Summary of Significant Accounting Policies | 3 Months Ended |
Mar. 31, 2015 |
Accounting Policies [Abstract] | |
Summary of Significant Accounting Policies | 2. Summary of Significant Accounting Policies |
Basis of Presentation |
The accompanying condensed consolidated financial statements include those of the Company and its subsidiaries, after elimination of all intercompany accounts and transactions. The accompanying condensed consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (“GAAP”). |
The condensed consolidated balance sheet at December 31, 2014 was derived from audited financial statements, but does not include all disclosures required by GAAP. The accompanying unaudited condensed consolidated financial statements as of March 31, 2015 and for the three months ended March 31, 2015 and 2014 have been prepared by the Company, pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”) for interim financial statements. Certain information and footnote disclosures normally included in financial statements prepared in accordance with GAAP have been condensed or omitted pursuant to such rules and regulations. However, the Company believes that the disclosures are adequate to make the information presented not misleading. These condensed consolidated financial statements should be read in conjunction with the Company’s audited consolidated financial statements and the notes thereto for the year ended December 31, 2014 included in the Company’s Annual Report on Form 10-K, File Number 001-33707, on file with the SEC. |
In the opinion of management, all adjustments, consisting only of normal recurring adjustments necessary for a fair statement of the Company’s consolidated financial position as of March 31, 2015 and consolidated results of operations and of cash flows for the three months ended March 31, 2015 and 2014, have been made. The results of operations for the three months ended March 31, 2015 are not necessarily indicative of the results of operations that may be expected for the year ending December 31, 2015. |
Use of Estimates |
The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. On an ongoing basis, management evaluates these estimates, judgments and assumptions, including those related to revenue recognition, stock-based compensation, goodwill and acquired intangible assets, capitalization of software and website development costs and income taxes. The Company bases these estimates on historical and anticipated results and trends and on various other assumptions that the Company believes are reasonable under the circumstances, including assumptions as to future events. These estimates form the basis for making judgments about the carrying values of assets and liabilities and recorded revenue and expenses that are not readily apparent from other sources. Actual results could differ from these estimates. |
Marketable Securities |
The Company’s marketable securities are classified as available-for-sale and are carried at fair value with the unrealized gains and losses reported as a component of accumulated other comprehensive income (loss) in stockholders’ equity. Realized gains and losses and declines in value judged to be other than temporary are included as a component of interest and other income (expense) based on the specific identification method. |
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At March 31, 2015, marketable securities by security type consisted of: |
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| | Amortized | | | Gross | | | Gross | | | Estimated | |
Cost | Unrealized | Unrealized | Fair |
| Gains | Losses | Value |
United States Treasury Notes | | $ | 11,796 | | | $ | 6 | | | $ | — | | | $ | 11,802 | |
Corporate and Agency Bonds | | | 43,213 | | | | 11 | | | | (7 | ) | | | 43,217 | |
Commercial Paper | | | 1,000 | | | | — | | | | — | | | | 1,000 | |
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Total | | $ | 56,009 | | | $ | 17 | | | $ | (7 | ) | | $ | 56,019 | |
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At March 31, 2015, marketable securities consisted of investments that mature within one year with the exception of government treasuries and corporate and agency bonds with a fair value of $19,172, which have maturities within two years. |
At December 31, 2014, marketable securities by security type consisted of: |
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| | Amortized | | | Gross | | | Gross | | | Estimated | |
Cost | Unrealized | Unrealized | Fair |
| Gains | Losses | Value |
United States Treasury Notes | | $ | 20,000 | | | $ | 6 | | | $ | — | | | $ | 20,006 | |
Corporate and Agency Bonds | | | 37,330 | | | | 2 | | | | (16 | ) | | | 37,316 | |
Commercial Paper | | | 999 | | | | — | | | | — | | | | 999 | |
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Total | | $ | 58,329 | | | $ | 8 | | | $ | (16 | ) | | $ | 58,321 | |
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Fair Value of Financial Instruments |
Certain assets and liabilities are carried at fair value under GAAP. Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. Valuation techniques used to measure fair value must maximize the use of observable inputs and minimize the use of unobservable inputs. A fair value hierarchy based on three levels of inputs, of which the first two are considered observable and the last is considered unobservable, is used to measure fair value: |
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| • | | Level 1 — Quoted prices in active markets for identical assets or liabilities. | | | | | | | | | | | | | |
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| • | | Level 2 — Inputs other than Level 1 that are observable, either directly or indirectly, such as quoted prices for similar assets or liabilities, quoted prices in markets that are not active, or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities. | | | | | | | | | | | | | |
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| • | | Level 3 — Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities. | | | | | | | | | | | | | |
