Document and Entity Information
Document and Entity Information | 12 Months Ended |
Dec. 31, 2016shares | |
Document and Entity Information [Abstract] | |
Document Type | 20-F |
Amendment Flag | false |
Document Period End Date | Dec. 31, 2016 |
Entity Registrant Name | Perion Network Ltd. |
Entity Central Index Key | 1,338,940 |
Current Fiscal Year End Date | --12-31 |
Document Fiscal Period Focus | FY |
Document Fiscal Year Focus | 2,016 |
Entity Filer Category | Accelerated Filer |
Entity Common Stock, Shares Outstanding | 77,223,069 |
Entity Current Reporting Status | Yes |
Entity Well-known Seasoned Issuer | No |
Entity Voluntary Filers | No |
CONSOLIDATED BALANCE SHEETS
CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands | Dec. 31, 2016 | Dec. 31, 2015 | |
Current Assets: | |||
Cash and cash equivalents | $ 23,962 | $ 17,519 | |
Short-term bank deposits | 8,414 | 42,442 | |
Accounts receivable (net of allowance of $1,063 and $789 at December 31, 2015 and 2016, respectively) | 71,346 | 66,662 | |
Prepaid expenses and other current assets | 10,036 | 17,396 | |
Total Current Assets | 113,758 | 144,019 | |
Property and equipment, net | 14,205 | 12,714 | |
Intangible assets, net | 44,018 | 66,072 | |
Goodwill | 190,737 | 203,693 | |
Deferred taxes | 4,117 | 12,344 | |
Other assets | 1,617 | 3,456 | |
Total Assets | 368,452 | 442,298 | |
Current Liabilities: | |||
Accounts payable | 38,293 | 40,388 | |
Accrued expenses and other liabilities | 17,466 | 22,857 | |
Short-term loans and current maturities of long-term and convertible debt | 17,944 | 23,756 | |
Deferred revenues | 5,354 | 7,731 | |
Payment obligation related to acquisitions | 7,653 | 11,893 | |
Total Current Liabilities | 86,710 | 106,625 | |
Long-Term Liabilities: | |||
Long-term debt, net of current maturities | 37,928 | 46,920 | |
Convertible debt, net of current maturities | [1] | 21,862 | 28,371 |
Payment obligation related to acquisitions | 37,231 | ||
Deferred taxes | 8,087 | 19,456 | |
Other long-term liabilities | 5,721 | 3,858 | |
Total Liabilities | 160,308 | 242,461 | |
Commitments and Contingencies | |||
Shareholders' Equity: | |||
Ordinary shares of ILS 0.01 par value - Authorized: 120,000,000 shares; Issued: 76,157,506 and 77,569,088 shares at December 31, 2015 and 2016, respectively; Outstanding: 75,811,487 and 77,223,069 shares at December 31, 2015 and 2016, respectively | 210 | 206 | |
Additional paid-in capital | 234,831 | 227,258 | |
Treasury shares at cost (346,019 shares at December 31, 2015 and 2016) | (1,002) | (1,002) | |
Accumulated other comprehensive loss | (265) | (794) | |
Accumulated deficit | (25,630) | (25,831) | |
Total Shareholders' Equity | 208,144 | 199,837 | |
Total Liabilities and Shareholders' Equity | $ 368,452 | $ 442,298 | |
[1] | include accrued interest of $463 and $376 as of December 31, 2015 and 2016 respectively |
CONSOLIDATED BALANCE SHEETS (Pa
CONSOLIDATED BALANCE SHEETS (Parenthetical) $ in Thousands | Dec. 31, 2016USD ($)shares | Dec. 31, 2015USD ($)shares |
Statement of Financial Position [Abstract] | ||
Accounts receivable, allowance for doubtful accounts | $ | $ 789 | $ 1,063 |
Ordinary shares, shares authorized | 120,000,000 | 120,000,000 |
Ordinary shares, shares issued | 77,569,088 | 76,157,506 |
Ordinary shares, shares outstanding | 77,223,069 | 75,811,487 |
Treasury shares | 346,019 | 346,019 |
CONSOLIDATED STATEMENTS OF INCO
CONSOLIDATED STATEMENTS OF INCOME - USD ($) $ in Thousands | 12 Months Ended | |||
Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | ||
Revenues: | ||||
Search and other | $ 172,683 | $ 188,897 | $ 343,655 | |
Advertising | 140,111 | 32,053 | 45,076 | |
Total Revenues | 312,794 | 220,950 | 388,731 | |
Costs and Expenses: | ||||
Cost of revenues | 16,515 | 7,877 | 10,950 | |
Customer acquisition costs and media buy | 140,210 | 91,194 | 174,575 | |
Research and development | 26,528 | 21,692 | 37,427 | |
Selling and marketing | 58,572 | 22,886 | 20,792 | |
General and administrative | 32,916 | 31,064 | 36,730 | |
Depreciation and amortization | 25,977 | 11,422 | 21,321 | |
Impairment, net of change in fair value of contingent consideration | 72,785 | 19,941 | ||
Restructuring charges | 728 | 1,052 | 3,981 | |
Total Costs and Expenses | 301,446 | 259,972 | 325,717 | |
Income (Loss) from Operations | 11,348 | (39,022) | 63,014 | |
Financial expenses, net | 8,288 | 1,939 | 2,888 | |
Income (Loss) before Taxes on Income | 3,060 | (40,961) | 60,126 | |
Taxes on income | 212 | 697 | 10,816 | |
Net Income (Loss) from Continuing Operations | 2,848 | (41,658) | 49,310 | |
Net loss from discontinued operations | (2,647) | (26,999) | (6,484) | |
Net Income (Loss) | $ 201 | $ (68,657) | $ 42,826 | |
Net Earnings (Loss) per Share - Basic: | ||||
Continuing operations | $ 0.04 | $ (0.58) | $ 0.72 | |
Discontinued operations | (0.04) | (0.38) | (0.09) | |
Net income (Loss) | 0 | [1] | (0.96) | 0.63 |
Net Earnings (Loss) per Share - Diluted: | ||||
Continuing operations | 0.04 | (0.58) | 0.67 | |
Discontinued operations | (0.04) | (0.38) | (0.09) | |
Net income (Loss) | $ 0 | [1] | $ (0.96) | $ 0.58 |
Weighted average number of shares - Basic: | ||||
Continuing and Discontinued operations | 76,560,454 | 71,300,432 | 68,213,209 | |
Weighted average number of shares - Diluted: | ||||
Continuing and Discontinued operations | 76,673,803 | 71,300,432 | 70,327,411 | |
[1] | Less than $0.01 |
CONSOLIDATED STATEMENT OF COMPR
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
Statement of Comprehensive Income [Abstract] | |||
Net Income (Loss) | $ 201 | $ (68,657) | $ 42,826 |
Other comprehensive income (loss): | |||
Change in foreign currency translation adjustment | 521 | (822) | |
Cash Flow Hedge: | |||
Unrealized gain (loss) from cash flow hedges | 175 | 206 | (62) |
Less: reclassification adjustment for net gain (loss) included in net income (loss) | (167) | (178) | 62 |
Net change | 8 | 28 | |
Other comprehensive income (loss) | 529 | (794) | |
Comprehensive Income (Loss) | $ 730 | $ (69,451) | $ 42,826 |
STATEMENTS OF CHANGES IN SHAREH
STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY - USD ($) $ in Thousands | Common Stock [Member] | Additional Paid-in Capital [Member] | Accumulated Other Comprehensive income (loss) [Member] | Retained earnings (Accumulated deficit) [Member] | Treasury Shares [Member] | Total |
Balance at Dec. 31, 2013 | $ 147 | $ 10,882 | $ (1,002) | $ 10,027 | ||
Balance, shares at Dec. 31, 2013 | 54,753,582 | |||||
Issuance of shares related to acquisitions | $ 38 | $ 171,514 | $ 171,552 | |||
Issuance of shares related to acquisitions, shares | 13,124,100 | |||||
Acquisition related expenses paid by the shareholders | 3,060 | 3,060 | ||||
Contribution by shareholders | 1,803 | 1,803 | ||||
Stock-based compensation | 15,145 | 15,145 | ||||
Exercise of stock options | $ 4 | 1,580 | 1,584 | |||
Exercise of stock options, shares | 1,324,749 | |||||
Other comprehensive income (loss) | ||||||
Net income (loss) | 42,826 | 42,826 | ||||
Balance at Dec. 31, 2014 | $ 189 | $ 203,984 | $ 42,826 | $ (1,002) | $ 245,997 | |
Balance, shares at Dec. 31, 2014 | 69,202,431 | 69,202,431 | ||||
Issuance of shares related to acquisitions | $ 5 | $ 5,574 | $ 5,579 | |||
Issuance of shares related to acquisitions, shares | 1,798,837 | |||||
Issuance of shares in private placement, net of issuance cost of $105 | $ 11 | 10,009 | 10,020 | |||
Issuance of shares in private placement, net of issuance cost of $105, shares | 4,436,898 | |||||
Stock-based compensation | 7,679 | 7,679 | ||||
Exercise of stock option and vesting of restricted stock units | $ 1 | 12 | 13 | |||
Exercise of stock option and vesting of restricted stock units, shares | 373,321 | |||||
Other comprehensive income (loss) | (794) | (794) | ||||
Net income (loss) | (68,657) | (68,657) | ||||
Balance at Dec. 31, 2015 | $ 206 | $ 227,258 | $ (794) | $ (25,831) | $ (1,002) | $ 199,837 |
Balance, shares at Dec. 31, 2015 | 75,811,487 | 75,811,487 | ||||
Issuance of shares related to acquisitions | $ 1 | $ 674 | $ 675 | |||
Issuance of shares related to acquisitions, shares | 290,981 | |||||
Issuance of shares related to price adjustment of private placement | $ 2 | (2) | ||||
Issuance of shares related to price adjustment of private placement, shares | 782,981 | |||||
Stock-based compensation | 6,900 | $ 6,900 | ||||
Exercise of stock options, shares | 200 | |||||
Exercise of stock option and vesting of restricted stock units | $ 1 | 1 | $ 2 | |||
Exercise of stock option and vesting of restricted stock units, shares | 337,620 | |||||
Other comprehensive income (loss) | 529 | 529 | ||||
Net income (loss) | 201 | 201 | ||||
Balance at Dec. 31, 2016 | $ 210 | $ 234,831 | $ (265) | $ (25,630) | $ (1,002) | $ 208,144 |
Balance, shares at Dec. 31, 2016 | 77,223,069 | 77,223,069 |
STATEMENTS OF CHANGES IN SHARE7
STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY (Parenthetical) $ in Thousands | 12 Months Ended |
Dec. 31, 2015USD ($) | |
Statement of Stockholders' Equity [Abstract] | |
Issuance of shares in private placement, issuance cost | $ 105 |
CONSOLIDATED STATEMENTS OF CASH
CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
Operating activities: | |||
Net income (loss) | $ 201 | $ (68,657) | $ 42,826 |
Loss from discontinued operations, net | (2,647) | (26,999) | (6,484) |
Net income (loss) from continuing operations | 2,848 | (41,658) | 49,310 |
Adjustments required to reconcile net income to net cash provided by operating activities: | |||
Depreciation and amortization | 25,977 | 11,422 | 21,321 |
Impairment of intangible assets and goodwill | 79,349 | 19,941 | |
Restructuring costs related to impairment of property and equipment | 254 | 124 | 632 |
Stock-based compensation expense | 6,844 | 6,738 | 13,769 |
Issuance of ordinary shares related to employees' retention | 63 | ||
Foreign currency translation | 980 | (347) | |
Acquisition related expenses paid by shareholders | 3,060 | ||
Accretion of payment obligation related to acquisition | 320 | 311 | 1,067 |
Accrued interest, net | 406 | 37 | 655 |
Deferred taxes, net | (3,268) | (8,973) | (13,851) |
Accrued severance pay, net | 214 | 238 | 392 |
Change in payment obligation related to acquisitions | 983 | (5,937) | 713 |
Fair value revaluation - convertible debt | 1,350 | 175 | (2,566) |
Loss from sale of property and equipment | 149 | 17 | 121 |
Net changes in operating assets and liabilities: | |||
Accounts receivable, net | (5,333) | 3,362 | (23,568) |
Prepaid expenses and other | 8,613 | (3,402) | (5,020) |
Accounts payable | (1,702) | (3,725) | 2,228 |
Accrued expenses and other liabilities | (2,486) | (13,250) | 9,261 |
Deferred revenues | (2,365) | (772) | (407) |
Net cash provided by continuing operating activities | 33,784 | 23,772 | 77,058 |
Net cash used in discontinued operating activities | (3,329) | (6,203) | (5,016) |
Net cash provided by operating activities | 30,455 | 17,569 | 72,042 |
Investing activities: | |||
Purchases of property and equipment | (1,504) | (2,029) | (10,882) |
Proceeds from sale of property and equipment | 151 | 24 | 58 |
Capitalization of development costs | (4,591) | (4,005) | |
Change in restricted cash, net | 647 | 50 | (202) |
Short-term deposits, net | 34,028 | (27,442) | (15,000) |
Cash paid for acquisition, net of cash acquired | (87,044) | 19,042 | |
Net cash provided by (used in) continuing investing activities | 28,731 | (120,446) | (6,984) |
Net cash provided by discontinued investing activities | |||
Net cash provided by (used in) investing activities | 28,731 | (120,446) | (6,984) |
Financing activities: | |||
Issuance of shares in private placement, net | 10,020 | ||
Exercise of stock options and restricted share units | 2 | 13 | 1,584 |
Contribution by shareholders | 585 | ||
Payments made in connection with acquisition | (29,537) | (1,534) | (2,545) |
Proceeds from the issuance of convertible debt | 37,852 | ||
Proceeds from short-term loans | 40,000 | 13,000 | |
Repayment of short-term loans | (46,000) | ||
Repayment of convertible debt | (7,620) | ||
Repayment of long-term loans | (9,452) | (2,300) | (2,300) |
Net cash provided by (used in) continuing financing activities | (52,607) | 19,199 | 35,176 |
Effect of exchange rate changes on cash and cash equivalents | (136) | 14 | |
Net increase (decrease) in cash and cash equivalents | 9,772 | (77,461) | 105,250 |
Decrease in cash and cash equivalents - discontinued activities | (3,329) | (6,203) | (5,016) |
Cash and cash equivalents at beginning of year | 17,519 | 101,183 | 949 |
Cash and cash equivalents at end of year | 23,962 | 17,519 | 101,183 |
Cash paid during the year for: | |||
Income taxes | 3,976 | 21,340 | 20,855 |
Interest | 5,678 | 2,260 | 260 |
Non-cash investing and financing activities: | |||
Issuance of shares in connection with acquisitions | 673 | 5,579 | 171,552 |
Issuance of shares in private placement | 2 | ||
Contribution by shareholders | 1,218 | ||
Acquisition related expenses paid by shareholders | 3,060 | ||
Stock-based compensation capitalized as part of capitalization of software development costs | 14 | 187 | |
Purchase of property and equipment on credit | $ 322 | $ 312 | $ 1,205 |
GENERAL
GENERAL | 12 Months Ended |
Dec. 31, 2016 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
GENERAL | NOTE 1: GENERAL a. Perion Network Ltd. ("Perion") and its wholly-owned subsidiaries (collectively referred to as the "Company"), is a global technology company, providing high-quality advertising solutions to brands and publishers, high-impact ad formats that capture consumer attention and drives engagement, branded search providing publishers with engagement and monetization solutions and a social programmatic platform. b. On January 2, 2014, the Company purchased all the outstanding shares of ClientConnect Ltd. ("ClientConnect"), in a stock-for-stock transaction. The ClientConnect acquisition has been reflected in the financial statements as a reverse acquisition of all of the outstanding shares and options by ClientConnect using the acquisition method of accounting whereby ClientConnect is the deemed accounting acquirer and Perion is the deemed accounting acquiree. On February 10, 2015, the Company completed the acquisition of Make Me Reach SAS ("MMR") and on November 30, 2015, completed the acquisition of Interactive Holding Corp and its subsidiaries (collectively referred to as "Undertone"). c. In March 2016, the Company decided to discontinue the operations of the mobile self-serve side of the business and put out for sale the mobile engagement business, both under the Growmobile business . . |
SIGNIFICANT ACCOUNTING POLICIES
SIGNIFICANT ACCOUNTING POLICIES | 12 Months Ended |
Dec. 31, 2016 | |
Accounting Policies [Abstract] | |
SIGNIFICANT ACCOUNTING POLICIES | NOTE 2: SIGNIFICANT ACCOUNTING POLICIES Basis of consolidation The consolidated financial statements include the accounts of Perion and its subsidiaries. All intercompany balances and transactions have been eliminated. Use of estimates The preparation of the consolidated financial statements in conformity with U.S. Generally Accepted Accounting Principles (“GAAP”) requires management to make estimates, judgments and assumptions that affect the amounts reported and disclosed in the financial statements and the accompanying notes. Actual results could differ materially from those estimates. On an ongoing basis, the Company's management evaluates its estimates, including those related to accounts receivable, intangible assets and goodwill, fair values and useful lives of intangible assets, fair values of stock-based awards, allowance for doubtful accounts, realizability of deferred tax assets, income taxes, and contingent liabilities, among others. Such estimates are based on historical experience and on various other assumptions that are believed to be reasonable, the results of which form the basis for making judgments about the carrying values of the Company’s assets and liabilities. Financial statements in U.S. dollars The reporting currency of the Company is the U.S. dollar (“USD”). Major parts of the Company’s operations are carried out by the Company and its subsidiaries in the United States and Israel. The functional currency of these entities is the USD. Accordingly, monetary accounts maintained in currencies other than the USD are remeasured into USD, in accordance with ASC 830, "Foreign Currency Matters". All transaction gains and losses resulting from the remeasurement of the monetary balance sheet items are reflected in the statements of income as financial income or expenses, as appropriate. Management believes that the USD is the currency of the primary economic environment in which the Company operates. The financial statements of other subsidiaries, whose functional currency is determined to be their local currency, have been translated into USD. All balance sheet accounts have been translated using the exchange rates in effect at the balance sheet date. Statement of operations amounts have been translated using the average exchange rate for the applicable year. The resulting translation adjustments are reported as an accumulated other comprehensive income (loss) component of shareholders' equity. Cash and cash equivalents and short-term deposits The Company considers all short-term, highly liquid and unrestricted cash balances, with stated maturities of three months or less from date of purchase, as cash equivalents. Short-term deposits are bank deposits with maturities of more than three months but less than one year. The short-term deposits as of December 31, 2015 and 2016 are denominated primarily in USD and bear interest at an average annual rate of 0. . Restricted cash Restricted cash is comprised primarily of security deposits that are held to secure the Company’s hedging activity , Restricted cash in the amount of $1,182, as of December 31, 2015, is included under other assets in the accompanying balance sheets. Accounts receivable and allowance for doubtful accounts Trade accounts receivables are stated at realizable value, net of an allowance for doubtful accounts. The Company evaluates its outstanding accounts receivable and establishes an allowance for doubtful accounts based on information available on their credit condition, current aging and historical experience. These allowances are reevaluated and adjusted periodically as additional information is available. Property and equipment Property and equipment are stated at cost, net of accumulated depreciation and amortization. Depreciation is calculated using the straight-line method over the estimated useful lives of the assets at the following annual rates: % Computers and peripheral equipment 33 Office furniture and equipment 6 - 15 Leasehold improvements are amortized using the straight-line method over the term of the lease or the estimated useful life of the improvements, whichever is shorter. Impairment of long-lived assets and intangible assets subject to amortization Property and equipment and intangible assets subject to amortization are reviewed for impairment in accordance with ASC 360, "Accounting for the Impairment or Disposal of Long-Lived Assets", whenever events or changes in circumstances indicate that the carrying value of an asset may not be recoverable. The recoverability of these assets is measured by comparing the carrying amounts to the future undiscounted cash flows the assets are expected to generate. If property and equipment and intangible assets are considered to be impaired, the impairment to be recognized equals the amount by which the carrying value of the asset exceeds its fair market value. In determining the fair values of long-lived assets for purpose of measuring impairment, the Company's assumptions include those that market participants will consider in valuations of similar assets. In 2014 and 2015, the Company recorded impairment charges of $19,941 and $8,471, respectively, with respect to intangible assets subject to amortization. No such impairment charges were recorded in 2016 (see Note 6). In addition, in connection with the restructuring plans of the Company in 2014 and 2015, the Company recorded, an impairment charge of $632 and Goodwill and other intangible assets Goodwill reflects the excess of the purchase price of business acquired over the fair value of net assets acquired. Goodwill is not amortized but instead is tested for impairment, in accordance with ASC 350, “Intangibles – Goodwill and Other”, at the reporting unit level (as of December 31, 2016, the Company had two reporting units – Search monetization and Undertone), at least annually at December 31 each year, or more frequently if events or changes in circumstances indicate that the carrying value may be impaired. The first step, identifying a potential impairment, compares the fair value of the reporting unit with its carrying amount. If the carrying amount exceeds its fair value, the second step would need to be performed; otherwise, no further step is required. The second step, measuring the impairment loss, compares the implied fair value of the goodwill with the carrying amount of the goodwill. Any excess of the carrying amount over the applied fair value is recognized as an impairment loss, and the carrying value of goodwill is written down to fair value. The Company determined that certain indicators of potential impairment existed during 2015 and 2016, which triggered goodwill impairment analysis for its reporting units. These indicators included a decrease in the Company’s share price and lower than expected sales and cash flow, as well as management decisions to abandon certain R&D projects. Based on the goodwill assessment for the search monetization reporting unit and Grow Mobile reporting unit, in 2015, the Company determined that the carrying amount of the reporting units exceeds their fair value and recorded an impairment of $87,043 (out of which $16,165 is included as a loss from discontinued operation) to its goodwill. No such impairment charges were recorded in 2014 or in 2016 . The majority of the inputs used in the discounted cash flow model to determine the fair value of the reporting units are unobservable and thus are considered to be Level 3 inputs. Intangible assets that are not considered to have an indefinite useful life are amortized over their estimated useful lives. The acquired customer arrangements, technology and logo are amortized over their estimated useful lives in proportion to the economic benefits realized. This accounting policy results in accelerated amortization of such intangible assets as compared to the straight-line method. Deferred Financing Costs Direct and incremental costs related to the issuance of debt are capitalized as deferred financing costs and are deducted from the carrying amount of that debt in the consolidated balance sheets. The Company amortizes deferred financing costs using the effective-interest method and records such amortization as interest expense. Revenue recognition The Company generates revenues primarily from two major sources: Search Revenues Advertising Revenues The Company evaluates whether Search and Advertising Revenues should be presented on a gross basis, which is the amount that a customer pays for the service, or on a net basis, which is the amount of the customer payment less amounts the Company pays to publishers. In making that evaluation, the Company considers indicators such as whether the Company is the primary obligor in the arrangement and assumes risks and rewards as a principal or an agent, including the credit risk, whether the Company has latitude in establishing prices and selecting its suppliers and whether it changes the products or performs part of the service. The evaluation of these factors is subject to significant judgment and subjectivity. Generally, in cases in which the Company is primarily obligated in a transaction, is subject to risk, involved in the determination of the product (or the service) specifications, separately negotiates each revenue service agreement or publisher agreement and can have several additional indicators, revenue is recorded on a gross basis. The Company recognizes revenue when all four revenue recognition criteria have been met: persuasive evidence of an arrangement exists; services are rendered; the fee or price charged is fixed or determinable; and collectability is reasonably assured. Deferred revenue is recorded when payments are received from customers in advance of the Company's rendering of services. Cost of revenues Cost of revenues consists primarily of expenses associated with the operation of the Company’s data centers, including depreciation, labor, energy and bandwidth costs, amortization of acquisition-related intangible assets, as well as content acquisition costs. The direct cost relating to search revenues is immaterial. Customer acquisition costs and media buy Customer acquisition costs and media buy consist of amounts paid to publishers who distribute the Company’s search applications and services and other products and the costs of advertising inventory incurred to deliver ads. Customer acquisition costs are primarily based on revenue share arrangements with minimum guaranty and are charged as incurred. Research and development costs Research and development costs are charged to the statement of income as incurred, except for certain costs relating to internally developed software, which are capitalized. The Company capitalizes certain internal and external software development costs, consisting primarily of direct labor associated with creating the internally developed software. Software development projects generally include three stages: (i) the preliminary project stage (all costs expensed as incurred); (ii) the application development stage (costs are capitalized) and (iii) the post implementation/operation stage (all costs expensed as incurred). The costs capitalized in the application development stage primarily include the costs of designing the application, coding and testing of the system. Capitalized costs are amortized using the straight-line method over the estimated useful life of the software, generally three years, once it is ready for its intended use. The Company believes that the straight-line recognition method best approximates the manner in which the expected benefit will be derived. Management evaluates the useful lives of these assets on an annual basis and tests for impairment whenever events or changes in circumstances occur that could impact the recoverability of these assets. As a result of changes in circumstances, management decided to abandon certain projects and therefore recorded an impairment charge of $3,390 in 2015, which is included as a loss from discontinued operation. Capitalized software development costs, net of accumulated amortization of $557 and $4,393 are included in property and equipment in the consolidated balance sheets as of December 31, 2015 and 2016, respectively (see Note 5). Income