Document and Entity Information
Document and Entity Information - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2017 | Feb. 28, 2018 | Jun. 30, 2017 | |
Document and Entity Information | |||
Entity Registrant Name | ROSETTA STONE INC | ||
Entity Central Index Key | 1,351,285 | ||
Document Type | 10-K | ||
Document Period End Date | Dec. 31, 2017 | ||
Amendment Flag | false | ||
Current Fiscal Year End Date | --12-31 | ||
Entity Well-known Seasoned Issuer | No | ||
Entity Voluntary Filers | No | ||
Entity Current Reporting Status | Yes | ||
Entity Filer Category | Accelerated Filer | ||
Entity Public Float | $ 230.9 | ||
Entity Common Stock, Shares Outstanding (in shares) | 22,473,537 | ||
Document Fiscal Year Focus | 2,017 | ||
Document Fiscal Period Focus | FY |
CONSOLIDATED BALANCE SHEETS
CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands | Dec. 31, 2017 | Dec. 31, 2016 |
Current assets: | ||
Cash and cash equivalents | $ 42,964 | $ 36,195 |
Restricted cash | 72 | 402 |
Accounts receivable (net of allowance for doubtful accounts of $375 and $1,072, at December 31, 2017 and December 31, 2016, respectively) | 24,517 | 31,788 |
Inventory | 3,536 | 6,767 |
Deferred sales commissions | 14,466 | 14,085 |
Prepaid expenses and other current assets | 4,543 | 3,813 |
Total current assets | 90,098 | 93,050 |
Deferred sales commissions | 3,306 | 4,143 |
Property and equipment, net | 30,649 | 24,795 |
Goodwill | 49,857 | 48,251 |
Intangible assets, net | 19,184 | 22,753 |
Other assets | 1,661 | 1,318 |
Total assets | 194,755 | 194,310 |
Current liabilities: | ||
Accounts payable | 8,984 | 10,684 |
Accrued compensation | 10,948 | 10,777 |
Income tax payable | 384 | 785 |
Obligations under capital lease | 450 | 532 |
Other current liabilities | 16,454 | 22,150 |
Deferred revenue | 110,670 | 113,821 |
Total current liabilities | 147,890 | 158,749 |
Deferred revenue | 40,593 | 27,636 |
Deferred income taxes | 1,968 | 6,173 |
Obligations under capital lease | 1,850 | 2,027 |
Other long-term liabilities | 31 | 1,384 |
Total liabilities | 192,332 | 195,969 |
Commitments and contingencies (Note 16) | ||
Stockholders' equity (deficit): | ||
Preferred stock, $0.001 par value; 10,000 and 10,000 shares authorized, zero and zero shares issued and outstanding at December 31, 2017 and December 31, 2016, respectively | 0 | 0 |
Non-designated common stock, $0.00005 par value, 190,000 and 190,000 shares authorized, 23,783 and 23,451 shares issued and 22,783 and 22,451 shares outstanding at December 31, 2017 and December 31, 2016, respectively | 2 | 2 |
Additional paid-in capital | 195,644 | 190,827 |
Treasury stock, at cost; 1,000 and 1,000 shares at December 31, 2017 and December 31, 2016, respectively | (11,435) | (11,435) |
Accumulated loss | (178,890) | (177,344) |
Accumulated other comprehensive loss | (2,898) | (3,709) |
Total stockholders' equity (deficit) | 2,423 | (1,659) |
Total liabilities and stockholders' equity (deficit) | $ 194,755 | $ 194,310 |
CONSOLIDATED BALANCE SHEETS (Pa
CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) $ in Thousands | Dec. 31, 2017 | Dec. 31, 2016 |
Statement of Financial Position [Abstract] | ||
Accounts receivable, allowance for doubtful accounts | $ 375 | $ 1,072 |
Preferred stock, par value (in dollars per share) | $ 0.001 | $ 0.001 |
Preferred stock, shares authorized (in shares) | 10,000,000 | 10,000,000 |
Preferred stock, shares issued (in shares) | 0 | 0 |
Preferred stock, shares outstanding (in shares) | 0 | 0 |
Non-designated common stock, par value (in dollars per share) | $ 0.00005 | $ 0.00005 |
Non-designated common stock, shares authorized (in shares) | 190,000,000 | 190,000,000 |
Non-designated common stock, shares issued (in shares) | 23,782,773 | 23,450,864 |
Non-designated common stock, shares outstanding (in shares) | 22,782,773 | 22,450,864 |
Treasury Stock, issued not outstanding (in shares) | 1,000,000 | 1,000,000 |
CONSOLIDATED STATEMENTS OF OPER
CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) shares in Thousands, $ in Thousands | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Revenue: | |||
Subscription and service | $ 168,442 | $ 154,336 | $ 151,701 |
Product | 16,151 | 39,753 | 65,969 |
Total revenue | 184,593 | 194,089 | 217,670 |
Cost of revenue: | |||
Cost of subscription and service revenue | 26,082 | 23,676 | 21,629 |
Cost of product revenue | 7,539 | 10,645 | 16,898 |
Total cost of revenue | 33,621 | 34,321 | 38,527 |
Gross profit | 150,972 | 159,768 | 179,143 |
Operating expenses | |||
Sales and marketing | 96,660 | 114,340 | 136,084 |
Research and development | 24,747 | 26,273 | 29,939 |
General and administrative | 34,066 | 40,501 | 50,124 |
Impairment | 0 | 3,930 | 6,754 |
Lease abandonment and termination | 0 | 1,644 | 55 |
Total operating expenses | 155,473 | 186,688 | 222,956 |
Loss from operations | (4,501) | (26,920) | (43,813) |
Other income and (expense): | |||
Interest income | 66 | 46 | 23 |
Interest expense | (491) | (470) | (378) |
Other income and (expense) | 881 | 2,297 | (1,469) |
Total other income and (expense) | 456 | 1,873 | (1,824) |
Loss before income taxes | (4,045) | (25,047) | (45,637) |
Income tax (benefit) expense | (2,499) | 2,503 | 1,159 |
Net loss | $ (1,546) | $ (27,550) | $ (46,796) |
Loss per share: | |||
Basic (in dollars per share) | $ (0.07) | $ (1.25) | $ (2.17) |
Diluted (in dollars per share) | $ (0.07) | $ (1.25) | $ (2.17) |
Common shares and equivalents outstanding: | |||
Basic weighted average shares (in shares) | 22,244 | 21,969 | 21,571 |
Diluted weighted average shares (in shares) | 22,244 | 21,969 | 21,571 |
CONSOLIDATED STATEMENTS OF COMP
CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Statement of Comprehensive Income [Abstract] | |||
Net loss | $ (1,546) | $ (27,550) | $ (46,796) |
Other comprehensive income (loss), net of tax: | |||
Foreign currency translation gain (loss) | 811 | (1,483) | (1,548) |
Other comprehensive income (loss) | 811 | (1,483) | (1,548) |
Comprehensive loss | $ (735) | $ (29,033) | $ (48,344) |
CONSOLIDATED STATEMENTS OF CHAN
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY (DEFICIT) - USD ($) shares in Thousands, $ in Thousands | Total | Non-Designated Common Stock | Additional Paid-in Capital | Treasury Stock | Accumulated Loss | Accumulated Other Comprehensive Loss |
Balance, beginning of period at Dec. 31, 2014 | $ 63,445 | $ 2 | $ 178,554 | $ (11,435) | $ (102,998) | $ (678) |
Balance, beginning of period (in shares) at Dec. 31, 2014 | 21,329 | |||||
Increase (Decrease) in Stockholders' Equity | ||||||
Stock Issued Upon the Exercise of Stock Options | 114 | 114 | ||||
Stock issued upon the exercise of stock options (in shares) | 25 | |||||
Restricted stock award vesting (in shares) | 452 | |||||
Stock-based Compensation Expense | 7,195 | 7,195 | ||||
Net loss | (46,796) | (46,796) | ||||
Other comprehensive income | (1,548) | (1,548) | ||||
Balance, end of period at Dec. 31, 2015 | 22,410 | $ 2 | 185,863 | (11,435) | (149,794) | (2,226) |
Balance, end of period (in shares) at Dec. 31, 2015 | 21,806 | |||||
Increase (Decrease) in Stockholders' Equity | ||||||
Stock Issued Upon the Exercise of Stock Options | 58 | 58 | ||||
Stock issued upon the exercise of stock options (in shares) | 13 | |||||
Restricted stock award vesting (in shares) | 255 | |||||
Stock-based Compensation Expense | 4,906 | 4,906 | ||||
Net loss | (27,550) | (27,550) | ||||
Other comprehensive income | (1,483) | (1,483) | ||||
Balance, end of period at Dec. 31, 2016 | (1,659) | $ 2 | 190,827 | (11,435) | (177,344) | (3,709) |
Balance, end of period (in shares) at Dec. 31, 2016 | 22,074 | |||||
Increase (Decrease) in Stockholders' Equity | ||||||
Stock Issued Upon the Exercise of Stock Options | 676 | 676 | ||||
Stock issued upon the exercise of stock options (in shares) | 79 | |||||
Restricted stock award vesting (in shares) | 163 | |||||
Stock-based Compensation Expense | 4,141 | 4,141 | ||||
Net loss | (1,546) | (1,546) | ||||
Other comprehensive income | 811 | 811 | ||||
Balance, end of period at Dec. 31, 2017 | $ 2,423 | $ 2 | $ 195,644 | $ (11,435) | $ (178,890) | $ (2,898) |
Balance, end of period (in shares) at Dec. 31, 2017 | 22,316 |
CONSOLIDATED STATEMENTS OF CASH
CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
CASH FLOWS FROM OPERATING ACTIVITIES: | |||
Net loss | $ (1,546,000) | $ (27,550,000) | $ (46,796,000) |
Adjustments to reconcile net loss to cash provided by (used in) operating activities: | |||
Stock-based compensation expense | 4,141,000 | 4,906,000 | 7,195,000 |
(Gain) loss on foreign currency transactions | (573,000) | (2,449,000) | 1,471,000 |
Bad debt (recovery) expense | (51,000) | 709,000 | 1,657,000 |
Depreciation and amortization | 12,009,000 | 13,322,000 | 13,660,000 |
Deferred income tax (benefit) expense | (4,201,000) | 1,162,000 | 849,000 |
(Gain) loss on disposal of equipment | (5,000) | 179,000 | (15,000) |
Amortization of deferred financing costs | 296,000 | 274,000 | 160,000 |
Loss on impairment | 0 | 3,930,000 | 6,754,000 |
Loss from equity method investments | 100,000 | 45,000 | 23,000 |
Gain on divestiture of subsidiary | (506,000) | 0 | (660,000) |
Net change in: | |||
Restricted cash | 342,000 | (378,000) | 43,000 |
Accounts receivable | 7,584,000 | 14,681,000 | 26,376,000 |
Inventory | 3,266,000 | 538,000 | (1,253,000) |
Deferred sales commissions | 491,000 | 919,000 | (4,121,000) |
Prepaid expenses and other current assets | (604,000) | (167,000) | 1,080,000 |
Income tax receivable or payable | (447,000) | 719,000 | 568,000 |
Other assets | (455,000) | 668,000 | (684,000) |
Accounts payable | (1,765,000) | (74,000) | (8,636,000) |
Accrued compensation | 69,000 | 2,701,000 | (5,485,000) |
Other current liabilities | (6,450,000) | (13,261,000) | (14,223,000) |
Other long-term liabilities | (1,243,000) | 558,000 | (486,000) |
Deferred revenue | 8,850,000 | (192,000) | 16,878,000 |
Net cash provided by (used in) operating activities | 19,302,000 | 1,240,000 | (5,645,000) |
CASH FLOWS FROM INVESTING ACTIVITIES: | |||
Purchases of property and equipment | (12,944,000) | (12,514,000) | (8,856,000) |
Proceeds from sale of fixed assets | 12,000 | 38,000 | 1,642,000 |
Acquisitions, net of cash acquired | 0 | 0 | (1,688,000) |
Proceeds (payments) on divestiture of subsidiary | 110,000 | 0 | (186,000) |
Other investing activities | 0 | 0 | (286,000) |
Net cash used in investing activities | (12,822,000) | (12,476,000) | (9,374,000) |
CASH FLOWS FROM FINANCING ACTIVITIES: | |||
Proceeds from the exercise of stock options | 676,000 | 58,000 | 114,000 |
Payment of deferred financing costs | (232,000) | (183,000) | (130,000) |
Payments under capital lease obligations | (562,000) | (533,000) | (711,000) |
Net cash used in financing activities | (118,000) | (658,000) | (727,000) |
Increase (decrease) in cash and cash equivalents | 6,362,000 | (11,894,000) | (15,746,000) |
Effect of exchange rate changes in cash and cash equivalents | 407,000 | 307,000 | (1,129,000) |
Net increase (decrease) in cash and cash equivalents | 6,769,000 | (11,587,000) | (16,875,000) |
Cash and cash equivalents—beginning of year | 36,195,000 | 47,782,000 | 64,657,000 |
Cash and cash equivalents—end of year | 42,964,000 | 36,195,000 | 47,782,000 |
Cash paid during the periods for: | |||
Interest | 195,000 | 197,000 | 218,000 |
Income taxes, net of refund | 1,896,000 | 604,000 | 601,000 |
Noncash financing and investing activities: | |||
Accrued liability for purchase of property and equipment | 967,000 | 270,000 | 258,000 |
Equipment acquired under capital lease | $ 0 | $ 27,000 | $ 462,000 |
NATURE OF OPERATIONS
NATURE OF OPERATIONS | 12 Months Ended |
Dec. 31, 2017 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
NATURE OF OPERATIONS | NATURE OF OPERATIONS Rosetta Stone Inc. and its subsidiaries ("Rosetta Stone," or the "Company") develop, market and support a suite of language-learning and literacy solutions consisting of web-based software subscriptions, perpetual software products, online and professional services, audio practice products and mobile applications. The Company's offerings are sold on a direct basis and through select third party retailers and distributors. The Company provides its solutions to customers through the sale of web-based software subscriptions and packaged software, domestically and in certain international markets. |
SUMMARY OF SIGNIFICANT ACCOUNTI
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 12 Months Ended |
Dec. 31, 2017 | |
Accounting Policies [Abstract] | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Principles of Consolidation The accompanying consolidated financial statements include the accounts of Rosetta Stone Inc. and its wholly owned subsidiaries. All intercompany accounts and transactions have been eliminated in consolidation. Use of Estimates The preparation of financial statements, in accordance with GAAP requires management to make certain estimates and assumptions. The amounts reported in the consolidated financial statements include significant estimates and assumptions that have been made, including, but not limited to, those related to revenue recognition, allowance for doubtful accounts, estimated sales returns and reserves, stock-based compensation, restructuring costs, fair value of intangibles and goodwill, disclosure of contingent assets and liabilities, disclosure of contingent litigation, allowance for valuation of deferred tax assets, and the Company's quarterly going concern assessment. The Company bases its estimates and assumptions on historical experience and on various other judgments that are believed to be reasonable under the circumstances. The Company continuously evaluates its estimates and assumptions. Actual results may differ from these estimates and assumptions. Revenue Recognition The Company's primary sources of revenue are web-based software subscriptions, online services, perpetual product software, and bundles of perpetual product software and online services. The Company also generates revenue from the sale of audio practice products, mobile applications, and professional services. Revenue is recognized when all of the following criteria are met: there is persuasive evidence of an arrangement; the product has been delivered or services have been rendered; the fee is fixed or determinable; and collectability is reasonably assured. Revenue is recorded net of discounts and net of taxes. The Company identifies the units of accounting contained within sales arrangements in accordance with Accounting Standards Codification ("ASC") subtopic 605-25 Revenue Recognition - Multiple Element Arrangements (“ASC 605-25”). In doing so, the Company evaluates a variety of factors including whether the undelivered element(s) have value to the customer on a stand-alone basis or if the undelivered element(s) could be sold by another vendor on a stand-alone basis. For multiple element arrangements that contain perpetual software products and related online services, the Company allocates the total arrangement consideration to its deliverables based on the existence of vendor-specific objective evidence of fair value, or vendor-specific objective evidence ("VSOE"), in accordance with ASC subtopic 985-605-25 Software: Revenue Recognition-Multiple-Element Arrangements ("ASC 985-605-25"). The Company generates a portion of its Consumer Language revenue from the CD and digital download formats of the Rosetta Stone language-learning product which are typically multiple-element arrangements that contain two deliverables: perpetual software, delivered at the time of sale, and online service, which is considered an undelivered software-related element. The online service includes access to conversational coaching services. Because the Company only sells the perpetual language-learning software on a stand-alone basis in its homeschool version, the Company does not have a sufficient concentration of stand-alone sales to establish VSOE for the perpetual product. Where VSOE of the undelivered online services can be established, arrangement consideration is allocated using the residual method. The Company determines VSOE by reference to the range of comparable stand-alone renewal sales of the online service. The Company reviews these stand-alone sales on a quarterly basis. VSOE is established if at least 80% of the stand-alone sales are within a range of plus or minus 15% of a midpoint of the range of prices, consistent with generally accepted industry practice. Where VSOE of undelivered services cannot be established, revenue is deferred and recognized commensurate with the delivery of the services. For non-software multiple element arrangements, the Company allocates revenue to all deliverables based on their relative selling prices. These arrangements can include web-based subscription services, audio practice products and professional services or any combination thereof. The Company does not have a sufficient concentration of stand-alone sales of the various deliverables noted above to its customers, and therefore cannot establish VSOE for each deliverable. Third party evidence of fair value does not exist for the web-based subscription, audio practice products and professional services due to the lack of interchangeable language-learning products and services within the market. Accordingly, the Company determines the relative selling price of the web-based subscription, audio practice products and professional services deliverables included in its non-software multiple element arrangements using the best estimated selling price. The Company determines the best estimated selling price based on its internally published price list which includes suggested sales prices for each deliverable based on the type of client and volume purchased. This price list is derived from past experience and from the expectation of obtaining a reasonable margin based on what each deliverable costs the Company. In the U.S. and Canada, the Company offers consumers who purchase packaged software and audio practice products directly from the Company a 30 -day, unconditional, full money-back refund. The Company also permits some of its retailers and distributors to return unsold packaged products, subject to certain limitations. In accordance with ASC subtopic 985-605, Software: Revenue Recognition ("ASC 985-605"), the Company estimates and establishes revenue reserves for packaged product returns at the time of sale based on historical return rates, estimated channel inventory levels, the timing of new product introductions and other factors. The Company distributes its products and services both directly to the end customer and indirectly through resellers. Resellers earn commissions generally calculated as a fixed percentage of the gross sale to the end customer. The Company evaluates each of its reseller relationships in accordance with ASC subtopic 605-45, Revenue Recognition - Principal Agent Considerations (“ASC 605-45”) to determine whether the revenue recognized from indirect sales should be the gross amount of the contract with the end customer or reduced for the reseller commission. In making this determination the Company evaluates a variety of factors including whether it is the primary obligor to the end customer. Revenue for web-based subscriptions and online services is recognized ratably over the term of the subscription or service period, assuming all revenue recognition criteria have been met. The CD and digital download formats of Rosetta Stone language-learning products are bundled with an online service where customers are allowed to begin their online services at any point during a registration window, which is typically up to six months from the date of purchase from us or an authorized reseller. The online services that are not activated during this registration window are forfeited and revenue is recognized upon expiry. Revenue from non-refundable upfront fees that are not related to products already delivered or services already performed is deferred and recognized ratably over the term of the related arrangement because the period over which a customer is expected to benefit from the service that is included within the subscription arrangements does not extend beyond the contractual period. Accounts receivable and deferred revenue are recorded at the time a customer enters into a binding subscription agreement. Software products are sold to end user customers and resellers. In many cases, revenue from sales to resellers is not contingent upon resale of the software to the end user and is recorded in the same manner as all other product sales. Revenue from sales of packaged software products and audio practice products is recognized as the products are shipped and title passes and risks of loss have been transferred. For many product sales, these criteria are met at the time the product is shipped. For some sales to resellers and certain other sales, the Company defers revenue until the customer receives the product because the Company legally retains a portion of the risk of loss on these sales during transit. In other cases where packaged software products are sold to resellers on a consignment basis, revenue is recognized for these consignment transactions once the end user sale has occurred, assuming the remaining revenue recognition criteria have been met. In accordance with ASC subtopic 605-50, Revenue Recognition: Customer Payments and Incentives (“ASC 605-50”), cash sales incentives to resellers are accounted for as a reduction of revenue, unless a specific identified benefit is identified and the fair value is reasonably determinable. Price protection for changes in the manufacturer suggested retail value granted to resellers for the inventory that they have on hand at the date the price protection is offered is recorded as a reduction to revenue at the time of sale. The Company offers customers the ability to make payments for packaged software purchases in installments over a period of time, which typically ranges between three and five months. Given that these installment payment plans are for periods less than 12 months , a successful collection history has been established and these fees are fixed and determinable, revenue is recognized at the time of sale, assuming the remaining revenue recognition criteria have been met. In connection with packaged software product sales and web-based software subscriptions, technical support is provided to customers, including customers of resellers, via telephone support at no additional cost for up to six months from the time of purchase. As the fee for technical support is included in the initial licensing fee, the technical support and services are generally provided within one year, the estimated cost of providing such support is deemed insignificant and no unspecified upgrades/enhancements are offered, technical support revenue is recognized together with the software product and web-based software subscription revenue. Costs associated with technical support are accrued at the time of sale. Sales commissions from non-cancellable web-based software subscription contracts are deferred and amortized in proportion to the revenue recognized from the related contract. Divestitures The Company deconsolidates divested subsidiaries when there is a loss of control or as appropriate when evaluated under the variable interest entity model. The Company recognizes a gain or loss at divestiture equal to the difference between the fair value of any consideration received and the carrying amount of the former subsidiary’s assets and liabilities. Any resulting gain or loss is reported in "Other income and (expense)" on the consolidated statement of operations. See Note 8 "Divestitures" for disclosures on the Company's recent divestiture. Cash and Cash Equivalents Cash and cash equivalents consist of highly liquid investments with original maturities of three months or less and demand deposits with financial institutions. Restricted Cash Restricted cash is generally used to reimburse funds to employees under the Company's flexible benefit plan and deposits received on subleased properties. Accounts Receivable and Allowance for Doubtful Accounts Accounts receivable consist of amounts due to the Company from its normal business activities. The Company provides an allowance for doubtful accounts to reflect the expected non-collection of accounts receivable based on past collection history and specific risks identified. Inventories Inventories are stated at the lower of cost, determined on a first-in first-out basis, or market. The Company reviews inventory for excess quantities and obsolescence based on its best estimates of future demand, product lifecycle status and product development plans. The Company uses historical information along with these future estimates to establish a new cost basis for obsolete and potential obsolete inventory. See Note 3 "Inventory" for disclosures on the Company's inventory balances. Concentrations of Credit Risk Accounts receivable and cash and cash equivalents subject the Company to its highest potential concentrations of credit risk. The Company reserves for credit losses on its trade accounts receivable. In addition, the Company maintains cash and investment balances in accounts at various banks and brokerage firms. The Company has not experienced any losses on cash and cash equivalent accounts to date. The Company sells its offerings to retailers, resellers, government agencies, and individual consumers and extends credit based on an evaluation of the customer's financial condition, and may require collateral, such as letters of credit, in certain circumstances. Exposure to losses on receivables is principally dependent on each customer's financial condition. The Company monitors its exposure for credit losses and maintains allowances for anticipated losses. No customer accounted for more than 10% of the Company's revenue during the years ended December 31, 2017 , 2016 or 2015 . The four largest distributor and reseller receivable balances collectively represented 17% and 23% of accounts receivable as of December 31, 2017 and 2016 , respectively. No customer accounted for more than 10% of accounts receivable as of December 31, 2017 , while one customer accounted for 13% of accounts receivable as of December 31, 2016 . The Company maintains trade credit insurance for certain customers to provide coverage, up to a certain limit, in the event of insolvency of some customers. Fair Value of Financial Instruments The Company values its assets and liabilities using the methods of fair value as described in ASC topic 820, Fair Value Measurements and Disclosures, ("ASC 820"). ASC 820 establishes a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value. The three levels of the fair value hierarchy are described below: Level 1: Quoted prices for identical instruments in active markets. Level 2: Quoted prices for similar instruments in active markets; quoted prices for identical or similar instruments in markets that are not active; and model-derived valuations whose inputs are observable or whose significant value drivers are observable. Level 3: Significant inputs to the valuation model are unobservable. The carrying amounts reported in the consolidated balance sheets for cash and cash equivalents, restricted cash, accounts receivable, accounts payable and other accrued expenses approximate fair value due to relatively short periods to maturity. Property and Equipment Property and equipment are stated at cost, less accumulated depreciation. Depreciation on property, building and leasehold improvements, furniture, equipment, and software is computed on a straight-line basis over the estimated useful lives of the assets, as follows: Software 3 years Computer equipment 3-5 years Automobiles 5 years Furniture and equipment 5-7 years Building 39 years Building improvements 15 years Leasehold improvements lesser of lease term or economic life Assets under capital leases lesser of lease term or economic life Expenses for repairs and maintenance that do not extend the life of equipment are charged to expense as incurred. Expenses for major renewals and betterments, which significantly extend the useful lives of existing property and equipment, are capitalized and depreciated. Upon retirement or disposition of property and equipment, the cost and related accumulated depreciation are removed from the accounts and any resulting gain or loss is recognized. See Note 4 "Property and Equipment" for the Company's additional disclosures. Valuation of Long-Lived Assets In accordance with ASC topic 360, Property, Plant and Equipment ("ASC 360"), the Company evaluates the recoverability of its long-lived assets. ASC 360 requires recognition of impairment of long-lived assets in the event that the net book value of such assets exceeds the future undiscounted net cash flows attributable to such assets. Impairment, if any, is recognized in the period of identification to the extent the carrying amount of an asset exceeds the fair value of such asset. Software Developed for Internal Use The Company capitalizes software development costs related to certain of its software platforms developed exclusively to provide its web-based subscription services and other general and administrative use software in accordance with ASC subtopic 350-40: Internal-Use Software . Development costs for internal-use software are expensed as incurred until the project reaches the application development stage. Internal-use software is defined to have the following characteristics: (a) the software is internally developed, or modified solely to meet the Company's internal needs, and (b) during the software's development or modification, no substantive plan exists or is being developed to market the software externally. Internally developed software is amortized over a three -year useful life. See Note 4 "Property and Equipment" for a discussion of the software developed for internal use. Intangible Assets Intangible assets consist of acquired technology, including developed and core technology, customer related assets, trade name and trademark, and other intangible assets. Those intangible assets with finite lives are recorded at cost and amortized on a straight line basis over their expected lives in accordance with ASC topic 350, Intangibles—Goodwill and Other ("ASC 350"). Annually, as of December 31, and more frequently if a triggering event occurs, the Company reviews its indefinite-lived intangible asset for impairment in accordance with ASC 350. This guidance provides the option to first assess qualitative factors to determine whether it is more likely than not that an indefinite-lived intangible asset is impaired as a basis for determining whether it is necessary to perform the quantitative test. If necessary, the quantitative test is performed by comparing the fair value of indefinite lived intangible assets to the carrying value. In the event the carrying value exceeds the fair value of the assets, the assets are written down to their fair value. The Rosetta Stone trade name is the Company's only indefinite-lived intangible asset. See Note 6 "Intangible Assets" for a discussion and results associated with the Company's recent intangible asset impairment tests. Goodwill Goodwill represents purchase consideration paid in a business combination that exceeds the values assigned to the net assets of acquired businesses. The Company tests goodwill for impairment annually on June 30 of each year or more frequently if impairment indicators arise. Goodwill is tested for impairment at the reporting unit level using a fair value approach, in accordance with the provisions of ASC 350. This guidance provides the option to first assess qualitative factors to determine whether it is more likely than not that the fair value of a reporting unit is less than its carrying value. If, based on a review of qualitative factors, it is more likely than not that the fair value of a reporting unit is less than its carrying value the Company performs a quantitative impairment test by comparing the fair value of a reporting unit with its carrying amount. If the carrying value exceeds the fair value, the Company measures the amount of impairment loss, if any. See Note 5 "Goodwill" for a discussion and results associated with the Company's recent goodwill impairment tests. For income tax purposes, the goodwill balances with tax basis are amortized over a period of 15 years. Guarantees Indemnifications are provided of varying scope and size to certain E&E Language and Literacy customers against claims of intellectual property infringement made by third parties arising from the use of its products. The Company has not incurred any costs or accrued any liabilities as a result of such obligations. Cost of Subscription and Service Revenue and Cost of Product Revenue The cost of subscription and service revenue primarily represents costs associated with supporting the web-based subscription services and online language-learning services, which includes online language conversation coaching, hosting costs and depreciation. Also included are the costs of credit card processing and customer technical support in both cost of product revenue and cost of subscription and service revenue. Cost of product revenue consists of the direct and indirect materials and labor costs to produce and distribute the Company's products. Such costs include packaging materials, computer headsets, freight, inventory receiving, costs associated with product assembly, third-party royalty fees and inventory storage, obsolescence and shrinkage. Research and Development Research and development expenses include employee compensation costs, consulting fees and overhead costs associated with the development of the Company's solutions. The Company develops a portion of its language-learning software products for perpetual sale to external customers. The Company considers technological feasibility to be established when all planning, designing, coding, and testing has been completed according to design specifications. The Company has determined that technological feasibility for such software products is reached shortly before the products are released to manufacturing. Costs incurred after technological feasibility is established have not been material, and accordingly, the Company has expensed all research and development costs when incurred. Income Taxes The Company accounts for income taxes in accordance with ASC topic 740, Income Taxes ("ASC 740"), which provides for an asset and liability approach to accounting for income taxes. Deferred tax assets and liabilities represent the future tax consequences of the differences between the financial statement carrying amounts of assets and liabilities versus the tax basis of assets and liabilities. Under this method, deferred tax assets are recognized for deductible temporary differences, and operating loss and tax credit carryforwards. Deferred liabilities are recognized for taxable temporary differences. Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion or all of the deferred tax assets will not be realized. The impact of tax rate changes on deferred tax assets and liabilities is recognized in the year that the change is enacted. Significant judgment is required to determine whether a valuation allowance is necessary and the amount of such valuation allowance, if appropriate. The valuation allowance is reviewed at each reporting period and is maintained until sufficient positive evidence exists to support a reversal. When assessing the realization of the Company's deferred tax assets, the Company considers all available evidence, including: • the nature, frequency, and severity of cumulative financial reporting losses in recent years; • the carryforward periods for the net operating loss, capital loss, and foreign tax credit carryforwards; • predictability of future operating profitability of the character necessary to realize the asset; • prudent and feasible tax planning strategies that would be implemented, if necessary, to protect against the loss of the deferred tax assets; and • the effect of reversing taxable temporary differences. The evaluation of the recoverability of the deferred tax assets requires that the Company weigh all positive and negative evidence to reach a conclusion that it is more likely than not that all or some portion of the deferred tax assets will not be realized. The weight given to the evidence is commensurate with the extent to which it can be objectively verified. The more negative evidence that exists, the more positive evidence is necessary and the more difficult it is to support a conclusion that a valuation allowance is not needed. The establishment of a valuation allowance has no effect on the ability to use the deferred tax assets in the future to reduce cash tax payments. The Company will continue to assess the likelihood that the deferred tax assets will be realizable at each reporting period and the valuation allowance will be adjusted accordingly, which could materially affect the Company's financial position and results of operations. See Note 15 "Income Taxes" for additional disclosures including the impact and additional disclosures associated with the recent Tax Reform enacted on December 22, 2017. Stock-Based Compensation The Company accounts for its stock-based compensation in accordance with ASC topic 718, Compensation—Stock Compensation ("ASC 718"). Under ASC 718, all stock-based awards, including employee stock option grants, are recorded at fair value as of the grant date. For options granted with service and/or performance conditions, the fair value of each grant is estimated on the date of grant using the Black-Scholes option pricing model. For options granted with market-based conditions, the fair value of each grant is estimated on the date of grant using the Monte-Carlo simulation model. These methods require the use of estimates, including future stock price volatility, expected term and forfeitures. As the Company does not have sufficient historical option exercise experience that spans the full 10 year contractual term for determining the expected term of options granted, the Company estimates the expected term of options using a combination of historical information and the simplified method for estimating the expected term. The Company uses its own historical stock price data to estimate its forfeiture rate and expected volatility over the most recent period commensurate with the estimated expected term of the awards. For the risk-free interest rate, the Company uses a U.S. Treasury Bond rate consistent with the estimated expected term of the option award. The Company's restricted stock and restricted stock unit grants are accounted for as equity awards. Stock compensation expense associated with service-based equity awards is recognized in the statement of operations on a straight-line basis over the requisite service period, which is the vesting period. For equity awards granted with performance-based conditions, stock compensation expense is recognized in the statement of operations ratably for each vesting tranche based on the probability that operating performance conditions will be met and to what extent. Changes in the probability estimates associated with performance-based awards will be accounted for in the period of change using a cumulative catch-up adjustment to retroactively apply the new probability estimates. In any period in which the Company determines that achievement of the performance metrics is not probable, the Company ceases recording compensation expense and all previously recognized compensation expense for the performance-based award is reversed. For equity awards granted with market-based conditions, stock compensation expense is recognized in the statement of operations ratably for each vesting tranche regardless of meeting or not meeting the market conditions. See Note 10 "Stock-Based Compensation" for additional disclosures. Restructuring Costs Restructuring plans have been initiated in each of the years ended December 31, 2017, 2016 and 2015 to reduce headcount and other costs in order to support the strategic shift in business focus. In connection with these plans, the Company incurred restructuring related costs, including employee severance and related benefit costs, contract termination costs, and other related costs. These costs are included within Cost of sales and Sales and marketing, Research and development, and General and administrative operating expense categories in the Company's consolidated statements of operations. Employee severance and related benefit costs primarily include cash payments, outplacement services, continuing health insurance coverage, and other benefits. Where no substantive involuntary termination plan previously existed, these severance costs are generally considered “one-time” benefits and recognized at fair value in the period in which a detailed plan has been approved by management and communicated to the terminated employees. Severance costs pursuant to ongoing benefit arrangements, including termination benefits provided for in existing employment contracts, are recognized when probable and reasonably estimable. Contract termination costs include penalties to cancel certain service and license contracts and costs to terminate operating leases. Contract termination costs are recognized at fair value in the period in which the contract is terminated in accordance with the contract terms. Other related costs generally include external consulting and legal costs associated with the strategic shift in business focus. Such costs are recognized at fair value in the period in which the costs are incurred. See Note 13 "Restructuring" for additional disclosures. Basic and Diluted Net Loss Per Share Net loss per share is computed under the provisions of ASC topic 260, Earnings Per Share . Basic loss per share is computed by dividing net loss by the weighted average number of common shares outstanding during the period. Diluted loss per share is computed by dividing net loss by the weighted average number of common shares and potential common shares outstanding during the period. Potential common shares are included in the diluted computation when dilutive. Potentially dilutive shares are computed using the treasury stock method and primarily consist of shares issuable upon the exercise of stock options, restricted stock awards, restricted stock units and conversion of shares of preferred stock. Common stock equivalent shares are excluded from the diluted computation if their effect is anti-dilutive. When there is a net loss, there is a presumption that there are no dilutive shares as these would be anti-dilutive. See Note 12 "Basic and Diluted Net Loss Per Share" for additional disclosures. Comprehensive Loss Comprehensive loss consists of net loss and other comprehensive income (loss). Other comprehensive income (loss) refers to revenues, expenses, gains, and losses that are not included in net loss, but rather are recorded directly in stockholders' equity (deficit). For the years ended December 31, 2017 , 2016 and 2015 , the Company's comprehensive loss consisted of net loss and foreign currency translation gains (losses). The other comprehensive income (loss) presented in the consolidated financial statements and the notes are presented net of tax. There has been no tax expense or benefit associated with the components other comprehensive income (loss) due to the presence of a full valuation allowance for each of the years ended December 31, 2017 , 2016 and 2015 . Components of accumulated other comprehensive loss as of December 31, 2017 are as follows (in thousands): Foreign Currency Total Balance at beginning of period $ (3,709 ) $ (3,709 ) Other comprehensive income before reclassifications 886 886 Amounts reclassified from accumulated other comprehensive income (75 ) (75 ) Net current period other comprehensive income 811 811 Accumulated other comprehensive loss $ (2,898 ) $ (2,898 ) Upon divestiture of an investment in a foreign entity, the amount attributable to the accumulated translation adjustment component of that foreign entity is removed as a component of other comprehensive income (loss) and reported as part of the gain or loss on sale or liquidation of the investment. During the year ended December 31, 2017 , transfers totaling of $0.1 million were made from accumulated other comprehensive income (loss) and recognized within net loss related to the sale of a foreign subsidiary. Foreign Currency Translation and Transactions The functional currency of the Company's foreign subsidiaries is their local currency. Accordingly, assets and liabilities of the foreign subsidiaries are translated into U.S. dollars at exchange rates in effect on the balance sheet date. Income and expense items are translated at average |
INVENTORY
INVENTORY | 12 Months Ended |
Dec. 31, 2017 | |
Inventory Disclosure [Abstract] | |
INVENTORY | INVENTORY Inventory consisted of the following (in thousands): As of December 31, 2017 2016 Raw materials $ 2,893 $ 4,384 Finished goods 643 2,383 Total inventory $ 3,536 $ 6,767 The finished goods inventory balance as of December 31, 2017 reflected the Company's ongoing efforts to transition the Consumer Language segment to a SaaS model. In the third quarter of 2017, the Company requested its consignment retail partners to return inventory totaling $1.9 million of finished packaged perpetual products. This non-cash inventory write-down was reflected as a cost of product revenue on the Company's statements of operations. |
PROPERTY AND EQUIPMENT
PROPERTY AND EQUIPMENT | 12 Months Ended |
Dec. 31, 2017 | |
Property, Plant and Equipment [Abstract] | |
PROPERTY AND EQUIPMENT | PROPERTY AND EQUIPMENT Property and equipment consisted of the following (in thousands): As of December 31, 2017 2016 Land $ 942 $ 876 Buildings and improvements 10,030 9,503 Leasehold improvements 1,468 1,645 Computer equipment 15,635 15,866 Software 54,600 43,688 Furniture and equipment 2,427 2,393 85,102 73,971 Less: accumulated depreciation (54,453 ) (49,176 ) Property and equipment, net $ 30,649 $ 24,795 The Company leases certain computer equipment, software, buildings, and machinery under capital lease agreements. As of December 31, 2017 and 2016 , assets under capital lease included in property and equipment above were $5.9 million and $5.4 million , respectively. As of December 31, 2017 and 2016 , accumulated depreciation and amortization relating to property and equipment under capital lease arrangements totaled $2.8 million and $2.1 million , respectively. For the years ended December 31, 2017 , 2016 , and 2015 the Company capitalized $12.7 million , $11.4 million , and $7.1 million respectively, of internal-use software development costs. During the years ended December 31, 2016 and 2015 , the Company recorded $1.0 million and $1.1 million respectively, in impairment expense related to the abandonment of previously capitalized internal-use software projects. There were no impairment charges during the year ended December 31, 2017 . Depreciation and amortization expense related to property and equipment includes depreciation related to its physical assets and amortization expense related to amounts capitalized in the development of internal-use software. Depreciation and amortization expense associated with property and equipment consisted of the following (in thousands): Years Ended December 31, 2017 2016 2015 Included in cost of revenue: Cost of subscription and service revenue $ 3,863 $ 3,057 $ 1,292 Cost of product revenue 1,117 1,377 1,010 Total included in cost of revenue 4,980 4,434 2,302 Included in operating expenses: Sales and marketing 546 489 722 Research and development 9 19 41 General and administrative 2,635 4,029 5,403 Total included in operating expenses 3,190 4,537 6,166 Total $ 8,170 $ 8,971 $ 8,468 |
GOODWILL
GOODWILL | 12 Months Ended |
Dec. 31, 2017 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
GOODWILL | GOODWILL The value of gross goodwill is primarily derived from the acquisition of Rosetta Stone Ltd. (formerly known as Fairfield & Sons, Ltd.) in January 2006, the acquisition of certain assets of SGLC International Co. Ltd ("SGLC") in November 2009, the acquisitions of Livemocha, Inc. ("Livemocha") in April 2013, the acquisition of Lexia Learning Systems, Inc. ("Lexia") in August 2013, and the acquisition of Tell Me More S.A. ("Tell Me More") in January 2014. The Company tests goodwill for impairment annually on June 30 of each year at the reporting unit level using a fair value approach, in accordance with the provisions of ASC 350, or more frequently, if impairment indicators arise. The Company also routinely reviews goodwill at the reporting unit level for potential impairment. The following table shows the balance and changes in goodwill for the Company's operating segments and reporting units for the years ended December 31, 2017 and 2016 (in thousands): E&E Language Literacy Consumer Language Total Balance as of January 1, 2016 Gross Goodwill $ 38,700 $ 9,962 $ 27,392 $ 76,054 Accumulated Impairment — — (25,774 ) (25,774 ) Goodwill as of January 1, 2016 $ 38,700 $ 9,962 $ 1,618 $ 50,280 Impairment of Consumer Fit Brains — — (1,740 ) (1,740 ) Effect of change in foreign currency rate (411 ) — 122 (289 ) Balance as of December 31, 2016 Gross Goodwill $ 38,289 $ 9,962 $ 27,514 $ 75,765 Accumulated Impairment — — (27,514 ) (27,514 ) Goodwill as of December 31, 2016 $ 38,289 $ 9,962 $ — $ 48,251 Effect of change in foreign currency rate 1,606 — — 1,606 Balance as of December 31, 2017 Gross Goodwill $ 39,895 $ 9,962 $ 27,514 $ 77,371 Accumulated Impairment — — (27,514 ) (27,514 ) Goodwill as of December 31, 2017 $ 39,895 $ 9,962 $ — $ 49,857 2017 Activity The Company began its June 30, 2017 annual goodwill test with the qualitative test for the two reporting units with goodwill balances. The Company concluded that there were no indicators of impairment that would cause it to believe that it is more likely than not that the fair value of its reporting units is less than the carrying value. Accordingly, a quantitative impairment test was not performed and no goodwill impairment charges were recorded in connection with the annual impairment test. As such, there was no impairment of goodwill during the year ended December 31, 2017. 2016 Activity The Company exercised its option to bypass the qualitative test for all reporting units with remaining goodwill balances in connection with the annual goodwill impairment analysis performed as of June 30, 2016. The E&E Language and Literacy reporting units both resulted in fair values that substantially exceeded the carrying values, and therefore no goodwill impairment charges were recorded in connection with the annual analysis for these reporting units. The Consumer Fit Brains reporting unit was also evaluated, which resulted in a fair value that was significantly below the carrying value. As a result, the Company recorded a 2016 impairment loss of $1.7 million , which represented a full impairment of the remaining Consumer Fit Brains reporting unit's goodwill. The impairment charge was recorded in the "Impairment" line on the statement of operations. The Company had previously recorded a partial impairment of the Consumer Fit Brains reporting unit in 2015 of $5.6 million |
INTANGIBLE ASSETS
INTANGIBLE ASSETS | 12 Months Ended |
Dec. 31, 2017 | |
Intangible Assets, Net (Excluding Goodwill) [Abstract] | |
INTANGIBLE ASSETS | INTANGIBLE ASSETS Intangible assets consisted of the following items as of the dates indicated (in thousands): Trade name / trademark * Core technology Customer relationships Patents and Other Total Gross Carrying Amount $ 12,431 $ 15,092 $ 26,149 $ 312 $ 53,984 Accumulated Amortization (1,481 ) (9,859 ) (18,485 ) (251 ) (30,076 ) Accumulated Impairment (26 ) (1,001 ) (128 ) — (1,155 ) Balance as of December 31, 2016 $ 10,924 $ 4,232 $ 7,536 $ 61 $ 22,753 Gross Carrying Amount $ 12,505 $ 15,636 $ 26,656 $ 312 $ 55,109 Accumulated Amortization (1,755 ) (12,222 ) (20,515 ) (278 ) (34,770 ) Accumulated Impairment (26 ) (1,001 ) (128 ) — (1,155 ) Balance as of December 31, 2017 $ 10,724 $ 2,413 $ 6,013 $ 34 $ 19,184 * Included within the Trade name/ trademark intangible asset category is the Rosetta Stone trade name with a carrying amount of $10.6 million . This intangible asset is considered to have an indefinite useful life and is therefore not amortized, but rather tested for impairment on at least an annual basis. The Company computes amortization of intangible assets on a straight-line basis over the estimated useful life. Below are the weighted average remaining useful lives of the Company's amortizing intangible assets: Weighted Average Life Trade name / trademark 0.58 years Core technology 1.94 years Customer relationships 5.00 years Patents 1.25 years Amortization expense consisted of the following (in thousands): Years Ended December 31, 2017 2016 2015 Included in cost of revenue: Cost of subscription and service revenue $ 455 $ 404 $ 322 Cost of product revenue 131 182 264 Total included in cost of revenue 586 586 586 Included in operating expenses: Sales and marketing 1,860 2,178 2,804 Research and development 1,393 1,587 1,802 General and administrative — — — Total included in operating expenses 3,253 3,765 4,606 Total $ 3,839 $ 4,351 $ 5,192 The following table summarizes the estimated future amortization expense related to intangible assets as of December 31, 2017 (in thousands): As of 2018 $ 3,335 2019 1,532 2020 1,282 2021 940 2022 940 Thereafter 548 Total $ 8,577 The Company evaluates its indefinite-lived intangible assets annually as of December 31 for indicators of impairment. The Company also routinely reviews indefinite-lived intangible assets and long-lived intangible assets for potential impairment as part of the Company’s internal control framework. The Company performed its annual indefinite-lived intangible asset impairment test on the Rosetta Stone tradename as of December 31, 2017 to determine if indicators of impairment exist. The Company elected to first assess qualitative factors to determine whether it is more likely than not that the Rosetta Stone trade name was impaired. Additionally, all other long-lived intangible assets were evaluated at December 31, 2017 to determine if indicators of impairment exist. As a result of these assessments, there were no indicators of impairment for the year ended December 31, 2017. 2016 Activity During the second quarter of 2016, the Company revised the business outlook and financial projections for the Consumer Fit Brains reporting unit, which prompted a long-lived intangible asset impairment analysis of the tradename, developed technology, and customer relationships associated with the Consumer Fit Brains reporting unit ("Consumer Fit Brains Intangible Assets"). The carrying values of the Consumer Fit Brains Intangible Assets exceeded the estimated fair values. As a result, the Company recorded an impairment loss of $1.2 million associated with the impairment of the remaining carrying value of the Consumer Fit Brains Intangible Assets as of June 30, 2016. The impairment charge was recorded in the "Impairment" line on the statement of operations. |
OTHER CURRENT LIABILITIES
OTHER CURRENT LIABILITIES | 12 Months Ended |
Dec. 31, 2017 | |
Other Liabilities Disclosure [Abstract] | |
OTHER CURRENT LIABILITIES | OTHER CURRENT LIABILITIES The following table summarizes other current liabilities (in thousands): As of 2017 2016 Accrued marketing expenses $ 5,316 $ 8,460 Accrued professional and consulting fees 1,609 2,050 Sales return reserve 1,176 1,338 Sales, withholding, and property taxes payable 3,616 3,772 Other 4,737 6,530 Total Other current liabilities $ 16,454 $ 22,150 |
DIVESTITURES
DIVESTITURES | 12 Months Ended |
Dec. 31, 2017 | |
Discontinued Operations and Disposal Groups [Abstract] | |
DIVESTITURES | DIVESTITURES On March 13, 2017, the Company entered into a Product and Intellectual Property Agreement, (the "PIPA") with SOURCENEXT Corporation, ("SOURCENEXT"), a leading software distributor and developer in Japan. Under the PIPA, the Company provided a perpetual, exclusive license of certain brands and trademarks, including the primary Rosetta Stone brand, and product code for exclusive development and sale of language and education-related products in Japan. In conjunction with the PIPA, the Company received approximately $9.0 million on March 13, 2017, and another $2.0 million on June 19, 2017. In addition, the Company is guaranteed to receive minimum payments totaling an additional $6.0 million over the next ten years. Finally, as part of the PIPA, the Company will have the first right to license and sell any products developed by SOURCENEXT under the Rosetta Stone trademark in territories outside of Japan. On April 25, 2017, the Company and SOURCENEXT signed a Stock Purchase Agreement ("SPA") for the sale of the Company's Japanese subsidiary ("RST Japan") and certain other assets related to the language market in Japan. The Company received $0.5 million associated with the SPA closure on June 29, 2017 when 100% of the Company's capital stock of RST Japan and the other assets related to the language market in Japan were transferred to SOURCENEXT. The SPA and the PIPA were considered related and viewed as a multiple element arrangement. Of the nearly $11.5 million that was received under the terms of the PIPA and SPA, approximately $11.4 million was allocated to deferred revenue to be recognized over an estimated 20 -year period. As this customer relationship progresses, the Company may prospectively reassess the 20 -year recognition period as needed. Approximately $0.1 million was allocated to RST Japan and the other assets related to the language market in Japan and was included in the gain calculation. At the time of closing, RST Japan was in a net liability position. The sale under the terms of the SPA resulted in a pre-tax gain of $0.4 million , reported in "Other income and (expense)" on the consolidated statement of operations. This gain was comprised of a gain of $0.5 million related to the sale of RST Japan and the other assets related to the language market in Japan, partially offset by a $0.1 million loss on the transfer of the foreign subsidiary's cumulative translation adjustment on the date of sale. In the third quarter of 2017, the PIPA was amended to provide SOURCENEXT with a two -year time-based license to the Company's speech recognition engine ("SRE") and software development kit ("SDK") in exchange for the acceleration of $1.5 million of future cash receipts under the PIPA. The $1.5 million associated with the amendment to the PIPA was collected and will be recognized as revenue ratably over the remaining life of the agreement. |
FINANCING ARRANGEMENTS
FINANCING ARRANGEMENTS | 12 Months Ended |
Dec. 31, 2017 | |
Leases [Abstract] | |
FINANCING ARRANGEMENTS | FINANCING ARRANGEMENTS Credit Facility On October 28, 2014 , Rosetta Stone Ltd (“RSL”), a wholly owned subsidiary of parent company Rosetta Stone Inc., executed a Loan and Security Agreement with Silicon Valley Bank (“Bank”) to obtain a $25.0 million revolving credit facility (the “credit facility”). Since the original date of execution, the Company and the Bank have executed several amendments to the credit facility to reflect updates to the Company's financial outlook and extend the credit facility. Under the amended agreement, the Company may borrow up to $25.0 million , including a sub-facility, which reduces available borrowings, for letters of credit in the aggregate availability amount of $4.0 million . Borrowings by RSL under the credit facility are guaranteed by the Company as the ultimate parent. The credit facility has a term that expires on April 1, 2020, during which time RSL may borrow and re-pay loan amounts and re-borrow the loan amounts subject to customary borrowing conditions. The total obligations under the credit facility cannot exceed the lesser of (i) the total revolving commitment of $25.0 million or (ii) the borrowing base, which is calculated as 80% of eligible accounts receivable. As a result, the borrowing base will fluctuate and the Company expects it will follow the general seasonality of cash and accounts receivable (lower in the first half of the year and higher in the second half of the year). If the borrowing base less any outstanding amounts, plus the cash held at SVB ("Availability") is greater than $25.0 million , then the Company may borrow up to an additional $5.0 million , but in no case can borrowings exceed $25.0 million . Interest on borrowings accrues at the Prime Rate provided that the Company maintains a minimum cash and Availability balance of $17.5 million . If cash and Availability is below $17.5 million , interest will accrue at the Prime Rate plus 1% . Proceeds of loans made under the credit facility may be used as working capital or to fund general business requirements. All obligations under the credit facility, including letters of credit, are secured by a security interest on substantially all of the Company’s assets including intellectual property rights and by a stock pledge by the Company of 100% of its ownership interests in U.S. subsidiaries and 66% of its ownership interests in certain foreign subsidiaries. The credit facility contains customary affirmative and negative covenants, including covenants that limit or restrict the ability to, among other things, incur additional indebtedness, dispose of assets, execute a material change in business, acquire or dispose of an entity, grant liens, make share repurchases, and make distributions, including payment of dividends. The Company is required to maintain compliance with a minimum liquidity amount and minimum financial performance requirements, as defined in the credit facility. As of December 31, 2017 , the Company was in compliance with all covenants. The credit facility contains customary events of default, including among others, non-payment defaults, covenant defaults, bankruptcy and insolvency defaults, and a change of control default, in each case, subject to customary exceptions. The occurrence of a default event could result in the Bank’s acceleration of repayment obligations of any loan amounts then outstanding. As of December 31, 2017 , there were no borrowings outstanding and the Company was eligible to borrow $15.1 million of available credit, less $4.0 million in letters of credit that have been issued by the Bank on the Company's behalf, resulting in a net borrowing availability of $11.1 million . A quarterly commitment fee accrues on any unused portion of the credit facility at a nominal annual rate. Capital Leases The Company enters into capital leases under non-committed arrangements for equipment and software. In addition, as a result of the Tell Me More Merger, the Company assumed a capital lease for a building near Versailles, France, where Tell Me More’s headquarters are located. The fair value of the lease liability at the date of acquisition was $4.0 million . During the years ended December 31, 2017 , 2016 , and 2015 , the Company acquired equipment or software through the issuance of capital leases totaling zero , $27 thousand and $0.5 million , respectively. This non-cash investing activity has been excluded from the consolidated statement of cash flows. As of December 31, 2017 , the future minimum payments under capital leases with initial terms of one year or more are as follows (in thousands): Periods Ending December 31, 2018 $ 548 2019 545 2020 540 2021 537 2022 402 Thereafter — Total minimum lease payments $ 2,572 Less amount representing interest 272 Present value of net minimum lease payments $ 2,300 Less current portion 450 Obligations under capital lease, long-term $ 1,850 |
STOCK-BASED COMPENSATION
STOCK-BASED COMPENSATION | 12 Months Ended |
Dec. 31, 2017 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |
STOCK-BASED COMPENSATION | STOCK-BASED COMPENSATION 2006 Stock Incentive Plan On January 4, 2006 , the Company established the Rosetta Stone Inc. 2006 Stock Incentive Plan (the "2006 Plan") under which the Company's Board of Directors, at its discretion, could grant stock options to employees and certain directors of the Company and affiliated entities. The 2006 Plan initially authorized the grant of stock options for up to 1,942,200 shares of common stock. On May 28, 2008 , the Board of Directors authorized the grant of additional stock options for up to 195,000 shares of common stock under the plan, resulting in total stock options available for grant under the 2006 Plan of 2,137,200 as of December 31, 2008 . The stock options granted under the 2006 Plan generally expire at the earlier of a specified period after termination of service or the date specified by the Board or its designated committee at the date of grant, but not more than ten years from such grant date. Stock issued as a result of exercises of stock options will be issued from the Company's authorized available stock. All unissued stock associated with the 2006 Stock Incentive Plan expired in 2016 at the end of the ten year contractual term. 2009 Omnibus Incentive Plan On February 27, 2009 , the Company's Board of Directors approved the 2009 Omnibus Incentive Plan (the "2009 Plan") that provides for the ability of the Company to grant up to 2,437,744 of new stock incentive awards or options including Incentive and Nonqualified Stock Options, Stock Appreciation Rights, Restricted Stock, Restricted Stock Units, Performance Units, Performance Shares, Performance based Restricted Stock, Share Awards, Phantom Stock and Cash Incentive Awards. Restricted stock awards are considered outstanding at the time of grant as the stockholder is entitled to voting rights and to receive any dividends declared subject to the loss of the right to receive accumulated dividends if the award is forfeited prior to vesting. Unvested restricted stock awards are not considered outstanding in the computation of basic earnings per share. The stock incentive awards and options granted under the 2009 Plan generally expire at the earlier of a specified period after termination of service or the date specified by the Board or its designated committee at the date of grant, but not more than ten years from such grant date. Concurrent with the approval of the 2009 Plan, the 2006 Plan was terminated for purposes of future grants. Since the establishment of the 2009 Plan, the Board of Directors authorized and the Company's shareholders' approved the allocation of additional shares of common stock to the 2009 Plan as follows: Authorization Dates of 2009 Plan Additions Number of Common Stock Shares Authorized to 2009 Plan February 27, 2009 2,437,744 May 26, 2011 1,000,000 May 23, 2012 1,122,930 May 23, 2013 2,317,000 May 20, 2014 500,000 June 12, 2015 1,200,000 May 27, 2017 1,900,000 At December 31, 2017 there were 2,206,689 shares available for future grant under the 2009 Plan. Valuation Assumptions The determination of fair value of stock-based awards is affected by assumptions regarding subjective and complex variables. Generally, assumptions are based on historical information and judgment is required to determine if historical trends may be indicators of future outcomes. In accordance with ASC 718, the fair value of stock-based awards to employees is calculated as of the date of grant. Compensation expense is then recognized over the requisite service period of the award. Stock-based compensation expense recognized is based on the estimated portion of the awards that are expected to vest. Estimated forfeiture rates are applied in the expense calculation. The Company determines the fair values of stock-based awards as follows: • Service-Based Restricted Stock Awards, Restricted Stock Units, Performance-Based Restricted Stock Awards, and Performance-Based Share Units: Fair value is determined based on the quoted market price of common stock on the date of grant. • Service-Based Stock Options and Performance-Based Stock Options: Fair value is determined using the Black-Scholes pricing model, which requires the use of estimates, including the risk-free interest rate, expected volatility, expected dividends, and expected term. • Market-Based Restricted Stock Awards and Market-Based Stock Options: The fair value is determined using a Monte-Carlo simulation model. The Monte Carlo valuation also estimates the quantity that would be awarded which is reflected in the fair value on the grant date. For the years ended December 31, 2017 , 2016 , and 2015 the fair value of service-based stock options and performance-based stock options granted was calculated using the following assumptions in the Black-Scholes model: Years Ended December 31, 2017 2016 2015 Expected stock price volatility 42%-45% 46%-47% 49%-63% Expected term of options 6 years 5.5-6.5 years 6 years Expected dividend yield — — — Risk-free interest rate 1.92%-2.05% 1.24%-1.50% 1.19%-1.75% For the years ended December 31, 2017 , 2016 , and 2015 the fair value of market-based stock options and market-based restricted stock awards granted was calculated using the following assumptions in the Monte-Carlo simulation model: Years Ended December 31, 2017 2016 2015 Expected stock price volatility none 45%-49% none Expected term of options none 1.7 years-7 years none Expected dividend yield none — none Risk-free interest rate none .71%-1.53% none Stock-Based Compensation Expense Stock compensation expense associated with service-based equity awards is recognized in the statement of operations on a straight-line basis over the requisite service period, which is the vesting period. For equity awards granted with performance-based conditions, stock compensation expense is recognized in the statement of operations ratably for each vesting tranche based on the probability that operating performance conditions will be met and to what extent. Changes in the probability estimates associated with performance-based awards will be accounted for in the period of change using a cumulative catch-up adjustment to retroactively apply the new probability estimates. In any period in which the Company determines that achievement of the performance metrics is not probable, the Company ceases recording compensation expense and all previously recognized compensation expense for the performance-based award is reversed. For equity awards granted with market-based conditions, stock compensation is recognized in the statement of operations ratably for each vesting tranche regardless of meeting or not meeting the market conditions. The following table presents stock-based compensation expense included in the related financial statement line items (in thousands): Years Ended December 31, 2017 2016 2015 Included in cost of revenue: Cost of subscription and service revenue $ 15 $ (4 ) $ 44 Cost of product revenue 54 52 57 Total included in cost of revenue 69 48 101 Included in operating expenses: Sales and marketing 561 998 1,327 Research & development 255 709 841 General and administrative 3,256 3,151 4,926 Total included in operating expenses 4,072 4,858 7,094 Total $ 4,141 $ 4,906 $ 7,195 Service-Based Restricted Stock Awards The following table summarizes the Company's service-based restricted stock activity for the years ended December 31, 2017 and 2016 , respectively: Nonvested Outstanding Weighted Average Grant Date Fair Value Aggregate Intrinsic Value Nonvested Awards, January 1, 2016 341,579 $ 10.61 $ 3,624,153 Awards granted 300,650 7.59 Awards vested (196,001 ) 9.54 Awards canceled (71,848 ) 9.65 Nonvested Awards, December 31, 2016 374,380 8.94 3,348,080 Awards granted 291,406 7.92 Awards vested (163,027 ) 9.84 Awards canceled (71,641 ) 8.03 Nonvested Awards, December 31, 2017 431,118 8.07 3,477,484 During 2017 and 2016 , 291,406 and 300,650 shares of service-based restricted stock were granted, respectively. The aggregate grant date fair value of the service-based restricted stock awards in 2017 and 2016 was $2.3 million and $2.3 million , respectively, which will be recognized as expense on a straight-line basis over the requisite service period of the awards, which is also the vesting period. Service-based restricted stock awards are granted at the discretion of the Board of Directors or the Compensation Committee (or its authorized member(s)) and generally vest over a four -year period based upon required service conditions and do not have performance or market conditions. The Company's service-based restricted stock awards are accounted for as equity awards. The grant date fair value is based on the market price of the Company's common stock at the date of grant. The Company did not grant any restricted stock prior to April 2009. During 2017 , 71,641 shares of restricted stock were forfeited. As of December 31, 2017 and 2016 , future compensation cost, net of forfeitures, related to the non-vested portion of the service-based restricted stock awards not yet recognized in the statement of operations was $2.2 million and $2.6 million and is expected to be recognized over a period of 2.25 years and 2.06 years, respectively. Service-Based Stock Options The following table summarizes the Company's service-based stock option activity from January 1, 2017 to December 31, 2017 : Options Weighted Weighted Aggregate Options Outstanding, January 1, 2017 1,793,930 $ 9.81 7.58 $ 1,154,498 Options granted 55,610 11.24 Options exercised (79,365 ) 8.52 Options cancelled (141,464 ) 11.10 Options Outstanding, December 31, 2017 1,628,711 9.81 6.79 5,203,196 Vested and expected to vest at December 31, 2017 1,594,473 9.86 6.77 5,044,582 Exercisable at December 31, 2017 1,250,476 $ 10.19 6.47 $ 3,733,000 As of December 31, 2017 and 2016 , there was approximately $1.3 million and $3.1 million of unrecognized compensation expense, net of estimated forfeitures, related to non-vested service-based stock options that is expected to be recognized over a weighted average period of 1.60 and 2.36 years, respectively. Service-based stock options are granted at the discretion of the Board of Directors or the Compensation Committee (or its authorized member(s)) and expire 10 years from the date of the grant. Service-based stock options generally vest over a four -year period based upon required service conditions and do not have performance or market conditions. The weighted average grant-date fair value per share of service-based stock options granted was $5.02 and $3.41 for the years ended December 31, 2017 and 2016 , respectively. The aggregate intrinsic value disclosed above represents the total intrinsic value (the difference between the fair market value of the Company's common stock as of December 31, 2017 , and the exercise price, multiplied by the number of in-the-money service-based stock options) that would have been received by the option holders had all option holders exercised their options on December 31, 2017 . This amount is subject to change based on changes to the fair market value of the Company's common stock. Restricted Stock Units The following table summarizes the Company's restricted stock unit activity from January 1, 2017 to December 31, 2017 : Units Outstanding Weighted Aggregate Units Outstanding, January 1, 2017 188,057 $ 9.93 $ 1,675,588 Units granted 46,601 11.23 Units released — — Units cancelled — — Units Outstanding, December 31, 2017 234,658 10.19 2,926,185 Vested and expected to vest at December 31, 2017 126,166 11.10 1,573,286 Vested and deferred at December 31, 2017 100,754 $ 11.79 $ 1,256,402 During 2017 and 2016 , 46,601 and 67,663 restricted stock units were granted, respectively, to members of the Board of Directors as part of their compensation package. Restricted stock units convert to common stock following the separation of service with the Company. The aggregate grant date fair value of the awards in 2017 and 2016 was $0.5 million and $0.5 million , respectively. All restricted stock unit awards vest quarterly over a one year period from the date of grant, with expense recognized straight-line over the vesting period. The Company's restricted stock units are accounted for as equity awards. The grant date fair value is based on the market price of the Company's common stock at the date of grant. The Company did not grant any restricted stock units prior to April 2009. Performance-Based Restricted Stock Units On March 17, 2017, the Company granted performance-based restricted stock units ("PSUs") to certain employees which will become eligible to vest based on the Company's achievement of certain pre-defined key operating performance goals during the cumulative period from January 1, 2017 to December 31, 2018, which will be certified by the Compensation Committee in February 2019. Any PSUs that become eligible to vest are subject to additional service requirements where the eligible PSUs will vest annually on a pro-rata basis over the two -year period beginning March 17, 2019. The PSUs were granted at "target" (at 100% of target). Based upon actual attainment of the operating performance results relative to target and the recipient's terms, actual issuance of PSUs can be eligible for vest anywhere between a maximum of 200% and 0% of the target number of PSUs originally granted. The following table summarizes the Company's PSU activity from January 1, 2017 to December 31, 2017 : PSUs Weighted Aggregate Non-vested PSUs, January 1, 2017 — $ — $ — PSUs granted 462,870 9.43 PSUs vested — — PSUs canceled (29,282 ) 9.43 Non-vested PSUs, December 31, 2017 433,588 $ 9.43 $ 5,406,842 As of December 31, 2017 , future compensation cost, net of estimated forfeitures, related to the non-vested portion of the PSUs not yet recognized in the consolidated statement of operations was $1.0 million and is expected to be recognized over a weighted average period of 1.5 years. CEO 2016 Performance and Market Conditioned Restricted Stock Awards and Stock Options Grants On April 4, 2016, the Company named Mr. John Hass as President, CEO and Chairman of the Board. In conjunction with his appointment, the Compensation Committee approved a stock-based compensation package for Mr. Hass aimed to provide significant reward potential for achieving outstanding Company operating performance results and building stockholder value. The package was comprised of 70,423 performance-based restricted stock awards (PRSAs), 314,465 performance-based stock options (PSOs), 70,423 market-based restricted stock awards (MRSAs), and 314,465 market-based stock options (MSOs). The April 4, 2016 grant date fair values associated with these grants were $7.10 , $3.24 , $6.17 and $0.94 , respectively. PRSAs and PSOs were eligible to vest based on the achievement of certain operating performance targets during the 2016 calendar year, related to defined measures of revenue, sales, adjusted free cash flow, and adjusted EBITDA, certified by the Compensation Committee in the first quarter of 2017. The PRSAs and PSOs are subject to additional service requirements where the eligible PRSAs and PSOs will vest 50% , 25% , and 25% on April 4, 2017, 2018 and 2019, respectively. Awards also vest if a majority change in control of the Company occurs during the performance or vesting period. On February 20, 2017, the Compensation Committee approved 64,719 PRSAs and 144,497 PSOs as eligible under this plan, subject to the aforementioned service vesting requirements. The non-eligible 5,704 and 169,968 PRSAs and PSOs, respectively, were cancelled as of February 20, 2017. As of December 31, 2017 , 32,359 PRSAs were vested and 72,248 PSOs were vested. As of December 31, 2017 , no PSOs have been exercised. As of December 31, 2017 and 2016 , future compensation cost related to the non-vested portion of the PRSAs and PSOs not yet recognized in the consolidated statement of operations was $0.1 million and $0.5 million and is expected to be recognized over a weighted average period of 1.09 years and 1.69 years , respectively. In addition to the market condition, the MRSAs and MSOs also have a service condition. Vesting of these MRSAs and MSOs are dependent upon whether the Company achieves predetermined growth rates of total stockholder return for the two -year measurement period beginning on January 4, 2016 and ending on December 29, 2017. Following the end of the market performance measurement period on December 29, 2017, the Compensation Committee will certify the eligible quantity of MRSAs and MSOs which will vest annually on a pro-rata basis over three years beginning April 4, 2018. The Company records compensation expense ratably for each vesting tranche of the MRSAs and MSOs based on the Monte Carlo fair value estimated on the grant date, regardless of meeting or not meeting the market conditions. The MRSAs were granted at "target" (at 100% of target). Based upon actual attainment of total stockholder return growth rate results through December 29, 2017 relative to target, actual issuance of MRSAs can fall anywhere between a maximum of 200% and 0% of the target number of MRSAs originally granted. The MSOs were granted at "maximum" (at 200% of target). Based on actual attainment of total stockholder return growth rate results through December 29, 2017 relative to maximum, actual issuance of stock options can fall anywhere between 100% and 0% of the maximum number of MSOs originally granted. As of December 31, 2017 and 2016 , future compensation cost related to the non-vested portion of the MRSAs and MSOs not yet recognized in the consolidated statement of operations was $0.3 million and $0.5 million and is expected to be recognized over a weighted average period of 1.79 years and 2.56 years , respectively. |
STOCKHOLDERS' EQUITY (DEFICIT)
STOCKHOLDERS' EQUITY (DEFICIT) | 12 Months Ended |
Dec. 31, 2017 | |
Stockholders' Equity Note [Abstract] | |
STOCKHOLDERS' EQUITY (DEFICIT) | STOCKHOLDERS' EQUITY (DEFICIT) At December 31, 2017 , the Company's Board of Directors had the authority to issue 200,000,000 shares of stock, of which 190,000,000 were designated as Common Stock, with a par value of $0.00005 per share, and 10,000,000 were designated as Preferred Stock, with a par value of $0.001 per share. At December 31, 2017 and 2016 , the Company had shares of Common Stock issued of 23,782,773 and 23,450,864 , respectively, and shares of Common Stock outstanding of 22,782,773 and 22,450,864 , respectively. On August 22, 2013 , the Company’s Board of Directors approved a share repurchase program under which the Company is authorized to repurchase up to $25.0 million of its outstanding common stock from time to time in the open market or in privately negotiated transactions depending on market conditions, other corporate considerations, debt facility covenants and other contractual limitations, and applicable legal requirements. For the year ended December 31, 2013 , the Company paid $11.4 million to repurchase 1,000,000 shares at a weighted average price of $11.44 per share as part of this program. No shares were repurchased during the years ended December 31, 2014, 2015 , 2016 , or 2017 . Shares repurchased under the program were recorded as treasury stock on the Company’s consolidated balance sheet. The shares repurchased under this program during the year ended December 31, 2013 were not the result of an accelerated share repurchase agreement. Management has not made a decision on whether shares purchased under this program will be retired or reissued. Holders of the Company's common stock are entitled to receive dividends when and if declared by the Board of Directors out of assets or funds legally available for that purpose. Future dividends are dependent on the Company's financial condition and results of operations, the capital requirements of its business, covenants associated with financing arrangements, other contractual restrictions, legal requirements, regulatory constraints, industry practice and other factors deemed relevant by its Board of Directors. The Company has not paid any cash dividends on its common stock and does not intend to do so in the foreseeable future. |
BASIC AND DILUTED NET LOSS PER
BASIC AND DILUTED NET LOSS PER SHARE | 12 Months Ended |
Dec. 31, 2017 | |
Earnings Per Share [Abstract] | |
BASIC AND DILUTED NET LOSS PER SHARE | BASIC AND DILUTED NET LOSS PER SHARE The following table sets forth the computation of basic and diluted net loss per common share: Years Ended December 31, 2017 2016 2015 (dollars in thousands, except per share amounts) Numerator: Net loss $ (1,546 ) $ (27,550 ) $ (46,796 ) Denominator: Basic weighted average shares 22,244 21,969 21,571 Diluted weighted average shares 22,244 21,969 21,571 Loss per share: Basic $ (0.07 ) $ (1.25 ) $ (2.17 ) Diluted $ (0.07 ) $ (1.25 ) $ (2.17 ) The Company calculates dilutive common stock equivalent shares using the treasury stock method. In periods where the Company has a net loss, no dilutive common stock equivalent shares are included in the calculation for diluted shares as they are considered anti-dilutive. The following table sets forth the dilutive common stock equivalent shares calculated using the treasury stock method (in thousands). Years Ended December 31, 2017 2016 2015 (in thousands) Stock options 231 16 35 Restricted stock units 209 174 39 Restricted stocks 296 129 82 Total common stock equivalent shares 736 319 156 Share-based awards to purchase approximately 0.7 million , 2.0 million and 2.2 million shares of common stock that had an exercise price in excess of the average market price of the common stock during the years ended December 31, 2017 , 2016 and 2015 , respectively, were not included in the calculation of diluted loss per share because they were anti-dilutive. |
RESTRUCTURING AND OTHER EMPLOYE
RESTRUCTURING AND OTHER EMPLOYEE SEVERANCE | 12 Months Ended |
Dec. 31, 2017 | |
Restructuring and Related Activities [Abstract] | |
RESTRUCTURING AND OTHER EMPLOYEE SEVERANCE | RESTRUCTURING AND OTHER EMPLOYEE SEVERANCE 2016 Restructuring Actions In the first quarter of 2016, the Company announced and initiated actions to withdraw the direct sales presence in almost all of its non-U.S. and non-northern European geographies related to the distribution of E&E Language offerings. The Company does not expect to incur any additional material restructuring costs in connection with the 2016 Restructuring Plan. The 2016 Restructuring Plan remaining balance is expected to be paid in early 2018. Restructuring charges included in the Company’s consolidated statement of operations related to the 2016 Restructuring Plan include the following: • Employee severance and related benefits costs incurred in connection with headcount reductions involving employees primarily in France, China, Brazil, Canada, Spain, Mexico, U.S. and the U.K.; • Contract termination costs associated with operating lease terminations from office closures; and • Other related costs. The following tables summarize activity with respect to the restructuring charges for the 2016 Restructuring Plan during the years ended December 31, 2017 and 2016 (in thousands): Balance at January 1, 2016 Cost Incurred Cash Payments Other Adjustments (1) Balance at December 31, 2016 Severance costs $ — $ 4,367 $ (3,867 ) $ — $ 500 Contract termination costs — 165 (74 ) (69 ) 22 Other costs — 590 (399 ) (121 ) 70 Total $ — $ 5,122 $ (4,340 ) $ (190 ) $ 592 Balance at January 1, 2017 Cost Incurred Cash Payments Other Adjustments (1) Balance at December 31, 2017 Severance costs $ 500 $ (50 ) $ (303 ) $ — $ 147 Contract termination costs 22 — (22 ) — — Other costs 70 14 (84 ) — — Total $ 592 $ (36 ) $ (409 ) $ — $ 147 (1) Other Adjustments includes non-cash period changes in the liability balance, which may include non-cash lease closure expense and foreign currency translation adjustments. 2015 Restructuring Actions In 2015, the Company announced and initiated actions to reduce headcount and other costs in order to support its strategic shift in business focus. During 2016, the final costs were incurred and final payments were made against the 2015 Restructuring Plan accruals. The Company does not expect to incur any additional restructuring costs in connection with the 2015 Plan. Other Employee Severance Actions In the first quarter of 2017, the Company initiated actions to reduce headcount in its Fit Brains business and in the U.S. and China locations within consumer product operations. Primarily comprised of severance costs associated with these actions, the Company recorded expense of $1.2 million . Of these amounts, $1.1 million has been paid and the remaining $0.1 million is expected to be paid in the first half of 2018. Cost Table The following table summarizes the major types of costs associated with the 2016 and 2015 Restructuring Plans and other employee severance actions for the years ended December 31, 2017 , 2016 , and 2015 and total costs incurred through December 31, 2017 (in thousands): Years ended Incurred through 2017 2016 2015 December 31, 2017 Severance costs $ 1,144 $ 4,438 $ 7,240 $ 12,822 Contract termination costs 37 165 1,134 1,336 Other costs 26 590 417 1,033 Total $ 1,207 $ 5,193 $ 8,791 $ 15,191 As of December 31, 2017 , the entire restructuring and other employee severance action liability of $0.3 million was classified as a current liability within accrued compensation and other current liabilities on the consolidated balance sheets. The following table presents restructuring costs associated with the 2016 and 2015 Restructuring Plans and other employee severance actions included in the related line items of the Statement of Operations (in thousands): Years ended 2017 2016 2015 Cost of revenue $ 378 $ 573 $ 113 Sales and marketing 411 2,324 4,492 Research and development 318 913 602 General and administrative 100 1,383 3,584 Total $ 1,207 $ 5,193 $ 8,791 These restructuring expenses are not allocated to any reportable segment under the Company's definition of segment contribution as defined in Note 19 "Segment Information." At each reporting date, the Company will evaluate its accrued restructuring costs to ensure the liabilities reported are still appropriate. Any changes to the estimated costs of executing approved restructuring plans will be reflected in the Company’s consolidated statements of operations. |
LEASE ABANDONMENT AND TERMINATI
LEASE ABANDONMENT AND TERMINATION | 12 Months Ended |
Dec. 31, 2017 | |
Restructuring and Related Activities [Abstract] | |
LEASE ABANDONMENT AND TERMINATION | LEASE ABANDONMENT AND TERMINATION As part of the Company’s effort to reduce general and administrative expenses through a planned space consolidation at its Arlington, Virginia headquarters location, the Company incurred a lease abandonment charge of $3.2 million for the year ended December 31, 2014. Prior to January 31, 2014, the Company occupied the 6th and 7th floors at its Arlington, Virginia headquarters. The Company estimated the liability under the operating lease agreements and accrued lease abandonment costs in accordance with ASC 420, Exit or Disposal Cost Obligations ("ASC 420"), as the Company has no future economic benefit from the abandoned space and the lease does not terminate until December 31, 2018. All leased space related to the 6th floor was abandoned and ceased to be used by the Company on January 31, 2014. In a further effort to reduce general and administrative expenses through a planned space consolidation, effective October 10, 2016, the Company relocated its headquarters location to 1621 North Kent Street, Suite 1200, Arlington, Virginia 22209. The previously leased space at the 7th floor of 1919 North Lynn Street was abandoned and ceased to be used by the Company on October 10, 2016 and resulted in $1.6 million in lease abandonment expense in the fourth quarter of 2016. A summary of the Company’s lease abandonment activity for the years ended December 31, 2017 and 2016 is as follows (in thousands): As of December 31, 2017 2016 Accrued lease abandonment costs, beginning of period $ 2,123 $ 1,282 Costs incurred and charged to expense — 1,644 Principal reductions (1,042 ) (803 ) Accrued lease abandonment costs, end of period $ 1,081 $ 2,123 Accrued lease abandonment costs liability: Short-term $ 1,081 $ 1,047 Long-term — 1,076 Total $ 1,081 $ 2,123 |
INCOME TAXES
INCOME TAXES | 12 Months Ended |
Dec. 31, 2017 | |
Income Tax Disclosure [Abstract] | |
INCOME TAXES | INCOME TAXES New tax legislation, commonly referred to as the Tax Cuts and Jobs Act ("Tax Reform"), was enacted on December 22, 2017. ASC 740, Accounting for Income Taxes , requires companies to recognize the effect of tax law changes in the period of enactment even though the effective date for most provisions is for tax years beginning after December 31, 2017, or in the case of certain other provisions, January 1, 2018. Given the significance of the Tax Reform, the SEC staff issued Staff Accounting Bulletin No. 118 (SAB 118), which allows registrants to record provisional amounts during a one year “measurement period” similar to that used when accounting for business combinations. However, the measurement period is deemed to have ended earlier when the registrant has obtained, prepared and analyzed the information necessary to finalize its accounting. During the measurement period, impacts of the Tax Reform law are expected to be recorded at the time a reasonable estimate for all or a portion of the effects can be made, and provisional amounts can be recognized and adjusted as information becomes available, prepared or analyzed. SAB 118 summarizes the process to be applied at each reporting period to account for and qualitatively disclose: (1) the effects of the change in tax law for which accounting is complete; (2) provisional amounts (or adjustments to provisional amounts) for the effects of the tax law where accounting is not complete, but that a reasonable estimate has been determined; and (3) a reasonable estimate cannot yet be made and therefore taxes are reflected in accordance with law prior to the enactment of the Tax Reform. Amounts recorded in the period ended December 31,2017, principally relate to the reduction in the U.S. corporate income tax rate from 35% to 21%, which resulted in the Company reporting an income tax benefit of $2.4 million to remeasure deferred tax liabilities associated with indefinite-lived intangible assets that will reverse at the new 21% rate. Absent this deferred tax liability, the Company is in a net deferred tax asset position that is offset by a full valuation allowance. Though the impact of the rate change has a net tax effect of zero, the accounting to determine the gross change in the deferred tax position and the offsetting valuation resulted in a $26.3 million reduction in both. Under the Tax Reform, deferred tax assets scheduled to reverse in subsequent years will result in net operating losses with an unlimited carryforward. The change in the carryforward period to post-2017 net operating losses allowed the Company to release valuation allowance associated with the reversing deferred tax assets to offset 80% of the deferred tax liability associated with indefinitely lived intangible asset. The release of valuation allowance resulted in the Company reporting an income tax benefit of $3.1 million . The Tax Reform includes a one-time mandatory repatriation transition tax on the net accumulated earnings and profits of a U.S. taxpayer’s foreign subsidiaries. The final impact of Tax Reform may differ from these estimates, due to, among other things, changes in interpretations, additional guidance that may be issued by the Internal Revenue Service or state and local authorities, and any updates or changes to estimates the Company has utilized to calculate the transition impact. Therefore, the Company's accounting for the elements of Tax Reform is incomplete. However, the Company was able to make reasonable estimates of the effects of Tax Reform. The Company will complete the accounting for these items during 2018, after completion of the 2017 U.S. income tax return. Other significant Tax Reform provisions that are not yet effective but may impact income taxes in future years include: an exemption from U.S. tax on dividends of future foreign earnings, a limitation of net operating losses generated after 2017 to 80% of taxable income, the inclusion of commissions and performance based compensation in determining the excess compensation limitation, and a minimum tax on certain foreign earnings in excess of 10% of the foreign subsidiaries tangible assets (i.e., global intangible low-taxed income or GILTI). The Company is still evaluating its policy election to treat the GILTI tax as a period expense or to provide U.S. deferred taxes on foreign temporary differences that are expected to generate GILTI income when they reverse in future years. The following table summarizes the significant components of the Company's deferred tax assets and liabilities as of December 31, 2017 and 2016 (in thousands): As of December 31, 2017 2016 Deferred tax assets: Inventory $ 847 $ 735 Net operating and capital loss carryforwards 46,683 61,174 Deferred revenue 11,534 10,862 Accrued liabilities 4,064 6,975 Stock-based compensation 3,790 4,440 Amortization and depreciation 773 1,056 Bad debt reserve 90 389 Foreign and other tax credits 2,047 1,881 Gross deferred tax assets 69,828 87,512 Valuation allowance (60,302 ) (78,363 ) Net deferred tax assets 9,526 9,149 Deferred tax liabilities: Goodwill and indefinite lived intangibles (5,033 ) (6,098 ) Deferred sales commissions (4,996 ) (7,060 ) Prepaid expenses (619 ) (656 ) Foreign currency translation (846 ) (1,508 ) Gross deferred tax liabilities (11,494 ) (15,322 ) Net deferred tax liabilities $ (1,968 ) $ (6,173 ) For the year ended December 31, 2017, the Company recorded an income tax benefit of $2.5 million . The tax benefit primarily related to the reduction in the corporate tax rate from 35% to 21% which resulted in a tax benefit of $5.5 million , offset by current year profits of operations in Canada, Germany, and the U.K. Additionally, the tax expense relates to the tax impact of the amortization of U.S. indefinite-lived intangible assets and the inability to recognize tax benefits associated with current year losses of operations in certain foreign jurisdictions and in the U.S. For the year ending December 31, 2016 , the Company recorded income tax expense of $2.5 million . The tax expense was primarily related to current year profits in of operations in Germany and the U.K. Additionally, the tax expense relates to the tax impact of the amortization of U.S. indefinite-lived intangible assets and the inability to recognize tax benefits associated with current year losses of operations in all other foreign jurisdictions and in the U.S. due to the valuation allowance recorded against the deferred tax asset balances of these entities. As of December 31, 2017 , a full valuation allowance was provided for domestic and certain foreign deferred tax assets in those jurisdictions where the Company has determined the deferred tax assets will more likely than not be realized. If future events change the outcome of the Company's projected return to profitability, a valuation allowance may not be required to reduce the deferred tax assets. The Company will continue to assess the need for a valuation allowance. As of December 31, 2017 , the Company had federal, state and foreign tax NOL carryforward amounts and expiration periods as follows (in thousands): Year of Expiration U.S. Federal State Brazil France Spain Mexico Total 2018-2022 $ — $ 409 $ — $ — $ — $ — $ 409 2023-2027 — 5,458 — — — 377 5,835 2028-2032 471 17,784 — — — — 18,255 2033-2037 125,759 108,086 — — 4 — 233,849 2038-2042 3,234 2,702 — — — — 5,936 Indefinite — — 4,160 7,673 697 — 12,530 Totals $ 129,464 $ 134,439 $ 4,160 $ 7,673 $ 701 $ 377 $ 276,814 As of December 31, 2017 , the Company had federal and state capital loss carryforward amounts and expiration periods as follows (in thousands): Year of Tax Capital Loss Expiration U.S. Federal State 2018-2022 $ 6,837 $ 2,351 2023-2027 15,135 14,990 2028-2032 — 164 2033-2037 — 362 2038-2042 — — Indefinite — — Totals $ 21,972 $ 17,867 As of December 31, 2017 , the Company had federal tax credit carryforward amounts and expiration periods as follows (in thousands): Year of Tax Credit Expiration U.S. Federal 2018-2022 $ — 2023-2027 1,638 2028-2032 166 2033-2037 218 2038-2042 — Indefinite 26 Totals $ 2,048 The components of loss before income taxes and the provision for taxes on income consist of the following (in thousands): Years Ended December 31, 2017 2016 2015 United States $ (12,648 ) $ (24,963 ) $ (41,458 ) Foreign 8,603 (84 ) (4,179 ) Loss before income taxes $ (4,045 ) $ (25,047 ) $ (45,637 ) The provision for taxes on income consists of the following (in thousands): Federal $ — $ — $ (157 ) State (21 ) 78 96 Foreign 1,701 1,250 444 Total current $ 1,680 $ 1,328 $ 383 Deferred: Federal $ (4,541 ) $ 1,147 $ 1,148 State 335 169 169 Foreign 27 (141 ) (541 ) Total deferred (4,179 ) 1,175 776 (Benefit) provision for income taxes $ (2,499 ) $ 2,503 $ 1,159 Reconciliation of income tax (benefit) provision computed at the U.S. federal statutory rate to income tax (benefit) expense is as follows (in thousands): Years Ended December 31, 2017 2016 2015 Income tax benefit at statutory federal rate $ (1,416 ) $ (8,766 ) $ (15,973 ) Remeasurement of deferred tax liability related to indefinite-lived intangible due to U.S. rate reduction, effective January 1, 2018 (2,586 ) — — Release of valuation allowance due to change in U.S. net operating loss carry forward period (3,103 ) — — Shortfall in tax benefit - stock compensation 233 — — State income tax expense, net of federal income tax effect 314 219 231 Tax capital loss in excess of book loss on sale of Japan subsidiary (5,297 ) — — Nondeductible goodwill impairment — 604 1,961 Other nondeductible expenses 398 384 88 Tax rate differential on foreign operations (816 ) (474 ) (1,019 ) Increase in valuation allowance 9,446 10,404 15,713 Tax audit settlements — — (96 ) Change in prior year estimates 150 — 225 Other tax credits 173 129 29 Other 5 3 — Income tax (benefit) expense $ (2,499 ) $ 2,503 $ 1,159 The Company accounts for uncertainty in income taxes under ASC topic 740-10-25, Income Taxes: Overall: Recognition, ("ASC 740-10-25"). ASC 740-10-25 prescribes a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. ASC 740-10-25 also provides guidance on derecognition, classification, interest and penalties, accounting in interim periods, disclosure, and transition. The Company recognizes interest and penalties related to unrecognized tax benefits as a component of income tax expense (benefit). As of December 31, 2017 and 2016 , the Company had no unrecognized tax benefits or interest and penalties. The Company is subject to taxation in the U.S. and various states and foreign jurisdictions. The Company's tax years 2011 and forward are subject to examination by the tax authorities. Prior to the fourth quarter of 2017, the Company asserted that the unremitted earnings of its foreign subsidiaries with unremitted earnings were deemed indefinitely reinvested. As the Company is in an aggregate net foreign deficit position for U.S. tax purposes, the Company is not liable for the transition tax enacted as part of the Tax Reform. As such, all prior earnings of the foreign subsidiaries with unremitted earnings are deemed to be previously taxed income for U.S. tax purposes as of December 31, 2017. The Company's assessment is provisional and we continue to assess the impact of the transition tax on unremitted earnings and its impact to the Company's outside basis. The Company made income tax payments of $2.2 million , $0.8 million , and $1.4 million , in 2017 , 2016 and 2015 , respectively. |
