Document and Entity Information
Document and Entity Information - shares | 9 Months Ended | |
Sep. 30, 2015 | Oct. 31, 2015 | |
Document and Entity Information | ||
Entity Registrant Name | Rocket Fuel Inc. | |
Entity Central Index Key | 1,477,200 | |
Document Type | 10-Q | |
Document Period End Date | Sep. 30, 2015 | |
Amendment Flag | false | |
Current Fiscal Year End Date | --12-31 | |
Entity Filer Category | Accelerated Filer | |
Entity Common Stock, Shares Outstanding | 43,024,143 | |
Document Fiscal Year Focus | 2,015 | |
Document Fiscal Period Focus | Q3 |
CONSOLIDATED BALANCE SHEETS
CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands | Sep. 30, 2015 | Dec. 31, 2014 |
Current Assets: | ||
Cash and cash equivalents | $ 83,083 | $ 107,056 |
Accounts receivable, net | 110,660 | 135,400 |
Deferred tax assets, net | 1,709 | 1,716 |
Prepaid expenses | 3,499 | 3,698 |
Other current assets | 1,689 | 12,531 |
Total current assets | 200,640 | 260,401 |
Property, equipment and software, net | 87,647 | 89,441 |
Restricted cash | 2,235 | 2,915 |
Intangible assets, net | 55,046 | 69,299 |
Goodwill | 0 | 115,412 |
Other assets | 1,326 | 1,797 |
Total assets | 346,894 | 539,265 |
Current Liabilities: | ||
Accounts payable | 61,414 | 76,085 |
Accrued and other current liabilities | 32,484 | 33,258 |
Deferred revenue | 1,651 | 593 |
Current portion of capital leases | 7,421 | 5,482 |
Revolving credit facility, net | 39,720 | 39,705 |
Revolving credit facility, net | 6,000 | 6,000 |
Total current liabilities | 148,690 | 161,123 |
Term loan —Less current portion, net | 19,047 | 23,335 |
Capital leases—Less current portion | 11,257 | 12,341 |
Deferred rent—Less current portion | 24,955 | 26,818 |
Deferred tax liabilities | 2,061 | 2,068 |
Other liabilities | 1,171 | 814 |
Total liabilities | $ 207,181 | $ 226,499 |
Commitments and contingencies (Note 10) | ||
Stockholders’ Equity: | ||
Common stock, $0.001 par value— 1,000,000,000 authorized as of September 30, 2015 and December 31, 2014; 42,976,684 and 42,002,533 issued and outstanding as of September 30, 2015 and December 31, 2014, respectively | $ 43 | $ 42 |
Additional paid-in capital | 446,410 | 421,630 |
Accumulated other comprehensive loss | (88) | (120) |
Accumulated deficit | (306,652) | (108,786) |
Total stockholders’ equity | 139,713 | 312,766 |
Total liabilities and stockholders’ equity | $ 346,894 | $ 539,265 |
CONSOLIDATED BALANCE SHEETS (Pa
CONSOLIDATED BALANCE SHEETS (Parenthetical) - $ / shares | Sep. 30, 2015 | Dec. 31, 2014 |
Statement of Financial Position [Abstract] | ||
Common stock, par value (in dollars per share) | $ 0.0001 | $ 0.0001 |
Common stock, shares authorized | 1,000,000,000 | 1,000,000,000 |
Common stock, shares issued | 42,976,684 | 42,002,533 |
Common stock, shares outstanding | 42,976,684 | 42,002,533 |
CONSOLIDATED STATEMENTS OF OPER
CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) shares in Thousands, $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2015 | Sep. 30, 2014 | Sep. 30, 2015 | Sep. 30, 2014 | |
Income Statement [Abstract] | ||||
Revenue | $ 111,836 | $ 102,098 | $ 336,235 | $ 269,137 |
Costs and expenses: | ||||
Media costs | 43,673 | 43,006 | 138,389 | 110,643 |
