Document_and_Entity_Informatio
Document and Entity Information Document | 3 Months Ended | |
Mar. 31, 2015 | Apr. 21, 2015 | |
Document and Entity Information [Abstract] | ||
Entity Registrant Name | ETSY INC | |
Entity Central Index Key | 1370637 | |
Current Fiscal Year End Date | -19 | |
Entity Filer Category | Non-accelerated Filer | |
Document Type | 10-Q | |
Document Period End Date | 31-Mar-15 | |
Document Fiscal Year Focus | 2015 | |
Document Fiscal Period Focus | Q1 | |
Amendment Flag | FALSE | |
Entity Common Stock, Shares Outstanding | 111,784,588 |
Consolidated_Balance_Sheets_Un
Consolidated Balance Sheets (Unaudited) (USD $) | Mar. 31, 2015 | Dec. 31, 2014 |
In Thousands, unless otherwise specified | ||
Current assets: | ||
Cash and cash equivalents | $70,739 | $69,659 |
Short-term investments | 21,533 | 19,184 |
Accounts receivable, net of allowance for doubtful accounts of $1,841 and $2,306 as of December 31, 2014 and March 31, 2015, respectively | 14,513 | 15,404 |
Prepaid and other current assets | 10,789 | 12,241 |
Deferred tax assets—current | 2,932 | 2,932 |
Deferred tax charge—current | 9,687 | 0 |
Funds receivable and seller accounts | 12,095 | 10,573 |
Total current assets | 142,288 | 129,993 |
Restricted cash | 5,341 | 5,341 |
Property and equipment, net | 78,438 | 75,538 |
Goodwill | 28,225 | 30,831 |
Intangible assets, net | 4,524 | 5,410 |
Deferred tax charge—net of current portion | 70,422 | 0 |
Other assets | 2,124 | 2,022 |
Total assets | 331,362 | 249,135 |
Current liabilities: | ||
Accounts payable | 7,058 | 8,231 |
Accrued expenses and other current liabilities | 21,893 | 17,442 |
Capital lease obligations—current | 2,181 | 1,755 |
Funds payable and amounts due to sellers | 12,095 | 10,573 |
Deferred revenue | 3,639 | 3,452 |
Total current liabilities | 46,866 | 41,453 |
Capital lease obligations—net of current portion | 3,542 | 3,148 |
Warrant liability | 1,915 | 1,920 |
Deferred tax liabilities | 70,849 | 3,081 |
Facility financing obligation | 51,507 | 50,320 |
Other liabilities | 21,569 | 1,913 |
Total liabilities | 196,248 | 101,835 |
Commitments and contingencies | ||
Convertible preferred stock (25,000,000 shares authorized pro forma): | ||
Carrying Values | 80,212 | 80,212 |
Stockholders’ equity: | ||
Common stock ($0.001 par value, 120,000,000 shares authorized as of December 31, 2014 and March 31, 2015 and 1,400,000,000 shares authorized pro forma March 31, 2015; 44,180,939, 44,834,221 and 98,282,464 shares issued and outstanding as of December 31, 2014, March 31, 2015 and pro forma March 31, 2015, respectively) | 45 | 44 |
Additional paid-in capital | 112,694 | 103,355 |
Accumulated deficit | -68,963 | -32,377 |
Accumulated other comprehensive (loss) income | 11,126 | -3,934 |
Total stockholders’ equity | 54,902 | 67,088 |
Total liabilities, convertible preferred stock and stockholders’ equity | 331,362 | 249,135 |
Series A Preferred Stock | ||
Convertible preferred stock (25,000,000 shares authorized pro forma): | ||
Carrying Values | 808 | 808 |
Series B Preferred Stock | ||
Convertible preferred stock (25,000,000 shares authorized pro forma): | ||
Carrying Values | 865 | 865 |
Series C Preferred Stock | ||
Convertible preferred stock (25,000,000 shares authorized pro forma): | ||
Carrying Values | 3,361 | 3,361 |
Series D Preferred Stock | ||
Convertible preferred stock (25,000,000 shares authorized pro forma): | ||
Carrying Values | 27,870 | 27,870 |
Series E Preferred Stock | ||
Convertible preferred stock (25,000,000 shares authorized pro forma): | ||
Carrying Values | 6,201 | 6,201 |
Series 1 Preferred Stock | ||
Convertible preferred stock (25,000,000 shares authorized pro forma): | ||
Carrying Values | 1,322 | 1,322 |
Series F Preferred Stock | ||
Convertible preferred stock (25,000,000 shares authorized pro forma): | ||
Carrying Values | 39,785 | 39,785 |
Pro Forma | ||
Current assets: | ||
Cash and cash equivalents | 70,739 | |
Short-term investments | 21,533 | |
Accounts receivable, net of allowance for doubtful accounts of $1,841 and $2,306 as of December 31, 2014 and March 31, 2015, respectively | 14,513 | |
Prepaid and other current assets | 10,789 | |
Deferred tax assets—current | 2,932 | |
Deferred tax charge—current | 9,687 | |
Funds receivable and seller accounts | 12,095 | |
Total current assets | 142,288 | |
Restricted cash | 5,341 | |
Property and equipment, net | 78,438 | |
Goodwill | 28,225 | |
Intangible assets, net | 4,524 | |
Deferred tax charge—net of current portion | 70,422 | |
Other assets | 2,124 | |
Total assets | 331,362 | |
Current liabilities: | ||
Accounts payable | 7,058 | |
Accrued expenses and other current liabilities | 21,893 | |
Capital lease obligations—current | 2,181 | |
Funds payable and amounts due to sellers | 12,095 | |
Deferred revenue | 3,639 | |
Total current liabilities | 46,866 | |
Capital lease obligations—net of current portion | 3,542 | |
Warrant liability | 0 | |
Deferred tax liabilities | 70,849 | |
Facility financing obligation | 51,507 | |
Other liabilities | 21,569 | |
Total liabilities | 194,333 | |
Commitments and contingencies | ||
Convertible preferred stock (25,000,000 shares authorized pro forma): | ||
Carrying Values | 0 | |
Stockholders’ equity: | ||
Common stock ($0.001 par value, 120,000,000 shares authorized as of December 31, 2014 and March 31, 2015 and 1,400,000,000 shares authorized pro forma March 31, 2015; 44,180,939, 44,834,221 and 98,282,464 shares issued and outstanding as of December 31, 2014, March 31, 2015 and pro forma March 31, 2015, respectively) | 98 | |
Additional paid-in capital | 194,768 | |
Accumulated deficit | -68,963 | |
Accumulated other comprehensive (loss) income | 11,126 | |
Total stockholders’ equity | 137,029 | |
Total liabilities, convertible preferred stock and stockholders’ equity | 331,362 | |
Pro Forma | Series A Preferred Stock | ||
Convertible preferred stock (25,000,000 shares authorized pro forma): | ||
Carrying Values | 0 | |
Pro Forma | Series B Preferred Stock | ||
Convertible preferred stock (25,000,000 shares authorized pro forma): | ||
Carrying Values | 0 | |
Pro Forma | Series C Preferred Stock | ||
Convertible preferred stock (25,000,000 shares authorized pro forma): | ||
Carrying Values | 0 | |
Pro Forma | Series D Preferred Stock | ||
Convertible preferred stock (25,000,000 shares authorized pro forma): | ||
Carrying Values | 0 | |
Pro Forma | Series E Preferred Stock | ||
Convertible preferred stock (25,000,000 shares authorized pro forma): | ||
Carrying Values | 0 | |
Pro Forma | Series 1 Preferred Stock | ||
Convertible preferred stock (25,000,000 shares authorized pro forma): | ||
Carrying Values | 0 | |
Pro Forma | Series F Preferred Stock | ||
Convertible preferred stock (25,000,000 shares authorized pro forma): | ||
Carrying Values | $0 |
Consolidated_Balance_Sheets_Un1
Consolidated Balance Sheets (Unaudited) (Parenthetical) (USD $) | Mar. 31, 2015 | Dec. 31, 2014 |
In Thousands, except Share data, unless otherwise specified | ||
Allowance for Doubtful Accounts | $2,306 | $1,841 |
Common Stock, Par Value Per Share | $0.00 | $0.00 |
Common Stock, Shares Authorized | 120,000,000 | 120,000,000 |
Common Stock, Shares, Issued | 44,834,221 | 44,180,939 |
Common Stock, Shares, Outstanding | 44,834,221 | 44,180,939 |
Series A Preferred Stock | ||
Temporary Equity, Par Value | $0.00 | $0.00 |
Shares Authorized | 2,363,786 | 2,363,786 |
Temporary Equity, Shares Issued | 2,363,786 | 2,363,786 |
Shares Outstanding | 2,363,786 | 2,363,786 |
Temporary Equity, Liquidation Preference | 808 | 808 |
Series B Preferred Stock | ||
Temporary Equity, Par Value | $0.00 | $0.00 |
Shares Authorized | 1,128,431 | 1,128,431 |
Temporary Equity, Shares Issued | 1,128,425 | 1,128,425 |
Shares Outstanding | 1,128,425 | 1,128,425 |
Temporary Equity, Liquidation Preference | 903 | 903 |
Series C Preferred Stock | ||
Temporary Equity, Par Value | $0.00 | $0.00 |
Shares Authorized | 1,234,084 | 1,234,084 |
Temporary Equity, Shares Issued | 1,222,282 | 1,222,282 |
Shares Outstanding | 1,222,282 | 1,222,282 |
Temporary Equity, Liquidation Preference | 3,263 | 3,263 |
Series D Preferred Stock | ||
Temporary Equity, Par Value | $0.00 | $0.00 |
Shares Authorized | 4,240,120 | 4,240,120 |
Temporary Equity, Shares Issued | 4,215,610 | 4,215,610 |
Shares Outstanding | 4,215,610 | 4,215,610 |
Temporary Equity, Liquidation Preference | 27,949 | 27,949 |
Series E Preferred Stock | ||
Temporary Equity, Par Value | $0.00 | $0.00 |
Shares Authorized | 401,450 | 401,450 |
Temporary Equity, Shares Issued | 396,727 | 396,727 |
Shares Outstanding | 396,727 | 396,727 |
