funds $ 180,021 $ — $ — $ 180,021 Commercial paper 35,881 — — 35,881 Corporate debt securities 79,760 8 (347 ) 79,421 U.S. government and government agency debt securities 17,198 — (2 ) 17,196 Total cash equivalents and marketable securities $ 312,860 $ 8 $ (349 ) $ 312,519 |
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, 2014 and 2015 : As of December 31, 2014 Adjusted Cost Fair Value (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 As of December 31, 2015 Adjusted Cost Fair Value (in thousands) Due in one year or less $ 266,205 $ 266,150 Due after one year through three years 46,655 46,369 Total $ 312,860 $ 312,519 |
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, 2014 and 2015 : 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 (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 ) As of December 31, 2015 Twelve Months or Less More than Twelve Months Total Fair Gross Unrealized Losses Fair Gross Unrealized Losses Fair Gross Unrealized Losses (in thousands) Money market funds $ — $ — $ — $ — $ — $ — Commercial paper — — — — — — Corporate debt securities 64,804 (293 ) 8,531 (54 ) 73,335 (347 ) U.S. government and government agency debt securities 16,241 (2 ) — — 16,241 (2 ) Total $ 81,045 $ (295 ) $ 8,531 $ (54 ) $ 89,576 $ (349 ) |
Schedule of accounts receivable, net | Accounts receivable, net consisted of the following as of December 31, 2014 and 2015 : As of December 31, 2014 2015 (in thousands) Accounts receivable, net Accounts receivable $ 219,655 $ 279,240 Allowance for doubtful accounts (1,218 ) (2,165 ) Total accounts receivable, net $ 218,437 $ 277,075 |
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 eleven months ended December 31, 2013 , the twelve months ended December 31, 2014 and the twelve months ended December 31, 2015 : Allowance for Doubtful Accounts Balance at Beginning of Period Additions Write-offs, Net of Recoveries Balance at End of Period (in thousands) 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 For the twelve months ended December 31, 2015 $ 1,218 2,085 (1,138 ) $ 2,165 |
Schedule of prepaid and other current assets | Prepaid and other current assets consisted of the following as of December 31, 2014 and 2015 : As of December 31, 2014 2015 (in thousands) Prepaid and other current assets Other current assets $ 8,520 $ 15,821 Prepaid expenses 6,169 13,908 Ticketing contract advance - short term, net — 4,092 Prepaid royalties 700 2,099 Total prepaid and other current assets $ 15,389 $ 35,920 |
Schedule of other long-term assets | Other long-term assets consisted of the following as of December 31, 2014 and 2015 : As of December 31, 2014 2015 (in thousands) Other long-term assets Other $ 1,826 $ 10,929 Ticketing contract advance - long-term — 9,824 Long-term security deposits 4,947 9,039 Total other long-term assets $ 6,773 $ 29,792 |
Schedule of property and equipment, net | Property and equipment, net consisted of the following as of December 31, 2014 and 2015 : As of December 31, 2014 2015 (in thousands) Property and equipment, net Servers, computers and other related equipment $ 39,890 $ 57,309 Leasehold improvements 25,893 35,947 Office furniture and equipment 2,721 5,470 Construction in progress 5,075 12,550 Software developed for internal use 4,519 10,239 Total property and equipment $ 78,098 $ 121,515 Less accumulated depreciation and amortization (35,177 ) (55,145 ) Total property and equipment, net $ 42,921 $ 66,370 |
Schedule of other current liabilities | Other current liabilities consisted of the following as of December 31, 2014 and 2015 : As of December 31, 2014 2015 (in thousands) Other current liabilities Ticketing amounts due to clients $ — $ 13,104 Other — 2,528 Total other current liabilities $ — $ 15,632 |
Schedule of other long-term liabilities | Other long-term liabilities consisted of the following as of December 31, 2014 and 2015 : As of December 31, 2014 2015 (in thousands) Other long-term liabilities Long-term deferred rent $ 15,068 $ 23,662 Other 1,705 7,200 Total other long-term liabilities $ 16,773 $ 30,862 |
Fair Value (Tables)
Fair Value (Tables) | 12 Months Ended |
Dec. 31, 2015 | |
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, 2014 and 2015 : As of December 31, 2014 Fair Value Measurement Using Quoted Prices in Active Markets for Identical Instruments (Level 1) Significant Other Observable Inputs (Level 2) Total (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 As of December 31, 2015 Fair Value Measurement Using Quoted Prices in Active Markets for Identical Instruments (Level 1) Significant Other Observable Inputs (Level 2) Total (in thousands) Assets Money market funds $ 180,021 $ — $ 180,021 Commercial paper — 35,881 35,881 Corporate debt securities — 79,421 79,421 U.S. government and government agency debt securities — 17,196 17,196 Total assets measured at fair value $ 180,021 $ 132,498 $ 312,519 |
Business Combinations (Tables)
Business Combinations (Tables) | 12 Months Ended |
Dec. 31, 2015 | |
Business Combinations [Abstract] | |
Summary of the components of the purchase consideration transferred | The following table summarizes the components of the purchase consideration transferred based on the closing price of $12.18 per share of our common stock as of the acquisition date: (in thousands) Cash paid by Pandora $ 191,479 Cash paid by Ticketfly to option holders 7,238 Common stock (11,193,847 shares at $12.18 per share) issued by Pandora to selling shareholders 136,342 Fair value of stock options and restricted stock units assumed 10,514 Less: purchase price adjustments (6,995 ) Less: post-combination compensation expense (3,235 ) Purchase consideration $ 335,343 |
Summary of the estimated fair values of assets acquired and liabilities assumed | The following table summarizes the estimated fair values of assets acquired and liabilities assumed as of the date of acquisition: (in thousands) Current assets $ 39,809 Long-term assets 15,982 Current liabilities (21,853 ) Long-term liabilities (6,298 ) Deferred tax liability (1,738 ) Intangible assets 76,800 Goodwill 232,641 Total $ 335,343 |
Schedule of unaudited pro forma results | The unaudited pro forma results do not reflect any cost saving synergies from operating efficiencies or the effect of the incremental costs incurred in integrating the two companies. Accordingly, these unaudited pro forma results are presented for informational purpose only and are not necessarily indicative of what the actual results of operations of the combined company would have been if the acquisition had occurred at the beginning of the period presented, nor are they indicative of future results of operations: Twelve Months Ended 2014 2015 (in thousands) Revenue $ 975,712 $ 1,222,452 Net loss $ (58,195 ) $ (210,111 ) |
Summary of the allocation of estimated fair values of net assets acquired including related estimated useful lives | The following table summarizes the allocation of estimated fair values of the net assets acquired during the year ended December 31, 2015 , including the related estimated useful lives, where applicable: Ticketfly Rdio Other Estimated fair value Estimated useful life in years Estimated fair value Estimated useful life in years Estimated fair value Estimated useful life in years (in thousands, except for estimated useful life) Intangible assets: Customer relationships - clients $ 37,300 8 $ — $ — Developed technology 28,100 5 26,400 2-5 1,550 4 Tradename 10,400 8 1,000 3 320 2 Customer relationships - users 1,000 2 — 940 2 FCC license - broadcast radio — — 193 Tangible assets acquired, net 27,640 1,969 (490 ) Deferred tax liabilities (1,738 ) — (49 ) Net assets acquired $ 102,702 $ 29,369 $ 2,464 Goodwill 232,641 48,131 23,103 Total fair value consideration $ 335,343 $ 77,500 $ 25,567 |
Goodwill and Other Intangible24
Goodwill and Other Intangible Assets (Tables) | 12 Months Ended |
Dec. 31, 2015 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Schedule of changes in the carrying amount of goodwill | The changes in the carrying amount of goodwill for the twelve months ended December 31, 2015 are as follows: Goodwill (in thousands) Balance as of December 31, 2014 $ — Goodwill resulting from business combinations 303,875 Balance as of December 31, 2015 $ 303,875 |
Summary of gross carrying amounts and accumulated amortization of intangibles - finite lived | The following summarizes information regarding the gross carrying amounts and accumulated amortization of intangibles: As of December 31, 2014 As of December 31, 2015 Weighted average remaining useful lives (in years) Gross Carrying Amount Accumulated Amortization Net Carrying Value Gross Carrying Amount Accumulated Amortization Net Carrying Value (in thousands) Finite-lived intangible assets Patents 8.5 $ 8,030 $ (1,091 ) $ 6,939 $ 8,030 $ (1,824 ) $ 6,206 Developed technology 4.7 — — — 56,050 (1,265 ) 54,785 Customer relationships - clients 7.8 — — — 37,300 (777 ) 36,523 Customer relationships - users 1.7 — — — 1,940 (318 ) 1,622 Trade names 7.3 — — — 11,720 (304 ) 11,416 Total finite-lived intangible assets 6.2 $ 8,030 $ (1,091 ) $ 6,939 $ 115,040 $ (4,488 ) $ 110,552 Indefinite-lived intangible assets FCC license - broadcast radio $ — $ — $ — $ 193 $ — $ 193 Total intangible assets $ 8,030 $ (1,091 ) $ 6,939 $ 115,233 $ (4,488 ) $ 110,745 |