The following tables present the Company’s fair value hierarchy for its cash equivalents and marketable securities, which are measured at fair value on a recurring basis as of March 31, 2015 and December 31, 2014: |
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| | Fair Value Measurements at March 31, 2015 Using | |
| | Level 1 | | | Level 2 | | | Level 3 | | | Total | |
Financial Assets: | | | | | | | | | | | | | | | | |
Money Market Instruments | | $ | 8,183 | | | $ | — | | | $ | — | | | $ | 8,183 | |
United States Treasury Notes | | | 11,802 | | | | — | | | | — | | | | 11,802 | |
Corporate and Agency Bonds | | | — | | | | 43,217 | | | | — | | | | 43,217 | |
Commercial Paper | | | — | | | | 1,000 | | | | — | | | | 1,000 | |
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Total | | $ | 19,985 | | | $ | 44,217 | | | $ | — | | | $ | 64,202 | |
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| | Fair Value Measurements at December 31, 2014 Using | |
| | Level 1 | | | Level 2 | | | Level 3 | | | Total | |
Financial Assets: | | | | | | | | | | | | | | | | |
Money Market Instruments | | $ | 5,885 | | | $ | — | | | $ | — | | | $ | 5,885 | |
United States Treasury Notes | | | 20,006 | | | | — | | | | — | | | | 20,006 | |
Corporate and Agency Bonds | | | — | | | | 37,316 | | | | — | | | | 37,316 | |
Commercial Paper | | | — | | | | 999 | | | | — | | | | 999 | |
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Total | | $ | 25,891 | | | $ | 38,315 | | | $ | — | | | $ | 64,206 | |
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Net Income Per Share |
Basic net income per share is computed by dividing net income by the weighted average number of unrestricted common shares outstanding for the period. |
Diluted net income per share is computed by dividing net income by the sum of the weighted average number of unrestricted common shares outstanding during the period and the weighted average number of potential common shares from the assumed exercise of stock options and the vesting of shares of restricted stock units using the “treasury stock” method when the effect is not anti-dilutive. |
The following is a summary of the shares used in computing diluted net income per share: |
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(in thousands) | | | | | | | | | | | |
| | Three months ended | | | | | | | | | |
March 31, | | | | | | | | |
| | 2015 | | | 2014 | | | | | | | | | |
Weighted average shares used in calculating basic net income per share | | | 32,091 | | | | 31,289 | | | | | | | | | |
Stock options | | | 1,397 | | | | 1,029 | | | | | | | | | |
Warrants | | | — | | | | 1 | | | | | | | | | |
Restricted stock units | | | 170 | | | | 123 | | | | | | | | | |
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Shares used in computing diluted net income per share | | | 33,658 | | | | 32,442 | | | | | | | | | |
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The following common stock equivalents were excluded from the computation of diluted net income per share because they had an anti-dilutive impact as the proceeds under the treasury stock method were in excess of the average fair market value for the period: |
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(in thousands) | | | | | | | | | | | |
| | Three months ended | | | | | | | | | |
March 31, | | | | | | | | |
| | 2015 | | | 2014 | | | | | | | | | |
Options to purchase common stock | | | 269 | | | | 1,031 | | | | | | | | | |
Restricted stock units | | | 79 | | | | 268 | | | | | | | | | |
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Total options exercisable into common stock and restricted stock units issuable in common stock | | | 348 | | | | 1,299 | | | | | | | | | |
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Recently Issued Accounting Pronouncements |
In May 2014, the Financial Accounting Standards Board (the “FASB”) issued new guidance, Revenue from Contracts with Customers, which requires an entity to recognize the amount of revenue to which it expects to be entitled for the transfer of promised goods or services to customers. This guidance will replace most existing revenue recognition guidance in GAAP when it becomes effective. The guidance also requires additional disclosure about the nature, amount, timing and uncertainty of revenue and cash flows arising from customer contracts, including significant judgments and changes in judgments and assets recognized from costs incurred to obtain or fulfill a contract. The new guidance is effective for the Company commencing January 1, 2017. Early application is not permitted. The guidance permits the use of either the retrospective or cumulative effect transition method. The Company is evaluating the effect that this guidance will have on its consolidated financial statements. |
In August 2014, the FASB issued new guidance, Presentation of Financial Statements — Going Concern. The new guidance addresses management’s responsibility to evaluate whether there is substantial doubt about an entity’s ability to continue as a going concern and to provide related footnote disclosures. Management’s evaluation should be based on relevant conditions and events that are known and reasonably knowable at the date that the financial statements are issued. The guidance will be effective for the first interim period within annual reporting periods beginning after December 15, 2016. Early adoption is permitted. The Company is evaluating the effect that this guidance will have on its consolidated financial statements. |
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In April 2015, the FASB issued new guidance, Intangibles—Goodwill and Other—Internal-Use Software: Customer’s Accounting for Fees Paid in a Cloud Computing Arrangement. The guidance clarifies the circumstances under which a cloud computing customer would account for the arrangement as a license of internal-use software. The guidance will be effective for the first interim period within annual reporting periods beginning after December 15, 2016. Early adoption is permitted. The Company does not believe the guidance will have a material impact on its consolidated financial statements. |