Document and Entity Information
Document and Entity Information - shares | 9 Months Ended | |
Sep. 30, 2016 | Oct. 25, 2016 | |
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-Q | |
Document Period End Date | Sep. 30, 2016 | |
Document Fiscal Year Focus | 2,016 | |
Document Fiscal Period Focus | Q3 | |
Amendment Flag | false | |
Entity Common Stock, Shares Outstanding | 233,335,503 |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets - USD ($) $ in Thousands | Sep. 30, 2016 | Dec. 31, 2015 |
Current assets | ||
Cash and cash equivalents | $ 207,695 | $ 334,667 |
Short-term investments | 50,052 | 35,844 |
Accounts receivable, net of allowance of $2,165 at December 31, 2015 and $3,023 at September 30, 2016 | 282,802 | 277,075 |
Prepaid content acquisition costs | 102,623 | 2,099 |
Prepaid expenses and other current assets | 34,166 | 33,821 |
Total current assets | 677,338 | 683,506 |
Long-term investments | 6,273 | 46,369 |
Property and equipment, net | 118,453 | 66,370 |
Goodwill | 306,706 | 303,875 |
Intangible assets, net | 95,565 | 110,745 |
Other long-term assets | 32,528 | 29,792 |
Total assets | 1,236,863 | 1,240,657 |
Current liabilities | ||
Accounts payable | 13,983 | 17,897 |
Accrued liabilities | 33,968 | 37,185 |
Accrued content acquisition costs | 106,275 | 97,390 |
Accrued compensation | 52,089 | 43,788 |
Deferred revenue | 31,971 | 19,939 |
Other current liabilities | 20,739 | 15,632 |
Total current liabilities | 259,025 | 231,831 |
Long-term debt, net | 337,429 | 234,577 |
Other long-term liabilities | 33,402 | 30,862 |
Total liabilities | 629,856 | 497,270 |
Stockholders’ equity | ||
Common stock: 224,970,412 shares issued and outstanding at December 31, 2015 and 233,312,446 at September 30, 2016 | 23 | 23 |
Additional paid-in capital | 1,227,197 | 1,110,539 |
Accumulated deficit | (619,627) | (366,658) |
Accumulated other comprehensive loss | (586) | (517) |
Total stockholders’ equity | 607,007 | 743,387 |
Total liabilities and stockholders’ equity | $ 1,236,863 | $ 1,240,657 |
Condensed Consolidated Balance3
Condensed Consolidated Balance Sheets (Parenthetical) - USD ($) $ in Thousands | Sep. 30, 2016 | Dec. 31, 2015 |
Statement of Financial Position [Abstract] | ||
Accounts receivable, allowance | $ 3,023 | $ 2,165 |
Common stock, shares issued (in shares) | 233,312,446 | 224,970,412 |
Common stock, shares outstanding (in shares) | 233,312,446 | 224,970,412 |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Operations - USD ($) shares in Thousands, $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2016 | Sep. 30, 2015 | Sep. 30, 2016 | Sep. 30, 2015 | |
Revenue | ||||
Advertising | $ 273,716 | $ 254,656 | $ 759,150 | $ 664,316 |
Subscription and other | 56,100 | 56,906 | 165,957 | 163,570 |
Ticketing service | 22,085 | 0 | 67,121 | 0 |
Total revenue | 351,901 | 311,562 | 992,228 | 827,886 |
Cost of revenue | ||||
Cost of revenue - Content acquisition costs | 174,334 | 211,272 | 522,231 | 467,429 |
Cost of revenue - Other | 25,556 | 21,414 | 71,388 | 57,690 |
Cost of revenue - Ticketing service | 15,318 | 0 | 45,223 | 0 |
Total cost of revenue | 215,208 | 232,686 | 638,842 | 525,119 |
Gross profit | 136,693 | 78,876 | 353,386 | 302,767 |
Operating expenses | ||||
Product development | 33,657 | 21,849 | 103,311 | 56,466 |
Sales and marketing | 116,475 | 107,286 | 357,909 | 285,595 |
General and administrative | 41,768 | 35,603 | 128,626 | 111,169 |
Total operating expenses | 191,900 | 164,738 | 589,846 | 453,230 |
Loss from operations | (55,207) | (85,862) | (236,460) | (150,463) |
Interest expense | (6,494) | (131) | (18,916) | (386) |
Other income, net | 579 | 95 | 1,696 | 803 |
Total other income (expense), net | (5,915) | (36) | (17,220) | 417 |
Loss before benefit from (provision for) income taxes | (61,122) | (85,898) | (253,680) | (150,046) |
Benefit from (provision for) income taxes | (412) | (32) | 711 | (206) |
Net loss | $ (61,534) | $ (85,930) | $ (252,969) | $ (150,252) |
Weighted-average common shares outstanding used in computing basic and diluted net loss per share | 232,139 | 212,760 | 229,524 | 211,487 |
Net loss per share, basic and diluted (in dollars per share) | $ (0.27) | $ (0.40) | $ (1.10) | $ (0.71) |
Condensed Consolidated Stateme5
Condensed Consolidated Statements of Comprehensive Loss - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2016 | Sep. 30, 2015 | Sep. 30, 2016 | Sep. 30, 2015 | |
Statement of Comprehensive Income [Abstract] | ||||
Net loss | $ (61,534) | $ (85,930) | $ (252,969) | $ (150,252) |
Change in foreign currency translation adjustment | (129) | (127) | (417) | (274) |
Change in net unrealized gains (loss) on marketable securities | (45) | 50 | 348 | 324 |
Other comprehensive income (loss) | (174) | (77) | (69) | 50 |
Total comprehensive loss | $ (61,708) | $ (86,007) | $ (253,038) | $ (150,202) |
Condensed Consolidated Stateme6
Condensed Consolidated Statements of Cash Flows - USD ($) $ in Thousands | 9 Months Ended | |
Sep. 30, 2016 | Sep. 30, 2015 | |
Operating activities | ||
Net loss | $ (252,969) | $ (150,252) |
Adjustments to reconcile net loss to net cash provided by (used in) operating activities | ||
Depreciation and amortization | 43,480 | 15,194 |
Stock-based compensation | 103,841 | 79,473 |
Amortization of premium on investments, net | 339 | 1,712 |
Other operating activities | 2,884 | 1,610 |
Amortization of debt discount | 13,587 | 0 |
Changes in operating assets and liabilities | ||
Accounts receivable | (8,338) | (45,796) |
Prepaid content acquisition costs | (100,524) | (167) |
Prepaid expenses and other assets | (12,655) | (6,397) |
Accounts payable, accrued and other current liabilities | (4,990) | 29,601 |
Accrued content acquisition costs | 8,875 | 89,423 |
Accrued compensation | 10,370 | 4,333 |
Other long-term liabilities | 598 | 1,500 |
Deferred revenue | 12,032 | 7,689 |
Reimbursement of cost of leasehold improvements | 4,397 | 1,014 |
Net cash provided by (used in) operating activities | (179,073) | 28,937 |
Investing activities | ||
Purchases of property and equipment | (46,400) | (21,336) |
Internal-use software costs | (22,339) | (5,997) |
Changes in restricted cash | (250) | 0 |
Purchases of investments | (12,413) | (138,721) |
Proceeds from maturities of investments | 34,816 | 179,799 |
Proceeds from sale of investments | 3,507 | 41,317 |
Payments related to acquisitions, net of cash acquired | (676) | (23,028) |
Net cash provided by (used in) investing activities | (43,755) | 32,034 |
Financing activities | ||
Borrowings under debt arrangements | 90,000 | 0 |
Proceeds from employee stock purchase plan | 6,395 | 5,089 |
Proceeds from exercise of stock options | 3,011 | 3,718 |
Payment of debt issuance costs | (32) | 0 |
Tax payments from net share settlements of restricted stock units | (3,126) | (2,295) |
Net cash provided by financing activities | 96,248 | 6,512 |
Effect of exchange rate changes on cash and cash equivalents | (392) | (459) |
Net increase (decrease) in cash and cash equivalents | (126,972) | 67,024 |
Cash and cash equivalents at beginning of period | 334,667 | 175,957 |
Cash and cash equivalents at end of period | 207,695 | 242,981 |
Supplemental disclosures of cash flow information | ||
Cash paid during the period for interest | 3,336 | 343 |
Purchases of property and equipment recorded in accounts payable and accrued liabilities | $ 8,321 | $ 1,328 |
Description of Business and Bas
Description of Business and Basis of Presentation | 9 Months Ended |
Sep. 30, 2016 | |
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 Plus. 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. Ticketing Service 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. We completed the acquisition of Ticketfly on October 31, 2015. 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 interim unaudited condensed consolidated financial statements and accompanying notes have been prepared in accordance with United States generally accepted accounting principles ("U.S. GAAP") along with the instructions to Form 10-Q and Article 10 of Securities and Exchange Commission ("SEC") Regulation S-X, and include the accounts of Pandora and our wholly owned subsidiaries. All intercompany balances and transactions have been eliminated in consolidation. In the opinion of our management, the interim unaudited condensed consolidated financial statements include all adjustments, which include only normal recurring adjustments, necessary for the fair presentation of our financial position for the periods presented. These interim unaudited condensed consolidated financial statements are not necessarily indicative of the results expected for the full fiscal year or for any subsequent period and should be read in conjunction with the audited consolidated financial statements and related notes included in our Annual Report on Form 10-K for the year ended December 31, 2015. Certain changes in presentation have been made to conform the prior period presentation to current period reporting. 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 condensed consolidated statements of cash flows. We have also reclassified internal-use software costs from the purchases of property and equipment line item to the internal-use software costs line item of our condensed consolidated statements of cash flows. We have also reclassified prepaid content acquisition costs from the prepaid expenses and other assets line item to the prepaid content acquisition costs line item of our condensed consolidated balance sheets and our condensed consolidated statements of cash flows. Lastly, we have reclassified interest expense from the other income (expense), net line item to the interest expense line item of our condensed consolidated statements of operations. 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 content acquisition costs, amortization of minimum guarantees under content acquisition agreements, selling prices for elements sold in multiple-element arrangements, the allowance for doubtful accounts, the fair value of stock options, market stock units ("MSUs"), stock-settled performance-based RSUs ("PSUs") and the Employee Stock Purchase Plan ("ESPP"), the provision for (benefit from) income taxes and the impact of forfeitures on stock-based compensation. To the extent there are material differences between these estimates, judgments |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 9 Months Ended |