taxes The Company accounts for income taxes in accordance with ASC 740, "Income Taxes". This Statement prescribes the use of the liability method, whereby deferred tax asset and liability account balances are determined based on differences between financial reporting and tax bases of assets and liabilities and are measured using the enacted tax rates and laws that will be in effect when the differences are expected to reverse. To the extent necessary, the Company provides a valuation allowance to reduce deferred tax assets to their estimated realizable value. The Company accounts for uncertain tax positions in accordance with ASC 740, which contains a two-step approach for recognizing and measuring uncertain tax positions. The first step is to evaluate the tax position taken or expected to be taken in a tax return by determining if the weight of available evidence indicates that it is more likely than not that the tax position will be sustained on audit, including resolution of any related appeals or litigation processes. The second step is to measure the tax benefit as the largest amount that is more than 50% likely to be realized upon ultimate settlement. The Company accrued interest and penalties related to unrecognized tax benefits in its financial expenses. Severance pay The majority of the Company's agreements with employees in Israel are in accordance with section 14 of the Severance Pay Law, 1963 (“Section 14”), where the Company's contributions for severance pay is paid to the employee upon termination instead of the severance liability that would otherwise be payable under the law as aforementioned. Upon contribution to a fund, based on the full amount of the employee's monthly salary, and release of the fund to the employee, no additional severance payments are required to be made by the Company to the employee. Therefore, the related obligation and amounts deposited on behalf of such obligation are not stated on the balance sheet, as the Company is legally released from obligation to such employees once the deposit amounts have been paid. The Company's liability for severance pay to its Israel-based employees not under Section 14, is calculated pursuant to Israel's Severance Pay Law based on the most recent monthly salaries of such employees, multiplied by the number of years of their employment, or a portion thereof, as of the balance sheet date. This liability is fully provided for by monthly deposits in insurance policies and by an accrual. The deposited funds include profits and losses accumulated up to the balance sheet date and they may be withdrawn only upon the fulfillment of the obligation pursuant to Israel's Severance Pay Law. Severance expenses from continuing operations for the years ended December 31, 2014, 2015 and 2016 amounted to $3,330, $2,310 and $2,917, respectively. The balances of severance deposits and accrued severance pay are immaterial and included in other assets and other long-term liabilities on the accompanying balance sheets, respectively. Employee benefit plan The Company’s U.S. operations maintain a retirement plan (the “U.S. Plan”) that qualifies as a deferred salary arrangement under Section 401(k) of the Internal Revenue Code. Participants in the U.S. Plan may elect to defer a portion of their pre-tax earnings, up to the Internal Revenue Service’s annual contribution limit. The Company matches 100% of each participant’s contributions , , Total employer 401(k) contributions for the years ended December 31, 2014, 2015 and 2016 were $116, $247 and $1,018, respectively. Comprehensive income (loss) The Company accounts for comprehensive income (loss) in accordance with ASC 220, "Comprehensive Income". This statement establishes standards for the reporting and display of comprehensive income and its components in a full set of general purpose financial statements. Comprehensive income generally represents all changes in shareholders' equity during the period except those resulting from investments by, or distributions to, shareholders. The Company determined that its other comprehensive income (loss) relates to hedging derivative instruments and foreign currency translation adjustments. Net earnings per share In accordance with ASC 260, "Earnings Per Share", basic net earnings per share ("Basic EPS") is computed by dividing net earnings attributable to ordinary shareholders by the weighted average number of ordinary shares outstanding during the period. Diluted net earnings per share ("Diluted EPS") reflects the potential dilution that could occur if stock options and other commitments to issue ordinary shares were exercised or equity awards vested, resulting in the issuance of ordinary shares that could share in the net earnings of the Company. The weighted average number of ordinary shares related to the outstanding options, restricted shares, convertible debt and warrants excluded from the calculations of diluted net earnings per ordinary share, as these securities are anti-dilutive, was 3,766,080, 14,179,439 and 10,700,363 for the years ended December 31, 2014, 2015 and 2016, respectively. Concentrations of credit risk Financial instruments, which potentially subject the Company to a concentration of credit risk, consist primarily of cash and cash equivalents, bank deposits, restricted cash and accounts receivable. The majority of the Company’s cash and cash equivalents, bank deposits and restricted cash are invested in USD instruments with major banks in the U.S. and Israel. Deposits in the U.S. may be in excess of insured limits and are not insured in other jurisdictions. Generally, these deposits may be redeemed upon demand and, therefore, bear minimal risk. The Company’s major customers are financially sound, and the Company believes low credit risk is associated with these customers. To date, the Company has not experienced any material bad debt losses. Total expenses for doubtful debts during 2014, 2015 and 2016 amounted to $1,035, $104 and $152, respectively. Stock-based compensation The Company accounts for stock-based compensation under ASC 718, "Compensation - Stock Compensation", which requires the measurement and recognition of compensation expense based on estimated fair values for all share-based payment awards made to employees and directors. ASC 718 requires companies to estimate the fair value of equity-based awards on the date of grant, using an option-pricing model. The value of the portion of the award that is ultimately expected to vest is recognized as an expense over the requisite service periods in the Company's consolidated statement of income. ASC The Company recognizes compensation expenses for the value of its awards, which have graded vesting based on service conditions, using the straight-line method, over the requisite service period of each of the awards, net of estimated forfeitures. Estimated forfeitures are based on actual historical pre-vesting forfeitures. For performance-based stock units, the Company recognizes compensation expenses for the value of such awards, if and when the Company concludes that it is probable that a performance condition will be achieved based on the accelerated attribution method over the requisite service period. The Company should reassess the probability of vesting at each reporting period for awards with performance conditions and adjust compensation cost based on its probability assessment. The Company accounted for changes in award terms as a modification in accordance with ASC 718. A modification to the terms of an award should be treated as an exchange of the original award for a new award with total compensation cost equal to the grant-date fair value of the original award plus the incremental value measured at the same date. Under ASC 718, the calculation of the incremental value is based on the excess of the fair value of the new (modified) award based on current circumstances over the fair value of the original award measured immediately before its terms are modified based on current circumstances. The Company estimates the fair value of its new stock-based awards using the Binomial option-pricing model. The following table presents the various assumptions used to estimate the fair value of the Company's stock-based awards granted to employees and directors in the periods presented: Year ended December 31 2014 2015 2016 Risk-free interest rate 0.10% - 1.72% 0.17% - 1.76% 0.46% - 1.73% Expected volatility 44.44% - 51.62% 43.49% - 50.31% 49.49% - 53.54% Early exercise factor 100% - 256% 160% - 210% 150% - 200% Forfeiture rate post vesting 0% - 15% 0% - 18% 5% - 20% Dividend yield 0% 0% 0% The expected volatility is calculated based on the actual historical stock price movements of the Company’s stock. The expected option term represents the period that the Company’s stock options are expected to be outstanding. The early exercise factor and the forfeiture rate post-vesting are calculated based on the Company’s estimated early exercise and post-vesting forfeiture multiples, which are based on comparable companies and on actual historical data. The risk-free interest rate is based on the yield from U.S. Treasury zero-coupon bonds, with a term which is equivalent to the expected term of the stock-based awards. The dividend yield is based on the current decision of the Company’s management not to distribute any dividends. The fair value of restricted stock units (“RSU”) is based on the market value of the underlying shares on the date of grant. Derivative instruments The Company accounts for derivatives and hedging based on ASC 815, "Derivatives and Hedging", which requires recognizing all derivatives on the balance sheet at fair value. If the derivatives meet the definition of a cash flow hedge and are so designated, depending on the nature of the hedge, the effective portion of the gain or loss on the derivative is reported as a component of other comprehensive income and reclassified into earnings in the same period, or periods, during which the hedged transaction affects earnings. The ineffective portion of a derivative’s change in fair value, if any, is recognized in earnings, as well as gains and losses from a derivative’s change in fair value that are not designated as hedges are recognized in earnings immediately. Starting 2014, in order to mitigate the potential adverse impact on cash flows resulting from fluctuations in the exchange rate of the new Israeli shekels (“ILS”), the Company started to hedge portions of its forecasted expenses denominated in ILS with swap and options contracts. In addition, the Company has entered into a cross currency interest rate swap agreement in order to transform cash flow in ILS into USD of interest payments and principal as derived from the Company’s convertible debt conditions (see Note 10). The Company does not speculate in these hedging instruments in order to profit from foreign currency exchanges, nor does it enter into trades for which there are no underlying exposures. The Company follows the requirements of ASC No. 815, ”Derivatives and Hedging” (“ASC 815”), which requires companies to recognize all of their derivative instruments as either assets or liabilities on the balance sheet at fair value. The accounting for changes in fair value (i.e. gains or losses) of a derivative instrument depends on whether it has been designated and qualifies as part of a hedging transaction and further, on the type of hedging transaction. For those derivative instruments that are designated and qualify as hedging instruments, a company must designate the hedging instrument, based upon the exposure being hedged, as a fair value hedge, cash flow hedge, or a hedge of a net investment in a foreign operation. To protect against the increase in value of forecasted foreign currency cash flow resulting mainly from salaries and related benefits and taxes paid in ILS during the year, the Company hedges portions of its anticipated payroll denominated in ILS for a period of one to twelve months with forward and options contracts (the “Hedging Contracts”). Accordingly, when the USD strengthens against the ILS, the decline in present value of future ILS currency expenses is offset by losses in the fair value of the Hedging Contracts. Conversely, when the USD weakens, the increase in the present value of future ILS expenses is offset by gains in the fair value of the Hedging Contracts. These Hedging Contracts are designated as cash flow hedges. Additionally, in order to mitigate the potential adverse impact of the fluctuations in the ILS-USD exchange rate in connection with the convertible debt (see Note 10), the Company has entered into a cross currency interest rate SWAP agreement (the “SWAP”) in order to hedge the future interest and principal payments, which are all denominated in ILS. However, since the convertible debt is measured at fair value at each reporting date, the SWAP does not qualify and was not designated as a cash flow hedge under ASC 815. In order to limit the Company’s interest expenses derived from the secured credit agreement of $50,000 in which the Company entered concurrently with the closing of the Undertone acquisition (see Note 6), the Company has purchased a Cap Option for the interest amounts expected to be paid till June 2018. The cap option is designated as cash flow hedge under ASC 815. The swap contracts were not designated as hedging instruments and therefore gains or losses resulting from the change of their fair value are recognized in "financial expenses, net". The Company measured the fair value of these contracts in accordance with ASC 820, "Fair Value Measurement and Disclosures", and they were classified as level 2. The notional value of the Company’s derivative instruments as of December 31, 2015 and 2016, amounted to $57,052 and $72,569, respectively. Notional values in USD are translated and calculated based on the spot rates for options and swap. Gross notional amounts do not quantify risk or represent assets or liabilities of the Company; however, they are used in the calculation of settlements under the contracts. Fair value of financial instruments The carrying amounts of financial instruments carried at cost, including cash and cash equivalents, short-term deposits, restricted cash, accounts receivable, prepaid expenses and other assets, accounts payable, accrued expenses and other liabilities approximate their fair value due to the short-term maturities of such instruments. The Company follows the provisions of ASC No. 820, “Fair Value Measurement” (“ASC 820”), which defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. In determining a fair value, the Company uses various valuation approaches. ASC 820 establishes a hierarchy for inputs used in measuring fair value that maximizes the use of observable inputs and minimizes the use of unobservable inputs by requiring that the most observable inputs be used when available. Observable inputs are inputs that market participants would use in pricing an asset or liability, based on market data obtained from sources independent of the Company. Unobservable inputs are inputs that reflect assumptions that market participants would use in pricing an asset or liability, based on the best information available under given circumstances. The hierarchy is broken down into three levels, based on the observability of inputs and assumptions, as follows: · Level 1 · Level 2 · Level 3 Treasury shares In the past, the Company repurchased its ordinary shares on the open market. The Company holds those shares as treasury shares and presents their cost as a reduction of shareholders' equity. Business combinations The Company accounted for business combination in accordance with ASC 805, "Business Combinations". ASC 805 requires recognition of assets acquired, liabilities assumed, and any non-controlling interest at the acquisition date, measured at their fair values as of that date. Any excess of the fair value of net assets acquired over purchase price is allocated to goodwill and any subsequent changes in estimated contingencies are to be recorded in earnings. In addition, changes in valuation allowance related to acquired deferred tax assets and in acquired income tax position are to be recognized in earnings. Acquisition related costs are expensed to the statement of income in the period incurred. Discontinued operations Under ASC 205, "Presentation of Financial Statements - Discontinued Operation", when a component of an entity, as defined in ASC 205, has been disposed of or is classified as held for sale, the results of its operations, including the gain or loss on its disposal are classified as discontinued operations and the assets and liabilities of such component are classified as assets and liabilities attributed to discontinued operations, provided that the operations, assets and liabilities and cash flows of the component have been eliminated from the entity’s consolidated operations and the entity will no longer have any significant continuing involvement in the operations of the component. In August 2016, the Company completed the sale of the GME business, including the intellectual property, know-how and technology, for total consideration of $1,750, which was included in net loss from discontinued operations in the consolidated statement of income for the year ended December 31, 2016 . The results of the discontinued operations , Year ended December 31, 2014 2015 2016* Costs and expenses 7,719 7,444 5,192 Impairment of intangible assets and goodwill - 19,555 - Gain on disposal of the discontinued operations - - (1,750 ) Loss before taxes on income (7,719 ) (26,999 ) (3,442 ) Taxes on income 1,235 - 795 Total net loss on discontinued operations $ (6,484 ) $ (26,999 ) $ (2,647 ) * Represent the results of the discontinued operations until their disposal. Depreciation expenses from discontinued operations totaled $92, $550 and $71, for the years ended December 31, 2014, 2015 and 2016, respectively. Reclassifications Certain financial statement data for prior years has been reclassified to conform to current year financial statement presentation. Recent Accounting Pronouncements In May 2014, the FASB issued Accounting Standards Update No. 2014-09 (ASU 2014-09) "Revenue from Contracts with Customers." ASU 2014-09 supersedes the revenue recognition requirements in “Revenue Recognition (Topic 606)”, and requires entities to recognize revenue when it transfers promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled to in exchange for those goods or services. Topic 606 was further amended during 2016 as follows: · In March 2016 by ASU 2016-08, Revenue from Contracts with Customers (Topic 606): Principal versus Agent Considerations (Reporting Revenue Gross versus Net), which clarifies the implementation guidance on principal versus agent considerations. The guidance includes indicators to assist an entity in determining whether it controls a specified good or service before it is transferred to the customers. · In April 2016, by 2016-10, Revenue from Contracts with Customers (Topic 606): Identifying Performance Obligations and Licensing, that clarified two aspects of ASC 606, identifying performance obligations and the licensing implementation guidance, while retaining the related principles of those areas. · In May 2016, by ASU No. 2016-12, Revenue from Contracts with Customers (Topic 606): Narrow-Scope Improvements and Practical Expedients. ASU 2016-12 address certain issues in the guidance on assessing collectability, presentation of sales taxes, noncash consideration, and completed contracts and contract modifications at transition. As currently issued and amended, ASC 606 is effective for annual reporting periods beginning after December 15, 2017, including interim periods within that reporting period, though early adoption is permitted for annual reporting periods beginning after December 15, 2016 using either of two methods: (1) full retrospective application or (2) modified retrospective application. The Company's management is currently evaluating the impact that the new principal versus agent guidance may have on the presentation of its |
FAIR VALUE OF FINANCIAL INSTRUM
FAIR VALUE OF FINANCIAL INSTRUMENTS | 12 Months Ended |
Dec. 31, 2016 | |
FAIR VALUE OF FINANCIAL INSTRUMENTS [Abstract] | |
FAIR VALUE OF FINANCIAL INSTRUMENTS | NOTE 3: FAIR VALUE OF FINANCIAL INSTRUMENTS The following table present assets and liabilities measured at fair value on a recurring basis as of December 31, 2016: Fair value measurements using input type Level 1 Level 2 Level 3 Total Assets: Derivative assets $ - $ 1,117 $ - $ 1,117 Total financial assets $ - $ 1,117 $ - $ 1,117 Liabilities: Payment obligation in connection with acquisitions $ - $ - $ 7,653 $ 7,653 Derivative liabilities - 84 - 84 Convertible debt 29,526 - - 29,526 Total financial liabilities $ 29,526 $ 84 $ 7,653 $ 37,263 The following table present assets and liabilities measured at fair value on a recurring basis as of December 31, 2015: Fair value measurements using input type Level 1 Level 2 Level 3 Total Assets: Derivative assets $ - $ 608 $ - $ 608 Total financial assets $ - $ 608 $ - $ 608 Liabilities: Payment obligation in connection with acquisitions $ - $ - $ 49,124 $ 49,124 Derivative liabilities - 214 - 214 Convertible debt 35,463 - - 35,463 Total financial liabilities $ 35,463 $ 214 $ 49,124 $ 84,801 The following table summarizes the changes in the Company’s liabilities measured at fair value using significant unobservable inputs (Level 3), during the year ended December 31, 2015 and 2016: Total fair value as of January 1, 2015 $ 13,645 Accretion of contingent liability related to acquisition 311 Change in fair value of contingent consideration related to acquisition (6,564 ) Settlements (2,500 ) Fair value of payment obligation in connection with Undertone acquisition 44,023 Reclassification to accrued expenses (189 ) Change in fair value recognized in earnings with respect to the employees of Grow Mobile 398 Total fair value as of December 31, 2015 $ 49,124 Accretion and interest of payment obligation related to acquisition $ 1,303 Settlements (7,537 ) Change to payment obligation as a result of working capital adjustment 309 Amendment to the merger agreement (35,546 ) Total fair value as of December 31, 2016 $ 7,653 |
ACQUISITIONS
ACQUISITIONS | 12 Months Ended |
Dec. 31, 2016 | |
Business Combinations [Abstract] | |
ACQUISITIONS | NOTE 4: ACQUISITIONS a. Interactive Holding Corp. On November 30, 2015, The Company executed an Agreement and Plan of Merger (the “Merger Agreement”) pursuant to which the Company consummated, on the same date, the acquisition of 100% of the shares of Interactive Holding Corp., a Delaware corporation, and its subsidiaries (collectively referred to as "Undertone") for a total preliminary purchase price of $133,101, comprised of the following: 1. $89,078 paid in cash on November 30, 2015; 2. $1,182 paid in cash on January 29, 2016; 3. An amount of $2,143 excess in tax advances paid in 2016 upon refund from tax authorities; 4. An amount of $3,000 to be paid in installments over the period ending September 2017 , , 5. $16,000 were retained as a holdback to cover potential claims until May 31, 2017, for which a liability of $14,391 was recorded at fair value ($14,476 and $14,129 at December 31, 2015 and August 2, 2016, respectively), and an amount of $20,000, deferred consideration payment, bearing 10% annual 6. Working capital adjustment in the amount of $1,498. In addition to the purchase price detailed above, the Company incurred acquisition related costs totaling $4,804 , Adjustments to purchase price: On August 2, 2016, the Company executed an amendment to the Merger Agreement, pursuant to which, the Company paid $22,000 and eliminated $35,546 at fair value, of obligations. Under said amendment, the Company reserved its right to claim indemnification only for certain material potential claims until May 2017. As a result of the amendment, the Company reduced the purchase price by $13,546. Final purchase price amounted to $119,768 including a working capital final adjustment of $213 in 2016 . Adjustments to the purchase price allocation: As of December 31, 2015, the estimated fair values were preliminary and based on the information that was available as of the closing date. In 2016, the Company recognized an adjustment of $590 to the goodwill balance, as a result of changes made to the preliminary amounts recognized for assets and liabilities, during the measurement period. As of December 31, 2016, the Company finalized the valuation and completed the purchase price allocation. The final allocation of the purchase price, to assets acquired and liabilities assumed, is as follows: Cash and cash equivalents $ 7,378 Accounts receivable 38,493 Prepaid expenses and other assets 4,427 Long term restricted cash 1,182 Property and equipment 1,905 Deferred taxes 815 Accounts payable (23,152 ) Accrued expenses and other liabilities (11,083 ) Deferred revenues (1,047 ) Long term loan, including current maturities (48,601 ) Deferred tax liability (20,241 ) Intangible assets 63,200 Goodwill 106,492 Total purchase price $ 119,768 The main reason for the acquisition was to continue the strategic evolution of the Company into a global technology company delivering high-quality advertising solutions to brands and publishers. The desired strategic benefits were to create a differentiated independent ad tech platform with significant scale and profitability, add noteworthy relationships with premium brands, agencies and publishers, enhance mobile footprint, extend programmatic capabilities, broaden product suite with the addition of proprietary, high-impact creative formats and substantially diversify revenue base. Under business combination accounting principles, the total purchase price was allocated to Undertone's net tangible and intangible assets based on their estimated fair values as set forth below. The excess of the purchase price over the net tangible and identifiable intangible assets was recorded as goodwill. The goodwill is attributable primarily to the strategic opportunities aforementioned. The related goodwill and intangible assets are not deductible for tax purposes. Intangible assets: The fair value of intangible assets was based on the market participant approach to valuation, performed by a third-party valuation firm, using estimates and assumptions provided by management. The following table sets forth the components of intangible assets associated with the Undertone acquisition: Estimated useful life Acquired technology (1) $ 19,500 5 years Customer relationships (2) 30,000 6 years Backlog (3) 4,200 less than 1 year Tradename (4) 9,500 4 years Total amount allocated to intangible assets $ 63,200 (1) Acquired technology represents the combined technology for delivering and administering Undertone’s attention-grabbing, full-page video advertisements and other advertising formats. (2) Customer relationships represent the existing relationships and agreements with Undertone’s brand advertisers. (3) Backlog represents customer insertion orders that are highly probable to be turned into revenues in the near future. (4) Tradename represents trade names and logos under which Undertone markets and sells its services. b. Make Me Reach SAS On February 10, 2015, the Company consummated the acquisition of 100% of the shares of Make Me Reach SAS, a private French company headquartered in Paris, France ("MMR"). MMR enables advertisers to efficiently and effectively scale their advertising campaigns on social media, with a specific focus on optimizing mobile ad campaigns. MMR is a Facebook Preferred Marketing Developer (PMD) and Twitter Marketing Platform Partner (MPP). The acquisition of MMR is part of the Company’s strategy to channel its future growth efforts towards the mobile advertising market, to extend its mobile marketing technology by adding the ability to advertise on social media and to provide developers a more effective mobile advertising tool. Additionally, the acquisition of MMR established the Company’s first office in Europe. The acquisition has been accounted for as a business combination under ASC No. 805, “Business Combination”. The purchase price was $6,394 in cash and $4,378 in the form of 1,437,510 ordinary shares. In the subsequent 12 months, the Company was required to pay additional $442 in cash and issued an additional $442 in ordinary shares to the founder of MMR, subject to retention conditions, which were paid in full in February 2016. In addition, certain key employees of MMR were entitled to retention payments of $144 in cash and $63 in the form of 18,998 ordinary shares, which were paid upon closing. An additional $266 in cash and $208 in the form of 92,348 ordinary shares that were subject to retention conditions, were paid to such key employees in February 2016. Amounts subject to retention conditions were included as payroll expenses in the statement of operations. In addition, the Company incurred acquisition related costs totaling $139, included in general and administrative expenses. Acquisition related costs include legal and accounting fees, as well as other external costs directly related to the acquisition. The allocation of the purchase price to assets acquired and liabilities assumed was as follows: Cash $ 1,050 Accounts receivable 666 Prepaid expenses and other assets 86 Property and equipment 87 Accounts payable (305 ) Accrued expenses and other liabilities (433 ) Deferred revenues (126 ) Deferred tax liability (1,159 ) Intangible assets 3,454 Goodwill 7,452 Total purchase price $ 10,772 The following table sets forth the components of intangible assets associated with the acquisition: Estimated useful life Acquired technology $ 1,261 5 years Customer relationship 395 5 years Distribution channel 1,798 5 years Total amount allocated to intangible assets $ 3,454 In performing the purchase price allocation, the Company considered, among other factors, analysis of historical financial performance, the best use of the acquired assets and estimates of future performance of MMR's products. In its allocation, the Company also conducted a valuation of intangible assets based on a market participant approach to valuation using an income approach and in connection therewith considered the report of an independent third party valuation firm and estimates and assumptions provided by management. |
