Document_and_Entity_Informatio
Document and Entity Information | 3 Months Ended | |
Sep. 30, 2014 | Oct. 31, 2014 | |
Document and Entity Information | ' | ' |
Entity Registrant Name | '2U, Inc. | ' |
Entity Central Index Key | '0001459417 | ' |
Document Type | '10-Q | ' |
Document Period End Date | 30-Sep-14 | ' |
Amendment Flag | 'false | ' |
Current Fiscal Year End Date | '--12-31 | ' |
Entity Current Reporting Status | 'Yes | ' |
Entity Filer Category | 'Non-accelerated Filer | ' |
Entity Common Stock, Shares Outstanding | ' | 40,541,993 |
Document Fiscal Year Focus | '2014 | ' |
Document Fiscal Period Focus | 'Q3 | ' |
Condensed_Consolidated_Balance
Condensed Consolidated Balance Sheets (USD $) | Sep. 30, 2014 | Dec. 31, 2013 |
In Thousands, unless otherwise specified | ||
Current assets: | ' | ' |
Cash and cash equivalents | $80,558 | $7,012 |
Accounts receivable, net | 10,038 | 1,835 |
Advance to clients, current | ' | 581 |
Prepaid expenses | 3,246 | 1,763 |
Total current assets | 93,842 | 11,191 |
Property and equipment, net | 5,841 | 5,231 |
Capitalized content development costs, net | 11,825 | 8,904 |
Advance to clients, non-current | 1,413 | ' |
Other non-current assets | 1,191 | 3,326 |
Total assets | 114,112 | 28,652 |
Current liabilities: | ' | ' |
Accounts payable | 4,677 | 5,089 |
Accrued expenses and other current liabilities | 14,720 | 12,025 |
Deferred revenue | 2,100 | 1,266 |
Refunds payable | 2,398 | 1,831 |
Total current liabilities | 23,895 | 20,211 |
Rebate reserve | 641 | 1,571 |
Other non-current liabilities | 649 | 847 |
Total liabilities | 25,185 | 22,629 |
Commitments and contingencies (Note 6) | ' | ' |
Redeemable convertible preferred stock: | ' | ' |
Redeemable convertible preferred stock | ' | 98,047 |
Stockholders' equity (deficit): | ' | ' |
Common stock, $0.001 par value, 60,000,000 shares authorized, 7,629,133 shares issued and outstanding as of December 31, 2013; 200,000,000 shares authorized, 40,346,564 shares issued and outstanding as of September 30, 2014 | 40 | 8 |
Additional paid-in capital | 213,718 | 7,817 |
Accumulated deficit | -124,831 | -99,849 |
Total stockholders' equity (deficit) | 88,927 | -92,024 |
Total liabilities, redeemable convertible preferred stock and stockholders' equity (deficit) | 114,112 | 28,652 |
Series A | ' | ' |
Redeemable convertible preferred stock: | ' | ' |
Redeemable convertible preferred stock | ' | 12,384 |
Series B | ' | ' |
Redeemable convertible preferred stock: | ' | ' |
Redeemable convertible preferred stock | ' | 22,210 |
Series C | ' | ' |
Redeemable convertible preferred stock: | ' | ' |
Redeemable convertible preferred stock | ' | 32,405 |
Series D | ' | ' |
Redeemable convertible preferred stock: | ' | ' |
Redeemable convertible preferred stock | ' | $31,048 |
Condensed_Consolidated_Balance1
Condensed Consolidated Balance Sheets (Parenthetical) (USD $) | Sep. 30, 2014 | Dec. 31, 2013 | Sep. 30, 2014 | Dec. 31, 2013 | Sep. 30, 2014 | Dec. 31, 2013 | Sep. 30, 2014 | Dec. 31, 2013 | Sep. 30, 2014 | Dec. 31, 2013 |
Series A | Series A | Series B | Series B | Series C | Series C | Series D | Series D | |||
Redeemable convertible preferred stock, par value (in dollars per share) | ' | ' | $0.00 | $0.00 | $0.00 | $0.00 | $0.00 | $0.00 | $0.00 | $0.00 |
Redeemable convertible preferred stock, shares authorized | ' | ' | 0 | 10,033,976 | 0 | 5,057,901 | 0 | 4,429,601 | 0 | 4,069,352 |
Redeemable convertible preferred stock, shares issued | ' | ' | 0 | 10,033,976 | 0 | 5,057,901 | 0 | 4,429,601 | 0 | 3,979,730 |
Redeemable convertible preferred stock, shares outstanding | ' | ' | 0 | 10,033,976 | 0 | 5,057,901 | 0 | 4,429,601 | 0 | 3,979,730 |
Preferred stock, par value (in dollars per share) | $0.00 | $0.00 | ' | ' | ' | ' | ' | ' | ' | ' |
Preferred stock, shares authorized | 5,000,000 | 0 | ' | ' | ' | ' | ' | ' | ' | ' |
Preferred stock, shares issued | 0 | 0 | ' | ' | ' | ' | ' | ' | ' | ' |
Preferred stock, shares outstanding | 0 | 0 | ' | ' | ' | ' | ' | ' | ' | ' |
Common stock, par value (in dollars per share) | $0.00 | $0.00 | ' | ' | ' | ' | ' | ' | ' | ' |
Common stock, shares authorized | 200,000,000 | 60,000,000 | ' | ' | ' | ' | ' | ' | ' | ' |
Common stock, shares issued | 40,346,564 | 7,629,133 | ' | ' | ' | ' | ' | ' | ' | ' |
Common stock, shares outstanding | 40,346,564 | 7,629,133 | ' | ' | ' | ' | ' | ' | ' | ' |
Condensed_Consolidated_Stateme
Condensed Consolidated Statements of Operations (USD $) | 3 Months Ended | 9 Months Ended | ||
In Thousands, except Share data, unless otherwise specified | Sep. 30, 2014 | Sep. 30, 2013 | Sep. 30, 2014 | Sep. 30, 2013 |
Condensed Consolidated Statements of Operations | ' | ' | ' | ' |
Revenue | $28,407 | $20,499 | $79,483 | $58,324 |
Costs and expenses: | ' | ' | ' | ' |
Servicing and support | 6,598 | 5,842 | 19,846 | 16,516 |
Technology and content development | 5,726 | 5,113 | 17,218 | 12,944 |
Program marketing and sales | 16,971 | 15,412 | 48,922 | 40,877 |
General and administrative | 6,303 | 4,269 | 17,447 | 10,794 |
Total costs and expenses | 35,598 | 30,636 | 103,433 | 81,131 |
Loss from operations | -7,191 | -10,137 | -23,950 | -22,807 |
Other income (expense): | ' | ' | ' | ' |
Interest expense | -176 | -1 | -1,094 | 12 |
Interest income | 30 | 5 | 62 | 21 |
Total other income (expense) | -146 | 4 | -1,032 | 33 |
Loss before income taxes | -7,337 | -10,133 | -24,982 | -22,774 |
Net loss | -7,337 | -10,133 | -24,982 | -22,774 |
Preferred stock accretion | ' | -87 | -89 | -261 |
Net loss attributable to common stockholders | ($7,337) | ($10,220) | ($25,071) | ($23,035) |
Net loss per share attributable to common stockholders, basic and diluted (in dollars per share) | ($0.18) | ($1.38) | ($0.86) | ($3.11) |
Weighted average common shares outstanding, basic and diluted (in shares) | 40,269,937 | 7,415,777 | 29,209,970 | 7,401,842 |
Condensed_Consolidated_Stateme1
Condensed Consolidated Statements of Changes in Stockholders' Equity (Deficit) (USD $) | Common Stock | Additional Paid-In Capital | Accumulated Deficit | Total |
In Thousands, except Share data, unless otherwise specified | ||||
Balance at Dec. 31, 2013 | $8 | $7,817 | ($99,849) | ($92,024) |
Balance (in shares) at Dec. 31, 2013 | 7,629,133 | ' | ' | 7,629,133 |
Increase (Decrease) in Stockholders' Equity | ' | ' | ' | ' |
Exercise of stock options | ' | 1,222 | ' | 1,222 |
Exercise of stock options (in shares) | 552,137 | ' | ' | ' |
Grant of common stock | ' | 55 | ' | 55 |
Grant of common stock (in shares) | 5,000 | ' | ' | ' |
Accretion of issuance costs on redeemable convertible preferred stock | ' | -89 | ' | -89 |
Stock-based compensation expense | ' | 5,486 | ' | 5,486 |
Conversion of redeemable convertible preferred stock to common stock | 23 | 98,113 | ' | 98,136 |
Conversion of redeemable convertible preferred stock to common stock (in shares) | 23,501,208 | ' | ' | ' |
Conversion of Series D warrant to common stock warrant | ' | 821 | ' | 821 |
Issuance of common stock from initial public offering, net of issuance costs | 9 | 100,293 | ' | 100,302 |
Issuance of common stock from initial public offering, net of issuance costs (in shares) | 8,626,377 | ' | ' | ' |
Exercise of warrants to purchase common stock (in shares) | 32,709 | ' | ' | ' |
Net loss | ' | ' | -24,982 | -24,982 |
Balance at Sep. 30, 2014 | $40 | $213,718 | ($124,831) | $88,927 |
Balance (in shares) at Sep. 30, 2014 | 40,346,564 | ' | ' | 40,346,564 |
Condensed_Consolidated_Stateme2
Condensed Consolidated Statements of Cash Flows (USD $) | 9 Months Ended | |
In Thousands, unless otherwise specified | Sep. 30, 2014 | Sep. 30, 2013 |
Cash flows from operating activities | ' | ' |
Net loss | ($24,982) | ($22,774) |
Adjustments to reconcile net loss to net cash used in operating activities: | ' | ' |
Depreciation and amortization | 4,240 | 3,082 |
Stock-based compensation expense | 5,486 | 1,707 |
Change in the fair value of the Series D redeemable convertible preferred stock warrant prior to conversion | 695 | -18 |
Changes in operating assets and liabilities: | ' | ' |
Accounts receivable, net | -8,203 | -16,957 |
Advances to clients | -832 | 166 |
Prepaid expenses | -1,483 | -290 |
Other assets | 1,119 | -73 |
Accounts payable | -240 | 244 |
Accrued expenses and other current liabilities | 3,624 | 5,096 |
Deferred revenue | 834 | 12,789 |
Refunds payable | 567 | 243 |
Rebate reserve | -930 | -294 |
Other liabilities | -18 | 38 |
Net cash used in operating activities | -20,123 | -17,041 |
Cash flows from investing activities | ' | ' |
Expenditures for property and equipment | -2,535 | -2,116 |
Capitalized content development cost expenditures | -5,299 | -3,561 |
Other investing activities | -21 | ' |
Net cash used in investing activities | -7,855 | -5,677 |
Cash flows from financing activities | ' | ' |
Proceeds from issuance of common stock, net of offering costs | 100,302 | ' |
Proceeds from exercise of stock options | 1,222 | 112 |
Repurchase of common shares | ' | -178 |
Proceeds from issuance of Series D redeemable convertible preferred stock, net of issuance costs | ' | 4,994 |
Net cash provided by financing activities | 101,524 | 4,928 |
Net (decrease) increase in cash and cash equivalents | 73,546 | -17,790 |
Cash and cash equivalents, beginning of period | 7,012 | 25,190 |
Cash and cash equivalents, end of period | 80,558 | 7,400 |
Supplemental disclosure of non-cash investing and financing activities | ' | ' |
Accretion of issuance costs on redeemable convertible preferred stock | 89 | 261 |
Accrued capital expenditures | 114 | 107 |
Deferred offering costs included in accounts payable and accrued expenses | 59 | 568 |
Common stock granted in exchange for consulting services received | $55 | ' |
Description_of_the_Business
Description of the Business | 9 Months Ended |
Sep. 30, 2014 | |
Description of the Business | ' |
Description of the Business | ' |
1.Description of the Business | |
2U, Inc. (the “Company”) was incorporated as 2Tor Inc. in the State of Delaware in April 2008 and changed its name to 2U, Inc. on October 11, 2012. Under long-term agreements, the Company provides a proprietary, cloud-based technology platform, bundled with technology-enabled services, that allows leading colleges and universities to deliver high quality online degree programs, extending the universities’ reach and distinguishing their brands. The Company’s comprehensive learning platform acts as the hub for all student and faculty academic and social interaction. The Company also provides a suite of technology-enabled services that support the complete lifecycle of a higher education program or course, including attracting students, facilitating in-program field placements and providing technical support. | |
Summary_of_Significant_Account
Summary of Significant Accounting Policies | 9 Months Ended | |||||||||
Sep. 30, 2014 | ||||||||||
Summary of Significant Accounting Policies | ' | |||||||||
Summary of Significant Accounting Policies | ' | |||||||||
2.Summary of Significant Accounting Policies | ||||||||||
Principles of Consolidation | ||||||||||
The accompanying unaudited condensed consolidated financial statements include the accounts of the Company and its wholly-owned subsidiary. All intercompany accounts and transactions have been eliminated in consolidation. | ||||||||||
Unaudited Condensed Consolidated Financial Information | ||||||||||
The accompanying unaudited condensed consolidated financial statements and footnotes have been prepared in accordance with generally accepted accounting principles in the United States of America (“U.S. GAAP”). The Company has condensed or omitted certain information and footnote disclosures normally included in financial statements presented in accordance with U.S. GAAP in the accompanying unaudited condensed consolidated financial statements. In the opinion of management, the interim financial information includes all adjustments of a normal recurring nature necessary for a fair presentation of financial position, the results of operations, changes in stockholders’ equity (deficit) and cash flows, and the disclosures made herein are adequate to prevent the information presented from being misleading. The results of operations for the three and nine months ended September 30, 2014 are not necessarily indicative of the results for the full year ending December 31, 2014 or the results for any future periods. These unaudited condensed consolidated interim financial statements should be read in conjunction with the audited consolidated financial statements and related notes for the year ended December 31, 2013, which are included in the Company’s prospectus (the “Prospectus”) filed pursuant to Rule 424(b) under the Securities and Exchange Act of 1933, as amended, with the Securities and Exchange Commission on March 28, 2014. | ||||||||||
There have been no changes to the Company’s significant accounting policies described in the Prospectus that have had a material impact on the unaudited condensed consolidated financial statements and related notes. | ||||||||||
Initial Public Offering | ||||||||||
On April 2, 2014, the Company closed the initial public offering of its common stock (“IPO”) in which the Company issued and sold 8,626,377 shares of its common stock, including the partial exercise of the underwriters’ over-allotment option, at an issuance price of $13.00 per share. The Company received net proceeds of $100.3 million after deducting underwriting discounts and commissions of $7.8 million and other offering expenses of approximately $4.0 million. Upon the closing of the IPO, all shares of the then-outstanding redeemable convertible preferred stock automatically converted into an aggregate of 23,501,208 shares of common stock, based on the shares of redeemable convertible preferred stock outstanding as of April 2, 2014. In addition, the outstanding Series D warrants automatically converted into warrants to purchase common stock, and the preferred stock warrant liability of $0.8 million as of April 2, 2014 was reclassified to additional paid-in capital. | ||||||||||
Use of Estimates | ||||||||||
The preparation of financial statements in accordance with U.S. GAAP requires management to make certain estimates and assumptions that affect the amounts reported in the unaudited condensed consolidated financial statements and accompanying notes. On an ongoing basis, the Company evaluates its estimates, including those related to the useful lives of long-lived assets, fair value measurement and income taxes, among others. The Company bases its estimates on historical experience and on various other assumptions that it believes to be reasonable, the results of which form the basis for making judgments about the carrying value of assets and liabilities. Actual results could differ from those estimates. | ||||||||||
Cash and Cash Equivalents | ||||||||||