Sep. 30, 2016 | |
Accounting Policies [Abstract] | |
Summary of Significant Accounting Policies | Summary of Significant Accounting Policies Other than discussed below, there have been no material changes to our significant accounting policies as compared to those described in our Annual Report on Form 10-K for the year ended December 31, 2015. Prepaid Content Acquisition Costs Prepaid content acquisition costs are primarily comprised of minimum guarantees under content acquisition agreements. From November 2015 through September 2016, we signed direct license agreements for recorded music with major and independent labels, distributors and publishers. Certain of these license agreements include minimum guarantee payments, some of which are paid in advance. These minimum guarantees may take the form of either a contractually obligated minimum over a specified period of time that requires a true-up payment at the end of the specified period if the cumulative payments have not met or exceeded the specified minimum, or cash advance payments made at the beginning of, or at intervals during, the specified period, which cash payments are then recoupable against content acquisition costs over the specified period. On a quarterly basis, we record the greater of the cumulative actual content acquisition costs incurred or the cumulative minimum guarantee based on forecasted usage for the minimum guarantee period. The minimum guarantee period is the period of time that the minimum guarantee relates to, as specified in each agreement, which may be annual or a longer period. The cumulative minimum guarantee, based on forecasted usage considers factors such as listening hours, revenue, subscribers and other terms of each agreement that impact our expected attainment or recoupment of the minimum guarantees on a non-straight line basis. Concentration of Credit Risk For the three and nine months ended September 30, 2015 and 2016 , we had no customers that accounted for more than 10% of our total revenue. As of December 31, 2015 and September 30, 2016 , we had no customers that accounted for more than 10% of our total accounts receivable. Recently Issued Accounting Standards In March 2016, the Financial Accounting Standards Board ("the FASB") issued Accounting Standards Update No. 2016-09, Compensation - Stock Compensation (Topic 718) ("ASU 2016-09"). ASU 2016-09 requires all income tax effects of awards to be recognized in the income statement when the awards vest or are settled. Additionally, it allows an employer to repurchase more of an employee's shares for tax withholding purposes without triggering liability accounting and to make a policy election to account for forfeitures as they occur. The guidance is effective for fiscal years beginning after December 15, 2016, and interim periods within that fiscal year, although early adoption is permitted. We are currently evaluating implementation methods and the effect that implementation of this standard will have on our consolidated financial statements upon adoption. In August 2014, the FASB issued Accounting Standards Update No. 2014-15, Going Concern (Subtopic 205-40) ("ASU 2014-15"). ASU 2014-15 requires management of all entities to evaluate whether there are conditions and events that raise substantial doubt about the entity’s ability to continue as a going concern within one year after the financial statements are issued (or available to be issued when applicable). The guidance is effective for fiscal years beginning after December 15, 2016 and for interim periods within that fiscal year. We do not expect the adoption of this guidance to have a material effect on our consolidated financial statements. 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. Under the guidance, revenue is recognized when a company transfers promised goods or services to customers in an amount that reflects the consideration to which the company expects to be entitled in exchange for those goods or services. The standard may be effective for public entities with annual and interim reporting periods beginning after December 15, 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. In February 2016, the FASB issued Accounting Standards Update No. 2016-02, Leases (Topic 842) |
Cash, Cash Equivalents and Inve
Cash, Cash Equivalents and Investments | 9 Months Ended |
Sep. 30, 2016 | |
Cash and Cash Equivalents [Abstract] | |
Cash, Cash Equivalents and Investments | Cash, Cash Equivalents and Investments Cash, cash equivalents and investments consisted of the following: As of As of (in thousands) Cash and cash equivalents Cash $ 104,361 $ 130,132 Money market funds 180,021 33,446 Commercial paper 31,089 35,904 Corporate debt securities 2,000 8,213 U.S. government and government agency debt securities 17,196 — Total cash and cash equivalents $ 334,667 $ 207,695 Short-term investments Commercial paper $ 4,792 $ 1,000 Corporate debt securities 31,052 49,052 Total short-term investments $ 35,844 $ 50,052 Long-term investments Corporate debt securities $ 46,369 $ 6,273 Total long-term investments $ 46,369 $ 6,273 Cash, cash equivalents and investments $ 416,880 $ 264,020 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 summarize our available-for-sale securities’ adjusted cost, gross unrealized gains, gross unrealized losses and fair value by significant investment category as of December 31, 2015 and September 30, 2016 . As of December 31, 2015 Adjusted Cost Unrealized Gains Unrealized Losses Fair Value (in thousands) 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 As of September 30, 2016 Adjusted Cost Unrealized Gains Unrealized Losses Fair Value (in thousands) Money market funds $ 33,446 $ — $ — $ 33,446 Commercial paper 36,904 — — 36,904 Corporate debt securities 63,531 26 (19 ) 63,538 Total cash equivalents and marketable securities $ 133,881 $ 26 $ (19 ) $ 133,888 The following table presents available-for-sale investments by contractual maturity date as of December 31, 2015 and September 30, 2016 . 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 As of September 30, 2016 Adjusted Cost Fair Value (in thousands) Due in one year or less $ 127,629 $ 127,615 Due after one year through three years 6,252 6,273 Total $ 133,881 $ 133,888 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, 2015 and September 30, 2016 . 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) 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 ) As of September 30, 2016 Twelve Months or Less More than Twelve Months Total Fair Gross Unrealized Losses Fair Gross Unrealized Losses Fair Gross Unrealized Losses (in thousands) Corporate debt securities $ 33,240 $ (12 ) $ 8,843 $ (7 ) $ 42,083 $ (19 ) Total $ 33,240 $ (12 ) $ 8,843 $ (7 ) $ 42,083 $ (19 ) 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 September 30, 2016 were primarily a result of unfavorable changes in interest rates subsequent to the initial purchase of these securities. As of September 30, 2016 , we owned 32 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 September 30, 2016 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 three and nine months ended September 30, 2016 , we did no t recognize any impairment charges. During the three and nine months ended September 30, 2016 , we had proceeds from the sale of available-for-sale securities of $3.0 million and $3.5 million |
Fair Value
Fair Value | 9 Months Ended |
Sep. 30, 2016 | |
Fair Value Disclosures [Abstract] | |
Fair Value | Fair Value We record cash equivalents and short-term 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, 2015 and September 30, 2016 : 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 As of September 30, 2016 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 $ 33,446 $ — $ 33,446 Commercial paper — 36,904 36,904 Corporate debt securities — 63,538 63,538 Total assets measured at fair value $ 33,446 $ 100,442 $ 133,888 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 short-term 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, 2015 and September 30, 2016 , we held no Level 3 assets or liabilities. Refer to Note 7, "Debt Instruments," for the carrying amount and estimated fair value of our convertible senior notes, which are not recorded at fair value as of September 30, 2016 |