PROPERTY AND EQUIPMENT, NET
PROPERTY AND EQUIPMENT, NET | 12 Months Ended |
Dec. 31, 2016 | |
Property, Plant and Equipment [Abstract] | |
PROPERTY AND EQUIPMENT, NET | NOTE 5: PROPERTY AND EQUIPMENT, NET December 31, 2015 2016 Cost: Computers and peripheral equipment $ 11,775 $ 9,607 Office furniture and equipment 2,837 2,679 Leasehold improvements 6,981 7,142 Capitalized software 557 5,005 Total cost 22,150 24,433 Less: accumulated depreciation and amortization 9,436 10,228 Property and equipment, net $ 12,714 $ 14,205 Depreciation and amortization of capitalized software costs from continued operations totaled $2,583, $2 , In connection with the 2014 restructuring plan, the Company impaired leasehold improvements in the amount of $632 relating to office space that will no longer be in use. In connection with the 2015 restructuring plan, the Company recorded an impairment of $159 relating to disposal of certain office furniture and equipment (see Note 16) which are included in restructuring charges in the statement of income. In addition, in connection with Growmobile platforms, the Company impaired software capitalized costs of $3,390, which are included as a loss from discontinued operations. During 2016, the Company capitalized software development costs of $4,605 (including $14 of stock-based compensation). Amortization expense for the related capitalized internally developed software in 2016 totaled $769, and is included in Cost of revenues in the accompanying consolidated statements of operations. During 2015, the Company capitalized software development costs of $4,192 (including $187 of stock-based compensation). Amortization expense for the related capitalized internally developed software in 2015 totaled $245, and is included in Net loss from discontinued operations in the accompanying consolidated statements of operations. |
GOODWILL AND OTHER INTANGIBLE A
GOODWILL AND OTHER INTANGIBLE ASSETS, NET | 12 Months Ended |
Dec. 31, 2016 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
GOODWILL AND OTHER INTANGIBLE ASSETS, NET | NOTE 6: GOODWILL AND OTHER INTANGIBLE ASSETS, NET a. Goodwill The changes in the net carrying amount of goodwill in 2015 and 2016 were as follows: Balance as of January 1, 2015 $ 164,092 Acquisition of MMR 7,452 Acquisition of Undertone 119,448 Impairment (87,043 ) Revaluation (foreign currency exchange) (256 ) Balance as of December 31, 2015 $ 203,693 Final adjustments to Undertone's purchase price (see Note 4) (12,956 ) Balance as of December 31, 2016 $ 190,737 b. Intangible assets, net The following is a summary of intangible assets as of December 31, 2016: December 31, 2015 Amortization OCI Disposals December 31, 2016 Acquired technology $ 30,715 $ - $ (41 ) $ - $ 30,674 Accumulated amortization (8,963 ) (5,543 ) 16 - (14,490 ) Impairment (956 ) - - - (956 ) Acquired technology, net 20,796 (5,543 ) (25 ) - 15,228 Customer relationships 31,911 - (13 ) - 31,898 Accumulated amortization (1,161 ) (12,750 ) 6 - (13,905 ) Impairment (91 ) - - - (91 ) Customer relationships, net 30,659 (12,750 ) (7 ) - 17,902 Tradename and other 22,483 - (59 ) (4,200 ) 18,224 Accumulated amortization (4,609 ) (3,681 ) 11 4,200 (4,079 ) Impairment (3,257 ) - - - (3,257 ) Tradename and other, net 14,617 (3,681 ) (48 ) - 10,888 Intangible assets, net $ 66,072 $ (21,974 ) $ (80 ) $ - $ 44,018 The following is a summary of intangible assets as of December 31, 2015: December 31, 2014 Additions Amortization Impairment OCI Disposals December 31, 2015 Acquired technology $ 38,515 $ 20,761 $ - $ - $ (46 ) $ (28,515 ) $ 30,715 Accumulated amortization (15,698 ) - (4,374 ) - 2 11,107 (8,963 ) Impairment (14,347 ) - - (4,017 ) - 17,408 (956 ) Acquired technology, net 8,470 20,761 (4,374 ) (4,017 ) (44 ) - 20,796 In-process R&D 2,000 - - - - (2,000 ) - Impairment (2,000 ) - - - - 2,000 - In-process R&D, net - - - - - - - Customer relationships 3,144 30,395 - - (14 ) (1,614 ) 31,911 Accumulated amortization (903 ) - (766 ) - - 508 (1,161 ) Impairment - - - (1,197 ) - 1,106 (91 ) Customer relationships, net 2,241 30,395 (766 ) (1,197 ) (14 ) - 30,659 Tradename and other 11,911 15,498 - - (66 ) (4,860 ) 22,483 Accumulated amortization (2,138 ) - (3,739 ) - 2 1,266 (4,609 ) Impairment (3,594 ) - - (3,257 ) - 3,594 (3,257 ) Tradename and other, net 6,179 15,498 (3,739 ) (3,257 ) (64 ) - 14,617 Intangible assets, net $ 16,890 $ 66,654 $ (8,879 ) $ (8,471 ) $ (122 ) $ - $ 66,072 The estimated useful life of the intangible assets are as follows: Estimated useful life Acquired technology 3-5 years Customer relationships 4-5 years Tradename and other 4-11 years In December 2014 and 2015, the Company performed an impairment review of several intangible assets that were recognized in connection with the acquisitions of Perion (see Note 1) and Grow Mobile, respectively, which resulted in total impairment charges of $19,941 and $8,471 that are included in impairment, net of change in fair value of contingent consideration in the statement of income for the years ended December 31, 2014 and 2015, respectively. Related deferred tax liabilities of $3,191 and $2,291 have also been written off and are included in taxes on income, as tax benefit, for the years ended December 31, 2014 and 2015, respectively. Such impairments resulted primarily due to lower than anticipated sales and cash flow as well as managerial decisions to abandon certain R&D projects. No such impairment charges were recorded in 2016 . Amortization of intangible assets, net, in each of the succeeding five years and thereafter is estimated as follows: 2017 $ 16,197 2018 12,028 2019 9,944 2020 4,861 2021 229 Thereafter 759 $ 44,018 |
ACCRUED EXPENSES AND OTHER LIAB
ACCRUED EXPENSES AND OTHER LIABILITIES | 12 Months Ended |
Dec. 31, 2016 | |
Payables and Accruals [Abstract] | |
ACCRUED EXPENSES AND OTHER LIABILITIES | NOTE 7: ACCRUED EXPENSES AND OTHER LIABILITIES December 31, 2015 2016 Employees and payroll accruals $ 10,190 $ 7,668 Government authorities 1,850 2,929 Professional services accruals 3,171 1,812 Other accruals 3,587 3,549 Other overhead related expenses 1,592 991 Accrued restructuring charges (see note 16) 1,756 - Hosting, software and web services accruals 497 433 Derivative liabilities 214 84 $ 22,857 $ 17,466 |
DERIVATIVES AND HEDGING ACTIVIT
DERIVATIVES AND HEDGING ACTIVITES | 12 Months Ended |
Dec. 31, 2016 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
DERIVATIVES AND HEDGING ACTIVITES | NOTE 8: DERIVATIVES AND HEDGING ACTIVITES The fair value of the Company’s outstanding derivative instruments is as follows: December 31, Balance sheet 2015 2016 Derivatives designated as hedging instruments: Foreign exchange forward contracts and other derivatives ''Prepaid expenses and other current assets'' $ 242 $ 125 ''Accrued expenses and other liabilities'' 214 84 ''Accumulated other comprehensive income'' - 36 Derivatives not designated as hedging instruments: Foreign exchange forward contracts and other derivatives ''Prepaid expenses and other current assets'' - $ 20 Cross currency SWAP ''Prepaid expenses and other current assets'' $ 366 $ 973 The decrease in unrealized gains recognized in accumulated other comprehensive income on derivatives, is as follows: December 31, 2015 2016 Option contracts $ 206 $ 175 The net losses reclassified from accumulated other comprehensive loss to the operating expenses are as follows: Gain recognized in Statements of Comprehensive Income Gain (loss) recognized in consolidated statements of Income Year ended December 31, Statement of Income item Year ended December 31, 2016 2014 2015 2016 Derivatives designated as hedging instruments: Foreign exchange options and forward contracts $ 36 "Operating expenses" $ (62 ) $ 178 $ 167 Derivatives not designated as hedging instruments: Foreign exchange options and forward contracts "Financial expenses" 125 (175 ) (16 ) SWAP "Financial expenses" - 225 608 Total $ 36 $ 63 $ 228 $ 759 |
SHORT TERM AND LONG TERM DEBT
SHORT TERM AND LONG TERM DEBT | 12 Months Ended |
Dec. 31, 2016 | |
Debt Disclosure [Abstract] | |
SHORT TERM AND LONG TERM DEBT | NOTE 9: SHOTR TERM AND LONG TERM DEBT 1. On May 17, 2012 the Company entered into loan agreements, with two Israeli Banks, pursuant to which the Company borrowed a total of $10,000. In December 2014 , 2. On November 30, 2015, concurrently with the closing of the Undertone acquisition, Interactive Holding Corp. entered into a new secured credit agreement for $50,000, due in quarterly installments from March 2016 to November 2019. The installments started at $625 per quarter, increase to $1,250 per quarter in March 2018 and require a final payment upon maturity of $35,000. The outstanding principal bears interest at LIBOR plus 5.5% per annum and is secured by substantially all the assets of the companies in the Undertone group and by guarantees of such companies. The credit is required to be prepaid by Undertone in certain circumstances, such as from proceeds of asset sales or casualty insurance policies, debt or equity offerings, or from excess cash flow in the event that Undertone's total leverage ratio exceeds specified targets, and a pro rata portion of indemnification payments (or offset of the holdback amount) under the Merger Agreement. The debt issuance cost amounted to $1,399, which was deducted from the carrying amount of that debt in the consolidated balance sheets and amortized during the term of the loan as interest expense according to the effective interest method. According to the credit agreement, Undertone has the option for prepayment , , , As of December 31, 2016, the principal outstanding balance was $42,500. Under said credit facility, Undertone is required to maintain financial covenants as of the end of each fiscal quarter as set forth in the credit facility. As of December 31, 2016, the Company satisfies all of the financial covenants. 3. On November 22, 2015, the Company borrowed $19,900 under a credit facility from an Israeli Bank. The credit facility was secured by a lien on the accounts receivable of ClientConnect Ltd., an Israeli subsidiary of Perion, from its current and future business clients and was guaranteed by Perion. As of December 31, 2015, the unpaid balance of the credit facility was $13,000 , 4. On November 28, 2016, the Company borrowed $7,000 under a credit facility from the same Israeli bank. The credit facility is guaranteed by a lien on the accounts receivable of ClientConnect Ltd., from its current and future business clients and is guaranteed by Perion. As of December 31, 2016, the utilized balance of the credit facility was $7,000 bearing annual interest of LIBOR + 3.3%. On January 26, 2017, the Company repaid the credit facility. As of December 31, 2016, the aggregate principal annual maturities according to the all of the above loan agreements were as follows: Repayment amount 2017 $ 11,150 2018 5,000 2019 33,750 Total principal payments 49,900 Less: unamortized original issue discount (1,316 ) Present value of principal payments 48,584 Less: current portion 10,656 Long-term debt $ 37,928 |
CONVERTIBLE DEBT
CONVERTIBLE DEBT | 12 Months Ended |
Dec. 31, 2016 | |
CONVERTIBLE DEBT [Abstract] | |
CONVERTIBLE DEBT | NOTE 10: CONVERTIBLE DEBT In September 2014, the Company completed a public offering in Israel of its Series L Convertible Bonds (the "Bonds"), with an aggregate par value of approximately ILS 143,500, out of which, as of December 31, 2016, approximately ILS 114,789 was outstanding, (approximately $29,854 as of December 31, 2016). The Bonds were issued at a purchase price equal to 96.5% of their par value and bear annual interest at a rate of 5%, payable semi-annually, subject to a possible increase up to 6% in the event and to the extent the Company’s debt rating is downgraded. The Bonds’ principal, denominated in ILS, is repayable in five equal annual instalments commenced on March 31, 2016. The Bonds are convertible, at the election of each holder, into the Company’s ordinary shares at a conversion price of ILS 33.605 per share ($8.74 on December 31, 2016) from the date of issuance and until March 15, 2020. The ordinary shares issued upon conversion of the Bonds will be listed on the NASDAQ Stock Market (“Nasdaq”) and the Tel-Aviv Stock Exchange (“TASE”), to extent that the Company's ordinary shares are listed thereon at the time of conversion. The conversion price is subject to adjustment in the event that the Company effects a share split or reverse share split, rights offering or a distribution of bonus shares or a cash dividend. The Company may redeem the Bonds upon delisting of the Bonds from the TASE, subject to certain conditions. In addition, the Company may redeem the Bonds or any part thereof at its discretion after December 1, 2014, subject to certain conditions. The Company elected to apply the fair value option in accordance with ASC 825, “Financial Instruments”, to the Bonds and therefore all unrealized gains and losses are recognized in earnings. As of December 31, 2016, the fair value of the Bonds, based on their quoted price at the TASE and including accrued interest of $376, was $29,526. The changes of the long-term convertible debt in 2015 and 2016 were as follows: Balance as of January 1, 2015 $ 35,752 Change in accrued interest 1,823 Change in fair value 175 Payment of interest (1,824 ) Balance as of December 31, 2015* $ 35,926 Change in accrued interest 1,586 Change in fair value 1,350 Payment of interest (1,716 ) Payment of principal (7,620 ) Balance as of December 31, 2016* $ 29,526 * include accrued interest of $463 and $376 as of December 31, 2015 and 2016, respectively In order to mitigate the potential adverse impact of the fluctuations in the ILS-USD exchange rate, the Company entered into a cross currency interest rate swap agreement (the “SWAP”) in order to hedge the future interest and principal payments of the Bonds, which are denominated in ILS. As of December 31, 2016, the Company satisfies all of the financial covenants associated with both the Bonds and the SWAP. As of December 31, 2016, the aggregate principal annual payments of the Bonds were as follows: Repayment amount 2017 $ 7,463 2018 7,464 2019 7,463 2020 7,464 $ 29,854 |
COMMITMENTS AND CONTINGENT LIAB
COMMITMENTS AND CONTINGENT LIABILITIES | 12 Months Ended |
Dec. 31, 2016 | |
Commitments and Contingencies Disclosure [Abstract] | |
COMMITMENTS AND CONTINGENT LIABILITIES | NOTE 11: COMMITMENTS AND CONTINGENT LIABILITIES a. Office lease commitments In January 2014, the Company entered into a lease agreement for new corporate offices in Holon, Israel. The lease expires in January 2025, with an option by the Company to extend for two additional terms of 24 months each. Additionally, the Company may exercise an early termination of the lease in November 2019. Certain other facilities of the Company are rented under operating lease agreements, which expire on various dates, the latest of which is in 2022. The Company recognizes rent expense under such arrangements on a straight-line basis. Furthermore, t Aggregate minimum lease commitments under the aforesaid non-cancelable operating leases as of December 31, 2016, were as follows: Minimum lease payments Minimum sublease rentals Net future minimum lease commitment 2017 $ 6 , $ 693 $ 5 , 2018 6 , 694 5 , 2019 4 , 697 3 , 2020 3,613 627 2,986 2021 3,342 695 2,647 Thereafter 6 , 970 5 , $ 30 , $ 4 , $ 25 , Facilities leasing expenses from continued operations in the years 2014, 2015 and 2016 were $1,166, $1,710 and $5,419, respectively. Car leases expenses from continued operations in the years 2014, 2015 and 2016 were $1,163, $1,046 and $790, respectively . b. Contingent purchase obligation On November 30, 2012, the Company completed the acquisition of 100% of Sweet IM’s shares. Pursuant to the terms of the Share Purchase Agreement (“SPA”) between the Company and SweetIM, the Company was obligated to pay SweetIM's shareholders, among other payments, a payment of up to $ 7,500 in cash in May 2014 if certain milestones were met (the “Contingent Payment”). The milestones were based on the Company's GAAP revenues in 2013, and the absence of certain changes in the industry in which the Company operates. On May 28, 2014, the Company paid $2,500 in respect of the Contingent Payment. Following such payment, on June 22, 2014, SweetIM’s Shareholders’ representative notified the Company claiming that the Company owes SweetIM’s shareholders the entire Contingent Payment. The Company believes that the claim is without merit and plans to defend against it vigorously. Until this dispute is resolved, the Company will maintain the $5 ,000 . , c. Legal Matters 1. In November 2013, MyMail, Ltd. (“MyMail”), a non-practicing entity, filed a lawsuit in the Eastern District of Texas alleging that ClientConnect's toolbar technology infringes one of its U.S. patents issued in September 2012, and demanding an injunction and monetary payments. In November 2014, the Company filed a Petition for Inter Partes Review ("IPR") in the United States Patent & Trademark Office, challenging the validity of the asserted claims of the patent in question. On December 31, 2014, MyMail filed an unopposed motion to stay the district court case pending resolution of the Petition for IPR. On January 9, 2015, the court granted a stay pending resolution of the Petition for IPR. On January 5, 2016, the parties have entered into a settlement agreement regarding, inter alia, the patent claim between the parties. The case was dismissed on January 8, 2016 and as a result the Company accrued for $550 as of December 31, 2015 which was paid in 2016. Conduit signed an agreement with Perion, pursuant to which, Conduit will reimburse Perion for 50% of any amounts incurred by Perion with respect to the claim above and the Company received such amount during 2016. 2. On December 22, 2015, Adtile filed a lawsuit against Perion and Intercept Interactive Inc. (“Intercept”), a subsidiary of Interactive Holding Corp., in the United States District Court for the District of Delaware. The lawsuit alleges various causes of action against Perion and Intercept, related to Intercept’s alleged unauthorized use and misappropriation of Adtile’s proprietary information and trade secrets. On February 3, 2016, Adtile Technologies Inc. filed a motion for preliminary injunction to, inter alia, prevent Undertone from creating or selling motion-activated advertisements. On June 23, 2016, the court denied Adtile’s motion for a preliminary injunction. On June 24, 2016, the court (i) granted Perion’s motion to dismiss and (ii) granted Undertone’s motion to stay the action and compel arbitration. The Company is unable to predict the outcome or range of possible loss at this stage, believes it has strong defenses against this lawsuit and intends to defend against it vigorously. From time to time, the Company is party to other various legal proceedings, claims and litigation that arise in the ordinary course of business. It is the opinion of management that the ultimate outcome of these matters will not have a material adverse effect on the Company's financial position, results of operations or cash flows. |
SHAREHOLDERS' EQUITY
SHAREHOLDERS' EQUITY | 12 Months Ended |
Dec. 31, 2016 | |
Stockholders' Equity Note [Abstract] | |
SHAREHOLDERS' EQUITY | NOTE 12: SHAREHOLDERS' EQUITY a. Ordinary shares On November 18, 2013, the shareholders resolved to increase the authorized share capital of the Company to 120,000,000 ordinary shares with a par value of ILS 0.01 each. The ordinary shares of the Company entitle their holders to voting rights, the right to receive cash dividend and the right to a share in excess assets upon liquidation of the Company. b. Private placement On December 3, 2015 (the “Effective date”), the Company completed a private placement of 4,436,898 ordinary shares for gross proceeds of $10,125 pursuant to a Securities Purchase Agreement (the “SPA”) with two investors. The purchase price per share was $2.282 per share, which was the average closing price of an ordinary share on the Nasdaq Global Select Market for the 30 trading days ending on December 1, 2015. According to the terms in the SPA, on September 1, 2016, the per share purchase price was adjusted downward to a price per share of $1.939, and the Company issued to the two investors 782,981 additional ordinary shares for no additional consideration. On November 30, 2015, the Company entered into Registration Rights Agreement (the "Agreement") with the two investors, pursuant to which the Company shall use its commercially reasonable efforts in order to file a registration statement on Form F-3 for the resale of the aforesaid Ordinary shares issued within timeframe as detailed in the Agreement. The registration statement was declared effective on March 31, 2016. The Company also agreed to other customary obligations regarding registration, including indemnification and maintenance of the applicable registration statement. c. Stock Options, Restricted Stock Units and Warrants In 2003, the Company's Board of Directors approved the 2003 Equity Incentive Plan (the "Plan") for an initial term of ten years from adoption and on December 9, 2012, extended the term of the Plan for an additional ten years. On August 7, 2013, the Company’s Board of Directors approved amendments to the Plan which include the ability to grant RSUs and restricted stock. The contractual term of the stock options is generally no more than five years and the vesting period of the options and RSUs granted under the Plan is between one and three years from the date of grant. The rights of the ordinary shares issued upon the exercise of stock options or RSUs are identical to those of the other ordinary shares of the Company. As of December 31, 2016, there were 7,719,995 ordinary shares reserved for future stock-based awards under the Plan. The following table summarizes the activities for the Company’s service-based stock options for the year ended December 31, 2016: Weighted average Number of options Exercise price Remaining contractual term (in years) Aggregate intrinsic value Outstanding at January 1, 2016 5 , , $ 5 . 3 . $ 1,709 Granted 2 248 $ 1 . Exercised (200 ) $ 2.00 Cancelled (2 , , ) $ 4 . Outstanding at December 31, 2016 5,354 , $ 4 . 2 . $ 549 Exercisable at December 31, 2016 1,552 , $ 7.88 1.43 $ 6 Vested and expected to vest at December 31, 2016 4,299 , $ 4 . 