COMMITMENTS AND CONTINGENCIES
COMMITMENTS AND CONTINGENCIES | 12 Months Ended |
Dec. 31, 2017 | |
Commitments and Contingencies Disclosure [Abstract] | |
COMMITMENTS AND CONTINGENCIES | COMMITMENTS AND CONTINGENCIES Operating Leases The Company leases copiers, parking spaces, buildings, a warehouse, and office space under operating lease and site license arrangements, some of which contain renewal options. The following table summarizes future minimum operating lease payments as of December 31, 2017 and the years thereafter (in thousands): As of Periods Ending December 31, 2018 $ 4,419 2019 1,742 2020 1,004 2021 590 2022 — Thereafter — Total future minimum operating lease payments $ 7,755 Total expenses under operating leases were $2.6 million , $4.0 million and $5.1 million during the years ended December 31, 2017 , 2016 and 2015 , respectively. The Company accounts for its leases under the provisions of ASC topic 840, Accounting for Leases ("ASC 840"), which require that leases be evaluated and classified as operating leases or capital leases for financial reporting purposes. Certain operating leases contain rent escalation clauses, which are recorded on a straight-line basis over the initial term of the lease with the difference between the rent paid and the straight-line rent recorded as either a deferred rent asset or liability depending on the calculation. Lease incentives received from landlords are recorded as deferred rent liabilities and are amortized on a straight-line basis over the lease term as a reduction to rent expense. Royalty Agreements The Company has entered into agreements to license software from vendors for incorporation in the Company's offerings. Pursuant to some of these agreements, the Company is required to pay minimum royalties or license fees over the term of the agreement regardless of actual license sales. In addition, such agreements typically specify that, in the event the software is incorporated into specified Company products, royalties will be due at a contractual rate based on actual sales volumes. These agreements are subject to various royalty rates typically calculated based on the level of sales for those products. The Company expenses these amounts to cost of sales or research and development expense, as appropriate. Royalty expense was $1.0 million , $0.3 million , and $0.2 million for the years ended December 31 2017 , 2016 and 2015 , respectively. Employment Agreements The Company has agreements with certain of its executives and key employees which provide guaranteed severance payments upon termination of their employment without cause. Litigation From time to time, the Company has been subject to various claims and legal actions in the ordinary course of its business. The Company is not currently involved in any legal proceeding the ultimate outcome of which, in its judgment based on information currently available, would have a material impact on its business, financial condition or results of operations. |
EMPLOYEE BENEFIT PLAN
EMPLOYEE BENEFIT PLAN | 12 Months Ended |
Dec. 31, 2017 | |
Retirement Benefits [Abstract] | |
EMPLOYEE BENEFIT PLAN | EMPLOYEE BENEFIT PLAN The Company maintains a defined contribution 401(k) Plan (the "Plan"). The Company matches employee contributions to the Plan up to 4% of their compensation. The Company recorded Company contribution matching expenses for the Plan totaling $2.1 million , $2.0 million , and $2.0 million for the years ended December 31, 2017 , 2016 and 2015 , respectively. |
RELATED PARTIES
RELATED PARTIES | 12 Months Ended |
Dec. 31, 2017 | |
Related Party Transactions [Abstract] | |
RELATED PARTIES | RELATED PARTIES As of December 31, 2017 and 2016 , the Company had outstanding receivables from employees in the amount of $0.1 million and $22,000 , respectively. |
SEGMENT INFORMATION
SEGMENT INFORMATION | 12 Months Ended |
Dec. 31, 2017 | |
Segment Reporting [Abstract] | |
SEGMENT INFORMATION | SEGMENT INFORMATION The Literacy segment derives the majority of its revenue from the sales of literacy solutions to educational institutions serving grades K through 12. The E&E Language segment derives revenue from sales of language-learning solutions to educational institutions, corporations, and government agencies worldwide. The Consumer Language segment derives the majority of its revenue from sales of language-learning solutions to individuals and retail partners. Revenue from transactions between the Company's operating segments is not material. The Company's current operating segments also represent the Company's reportable segments. The Company and its Chief Operating Decision Maker ("CODM") assess profitability and performance of each of its current operating segments in terms of segment contribution. Segment contribution is calculated as segment revenue less expenses directly incurred by or allocated to the segment. Direct segment expenses include costs and expenses that are directly incurred by or allocated to the segment and include materials costs, service costs, customer care and coaching costs, sales and marketing expenses, and bad debt expense. In addition to the previously referenced expenses, the Literacy segment includes direct research and development expenses and Combined Language includes shared research and development expenses, cost of revenue, and sales and marketing expenses applicable to the Consumer Language and E&E Language segments. Segment contribution excludes depreciation, amortization, stock compensation, restructuring and other related expenses. The Company does not allocate expenses beneficial to all segments, which include certain general and administrative expenses such as legal fees, payroll processing fees, accounting related expenses, lease abandonment, impairment, and non-operating income and expense. These expenses are included below the segment contribution line in the unallocated expenses section of the tables presented below. Beginning on January 1, 2017, the Company modified its definition and presentation of segment contribution. E&E Language segment and Consumer Language segment are now characterized as "Language" since both of these segments primarily address the language-learning market and share many of the same costs. These shared language costs are included in the "Shared Services" column of the tables presented below. General and administrative expenses directly incurred by the Language segments consist only of bad debt expense, net of recoveries. Additionally, research and developments expenses are now included in segment contribution. Further, the depreciation, amortization, stock compensation, restructuring and other related expenses which are included in cost of revenue, sales and marketing, research and development, and general and administrative are presented in total as unallocated costs. Prior periods have been reclassified to reflect the current segment presentation and definition of segment contribution. The Company will continue to evaluate its management reporting and will update its operating and reportable segments as appropriate. With the exception of goodwill, the Company does not identify or allocate its assets by operating segment. Consequently, the Company does not present assets or liabilities by operating segment. Operating results by segment for the year ended December 31, 2017 was as follows (in thousands, except percentages): Language Literacy Segment E&E Language Segment Consumer Language Segment Shared Services Combined Language Total Company Revenue $ 43,608 $ 65,267 $ 75,718 $ — $ 140,985 $ 184,593 Cost of revenue 6,924 7,149 13,485 50 20,684 $ 27,608 Sales and marketing 23,369 31,089 37,366 1,459 69,914 $ 93,283 Research and development 6,479 — — 15,860 15,860 $ 22,339 General and administrative 1,872 132 18 — 150 $ 2,022 Segment contribution $ 4,964 $ 26,897 $ 24,849 $ (17,369 ) $ 34,377 $ 39,341 Segment contribution margin % 11.4 % 41.2 % 32.8 % Unallocated depreciation and amortization, stock compensation, restructuring and other expenses (net) included in: Cost of revenue 6,013 Sales and marketing 3,377 Research and development 2,408 General and administrative 6,348 Subtotal 18,146 Corporate unallocated expenses, net: Unallocated general and administrative 25,696 Unallocated lease abandonment expense (456 ) Subtotal 25,240 Loss before income taxes $ (4,045 ) Operating results by segment for the year ended December 31, 2016 was as follows (in thousands, except percentages): Language Literacy Segment E&E Language Segment Consumer Language Segment Shared Services Combined Language Total Company Revenue $ 34,123 $ 72,083 $ 87,883 $ — $ 159,966 $ 194,089 Cost of revenue 4,753 9,245 14,698 (17 ) 23,926 $ 28,679 Sales and marketing 21,650 33,441 51,508 1,902 86,851 $ 108,501 Research and development 4,111 — — 18,874 18,874 $ 22,985 General and administrative 2,077 315 175 — 490 $ 2,567 Segment contribution $ 1,532 $ 29,082 $ 21,502 $ (20,759 ) $ 29,825 $ 31,357 Segment contribution margin % 4.5 % 40.3 % 24.5 % Unallocated depreciation and amortization, stock compensation, restructuring and other expenses (net) included in: Cost of revenue 5,642 Sales and marketing 5,839 Research and development 3,288 General and administrative 10,935 Subtotal 25,704 Corporate unallocated expenses, net: Unallocated general and administrative 26,999 Unallocated lease abandonment expense (1,873 ) Unallocated impairment 3,930 Unallocated non-operating income 1,644 Subtotal 30,700 Loss before income taxes $ (25,047 ) Operating results by segment for the year ended December 31, 2015 was as follows (in thousands, except percentages): Language Literacy Segment E&E Language Segment Consumer Language Segment Shared Services Combined Language Total Company Revenue $ 21,928 $ 76,129 $ 119,613 $ — $ 195,742 $ 217,670 Cost of revenue 2,574 12,124 20,792 (19 ) 32,897 $ 35,471 Sales and marketing 16,628 40,829 66,839 3,661 111,329 $ 127,957 Research and development 4,542 — — 22,101 22,101 $ 26,643 General and administrative 1,647 400 1,244 — 1,644 $ 3,291 Segment contribution $ (3,463 ) $ 22,776 $ 30,738 $ (25,743 ) $ 27,771 $ 24,308 Segment contribution margin % (15.8 )% 29.9 % 25.7 % Unallocated depreciation and amortization, stock compensation, restructuring and other expenses (net) included in: Cost of revenue 3,056 Sales and marketing 8,127 Research and development 3,296 General and administrative 15,565 Subtotal 30,044 Corporate unallocated expenses, net: Unallocated general and administrative 31,268 Unallocated lease abandonment expense 1,824 Unallocated impairment 6,754 Unallocated non-operating income 55 Subtotal 39,901 Loss before income taxes $ (45,637 ) Geographic Information Revenue by major geographic region is based primarily upon the geographic location of the customers who purchase the Company's products. The geographic locations of distributors and resellers who purchase and resell the Company's products may be different from the geographic locations of end customers. The information below summarizes revenue from customers by geographic area as of December 31, 2017 , 2016 and 2015 , respectively (in thousands): Years Ended December 31, 2017 2016 2015 United States $ 158,825 $ 162,815 $ 177,966 International 25,768 31,274 39,704 Total revenue $ 184,593 $ 194,089 $ 217,670 The information below summarizes long-lived assets by geographic area classified as held and used for the years ended December 31, 2017 and 2016 , respectively (in thousands): As of December 31, 2017 2016 United States $ 27,647 $ 21,652 International 3,002 3,143 Total property and equipment, net $ 30,649 $ 24,795 Revenue by Product and Service The Company earns revenue from the sale of language-learning, literacy and brain fitness products and services. The information below summarizes revenue by type for the years ended December 31, 2017 , 2016 and 2015 , respectively (in thousands): As of December 31, 2017 2016 2015 Language learning $ 138,082 $ 155,532 $ 191,568 Literacy 43,608 34,123 21,928 Brain Fitness 2,903 4,434 4,174 Total revenue $ 184,593 $ 194,089 $ 217,670 |
VALUATION AND QUALIFYING ACCOUN
VALUATION AND QUALIFYING ACCOUNTS | 12 Months Ended |
Dec. 31, 2017 | |
Valuation and Qualifying Accounts [Abstract] | |
VALUATION AND QUALIFYING ACCOUNTS | VALUATION AND QUALIFYING ACCOUNTS The following table includes the Company's valuation and qualifying accounts for the respective periods (in thousands): Years Ended December 31, 2017 2016 2015 Allowance for doubtful accounts: Beginning balance $ 1,072 $ 1,196 $ 1,434 Charged to costs and expenses (51 ) 709 1,657 Deductions—accounts written off (646 ) (833 ) (1,895 ) Ending balance $ 375 $ 1,072 $ 1,196 Promotional rebate and coop advertising reserves: Beginning balance $ 5,968 $ 16,910 $ 23,437 Charged to costs and expenses 6,421 18,337 40,563 Deductions - reserves utilized (10,014 ) (29,279 ) (47,090 ) Ending balance $ 2,375 $ 5,968 $ 16,910 Sales return reserve: Beginning balance $ 1,338 $ 3,728 $ 3,570 Charged against revenue 4,943 5,034 11,474 Deductions—reserves utilized (5,105 ) (7,424 ) (11,316 ) Ending balance $ 1,176 $ 1,338 3,728 Deferred income tax asset valuation allowance: Beginning balance $ 78,363 70,464 53,809 Charged to costs and expenses (16,806 ) 7,899 16,655 Deductions (1,255 ) — — Ending balance $ 60,302 $ 78,363 $ 70,464 |
SUPPLEMENTAL QUARTERLY FINANCIA
SUPPLEMENTAL QUARTERLY FINANCIAL INFORMATION (Unaudited) | 12 Months Ended |
Dec. 31, 2017 | |
Quarterly Financial Information Disclosure [Abstract] | |
SUPPLEMENTAL QUARTERLY FINANCIAL INFORMATION (Unaudited) | SUPPLEMENTAL QUARTERLY FINANCIAL INFORMATION (Unaudited) Summarized quarterly supplemental consolidated financial information for 2017 and 2016 are as follows (in thousands, except per share amounts): Three Months Ended March 31, June 30, September 30, December 31, 2017 Revenue $ 47,693 $ 45,905 $ 46,206 $ 44,789 Gross profit $ 39,552 $ 38,314 $ 36,758 $ 36,348 Net income (loss) $ 454 $ (1,135 ) $ (3,231 ) $ 2,366 Basic earnings (loss) per share $ 0.02 $ (0.05 ) $ (0.14 ) $ 0.11 Shares used in basic per share computation 22,125 22,248 22,285 22,316 Diluted earnings (loss) per share $ 0.02 $ (0.05 ) $ (0.14 ) $ 0.10 Shares used in diluted per share computation 22,590 22,248 22,285 23,248 2016 Revenue $ 48,002 $ 45,716 $ 48,693 $ 51,678 Gross profit $ 39,954 $ 37,752 $ 40,322 $ 41,740 Net loss $ (7,507 ) $ (8,978 ) $ (5,452 ) $ (5,613 ) Basic loss per share $ (0.34 ) $ (0.41 ) $ (0.25 ) $ (0.25 ) Shares used in basic per share computation 21,867 21,948 21,993 22,065 Diluted loss per share $ (0.34 ) $ (0.41 ) $ (0.25 ) $ (0.25 ) Shares used in diluted per share computation 21,867 21,948 21,993 22,065 |
SUBSEQUENT EVENTS
SUBSEQUENT EVENTS | 12 Months Ended |
Dec. 31, 2017 | |
Subsequent Events [Abstract] | |
SUBSEQUENT EVENTS | SUBSEQUENT EVENTS On February 26, 2018, the Company entered into the second amendment to the PIPA with SOURCENEXT. See Note 8 "Divestitures" for a description of the PIPA and the relationship with SOURCENEXT. Under the second amendment, the Company agreed to extend the SRE and SDK time-based license to a five -year term from the date of the second amendment and also provide additional foreign language speech modules under the same license term. In exchange, the Company will receive an accelerated cash receipt of $4.5 million of the $6.0 million in guaranteed minimum payments that were scheduled to be received in future periods under the terms of the PIPA. |
SUMMARY OF SIGNIFICANT ACCOUN30
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies) | 12 Months Ended |
Dec. 31, 2017 | |
Accounting Policies [Abstract] | |
Principles of Consolidation | Principles of Consolidation The accompanying consolidated financial statements include the accounts of Rosetta Stone Inc. and its wholly owned subsidiaries. All intercompany accounts and transactions have been eliminated in consolidation. |
Use of Estimates | Use of Estimates The preparation of financial statements, in accordance with GAAP requires management to make certain estimates and assumptions. The amounts reported in the consolidated financial statements include significant estimates and assumptions that have been made, including, but not limited to, those related to revenue recognition, allowance for doubtful accounts, estimated sales returns and reserves, stock-based compensation, restructuring costs, fair value of intangibles and goodwill, disclosure of contingent assets and liabilities, disclosure of contingent litigation, allowance for valuation of deferred tax assets, and the Company's quarterly going concern assessment. The Company bases its estimates and assumptions on historical experience and on various other judgments that are believed to be reasonable under the circumstances. The Company continuously evaluates its estimates and assumptions. Actual results may differ from these estimates and assumptions. |
Revenue Recognition | Revenue Recognition The Company's primary sources of revenue are web-based software subscriptions, online services, perpetual product software, and bundles of perpetual product software and online services. The Company also generates revenue from the sale of audio practice products, mobile applications, and professional services. Revenue is recognized when all of the following criteria are met: there is persuasive evidence of an arrangement; the product has been delivered or services have been rendered; the fee is fixed or determinable; and collectability is reasonably assured. Revenue is recorded net of discounts and net of taxes. The Company identifies the units of accounting contained within sales arrangements in accordance with Accounting Standards Codification ("ASC") subtopic 605-25 Revenue Recognition - Multiple Element Arrangements (“ASC 605-25”). In doing so, the Company evaluates a variety of factors including whether the undelivered element(s) have value to the customer on a stand-alone basis or if the undelivered element(s) could be sold by another vendor on a stand-alone basis. For multiple element arrangements that contain perpetual software products and related online services, the Company allocates the total arrangement consideration to its deliverables based on the existence of vendor-specific objective evidence of fair value, or vendor-specific objective evidence ("VSOE"), in accordance with ASC subtopic 985-605-25 Software: Revenue Recognition-Multiple-Element Arrangements ("ASC 985-605-25"). The Company generates a portion of its Consumer Language revenue from the CD and digital download formats of the Rosetta Stone language-learning product which are typically multiple-element arrangements that contain two deliverables: perpetual software, delivered at the time of sale, and online service, which is considered an undelivered software-related element. The online service includes access to conversational coaching services. Because the Company only sells the perpetual language-learning software on a stand-alone basis in its homeschool version, the Company does not have a sufficient concentration of stand-alone sales to establish VSOE for the perpetual product. Where VSOE of the undelivered online services can be established, arrangement consideration is allocated using the residual method. The Company determines VSOE by reference to the range of comparable stand-alone renewal sales of the online service. The Company reviews these stand-alone sales on a quarterly basis. VSOE is established if at least 80% of the stand-alone sales are within a range of plus or minus 15% of a midpoint of the range of prices, consistent with generally accepted industry practice. Where VSOE of undelivered services cannot be established, revenue is deferred and recognized commensurate with the delivery of the services. For non-software multiple element arrangements, the Company allocates revenue to all deliverables based on their relative selling prices. These arrangements can include web-based subscription services, audio practice products and professional services or any combination thereof. The Company does not have a sufficient concentration of stand-alone sales of the various deliverables noted above to its customers, and therefore cannot establish VSOE for each deliverable. Third party evidence of fair value does not exist for the web-based subscription, audio practice products and professional services due to the lack of interchangeable language-learning products and services within the market. Accordingly, the Company determines the relative selling price of the web-based subscription, audio practice products and professional services deliverables included in its non-software multiple element arrangements using the best estimated selling price. The Company determines the best estimated selling price based on its internally published price list which includes suggested sales prices for each deliverable based on the type of client and volume purchased. This price list is derived from past experience and from the expectation of obtaining a reasonable margin based on what each deliverable costs the Company. In the U.S. and Canada, the Company offers consumers who purchase packaged software and audio practice products directly from the Company a 30 -day, unconditional, full money-back refund. The Company also permits some of its retailers and distributors to return unsold packaged products, subject to certain limitations. In accordance with ASC subtopic 985-605, Software: Revenue Recognition ("ASC 985-605"), the Company estimates and establishes revenue reserves for packaged product returns at the time of sale based on historical return rates, estimated channel inventory levels, the timing of new product introductions and other factors. The Company distributes its products and services both directly to the end customer and indirectly through resellers. Resellers earn commissions generally calculated as a fixed percentage of the gross sale to the end customer. The Company evaluates each of its reseller relationships in accordance with ASC subtopic 605-45, Revenue Recognition - Principal Agent Considerations (“ASC 605-45”) to determine whether the revenue recognized from indirect sales should be the gross amount of the contract with the end customer or reduced for the reseller commission. In making this determination the Company evaluates a variety of factors including whether it is the primary obligor to the end customer. Revenue for web-based subscriptions and online services is recognized ratably over the term of the subscription or service period, assuming all revenue recognition criteria have been met. The CD and digital download formats of Rosetta Stone language-learning products are bundled with an online service where customers are allowed to begin their online services at any point during a registration window, which is typically up to six months from the date of purchase from us or an authorized reseller. The online services that are not activated during this registration window are forfeited and revenue is recognized upon expiry. Revenue from non-refundable upfront fees that are not related to products already delivered or services already performed is deferred and recognized ratably over the term of the related arrangement because the period over which a customer is expected to benefit from the service that is included within the subscription arrangements does not extend beyond the contractual period. Accounts receivable and deferred revenue are recorded at the time a customer enters into a binding subscription agreement. Software products are sold to end user customers and resellers. In many cases, revenue from sales to resellers is not contingent upon resale of the software to the end user and is recorded in the same manner as all other product sales. Revenue from sales of packaged software products and audio practice products is recognized as the products are shipped and title passes and risks of loss have been transferred. For many product sales, these criteria are met at the time the product is shipped. For some sales to resellers and certain other sales, the Company defers revenue until the customer receives the product because the Company legally retains a portion of the risk of loss on these sales during transit. In other cases where packaged software products are sold to resellers on a consignment basis, revenue is recognized for these consignment transactions once the end user sale has occurred, assuming the remaining revenue recognition criteria have been met. In accordance with ASC subtopic 605-50, Revenue Recognition: Customer Payments and Incentives (“ASC 605-50”), cash sales incentives to resellers are accounted for as a reduction of revenue, unless a specific identified benefit is identified and the fair value is reasonably determinable. Price protection for changes in the manufacturer suggested retail value granted to resellers for the inventory that they have on hand at the date the price protection is offered is recorded as a reduction to revenue at the time of sale. The Company offers customers the ability to make payments for packaged software purchases in installments over a period of time, which typically ranges between three and five months. Given that these installment payment plans are for periods less than 12 months , a successful collection history has been established and these fees are fixed and determinable, revenue is recognized at the time of sale, assuming the remaining revenue recognition criteria have been met. In connection with packaged software product sales and web-based software subscriptions, technical support is provided to customers, including customers of resellers, via telephone support at no additional cost for up to six months from the time of purchase. As the fee for technical support is included in the initial licensing fee, the technical support and services are generally provided within one year, the estimated cost of providing such support is deemed insignificant and no unspecified upgrades/enhancements are offered, technical support revenue is recognized together with the software product and web-based software subscription revenue. Costs associated with technical support are accrued at the time of sale. Sales commissions from non-cancellable web-based software subscription contracts are deferred and amortized in proportion to the revenue recognized from the related contract. |
Divestitures | Divestitures The Company deconsolidates divested subsidiaries when there is a loss of control or as appropriate when evaluated under the variable interest entity model. The Company recognizes a gain or loss at divestiture equal to the difference between the fair value of any consideration received and the carrying amount of the former subsidiary’s assets and liabilities. Any resulting gain or loss is reported in "Other income and (expense)" on the consolidated statement of operations. See Note 8 "Divestitures" for disclosures on the Company's recent divestiture. |
Cash and Cash Equivalents | Cash and Cash Equivalents Cash and cash equivalents consist of highly liquid investments with original maturities of three months or less and demand deposits with financial institutions. |
Restricted Cash | Restricted Cash Restricted cash is generally used to reimburse funds to employees under the Company's flexible benefit plan and deposits received on subleased properties. |
Accounts Receivable and Allowance for Doubtful Accounts | Accounts Receivable and Allowance for Doubtful Accounts Accounts receivable consist of amounts due to the Company from its normal business activities. The Company provides an allowance for doubtful accounts to reflect the expected non-collection of accounts receivable based on past collection history and specific risks identified. |
Inventories | Inventories Inventories are stated at the lower of cost, determined on a first-in first-out basis, or market. The Company reviews inventory for excess quantities and obsolescence based on its best estimates of future demand, product lifecycle status and product development plans. The Company uses historical information along with these future estimates to establish a new cost basis for obsolete and potential obsolete inventory. See Note 3 "Inventory" for disclosures on the Company's inventory balances. |
Concentrations of Credit Risk | Concentrations of Credit Risk Accounts receivable and cash and cash equivalents subject the Company to its highest potential concentrations of credit risk. The Company reserves for credit losses on its trade accounts receivable. In addition, the Company maintains cash and investment balances in accounts at various banks and brokerage firms. The Company has not experienced any losses on cash and cash equivalent accounts to date. The Company sells its offerings to retailers, resellers, government agencies, and individual consumers and extends credit based on an evaluation of the customer's financial condition, and may require collateral, such as letters of credit, in certain circumstances. Exposure to losses on receivables is principally dependent on each customer's financial condition. The Company monitors its exposure for credit losses and maintains allowances for anticipated losses. No customer accounted for more than 10% of the Company's revenue during the years ended December 31, 2017 , 2016 or 2015 . The four largest distributor and reseller receivable balances collectively represented 17% and 23% of accounts receivable as of December 31, 2017 and 2016 , respectively. No customer accounted for more than 10% of accounts receivable as of December 31, 2017 , while one customer accounted for 13% of accounts receivable as of December 31, 2016 . The Company maintains trade credit insurance for certain customers to provide coverage, up to a certain limit, in the event of insolvency of some customers. |
Fair Value of Financial Instruments | Fair Value of Financial Instruments The Company values its assets and liabilities using the methods of fair value as described in ASC topic 820, Fair Value Measurements and Disclosures, ("ASC 820"). ASC 820 establishes a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value. The three levels of the fair value hierarchy are described below: Level 1: Quoted prices for identical instruments in active markets. Level 2: Quoted prices for similar instruments in active markets; quoted prices for identical or similar instruments in markets that are not active; and model-derived valuations whose inputs are observable or whose significant value drivers are observable. Level 3: Significant inputs to the valuation model are unobservable. The carrying amounts reported in the consolidated balance sheets for cash and cash equivalents, restricted cash, accounts receivable, accounts payable and other accrued expenses approximate fair value due to relatively short periods to maturity. |
Property and Equipment | Property and Equipment Property and equipment are stated at cost, less accumulated depreciation. Depreciation on property, building and leasehold improvements, furniture, equipment, and software is computed on a straight-line basis over the estimated useful lives of the assets, as follows: Software 3 years Computer equipment 3-5 years Automobiles 5 years Furniture and equipment 5-7 years Building 39 years Building improvements 15 years Leasehold improvements lesser of lease term or economic life Assets under capital leases lesser of lease term or economic life Expenses for repairs and maintenance that do not extend the life of equipment are charged to expense as incurred. Expenses for major renewals and betterments, which significantly extend the useful lives of existing property and equipment, are capitalized and depreciated. Upon retirement or disposition of property and equipment, the cost and related accumulated depreciation are removed from the accounts and any resulting gain or loss is recognized. See Note 4 "Property and Equipment" for the Company's additional disclosures. |