Cash and cash equivalents consist of bank checking and money market accounts and investments in certificates of deposit that mature in less than three months. The Company considers all highly liquid marketable securities with maturities at the time of purchase of three months or less to be cash equivalents, and they are carried at fair value. | ||||||||||
Revenue Recognition and Deferred Revenue | ||||||||||
The Company recognizes revenue when all of the following conditions are met: (i) persuasive evidence of an arrangement exists, (ii) rendering of services is complete, (iii) fees are fixed or determinable and (iv) collection of fees is reasonably assured. | ||||||||||
The Company primarily derives its revenue from long-term contracts that typically range from 10 to 15 years in length. Under these contracts, the Company enables access to its cloud-based technology platform and provides technology-enabled marketing, content development and supporting services to its clients and their faculty and students. The Company is entitled to a contractually specified percentage of net program proceeds from its clients. These net program proceeds represent gross proceeds billed by clients to students, less credit card fees and other specified charges the Company has agreed to exclude in certain of its client contracts. A refund allowance is established for the Company’s share of tuition and fees ultimately uncollected by its clients. The Company also offered rebates to a group of students who enrolled in a specific client program between 2009 and 2011, which the Company will pay to the student if he or she completes the degree and certain post-graduation work requirements within a specified period of time. These rebates and refunds offset the net program proceeds recognized as revenue. Revenue is recognized ratably over the service period, which the Company defines as the first through the last day of classes for each semester in a client’s program. The Company invoices its clients based on enrollment reports that are generated by its clients. In some instances, these enrollment reports are received prior to the conclusion of the drop/add period. In such cases, the Company establishes a reserve against revenue, if necessary, based on its estimate of changes in enrollments expected prior to the end of the drop/add period. | ||||||||||
The Company generates substantially all of its revenue from multiple-deliverable contractual arrangements with its clients. Under each of these arrangements, the Company provides (i) a cloud-based technology platform that serves as a learning platform for its client’s faculty and students and which also enables a comprehensive range of other client functions, (ii) program marketing and application services for student acquisition, (iii) in conjunction with the client’s faculty members, content development for courses and (iv) faculty and student support services, including technical field training and support, non-academic student advising, academic progress monitoring and career services. | ||||||||||
In order to treat deliverables in a multiple-deliverable contractual arrangement as separate units of accounting, deliverables must have standalone value upon delivery. The services are provided primarily in support of courses offered over the Company’s platform and for students of the online courses delivered over its platform. Accordingly, the Company has determined that no individual deliverable has standalone value upon delivery and, therefore, deliverables within the Company’s multiple-deliverable arrangements do not qualify for treatment as separate units of accounting. Accordingly, the Company considers all deliverables to be a single unit of accounting and recognizes revenue from the entire arrangement over the term of the service period. | ||||||||||
Advance payments are recorded as deferred revenue until services are delivered or obligations are met, at which time revenue is recognized. Deferred revenue as of a particular balance sheet date represents the excess of amounts received as compared to amounts recognized in revenue in the unaudited condensed consolidated statements of operations as of the end of the reporting period, and such amounts are reflected as a current liability on the Company’s unaudited condensed consolidated balance sheets. | ||||||||||
Fair Value Measurements | ||||||||||
The carrying amounts of certain assets and liabilities, including cash and cash equivalents, accounts receivable, accounts payable and accrued expenses and other current liabilities, approximate their respective fair values due to their short-term nature. | ||||||||||
Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date, based on the Company’s principal or, in the absence of a principal, most advantageous, market for the specific asset or liability. | ||||||||||
U.S. GAAP provides for a three-tier fair value hierarchy to classify and disclose all assets and liabilities measured at fair value on a recurring basis, as well as assets and liabilities measured at fair value on a non-recurring basis, in periods subsequent to their initial measurement. The fair value hierarchy requires the Company to use observable inputs when available, and to minimize the use of unobservable inputs when determining fair value. The three tiers are defined as follows: | ||||||||||
Level 1 — Observable inputs that reflect quoted market prices (unadjusted) for identical assets or liabilities in active markets; | ||||||||||
Level 2 — Observable inputs, other than quoted prices in active markets, that are observable either directly or indirectly in the marketplace for identical or similar assets and liabilities; and | ||||||||||
Level 3 — Unobservable inputs that are supported by little or no market data, which require the Company to develop its own assumptions about the assumptions market participants would use in pricing the asset or liability based on the best information available in the circumstances. | ||||||||||
Assets and Liabilities Measured at Fair Value on a Recurring Basis | ||||||||||
The Company evaluates its financial assets and liabilities subject to fair value measurements on a recurring basis to determine the appropriate level in which to classify them for each reporting period. This determination requires significant judgments to be made. | ||||||||||
Prior to converting to common stock warrants upon the closing of the IPO on April 2, 2014, the Company used an option pricing model to determine the fair value of the Series D redeemable convertible preferred stock warrants. The valuation required the input of subjective assumptions, including the risk-free interest rate, the value of the underlying securities and the expected stock price volatility. The risk-free interest rate assumption was based upon observed interest rates for constant maturity U.S. Treasury securities consistent with the term of the warrants. The expected stock price volatility assumption was based on historical volatilities for publicly traded stock of comparable companies over the term of the warrants. The value of the underlying securities assumption was based upon the market price of the Company’s common stock as the redeemable convertible preferred stock warrants became convertible into shares of common stock upon closing of the IPO. | ||||||||||
Concentration of Credit Risk | ||||||||||
Financial instruments that subject the Company to significant concentrations of credit risk consist primarily of cash and cash equivalents and accounts receivable. All of the Company’s cash is held at financial institutions that management believes to be of high credit quality. The Company’s bank accounts exceed federally insured limits at times. The Company has not experienced any losses on cash to date. To manage accounts receivable risk, the Company evaluates the creditworthiness of its clients and maintains an allowance for doubtful accounts, if needed. | ||||||||||
Three of the Company’s university clients accounted for the following percentages of revenue for the periods presented below: | ||||||||||
Three Months Ended | Nine Months Ended | |||||||||
September 30, | September 30, | |||||||||
2013 | 2014 | 2013 | 2014 | |||||||
Client A | 67% | 56% | 70% | 57% | ||||||
Client B | 17 | 15 | 17 | 15 | ||||||
Client C | 13 | 13 | 12 | 13 | ||||||
Additionally, the Company’s largest university client accounted for 51% and 71% of the Company’s accounts receivable balance as of December 31, 2013 and September 30, 2014, respectively. Further, another university client accounted for 26% of the Company’s accounts receivable balance as of December 31, 2013, while an additional university client accounted for 11% of the Company’s accounts receivable balance as of September 30, 2014. | ||||||||||
Property and Equipment | ||||||||||
Property and equipment is stated at cost less accumulated depreciation and amortization. Computer software is included in property and equipment and consists internally-developed software. Expenditures for major additions, construction and improvements are capitalized. Depreciation and amortization is expensed using the straight-line method over the estimated useful lives of the related assets, which range from three to five years for computer hardware and five to seven years for furniture and office equipment. Leasehold improvements are depreciated on a straight-line basis over the lesser of the remaining term of the leased facility or the estimated useful life of the improvement, which ranges from four to ten years. Useful lives of significant assets are periodically reviewed and adjusted prospectively to reflect the Company’s current estimates of the respective assets’ expected utility. Repair and maintenance costs are expensed as incurred. | ||||||||||
The Company capitalizes certain costs associated with internally-developed software, primarily consisting of direct labor associated with creating the software. Software development projects generally include three stages: the preliminary project stage (all costs are expensed as incurred), the application development stage (certain costs are capitalized and certain costs are expensed as incurred) and the post-implementation/operation stage (all costs are expensed as incurred). Costs capitalized in the application development stage include costs of designing the application, coding, integrating the Company’s and the university’s networks and systems, and the testing of the software. Capitalization of costs requires judgment in determining when a project has reached the application development stage and the period over which the Company expects to benefit from the use of that software. Once the software is placed in service, these costs are depreciated on the straight-line method over the estimated useful life of the software, which is generally three years. | ||||||||||
Capitalized Content Development Costs | ||||||||||
The Company works with each client’s faculty members to develop and maintain educational content that is delivered to their students through the Company’s cloud-based technology platform. The online content developed jointly by the Company and its clients consists of subjects chosen and taught by clients’ faculty members and incorporates references and examples designed to remain relevant over extended periods of time. Online delivery of the content, combined with live, face-to-face instruction, provides the Company with rapid user feedback that it uses to make ongoing corrections, modifications and improvements to the course content. The Company’s clients retain all intellectual property rights to the developed content, although the Company retains the rights to the content packaging and delivery mechanisms. Much of the Company’s new content development uses proven delivery platforms and is therefore primarily subject-specific in nature. As a result, a significant portion of content development costs qualify for capitalization due to the focus of the Company’s development efforts on the unique subject matter of the content. Similar to on-campus programs offered by the Company’s clients, the online degree programs enabled by the Company offer numerous courses for each degree. The Company therefore capitalizes its development costs on a course-by-course basis. As students must matriculate into a client program in order to take a course, revenues and identifiable cash flows are also measured at the client program level. | ||||||||||
The Company develops content on a course-by-course basis in conjunction with the faculty for each client program. The clients and their faculty generally provide course outlines in the form of the curriculum, required textbooks, case studies and other reading materials, as well as presentations that are typically used in the on-campus setting. The Company is then responsible for, and incurs all of the expenses related to, the conversion of the materials provided by each client into a format suitable for delivery through the Company’s cloud-based technology platform. | ||||||||||
The content development costs that qualify for capitalization are third-party direct costs, such as videography, editing and other services associated with creating digital content. Additionally, the Company capitalizes internal payroll and payroll-related costs incurred to create and produce videos and other digital content utilized in the clients’ programs for delivery via the Company’s platform. Capitalization ends when content has been fully developed by both the Company and the client, at which time amortization of the capitalized content development costs begins. The capitalized costs are recorded on a course-by-course basis and included in capitalized content costs on the unaudited condensed consolidated balance sheets. These costs are amortized using the straight-line method over the estimated useful life of the respective capitalized content program, which is generally five years. The estimated useful life corresponds with the Company’s planned curriculum refresh rate. This refresh rate is consistent with expected curriculum refresh rates as cited by program faculty members for similar on-campus programs. It is reasonably possible that developed content could be refreshed before the estimated useful lives are complete. | ||||||||||
Impairment of Long-Lived Assets | ||||||||||
The Company reviews long-lived assets, which consist of property and equipment and capitalized content development costs, for impairment whenever events or changes in circumstances indicate the carrying value of an asset may not be recoverable. In order to assess the recoverability of the capitalized content development costs, the costs are grouped by program, which is the lowest level of independent cash flows. Recoverability of the long-lived asset is measured by a comparison of the carrying value of the asset or asset group to the future undiscounted net cash flows expected to be generated by the asset or asset group. If such assets are not recoverable, the impairment to be recognized is measured by the amount by which the carrying value of the asset exceeds the estimated fair value (discounted cash flow) of the asset or asset group. The Company’s impairment analysis is based upon forecasted financial and operational results. The actual results could vary from the Company’s forecasts, especially in relation to recently launched programs. | ||||||||||