2 . $ 316 The weighted-average grant-date fair 2015 and 2016 was $4.49, $1.14 and $0.64, respectively. The aggregate intrinsic value of the outstanding stock options at December 31, 2016, represents the intrinsic value of 1,262,969 outstanding options that were in-the-money as of such date. The remaining 4,091,251 outstanding options were out-of-the-money as of December 31, 2016, and their intrinsic value was considered as zero. Total intrinsic value of options exercised during the years ended 2016 was $9.0 and less than $1.0, respectively. The number of options expected to vest reflects an estimated forfeiture rate. The following table summarizes the activities for the Company’s performance-based stock options for the year ended December 31, 2016: Weighted average Number of Performance based options Exercise price Remaining contractual term (in years) Aggregate intrinsic value Outstanding at January 1, 2016 3,550,000 $ 2.38 4.93 $ 4,793 Cancelled (2,033,334 ) $ 2.28 Outstanding at December 31, 2016 1,516,666 $ 2.53 3.77 - Exercisable at December 31, 2016 549,995 $ 2.51 3.48 - Vested and expected to vest at December 31, 2016 1,174,535 $ 2.52 3.72 - The performance based options’ vesting is contingent upon achieving specific financial targets of the Company, set at the grant date. The weighted-average grant-date fair value of performance-based options granted during the year ended December 31, 2015 , was $0.90. There is no aggregate intrinsic value of the outstanding performance-based options at 2016, since they were all are out-of-the-money as of such date. The number of options expected to vest reflects an estimated forfeiture rate. The following table summarizes additional information regarding outstanding and exercisable stock options under the Company's Stock Option Plan as of December 31, 2016: Outstanding Exercisable Range of exercise price Number of options Weighted average remaining contractual life (years) Weighted average exercise price Number of options Weighted average remaining contractual life (years) Weighted average exercise price $0.34-$2.00 1,504,493 4.28 $ 1.09 86,249 2.01 $ 1.88 $2.11-$2.52 2,200,166 3.47 $ 2.28 539,994 3.45 $ 2.26 $3.27-$3.77 1,917,666 2.70 $ 3.57 312,496 2.40 $ 3.61 $4.04-$6.93 312,521 1.21 $ 5.20 295,851 1.11 $ 5.22 $7.80-$9.14 141,875 1.03 $ 8.71 141,875 1.03 $ 8.71 $10.06-$11.94 668,540 1.46 $ 11.21 606,587 1.38 $ 11.24 $12.56-$13.54 125,625 0.46 $ 12.59 118,957 0.37 $ 12.58 6,870,886 3.03 $ 3.70 2,102,009 1.97 $ 6.47 The following table summarizes the activities for the Company’s RSUs for the year ended December 31, Number of RSUs Weighted average grant date fair value Unvested at January 1, 2016 692,320 $ 12.64 Vested (337,420 ) $ 12 .64 Cancelled (27,900 ) $ 12.64 Unvested at December 31, 2016 327,000 $ 12.64 Expected to vest after December 31, 2016 327,000 $ 12.64 RSUs expected to vest after December 31, 2016 were all vested on January 3, 2017. The Company recognized share-based compensation expenses related to its in the consolidated statements of operations as follows: Year ended December 31, 2014 2015 2016 Cost of revenues $ 249 $ 247 $ 219 Research and development 2,058 804 708 Selling and marketing 1,940 1,397 1,907 General and administrative 9,302 4,290 4,010 Restructuring costs 220 - - Total $ 13,769 $ 6,738 $ 6,844 Share-based compensation in discontinued operations $ (1,376 ) $ 878 $ 42 As of December 31, 2016, there was $1,179 of unrecognized compensation cost related to outstanding stock options and RSUs, $182 related to outstanding warrants and $332 related to outstanding performance-based options. These amounts are expected to be recognized over a weighted-average period of 1.33 years related to outstanding stock options and RSUs, 1.99 years related to outstanding warrants and 1.25 years related to outstanding performance-based options. To the extent the actual forfeiture rate is different from what has been estimated, stock-based compensation related to these awards will differ from the initial expectations. a. In connection with the termination of one of the Company officers’ employment in 2014, the Company reached a settlement under which it accelerates 479,980 stock options upon termination. In accordance with ASC 718, "Compensation - Stock Compensation", the Company reversed expenses previously recorded in connection with the unvested stock options and remeasured the award as of the termination date. Total incremental expense incurred in connection with the acceleration amounted to approximately $4,800 and was included in general and administrative expenses in 2014 . b. In connection with the restructuring in November 2014 (see Note 16), the Company accelerated 33,333 RSUs of one of its officers. Total incremental expense incurred in connection with the acceleration amounted to $220 and was included in restructuring charges . c. In connection with the Undertone acquisition, the Company granted warrants to purchase 200,000 ordinary shares, at a weighted average exercise price of $3.03 per share, to a third-party vendor that provides development services to Undertone. The weighted-average grant-date fair value of the warrants granted was $1.23. The total expense incurred in 2015 and 2016 was $2.0 and $62.0, respectively. |
FINANCIAL INCOME (EXPENSE), NET
FINANCIAL INCOME (EXPENSE), NET | 12 Months Ended |
Dec. 31, 2016 | |
Other Income and Expenses [Abstract] | |
FINANCIAL INCOME (EXPENSE), NET | NOTE 13: FINANCIAL INCOME (EXPENSE), NET Year ended December 31, 2014 2015 2016 Financial income: Interest income $ 93 $ 551 $ 204 Foreign currency translation gains, net - 572 - Change in fair value of convertible debt 2,566 - - Change in fair value of SWAP - 225 608 $ 2,659 $ 1,348 $ 812 Financial expense: Foreign currency translation losses, net $ (2,669 ) $ - $ (779 ) Interest and change in fair value of payment obligation related to acquisitions (1,067 ) (489 ) (1,303 ) Issuance costs of convertible debt (741 ) - - Interest expense on debts (733 ) (2,313 ) (5,306 ) Change in fair value of convertible debt - (175 ) (1,350 ) Bank charges and other (337 ) (310 ) (362 ) $ (5,547 ) $ (3,287 ) $ (9,100 ) Financial expense, net $ (2,888 ) $ (1,939 ) $ (8,288 ) |
INCOME TAXES
INCOME TAXES | 12 Months Ended |
Dec. 31, 2016 | |
Income Tax Disclosure [Abstract] | |
INCOME TAXES | NOTE 14: INCOME TAXES a. Income (Loss) before taxes on income Income (Loss) before taxes on income is comprised as follows: Year ended December 31, 2014 2015 2016 Domestic $ 62,991 $ (16,712 ) $ (3,393 ) Foreign (2,865 ) (24,249 ) 6,453 Total $ 60,126 $ (40,961 ) $ 3,060 b. Taxes on income Taxes on income are comprised as follows: Year ended December 31, 2014 2015 2016 Current taxes $ 24,667 $ 9,670 $ 3,480 Deferred tax benefit (13,851 ) (8,973 ) (3,268 ) Total $ 10,816 $ 697 $ 212 Taxes on income by jurisdiction were as follows: Year ended December 31, 2014 2015 2016 Domestic $ 12,951 $ 8,830 $ 3,396 Foreign (2,135 ) (8,133 ) (3,184 ) Total $ 10,816 $ 697 $ 212 Domestic: Current taxes $ 24,507 $ 8,943 $ 2,459 Deferred tax (benefit) expense (11,556 ) (113 ) 937 Total - Domestic $ 12,951 $ 8,830 $ 3,396 Foreign: Current taxes $ 160 $ 727 $ 1,021 Deferred tax benefit (2,295 ) (8,860 ) (4,205 ) Total - Foreign $ (2,135 ) $ (8,133 ) $ (3,184 ) Total income tax expense $ 10,816 $ 697 $ 212 c. Deferred Taxes Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. The significant components of the Company’s deferred tax assets and liabilities are as follows: December 31, 2015 2016 Deferred tax assets: Net operating loss carry forwards $ 10,280 $ 8,267 Research and development 4,008 3,190 Other temporary differences mainly relating to reserve and allowances 4,058 2,703 Deferred tax assets, before valuation allowance 18,346 14,160 Valuation allowance 4,212 4,739 Total deferred tax assets, net $ 14,134 $ 9,421 Deferred tax liabilities: Intangible assets $ (17,971 ) $ (10,998 ) Property and equipment, net (3,275 ) (2,393 ) Total deferred tax liabilities $ (21,246 ) $ (13,391 ) Total deferred tax liability, net $ (7,112 ) $ (3,970 ) Domestic: Long term deferred tax asset, net $ 5,006 $ 4,069 Long term deferred tax liability (261 ) - $ 4,745 $ 4,069 Foreign: Long term deferred tax asset, net $ 7,338 $ 48 Long term deferred tax liability (19,195 ) (8,087 ) $ (11,857 ) $ (8,039 ) Total deferred tax liability, net $ (7,112 ) $ (3,970 ) The $527 change in the total valuation allowance for the year ended December 31, 2016, relates to the increase in deferred taxes on operating loss carry-forwards and temporary differences for which a full valuation allowance was recorded. This amount is net of a $448 decrease due to a change in the tax rate. d. Reconciliation of the Company’s effective tax rate to the statutory tax rate in Israel A reconciliation between the theoretical tax expense, assuming all income is taxed at the statutory tax rate applicable to income of the Company, and the actual tax expense as reported in the statement of income is as follows: Year ended December 31, 2014 2015 2016 Income (Loss) before taxes on income $ 60,126 $ (40,961 ) $ 3,060 Statutory tax rate in Israel 26.5 % 26.5 % 25.0 % Theoretical tax expense (income) $ 15,933 $ (10,855 ) $ 765 Increase (decrease) in tax expenses resulting from: "Preferred Enterprise" benefits * (13,325 ) (5,654 ) (1,356 ) Non-deductible expenses including impairment charges 8,015 20,738 1,777 Deferred taxes on losses and other temporary charges for which a valuation allowance was provided, net 1,962 (4,617 ) 527 Tax adjustment in respect of different tax rate of foreign subsidiaries (793 ) 1,185 (2,032 ) Change in future tax rate - - 448 Other (976 ) (100 ) 83 Taxes on income $ 10,816 $ 697 $ 212 * Benefit per ordinary share from "Preferred Enterprise" status: Basic $ 0.17 $ 0.12 $ 0.02 Diluted $ 0.16 $ 0.12 $ 0.02 e. Income tax rates Taxable income of Israeli companies is generally subject to corporate tax at the rate of 25% for the 2013 tax year, 26.5% for the 2014 and 2015 tax years, and 25% for the 2016 tax year. On December 30, 2016, as part of the Economic Efficiency Law (Legislative Amendments for Accomplishment of Budgetary Targets for Budget Years 2017-2018), 5777-2016, the corporate tax rate was reduced to 24% for the 2017 tax year and to 23% in 2018 tax year. However, the effective tax rate payable by a company that derives income from a Preferred Enterprise (as discussed below) may be considerably lower. Non-Israeli subsidiaries are taxed according to the tax laws in their respective countries of residence. Taxes were not provided for undistributed earnings of the Company’s foreign subsidiaries. Currently the Company does not intend to distribute any amounts of its undistributed earnings as dividends. The Company intends to reinvest these earnings indefinitely in the foreign subsidiaries and pay down its debt. Accordingly, no deferred income taxes have been provided in respect of these subsidiaries. If these earnings were distributed to Israel in the form of dividends or otherwise, the Company would be subject to additional Israeli income taxes (subject to an adjustment for foreign tax credits) and foreign withholding taxes. The amount of undistributed earnings of foreign subsidiaries is immaterial. f. Law for the Encouragement of Capital Investments, 1959 The Law for Encouragement of Capital Investments, 1959 (the "Investment Law") provides tax benefits for Israeli companies meeting certain requirements and criteria. The Investment Law has undergone certain amendments and reforms in recent years. The Israeli parliament enacted a reform to the Investment Law, effective January 2011. According to the reform, a flat rate tax applies to companies eligible for the "Preferred Enterprise" status. In order to be eligible for Preferred Enterprise status, a company must meet minimum requirements to establish that it contributes to the country’s economic growth and is a competitive factor for the gross domestic product. The Company’s Israeli operations elected “Preferred Enterprise” status, starting in 2011. Benefits granted to a Preferred Enterprise include reduced tax rates. In peripheral regions (Development Area A) the reduced tax rate was 7% in 2013, 9% in 2014, 9% in 2015 and 9% in 2016. As part of Economic Efficiency Law (Legislative Amendments for Accomplishment of Budgetary Targets for Budget Years 2017-2018), 5777-2016, the tax rate for Area A will be 7.5% in 2017 onwards. In other regions the tax rate is 16%. Preferred Enterprises in peripheral regions will be eligible for Investment Center grants, as well as the applicable reduced tax rates. A distribution from a Preferred Enterprise out of the "Preferred Income" would be subject to 15% withholding tax for Israeli-resident individuals and non-Israeli residents (subject to applicable treaty rates), or 20% for dividends which are distributed on or after January 1, 2014 and from “Preferred Income” that was produced or accrued after such date. A distribution from a Preferred Enterprise out of the "Preferred Income" would be exempt from withholding tax for an Israeli-resident company. In January 2014 and as part of ClientConnect’s spin-off that occurred on December 31, 2013, Conduit received a ruling from the Israel Tax Authority (the “Spin-off Ruling”), pursuant to which Conduit released an additional amount of $270,840 of its “trapped earnings”. g. Uncertain tax positions A reconciliation of the beginning and ending balances of the total amounts of unrecognized tax benefits is as follows: December 31, 2015 2016 Balance at the beginning of the year $ 724 $ 2,367 Decrease related to prior year tax positions, net (22 ) (195 ) Increase related to current year tax positions 1,665 1,257 Balance at the end of the year $ 2,367 $ 3,429 The Company does not expect uncertain tax positions to change significantly over the next 12 months, except in the case of settlements with tax authorities, the likelihood and timing of which are difficult to estimate. The Company believes that it has adequately provided for any reasonably foreseeable outcome related to tax audits and settlements, although the final tax outcome of its tax audits could be different from that which is reflected in the Company's income tax provisions and accruals. Such differences could have a material effect on the Company's income tax provision and net income in the period in which such determination is made. The Company’s tax assessments in Israel and the U.S. for tax years prior to 2012 are considered final. The Company has net operating losses in the U.S. from prior tax periods beginning in 2005 which may be subject to examination upon utilization in future tax periods h. Tax loss carry-forwards As of December 31, 2016, the Company’s U.S. subsidiaries have net operating loss carry-forwards of $10,000. Net operating losses in the U.S. may be carried forward through periods which will expire in the years starting from 2024 up to 2034. Utilization of U.S. net operating losses may be subject to substantial annual limitation due to the "change in ownership" provisions of the Internal Revenue Code of 1986 and similar state provisions. The annual limitation may result in the expiration of net operating losses before utilization. As of December 31, 2016, the Company’s European subsidiaries have net operating loss carry-forwards of $7,340. As of December 31, 2016, Perion have net operating loss carry-forwards, in Israel, of $12,780. |
EARNINGS PER SHARE
EARNINGS PER SHARE | 12 Months Ended |
Dec. 31, 2016 | |
Earnings Per Share [Abstract] | |
EARNINGS PER SHARE | NOTE 15: EARNINGS PER SHARE The table below presents the computation of basic and diluted net earnings per common share: Year ended December 31, 2014 2015 2016 Numerator: Net income (Loss) attributable to ordinary shares - basic $ 49,310 $ (41,658 ) $ 2,848 Gains related to convertible debt, net (2,100 ) - - Net income (Loss) from continuing operations - diluted $ 47,210 $ (41,658 ) $ 2,848 Net loss from discontinued operations – basic and diluted $ (6,484 ) $ (26,999 ) $ (2,647 ) Denominator: Number of ordinary shares outstanding during the year 68,213,209 71,300,432 76,560,454 Weighted average effect of dilutive securities: Assumed conversion of convertible debt 1,090,906 - - Shares to be issued in connection with acquisition 52,664 - - Employee stock options and restricted stock units 970,632 - 113,349 Diluted number of ordinary shares outstanding - Continuing and discontinued operations 70,327,411 71,300,432 76,673,803 Basic net earnings (loss) per ordinary share Continuing operations $ 0.72 $ (0.58 ) $ 0.04 Discontinued operations $ (0.09 ) $ (0.38 ) $ (0.04 ) Net income (loss) $ 0.63 $ (0.96 ) $ 0.00 *) Diluted net earnings (loss) per ordinary share Continuing operations $ 0.67 $ (0.58 ) $ 0.04 Discontinued operations $ (0.09 ) $ (0.38 ) $ (0.04 ) Net income (loss) $ 0.58 $ (0.96 ) $ 0.00 *) Ordinary shares equivalents excluded because their effect would have been anti-dilutive 3,766,080 14,179,439 10,700,363 *) Less than $0.01 |
RESTRUCTURING COSTS
RESTRUCTURING COSTS | 12 Months Ended |
Dec. 31, 2016 | |
Restructuring and Related Activities [Abstract] | |
RESTRUCTURING COSTS | NOTE 16: RESTRUCTURING COSTS In November 2014, the Company initiated a restructuring plan of its search monetization business, mainly to reduce workforce, close certain facilities, as well as other cost saving measures. Pursuant to this restructuring plan, in 2014, the Company incurred cumulative charges of $3,981 as follows: Payroll and s hare-based compensation expenses $ 1,993 Lease facilities and related expenses 1,248 Property and equipment impairment 632 Other 108 Total restructuring costs $ 3,981 In October 2015, the Company initiated a restructuring plan of one of its consumer app development projects, mainly to reduce workforce, close certain facilities, as well as other cost saving measures. Pursuant to this restructuring plan, in 2015, the Company incurred cumulative charges of $1,052 as follows: Severance and payroll related $ 1,022 Property and equipment impairment 159 Write-off of prepaid royalties 219 Other (348 ) Total restructuring costs $ 1,052 As of December 31, 2015, the restructuring accrual amounted to $1,756, and is on the balance sheet. In 2016, there was no accrual. T December 31, 2016 December 31, 2015 Additional costs Cash payments Adjustments December 31, 2016 2015 Restructuring Plan: Severance and Payroll related $ 752 $ 272 $ (1,065 ) $ 41 $ - Rent and related expenses - 456 - (456 ) - Restructuring accrual assumed upon acquisition 1,004 - (566 ) (438 ) - $ 1,756 $ 728 $ (1,631 ) $ (853 ) $ - |
RELATED PARTY TRANSACTIONS
RELATED PARTY TRANSACTIONS | 12 Months Ended |
Dec. 31, 2016 | |
Related Party Transactions [Abstract] | |
RELATED PARTY TRANSACTIONS | NOTE 17: RELATED PARTY TRANSACTIONS ClientConnect and Conduit entered into agreements pursuant to which the parties agreed to provide and receive certain administrative and business support services and systems, including data services, information technology, information security and management information systems, for consideration at market terms, from each other. In September 2014, following the Company’s moving of its offices to Holon, the above mentioned services were no longer provided. During 2014, ClientConnect received $1,645 , of services from Conduit, and provided $142, of services to Conduit. |
MAJOR CUSTOMERS
MAJOR CUSTOMERS | 12 Months Ended |
Dec. 31, 2016 | |
Risks and Uncertainties [Abstract] | |
MAJOR CUSTOMERS | NOTE 18: MAJOR CUSTOMERS A substantial portion of the Company's revenue is derived from search fees and online advertising, the market for which is highly competitive and rapidly changing. Significant changes in this industry or in customer buying behavior would adversely affect the Company’s operating results. The following table sets forth the customers that represented 10% or more of the Company’s total revenues in each of the years presented below: Year ended December 31, 2014 2015 2016 Customer A 74 % 81 % 49 % |
GEOGRAPHIC INFORMATION
GEOGRAPHIC INFORMATION | 12 Months Ended |
Dec. 31, 2016 | |
Segment Reporting [Abstract] | |
GEOGRAPHIC INFORMATION | NOTE 19: GEOGRAPHIC INFORMATION The Company operates as one operating segment. Operating segments are defined as components of an enterprise for which separate financial information is evaluated regularly by the Chief Operating Decision Maker, who is the Chief Executive Officer, in deciding how to allocate resources and assessing performance. Over the past few years, the Company has completed several acquisitions. These acquisitions have allowed the Company to expand its offerings, presence and reach in various market segments. While the Company has offerings in multiple enterprise market segments, the Company’s business operates in one segment which is the High Impact Advertising solutions, and the Company’s Chief Operating Decision Maker evaluates the Company’s financial information and resources and assesses the performance of these resources on a consolidated basis. The following table presents the total revenues for the years ended December 31, 2014, 2015 and 2016, allocated to the geographic areas in which they were generated: Year ended December 31, 2014 2015 2016 North America (mainly U.S.) $ 292,409 $ 173,424 $ 253,960 Europe 69,281 40,612 47,012 Other 27,041 6,914 11,822 $ 388,731 $ 220,950 $ 312,794 The total revenues are attributed to geographic areas based on the location of the end-users. The following table presents the locations of the Company’s property and equipment as of December 31, 2015 and 2016: December 31, 2015 2016 Israel $ 9,161 $ 9,108 U.S. 3,071 4,402 Europe 482 695 $ 12,714 $ 14,205 |
SUBSEQUENT EVENTS
SUBSEQUENT EVENTS | 12 Months Ended |
Dec. 31, 2016 | |
Subsequent Events [Abstract] | |
SUBSEQUENT EVENTS | NOTE 20: SUBSEQUENT EVENTS On January 23, 2017, Perion announced the appointment of Doron Gerstel as Perion’s Chief Executive Officer effective April 2, 2017 and Yacov Kaufman as Interim Chief Executive Officer, until then. |
SIGNIFICANT ACCOUNTING POLICI29
SIGNIFICANT ACCOUNTING POLICIES (Policies) | 12 Months Ended |
Dec. 31, 2016 | |
Accounting Policies [Abstract] | |
Basis of consolidation | Basis of consolidation The consolidated financial statements include the accounts of Perion and its subsidiaries. All intercompany balances and transactions have been eliminated. |
Use of estimates | Use of estimates The preparation of the consolidated financial statements in conformity with U.S. Generally Accepted Accounting Principles (“GAAP”) requires management to make estimates, judgments and assumptions that affect the amounts reported and disclosed in the financial statements and the accompanying notes. Actual results could differ materially from those estimates. On an ongoing basis, the Company's management evaluates its estimates, including those related to accounts receivable, intangible assets and goodwill, fair values and useful lives of intangible assets, fair values of stock-based awards, allowance for doubtful accounts, realizability of deferred tax assets, income taxes, and contingent liabilities, among others. Such estimates are based on historical experience and on various other assumptions that are believed to be reasonable, the results of which form the basis for making judgments about the carrying values of the Company’s assets and liabilities. |
Financial statements in U.S. dollars | Financial statements in U.S. dollars The reporting currency of the Company is the U.S. dollar (“USD”). Major parts of the Company’s operations are carried out by the Company and its subsidiaries in the United States and Israel. The functional currency of these entities is the USD. Accordingly, monetary accounts maintained in currencies other than the USD are remeasured into USD, in accordance with ASC 830, "Foreign Currency Matters". All transaction gains and losses resulting from the remeasurement of the monetary balance sheet items are reflected in the statements of income as financial income or expenses, as appropriate. Management believes that the USD is the currency of the primary economic environment in which the Company operates. The financial statements of other subsidiaries, whose functional currency is determined to be their local currency, have been translated into USD. All balance sheet accounts have been translated using the exchange rates in effect at the balance sheet date. Statement of operations amounts have been translated using the average exchange rate for the applicable year. The resulting translation adjustments are reported as an accumulated other comprehensive income (loss) component of shareholders' equity. |
Cash and cash equivalents and short-term deposits | Cash and cash equivalents and short-term deposits The Company considers all short-term, highly liquid and unrestricted cash balances, with stated maturities of three months or less from date of purchase, as cash equivalents. Short-term deposits are bank deposits with maturities of more than three months but less than one year. The short-term deposits as of December 31, 2015 and 2016 are denominated primarily in USD and bear interest at an average annual rate of 0. . |
Restricted cash | Restricted cash Restricted cash is comprised primarily of security deposits that are held to secure the Company’s hedging activity , Restricted cash in the amount of $1,182, as of December 31, 2015, is included under other assets in the accompanying balance sheets. |
Accounts receivable and allowance for doubtful accounts | Accounts receivable and allowance for doubtful accounts Trade accounts receivables are stated at realizable value, net of an allowance for doubtful accounts. The Company evaluates its outstanding accounts receivable and establishes an allowance for doubtful accounts based on information available on their credit condition, current aging and historical experience. These allowances are reevaluated and adjusted periodically as additional information is available. |
Property and equipment | Property and equipment Property and equipment are stated at cost, net of accumulated depreciation and amortization. Depreciation is calculated using the straight-line method over the estimated useful lives of the assets at the following annual rates: % Computers and peripheral equipment 33 Office furniture and equipment 6 - 15 Leasehold improvements are amortized using the straight-line method over the term of the lease or the estimated useful life of the improvements, whichever is shorter. |
Impairment of long-lived assets and intangible assets subject to amortization | Impairment of long-lived assets and intangible assets subject to amortization Property and equipment and intangible assets subject to amortization are reviewed for impairment in accordance with ASC 360, "Accounting for the Impairment or Disposal of Long-Lived Assets", whenever events or changes in circumstances indicate that the carrying value of an asset may not be recoverable. The recoverability of these assets is measured by comparing the carrying amounts to the future undiscounted cash flows the assets are expected to generate. If property and equipment and intangible assets are considered to be impaired, the impairment to be recognized equals the amount by which the carrying value of the asset exceeds its fair market value. In determining the fair values of long-lived assets for purpose of measuring impairment, the Company's assumptions include those that market participants will consider in valuations of similar assets. In 2014 and 2015, the Company recorded impairment charges of $19,941 and $8,471, respectively, with respect to intangible assets subject to amortization. No such impairment charges were recorded in 2016 (see Note 6). In addition, in connection with the restructuring plans of the Company in 2014 and 2015, the Company recorded, an impairment charge of $632 and |