Summary of gross carrying amounts and accumulated amortization of intangibles - indefinite lived | The following summarizes information regarding the gross carrying amounts and accumulated amortization of intangibles: As of December 31, 2014 As of December 31, 2015 Weighted average remaining useful lives (in years) Gross Carrying Amount Accumulated Amortization Net Carrying Value Gross Carrying Amount Accumulated Amortization Net Carrying Value (in thousands) Finite-lived intangible assets Patents 8.5 $ 8,030 $ (1,091 ) $ 6,939 $ 8,030 $ (1,824 ) $ 6,206 Developed technology 4.7 — — — 56,050 (1,265 ) 54,785 Customer relationships - clients 7.8 — — — 37,300 (777 ) 36,523 Customer relationships - users 1.7 — — — 1,940 (318 ) 1,622 Trade names 7.3 — — — 11,720 (304 ) 11,416 Total finite-lived intangible assets 6.2 $ 8,030 $ (1,091 ) $ 6,939 $ 115,040 $ (4,488 ) $ 110,552 Indefinite-lived intangible assets FCC license - broadcast radio $ — $ — $ — $ 193 $ — $ 193 Total intangible assets $ 8,030 $ (1,091 ) $ 6,939 $ 115,233 $ (4,488 ) $ 110,745 |
Schedule of future amortization expense related to finite-lived intangible assets | The following is a schedule of future amortization expense related to finite-lived intangible assets as of December 31, 2015 . As of (in thousands) 2016 $ 20,437 2017 20,002 2018 17,649 2019 17,129 2020 15,896 Thereafter 19,439 Total future amortization expense $ 110,552 |
Debt Instruments (Tables)
Debt Instruments (Tables) | 12 Months Ended |
Dec. 31, 2015 | |
Debt Disclosure [Abstract] | |
Schedule of long-term debt | Long-term debt, net consisted of the following: As of December 31, 2014 2015 (in thousands) 1.75% convertible senior notes due 2020 $ — $ 345,000 Unamortized discount on convertible senior notes — (110,423 ) Long-term debt, net $ — $ 234,577 |
Summary of the effective interest rate, contractually stated interest expense and costs related to amortization of discount for the Notes | The following table outlines the effective interest rate, contractually stated interest expense and costs related to the amortization of the discount for the Notes: Twelve Months Ended 2015 (in thousands except for effective interest rate) Effective interest rate 10.18 % Contractually stated interest expense $ 369 Amortization of discount $ 1,084 |
Commitments and Contingencies (
Commitments and Contingencies (Tables) | 12 Months Ended |
Dec. 31, 2015 | |
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, 2015 : As of December 31, 2015 Future Minimum Lease Payments Future Minimum Sublease Income (in thousands) 2016 $ 19,044 $ 1,246 2017 23,219 1,277 2018 22,722 541 2019 22,148 — 2020 19,599 — Thereafter 55,902 — Total $ 162,634 $ 3,064 |
Provision for Income Taxes (Tab
Provision for Income Taxes (Tables) | 12 Months Ended |
Dec. 31, 2015 | |
Income Tax Disclosure [Abstract] | |
Schedule of loss before provision for income taxes by jurisdiction | Loss before provision for income taxes by jurisdiction consists of the following: Eleven Months Ended Twelve Months Ended December 31, 2013 2014 2015 (in thousands) Jurisdiction Domestic $ (24,005 ) $ (24,230 ) $ (163,460 ) Foreign (2,918 ) (5,592 ) (7,751 ) Loss before provision for income taxes $ (26,923 ) $ (29,822 ) $ (171,211 ) |
Schedule of provision for income taxes | The provision for income taxes consists of the following: Eleven Months Ended Twelve Months Ended December 31, 2013 2014 2015 (in thousands) Current Federal $ — $ — $ — State and local 7 353 9 International 87 231 214 Total current income tax expense $ 94 $ 584 $ 223 Deferred Federal (10,166 ) (9,996 ) (17,943 ) State and local (2,027 ) (6,238 ) (2,174 ) Valuation allowance 12,193 16,234 18,344 Total deferred income tax expense (benefit) $ — $ — $ (1,773 ) Total provision for (benefit from) income taxes $ 94 $ 584 $ (1,550 ) |
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: Eleven Months Ended Twelve Months Ended December 31, 2013 2014 2015 U.S. federal taxes at statutory rate 34 % 34 % 34 % State taxes, net of federal benefit — (1 ) — Permanent differences 5 4 3 Foreign rate differential (4 ) (7 ) (1 ) Federal and state credits, net of reserve 8 11 2 Impact of acquired DTAs and DTLs — — 1 Change in valuation allowance (46 ) (55 ) (33 ) Change in rate — 6 (1 ) Deferred adjustments 3 6 (4 ) Effective tax rate — % (2 )% 1 % |
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, 2014 2015 (in thousands) Deferred tax assets Net operating loss carryforwards $ 27,487 $ 91,658 Tax credit carryforwards 10,839 14,204 Allowances and other 13,832 21,802 Stock options 24,215 29,927 Depreciation and amortization 255 — Total deferred tax assets $ 76,628 $ 157,591 Valuation allowance (73,983 ) (92,772 ) Total deferred tax assets, net of valuation allowance $ 2,645 $ 64,819 Deferred tax liabilities Convertible debt — (37,580 ) Depreciation and amortization (2,645 ) (27,252 ) Total deferred tax liabilities $ (2,645 ) $ (64,832 ) Net deferred tax assets (liabilities) $ — $ (13 ) |
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: Twelve Months Ended 2014 2015 (in thousands) Beginning balance $ 5,220 $ 5,793 Increases related to tax positions taken during a prior year 1,161 — Decreases related to tax positions taken during a prior year (1,924 ) (74 ) Increases related to tax positions taken during the current year 1,336 1,145 Ending balance $ 5,793 $ 6,864 |
Stock-based Compensation Plan28
Stock-based Compensation Plans and Awards (Tables) | 12 Months Ended |
Dec. 31, 2015 | |
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, 2015 and the activity during the twelve months ended December 31, 2015 are as follows: Shares Available for Grant Equity Awards ESPP Total Balance as of December 31, 2014 14,326,460 3,857,735 18,184,195 Additional shares authorized 8,323,469 — 8,323,469 Ticketfly shares authorized 3,215,223 — 3,215,223 Options granted (2,940,736 ) — (2,940,736 ) Restricted stock granted (11,678,792 ) — (11,678,792 ) Market stock units granted (776,000 ) — (776,000 ) ESPP shares issued — (538,398 ) (538,398 ) Options forfeited 7,709 — 7,709 Restricted stock forfeited 1,245,994 — 1,245,994 Balance as of December 31, 2015 11,723,327 3,319,337 15,042,664 |
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 2014 2015 Expected life (in years) 0.5 0.5 Risk-free interest rate 0.06 % 0.12 % Expected volatility 42 % 52 % Expected dividend yield 0 % 0 % |
Schedule of stock option activity | Stock option activity during the twelve months ended December 31, 2015 was as follows: Options Outstanding Outstanding Weighted-Average Exercise Price Weighted-Average Remaining Contractual Term (in years) Aggregate Intrinsic Value (1) (in thousands, except share and per share data) Balance as of December 31, 2014 10,980,256 $ 7.91 1.08 $ 120,033 Granted 2,940,736 3.44 Exercised (1,077,797 ) 4.78 Forfeited (27,304 ) 6.09 Balance as of December 31, 2015 12,815,891 7.15 1.09 101,151 Vested and exercisable as of December 31, 2015 9,292,855 5.74 0.57 81,541 Expected to vest as of December 31, 2015 (2) 3,259,020 $ 10.81 2.47 $ 18,156 (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 $17.83 and $13.41 as of December 31, 2014 and 2015. (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 eleven months ended December 31, 2013 , the twelve months ended December 31, 2014 and the twelve months ended December 31, 2015 was determined on the grant date using the Black-Scholes option pricing model with the following assumptions: Eleven Months Ended Twelve Months Ended 2013 2014 2015 Expected life (in years) 5.99 - 6.32 6.08 6.08 Risk-free interest rate 1.00% - 2.04% 1.71% - 1.93% 1.75% - 1.92% Expected volatility 58% - 59% 58% - 59% 49% - 50% Expected dividend yield 0 % 0 % 0 % |
Schedule of activities for RSUs and MSUs | The following table summarizes the activities for our MSUs for the twelve months ended December 31, 2015 : Number of MSUs Weighted-Average Grant Date Fair Value Unvested as of December 31, 2014 — $ — Granted 776,000 5.60 Vested — — Forfeited — — Unvested as of December 31, 2015 776,000 5.60 Expected to vest as of December 31, 2015 (1) 710,882 $ 5.60 (1) MSUs expected to vest reflect an estimated forfeiture rate. The following table summarizes the activities for our RSUs for the twelve months ended December 31, 2015 : Number of RSUs Weighted-Average Grant Date Fair Value Unvested as of December 31, 2014 11,024,068 $ 21.99 Granted 11,678,792 15.40 Vested (4,184,415 ) 21.06 Forfeited (1,246,360 ) 19.89 Unvested as of December 31, 2015 17,272,085 17.91 Expected to vest as of December 31, 2015 (1) 15,595,029 $ 17.90 (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: Eleven Months Ended December 31, Twelve Months Ended 2013 2014 2015 (in thousands) Stock-based compensation expense Cost of revenue—Other $ 1,946 $ 4,414 $ 5,531 Cost of revenue—Ticketing service — — 40 Product development 8,802 17,546 23,671 Sales and marketing 20,222 42,165 52,747 General and administrative 9,071 22,930 29,656 Total stock-based compensation expense $ 40,041 $ 87,055 $ 111,645 |
Common Stock and Net Loss Per29
Common Stock and Net Loss Per Share (Tables) | 12 Months Ended |
Dec. 31, 2015 | |
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: Eleven Months Ended Twelve Months Ended 2013 2014 2015 (in thousands except per share amounts) Numerator Net loss $ (27,017 ) $ (30,406 ) $ (169,661 ) Denominator Weighted-average common shares outstanding used in computing basic and diluted net loss per share 180,968 205,273 213,790 Net loss per share, basic and diluted $ (0.15 ) $ (0.15 ) $ (0.79 ) |
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 December 31, 2013 As of December 31, 2014 As of December 31, 2015 (in thousands) Options to purchase common stock 22,708 10,980 12,816 Restricted stock units 10,366 11,024 17,272 Market stock units — — 776 Total common stock equivalents 33,074 22,004 30,864 |
Selected Quarterly Financial 30