Commitments and Contingencies
Commitments and Contingencies | 9 Months Ended |
Sep. 30, 2016 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | Commitments and Contingencies Minimum Guarantees - Content Acquisition Costs Certain of our content acquisition agreements contain minimum guarantees, and require that we make upfront minimum guarantee payments. As of September 30, 2016 , we have future minimum guarantee commitments of $780.1 million , of which $18.1 million will be paid in the three months ended December 31, 2016, $354.9 million will be paid in 2017 and the remainder will be paid thereafter. On a quarterly basis, we record the greater of the cumulative actual content acquisition costs incurred or the cumulative minimum guarantee based on forecasted usage for the minimum guarantee period. The minimum guarantee period is the period of time that the minimum guarantee relates to, as specified in each agreement, which may be annual or a longer period. The cumulative minimum guarantee, based on forecasted usage considers factors such as listening hours, revenue, subscribers and other terms of each agreement that impact our expected attainment or recoupment of the minimum guarantees on a non-straight line basis. 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. Pre-1972 copyright litigation On April 17, 2014, UMG Recordings, Inc., Sony Music Entertainment, Capitol Records, LLC, Warner Music Group Corp. and ABKCO Music and Records, Inc. filed suit against Pandora Media Inc. in the Supreme Court of the State of New York. The complaint claims common law copyright infringement and unfair competition arising from allegations that Pandora owes royalties for the public performance of sound recordings recorded prior to February 15, 1972. 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 in 2016 based on the allocation of pre-1972 listening throughout the remainder of the settlement period. The pre-72 settlement further required that we make four additional installment payments of $7.5 million each. The first was paid in December 2015, the second was paid in March 2016, the third was paid in June 2016 and the final installment was paid in September 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. The Ninth Circuit has scheduled oral argument on December 8, 2016. 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 Pandora Media, Inc. in the federal district court for the Northern District of Illinois. 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 a 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 Pandora Media, Inc. in the federal district court for the District of New Jersey. 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. On December 29, 2015, Pandora filed a motion to dismiss and motion to stay the case pending the Second Circuit’s decision. On March 16, 2016, the district court granted the motion to stay. The motion to dismiss remains pending. On September 7, 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 California. The complaint alleges common law copyright infringement, violation of the California Civil Code, misappropriation, unfair business practices and conversion arising from allegations that we owe royalties for the public performance of sound recordings recorded prior to February 15, 1972. On October 5, 2016, the district court transferred the case to the federal district court for the Northern District of California. On October 21, 2016, 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. The outcome of any litigation is inherently uncertain. Except as noted above, 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 rates for content acquisition costs 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. |
Goodwill and Intangible Assets
Goodwill and Intangible Assets | 9 Months Ended |
Sep. 30, 2016 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Goodwill and Intangible Assets | Goodwill and Intangible Assets During the nine months ended September 30, 2016 , we completed a business combination that was not material to our condensed consolidated financial statements. During the nine months ended September 30, 2016 , we made an adjustment to goodwill and deferred tax liabilities as a result of the impact of final pre-acquisition Ticketfly income tax returns filed. The changes in the carrying amount of goodwill for the nine months ended September 30, 2016 , are as follows: Goodwill (in thousands) Balance as of December 31, 2015 $ 303,875 Goodwill resulting from business combination and purchase price adjustments 2,831 Balance as of September 30, 2016 $ 306,706 The following summarizes information regarding the gross carrying amounts and accumulated amortization of intangible assets. As of December 31, 2015 As of September 30, 2016 Gross Carrying Amount Accumulated Amortization Net Carrying Value Gross Carrying Amount Accumulated Amortization Net Carrying Value (in thousands) (in thousands) Finite-lived intangible assets Patents $ 8,030 $ (1,824 ) $ 6,206 $ 8,030 $ (2,373 ) $ 5,657 Developed technology 56,050 (1,265 ) 54,785 56,165 (10,515 ) 45,650 Customer relationships - clients 37,300 (777 ) 36,523 37,399 (4,309 ) 33,090 Customer relationships - users 1,940 (318 ) 1,622 1,940 (1,046 ) 894 Trade names 11,720 (304 ) 11,416 11,735 (1,654 ) 10,081 Total finite-lived intangible assets $ 115,040 $ (4,488 ) $ 110,552 $ 115,269 $ (19,897 ) $ 95,372 Indefinite-lived intangible assets FCC license - Broadcast Radio $ 193 $ — $ 193 $ 193 $ — $ 193 Total intangible assets $ 115,233 $ (4,488 ) $ 110,745 $ 115,462 $ (19,897 ) $ 95,565 Amortization expense of intangible assets was $0.4 million and $5.1 million for the three months ended September 30, 2015 and 2016 . Amortization expense of intangible assets was $0.8 million and $15.4 million for the nine months ended September 30, 2015 and 2016 . The following is a schedule of future amortization expense related to finite-lived intangible assets as of September 30, 2016 . As of (in thousands) Remainder of 2016 $ 5,138 2017 20,116 2018 17,654 2019 17,129 2020 15,896 Thereafter 19,439 Total future amortization expense $ 95,372 |
Debt Instruments
Debt Instruments | 9 Months Ended |
Sep. 30, 2016 | |
Debt Disclosure [Abstract] | |
Debt Instruments | Debt Instruments Long-term debt, net consisted of the following: As of December 31, As of September 30, 2015 2016 (in thousands) 1.75% convertible senior notes due 2020 $ 345,000 $ 345,000 Credit facility — 90,000 Unamortized discount and deferred issuance costs (110,423 ) (97,571 ) Long-term debt, net $ 234,577 $ 337,429 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 as further described below; 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: Three months ended Nine months ended 2016 (in thousands except for effective interest rate) Effective interest rate 10.18 % 10.18 % Contractually stated interest expense $ 1,505 $ 4,536 Amortization of discount $ 4,649 $ 13,587 The capped call transactions are expected 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. The total estimated fair value of the Notes as of September 30, 2016 was $362.1 million . The fair value was determined using a methodology that combines direct market observations with quantitative pricing models to generate evaluated prices. We consider the fair value of the Notes to be a Level 2 measurement due to the limited trading activity of the Notes. The closing price of our common stock was $14.33 on September 30, 2016 , which was less than the initial conversion price for the Notes of approximately $16.42 per share. As such, the if-converted value of the Notes was less than the principal amount of $345.0 million . Credit Facility We are party to a $120.0 million credit facility with a syndicate of financial institutions, which expires on September 12, 2018. In September 2016, we borrowed $90.0 million from the credit facility to enhance our working capital position. The amount borrowed is included in long-term debt on our balance sheet. Interest is payable quarterly at the applicable annual interest rate of 3.81% through September 2017. The applicable interest rate will be adjusted in September 2017. As of September 30, 2016 , we had $1.2 million in letters of credit outstanding and $28.8 million of available borrowing capacity under the credit facility. We are in compliance with all financial covenants associated with the credit facility as of September 30, 2016 |
Stock-based Compensation Plans
Stock-based Compensation Plans and Awards | 9 Months Ended |
Sep. 30, 2016 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |
Stock-based Compensation Plans and Awards | Stock-based Compensation Plans and Awards ESPP The ESPP allows eligible employees to purchase shares of our common stock through payroll deductions of up to 15% of their eligible compensation. The ESPP provides for six -month offering periods, commencing in February and August of each year. 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 following assumptions for the Black-Scholes option pricing model were used to determine the per-share fair value of shares to be granted under the ESPP: Three months ended September 30, Nine months ended September 30, 2015 2016 2015 2016 Expected life (in years) 0.5 0.5 0.5 0.5 Risk-free interest rate 0.07 - 0.24% 0.41 - 0.44% 0.05 - 0.24% 0.24 - 0.44% Expected volatility 29 - 42% 41 - 52% 29 - 42% 41 - 52% Expected dividend yield 0 % 0 % 0 % 0 % During the three months ended September 30, 2015 and 2016 , we withheld $1.8 million and $2.6 million in contributions from employees and recognized $0.6 million and $0.9 million of stock-based compensation expense related to the ESPP, respectively. During the nine months ended September 30, 2015 and 2016 , we withheld $5.1 million and $6.4 million in contributions from employees and recognized $1.9 million and $2.3 million of stock-based compensation expense related to the ESPP, respectively. In the three months ended September 30, 2015 and 2016 , 255,432 and 643,562 shares of common stock were issued under the ESPP. In the nine months ended September 30, 2015 and 2016 , 538,398 and 1,254,910 shares of common stock were issued under the ESPP. Employee Stock-Based Awards Our 2011 Equity Incentive Plan (the "2011 Plan") provides for the issuance of stock options, restricted stock units and other stock-based awards to our employees. The 2011 Plan is administered by the compensation committee of our board of directors. Stock options We measure stock-based compensation expense for stock options at the grant date fair value of the award and recognize expense on a straight-line basis over the requisite service period, which is generally the vesting period. We estimate the fair value of stock options using the Black-Scholes option-pricing model. During the three months ended September 30, 2015 and 2016 , we recorded stock-based compensation expense from stock options of approximately $2.3 million and $2.2 million . During the nine months ended September 30, 2015 and 2016 , we recorded stock-based compensation expense from stock options of approximately $7.5 million and $11.3 million . There were no options granted in the three and nine months ended September 30, 2016 . Restricted stock units ("RSUs") The fair value of RSUs is expensed ratably over the vesting period. RSUs typically have an initial annual cliff vest and then vest quarterly thereafter over the service period, which is generally four years . During the three months ended September 30, 2015 and 2016 , we recorded stock-based compensation expense from RSUs of approximately $25.4 million and $28.2 million . During the nine months ended September 30, 2015 and 2016 , we recorded stock-based compensation expense from RSUs of approximately $69.1 million and $87.2 million . MSUs In March 2015, the compensation committee of the board of directors granted performance awards consisting of market stock units to certain key executives under our 2011 Plan. MSUs granted in March 2015 are earned as a function of Pandora’s total stock return ("TSR") 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 total potential 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 nine months ended September 30, 2015 we granted 776,000 MSUs at a total grant-date fair value of $4.3 million . There were no MSUs granted in the three or nine months ended September 30, 2016 . During the three months ended September 30, 2015 and 2016 , we recorded stock-based compensation expense from MSUs of approximately $0.5 million and $0.2 million . During the nine months ended September 30, 2015 and 2016 , we recorded stock-based compensation expense from MSUs of approximately $1.0 million and $0.6 million . In February 2016, the compensation committee of the board of directors certified the results of the One-Year Performance Period of the 2015 MSU grant, which concluded December 31, 2015. During the One-Year Performance Period, our relative TSR declined 26 percentage points relative to the Russell 2000 Index TSR for the period, which resulted in the vesting of the One-Year Performance Period at 22% of the one-third vesting opportunity for the period. PSUs In April 2016, the compensation committee of the board of directors granted 2016 Performance Awards consisting of stock-settled performance-based RSUs to certain key executives under our 2011 Plan. PSUs granted in April 2016 have a vesting period that includes a four year service period, during which one fourth of the awards will vest after one year and the remainder will vest quarterly thereafter. The PSUs are earned when our trailing average ninety -day stock price is equal to or greater than $20.00 . If the trailing average ninety -day stock price does not equal or exceed $20.00 on the applicable vesting date, then the portion of the award that was scheduled to vest on such vesting date shall not vest but shall vest on the next vesting date on which the trailing average ninety -day stock price equals or exceeds $20.00 . Any portion of the award that remains unvested as of the final vesting date shall be canceled and forfeited. We have determined the grant-date fair value of the PSUs granted in April 2016 using a Monte Carlo simulation performed by a third-party valuation firm. We recognize stock-based compensation for the PSUs over the requisite service period, which is approximately four years, using the accelerated attribution method. During the nine months ended September 30, 2016 we granted 1,725,000 PSUs at a total grant-date fair value of $8.7 million . There were no PSUs granted in the three or nine months ended September 30, 2015 . During the three and nine months ended September 30, 2016 , we recorded stock-based compensation expense from PSUs of approximately $1.3 million and $2.4 million . There was no stock-based compensation expense from PSUs in the three or nine months ended September 30, 2015 . Stock-based Compensation Expense Stock-based compensation expense related to all employee and non-employee stock-based awards was as follows: Three months ended Nine months ended 2015 2016 2015 2016 (in thousands) (in thousands) Stock-based compensation expense Cost of revenue - Other $ 1,427 $ 1,538 $ 4,040 $ 4,559 Cost of revenue - Ticketing service — 27 — 154 Product development 6,189 7,347 16,148 23,091 Sales and marketing 13,732 14,932 38,403 43,673 General and administrative 7,446 8,910 20,882 32,364 Total stock-based compensation expense $ 28,794 $ 32,754 $ 79,473 $ 103,841 In the nine months ended September 30, 2016 , we recorded stock-based compensation expense of $6.8 million |
Net Loss Per Share
Net Loss Per Share | 9 Months Ended |
Sep. 30, 2016 | |
Earnings Per Share [Abstract] | |
Net Loss Per Share | Net Loss Per Share Basic net loss per share is computed by dividing the net loss by the weighted-average number of shares of common stock outstanding during the period. Diluted net loss per share is computed by giving effect to all potential shares of common stock, including stock options, restricted stock units, market stock units and performance-based RSUs, to the extent dilutive. Basic and diluted net loss per share were the same for the three and nine months ended September 30, 2015 and 2016 , 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: Three months ended September 30, Nine months ended September 30, 2015 2016 2015 2016 (in thousands except per share amounts) (in thousands except per share amounts) Numerator Net loss $ (85,930 ) $ (61,534 ) $ (150,252 ) $ (252,969 ) Denominator Weighted-average common shares outstanding used in computing basic and diluted net loss per share 212,760 232,139 211,487 229,524 Net loss per share, basic and diluted $ (0.40 ) $ (0.27 ) $ (0.71 ) $ (1.10 ) 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 September 30, 2015 2016 (in thousands) Options to purchase common stock 10,492 9,665 Restricted stock units 16,653 23,554 Performance awards* 776 2,315 Total common stock equivalents 27,921 35,534 *Includes potential common shares outstanding for MSUs and PSUs 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 September 30, 2016 , the conversion feature of the Notes was anti-dilutive. |
Summary of Significant Accoun16
Summary of Significant Accounting Policies (Policies) | 9 Months Ended |
Sep. 30, 2016 | |
Accounting Policies [Abstract] | |
Basis of Presentation | The interim unaudited condensed consolidated financial statements and accompanying notes have been prepared in accordance with United States generally accepted accounting principles ("U.S. GAAP") along with the instructions to Form 10-Q and Article 10 of Securities and Exchange Commission ("SEC") Regulation S-X, and include the accounts of Pandora and our wholly owned subsidiaries. |
Consolidation | All intercompany balances and transactions have been eliminated in consolidation. In the opinion of our management, the interim unaudited condensed consolidated financial statements include all adjustments, which include only normal recurring adjustments, necessary for the fair presentation of our financial position for the periods presented. These interim unaudited condensed consolidated financial statements are not necessarily indicative of the results expected for the full fiscal year or for any subsequent period and should be read in conjunction with the audited consolidated financial statements and related notes included in our Annual Report on Form 10-K for the year ended December 31, 2015. |