Goodwill and other intangible assets | Goodwill and other intangible assets Goodwill reflects the excess of the purchase price of business acquired over the fair value of net assets acquired. Goodwill is not amortized but instead is tested for impairment, in accordance with ASC 350, “Intangibles – Goodwill and Other”, at the reporting unit level (as of December 31, 2016, the Company had two reporting units – Search monetization and Undertone), at least annually at December 31 each year, or more frequently if events or changes in circumstances indicate that the carrying value may be impaired. The first step, identifying a potential impairment, compares the fair value of the reporting unit with its carrying amount. If the carrying amount exceeds its fair value, the second step would need to be performed; otherwise, no further step is required. The second step, measuring the impairment loss, compares the implied fair value of the goodwill with the carrying amount of the goodwill. Any excess of the carrying amount over the applied fair value is recognized as an impairment loss, and the carrying value of goodwill is written down to fair value. The Company determined that certain indicators of potential impairment existed during 2015 and 2016, which triggered goodwill impairment analysis for its reporting units. These indicators included a decrease in the Company’s share price and lower than expected sales and cash flow, as well as management decisions to abandon certain R&D projects. Based on the goodwill assessment for the search monetization reporting unit and Grow Mobile reporting unit, in 2015, the Company determined that the carrying amount of the reporting units exceeds their fair value and recorded an impairment of $87,043 (out of which $16,165 is included as a loss from discontinued operation) to its goodwill. No such impairment charges were recorded in 2014 or in 2016 . The majority of the inputs used in the discounted cash flow model to determine the fair value of the reporting units are unobservable and thus are considered to be Level 3 inputs. Intangible assets that are not considered to have an indefinite useful life are amortized over their estimated useful lives. The acquired customer arrangements, technology and logo are amortized over their estimated useful lives in proportion to the economic benefits realized. This accounting policy results in accelerated amortization of such intangible assets as compared to the straight-line method. |
Deferred Financing Costs | Deferred Financing Costs Direct and incremental costs related to the issuance of debt are capitalized as deferred financing costs and are deducted from the carrying amount of that debt in the consolidated balance sheets. The Company amortizes deferred financing costs using the effective-interest method and records such amortization as interest expense. |
Revenue recognition | Revenue recognition The Company generates revenues primarily from two major sources: Search Revenues Advertising Revenues The Company evaluates whether Search and Advertising Revenues should be presented on a gross basis, which is the amount that a customer pays for the service, or on a net basis, which is the amount of the customer payment less amounts the Company pays to publishers. In making that evaluation, the Company considers indicators such as whether the Company is the primary obligor in the arrangement and assumes risks and rewards as a principal or an agent, including the credit risk, whether the Company has latitude in establishing prices and selecting its suppliers and whether it changes the products or performs part of the service. The evaluation of these factors is subject to significant judgment and subjectivity. Generally, in cases in which the Company is primarily obligated in a transaction, is subject to risk, involved in the determination of the product (or the service) specifications, separately negotiates each revenue service agreement or publisher agreement and can have several additional indicators, revenue is recorded on a gross basis. The Company recognizes revenue when all four revenue recognition criteria have been met: persuasive evidence of an arrangement exists; services are rendered; the fee or price charged is fixed or determinable; and collectability is reasonably assured. Deferred revenue is recorded when payments are received from customers in advance of the Company's rendering of services. |
Cost of revenues | Cost of revenues Cost of revenues consists primarily of expenses associated with the operation of the Company’s data centers, including depreciation, labor, energy and bandwidth costs, amortization of acquisition-related intangible assets, as well as content acquisition costs. The direct cost relating to search revenues is immaterial. |
Customer acquisition costs and media buy | Customer acquisition costs and media buy Customer acquisition costs and media buy consist of amounts paid to publishers who distribute the Company’s search applications and services and other products and the costs of advertising inventory incurred to deliver ads. Customer acquisition costs are primarily based on revenue share arrangements with minimum guaranty and are charged as incurred. |
Research and development costs | Research and development costs Research and development costs are charged to the statement of income as incurred, except for certain costs relating to internally developed software, which are capitalized. The Company capitalizes certain internal and external software development costs, consisting primarily of direct labor associated with creating the internally developed software. Software development projects generally include three stages: (i) the preliminary project stage (all costs expensed as incurred); (ii) the application development stage (costs are capitalized) and (iii) the post implementation/operation stage (all costs expensed as incurred). The costs capitalized in the application development stage primarily include the costs of designing the application, coding and testing of the system. Capitalized costs are amortized using the straight-line method over the estimated useful life of the software, generally three years, once it is ready for its intended use. The Company believes that the straight-line recognition method best approximates the manner in which the expected benefit will be derived. Management evaluates the useful lives of these assets on an annual basis and tests for impairment whenever events or changes in circumstances occur that could impact the recoverability of these assets. As a result of changes in circumstances, management decided to abandon certain projects and therefore recorded an impairment charge of $3,390 in 2015, which is included as a loss from discontinued operation. Capitalized software development costs, net of accumulated amortization of $557 and $4,393 are included in property and equipment in the consolidated balance sheets as of December 31, 2015 and 2016, respectively (see Note 5). |
Income taxes | Income taxes The Company accounts for income taxes in accordance with ASC 740, "Income Taxes". This Statement prescribes the use of the liability method, whereby deferred tax asset and liability account balances are determined based on differences between financial reporting and tax bases of assets and liabilities and are measured using the enacted tax rates and laws that will be in effect when the differences are expected to reverse. To the extent necessary, the Company provides a valuation allowance to reduce deferred tax assets to their estimated realizable value. The Company accounts for uncertain tax positions in accordance with ASC 740, which contains a two-step approach for recognizing and measuring uncertain tax positions. The first step is to evaluate the tax position taken or expected to be taken in a tax return by determining if the weight of available evidence indicates that it is more likely than not that the tax position will be sustained on audit, including resolution of any related appeals or litigation processes. The second step is to measure the tax benefit as the largest amount that is more than 50% likely to be realized upon ultimate settlement. The Company accrued interest and penalties related to unrecognized tax benefits in its financial expenses. |
Severance pay | Severance pay The majority of the Company's agreements with employees in Israel are in accordance with section 14 of the Severance Pay Law, 1963 (“Section 14”), where the Company's contributions for severance pay is paid to the employee upon termination instead of the severance liability that would otherwise be payable under the law as aforementioned. Upon contribution to a fund, based on the full amount of the employee's monthly salary, and release of the fund to the employee, no additional severance payments are required to be made by the Company to the employee. Therefore, the related obligation and amounts deposited on behalf of such obligation are not stated on the balance sheet, as the Company is legally released from obligation to such employees once the deposit amounts have been paid. The Company's liability for severance pay to its Israel-based employees not under Section 14, is calculated pursuant to Israel's Severance Pay Law based on the most recent monthly salaries of such employees, multiplied by the number of years of their employment, or a portion thereof, as of the balance sheet date. This liability is fully provided for by monthly deposits in insurance policies and by an accrual. The deposited funds include profits and losses accumulated up to the balance sheet date and they may be withdrawn only upon the fulfillment of the obligation pursuant to Israel's Severance Pay Law. Severance expenses from continuing operations for the years ended December 31, 2014, 2015 and 2016 amounted to $3,330, $2,310 and $2,917, respectively. The balances of severance deposits and accrued severance pay are immaterial and included in other assets and other long-term liabilities on the accompanying balance sheets, respectively. |
Employee benefit plan | Employee benefit plan The Company’s U.S. operations maintain a retirement plan (the “U.S. Plan”) that qualifies as a deferred salary arrangement under Section 401(k) of the Internal Revenue Code. Participants in the U.S. Plan may elect to defer a portion of their pre-tax earnings, up to the Internal Revenue Service’s annual contribution limit. The Company matches 100% of each participant’s contributions , , Total employer 401(k) contributions for the years ended December 31, 2014, 2015 and 2016 were $116, $247 and $1,018, respectively. |
Comprehensive income (loss) | Comprehensive income (loss) The Company accounts for comprehensive income (loss) in accordance with ASC 220, "Comprehensive Income". This statement establishes standards for the reporting and display of comprehensive income and its components in a full set of general purpose financial statements. Comprehensive income generally represents all changes in shareholders' equity during the period except those resulting from investments by, or distributions to, shareholders. The Company determined that its other comprehensive income (loss) relates to hedging derivative instruments and foreign currency translation adjustments. |
Net earnings per share | Net earnings per share In accordance with ASC 260, "Earnings Per Share", basic net earnings per share ("Basic EPS") is computed by dividing net earnings attributable to ordinary shareholders by the weighted average number of ordinary shares outstanding during the period. Diluted net earnings per share ("Diluted EPS") reflects the potential dilution that could occur if stock options and other commitments to issue ordinary shares were exercised or equity awards vested, resulting in the issuance of ordinary shares that could share in the net earnings of the Company. The weighted average number of ordinary shares related to the outstanding options, restricted shares, convertible debt and warrants excluded from the calculations of diluted net earnings per ordinary share, as these securities are anti-dilutive, was 3,766,080, 14,179,439 and 10,700,363 for the years ended December 31, 2014, 2015 and 2016, respectively. |
Concentrations of credit risk | Concentrations of credit risk Financial instruments, which potentially subject the Company to a concentration of credit risk, consist primarily of cash and cash equivalents, bank deposits, restricted cash and accounts receivable. The majority of the Company’s cash and cash equivalents, bank deposits and restricted cash are invested in USD instruments with major banks in the U.S. and Israel. Deposits in the U.S. may be in excess of insured limits and are not insured in other jurisdictions. Generally, these deposits may be redeemed upon demand and, therefore, bear minimal risk. The Company’s major customers are financially sound, and the Company believes low credit risk is associated with these customers. To date, the Company has not experienced any material bad debt losses. Total expenses for doubtful debts during 2014, 2015 and 2016 amounted to $1,035, $104 and $152, respectively. |
Stock-based compensation | Stock-based compensation The Company accounts for stock-based compensation under ASC 718, "Compensation - Stock Compensation", which requires the measurement and recognition of compensation expense based on estimated fair values for all share-based payment awards made to employees and directors. ASC 718 requires companies to estimate the fair value of equity-based awards on the date of grant, using an option-pricing model. The value of the portion of the award that is ultimately expected to vest is recognized as an expense over the requisite service periods in the Company's consolidated statement of income. ASC The Company recognizes compensation expenses for the value of its awards, which have graded vesting based on service conditions, using the straight-line method, over the requisite service period of each of the awards, net of estimated forfeitures. Estimated forfeitures are based on actual historical pre-vesting forfeitures. For performance-based stock units, the Company recognizes compensation expenses for the value of such awards, if and when the Company concludes that it is probable that a performance condition will be achieved based on the accelerated attribution method over the requisite service period. The Company should reassess the probability of vesting at each reporting period for awards with performance conditions and adjust compensation cost based on its probability assessment. The Company accounted for changes in award terms as a modification in accordance with ASC 718. A modification to the terms of an award should be treated as an exchange of the original award for a new award with total compensation cost equal to the grant-date fair value of the original award plus the incremental value measured at the same date. Under ASC 718, the calculation of the incremental value is based on the excess of the fair value of the new (modified) award based on current circumstances over the fair value of the original award measured immediately before its terms are modified based on current circumstances. The Company estimates the fair value of its new stock-based awards using the Binomial option-pricing model. The following table presents the various assumptions used to estimate the fair value of the Company's stock-based awards granted to employees and directors in the periods presented: Year ended December 31 2014 2015 2016 Risk-free interest rate 0.10% - 1.72% 0.17% - 1.76% 0.46% - 1.73% Expected volatility 44.44% - 51.62% 43.49% - 50.31% 49.49% - 53.54% Early exercise factor 100% - 256% 160% - 210% 150% - 200% Forfeiture rate post vesting 0% - 15% 0% - 18% 5% - 20% Dividend yield 0% 0% 0% The expected volatility is calculated based on the actual historical stock price movements of the Company’s stock. The expected option term represents the period that the Company’s stock options are expected to be outstanding. The early exercise factor and the forfeiture rate post-vesting are calculated based on the Company’s estimated early exercise and post-vesting forfeiture multiples, which are based on comparable companies and on actual historical data. The risk-free interest rate is based on the yield from U.S. Treasury zero-coupon bonds, with a term which is equivalent to the expected term of the stock-based awards. The dividend yield is based on the current decision of the Company’s management not to distribute any dividends. The fair value of restricted stock units (“RSU”) is based on the market value of the underlying shares on the date of grant. |
Derivative instruments | Derivative instruments The Company accounts for derivatives and hedging based on ASC 815, "Derivatives and Hedging", which requires recognizing all derivatives on the balance sheet at fair value. If the derivatives meet the definition of a cash flow hedge and are so designated, depending on the nature of the hedge, the effective portion of the gain or loss on the derivative is reported as a component of other comprehensive income and reclassified into earnings in the same period, or periods, during which the hedged transaction affects earnings. The ineffective portion of a derivative’s change in fair value, if any, is recognized in earnings, as well as gains and losses from a derivative’s change in fair value that are not designated as hedges are recognized in earnings immediately. Starting 2014, in order to mitigate the potential adverse impact on cash flows resulting from fluctuations in the exchange rate of the new Israeli shekels (“ILS”), the Company started to hedge portions of its forecasted expenses denominated in ILS with swap and options contracts. In addition, the Company has entered into a cross currency interest rate swap agreement in order to transform cash flow in ILS into USD of interest payments and principal as derived from the Company’s convertible debt conditions (see Note 10). The Company does not speculate in these hedging instruments in order to profit from foreign currency exchanges, nor does it enter into trades for which there are no underlying exposures. The Company follows the requirements of ASC No. 815, ”Derivatives and Hedging” (“ASC 815”), which requires companies to recognize all of their derivative instruments as either assets or liabilities on the balance sheet at fair value. The accounting for changes in fair value (i.e. gains or losses) of a derivative instrument depends on whether it has been designated and qualifies as part of a hedging transaction and further, on the type of hedging transaction. For those derivative instruments that are designated and qualify as hedging instruments, a company must designate the hedging instrument, based upon the exposure being hedged, as a fair value hedge, cash flow hedge, or a hedge of a net investment in a foreign operation. To protect against the increase in value of forecasted foreign currency cash flow resulting mainly from salaries and related benefits and taxes paid in ILS during the year, the Company hedges portions of its anticipated payroll denominated in ILS for a period of one to twelve months with forward and options contracts (the “Hedging Contracts”). Accordingly, when the USD strengthens against the ILS, the decline in present value of future ILS currency expenses is offset by losses in the fair value of the Hedging Contracts. Conversely, when the USD weakens, the increase in the present value of future ILS expenses is offset by gains in the fair value of the Hedging Contracts. These Hedging Contracts are designated as cash flow hedges. Additionally, in order to mitigate the potential adverse impact of the fluctuations in the ILS-USD exchange rate in connection with the convertible debt (see Note 10), the Company has entered into a cross currency interest rate SWAP agreement (the “SWAP”) in order to hedge the future interest and principal payments, which are all denominated in ILS. However, since the convertible debt is measured at fair value at each reporting date, the SWAP does not qualify and was not designated as a cash flow hedge under ASC 815. In order to limit the Company’s interest expenses derived from the secured credit agreement in which the Company entered concurrently with the closing of the Undertone acquisition (see Note 6), the Company has purchased a Cap Option for the interest amounts expected to be paid till June 2018. The cap option is designated as cash flow hedge under ASC 815. The swap contracts were not designated as hedging instruments and therefore gains or losses resulting from the change of their fair value are recognized in "financial expenses, net". The Company measured the fair value of these contracts in accordance with ASC 820, "Fair Value Measurement and Disclosures", and they were classified as level 2. The notional value of the Company’s derivative instruments as of December 31, 2015 and 2016, amounted to $57,052 and $72,569, respectively. Notional values in USD are translated and calculated based on the spot rates for options and swap. Gross notional amounts do not quantify risk or represent assets or liabilities of the Company; however, they are used in the calculation of settlements under the contracts. |
Fair value of financial instruments | Fair value of financial instruments The carrying amounts of financial instruments carried at cost, including cash and cash equivalents, short-term deposits, restricted cash, accounts receivable, prepaid expenses and other assets, accounts payable, accrued expenses and other liabilities approximate their fair value due to the short-term maturities of such instruments. The Company follows the provisions of ASC No. 820, “Fair Value Measurement” (“ASC 820”), which defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. In determining a fair value, the Company uses various valuation approaches. ASC 820 establishes a hierarchy for inputs used in measuring fair value that maximizes the use of observable inputs and minimizes the use of unobservable inputs by requiring that the most observable inputs be used when available. Observable inputs are inputs that market participants would use in pricing an asset or liability, based on market data obtained from sources independent of the Company. Unobservable inputs are inputs that reflect assumptions that market participants would use in pricing an asset or liability, based on the best information available under given circumstances. The hierarchy is broken down into three levels, based on the observability of inputs and assumptions, as follows: · Level 1 · Level 2 · Level 3 |
Treasury shares | Treasury shares In the past, the Company repurchased its ordinary shares on the open market. The Company holds those shares as treasury shares and presents their cost as a reduction of shareholders' equity. |
Business combinations | Business combinations The Company accounted for business combination in accordance with ASC 805, "Business Combinations". ASC 805 requires recognition of assets acquired, liabilities assumed, and any non-controlling interest at the acquisition date, measured at their fair values as of that date. Any excess of the fair value of net assets acquired over purchase price is allocated to goodwill and any subsequent changes in estimated contingencies are to be recorded in earnings. In addition, changes in valuation allowance related to acquired deferred tax assets and in acquired income tax position are to be recognized in earnings. Acquisition related costs are expensed to the statement of income in the period incurred. |
Discontinued operations | Discontinued operations Under ASC 205, "Presentation of Financial Statements - Discontinued Operation", when a component of an entity, as defined in ASC 205, has been disposed of or is classified as held for sale, the results of its operations, including the gain or loss on its disposal are classified as discontinued operations and the assets and liabilities of such component are classified as assets and liabilities attributed to discontinued operations, provided that the operations, assets and liabilities and cash flows of the component have been eliminated from the entity’s consolidated operations and the entity will no longer have any significant continuing involvement in the operations of the component. In August 2016, the Company completed the sale of the GME business, including the intellectual property, know-how and technology, for total consideration of $1,750, which was included in net loss from discontinued operations in the consolidated statement of income for the year ended December 31, 2016 . The results of the discontinued operations , Year ended December 31, 2014 2015 2016* Costs and expenses 7,719 7,444 5,192 Impairment of intangible assets and goodwill - 19,555 - Gain on disposal of the discontinued operations - - (1,750 ) Loss before taxes on income (7,719 ) (26,999 ) (3,442 ) Taxes on income 1,235 - 795 Total net loss on discontinued operations $ (6,484 ) $ (26,999 ) $ (2,647 ) * Represent the results of the discontinued operations until their disposal. Depreciation expenses from discontinued operations totaled $92, $550 and $71, for the years ended December 31, 2014, 2015 and 2016, respectively. |
Reclassifications | Reclassifications Certain financial statement data for prior years has been reclassified to conform to current year financial statement presentation. |