Temporary Equity, Liquidation Preference | 6,300 | 6,300 |
Series 1 Preferred Stock | ||
Temporary Equity, Par Value | $0.00 | $0.00 |
Shares Authorized | 203,399 | 203,399 |
Temporary Equity, Shares Issued | 203,399 | 203,399 |
Shares Outstanding | 203,399 | 203,399 |
Temporary Equity, Liquidation Preference | 1,312 | 1,312 |
Series F Preferred Stock | ||
Temporary Equity, Par Value | $0.00 | $0.00 |
Shares Authorized | 11,594,203 | 11,594,203 |
Temporary Equity, Shares Issued | 11,594,203 | 11,594,203 |
Shares Outstanding | 11,594,203 | 11,594,203 |
Temporary Equity, Liquidation Preference | $40,000 | $40,000 |
Pro Forma | ||
Common Stock, Par Value Per Share | $0.00 | |
Common Stock, Shares Authorized | 1,400,000,000 | |
Common Stock, Shares, Issued | 98,282,464 | |
Common Stock, Shares, Outstanding | 98,282,464 | |
Pro Forma | Convertible Preferred Stock | ||
Shares Authorized | 25,000,000 | |
Pro Forma | Series A Preferred Stock | ||
Temporary Equity, Shares Issued | 0 | |
Shares Outstanding | 0 | |
Pro Forma | Series B Preferred Stock | ||
Temporary Equity, Shares Issued | 0 | |
Shares Outstanding | 0 | |
Pro Forma | Series C Preferred Stock | ||
Temporary Equity, Shares Issued | 0 | |
Shares Outstanding | 0 | |
Pro Forma | Series D Preferred Stock | ||
Temporary Equity, Shares Issued | 0 | |
Shares Outstanding | 0 | |
Pro Forma | Series E Preferred Stock | ||
Temporary Equity, Shares Issued | 0 | |
Shares Outstanding | 0 | |
Pro Forma | Series 1 Preferred Stock | ||
Temporary Equity, Shares Issued | 0 | |
Shares Outstanding | 0 | |
Pro Forma | Series F Preferred Stock | ||
Temporary Equity, Shares Issued | 0 | |
Shares Outstanding | 0 |
Consolidated_Statements_of_Ope
Consolidated Statements of Operations (Unaudited) (USD $) | 3 Months Ended | |
In Thousands, except Share data, unless otherwise specified | Mar. 31, 2015 | Mar. 31, 2014 |
Income Statement [Abstract] | ||
Revenue | $58,543 | $40,536 |
Cost of revenue | 20,709 | 15,394 |
Gross profit | 37,834 | 25,142 |
Operating expenses: | ||
Marketing | 12,210 | 7,468 |
Product development | 10,009 | 8,042 |
General and administrative | 20,457 | 9,213 |
Total operating expenses | 42,676 | 24,723 |
Income (loss) from operations | -4,842 | 419 |
Other (expense) income: | ||
Interest expense and amortization of deferred financing costs | -193 | -57 |
Interest and dividend income | 15 | 4 |
Net unrealized (loss) gain on warrant and other liabilities | 12 | -616 |
Foreign exchange loss | -20,853 | 0 |
Total other expense | -21,019 | -669 |
Loss before income taxes | -25,861 | -250 |
Provision for income taxes | -10,725 | -213 |
Net loss | ($36,586) | ($463) |
Net loss per share attributable to common stockholders: | ||
Basic and diluted (in dollars per share) | ($0.84) | ($0.01) |
Weighted average common shares outstanding: | ||
Basic and diluted (shares) | 43,703,508 | 34,512,839 |
Pro forma net loss per share attributable to common stockholders: | ||
Basic and diluted (in dollars per share) | ($0.38) | |
Pro forma weighted average common shares outstanding: | ||
Basic and diluted (shares) | 97,151,751 |
Consolidated_Statements_of_Com
Consolidated Statements of Comprehensive Loss (Unaudited) Statement (USD $) | 3 Months Ended | |
In Thousands, unless otherwise specified | Mar. 31, 2015 | Mar. 31, 2014 |
Statement of Comprehensive Income [Abstract] | ||
Net loss | ($36,586) | ($463) |
Other comprehensive (loss) income: | ||
Cumulative translation adjustment | 15,056 | -22 |
Unrealized (losses) gains on marketable securities, net of tax | 4 | -3 |
Other comprehensive (loss) income | 15,060 | -25 |
Comprehensive loss | ($21,526) | ($488) |
Consolidated_Statements_of_Cha
Consolidated Statements of Changes in Convertible Preferred Stock and Stockholders' Equity (Unaudited) (USD $) | Total | Series A Preferred Stock | Series B Preferred Stock | Series C Preferred Stock | Series D Preferred Stock | Series E Preferred Stock | Series 1 Preferred Stock | Series F Preferred Stock | Preferred Stock | Preferred Stock | Preferred Stock | Preferred Stock | Preferred Stock | Preferred Stock | Preferred Stock | Common Stock | Additional Paid-in Capital | Accumulated Deficit | Accumulated Other Comprehensive (Loss) Income |
In Thousands, except Share data, unless otherwise specified | Series A Preferred Stock | Series B Preferred Stock | Series C Preferred Stock | Series D Preferred Stock | Series E Preferred Stock | Series 1 Preferred Stock | Series F Preferred Stock | ||||||||||||
Beginning balance at Dec. 31, 2014 | $67,088 | $44 | $103,355 | ($32,377) | ($3,934) | ||||||||||||||
Convertible preferred stock, beginning balance at Dec. 31, 2014 | 80,212 | 808 | 865 | 3,361 | 27,870 | 6,201 | 1,322 | 39,785 | 808 | 865 | 3,361 | 27,870 | 6,201 | 1,322 | 39,785 | ||||
Beginning balance, shares at Dec. 31, 2014 | 44,180,939 | ||||||||||||||||||
Convertible preferred stock, beginning balance (in shares) at Dec. 31, 2014 | 2,363,786 | 1,128,425 | 1,222,282 | 4,215,610 | 396,727 | 203,399 | 11,594,203 | 2,363,786 | 1,128,425 | 1,222,282 | 4,215,610 | 396,727 | 203,399 | 11,594,203 | |||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||||||||||||||
Stock options expense | 2,196 | 2,196 | |||||||||||||||||
Exercise of vested options, shares | 465,047 | ||||||||||||||||||
Exercise of vested options | 1,188 | 1 | 1,187 | ||||||||||||||||
Contribution to Etsy.org, shares | 188,235 | ||||||||||||||||||
Contribution to Etsy.org | 3,200 | 3,200 | |||||||||||||||||
Stock expense-acquisitions | 284 | 284 | |||||||||||||||||
Excess tax benefit from the exercise of stock options | 2,472 | 2,472 | |||||||||||||||||
Other comprehensive income | 15,060 | 15,060 | |||||||||||||||||
Net loss | -36,586 | -36,586 | |||||||||||||||||
Ending balance at Mar. 31, 2015 | 54,902 | 45 | 112,694 | -68,963 | 11,126 | ||||||||||||||
Convertible preferred stock, ending balance at Mar. 31, 2015 | $80,212 | $808 | $865 | $3,361 | $27,870 | $6,201 | $1,322 | $39,785 | $808 | $865 | $3,361 | $27,870 | $6,201 | $1,322 | $39,785 | ||||
Ending balance, shares at Mar. 31, 2015 | 44,834,221 | ||||||||||||||||||
Convertible preferred stock, ending balance (in shares) at Mar. 31, 2015 | 2,363,786 | 1,128,425 | 1,222,282 | 4,215,610 | 396,727 | 203,399 | 11,594,203 | 2,363,786 | 1,128,425 | 1,222,282 | 4,215,610 | 396,727 | 203,399 | 11,594,203 |
Consolidated_Statements_of_Cas
Consolidated Statements of Cash Flows (Unaudited) (USD $) | 3 Months Ended | |
In Thousands, unless otherwise specified | Mar. 31, 2015 | Mar. 31, 2014 |
Cash flows from operating activities | ||
Net loss | ($36,586) | ($463) |
Adjustments to reconcile net loss to net cash provided by operating activities: | ||
Stock-based compensation expense | 2,133 | 1,176 |
Stock-based compensation expense-acquisitions | 1,841 | 0 |
Contribution of stock to Etsy.org | 3,200 | 0 |
Depreciation and amortization expense | 4,341 | 3,895 |
Bad debt expense | 767 | 338 |
Foreign exchange loss | 20,853 | 0 |
Amortization of debt issuance costs | 31 | 0 |
Net unrealized loss (gain) on warrant and other liabilities | -12 | 616 |
Loss on disposal of assets | 332 | 71 |
Deferred income taxes | 67,768 | 108 |
Excess tax benefit from exercise of stock options | -2,472 | 0 |
Changes in operating assets and liabilities: | ||
Accounts receivable | 46 | -14 |
Funds receivable and seller accounts | -1,911 | -1,335 |
Prepaid expenses and other current assets | 3,100 | -2,353 |
Deferred tax charges | -80,109 | 0 |
Other assets | 182 | -46 |
Accounts payable | -419 | -805 |
Accrued liabilities | 3,969 | 3,481 |
Funds payable and amounts due to sellers | 1,912 | 1,275 |
Deferred revenue | 216 | 240 |
Other liabilities | 19,713 | 0 |
Net cash provided by operating activities | 8,895 | 6,184 |
Cash flows from investing activities | ||
Purchases of property and equipment | -1,852 | -571 |
Development of internal-use software | -2,428 | -2,235 |
Purchase of U.S. Government and agency bills | -5,400 | -9,262 |
Sale of marketable securities | 3,055 | 8,066 |
Net cash used in investing activities | -6,625 | -4,002 |
Cash flows from financing activities | ||
Proceeds from exercise of stock options | 1,188 | 5,758 |
Excess tax benefit from the exercise of stock options | 2,472 | 0 |
Payments on capitalized lease obligations | -503 | -323 |
Deferred payments on acquisition of business | 0 | -75 |
Payments relating to public offering | -1,482 | 0 |
Net cash provided by financing activities | 1,675 | 5,360 |
Effect of exchange rate changes on cash | -2,865 | 117 |
Net increase in cash and cash equivalents | 1,080 | 7,659 |
Cash and cash equivalents at beginning of period | 69,659 | 36,795 |