Reclassification | Certain changes in presentation have been made to conform the prior period presentation to current period reporting. 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 condensed consolidated statements of cash flows. We have also reclassified internal-use software costs from the purchases of property and equipment line item to the internal-use software costs line item of our condensed consolidated statements of cash flows. We have also reclassified prepaid content acquisition costs from the prepaid expenses and other assets line item to the prepaid content acquisition costs line item of our condensed consolidated balance sheets and our condensed consolidated statements of cash flows. Lastly, we have reclassified interest expense from the other income (expense), net line item to the interest expense line item of our condensed consolidated statements of operations. |
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 content acquisition costs, amortization of minimum guarantees under content acquisition agreements, selling prices for elements sold in multiple-element arrangements, the allowance for doubtful accounts, the fair value of stock options, market stock units ("MSUs"), stock-settled performance-based RSUs ("PSUs") and the Employee Stock Purchase Plan ("ESPP"), the provision for (benefit from) income taxes and the impact of forfeitures on stock-based compensation. 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. |
Prepaid Content Acquisition Costs | Prepaid content acquisition costs are primarily comprised of minimum guarantees under content acquisition agreements. From November 2015 through September 2016, we signed direct license agreements for recorded music with major and independent labels, distributors and publishers. Certain of these license agreements include minimum guarantee payments, some of which are paid in advance. These minimum guarantees may take the form of either a contractually obligated minimum over a specified period of time that requires a true-up payment at the end of the specified period if the cumulative payments have not met or exceeded the specified minimum, or cash advance payments made at the beginning of, or at intervals during, the specified period, which cash payments are then recoupable against content acquisition costs over the specified period. On a quarterly basis, we record the greater of the cumulative actual content acquisition costs incurred or the cumulative minimum guarantee based on forecasted usage for the minimum guarantee period. The minimum guarantee period is the period of time that the minimum guarantee relates to, as specified in each agreement, which may be annual or a longer period. The cumulative minimum guarantee, based on forecasted usage considers factors such as listening hours, revenue, subscribers and other terms of each agreement that impact our expected attainment or recoupment of the minimum guarantees on a non-straight line basis. |
Concentration of Credit Risk | For the three and nine months ended September 30, 2015 and 2016 , we had no customers that accounted for more than 10% of our total revenue. As of December 31, 2015 and September 30, 2016 , we had no |
Recently Issued Accounting Standards | In March 2016, the Financial Accounting Standards Board ("the FASB") issued Accounting Standards Update No. 2016-09, Compensation - Stock Compensation (Topic 718) ("ASU 2016-09"). ASU 2016-09 requires all income tax effects of awards to be recognized in the income statement when the awards vest or are settled. Additionally, it allows an employer to repurchase more of an employee's shares for tax withholding purposes without triggering liability accounting and to make a policy election to account for forfeitures as they occur. The guidance is effective for fiscal years beginning after December 15, 2016, and interim periods within that fiscal year, although early adoption is permitted. We are currently evaluating implementation methods and the effect that implementation of this standard will have on our consolidated financial statements upon adoption. In August 2014, the FASB issued Accounting Standards Update No. 2014-15, Going Concern (Subtopic 205-40) ("ASU 2014-15"). ASU 2014-15 requires management of all entities to evaluate whether there are conditions and events that raise substantial doubt about the entity’s ability to continue as a going concern within one year after the financial statements are issued (or available to be issued when applicable). The guidance is effective for fiscal years beginning after December 15, 2016 and for interim periods within that fiscal year. We do not expect the adoption of this guidance to have a material effect on our consolidated financial statements. 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. Under the guidance, revenue is recognized when a company transfers promised goods or services to customers in an amount that reflects the consideration to which the company expects to be entitled in exchange for those goods or services. The standard may be effective for public entities with annual and interim reporting periods beginning after December 15, 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. In February 2016, the FASB issued Accounting Standards Update No. 2016-02, Leases (Topic 842) |
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. |
Cash, Cash Equivalents and In17
Cash, Cash Equivalents and Investments (Tables) | 9 Months Ended |
Sep. 30, 2016 | |
Cash and Cash Equivalents [Abstract] | |
Schedule of cash, cash equivalents and investments | Cash, cash equivalents and investments consisted of the following: As of As of (in thousands) Cash and cash equivalents Cash $ 104,361 $ 130,132 Money market funds 180,021 33,446 Commercial paper 31,089 35,904 Corporate debt securities 2,000 8,213 U.S. government and government agency debt securities 17,196 — Total cash and cash equivalents $ 334,667 $ 207,695 Short-term investments Commercial paper $ 4,792 $ 1,000 Corporate debt securities 31,052 49,052 Total short-term investments $ 35,844 $ 50,052 Long-term investments Corporate debt securities $ 46,369 $ 6,273 Total long-term investments $ 46,369 $ 6,273 Cash, cash equivalents and investments $ 416,880 $ 264,020 |
Summary of available-for-sale securities' adjusted cost, gross unrealized gains, gross unrealized losses and fair value by significant investment category | The following tables summarize our available-for-sale securities’ adjusted cost, gross unrealized gains, gross unrealized losses and fair value by significant investment category as of December 31, 2015 and September 30, 2016 . As of December 31, 2015 Adjusted Cost Unrealized Gains Unrealized Losses Fair Value (in thousands) 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 As of September 30, 2016 Adjusted Cost Unrealized Gains Unrealized Losses Fair Value (in thousands) Money market funds $ 33,446 $ — $ — $ 33,446 Commercial paper 36,904 — — 36,904 Corporate debt securities 63,531 26 (19 ) 63,538 Total cash equivalents and marketable securities $ 133,881 $ 26 $ (19 ) $ 133,888 |
Schedule of available-for-sale investments by contractual maturity date | The following table presents available-for-sale investments by contractual maturity date as of December 31, 2015 and September 30, 2016 . 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 As of September 30, 2016 Adjusted Cost Fair Value (in thousands) Due in one year or less $ 127,629 $ 127,615 Due after one year through three years 6,252 6,273 Total $ 133,881 $ 133,888 |
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, 2015 and September 30, 2016 . 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) 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 ) As of September 30, 2016 Twelve Months or Less More than Twelve Months Total Fair Gross Unrealized Losses Fair Gross Unrealized Losses Fair Gross Unrealized Losses (in thousands) Corporate debt securities $ 33,240 $ (12 ) $ 8,843 $ (7 ) $ 42,083 $ (19 ) Total $ 33,240 $ (12 ) $ 8,843 $ (7 ) $ 42,083 $ (19 ) |
Fair Value (Tables)
Fair Value (Tables) | 9 Months Ended |
Sep. 30, 2016 | |
Fair Value Disclosures [Abstract] | |
Schedule of fair value of financial assets and liabilities inputs | The fair value of these financial assets and liabilities was determined using the following inputs at December 31, 2015 and September 30, 2016 : 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 As of September 30, 2016 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 $ 33,446 $ — $ 33,446 Commercial paper — 36,904 36,904 Corporate debt securities — 63,538 63,538 Total assets measured at fair value $ 33,446 $ 100,442 $ 133,888 |
Goodwill and Intangible Assets
Goodwill and Intangible Assets (Tables) | 9 Months Ended |
Sep. 30, 2016 | |
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 nine months ended September 30, 2016 , are as follows: Goodwill (in thousands) Balance as of December 31, 2015 $ 303,875 Goodwill resulting from business combination and purchase price adjustments 2,831 Balance as of September 30, 2016 $ 306,706 |