Other Non-Current Assets | ||||||||||
Other non-current assets consist primarily of deferred financing costs which were incurred by the Company directly in connection with obtaining its revolving line of credit. These deferred financing costs are amortized over a useful life equal to the term of the underlying line of credit. Additional other non-current assets consist of intangible assets associated with the Company’s registered domain names and security deposits on leased office facilities. Until April 2, 2014, other non-current assets also consisted of costs the Company deferred which were incurred directly in connection with its IPO. | ||||||||||
Refunds Payable | ||||||||||
The Company records a refunds payable liability related to the amounts owed to clients as a result of students defaulting on their payments to clients. The Company may receive its portion of net program proceeds prior to a client collecting the full amount of tuition and applicable fees from its students. The Company calculates the refunds payable liability by estimating the future amounts owed to a client resulting from non-payment by students. The Company’s estimate is based on historical collection experience, market and income trends, and a review of the client’s accounts receivable aging. | ||||||||||
Rebate Reserve | ||||||||||
The Company has recorded a rebate reserve liability that results from having offered students who first enrolled in a specific Master of Arts in Teaching program between April 2009 and June 2011 a rebate if they complete their degree and teach in a designated low-income school district for five consecutive years within the first six years after graduation. The Company accounts for the rebate reserve as a contingent sales incentive and has recorded a rebate reserve liability to recognize the obligation to rebate amounts to students who satisfactorily complete the rebate requirements. | ||||||||||
Advances to Clients | ||||||||||
The Company is contractually obligated to pay advances to certain of its clients in order to fund start-up expenses of the program on behalf of the client. Advances to clients are stated at realizable value. The advances are repaid to the Company on terms as required in the respective agreements. The Company recognizes imputed interest income on these advance payments when there is a significant amount of imputed interest. | ||||||||||
Comprehensive Loss | ||||||||||
The Company’s net loss equals comprehensive loss for all periods presented as the Company has no material components of other comprehensive income. | ||||||||||
Stock-Based Compensation | ||||||||||
The Company accounts for stock-based compensation awards based on the fair value of the award as of the grant date. For awards subject to service-based vesting conditions, the Company recognizes stock-based compensation expense on a straight-line basis over the awards’ requisite service period, adjusted for estimated forfeitures. For awards subject to both performance and service-based vesting conditions, the Company recognizes stock-based compensation expense using an accelerated recognition method when it is probable that the performance condition will be achieved. | ||||||||||
Basic and Diluted Loss per Common Share | ||||||||||
The Company uses the two-class method to compute net loss per common share because the Company has issued securities, other than common stock, that contractually entitle the holders to participate in dividends and earnings of the Company. The two-class method requires earnings for the period to be allocated between common stock and participating securities based upon their respective rights to receive distributed and undistributed earnings. Holders of each series of the Company’s redeemable convertible preferred stock (prior to their conversion to common shares) were entitled to participate in distributions, when and if declared by the board of directors, that are made to common stockholders, and as a result are considered participating securities. | ||||||||||
Under the two-class method, for periods with net income, basic net income per common share is computed by dividing the net income attributable to common stockholders by the weighted average number of shares of common stock outstanding during the period. Net income attributable to common stockholders is computed by subtracting from net income the portion of current year earnings that the participating securities would have been entitled to receive pursuant to their dividend rights had all of the year’s earnings been distributed. No such adjustment to earnings is made during periods with a net loss, as the holders of the participating securities have no obligation to fund losses. Diluted net loss per common share is computed under the two-class method by using the weighted average number of shares of common stock outstanding, plus, for periods with net income attributable to common stockholders, the potential dilutive effects of stock options and warrants. In addition, the Company analyzes the potential dilutive effect of the outstanding participating securities under the “if-converted” method when calculating diluted earnings per share, in which it is assumed that the outstanding participating securities convert into common stock at the beginning of the period. The Company reports the more dilutive of the approaches (two-class or “if-converted”) as its diluted net income per share during the period. Due to net losses for the three- and nine-month periods ended September 30, 2013 and 2014, basic and diluted loss per share were the same, as the effect of potentially dilutive securities would have been anti-dilutive. | ||||||||||
Recent Accounting Pronouncements | ||||||||||
In July 2013, the Financial Accounting Standards Board (“FASB”) issued ASU No. 2013-11, Presentation of an Unrecognized Tax Benefit When a Net Operating Loss Carryforward, a Similar Tax Loss, or a Tax Credit Carryforward Exists, which is effective for interim or annual periods beginning after December 15, 2013. This guidance provides financial statement presentation guidance on whether an unrecognized tax benefit must be presented as either a reduction to a deferred tax asset or separately as a liability. The Company adopted this new guidance on January 1, 2014 and the adoption did not have a material impact on the Company’s financial condition, results of operations or disclosures. | ||||||||||
On May 28, 2014, the FASB issued ASU No. 2014-09, 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. The ASU will replace most existing revenue recognition guidance in U.S. GAAP when it becomes effective. The new standard is effective for the Company on January 1, 2017. Early application is not permitted. The standard permits the use of either the retrospective or cumulative effect transition method. The Company is evaluating the effect that ASU 2014-09 will have on its consolidated financial statements and related disclosures. The Company has not yet selected a transition method nor has it determined the effect of the standard on its ongoing financial reporting. | ||||||||||
Segment and Geographic Information | ||||||||||
Operating segments are defined as components of an enterprise for which discrete financial information is available that is evaluated regularly by the chief operating decision maker (“CODM”) for purposes of allocating resources and evaluating financial performance. The Company’s CODM reviews the financial information presented on a consolidated basis for purposes of allocating resources and evaluating financial performance. As such, the Company’s operations constitute a single operating segment and one reportable segment. The Company offers similar services to substantially all of its clients, which primarily represent well-recognized nonprofit colleges and universities in the United States. | ||||||||||
Substantially all assets were held and all revenue was generated in the United States during all periods presented. | ||||||||||
Fair_Value_Measurements
Fair Value Measurements | 9 Months Ended | |||||||||||||
Sep. 30, 2014 | ||||||||||||||
Fair Value Measurements | ' | |||||||||||||
Fair Value Measurements | ' | |||||||||||||
3.Fair Value Measurements | ||||||||||||||
Assets and liabilities measured at fair value on a recurring basis are summarized below (in thousands): | ||||||||||||||
Balance as of December 31, 2013 | ||||||||||||||
Total | Level 1 | Level 2 | Level 3 | |||||||||||
Assets: | ||||||||||||||
Cash equivalents | $ | 3,357 | $ | 3,357 | $ | — | $ | — | ||||||
Liabilities: | ||||||||||||||
Series D redeemable convertible preferred stock warrants | $ | 126 | $ | — | $ | — | $ | 126 | ||||||
Balance as of September 30, 2014 | ||||||||||||||
Total | Level 1 | Level 2 | Level 3 | |||||||||||
Assets: | ||||||||||||||
Cash equivalents | $ | 76,412 | $ | 76,412 | $ | — | $ | — | ||||||
In order to determine the fair value of the Series D redeemable convertible preferred stock warrants, the Company used an option pricing model. The valuation required the input of subjective assumptions, including the risk-free interest rate, the value of the underlying securities and the expected stock price volatility. The risk-free interest rate assumption was based upon observed interest rates for constant maturity U.S. Treasury securities consistent with the term of the warrants. The expected stock price volatility assumption was based on historical volatilities for publicly traded stock of comparable companies over the term of the warrants. | ||||||||||||||
Property_and_Equipment
Property and Equipment | 9 Months Ended | |||||||
Sep. 30, 2014 | ||||||||
Property and Equipment | ' | |||||||
Property and Equipment | ' | |||||||
4.Property and Equipment | ||||||||
Property and equipment consisted of the following (in thousands): | ||||||||
December 31, | September 30, | |||||||
2013 | 2014 | |||||||
Internally-developed software | $ | 5,516 | $ | 7,149 | ||||
Computer hardware | 2,082 | 2,374 | ||||||
Furniture and office equipment | 774 | 1,067 | ||||||
Leasehold improvements | 1,494 | 1,706 | ||||||
Total | 9,866 | 12,296 | ||||||
Accumulated depreciation | (4,635 | ) | (6,455 | ) | ||||
Property and equipment, net | $ | 5,231 | $ | 5,841 | ||||
Depreciation expense was $0.6 million for each of the three-month periods ended September 30, 2013 and 2014. Depreciation expense for the nine months ended September 30, 2013 and 2014 was $1.5 million and $1.8 million, respectively. | ||||||||
Capitalized_Content_Developmen
Capitalized Content Development Costs | 9 Months Ended | |||||||
Sep. 30, 2014 | ||||||||
Capitalized Content Development Costs | ' | |||||||
Capitalized Content Development Costs | ' | |||||||
5.Capitalized Content Development Costs | ||||||||
Capitalized content development costs consisted of the following as of (in thousands): | ||||||||
December 31, | September 30, | |||||||
2013 | 2014 | |||||||
Capitalized content development costs | $ | 11,816 | $ | 16,076 | ||||
Capitalized content development costs in process | 1,961 | 2,353 | ||||||
Accumulated amortization | (4,873 | ) | (6,604 | ) | ||||
Capitalized content development costs, net | $ | 8,904 | $ | 11,825 | ||||
The Company recorded amortization expense related to capitalized content development costs of $0.5 million and $1.0 million for the three months ended September 30, 2013 and 2014, respectively. The Company recorded amortization expense related to capitalized content development costs of $1.5 million and $2.4 million for the nine months ended September 30, 2013 and 2014, respectively. | ||||||||
As of September 30, 2014, the estimated future amortization expense for the capitalized content development costs is as follows (in thousands): | ||||||||
2014 | $ | 762 | ||||||
2015 | 2,860 | |||||||
2016 | 2,423 | |||||||
2017 | 1,829 | |||||||
2018 | 1,272 | |||||||
Thereafter | 326 | |||||||
Total | $ | 9,472 | ||||||
Commitments_and_Contingencies
Commitments and Contingencies | 9 Months Ended | ||||
Sep. 30, 2014 | |||||
Commitments and Contingencies | ' | ||||
Commitments and Contingencies | ' | ||||
6.Commitments and Contingencies | |||||
Line of Credit | |||||
On December 31, 2013, the Company secured a revolving line of credit with an aggregate borrowing base not to exceed $37.0 million. On January 21, 2014, the Company borrowed $5.0 million under this line of credit and repaid this borrowing in full on February 18, 2014; therefore, no amounts were outstanding as of September 30, 2014. The availability of this credit line is subject to the Company’s compliance with certain reporting and financial covenants. The Company is currently in compliance with all such covenants. | |||||
Legal Contingencies | |||||
From time to time, the Company may become involved in legal proceedings or other contingencies in the ordinary course of its business. The Company is not presently involved in any legal proceeding or other contingency that, if determined adversely to it, would individually or in the aggregate have a material adverse effect on its business, operating results, financial condition or cash flows. Accordingly, the Company does not believe that there is a reasonable possibility that a material loss exceeding amounts already recognized may have been incurred as of the date of the balance sheets presented herein. | |||||
Program Marketing and Sales Commitments | |||||
Certain of the agreements entered into between the Company and its clients require the Company to commit to meet certain staffing and spending investment thresholds related to program marketing and sales activities. The Company believes it is currently in compliance with all such commitments. | |||||
Operating Leases | |||||
The Company leases office facilities under non-cancelable operating leases in California, New York, Maryland, North Carolina and Hong Kong. The Company also leases furniture and office equipment under non-cancelable leases. As of September 30, 2014, the future minimum lease payments (net of aggregate expected sublease payments of $0.5 million) were as follows (in thousands): | |||||
2014 | $ | 676 | |||
2015 | 2,595 | ||||
2016 | 2,540 | ||||
2017 | 1,923 | ||||
2018 | 1,250 | ||||
Thereafter | 739 | ||||
Total future minimum lease payments | $ | 9,723 | |||