Cash and cash equivalents at end of period | 70,739 | 44,454 |
Supplemental non-cash disclosures | ||
Equipment acquired under capital lease obligations | 1,324 | 752 |
Stock-based compensation capitalized in development of capitalized software | 63 | 53 |
Non-cash additions to development of internal-use software and property and equipment | 576 | 30 |
Non-cash addition to construction in progress related to build-to-suit lease and facility financing obligation | 1,674 | 0 |
Non-cash addition to capitalized public offering costs | $1,977 | $0 |
Basis_of_Presentation_and_Summ
Basis of Presentation and Summary of Significant Accounting Policies | 3 Months Ended |
Mar. 31, 2015 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Basis of Presentation and Summary of Significant Accounting Policies | Basis of Presentation and Summary of Significant Accounting Policies |
Description of Business | |
Etsy, Inc. (the “Company” or “Etsy”) was incorporated in Delaware in February 2006. Etsy operates a marketplace where people around the world connect, both online and offline, to make, sell and buy unique goods. The Company generates revenue primarily from transaction and listing fees, Promoted Listings, Direct Checkout fees, and Shipping Label sales. | |
Initial Public Offering | |
The Company completed an initial public offering (the "IPO") of its common stock on April 21, 2015. See Note 9—Subsequent Events for additional details. | |
Basis of Consolidation | |
The consolidated financial statements include the accounts of Etsy and its wholly-owned subsidiaries. All intercompany balances and transactions have been eliminated in consolidation. | |
Unaudited Interim Financial Information | |
The accompanying consolidated balance sheet as of March 31, 2015, and the related consolidated statements of operations, comprehensive loss, and cash flows for the three months ended March 31, 2014 and 2015, and the consolidated statement of changes in convertible preferred stock and stockholders’ equity for the three months ended March 31, 2015 are unaudited. The unaudited interim financial statements have been prepared on the same basis as the annual consolidated financial statements and, in the opinion of management, reflect all adjustments, which include only normal recurring adjustments, necessary to state fairly the Company’s financial position as of March 31, 2015 and results of operations and cash flows for the three months ended March 31, 2014 and 2015. The financial data and the other information disclosed in these notes to the consolidated financial statements related to these three-month periods are unaudited. | |
There have been no material changes in the Company's significant accounting policies from those that were disclosed in the prospectus filed with the SEC on April 16, 2015. | |
Unaudited Pro Forma Financial Information | |
Upon the consummation of the IPO, all of the outstanding shares of convertible preferred stock converted into shares of common stock. The March 31, 2015 unaudited pro forma consolidated balance sheet data has been prepared to reflect the conversion of the outstanding convertible preferred stock into 53,448,243 shares of common stock. | |
Reverse Stock Split | |
The Company effected a 1-for-2 reverse split of its common stock on March 25, 2015. The reverse split combined each two shares of the Company’s issued and outstanding common stock into one share of common stock and correspondingly adjusted the conversion prices of its convertible preferred stock. No fractional shares were issued in connection with the reverse split, and any fractional shares resulting from the reverse split were rounded down to the nearest whole share. All share, per share and related information presented in the consolidated financial statements and accompanying notes have been retroactively adjusted, where applicable, to reflect the reverse stock split. | |
Use of Estimates | |
The preparation of the Company’s consolidated financial statements in conformity with accounting principles generally accepted in the United States of America (“GAAP”) requires management to make estimates and judgments that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. The accounting estimates that require management’s most difficult and subjective judgments include revenue recognition, income taxes, website development costs and internal-use software, purchase price allocations for business combinations, valuation of goodwill and intangible assets and stock-based compensation. The Company evaluates its estimates and judgments on an ongoing basis and revises them when necessary. Actual results may differ from the original or revised estimates. | |
Income Taxes | |
The Company's income tax provision for interim periods is determined using an estimate of its annual effective tax rate adjusted for discrete items, if any, for relevant interim periods. The Company updates its estimate of the annual effective tax rate each quarter and makes cumulative adjustments if its estimated annual tax rate changes. | |
The Company's quarterly tax provision and quarterly estimate of its annual effective tax rate are subject to significant variations due to several factors, including variability in predicting its pretax and taxable income and the mix of jurisdictions to which those relate, changes of expenses or losses for which tax benefits are not recognized, and changes in the laws, regulations, and administrative practices of the jurisdictions in which the Company operates. | |
Recent Accounting Pronouncements | |
In May 2014, the Financial Accounting Standards Board, or FASB, issued an accounting standards update that replaces existing revenue recognition guidance. The new guidance is effective for the annual and interim periods beginning after December 15, 2017. Among other things, the updated guidance requires companies to recognize revenue in a way that depicts 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. The Company is currently evaluating the effect the guidance will have on its consolidated financial statements. | |
In August 2014, the FASB issued an accounting standard update under which management will be required to assess an entity’s ability to continue as a going concern and provide related disclosures in certain circumstances. The new guidance is effective for annual and interim periods beginning after December 15, 2016. The adoption of this guidance is not expected to have an impact on the Company’s financial statements or disclosures. | |
In April 2015, the FASB issued an accounting standard under which customers will apply the same criteria as vendors to determine whether a cloud computing arrangement contains a software license or is solely a service contract. The new standard is effective for annual and interim periods beginning after December 15, 2015. The Company is currently evaluating the effect the guidance will have on its consolidated financial statements. |
Debt
Debt | 3 Months Ended |
Mar. 31, 2015 | |
Debt Disclosure [Abstract] | |
Debt | Debt |
Credit Agreement | |
In May 2014, the Company entered into a $35.0 million senior secured revolving credit facility pursuant to a Revolving Credit and Guaranty Agreement with several lenders (the “Credit Agreement”). The Credit Agreement will mature in May 2019. The Credit Agreement includes a letter of credit sublimit of $10.0 million and a swingline loan sublimit of $15.0 million. | |
Borrowings under the Credit Agreement (other than swingline loans) bear interest, at the Company’s option, at (i) a base rate equal to the highest of (a) the prime rate, (b) the federal funds rate plus 0.50% and (c) an adjusted LIBOR rate for a one-month interest period plus 1.00%, in each case plus a margin ranging from 0.00% to 0.25% or (ii) an adjusted LIBOR rate plus a margin ranging from 1.00% to 1.25%. Swingline loans under the Credit Agreement bear interest at the same base rate (plus the margin applicable to borrowings bearing interest at the base rate). These margins are determined based on the total leverage ratio for the preceding four fiscal quarter period. The Company is also obligated to pay other customary fees for a credit facility of this size and type, including an unused commitment fee and fees associated with letters of credit. The Credit Agreement also permits the Company, in certain circumstances, to request an increase in the facility by an amount of up to $50.0 million (and in minimum amounts of $10.0 million) at the same maturity, pricing and other terms. | |