Recent Accounting Pronouncements | Recent Accounting Pronouncements In May 2014, the FASB issued Accounting Standards Update No. 2014-09 (ASU 2014-09) "Revenue from Contracts with Customers." ASU 2014-09 supersedes the revenue recognition requirements in “Revenue Recognition (Topic 606)”, and requires entities to recognize revenue when it transfers promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled to in exchange for those goods or services. Topic 606 was further amended during 2016 as follows: · In March 2016 by ASU 2016-08, Revenue from Contracts with Customers (Topic 606): Principal versus Agent Considerations (Reporting Revenue Gross versus Net), which clarifies the implementation guidance on principal versus agent considerations. The guidance includes indicators to assist an entity in determining whether it controls a specified good or service before it is transferred to the customers. · In April 2016, by 2016-10, Revenue from Contracts with Customers (Topic 606): Identifying Performance Obligations and Licensing, that clarified two aspects of ASC 606, identifying performance obligations and the licensing implementation guidance, while retaining the related principles of those areas. · In May 2016, by ASU No. 2016-12, Revenue from Contracts with Customers (Topic 606): Narrow-Scope Improvements and Practical Expedients. ASU 2016-12 address certain issues in the guidance on assessing collectability, presentation of sales taxes, noncash consideration, and completed contracts and contract modifications at transition. As currently issued and amended, ASC 606 is effective for annual reporting periods beginning after December 15, 2017, including interim periods within that reporting period, though early adoption is permitted for annual reporting periods beginning after December 15, 2016 using either of two methods: (1) full retrospective application or (2) modified retrospective application. The Company's management is currently evaluating the impact that the new principal versus agent guidance may have on the presentation of its revenue arrangements, and the expected impact on its business processes, systems and controls, but had not completed its evaluation. The Company expect to complete its assessment process during 2017 and adopt the new standard on January 1, 2018. The Company did not select yet the transition method of the new standard. In February 2016, the FASB issued ASU 2016-02, Leases. ASU 2016-02 requires that long-term lease arrangements be recognized on the balance sheet. The standard is effective for interim and annual periods beginning after December 15, 2018, and early adoption is permitted. The Company is currently evaluating the impact of adoption on its consolidated financial statements. In March 2016, the FASB issued Accounting Standards Update No. 2016-09, Compensation-Stock Compensation (Topic 718): Improvement to Employee Share-based Payment Accounting (ASU 2016-09), to simplify the accounting for share-based payment transactions, including the income tax consequences, an option to recognize gross share-based compensation expense with actual forfeitures recognized as they occur, as well as certain classifications on the statement of cash flows. This guidance will be effective for the Company in the first quarter of 2017, and early adoption is permitted. The Company is currently evaluating the effect that this guidance will have on its consolidated financial statements. In November 2016, the FASB issued Accounting Standards Update (ASU) 2016-18, Statement of Cash Flows: Restricted Cash, providing specific guidance on the cash flow classification and presentation of changes in restricted cash and restricted cash equivalents. Amounts generally described as restricted cash should be included with cash and cash equivalents when reconciling the beginning-of-period and end-of-period total amounts shown on the statement of cash flow. The amendments in ASU 2016-18 are effective for fiscal years beginning after December 15, 2017, and interim periods therein. Early adoption is permitted, including adoption in an interim period. The Company is currently evaluating the effect, if any, that the adoption of ASU 2016-18 will have on its financial statements. In January 2017, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No. 2017-04, “Intangibles—Goodwill and Other (Topic 350): - Simplifying the Test for Goodwill Impairment”, which eliminates the requirement to calculate the implied fair value of goodwill (i.e., Step 2 of the goodwill impairment test) for the purpose of measuring a goodwill impairment charge. Instead, an impairment charge shall be recognized based on the excess of a reporting unit’s carrying amount over its fair value. The standard shall be applied prospectively and is effective for annual and interim impairment tests performed in periods beginning after December 15, 2019, for public entities. Early adoption is permitted for annual and interim goodwill impairment testing dates after January 1, 2017. The Company will adopt the new guidance on January 1, 2017. |
SIGNIFICANT ACCOUNTING POLICI30
SIGNIFICANT ACCOUNTING POLICIES (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Accounting Policies [Abstract] | |
Schedule of Estimated Useful Lives at an Annual Rate | % Computers and peripheral equipment 33 Office furniture and equipment 6 - 15 |
Schedule of assumptions used to estimate the fair value of the stock-based awards granted to employees and directors | Year ended December 31 2014 2015 2016 Risk-free interest rate 0.10% - 1.72% 0.17% - 1.76% 0.46% - 1.73% Expected volatility 44.44% - 51.62% 43.49% - 50.31% 49.49% - 53.54% Early exercise factor 100% - 256% 160% - 210% 150% - 200% Forfeiture rate post vesting 0% - 15% 0% - 18% 5% - 20% Dividend yield 0% 0% 0% |
Pro forma discontinued operations results | Year ended December 31, 2014 2015 2016* Costs and expenses 7,719 7,444 5,192 Impairment of intangible assets and goodwill - 19,555 - Gain on disposal of the discontinued operations - - (1,750 ) Loss before taxes on income (7,719 ) (26,999 ) (3,442 ) Taxes on income 1,235 - 795 Total net loss on discontinued operations $ (6,484 ) $ (26,999 ) $ (2,647 ) |
FAIR VALUE OF FINANCIAL INSTR31
FAIR VALUE OF FINANCIAL INSTRUMENTS (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
FAIR VALUE OF FINANCIAL INSTRUMENTS [Abstract] | |
Schedule of Fair Value Measurements | The following table present assets and liabilities measured at fair value on a recurring basis as of December 31, 2016: Fair value measurements using input type Level 1 Level 2 Level 3 Total Assets: Derivative assets $ - $ 1,117 $ - $ 1,117 Total financial assets $ - $ 1,117 $ - $ 1,117 Liabilities: Payment obligation in connection with acquisitions $ - $ - $ 7,653 $ 7,653 Derivative liabilities - 84 - 84 Convertible debt 29,526 - - 29,526 Total financial liabilities $ 29,526 $ 84 $ 7,653 $ 37,263 The following table present assets and liabilities measured at fair value on a recurring basis as of December 31, 2015: Fair value measurements using input type Level 1 Level 2 Level 3 Total Assets: Derivative assets $ - $ 608 $ - $ 608 Total financial assets $ - $ 608 $ - $ 608 Liabilities: Payment obligation in connection with acquisitions $ - $ - $ 49,124 $ 49,124 Derivative liabilities - 214 - 214 Convertible debt 35,463 - - 35,463 Total financial liabilities $ 35,463 $ 214 $ 49,124 $ 84,801 |
Schedule of liabilities measured at fair value using significant unobservable inputs (Level 3) | Total fair value as of January 1, 2015 $ 13,645 Accretion of contingent liability related to acquisition 311 Change in fair value of contingent consideration related to acquisition (6,564 ) Settlements (2,500 ) Fair value of payment obligation in connection with Undertone acquisition 44,023 Reclassification to accrued expenses (189 ) Change in fair value recognized in earnings with respect to the employees of Grow Mobile 398 Total fair value as of December 31, 2015 $ 49,124 Accretion and interest of payment obligation related to acquisition $ 1,303 Settlements (7,537 ) Change to payment obligation as a result of working capital adjustment 309 Amendment to the merger agreement (35,546 ) Total fair value as of December 31, 2016 $ 7,653 |
ACQUISITIONS (Tables)
ACQUISITIONS (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Undertone [Member] | |
Business Acquisition [Line Items] | |
Schedule of allocation of purchase price to net tangible and intangible assets based on their estimated fair values | Cash and cash equivalents $ 7,378 Accounts receivable 38,493 Prepaid expenses and other assets 4,427 Long term restricted cash 1,182 Property and equipment 1,905 Deferred taxes 815 Accounts payable (23,152 ) Accrued expenses and other liabilities (11,083 ) Deferred revenues (1,047 ) Long term loan, including current maturities (48,601 ) Deferred tax liability (20,241 ) Intangible assets 63,200 Goodwill 106,492 Total purchase price $ 119,768 |
Schedule of components of intangible assets associated with the acquisition | Estimated useful life Acquired technology (1) $ 19,500 5 years Customer relationships (2) 30,000 6 years Backlog (3) 4,200 less than 1 year Tradename (4) 9,500 4 years Total amount allocated to intangible assets $ 63,200 |
MMR [Member] | |
Business Acquisition [Line Items] | |
Schedule of allocation of purchase price to net tangible and intangible assets based on their estimated fair values | Cash $ 1,050 Accounts receivable 666 Prepaid expenses and other assets 86 Property and equipment 87 Accounts payable (305 ) Accrued expenses and other liabilities (433 ) Deferred revenues (126 ) Deferred tax liability (1,159 ) Intangible assets 3,454 Goodwill 7,452 Total purchase price $ 10,772 |
Schedule of components of intangible assets associated with the acquisition | Estimated useful life Acquired technology $ 1,261 5 years Customer relationship 395 5 years Distribution channel 1,798 5 years Total amount allocated to intangible assets $ 3,454 |
PROPERTY AND EQUIPMENT, NET (Ta
PROPERTY AND EQUIPMENT, NET (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Property, Plant and Equipment [Abstract] | |
Schedule of Property and Equipment | December 31, 2015 2016 Cost: Computers and peripheral equipment $ 11,775 $ 9,607 Office furniture and equipment 2,837 2,679 Leasehold improvements 6,981 7,142 Capitalized software 557 5,005 Total cost 22,150 24,433 Less: accumulated depreciation and amortization 9,436 10,228 Property and equipment, net $ 12,714 $ 14,205 |
GOODWILL AND OTHER INTANGIBLE34
GOODWILL AND OTHER INTANGIBLE ASSETS, NET (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Schedule of Changes in Goodwill | Balance as of January 1, 2015 $ 164,092 Acquisition of MMR 7,452 Acquisition of Undertone 119,448 Impairment (87,043 ) Revaluation (foreign currency exchange) (256 ) Balance as of December 31, 2015 $ 203,693 Final adjustments to Undertone's purchase price (see Note 4) (12,956 ) Balance as of December 31, 2016 $ 190,737 |
Summary of Intangible Assets | The following is a summary of intangible assets as of December 31, 2016: December 31, 2015 Amortization OCI Disposals December 31, 2016 Acquired technology $ 30,715 $ - $ (41 ) $ - $ 30,674 Accumulated amortization (8,963 ) (5,543 ) 16 - (14,490 ) Impairment (956 ) - - - (956 ) Acquired technology, net 20,796 (5,543 ) (25 ) - 15,228 Customer relationships 31,911 - (13 ) - 31,898 Accumulated amortization (1,161 ) (12,750 ) 6 - (13,905 ) Impairment (91 ) - - - (91 ) Customer relationships, net 30,659 (12,750 ) (7 ) - 17,902 Tradename and other 22,483 - (59 ) (4,200 ) 18,224 Accumulated amortization (4,609 ) (3,681 ) 11 4,200 (4,079 ) Impairment (3,257 ) - - - (3,257 ) Tradename and other, net 14,617 (3,681 ) (48 ) - 10,888 Intangible assets, net $ 66,072 $ (21,974 ) $ (80 ) $ - $ 44,018 The following is a summary of intangible assets as of December 31, 2015: December 31, 2014 Additions Amortization Impairment OCI Disposals December 31, 2015 Acquired technology $ 38,515 $ 20,761 $ - $ - $ (46 ) $ (28,515 ) $ 30,715 Accumulated amortization (15,698 ) - (4,374 ) - 2 11,107 (8,963 ) Impairment (14,347 ) - - (4,017 ) - 17,408 (956 ) Acquired technology, net 8,470 20,761 (4,374 ) (4,017 ) (44 ) - 20,796 In-process R&D 2,000 - - - - (2,000 ) - Impairment (2,000 ) - - - - 2,000 - In-process R&D, net - - - - - - - Customer relationships 3,144 30,395 - - (14 ) (1,614 ) 31,911 Accumulated amortization (903 ) - (766 ) - - 508 (1,161 ) Impairment - - - (1,197 ) - 1,106 (91 ) Customer relationships, net 2,241 30,395 (766 ) (1,197 ) (14 ) - 30,659 Tradename and other 11,911 15,498 - - (66 ) (4,860 ) 22,483 Accumulated amortization (2,138 ) - (3,739 ) - 2 1,266 (4,609 ) Impairment (3,594 ) - - (3,257 ) - 3,594 (3,257 ) Tradename and other, net 6,179 15,498 (3,739 ) (3,257 ) (64 ) - 14,617 Intangible assets, net $ 16,890 $ 66,654 $ (8,879 ) $ (8,471 ) $ (122 ) $ - $ 66,072 |
Schedule of Estimated Useful Life of the Intangible Assets | Estimated useful life Acquired technology 3-5 years Customer relationships 4-5 years Tradename and other 4-11 years |
Schedule of Estimated Future Amortization Expense | 2017 $ 16,197 2018 12,028 2019 9,944 2020 4,861 2021 229 Thereafter 759 $ 44,018 |
ACCRUED EXPENSES AND OTHER LI35
ACCRUED EXPENSES AND OTHER LIABILITIES (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Payables and Accruals [Abstract] | |
Schedule of Accrued Expenses and Other Liabilities | December 31, 2015 2016 Employees and payroll accruals $ 10,190 $ 7,668 Government authorities 1,850 2,929 Professional services accruals 3,171 1,812 Other accruals 3,587 3,549 Other overhead related expenses 1,592 991 Accrued restructuring charges (see note 16) 1,756 - Hosting, software and web services accruals 497 433 Derivative liabilities 214 84 $ 22,857 $ 17,466 |
DERIVATIVES AND HEDGING ACTIV36
DERIVATIVES AND HEDGING ACTIVITES (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
Schedule of fair value of the Companys outstanding derivative instruments | December 31, Balance sheet 2015 2016 Derivatives designated as hedging instruments: Foreign exchange forward contracts and other derivatives ''Prepaid expenses and other current assets'' $ 242 $ 125 ''Accrued expenses and other liabilities'' 214 84 ''Accumulated other comprehensive income'' - 36 Derivatives not designated as hedging instruments: Foreign exchange forward contracts and other derivatives ''Prepaid expenses and other current assets'' - $ 20 Cross currency SWAP ''Prepaid expenses and other current assets'' $ 366 $ 973 |
Schedule of decrease in unrealized gains recognized in accumulated other comprehensive income on derivatives | December 31, 2015 2016 Option contracts $ 206 $ 175 |
Schedule of net losses reclassified from accumulated other comprehensive loss to the operating expenses | Gain recognized in Statements of Comprehensive Income Gain (loss) recognized in consolidated statements of Income Year ended December 31, Statement of Income item Year ended December 31, 2016 2014 2015 2016 Derivatives designated as hedging instruments: Foreign exchange options and forward contracts $ 36 "Operating expenses" $ (62 ) $ 178 $ 167 Derivatives not designated as hedging instruments: Foreign exchange options and forward contracts "Financial expenses" 125 (175 ) (16 ) SWAP "Financial expenses" - 225 608 Total $ 36 $ 63 $ 228 $ 759 |
SHORT TERM AND LONG TERM DEBT (
SHORT TERM AND LONG TERM DEBT (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Notes Payable to Banks [Member] | |
Debt Instrument Line Items | |
Schedule of aggregate principal annual payments of the bonds | Repayment amount 2017 $ 11,150 2018 5,000 2019 33,750 Total principal payments 49,900 Less: unamortized original issue discount (1,316 ) Present value of principal payments 48,584 Less: current portion 10,656 Long-term debt $ 37,928 |
CONVERTIBLE DEBT (Tables)
CONVERTIBLE DEBT (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
CONVERTIBLE DEBT [Abstract] | |
Schedule of Changes of Long-term Convertible Debt | Balance as of January 1, 2015 $ 35,752 Change in accrued interest 1,823 Change in fair value 175 Payment of interest (1,824 ) Balance as of December 31, 2015* $ 35,926 Change in accrued interest 1,586 Change in fair value 1,350 Payment of interest (1,716 ) Payment of principal (7,620 ) Balance as of December 31, 2016* $ 29,526 |
CONVERTIBLE DEBT (Tables)39
CONVERTIBLE DEBT (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Series L Convertible Bonds [Member] | |
Debt Instrument Line Items | |
Schedule of aggregate principal annual payments of the bonds | Repayment amount 2017 $ 7,463 2018 7,464 2019 7,463 2020 7,464 $ 29,854 |
COMMITMENTS AND CONTINGENT LI40
COMMITMENTS AND CONTINGENT LIABILITIES (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Commitments and Contingencies Disclosure [Abstract] | |
Schedule of Aggregate Minimum Lease Commitments | Minimum lease payments Minimum sublease rentals Net future minimum lease commitment 2017 $ 6 , $ 693 $ 5 , 2018 6 , 694 5 , 2019 4 , 697 3 , 2020 3,613 627 2,986 2021 3,342 695 2,647 Thereafter 6 , 970 5 , $ 30 , $ 4 , $ 25 , |
SHAREHOLDERS' EQUITY (Tables)
SHAREHOLDERS' EQUITY (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Schedule of Stock Option Activity | Weighted average Number of options Exercise price Remaining contractual term (in years) Aggregate intrinsic value Outstanding at January 1, 2016 5 , , $ 5 . 3 . $ 1,709 Granted 2 248 $ 1 . Exercised (200 ) $ 2.00 Cancelled (2 , , ) $ 4 . Outstanding at December 31, 2016 5,354 , $ 4 . 2 . $ 549 Exercisable at December 31, 2016 1,552 , $ 7.88 1.43 $ 6 Vested and expected to vest at December 31, 2016 4,299 , $ 4 . 2 . $ 316 |
Schedule of Option Activity by Price Range | Outstanding Exercisable Range of exercise price Number of options Weighted average remaining contractual life (years) Weighted average exercise price Number of options Weighted average remaining contractual life (years) Weighted average exercise price $0.34-$2.00 1,504,493 4.28 $ 1.09 86,249 2.01 $ 1.88 $2.11-$2.52 2,200,166 3.47 $ 2.28 539,994 3.45 $ 2.26 $3.27-$3.77 1,917,666 2.70 $ 3.57 312,496 2.40 $ 3.61 $4.04-$6.93 312,521 1.21 $ 5.20 295,851 1.11 $ 5.22 $7.80-$9.14 141,875 1.03 $ 8.71 141,875 1.03 $ 8.71 $10.06-$11.94 668,540 1.46 $ 11.21 606,587 1.38 $ 11.24 $12.56-$13.54 125,625 0.46 $ 12.59 118,957 0.37 $ 12.58 6,870,886 3.03 $ 3.70 2,102,009 1.97 $ 6.47 |
Schedule of Restricted Stock Unit Activity | Number of RSUs Weighted average grant date fair value Unvested at January 1, 2016 692,320 $ 12.64 Vested (337,420 ) $ 12 .64 Cancelled (27,900 ) $ 12.64 Unvested at December 31, 2016 327,000 $ 12.64 Expected to vest after December 31, 2016 327,000 $ 12.64 |
Schedule of Stock-Based Compensation Expense | Year ended December 31, 2014 2015 2016 Cost of revenues $ 249 $ 247 $ 219 Research and development 2,058 804 708 Selling and marketing 1,940 1,397 1,907 General and administrative 9,302 4,290 4,010 Restructuring costs 220 - - Total $ 13,769 $ 6,738 $ 6,844 Share-based compensation in discontinued operations $ (1,376 ) $ 878 $ 42 |
Performance-based Stock Options [Member] | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Schedule of Stock Option Activity | Weighted average Number of Performance based options Exercise price Remaining contractual term (in years) Aggregate intrinsic value Outstanding at January 1, 2016 3,550,000 $ 2.38 4.93 $ 4,793 Cancelled (2,033,334 ) $ 2.28 Outstanding at December 31, 2016 1,516,666 $ 2.53 3.77 - Exercisable at December 31, 2016 549,995 $ 2.51 3.48 - Vested and expected to vest at December 31, 2016 1,174,535 $ 2.52 3.72 - |
FINANCIAL INCOME (EXPENSE), N42
FINANCIAL INCOME (EXPENSE), NET (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Other Income and Expenses [Abstract] | |
Schedule of Financial Income (Expense), Net | Year ended December 31, 2014 2015 2016 Financial income: Interest income $ 93 $ 551 $ 204 Foreign currency translation gains, net - 572 - Change in fair value of convertible debt 2,566 - - Change in fair value of SWAP - 225 608 $ 2,659 $ 1,348 $ 812 Financial expense: Foreign currency translation losses, net $ (2,669 ) $ - $ (779 ) Interest and change in fair value of payment obligation related to acquisitions (1,067 ) (489 ) (1,303 ) Issuance costs of convertible debt (741 ) - - Interest expense on debts (733 ) (2,313 ) (5,306 ) Change in fair value of convertible debt - (175 ) (1,350 ) Bank charges and other (337 ) (310 ) (362 ) $ (5,547 ) $ (3,287 ) $ (9,100 ) Financial expense, net $ (2,888 ) $ (1,939 ) $ (8,288 ) |
INCOME TAXES (Tables)
INCOME TAXES (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Income Tax Disclosure [Abstract] | |
Schedule of Income (Loss) Before Taxes | Year ended December 31, 2014 2015 2016 Domestic $ 62,991 $ (16,712 ) $ (3,393 ) Foreign (2,865 ) (24,249 ) 6,453 Total $ 60,126 $ (40,961 ) $ 3,060 |
Schedule of Income Taxes | Year ended December 31, 2014 2015 2016 Current taxes $ 24,667 $ 9,670 $ 3,480 Deferred tax benefit (13,851 ) (8,973 ) (3,268 ) Total $ 10,816 $ 697 $ 212 |
Schedule of Income Taxes by Jurisdiction | Year ended December 31, 2014 2015 2016 Domestic $ 12,951 $ 8,830 $ 3,396 Foreign (2,135 ) (8,133 ) (3,184 ) Total $ 10,816 $ 697 $ 212 Domestic: Current taxes $ 24,507 $ 8,943 $ 2,459 Deferred tax (benefit) expense (11,556 ) (113 ) 937 Total - Domestic $ 12,951 $ 8,830 $ 3,396 Foreign: Current taxes $ 160 $ 727 $ 1,021 Deferred tax benefit (2,295 ) (8,860 ) (4,205 ) Total - Foreign $ (2,135 ) $ (8,133 ) $ (3,184 ) Total income tax expense $ 10,816 $ 697 $ 212 |
Schedule of Deferred Tax Assets (Liabilities) | December 31, 2015 2016 Deferred tax assets: Net operating loss carry forwards $ 10,280 $ 8,267 Research and development 4,008 3,190 Other temporary differences mainly relating to reserve and allowances 4,058 2,703 Deferred tax assets, before valuation allowance 18,346 14,160 Valuation allowance 4,212 4,739 Total deferred tax assets, net $ 14,134 $ 9,421 Deferred tax liabilities: Intangible assets $ (17,971 ) $ (10,998 ) Property and equipment, net (3,275 ) (2,393 ) Total deferred tax liabilities $ (21,246 ) $ (13,391 ) Total deferred tax liability, net $ (7,112 ) $ (3,970 ) Domestic: Long term deferred tax asset, net $ 5,006 $ 4,069 Long term deferred tax liability (261 ) - $ 4,745 $ 4,069 Foreign: Long term deferred tax asset, net $ 7,338 $ 48 Long term deferred tax liability (19,195 ) (8,087 ) $ (11,857 ) $ (8,039 ) Total deferred tax liability, net $ (7,112 ) $ (3,970 ) |
Schedule of the Reconciliation of the Effective Tax Rate | Year ended December 31, 2014 2015 2016 Income (Loss) before taxes on income $ 60,126 $ (40,961 ) $ 3,060 Statutory tax rate in Israel 26.5 % 26.5 % 25.0 % Theoretical tax expense (income) $ 15,933 $ (10,855 ) $ 765 Increase (decrease) in tax expenses resulting from: "Preferred Enterprise" benefits * (13,325 ) (5,654 ) (1,356 ) Non-deductible expenses including impairment charges 8,015 20,738 1,777 Deferred taxes on losses and other temporary charges for which a valuation allowance was provided, net 1,962 (4,617 ) 527 Tax adjustment in respect of different tax rate of foreign subsidiaries (793 ) 1,185 (2,032 ) Change in future tax rate - - 448 Other (976 ) (100 ) 83 Taxes on income $ 10,816 $ 697 $ 212 * Benefit per ordinary share from "Preferred Enterprise" status: Basic $ 0.17 $ 0.12 $ 0.02 Diluted $ 0.16 $ 0.12 $ 0.02 |
Schedule of Unrecognized Tax Benefits | December 31, 2015 2016 Balance at the beginning of the year $ 724 $ 2,367 Decrease related to prior year tax positions, net (22 ) (195 ) Increase related to current year tax positions 1,665 1,257 Balance at the end of the year $ 2,367 $ 3,429 |
EARNINGS PER SHARE (Tables)
EARNINGS PER SHARE (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Earnings Per Share [Abstract] | |
Schedule of the computation of basic and diluted net earnings per common share | Year ended December 31, 2014 2015 2016 Numerator: Net income (Loss) attributable to ordinary shares - basic $ 49,310 $ (41,658 ) $ 2,848 Gains related to convertible debt, net (2,100 ) - - Net income (Loss) from continuing operations - diluted $ 47,210 $ (41,658 ) $ 2,848 Net loss from discontinued operations – basic and diluted $ (6,484 ) $ (26,999 ) $ (2,647 ) Denominator: Number of ordinary shares outstanding during the year 68,213,209 71,300,432 76,560,454 Weighted average effect of dilutive securities: Assumed conversion of convertible debt 1,090,906 - - Shares to be issued in connection with acquisition 52,664 - - Employee stock options and restricted stock units 970,632 - 113,349 Diluted number of ordinary shares outstanding - Continuing and discontinued operations 70,327,411 71,300,432 76,673,803 Basic net earnings (loss) per ordinary share Continuing operations $ 0.72 $ (0.58 ) $ 0.04 Discontinued operations $ (0.09 ) $ (0.38 ) $ (0.04 ) Net income (loss) $ 0.63 $ (0.96 ) $ 0.00 *) Diluted net earnings (loss) per ordinary share Continuing operations $ 0.67 $ (0.58 ) $ 0.04 Discontinued operations $ (0.09 ) $ (0.38 ) $ (0.04 ) Net income (loss) $ 0.58 $ (0.96 ) $ 0.00 *) Ordinary shares equivalents excluded because their effect would have been anti-dilutive 3,766,080 14,179,439 10,700,363 |
RESTRUCTURING COSTS (Tables)
RESTRUCTURING COSTS (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Restructuring and Related Activities [Abstract] | |
Schedule of restructuring accruals | In November 2014, the Company initiated a restructuring plan of its search monetization business, mainly to reduce workforce, close certain facilities, as well as other cost saving measures. Pursuant to this restructuring plan, in 2014, the Company incurred cumulative charges of $3,981 as follows: Payroll and s hare-based compensation expenses $ 1,993 Lease facilities and related expenses 1,248 Property and equipment impairment 632 Other 108 Total restructuring costs $ 3,981 In October 2015, the Company initiated a restructuring plan of one of its consumer app development projects, mainly to reduce workforce, close certain facilities, as well as other cost saving measures. Pursuant to this restructuring plan, in 2015, the Company incurred cumulative charges of $1,052 as follows: Severance and payroll related $ 1,022 Property and equipment impairment 159 Write-off of prepaid royalties 219 Other (348 ) Total restructuring costs $ 1,052 |
Schedule of accrued restructuring liability | December 31, 2015 Additional costs Cash payments Adjustments December 31, 2016 2015 Restructuring Plan: Severance and Payroll related $ 752 $ 272 $ (1,065 ) $ 41 $ - Rent and related expenses - 456 - (456 ) - Restructuring accrual assumed upon acquisition 1,004 - (566 ) (438 ) - $ 1,756 $ 728 $ (1,631 ) $ (853 ) $ - |
MAJOR CUSTOMERS (Tables)
MAJOR CUSTOMERS (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Risks and Uncertainties [Abstract] | |
Schedule of Revenues and Receivables by Major Customer | Year ended December 31, 2014 2015 2016 Customer A 74 % 81 % 49 % |
GEOGRAPHIC INFORMATION (Tables)
GEOGRAPHIC INFORMATION (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Segment Reporting [Abstract] | |
Schedule of total revenues attributed to geographic areas | Year ended December 31, 2014 2015 2016 North America (mainly U.S.) $ 292,409 $ 173,424 $ 253,960 Europe 69,281 40,612 47,012 Other 27,041 6,914 11,822 $ 388,731 $ 220,950 $ 312,794 |
Schedule of property and equipment attributed to geographic areas | December 31, 2015 2016 Israel $ 9,161 $ 9,108 U.S. 3,071 4,402 Europe 482 695 $ 12,714 $ 14,205 |
SIGNIFICANT ACCOUNTING POLICI48
SIGNIFICANT ACCOUNTING POLICIES (Narrative) (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
Summary of Significant Accounting Policies [Line Items] | |||
Short-term deposits average rate (as a percent) | 1.12% | 0.72% | |
Restricted cash, current | $ 1,184 | $ 646 | |
Restricted cash, non-current | 1,182 | ||
Stock-based compensation cost capitalized | 14 | 187 | |
Amortization expense | 21,974 | 8,879 | |
Software capitalized impairment costs from discontinued operations | 3,390 | ||
Impairment of intangible assets | 8,471 | 19,941 | |
Impairment charges recorded in connection with the restructuring plans, related to its property and equipment | 124 | 632 | |
Goodwill impairment loss | 87,043 | ||
Goodwill impairment loss from discontinued operations | 16,165 | ||
Severance expenses from continuing operations | $ 2,917 | 2,310 | 3,330 |
Percentage of matching contribution for three percent of employee deferral | 100.00% | ||
Percentage of employee deferral | 3.00% | ||
Percentage of matching contribution for two percent of employee deferral | 50.00% | ||
Percentage of employee deferral for fifty percent of participant's contributions | 2.00% | ||
Total employer 401(k) contributions | $ 1,018 | $ 247 | $ 116 |
Weighted average number of anti-dilutive securities excluded from diluted earnings per share | 10,700,363 | 14,179,439 | 3,766,080 |