The future minimum lease payments due under non-cancelable operating lease arrangements contain fixed rent increases over the term of the lease. Rent expense on these operating leases is recognized over the term of the lease on a straight-line basis. The excess of rent expense over future minimum lease payments due has been reported in other non-current liabilities in the accompanying unaudited condensed consolidated balance sheets. The deferred rent liability related to these leases totaled $0.5 million and $0.5 million as of December 31, 2013 and September 30, 2014, respectively. | |||||
Total net rent expense for the three months ended September 30, 2013 and 2014 was $0.6 million and $0.7 million, respectively. Total net rent expense for the nine-month periods ended September 30, 2013 and 2014 was $1.6 million and $2.0 million, respectively. | |||||
Payments to Clients | |||||
The Company is contractually obligated to make fixed payments to certain of its university clients in exchange for various intellectual property and other rights. As of September 30, 2014, the future minimum payments to the Company’s clients for intellectual property and other rights were as follows (in thousands): | |||||
2014 | $ | — | |||
2015 | 500 | ||||
2016 | 800 | ||||
2017 | 800 | ||||
2018 | 300 | ||||
Thereafter | 3,000 | ||||
Total future minimum program payments | $ | 5,400 | |||
Income_Taxes
Income Taxes | 9 Months Ended |
Sep. 30, 2014 | |
Income Taxes | ' |
Income Taxes | ' |
7.Income Taxes | |
Income taxes are accounted for under the asset and liability method, which requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of events that are included in the financial statements. Deferred tax assets are subject to periodic recoverability assessments. Recognition of deferred tax assets is appropriate only if the likelihood of realization of such assets is more likely to occur, than not. At December 31, 2013, the Company had federal net operating loss (“NOL”) carryforwards of approximately $86.0 million, which expire between 2029 and 2033. At December 31, 2013, the Company had individual state net operating loss carryforwards up to $73.1 million, which expire between 2021 and 2033. A full valuation allowance has been established to offset the net deferred tax assets. The utilization of the loss carryforwards to reduce future income taxes will depend on the Company’s ability to generate sufficient taxable income prior to the expiration of the NOL carryforwards. In addition, a certain portion of the above NOLs may be subject to Internal Revenue Code Section 382 limitations, which may limit their future use. The Company has experienced a number of transactions which could lead to a limitation of its NOLs under Section 382 of the Internal Revenue Code. The Company intends to complete a study regarding this limitation by December 31, 2014. It is reasonably possible that the results of the study will reduce the reported net operating losses and other deferred tax assets. | |
The Company determines its annual effective tax rate for the full fiscal year and applies that rate to its income before income taxes in determining its provision for income taxes for interim periods. The Company also records discrete items in each respective period as appropriate. The Company’s effective tax rate for the three and nine months ended September 30, 2013 and 2014 was 0%. | |
The Company permanently reinvests cumulative undistributed earnings of its subsidiary in non-U.S. operations. U.S. federal income taxes have not been provided for in relation to undistributed earnings to the extent that they are permanently reinvested in the Company’s non-U.S. operations. It is not practical at this time to determine the income tax liability that would result upon repatriation to the United States. As of December 31, 2013 and September 30, 2014, the undistributed earnings of the Company’s subsidiary were not material. | |
The Company applies the provisions of ASC 740-10 to uncertain tax positions. ASC 740-10 clarifies accounting for income taxes by prescribing a minimum probability threshold that a tax position must meet before a financial statement benefit is recognized. If the probability for sustaining a tax position is greater than 50%, then the tax position is warranted and recognition should be at the highest amount which would be expected to be realized upon settlement. The Company did not identify any tax positions that would be required for inclusion in the financial statements. As of September 30, 2014, the Company had not made any changes to its tax positions since December 31, 2013. | |
The Company recognizes interest and penalties related to uncertain tax positions in income tax expense. As of December 31, 2013 and September 30, 2014, the Company had no accrued interest or penalties related to uncertain tax positions. | |
The Company has analyzed its filing positions in all significant federal, state and foreign jurisdictions where it is required to file income tax returns, as well as open tax years in these jurisdictions. With few exceptions, the Company is no longer subject to U.S. federal, state and local tax examinations by tax authorities for the years prior to 2010, though the NOL carryforwards can be adjusted upon audit and could impact taxes owed in open tax years. No income tax returns are currently under examination by the taxing authorities. | |
Redeemable_Convertible_Preferr
Redeemable Convertible Preferred Stock | 9 Months Ended | ||||||||||||||||
Sep. 30, 2014 | |||||||||||||||||
Redeemable Convertible Preferred Stock | ' | ||||||||||||||||
Redeemable Convertible Preferred Stock | ' | ||||||||||||||||
8.Redeemable Convertible Preferred Stock | |||||||||||||||||
The following table summarizes the Company’s issuances of redeemable convertible preferred stock: | |||||||||||||||||
Issue Date | Series | Purchase | Number of | Conversion Price | |||||||||||||
Price per | Shares | per Share | |||||||||||||||
Share | |||||||||||||||||
June 2009 | Series A | $ | 1.27 | 10,033,976 | $ | 1.27 | |||||||||||
February 2010 | Series B | $ | 4.46 | 5,057,901 | $ | 4.46 | |||||||||||
March 2011 | Series C | $ | 7.34 | 4,429,601 | $ | 7.34 | |||||||||||
March 2012 | Series D | $ | 7.81 | 3,339,902 | $ | 7.81 | |||||||||||
January 2013 | Series D | $ | 7.81 | 639,828 | $ | 7.81 | |||||||||||
Each of the purchase prices per share above excludes the cost of issuance. Any costs incurred in connection with the issuance of the various classes of preferred stock have been recorded as a reduction of the carrying amount of the preferred stock and were accreted through a charge to additional paid-in capital through April 2, 2014. | |||||||||||||||||
Summary of Activity | |||||||||||||||||
The following table presents a summary of activity for the redeemable convertible preferred stock issued and outstanding for the periods presented below (in thousands): | |||||||||||||||||
Redeemable Convertible Preferred Stock | |||||||||||||||||
Series A | Series B | Series C | Series D | Total | |||||||||||||
Amount | |||||||||||||||||
Balance, December 31, 2013 | $ | 12,384 | $ | 22,210 | $ | 32,405 | $ | 31,048 | $ | 98,047 | |||||||
Accretion of issuance costs on redeemable convertible preferred stock | 36 | 36 | 12 | 5 | 89 | ||||||||||||
Conversion of preferred stock into common stock | (12,420 | ) | (22,246 | ) | (32,417 | ) | (31,053 | ) | (98,136 | ) | |||||||
Balance, September 30, 2014 | $ | — | $ | — | $ | — | $ | — | $ | — | |||||||
Upon closing of the Company’s IPO on April 2, 2014, all outstanding shares of redeemable convertible preferred stock automatically converted into an aggregate of 23,501,208 shares of common stock. | |||||||||||||||||
Common_Stock_and_Preferred_Sto
Common Stock and Preferred Stock Reserved for Future Issuance | 9 Months Ended | |||
Sep. 30, 2014 | ||||
Common Stock and Preferred Stock Reserved for Future Issuance | ' | |||
Common Stock and Preferred Stock Reserved for Future Issuance | ' | |||
9.Common Stock and Preferred Stock Reserved for Future Issuance | ||||
Immediately upon the closing of the IPO on April 2, 2014, the Company’s certificate of incorporation was amended and restated to, among other things, authorize 200,000,000 shares of common stock and 5,000,000 shares of preferred stock. As of September 30, 2014, the Company was authorized to issue 205,000,000 total shares of capital stock, consisting of 200,000,000 shares of common stock and 5,000,000 shares of preferred stock. At September 30, 2014, the Company had reserved a total of 8,162,067 of its authorized shares of common stock for future issuance as follows: | ||||
Outstanding stock options | 6,282,657 | |||
Possible future issuance under stock option plans | 866,171 | |||
Outstanding restricted stock units | 1,013,239 | |||
Total common shares reserved for future issuance | 8,162,067 | |||
Warrants
Warrants | 9 Months Ended |
Sep. 30, 2014 | |
Warrants | ' |
Warrants | ' |
10.Warrants | |
In connection with the line of credit secured in April 2012, the Company issued a warrant to purchase 12,797 shares of the Company’s Series D redeemable convertible preferred stock with an exercise price of $7.81 per share and an expiration date in 2022. The warrant was valued at $74 thousand on the date of grant and at $19 thousand as of December 31, 2013. | |
In connection with the line of credit secured in December 2013, the Company issued a warrant to purchase 71,021 shares of the Company’s Series D redeemable convertible preferred stock with an exercise price of $7.81 per share and an expiration date in 2023. The warrant was valued at $107 thousand as of December 31, 2013. | |
As of December 31, 2013, each of the Series D warrants were classified as a liability in the accompanying unaudited condensed consolidated balance sheets and adjusted to fair value due to the fact that they were exercisable into redeemable convertible preferred securities. | |
Upon the closing of the Company’s IPO on April 2, 2014, the warrants to purchase Series D redeemable convertible preferred stock automatically converted into warrants to purchase common stock and the liability at its then fair value of $821 thousand was reclassified to additional paid-in capital. Prior to April 2, 2014, the inputs to the fair value model for the warrants were considered Level 3 inputs under ASC 820, Fair Value Measurements and Disclosures, and all changes in the fair value of the warrants were recorded as a component of interest expense. The Company recorded reductions of interest expense of $6 thousand and $18 thousand for the three and nine months ended September 30, 2013, respectively, related to the fair value adjustment of the warrants. The Company recorded no interest expense for the three months ended September 30, 2014 and $695 thousand for the nine months ended September 30, 2014 related to the fair value adjustment of the warrants. | |
On May 22, 2014, the holder of the warrants issued a notice of exercise to the Company to purchase 83,818 shares of common stock. In lieu of payment of the exercise price, the Company withheld from issuance a number of shares equal to the full exercise price divided by the price per share of the Company’s common stock as measured on a volume weighted average price basis over the 10-day trading period immediately prior to May 22, 2014. Consequently, the exercise of the warrants resulted in the issuance of 32,709 shares of the Company’s common stock to the holder of the warrants, which represents a non-cash financing activity for purposes of the condensed consolidated statement of cash flows. | |
StockBased_Compensation
Stock-Based Compensation | 9 Months Ended | |||||||||||||
Sep. 30, 2014 | ||||||||||||||
Stock-Based Compensation | ' | |||||||||||||
Stock-Based Compensation | ' | |||||||||||||
11.Stock-Based Compensation | ||||||||||||||
The Company maintains two share-based employee compensation plans: the 2008 Stock Incentive Plan (the “2008 Plan”) and the 2014 Equity Incentive Plan (the “2014 Plan”). The 2008 Plan provided for the grant of incentive stock options to the Company’s employees, and for the grant of nonstatutory stock options, restricted stock awards and deferred stock awards to the Company’s employees, directors and consultants. The 2014 Plan provides for the grant of incentive stock options to the Company’s employees, and for the grant of nonstatutory stock options, restricted stock awards, restricted stock unit awards, stock appreciation rights, performance stock awards and other forms of stock compensation to the Company’s employees, including officers, consultants and directors. The 2014 Plan also provides for the grant of performance cash awards to the Company’s eligible employees, consultants and directors. Shares reserved but unissued under the 2008 Plan are included as shares reserved for issuance under the 2014 Plan. No further options or stock awards can be granted under the 2008 Plan, and all outstanding stock awards granted under the 2008 Plan will continue to be governed by their existing terms. | ||||||||||||||
The Company’s stock-based compensation expense included in the unaudited condensed consolidated statements of operations is as follows: | ||||||||||||||
Three Months Ended | Nine Months Ended | |||||||||||||
September 30, | September 30, | |||||||||||||
2013 | 2014 | 2013 | 2014 | |||||||||||
(in thousands) | ||||||||||||||
Servicing and support | $ | 79 | $ | 436 | $ | 272 | $ | 1,050 | ||||||
Technology and content development | 39 | 269 | 102 | 578 | ||||||||||
Program marketing and sales | 41 | 191 | 131 | 512 | ||||||||||
General and administrative | 480 | 1,351 | 1,202 | 3,346 | ||||||||||
Total stock-based compensation expense | $ | 639 | $ | 2,247 | $ | 1,707 | $ | 5,486 | ||||||
A total of 2,800,000 shares of the Company’s common stock are reserved for issuance pursuant to the 2014 Plan. In addition, the shares reserved for issuance under the 2014 Plan will include (a) those shares reserved but unissued under the 2008 Plan, and (b) shares returned to the 2008 Plan as the result of expiration or termination of awards (provided that the maximum number of shares that may be added to the 2014 Plan pursuant to (a) and (b) is 5,943,348 shares). The number of shares of the Company’s common stock that may be issued under the 2014 Plan will automatically increase on January 1 of each year, for a period of ten years, from January 1, 2015 continuing through January 1, 2024, by 5% of the total number of shares of the Company’s common stock outstanding on December 31st of the preceding calendar year, or a lesser number of shares as may be determined by the Company’s board of directors. | ||||||||||||||
The following is a summary of the option activity: | ||||||||||||||
Number of | Weighted-Average | Weighted-Average | Aggregate | |||||||||||
Options | Exercise Price per | Remaining | Intrinsic | |||||||||||
Share | Contractual Term | Value | ||||||||||||
(in years) | (in thousands) | |||||||||||||
Outstanding balance at December 31, 2013 | 5,883,885 | $ | 3.53 | 7.45 | $ | 36,884 | ||||||||
Granted | 1,314,970 | 11.22 | 9.06 | |||||||||||