Selected Quarterly Financial Data (unaudited) (Tables) | 12 Months Ended |
Dec. 31, 2015 | |
Quarterly Financial Information Disclosure [Abstract] | |
Schedule of selected quarterly financial data (unaudited) | Three months ended March 31, June 30, September 30, December 31, March 31, June 30, September 30, December 31, 2014 2014 2014 2014 2015 2015 2015 2015 (in thousands, except per share data) Total revenue (1) $ 194,315 $ 218,894 $ 239,593 $ 268,000 $ 230,764 $ 285,560 $ 311,562 $ 336,157 Cost of revenue Cost of Revenue—Content acquisition costs 108,275 111,461 111,315 115,326 126,023 130,134 211,272 142,933 Cost of revenue—Other 14,979 13,989 15,453 17,206 16,233 20,043 21,414 22,168 Cost of revenue—Ticketing service (1) — — — — — — — 7,121 Total cost of revenue 123,254 125,450 126,768 132,532 142,256 150,177 232,686 172,222 Gross profit 71,061 93,444 112,825 135,468 88,508 135,383 78,876 163,935 Operating expenses Product development (1) 11,831 13,076 13,381 14,865 15,875 18,742 21,849 28,115 Sales and marketing (1) 61,864 66,232 72,320 76,914 84,274 94,035 107,286 112,574 General and administrative (1) 26,361 25,865 29,143 31,074 36,754 38,812 35,603 42,774 Total operating expenses 100,056 105,173 114,844 122,853 136,903 151,589 164,738 183,463 Income (loss) from operations (28,995 ) (11,729 ) (2,019 ) 12,615 (48,395 ) (16,206 ) (85,862 ) (19,528 ) Net income (loss) (28,931 ) (11,728 ) (2,025 ) 12,278 (48,257 ) (16,065 ) (85,930 ) (19,409 ) Net income (loss) per share, basic (0.14 ) (0.06 ) (0.01 ) 0.06 (0.23 ) (0.08 ) (0.40 ) (0.09 ) Net income (loss) per share, diluted $ (0.14 ) $ (0.06 ) $ (0.01 ) $ 0.06 $ (0.23 ) $ (0.08 ) $ (0.40 ) $ (0.09 ) (1) Includes two months of revenue and expense for Ticketfly from the acquisition date of October 31, 2015 to December 31, 2015. |
Summary of Significant Accoun31
Summary of Significant Accounting Policies - Narrative (Details) | 1 Months Ended | 2 Months Ended | 3 Months Ended | 11 Months Ended | 12 Months Ended | |
Mar. 31, 2015performance_period | Dec. 31, 2015USD ($) | Mar. 31, 2014USD ($) | Dec. 31, 2013USD ($)customer | Dec. 31, 2015USD ($)customer | Dec. 31, 2014USD ($)customer | |
Concentration Risk [Line Items] | ||||||
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 | |||||
Actual credit losses | 400,000 | $ 1,100,000 | $ 1,100,000 | |||
Capitalized cost, net of amortization, related to internal use software and website development costs | $ 2,700,000 | 700,000 | 2,700,000 | 1,300,000 | ||
Amortization expense on ticketing contract advances | 700,000 | |||||
Impairment of goodwill | $ 0 | |||||
Service period over which company recognizes stock-based compensation | 4 years | |||||
Advertising expenses | $ 4,200,000 | $ 35,100,000 | 10,400,000 | |||
ASU 2015-03 | Long-term debt | Adjustments for new accounting principle, early adoption | ||||||
Concentration Risk [Line Items] | ||||||
Reduction to long-term debt | (5,900,000) | (5,900,000) | ||||
ASU 2015-03 | Equity | Adjustments for new accounting principle, early adoption | ||||||
Concentration Risk [Line Items] | ||||||
Reduction to long-term debt | (2,600,000) | $ (2,600,000) | ||||
Market stock units granted | ||||||
Concentration Risk [Line Items] | ||||||
Service period over which company recognizes stock-based compensation | 2 years 1 month 17 days | |||||
Number of performance periods used for measurement | performance_period | 3 | |||||
Internal use software and website development | ||||||
Concentration Risk [Line Items] | ||||||
Estimated useful lives of assets | 3 years | |||||
Capitalized cost, net of amortization, related to internal use software and website development costs | $ 6,300,000 | $ 6,300,000 | $ 2,800,000 | |||
Minimum | ||||||
Concentration Risk [Line Items] | ||||||
Estimated useful lives of assets | 3 years | |||||
Life of ticketing contract term | 3 years | |||||
Finite-lived intangible asset, useful life | 2 years | |||||
Maximum | ||||||
Concentration Risk [Line Items] | ||||||
Estimated useful lives of assets | 5 years | |||||
Life of ticketing contract term | 5 years | |||||
Finite-lived intangible asset, useful life | 11 years | |||||
Revenue | Customer concentration risk | ||||||
Concentration Risk [Line Items] | ||||||
Number of major customers representing 10% or more of total revenue/total accounts receivable | customer | 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 | customer | 0 | 0 |
Composition of Certain Financ32
Composition of Certain Financial Statement Captions - Schedule of cash, cash equivalents and investments (Details) - USD ($) $ in Thousands | Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | Jan. 31, 2013 |
Cash, Cash Equivalents and Investments | ||||
Total cash and cash equivalents | $ 334,667 | $ 175,957 | $ 245,755 | $ 65,725 |
Total short-term investments | 35,844 | 178,631 | ||
Total long-term investments | 46,369 | 104,243 | ||
Total cash, cash equivalents and investments | 416,880 | 458,831 | ||
Cash | ||||
Cash, Cash Equivalents and Investments | ||||
Total cash and cash equivalents | 104,361 | 72,487 | ||
Money market funds | ||||
Cash, Cash Equivalents and Investments | ||||
Total cash and cash equivalents | 180,021 | 89,113 | ||
Commercial paper | ||||
Cash, Cash Equivalents and Investments | ||||
Total cash and cash equivalents | 31,089 | 9,349 | ||
Total short-term investments | 4,792 | 45,443 | ||
Corporate debt securities | ||||
Cash, Cash Equivalents and Investments | ||||
Total cash and cash equivalents | 2,000 | 5,008 | ||
Total short-term investments | 31,052 | 128,691 | ||
Total long-term investments | 46,369 | 100,998 | ||
U.S. government and government agency debt securities | ||||
Cash, Cash Equivalents and Investments | ||||
Total cash and cash equivalents | 17,196 | 0 | ||
Total short-term investments | 0 | 4,497 | ||
Total long-term investments | $ 0 | $ 3,245 |
Composition of Certain Financ33
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 ($) $ in Thousands | Dec. 31, 2015 | Dec. 31, 2014 |
Schedule of Available-for-sale Securities [Line Items] | ||
Adjusted Cost | $ 312,860 | $ 386,791 |
Unrealized Gains | 8 | 6 |
Unrealized Losses | (349) | (453) |
Fair Value | 312,519 | 386,344 |
Money market funds | ||
Schedule of Available-for-sale Securities [Line Items] | ||
Adjusted Cost | 180,021 | 89,113 |
Unrealized Gains | 0 | 0 |
Unrealized Losses | 0 | 0 |
Fair Value | 180,021 | 89,113 |
Commercial paper | ||
Schedule of Available-for-sale Securities [Line Items] | ||
Adjusted Cost | 35,881 | 54,792 |
Unrealized Gains | 0 | 0 |
Unrealized Losses | 0 | 0 |
Fair Value | 35,881 | 54,792 |
Corporate debt securities | ||
Schedule of Available-for-sale Securities [Line Items] | ||
Adjusted Cost | 79,760 | 235,135 |
Unrealized Gains | 8 | 6 |
Unrealized Losses | (347) | (444) |
Fair Value | 79,421 | 234,697 |
U.S. government and government agency debt securities | ||
Schedule of Available-for-sale Securities [Line Items] | ||
Adjusted Cost | 17,198 | 7,751 |
Unrealized Gains | 0 | 0 |
Unrealized Losses | (2) | (9) |
Fair Value | $ 17,196 | $ 7,742 |
Composition of Certain Financ34
Composition of Certain Financial Statement Captions - Schedule of available-for-sale investments by contractual maturity date (Details) - USD ($) $ in Thousands | Dec. 31, 2015 | Dec. 31, 2014 |
Adjusted Cost | ||
Due in one year or less | $ 266,205 | $ 282,206 |
Due after one year through three years | 46,655 | 104,585 |
Total | 312,860 | 386,791 |
Fair Value | ||
Due in one year or less | 266,150 | 282,101 |
Due after one year through three years | 46,369 | 104,243 |
Total | $ 312,519 | $ 386,344 |
Composition of Certain Financ35
Composition of Certain Financial Statement Captions - Summary of available-for-sale securities' fair value and gross unrealized losses (Details) - USD ($) $ in Thousands | Dec. 31, 2015 | Dec. 31, 2014 |
Schedule of Available-for-sale Securities [Line Items] | ||
Available-for-sale securities, continuous unrealized loss position, twelve months or less, fair value | $ 81,045 | $ 197,939 |
Available-for-sale securities, continuous unrealized loss position, twelve months or less, gross unrealized losses | (295) | (431) |
Available-for-sale securities, continuous unrealized loss position, more than twelve months, fair value | 8,531 | 12,148 |
Available-for-sale securities, continuous unrealized loss position, more than twelve months, gross unrealized losses | (54) | (22) |
Available-for-sale securities, continuous unrealized loss position, total, fair value | 89,576 | 210,087 |
Available-for-sale securities, continuous unrealized loss position, total, gross unrealized losses | (349) | (453) |
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 | 64,804 | 192,699 |
Available-for-sale securities, continuous unrealized loss position, twelve months or less, gross unrealized losses | (293) | (422) |
Available-for-sale securities, continuous unrealized loss position, more than twelve months, fair value | 8,531 | 12,148 |
Available-for-sale securities, continuous unrealized loss position, more than twelve months, gross unrealized losses | (54) | (22) |
Available-for-sale securities, continuous unrealized loss position, total, fair value | 73,335 | 204,847 |
Available-for-sale securities, continuous unrealized loss position, total, gross unrealized losses | (347) | (444) |
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 | 16,241 | 5,240 |
Available-for-sale securities, continuous unrealized loss position, twelve months or less, gross unrealized losses | (2) | (9) |
Available-for-sale securities, continuous unrealized loss position, more than twelve months, fair value | 0 | 0 |