Summary of gross carrying amounts and accumulated amortization of intangible assets - finite lived | The following summarizes information regarding the gross carrying amounts and accumulated amortization of intangible assets. As of December 31, 2015 As of September 30, 2016 Gross Carrying Amount Accumulated Amortization Net Carrying Value Gross Carrying Amount Accumulated Amortization Net Carrying Value (in thousands) (in thousands) Finite-lived intangible assets Patents $ 8,030 $ (1,824 ) $ 6,206 $ 8,030 $ (2,373 ) $ 5,657 Developed technology 56,050 (1,265 ) 54,785 56,165 (10,515 ) 45,650 Customer relationships - clients 37,300 (777 ) 36,523 37,399 (4,309 ) 33,090 Customer relationships - users 1,940 (318 ) 1,622 1,940 (1,046 ) 894 Trade names 11,720 (304 ) 11,416 11,735 (1,654 ) 10,081 Total finite-lived intangible assets $ 115,040 $ (4,488 ) $ 110,552 $ 115,269 $ (19,897 ) $ 95,372 Indefinite-lived intangible assets FCC license - Broadcast Radio $ 193 $ — $ 193 $ 193 $ — $ 193 Total intangible assets $ 115,233 $ (4,488 ) $ 110,745 $ 115,462 $ (19,897 ) $ 95,565 |
Summary of gross carrying amounts of intangible assets - indefinite lived | The following summarizes information regarding the gross carrying amounts and accumulated amortization of intangible assets. As of December 31, 2015 As of September 30, 2016 Gross Carrying Amount Accumulated Amortization Net Carrying Value Gross Carrying Amount Accumulated Amortization Net Carrying Value (in thousands) (in thousands) Finite-lived intangible assets Patents $ 8,030 $ (1,824 ) $ 6,206 $ 8,030 $ (2,373 ) $ 5,657 Developed technology 56,050 (1,265 ) 54,785 56,165 (10,515 ) 45,650 Customer relationships - clients 37,300 (777 ) 36,523 37,399 (4,309 ) 33,090 Customer relationships - users 1,940 (318 ) 1,622 1,940 (1,046 ) 894 Trade names 11,720 (304 ) 11,416 11,735 (1,654 ) 10,081 Total finite-lived intangible assets $ 115,040 $ (4,488 ) $ 110,552 $ 115,269 $ (19,897 ) $ 95,372 Indefinite-lived intangible assets FCC license - Broadcast Radio $ 193 $ — $ 193 $ 193 $ — $ 193 Total intangible assets $ 115,233 $ (4,488 ) $ 110,745 $ 115,462 $ (19,897 ) $ 95,565 |
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 September 30, 2016 . As of (in thousands) Remainder of 2016 $ 5,138 2017 20,116 2018 17,654 2019 17,129 2020 15,896 Thereafter 19,439 Total future amortization expense $ 95,372 |
Debt Instruments (Tables)
Debt Instruments (Tables) | 9 Months Ended |
Sep. 30, 2016 | |
Debt Disclosure [Abstract] | |
Schedule of long-term debt | Long-term debt, net consisted of the following: As of December 31, As of September 30, 2015 2016 (in thousands) 1.75% convertible senior notes due 2020 $ 345,000 $ 345,000 Credit facility — 90,000 Unamortized discount and deferred issuance costs (110,423 ) (97,571 ) Long-term debt, net $ 234,577 $ 337,429 |
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: Three months ended Nine months ended 2016 (in thousands except for effective interest rate) Effective interest rate 10.18 % 10.18 % Contractually stated interest expense $ 1,505 $ 4,536 Amortization of discount $ 4,649 $ 13,587 |
Stock-based Compensation Plan21
Stock-based Compensation Plans and Awards (Tables) | 9 Months Ended |
Sep. 30, 2016 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |
Schedule of assumptions used for determining the per-share fair value of shares granted under the ESPP | The following assumptions for the Black-Scholes option pricing model were used to determine the per-share fair value of shares to be granted under the ESPP: Three months ended September 30, Nine months ended September 30, 2015 2016 2015 2016 Expected life (in years) 0.5 0.5 0.5 0.5 Risk-free interest rate 0.07 - 0.24% 0.41 - 0.44% 0.05 - 0.24% 0.24 - 0.44% Expected volatility 29 - 42% 41 - 52% 29 - 42% 41 - 52% Expected dividend yield 0 % 0 % 0 % 0 % |
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: Three months ended Nine months ended 2015 2016 2015 2016 (in thousands) (in thousands) Stock-based compensation expense Cost of revenue - Other $ 1,427 $ 1,538 $ 4,040 $ 4,559 Cost of revenue - Ticketing service — 27 — 154 Product development 6,189 7,347 16,148 23,091 Sales and marketing 13,732 14,932 38,403 43,673 General and administrative 7,446 8,910 20,882 32,364 Total stock-based compensation expense $ 28,794 $ 32,754 $ 79,473 $ 103,841 |
Net Loss Per Share (Tables)
Net Loss Per Share (Tables) | 9 Months Ended |
Sep. 30, 2016 | |
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: Three months ended September 30, Nine months ended September 30, 2015 2016 2015 2016 (in thousands except per share amounts) (in thousands except per share amounts) Numerator Net loss $ (85,930 ) $ (61,534 ) $ (150,252 ) $ (252,969 ) Denominator Weighted-average common shares outstanding used in computing basic and diluted net loss per share 212,760 232,139 211,487 229,524 Net loss per share, basic and diluted $ (0.40 ) $ (0.27 ) $ (0.71 ) $ (1.10 ) |
Schedule of potential common shares outstanding 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 September 30, 2015 2016 (in thousands) Options to purchase common stock 10,492 9,665 Restricted stock units 16,653 23,554 Performance awards* 776 2,315 Total common stock equivalents 27,921 35,534 *Includes potential common shares outstanding for MSUs and PSUs |
Cash, Cash Equivalents and In23
Cash, Cash Equivalents and Investments - Schedule of Cash, Cash Equivalents and Investments (Details) - USD ($) $ in Thousands | Sep. 30, 2016 | Dec. 31, 2015 | Sep. 30, 2015 | Dec. 31, 2014 |
Cash, Cash Equivalents and Investments | ||||
Cash and cash equivalents | $ 207,695 | $ 334,667 | $ 242,981 | $ 175,957 |
Short-term investments | 50,052 | 35,844 | ||
Long-term investments | 6,273 | 46,369 | ||
Cash, cash equivalents and investments | 264,020 | 416,880 | ||
Cash | ||||
Cash, Cash Equivalents and Investments | ||||
Cash and cash equivalents | 130,132 | 104,361 | ||
Money market funds | ||||
Cash, Cash Equivalents and Investments | ||||
Cash and cash equivalents | 33,446 | 180,021 | ||
Commercial paper | ||||
Cash, Cash Equivalents and Investments | ||||
Cash and cash equivalents | 35,904 | 31,089 | ||
Short-term investments | 1,000 | 4,792 | ||
Corporate debt securities | ||||
Cash, Cash Equivalents and Investments | ||||
Cash and cash equivalents | 8,213 | 2,000 | ||
Short-term investments | 49,052 | 31,052 | ||
Long-term investments | 6,273 | 46,369 | ||
U.S. government and government agency debt securities | ||||
Cash, Cash Equivalents and Investments | ||||
Cash and cash equivalents | $ 0 | $ 17,196 |
Cash, Cash Equivalents and In24
Cash, Cash Equivalents and Investments - 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 | Sep. 30, 2016 | Dec. 31, 2015 |
Schedule of Available-for-sale Securities [Line Items] | ||
Adjusted Cost | $ 133,881 | $ 312,860 |
Unrealized Gains | 26 | 8 |
Unrealized Losses | (19) | (349) |
Fair Value | 133,888 | 312,519 |
Money market funds | ||
Schedule of Available-for-sale Securities [Line Items] | ||
Adjusted Cost | 33,446 | 180,021 |
Unrealized Gains | 0 | 0 |
Unrealized Losses | 0 | 0 |
Fair Value | 33,446 | 180,021 |
Commercial paper | ||
Schedule of Available-for-sale Securities [Line Items] | ||
Adjusted Cost | 36,904 | 35,881 |
Unrealized Gains | 0 | 0 |
Unrealized Losses | 0 | 0 |
Fair Value | 36,904 | 35,881 |
Corporate debt securities | ||
Schedule of Available-for-sale Securities [Line Items] | ||
Adjusted Cost | 63,531 | 79,760 |
Unrealized Gains | 26 | 8 |
Unrealized Losses | (19) | (347) |
Fair Value | $ 63,538 | 79,421 |
U.S. government and government agency debt securities | ||
Schedule of Available-for-sale Securities [Line Items] | ||
Adjusted Cost | 17,198 | |
Unrealized Gains | 0 | |
Unrealized Losses | (2) | |
Fair Value | $ 17,196 |
Cash, Cash Equivalents and In25
Cash, Cash Equivalents and Investments - Schedule of Available-for-sale Investments by Contractual Maturity Date (Details) - USD ($) $ in Thousands | Sep. 30, 2016 | Dec. 31, 2015 |
Adjusted Cost | ||
Due in one year or less | $ 127,629 | $ 266,205 |
Due after one year through three years | 6,252 | 46,655 |
Total | 133,881 | 312,860 |
Fair Value | ||
Due in one year or less | 127,615 | 266,150 |
Due after one year through three years | 6,273 | 46,369 |
Total | $ 133,888 | $ 312,519 |
Cash, Cash Equivalents and In26
Cash, Cash Equivalents and Investments - Summary of Available-for-sale Securities' Fair Value and Gross Unrealized Losses (Details) - USD ($) $ in Thousands | Sep. 30, 2016 | Dec. 31, 2015 |
Fair Value | ||
Twelve Months or Less | $ 33,240 | $ 81,045 |
More than Twelve Months | 8,843 | 8,531 |
Total | 42,083 | 89,576 |
Gross Unrealized Losses | ||
Twelve Months or Less | (12) | (295) |
More than Twelve Months | (7) | (54) |
Total | (19) | (349) |
Corporate debt securities | ||
Fair Value | ||
Twelve Months or Less | 33,240 | 64,804 |
More than Twelve Months | 8,843 | 8,531 |
Total | 42,083 | 73,335 |
Gross Unrealized Losses | ||
Twelve Months or Less | (12) | (293) |
More than Twelve Months | (7) | (54) |
Total | $ (19) | (347) |
U.S. government and government agency debt securities | ||
Fair Value | ||
Twelve Months or Less | 16,241 | |
More than Twelve Months | 0 | |
Total | 16,241 | |
Gross Unrealized Losses | ||
Twelve Months or Less | (2) | |
More than Twelve Months | 0 | |
Total | $ (2) |
Cash, Cash Equivalents and In27
Cash, Cash Equivalents and Investments - Narrative (Details) | 3 Months Ended | 9 Months Ended | |
Sep. 30, 2016USD ($)security | Sep. 30, 2016USD ($)security | Sep. 30, 2015USD ($) | |
Cash and Cash Equivalents [Abstract] | |||