Exercised | (552,137 | ) | 2.21 | 5.45 | ||||||||||
Forfeited | (364,061 | ) | 3.53 | |||||||||||
Expired | — | — | ||||||||||||
Outstanding balance at September 30, 2014 | 6,282,657 | 5.23 | 7.48 | 64,938 | ||||||||||
Exercisable at September 30, 2014 | 3,212,353 | 2.65 | 6.28 | 41,563 | ||||||||||
Vested and expected to vest at September 30, 2014 | 6,030,608 | 5.12 | 7.43 | 63,172 | ||||||||||
Total compensation cost related to the nonvested options not yet recognized as of September 30, 2014 was $10.8 million and will be recognized over a weighted average period of approximately 2.6 years. | ||||||||||||||
The aggregate intrinsic value of the employee options exercised during the nine months ended September 30, 2014 was $7.4 million. | ||||||||||||||
Net_Loss_per_Share
Net Loss per Share | 9 Months Ended | |||||||||||||
Sep. 30, 2014 | ||||||||||||||
Net Loss per Share | ' | |||||||||||||
Net Loss per Share | ' | |||||||||||||
12.Net Loss per Share | ||||||||||||||
Diluted loss per share is the same as basic loss per share for all periods presented because the effects of potentially dilutive items were anti-dilutive given the Company’s net loss. The following securities have been excluded from the calculation of weighted average common shares outstanding because the effect is anti-dilutive: | ||||||||||||||
Three and Nine Months Ended | ||||||||||||||
September 30, | ||||||||||||||
2013 | 2014 | |||||||||||||
Redeemable convertible preferred stock: | ||||||||||||||
Series A | 10,033,976 | — | ||||||||||||
Series B | 5,057,901 | — | ||||||||||||
Series C | 4,429,601 | — | ||||||||||||
Series D | 3,979,730 | — | ||||||||||||
Warrants to purchase Series D redeemable convertible preferred stock | 12,797 | — | ||||||||||||
Stock options | 5,483,948 | 6,282,657 | ||||||||||||
Restricted stock units | — | 1,013,239 | ||||||||||||
Basic and diluted net loss per share attributable to common stockholders is calculated as follows: | ||||||||||||||
Three Months Ended | Nine Months Ended | |||||||||||||
September 30, | September 30, | |||||||||||||
2013 | 2014 | 2013 | 2014 | |||||||||||
Numerator (in thousands): | ||||||||||||||
Net loss attributable to common stockholders | $ | (10,220 | ) | $ | (7,337 | ) | $ | (23,035 | ) | $ | (25,071 | ) | ||
Denominator: | ||||||||||||||
Weighted-average common shares outstanding, basic and diluted | 7,415,777 | 40,269,937 | 7,401,842 | 29,209,970 | ||||||||||
Net loss per share attributable to common stockholders, basic and diluted | $ | (1.38 | ) | $ | (0.18 | ) | $ | (3.11 | ) | $ | (0.86 | ) | ||
Summary_of_Significant_Account1
Summary of Significant Accounting Policies (Policies) | 9 Months Ended | |||||||||
Sep. 30, 2014 | ||||||||||
Summary of Significant Accounting Policies | ' | |||||||||
Principles of Consolidation | ' | |||||||||
Principles of Consolidation | ||||||||||
The accompanying unaudited condensed consolidated financial statements include the accounts of the Company and its wholly-owned subsidiary. All intercompany accounts and transactions have been eliminated in consolidation. | ||||||||||
Unaudited Condensed Consolidated Financial Information | ||||||||||
The accompanying unaudited condensed consolidated financial statements and footnotes have been prepared in accordance with generally accepted accounting principles in the United States of America (“U.S. GAAP”). The Company has condensed or omitted certain information and footnote disclosures normally included in financial statements presented in accordance with U.S. GAAP in the accompanying unaudited condensed consolidated financial statements. In the opinion of management, the interim financial information includes all adjustments of a normal recurring nature necessary for a fair presentation of financial position, the results of operations, changes in stockholders’ equity (deficit) and cash flows, and the disclosures made herein are adequate to prevent the information presented from being misleading. The results of operations for the three and nine months ended September 30, 2014 are not necessarily indicative of the results for the full year ending December 31, 2014 or the results for any future periods. These unaudited condensed consolidated interim financial statements should be read in conjunction with the audited consolidated financial statements and related notes for the year ended December 31, 2013, which are included in the Company’s prospectus (the “Prospectus”) filed pursuant to Rule 424(b) under the Securities and Exchange Act of 1933, as amended, with the Securities and Exchange Commission on March 28, 2014. | ||||||||||
There have been no changes to the Company’s significant accounting policies described in the Prospectus that have had a material impact on the unaudited condensed consolidated financial statements and related notes. | ||||||||||
Initial Public Offering | ' | |||||||||
Initial Public Offering | ||||||||||
On April 2, 2014, the Company closed the initial public offering of its common stock (“IPO”) in which the Company issued and sold 8,626,377 shares of its common stock, including the partial exercise of the underwriters’ over-allotment option, at an issuance price of $13.00 per share. The Company received net proceeds of $100.3 million after deducting underwriting discounts and commissions of $7.8 million and other offering expenses of approximately $4.0 million. Upon the closing of the IPO, all shares of the then-outstanding redeemable convertible preferred stock automatically converted into an aggregate of 23,501,208 shares of common stock, based on the shares of redeemable convertible preferred stock outstanding as of April 2, 2014. In addition, the outstanding Series D warrants automatically converted into warrants to purchase common stock, and the preferred stock warrant liability of $0.8 million as of April 2, 2014 was reclassified to additional paid-in capital. | ||||||||||
Use of Estimates | ' | |||||||||
Use of Estimates | ||||||||||
The preparation of financial statements in accordance with U.S. GAAP requires management to make certain estimates and assumptions that affect the amounts reported in the unaudited condensed consolidated financial statements and accompanying notes. On an ongoing basis, the Company evaluates its estimates, including those related to the useful lives of long-lived assets, fair value measurement and income taxes, among others. The Company bases its estimates on historical experience and on various other assumptions that it believes to be reasonable, the results of which form the basis for making judgments about the carrying value of assets and liabilities. Actual results could differ from those estimates. | ||||||||||
Cash and Cash Equivalents | ' | |||||||||
Cash and Cash Equivalents | ||||||||||
Cash and cash equivalents consist of bank checking and money market accounts and investments in certificates of deposit that mature in less than three months. The Company considers all highly liquid marketable securities with maturities at the time of purchase of three months or less to be cash equivalents, and they are carried at fair value. | ||||||||||
Revenue Recognition and Deferred Revenue | ' | |||||||||
Revenue Recognition and Deferred Revenue | ||||||||||
The Company recognizes revenue when all of the following conditions are met: (i) persuasive evidence of an arrangement exists, (ii) rendering of services is complete, (iii) fees are fixed or determinable and (iv) collection of fees is reasonably assured. | ||||||||||
The Company primarily derives its revenue from long-term contracts that typically range from 10 to 15 years in length. Under these contracts, the Company enables access to its cloud-based technology platform and provides technology-enabled marketing, content development and supporting services to its clients and their faculty and students. The Company is entitled to a contractually specified percentage of net program proceeds from its clients. These net program proceeds represent gross proceeds billed by clients to students, less credit card fees and other specified charges the Company has agreed to exclude in certain of its client contracts. A refund allowance is established for the Company’s share of tuition and fees ultimately uncollected by its clients. The Company also offered rebates to a group of students who enrolled in a specific client program between 2009 and 2011, which the Company will pay to the student if he or she completes the degree and certain post-graduation work requirements within a specified period of time. These rebates and refunds offset the net program proceeds recognized as revenue. Revenue is recognized ratably over the service period, which the Company defines as the first through the last day of classes for each semester in a client’s program. The Company invoices its clients based on enrollment reports that are generated by its clients. In some instances, these enrollment reports are received prior to the conclusion of the drop/add period. In such cases, the Company establishes a reserve against revenue, if necessary, based on its estimate of changes in enrollments expected prior to the end of the drop/add period. | ||||||||||
The Company generates substantially all of its revenue from multiple-deliverable contractual arrangements with its clients. Under each of these arrangements, the Company provides (i) a cloud-based technology platform that serves as a learning platform for its client’s faculty and students and which also enables a comprehensive range of other client functions, (ii) program marketing and application services for student acquisition, (iii) in conjunction with the client’s faculty members, content development for courses and (iv) faculty and student support services, including technical field training and support, non-academic student advising, academic progress monitoring and career services. | ||||||||||
In order to treat deliverables in a multiple-deliverable contractual arrangement as separate units of accounting, deliverables must have standalone value upon delivery. The services are provided primarily in support of courses offered over the Company’s platform and for students of the online courses delivered over its platform. Accordingly, the Company has determined that no individual deliverable has standalone value upon delivery and, therefore, deliverables within the Company’s multiple-deliverable arrangements do not qualify for treatment as separate units of accounting. Accordingly, the Company considers all deliverables to be a single unit of accounting and recognizes revenue from the entire arrangement over the term of the service period. | ||||||||||
Advance payments are recorded as deferred revenue until services are delivered or obligations are met, at which time revenue is recognized. Deferred revenue as of a particular balance sheet date represents the excess of amounts received as compared to amounts recognized in revenue in the unaudited condensed consolidated statements of operations as of the end of the reporting period, and such amounts are reflected as a current liability on the Company’s unaudited condensed consolidated balance sheets. | ||||||||||
Fair Value Measurements | ' | |||||||||
Fair Value Measurements | ||||||||||
The carrying amounts of certain assets and liabilities, including cash and cash equivalents, accounts receivable, accounts payable and accrued expenses and other current liabilities, approximate their respective fair values due to their short-term nature. | ||||||||||
Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date, based on the Company’s principal or, in the absence of a principal, most advantageous, market for the specific asset or liability. | ||||||||||
U.S. GAAP provides for a three-tier fair value hierarchy to classify and disclose all assets and liabilities measured at fair value on a recurring basis, as well as assets and liabilities measured at fair value on a non-recurring basis, in periods subsequent to their initial measurement. The fair value hierarchy requires the Company to use observable inputs when available, and to minimize the use of unobservable inputs when determining fair value. The three tiers are defined as follows: | ||||||||||
Level 1 — Observable inputs that reflect quoted market prices (unadjusted) for identical assets or liabilities in active markets; | ||||||||||
Level 2 — Observable inputs, other than quoted prices in active markets, that are observable either directly or indirectly in the marketplace for identical or similar assets and liabilities; and | ||||||||||
Level 3 — Unobservable inputs that are supported by little or no market data, which require the Company to develop its own assumptions about the assumptions market participants would use in pricing the asset or liability based on the best information available in the circumstances. | ||||||||||
Assets and Liabilities Measured at Fair Value on a Recurring Basis | ||||||||||
The Company evaluates its financial assets and liabilities subject to fair value measurements on a recurring basis to determine the appropriate level in which to classify them for each reporting period. This determination requires significant judgments to be made. | ||||||||||
Prior to converting to common stock warrants upon the closing of the IPO on April 2, 2014, the Company used an option pricing model to determine the fair value of the Series D redeemable convertible preferred stock warrants. The valuation required the input of subjective assumptions, including the risk-free interest rate, the value of the underlying securities and the expected stock price volatility. The risk-free interest rate assumption was based upon observed interest rates for constant maturity U.S. Treasury securities consistent with the term of the warrants. The expected stock price volatility assumption was based on historical volatilities for publicly traded stock of comparable companies over the term of the warrants. The value of the underlying securities assumption was based upon the market price of the Company’s common stock as the redeemable convertible preferred stock warrants became convertible into shares of common stock upon closing of the IPO. | ||||||||||
Concentration of Credit Risk | ' | |||||||||
Concentration of Credit Risk | ||||||||||
Financial instruments that subject the Company to significant concentrations of credit risk consist primarily of cash and cash equivalents and accounts receivable. All of the Company’s cash is held at financial institutions that management believes to be of high credit quality. The Company’s bank accounts exceed federally insured limits at times. The Company has not experienced any losses on cash to date. To manage accounts receivable risk, the Company evaluates the creditworthiness of its clients and maintains an allowance for doubtful accounts, if needed. | ||||||||||