Valuation of Long-Lived Assets | Valuation of Long-Lived Assets In accordance with ASC topic 360, Property, Plant and Equipment ("ASC 360"), the Company evaluates the recoverability of its long-lived assets. ASC 360 requires recognition of impairment of long-lived assets in the event that the net book value of such assets exceeds the future undiscounted net cash flows attributable to such assets. Impairment, if any, is recognized in the period of identification to the extent the carrying amount of an asset exceeds the fair value of such asset. |
Software Developed for Internal Use | Software Developed for Internal Use The Company capitalizes software development costs related to certain of its software platforms developed exclusively to provide its web-based subscription services and other general and administrative use software in accordance with ASC subtopic 350-40: Internal-Use Software . Development costs for internal-use software are expensed as incurred until the project reaches the application development stage. Internal-use software is defined to have the following characteristics: (a) the software is internally developed, or modified solely to meet the Company's internal needs, and (b) during the software's development or modification, no substantive plan exists or is being developed to market the software externally. Internally developed software is amortized over a three -year useful life. |
Intangible Assets | Intangible Assets Intangible assets consist of acquired technology, including developed and core technology, customer related assets, trade name and trademark, and other intangible assets. Those intangible assets with finite lives are recorded at cost and amortized on a straight line basis over their expected lives in accordance with ASC topic 350, Intangibles—Goodwill and Other ("ASC 350"). Annually, as of December 31, and more frequently if a triggering event occurs, the Company reviews its indefinite-lived intangible asset for impairment in accordance with ASC 350. This guidance provides the option to first assess qualitative factors to determine whether it is more likely than not that an indefinite-lived intangible asset is impaired as a basis for determining whether it is necessary to perform the quantitative test. If necessary, the quantitative test is performed by comparing the fair value of indefinite lived intangible assets to the carrying value. In the event the carrying value exceeds the fair value of the assets, the assets are written down to their fair value. The Rosetta Stone trade name is the Company's only indefinite-lived intangible asset. |
Goodwill | Goodwill Goodwill represents purchase consideration paid in a business combination that exceeds the values assigned to the net assets of acquired businesses. The Company tests goodwill for impairment annually on June 30 of each year or more frequently if impairment indicators arise. Goodwill is tested for impairment at the reporting unit level using a fair value approach, in accordance with the provisions of ASC 350. This guidance provides the option to first assess qualitative factors to determine whether it is more likely than not that the fair value of a reporting unit is less than its carrying value. If, based on a review of qualitative factors, it is more likely than not that the fair value of a reporting unit is less than its carrying value the Company performs a quantitative impairment test by comparing the fair value of a reporting unit with its carrying amount. If the carrying value exceeds the fair value, the Company measures the amount of impairment loss, if any. See Note 5 "Goodwill" for a discussion and results associated with the Company's recent goodwill impairment tests. For income tax purposes, the goodwill balances with tax basis are amortized over a period of 15 years. |
Guarantees | Guarantees Indemnifications are provided of varying scope and size to certain E&E Language and Literacy customers against claims of intellectual property infringement made by third parties arising from the use of its products. The Company has not incurred any costs or accrued any liabilities as a result of such obligations. |
Cost of Subscription and Service Revenue and Cost of Product Revenue | Cost of Subscription and Service Revenue and Cost of Product Revenue The cost of subscription and service revenue primarily represents costs associated with supporting the web-based subscription services and online language-learning services, which includes online language conversation coaching, hosting costs and depreciation. Also included are the costs of credit card processing and customer technical support in both cost of product revenue and cost of subscription and service revenue. Cost of product revenue consists of the direct and indirect materials and labor costs to produce and distribute the Company's products. Such costs include packaging materials, computer headsets, freight, inventory receiving, costs associated with product assembly, third-party royalty fees and inventory storage, obsolescence and shrinkage. |
Research and Development | Research and Development Research and development expenses include employee compensation costs, consulting fees and overhead costs associated with the development of the Company's solutions. The Company develops a portion of its language-learning software products for perpetual sale to external customers. The Company considers technological feasibility to be established when all planning, designing, coding, and testing has been completed according to design specifications. The Company has determined that technological feasibility for such software products is reached shortly before the products are released to manufacturing. Costs incurred after technological feasibility is established have not been material, and accordingly, the Company has expensed all research and development costs when incurred. |
Income Taxes | Income Taxes The Company accounts for income taxes in accordance with ASC topic 740, Income Taxes ("ASC 740"), which provides for an asset and liability approach to accounting for income taxes. Deferred tax assets and liabilities represent the future tax consequences of the differences between the financial statement carrying amounts of assets and liabilities versus the tax basis of assets and liabilities. Under this method, deferred tax assets are recognized for deductible temporary differences, and operating loss and tax credit carryforwards. Deferred liabilities are recognized for taxable temporary differences. Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion or all of the deferred tax assets will not be realized. The impact of tax rate changes on deferred tax assets and liabilities is recognized in the year that the change is enacted. Significant judgment is required to determine whether a valuation allowance is necessary and the amount of such valuation allowance, if appropriate. The valuation allowance is reviewed at each reporting period and is maintained until sufficient positive evidence exists to support a reversal. When assessing the realization of the Company's deferred tax assets, the Company considers all available evidence, including: • the nature, frequency, and severity of cumulative financial reporting losses in recent years; • the carryforward periods for the net operating loss, capital loss, and foreign tax credit carryforwards; • predictability of future operating profitability of the character necessary to realize the asset; • prudent and feasible tax planning strategies that would be implemented, if necessary, to protect against the loss of the deferred tax assets; and • the effect of reversing taxable temporary differences. The evaluation of the recoverability of the deferred tax assets requires that the Company weigh all positive and negative evidence to reach a conclusion that it is more likely than not that all or some portion of the deferred tax assets will not be realized. The weight given to the evidence is commensurate with the extent to which it can be objectively verified. The more negative evidence that exists, the more positive evidence is necessary and the more difficult it is to support a conclusion that a valuation allowance is not needed. The establishment of a valuation allowance has no effect on the ability to use the deferred tax assets in the future to reduce cash tax payments. The Company will continue to assess the likelihood that the deferred tax assets will be realizable at each reporting period and the valuation allowance will be adjusted accordingly, which could materially affect the Company's financial position and results of operations. |
Stock-Based Compensation | Stock-Based Compensation The Company accounts for its stock-based compensation in accordance with ASC topic 718, Compensation—Stock Compensation ("ASC 718"). Under ASC 718, all stock-based awards, including employee stock option grants, are recorded at fair value as of the grant date. For options granted with service and/or performance conditions, the fair value of each grant is estimated on the date of grant using the Black-Scholes option pricing model. For options granted with market-based conditions, the fair value of each grant is estimated on the date of grant using the Monte-Carlo simulation model. These methods require the use of estimates, including future stock price volatility, expected term and forfeitures. As the Company does not have sufficient historical option exercise experience that spans the full 10 year contractual term for determining the expected term of options granted, the Company estimates the expected term of options using a combination of historical information and the simplified method for estimating the expected term. The Company uses its own historical stock price data to estimate its forfeiture rate and expected volatility over the most recent period commensurate with the estimated expected term of the awards. For the risk-free interest rate, the Company uses a U.S. Treasury Bond rate consistent with the estimated expected term of the option award. The Company's restricted stock and restricted stock unit grants are accounted for as equity awards. Stock compensation expense associated with service-based equity awards is recognized in the statement of operations on a straight-line basis over the requisite service period, which is the vesting period. For equity awards granted with performance-based conditions, stock compensation expense is recognized in the statement of operations ratably for each vesting tranche based on the probability that operating performance conditions will be met and to what extent. Changes in the probability estimates associated with performance-based awards will be accounted for in the period of change using a cumulative catch-up adjustment to retroactively apply the new probability estimates. In any period in which the Company determines that achievement of the performance metrics is not probable, the Company ceases recording compensation expense and all previously recognized compensation expense for the performance-based award is reversed. For equity awards granted with market-based conditions, stock compensation expense is recognized in the statement of operations ratably for each vesting tranche regardless of meeting or not meeting the market conditions. See Note 10 "Stock-Based Compensation" for additional disclosures. |
Restructuring Costs | Restructuring Costs Restructuring plans have been initiated in each of the years ended December 31, 2017, 2016 and 2015 to reduce headcount and other costs in order to support the strategic shift in business focus. In connection with these plans, the Company incurred restructuring related costs, including employee severance and related benefit costs, contract termination costs, and other related costs. These costs are included within Cost of sales and Sales and marketing, Research and development, and General and administrative operating expense categories in the Company's consolidated statements of operations. Employee severance and related benefit costs primarily include cash payments, outplacement services, continuing health insurance coverage, and other benefits. Where no substantive involuntary termination plan previously existed, these severance costs are generally considered “one-time” benefits and recognized at fair value in the period in which a detailed plan has been approved by management and communicated to the terminated employees. Severance costs pursuant to ongoing benefit arrangements, including termination benefits provided for in existing employment contracts, are recognized when probable and reasonably estimable. Contract termination costs include penalties to cancel certain service and license contracts and costs to terminate operating leases. Contract termination costs are recognized at fair value in the period in which the contract is terminated in accordance with the contract terms. Other related costs generally include external consulting and legal costs associated with the strategic shift in business focus. Such costs are recognized at fair value in the period in which the costs are incurred. |
Basic and Diluted Net Loss Per Share | Basic and Diluted Net Loss Per Share Net loss per share is computed under the provisions of ASC topic 260, Earnings Per Share . Basic loss per share is computed by dividing net loss by the weighted average number of common shares outstanding during the period. Diluted loss per share is computed by dividing net loss by the weighted average number of common shares and potential common shares outstanding during the period. Potential common shares are included in the diluted computation when dilutive. Potentially dilutive shares are computed using the treasury stock method and primarily consist of shares issuable upon the exercise of stock options, restricted stock awards, restricted stock units and conversion of shares of preferred stock. Common stock equivalent shares are excluded from the diluted computation if their effect is anti-dilutive. When there is a net loss, there is a presumption that there are no dilutive shares as these would be anti-dilutive. |
Comprehensive Loss | Comprehensive Loss Comprehensive loss consists of net loss and other comprehensive income (loss). Other comprehensive income (loss) refers to revenues, expenses, gains, and losses that are not included in net loss, but rather are recorded directly in stockholders' equity (deficit). For the years ended December 31, 2017 , 2016 and 2015 , the Company's comprehensive loss consisted of net loss and foreign currency translation gains (losses). The other comprehensive income (loss) presented in the consolidated financial statements and the notes are presented net of tax. |
Foreign Currency Translation and Transactions | Foreign Currency Translation and Transactions The functional currency of the Company's foreign subsidiaries is their local currency. Accordingly, assets and liabilities of the foreign subsidiaries are translated into U.S. dollars at exchange rates in effect on the balance sheet date. Income and expense items are translated at average rates for the period. Translation adjustments are recorded as a component of other comprehensive income (loss) in stockholders' equity (deficit). Cash flows of consolidated foreign subsidiaries, whose functional currency is the local currency, are translated to U.S. dollars using average exchange rates for the period. The Company reports the effect of exchange rate changes on cash balances held in foreign currencies as a separate item in the reconciliation of the changes in cash and cash equivalents during the period. |
Advertising Costs | Advertising Costs Costs for advertising are expensed as incurred. |
Going Concern Assessment | Going Concern Assessment As part of its internal control framework, the Company routinely performs a quarterly going concern assessment in accordance with ASC sub-topic 205-40, Presentation of Financial Statements - Going Concern ("ASC 205-40"). Under ASC 205-40, management is required to assess the Company's ability to continue as a going concern. As further described below, management has concluded based on projections that the cash balance, funds available from the line of credit, and the cash flows from operations are sufficient to meet the liquidity needs through the one year period following the financial statement issuance date. The consolidated financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. Management has evaluated whether relevant conditions or events, considered in the aggregate, indicate that there is substantial doubt about the Company's ability to continue as a going concern. Substantial doubt exists when conditions and events, considered in the aggregate, indicate it is probable that the Company will be unable to meet its obligations as they become due within one year after the financial statement issuance date. The assessment is based on the relevant conditions that are known or reasonable knowable as of March 7, 2018 . The assessment of the Company's ability to meet its future obligations is inherently judgmental, subjective and susceptible to change. The inputs that are considered important in the Company's going concern analysis, include, but are not limited to, the Company's 2018 cash flow forecast, 2018 operating budget, and long-term plan that extends beyond 2018 . These inputs consider information including, but not limited to, the Company’s financial condition, liquidity sources, obligations due within one year after the financial statement issuance date, funds necessary to maintain operations, and financial conditions, including negative financial trends or other indicators of possible financial difficulty. The Company has considered both quantitative and qualitative factors as part of the assessment that are known or reasonably knowable as of March 7, 2018 , and concluded that conditions and events considered in the aggregate, do not indicate that it is probable that the Company will be unable to meet obligations as they become due through the one year period following the financial statement issuance date. |
Recently Issued Accounting Standards | Recently Issued Accounting Standards During 2017 , the Company adopted the following recently issued Accounting Standard Updates ("ASU"): In March 2016, the Financial Accounting Standards Board ("FASB") issued ASU No. 2016-09, Compensation - Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting ("ASU 2016-09"). Under ASU 2016-09, accounting for share-based payment award transactions was simplified related to the accounting for (a) income tax effects; (b) minimum statutory tax withholding requirements; (c) and forfeitures. ASU 2016-09 is effective for public entities in annual periods beginning after December 15, 2016, including interim periods within those annual periods. Early adoption is permitted. The Company adopted this ASU as of January 1, 2017. Due to the historical cumulative shortfall position, the adoption of ASU 2016-09 did not result in a cumulative-effect adjustment to retained earnings. ASU 2016-09 allows for an entity-wide accounting policy election, which would be applied prospectively, to either account for forfeitures when they occur or continue to estimate the number of awards that are expected to vest. The Company has elected to continue to estimate the number of awards that are expected to vest. Other aspects of adoption ASU 2016-09 did not have a material impact to the Company’s consolidated financial statements. In January 2017, the FASB issued ASU No. 2017-01, Business Combination (Topic 805) Clarifying the Definition of a Business ("ASU 2017-01"). ASU 2017-01 clarifies the definition of a business and requires that an entity apply certain criteria in order to determine when a set of assets and activities qualifies as a business. ASU 2017-01 is effective for public entities for fiscal years beginning after December 15, 2017 and interim periods within those fiscal years, and should be applied on a prospective basis. Early adoption is permitted. The Company early adopted this guidance as of January 1, 2017. Due to the prospective application of this ASU, there was no impact to historical financial statements and no additional disclosures are required. The following ASUs were recently issued but have not yet been adopted by the Company: In February 2018, the FASB issued ASU No. 2018-02, Income Statement - Reporting Comprehensive Income (Topic 220): Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income ("ASU 2018-02"). ASU 2018-02 provides financial statement preparers with an option to reclassify stranded tax effects within accumulated other comprehensive income to retained earnings in each period in which the effect of the change in the U.S. federal corporate income tax rate in the Tax Reform (or portion thereof) is recorded. ASU 2018-02 is effective for fiscal years beginning after December 15, 2018. Early adoption is permitted for any interim period for which financial statements have not been issued. The Company does not believe that the adoption of this guidance will have a material impact on the Company's consolidated financial statements due the presence of a full valuation allowance. However, the Company is in the process of evaluating the impact of this new guidance on the Company's consolidated financial statements and disclosures. In January 2017, the FASB issued ASU No. 2017-04, Intangibles - Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment ("ASU 2017-04"). ASU 2017-04 simplifies the subsequent measurement of goodwill and eliminates Step 2 from the goodwill impairment test. ASU 2017-04 is effective for annual and interim goodwill tests beginning after December 15, 2019. Early adoption is permitted for interim or annual goodwill impairment tests performed on testing dates on or after January 1, 2017. The Company is in the process of evaluating the guidance. Given the prospective adoption application, there is no impact on the Company's historical consolidated financial statements and disclosures. In November 2016, the FASB issued ASU No. 2016-18, Statement of Cash Flows (Topic 230) Restricted Cash a consensus of the FASB Emerging Issues Task Force ("ASU 2016-18"). Under ASU 2016-18, 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 flows. ASU 2016-18 is effective for public entities in fiscal years beginning after December 15, 2017, including interim periods within those fiscal years. Early adoption is permitted. The Company will adopt this new guidance for its 2018 interim and annual reporting periods. The new guidance only impacts presentation of the Company's consolidated statement of cash flows. In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842) ("ASU 2016-02"). Under ASU 2016-02, entities will be required to recognize a lease liability and a right-of-use asset for all leases. Lessor accounting is largely unchanged. ASU 2016-02 is effective for public entities in fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. Early adoption is permitted. The Company is in the process of evaluating the impact of the new guidance on the Company's consolidated financial statements and disclosures. In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments ("ASU 2016-13"). ASU 2016-13 changes the methodology for measuring credit losses of financial instruments and the timing of when such losses are recorded. ASU 2016-13 is effective for fiscal years, and interim periods within those years, beginning after December 15, 2019. Early adoption is permitted for fiscal years, and interim periods within those years, beginning after December 15, 2018. The Company is in the process of evaluating the impact of the new guidance on the Company's consolidated financial statements and disclosures. In January 2016, the FASB issued ASU No. 2016-01, Financial Instruments-Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities ("ASU 2016-01"). ASU 2016-01 changes how entities measure certain equity investments and present changes in the fair value of financial liabilities measured under the fair value option that are attributable to their own credit. Under the new guidance, entities will be required to measure equity investments that do not result in consolidation and are not accounted for under the equity method at fair value and recognize any changes in fair value in net income unless the investments qualify for the new practicability exception. The accounting for other financial instruments, such as loans and investments in debt securities is largely unchanged. ASU 2016-01 is effective for public entities in fiscal years beginning after December 15, 2017, including interim periods within those fiscal years. The Company does not believe that the adoption of this guidance will have a material impact on the Company's consolidated financial statements and disclosures. In May 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers (Topic 606) , which replaces the current revenue accounting guidance. In August 2015, the FASB issued ASU No. 2015-14, Revenue from Contracts with Customers (Topic 606): Deferral of the Effective Date which defers the effective date of the updated guidance on revenue recognition by one year. In March 2016, the FASB issued ASU No. 2016-08, Revenue from Contracts with Customers (Topic 606): Principal versus Agent Considerations (Reporting Revenue Gross versus Net) , which clarifies and improves the operability and understandability of the implementation guidance on principal versus agent considerations. In April 2016, the FASB issued ASU No. 2016-10, Revenue from Contracts with Customers (Topic 606): Identifying Performance Obligations and Licensing , which clarifies and improves the operability and understanding of the implementation guidance on identifying performance obligations and licensing. Collectively these ASUs comprise the new revenue standard ("New Revenue Standard"). The core principle of the New Revenue Standard is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. To achieve that core principle, an entity should apply a five step model to 1) identify the contract(s) with a customer, 2) identify the performance obligations in the contract, 3) determine the transaction price, 4) allocate the transaction price to the performance obligations in the contract and 5) recognize revenue when (or as) the entity satisfies a performance obligation. The New Revenue Standard is effective for annual periods beginning after December 15, 2017. The Company will adopt the New Revenue Standard beginning in the first quarter of 2018. The New Revenue Standard provides the option between two different methods of adoption. The Company will adopt the New Revenue Standard using the modified retrospective method. The modified retrospective method requires the Company to calculate the cumulative effect of applying the new guidance as of the date of adoption via adjustment to retained earnings. The Company has substantially completed its evaluation of the impact the New Revenue Standard will have on its financial statements, disclosures, policies, processes, and system requirements. The Company has completed the development of its "recast tool" that enables the Company to determine the cumulative effect of adopting the new guidance as of January 1, 2018. As part of its evaluation, the Company has concluded the impact of the change in the New Revenue Standard on the E&E Language and Literacy segments will be minimal as the accounting outcome for the vast majority of these transactions remains unchanged. Due to the elimination of software specific accounting guidance, nearly all of the impact of adopting the New Revenue Standard will result from changes to the accounting for the packaged perpetual software product line that also includes non-software elements within the Consumer Language segment. Under the current revenue standard, the Company uses the residual method to allocate consideration between the software and non-software elements within a transaction. This results in a fixed amount being allocated to the non-software element, which is generally deferred and recognized over time, and any discount being fully allocated to the software element, which is recognized as revenue at the time of sale. Under the New Revenue Standard, any discounts will be allocated to all of the elements within a software transaction based on relative selling price. Accordingly, this will result in different amounts allocated to the various elements which are recognized into revenue at different times. As such, the Company currently estimates the adoption of the New Revenue Standard will increase the 2018 beginning retained earnings balance by approximately $0.8 million , decrease deferred revenue by $0.6 million , and decrease other current liabilities by $0.2 million , associated with eliminating the Company's accrual for post-contract customer support. As part of the Consumer Language migration to a fully SaaS business, the Company began to phase out the sale of perpetual product bundled with short-term online services (for which VSOE has been established) in the second half of 2017. The Company then began offering perpetual product bundled with a long-term web-based software subscription (for which VSOE has not been established). This shift in product offerings has impacted the timing of revenue recognition under existing revenue recognition rules and is expected to impact the timing of revenue recognized under the New Revenue Standard. Under existing revenue recognition rules, perpetual product bundled with undelivered services without VSOE are deferred in full and recognized ratably over the service period. Under the New Revenue Standard, the transaction price is allocated to each performance obligation based on relative selling price and recognized when the performance obligations are satisfied. Accordingly, the Company estimates that the adoption of the New Revenue Standard will result in earlier recognition of revenue from sales of its current Consumer Language bundled offering than would have otherwise been recognized under the prior revenue recognition rules. As the Company continues its path toward a 100% SaaS business, the timing of revenue recognition will shift from partial up-front recognition to full recognition over time. Further, the Company does not expect any tax impact due to the presence of a full valuation allowance. The additional impacts to the financial statements include the new qualitative and quantitative disclosures that will be required upon adoption of the New Revenue Standard. The Company continues to evaluate the impact of the New Revenue Standard and any assessments made are subject to change. |
SUMMARY OF SIGNIFICANT ACCOUN31
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Accounting Policies [Abstract] | |
Schedule of Estimated Useful Lives of Property, Equipment and Software | Depreciation on property, building and leasehold improvements, furniture, equipment, and software is computed on a straight-line basis over the estimated useful lives of the assets, as follows: Software 3 years Computer equipment 3-5 years Automobiles 5 years Furniture and equipment 5-7 years Building 39 years Building improvements 15 years Leasehold improvements lesser of lease term or economic life Assets under capital leases lesser of lease term or economic life Depreciation and amortization expense associated with property and equipment consisted of the following (in thousands): Years Ended December 31, 2017 2016 2015 Included in cost of revenue: Cost of subscription and service revenue $ 3,863 $ 3,057 $ 1,292 Cost of product revenue 1,117 1,377 1,010 Total included in cost of revenue 4,980 4,434 2,302 Included in operating expenses: Sales and marketing 546 489 722 Research and development 9 19 41 General and administrative 2,635 4,029 5,403 Total included in operating expenses 3,190 4,537 6,166 Total $ 8,170 $ 8,971 $ 8,468 |
Schedule of Accumulated Other Comprehensive Income (Loss) | Components of accumulated other comprehensive loss as of December 31, 2017 are as follows (in thousands): Foreign Currency Total Balance at beginning of period $ (3,709 ) $ (3,709 ) Other comprehensive income before reclassifications 886 886 Amounts reclassified from accumulated other comprehensive income (75 ) (75 ) Net current period other comprehensive income 811 811 Accumulated other comprehensive loss $ (2,898 ) $ (2,898 ) |
INVENTORY (Tables)
INVENTORY (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Inventory Disclosure [Abstract] | |
Schedule of Inventory | Inventory consisted of the following (in thousands): As of December 31, 2017 2016 Raw materials $ 2,893 $ 4,384 Finished goods 643 2,383 Total inventory $ 3,536 $ 6,767 |
PROPERTY AND EQUIPMENT (Tables)
PROPERTY AND EQUIPMENT (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Property, Plant and Equipment [Abstract] | |
Schedule of Property and Equipment | Property and equipment consisted of the following (in thousands): As of December 31, 2017 2016 Land $ 942 $ 876 Buildings and improvements 10,030 9,503 Leasehold improvements 1,468 1,645 Computer equipment 15,635 15,866 Software 54,600 43,688 Furniture and equipment 2,427 2,393 85,102 73,971 Less: accumulated depreciation (54,453 ) (49,176 ) Property and equipment, net $ 30,649 $ 24,795 |
Depreciation and Amortization Expense of Property and Equipment | Depreciation on property, building and leasehold improvements, furniture, equipment, and software is computed on a straight-line basis over the estimated useful lives of the assets, as follows: Software 3 years Computer equipment 3-5 years Automobiles 5 years Furniture and equipment 5-7 years Building 39 years Building improvements 15 years Leasehold improvements lesser of lease term or economic life Assets under capital leases lesser of lease term or economic life Depreciation and amortization expense associated with property and equipment consisted of the following (in thousands): Years Ended December 31, 2017 2016 2015 Included in cost of revenue: Cost of subscription and service revenue $ 3,863 $ 3,057 $ 1,292 Cost of product revenue 1,117 1,377 1,010 Total included in cost of revenue 4,980 4,434 2,302 Included in operating expenses: Sales and marketing 546 489 722 Research and development 9 19 41 General and administrative 2,635 4,029 5,403 Total included in operating expenses 3,190 4,537 6,166 Total $ 8,170 $ 8,971 $ 8,468 |