The Credit Agreement contains customary representations and warranties applicable to the Company and its subsidiaries and customary affirmative and negative covenants applicable to the Company and its restricted subsidiaries. The negative covenants include restrictions on, among other things, indebtedness, liens, investments, mergers, dispositions, transactions with affiliates and dividends and other distributions. These restrictions do not prohibit a subsidiary of the Company from making pro rata payments to the Company or any other person that owns an equity interest in such subsidiary. The Credit Agreement contains a financial covenant that requires the Company and its subsidiaries to maintain a total leverage ratio (defined as net debt to adjusted EBITDA) not to exceed 3.50 to 1.00. | |
The Credit Agreement includes customary events of default, including a change in control and a cross-default on the Company’s material indebtedness. The Company’s obligations under the Credit Agreement are secured by substantially all of the Company and its subsidiaries’ assets, and its obligations under the Credit Agreement are guaranteed by certain of the Company’s subsidiaries. | |
In March 2015, the Company amended the Credit Agreement (the “Amended Credit Agreement”) to increase the senior secured revolving credit facility to $50.0 million. The Amended Credit Agreement contains the same pricing covenants and other material terms as the Credit Agreement. At March 31, 2015, the Company did not have any borrowings under the Credit Agreement. |
Stockbased_Compensation
Stock-based Compensation | 3 Months Ended | |||||||
Mar. 31, 2015 | ||||||||
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | ||||||||
Stock-based Compensation | Stock-based Compensation | |||||||
The Company's 2015 Equity Incentive Plan (the "2015 Plan") was adopted by its board of directors and approved by stockholders in March 2015. The 2015 Plan became effective immediately upon adoption although no awards were made under it until the effective date of the IPO. The 2015 Plan replaced the 2006 Stock Plan described below, and no further grants will be made under the 2006 Stock Plan as of the effective date of the IPO. | ||||||||
Under the 2006 Stock Plan, incentive and nonqualified stock options or rights to purchase common stock were granted to eligible participants. Options were generally granted for a term of 10 years. Options granted under the 2006 Stock Plan generally vest 25% after the first year of service and ratably each month over the remaining 36-month period contingent on continued employment with the Company on each vesting date. At March 31, 2015, 24,252,967 shares were authorized under the 2006 Stock Plan, and 632,509 shares were available for future grant. | ||||||||
The fair value of each option award is estimated on the date of grant using the Black-Scholes option-pricing model. Before it completed its IPO, the Company utilized equity valuations based on comparable publicly-traded companies, discounted free cash flows, an analysis of the Company's enterprise value and any other factors deemed relevant in estimating the fair value of its common stock. The risk-free rate for periods within the contractual life of the option is based on the U.S. Treasury yield curve in effect at the time of grant. Expected volatilities are based on implied volatilities from market comparisons of certain publicly traded companies and other factors. The expected term of stock options granted has been determined using the simplified method, which uses the midpoint between the vesting date and the contractual term. The requisite service period is generally four years from the date of grant. | ||||||||
The Company granted 1,018,745 shares in the three months ended March 31, 2015 at a weighted-average grant date fair value of $7.19. | ||||||||
The fair value of options granted in each year using the Black-Scholes pricing model has been based on the following assumptions: | ||||||||
Three Months Ended | ||||||||
March 31, | ||||||||
2014 | 2015 | |||||||
Volatility | 48.0% - 49.0% | 40.4% - 42.7% | ||||||
Risk-free interest rate | 1.7% - 1.9% | 1.3% - 1.3% | ||||||
Expected term (in years) | 5.46 - 6.08 | 5.58 - 6.08 | ||||||
Dividend rate | —% | —% | ||||||
Total stock-based compensation expense included in the consolidated statements of operations is as follows (in thousands): | ||||||||
Three Months Ended | ||||||||
March 31, | ||||||||
2014 | 2015 | |||||||
Cost of revenue | $ | 95 | $ | 408 | ||||
Marketing | 30 | 103 | ||||||
Product development | 291 | 544 | ||||||
General and administrative | 760 | 2,919 | ||||||
$ | 1,176 | $ | 3,974 | |||||
The total stock-based compensation expense in the three months ended March 31, 2015 includes $1.8 million in acquisition-related stock-based compensation expense. |
Income_Taxes
Income Taxes | 3 Months Ended |
Mar. 31, 2015 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | Income Taxes |
In January 2015, the Company implemented an updated global corporate structure to more closely align with its global operations and future expansion plans outside of the United States. The new structure changes how the Company uses its intellectual property and implements certain intercompany arrangements, which the Company believes may result in a reduction in its overall effective tax rate and other operational efficiencies. The revised structure resulted in the setup of a deferred tax liability in the amount of $67.8 million on the taxable gain created in the transaction. A deferred charge was recorded for the same amount representing the future income tax which will be amortized into income tax expense over five years. During the three months ended March 31, 2015, $6.1 million was recorded to income tax expense. | |
The amount of unrecognized tax benefits, included within “Other liabilities” on the consolidated balance sheets, increased $20.4 million in the three months ended March 31, 2015, from $0.4 million at December 31, 2014 to $20.8 million at March 31, 2015. The increase was primarily in connection with the implementation of the updated global corporate structure. During the three months ended March 31, 2015, $1.8 million was recorded to income tax expense. The total amount of unrecognized tax benefits that, if recognized, would favorably affect the effective tax rate is $2.4 million at March 31, 2015. A deferred charge of $20.2 million was recorded representing the future income tax which will be amortized into income tax expense over five years. In addition, the Company is subject to examination in various jurisdictions related to income tax matters. The resolution of these matters, giving recognition to the recorded reserve, could have an adverse impact on the Company’s business. |
Fair_Value_Measurements
Fair Value Measurements | 3 Months Ended | |||||||||||||||
Mar. 31, 2015 | ||||||||||||||||
Fair Value Disclosures [Abstract] | ||||||||||||||||
Fair Value Measurements | Fair Value Measurements | |||||||||||||||
The Company has characterized its investments in marketable securities, based on the priority of the inputs used to value the investments, into a three-level fair value hierarchy. The fair value hierarchy gives the highest priority to quoted prices in active markets for identical assets or liabilities (Level 1), and lowest priority to unobservable inputs (Level 3). If the inputs used to measure the investments fall within different levels of the hierarchy, the categorization is based on the lowest level input that is significant to the fair value measurement of the investment. Investments recorded in the accompanying consolidated balance sheet are categorized based on the inputs to valuation techniques as follows: | ||||||||||||||||
Level 1—These are investments where values are based on unadjusted quoted prices for identical assets in an active market that the Company has the ability to access. | ||||||||||||||||
Level 2—These are investments where values are based on quoted market prices in markets that are not active or model derived valuations in which all significant inputs are observable in active markets. | ||||||||||||||||
Level 3—These are liabilities where values are derived from techniques in which one or more significant inputs are unobservable. | ||||||||||||||||
The following are the major categories of assets and liabilities measured at fair value on a recurring basis as of December 31, 2014 and March 31, 2015 using quoted prices in active markets for identical assets (Level 1), significant other observable inputs (Level 2) and significant unobservable inputs (Level 3) (in thousands): | ||||||||||||||||