Three of the Company’s university clients accounted for the following percentages of revenue for the periods presented below: | ||||||||||
Three Months Ended | Nine Months Ended | |||||||||
September 30, | September 30, | |||||||||
2013 | 2014 | 2013 | 2014 | |||||||
Client A | 67% | 56% | 70% | 57% | ||||||
Client B | 17 | 15 | 17 | 15 | ||||||
Client C | 13 | 13 | 12 | 13 | ||||||
Additionally, the Company’s largest university client accounted for 51% and 71% of the Company’s accounts receivable balance as of December 31, 2013 and September 30, 2014, respectively. Further, another university client accounted for 26% of the Company’s accounts receivable balance as of December 31, 2013, while an additional university client accounted for 11% of the Company’s accounts receivable balance as of September 30, 2014. | ||||||||||
Property and Equipment | ' | |||||||||
Property and Equipment | ||||||||||
Property and equipment is stated at cost less accumulated depreciation and amortization. Computer software is included in property and equipment and consists internally-developed software. Expenditures for major additions, construction and improvements are capitalized. Depreciation and amortization is expensed using the straight-line method over the estimated useful lives of the related assets, which range from three to five years for computer hardware and five to seven years for furniture and office equipment. Leasehold improvements are depreciated on a straight-line basis over the lesser of the remaining term of the leased facility or the estimated useful life of the improvement, which ranges from four to ten years. Useful lives of significant assets are periodically reviewed and adjusted prospectively to reflect the Company’s current estimates of the respective assets’ expected utility. Repair and maintenance costs are expensed as incurred. | ||||||||||
The Company capitalizes certain costs associated with internally-developed software, primarily consisting of direct labor associated with creating the software. Software development projects generally include three stages: the preliminary project stage (all costs are expensed as incurred), the application development stage (certain costs are capitalized and certain costs are expensed as incurred) and the post-implementation/operation stage (all costs are expensed as incurred). Costs capitalized in the application development stage include costs of designing the application, coding, integrating the Company’s and the university’s networks and systems, and the testing of the software. Capitalization of costs requires judgment in determining when a project has reached the application development stage and the period over which the Company expects to benefit from the use of that software. Once the software is placed in service, these costs are depreciated on the straight-line method over the estimated useful life of the software, which is generally three years. | ||||||||||
Capitalized Content Development Costs | ' | |||||||||
Capitalized Content Development Costs | ||||||||||
The Company works with each client’s faculty members to develop and maintain educational content that is delivered to their students through the Company’s cloud-based technology platform. The online content developed jointly by the Company and its clients consists of subjects chosen and taught by clients’ faculty members and incorporates references and examples designed to remain relevant over extended periods of time. Online delivery of the content, combined with live, face-to-face instruction, provides the Company with rapid user feedback that it uses to make ongoing corrections, modifications and improvements to the course content. The Company’s clients retain all intellectual property rights to the developed content, although the Company retains the rights to the content packaging and delivery mechanisms. Much of the Company’s new content development uses proven delivery platforms and is therefore primarily subject-specific in nature. As a result, a significant portion of content development costs qualify for capitalization due to the focus of the Company’s development efforts on the unique subject matter of the content. Similar to on-campus programs offered by the Company’s clients, the online degree programs enabled by the Company offer numerous courses for each degree. The Company therefore capitalizes its development costs on a course-by-course basis. As students must matriculate into a client program in order to take a course, revenues and identifiable cash flows are also measured at the client program level. | ||||||||||
The Company develops content on a course-by-course basis in conjunction with the faculty for each client program. The clients and their faculty generally provide course outlines in the form of the curriculum, required textbooks, case studies and other reading materials, as well as presentations that are typically used in the on-campus setting. The Company is then responsible for, and incurs all of the expenses related to, the conversion of the materials provided by each client into a format suitable for delivery through the Company’s cloud-based technology platform. | ||||||||||
The content development costs that qualify for capitalization are third-party direct costs, such as videography, editing and other services associated with creating digital content. Additionally, the Company capitalizes internal payroll and payroll-related costs incurred to create and produce videos and other digital content utilized in the clients’ programs for delivery via the Company’s platform. Capitalization ends when content has been fully developed by both the Company and the client, at which time amortization of the capitalized content development costs begins. The capitalized costs are recorded on a course-by-course basis and included in capitalized content costs on the unaudited condensed consolidated balance sheets. These costs are amortized using the straight-line method over the estimated useful life of the respective capitalized content program, which is generally five years. The estimated useful life corresponds with the Company’s planned curriculum refresh rate. This refresh rate is consistent with expected curriculum refresh rates as cited by program faculty members for similar on-campus programs. It is reasonably possible that developed content could be refreshed before the estimated useful lives are complete. | ||||||||||
Impairment of Long-Lived Assets | ' | |||||||||
Impairment of Long-Lived Assets | ||||||||||
The Company reviews long-lived assets, which consist of property and equipment and capitalized content development costs, for impairment whenever events or changes in circumstances indicate the carrying value of an asset may not be recoverable. In order to assess the recoverability of the capitalized content development costs, the costs are grouped by program, which is the lowest level of independent cash flows. Recoverability of the long-lived asset is measured by a comparison of the carrying value of the asset or asset group to the future undiscounted net cash flows expected to be generated by the asset or asset group. If such assets are not recoverable, the impairment to be recognized is measured by the amount by which the carrying value of the asset exceeds the estimated fair value (discounted cash flow) of the asset or asset group. The Company’s impairment analysis is based upon forecasted financial and operational results. The actual results could vary from the Company’s forecasts, especially in relation to recently launched programs. | ||||||||||
Other Non-Current Assets | ' | |||||||||
Other Non-Current Assets | ||||||||||
Other non-current assets consist primarily of deferred financing costs which were incurred by the Company directly in connection with obtaining its revolving line of credit. These deferred financing costs are amortized over a useful life equal to the term of the underlying line of credit. Additional other non-current assets consist of intangible assets associated with the Company’s registered domain names and security deposits on leased office facilities. Until April 2, 2014, other non-current assets also consisted of costs the Company deferred which were incurred directly in connection with its IPO. | ||||||||||
Refunds Payable | ' | |||||||||
Refunds Payable | ||||||||||
The Company records a refunds payable liability related to the amounts owed to clients as a result of students defaulting on their payments to clients. The Company may receive its portion of net program proceeds prior to a client collecting the full amount of tuition and applicable fees from its students. The Company calculates the refunds payable liability by estimating the future amounts owed to a client resulting from non-payment by students. The Company’s estimate is based on historical collection experience, market and income trends, and a review of the client’s accounts receivable aging. | ||||||||||
Rebate Reserve | ' | |||||||||
Rebate Reserve | ||||||||||
The Company has recorded a rebate reserve liability that results from having offered students who first enrolled in a specific Master of Arts in Teaching program between April 2009 and June 2011 a rebate if they complete their degree and teach in a designated low-income school district for five consecutive years within the first six years after graduation. The Company accounts for the rebate reserve as a contingent sales incentive and has recorded a rebate reserve liability to recognize the obligation to rebate amounts to students who satisfactorily complete the rebate requirements. | ||||||||||
Advances to Clients | ' | |||||||||
Advances to Clients | ||||||||||
The Company is contractually obligated to pay advances to certain of its clients in order to fund start-up expenses of the program on behalf of the client. Advances to clients are stated at realizable value. The advances are repaid to the Company on terms as required in the respective agreements. The Company recognizes imputed interest income on these advance payments when there is a significant amount of imputed interest. | ||||||||||
Comprehensive Loss | ' | |||||||||
Comprehensive Loss | ||||||||||
The Company’s net loss equals comprehensive loss for all periods presented as the Company has no material components of other comprehensive income. | ||||||||||
Stock-Based Compensation | ' | |||||||||
Stock-Based Compensation | ||||||||||
The Company accounts for stock-based compensation awards based on the fair value of the award as of the grant date. For awards subject to service-based vesting conditions, the Company recognizes stock-based compensation expense on a straight-line basis over the awards’ requisite service period, adjusted for estimated forfeitures. For awards subject to both performance and service-based vesting conditions, the Company recognizes stock-based compensation expense using an accelerated recognition method when it is probable that the performance condition will be achieved. | ||||||||||
Basic and Diluted Loss per Common Share | ' | |||||||||
Basic and Diluted Loss per Common Share | ||||||||||
The Company uses the two-class method to compute net loss per common share because the Company has issued securities, other than common stock, that contractually entitle the holders to participate in dividends and earnings of the Company. The two-class method requires earnings for the period to be allocated between common stock and participating securities based upon their respective rights to receive distributed and undistributed earnings. Holders of each series of the Company’s redeemable convertible preferred stock (prior to their conversion to common shares) were entitled to participate in distributions, when and if declared by the board of directors, that are made to common stockholders, and as a result are considered participating securities. | ||||||||||
Under the two-class method, for periods with net income, basic net income per common share is computed by dividing the net income attributable to common stockholders by the weighted average number of shares of common stock outstanding during the period. Net income attributable to common stockholders is computed by subtracting from net income the portion of current year earnings that the participating securities would have been entitled to receive pursuant to their dividend rights had all of the year’s earnings been distributed. No such adjustment to earnings is made during periods with a net loss, as the holders of the participating securities have no obligation to fund losses. Diluted net loss per common share is computed under the two-class method by using the weighted average number of shares of common stock outstanding, plus, for periods with net income attributable to common stockholders, the potential dilutive effects of stock options and warrants. In addition, the Company analyzes the potential dilutive effect of the outstanding participating securities under the “if-converted” method when calculating diluted earnings per share, in which it is assumed that the outstanding participating securities convert into common stock at the beginning of the period. The Company reports the more dilutive of the approaches (two-class or “if-converted”) as its diluted net income per share during the period. Due to net losses for the three- and nine-month periods ended September 30, 2013 and 2014, basic and diluted loss per share were the same, as the effect of potentially dilutive securities would have been anti-dilutive. | ||||||||||
Recent Accounting Pronouncements | ' | |||||||||
Recent Accounting Pronouncements | ||||||||||
In July 2013, the Financial Accounting Standards Board (“FASB”) issued ASU No. 2013-11, Presentation of an Unrecognized Tax Benefit When a Net Operating Loss Carryforward, a Similar Tax Loss, or a Tax Credit Carryforward Exists, which is effective for interim or annual periods beginning after December 15, 2013. This guidance provides financial statement presentation guidance on whether an unrecognized tax benefit must be presented as either a reduction to a deferred tax asset or separately as a liability. The Company adopted this new guidance on January 1, 2014 and the adoption did not have a material impact on the Company’s financial condition, results of operations or disclosures. | ||||||||||
On May 28, 2014, the FASB issued ASU No. 2014-09, 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. The ASU will replace most existing revenue recognition guidance in U.S. GAAP when it becomes effective. The new standard is effective for the Company on January 1, 2017. Early application is not permitted. The standard permits the use of either the retrospective or cumulative effect transition method. The Company is evaluating the effect that ASU 2014-09 will have on its consolidated financial statements and related disclosures. The Company has not yet selected a transition method nor has it determined the effect of the standard on its ongoing financial reporting. | ||||||||||