GOODWILL (Tables)
GOODWILL (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Schedule of the Balance and Changes in Goodwill, by Reporting Unit | The following table shows the balance and changes in goodwill for the Company's operating segments and reporting units for the years ended December 31, 2017 and 2016 (in thousands): E&E Language Literacy Consumer Language Total Balance as of January 1, 2016 Gross Goodwill $ 38,700 $ 9,962 $ 27,392 $ 76,054 Accumulated Impairment — — (25,774 ) (25,774 ) Goodwill as of January 1, 2016 $ 38,700 $ 9,962 $ 1,618 $ 50,280 Impairment of Consumer Fit Brains — — (1,740 ) (1,740 ) Effect of change in foreign currency rate (411 ) — 122 (289 ) Balance as of December 31, 2016 Gross Goodwill $ 38,289 $ 9,962 $ 27,514 $ 75,765 Accumulated Impairment — — (27,514 ) (27,514 ) Goodwill as of December 31, 2016 $ 38,289 $ 9,962 $ — $ 48,251 Effect of change in foreign currency rate 1,606 — — 1,606 Balance as of December 31, 2017 Gross Goodwill $ 39,895 $ 9,962 $ 27,514 $ 77,371 Accumulated Impairment — — (27,514 ) (27,514 ) Goodwill as of December 31, 2017 $ 39,895 $ 9,962 $ — $ 49,857 |
INTANGIBLE ASSETS (Tables)
INTANGIBLE ASSETS (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Intangible Assets, Net (Excluding Goodwill) [Abstract] | |
Schedule of Intangible Assets | Intangible assets consisted of the following items as of the dates indicated (in thousands): Trade name / trademark * Core technology Customer relationships Patents and Other Total Gross Carrying Amount $ 12,431 $ 15,092 $ 26,149 $ 312 $ 53,984 Accumulated Amortization (1,481 ) (9,859 ) (18,485 ) (251 ) (30,076 ) Accumulated Impairment (26 ) (1,001 ) (128 ) — (1,155 ) Balance as of December 31, 2016 $ 10,924 $ 4,232 $ 7,536 $ 61 $ 22,753 Gross Carrying Amount $ 12,505 $ 15,636 $ 26,656 $ 312 $ 55,109 Accumulated Amortization (1,755 ) (12,222 ) (20,515 ) (278 ) (34,770 ) Accumulated Impairment (26 ) (1,001 ) (128 ) — (1,155 ) Balance as of December 31, 2017 $ 10,724 $ 2,413 $ 6,013 $ 34 $ 19,184 * Included within the Trade name/ trademark intangible asset category is the Rosetta Stone trade name with a carrying amount of $10.6 million . This intangible asset is considered to have an indefinite useful life and is therefore not amortized, but rather tested for impairment on at least an annual basis. |
Schedule of Estimated Useful Lives of Acquired Intangible Assets | Below are the weighted average remaining useful lives of the Company's amortizing intangible assets: Weighted Average Life Trade name / trademark 0.58 years Core technology 1.94 years Customer relationships 5.00 years Patents 1.25 years |
Schedule of Amortization Expense | Amortization expense consisted of the following (in thousands): Years Ended December 31, 2017 2016 2015 Included in cost of revenue: Cost of subscription and service revenue $ 455 $ 404 $ 322 Cost of product revenue 131 182 264 Total included in cost of revenue 586 586 586 Included in operating expenses: Sales and marketing 1,860 2,178 2,804 Research and development 1,393 1,587 1,802 General and administrative — — — Total included in operating expenses 3,253 3,765 4,606 Total $ 3,839 $ 4,351 $ 5,192 |
Summary of the Estimated Future Amortization Expense Related to Intangible Assets | The following table summarizes the estimated future amortization expense related to intangible assets as of December 31, 2017 (in thousands): As of 2018 $ 3,335 2019 1,532 2020 1,282 2021 940 2022 940 Thereafter 548 Total $ 8,577 |
OTHER CURRENT LIABILITIES (Tabl
OTHER CURRENT LIABILITIES (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Other Liabilities Disclosure [Abstract] | |
Summary of Other Current Liabilities | The following table summarizes other current liabilities (in thousands): As of 2017 2016 Accrued marketing expenses $ 5,316 $ 8,460 Accrued professional and consulting fees 1,609 2,050 Sales return reserve 1,176 1,338 Sales, withholding, and property taxes payable 3,616 3,772 Other 4,737 6,530 Total Other current liabilities $ 16,454 $ 22,150 |
FINANCING ARRANGEMENTS (Tables)
FINANCING ARRANGEMENTS (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Leases [Abstract] | |
Schedule of Future Minimum Lease Payments of Capital Leases | As of December 31, 2017 , the future minimum payments under capital leases with initial terms of one year or more are as follows (in thousands): Periods Ending December 31, 2018 $ 548 2019 545 2020 540 2021 537 2022 402 Thereafter — Total minimum lease payments $ 2,572 Less amount representing interest 272 Present value of net minimum lease payments $ 2,300 Less current portion 450 Obligations under capital lease, long-term $ 1,850 |
STOCK-BASED COMPENSATION (Table
STOCK-BASED COMPENSATION (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |
Disclosure of Share-based Compensation Arrangements by Share-based Payment Award | Since the establishment of the 2009 Plan, the Board of Directors authorized and the Company's shareholders' approved the allocation of additional shares of common stock to the 2009 Plan as follows: Authorization Dates of 2009 Plan Additions Number of Common Stock Shares Authorized to 2009 Plan February 27, 2009 2,437,744 May 26, 2011 1,000,000 May 23, 2012 1,122,930 May 23, 2013 2,317,000 May 20, 2014 500,000 June 12, 2015 1,200,000 May 27, 2017 1,900,000 |
Schedule of Share-based Payment Award, Stock Options, Valuation Assumptions | For the years ended December 31, 2017 , 2016 , and 2015 the fair value of market-based stock options and market-based restricted stock awards granted was calculated using the following assumptions in the Monte-Carlo simulation model: Years Ended December 31, 2017 2016 2015 Expected stock price volatility none 45%-49% none Expected term of options none 1.7 years-7 years none Expected dividend yield none — none Risk-free interest rate none .71%-1.53% none For the years ended December 31, 2017 , 2016 , and 2015 the fair value of service-based stock options and performance-based stock options granted was calculated using the following assumptions in the Black-Scholes model: Years Ended December 31, 2017 2016 2015 Expected stock price volatility 42%-45% 46%-47% 49%-63% Expected term of options 6 years 5.5-6.5 years 6 years Expected dividend yield — — — Risk-free interest rate 1.92%-2.05% 1.24%-1.50% 1.19%-1.75% |
Schedule of Employee Service Share-based Compensation, Allocation of Recognized Period Costs | The following table presents stock-based compensation expense included in the related financial statement line items (in thousands): Years Ended December 31, 2017 2016 2015 Included in cost of revenue: Cost of subscription and service revenue $ 15 $ (4 ) $ 44 Cost of product revenue 54 52 57 Total included in cost of revenue 69 48 101 Included in operating expenses: Sales and marketing 561 998 1,327 Research & development 255 709 841 General and administrative 3,256 3,151 4,926 Total included in operating expenses 4,072 4,858 7,094 Total $ 4,141 $ 4,906 $ 7,195 |
Schedule of Nonvested Share Activity | The following table summarizes the Company's service-based restricted stock activity for the years ended December 31, 2017 and 2016 , respectively: Nonvested Outstanding Weighted Average Grant Date Fair Value Aggregate Intrinsic Value Nonvested Awards, January 1, 2016 341,579 $ 10.61 $ 3,624,153 Awards granted 300,650 7.59 Awards vested (196,001 ) 9.54 Awards canceled (71,848 ) 9.65 Nonvested Awards, December 31, 2016 374,380 8.94 3,348,080 Awards granted 291,406 7.92 Awards vested (163,027 ) 9.84 Awards canceled (71,641 ) 8.03 Nonvested Awards, December 31, 2017 431,118 8.07 3,477,484 |
Schedule of Stock Option Activity | The following table summarizes the Company's service-based stock option activity from January 1, 2017 to December 31, 2017 : Options Weighted Weighted Aggregate Options Outstanding, January 1, 2017 1,793,930 $ 9.81 7.58 $ 1,154,498 Options granted 55,610 11.24 Options exercised (79,365 ) 8.52 Options cancelled (141,464 ) 11.10 Options Outstanding, December 31, 2017 1,628,711 9.81 6.79 5,203,196 Vested and expected to vest at December 31, 2017 1,594,473 9.86 6.77 5,044,582 Exercisable at December 31, 2017 1,250,476 $ 10.19 6.47 $ 3,733,000 |
Schedule of Restricted Stock Units Award Activity | The following table summarizes the Company's restricted stock unit activity from January 1, 2017 to December 31, 2017 : Units Outstanding Weighted Aggregate Units Outstanding, January 1, 2017 188,057 $ 9.93 $ 1,675,588 Units granted 46,601 11.23 Units released — — Units cancelled — — Units Outstanding, December 31, 2017 234,658 10.19 2,926,185 Vested and expected to vest at December 31, 2017 126,166 11.10 1,573,286 Vested and deferred at December 31, 2017 100,754 $ 11.79 $ 1,256,402 |
Schedule of Nonvested Restricted Stock Activity | The following table summarizes the Company's PSU activity from January 1, 2017 to December 31, 2017 : PSUs Weighted Aggregate Non-vested PSUs, January 1, 2017 — $ — $ — PSUs granted 462,870 9.43 PSUs vested — — PSUs canceled (29,282 ) 9.43 Non-vested PSUs, December 31, 2017 433,588 $ 9.43 $ 5,406,842 |
BASIC AND DILUTED NET LOSS PE39
BASIC AND DILUTED NET LOSS PER SHARE (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Earnings Per Share [Abstract] | |
Schedule of Earnings Per Share, Basic and Diluted | The following table sets forth the computation of basic and diluted net loss per common share: Years Ended December 31, 2017 2016 2015 (dollars in thousands, except per share amounts) Numerator: Net loss $ (1,546 ) $ (27,550 ) $ (46,796 ) Denominator: Basic weighted average shares 22,244 21,969 21,571 Diluted weighted average shares 22,244 21,969 21,571 Loss per share: Basic $ (0.07 ) $ (1.25 ) $ (2.17 ) Diluted $ (0.07 ) $ (1.25 ) $ (2.17 ) |
Schedule of Antidilutive Securities Excluded from Computation of Earnings Per Share | The following table sets forth the dilutive common stock equivalent shares calculated using the treasury stock method (in thousands). Years Ended December 31, 2017 2016 2015 (in thousands) Stock options 231 16 35 Restricted stock units 209 174 39 Restricted stocks 296 129 82 Total common stock equivalent shares 736 319 156 |
RESTRUCTURING AND OTHER EMPLO40
RESTRUCTURING AND OTHER EMPLOYEE SEVERANCE (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Restructuring and Related Activities [Abstract] | |
Schedule of Restructuring Reserve by Type of Cost | The following tables summarize activity with respect to the restructuring charges for the 2016 Restructuring Plan during the years ended December 31, 2017 and 2016 (in thousands): Balance at January 1, 2016 Cost Incurred Cash Payments Other Adjustments (1) Balance at December 31, 2016 Severance costs $ — $ 4,367 $ (3,867 ) $ — $ 500 Contract termination costs — 165 (74 ) (69 ) 22 Other costs — 590 (399 ) (121 ) 70 Total $ — $ 5,122 $ (4,340 ) $ (190 ) $ 592 Balance at January 1, 2017 Cost Incurred Cash Payments Other Adjustments (1) Balance at December 31, 2017 Severance costs $ 500 $ (50 ) $ (303 ) $ — $ 147 Contract termination costs 22 — (22 ) — — Other costs 70 14 (84 ) — — Total $ 592 $ (36 ) $ (409 ) $ — $ 147 (1) Other Adjustments includes non-cash period changes in the liability balance, which may include non-cash lease closure expense and foreign currency translation adjustments. |
Restructuring and Related Costs | The following table summarizes the major types of costs associated with the 2016 and 2015 Restructuring Plans and other employee severance actions for the years ended December 31, 2017 , 2016 , and 2015 and total costs incurred through December 31, 2017 (in thousands): Years ended Incurred through 2017 2016 2015 December 31, 2017 Severance costs $ 1,144 $ 4,438 $ 7,240 $ 12,822 Contract termination costs 37 165 1,134 1,336 Other costs 26 590 417 1,033 Total $ 1,207 $ 5,193 $ 8,791 $ 15,191 A summary of the Company’s lease abandonment activity for the years ended December 31, 2017 and 2016 is as follows (in thousands): As of December 31, 2017 2016 Accrued lease abandonment costs, beginning of period $ 2,123 $ 1,282 Costs incurred and charged to expense — 1,644 Principal reductions (1,042 ) (803 ) Accrued lease abandonment costs, end of period $ 1,081 $ 2,123 Accrued lease abandonment costs liability: Short-term $ 1,081 $ 1,047 Long-term — 1,076 Total $ 1,081 $ 2,123 |
Schedule of Restructuring and related Costs by Income Statement Location | The following table presents restructuring costs associated with the 2016 and 2015 Restructuring Plans and other employee severance actions included in the related line items of the Statement of Operations (in thousands): Years ended 2017 2016 2015 Cost of revenue $ 378 $ 573 $ 113 Sales and marketing 411 2,324 4,492 Research and development 318 913 602 General and administrative 100 1,383 3,584 Total $ 1,207 $ 5,193 $ 8,791 |
LEASE ABANDONMENT AND TERMINA41
LEASE ABANDONMENT AND TERMINATION (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Restructuring and Related Activities [Abstract] | |
Summary of Lease Abandonment Costs | The following table summarizes the major types of costs associated with the 2016 and 2015 Restructuring Plans and other employee severance actions for the years ended December 31, 2017 , 2016 , and 2015 and total costs incurred through December 31, 2017 (in thousands): Years ended Incurred through 2017 2016 2015 December 31, 2017 Severance costs $ 1,144 $ 4,438 $ 7,240 $ 12,822 Contract termination costs 37 165 1,134 1,336 Other costs 26 590 417 1,033 Total $ 1,207 $ 5,193 $ 8,791 $ 15,191 A summary of the Company’s lease abandonment activity for the years ended December 31, 2017 and 2016 is as follows (in thousands): As of December 31, 2017 2016 Accrued lease abandonment costs, beginning of period $ 2,123 $ 1,282 Costs incurred and charged to expense — 1,644 Principal reductions (1,042 ) (803 ) Accrued lease abandonment costs, end of period $ 1,081 $ 2,123 Accrued lease abandonment costs liability: Short-term $ 1,081 $ 1,047 Long-term — 1,076 Total $ 1,081 $ 2,123 |
INCOME TAXES (Tables)
INCOME TAXES (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Income Tax Disclosure [Abstract] | |
Summary of Significant Components of Deferred Tax Assets and Liabilities | The following table summarizes the significant components of the Company's deferred tax assets and liabilities as of December 31, 2017 and 2016 (in thousands): As of December 31, 2017 2016 Deferred tax assets: Inventory $ 847 $ 735 Net operating and capital loss carryforwards 46,683 61,174 Deferred revenue 11,534 10,862 Accrued liabilities 4,064 6,975 Stock-based compensation 3,790 4,440 Amortization and depreciation 773 1,056 Bad debt reserve 90 389 Foreign and other tax credits 2,047 1,881 Gross deferred tax assets 69,828 87,512 Valuation allowance (60,302 ) (78,363 ) Net deferred tax assets 9,526 9,149 Deferred tax liabilities: Goodwill and indefinite lived intangibles (5,033 ) (6,098 ) Deferred sales commissions (4,996 ) (7,060 ) Prepaid expenses (619 ) (656 ) Foreign currency translation (846 ) (1,508 ) Gross deferred tax liabilities (11,494 ) (15,322 ) Net deferred tax liabilities $ (1,968 ) $ (6,173 ) |
Summary of Operating Loss Carryforwards | As of December 31, 2017 , the Company had federal, state and foreign tax NOL carryforward amounts and expiration periods as follows (in thousands): Year of Expiration U.S. Federal State Brazil France Spain Mexico Total 2018-2022 $ — $ 409 $ — $ — $ — $ — $ 409 2023-2027 — 5,458 — — — 377 5,835 2028-2032 471 17,784 — — — — 18,255 2033-2037 125,759 108,086 — — 4 — 233,849 2038-2042 3,234 2,702 — — — — 5,936 Indefinite — — 4,160 7,673 697 — 12,530 Totals $ 129,464 $ 134,439 $ 4,160 $ 7,673 $ 701 $ 377 $ 276,814 |
Summary of Capital Loss Carryforwards | As of December 31, 2017 , the Company had federal and state capital loss carryforward amounts and expiration periods as follows (in thousands): Year of Tax Capital Loss Expiration U.S. Federal State 2018-2022 $ 6,837 $ 2,351 2023-2027 15,135 14,990 2028-2032 — 164 2033-2037 — 362 2038-2042 — — Indefinite — — Totals $ 21,972 $ 17,867 |
Summary of Tax Credit Carryforwards | As of December 31, 2017 , the Company had federal tax credit carryforward amounts and expiration periods as follows (in thousands): Year of Tax Credit Expiration U.S. Federal 2018-2022 $ — 2023-2027 1,638 2028-2032 166 2033-2037 218 2038-2042 — Indefinite 26 Totals $ 2,048 |
Schedule of Components of Income (Loss) Before Income Taxes | The components of loss before income taxes and the provision for taxes on income consist of the following (in thousands): Years Ended December 31, 2017 2016 2015 United States $ (12,648 ) $ (24,963 ) $ (41,458 ) Foreign 8,603 (84 ) (4,179 ) Loss before income taxes $ (4,045 ) $ (25,047 ) $ (45,637 ) The provision for taxes on income consists of the following (in thousands): Federal $ — $ — $ (157 ) State (21 ) 78 96 Foreign 1,701 1,250 444 Total current $ 1,680 $ 1,328 $ 383 Deferred: Federal $ (4,541 ) $ 1,147 $ 1,148 State 335 169 169 Foreign 27 (141 ) (541 ) Total deferred (4,179 ) 1,175 776 (Benefit) provision for income taxes $ (2,499 ) $ 2,503 $ 1,159 |
Schedule of Reconciliation of Income Tax Provision (Benefit) Computed at the U.S. Federal Statutory Rate to Income Tax Expense | Reconciliation of income tax (benefit) provision computed at the U.S. federal statutory rate to income tax (benefit) expense is as follows (in thousands): Years Ended December 31, 2017 2016 2015 Income tax benefit at statutory federal rate $ (1,416 ) $ (8,766 ) $ (15,973 ) Remeasurement of deferred tax liability related to indefinite-lived intangible due to U.S. rate reduction, effective January 1, 2018 (2,586 ) — — Release of valuation allowance due to change in U.S. net operating loss carry forward period (3,103 ) — — Shortfall in tax benefit - stock compensation 233 — — State income tax expense, net of federal income tax effect 314 219 231 Tax capital loss in excess of book loss on sale of Japan subsidiary (5,297 ) — — Nondeductible goodwill impairment — 604 1,961 Other nondeductible expenses 398 384 88 Tax rate differential on foreign operations (816 ) (474 ) (1,019 ) Increase in valuation allowance 9,446 10,404 15,713 Tax audit settlements — — (96 ) Change in prior year estimates 150 — 225 Other tax credits 173 129 29 Other 5 3 — Income tax (benefit) expense $ (2,499 ) $ 2,503 $ 1,159 |
COMMITMENTS AND CONTINGENCIES (
COMMITMENTS AND CONTINGENCIES (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Commitments and Contingencies Disclosure [Abstract] | |
Summary of Future Minimum Operating Lease Payments | The following table summarizes future minimum operating lease payments as of December 31, 2017 and the years thereafter (in thousands): As of Periods Ending December 31, 2018 $ 4,419 2019 1,742 2020 1,004 2021 590 2022 — Thereafter — Total future minimum operating lease payments $ 7,755 |
SEGMENT INFORMATION (Tables)
SEGMENT INFORMATION (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Segment Reporting [Abstract] | |
Schedule of Operating Results by Segment | Operating results by segment for the year ended December 31, 2017 was as follows (in thousands, except percentages): Language Literacy Segment E&E Language Segment Consumer Language Segment Shared Services Combined Language Total Company Revenue $ 43,608 $ 65,267 $ 75,718 $ — $ 140,985 $ 184,593 Cost of revenue 6,924 7,149 13,485 50 20,684 $ 27,608 Sales and marketing 23,369 31,089 37,366 1,459 69,914 $ 93,283 Research and development 6,479 — — 15,860 15,860 $ 22,339 General and administrative 1,872 132 18 — 150 $ 2,022 Segment contribution $ 4,964 $ 26,897 $ 24,849 $ (17,369 ) $ 34,377 $ 39,341 Segment contribution margin % 11.4 % 41.2 % 32.8 % Unallocated depreciation and amortization, stock compensation, restructuring and other expenses (net) included in: Cost of revenue 6,013 Sales and marketing 3,377 Research and development 2,408 General and administrative 6,348 Subtotal 18,146 Corporate unallocated expenses, net: Unallocated general and administrative 25,696 Unallocated lease abandonment expense (456 ) Subtotal 25,240 Loss before income taxes $ (4,045 ) Operating results by segment for the year ended December 31, 2016 was as follows (in thousands, except percentages): Language Literacy Segment E&E Language Segment Consumer Language Segment Shared Services Combined Language Total Company Revenue $ 34,123 $ 72,083 $ 87,883 $ — $ 159,966 $ 194,089 Cost of revenue 4,753 9,245 14,698 (17 ) 23,926 $ 28,679 Sales and marketing 21,650 33,441 51,508 1,902 86,851 $ 108,501 Research and development 4,111 — — 18,874 18,874 $ 22,985 General and administrative 2,077 315 175 — 490 $ 2,567 Segment contribution $ 1,532 $ 29,082 $ 21,502 $ (20,759 ) $ 29,825 $ 31,357 Segment contribution margin % 4.5 % 40.3 % 24.5 % Unallocated depreciation and amortization, stock compensation, restructuring and other expenses (net) included in: Cost of revenue 5,642 Sales and marketing 5,839 Research and development 3,288 General and administrative 10,935 Subtotal 25,704 Corporate unallocated expenses, net: Unallocated general and administrative 26,999 Unallocated lease abandonment expense (1,873 ) Unallocated impairment 3,930 Unallocated non-operating income 1,644 Subtotal 30,700 Loss before income taxes $ (25,047 ) Operating results by segment for the year ended December 31, 2015 was as follows (in thousands, except percentages): Language Literacy Segment E&E Language Segment Consumer Language Segment Shared Services Combined Language Total Company Revenue $ 21,928 $ 76,129 $ 119,613 $ — $ 195,742 $ 217,670 Cost of revenue 2,574 12,124 20,792 (19 ) 32,897 $ 35,471 Sales and marketing 16,628 40,829 66,839 3,661 111,329 $ 127,957 Research and development 4,542 — — 22,101 22,101 $ 26,643 General and administrative 1,647 400 1,244 — 1,644 $ 3,291 Segment contribution $ (3,463 ) $ 22,776 $ 30,738 $ (25,743 ) $ 27,771 $ 24,308 Segment contribution margin % (15.8 )% 29.9 % 25.7 % Unallocated depreciation and amortization, stock compensation, restructuring and other expenses (net) included in: Cost of revenue 3,056 Sales and marketing 8,127 Research and development 3,296 General and administrative 15,565 Subtotal 30,044 Corporate unallocated expenses, net: Unallocated general and administrative 31,268 Unallocated lease abandonment expense 1,824 Unallocated impairment 6,754 Unallocated non-operating income 55 Subtotal 39,901 Loss before income taxes $ (45,637 ) |
Summary of Revenue from Customers by Geographic Area and Products | The information below summarizes revenue from customers by geographic area as of December 31, 2017 , 2016 and 2015 , respectively (in thousands): Years Ended December 31, 2017 2016 2015 United States $ 158,825 $ 162,815 $ 177,966 International 25,768 31,274 39,704 Total revenue $ 184,593 $ 194,089 $ 217,670 |
Summary of Long-lived Assets by Geographic Area | The information below summarizes long-lived assets by geographic area classified as held and used for the years ended December 31, 2017 and 2016 , respectively (in thousands): As of December 31, 2017 2016 United States $ 27,647 $ 21,652 International 3,002 3,143 Total property and equipment, net $ 30,649 $ 24,795 |
Summary of Revenue from Customers by Type | The information below summarizes revenue by type for the years ended December 31, 2017 , 2016 and 2015 , respectively (in thousands): As of December 31, 2017 2016 2015 Language learning $ 138,082 $ 155,532 $ 191,568 Literacy 43,608 34,123 21,928 Brain Fitness 2,903 4,434 4,174 Total revenue $ 184,593 $ 194,089 $ 217,670 |
VALUATION AND QUALIFYING ACCO45
VALUATION AND QUALIFYING ACCOUNTS (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Valuation and Qualifying Accounts [Abstract] | |
Schedule of Valuation and Qualifying Accounts | The following table includes the Company's valuation and qualifying accounts for the respective periods (in thousands): Years Ended December 31, 2017 2016 2015 Allowance for doubtful accounts: Beginning balance $ 1,072 $ 1,196 $ 1,434 Charged to costs and expenses (51 ) 709 1,657 Deductions—accounts written off (646 ) (833 ) (1,895 ) Ending balance $ 375 $ 1,072 $ 1,196 Promotional rebate and coop advertising reserves: Beginning balance $ 5,968 $ 16,910 $ 23,437 Charged to costs and expenses 6,421 18,337 40,563 Deductions - reserves utilized (10,014 ) (29,279 ) (47,090 ) Ending balance $ 2,375 $ 5,968 $ 16,910 Sales return reserve: Beginning balance $ 1,338 $ 3,728 $ 3,570 Charged against revenue 4,943 5,034 11,474 Deductions—reserves utilized (5,105 ) (7,424 ) (11,316 ) Ending balance $ 1,176 $ 1,338 3,728 Deferred income tax asset valuation allowance: Beginning balance $ 78,363 70,464 53,809 Charged to costs and expenses (16,806 ) 7,899 16,655 Deductions (1,255 ) — — Ending balance $ 60,302 $ 78,363 $ 70,464 |
SUPPLEMENTAL QUARTERLY FINANC46
SUPPLEMENTAL QUARTERLY FINANCIAL INFORMATION (Unaudited) (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Quarterly Financial Information Disclosure [Abstract] | |
Summary of Quarterly Supplemental Consolidated Financial Information | Summarized quarterly supplemental consolidated financial information for 2017 and 2016 are as follows (in thousands, except per share amounts): Three Months Ended March 31, June 30, September 30, December 31, 2017 Revenue $ 47,693 $ 45,905 $ 46,206 $ 44,789 Gross profit $ 39,552 $ 38,314 $ 36,758 $ 36,348 Net income (loss) $ 454 $ (1,135 ) $ (3,231 ) $ 2,366 Basic earnings (loss) per share $ 0.02 $ (0.05 ) $ (0.14 ) $ 0.11 Shares used in basic per share computation 22,125 22,248 22,285 22,316 Diluted earnings (loss) per share $ 0.02 $ (0.05 ) $ (0.14 ) $ 0.10 Shares used in diluted per share computation 22,590 22,248 22,285 23,248 2016 Revenue $ 48,002 $ 45,716 $ 48,693 $ 51,678 Gross profit $ 39,954 $ 37,752 $ 40,322 $ 41,740 Net loss $ (7,507 ) $ (8,978 ) $ (5,452 ) $ (5,613 ) Basic loss per share $ (0.34 ) $ (0.41 ) $ (0.25 ) $ (0.25 ) Shares used in basic per share computation 21,867 21,948 21,993 22,065 Diluted loss per share $ (0.34 ) $ (0.41 ) $ (0.25 ) $ (0.25 ) Shares used in diluted per share computation 21,867 21,948 21,993 22,065 |
SUMMARY OF SIGNIFICANT ACCOUN47
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Narrative (Details) | 12 Months Ended | ||
Dec. 31, 2017USD ($)deliverable | Dec. 31, 2016USD ($) | Dec. 31, 2015USD ($) | |
Revenue Recognition Arrangements [Line Items] | |||
Refund, unconditional, full money-back, daily criteria | 30 days | ||
Percentage of concentration risk | 10.00% | 10.00% | |
Amortization period of goodwill for tax purposes | 15 years | ||
Expiration period | 10 years | ||
Other comprehensive income (loss), tax | $ 0 | $ 0 | $ 0 |
Net loss on sale of foreign subsidiary | 75,000 | ||
Advertising expense | 24,900,000 | 37,000,000 | $ 46,900,000 |
Other current liabilities | $ (16,454,000) | $ (22,150,000) | |
Internally Developed Software | |||
Revenue Recognition Arrangements [Line Items] | |||
Estimated useful lives | 3 years | ||
Accounts Receivable | Customer Concentration Risk | |||
Revenue Recognition Arrangements [Line Items] | |||
Percentage of concentration risk | 17.00% | 23.00% | |
Accounts Receivable | Customer Concentration Risk | Customer Number One | |||
Revenue Recognition Arrangements [Line Items] | |||
Percentage of concentration risk | 13.00% | ||
Maximum | Stock options | 2006 Plan | |||
Revenue Recognition Arrangements [Line Items] | |||
Expiration period | 10 years | ||
Rosetta Stone Version 4 TOTALe Bundles | |||
Revenue Recognition Arrangements [Line Items] | |||
Number of deliverables identified | deliverable | 2 | ||
Rosetta Stone Version 4 TOTALe Bundles | Maximum | |||
Revenue Recognition Arrangements [Line Items] | |||
Period of registration window to begin services from the date of purchase from the entity (up to) | 6 months | ||
Packaged Software | Maximum | |||
Revenue Recognition Arrangements [Line Items] | |||
Period offered to customers for payment of purchases in installments | 5 months | ||
Period of installment payment plans (less than) | 12 months | ||
Packaged Software | Minimum | |||
Revenue Recognition Arrangements [Line Items] | |||
Period offered to customers for payment of purchases in installments | 3 months | ||
Packaged Software and Online Software Subscriptions | Maximum | |||
Revenue Recognition Arrangements [Line Items] | |||
Period of providing technical support in connection with packaged software product sales and online software subscriptions (up to) | 6 months | ||
New Revenue Standard | |||
Revenue Recognition Arrangements [Line Items] | |||
Deferred revenue | $ 600,000 | ||
Other current liabilities | 200,000 | ||
New Revenue Standard | Accumulated Loss | |||
Revenue Recognition Arrangements [Line Items] | |||
Retained earnings | $ 800,000 |
SUMMARY OF SIGNIFICANT ACCOUN48
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Property and Equipment (Details) | 12 Months Ended |
Dec. 31, 2017 | |
Software | |
Property, Plant and Equipment [Line Items] | |
Estimated useful lives | 3 years |
Computer equipment | Minimum | |
Property, Plant and Equipment [Line Items] | |
Estimated useful lives | 3 years |
Computer equipment | Maximum | |
Property, Plant and Equipment [Line Items] | |
Estimated useful lives | 5 years |
Automobiles | |
Property, Plant and Equipment [Line Items] | |
Estimated useful lives | 5 years |
Furniture and equipment | Minimum | |
Property, Plant and Equipment [Line Items] | |
Estimated useful lives | 5 years |
Furniture and equipment | Maximum | |
Property, Plant and Equipment [Line Items] | |
Estimated useful lives | 7 years |
Building | |
Property, Plant and Equipment [Line Items] | |
Estimated useful lives | 39 years |
Building improvements | |
Property, Plant and Equipment [Line Items] | |
Estimated useful lives | 15 years |
SUMMARY OF SIGNIFICANT ACCOUN49
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Components of Accumulated Comprehensive Loss (Details) $ in Thousands | 12 Months Ended |
Dec. 31, 2017USD ($) | |
AOCI Including Portion Attributable to Noncontrolling Interest, Net of Tax [Roll Forward] | |
Balance, beginning of period | $ (1,659) |
Other comprehensive income before reclassifications | 886 |
Amounts reclassified from accumulated other comprehensive income | (75) |
Net current period other comprehensive income | 811 |
Balance, end of period | 2,423 |
AOCI Attributable to Parent | |
AOCI Including Portion Attributable to Noncontrolling Interest, Net of Tax [Roll Forward] | |
Balance, beginning of period | (3,709) |
Balance, end of period | (2,898) |
Foreign Currency | |
AOCI Including Portion Attributable to Noncontrolling Interest, Net of Tax [Roll Forward] | |
Other comprehensive income before reclassifications | 886 |
Amounts reclassified from accumulated other comprehensive income | (75) |
Net current period other comprehensive income | $ 811 |
INVENTORY - Schedule of Invento
INVENTORY - Schedule of Inventory (Details) - USD ($) $ in Thousands | Dec. 31, 2017 | Dec. 31, 2016 |
Inventory Disclosure [Abstract] | ||
Raw materials | $ 2,893 | $ 4,384 |
Finished goods | 643 | 2,383 |
Total inventory | $ 3,536 | $ 6,767 |
INVENTORY - Narrative (Details)
INVENTORY - Narrative (Details) $ in Millions | 3 Months Ended |
Sep. 30, 2017USD ($) | |
Inventory Disclosure [Abstract] | |
Return inventory under consignment | $ 1.9 |
PROPERTY AND EQUIPMENT - Schedu
PROPERTY AND EQUIPMENT - Schedule of Property and Equipment (Details) - USD ($) $ in Thousands | Dec. 31, 2017 | Dec. 31, 2016 |
Property, Plant and Equipment [Line Items] | ||
Property, plant and equipment, gross | $ 85,102 | $ 73,971 |
Less: accumulated depreciation | (54,453) | (49,176) |
Property and equipment, net | 30,649 | 24,795 |
Land | ||
Property, Plant and Equipment [Line Items] | ||
Property, plant and equipment, gross | 942 | 876 |
Buildings and improvements | ||
Property, Plant and Equipment [Line Items] | ||
Property, plant and equipment, gross | 10,030 | 9,503 |
Leasehold improvements | ||
Property, Plant and Equipment [Line Items] | ||
Property, plant and equipment, gross | 1,468 | 1,645 |
Computer equipment | ||
Property, Plant and Equipment [Line Items] | ||
Property, plant and equipment, gross | 15,635 | 15,866 |
Software | ||
Property, Plant and Equipment [Line Items] | ||
Property, plant and equipment, gross | 54,600 | 43,688 |
Furniture and equipment | ||
Property, Plant and Equipment [Line Items] | ||
Property, plant and equipment, gross | $ 2,427 | $ 2,393 |
PROPERTY AND EQUIPMENT - Narrat
PROPERTY AND EQUIPMENT - Narrative (Details) - USD ($) | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Property, Plant and Equipment [Line Items] | |||
Accumulated depreciation and amortization relating under capital lease arrangements | $ 54,453,000 | $ 49,176,000 | |
Amounts capitalized as internal-use software | 12,700,000 | 11,400,000 | $ 7,100,000 |
Impairment expense of internal-use software projects | 0 | 1,000,000 | $ 1,100,000 |
Computer Equipment and Software | |||
Property, Plant and Equipment [Line Items] | |||
Assets under capital lease | 5,900,000 | 5,400,000 | |
Accumulated depreciation and amortization relating under capital lease arrangements | $ 2,800,000 | $ 2,100,000 |
PROPERTY AND EQUIPMENT - Deprec
PROPERTY AND EQUIPMENT - Depreciation and Amortization of Property and Equipment (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Property, Plant and Equipment [Line Items] | |||
Accumulated depreciation and amortization relating under capital lease arrangements | $ 54,453 | $ 49,176 | |
Amortization | 8,170 | 8,971 | $ 8,468 |
Cost of subscription and service revenue | |||
Property, Plant and Equipment [Line Items] | |||
Amortization | 3,863 | 3,057 | 1,292 |
Cost of product revenue | |||
Property, Plant and Equipment [Line Items] | |||
Amortization | 1,117 | 1,377 | 1,010 |
Total included in cost of revenue | |||
Property, Plant and Equipment [Line Items] | |||
Amortization | 4,980 | 4,434 | 2,302 |
Sales and marketing | |||
Property, Plant and Equipment [Line Items] | |||