As of December 31, 2014 | ||||||||||||||||
Level 1 | Level 2 | Level 3 | Total | |||||||||||||
Asset | ||||||||||||||||
Cash equivalents: | ||||||||||||||||
Money market funds | $ | 20,288 | $ | — | $ | — | $ | 20,288 | ||||||||
U.S. Government bills | 2,426 | — | — | 2,426 | ||||||||||||
22,714 | — | — | 22,714 | |||||||||||||
Short-term investments: | ||||||||||||||||
U.S. Government and agency bills | 19,184 | — | — | 19,184 | ||||||||||||
$ | 41,898 | $ | — | $ | — | $ | 41,898 | |||||||||
Liability | ||||||||||||||||
Put option classified as liability | $ | — | $ | — | $ | 16 | $ | 16 | ||||||||
Acquisition–related contingent consideration classified as liability | — | — | 3,374 | 3,374 | ||||||||||||
Warrants classified as liability | — | — | 1,920 | 1,920 | ||||||||||||
$ | — | $ | — | $ | 5,310 | $ | 5,310 | |||||||||
As of March 31, 2015 | ||||||||||||||||
Level 1 | Level 2 | Level 3 | Total | |||||||||||||
Asset | ||||||||||||||||
Cash equivalents: | ||||||||||||||||
Money market funds | $ | 20,289 | $ | — | $ | — | $ | 20,289 | ||||||||
U.S. Government bills | 86 | — | — | 86 | ||||||||||||
20,375 | — | — | 20,375 | |||||||||||||
Short-term investments: | ||||||||||||||||
U.S. Government and agency bills | 21,533 | — | — | 21,533 | ||||||||||||
$ | 41,908 | $ | — | $ | — | $ | 41,908 | |||||||||
Liability | ||||||||||||||||
Put option classified as liability | $ | — | $ | — | $ | 10 | $ | 10 | ||||||||
Acquisition–related contingent consideration classified as liability | — | — | 4,931 | 4,931 | ||||||||||||
Warrants classified as liability | — | — | 1,915 | 1,915 | ||||||||||||
$ | — | $ | — | $ | 6,856 | $ | 6,856 | |||||||||
Level 1 instruments include money market funds and Corporate Certificates of Deposit and AAA-rated U.S. Government and agency securities, which are valued based on inputs including quotes from broker-dealers or recently executed transactions in the same or similar securities. | ||||||||||||||||
The table below provides a reconciliation of the beginning and ending balances for the liabilities measured at fair value using significant unobservable inputs (Level 3) (in thousands): | ||||||||||||||||
Three Months Ended | ||||||||||||||||
March 31, | ||||||||||||||||
2015 | ||||||||||||||||
Balance at beginning of period | $ | 5,310 | ||||||||||||||
Acquired | — | |||||||||||||||
Changes to liability-classified stock awards | 1,557 | |||||||||||||||
Settled | — | |||||||||||||||
Net decrease in fair value | (11 | ) | ||||||||||||||
Balance at end of period | $ | 6,856 | ||||||||||||||
Net_Loss_Per_Share
Net Loss Per Share | 3 Months Ended | |||||||
Mar. 31, 2015 | ||||||||
Earnings Per Share [Abstract] | ||||||||
Net Loss Per Share | Net Loss Per Share | |||||||
The following table presents the calculation of basic and diluted net loss per share for periods presented (in thousands, except share and per share data): | ||||||||
Three Months Ended | ||||||||
March 31, | ||||||||
2014 | 2015 | |||||||
Net loss | $ | (463 | ) | $ | (36,586 | ) | ||
Basic and diluted shares: | ||||||||
Weighted-average common shares outstanding | 34,512,839 | 43,703,508 | ||||||
Net loss per share attributable to common stockholders: | ||||||||
Basic and diluted net loss per share applicable to common stockholders | $ | (0.01 | ) | $ | (0.84 | ) | ||
The following potential common shares were excluded from the calculation of diluted net loss per share attributable to common stockholders because their effect would have been anti-dilutive for the periods presented: | ||||||||
Three Months Ended | ||||||||
March 31, | ||||||||
2014 | 2015 | |||||||
Stock options | 11,832,375 | 12,009,423 | ||||||
Warrants | 203,030 | 203,030 | ||||||
Convertible preferred stock | 53,448,243 | 53,448,243 | ||||||
Total anti-dilutive securities | 65,483,648 | 65,660,696 | ||||||
Unaudited Pro Forma Net Loss Per Share | ||||||||
The following table sets forth the computation of the Company’s unaudited pro forma basic and diluted net loss per share of common stock (in thousands except share and per share data): | ||||||||
Three Months Ended | ||||||||
March 31, | ||||||||
2015 | ||||||||
Numerator: | ||||||||
Net loss for basic and diluted earnings per share | $ | (36,586 | ) | |||||
Add: Net change in fair value of warrant liabilities | (5 | ) | ||||||
Net loss for pro forma basic and diluted earnings per share | $ | (36,591 | ) | |||||
Denominator: | ||||||||
Weighted average common stock outstanding (basic) | 43,703,508 | |||||||
Add: conversion of convertible preferred stock | 53,448,243 | |||||||
Total weighted average shares outstanding used in basic pro forma net loss per share | 97,151,751 | |||||||
Dilutive effect of stock options and warrants | — | |||||||
Total weighted average shares outstanding used in diluted pro forma net loss per share | 97,151,751 | |||||||
Pro forma basic and diluted net loss per share | $ | (0.38 | ) | |||||
The following potential common shares were excluded from the calculation of diluted pro forma net loss per share attributable to common stockholders because their effect would have been anti-dilutive for the periods presented: | ||||||||
Three Months Ended | ||||||||
March 31, | ||||||||
2015 | ||||||||
Stock options | 12,009,423 | |||||||
Warrants | 203,030 | |||||||
Total anti-dilutive | 12,212,453 | |||||||
Segment_and_Geographic_Informa
Segment and Geographic Information | 3 Months Ended | |||||||
Mar. 31, 2015 | ||||||||
Segment Reporting [Abstract] | ||||||||
Segment and Geographic Information | Segment and Geographic Information | |||||||
Revenue by country is based on the current billing address of the seller. The following table summarizes revenue by geographic area (in thousands): | ||||||||
Three Months Ended | ||||||||
March 31, | ||||||||
2014 | 2015 | |||||||
United States | $ | 32,797 | $ | 45,752 | ||||
International | 7,739 | 12,791 | ||||||
Revenue | $ | 40,536 | $ | 58,543 | ||||
No individual international country’s revenue exceeds 5% of total revenue. |
Contingencies
Contingencies | 3 Months Ended |
Mar. 31, 2015 | |
Commitments and Contingencies Disclosure [Abstract] | |
Contingencies | Contingencies |
Tax Contingencies | |
The Company had a reserve of $3.5 million and $3.8 million at December 31, 2014 and March 31, 2015, respectively, for certain non-income tax obligations, representing management’s best estimate of its liability. In addition, the Company could be subject to examination in various jurisdictions related to non-income tax matters. The resolution of these types of matters, giving recognition to the recorded reserve, could have an adverse impact on the Company’s business. | |
Legal Proceedings | |
On May 13, 2015, a purported securities class action complaint (Altayyar v. Etsy, Inc., et al., Docket No. 1:15-cv-02785) was filed in the United States District Court for the Eastern District of New York against the Company and certain officers. The complaint is brought on behalf of a purported class consisting of all persons or entities who purchased or otherwise acquired shares of the Company's common stock from April 16, 2015 through and including May 10, 2015. The complaint asserts violations of Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 based on allegedly false or misleading statements and omissions with respect to, among other things, merchandise for sale on the Company's website that may be counterfeit or constitute trademark or copyright infringement and actions taken by third-party brands against Etsy sellers for trademark or copyright infringement. The complaint seeks certification as a class action and unspecified compensatory damages plus interest and attorneys' fees. The Company and the named officers intend to defend themselves vigorously against this action. The Company anticipates that related suits could also be filed and, if so, would be consolidated into a single class action against the Company. In light of, among other things, the early stage of the litigation, the Company is unable to predict the outcome of this matter and is unable to make a meaningful estimate of the amount or range of loss, if any, that could result from an unfavorable outcome. | |
In addition, from time to time in the normal course of business, various other claims and litigation have been asserted or commenced against the Company. Due to uncertainties inherent in litigation and other claims, the Company can give no assurance that it will prevail in any such matters, which could subject the Company to significant liability for damages. Any claims or litigation, regardless of their success, could have an adverse effect on the Company’s consolidated results of operations or cash flows in the period the claims or litigation are resolved. As of March 31, 2015, the Company does not believe that there are any material litigation exposures relating to these other claims. |