Segment and Geographic Information | ' | |||||||||
Segment and Geographic Information | ||||||||||
Operating segments are defined as components of an enterprise for which discrete financial information is available that is evaluated regularly by the chief operating decision maker (“CODM”) for purposes of allocating resources and evaluating financial performance. The Company’s CODM reviews the financial information presented on a consolidated basis for purposes of allocating resources and evaluating financial performance. As such, the Company’s operations constitute a single operating segment and one reportable segment. The Company offers similar services to substantially all of its clients, which primarily represent well-recognized nonprofit colleges and universities in the United States. | ||||||||||
Substantially all assets were held and all revenue was generated in the United States during all periods presented. | ||||||||||
Summary_of_Significant_Account2
Summary of Significant Accounting Policies (Tables) | 9 Months Ended | |||||||||
Sep. 30, 2014 | ||||||||||
Summary of Significant Accounting Policies | ' | |||||||||
Schedule of concentration of revenue | ' | |||||||||
Three Months Ended | Nine Months Ended | |||||||||
September 30, | September 30, | |||||||||
2013 | 2014 | 2013 | 2014 | |||||||
Client A | 67% | 56% | 70% | 57% | ||||||
Client B | 17 | 15 | 17 | 15 | ||||||
Client C | 13 | 13 | 12 | 13 | ||||||
Fair_Value_Measurements_Tables
Fair Value Measurements (Tables) | 9 Months Ended | |||||||||||||
Sep. 30, 2014 | ||||||||||||||
Fair Value Measurements | ' | |||||||||||||
Schedule of assets and liabilities measured at fair value on a recurring basis | ' | |||||||||||||
Balance as of December 31, 2013 | ||||||||||||||
Total | Level 1 | Level 2 | Level 3 | |||||||||||
Assets: | ||||||||||||||
Cash equivalents | $ | 3,357 | $ | 3,357 | $ | — | $ | — | ||||||
Liabilities: | ||||||||||||||
Series D redeemable convertible preferred stock warrants | $ | 126 | $ | — | $ | — | $ | 126 | ||||||
Balance as of September 30, 2014 | ||||||||||||||
Total | Level 1 | Level 2 | Level 3 | |||||||||||
Assets: | ||||||||||||||
Cash equivalents | $ | 76,412 | $ | 76,412 | $ | — | $ | — | ||||||
Property_and_Equipment_Tables
Property and Equipment (Tables) | 9 Months Ended | |||||||
Sep. 30, 2014 | ||||||||
Property and Equipment | ' | |||||||
Schedule of Property and equipment | ' | |||||||
December 31, | September 30, | |||||||
2013 | 2014 | |||||||
Internally-developed software | $ | 5,516 | $ | 7,149 | ||||
Computer hardware | 2,082 | 2,374 | ||||||
Furniture and office equipment | 774 | 1,067 | ||||||
Leasehold improvements | 1,494 | 1,706 | ||||||
Total | 9,866 | 12,296 | ||||||
Accumulated depreciation | (4,635 | ) | (6,455 | ) | ||||
Property and equipment, net | $ | 5,231 | $ | 5,841 | ||||
Capitalized_Content_Developmen1
Capitalized Content Development Costs (Tables) | 9 Months Ended | |||||||
Sep. 30, 2014 | ||||||||
Capitalized Content Development Costs | ' | |||||||
Schedule of capitalized content development costs | ' | |||||||
December 31, | September 30, | |||||||
2013 | 2014 | |||||||
Capitalized content development costs | $ | 11,816 | $ | 16,076 | ||||
Capitalized content development costs in process | 1,961 | 2,353 | ||||||
Accumulated amortization | (4,873 | ) | (6,604 | ) | ||||
Capitalized content development costs, net | $ | 8,904 | $ | 11,825 | ||||
Schedule of estimated future amortization expense for the capitalized content development costs | ' | |||||||
2014 | $ | 762 | ||||||
2015 | 2,860 | |||||||
2016 | 2,423 | |||||||
2017 | 1,829 | |||||||
2018 | 1,272 | |||||||
Thereafter | 326 | |||||||
Total | $ | 9,472 | ||||||
Commitments_and_Contingencies_
Commitments and Contingencies (Tables) | 9 Months Ended | ||||
Sep. 30, 2014 | |||||
Commitments and Contingencies | ' | ||||
Schedule of future minimum lease payments, net of aggregate expected sublease payments | ' | ||||
2014 | $ | 676 | |||
2015 | 2,595 | ||||
2016 | 2,540 | ||||
2017 | 1,923 | ||||
2018 | 1,250 | ||||
Thereafter | 739 | ||||
Total future minimum lease payments | $ | 9,723 | |||
Schedule of future minimum program payments for intellectual property and other rights | ' | ||||
2014 | $ | — | |||
2015 | 500 | ||||
2016 | 800 | ||||
2017 | 800 | ||||
2018 | 300 | ||||
Thereafter | 3,000 | ||||
Total future minimum program payments | $ | 5,400 | |||
Redeemable_Convertible_Preferr1
Redeemable Convertible Preferred Stock (Tables) | 9 Months Ended | ||||||||||||||||
Sep. 30, 2014 | |||||||||||||||||
Redeemable Convertible Preferred Stock | ' | ||||||||||||||||
Schedule of issuances of redeemable convertible preferred stock | ' | ||||||||||||||||
Issue Date | Series | Purchase | Number of | Conversion Price | |||||||||||||
Price per | Shares | per Share | |||||||||||||||
Share | |||||||||||||||||
June 2009 | Series A | $ | 1.27 | 10,033,976 | $ | 1.27 | |||||||||||
February 2010 | Series B | $ | 4.46 | 5,057,901 | $ | 4.46 | |||||||||||
March 2011 | Series C | $ | 7.34 | 4,429,601 | $ | 7.34 | |||||||||||
March 2012 | Series D | $ | 7.81 | 3,339,902 | $ | 7.81 | |||||||||||
January 2013 | Series D | $ | 7.81 | 639,828 | $ | 7.81 | |||||||||||
Schedule of activity for the redeemable convertible preferred stock issued and outstanding | ' | ||||||||||||||||
Redeemable Convertible Preferred Stock | |||||||||||||||||
Series A | Series B | Series C | Series D | Total | |||||||||||||
Amount | |||||||||||||||||
Balance, December 31, 2013 | $ | 12,384 | $ | 22,210 | $ | 32,405 | $ | 31,048 | $ | 98,047 | |||||||
Accretion of issuance costs on redeemable convertible preferred stock | 36 | 36 | 12 | 5 | 89 | ||||||||||||
Conversion of preferred stock into common stock | (12,420 | ) | (22,246 | ) | (32,417 | ) | (31,053 | ) | (98,136 | ) | |||||||
Balance, September 30, 2014 | $ | — | $ | — | $ | — | $ | — | $ | — | |||||||
Common_Stock_and_Preferred_Sto1
Common Stock and Preferred Stock Reserved for Future Issuance (Tables) | 9 Months Ended | |||
Sep. 30, 2014 | ||||
Common Stock and Preferred Stock Reserved for Future Issuance | ' | |||
Schedule of shares of common stock reserved for future issuance | ' | |||
Outstanding stock options | 6,282,657 | |||
Possible future issuance under stock option plans | 866,171 | |||
Outstanding restricted stock units | 1,013,239 | |||
Total common shares reserved for future issuance | 8,162,067 | |||
StockBased_Compensation_Tables
Stock-Based Compensation (Tables) | 9 Months Ended | |||||||||||||
Sep. 30, 2014 | ||||||||||||||
Stock-Based Compensation | ' | |||||||||||||
Schedule of stock-based compensation expense included in the unaudited condensed consolidated statements of operations | ' | |||||||||||||
Three Months Ended | Nine Months Ended | |||||||||||||
September 30, | September 30, | |||||||||||||
2013 | 2014 | 2013 | 2014 | |||||||||||
(in thousands) | ||||||||||||||
Servicing and support | $ | 79 | $ | 436 | $ | 272 | $ | 1,050 | ||||||
Technology and content development | 39 | 269 | 102 | 578 | ||||||||||
Program marketing and sales | 41 | 191 | 131 | 512 | ||||||||||
General and administrative | 480 | 1,351 | 1,202 | 3,346 | ||||||||||
Total stock-based compensation expense | $ | 639 | $ | 2,247 | $ | 1,707 | $ | 5,486 | ||||||
Summary of option activity | ' | |||||||||||||
Number of | Weighted-Average | Weighted-Average | Aggregate | |||||||||||
Options | Exercise Price per | Remaining | Intrinsic | |||||||||||
Share | Contractual Term | Value | ||||||||||||
(in years) | (in thousands) | |||||||||||||
Outstanding balance at December 31, 2013 | 5,883,885 | $ | 3.53 | 7.45 | $ | 36,884 | ||||||||
Granted | 1,314,970 | 11.22 | 9.06 | |||||||||||
Exercised | (552,137 | ) | 2.21 | 5.45 | ||||||||||
Forfeited | (364,061 | ) | 3.53 | |||||||||||
Expired | — | — | ||||||||||||
Outstanding balance at September 30, 2014 | 6,282,657 | 5.23 | 7.48 | 64,938 | ||||||||||
Exercisable at September 30, 2014 | 3,212,353 | 2.65 | 6.28 | 41,563 | ||||||||||
Vested and expected to vest at September 30, 2014 | 6,030,608 | 5.12 | 7.43 | 63,172 | ||||||||||
Net_Loss_per_Share_Tables
Net Loss per Share (Tables) | 9 Months Ended | |||||||||||||
Sep. 30, 2014 | ||||||||||||||
Net Loss per Share | ' | |||||||||||||
Schedule of potential dilutive securities that would have been anti-dilutive due to net loss | ' | |||||||||||||
Three and Nine Months Ended | ||||||||||||||
September 30, | ||||||||||||||
2013 | 2014 | |||||||||||||
Redeemable convertible preferred stock: | ||||||||||||||
Series A | 10,033,976 | — | ||||||||||||
Series B | 5,057,901 | — | ||||||||||||
Series C | 4,429,601 | — | ||||||||||||
Series D | 3,979,730 | — | ||||||||||||
Warrants to purchase Series D redeemable convertible preferred stock | 12,797 | — | ||||||||||||
Stock options | 5,483,948 | 6,282,657 | ||||||||||||
Restricted stock units | — | 1,013,239 | ||||||||||||
Schedule of calculation of basic and diluted net loss per share attributable to common stockholders | ' | |||||||||||||
Three Months Ended | Nine Months Ended | |||||||||||||
September 30, | September 30, | |||||||||||||
2013 | 2014 | 2013 | 2014 | |||||||||||
Numerator (in thousands): | ||||||||||||||
Net loss attributable to common stockholders | $ | (10,220 | ) | $ | (7,337 | ) | $ | (23,035 | ) | $ | (25,071 | ) | ||
Denominator: | ||||||||||||||
Weighted-average common shares outstanding, basic and diluted | 7,415,777 | 40,269,937 | 7,401,842 | 29,209,970 | ||||||||||
Net loss per share attributable to common stockholders, basic and diluted | $ | (1.38 | ) | $ | (0.18 | ) | $ | (3.11 | ) | $ | (0.86 | ) | ||
Summary_of_Significant_Account3
Summary of Significant Accounting Policies (Details) (USD $) | 0 Months Ended |
In Millions, except Share data, unless otherwise specified | Apr. 02, 2014 |
Initial Public Offering | ' |
Common stock sold and issued in initial public offering (IPO) (in shares) | 8,626,377 |
Issuance price (in dollars per share) | $13 |
Net proceeds from IPO, after deducting underwriting discounts and commissions and other offering expenses | $100.30 |
Underwriting discounts and commissions | 7.8 |
Offering expenses | 4 |
Redeemable convertible preferred stock converted into shares of common stock | 23,501,208 |
Preferred stock warrant liability | $0.80 |
Summary_of_Significant_Account4
Summary of Significant Accounting Policies (Details 2) | 9 Months Ended |
Sep. 30, 2014 | |
Minimum | ' |
Revenue Recognition and Deferred Revenue | ' |
Period to derive revenue under long-term contracts | '10 years |
Maximum | ' |
Revenue Recognition and Deferred Revenue | ' |
Period to derive revenue under long-term contracts | '15 years |
Summary_of_Significant_Account5
Summary of Significant Accounting Policies (Details 3) | 3 Months Ended | 9 Months Ended | 3 Months Ended | 9 Months Ended | 3 Months Ended | 9 Months Ended | 12 Months Ended | 9 Months Ended | ||||||||
Sep. 30, 2014 | Sep. 30, 2013 | Sep. 30, 2014 | Sep. 30, 2013 | Sep. 30, 2014 | Sep. 30, 2013 | Sep. 30, 2014 | Sep. 30, 2013 | Sep. 30, 2014 | Sep. 30, 2013 | Sep. 30, 2014 | Sep. 30, 2013 | Sep. 30, 2014 | Dec. 31, 2013 | Dec. 31, 2013 | Sep. 30, 2014 | |
Revenue | Revenue | Revenue | Revenue | Revenue | Revenue | Revenue | Revenue | Revenue | Revenue | Revenue | Revenue | Accounts receivable | Accounts receivable | Accounts receivable | Accounts receivable | |
Customer concentration risk | Customer concentration risk | Customer concentration risk | Customer concentration risk | Customer concentration risk | Customer concentration risk | Customer concentration risk | Customer concentration risk | Customer concentration risk | Customer concentration risk | Customer concentration risk | Customer concentration risk | Credit concentration risk | Credit concentration risk | Credit concentration risk | Credit concentration risk | |
Client A | Client A | Client A | Client A | Client B | Client B | Client B | Client B | Client C | Client C | Client C | Client C | First University | First University | Second University | Third University | |
Concentration of Credit Risk | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Percentage of concentration of credit risk | 56.00% | 67.00% | 57.00% | 70.00% | 15.00% | 17.00% | 15.00% | 17.00% | 13.00% | 13.00% | 13.00% | 12.00% | 71.00% | 51.00% | 26.00% | 11.00% |
Summary_of_Significant_Account6
Summary of Significant Accounting Policies (Details 4) | 9 Months Ended |
Sep. 30, 2014 | |
item | |
Capitalized Content Development Costs | ' |
Useful life of capitalized content development costs | '5 years |
Rebate Reserve | ' |
Period of teaching in designated low-income school to get rebate | '5 years |
Period start with in teaching in designated low-income school to get rebate | '6 years |
Segment and Geographic Information | ' |
Number of reportable segments | 1 |
Computer hardware | Minimum | ' |
Property and equipment | ' |
Useful life | '3 years |
Computer hardware | Maximum | ' |
Property and equipment | ' |
Useful life | '5 years |
Furniture and office equipment | Minimum | ' |
Property and equipment | ' |
Useful life | '5 years |
Furniture and office equipment | Maximum | ' |
Property and equipment | ' |
Useful life | '7 years |
Leasehold improvements | Minimum | ' |
Property and equipment | ' |
Useful life | '4 years |
Leasehold improvements | Maximum | ' |
Property and equipment | ' |
Useful life | '10 years |
Internally-developed software | ' |
Property and equipment | ' |
Useful life | '3 years |
Fair_Value_Measurements_Detail
Fair Value Measurements (Details) (Recurring basis, USD $) | Sep. 30, 2014 | Dec. 31, 2013 |
In Thousands, unless otherwise specified | ||
Total | ' | ' |
Assets: | ' | ' |
Cash equivalents | $76,412 | $3,357 |
Liabilities: | ' | ' |
Series D redeemable convertible preferred stock warrants | ' | 126 |
Level 1 | ' | ' |
Assets: | ' | ' |
Cash equivalents | 76,412 | 3,357 |
Level 3 | ' | ' |
Liabilities: | ' | ' |
Series D redeemable convertible preferred stock warrants | ' | $126 |
Property_and_Equipment_Details
Property and Equipment (Details) (USD $) | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2014 | Sep. 30, 2013 | Sep. 30, 2014 | Sep. 30, 2013 | Dec. 31, 2013 | |
Property and equipment | ' | ' | ' | ' | ' |
Property and equipment, gross | $12,296,000 | ' | $12,296,000 | ' | $9,866,000 |
Accumulated depreciation | -6,455,000 | ' | -6,455,000 | ' | -4,635,000 |
Property and equipment, net | 5,841,000 | ' | 5,841,000 | ' | 5,231,000 |
Depreciation expense | 600,000 | 600,000 | 1,800,000 | 1,500,000 | ' |
Internally-developed software | ' | ' | ' | ' | ' |
Property and equipment | ' | ' | ' | ' | ' |
Property and equipment, gross | 7,149,000 | ' | 7,149,000 | ' | 5,516,000 |
Computer hardware | ' | ' | ' | ' | ' |
Property and equipment | ' | ' | ' | ' | ' |
Property and equipment, gross | 2,374,000 | ' | 2,374,000 | ' | 2,082,000 |
Furniture and office equipment | ' | ' | ' | ' | ' |