Number of owned securities that were in an unrealized loss position | security | 32 | 32 | |
Unrealized losses deemed to be other-than-temporary, recognized | $ 0 | $ 0 | |
Proceeds from sale of investments | $ 3,000,000 | $ 3,507,000 | $ 41,317,000 |
Fair Value - Schedule of Fair V
Fair Value - Schedule of Fair Value of Financial Assets and Liabilities Inputs (Details) - USD ($) $ in Thousands | Sep. 30, 2016 | Dec. 31, 2015 |
Assets: | ||
Total assets measured at fair value | $ 133,888 | $ 312,519 |
Money market funds | ||
Assets: | ||
Total assets measured at fair value | 33,446 | 180,021 |
Commercial paper | ||
Assets: | ||
Total assets measured at fair value | 36,904 | 35,881 |
Corporate debt securities | ||
Assets: | ||
Total assets measured at fair value | 63,538 | 79,421 |
U.S. government and government agency debt securities | ||
Assets: | ||
Total assets measured at fair value | 17,196 | |
Quoted Prices in Active Markets for Identical Instruments (Level 1) | ||
Assets: | ||
Total assets measured at fair value | 33,446 | 180,021 |
Quoted Prices in Active Markets for Identical Instruments (Level 1) | Money market funds | ||
Assets: | ||
Total assets measured at fair value | 33,446 | 180,021 |
Quoted Prices in Active Markets for Identical Instruments (Level 1) | Commercial paper | ||
Assets: | ||
Total assets measured at fair value | 0 | 0 |
Quoted Prices in Active Markets for Identical Instruments (Level 1) | Corporate debt securities | ||
Assets: | ||
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 | ||
Assets: | ||
Total assets measured at fair value | 0 | |
Significant Other Observable Inputs (Level 2) | ||
Assets: | ||
Total assets measured at fair value | 100,442 | 132,498 |
Significant Other Observable Inputs (Level 2) | Money market funds | ||
Assets: | ||
Total assets measured at fair value | 0 | 0 |
Significant Other Observable Inputs (Level 2) | Commercial paper | ||
Assets: | ||
Total assets measured at fair value | 36,904 | 35,881 |
Significant Other Observable Inputs (Level 2) | Corporate debt securities | ||
Assets: | ||
Total assets measured at fair value | $ 63,538 | 79,421 |
Significant Other Observable Inputs (Level 2) | U.S. government and government agency debt securities | ||
Assets: | ||
Total assets measured at fair value | $ 17,196 |
Fair Value - Narrative (Details
Fair Value - Narrative (Details) - Level 3 - USD ($) | Sep. 30, 2016 | Dec. 31, 2015 |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Total assets measured at fair value | $ 0 | $ 0 |
Liabilities measured at fair value | $ 0 | $ 0 |
Commitments and Contingencies -
Commitments and Contingencies - Narrative (Details) | 1 Months Ended | 9 Months Ended | 12 Months Ended | |||||
Sep. 30, 2016USD ($) | Jun. 30, 2016USD ($) | Mar. 31, 2016USD ($) | Dec. 31, 2015USD ($) | Oct. 31, 2015USD ($)installment | Sep. 30, 2016USD ($) | Sep. 30, 2015USD ($) | Dec. 31, 2015USD ($) | |
Loss Contingencies [Line Items] | ||||||||
Total future minimum guarantee payments | $ 780,100,000 | $ 780,100,000 | ||||||
Future minimum guarantee commitments to be paid this year | 18,100,000 | 18,100,000 | ||||||
Future minimum guarantee commitments to be paid this year due in 2017 | 354,900,000 | 354,900,000 | ||||||
Pre-1972 Copyright Litigation | ||||||||
Loss Contingencies [Line Items] | ||||||||
Number of litigation installments | installment | 4 | |||||||
Litigation settlement, amount | $ 90,000,000 | |||||||
Payment for legal settlement | $ 7,500,000 | $ 7,500,000 | $ 7,500,000 | $ 7,500,000 | $ 60,000,000 | |||
Litigation settlement, expense | $ 24,600,000 | $ 57,900,000 | ||||||
Pre-1972 Copyright Litigation | Cost of revenue - content acquisition costs | ||||||||
Loss Contingencies [Line Items] | ||||||||
Litigation settlement, expense | $ 65,400,000 |
Goodwill and Intangible Asset31
Goodwill and Intangible Assets - Schedule of Changes in the Carrying Amount of Goodwill (Details) $ in Thousands | 9 Months Ended |
Sep. 30, 2016USD ($) | |
Goodwill | |
Balance as of December 31, 2015 | $ 303,875 |
Goodwill resulting from business combination and purchase price adjustments | 2,831 |
Balance as of September 30, 2016 | $ 306,706 |
Goodwill and Intangible Asset32
Goodwill and Intangible Assets - Summary of Gross Carrying Amounts and Accumulated Amortization of Intangible Assets (Details) - USD ($) $ in Thousands | Sep. 30, 2016 | Dec. 31, 2015 |
Finite-lived intangible assets | ||
Gross Carrying Amount | $ 115,269 | $ 115,040 |
Accumulated Amortization | (19,897) | (4,488) |
Net Carrying Value | 95,372 | 110,552 |
Total intangible assets, Gross Carrying Amount | 115,462 | 115,233 |
Total intangible assets, Accumulated Amortization | (19,897) | (4,488) |
Total intangible assets, Net Carrying Value | 95,565 | 110,745 |
FCC license - Broadcast Radio | ||
Indefinite-lived intangible assets | ||
Net Carrying Value | 193 | 193 |
Patents | ||
Finite-lived intangible assets | ||
Gross Carrying Amount | 8,030 | 8,030 |
Accumulated Amortization | (2,373) | (1,824) |
Net Carrying Value | 5,657 | 6,206 |
Total intangible assets, Accumulated Amortization | (2,373) | (1,824) |
Developed technology | ||
Finite-lived intangible assets | ||
Gross Carrying Amount | 56,165 | 56,050 |
Accumulated Amortization | (10,515) | (1,265) |
Net Carrying Value | 45,650 | 54,785 |
Total intangible assets, Accumulated Amortization | (10,515) | (1,265) |
Customer relationships - clients | ||
Finite-lived intangible assets | ||
Gross Carrying Amount | 37,399 | 37,300 |
Accumulated Amortization | (4,309) | (777) |
Net Carrying Value | 33,090 | 36,523 |
Total intangible assets, Accumulated Amortization | (4,309) | (777) |
Customer relationships - users | ||
Finite-lived intangible assets | ||
Gross Carrying Amount | 1,940 | 1,940 |
Accumulated Amortization | (1,046) | (318) |
Net Carrying Value | 894 | 1,622 |
Total intangible assets, Accumulated Amortization | (1,046) | (318) |
Trade names | ||
Finite-lived intangible assets | ||
Gross Carrying Amount | 11,735 | 11,720 |
Accumulated Amortization | (1,654) | (304) |
Net Carrying Value | 10,081 | 11,416 |
Total intangible assets, Accumulated Amortization | $ (1,654) | $ (304) |
Goodwill and Intangible Asset33
Goodwill and Intangible Assets - Narrative (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2016 | Sep. 30, 2015 | Sep. 30, 2016 | Sep. 30, 2015 | |
Goodwill and Intangible Assets Disclosure [Abstract] | ||||
Amortization expense of intangible assets | $ 5.1 | $ 0.4 | $ 15.4 | $ 0.8 |
Goodwill and Intangible Asset34
Goodwill and Intangible Assets - Schedule of Future Amortization Expense Related to Finite-lived Intangible Assets (Details) - USD ($) $ in Thousands | Sep. 30, 2016 | Dec. 31, 2015 |
Goodwill and Intangible Assets Disclosure [Abstract] | ||
Remainder of 2016 | $ 5,138 | |
2,017 | 20,116 | |
2,018 | 17,654 | |
2,019 | 17,129 | |
2,020 | 15,896 | |
Thereafter | 19,439 | |
Net Carrying Value | $ 95,372 | $ 110,552 |
Debt Instruments - Schedule of
Debt Instruments - Schedule of Long-Term Debt (Details) - USD ($) $ in Thousands | Sep. 30, 2016 | Dec. 31, 2015 |
Debt Instrument [Line Items] | ||
Unamortized discount and deferred issuance costs | $ (97,571) | $ (110,423) |
Long-term debt, net | 337,429 | 234,577 |
Convertible debt | 1.75% convertible senior notes due 2020 | ||
Debt Instrument [Line Items] | ||
1.75% convertible senior notes due 2020 | 345,000 | 345,000 |
Line of credit | ||
Debt Instrument [Line Items] | ||
Credit facility | $ 90,000 | $ 0 |
Debt Instruments - Convertible
Debt Instruments - Convertible Debt Offering (Details) $ / shares in Units, shares in Millions | Dec. 09, 2015USD ($)$ / shares$ / unit | Sep. 30, 2016USD ($)day$ / sharesshares |
Debt Instruments | ||
Closing price of common stock (in dollars per share) | $ / shares | $ 14.33 | |
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 | 0.0609050 | |
Debt instrument, conversion price (in dollars per share) | $ / shares | $ 16.42 | |
Value of debt | $ 233,500,000 | $ 362,100,000 |
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 | After December 5, 2018 | ||
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 | |
Debt instrument, redemption price, percentage of principal | 100.00% | |
Convertible debt | Notes | Preceding July 1, 2020, after the quarter ending on March 31, 2016 and additional criteria | ||
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 | Preceding July 1, 2020, after the measurement period and additional criteria | ||
Debt Instruments | ||
Debt instrument, threshold note trading days | day | 5 | |
Debt instrument, threshold consecutive note trading days | 10 days | |
Debt instrument, threshold principle amount of note trigger | $ 1,000 | |
Debt instrument, threshold percentage of note price trigger (less than) | 98.00% | |
Maximum | Convertible debt | Notes | ||
Debt Instruments | ||
Debt conversion, maximum number of shares of common stock convertible by Notes | shares | 27.3 |
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 | 3 Months Ended | 9 Months Ended |
Sep. 30, 2016USD ($) | Sep. 30, 2016USD ($) | |
Debt Instrument [Line Items] | ||
Effective interest rate | 10.18% | 10.18% |
Contractually stated interest expense | $ 1,505 | $ 4,536 |
Amortization of discount | $ 4,649 | $ 13,587 |
Debt Instruments - Credit Facil