Available-for-sale securities, continuous unrealized loss position, more than twelve months, gross unrealized losses | 0 | 0 |
Available-for-sale securities, continuous unrealized loss position, total, fair value | 16,241 | 5,240 |
Available-for-sale securities, continuous unrealized loss position, total, gross unrealized losses | $ (2) | $ (9) |
Composition of Certain Financ36
Composition of Certain Financial Statement Captions - Narrative (Details) | 11 Months Ended | 12 Months Ended | |
Dec. 31, 2013USD ($) | Dec. 31, 2015USD ($)security | Dec. 31, 2014USD ($) | |
Property, Plant and Equipment [Line Items] | |||
Number of owned securities that were in an unrealized loss position | security | 71 | ||
Unrealized losses deemed to be other-than-temporary | $ 0 | ||
Proceeds from sale of available-for-sale securities | $ 0 | 111,356,000 | $ 0 |
Realized gain (loss) in connecting with sales of available-for-sale securities | 0 | ||
Depreciation | 9,700,000 | 20,400,000 | 14,700,000 |
Capitalized cost related to internal use software and website development costs | 700,000 | 2,700,000 | 1,300,000 |
Accumulated amortization | $ 55,145,000 | 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 | $ 6,300,000 | 2,800,000 | |
Accumulated amortization | 4,000,000 | 1,700,000 | |
Amortization expense | $ 600,000 | 2,200,000 | $ 1,100,000 |
Other current assets | |||
Property, Plant and Equipment [Line Items] | |||
Receivables for the reimbursement of costs of leasehold improvements in connection with operating leases | $ 12,900,000 |
Composition of Certain Financ37
Composition of Certain Financial Statement Captions - Schedule of accounts receivable, net (Details) - USD ($) $ in Thousands | Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | Jan. 31, 2013 |
Accounts receivable, net | ||||
Accounts receivable | $ 279,240 | $ 219,655 | ||
Allowance for doubtful accounts | (2,165) | (1,218) | $ (1,272) | $ (761) |
Total accounts receivable, net | $ 277,075 | $ 218,437 |
Composition of Certain Financ38
Composition of Certain Financial Statement Captions - Schedule of allowance for doubtful accounts (Details) - USD ($) $ in Thousands | 11 Months Ended | 12 Months Ended | |
Dec. 31, 2013 | Dec. 31, 2015 | Dec. 31, 2014 | |
Allowance for Doubtful Accounts | |||
Balance at Beginning of Period | $ 761 | $ 1,218 | $ 1,272 |
Additions | 948 | 2,085 | 1,064 |
Write-offs, Net of Recoveries | (437) | (1,138) | (1,118) |
Balance at End of Period | $ 1,272 | $ 2,165 | $ 1,218 |
Composition of Certain Financ39
Composition of Certain Financial Statement Captions - Schedule of prepaid and other current assets (Details) - USD ($) $ in Thousands | Dec. 31, 2015 | Dec. 31, 2014 |
Prepaid and other current assets | ||
Other current assets | $ 15,821 | $ 8,520 |
Prepaid expenses | 13,908 | 6,169 |
Ticketing contract advance - short term, net | 4,092 | 0 |
Prepaid royalties | 2,099 | 700 |
Total prepaid and other current assets | $ 35,920 | $ 15,389 |
Composition of Certain Financ40
Composition of Certain Financial Statement Captions - Schedule of other long-term assets (Details) - USD ($) $ in Thousands | Dec. 31, 2015 | Dec. 31, 2014 |
Other long-term assets | ||
Other | $ 10,929 | $ 1,826 |
Ticketing contract advance - long-term | 9,824 | 0 |
Long-term security deposits | 9,039 | 4,947 |
Total other long-term assets | $ 29,792 | $ 6,773 |
Composition of Certain Financ41
Composition of Certain Financial Statement Captions - Schedule of property and equipment, net (Details) - USD ($) $ in Thousands | Dec. 31, 2015 | Dec. 31, 2014 |
Property, Plant and Equipment [Line Items] | ||
Total property and equipment | $ 121,515 | $ 78,098 |
Less accumulated depreciation and amortization | (55,145) | (35,177) |
Total property and equipment, net | 66,370 | 42,921 |
Servers, computers and other related equipment | ||
Property, Plant and Equipment [Line Items] | ||
Total property and equipment | 57,309 | 39,890 |
Leasehold improvements | ||
Property, Plant and Equipment [Line Items] | ||
Total property and equipment | 35,947 | 25,893 |
Office furniture and equipment | ||
Property, Plant and Equipment [Line Items] | ||
Total property and equipment | 5,470 | 2,721 |
Construction in progress | ||
Property, Plant and Equipment [Line Items] | ||
Total property and equipment | 12,550 | 5,075 |
Software developed for internal use | ||
Property, Plant and Equipment [Line Items] | ||
Total property and equipment | 10,239 | 4,519 |
Less accumulated depreciation and amortization | $ (4,000) | $ (1,700) |
Composition of Certain Financ42
Composition of Certain Financial Statement Captions - Schedule of other current liabilities (Details) - USD ($) $ in Thousands | Dec. 31, 2015 | Dec. 31, 2014 |
Other current liabilities | ||
Ticketing amounts due to clients | $ 13,104 | $ 0 |
Other | 2,528 | 0 |
Total other current liabilities | $ 15,632 | $ 0 |
Composition of Certain Financ43
Composition of Certain Financial Statement Captions - Schedule of other long-term liabilities (Details) - USD ($) $ in Thousands | Dec. 31, 2015 | Dec. 31, 2014 |
Other long-term liabilities | ||
Long-term deferred rent | $ 23,662 | $ 15,068 |
Other | 7,200 | 1,705 |
Total other long-term liabilities | $ 30,862 | $ 16,773 |
Fair Value - Schedule of fair v
Fair Value - Schedule of fair value of financial assets and liabilities (Details) - USD ($) $ in Thousands | Dec. 31, 2015 | Dec. 31, 2014 |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Total assets measured at fair value | $ 312,519 | $ 386,344 |
Money market funds | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Total assets measured at fair value | 180,021 | 89,113 |
Commercial paper | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Total assets measured at fair value | 35,881 | 54,792 |
Corporate debt securities | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Total assets measured at fair value | 79,421 | 234,697 |
U.S. government and government agency debt securities | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Total assets measured at fair value | 17,196 | 7,742 |
Quoted Prices in Active Markets for Identical Instruments (Level 1) | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Total assets measured at fair value | 180,021 | 89,113 |
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] | ||
Total assets measured at fair value | 180,021 | 89,113 |
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] | ||
Total assets measured at fair value | 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] | ||
Total assets measured at fair value | 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] | ||
Total assets measured at fair value | 0 | 0 |
Significant Other Observable Inputs (Level 2) | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Total assets measured at fair value | 132,498 | 297,231 |
Significant Other Observable Inputs (Level 2) | Money market funds | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Total assets measured at fair value | 0 | 0 |
Significant Other Observable Inputs (Level 2) | Commercial paper | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Total assets measured at fair value | 35,881 | 54,792 |
Significant Other Observable Inputs (Level 2) | Corporate debt securities | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Total assets measured at fair value | 79,421 | 234,697 |
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] | ||
Total assets measured at fair value | $ 17,196 | $ 7,742 |
Fair Value - Narrative (Details
Fair Value - Narrative (Details) - Fair Value, Inputs, Level 3 - USD ($) | Dec. 31, 2015 | Dec. 31, 2014 |
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 |
Business Combinations - Narrati
Business Combinations - Narrative (Details) $ / shares in Units, $ in Thousands | Dec. 23, 2015USD ($) | Oct. 31, 2015USD ($)$ / sharesshares | Dec. 31, 2015company |
Business Acquisition [Line Items] | |||
Number of companies integrated | company | 2 | ||
Ticketfly | |||
Business Acquisition [Line Items] | |||
Aggregate purchase price | $ 335,343 | ||
Shares issued in acquisition (in shares) | shares | 11,193,847 | ||
Cash paid | $ 191,479 | ||
Share price (in dollars per share) | $ / shares | $ 12.18 | ||
Post-combination compensation expense | $ 3,235 | ||
Post-combination compensation expense (in shares) | shares | 200,000 | ||
Post-combination compensation expense, cash | $ 1,900 | ||
Required service period (up to) | 3 years | ||
Estimated liabilities for indirect taxes and other liabilities | $ 7,000 | ||
Escrow receivable | $ 7,000 | ||
Rdio | |||
Business Acquisition [Line Items] | |||
Aggregate purchase price | $ 77,500 | ||
Cash paid | $ 2,500 |
Business Combinations - Summary
Business Combinations - Summary of the components of the purchase consideration transferred (Details) - Ticketfly $ in Thousands | Oct. 31, 2015USD ($) |
Business Acquisition [Line Items] | |
Cash paid by Pandora | $ 191,479 |
Cash paid by Ticketfly to option holders | 7,238 |
Common stock (11,193,847 shares at $12.18 per share) issued by Pandora to selling shareholders | 136,342 |
Fair value of stock options and restricted stock units assumed | 10,514 |
Less: purchase price adjustments | (6,995) |
Less: post-combination compensation expense | (3,235) |
Purchase consideration | $ 335,343 |
Business Combinations - Summa48
Business Combinations - Summary of the components of the purchase consideration transferred (Parenthetical) (Details) - Ticketfly | Oct. 31, 2015$ / sharesshares |
Business Acquisition [Line Items] | |
Shares issued in acquisition (in shares) | shares | 11,193,847 |
Share price (in dollars per share) | $ / shares | $ 12.18 |