Subsequent_Events
Subsequent Events | 3 Months Ended |
Mar. 31, 2015 | |
Subsequent Events [Abstract] | |
Subsequent Events | Subsequent Events |
On April 21, 2015, the Company closed its IPO in which the Company issued and sold 13,333,333 shares of common stock at a public offering price of $16.00 per share. The Company received net proceeds of $194.2 million after deducting underwriting discounts of $13.9 million and other offering expenses of approximately $5.2 million. These expenses were recorded against the proceeds received from the IPO. | |
Certain selling stockholders sold an additional 5,833,332 shares of common stock in the IPO. The Company did not receive any proceeds from the sale of the shares sold by the selling stockholders. | |
Upon the closing of the IPO, all outstanding shares of preferred stock of the Company converted into 53,448,243 shares of common stock. |
Basis_of_Presentation_and_Summ1
Basis of Presentation and Summary of Significant Accounting Policies (Policies) | 3 Months Ended |
Mar. 31, 2015 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Basis of Consolidation | The consolidated financial statements include the accounts of Etsy and its wholly-owned subsidiaries. All intercompany balances and transactions have been eliminated in consolidation. |
Use of Estimates | The preparation of the Company’s consolidated financial statements in conformity with accounting principles generally accepted in the United States of America (“GAAP”) requires management to make estimates and judgments that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. The accounting estimates that require management’s most difficult and subjective judgments include revenue recognition, income taxes, website development costs and internal-use software, purchase price allocations for business combinations, valuation of goodwill and intangible assets and stock-based compensation. The Company evaluates its estimates and judgments on an ongoing basis and revises them when necessary. Actual results may differ from the original or revised estimates. |
Income Taxes | The Company's income tax provision for interim periods is determined using an estimate of its annual effective tax rate adjusted for discrete items, if any, for relevant interim periods. The Company updates its estimate of the annual effective tax rate each quarter and makes cumulative adjustments if its estimated annual tax rate changes. |
The Company's quarterly tax provision and quarterly estimate of its annual effective tax rate are subject to significant variations due to several factors, including variability in predicting its pretax and taxable income and the mix of jurisdictions to which those relate, changes of expenses or losses for which tax benefits are not recognized, and changes in the laws, regulations, and administrative practices of the jurisdictions in which the Company operates. | |
Recent Accounting Pronouncements | In May 2014, the Financial Accounting Standards Board, or FASB, issued an accounting standards update that replaces existing revenue recognition guidance. The new guidance is effective for the annual and interim periods beginning after December 15, 2017. Among other things, the updated guidance requires companies to recognize revenue in a way that depicts 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. The Company is currently evaluating the effect the guidance will have on its consolidated financial statements. |
In August 2014, the FASB issued an accounting standard update under which management will be required to assess an entity’s ability to continue as a going concern and provide related disclosures in certain circumstances. The new guidance is effective for annual and interim periods beginning after December 15, 2016. The adoption of this guidance is not expected to have an impact on the Company’s financial statements or disclosures. | |
In April 2015, the FASB issued an accounting standard under which customers will apply the same criteria as vendors to determine whether a cloud computing arrangement contains a software license or is solely a service contract. The new standard is effective for annual and interim periods beginning after December 15, 2015. The Company is currently evaluating the effect the guidance will have on its consolidated financial statements. |
Stockbased_Compensation_Tables
Stock-based Compensation (Tables) | 3 Months Ended | |||||||
Mar. 31, 2015 | ||||||||
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | ||||||||
Schedule of Share-based Payment Award, Stock Options, Valuation Assumptions | The fair value of options granted in each year using the Black-Scholes pricing model has been based on the following assumptions: | |||||||
Three Months Ended | ||||||||
March 31, | ||||||||
2014 | 2015 | |||||||
Volatility | 48.0% - 49.0% | 40.4% - 42.7% | ||||||
Risk-free interest rate | 1.7% - 1.9% | 1.3% - 1.3% | ||||||
Expected term (in years) | 5.46 - 6.08 | 5.58 - 6.08 | ||||||
Dividend rate | —% | —% | ||||||
Schedule of Share-based Compensation, Allocation of Recognized Period Costs | Total stock-based compensation expense included in the consolidated statements of operations is as follows (in thousands): | |||||||
Three Months Ended | ||||||||
March 31, | ||||||||
2014 | 2015 | |||||||
Cost of revenue | $ | 95 | $ | 408 | ||||
Marketing | 30 | 103 | ||||||
Product development | 291 | 544 | ||||||
General and administrative | 760 | 2,919 | ||||||
$ | 1,176 | $ | 3,974 | |||||
Fair_Value_Measurements_Tables
Fair Value Measurements (Tables) | 3 Months Ended | |||||||||||||||
Mar. 31, 2015 | ||||||||||||||||
Fair Value Disclosures [Abstract] | ||||||||||||||||
Fair Value Measurements, Recurring | The following are the major categories of assets and liabilities measured at fair value on a recurring basis as of December 31, 2014 and March 31, 2015 using quoted prices in active markets for identical assets (Level 1), significant other observable inputs (Level 2) and significant unobservable inputs (Level 3) (in thousands): | |||||||||||||||
As of December 31, 2014 | ||||||||||||||||
Level 1 | Level 2 | Level 3 | Total | |||||||||||||
Asset | ||||||||||||||||
Cash equivalents: | ||||||||||||||||
Money market funds | $ | 20,288 | $ | — | $ | — | $ | 20,288 | ||||||||
U.S. Government bills | 2,426 | — | — | 2,426 | ||||||||||||
22,714 | — | — | 22,714 | |||||||||||||
Short-term investments: | ||||||||||||||||
U.S. Government and agency bills | 19,184 | — | — | 19,184 | ||||||||||||
$ | 41,898 | $ | — | $ | — | $ | 41,898 | |||||||||
Liability | ||||||||||||||||
Put option classified as liability | $ | — | $ | — | $ | 16 | $ | 16 | ||||||||
Acquisition–related contingent consideration classified as liability | — | — | 3,374 | 3,374 | ||||||||||||
Warrants classified as liability | — | — | 1,920 | 1,920 | ||||||||||||
$ | — | $ | — | $ | 5,310 | $ | 5,310 | |||||||||
As of March 31, 2015 | ||||||||||||||||
Level 1 | Level 2 | Level 3 | Total | |||||||||||||
Asset | ||||||||||||||||
Cash equivalents: | ||||||||||||||||
Money market funds | $ | 20,289 | $ | — | $ | — | $ | 20,289 | ||||||||
U.S. Government bills | 86 | — | — | 86 | ||||||||||||
20,375 | — | — | 20,375 | |||||||||||||
Short-term investments: | ||||||||||||||||
U.S. Government and agency bills | 21,533 | — | — | 21,533 | ||||||||||||
$ | 41,908 | $ | — | $ | — | $ | 41,908 | |||||||||
Liability | ||||||||||||||||
Put option classified as liability | $ | — | $ | — | $ | 10 | $ | 10 | ||||||||
Acquisition–related contingent consideration classified as liability | — | — | 4,931 | 4,931 | ||||||||||||
Warrants classified as liability | — | — | 1,915 | 1,915 | ||||||||||||
$ | — | $ | — | $ | 6,856 | $ | 6,856 | |||||||||
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation | The table below provides a reconciliation of the beginning and ending balances for the liabilities measured at fair value using significant unobservable inputs (Level 3) (in thousands): | |||||||||||||||
Three Months Ended | ||||||||||||||||
March 31, | ||||||||||||||||
2015 | ||||||||||||||||
Balance at beginning of period | $ | 5,310 | ||||||||||||||
Acquired | — | |||||||||||||||
Changes to liability-classified stock awards | 1,557 | |||||||||||||||
Settled | — | |||||||||||||||
Net decrease in fair value | (11 | ) | ||||||||||||||
Balance at end of period | $ | 6,856 | ||||||||||||||
Net_Loss_Per_Share_Tables