Total expenses for doubtful debts | $ 152 | $ 104 | $ 1,035 |
Notional value of derivative instruments | 72,569 | 57,052 | |
Total consideration | 1,750 | ||
Property and equipment, net | 14,205 | 12,714 | |
Depreciation expenses from discontinued operations | 71 | 550 | $ 92 |
Capitalized software [Member] | |||
Summary of Significant Accounting Policies [Line Items] | |||
Property and equipment, net | $ 4,393 | $ 557 |
SIGNIFICANT ACCOUNTING POLICI49
SIGNIFICANT ACCOUNTING POLICIES (Schedule of Estimated Useful Lives at Annual Rates) (Details) | 12 Months Ended |
Dec. 31, 2016 | |
Computers and peripheral equipment [Member] | |
Property, Plant and Equipment [Line Items] | |
Estimated useful lives, annual rate | 33.00% |
Office furniture and equipment [Member] | Minimum [Member] | |
Property, Plant and Equipment [Line Items] | |
Estimated useful lives, annual rate | 6.00% |
Office furniture and equipment [Member] | Maximum [Member] | |
Property, Plant and Equipment [Line Items] | |
Estimated useful lives, annual rate | 15.00% |
SIGNIFICANT ACCOUNTING POLICI50
SIGNIFICANT ACCOUNTING POLICIES (Schedule of Stock-Based Compensation Assumptions) (Details) | 12 Months Ended | ||
Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Risk-free interest rate, minimum | 0.46% | 0.17% | 0.10% |
Risk-free interest rate, maximum | 1.73% | 1.76% | 1.72% |
Expected volatility, minimum | 49.49% | 43.49% | 44.44% |
Expected volatility, maximum | 53.54% | 50.31% | 51.62% |
Dividend yield | 0.00% | 0.00% | 0.00% |
Minimum [Member] | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Early exercise factor (as a percent) | 150.00% | 160.00% | 100.00% |
Forfeiture rate post vesting | 5.00% | 0.00% | 0.00% |
Maximum [Member] | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Early exercise factor (as a percent) | 200.00% | 210.00% | 256.00% |
Forfeiture rate post vesting | 20.00% | 18.00% | 15.00% |
SIGNIFICANT ACCOUNTING POLICI51
SIGNIFICANT ACCOUNTING POLICIES (Schedule of discontinued operations including prior periods) (Details) - USD ($) $ in Thousands | 12 Months Ended | |||
Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | ||
Accounting Policies [Abstract] | ||||
Costs and expenses | $ 5,192 | [1] | $ 7,444 | $ 7,719 |
Impairment of intangible assets and goodwill | 19,555 | |||
Gain on disposal of the discontinued operations | (1,750) | [1] | ||
Loss before taxes on income | (3,442) | [1] | (26,999) | (7,719) |
Taxes on income | 795 | [1] | 1,235 | |
Total net loss on discontinued operations | $ (2,647) | [1] | $ (26,999) | $ (6,484) |
[1] | Represent the results of the discontinued operations until their disposal. |
FAIR VALUE OF FINANCIAL INSTR52
FAIR VALUE OF FINANCIAL INSTRUMENTS (Schedule of Fair Value Measurements) (Details) - USD ($) $ in Thousands | Dec. 31, 2016 | Dec. 31, 2015 |
Assets: | ||
Derivative assets | $ 1,117 | $ 608 |
Total financial assets | 1,117 | 608 |
Liabilities: | ||
Payment obligation in connection with acquisitions | 7,653 | 49,124 |
Derivative liabilities | 84 | 214 |
Convertible debt | 29,526 | 35,463 |
Total financial liabilities | 37,263 | 84,801 |
Level 1 [Member] | ||
Assets: | ||
Derivative assets | ||
Total financial assets | ||
Liabilities: | ||
Payment obligation in connection with acquisitions | ||
Derivative liabilities | ||
Convertible debt | 29,526 | 35,463 |
Total financial liabilities | 29,526 | 35,463 |
Level 2 [Member] | ||
Assets: | ||
Derivative assets | 1,117 | 608 |
Total financial assets | 1,117 | 608 |
Liabilities: | ||
Payment obligation in connection with acquisitions | ||
Derivative liabilities | 84 | 214 |
Convertible debt | ||
Total financial liabilities | 84 | 214 |
Level 3 [Member] | ||
Assets: | ||
Derivative assets | ||
Total financial assets | ||
Liabilities: | ||
Payment obligation in connection with acquisitions | 7,653 | 49,124 |
Derivative liabilities | ||
Convertible debt | ||
Total financial liabilities | $ 7,653 | $ 49,124 |
FAIR VALUE OF FINANCIAL INSTR53
FAIR VALUE OF FINANCIAL INSTRUMENTS (Schedule of Company's liabilities measured at fair value) (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2016 | Dec. 31, 2015 | |
FAIR VALUE OF FINANCIAL INSTRUMENTS [Abstract] | ||
Beginning balance | $ 49,124 | $ 13,645 |
Accretion of contingent liability related to acquisition | 311 | |
Accretion and interest of payment obligation related to acquisition | 1,303 | |
Change in fair value of contingent consideration related to acquisition | (6,564) | |
Settlements | (7,537) | (2,500) |
Change to payment obligation as a result of working capital adjustment | 309 | |
Amendment to the merger agreement | (35,546) | |
Fair value of payment obligation in connection with Undertone acquisition | 44,023 | |
Reclassification to accrued expenses | (189) | |
Changes in fair value recognized in earnings with respect to the employees of Grow Mobile | 398 | |
Ending balance | $ 7,653 | $ 49,124 |
ACQUISITIONS (Narrative) (Detai
ACQUISITIONS (Narrative) (Details) - USD ($) $ in Thousands | Feb. 29, 2016 | Nov. 30, 2015 | Feb. 10, 2015 | Feb. 10, 2015 | Feb. 29, 2016 | Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | Aug. 02, 2016 | Jan. 29, 2016 |
Business Acquisition [Line Items] | ||||||||||
Amortization of intangible assets | $ 21,974 | $ 8,879 | ||||||||
Value of shares of common stock paid in acquisition | 675 | 5,579 | $ 171,552 | |||||||
Expenses related to Merger Consideration Incentive Plan recorded as operating expenses | 6,844 | 6,738 | $ 13,769 | |||||||
Goodwill adjustments | (12,956) | |||||||||
Undertone [Member] | ||||||||||
Business Acquisition [Line Items] | ||||||||||
Percent of equity acquired | 100.00% | |||||||||
Consideration paid with cash | $ 89,078 | |||||||||
Retained amount as holdback to cover potential claims | 16,000 | |||||||||
Contingent consideration liability | 14,391 | 14,476 | $ 14,129 | |||||||
Installments amount | 3,000 | |||||||||
Installments due amount | 2,804 | 2,820 | ||||||||
Installments amount paid | 1,000 | 22,000 | ||||||||
Fair value of obligations eliminated | 1,939 | 35,546 | ||||||||
Deferred consideration payment | $ 20,000 | |||||||||
Interest rate (as a percent) | 10.00% | |||||||||
Deferred consideration payment due amount | $ 22,005 | 21,859 | 21,417 | |||||||
Deferred payment amount | $ 1,182 | |||||||||
Excess in tax advances which will be paid upon refund from tax authorities | 2,143 | |||||||||
Acquisition related costs incurred | 4,804 | |||||||||
Expected maximum period to finalize valuation and purchase price allocation | 1 year | |||||||||
Goodwill adjustments | 590 | |||||||||
Working Captial adjustment | 213 | $ 1,498 | ||||||||
Reduce purchase price merger | $ 13,546 | |||||||||
Final purchase price amount | $ 133,101 | |||||||||
MMR [Member] | ||||||||||
Business Acquisition [Line Items] | ||||||||||
Percent of equity acquired | 100.00% | 100.00% | ||||||||
Consideration paid with cash | $ 6,394 | |||||||||
Value of shares of common stock paid in acquisition | $ 4,378 | |||||||||
Shares issued for acquisition | 1,437,510 | |||||||||
MMR [Member] | Make Me Reach SAS Founder [Member] | ||||||||||
Business Acquisition [Line Items] | ||||||||||
Additional consideration required to be paid with cash subject to retention conditions | $ 442 | $ 442 | ||||||||
Value of shares of common stock paid or to be paid in acquisition subject to retention conditions | 442 | 442 | ||||||||
MMR [Member] | MakeMeReach SAS Employee [Member] | ||||||||||
Business Acquisition [Line Items] | ||||||||||
Consideration paid with cash | 144 | |||||||||
Additional consideration required to be paid with cash subject to retention conditions | 266 | 266 | ||||||||
Value of shares of common stock paid or to be paid in acquisition subject to retention conditions | 208 | $ 208 | ||||||||
Value of shares of common stock paid in acquisition | $ 63 | |||||||||
Shares issued for acquisition | 18,998 | |||||||||
Shares issued for acquisition subject to retention conditions | 92,348 |
ACQUISITIONS (Schedule of Alloc
ACQUISITIONS (Schedule of Allocation of Purchase Price to Assets Acquired and Liabilities Assumed) (Details) - USD ($) $ in Thousands | Dec. 31, 2016 | Dec. 31, 2015 | Nov. 30, 2015 | Feb. 10, 2015 | Dec. 31, 2014 |
Business Acquisition [Line Items] | |||||
Goodwill | $ 190,737 | $ 203,693 | $ 164,092 | ||
Undertone [Member] | |||||
Business Acquisition [Line Items] | |||||
Cash and cash equivalents | 7,378 | ||||
Accounts receivable | 38,493 | ||||
Prepaid expenses and other assets | 4,427 | ||||
Long term restricted cash | 1,182 | ||||
Property and equipment | 1,905 | ||||
Deferred taxes | 815 | ||||
Accounts payable | (23,152) | ||||
Accrued expenses and other liabilities | (11,083) | ||||
Deferred revenues | (1,047) | ||||
Long term loan, including current maturities | (48,601) | ||||
Deferred tax liability | (20,241) | ||||
Intangible assets | 63,200 | $ 63,200 | |||
Goodwill | 106,492 | ||||
Total purchase price | 119,768 | ||||
MMR [Member] | |||||
Business Acquisition [Line Items] | |||||
Cash and cash equivalents | $ 1,050 | ||||
Accounts receivable | 666 | ||||
Prepaid expenses and other assets | 86 | ||||
Property and equipment | 87 | ||||
Accounts payable | (305) | ||||
Accrued expenses and other liabilities | (433) | ||||
Deferred revenues | (126) | ||||
Deferred tax liability | (1,159) | ||||
Intangible assets | $ 3,454 | 3,454 | |||
Goodwill | 7,452 | ||||
Total purchase price | $ 10,772 |
ACQUISITIONS (Schedule of Compo
ACQUISITIONS (Schedule of Components of Intangible Assets Associated with Acquisition) (Details) - USD ($) $ in Thousands | Nov. 30, 2015 | Dec. 31, 2016 | Dec. 31, 2015 | Feb. 10, 2015 | |
Business Acquisition [Line Items] | |||||
Impairment | $ 8,471 | ||||
Customer Relationships [Member] | |||||
Business Acquisition [Line Items] | |||||
Impairment | $ 1,197 | ||||
MMR [Member] | |||||
Business Acquisition [Line Items] | |||||
Intangible assets | $ 3,454 | $ 3,454 | |||
MMR [Member] | Developed Technology Rights [Member] | |||||
Business Acquisition [Line Items] | |||||
Intangible assets | $ 1,261 | ||||
Estimated useful lives | 5 years | ||||
MMR [Member] | Customer Relationships [Member] | |||||
Business Acquisition [Line Items] | |||||
Intangible assets | $ 395 | ||||
Estimated useful lives | 5 years | ||||
MMR [Member] | Distribution Channels [Member] | |||||
Business Acquisition [Line Items] | |||||
Intangible assets | $ 1,798 | ||||
Estimated useful lives | 5 years | ||||
Undertone [Member] | |||||
Business Acquisition [Line Items] | |||||
Intangible assets | $ 63,200 | $ 63,200 | |||
Undertone [Member] | Developed Technology Rights [Member] | |||||
Business Acquisition [Line Items] | |||||
Intangible assets | [1] | $ 19,500 | |||
Estimated useful lives | 5 years | ||||
Undertone [Member] | Customer Relationships [Member] | |||||
Business Acquisition [Line Items] | |||||
Intangible assets | [2] | $ 30,000 | |||
Estimated useful lives | 6 years | ||||
Undertone [Member] | Backlog [Member] | |||||
Business Acquisition [Line Items] | |||||
Intangible assets | [3] | $ 4,200 | |||
Undertone [Member] | Backlog [Member] | Maximum [Member] | |||||
Business Acquisition [Line Items] | |||||
Estimated useful lives | 1 year | ||||
Undertone [Member] | Trade Names [Member] | |||||
Business Acquisition [Line Items] | |||||
Intangible assets | [4] | $ 9,500 | |||
Estimated useful lives | 4 years | ||||
[1] | Acquired technology represents the combined technology for delivering and administering Undertone's attention-grabbing, full-page video advertisements and other advertising formats. | ||||
[2] | Customer relationships represent the existing relationships and agreements with Undertone's brand advertisers. | ||||
[3] | Backlog represents customer insertion orders that are highly probable to be turned into revenues in the near future. | ||||
[4] | Tradename represents trade names and logos under which Undertone markets and sells its services. |
PROPERTY AND EQUIPMENT, NET (De
PROPERTY AND EQUIPMENT, NET (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
Property, Plant and Equipment [Line Items] | |||
Property and equipment | $ 24,433 | $ 22,150 | |
Less: accumulated depreciation and amortization | 10,228 | 9,436 | |
Property and equipment, net | 14,205 | 12,714 | |
Depreciation and amortization expenses, continued operations | 4,003 | 2,543 | $ 2,583 |
Impairment charges of asset that will no longer be in use | 124 | $ 632 | |
Software capitalized impairment costs from discontinued operations | 3,390 | ||
Capitalized software development costs | 4,605 | 4,192 | |
Stock-based compensation expense | 14 | 187 | |
Amortization expense | 769 | 245 | |
Computers and peripheral equipment [Member] | |||
Property, Plant and Equipment [Line Items] | |||
Property and equipment | 9,607 | 11,775 | |
Office furniture and equipment [Member] | |||
Property, Plant and Equipment [Line Items] | |||
Property and equipment | 2,679 | 2,837 | |
Impairment charges of asset that will no longer be in use | 159 | ||
Leasehold Improvements [Member] | |||
Property, Plant and Equipment [Line Items] | |||
Property and equipment | 7,142 | 6,981 | |
Capitalized software [Member] | |||
Property, Plant and Equipment [Line Items] | |||
Property and equipment | 5,005 | 3,390 | |
Less: accumulated depreciation and amortization | 4,393 | 557 | |
Property and equipment, net | $ 4,393 | $ 557 |
GOODWILL AND OTHER INTANGIBLE58
GOODWILL AND OTHER INTANGIBLE ASSETS, NET (Schedule of Changes in Goodwill) (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2016 | Dec. 31, 2015 | |
Goodwill [Line Items] | ||
Balance as of January 1 | $ 203,693 | $ 164,092 |
Acquisition | ||
Impairment | (87,043) | |
Revaluation (foreign currency exchange) | (256) | |
Final adjustments to Undertone's purchase price (see Note 4) | (12,956) | |
Balance as of December 31 | 190,737 | 203,693 |
Undertone [Member] | ||
Goodwill [Line Items] | ||
Acquisition | 119,448 | |
Final adjustments to Undertone's purchase price (see Note 4) | 590 | |
Balance as of December 31 | $ 106,492 | |
MMR [Member] | ||
Goodwill [Line Items] | ||
Acquisition | $ 7,452 |
GOODWILL AND OTHER INTANGIBLE59
GOODWILL AND OTHER INTANGIBLE ASSETS, NET (Summary of Intangible Assets) (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2016 | Dec. 31, 2015 | |
Accumulated amortization | ||
Amortization | $ (21,974) | $ (8,879) |
Impairment | ||
Impairment | (8,471) | |
Intangible assets, Net | ||
Balance at beginning of period | 66,072 | 16,890 |
Additions | 66,654 | |
Amortization | (21,974) | (8,879) |
Impairment | (8,471) | |
OCI | (80) | (122) |
Disposals | ||
Balance at end of period | 44,018 | 66,072 |
Acquired technology [Member] | ||
Intangible assets, Gross | ||
Balance at beginning of period | 30,715 | 38,515 |
Additions | 20,761 | |
Amortization | ||
Impairment | ||
OCI | (41) | (46) |
Disposals | (28,515) | |
Balance at end of period | 30,674 | 30,715 |
Accumulated amortization | ||
Balance at beginning of period | (8,963) | (15,698) |
Additions | ||
Amortization | (5,543) | (4,374) |
Impairment | ||
OCI | 16 | 2 |
Disposals | 11,107 | |
Balance at end of period | (14,490) | (8,963) |
Impairment | ||
Balance at beginning of period | (956) | (14,347) |
Additions | ||
Amortization | ||
Impairment | (4,017) | |
OCI | ||
Disposals | 17,408 | |
Balance at end of period | (956) | (956) |
Intangible assets, Net | ||
Balance at beginning of period | 20,796 | 8,470 |
Additions | 20,761 | |
Amortization | (5,543) | (4,374) |
Impairment | (4,017) | |
OCI | (25) | (44) |
Disposals | ||
Balance at end of period | 15,228 | 20,796 |
Customer Relationships [Member] | ||
Intangible assets, Gross | ||
Balance at beginning of period | 31,911 | 3,144 |
Additions | 30,395 | |
Amortization | ||
Impairment | ||
OCI | (13) | (14) |
Disposals | (1,614) | |
Balance at end of period | 31,898 | 31,911 |
Accumulated amortization | ||
Balance at beginning of period | (1,161) | (903) |
Additions | ||
Amortization | (12,750) | (766) |
Impairment | ||
OCI | 6 | |
Disposals | 508 | |
Balance at end of period | (13,905) | (1,161) |
Impairment | ||
Balance at beginning of period | (91) | |
Additions | ||
Amortization | ||
Impairment | (1,197) | |
OCI | ||
Disposals | 1,106 | |
Balance at end of period | (91) | (91) |
Intangible assets, Net | ||
Balance at beginning of period | 30,659 | 2,241 |
Additions | 30,395 | |
Amortization | (12,750) | (766) |
Impairment | (1,197) | |
OCI | (7) | (14) |
Disposals | ||
Balance at end of period | 17,902 | 30,659 |
Tradename and other [Member] | ||
Intangible assets, Gross | ||
Balance at beginning of period | 22,483 | 11,911 |
Additions | 15,498 | |
Amortization | ||
Impairment | ||
OCI | (59) | (66) |
Disposals | (4,200) | (4,860) |
Balance at end of period | 18,224 | 22,483 |
Accumulated amortization | ||
Balance at beginning of period | (4,609) | (2,138) |
Additions | ||
Amortization | (3,681) | (3,739) |
Impairment | ||
OCI | 11 | 2 |
Disposals | 4,200 | 1,266 |
Balance at end of period | (4,079) | (4,609) |
Impairment | ||
Balance at beginning of period | (3,257) | (3,594) |
Additions | ||
Amortization | ||
Impairment | (3,257) | |
OCI | ||
Disposals | 3,594 | |
Balance at end of period | (3,257) | (3,257) |
Intangible assets, Net | ||
Balance at beginning of period | 14,617 | 6,179 |
Additions | 15,498 | |
Amortization | (3,681) | (3,739) |
Impairment | (3,257) | |
OCI | (48) | (64) |
Disposals | ||
Balance at end of period | 10,888 | 14,617 |
In-process R&D [Member] | ||
Intangible assets, Gross | ||
Balance at beginning of period | 2,000 | |
Additions | ||
Amortization | ||
Impairment | ||
OCI | ||
Disposals | (2,000) | |
Balance at end of period | ||
Impairment | ||
Balance at beginning of period | (2,000) | |
Additions | ||
Amortization | ||
Impairment | ||
OCI | ||
Disposals | 2,000 | |
Balance at end of period | ||
Intangible assets, Net | ||
Balance at beginning of period | ||
Additions | ||
Amortization | ||
Impairment | ||
OCI | ||
Disposals | ||
Balance at end of period |
GOODWILL AND OTHER INTANGIBLE60
GOODWILL AND OTHER INTANGIBLE ASSETS, NET (Schedule of Estimated Useful Life of Intangible Assets) (Details) | 12 Months Ended |
Dec. 31, 2016 | |
Acquired technology [Member] | Minimum [Member] | |
Finite-Lived Intangible Assets [Line Items] | |
Weighted Avarage Useful Life | 3 years |
Acquired technology [Member] | Maximum [Member] | |
Finite-Lived Intangible Assets [Line Items] | |
Weighted Avarage Useful Life | 5 years |
Customer Relationships [Member] | Minimum [Member] | |
Finite-Lived Intangible Assets [Line Items] | |
Weighted Avarage Useful Life | 4 years |
Customer Relationships [Member] | Maximum [Member] | |
Finite-Lived Intangible Assets [Line Items] | |
Weighted Avarage Useful Life | 5 years |
Tradename and other [Member] | Minimum [Member] | |
Finite-Lived Intangible Assets [Line Items] | |
Weighted Avarage Useful Life | 4 years |
Tradename and other [Member] | Maximum [Member] | |
Finite-Lived Intangible Assets [Line Items] | |
Weighted Avarage Useful Life | 11 years |
GOODWILL AND OTHER INTANGIBLE61
GOODWILL AND OTHER INTANGIBLE ASSETS, NET (Schedule Of Estimated Future Amortization Expense) (Details) - USD ($) $ in Thousands | Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 |
Goodwill and Intangible Assets Disclosure [Abstract] | |||
2,017 | $ 16,197 | ||
2,018 | 12,028 | ||
2,019 | 9,944 | ||
2,020 | 4,861 | ||
2,021 | 229 | ||
Thereafter | 759 | ||
Net carrying amount | $ 44,018 | $ 66,072 | $ 16,890 |
GOODWILL AND OTHER INTANGIBLE62
GOODWILL AND OTHER INTANGIBLE ASSETS, NET (Narrative) (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2015 | Dec. 31, 2014 | |
Business Acquisition [Line Items] | ||
Impairment | $ 8,471 | |
Grow Mobile [Member] | ||
Business Acquisition [Line Items] | ||
Impairment | 8,471 | |
Deferred tax liability written off and included in taxed on income as tax benefit | $ 2,291 | |
Perion Network Ltd [Member] | ||
Business Acquisition [Line Items] | ||
Impairment | $ 19,941 | |
Deferred tax liability written off and included in taxed on income as tax benefit | $ 3,191 |
ACCRUED EXPENSES AND OTHER LI63
ACCRUED EXPENSES AND OTHER LIABILITIES (Details) - USD ($) $ in Thousands | Dec. 31, 2016 | Dec. 31, 2015 |
Payables and Accruals [Abstract] | ||
Employees and payroll accruals | $ 7,668 | $ 10,190 |
Government authorities | 2,929 | 1,850 |
Professional services accruals | 1,812 | 3,171 |
Other accruals | 3,549 | 3,587 |
Other overhead related expenses | 991 | 1,592 |
Accrued restructuring charges (see note 16) | 1,756 | |
Hosting, software and web services accruals | 433 | 497 |
Derivative liabilities | 84 | 214 |
Accrued expenses and other liabilities, total | $ 17,466 | $ 22,857 |
DERIVATIVES AND HEDGING ACTIV64
DERIVATIVES AND HEDGING ACTIVITES (Schedule of Fair Value of Company's Outstanding Derivative Instruments) (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2016 | Dec. 31, 2015 | |
Derivatives designated as hedging instruments: | ||
Foreign exchange forward contracts and other derivatives - Prepaid expenses and other current assets | $ 125 | $ 242 |
Foreign exchange forward contracts and other derivatives - Accrued expenses and other liabilities | 84 | 214 |
Foreign exchange forward contracts and other derivatives - Accumulated other comprehensive income | 36 | |
Derivatives not designated as hedging instruments | ||
Foreign exchange forward contracts and other derivatives - Prepaid expenses and other current assets | 20 | |
Cross currency SWAP - Prepaid expenses and other current assets | $ 973 | $ 366 |
DERIVATIVES AND HEDGING ACTIV65
DERIVATIVES AND HEDGING ACTIVITES (Schedule of Increase in Unrealized Gains (Losses) Recognized in Accumulated Other Comprehensive Income (Loss) on Derivatives) (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2016 | Dec. 31, 2015 | |
Option contracts [Member] | Other Comprehensive Income (Loss) [Member] | ||
Derivative Instruments, Gain (Loss) [Line Items] | ||
Total unrealized gain (loss) | $ 175 | $ 206 |
DERIVATIVES AND HEDGING ACTIV66
DERIVATIVES AND HEDGING ACTIVITES (Schedule of Net (Gains) Losses Reclassified from Accumulated Other Comprehensive Income (Loss) to Operating Expenses) (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
Derivatives not designated as hedging instruments: | |||
Total | $ 759 | $ 228 | $ 63 |
Financial expenses [Member] | SWAP [Member] | |||
Derivatives not designated as hedging instruments: | |||
Gain (loss) recognized in Consolidated Statements of Income | 608 | 225 | |
Foreign exchange options and forward contracts [Member] | |||
Derivatives designated as hedging instruments: | |||
Gain recognized in Statements of Comprehensive Income | 36 | ||
Foreign exchange options and forward contracts [Member] | Operating expenses [Member] | |||
Derivatives designated as hedging instruments: | |||
Gain (loss) recognized in Consolidated Statements of Income | 167 | 178 | (62) |
Foreign exchange options and forward contracts [Member] | Financial expenses [Member] | |||
Derivatives not designated as hedging instruments: | |||
Gain (loss) recognized in Consolidated Statements of Income | $ (16) | $ (175) | $ 125 |
SHORT TERM AND LONG TERM DEBT67
SHORT TERM AND LONG TERM DEBT (Narrative) (Details) - USD ($) $ in Thousands | Nov. 28, 2016 | Nov. 22, 2015 | Dec. 31, 2016 | Dec. 31, 2015 | Nov. 30, 2015 |
New credit facility from an Israeli Bank [Member] | |||||
Debt Instrument Line Items | |||||
Debt instrument, description of variable rate basis | Libor | ||||
Debt instrument, basis spread on variable rate | 3.30% | 1.20% | |||
Amount borrowed under credit facility | $ 7,000 | $ 19,900 | |||
Unpaid balance of the credit facility | $ 13,000 | ||||
New secured credit agreement [Member] | |||||
Debt Instrument Line Items | |||||
Debt instrument, face amount | $ 42,500 | $ 50,000 | |||
Frequency of payments | quarterly | ||||
Debt instrument, starting per quarter installment amount | 625 | ||||
Debt instrument, per quarter installment amount from March 2018 | $ 1,250 | ||||
Debt instrument, description of variable rate basis | LIBOR | ||||
Debt instrument, basis spread on variable rate | 5.50% | ||||
Debt issuance cost, deducted from the carrying amount of that debt in the consolidated balance sheets | $ 1,399 | ||||
Repayments of debt | $ 5,000 | ||||
Two Israeli Banks [Member] | |||||
Debt Instrument Line Items | |||||
Debt instrument, face amount | $ 10,000 | ||||
Israeli Bank One [Member] | |||||
Debt Instrument Line Items | |||||
Debt instrument, date of issuance | May 17, 2012 | ||||
Israeli Bank Two [Member] | |||||
Debt Instrument Line Items | |||||
Debt instrument, date of issuance | May 17, 2012 | ||||
Debt instrument, face amount | $ 400 |
SHORT TERM AND LONG TERM DEBT68
SHORT TERM AND LONG TERM DEBT (Schedule of Aggregate Annual Maturities) (Details) - Debt Instrument [Line Items] $ in Thousands | Dec. 31, 2016USD ($) |
Debt Instrument Line Items | |
2,017 | $ 11,150 |
2,018 | 5,000 |
2,019 | 33,750 |
Total principal payments | 49,900 |
Less: unamortized original issue discount | (1,316) |
Present value of principal payments | 48,584 |
Less: current portion | (10,656) |
Long-term debt | $ 37,928 |
CONVERTIBLE DEBT (Narrative) (D
CONVERTIBLE DEBT (Narrative) (Details) ₪ / shares in Units, $ / shares in Units, ₪ in Thousands, $ in Thousands | Dec. 03, 2015USD ($) | Dec. 31, 2016USD ($)$ / shares | Dec. 31, 2016ILS (₪) | Dec. 31, 2015USD ($) | Sep. 30, 2014ILS (₪)₪ / shares |
Debt Instrument Line Items | |||||
Proceeds from private placement | $ 10,125 | ||||
Convertible debt | $ 29,526 | $ 35,463 | |||
Series L Convertible Bonds [Member] | |||||
Debt Instrument Line Items | |||||
Convertible bonds, aggregate par value | $ 29,854 | ₪ 143,500 | |||
Bond purchase price expressed as a percentage of par value | 96.50% | ||||
Convertible bonds, annual interest rate | 5.00% | 5.00% | |||
Date of first required payment | Mar. 31, 2016 | ||||
Convertible bonds, conversion price | (per share) | $ 8.74 | ₪ 33.605 | |||
Accrued interest | $ 376 | $ 463 | |||
Convertible debt | $ 29,526 | ||||
Series L Convertible Bonds [Member] | Israel, New Shekels [Member] | |||||
Debt Instrument Line Items | |||||
Convertible bonds, aggregate par value | ₪ | ₪ 114,789 | ||||
Series L Convertible Bonds [Member] | Maximum [Member] | |||||
Debt Instrument Line Items | |||||
Convertible bonds, annual interest rate | 6.00% | 6.00% |
CONVERTIBLE DEBT (Schedule of C
CONVERTIBLE DEBT (Schedule of Changes of Long-term Convertible Debt) (Details) - USD ($) $ in Thousands | 12 Months Ended | |||||
Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | ||||
Debt Instrument Line Items | ||||||
Interest Payable | $ 376 | $ 463 | ||||
Convertible Debt [Roll Forward] | ||||||
Balance at the beginning of period | [1] | 28,371 | ||||
Issuance of convertible debt | $ 37,852 | |||||
Change in fair value | (2,566) | |||||
Balance at the end of period | [1] | 21,862 | 28,371 | |||
Series L Convertible Bonds [Member] | ||||||
Convertible Debt [Roll Forward] | ||||||