Business Combinations - Summa49
Business Combinations - Summary of the estimated fair values of assets acquired and liabilities assumed (Details) - USD ($) $ in Thousands | Dec. 31, 2015 | Oct. 31, 2015 | Dec. 31, 2014 |
Business Acquisition [Line Items] | |||
Goodwill | $ 303,875 | $ 0 | |
Ticketfly | |||
Business Acquisition [Line Items] | |||
Current assets | $ 39,809 | ||
Long-term assets | 15,982 | ||
Current liabilities | (21,853) | ||
Long-term liabilities | (6,298) | ||
Deferred tax liability | (1,738) | (1,738) | |
Intangible assets | 76,800 | ||
Goodwill | 232,641 | 232,641 | |
Total | $ 335,343 | $ 335,343 |
Business Combinations - Schedul
Business Combinations - Schedule of unaudited pro forma results (Details) - Ticketfly - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2015 | Dec. 31, 2014 | |
Business Acquisition [Line Items] | ||
Revenue | $ 1,222,452 | $ 975,712 |
Net loss | $ (210,111) | $ (58,195) |
Business Combinations - Summa51
Business Combinations - Summary of the allocation of estimated fair values of net assets acquired including related estimated useful lives (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2015 | Oct. 31, 2015 | Dec. 31, 2014 | |
Business Acquisition [Line Items] | |||
Goodwill | $ 303,875 | $ 0 | |
Ticketfly | |||
Business Acquisition [Line Items] | |||
Tangible assets acquired, net | 27,640 | ||
Deferred tax liability | (1,738) | $ (1,738) | |
Net assets acquired | 102,702 | ||
Goodwill | 232,641 | 232,641 | |
Total | 335,343 | $ 335,343 | |
Ticketfly | Customer relationships - clients | |||
Business Acquisition [Line Items] | |||
Estimated fair value | $ 37,300 | ||
Estimated useful life in years | 8 years | ||
Ticketfly | Developed technology | |||
Business Acquisition [Line Items] | |||
Estimated fair value | $ 28,100 | ||
Estimated useful life in years | 5 years | ||
Ticketfly | Tradename | |||
Business Acquisition [Line Items] | |||
Estimated fair value | $ 10,400 | ||
Estimated useful life in years | 8 years | ||
Ticketfly | Customer relationships - users | |||
Business Acquisition [Line Items] | |||
Estimated fair value | $ 1,000 | ||
Estimated useful life in years | 2 years | ||
Ticketfly | FCC license - broadcast radio | |||
Business Acquisition [Line Items] | |||
Estimated fair value | $ 0 | ||
Rdio | |||
Business Acquisition [Line Items] | |||
Tangible assets acquired, net | 1,969 | ||
Deferred tax liability | 0 | ||
Net assets acquired | 29,369 | ||
Goodwill | 48,131 | ||
Total | 77,500 | ||
Rdio | Customer relationships - clients | |||
Business Acquisition [Line Items] | |||
Estimated fair value | 0 | ||
Rdio | Developed technology | |||
Business Acquisition [Line Items] | |||
Estimated fair value | $ 26,400 | ||
Rdio | Developed technology | Minimum | |||
Business Acquisition [Line Items] | |||
Estimated useful life in years | 2 years | ||
Rdio | Developed technology | Maximum | |||
Business Acquisition [Line Items] | |||
Estimated useful life in years | 5 years | ||
Rdio | Tradename | |||
Business Acquisition [Line Items] | |||
Estimated fair value | $ 1,000 | ||
Estimated useful life in years | 3 years | ||
Rdio | Customer relationships - users | |||
Business Acquisition [Line Items] | |||
Estimated fair value | $ 0 | ||
Rdio | FCC license - broadcast radio | |||
Business Acquisition [Line Items] | |||
Estimated fair value | 0 | ||
Other | |||
Business Acquisition [Line Items] | |||
Tangible assets acquired, net | (490) | ||
Deferred tax liability | (49) | ||
Net assets acquired | 2,464 | ||
Goodwill | 23,103 | ||
Total | 25,567 | ||
Other | Customer relationships - clients | |||
Business Acquisition [Line Items] | |||
Estimated fair value | 0 | ||
Other | Developed technology | |||
Business Acquisition [Line Items] | |||
Estimated fair value | $ 1,550 | ||
Estimated useful life in years | 4 years | ||
Other | Tradename | |||
Business Acquisition [Line Items] | |||
Estimated fair value | $ 320 | ||
Estimated useful life in years | 2 years | ||
Other | Customer relationships - users | |||
Business Acquisition [Line Items] | |||
Estimated fair value | $ 940 | ||
Estimated useful life in years | 2 years | ||
Other | FCC license - broadcast radio | |||
Business Acquisition [Line Items] | |||
Estimated fair value | $ 193 |
Goodwill and Other Intangible52
Goodwill and Other Intangible Assets - Schedule of changes in the carrying amount of goodwill (Details) $ in Thousands | 12 Months Ended |
Dec. 31, 2015USD ($) | |
Goodwill [Roll Forward] | |
Balance as of December 31, 2014 | $ 0 |
Goodwill resulting from business combinations | 303,875 |
Balance as of December 31, 2015 | $ 303,875 |
Goodwill and Other Intangible53
Goodwill and Other Intangible Assets - Summary of gross carrying amounts and accumulated amortization of intangibles (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2015 | Dec. 31, 2014 | |
Acquired Finite-Lived Intangible Assets [Line Items] | ||
Weighted average remaining useful lives (in years) | 6 years 2 months 12 days | |
Finite-lived intangible assets | ||
Gross Carrying Amount | $ 115,040 | $ 8,030 |
Accumulated Amortization | (4,488) | (1,091) |
Total future amortization expense | 110,552 | 6,939 |
Indefinite-lived intangible assets | ||
Total intangible assets, Gross Carrying Amount | 115,233 | 8,030 |
Total intangible assets, Accumulated Amortization | (4,488) | (1,091) |
Total intangible assets, Net Carrying Value | 110,745 | 6,939 |
FCC license - broadcast radio | ||
Indefinite-lived intangible assets | ||
Indefinite-lived intangible assets | $ 193 | 0 |
Patents | ||
Acquired Finite-Lived Intangible Assets [Line Items] | ||
Weighted average remaining useful lives (in years) | 8 years 6 months | |
Finite-lived intangible assets | ||
Gross Carrying Amount | $ 8,030 | 8,030 |
Accumulated Amortization | (1,824) | (1,091) |
Total future amortization expense | 6,206 | 6,939 |
Indefinite-lived intangible assets | ||
Total intangible assets, Accumulated Amortization | $ (1,824) | (1,091) |
Developed technology | ||
Acquired Finite-Lived Intangible Assets [Line Items] | ||
Weighted average remaining useful lives (in years) | 4 years 8 months 12 days | |
Finite-lived intangible assets | ||
Gross Carrying Amount | $ 56,050 | 0 |
Accumulated Amortization | (1,265) | 0 |
Total future amortization expense | 54,785 | 0 |
Indefinite-lived intangible assets | ||
Total intangible assets, Accumulated Amortization | $ (1,265) | 0 |
Customer relationships - clients | ||
Acquired Finite-Lived Intangible Assets [Line Items] | ||
Weighted average remaining useful lives (in years) | 7 years 9 months 18 days | |
Finite-lived intangible assets | ||
Gross Carrying Amount | $ 37,300 | 0 |
Accumulated Amortization | (777) | 0 |
Total future amortization expense | 36,523 | 0 |
Indefinite-lived intangible assets | ||
Total intangible assets, Accumulated Amortization | $ (777) | 0 |
Customer relationships - users | ||
Acquired Finite-Lived Intangible Assets [Line Items] | ||
Weighted average remaining useful lives (in years) | 1 year 8 months 12 days | |
Finite-lived intangible assets | ||
Gross Carrying Amount | $ 1,940 | 0 |
Accumulated Amortization | (318) | 0 |
Total future amortization expense | 1,622 | 0 |
Indefinite-lived intangible assets | ||
Total intangible assets, Accumulated Amortization | $ (318) | 0 |
Trade names | ||
Acquired Finite-Lived Intangible Assets [Line Items] | ||
Weighted average remaining useful lives (in years) | 7 years 3 months 18 days | |
Finite-lived intangible assets | ||
Gross Carrying Amount | $ 11,720 | 0 |
Accumulated Amortization | (304) | 0 |
Total future amortization expense | 11,416 | 0 |
Indefinite-lived intangible assets | ||
Total intangible assets, Accumulated Amortization | $ (304) | $ 0 |
Goodwill and Other Intangible54
Goodwill and Other Intangible Assets - Narrative (Details) - USD ($) $ in Millions | 11 Months Ended | 12 Months Ended | |
Dec. 31, 2013 | Dec. 31, 2015 | Dec. 31, 2014 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |||
Amortization expense of intangible assets | $ 0.4 | $ 3.4 | $ 0.7 |
Goodwill and Other Intangible55
Goodwill and Other Intangible Assets - Schedule of future amortization expense related to finite-lived intangible assets (Details) - USD ($) $ in Thousands | Dec. 31, 2015 | Dec. 31, 2014 |
Goodwill and Intangible Assets Disclosure [Abstract] | ||
2,016 | $ 20,437 | |
2,017 | 20,002 | |
2,018 | 17,649 | |
2,019 | 17,129 | |
2,020 | 15,896 | |
Thereafter | 19,439 | |
Total future amortization expense | $ 110,552 | $ 6,939 |
Debt Instruments - Schedule of
Debt Instruments - Schedule of long-term debt (Details) - USD ($) $ in Thousands | Dec. 31, 2015 | Dec. 31, 2014 |
Debt Instrument [Line Items] | ||
Long-term debt, net | $ 234,577 | $ 0 |
Convertible debt | 1.75% convertible senior notes due 2020 | ||
Debt Instrument [Line Items] | ||
Long-term debt, gross | 345,000 | 0 |
Unamortized discount on convertible senior notes | (110,423) | 0 |
Long-term debt, net | $ 234,577 | $ 0 |
Debt Instruments - Narrative (D
Debt Instruments - Narrative (Details) $ / shares in Units, shares in Millions | Dec. 09, 2015USD ($)day$ / shares$ / unitshares | Dec. 31, 2015USD ($) | May. 31, 2011USD ($) | Dec. 31, 2013USD ($) | Dec. 31, 2015USD ($) | Dec. 31, 2014USD ($) |
Debt Instruments | ||||||
Payments for capped call transactions | $ 0 | $ 43,160,000 | $ 0 | |||
Debt instrument, conversion price | $ / shares | $ 16.42 | |||||
Line of credit | ||||||
Debt Instruments | ||||||
Maximum borrowings available | $ 120,000,000 | 120,000,000 | ||||
Credit facility financial covenant, minimum liquidity | 10,000,000 | $ 5,000,000 | ||||