Other cost of revenue | 20,105 | 11,946 | 59,887 | 28,767 |
Research and development | 11,022 | 11,200 | 34,136 | 26,875 |
Sales and marketing | 41,681 | 40,421 | 126,309 | 103,969 |
General and administrative | 12,328 | 19,320 | 44,663 | 41,795 |
Impairment of goodwill | 117,521 | 0 | 117,521 | 0 |
Restructuring | 0 | 0 | 6,471 | 0 |
Total costs and expenses | 246,330 | 125,893 | 527,376 | 312,049 |
Operating loss | (134,494) | (23,795) | (191,141) | (42,912) |
Interest expense | 1,087 | 1,157 | 3,472 | 2,085 |
Other (income) expense, net | 797 | 1,999 | 2,309 | 2,443 |
Loss before income taxes | (136,378) | (26,951) | (196,922) | (47,440) |
Income tax (benefit) provision | 213 | (4,120) | 942 | (3,625) |
Net loss | $ (136,591) | $ (22,831) | $ (197,864) | $ (43,815) |
Basic and diluted net loss per share attributable to common stockholders (in dollars per share) | $ (3.19) | $ (0.61) | $ (4.67) | $ (1.23) |
Basic and diluted weighted-average shares used to compute net loss per share attributable to common stockholders (shares) | 42,763 | 37,230 | 42,350 | 35,490 |
CONSOLIDATED STATEMENTS OF COMP
CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2015 | Sep. 30, 2014 | Sep. 30, 2015 | Sep. 30, 2014 | ||
Statement of Comprehensive Income [Abstract] | |||||
Net loss | $ (136,591) | $ (22,831) | $ (197,864) | $ (43,815) | |
Other comprehensive income (loss): | |||||
Foreign currency translation adjustments | [1] | 25 | (54) | 32 | (29) |
Comprehensive loss | $ (136,566) | $ (22,885) | $ (197,832) | $ (43,844) | |
[1] | Reclassifications out of Other comprehensive income (loss) into Net loss were not significant. |
CONSOLIDATED STATEMENTS OF STOC
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY - USD ($) $ in Thousands | Total | Series C1 Preferred Stock [Member] | Convertible Preferred Stock [Member] | Common Stock | Additional Paid-In Capital | Accumulated Other Comprehensive Income (Loss) | Accumulated Deficit | Employee stock purchase plan | Employee stock purchase planMaximum | Employee stock purchase planMinimum |
Balance at Dec. 31, 2011 | $ 13,388 | $ 26,224 | $ 7 | $ 364 | $ (7) | $ (13,200) | ||||
Balance (in shares) at Dec. 31, 2011 | 16,546,257 | 7,927,771 | ||||||||
Increase (Decrease) in Stockholders' Equity | ||||||||||
Issuance of common stock upon exercises of employee stock options, net of repurchases | $ 181 | $ 1 | 180 | |||||||
Stock Issued During Period, Shares, Restricted Stock Award, Gross | 13,571 | |||||||||
Stock Issued During Period, Value, Restricted Stock Award, Gross | $ 33 | 33 | ||||||||
Issuance of common stock upon exercises of employee stock options, net of repurchases (in shares) | 738,699 | |||||||||
Issuance of stock, net of issuance costs | 34,393 | $ 34,393 | ||||||||
Issuance of stock, net of issuance costs (in shares) | 2,932,675 | |||||||||
Stock-based compensation | 3,288 | 3,288 | ||||||||
Foreign currency translation adjustment | (77) | (77) | ||||||||
Net loss | (10,343) | (10,343) | ||||||||
Balance at Dec. 31, 2012 | 40,863 | $ 60,617 | $ 8 | 3,865 | (84) | (23,543) | ||||
Balance (in shares) at Dec. 31, 2012 | 19,478,932 | 8,680,041 | ||||||||
Increase (Decrease) in Stockholders' Equity | ||||||||||
Issuance of common stock upon exercises of employee stock options, net of repurchases | 637 | $ 1 | 636 | |||||||