Net Loss Per Share (Tables) | 3 Months Ended | |||||||
Mar. 31, 2015 | ||||||||
Earnings Per Share [Abstract] | ||||||||
Schedule of Earnings Per Share, Basic and Diluted | The following table presents the calculation of basic and diluted net loss per share for periods presented (in thousands, except share and per share data): | |||||||
Three Months Ended | ||||||||
March 31, | ||||||||
2014 | 2015 | |||||||
Net loss | $ | (463 | ) | $ | (36,586 | ) | ||
Basic and diluted shares: | ||||||||
Weighted-average common shares outstanding | 34,512,839 | 43,703,508 | ||||||
Net loss per share attributable to common stockholders: | ||||||||
Basic and diluted net loss per share applicable to common stockholders | $ | (0.01 | ) | $ | (0.84 | ) | ||
The following table sets forth the computation of the Company’s unaudited pro forma basic and diluted net loss per share of common stock (in thousands except share and per share data): | ||||||||
Three Months Ended | ||||||||
March 31, | ||||||||
2015 | ||||||||
Numerator: | ||||||||
Net loss for basic and diluted earnings per share | $ | (36,586 | ) | |||||
Add: Net change in fair value of warrant liabilities | (5 | ) | ||||||
Net loss for pro forma basic and diluted earnings per share | $ | (36,591 | ) | |||||
Denominator: | ||||||||
Weighted average common stock outstanding (basic) | 43,703,508 | |||||||
Add: conversion of convertible preferred stock | 53,448,243 | |||||||
Total weighted average shares outstanding used in basic pro forma net loss per share | 97,151,751 | |||||||
Dilutive effect of stock options and warrants | — | |||||||
Total weighted average shares outstanding used in diluted pro forma net loss per share | 97,151,751 | |||||||
Pro forma basic and diluted net loss per share | $ | (0.38 | ) | |||||
Schedule of Antidilutive Securities Excluded from Computation of Earnings Per Share | The following potential common shares were excluded from the calculation of diluted pro forma net loss per share attributable to common stockholders because their effect would have been anti-dilutive for the periods presented: | |||||||
Three Months Ended | ||||||||
March 31, | ||||||||
2015 | ||||||||
Stock options | 12,009,423 | |||||||
Warrants | 203,030 | |||||||
Total anti-dilutive | 12,212,453 | |||||||
The following potential common shares were excluded from the calculation of diluted net loss per share attributable to common stockholders because their effect would have been anti-dilutive for the periods presented: | ||||||||
Three Months Ended | ||||||||
March 31, | ||||||||
2014 | 2015 | |||||||
Stock options | 11,832,375 | 12,009,423 | ||||||
Warrants | 203,030 | 203,030 | ||||||
Convertible preferred stock | 53,448,243 | 53,448,243 | ||||||
Total anti-dilutive securities | 65,483,648 | 65,660,696 | ||||||
Segment_and_Geographic_Informa1
Segment and Geographic Information (Tables) | 3 Months Ended | |||||||
Mar. 31, 2015 | ||||||||
Segment Reporting [Abstract] | ||||||||
Revenue from External Customers by Geographic Areas | The following table summarizes revenue by geographic area (in thousands): | |||||||
Three Months Ended | ||||||||
March 31, | ||||||||
2014 | 2015 | |||||||
United States | $ | 32,797 | $ | 45,752 | ||||
International | 7,739 | 12,791 | ||||||
Revenue | $ | 40,536 | $ | 58,543 | ||||
Basis_of_Presentation_and_Summ2
Basis of Presentation and Summary of Significant Accounting Policies (Details) | 0 Months Ended | 3 Months Ended |
Mar. 25, 2015 | Mar. 31, 2015 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Reverse stock split conversion ratio | 0.5 | |
Pro Forma | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Conversion of convertible preferred stock into common stock, shares | 53,448,243 |
Debt_Details
Debt (Details) (Revolving Credit Facility, USD $) | 3 Months Ended | |
Mar. 31, 2015 | 31-May-14 | |
Debt Instrument [Line Items] | ||
Line of credit, maximum borrowing capacity | 50,000,000 | $35,000,000 |
Line of credit, maximum available borrowing capacity | 50,000,000 | |
Line of credit, maximum available borrowing capacity, minimum increment of increase | 10,000,000 | |
Total leverage ratio | 3.5 | |
Letter of Credit | ||
Debt Instrument [Line Items] | ||
Line of credit, maximum borrowing capacity | 10,000,000 | |
Bridge Loan | ||
Debt Instrument [Line Items] | ||
Line of credit, maximum borrowing capacity | $15,000,000 | |
Federal Funds Effective Swap Rate | ||
Debt Instrument [Line Items] | ||
Line of credit, basis spread on variable interest rate | 0.50% | |
One-Month London Interbank Offered Rate (LIBOR) | ||
Debt Instrument [Line Items] | ||
Line of credit, basis spread on variable interest rate | 1.00% | |
Minimum | One-Month London Interbank Offered Rate (LIBOR) | ||
Debt Instrument [Line Items] | ||
Line of credit, basis spread on variable interest rate | 1.00% | |
Minimum | Base Rate | ||
Debt Instrument [Line Items] | ||
Line of credit, basis spread on variable interest rate | 0.00% | |
Maximum | One-Month London Interbank Offered Rate (LIBOR) | ||
Debt Instrument [Line Items] | ||
Line of credit, basis spread on variable interest rate | 1.25% | |
Maximum | Base Rate | ||
Debt Instrument [Line Items] | ||
Line of credit, basis spread on variable interest rate | 0.25% |
Stockbased_Compensation_Fair_V
Stock-based Compensation - Fair Value of Options Granted Using the Black-Scholes Pricing Model (Details) (Stock Options) | 3 Months Ended | |
Mar. 31, 2015 | Mar. 31, 2014 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Volatility, minimum | 40.40% | 48.00% |
Volatility, maximum | 42.70% | 49.00% |
Risk-free interest rate, minimum | 1.30% | 1.70% |
Risk-free interest rate, maximum | 1.30% | 1.90% |
Dividend rate | 0.00% | 0.00% |
Minimum | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Expected term (in years) | 5 years 6 months 29 days | 5 years 5 months 16 days |
Maximum | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Expected term (in years) | 6 years 0 months 29 days | 6 years 0 months 29 days |
Stockbased_Compensation_Alloca
Stock-based Compensation - Allocated Share-Based Compensation Expense (Details) (USD $) | 3 Months Ended | |
In Thousands, unless otherwise specified | Mar. 31, 2015 | Mar. 31, 2014 |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Share-based compensation expense | $3,974 | $1,176 |
Cost of revenue | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Share-based compensation expense | 408 | 95 |
Marketing | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Share-based compensation expense | 103 | 30 |
Product development | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Share-based compensation expense | 544 | 291 |
General and administrative | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Share-based compensation expense | $2,919 | $760 |
Stockbased_Compensation_Additi
Stock-based Compensation - Additional Information (Details) (USD $) | 3 Months Ended | |
In Thousands, except Share data, unless otherwise specified | Mar. 31, 2015 | Mar. 31, 2014 |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Options granted in period (in shares) | 1,018,745 | |
Weighted average grant date fair value of options | $7.19 | |
Stock-based compensation expense-acquisitions | $1,841 | $0 |
Stock Options | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Stock option requisite service period | 4 years | |
2006 Stock Plan | Stock Options | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Term for options | 10 years | |
Number of shares authorized | 24,252,967 | |
Number of shares available for grant | 632,509 | |
Tranche One | 2006 Stock Plan | Stock Options | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Stock option vesting rights, percentage | 25.00% | |
Tranche Two | 2006 Stock Plan | Stock Options | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Stock option vesting period | 36 months |
Income_Taxes_Details
Income Taxes (Details) (USD $) | 1 Months Ended | 3 Months Ended | ||
In Millions, unless otherwise specified | Jan. 31, 2015 | Mar. 31, 2015 | Jan. 01, 2015 | Dec. 31, 2014 |
Income Tax Contingency [Line Items] | ||||
Deferred tax liability for gain in revised corporate structure transaction | $67.80 | |||
Deferred charge amortization period | 5 years | |||
Deferred charge amortized to income tax expense | 6.1 | |||
Amortization of deferred charges related to unrecognized tax benefits | 1.8 | |||
Unrecognized tax benefits that would impact effective tax rate favorably | 2.4 | |||
Deferred charge related to unrecognized tax benefits | 20.2 | |||
Deferred charge related to deferred tax liability | 67.8 | |||
Other Noncurrent Liabilities | ||||