Line of credit facility, unused capacity, commitment fee percentage | 0.375% | |||||
Interest rate, minimum | 2.00% | |||||
Interest rate, maximum | 2.25% | |||||
Outstanding borrowings | 0 | 0 | 0 | |||
Available borrowing capacity | 118,900,000 | 118,900,000 | 58,900,000 | |||
Debt issuance cost | $ 400,000 | |||||
Credit facility term remaining | 4 years | |||||
Amortization of debt issuance costs | $ 200,000 | $ 200,000 | 200,000 | |||
Line of credit | LIBOR | ||||||
Debt Instruments | ||||||
Variable interest rate base | LIBO | |||||
Line of credit | LIBOR | Minimum | ||||||
Debt Instruments | ||||||
Margin | 2.00% | |||||
Line of credit | LIBOR | Maximum | ||||||
Debt Instruments | ||||||
Margin | 2.25% | |||||
Line of credit | Alternate base rate | ||||||
Debt Instruments | ||||||
Variable interest rate base | alternate base rate | |||||
Line of credit | Alternate base rate | Minimum | ||||||
Debt Instruments | ||||||
Margin | 1.00% | |||||
Line of credit | Alternate base rate | Maximum | ||||||
Debt Instruments | ||||||
Margin | 1.25% | |||||
Letter of credit | ||||||
Debt Instruments | ||||||
Maximum borrowings available | 15,000,000 | 15,000,000 | ||||
Outstanding amount | $ 1,100,000 | $ 1,100,000 | $ 1,100,000 | |||
Convertible debt | Notes | ||||||
Debt Instruments | ||||||
Aggregate principal amount | $ 345,000,000 | |||||
Interest rate | 1.75% | |||||
Net proceeds from sale of debt | $ 336,500,000 | |||||
Payments for capped call transactions | $ 43,200,000 | |||||
Debt instrument, conversion ratio | 0.060905 | |||||
Debt instrument, conversion price | $ / shares | $ 16.42 | |||||
Debt instrument, redemption price, percentage of principal | 100.00% | |||||
Debt conversion, maximum number of shares of common stock convertible by Notes | shares | 27.3 | |||||
Value of debt | $ 233,500,000 | |||||
Carrying amount of equity component reported in additional paid-in-capital | 103,000,000 | |||||
Debt fees and expenses | $ 2,600,000 | |||||
Initial cap price (in dollars per share) | $ / unit | 25.26 | |||||
Convertible debt | Notes | Redemption, period 1 | ||||||
Debt Instruments | ||||||
Debt instrument, threshold percentage of stock price trigger | 130.00% | |||||
Debt instrument, threshold trading days | day | 20 | |||||
Debt instrument, threshold consecutive trading days | 30 days | |||||
Debt instrument, threshold notice trading days | day | 5 | |||||
Convertible debt | Notes | Redemption, period 2 | ||||||
Debt Instruments | ||||||
Debt instrument, threshold percentage of stock price trigger | 130.00% | |||||
Debt instrument, threshold trading days | day | 20 | |||||
Debt instrument, threshold consecutive trading days | 30 days | |||||
Convertible debt | Notes | Redemption, period 3 | ||||||
Debt Instruments | ||||||
Debt instrument, threshold note trading days | day | 5 | |||||
Debt instrument, threshold consecutive note trading days | 10 days | |||||
Debt instrument, threshold percentage of note price trigger | 98.00% |
Debt Instruments - Summary of t
Debt Instruments - Summary of the effective interest rate, contractually stated interest expense and costs related to amortization of discount for the Notes (Details) - Convertible debt - Notes $ in Thousands | 12 Months Ended |
Dec. 31, 2015USD ($) | |
Debt Instrument [Line Items] | |
Effective interest rate | 10.18% |
Contractually stated interest expense | $ 369 |
Amortization of discount | $ 1,084 |
Commitments and Contingencies -
Commitments and Contingencies - Schedule of future minimum lease payments under operating leases (Details) $ in Thousands | Dec. 31, 2015USD ($) |
Future Minimum Lease Payments | |
2,016 | $ 19,044 |
2,017 | 23,219 |
2,018 | 22,722 |
2,019 | 22,148 |
2,020 | 19,599 |
Thereafter | 55,902 |
Total | 162,634 |
Future Minimum Sublease Income | |
2,016 | 1,246 |
2,017 | 1,277 |
2,018 | 541 |
2,019 | 0 |
2,020 | 0 |
Thereafter | 0 |
Total | $ 3,064 |
Commitments and Contingencies60
Commitments and Contingencies - Narrative (Details) | Oct. 23, 2015USD ($) | Oct. 31, 2015USD ($) | Jun. 30, 2013 | Oct. 01, 2016installment | Dec. 31, 2013USD ($) | Dec. 31, 2016USD ($) | Oct. 01, 2016USD ($)installment | Dec. 31, 2015USD ($) | Dec. 31, 2014USD ($) | Sep. 30, 2015USD ($) | Sep. 30, 2015USD ($) |
Loss Contingencies [Line Items] | |||||||||||
Rent expenses | $ 5,700,000 | $ 12,200,000 | $ 8,600,000 | ||||||||
Deferred rent | 23,900,000 | $ 15,300,000 | |||||||||
Minimum, non-cancelable purchase obligations | 153,300,000 | ||||||||||
Non-cancelable royalty related contractual obligation, recoupable against future royalty payments | 124,000,000 | ||||||||||
Non-cancelable royalty related contractual obligation, not recoupable against future royalty payments | 29,300,000 | ||||||||||
Radio Music Licensing Committee | |||||||||||
Loss Contingencies [Line Items] | |||||||||||
Royalty expense, percent | 1.70% | ||||||||||
Radio Music Licensing Committee | Cost of revenue - content acquisition costs | |||||||||||
Loss Contingencies [Line Items] | |||||||||||
Litigation settlement, expense | 28,200,000 | $ 23,900,000 | |||||||||
Pre-1972 Copyright Litigation | |||||||||||
Loss Contingencies [Line Items] | |||||||||||
Litigation settlement, amount | $ 90,000,000 | ||||||||||
Payment for legal settlement | $ 60,000,000 | ||||||||||
Pre-1972 Copyright Litigation | Scenario, Forecast | |||||||||||
Loss Contingencies [Line Items] | |||||||||||
Payment for legal settlement | $ 7,500,000 | ||||||||||
Number of litigation installments | installment | 3 | 4 | |||||||||
Pre-1972 Copyright Litigation | Cost of revenue - content acquisition costs | |||||||||||
Loss Contingencies [Line Items] | |||||||||||
Litigation settlement, expense | $ 65,400,000 | $ 57,900,000 | |||||||||
Pre-1972 Copyright Litigation | Cost of revenue - content acquisition costs | Scenario, Forecast | |||||||||||
Loss Contingencies [Line Items] | |||||||||||
Litigation settlement, expense | $ 24,600,000 |
Provision for Income Taxes - Sc
Provision for Income Taxes - Schedule of loss before provision for income taxes by jurisdiction (Details) - USD ($) $ in Thousands | 11 Months Ended | 12 Months Ended | |
Dec. 31, 2013 | Dec. 31, 2015 | Dec. 31, 2014 | |
Jurisdiction | |||
Domestic | $ (24,005) | $ (163,460) | $ (24,230) |
Foreign | (2,918) | (7,751) | (5,592) |
Loss before benefit from (provision for) income taxes | $ (26,923) | $ (171,211) | $ (29,822) |
Provision for Income Taxes - 62
Provision for Income Taxes - Schedule of provision for income taxes (Details) - USD ($) $ in Thousands | 11 Months Ended | 12 Months Ended | |
Dec. 31, 2013 | Dec. 31, 2015 | Dec. 31, 2014 | |
Current | |||
Federal | $ 0 | $ 0 | $ 0 |
State and local | 7 | 9 | 353 |
International | 87 | 214 | 231 |
Total current income tax expense | 94 | 223 | 584 |
Deferred | |||
Federal | (10,166) | (17,943) | (9,996) |
State and local | (2,027) | (2,174) | (6,238) |
Valuation allowance | 12,193 | 18,344 | 16,234 |
Total deferred income tax expense (benefit) | 0 | (1,773) | 0 |
Total provision for (benefit from) income taxes | $ 94 | $ (1,550) | $ 584 |
Provision for Income Taxes - Na
Provision for Income Taxes - Narrative (Details) - USD ($) | 11 Months Ended | 12 Months Ended | |
Dec. 31, 2013 | Dec. 31, 2015 | Dec. 31, 2014 | |
Operating Loss Carryforwards [Line Items] | |||
Decrease in income tax provision | $ (2,100,000) | ||
Release of valuation allowance as a result of acquisitions | 1,800,000 | ||
Increase in valuation allowance | 18,800,000 | ||
Unrecognized tax benefits | $ 5,220,000 | 6,864,000 | $ 5,793,000 |
Income tax, penalties and interest expense | $ 0 | 0 | $ 0 |
Federal | |||
Operating Loss Carryforwards [Line Items] | |||
Net operating loss carryforwards | 613,000,000 | ||
Tax credit carryforwards | 9,700,000 | ||
Net operating loss carryforwards recognized through additional paid in capital, if realized | 377,000,000 | ||
Federal | Acquisitions | |||
Operating Loss Carryforwards [Line Items] | |||
Net operating loss carryforwards | 67,600,000 | ||
State | |||
Operating Loss Carryforwards [Line Items] | |||
Net operating loss carryforwards | 480,000,000 | ||
Tax credit carryforwards that do not expire | 10,700,000 | ||
Tax credit carryforwards that will expire beginning in 2024 | 4,900,000 | ||
State | Acquisitions | |||
Operating Loss Carryforwards [Line Items] | |||
Net operating loss carryforwards | 42,900,000 | ||
Foreign | |||
Operating Loss Carryforwards [Line Items] | |||
Net operating loss carryforwards | 4,300,000 | ||
Foreign | Acquisitions | |||
Operating Loss Carryforwards [Line Items] | |||
Net operating loss carryforwards | $ 4,300,000 |
Provision for Income Taxes - 64
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, 2015 | Dec. 31, 2014 | |
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% | 0.00% | (1.00%) |
Permanent differences | 5.00% | 3.00% | 4.00% |
Foreign rate differential | (4.00%) | (1.00%) | (7.00%) |
Federal and state credits, net of reserve | 8.00% | 2.00% | 11.00% |
Impact of acquired DTAs and DTLs | 0.00% | 1.00% | 0.00% |
Change in valuation allowance | (46.00%) | (33.00%) | (55.00%) |
Change in rate | 0.00% | (1.00%) | 6.00% |
Deferred adjustments | 3.00% | (4.00%) | 6.00% |
Effective tax rate | 0.00% | 1.00% | (2.00%) |
Provision for Income Taxes - 65
Provision for Income Taxes - Schedule of major components of deferred tax assets and liabilities (Details) - USD ($) $ in Thousands | Dec. 31, 2015 | Dec. 31, 2014 |
Deferred tax assets | ||
Net operating loss carryforwards | $ 91,658 | $ 27,487 |
Tax credit carryforwards | 14,204 | 10,839 |
Allowances and other | 21,802 | 13,832 |