Amortization | 546 | 489 | 722 |
Research and development | |||
Property, Plant and Equipment [Line Items] | |||
Amortization | 9 | 19 | 41 |
General and administrative | |||
Property, Plant and Equipment [Line Items] | |||
Amortization | 2,635 | 4,029 | 5,403 |
Total included in operating expenses | |||
Property, Plant and Equipment [Line Items] | |||
Amortization | $ 3,190 | $ 4,537 | $ 6,166 |
GOODWILL - Schedule of Goodwill
GOODWILL - Schedule of Goodwill (Details) - USD ($) | 6 Months Ended | 12 Months Ended | ||
Jun. 30, 2016 | Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Goodwill [Roll Forward] | ||||
Gross Goodwill, beginning of period | $ 76,054,000 | $ 75,765,000 | $ 76,054,000 | |
Accumulated Impairment, beginning of period | (25,774,000) | (27,514,000) | (25,774,000) | |
Goodwill, beginning of period | 50,280,000 | 48,251,000 | 50,280,000 | |
Goodwill, Impairment | 0 | (1,740,000) | ||
Effect of change in foreign currency rate | 1,606,000 | (289,000) | ||
Gross Goodwill, end of period | 77,371,000 | 75,765,000 | $ 76,054,000 | |
Accumulated Impairment, end of period | (27,514,000) | (27,514,000) | (25,774,000) | |
Goodwill, end of period | 49,857,000 | 48,251,000 | 50,280,000 | |
Unallocated non-operating income | 456,000 | 1,873,000 | (1,824,000) | |
E&E Language | ||||
Goodwill [Roll Forward] | ||||
Gross Goodwill, beginning of period | 38,700,000 | 38,289,000 | 38,700,000 | |
Accumulated Impairment, beginning of period | 0 | 0 | 0 | |
Goodwill, beginning of period | 38,700,000 | 38,289,000 | 38,700,000 | |
Goodwill, Impairment | 0 | 0 | ||
Effect of change in foreign currency rate | 1,606,000 | (411,000) | ||
Gross Goodwill, end of period | 39,895,000 | 38,289,000 | 38,700,000 | |
Accumulated Impairment, end of period | 0 | 0 | 0 | |
Goodwill, end of period | 39,895,000 | 38,289,000 | 38,700,000 | |
Literacy | ||||
Goodwill [Roll Forward] | ||||
Gross Goodwill, beginning of period | 9,962,000 | 9,962,000 | 9,962,000 | |
Accumulated Impairment, beginning of period | 0 | 0 | 0 | |
Goodwill, beginning of period | 9,962,000 | 9,962,000 | 9,962,000 | |
Goodwill, Impairment | 0 | 0 | ||
Effect of change in foreign currency rate | 0 | 0 | ||
Gross Goodwill, end of period | 9,962,000 | 9,962,000 | 9,962,000 | |
Accumulated Impairment, end of period | 0 | 0 | 0 | |
Goodwill, end of period | 9,962,000 | 9,962,000 | 9,962,000 | |
Consumer Language Segment | ||||
Goodwill [Roll Forward] | ||||
Gross Goodwill, beginning of period | 27,392,000 | 27,514,000 | 27,392,000 | |
Accumulated Impairment, beginning of period | (25,774,000) | (27,514,000) | (25,774,000) | |
Goodwill, beginning of period | $ 1,618,000 | 0 | 1,618,000 | |
Goodwill, Impairment | (1,740,000) | |||
Effect of change in foreign currency rate | 0 | 122,000 | ||
Gross Goodwill, end of period | 27,514,000 | 27,514,000 | 27,392,000 | |
Accumulated Impairment, end of period | (27,514,000) | (27,514,000) | (25,774,000) | |
Goodwill, end of period | $ 0 | 0 | 1,618,000 | |
Corporate, Non-Segment | ||||
Goodwill [Roll Forward] | ||||
Goodwill, Impairment | (3,930,000) | (6,754,000) | ||
Unallocated non-operating income | $ (1,644,000) | $ (55,000) |
GOODWILL - Narrative (Details)
GOODWILL - Narrative (Details) - USD ($) | 6 Months Ended | 12 Months Ended | ||
Jun. 30, 2016 | Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Goodwill [Line Items] | ||||
Unallocated impairment | $ 0 | $ 1,740,000 | ||
Consumer Fit Brains | Brain Fitness | ||||
Goodwill [Line Items] | ||||
Unallocated impairment | 1,700,000 | $ 5,600,000 | ||
E&E Language | ||||
Goodwill [Line Items] | ||||
Unallocated impairment | $ 0 | 0 | ||
Literacy | ||||
Goodwill [Line Items] | ||||
Unallocated impairment | $ 0 | $ 0 |
INTANGIBLE ASSETS - Schedule of
INTANGIBLE ASSETS - Schedule of Intangible Assets (Details) - USD ($) $ in Thousands | Dec. 31, 2017 | Dec. 31, 2016 |
Finite-Lived Intangible Assets [Line Items] | ||
Gross carrying amount of finite and indefinite lived intangible assets | $ 55,109 | $ 53,984 |
Accumulated Amortization | (34,770) | (30,076) |
Accumulated Impairment | (1,155) | (1,155) |
Intangible assets balance | 19,184 | 22,753 |
Total | 8,577 | |
Trade name / trademark | ||
Finite-Lived Intangible Assets [Line Items] | ||
Gross carrying amount of finite and indefinite lived intangible assets | 12,505 | 12,431 |
Accumulated Amortization | (1,755) | (1,481) |
Accumulated Impairment | (26) | (26) |
Intangible assets balance | 10,724 | 10,924 |
Core technology | ||
Finite-Lived Intangible Assets [Line Items] | ||
Gross carrying amount of finite lived intangible assets | 15,636 | 15,092 |
Accumulated Amortization | (12,222) | (9,859) |
Accumulated Impairment | (1,001) | (1,001) |
Total | 2,413 | 4,232 |
Customer relationships | ||
Finite-Lived Intangible Assets [Line Items] | ||
Gross carrying amount of finite lived intangible assets | 26,656 | 26,149 |
Accumulated Amortization | (20,515) | (18,485) |
Accumulated Impairment | (128) | (128) |
Total | 6,013 | 7,536 |
Patents and Other | ||
Finite-Lived Intangible Assets [Line Items] | ||
Gross carrying amount of finite lived intangible assets | 312 | 312 |
Accumulated Amortization | (278) | (251) |
Accumulated Impairment | 0 | 0 |
Total | $ 34 | $ 61 |
INTANGIBLE ASSETS - Narrative (
INTANGIBLE ASSETS - Narrative (Details) - USD ($) | 3 Months Ended | 12 Months Ended |
Jun. 30, 2016 | Dec. 31, 2017 | |
Finite-Lived Intangible Assets [Line Items] | ||
Impairment of intangible assets (excluding goodwill) | $ 0 | |
Consumer Fit Brains | ||
Finite-Lived Intangible Assets [Line Items] | ||
impairment loss | $ 1,200,000 | |
Trade Names | Rosetta Stone Ltd | ||
Finite-Lived Intangible Assets [Line Items] | ||
Indefinite lived intangibles associated with acquisitions | $ 10,600,000 |
INTANGIBLE ASSETS - Useful Live
INTANGIBLE ASSETS - Useful Lives (Details) - Weighted Average | 12 Months Ended |
Dec. 31, 2017 | |
Trade name / trademark | |
Finite-Lived Intangible Assets [Line Items] | |
Weighted Average Life | 6 months 29 days |
Core technology | |
Finite-Lived Intangible Assets [Line Items] | |
Weighted Average Life | 1 year 11 months 8 days |
Customer relationships | |
Finite-Lived Intangible Assets [Line Items] | |
Weighted Average Life | 5 years |
Patents | |
Finite-Lived Intangible Assets [Line Items] | |
Weighted Average Life | 1 year 2 months 30 days |
INTANGIBLE ASSETS - Amortizatio
INTANGIBLE ASSETS - Amortization Expense (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Finite-Lived Intangible Assets [Line Items] | |||
Amortization of intangible assets | $ 3,839 | $ 4,351 | $ 5,192 |
Cost of subscription and service revenue | |||
Finite-Lived Intangible Assets [Line Items] | |||
Amortization of intangible assets | 455 | 404 | 322 |
Cost of product revenue | |||
Finite-Lived Intangible Assets [Line Items] | |||
Amortization of intangible assets | 131 | 182 | 264 |
Total included in cost of revenue | |||
Finite-Lived Intangible Assets [Line Items] | |||
Amortization of intangible assets | 586 | 586 | 586 |
Sales and marketing | |||
Finite-Lived Intangible Assets [Line Items] | |||
Amortization of intangible assets | 1,860 | 2,178 | 2,804 |
Research and development | |||
Finite-Lived Intangible Assets [Line Items] | |||
Amortization of intangible assets | 1,393 | 1,587 | 1,802 |
General and administrative | |||
Finite-Lived Intangible Assets [Line Items] | |||
Amortization of intangible assets | 0 | 0 | 0 |
Total included in operating expenses | |||
Finite-Lived Intangible Assets [Line Items] | |||
Amortization of intangible assets | $ 3,253 | $ 3,765 | $ 4,606 |
INTANGIBLE ASSETS - Estimated F
INTANGIBLE ASSETS - Estimated Future Amortization Expense (Details) $ in Thousands | Dec. 31, 2017USD ($) |
Summary of the estimated future amortization expense related to intangible assets | |
2,018 | $ 3,335 |
2,019 | 1,532 |
2,020 | 1,282 |
2,021 | 940 |
2,022 | 940 |
Thereafter | 548 |
Total | $ 8,577 |
OTHER CURRENT LIABILITIES (Deta
OTHER CURRENT LIABILITIES (Details) - USD ($) $ in Thousands | Dec. 31, 2017 | Dec. 31, 2016 |
Other Liabilities Disclosure [Abstract] | ||
Accrued marketing expenses | $ 5,316 | $ 8,460 |
Accrued professional and consulting fees | 1,609 | 2,050 |
Sales return reserve | 1,176 | 1,338 |
Sales, withholding, and property taxes payable | 3,616 | 3,772 |
Other | 4,737 | 6,530 |
Total Other current liabilities | $ 16,454 | $ 22,150 |
DIVESTITURES - Narrative (Detai
DIVESTITURES - Narrative (Details) - USD ($) | Jun. 29, 2017 | Jun. 19, 2017 | Mar. 13, 2017 | Sep. 30, 2017 | Dec. 31, 2017 | Dec. 31, 2017 |
Rosetta Stone Korea | Discontinued Operations, Held-for-sale or Disposed of by Sale | ||||||
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | ||||||
Percent of acquisition by management | 100.00% | |||||
Collaborative Arrangement | ||||||
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | ||||||
Proceeds from license fees received | $ 2,000,000 | $ 9,000,000 | ||||
Estimated proceeds from license fees, additional minimum payment | $ 6,000,000 | |||||
Additional minimum payment, amortization period | 10 years | |||||
Licensing agreement term, in years | 2 years | |||||
Accelerated future cash receipts | $ 1,500,000 | |||||
Collaborative Arrangement | Rosetta Stone Japan Inc. | ||||||
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | ||||||
Consideration of disposal group | $ 500,000 | |||||
deferred revenue decrease | $ 11,400,000 | $ 11,400,000 | ||||
Additional minimum payment recognized, period | 20 years | |||||
Collaborative Arrangement | Rosetta Stone Japan Inc. | Discontinued Operations, Held-for-sale or Disposed of by Sale | ||||||
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | ||||||
Proceeds from license fees received and disposal group consideration | 11,500,000 | |||||
Gain on sale of subsidiary, before foreign currency translation gain | $ 500,000 | |||||
Foreign currency translation loss of disposal group | 100,000 | |||||
Collaborative Arrangement | Rosetta Stone Japan Inc. | Discontinued Operations, Held-for-sale or Disposed of by Sale | Other Nonoperating Income (Expense) | ||||||
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | ||||||
Gain on sale of subsidiary | $ 400,000 | |||||
Collaborative Arrangement | Rosetta Stone Japan Inc. | Discontinued Operations, Held-for-sale or Disposed of by Sale | Other Assets | ||||||
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | ||||||
License fee revenue | $ 100,000 |
FINANCING ARRANGEMENTS - Narrat
FINANCING ARRANGEMENTS - Narrative (Details) - USD ($) | Oct. 28, 2014 | Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | Jan. 31, 2014 |
Line of Credit Facility [Line Items] | |||||
Equipment acquired under capital lease | $ 0 | $ 27,000 | $ 462,000 | ||
Tell Me More SA | |||||
Line of Credit Facility [Line Items] | |||||
Fair value of the lease liability at the date of acquisition | $ 4,000,000 | ||||
Revolving Credit Facility | Line of Credit | |||||
Line of Credit Facility [Line Items] | |||||
Borrowing capacity provided under credit facility | $ 25,000,000 | 15,100,000 | |||
Maximum borrowing capacity, accounts receivable collateral basis, percentage | 80.00% | ||||
Maximum conditional borrowing capacity | $ 5,000,000 | ||||
Minimum cash and availability balance | $ 17,500,000 | ||||
Applicable interest rate added to the reference rate | 1.00% | ||||
Long-term line of credit | 0 | ||||
Net borrowing availability | 11,100,000 | ||||
Revolving Credit Facility | Line of Credit | United States | Parent Company and Guarantor Subsidiaries | |||||
Line of Credit Facility [Line Items] | |||||
Line of credit, ownership stock pledged as collateral, percentage | 100.00% | ||||
Revolving Credit Facility | Line of Credit | Foreign Countries | Parent Company and Guarantor Subsidiaries | |||||
Line of Credit Facility [Line Items] | |||||
Line of credit, ownership stock pledged as collateral, percentage | 66.00% | ||||
Letter of Credit | Line of Credit | |||||
Line of Credit Facility [Line Items] | |||||
Borrowing capacity provided under credit facility | $ 4,000,000 | $ 4,000,000 |
FINANCING ARRANGEMENTS - Capita
FINANCING ARRANGEMENTS - Capital Lease (Details) - USD ($) $ in Thousands | Dec. 31, 2017 | Dec. 31, 2016 |
Leases [Abstract] | ||
2,018 | $ 548 | |
2,019 | 545 | |
2,020 | 540 | |
2,021 | 537 | |
2,022 | 402 | |
Thereafter | 0 | |
Total minimum lease payments | 2,572 | |
Less amount representing interest | 272 | |
Present value of net minimum lease payments | 2,300 | |
Less current portion | 450 | $ 532 |
Obligations under capital lease, long-term | $ 1,850 | $ 2,027 |
STOCK-BASED COMPENSATION STOCK-
STOCK-BASED COMPENSATION STOCK-BASED COMPENSATION - Narrative (Details) - USD ($) | May 27, 2017 | Mar. 17, 2017 | Feb. 20, 2017 | Apr. 04, 2016 | Jun. 12, 2015 | May 20, 2014 | May 23, 2013 | May 23, 2012 | May 26, 2011 | Feb. 27, 2009 | May 28, 2008 | Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2008 | Jan. 04, 2006 |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||||||||||
Expiration period | 10 years | ||||||||||||||
Restricted Stock Award, Service-Based | |||||||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||||||||||
Awards granted (in shares) | 291,406 | 300,650 | |||||||||||||
Aggregate grant date fair value of awards | $ 2,300,000 | $ 2,300,000 | |||||||||||||
Vesting period | 4 years | ||||||||||||||
Awards cancelled (in shares) | 71,641 | 71,848 | |||||||||||||
Compensation cost not yet recognized | $ 2,200,000 | $ 2,600,000 | |||||||||||||
Period over which future compensation cost expected to be recognized | 2 years 2 months 30 days | 2 years 22 days | |||||||||||||
Awards granted (in dollars per share) | $ 7.92 | $ 7.59 | |||||||||||||
Employee Stock Option, Serviced-Based | |||||||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||||||||||
Vesting period | 4 years | ||||||||||||||
Period over which future compensation cost expected to be recognized | 1 year 7 months 6 days | 2 years 4 months 9 days | |||||||||||||
Unrecognized stock-based compensation expense related to non-vested stock option awards | $ 1,300,000 | $ 3,100,000 | |||||||||||||
Options granted (in dollars per share) | $ 5.02 | $ 3.41 | |||||||||||||
Options granted (in shares) | 55,610 | ||||||||||||||
Options outstanding (in shares) | 1,628,711 | 1,793,930 | |||||||||||||
Exercisable at the end of the period (in shares) | 1,250,476 | ||||||||||||||
Restricted Stock Units (RSUs) | |||||||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||||||||||
Awards granted (in shares) | 46,601 | 67,663 | |||||||||||||
Aggregate grant date fair value of awards | $ 500,000 | $ 500,000 | |||||||||||||
Vesting period | 1 year | ||||||||||||||
Awards cancelled (in shares) | 0 | ||||||||||||||
Awards granted (in dollars per share) | $ 11.23 | ||||||||||||||
Restricted Stock Units, Performance-Based | |||||||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||||||||||
Awards granted (in shares) | 462,870 | ||||||||||||||
Vesting period | 2 years | ||||||||||||||
Awards cancelled (in shares) | 29,282 | ||||||||||||||
Compensation cost not yet recognized | $ 1,006,405 | ||||||||||||||
Period over which future compensation cost expected to be recognized | 1 year 6 months | ||||||||||||||
Attainment of target, granted, percentage | 100.00% | ||||||||||||||
Awards granted (in dollars per share) | $ 9.43 | ||||||||||||||
Restricted Stock Units, Performance-Based | Maximum | |||||||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||||||||||
Grant target threshold, percentage | 200.00% | ||||||||||||||
Restricted Stock Units, Performance-Based | Minimum | |||||||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||||||||||
Grant target threshold, percentage | 0.00% | ||||||||||||||
Restricted Stock, Performance-Based | President, Chief Executive Officer, and Board of Directors Chairman | |||||||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||||||||||
Awards granted (in shares) | 70,423 | ||||||||||||||
Awards cancelled (in shares) | 5,704 | ||||||||||||||
Awards granted (in dollars per share) | $ 7.10 | ||||||||||||||
Equity instrument awards outstanding (in shares) | 64,719 | 32,359 | |||||||||||||
Restricted Stock, Performance-Based | President, Chief Executive Officer, and Board of Directors Chairman | Vest April 4, 2017 | |||||||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||||||||||
Award vesting rights, percentage | 50.00% | ||||||||||||||
Restricted Stock, Performance-Based | President, Chief Executive Officer, and Board of Directors Chairman | Vest April 4, 2018 | |||||||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||||||||||
Award vesting rights, percentage | 25.00% | ||||||||||||||
Restricted Stock, Performance-Based | President, Chief Executive Officer, and Board of Directors Chairman | Vest April 4, 2019 | |||||||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||||||||||
Award vesting rights, percentage | 25.00% | ||||||||||||||
Employee Stock Option, Performance-Based | President, Chief Executive Officer, and Board of Directors Chairman | |||||||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||||||||||
Options granted (in dollars per share) | $ 3.24 | ||||||||||||||
Options granted (in shares) | 314,465 | ||||||||||||||
Equity instrument awards outstanding (in shares) | 72,248 | ||||||||||||||
Options outstanding (in shares) | 144,497 | ||||||||||||||
Options cancelled (in shares) | 169,968 | ||||||||||||||
Exercisable at the end of the period (in shares) | 0 | ||||||||||||||
Employee Stock Option, Performance-Based | President, Chief Executive Officer, and Board of Directors Chairman | Vest April 4, 2017 | |||||||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||||||||||
Award vesting rights, percentage | 50.00% | ||||||||||||||
Employee Stock Option, Performance-Based | President, Chief Executive Officer, and Board of Directors Chairman | Vest April 4, 2018 | |||||||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||||||||||
Award vesting rights, percentage | 25.00% | ||||||||||||||
Employee Stock Option, Performance-Based | President, Chief Executive Officer, and Board of Directors Chairman | Vest April 4, 2019 | |||||||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||||||||||
Award vesting rights, percentage | 25.00% | ||||||||||||||
Restricted Stock Award, Market-Based | President, Chief Executive Officer, and Board of Directors Chairman | |||||||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||||||||||
Awards granted (in shares) | 70,423 | ||||||||||||||
Vesting period | 3 years | ||||||||||||||
Attainment of target, granted, percentage | 100.00% | ||||||||||||||
Awards granted (in dollars per share) | $ 6.17 | ||||||||||||||
Vesting schedule growth rate, measurement period | 2 years | ||||||||||||||
Restricted Stock Award, Market-Based | Maximum | President, Chief Executive Officer, and Board of Directors Chairman | |||||||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||||||||||
Grant target threshold, percentage | 200.00% | ||||||||||||||
Restricted Stock Award, Market-Based | Minimum | President, Chief Executive Officer, and Board of Directors Chairman | |||||||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||||||||||
Grant target threshold, percentage | 0.00% | ||||||||||||||
Employee Stock Option, Market-Based | President, Chief Executive Officer, and Board of Directors Chairman | |||||||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||||||||||
Vesting period | 3 years | ||||||||||||||
Options granted (in dollars per share) | $ 0.94 | ||||||||||||||
Options granted (in shares) | 314,465 | ||||||||||||||
Vesting schedule growth rate, measurement period | 2 years | ||||||||||||||
Options, granted target threshold, percentage | 100.00% | ||||||||||||||
Employee Stock Option, Market-Based | Maximum | President, Chief Executive Officer, and Board of Directors Chairman | |||||||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||||||||||
Attainment of target, granted, percentage | 200.00% | ||||||||||||||
Employee Stock Option, Market-Based | Minimum | President, Chief Executive Officer, and Board of Directors Chairman | |||||||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||||||||||
Options, granted target threshold, percentage | 0.00% | ||||||||||||||
Restricted Stock, Performance-Based and Employee Stock Option, Performance-Based | President, Chief Executive Officer, and Board of Directors Chairman | |||||||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||||||||||
Non-vested compensation cost not yet recognized | $ 100,000 | $ 500,000 | |||||||||||||
Period over which future compensation cost expected to be recognized | 1 year 1 month 2 days | 1 year 8 months 9 days | |||||||||||||
Restricted Stock, Market-Based and Employee Stock Option, Market-Based | President, Chief Executive Officer, and Board of Directors Chairman | |||||||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||||||||||
Non-vested compensation cost not yet recognized | $ 300,000 | $ 500,000 | |||||||||||||
Period over which future compensation cost expected to be recognized | 1 year 9 months 14 days | 2 years 6 months 22 days | |||||||||||||
2006 Plan | Stock options | |||||||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||||||||||
Number of shares authorized for grant (in shares) | 2,137,200 | 1,942,200 | |||||||||||||
Number of additional shares authorized for grant (in shares) | 195,000 | ||||||||||||||
2006 Plan | Stock options | Maximum | |||||||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||||||||||
Expiration period | 10 years | ||||||||||||||
2009 Plan | |||||||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||||||||||
Number of additional shares authorized for grant (in shares) | 1,900,000 | 1,200,000 | 500,000 | 2,317,000 | 1,122,930 | 1,000,000 | 2,437,744 | ||||||||
Shares available for future grant under plan (in shares) | 2,206,689 | ||||||||||||||
2009 Plan | Maximum | |||||||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||||||||||
Expiration period | 10 years |
STOCK-BASED COMPENSATION STOC67
STOCK-BASED COMPENSATION STOCK-BASED COMPENSATION - Schedule of Shares Authorized (Details) - shares | May 27, 2017 | Jun. 12, 2015 | May 20, 2014 | May 23, 2013 | May 23, 2012 | May 26, 2011 | Feb. 27, 2009 |
2009 Plan | |||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||
Number of additional shares authorized for grant (in shares) | 1,900,000 | 1,200,000 | 500,000 | 2,317,000 | 1,122,930 | 1,000,000 | 2,437,744 |
STOCK-BASED COMPENSATION - Weig
STOCK-BASED COMPENSATION - Weighted Average Assumption (Details) | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Employee Stock Option, Serviced-Based | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Expected stock price volatility Minimum | 42.00% | 46.00% | 49.00% |
Expected stock price volatility Maximum | 45.00% | 47.00% | 63.00% |
Expected term of options | 6 years | 6 years | |
Expected dividend yield | 0.00% | 0.00% | 0.00% |
Risk-free interest rate Minimum | 1.92% | 1.24% | 1.19% |
Risk-free interest rate Maximum | 2.05% | 1.50% | 1.75% |
Employee Stock Option, Serviced-Based | Minimum | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Expected term of options | 5 years 6 months | ||
Employee Stock Option, Serviced-Based | Maximum | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Expected term of options | 6 years 6 months | ||
Employee Stock Option, Performance-Based | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Expected stock price volatility Minimum | 42.00% | 46.00% | 49.00% |
Expected stock price volatility Maximum | 45.00% | 47.00% | 63.00% |
Expected term of options | 6 years | 6 years | |
Expected dividend yield | 0.00% | 0.00% | 0.00% |
Risk-free interest rate Minimum | 1.92% | 1.24% | 1.19% |
Risk-free interest rate Maximum | 2.05% | 1.50% | 1.75% |
Employee Stock Option, Performance-Based | Minimum | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Expected term of options | 5 years 6 months | ||
Employee Stock Option, Performance-Based | Maximum | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Expected term of options | 6 years 6 months | ||
Employee Stock Option, Market-Based | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Expected stock price volatility Minimum | 44.90% | ||
Expected stock price volatility Maximum | 49.00% | ||
Expected dividend yield | 0.00% | ||
Risk-free interest rate Minimum | 0.71% | ||
Risk-free interest rate Maximum | 1.53% | ||
Employee Stock Option, Market-Based | Minimum | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Expected term of options | 1 year 8 months 22 days | ||
Employee Stock Option, Market-Based | Maximum | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Expected term of options | 7 years | ||
Restricted Stock Award, Market-Based | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Expected stock price volatility Minimum | 45.00% | ||
Expected stock price volatility Maximum | 49.00% | ||
Expected dividend yield | 0.00% | ||
Risk-free interest rate Minimum | 0.71% | ||
Risk-free interest rate Maximum | 1.53% | ||
Restricted Stock Award, Market-Based | Minimum | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Expected term of options | 1 year 8 months 22 days | ||
Restricted Stock Award, Market-Based | Maximum | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Expected term of options | 7 years |
STOCK-BASED COMPENSATION - Stoc
STOCK-BASED COMPENSATION - Stock-Based Compensation Expense (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items] | |||
Share-based compensation expense | $ 4,141 | $ 4,906 | $ 7,195 |
Cost of subscription and service revenue | |||
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items] | |||
Share-based compensation expense | 15 | (4) | 44 |
Cost of product revenue | |||
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items] | |||
Share-based compensation expense | 54 | 52 | 57 |
Total included in cost of revenue | |||
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items] | |||
Share-based compensation expense | 69 | 48 | 101 |
Sales and marketing | |||
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items] | |||
Share-based compensation expense | 561 | 998 | 1,327 |
Research & development | |||
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items] | |||
Share-based compensation expense | 255 | 709 | 841 |
General and administrative | |||
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items] | |||
Share-based compensation expense | 3,256 | 3,151 | 4,926 |
Total included in operating expenses | |||
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items] | |||
Share-based compensation expense | $ 4,072 | $ 4,858 | $ 7,094 |
STOCK-BASED COMPENSATION - Rest
STOCK-BASED COMPENSATION - Restricted Stock Awards (Details) - Restricted Stock Award, Service-Based - USD ($) | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Nonvested Outstanding | |||
Balance, beginning of period (in shares) | 374,380 | 341,579 | |
Awards granted (in shares) | 291,406 | 300,650 | |
Awards vested (in shares) | (163,027) | (196,001) | |
Awards cancelled (in shares) | (71,641) | (71,848) | |
Balance, end of period (in shares) | 431,118 | 374,380 | |
Weighted Average Grant Date Fair Value | |||
Balance, beginning of period (in dollars per share) | $ 8.94 | $ 10.61 | |
Awards granted (in dollars per share) | 7.92 | 7.59 | |
Awards vested (in dollars per share) | 9.84 | 9.54 | |
Awards cancelled (in dollars per share) | 8.03 | 9.65 | |
Balance, end of period (in dollars per share) | $ 8.07 | $ 8.94 | |
Aggregate Intrinsic Value | |||
Awards outstanding at Balance Sheet date | $ 3,477,484 | $ 3,348,080 | $ 3,624,153 |
STOCK-BASED COMPENSATION - St71
STOCK-BASED COMPENSATION - Stock Option Activity (Details) - Employee Stock Option, Serviced-Based - USD ($) | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
Options Outstanding | ||
Options Outstanding, beginning of period (in shares) | 1,793,930 | |
Options granted (in shares) | 55,610 | |
Options exercised (in shares) | (79,365) | |
Options cancelled (in shares) | (141,464) | |
Options Outstanding, end of period (in shares) | 1,628,711 | 1,793,930 |
Vested and expected to vest at the end of the period (in shares) | 1,594,473 | |
Exercisable at the end of the period (in shares) | 1,250,476 | |
Weighted Average Exercise Price | ||
Options Outstanding, beginning of period (in dollars per share) | $ 9.81 | |
Options granted (in dollars per share) | 11.24 | |
Options exercised (in dollars per share) | 8.52 | |
Options cancelled (in dollars per share) | 11.10 | |
Options Outstanding, end of period (in dollars per share) | 9.81 | $ 9.81 |
Vested and expected to vest at the end of the period (in dollars per share) | 9.86 | |
Exercisable at the end of the period (in dollars per share) | $ 10.19 | |
Weighted Average Contractual Life (years) | ||
Options Outstanding at balance sheet date | 6 years 9 months 14 days | 7 years 6 months 29 days |
Vested and expected to vest at the end of the period | 6 years 9 months 7 days | |
Exercisable at the end of the period | 6 years 5 months 20 days | |
Aggregate Intrinsic Value | ||
Options outstanding at balance sheet date | $ 5,203,196 | $ 1,154,498 |
Vested and expected to vest at the end of the period | 5,044,582 | |
Exercisable at the end of the period | $ 3,733,000 |
STOCK-BASED COMPENSATION - Re72
STOCK-BASED COMPENSATION - Restricted Stock Units (Details) - Restricted Stock Units (RSUs) - USD ($) | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2017 | |
Units Outstanding | |||
Balance, beginning of period (in shares) | 188,057 | ||
Units granted (in shares) | 46,601 | 67,663 | |
Units released (in shares) | 0 | ||
Units cancelled (in shares) | 0 | ||
Balance, end of period (in shares) | 234,658 | 188,057 | |
Vested and expected to vest at the end of the period, units outstanding (in shares) | 126,166 | ||
Vested and deferred at the end of the period, units outstanding (in shares) | 100,754 | ||
Weighted Average Grant Date Fair Value | |||
Balance, beginning of period (in dollars per share) | $ 9.93 | ||
Units granted (in dollars per share) | 11.23 | ||
Units released (in dollars per share) | 0 | ||
Units cancelled (in dollars per share) | 0 | ||
Balance, end of period (in dollars per share) | $ 10.19 | $ 9.93 | |
Vested and expected to vest at the end of the period (in dollars per share) | $ 11.10 | ||
Vested and deferred at the end of the period (in dollars per share) | $ 11.79 | ||
Aggregate Intrinsic Value | |||
Units Outstanding at balance sheet date | $ 2,926,185 | $ 1,675,588 | $ 2,926,185 |
Units Outstanding at balance sheet date | $ 2,926,185 | $ 1,675,588 | |
Vested and expected to vest at the end of the period | 1,573,286 | ||
Vested and deferred at the end of the period | $ 1,256,402 |
STOCK-BASED COMPENSATION - Perf
STOCK-BASED COMPENSATION - Performance-Based Restricted Stock Units (Details) - Restricted Stock Units, Performance-Based | 12 Months Ended |
Dec. 31, 2017USD ($)$ / sharesshares | |
PSUs | |
Balance, beginning of period (in shares) | shares | 0 |
Awards granted (in shares) | shares | 462,870 |
Awards vested (in shares) | shares | 0 |
Awards cancelled (in shares) | shares | (29,282) |
Balance, end of period (in shares) | shares | 433,588 |
Weighted Average Grant Date Fair Value | |
Balance, beginning of period (in dollars per share) | $ / shares | $ 0 |
Awards granted (in dollars per share) | $ / shares | 9.43 |
Awards vested (in dollars per share) | $ / shares | 0 |
Awards cancelled (in dollars per share) | $ / shares | 9.43 |
Balance, end of period (in dollars per share) | $ / shares | $ 9.43 |
Aggregate Intrinsic Value | |
Balance, beginning of period | $ | $ 0 |
Balance, end of period | $ | $ 5,406,842 |
STOCKHOLDERS' EQUITY (DEFICIT)
STOCKHOLDERS' EQUITY (DEFICIT) - Narrative (Details) - USD ($) | 12 Months Ended | |||||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | Aug. 22, 2013 | |
Stockholders' Equity Note [Abstract] | ||||||
Capital units, authorized (in shares) | 200,000,000 | |||||
Common stock, shares authorized (in shares) | 190,000,000 | 190,000,000 | ||||
Common stock, par value (in dollars per share) | $ 0.00005 | $ 0.00005 | ||||
Preferred stock, shares authorized (in shares) | 10,000,000 | 10,000,000 | ||||
Preferred stock, par value (in dollars per share) | $ 0.001 | $ 0.001 | ||||
Common stock, shares issued (in shares) | 23,782,773 | 23,450,864 | ||||
Common stock, shares outstanding (in shares) | 22,782,773 | 22,450,864 | ||||
Share repurchase program, number of shares authorized to repurchase, value | $ 25,000,000 | |||||
Stock repurchased during the year, value | $ 11,400,000 | |||||
Shares repurchased under the share repurchase program (in shares) | 0 | 0 | 0 | 0 | 1,000,000 | |
Stock repurchased during the year, weighted average price (in dollars per share) | $ 11.44 |
BASIC AND DILUTED NET LOSS PE75
BASIC AND DILUTED NET LOSS PER SHARE - Computation of Basic and Diluted Net Loss Per Common Share (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands | 3 Months Ended | 12 Months Ended | |||||||||
Dec. 31, 2017 | Sep. 30, 2017 | Jun. 30, 2017 | Mar. 31, 2017 | Dec. 31, 2016 | Sep. 30, 2016 | Jun. 30, 2016 | Mar. 31, 2016 | Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Numerator: | |||||||||||
Net loss | $ 2,366 | $ (3,231) | $ (1,135) | $ 454 | $ (5,613) | $ (5,452) | $ (8,978) | $ (7,507) | $ (1,546) | $ (27,550) | $ (46,796) |
Denominator: | |||||||||||
Basic weighted average shares (in shares) | 22,316 | 22,285 | 22,248 | 22,125 | 22,065 | 21,993 | 21,948 | 21,867 | 22,244 | 21,969 | 21,571 |
Diluted weighted average shares (in shares) | 23,248 | 22,285 | 22,248 | 22,590 | 22,065 | 21,993 | 21,948 | 21,867 | 22,244 | 21,969 | 21,571 |
Loss per share: | |||||||||||
Basic (in dollars per share) | $ 0.11 | $ (0.14) | $ (0.05) | $ 0.02 | $ (0.25) | $ (0.25) | $ (0.41) | $ (0.34) | $ (0.07) | $ (1.25) | $ (2.17) |
Diluted (in dollars per share) | $ 0.10 | $ (0.14) | $ (0.05) | $ 0.02 | $ (0.25) | $ (0.25) | $ (0.41) | $ (0.34) | $ (0.07) | $ (1.25) | $ (2.17) |
BASIC AND DILUTED NET LOSS PE76