Property and equipment | ' | ' | ' | ' | ' |
Property and equipment, gross | 1,067,000 | ' | 1,067,000 | ' | 774,000 |
Leasehold improvements | ' | ' | ' | ' | ' |
Property and equipment | ' | ' | ' | ' | ' |
Property and equipment, gross | $1,706,000 | ' | $1,706,000 | ' | $1,494,000 |
Capitalized_Content_Developmen2
Capitalized Content Development Costs (Details) (USD $) | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2014 | Sep. 30, 2013 | Sep. 30, 2014 | Sep. 30, 2013 | Dec. 31, 2013 | |
Capitalized Content Development Costs | ' | ' | ' | ' | ' |
Capitalized content development costs | $16,076,000 | ' | $16,076,000 | ' | $11,816,000 |
Capitalized content development costs in process | 2,353,000 | ' | 2,353,000 | ' | 1,961,000 |
Accumulated amortization | -6,604,000 | ' | -6,604,000 | ' | -4,873,000 |
Capitalized content development costs, net | 11,825,000 | ' | 11,825,000 | ' | 8,904,000 |
Amortization expense related to capitalized content development costs | 1,000,000 | 500,000 | 2,400,000 | 1,500,000 | ' |
Estimated future amortization expense for the capitalized content development costs | ' | ' | ' | ' | ' |
2014 | 762,000 | ' | 762,000 | ' | ' |
2015 | 2,860,000 | ' | 2,860,000 | ' | ' |
2016 | 2,423,000 | ' | 2,423,000 | ' | ' |
2017 | 1,829,000 | ' | 1,829,000 | ' | ' |
2018 | 1,272,000 | ' | 1,272,000 | ' | ' |
Thereafter | 326,000 | ' | 326,000 | ' | ' |
Total | $9,472,000 | ' | $9,472,000 | ' | ' |
Commitments_and_Contingencies_1
Commitments and Contingencies (Details) (USD $) | 0 Months Ended | 3 Months Ended | 9 Months Ended | ||||
Feb. 18, 2014 | Jan. 21, 2014 | Sep. 30, 2014 | Sep. 30, 2013 | Sep. 30, 2014 | Sep. 30, 2013 | Dec. 31, 2013 | |
Line of Credit | ' | ' | ' | ' | ' | ' | ' |
Aggregate borrowing base | ' | ' | ' | ' | ' | ' | $37,000,000 |
Amount borrowed | ' | 5,000,000 | ' | ' | ' | ' | ' |
Borrowings repaid | 5,000,000 | ' | ' | ' | ' | ' | ' |
Amount outstanding | ' | ' | 0 | ' | 0 | ' | ' |
Aggregate expected sublease payments | ' | ' | 500,000 | ' | 500,000 | ' | ' |
Future minimum lease payments, net of aggregate expected sublease payments | ' | ' | ' | ' | ' | ' | ' |
2014 | ' | ' | 676,000 | ' | 676,000 | ' | ' |
2015 | ' | ' | 2,595,000 | ' | 2,595,000 | ' | ' |
2016 | ' | ' | 2,540,000 | ' | 2,540,000 | ' | ' |
2017 | ' | ' | 1,923,000 | ' | 1,923,000 | ' | ' |
2018 | ' | ' | 1,250,000 | ' | 1,250,000 | ' | ' |
Thereafter | ' | ' | 739,000 | ' | 739,000 | ' | ' |
Total future minimum lease payments | ' | ' | 9,723,000 | ' | 9,723,000 | ' | ' |
Total net rent expense | ' | ' | 600,000 | ' | 600,000 | ' | 500,000 |
Rent expense net of sublease income | ' | ' | 700,000 | 600,000 | 2,000,000 | 1,600,000 | ' |
Future minimum program payments for intellectual property and other rights | ' | ' | ' | ' | ' | ' | ' |
2015 | ' | ' | 500,000 | ' | 500,000 | ' | ' |
2016 | ' | ' | 800,000 | ' | 800,000 | ' | ' |
2017 | ' | ' | 800,000 | ' | 800,000 | ' | ' |
2018 | ' | ' | 300,000 | ' | 300,000 | ' | ' |
Thereafter | ' | ' | 3,000,000 | ' | 3,000,000 | ' | ' |
Total future minimum program payments | ' | ' | $5,400,000 | ' | $5,400,000 | ' | ' |
Income_Taxes_Details
Income Taxes (Details) (USD $) | 3 Months Ended | 9 Months Ended | |||
In Millions, unless otherwise specified | Sep. 30, 2014 | Sep. 30, 2013 | Sep. 30, 2014 | Sep. 30, 2013 | Dec. 31, 2013 |
Income Taxes | ' | ' | ' | ' | ' |
Federal net operating loss carryforwards | ' | ' | ' | ' | $86 |
State net operating loss carryforwards | ' | ' | ' | ' | 73.1 |
Effective tax rate (as a percent) | 0.00% | 0.00% | 0.00% | 0.00% | ' |
Accrued interest or penalties related to uncertain tax positions | $0 | ' | $0 | ' | $0 |
Redeemable_Convertible_Preferr2
Redeemable Convertible Preferred Stock (Details) (USD $) | 0 Months Ended | 9 Months Ended | 1 Months Ended | 9 Months Ended | 1 Months Ended | 9 Months Ended | 1 Months Ended | 9 Months Ended | 1 Months Ended | 9 Months Ended | |||||
In Thousands, except Share data, unless otherwise specified | Apr. 02, 2014 | Sep. 30, 2014 | Jun. 30, 2009 | Sep. 30, 2014 | Dec. 31, 2013 | Feb. 28, 2010 | Sep. 30, 2014 | Dec. 31, 2013 | Mar. 31, 2011 | Sep. 30, 2014 | Dec. 31, 2013 | Jan. 31, 2013 | Mar. 31, 2012 | Sep. 30, 2014 | Dec. 31, 2013 |
Series A | Series A | Series A | Series B | Series B | Series B | Series C | Series C | Series C | Series D | Series D | Series D | Series D | |||
Issuances of redeemable convertible preferred stock | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Purchase Price per Share (in dollars per share) | $13 | ' | $1.27 | ' | ' | $4.46 | ' | ' | $7.34 | ' | ' | $7.81 | $7.81 | ' | ' |
Number of Shares | ' | ' | 10,033,976 | 0 | 10,033,976 | 5,057,901 | 0 | 5,057,901 | 4,429,601 | 0 | 4,429,601 | 639,828 | 3,339,902 | 0 | 3,979,730 |
Conversion Price per Share (in dollars per share) | ' | ' | $1.27 | ' | ' | $4.46 | ' | ' | $7.34 | ' | ' | $7.81 | $7.81 | ' | ' |
Summary of activity for the Preferred Stock issued and outstanding | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Balance at the beginning of the period | ' | $98,047 | ' | $12,384 | ' | ' | $22,210 | ' | ' | $32,405 | ' | ' | ' | $31,048 | ' |
Accretion of issuance costs on redeemable convertible preferred stock | ' | 89 | ' | 36 | ' | ' | 36 | ' | ' | 12 | ' | ' | ' | 5 | ' |
Conversion of preferred stock into common stock | ' | ($98,136) | ' | ($12,420) | ' | ' | ($22,246) | ' | ' | ($32,417) | ' | ' | ' | ($31,053) | ' |
Redeemable convertible preferred stock converted into shares of common stock | 23,501,208 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Common_Stock_and_Preferred_Sto2
Common Stock and Preferred Stock Reserved for Future Issuance (Details) | Sep. 30, 2014 | Apr. 02, 2014 | Dec. 31, 2013 |
Common Stock and Preferred Stock Reserved for Future Issuance | ' | ' | ' |
Authorized shares of capital stock | 205,000,000 | ' | ' |
Authorized shares of common stock | 200,000,000 | 200,000,000 | 60,000,000 |
Authorized shares of preferred stock | 5,000,000 | 5,000,000 | 0 |
Shares of common stock reserved for future issuance | ' | ' | ' |
Outstanding stock options | 6,282,657 | ' | ' |
Possible future issuance under stock option plans | 866,171 | ' | ' |
Outstanding restricted stock units | 1,013,239 | ' | ' |
Total common shares reserved for future issuance | 8,162,067 | ' | ' |
Warrants_Details
Warrants (Details) (USD $) | 0 Months Ended | 3 Months Ended | 9 Months Ended | |||||||
In Thousands, except Share data, unless otherwise specified | 22-May-14 | 22-May-14 | Apr. 02, 2014 | Sep. 30, 2014 | Sep. 30, 2013 | Sep. 30, 2014 | Sep. 30, 2013 | Dec. 31, 2013 | Apr. 30, 2012 | Dec. 31, 2013 |
Warrant issued to purchase Series D redeemable convertible preferred stock expiring in 2022 | Warrant issued to purchase Series D redeemable convertible preferred stock expiring in 2022 | Warrant issued to purchase Series D redeemable convertible preferred stock expiring in 2023 | ||||||||
Warrants | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Number of shares of preferred stock that may be purchased by warrant | ' | ' | ' | ' | ' | ' | ' | ' | 12,797 | 71,021 |
Exercise price of warrant (in dollars per share) | ' | ' | ' | ' | ' | ' | ' | ' | $7.81 | $7.81 |
Fair value of warrant (in dollars per share) | ' | ' | ' | ' | ' | ' | ' | $19 | $74 | $107 |
Amount of warrants liability reclassified to additional paid in capital on conversion of warrants to purchase Series D redeemable convertible preferred stock | ' | ' | 821 | ' | ' | ' | ' | ' | ' | ' |
Reductions of interest expense | ' | ' | ' | ' | 6 | ' | 18 | ' | ' | ' |
Interest expense on fair value adjustment of the warrants | ' | ' | ' | $0 | ' | $695 | ' | ' | ' | ' |
Shares of common stock to be purchased upon receipt of notice of exercise from holder of warrants | ' | 83,818 | ' | ' | ' | ' | ' | ' | ' | ' |
Number of trading days considered in volume weighted average price of common stock | ' | '10 days | ' | ' | ' | ' | ' | ' | ' | ' |
Issuance of shares of common stock upon receipt of notice of exercise from holder of warrants | 32,709 | ' | ' | ' | ' | ' | ' | ' | ' | ' |
StockBased_Compensation_Detail
Stock-Based Compensation (Details) (USD $) | 3 Months Ended | 9 Months Ended | ||
In Thousands, except Share data, unless otherwise specified | Sep. 30, 2014 | Sep. 30, 2013 | Sep. 30, 2014 | Sep. 30, 2013 |
item | item | |||
Stock-Based Compensation | ' | ' | ' | ' |
Number of share-based employee compensation plans | 2 | ' | 2 | ' |
Number of options or stock awards available for grant under the 2008 Plan | 0 | ' | 0 | ' |
Stock-based compensation expense included in the unaudited condensed consolidated statements of operations | ' | ' | ' | ' |
Stock-based compensation expense | $2,247 | $639 | $5,486 | $1,707 |
Servicing and support | ' | ' | ' | ' |
Stock-based compensation expense included in the unaudited condensed consolidated statements of operations | ' | ' | ' | ' |
Stock-based compensation expense | 436 | 79 | 1,050 | 272 |
Technology and content development | ' | ' | ' | ' |
Stock-based compensation expense included in the unaudited condensed consolidated statements of operations | ' | ' | ' | ' |
Stock-based compensation expense | 269 | 39 | 578 | 102 |
Program marketing and sales | ' | ' | ' | ' |
Stock-based compensation expense included in the unaudited condensed consolidated statements of operations | ' | ' | ' | ' |
Stock-based compensation expense | 191 | 41 | 512 | 131 |
General and administrative | ' | ' | ' | ' |
Stock-based compensation expense included in the unaudited condensed consolidated statements of operations | ' | ' | ' | ' |
Stock-based compensation expense | $1,351 | $480 | $3,346 | $1,202 |
StockBased_Compensation_Detail1
Stock-Based Compensation (Details 2) (USD $) | 9 Months Ended | 12 Months Ended |
Sep. 30, 2014 | Dec. 31, 2013 | |
Stock options | ' | ' |
Number of Options | ' | ' |
Outstanding balance at the beginning of the period (in shares) | 5,883,885 | ' |
Granted (in shares) | 1,314,970 | ' |
Exercised (in shares) | -552,137 | ' |
Forfeited (in shares) | -364,061 | ' |
Outstanding balance at the end of the period (in shares) | 6,282,657 | 5,883,885 |
Exercisable at the end of the period (in shares) | 3,212,353 | ' |
Vested and expected to vest at the end of the period (in shares) | 6,030,608 | ' |
Weighted Average Exercise Price per Share | ' | ' |
Outstanding balance at the beginning of the period (in dollars per share) | $3.53 | ' |
Granted (in dollars per share) | $11.22 | ' |
Exercised (in dollars per share) | $2.21 | ' |
Forfeited (in dollars per share) | $3.53 | ' |
Outstanding balance at the end of the period (in dollars per share) | $5.23 | $3.53 |
Exercisable at the end of the period (in dollars per share) | $2.65 | ' |
Vested and expected to vest at the end of the period (in dollars per share) | $5.12 | ' |
Weighted Average Remaining Contractual Term | ' | ' |
Outstanding balance at the beginning of the period | '7 years 5 months 23 days | '7 years 5 months 12 days |
Granted | '9 years 22 days | ' |
Exercised | '5 years 5 months 12 days | ' |
Outstanding balance at the end of the period | '7 years 5 months 23 days | '7 years 5 months 12 days |
Exercisable at the end of the period | '6 years 3 months 11 days | ' |
Vested and expected to vest at the end of the period | '7 years 5 months 5 days | ' |
Aggregate Intrinsic Value | ' | ' |
Outstanding balance at the end of the period | $64,938,000 | $36,884,000 |
Exercisable at the end of the period | 41,563,000 | ' |
Vested and expected to vest at the end of the period | 63,172,000 | ' |
Additional disclosures | ' | ' |
Compensation cost related to the nonvested awards not yet recognized | 10,800,000 | ' |
Weighted average period for recognition of compensation cost | '2 years 7 months 6 days | ' |
Aggregate intrinsic value of employee options exercised | $7,400,000 | ' |
2014 Equity Incentive Plan | ' | ' |
Stock-Based Compensation | ' | ' |
Common stock reserved for issuance (in shares) | 2,800,000 | ' |
Period of annual automatic increase in the number of shares authorized | '10 years | ' |
2014 Equity Incentive Plan | Maximum | ' | ' |
Stock-Based Compensation | ' | ' |
Number of shares that may be added to the 2014 Plan | 5,943,348 | ' |
Percentage applied on total number of shares of common stock outstanding on previous calendar year for automatic inclusion in the plan | 5.00% | ' |
Net_Loss_per_Share_Details
Net Loss per Share (Details) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2014 | Sep. 30, 2013 | Sep. 30, 2014 | Sep. 30, 2013 | |
RSUs | ' | ' | ' | ' |
Potential dilutive securities that would have been anti-dilutive | ' | ' | ' | ' |
Potential dilutive securities that would have been anti-dilutive due to net loss (in shares) | 1,013,239 | ' | 1,013,239 | ' |
Series A | ' | ' | ' | ' |
Potential dilutive securities that would have been anti-dilutive | ' | ' | ' | ' |
Potential dilutive securities that would have been anti-dilutive due to net loss (in shares) | ' | 10,033,976 | ' | 10,033,976 |
Series B | ' | ' | ' | ' |
Potential dilutive securities that would have been anti-dilutive | ' | ' | ' | ' |
Potential dilutive securities that would have been anti-dilutive due to net loss (in shares) | ' | 5,057,901 | ' | 5,057,901 |
Series C | ' | ' | ' | ' |
Potential dilutive securities that would have been anti-dilutive | ' | ' | ' | ' |
Potential dilutive securities that would have been anti-dilutive due to net loss (in shares) | ' | 4,429,601 | ' | 4,429,601 |
Series D | ' | ' | ' | ' |
Potential dilutive securities that would have been anti-dilutive | ' | ' | ' | ' |
Potential dilutive securities that would have been anti-dilutive due to net loss (in shares) | ' | 3,979,730 | ' | 3,979,730 |
Warrants to purchase Series D redeemable convertible preferred stock | ' | ' | ' | ' |
Potential dilutive securities that would have been anti-dilutive | ' | ' | ' | ' |
Potential dilutive securities that would have been anti-dilutive due to net loss (in shares) | ' | 12,797 | ' | 12,797 |
Stock options | ' | ' | ' | ' |
Potential dilutive securities that would have been anti-dilutive | ' | ' | ' | ' |
Potential dilutive securities that would have been anti-dilutive due to net loss (in shares) | 6,282,657 | 5,483,948 | 6,282,657 | 5,483,948 |
Net_Loss_per_Share_Details_2
Net Loss per Share (Details 2) (USD $) | 3 Months Ended | 9 Months Ended | ||
In Thousands, except Share data, unless otherwise specified | Sep. 30, 2014 | Sep. 30, 2013 | Sep. 30, 2014 | Sep. 30, 2013 |
Numerator | ' | ' | ' | ' |
Net loss attributable to common stockholders | ($7,337) | ($10,220) | ($25,071) | ($23,035) |
Denominator: | ' | ' | ' | ' |
Weighted-average common shares outstanding, basic and diluted (in shares) | 40,269,937 | 7,415,777 | 29,209,970 | 7,401,842 |
Net loss per share attributable to common stockholders, basic and diluted (in dollars per share) | ($0.18) | ($1.38) | ($0.86) | ($3.11) |