Debt Instruments - Credit Facility (Details) - USD ($) | 1 Months Ended | 9 Months Ended | |
Sep. 30, 2016 | Sep. 30, 2016 | Sep. 30, 2015 | |
Debt Instruments | |||
Credit facility | $ 90,000,000 | $ 0 | |
Line of credit | |||
Debt Instruments | |||
Maximum borrowings available | $ 120,000,000 | $ 120,000,000 | |
Credit facility | $ 90,000,000 | ||
Interest rate | 3.81% | 3.81% | |
Available borrowing capacity | $ 28,800,000 | $ 28,800,000 | |
Letter of credit | |||
Debt Instruments | |||
Outstanding amount | $ 1,200,000 | $ 1,200,000 |
Stock-based Compensation Plan39
Stock-based Compensation Plans and Awards - ESPP, Employee Stock Based Awards, Stock Options, Restricted Stock Units Narrative (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2016 | Sep. 30, 2015 | Sep. 30, 2016 | Sep. 30, 2015 | |
Stock-based Compensation Plans and Awards | ||||
Stock-based compensation expense | $ 32,754 | $ 28,794 | $ 103,841 | $ 79,473 |
Employee stock | ||||
Stock-based Compensation Plans and Awards | ||||
Percentage of eligible compensation to purchase common stock through payroll deductions (as a percent) | 15.00% | 15.00% | ||
Offering period | 6 months | |||
Contributions from employees withheld | $ 2,600 | 1,800 | $ 6,400 | 5,100 |
Stock-based compensation expense | $ 900 | $ 600 | $ 2,300 | $ 1,900 |
Common stock issued (in shares) | 643,562 | 255,432 | 1,254,910 | 538,398 |
Stock options | ||||
Stock-based Compensation Plans and Awards | ||||
Stock-based compensation expense | $ 2,200 | $ 2,300 | $ 11,300 | $ 7,500 |
Options granted (in shares) | 0 | 0 | 0 | 0 |
Restricted stock units | ||||
Stock-based Compensation Plans and Awards | ||||
Stock-based compensation expense | $ 28,200 | $ 25,400 | $ 87,200 | $ 69,100 |
Vesting period | 4 years |
Stock-based Compensation Plan40
Stock-based Compensation Plans and Awards - Schedule of Assumptions Used for Determining the Per-Share Fair Value (Details) - Employee stock - Black Scholes Options Pricing Model | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2016 | Sep. 30, 2015 | Sep. 30, 2016 | Sep. 30, 2015 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Expected life (in years) | 15 days | 15 days | 15 days | 15 days |
Risk-free interest rate, minimum | 0.41% | 0.07% | 0.24% | 0.05% |
Risk-free interest rate, maximum | 0.44% | 0.24% | 0.44% | 0.24% |
Expected volatility, minimum | 41.00% | 29.00% | 41.00% | 29.00% |
Expected volatility, maximum | 52.00% | 42.00% | 52.00% | 42.00% |
Expected dividend yield | 0.00% | 0.00% | 0.00% | 0.00% |
Stock-based Compensation Plan41
Stock-based Compensation Plans and Awards - MSUs Narrative (Details) $ in Thousands | 1 Months Ended | 3 Months Ended | 9 Months Ended | 12 Months Ended | ||
Mar. 31, 2015performance_period | Sep. 30, 2016USD ($)shares | Sep. 30, 2015USD ($) | Sep. 30, 2016USD ($)shares | Sep. 30, 2015USD ($)shares | Dec. 31, 2015 | |
Stock-based Compensation Plans and Awards | ||||||
Stock-based compensation expense | $ 32,754 | $ 28,794 | $ 103,841 | $ 79,473 | ||
Market Stock Units (MSUs) | ||||||
Stock-based Compensation Plans and Awards | ||||||
Number of performance periods | performance_period | 3 | |||||
Total stockholder return, duration period | 90 days | |||||
Performance multiplier, percentage point decrease | 3.00% | |||||
Requisite service period | 3 years | |||||
Grants in period (in shares) | shares | 0 | 0 | 776,000 | |||
Grant-date fair value | $ 4,300 | |||||
Stock-based compensation expense | $ 200 | $ 500 | $ 600 | $ 1,000 | ||
Market Stock Units (MSUs) | One-Year Performance Period | ||||||
Stock-based Compensation Plans and Awards | ||||||
Vesting percent | 33.33% | 22.00% | ||||
TSR decline (percent) | 26.00% | |||||
Market Stock Units (MSUs) | Two-Year Performance Period | ||||||
Stock-based Compensation Plans and Awards | ||||||
Vesting percent | 33.33% | |||||
Market Stock Units (MSUs) | Three-Year Performance Period | ||||||
Stock-based Compensation Plans and Awards | ||||||
Performance multiplier, percentage point increase | 2.00% | |||||
Market Stock Units (MSUs) | Maximum | One-Year Performance Period | ||||||
Stock-based Compensation Plans and Awards | ||||||
Performance multiplier | 100.00% | |||||
Market Stock Units (MSUs) | Maximum | Two-Year Performance Period | ||||||
Stock-based Compensation Plans and Awards | ||||||
Performance multiplier | 100.00% | |||||
Market Stock Units (MSUs) | Maximum | Three-Year Performance Period | ||||||
Stock-based Compensation Plans and Awards | ||||||
Performance multiplier | 200.00% |
Stock-based Compensation Plan42
Stock-based Compensation Plans and Awards - PSUs Narrative (Details) - USD ($) | 1 Months Ended | 3 Months Ended | 9 Months Ended | 12 Months Ended | |||
Apr. 30, 2016 | Mar. 31, 2015 | Sep. 30, 2016 | Sep. 30, 2015 | Sep. 30, 2016 | Sep. 30, 2015 | Dec. 31, 2015 | |
Stock-based Compensation Plans and Awards | |||||||
Stock-based compensation expense | $ 32,754,000 | $ 28,794,000 | $ 103,841,000 | $ 79,473,000 | |||
PSUs | |||||||
Stock-based Compensation Plans and Awards | |||||||
Requisite service period | 4 years | ||||||
Total stockholder return, duration period | 90 days | ||||||
Grants in period (in shares) | 1,725,000 | 0 | 1,725,000 | 0 | |||
Grant-date fair value | $ 8,700,000 | $ 8,700,000 | |||||
Stock-based compensation expense | $ 1,300,000 | $ 0 | $ 2,400,000 | $ 0 | |||
PSUs | Minimum | |||||||
Stock-based Compensation Plans and Awards | |||||||
90 Day trailing stock price to vest (usd per share) | $ 20 | ||||||
PSUs | One-Year Performance Period | |||||||
Stock-based Compensation Plans and Awards | |||||||
Vesting percent | 25.00% | ||||||
Market Stock Units (MSUs) | |||||||
Stock-based Compensation Plans and Awards | |||||||
Requisite service period | 3 years | ||||||
Total stockholder return, duration period | 90 days | ||||||
Grants in period (in shares) | 0 | 0 | 776,000 | ||||
Grant-date fair value | $ 4,300,000 | ||||||
Stock-based compensation expense | $ 200,000 | $ 500,000 | $ 600,000 | $ 1,000,000 | |||
Market Stock Units (MSUs) | Two-Year Performance Period | |||||||
Stock-based Compensation Plans and Awards | |||||||
Vesting percent | 33.33% | ||||||
Market Stock Units (MSUs) | Two-Year Performance Period | Maximum | |||||||
Stock-based Compensation Plans and Awards | |||||||
Performance multiplier | 100.00% | ||||||
Market Stock Units (MSUs) | One-Year Performance Period | |||||||
Stock-based Compensation Plans and Awards | |||||||
Vesting percent | 33.33% | 22.00% | |||||
Market Stock Units (MSUs) | One-Year Performance Period | Maximum | |||||||
Stock-based Compensation Plans and Awards | |||||||
Performance multiplier | 100.00% |
Stock-based Compensation Plan43
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 | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2016 | Sep. 30, 2015 | Sep. 30, 2016 | Sep. 30, 2015 | |
Stock-based compensation expenses: | ||||
Total stock-based compensation expense | $ 32,754 | $ 28,794 | $ 103,841 | $ 79,473 |
Cost of revenue - Other | ||||
Stock-based compensation expenses: | ||||
Total stock-based compensation expense | 1,538 | 1,427 | 4,559 | 4,040 |
Cost of revenue - Ticketing service | ||||
Stock-based compensation expenses: | ||||
Total stock-based compensation expense | 27 | 0 | 154 | 0 |
Product development | ||||
Stock-based compensation expenses: | ||||
Total stock-based compensation expense | 7,347 | 6,189 | 23,091 | 16,148 |
Sales and marketing | ||||
Stock-based compensation expenses: | ||||
Total stock-based compensation expense | 14,932 | 13,732 | 43,673 | 38,403 |
General and administrative | ||||
Stock-based compensation expenses: | ||||
Total stock-based compensation expense | $ 8,910 | $ 7,446 | 32,364 | $ 20,882 |
Executive severance | ||||
Stock-based compensation expenses: | ||||
Total stock-based compensation expense | $ 6,800 |
Net Loss Per Share - Schedule o
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 | 9 Months Ended | ||
Sep. 30, 2016 | Sep. 30, 2015 | Sep. 30, 2016 | Sep. 30, 2015 | |
Numerator | ||||
Net loss | $ (61,534) | $ (85,930) | $ (252,969) | $ (150,252) |
Denominator | ||||
Weighted-average common shares outstanding used in computing basic and diluted net loss per share | 232,139 | 212,760 | 229,524 | 211,487 |
Net loss per share, basic and diluted (in dollars per share) | $ (0.27) | $ (0.40) | $ (1.10) | $ (0.71) |
Net Loss Per Share - Schedule45
Net Loss Per Share - Schedule of Potential Common Shares Outstanding Excluded from the Computation of Diluted Net Loss Per Share (Details) - shares shares in Thousands | 9 Months Ended | |
Sep. 30, 2016 | Sep. 30, 2015 | |
Anti-dilutive securities | ||
Total common stock equivalents (in shares) | 35,534 | 27,921 |
Options to purchase common stock | ||
Anti-dilutive securities | ||
Total common stock equivalents (in shares) | 9,665 | 10,492 |
Restricted stock units | ||
Anti-dilutive securities | ||
Total common stock equivalents (in shares) | 23,554 | 16,653 |
Performance awards | ||
Anti-dilutive securities | ||
Total common stock equivalents (in shares) | 2,315 | 776 |
Net Loss Per Share - Narrative
Net Loss Per Share - Narrative (Details) - 1.75% convertible senior notes due 2020 - Convertible debt | Dec. 09, 2015$ / shares |
Debt Instrument [Line Items] | |
Interest rate | 1.75% |
Debt instrument, conversion price (in dollars per share) | $ 16.42 |