Balance at the beginning of period | 35,926 | [1] | 35,752 | |||
Accrued interest | 1,586 | 1,823 | ||||
Change in fair value | 1,350 | 175 | ||||
Payment of interest | (1,716) | (1,824) | ||||
Payment of principal | (7,620) | |||||
Balance at the end of period | 29,526 | [1] | $ 35,926 | [1] | $ 35,752 | |
2,017 | 7,463 | |||||
2,018 | 7,464 | |||||
2,019 | 7,463 | |||||
2,020 | 7,464 | |||||
Fair value of principal payments | $ 29,854 | |||||
[1] | include accrued interest of $463 and $376 as of December 31, 2015 and 2016 respectively |
COMMITMENTS AND CONTINGENT LI71
COMMITMENTS AND CONTINGENT LIABILITIES (Narrative) (Details) $ in Thousands | 12 Months Ended | ||||||
Dec. 31, 2016USD ($)item | Dec. 31, 2015USD ($) | Nov. 30, 2015 | Feb. 10, 2015 | Jul. 15, 2014 | May 28, 2014USD ($) | Nov. 30, 2012USD ($) | |
Business Acquisition [Line Items] | |||||||
Number of additional lease periods | item | 2 | ||||||
Number of periods in additional lease | 24 months | ||||||
Lease expiration date | Jan. 31, 2025 | ||||||
Sweet Im Ltd [Member] | |||||||
Business Acquisition [Line Items] | |||||||
Percentage of shares acquired | 100.00% | ||||||
Maximum subsequent consideration due for acquisition | $ 7,500 | ||||||
Estimated contingent payment | $ 2,500 | ||||||
Liability to be maintained | $ 5,000 | ||||||
Client Connect [Member] | |||||||
Business Acquisition [Line Items] | |||||||
Percentage of amount incurred to be reimbursed | 50.00% | ||||||
Amount accrued for the settlement | $ 550 | ||||||
Undertone [Member] | |||||||
Business Acquisition [Line Items] | |||||||
Percentage of shares acquired | 100.00% | ||||||
MMR [Member] | |||||||
Business Acquisition [Line Items] | |||||||
Percentage of shares acquired | 100.00% | ||||||
Grow Mobile [Member] | |||||||
Business Acquisition [Line Items] | |||||||
Percentage of shares acquired | 100.00% |
COMMITMENTS AND CONTINGENT LI72
COMMITMENTS AND CONTINGENT LIABILITIES (Schedule of Aggregate minimum lease commitments) (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
New offices in Holon, Israel [Member] | |||
Future minimum payments, operating leases: | |||
Lease expense | $ 5,419 | $ 1,710 | $ 1,166 |
New offices in Holon, Israel [Member] | Minimum Lease Payments [Member] | |||
Future minimum payments, operating leases: | |||
2,017 | 6,275 | ||
2,018 | 6,318 | ||
2,019 | 4,297 | ||
2,020 | 3,613 | ||
2,021 | 3,342 | ||
Thereafter | 6,262 | ||
Total | 30,107 | ||
New offices in Holon, Israel [Member] | Minimum Sublease Rentals [Member] | |||
Future minimum payments, operating leases: | |||
2,017 | 693 | ||
2,018 | 694 | ||
2,019 | 697 | ||
2,020 | 627 | ||
2,021 | 695 | ||
Thereafter | 970 | ||
Total | 4,376 | ||
New offices in Holon, Israel [Member] | Net future minimum lease commitment [Member] | |||
Future minimum payments, operating leases: | |||
2,017 | 5,582 | ||
2,018 | 5,624 | ||
2,019 | 3,600 | ||
2,020 | 2,986 | ||
2,021 | 2,647 | ||
Thereafter | 5,292 | ||
Total | 25,731 | ||
Vehicles [Member] | |||
Future minimum payments, operating leases: | |||
Lease expense | $ 790 | $ 1,046 | $ 1,163 |
SHAREHOLDERS' EQUITY (Narrative
SHAREHOLDERS' EQUITY (Narrative) (Details) $ / shares in Units, $ in Thousands | Sep. 01, 2016$ / sharesshares | Dec. 03, 2015USD ($)$ / sharesshares | Nov. 01, 2014USD ($)shares | Dec. 31, 2016USD ($)$ / sharesshares | Dec. 31, 2015USD ($)$ / shares | Dec. 31, 2014USD ($)$ / sharesshares | Dec. 31, 2016₪ / shares | Dec. 31, 2015₪ / sharesshares | Nov. 18, 2013₪ / sharesshares |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||||
Ordinary shares, shares authorized | shares | 120,000,000 | 120,000,000 | 120,000,000 | ||||||
Ordinary shares, par value per share | ₪ / shares | ₪ 0.01 | ₪ 0.01 | ₪ 0.01 | ||||||
Ordinary shares issued in private placement | shares | 782,981 | 4,436,898 | |||||||
Gross proceeds from private placement | $ 10,125 | ||||||||
Purchase price per share (in dollars per share) | $ / shares | $ 2.282 | ||||||||
Period taken to calculate the average closing price of an ordinary share | 30 days | ||||||||
Share price | $ / shares | $ 1.939 | ||||||||
Weighted average fair value of stock options granted | $ / shares | $ 0.64 | $ 1.14 | $ 4.49 | ||||||
Options outstanding, in-the-money | shares | 1,262,969 | ||||||||
Options outstanding, out of the money | shares | 4,091,251 | ||||||||
Total intrinsic value of options exercised | $ 1 | $ 9 | |||||||
Number of stock options accelerated | shares | 479,980 | ||||||||
Total expense incurred in connection with the acceleration | $ 4,800 | ||||||||
Total expense incurred | $ 6,844 | $ 6,738 | $ 13,769 | ||||||
Stock Option Plan 2003 [Member] | |||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||||
Shares available for grant | shares | 7,719,995 | ||||||||
Undertone [Member] | |||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||||
Warrants to purchase ordinary shares granted | shares | 200,000 | ||||||||
Weighted average exercise price of warrants | $ / shares | $ 3.03 | ||||||||
Weighted-average grant-date fair value | $ / shares | $ 1.23 | ||||||||
Total expense incurred | $ 2 | ||||||||
Performance-based Stock Options [Member] | |||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||||
Weighted average fair value of stock options granted | $ / shares | $ 0.90 | ||||||||
Unrecognized compensation cost related to outstanding stock options and RSUs | $ 332 | ||||||||
Unrecognized compensation cost related to outstanding stock options and RSUs, expected period of recognition | 1 year 3 months | ||||||||
Warrant [Member] | |||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||||
Unrecognized compensation cost related to outstanding stock options and RSUs | $ 182 | ||||||||
Unrecognized compensation cost related to outstanding stock options and RSUs, expected period of recognition | 1 year 11 months 27 days | ||||||||
Stock Options And Restricted Stock Units RSU [Member] | |||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||||
Unrecognized compensation cost related to outstanding stock options and RSUs | $ 1,179 | ||||||||
Unrecognized compensation cost related to outstanding stock options and RSUs, expected period of recognition | 1 year 3 months 29 days | ||||||||
Restricted Stock Units (RSUs) [Member] | |||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||||
Number of stock options accelerated | shares | 33,333 | ||||||||
Total expense incurred in connection with the acceleration | $ 220 | ||||||||
Restricted Stock Units (RSUs) [Member] | Stock Option Plan 2003 [Member] | Maximum [Member] | |||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||||
Vesting period for plan | 3 years | ||||||||
Restricted Stock Units (RSUs) [Member] | Stock Option Plan 2003 [Member] | Minimum [Member] | |||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||||
Vesting period for plan | 1 year |
SHAREHOLDERS' EQUITY (Schedule
SHAREHOLDERS' EQUITY (Schedule of Stock Option Activity) (Details) - USD ($) $ / shares in Units, $ in Thousands | 12 Months Ended | |
Dec. 31, 2016 | Dec. 31, 2015 | |
Number of options | ||
Outstanding at January 1, 2016 | 5,467,337 | |
Granted | 2,248,000 | |
Exercised | (200) | |
Cancelled | (2,360,917) | |
Outstanding at December 31, 2016 | 5,354,220 | 5,467,337 |
Exercisable at December 31, 2016 | 1,552,014 | |
Vested and expected to vest at December 31, 2016 | 4,299,107 | |
Weighted average Exercise price | ||
Outstanding at January 1, 2016 | $ 5.30 | |
Granted | 1.94 | |
Exercised | 2 | |
Cancelled | 4.97 | |
Outstanding at December 31, 2016 | 4.04 | $ 5.30 |
Exercisable at December 31, 2016 | 7.88 | |
Vested and expected to vest at December 31, 2016 | $ 4.57 | |
Weighted average Remaining contractual term | ||
Outstanding | 2 years 9 months 26 days | 3 years 2 months 1 day |
Exercisable at December 31, 2016 | 1 year 5 months 5 days | |
Vested and expected to vest at December 31, 2016 | 2 years 6 months 26 days | |
Aggregate intrinsic value | ||
Outstanding at January 1, 2016 | $ 1,709 | |
Outstanding at December 31, 2016 | 549 | $ 1,709 |
Exercisable at December 31, 2016 | 6 | |
Vested and expected to vest at December 31, 2016 | $ 316 | |
Performance-based Stock Options [Member] | ||
Number of options | ||
Outstanding at January 1, 2016 | 3,550,000 | |
Cancelled | (2,033,334) | |
Outstanding at December 31, 2016 | 1,516,666 | 3,550,000 |
Exercisable at December 31, 2016 | 549,995 | |
Vested and expected to vest at December 31, 2016 | 1,174,535 | |
Weighted average Exercise price | ||
Outstanding at January 1, 2016 | $ 2.38 | |
Cancelled | 2.28 | |
Outstanding at December 31, 2016 | 2.53 | $ 2.38 |
Exercisable at December 31, 2016 | 2.51 | |
Vested and expected to vest at December 31, 2016 | $ 2.52 | |
Weighted average Remaining contractual term | ||
Outstanding | 3 years 9 months 7 days | 4 years 11 months 5 days |
Exercisable at December 31, 2016 | 3 years 5 months 23 days | |
Vested and expected to vest at December 31, 2016 | 3 years 8 months 19 days | |
Aggregate intrinsic value | ||
Outstanding at January 1, 2016 | $ 4,793 | |
Outstanding at December 31, 2016 | $ 4,793 | |
Exercisable at December 31, 2016 | ||
Vested and expected to vest at December 31, 2016 |
SHAREHOLDERS' EQUITY (Schedul75
SHAREHOLDERS' EQUITY (Schedule of Option Activity by Price Range) (Details) | 12 Months Ended |
Dec. 31, 2016$ / sharesshares | |
Outstanding | |
Number of options | shares | 6,870,886 |
Weighted average remaining contractual life (years) | 3 years 11 days |
Weighted average exercise price | $ 3.70 |
Exercisable | |
Number of options | shares | 2,102,009 |
Weighted average remaining contractual life (years) | 1 year 11 months 19 days |
Weighted average exercise price | $ 6.47 |
$0.34-$2.00 [Member] | |
Outstanding | |
Range of exercise price, minimum | 0.34 |
Range of exercise price, maximum | $ 2 |
Number of options | shares | 1,504,493 |
Weighted average remaining contractual life (years) | 4 years 3 months 11 days |
Weighted average exercise price | $ 1.09 |
Exercisable | |
Number of options | shares | 86,249 |
Weighted average remaining contractual life (years) | 2 years 4 days |
Weighted average exercise price | $ 1.88 |
$2.11-$2.52 [Member] | |
Outstanding | |
Range of exercise price, minimum | 2.11 |
Range of exercise price, maximum | $ 2.52 |
Number of options | shares | 2,200,166 |
Weighted average remaining contractual life (years) | 3 years 5 months 19 days |
Weighted average exercise price | $ 2.28 |
Exercisable | |
Number of options | shares | 539,994 |
Weighted average remaining contractual life (years) | 3 years 5 months 12 days |
Weighted average exercise price | $ 2.26 |
$3.27-$3.77 [Member] | |
Outstanding | |
Range of exercise price, minimum | 3.27 |
Range of exercise price, maximum | $ 3.77 |
Number of options | shares | 1,917,666 |
Weighted average remaining contractual life (years) | 2 years 8 months 12 days |
Weighted average exercise price | $ 3.57 |
Exercisable | |
Number of options | shares | 312,496 |
Weighted average remaining contractual life (years) | 2 years 4 months 24 days |
Weighted average exercise price | $ 3.61 |
$4.04-$6.93 [Member] | |
Outstanding | |
Range of exercise price, minimum | 4.04 |
Range of exercise price, maximum | $ 6.93 |
Number of options | shares | 312,521 |
Weighted average remaining contractual life (years) | 1 year 2 months 16 days |
Weighted average exercise price | $ 5.20 |
Exercisable | |
Number of options | shares | 295,851 |
Weighted average remaining contractual life (years) | 1 year 1 month 10 days |
Weighted average exercise price | $ 5.22 |
$7.80-$9.14 [Member] | |
Outstanding | |
Range of exercise price, minimum | 7.80 |
Range of exercise price, maximum | $ 9.14 |
Number of options | shares | 141,875 |
Weighted average remaining contractual life (years) | 1 year 11 days |
Weighted average exercise price | $ 8.71 |
Exercisable | |
Number of options | shares | 141,875 |
Weighted average remaining contractual life (years) | 1 year 11 days |
Weighted average exercise price | $ 8.71 |
$10.06-$11.94 [Member] | |
Outstanding | |
Range of exercise price, minimum | 10.06 |
Range of exercise price, maximum | $ 11.94 |
Number of options | shares | 668,540 |
Weighted average remaining contractual life (years) | 1 year 5 months 16 days |
Weighted average exercise price | $ 11.21 |
Exercisable | |
Number of options | shares | 606,587 |
Weighted average remaining contractual life (years) | 1 year 4 months 17 days |
Weighted average exercise price | $ 11.24 |
$12.56-$13.54 [Member] | |
Outstanding | |
Range of exercise price, minimum | 12.56 |
Range of exercise price, maximum | $ 13.54 |
Number of options | shares | 125,625 |
Weighted average remaining contractual life (years) | 5 months 16 days |
Weighted average exercise price | $ 12.59 |
Exercisable | |
Number of options | shares | 118,957 |
Weighted average remaining contractual life (years) | 4 months 13 days |
Weighted average exercise price | $ 12.58 |
SHAREHOLDERS' EQUITY (Schedul76
SHAREHOLDERS' EQUITY (Schedule of Restricted Stock Unit Activity) (Details) - Restricted Stock Units (RSUs) [Member] | 12 Months Ended |
Dec. 31, 2016$ / sharesshares | |
Number of RSUs | |
Outstanding at the beginning of year | shares | 692,320 |
Vested | shares | (337,420) |
Cancelled | shares | (27,900) |
Outstanding at the end of year | shares | 327,000 |
Expected to vest after December 31, 2016 | shares | 327,000 |
Weighted average grant date fair value | |
Outstanding, beginning balance | $ / shares | $ 12.64 |
Vested | $ / shares | 12.64 |
Cancelled | $ / shares | 12.64 |
Outstanding, ending balance | $ / shares | 12.64 |
Expected to vest after December 31, 2016 | $ / shares | $ 12.64 |
SHAREHOLDERS' EQUITY (Schedul77
SHAREHOLDERS' EQUITY (Schedule of Stock Based Compensation Expense) (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items] | |||
Share-based compensation expense | $ 6,844 | $ 6,738 | $ 13,769 |
Share-based compensation in discontinued operations | 42 | 878 | (1,376) |
Cost of revenues [Member] | |||
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items] | |||
Share-based compensation expense | 219 | 247 | 249 |
Research and Development [Member] | |||
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items] | |||
Share-based compensation expense | 708 | 804 | 2,058 |
Selling and Marketing [Member] | |||
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items] | |||
Share-based compensation expense | 1,907 | 1,397 | 1,940 |
General and Administrative [Member] | |||
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items] | |||
Share-based compensation expense | 4,010 | 4,290 | 9,302 |
Restructuring Costs [Member] | |||
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items] | |||
Share-based compensation expense | $ 220 |
FINANCIAL INCOME (EXPENSE), N78
FINANCIAL INCOME (EXPENSE), NET (Schedule of Financial Income (Expense), Net) (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
Financial income: | |||
Interest income | $ 204 | $ 551 | $ 93 |
Foreign currency translation gains, net | 572 | ||
Change in fair value of convertible debt | 2,566 | ||
Change in fair value of SWAP | 608 | 225 | |
Financial income | 812 | 1,348 | 2,659 |
Financial expense: | |||
Foreign currency translation losses, net | (779) | (2,669) | |
Interest and change in fair value of payment obligation related to acquisitions | (1,303) | (489) | (1,067) |
Issuance costs of convertible debt | (741) | ||
Interest expense on debts | (5,306) | (2,313) | (733) |
Change in fair value of convertible debt | (1,350) | (175) | |
Bank charges and other | (362) | (310) | (337) |
Financial expenses | (9,100) | (3,287) | (5,547) |
Financial expense, net | $ (8,288) | $ (1,939) | $ (2,888) |
INCOME TAXES (Narrative) (Detai
INCOME TAXES (Narrative) (Details) - USD ($) $ in Thousands | 1 Months Ended | 12 Months Ended | |||
Jan. 31, 2014 | Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | |
Taxes On Income [Line Items] | |||||
Income tax rate | 25.00% | 26.50% | 26.50% | 25.00% | |
Dividend distrubutions, withholding tax rate | 20.00% | 15.00% | |||
Amount of trapped earning out of Beneficiary Enterprise released | $ 270,840 | ||||
Net operating loss carry forward | $ 12,780 | ||||
Change in valuation allowance | 527 | ||||
Change in valuation allowance which relates to the increase in deferred taxes on operating loss carry-forwards and temporary differences due to change in the tax rate | $ 448 | ||||
Peripheral Regions Development Area A [Member] | |||||
Taxes On Income [Line Items] | |||||
Preferred Enterprise tax rate | 9.00% | 9.00% | 9.00% | 7.00% | |
Internal Revenue Service (IRS) [Member] | |||||
Taxes On Income [Line Items] | |||||
Net operating loss carry forward | $ 10,000 | ||||
Internal Revenue Service (IRS) [Member] | Latest Tax Year [Member] | |||||
Taxes On Income [Line Items] | |||||
Expiration of operating loss carry forwards | Dec. 31, 2034 | ||||
Internal Revenue Service (IRS) [Member] | Earliest Tax Year [Member] | |||||
Taxes On Income [Line Items] | |||||
Expiration of operating loss carry forwards | Dec. 31, 2024 | ||||
European Subsidiaries [Member] | |||||
Taxes On Income [Line Items] | |||||
Net operating loss carry forward | $ 7,340 |
INCOME TAXES (Schedule of Incom
INCOME TAXES (Schedule of Income (Loss) Before Taxes) (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
Income Tax Disclosure [Abstract] | |||
Domestic | $ (3,393) | $ (16,712) | $ 62,991 |
Foreign | 6,453 | (24,249) | (2,865) |
Income (Loss) before Taxes on Income | $ 3,060 | $ (40,961) | $ 60,126 |
INCOME TAXES (Schedule of Taxes
INCOME TAXES (Schedule of Taxes on Income (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
Income Tax Disclosure [Abstract] | |||
Current taxes | $ 3,480 | $ 9,670 | $ 24,667 |
Deferred tax benefit | (3,268) | (8,973) | (13,851) |
Taxes on income | $ 212 | $ 697 | $ 10,816 |
INCOME TAXES (Schedule of Tax82
INCOME TAXES (Schedule of Taxes on Income by Jurisdiction (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
Taxes on income by jurisdiction | |||
Domestic | $ 3,396 | $ 8,830 | $ 12,951 |
Foreign | (3,184) | (8,133) | (2,135) |
Taxes on income | 212 | 697 | 10,816 |
Domestic: | |||
Current taxes | 2,459 | 8,943 | 24,507 |
Deferred tax (benefit) expense | 937 | (113) | (11,556) |
Total - Domestic | 3,396 | 8,830 | 12,951 |
Foreign: | |||
Current taxes | 1,021 | 727 | 160 |
Deferred tax benefit | (4,205) | (8,860) | (2,295) |
Total - Foreign | (3,184) | (8,133) | (2,135) |
Total income tax expense | $ 212 | $ 697 | $ 10,816 |
INCOME TAXES (Schedule of Defer
INCOME TAXES (Schedule of Deferred Tax Assets (Liabilities)) (Details) - USD ($) $ in Thousands | Dec. 31, 2016 | Dec. 31, 2015 |
Deferred tax assets: | ||
Net operating loss carry forwards | $ 8,267 | $ 10,280 |
Research and development | 3,190 | 4,008 |
Other temporary differences mainly relating to reserve and allowances | 2,703 | 4,058 |
Deferred tax assets, before valuation allowance | 14,160 | 18,346 |
Valuation allowance | 4,739 | 4,212 |
Total deferred tax assets, net | 9,421 | 14,134 |
Intangible assets | (10,998) | (17,971) |
Property and equipment, net | (2,393) | (3,275) |
Total deferred tax liabilities | (13,391) | (21,246) |
Long term deferred tax liability | (8,087) | (19,456) |
Total deferred tax liability, net | (3,970) | (7,112) |
Foreign Tax Authority [Member] | ||
Deferred tax assets: | ||
Long term deferred tax asset, net | 48 | 7,338 |
Long term deferred tax liability | (8,087) | (19,195) |
Total deferred tax liability, net | (8,039) | (11,857) |
Domestic Tax Authority [Member] | ||
Deferred tax assets: | ||
Long term deferred tax asset, net | 4,069 | 5,006 |
Long term deferred tax liability | (261) | |
Total deferred tax liability, net | $ 4,069 | $ 4,745 |
INCOME TAXES (Schedule of the R
INCOME TAXES (Schedule of the Reconciliation of the Effective Tax Rate) (Details) - USD ($) $ / shares in Units, $ in Thousands | 12 Months Ended | ||
Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
Income Tax Disclosure [Abstract] | |||
Income (loss) before taxes on income | $ 3,060 | $ (40,961) | $ 60,126 |
Statutory tax rate in Israel | 25.00% | 26.50% | 26.50% |
Theoretical tax expense (income) | $ 765 | $ (10,855) | $ 15,933 |
Increase (decrease) in tax expenses resulting from: | |||
"Preferred Enterprise" benefits | (1,356) | (5,654) | (13,325) |
Non-deductible expenses including impairment charges | 1,777 | 20,738 | 8,015 |
Deferred taxes on losses and other temporary charges for which a valuation allowance was provided, net | 527 | (4,617) | 1,962 |
Tax adjustment in respect of different tax rate of foreign subsidiaries | (2,032) | 1,185 | (793) |
Change in future tax rate | 448 | ||
Other | 83 | (100) | (976) |
Taxes on income | $ 212 | $ 697 | $ 10,816 |
Benefit per ordinary share from "Preferred Enterprise" status: | |||
Basic | $ 0.02 | $ 0.12 | $ 0.17 |
Diluted | $ 0.02 | $ 0.12 | $ 0.16 |
INCOME TAXES (Schedule of Unrec
INCOME TAXES (Schedule of Unrecognized Tax Benefits) (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2016 | Dec. 31, 2015 | |
Income Tax Disclosure [Abstract] | ||
Balance at the beginning of the year | $ 2,367 | $ 724 |
Decrease related to prior year tax positions, net | (195) | (22) |
Increase related to current year tax positions | 1,257 | 1,665 |
Balance at the end of the year | $ 3,429 | $ 2,367 |
EARNINGS PER SHARE (Schedule of
EARNINGS PER SHARE (Schedule of Computation of Basic and Diluted Net Earnings Per Common Share) (Details) - USD ($) $ / shares in Units, $ in Thousands | 12 Months Ended | |||
Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | ||
Numerator: | ||||
Net income (Loss) attributable to ordinary shares - basic | $ 2,848 | $ (41,658) | $ 49,310 | |
Gains related to convertible debt, net | (2,100) | |||
Net income (Loss) from continuing operations - diluted | 2,848 | (41,658) | 47,210 | |
Net loss from discontinued operations - basic and diluted | $ (2,647) | $ (26,999) | $ (6,484) | |
Denominator: | ||||
Number of ordinary shares outstanding during the year | 76,560,454 | 71,300,432 | 68,213,209 | |
Weighted average effect of dilutive securities: | ||||
Assumed conversion of convertible debt | 1,090,906 | |||
Shares to be issued in connection with acquisition | 52,664 | |||
Employee stock options and restricted stock units | 113,349 | 970,632 | ||
Diluted number of ordinary shares outstanding - Continuing and discontinued operations | 76,673,803 | 71,300,432 | 70,327,411 | |
Basic net earnings (loss) per ordinary share | ||||
Continuing operations | $ 0.04 | $ (0.58) | $ 0.72 | |
Discontinued operations | (0.04) | (0.38) | (0.09) | |
Net income (Loss) | 0 | [1] | (0.96) | 0.63 |
Diluted net earnings (loss) per ordinary share | ||||
Continuing operations | 0.04 | (0.58) | 0.67 | |
Discontinued operations | (0.04) | (0.38) | (0.09) | |
Net income (Loss) | $ 0 | [1] | $ (0.96) | $ 0.58 |
Ordinary shares equivalents excluded because their effect would have been anti-dilutive | 10,700,363 | 14,179,439 | 3,766,080 | |
[1] | Less than $0.01 |
RESTRUCTURING COSTS (Schedule o
RESTRUCTURING COSTS (Schedule of Restructuring Accruals) (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2016 | |
Restructuring Cost and Reserve [Line Items] | |||
Total restructuring costs | $ 1,052 | $ 3,981 | |
Restructuring accrual | 1,756 | ||
Severance and payroll related [Member] | |||
Restructuring Cost and Reserve [Line Items] | |||
Total restructuring costs | 1,022 | ||
Property and Equipment Impairment [Member] | |||
Restructuring Cost and Reserve [Line Items] | |||
Total restructuring costs | 159 | 632 | |
Write Off of Prepaid Royalties [Member] | |||
Restructuring Cost and Reserve [Line Items] | |||
Total restructuring costs | 219 | ||
Other [Member] | |||
Restructuring Cost and Reserve [Line Items] | |||
Total restructuring costs | $ (348) | 108 | |
Payroll and share-based compesnation [Member] | |||
Restructuring Cost and Reserve [Line Items] | |||
Total restructuring costs | 1,993 | ||
Lease Facilities and Related Expenses [Member] | |||
Restructuring Cost and Reserve [Line Items] | |||
Total restructuring costs | $ 1,248 |
RESTRUCTURING COSTS (Schedule88
RESTRUCTURING COSTS (Schedule of Accrued Restructuring Liability) (Details) $ in Thousands | 12 Months Ended |
Dec. 31, 2016USD ($) | |
Restructuring Cost and Reserve [Line Items] | |
Balance at beginning of period | $ 1,756 |
Additional costs | 728 |
Cash payments | (1,631) |
Adjustments | (853) |
Balance at end of period | |
Severance and payroll related [Member] | Restructuring 2015 Plan [Member] | |
Restructuring Cost and Reserve [Line Items] | |
Balance at beginning of period | 752 |
Additional costs | 272 |
Cash payments | (1,065) |
Adjustments | 41 |
Balance at end of period | |
Rent and Related Expenses [Member] | Restructuring 2015 Plan [Member] | |
Restructuring Cost and Reserve [Line Items] | |
Balance at beginning of period | |
Additional costs | 456 |
Cash payments | |
Adjustments | (456) |
Balance at end of period | |
Restructuring Accrual Assumed Upon Acquisition [Member] | Restructuring 2015 Plan [Member] | |
Restructuring Cost and Reserve [Line Items] | |
Balance at beginning of period | 1,004 |
Additional costs | |
Cash payments | (566) |
Adjustments | (438) |
Balance at end of period |
RELATED PARTY TRANSACTIONS (Det
RELATED PARTY TRANSACTIONS (Details) - Conduit Shareholders [Member] - Client Connect [Member] $ in Thousands | 12 Months Ended |
Dec. 31, 2014USD ($) | |
Related Party Transaction [Line Items] | |
Services provided by related party to Client Connect, Ltd. | $ 1,645 |
Revenue from transactions with related party to Client Connect, Ltd. | $ 142 |
MAJOR CUSTOMERS (Details)
MAJOR CUSTOMERS (Details) | 12 Months Ended | ||
Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
Credit Concentration Risk [Member] | Sales Revenue, Net [Member] | Customer A [Member] | |||
Concentration Risk [Line Items] | |||
Concentration risk, percentage | 49.00% | 81.00% | 74.00% |
GEOGRAPHIC INFORMATION (Details
GEOGRAPHIC INFORMATION (Details) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2016USD ($)item | Dec. 31, 2015USD ($) | Dec. 31, 2014USD ($) | |
Revenues from External Customers and Long-Lived Assets [Line Items] | |||
Number of operating segments | item | 1 | ||
Total Revenues | $ 312,794 | $ 220,950 | $ 388,731 |
Property and equipment, net | 14,205 | 12,714 | |
North America (mainly U.S.) [Member] | |||
Revenues from External Customers and Long-Lived Assets [Line Items] | |||
Total Revenues | 253,960 | 173,424 | 292,409 |
Property and equipment, net | 4,402 | 3,071 | 1,460 |
Europe [Member] | |||
Revenues from External Customers and Long-Lived Assets [Line Items] | |||
Total Revenues | 47,012 | 40,612 | 69,281 |
Property and equipment, net | 695 | 482 | 768 |
Other [Member] | |||
Revenues from External Customers and Long-Lived Assets [Line Items] | |||
Total Revenues | 11,822 | 6,914 | 27,041 |
Israel [Member] | |||
Revenues from External Customers and Long-Lived Assets [Line Items] | |||
Property and equipment, net | $ 9,108 | $ 9,161 | $ 9,952 |