BASIC AND DILUTED NET LOSS PER SHARE - Dilutive Common Stock Equivalent (Details) - shares shares in Thousands | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | |||
Total common stock equivalent shares (in shares) | 736 | 319 | 156 |
Stock options | |||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | |||
Total common stock equivalent shares (in shares) | 231 | 16 | 35 |
Restricted stock units | |||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | |||
Total common stock equivalent shares (in shares) | 209 | 174 | 39 |
Restricted stocks | |||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | |||
Total common stock equivalent shares (in shares) | 296 | 129 | 82 |
BASIC AND DILUTED NET LOSS PE77
BASIC AND DILUTED NET LOSS PER SHARE - Narrative (Details) - shares shares in Millions | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Earnings Per Share [Abstract] | |||
Common stock (in shares) | 0.7 | 2 | 2.2 |
RESTRUCTURING AND OTHER EMPLO78
RESTRUCTURING AND OTHER EMPLOYEE SEVERANCE - Restructuring Reserve (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Restructuring Reserve [Roll Forward] | |||
Cost Incurred | $ 1,207 | $ 5,193 | $ 8,791 |
Severance costs | |||
Restructuring Reserve [Roll Forward] | |||
Cost Incurred | 1,144 | 4,438 | 7,240 |
Contract termination costs | |||
Restructuring Reserve [Roll Forward] | |||
Cost Incurred | 37 | 165 | 1,134 |
Other costs | |||
Restructuring Reserve [Roll Forward] | |||
Cost Incurred | 26 | 590 | 417 |
Restructuring Plan, 2016 | |||
Restructuring Reserve [Roll Forward] | |||
Accrued lease abandonment costs, beginning of period | 592 | 0 | |
Cost Incurred | (36) | 5,122 | |
Cash Payments | (409) | (4,340) | |
Other Adjustments | 0 | (190) | |
Accrued lease abandonment costs, end of period | 147 | 592 | 0 |
Restructuring Plan, 2016 | Severance costs | |||
Restructuring Reserve [Roll Forward] | |||
Accrued lease abandonment costs, beginning of period | 500 | 0 | |
Cost Incurred | (50) | 4,367 | |
Cash Payments | (303) | (3,867) | |
Other Adjustments | 0 | 0 | |
Accrued lease abandonment costs, end of period | 147 | 500 | 0 |
Restructuring Plan, 2016 | Contract termination costs | |||
Restructuring Reserve [Roll Forward] | |||
Accrued lease abandonment costs, beginning of period | 22 | 0 | |
Cost Incurred | 0 | 165 | |
Cash Payments | (22) | (74) | |
Other Adjustments | 0 | (69) | |
Accrued lease abandonment costs, end of period | 0 | 22 | 0 |
Restructuring Plan, 2016 | Other costs | |||
Restructuring Reserve [Roll Forward] | |||
Accrued lease abandonment costs, beginning of period | 70 | 0 | |
Cost Incurred | 14 | 590 | |
Cash Payments | (84) | (399) | |
Other Adjustments | 0 | (121) | |
Accrued lease abandonment costs, end of period | $ 0 | $ 70 | $ 0 |
RESTRUCTURING AND OTHER EMPLO79
RESTRUCTURING AND OTHER EMPLOYEE SEVERANCE - Narrative (Details) - USD ($) $ in Millions | 3 Months Ended | 12 Months Ended |
Mar. 31, 2017 | Dec. 31, 2017 | |
Accrued Compensation and Other Current Liabilities | ||
Restructuring Cost and Reserve [Line Items] | ||
Restructuring and other employee severance action liability | $ 0.3 | |
Other Restructuring Plan | ||
Restructuring Cost and Reserve [Line Items] | ||
Severance costs | $ 1.2 | |
Other Restructuring Plan | Severance Costs | ||
Restructuring Cost and Reserve [Line Items] | ||
Payments for restructuring | 1.1 | |
Severance costs expected to be paid | $ 0.1 |
RESTRUCTURING AND OTHER EMPLO80
RESTRUCTURING AND OTHER EMPLOYEE SEVERANCE - Restructuring by Type of Costs (Details) - USD ($) $ in Thousands | 12 Months Ended | 36 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2017 | |
Restructuring Cost and Reserve [Line Items] | ||||
Cost Incurred | $ 1,207 | $ 5,193 | $ 8,791 | |
Incurred through end of period | $ 15,191 | |||
Severance costs | ||||
Restructuring Cost and Reserve [Line Items] | ||||
Cost Incurred | 1,144 | 4,438 | 7,240 | |
Incurred through end of period | 12,822 | |||
Contract termination costs | ||||
Restructuring Cost and Reserve [Line Items] | ||||
Cost Incurred | 37 | 165 | 1,134 | |
Incurred through end of period | 1,336 | |||
Other costs | ||||
Restructuring Cost and Reserve [Line Items] | ||||
Cost Incurred | $ 26 | $ 590 | $ 417 | |
Incurred through end of period | $ 1,033 |
RESTRUCTURING AND OTHER EMPLO81
RESTRUCTURING AND OTHER EMPLOYEE SEVERANCE - Restructuring Costs by Income Statement Location (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Restructuring Cost and Reserve [Line Items] | |||
Cost Incurred | $ 1,207 | $ 5,193 | $ 8,791 |
Cost of revenue | |||
Restructuring Cost and Reserve [Line Items] | |||
Cost Incurred | 378 | 573 | 113 |
Sales and marketing | |||
Restructuring Cost and Reserve [Line Items] | |||
Cost Incurred | 411 | 2,324 | 4,492 |
Research and development | |||
Restructuring Cost and Reserve [Line Items] | |||
Cost Incurred | 318 | 913 | 602 |
General and administrative | |||
Restructuring Cost and Reserve [Line Items] | |||
Cost Incurred | $ 100 | $ 1,383 | $ 3,584 |
LEASE ABANDONMENT AND TERMINA82
LEASE ABANDONMENT AND TERMINATION - Narrative (Details) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended | |||
Dec. 31, 2016 | Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
Restructuring Cost and Reserve [Line Items] | |||||
Lease abandonment charge | $ 1,207 | $ 5,193 | $ 8,791 | ||
Lease abandonment expense | 0 | 1,644 | $ 55 | ||
Facility Closing | |||||
Restructuring Cost and Reserve [Line Items] | |||||
Lease abandonment charge | $ 0 | $ 1,644 | |||
Facility Closing | Virginia | |||||
Restructuring Cost and Reserve [Line Items] | |||||
Lease abandonment charge | $ 3,200 | ||||
Lease abandonment expense | $ 1,600 |
LEASE ABANDONMENT AND TERMINA83
LEASE ABANDONMENT AND TERMINATION - Lease Abandonment Activity (Details) - USD ($) $ in Thousands | 12 Months Ended | ||||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2017 | Dec. 31, 2016 | |
Restructuring Reserve [Roll Forward] | |||||
Costs incurred and charged to expense | $ 1,207 | $ 5,193 | $ 8,791 | ||
Facility Closing | |||||
Restructuring Reserve [Roll Forward] | |||||
Accrued lease abandonment costs, beginning of period | 2,123 | 1,282 | |||
Costs incurred and charged to expense | 0 | 1,644 | |||
Principal reductions | (1,042) | (803) | |||
Accrued lease abandonment costs, end of period | 1,081 | 2,123 | 1,282 | ||
Accrued lease abandonment costs liability: | |||||
Short-term | $ 1,081 | $ 1,047 | |||
Long-term | 0 | 1,076 | |||
Total | $ 2,123 | $ 1,282 | $ 1,282 | $ 1,081 | $ 2,123 |
INCOME TAXES - Narrative (Detai
INCOME TAXES - Narrative (Details) - USD ($) | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Income Tax Disclosure [Abstract] | |||
Tax cut benefit | $ 2,400,000 | ||
Income tax benefit to remeasure deferred tax liabilities | 26,300,000 | ||
Offsetting valuation allowance benefit | $ 26,300,000 | ||
Deferred tax liability, percentage offset | 80.00% | ||
Income tax benefit, related to intangibles | $ 3,100,000 | ||
Income tax (benefit) expense | (2,499,000) | $ 2,503,000 | $ 1,159,000 |
Income tax benefit, change in tax rate | (5,500,000) | ||
Unrecognized tax benefits | 0 | 0 | |
Income tax payments | 2,200,000 | 800,000 | $ 1,400,000 |
Unrecognized Tax Benefits, Income Tax Penalties and Interest Accrued | $ 0 | $ 0 |
INCOME TAXES - Schedule of Defe
INCOME TAXES - Schedule of Deferred Tax Assets and Liabilities (Details) - USD ($) $ in Thousands | Dec. 31, 2017 | Dec. 31, 2016 |
Deferred tax assets: | ||
Inventory | $ 847 | $ 735 |
Net operating and capital loss carryforwards | 46,683 | 61,174 |
Deferred revenue | 11,534 | 10,862 |
Accrued liabilities | 4,064 | 6,975 |
Stock-based compensation | 3,790 | 4,440 |
Amortization and depreciation | 773 | 1,056 |
Bad debt reserve | 90 | 389 |
Foreign and other tax credits | 2,047 | 1,881 |
Gross deferred tax assets | 69,828 | 87,512 |
Valuation allowance | (60,302) | (78,363) |
Net deferred tax assets | 9,526 | 9,149 |
Deferred tax liabilities: | ||
Goodwill and indefinite lived intangibles | (5,033) | (6,098) |
Deferred sales commissions | (4,996) | (7,060) |
Prepaid expenses | (619) | (656) |
Foreign currency translation | (846) | (1,508) |
Gross deferred tax liabilities | (11,494) | (15,322) |
Net deferred tax liabilities | $ (1,968) | $ (6,173) |
INCOME TAXES - Net Operating Lo
INCOME TAXES - Net Operating Losses Carryforward and Tax Credit Carryforward (Details) $ in Thousands | Dec. 31, 2017USD ($) |
Operating Loss Carryforwards [Line Items] | |
Operating loss carryforward, amount | $ 276,814 |
U.S. Federal | |
Operating Loss Carryforwards [Line Items] | |
Operating loss carryforward, amount | 129,464 |
Capital loss carryforward, amount | 21,972 |
Tax credit carryforward, amount | 2,048 |
State | |
Operating Loss Carryforwards [Line Items] | |
Operating loss carryforward, amount | 134,439 |
Capital loss carryforward, amount | 17,867 |
Brazil | Foreign | |
Operating Loss Carryforwards [Line Items] | |
Operating loss carryforward, amount | 4,160 |
France | Foreign | |
Operating Loss Carryforwards [Line Items] | |
Operating loss carryforward, amount | 7,673 |
Spain | Foreign | |
Operating Loss Carryforwards [Line Items] | |
Operating loss carryforward, amount | 701 |
Mexico | Foreign | |
Operating Loss Carryforwards [Line Items] | |
Operating loss carryforward, amount | 377 |
2018-2022 | |
Operating Loss Carryforwards [Line Items] | |
Operating loss carryforward, amount | 409 |
2018-2022 | U.S. Federal | |
Operating Loss Carryforwards [Line Items] | |
Operating loss carryforward, amount | 0 |
Capital loss carryforward, amount | 6,837 |
Tax credit carryforward, amount | 0 |
2018-2022 | State | |
Operating Loss Carryforwards [Line Items] | |
Operating loss carryforward, amount | 409 |
Capital loss carryforward, amount | 2,351 |
2018-2022 | Brazil | Foreign | |
Operating Loss Carryforwards [Line Items] | |
Operating loss carryforward, amount | 0 |
2018-2022 | France | Foreign | |
Operating Loss Carryforwards [Line Items] | |
Operating loss carryforward, amount | 0 |
2018-2022 | Spain | Foreign | |
Operating Loss Carryforwards [Line Items] | |
Operating loss carryforward, amount | 0 |
2018-2022 | Mexico | Foreign | |
Operating Loss Carryforwards [Line Items] | |
Operating loss carryforward, amount | 0 |
2023-2027 | |
Operating Loss Carryforwards [Line Items] | |
Operating loss carryforward, amount | 5,835 |
2023-2027 | U.S. Federal | |
Operating Loss Carryforwards [Line Items] | |
Operating loss carryforward, amount | 0 |
Capital loss carryforward, amount | 15,135 |
Tax credit carryforward, amount | 1,638 |
2023-2027 | State | |
Operating Loss Carryforwards [Line Items] | |
Operating loss carryforward, amount | 5,458 |
Capital loss carryforward, amount | 14,990 |
2023-2027 | Brazil | Foreign | |
Operating Loss Carryforwards [Line Items] | |
Operating loss carryforward, amount | 0 |
2023-2027 | France | Foreign | |
Operating Loss Carryforwards [Line Items] | |
Operating loss carryforward, amount | 0 |
2023-2027 | Spain | Foreign | |
Operating Loss Carryforwards [Line Items] | |
Operating loss carryforward, amount | 0 |
2023-2027 | Mexico | Foreign | |
Operating Loss Carryforwards [Line Items] | |
Operating loss carryforward, amount | 377 |
2028-2032 | |
Operating Loss Carryforwards [Line Items] | |
Operating loss carryforward, amount | 18,255 |
2028-2032 | U.S. Federal | |
Operating Loss Carryforwards [Line Items] | |
Operating loss carryforward, amount | 471 |
Capital loss carryforward, amount | 0 |
Tax credit carryforward, amount | 166 |
2028-2032 | State | |
Operating Loss Carryforwards [Line Items] | |
Operating loss carryforward, amount | 17,784 |
Capital loss carryforward, amount | 164 |
2028-2032 | Brazil | Foreign | |
Operating Loss Carryforwards [Line Items] | |
Operating loss carryforward, amount | 0 |
2028-2032 | France | Foreign | |
Operating Loss Carryforwards [Line Items] | |
Operating loss carryforward, amount | 0 |
2028-2032 | Spain | Foreign | |
Operating Loss Carryforwards [Line Items] | |
Operating loss carryforward, amount | 0 |
2028-2032 | Mexico | Foreign | |
Operating Loss Carryforwards [Line Items] | |
Operating loss carryforward, amount | 0 |
2033-2037 | |
Operating Loss Carryforwards [Line Items] | |
Operating loss carryforward, amount | 233,849 |
2033-2037 | U.S. Federal | |
Operating Loss Carryforwards [Line Items] | |
Operating loss carryforward, amount | 125,759 |
Capital loss carryforward, amount | 0 |
Tax credit carryforward, amount | 218 |
2033-2037 | State | |
Operating Loss Carryforwards [Line Items] | |
Operating loss carryforward, amount | 108,086 |
Capital loss carryforward, amount | 362 |
2033-2037 | Brazil | Foreign | |
Operating Loss Carryforwards [Line Items] | |
Operating loss carryforward, amount | 0 |
2033-2037 | France | Foreign | |
Operating Loss Carryforwards [Line Items] | |
Operating loss carryforward, amount | 0 |
2033-2037 | Spain | Foreign | |
Operating Loss Carryforwards [Line Items] | |
Operating loss carryforward, amount | 4 |
2033-2037 | Mexico | Foreign | |
Operating Loss Carryforwards [Line Items] | |
Operating loss carryforward, amount | 0 |
2038-2042 | |
Operating Loss Carryforwards [Line Items] | |
Operating loss carryforward, amount | 5,936 |
2038-2042 | U.S. Federal | |
Operating Loss Carryforwards [Line Items] | |
Operating loss carryforward, amount | 3,234 |
Capital loss carryforward, amount | 0 |
Tax credit carryforward, amount | 0 |
2038-2042 | State | |
Operating Loss Carryforwards [Line Items] | |
Operating loss carryforward, amount | 2,702 |
Capital loss carryforward, amount | 0 |
2038-2042 | Brazil | Foreign | |
Operating Loss Carryforwards [Line Items] | |
Operating loss carryforward, amount | 0 |
2038-2042 | France | Foreign | |
Operating Loss Carryforwards [Line Items] | |
Operating loss carryforward, amount | 0 |
2038-2042 | Spain | Foreign | |
Operating Loss Carryforwards [Line Items] | |
Operating loss carryforward, amount | 0 |
2038-2042 | Mexico | Foreign | |
Operating Loss Carryforwards [Line Items] | |
Operating loss carryforward, amount | 0 |
Indefinite | |
Operating Loss Carryforwards [Line Items] | |
Operating loss carryforward, amount | 12,530 |
Indefinite | U.S. Federal | |
Operating Loss Carryforwards [Line Items] | |
Operating loss carryforward, amount | 0 |
Capital loss carryforward, amount | 0 |
Tax credit carryforward, amount | 26 |
Indefinite | State | |
Operating Loss Carryforwards [Line Items] | |
Operating loss carryforward, amount | 0 |
Capital loss carryforward, amount | 0 |
Indefinite | Brazil | Foreign | |
Operating Loss Carryforwards [Line Items] | |
Operating loss carryforward, amount | 4,160 |
Indefinite | France | Foreign | |
Operating Loss Carryforwards [Line Items] | |
Operating loss carryforward, amount | 7,673 |
Indefinite | Spain | Foreign | |
Operating Loss Carryforwards [Line Items] | |
Operating loss carryforward, amount | 697 |
Indefinite | Mexico | Foreign | |
Operating Loss Carryforwards [Line Items] | |
Operating loss carryforward, amount | $ 0 |
INCOME TAXES - Loss Before Inco
INCOME TAXES - Loss Before Income Taxes and Provision for Taxes (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Components of income (loss) before income tax expense | |||
United States | $ (12,648) | $ (24,963) | $ (41,458) |
Foreign | 8,603 | (84) | (4,179) |
Loss before income taxes | (4,045) | (25,047) | (45,637) |
The provision for taxes on income consists of the following (in thousands): | |||
Federal | 0 | 0 | (157) |
State | (21) | 78 | 96 |
Foreign | 1,701 | 1,250 | 444 |
Total current | 1,680 | 1,328 | 383 |
Deferred: | |||
Federal | (4,541) | 1,147 | 1,148 |
State | 335 | 169 | 169 |
Foreign | 27 | (141) | (541) |
Total deferred | (4,179) | 1,175 | 776 |
(Benefit) provision for income taxes | $ (2,499) | $ 2,503 | $ 1,159 |
INCOME TAXES - Reconciliation o
INCOME TAXES - Reconciliation of Income Tax Provision (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Income Tax Disclosure [Abstract] | |||
Income tax benefit at statutory federal rate | $ (1,416) | $ (8,766) | $ (15,973) |
Remeasurement of deferred tax liability related to indefinite-lived intangible due to U.S. rate reduction, effective January 1, 2018 | (2,586) | 0 | 0 |
Release of valuation allowance due to change in U.S. net operating loss carry forward period | (3,103) | 0 | 0 |
Shortfall in tax benefit - stock compensation | 233 | 0 | 0 |
State income tax expense, net of federal income tax effect | 314 | 219 | 231 |
Tax capital loss in excess of book loss on sale of Japan subsidiary | (5,297) | 0 | 0 |
Nondeductible goodwill impairment | 0 | 604 | 1,961 |
Other nondeductible expenses | 398 | 384 | 88 |
Tax rate differential on foreign operations | (816) | (474) | (1,019) |
Increase in valuation allowance | 9,446 | 10,404 | 15,713 |
Tax audit settlements | 0 | 0 | (96) |
Change in prior year estimates | 150 | 0 | 225 |
Other tax credits | 173 | 129 | 29 |
Other | 5 | 3 | 0 |
(Benefit) provision for income taxes | $ (2,499) | $ 2,503 | $ 1,159 |
COMMITMENTS AND CONTINGENCIES -
COMMITMENTS AND CONTINGENCIES - Future Minimum Operating Lease Payments (Details) $ in Thousands | Dec. 31, 2017USD ($) |
Commitments and Contingencies Disclosure [Abstract] | |
2,018 | $ 4,419 |
2,019 | 1,742 |
2,020 | 1,004 |
2,021 | 590 |
2,022 | 0 |
Thereafter | 0 |
Total future minimum operating lease payments | $ 7,755 |
COMMITMENTS AND CONTINGENCIES90
COMMITMENTS AND CONTINGENCIES - Narrative (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Commitments and Contingencies Disclosure [Abstract] | |||
Rent expense | $ 2.6 | $ 4 | $ 5.1 |
Royalty expense | $ 1 | $ 0.3 | $ 0.2 |
EMPLOYEE BENEFIT PLAN - Narrati
EMPLOYEE BENEFIT PLAN - Narrative (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
EMPLOYEE BENEFIT PLAN | |||
Expenses for the plan | $ 2.1 | $ 2 | $ 2 |
Maximum | |||
EMPLOYEE BENEFIT PLAN | |||
Percentage of contributions vested | 4.00% |
RELATED PARTIES - Narrative (De
RELATED PARTIES - Narrative (Details) - USD ($) $ in Thousands | Dec. 31, 2017 | Dec. 31, 2016 |
Related Party Transactions [Abstract] | ||
Outstanding receivables from employees | $ 100 | $ 22 |
SEGMENT INFORMATION - Operating
SEGMENT INFORMATION - Operating Results by Segment (Details) - USD ($) | 3 Months Ended | 6 Months Ended | 12 Months Ended | |||||||||
Dec. 31, 2017 | Sep. 30, 2017 | Jun. 30, 2017 | Mar. 31, 2017 | Dec. 31, 2016 | Sep. 30, 2016 | Jun. 30, 2016 | Mar. 31, 2016 | Jun. 30, 2016 | Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Segment Reporting Information [Line Items] | ||||||||||||
Revenue | $ 44,789,000 | $ 46,206,000 | $ 45,905,000 | $ 47,693,000 | $ 51,678,000 | $ 48,693,000 | $ 45,716,000 | $ 48,002,000 | $ 184,593,000 | $ 194,089,000 | $ 217,670,000 | |
Segment contribution: | ||||||||||||
Cost of revenue | 33,621,000 | 34,321,000 | 38,527,000 | |||||||||
Sales and marketing | 96,660,000 | 114,340,000 | 136,084,000 | |||||||||
Research and development | 24,747,000 | 26,273,000 | 29,939,000 | |||||||||
General and administrative | 34,066,000 | 40,501,000 | 50,124,000 | |||||||||
Loss from operations | (4,501,000) | (26,920,000) | (43,813,000) | |||||||||
Unallocated depreciation and amortization, stock compensation, restructuring and other expenses (net) included in: | ||||||||||||
Cost of revenue | 33,621,000 | 34,321,000 | 38,527,000 | |||||||||
Sales and marketing | 96,660,000 | 114,340,000 | 136,084,000 | |||||||||
Research and development | 24,747,000 | 26,273,000 | 29,939,000 | |||||||||
General and administrative | 34,066,000 | 40,501,000 | 50,124,000 | |||||||||
Corporate unallocated expenses, net: | ||||||||||||
Unallocated general and administrative | 34,066,000 | 40,501,000 | 50,124,000 | |||||||||
Unallocated lease abandonment and termination | 0 | 1,644,000 | 55,000 | |||||||||
Unallocated impairment | 0 | 1,740,000 | ||||||||||
Unallocated non-operating income | 456,000 | 1,873,000 | (1,824,000) | |||||||||
Loss before income taxes | (4,045,000) | (25,047,000) | (45,637,000) | |||||||||
Operating Segments | ||||||||||||
Segment contribution: | ||||||||||||
Cost of revenue | 27,608,000 | 28,679,000 | 35,471,000 | |||||||||
Sales and marketing | 93,283,000 | 108,501,000 | 127,957,000 | |||||||||
Research and development | 22,339,000 | 22,985,000 | 26,643,000 | |||||||||
General and administrative | 2,022,000 | 2,567,000 | 3,291,000 | |||||||||
Loss from operations | 39,341,000 | 31,357,000 | 24,308,000 | |||||||||
Unallocated depreciation and amortization, stock compensation, restructuring and other expenses (net) included in: | ||||||||||||
Cost of revenue | 27,608,000 | 28,679,000 | 35,471,000 | |||||||||
Sales and marketing | 93,283,000 | 108,501,000 | 127,957,000 | |||||||||
Research and development | 22,339,000 | 22,985,000 | 26,643,000 | |||||||||
General and administrative | 2,022,000 | 2,567,000 | 3,291,000 | |||||||||
Corporate unallocated expenses, net: | ||||||||||||
Unallocated general and administrative | 2,022,000 | 2,567,000 | 3,291,000 | |||||||||
Loss before income taxes | (4,045,000) | (25,047,000) | (45,637,000) | |||||||||
Shared Services | ||||||||||||
Segment contribution: | ||||||||||||
Cost of revenue | 50,000 | (17,000) | (19,000) | |||||||||
Sales and marketing | 1,459,000 | 1,902,000 | 3,661,000 | |||||||||
Research and development | 15,860,000 | 18,874,000 | 22,101,000 | |||||||||
General and administrative | 0 | 0 | 0 | |||||||||
Loss from operations | (17,369,000) | (20,759,000) | (25,743,000) | |||||||||
Unallocated depreciation and amortization, stock compensation, restructuring and other expenses (net) included in: | ||||||||||||
Cost of revenue | 50,000 | (17,000) | (19,000) | |||||||||
Sales and marketing | 1,459,000 | 1,902,000 | 3,661,000 | |||||||||
Research and development | 15,860,000 | 18,874,000 | 22,101,000 | |||||||||
General and administrative | 0 | 0 | 0 | |||||||||
Corporate unallocated expenses, net: | ||||||||||||
Unallocated general and administrative | 0 | 0 | 0 | |||||||||
Segment Reconciling Items | ||||||||||||
Segment contribution: | ||||||||||||
Cost of revenue | 6,013,000 | 5,642,000 | 3,056,000 | |||||||||
Sales and marketing | 3,377,000 | 5,839,000 | 8,127,000 | |||||||||
Research and development | 2,408,000 | 3,288,000 | 3,296,000 | |||||||||
General and administrative | 6,348,000 | 10,935,000 | 15,565,000 | |||||||||
Unallocated depreciation and amortization, stock compensation, restructuring and other expenses (net) included in: | ||||||||||||
Cost of revenue | 6,013,000 | 5,642,000 | 3,056,000 | |||||||||
Sales and marketing | 3,377,000 | 5,839,000 | 8,127,000 | |||||||||
Research and development | 2,408,000 | 3,288,000 | 3,296,000 | |||||||||
General and administrative | 6,348,000 | 10,935,000 | 15,565,000 | |||||||||
Subtotal | 18,146,000 | 25,704,000 | 30,044,000 | |||||||||
Corporate unallocated expenses, net: | ||||||||||||
Unallocated general and administrative | 6,348,000 | 10,935,000 | 15,565,000 | |||||||||
Corporate, Non-Segment | ||||||||||||
Segment contribution: | ||||||||||||
General and administrative | 25,696,000 | 26,999,000 | 31,268,000 | |||||||||
Unallocated depreciation and amortization, stock compensation, restructuring and other expenses (net) included in: | ||||||||||||
General and administrative | 25,696,000 | 26,999,000 | 31,268,000 | |||||||||
Corporate unallocated expenses, net: | ||||||||||||
Unallocated general and administrative | 25,696,000 | 26,999,000 | 31,268,000 | |||||||||
Unallocated lease abandonment and termination | (456,000) | (1,873,000) | 1,824,000 | |||||||||
Unallocated impairment | 3,930,000 | 6,754,000 | ||||||||||
Unallocated non-operating income | (1,644,000) | (55,000) | ||||||||||
Subtotal | 25,240,000 | 30,700,000 | 39,901,000 | |||||||||
Literacy Segment | ||||||||||||
Segment Reporting Information [Line Items] | ||||||||||||
Revenue | $ 43,608,000 | $ 34,123,000 | $ 21,928,000 | |||||||||
Segment contribution: | ||||||||||||
Segment contribution margin % | 11.40% | 4.50% | (15.80%) | |||||||||
Corporate unallocated expenses, net: | ||||||||||||
Unallocated impairment | $ 0 | $ 0 | ||||||||||
Literacy Segment | Operating Segments | ||||||||||||
Segment contribution: | ||||||||||||
Cost of revenue | $ 6,924,000 | 4,753,000 | $ 2,574,000 | |||||||||
Sales and marketing | 23,369,000 | 21,650,000 | 16,628,000 | |||||||||
Research and development | 6,479,000 | 4,111,000 | 4,542,000 | |||||||||
General and administrative | 1,872,000 | 2,077,000 | 1,647,000 | |||||||||
Loss from operations | 4,964,000 | 1,532,000 | (3,463,000) | |||||||||
Unallocated depreciation and amortization, stock compensation, restructuring and other expenses (net) included in: | ||||||||||||
Cost of revenue | 6,924,000 | 4,753,000 | 2,574,000 | |||||||||
Sales and marketing | 23,369,000 | 21,650,000 | 16,628,000 | |||||||||
Research and development | 6,479,000 | 4,111,000 | 4,542,000 | |||||||||
General and administrative | 1,872,000 | 2,077,000 | 1,647,000 | |||||||||
Corporate unallocated expenses, net: | ||||||||||||
Unallocated general and administrative | 1,872,000 | 2,077,000 | 1,647,000 | |||||||||
E&E Language Segment | ||||||||||||
Segment Reporting Information [Line Items] | ||||||||||||
Revenue | $ 65,267,000 | $ 72,083,000 | $ 76,129,000 | |||||||||
Segment contribution: | ||||||||||||
Segment contribution margin % | 41.20% | 40.30% | 29.90% | |||||||||
E&E Language Segment | Operating Segments | ||||||||||||
Segment contribution: | ||||||||||||
Cost of revenue | $ 7,149,000 | $ 9,245,000 | $ 12,124,000 | |||||||||
Sales and marketing | 31,089,000 | 33,441,000 | 40,829,000 | |||||||||
Research and development | 0 | 0 | 0 | |||||||||
General and administrative | 132,000 | 315,000 | 400,000 | |||||||||
Loss from operations | 26,897,000 | 29,082,000 | 22,776,000 | |||||||||
Unallocated depreciation and amortization, stock compensation, restructuring and other expenses (net) included in: | ||||||||||||
Cost of revenue | 7,149,000 | 9,245,000 | 12,124,000 | |||||||||
Sales and marketing | 31,089,000 | 33,441,000 | 40,829,000 | |||||||||
Research and development | 0 | 0 | 0 | |||||||||
General and administrative | 132,000 | 315,000 | 400,000 | |||||||||
Corporate unallocated expenses, net: | ||||||||||||
Unallocated general and administrative | 132,000 | 315,000 | 400,000 | |||||||||
Consumer Language Segment | ||||||||||||
Segment Reporting Information [Line Items] | ||||||||||||
Revenue | $ 75,718,000 | $ 87,883,000 | $ 119,613,000 | |||||||||
Segment contribution: | ||||||||||||
Segment contribution margin % | 32.80% | 24.50% | 25.70% | |||||||||
Corporate unallocated expenses, net: | ||||||||||||
Unallocated impairment | $ 1,740,000 | |||||||||||
Consumer Language Segment | Operating Segments | ||||||||||||
Segment contribution: | ||||||||||||
Cost of revenue | $ 13,485,000 | 14,698,000 | $ 20,792,000 | |||||||||
Sales and marketing | 37,366,000 | 51,508,000 | 66,839,000 | |||||||||
Research and development | 0 | 0 | 0 | |||||||||
General and administrative | 18,000 | 175,000 | 1,244,000 | |||||||||
Loss from operations | 24,849,000 | 21,502,000 | 30,738,000 | |||||||||
Unallocated depreciation and amortization, stock compensation, restructuring and other expenses (net) included in: | ||||||||||||
Cost of revenue | 13,485,000 | 14,698,000 | 20,792,000 | |||||||||
Sales and marketing | 37,366,000 | 51,508,000 | 66,839,000 | |||||||||
Research and development | 0 | 0 | 0 | |||||||||
General and administrative | 18,000 | 175,000 | 1,244,000 | |||||||||
Corporate unallocated expenses, net: | ||||||||||||
Unallocated general and administrative | 18,000 | 175,000 | 1,244,000 | |||||||||
Combined Language | ||||||||||||
Segment Reporting Information [Line Items] | ||||||||||||
Revenue | 140,985,000 | 159,966,000 | 195,742,000 | |||||||||
Segment contribution: | ||||||||||||
Cost of revenue | 20,684,000 | 23,926,000 | 32,897,000 | |||||||||
Sales and marketing | 69,914,000 | 86,851,000 | 111,329,000 | |||||||||
Research and development | 15,860,000 | 18,874,000 | 22,101,000 | |||||||||
General and administrative | 150,000 | 490,000 | 1,644,000 | |||||||||
Loss from operations | 34,377,000 | 29,825,000 | 27,771,000 | |||||||||
Unallocated depreciation and amortization, stock compensation, restructuring and other expenses (net) included in: | ||||||||||||
Cost of revenue | 20,684,000 | 23,926,000 | 32,897,000 | |||||||||
Sales and marketing | 69,914,000 | 86,851,000 | 111,329,000 | |||||||||
Research and development | 15,860,000 | 18,874,000 | 22,101,000 | |||||||||
General and administrative | 150,000 | 490,000 | 1,644,000 | |||||||||
Corporate unallocated expenses, net: | ||||||||||||
Unallocated general and administrative | $ 150,000 | $ 490,000 | $ 1,644,000 |
SEGMENT INFORMATION - Geographi
SEGMENT INFORMATION - Geographic Area (Details) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended | |||||||||
Dec. 31, 2017 | Sep. 30, 2017 | Jun. 30, 2017 | Mar. 31, 2017 | Dec. 31, 2016 | Sep. 30, 2016 | Jun. 30, 2016 | Mar. 31, 2016 | Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Geographic Information | |||||||||||
Total revenue | $ 44,789 | $ 46,206 | $ 45,905 | $ 47,693 | $ 51,678 | $ 48,693 | $ 45,716 | $ 48,002 | $ 184,593 | $ 194,089 | $ 217,670 |
Long-lived assets | 30,649 | 24,795 | 30,649 | 24,795 | |||||||
United States | |||||||||||
Geographic Information | |||||||||||
Total revenue | 158,825 | 162,815 | 177,966 | ||||||||
Long-lived assets | 27,647 | 21,652 | 27,647 | 21,652 | |||||||
International | |||||||||||
Geographic Information | |||||||||||
Total revenue | 25,768 | 31,274 | $ 39,704 | ||||||||
Long-lived assets | $ 3,002 | $ 3,143 | $ 3,002 | $ 3,143 |
SEGMENT INFORMATION - Revenue b
SEGMENT INFORMATION - Revenue by Product and Service (Details) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended | |||||||||
Dec. 31, 2017 | Sep. 30, 2017 | Jun. 30, 2017 | Mar. 31, 2017 | Dec. 31, 2016 | Sep. 30, 2016 | Jun. 30, 2016 | Mar. 31, 2016 | Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Revenue from External Customer [Line Items] | |||||||||||
Total revenue | $ 44,789 | $ 46,206 | $ 45,905 | $ 47,693 | $ 51,678 | $ 48,693 | $ 45,716 | $ 48,002 | $ 184,593 | $ 194,089 | $ 217,670 |
Language learning | |||||||||||
Revenue from External Customer [Line Items] | |||||||||||
Total revenue | 138,082 | 155,532 | 191,568 | ||||||||
Literacy | |||||||||||
Revenue from External Customer [Line Items] | |||||||||||
Total revenue | 43,608 | 34,123 | 21,928 | ||||||||
Brain Fitness | |||||||||||
Revenue from External Customer [Line Items] | |||||||||||
Total revenue | $ 2,903 | $ 4,434 | $ 4,174 |
VALUATION AND QUALIFYING ACCO96
VALUATION AND QUALIFYING ACCOUNTS - Schedule of Valuation and Qualifying Accounts (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Allowance for doubtful accounts: | |||
Movement in Valuation Allowances and Reserves [Roll Forward] | |||
Beginning balance | $ 1,072 | $ 1,196 | $ 1,434 |
Charged to costs and expenses | (51) | 709 | 1,657 |
Deductions | (646) | (833) | (1,895) |
Ending balance | 375 | 1,072 | 1,196 |
Promotional rebate and coop advertising reserves: | |||
Movement in Valuation Allowances and Reserves [Roll Forward] | |||
Beginning balance | 5,968 | 16,910 | 23,437 |
Charged to costs and expenses | 6,421 | 18,337 | 40,563 |
Deductions | (10,014) | (29,279) | (47,090) |
Ending balance | 2,375 | 5,968 | 16,910 |
Sales return reserve: | |||
Movement in Valuation Allowances and Reserves [Roll Forward] | |||
Beginning balance | 1,338 | 3,728 | 3,570 |
Deductions | (5,105) | (7,424) | (11,316) |
Charged against revenue | 4,943 | 5,034 | 11,474 |
Ending balance | 1,176 | 1,338 | 3,728 |
Deferred income tax asset valuation allowance: | |||
Movement in Valuation Allowances and Reserves [Roll Forward] | |||
Beginning balance | 78,363 | 70,464 | 53,809 |
Charged to costs and expenses | (16,806) | 7,899 | 16,655 |
Deductions | (1,255) | 0 | 0 |
Ending balance | $ 60,302 | $ 78,363 | $ 70,464 |
SUPPLEMENTAL QUARTERLY FINANC97
SUPPLEMENTAL QUARTERLY FINANCIAL INFORMATION (Unaudited) - Quarterly Supplemental Consolidated Financial Information (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands | 3 Months Ended | 12 Months Ended | |||||||||
Dec. 31, 2017 | Sep. 30, 2017 | Jun. 30, 2017 | Mar. 31, 2017 | Dec. 31, 2016 | Sep. 30, 2016 | Jun. 30, 2016 | Mar. 31, 2016 | Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Quarterly Financial Information Disclosure [Abstract] | |||||||||||
Revenue | $ 44,789 | $ 46,206 | $ 45,905 | $ 47,693 | $ 51,678 | $ 48,693 | $ 45,716 | $ 48,002 | $ 184,593 | $ 194,089 | $ 217,670 |
Gross profit | 36,348 | 36,758 | 38,314 | 39,552 | 41,740 | 40,322 | 37,752 | 39,954 | 150,972 | 159,768 | 179,143 |
Net income (loss) | $ 2,366 | $ (3,231) | $ (1,135) | $ 454 | $ (5,613) | $ (5,452) | $ (8,978) | $ (7,507) | $ (1,546) | $ (27,550) | $ (46,796) |
Basic income (loss) per share (in dollars per share) | $ 0.11 | $ (0.14) | $ (0.05) | $ 0.02 | $ (0.25) | $ (0.25) | $ (0.41) | $ (0.34) | $ (0.07) | $ (1.25) | $ (2.17) |
Shares used in basic per share computation (in shares) | 22,316 | 22,285 | 22,248 | 22,125 | 22,065 | 21,993 | 21,948 | 21,867 | 22,244 | 21,969 | 21,571 |
Diluted income (loss) per share (in dollars per share) | $ 0.10 | $ (0.14) | $ (0.05) | $ 0.02 | $ (0.25) | $ (0.25) | $ (0.41) | $ (0.34) | $ (0.07) | $ (1.25) | $ (2.17) |
Shares used in diluted per share computation (in shares) | 23,248 | 22,285 | 22,248 | 22,590 | 22,065 | 21,993 | 21,948 | 21,867 | 22,244 | 21,969 | 21,571 |
SUBSEQUENT EVENTS (Narrative) (
SUBSEQUENT EVENTS (Narrative) (Details) - Collaborative Arrangement - USD ($) | Feb. 26, 2018 | Jun. 19, 2017 | Mar. 13, 2017 | Sep. 30, 2017 |
Subsequent Event [Line Items] | ||||
Licensing agreement term, in years | 2 years | |||
Proceeds from license fees received | $ 2,000,000 | $ 9,000,000 | ||
Estimated proceeds from license fees, additional minimum payment | $ 6,000,000 | |||
Subsequent Event | ||||
Subsequent Event [Line Items] | ||||
Licensing agreement term, in years | 5 years | |||
Proceeds from license fees received | $ 4,500,000 | |||
Estimated proceeds from license fees, additional minimum payment | $ 6,000,000 |