Stock options | 29,927 | 24,215 |
Depreciation and amortization | 0 | 255 |
Total deferred tax assets | 157,591 | 76,628 |
Valuation allowance | (92,772) | (73,983) |
Total deferred tax assets, net of valuation allowance | 64,819 | 2,645 |
Deferred tax liabilities | ||
Convertible debt | (37,580) | 0 |
Depreciation and amortization | (27,252) | (2,645) |
Total deferred tax liabilities | (64,832) | (2,645) |
Net deferred tax assets | $ 0 | |
Net deferred tax liabilities | $ (13) |
Provision for Income Taxes - 66
Provision for Income Taxes - Schedule of reconciliation of beginning and ending amounts of unrecognized tax benefits (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2015 | Dec. 31, 2014 | |
Reconciliation of Unrecognized Tax Benefits, Excluding Amounts Pertaining to Examined Tax Returns [Roll Forward] | ||
Unrecognized tax benefits, beginning balance | $ 5,793 | $ 5,220 |
Increases related to tax positions taken during a prior year | 0 | 1,161 |
Decreases related to tax positions taken during a prior year | (74) | (1,924) |
Increases related to tax positions taken during the current year | 1,145 | 1,336 |
Unrecognized tax benefits, ending balance | $ 6,864 | $ 5,793 |
Stock-based Compensation Plan67
Stock-based Compensation Plans and Awards - Narrative (Details) | Jun. 14, 2011shares | Mar. 31, 2015performance_period | Dec. 31, 2013USD ($)shares | Dec. 31, 2013USD ($)$ / sharesshares | Dec. 31, 2015USD ($)$ / sharesshares | Dec. 31, 2014USD ($)$ / sharesshares | Dec. 31, 2011 |
Stock-based Compensation Plans and Awards | |||||||
Shares of common stock previously reserved but unissued (in shares) | shares | 15,042,664 | 18,184,195 | |||||
Annual fixed increase alternative, increase in shares of common stock reserved for issuance (in shares) | shares | 10,000,000 | ||||||
Annual percentage increase alternative, increase in common stock reserved for issuance as a percentage of common stock outstanding | 4.00% | ||||||
Stock-based compensation expense | $ 40,041,000 | $ 111,645,000 | $ 87,055,000 | ||||
ESPP shares issued (in shares) | shares | 538,398 | ||||||
Weighted-average period for recognition of unrecognized compensation | 4 years | ||||||
Capitalized cost related to internal use software and website development costs | $ 700,000 | 700,000 | $ 2,700,000 | 1,300,000 | |||
Stock options | |||||||
Stock-based Compensation Plans and Awards | |||||||
Stock-based compensation expense | $ 10,600,000 | $ 10,700,000 | $ 14,700,000 | ||||
Weighted-average fair value of stock option granted (in dollars per share) | $ / shares | $ 9.34 | $ 9.08 | $ 19.74 | ||||
Total grant date fair value of stock options vested | $ 9,100,000 | $ 17,600,000 | $ 16,000,000 | ||||
Aggregate intrinsic value of options exercised | 93,800,000 | 9,500,000 | 169,200,000 | ||||
Total fair value of options vested | $ 9,400,000 | 17,600,000 | 16,500,000 | ||||
Employee stock | |||||||
Stock-based Compensation Plans and Awards | |||||||
Shares of common stock reserved for the issuance (in shares) | shares | 4,000,000 | 4,000,000 | |||||
Percentage of payroll deductions of eligible employees to purchase shares of common stock (up to) | 15.00% | 15.00% | |||||
Maximum amount of payroll deductions eligible employees can use per calendar year | $ 25,000 | ||||||
Offering period | 6 months | ||||||
Exercise price as a percentage of the fair market value of the common stock | 85.00% | ||||||
Amounts withheld in contributions from employees | 7,600,000 | 6,400,000 | |||||
Stock-based compensation expense | $ 0 | $ 3,300,000 | $ 2,100,000 | ||||
ESPP shares issued (in shares) | shares | 538,398 | 149,378 | |||||
Weighted average purchase price (in dollars per share) | $ / shares | $ 17.80 | $ 23.95 | |||||
Unrecognized compensation cost | $ 32,200,000 | ||||||
Weighted-average period for recognition of unrecognized compensation | 2 years 5 months 19 days | ||||||
RSUs | |||||||
Stock-based Compensation Plans and Awards | |||||||
Vesting period | 4 years | ||||||
Stock-based compensation expense | 28,900,000 | $ 96,100,000 | $ 69,900,000 | ||||
Weighted-average period for recognition of unrecognized compensation | 2 years 9 months | ||||||
Compensation cost not yet recognized | $ 256,100,000 | ||||||
Grants in period (in shares) | shares | 11,678,792 | ||||||
Market stock units granted | |||||||
Stock-based Compensation Plans and Awards | |||||||
Stock-based compensation expense | $ 0 | $ 1,500,000 | $ 0 | ||||
Weighted-average period for recognition of unrecognized compensation | 2 years 1 month 17 days | ||||||
Total grant date fair value of stock options vested | $ 4,300,000 | ||||||
Compensation cost not yet recognized | $ 2,800,000 | ||||||
Number of performance periods used for measurement | performance_period | 3 | ||||||
Total stockholder return, duration period | 90 days | ||||||
Performance multiplier, percentage point decrease | 3.00% | ||||||
Performance multiplier, percentage point increase | 2.00% | ||||||
Grants in period (in shares) | shares | 776,000 | ||||||
Market stock units granted | One-Year Performance Period | |||||||
Stock-based Compensation Plans and Awards | |||||||
Vesting percent | 33.33% | ||||||
Market stock units granted | Two-Year Performance Period | |||||||
Stock-based Compensation Plans and Awards | |||||||
Vesting percent | 33.33% | ||||||
Market stock units granted | Maximum | One and Two-Year Performance Period | |||||||
Stock-based Compensation Plans and Awards | |||||||
Performance multiplier | 100.00% | ||||||
Market stock units granted | Maximum | Three-Year Performance Period | |||||||
Stock-based Compensation Plans and Awards | |||||||
Performance multiplier | 200.00% | ||||||
2011 Plan | |||||||
Stock-based Compensation Plans and Awards | |||||||
Shares of common stock reserved for the issuance (in shares) | shares | 12,000,000 | ||||||
2011 Plan | Stock options | |||||||
Stock-based Compensation Plans and Awards | |||||||
Vesting period | 4 years | ||||||
2011 Plan | Stock options | Maximum | |||||||
Stock-based Compensation Plans and Awards | |||||||
Expiration term (no more than) | 10 years | ||||||
2004 Plan | |||||||
Stock-based Compensation Plans and Awards | |||||||
Shares of common stock previously reserved but unissued (in shares) | shares | 1,506,424 |
Stock-based Compensation Plan68
Stock-based Compensation Plans and Awards - Schedule of shares available for grant and activity (Details) | 12 Months Ended |
Dec. 31, 2015shares | |
Shares Available for Grant | |
Balance as of December 31, 2014 | 18,184,195 |
Additional shares authorized | 8,323,469 |
Options granted | (2,940,736) |
ESPP shares issued | (538,398) |
Options forfeited | 7,709 |
Restricted stock forfeited | 1,245,994 |
Balance as of December 31, 2015 | 15,042,664 |
Restricted stock granted | |
Shares Available for Grant | |
Stock granted | (11,678,792) |
Market stock units granted | |
Shares Available for Grant | |
Stock granted | (776,000) |
Restricted stock forfeited | 0 |
Ticketfly | |
Shares Available for Grant | |
Additional shares authorized | 3,215,223 |
Equity Awards | |
Shares Available for Grant | |
Balance as of December 31, 2014 | 14,326,460 |
Additional shares authorized | 8,323,469 |
Options granted | (2,940,736) |
ESPP shares issued | 0 |
Options forfeited | 7,709 |
Restricted stock forfeited | 1,245,994 |
Balance as of December 31, 2015 | 11,723,327 |
Equity Awards | Restricted stock granted | |
Shares Available for Grant | |
Stock granted | (11,678,792) |
Equity Awards | Market stock units granted | |
Shares Available for Grant | |
Stock granted | (776,000) |
Equity Awards | Ticketfly | |
Shares Available for Grant | |
Additional shares authorized | 3,215,223 |
ESPP | |
Shares Available for Grant | |
Balance as of December 31, 2014 | 3,857,735 |
Additional shares authorized | 0 |
Options granted | 0 |
ESPP shares issued | (538,398) |
Options forfeited | 0 |
Restricted stock forfeited | 0 |
Balance as of December 31, 2015 | 3,319,337 |
ESPP | Restricted stock granted | |
Shares Available for Grant | |
Stock granted | 0 |
ESPP | Ticketfly | |
Shares Available for Grant | |
Additional shares authorized | 0 |
Stock-based Compensation Plan69
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, 2015 | Dec. 31, 2014 | |
Assumptions used to calculate per-share fair value of stock option at the date of grant | ||
Expected life (in years) | 6 months | 6 months |
Risk-free interest rate | 0.12% | 0.06% |
Expected volatility | 52.00% | 42.00% |
Expected dividend yield | 0.00% | 0.00% |
Stock-based Compensation Plan70
Stock-based Compensation Plans and Awards - Schedule of stock option activity (Details) - USD ($) $ / shares in Units, $ in Thousands | 12 Months Ended | |
Dec. 31, 2015 | Dec. 31, 2014 | |
Outstanding Stock Options | ||
Granted (in shares) | 2,940,736 | |
Stock options | ||
Outstanding Stock Options | ||
Balance at the beginning of the period (in shares) | 10,980,256 | |
Granted (in shares) | 2,940,736 | |
Exercised (in shares) | (1,077,797) | |
Forfeited (in shares) | (27,304) | |
Balance at the end of the period (in shares) | 12,815,891 | 10,980,256 |
Vested and exercisable at the end of the period (in shares) | 9,292,855 | |
Expected to vest at the end of the period (in shares) | 3,259,020 | |
Weighted-Average Exercise Price | ||
Balance at the beginning of the period (in dollars per share) | $ 7.91 | |
Granted (in dollars per share) | 3.44 | |
Exercised (in dollars per share) | 4.78 | |
Forfeited (in dollars per share) | 6.09 | |
Balance at the end of the period (in dollars per share) | 7.15 | $ 7.91 |
Vested and exercisable at the end of the period (in dollars per share) | 5.74 | |