Income Tax Contingency [Line Items] | ||||
Increase in unrecognized tax benefits | 20.4 | |||
Unrecognized tax benefits | $20.80 | $0.40 |
Fair_Value_Measurements_Schedu
Fair Value Measurements - Schedule of Major Categories of Assets and Liabilities Measured at Fair Value on a Recurring Basis (Details) (Recurring, USD $) | Mar. 31, 2015 | Dec. 31, 2014 |
In Thousands, unless otherwise specified | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Cash equivalents | $20,375 | $22,714 |
Short-term Investments | 41,908 | 41,898 |
Liability | 6,856 | 5,310 |
Put Option Classified As Liability | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Liability | 10 | 16 |
Acquisition-related Contingent Consideration Classsified as Liability | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Liability | 4,931 | 3,374 |
Warrants Classified as Liability | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Liability | 1,915 | 1,920 |
Money Market Funds | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Cash equivalents | 20,289 | 20,288 |
US Government Bills | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Cash equivalents | 86 | 2,426 |
US Government and Agency Bills | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Investments, Fair Value Disclosure | 21,533 | 19,184 |
Level 1 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Cash equivalents | 20,375 | 22,714 |
Short-term Investments | 41,908 | 41,898 |
Liability | 0 | 0 |
Level 1 | Put Option Classified As Liability | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Liability | 0 | 0 |
Level 1 | Acquisition-related Contingent Consideration Classsified as Liability | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Liability | 0 | 0 |
Level 1 | Warrants Classified as Liability | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Liability | 0 | 0 |
Level 1 | Money Market Funds | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Cash equivalents | 20,289 | 20,288 |
Level 1 | US Government Bills | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Cash equivalents | 86 | 2,426 |
Level 1 | US Government and Agency Bills | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Investments, Fair Value Disclosure | 21,533 | 19,184 |
Level 2 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Cash equivalents | 0 | 0 |
Short-term Investments | 0 | 0 |
Liability | 0 | 0 |
Level 2 | Put Option Classified As Liability | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Liability | 0 | 0 |
Level 2 | Acquisition-related Contingent Consideration Classsified as Liability | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Liability | 0 | 0 |
Level 2 | Warrants Classified as Liability | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Liability | 0 | 0 |
Level 2 | Money Market Funds | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Cash equivalents | 0 | 0 |
Level 2 | US Government Bills | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Cash equivalents | 0 | 0 |
Level 2 | US Government and Agency Bills | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Investments, Fair Value Disclosure | 0 | 0 |
Level 3 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Cash equivalents | 0 | 0 |
Short-term Investments | 0 | 0 |
Liability | 6,856 | 5,310 |
Level 3 | Put Option Classified As Liability | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Liability | 10 | 16 |
Level 3 | Acquisition-related Contingent Consideration Classsified as Liability | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Liability | 4,931 | 3,374 |
Level 3 | Warrants Classified as Liability | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Liability | 1,915 | 1,920 |
Level 3 | Money Market Funds | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Cash equivalents | 0 | 0 |
Level 3 | US Government Bills | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Cash equivalents | 0 | 0 |
Level 3 | US Government and Agency Bills | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Investments, Fair Value Disclosure | $0 | $0 |
Fair_Value_Measurements_Schedu1
Fair Value Measurements - Schedule of Unobservable Inputs Reconciliation (Details) (USD $) | 3 Months Ended |
In Thousands, unless otherwise specified | Mar. 31, 2015 |
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward] | |
Balance at beginning of period | $5,310 |
Acquired | 0 |
Changes to liability-classified stock awards | 1,557 |
Settled | 0 |
Net decrease in fair value | -11 |
Balance at end of period | $6,856 |
Net_Loss_Per_Share_Calculation
Net Loss Per Share - Calculation of Basic and Diluted Net Loss Per Share (Details) (USD $) | 3 Months Ended | |
In Thousands, except Share data, unless otherwise specified | Mar. 31, 2015 | Mar. 31, 2014 |
Earnings Per Share [Abstract] | ||
Net loss | ($36,586) | ($463) |
Basic and diluted shares: | ||
Weighted-average common shares outstanding | 43,703,508 | 34,512,839 |
Net loss per share attributable to common stockholders: | ||
Basic and diluted net loss per share applicable to common stockholders | ($0.84) | ($0.01) |
Net_Loss_Per_Share_Summary_of_
Net Loss Per Share - Summary of Shares Excluded from the Calculation of Diluted Net Loss Per Share (Details) | 3 Months Ended | |
Mar. 31, 2015 | Mar. 31, 2014 | |
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Anti-dilutive securities excluded from computation of earnings per share | 65,660,696 | 65,483,648 |
Stock Options | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Anti-dilutive securities excluded from computation of earnings per share | 12,009,423 | 11,832,375 |
Warrants | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Anti-dilutive securities excluded from computation of earnings per share | 203,030 | 203,030 |
Convertible Preferred Stock | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Anti-dilutive securities excluded from computation of earnings per share | 53,448,243 | 53,448,243 |
Pro Forma | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Anti-dilutive securities excluded from computation of earnings per share | 12,212,453 | |
Pro Forma | Stock Options | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Anti-dilutive securities excluded from computation of earnings per share | 12,009,423 | |
Pro Forma | Warrants | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Anti-dilutive securities excluded from computation of earnings per share | 203,030 |
Net_Loss_Per_Share_Calculation1
Net Loss Per Share - Calculation of Basic and Diluted Net Loss Per Share, Pro Forma (Details) (USD $) | 3 Months Ended | |
In Thousands, except Share data, unless otherwise specified | Mar. 31, 2015 | Mar. 31, 2014 |
Numerator: | ||
Net loss | ($36,586) | ($463) |
Add: Net change in fair value of warrant liabilities | -5 | |
Net loss for pro forma basic and diluted earnings per share | ($36,591) | |
Denominator: | ||
Weighted average common stock outstanding (basic) | 43,703,508 | |
Add: conversion of convertible preferred stock | 53,448,243 | |
Total weighted average shares outstanding used in basic pro forma net loss per share | 97,151,751 | |
Dilutive effect of stock options and warrants | 0 | |
Total weighted average shares outstanding used in diluted pro forma net loss per share | 97,151,751 | |
Pro forma basic and diluted net loss per share | ($0.38) |
Segment_and_Geographic_Informa2
Segment and Geographic Information (Details) (USD $) | 3 Months Ended | |
In Thousands, unless otherwise specified | Mar. 31, 2015 | Mar. 31, 2014 |
Revenue, Major Customer [Line Items] | ||
Revenue | $58,543 | $40,536 |
United States | ||
Revenue, Major Customer [Line Items] | ||
Revenue | 45,752 | 32,797 |
International | ||
Revenue, Major Customer [Line Items] | ||
Revenue | $12,791 | $7,739 |
Contingencies_Details
Contingencies (Details) (Non-income Tax Obligations, USD $) | Mar. 31, 2015 | Dec. 31, 2014 |
In Millions, unless otherwise specified | ||
Non-income Tax Obligations | ||
Loss Contingencies [Line Items] | ||
Non-income tax obligation reserve | $3.80 | $3.50 |
Subsequent_Events_Details
Subsequent Events (Details) (IPO, Subsequent Event, USD $) | 0 Months Ended | |
In Millions, except Share data, unless otherwise specified | Apr. 21, 2015 | Apr. 21, 2015 |
Subsequent Event [Line Items] | ||
Shares issued | 13,333,333 | |
Proceeds from initial public offering | $194.20 | |
Share price | $16 | $16 |
Underwriting discount | 13.9 | |
Other offering expense | $5.20 | |
Sale of stock by stockholders | 5,833,332 | |
Convertible Preferred Stock | ||
Subsequent Event [Line Items] | ||
Conversion of convertible preferred stock into common stock, shares | 53,448,243 |