Expected to vest at the end of the period (in dollars per share) | $ 10.81 | |
Weighted-Average Remaining Contractual Term (in years) | ||
Outstanding at the beginning of the period | 1 year 1 month 2 days | 1 year 29 days |
Outstanding at the end of the period | 1 year 1 month 2 days | 1 year 29 days |
Vested and exercisable at the end of the period | 6 months 26 days | |
Expected to vest at the end of the period | 2 years 5 months 19 days | |
Aggregate Intrinsic Value | ||
Aggregate intrinsic value beginning of the period | $ 101,151 | $ 120,033 |
Aggregate intrinsic value end of the period | 101,151 | $ 120,033 |
Vested and exercisable at the end of the period | 81,541 | |
Expected to vest at the end of the period | $ 18,156 |
Stock-based Compensation Plan71
Stock-based Compensation Plans and Awards - Schedule of stock option activity (Footnote) (Details) - $ / shares | Dec. 31, 2015 | Dec. 31, 2014 |
Stock options | ||
Stock-based Compensation Plans and Awards | ||
Fair value per share of common stock (in dollars per share) | $ 13.41 | $ 17.83 |
Stock-based Compensation Plan72
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, 2015 | Dec. 31, 2014 | |
Assumptions used to calculate per-share fair value of stock option at the date of grant | |||
Expected life (in years) | 6 years 28 days | 6 years 28 days | |
Risk-free interest rate, minimum (as a percent) | 1.00% | 1.75% | 1.71% |
Risk-free interest rate, maximum (as a percent) | 2.04% | 1.92% | 1.93% |
Expected volatility, minimum (as a percent) | 58.00% | 49.00% | 58.00% |
Expected volatility, maximum | 59.00% | 50.00% | 59.00% |
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 | ||
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 |
Stock-based Compensation Plan73
Stock-based Compensation Plans and Awards - Schedule of activities for RSUs and MSUs (Details) | 12 Months Ended |
Dec. 31, 2015$ / sharesshares | |
Number of RSUs | |
Forfeited (in shares) | (1,245,994) |
RSUs | |
Number of RSUs | |
Unvested at the beginning of the period (in shares) | 11,024,068 |
Granted (in shares) | 11,678,792 |
Vested (in shares) | (4,184,415) |
Forfeited (in shares) | (1,246,360) |
Unvested at the end of the period (in shares) | 17,272,085 |
Expected to vest at end of the period (in shares) | 15,595,029 |
Weighted-Average Grant Date Fair Value | |
Unvested at the beginning of the period (in dollars per share) | $ / shares | $ 21.99 |
Granted (in dollars per share) | $ / shares | 15.40 |
Vested (in dollars per share) | $ / shares | 21.06 |
Forfeited (in dollars per share) | $ / shares | 19.89 |
Unvested at the end of the period (in dollars per share) | $ / shares | 17.91 |
Expected to vest at end of the period (in dollars per share) | $ / shares | $ 17.90 |
Market stock units granted | |
Number of RSUs | |
Unvested at the beginning of the period (in shares) | 0 |
Granted (in shares) | 776,000 |
Vested (in shares) | 0 |
Forfeited (in shares) | 0 |
Unvested at the end of the period (in shares) | 776,000 |
Expected to vest at end of the period (in shares) | 710,882 |
Weighted-Average Grant Date Fair Value | |
Unvested at the beginning of the period (in dollars per share) | $ / shares | $ 0 |
Granted (in dollars per share) | $ / shares | 5.60 |
Vested (in dollars per share) | $ / shares | 0 |
Forfeited (in dollars per share) | $ / shares | 0 |
Unvested at the end of the period (in dollars per share) | $ / shares | 5.60 |
Expected to vest at end of the period (in dollars per share) | $ / shares | $ 5.60 |
Stock-based Compensation Plan74
Stock-based Compensation Plans and Awards - Schedule of stock-based compensation expenses related to all employee and non-employee stock-based awards (Details) - USD ($) $ in Thousands | 11 Months Ended | 12 Months Ended | |
Dec. 31, 2013 | Dec. 31, 2015 | Dec. 31, 2014 | |
Stock-based Compensation Plans and Awards | |||
Total stock-based compensation expense | $ 40,041 | $ 111,645 | $ 87,055 |
Cost of revenue—Other | |||
Stock-based Compensation Plans and Awards | |||
Total stock-based compensation expense | 1,946 | 5,531 | 4,414 |
Cost of revenue—Ticketing service | |||
Stock-based Compensation Plans and Awards | |||
Total stock-based compensation expense | 0 | 40 | 0 |
Product development | |||
Stock-based Compensation Plans and Awards | |||
Total stock-based compensation expense | 8,802 | 23,671 | 17,546 |
Sales and marketing | |||
Stock-based Compensation Plans and Awards | |||
Total stock-based compensation expense | 20,222 | 52,747 | 42,165 |
General and administrative | |||
Stock-based Compensation Plans and Awards | |||
Total stock-based compensation expense | $ 9,071 | $ 29,656 | $ 22,930 |
Common Stock and Net Loss Per75
Common Stock and Net Loss Per Share - Narrative (Details) $ / shares in Units, $ in Thousands | 1 Months Ended | 11 Months Ended | 12 Months Ended | ||
Sep. 30, 2013USD ($)$ / sharesshares | Dec. 31, 2013USD ($) | Dec. 31, 2015USD ($)vote | Dec. 31, 2014USD ($) | Dec. 09, 2015$ / shares | |
Earnings Per Share [Abstract] | |||||
Number of voting rights per share | vote | 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) | $ / shares | $ 25 | ||||
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 | |
Debt instrument, conversion price | $ / shares | $ 16.42 |
Common Stock and Net Loss Per76
Common Stock and Net Loss Per Share - Schedule of the computation of historical basic and diluted net loss per share (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands | 3 Months Ended | 11 Months Ended | 12 Months Ended | ||||||||
Dec. 31, 2015 | Sep. 30, 2015 | Jun. 30, 2015 | Mar. 31, 2015 | Dec. 31, 2014 | Sep. 30, 2014 | Jun. 30, 2014 | Mar. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2015 | Dec. 31, 2014 | |
Numerator | |||||||||||
Net loss | $ (19,409) | $ (85,930) | $ (16,065) | $ (48,257) | $ 12,278 | $ (2,025) | $ (11,728) | $ (28,931) | $ (27,017) | $ (169,661) | $ (30,406) |
Denominator | |||||||||||
Weighted-average common shares outstanding used in computing basic and diluted net loss per share (in shares) | 180,968 | 213,790 | 205,273 | ||||||||
Net loss per share, basic and diluted (in dollars per share) | $ (0.15) | $ (0.79) | $ (0.15) |
Common Stock and Net Loss Per77
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) - shares shares in Thousands | 11 Months Ended | 12 Months Ended | |
Dec. 31, 2013 | Dec. 31, 2015 | Dec. 31, 2014 | |
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | |||
Total common stock equivalents (in shares) | 33,074 | 30,864 | 22,004 |
Options to purchase common stock | |||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | |||
Total common stock equivalents (in shares) | 22,708 | 12,816 | 10,980 |
Restricted stock units | |||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | |||
Total common stock equivalents (in shares) | 10,366 | 17,272 | 11,024 |
Market stock units | |||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | |||
Total common stock equivalents (in shares) | 0 | 776 | 0 |
Selected Quarterly Financial 78
Selected Quarterly Financial Data (unaudited) (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 11 Months Ended | 12 Months Ended | ||||||||
Dec. 31, 2015 | Sep. 30, 2015 | Jun. 30, 2015 | Mar. 31, 2015 | Dec. 31, 2014 | Sep. 30, 2014 | Jun. 30, 2014 | Mar. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2015 | Dec. 31, 2014 | |
Quarterly Financial Information Disclosure [Abstract] | |||||||||||
Total revenue | $ 336,157 | $ 311,562 | $ 285,560 | $ 230,764 | $ 268,000 | $ 239,593 | $ 218,894 | $ 194,315 | $ 600,233 | $ 1,164,043 | $ 920,802 |
Cost of revenue | |||||||||||
Cost of revenue—Content acquisition costs | 142,933 | 211,272 | 130,134 | 126,023 | 115,326 | 111,315 | 111,461 | 108,275 | 314,866 | 610,362 | 446,377 |
Cost of revenue—Other | 22,168 | 21,414 | 20,043 | 16,233 | 17,206 | 15,453 | 13,989 | 14,979 | 42,217 | 79,858 | 61,627 |
Cost of revenue—Ticketing service | 7,121 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 7,121 | 0 |
Total cost of revenue | 172,222 | 232,686 | 150,177 | 142,256 | 132,532 | 126,768 | 125,450 | 123,254 | 357,083 | 697,341 | 508,004 |
Gross profit | 163,935 | 78,876 | 135,383 | 88,508 | 135,468 | 112,825 | 93,444 | 71,061 | 243,150 | 466,702 | 412,798 |
Operating expenses | |||||||||||
Product development | 28,115 | 21,849 | 18,742 | 15,875 | 14,865 | 13,381 | 13,076 | 11,831 | 31,294 | 84,581 | 53,153 |
Sales and marketing | 112,574 | 107,286 | 94,035 | 84,274 | 76,914 | 72,320 | 66,232 | 61,864 | 169,005 | 398,169 | 277,330 |
General and administrative | 42,774 | 35,603 | 38,812 | 36,754 | 31,074 | 29,143 | 25,865 | 26,361 | 69,300 | 153,943 | 112,443 |
Total operating expenses | 183,463 | 164,738 | 151,589 | 136,903 | 122,853 | 114,844 | 105,173 | 100,056 | 269,599 | 636,693 | 442,926 |
Income (loss) from operations | (19,528) | (85,862) | (16,206) | (48,395) | 12,615 | (2,019) | (11,729) | (28,995) | (26,449) | (169,991) | (30,128) |
Net income (loss) | $ (19,409) | $ (85,930) | $ (16,065) | $ (48,257) | $ 12,278 | $ (2,025) | $ (11,728) | $ (28,931) | $ (27,017) | $ (169,661) | $ (30,406) |
Net income (loss) per share, basic (in dollars per share) | $ (0.09) | $ (0.40) | $ (0.08) | $ (0.23) | $ 0.06 | $ (0.01) | $ (0.06) | $ (0.14) | |||
Net income (loss) per share, diluted (in dollars per share) | $ (0.09) | $ (0.40) | $ (0.08) | $ (0.23) | $ 0.06 | $ (0.01) | $ (0.06) | $ (0.14) |
Selected Quarterly Financial 79
Selected Quarterly Financial Data (unaudited) (Footnote) (Details) | 2 Months Ended |
Dec. 31, 2015 | |
Ticketfly | |
Business Acquisition [Line Items] | |
Period of revenue and expense | 2 years |