Stock Issued During Period, Shares, Conversion of Convertible Securities | (19,478,932) | (19,478,932) | ||||||||
Stock Issued During Period, Value, Conversion of Convertible Securities | $ 0 | $ (60,617) | $ 19 | 60,598 | ||||||
Common Stock Issued During Period Shares Conversion of Warrants | 266,530 | |||||||||
Common Stock Issued During Period Value Conversion of Warrants | $ 7,580 | $ 1 | 7,579 | |||||||
Issuance of common stock upon exercises of employee stock options, net of repurchases (in shares) | 400,489 | |||||||||
Issuance of stock, net of issuance costs | $ 103,307 | $ 4 | 103,303 | |||||||
Issuance of stock, net of issuance costs (in shares) | 4,000,000 | |||||||||
Stock-based compensation | $ 11,643 | 11,643 | ||||||||
Foreign currency translation adjustment | 69 | 69 | ||||||||
Net loss | (20,932) | (20,932) | ||||||||
Balance at Dec. 31, 2013 | 143,167 | $ 33 | 187,624 | (15) | (44,475) | |||||
Balance (in shares) at Dec. 31, 2013 | 32,825,992 | |||||||||
Increase (Decrease) in Stockholders' Equity | ||||||||||
Issuance of common stock upon exercises of employee stock options, net of repurchases | 4,545 | $ 2 | 4,543 | |||||||
Issuance of common stock upon exercises of employee stock options, net of repurchases (in shares) | 1,473,565 | |||||||||
Issuance of common stock upon vesting of restricted stock units | 0 | $ 0 | ||||||||
Issuance of common stock upon exercise vesting of restricted stock units (in shares) | 118,147 | |||||||||
Shares withheld related to net share settlement of restricted stock units | (567) | (567) | ||||||||
Stock Issued During Period, Shares, Acquisitions | 5,253,084 | |||||||||
Stock Issued During Period, Value, Acquisitions | 82,421 | $ 5 | 82,416 | |||||||
Shares withheld related to net share settlement of restricted stock units (in shares) | (38,242) | |||||||||
Issuance of common stock in connection with employee stock purchase plan | 6,454 | 6,454 | ||||||||
Issuance of stock, net of issuance costs | 115,403 | $ 2 | 115,401 | |||||||
Issuance of stock, net of issuance costs (in shares) | 2,000,000 | |||||||||
Issuance of common stock in connection with employee stock purchase plan (in shares) | 369,987 | |||||||||
Stock-based compensation | 25,481 | 25,481 | ||||||||
Foreign currency translation adjustment | (105) | (105) | ||||||||
Tax benefit from stock-based award activity | 278 | 278 | ||||||||
Net loss | (64,311) | (64,311) | ||||||||
Balance at Dec. 31, 2014 | 312,766 | $ 42 | $ 421,630 | $ (120) | $ (108,786) | |||||
Balance (in shares) at Dec. 31, 2014 | 42,002,533 | |||||||||
Expected term (years) | 6 months | 6 months | ||||||||
Increase (Decrease) in Stockholders' Equity | ||||||||||
Net loss | (197,864) | |||||||||
Balance at Sep. 30, 2015 | $ 139,713 | |||||||||
Increase (Decrease) in Stockholders' Equity | ||||||||||
Dividend yield | 0.00% |
CONSOLIDATED STATEMENTS OF CASH
CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands | 9 Months Ended | |
Sep. 30, 2015 | Sep. 30, 2014 | |
OPERATING ACTIVITIES: | ||
Net loss | $ (197,864) | $ (43,815) |
Adjustments to reconcile net loss to net cash provided by (used in) operating activities: | ||
Impairment of goodwill | 117,521 | 0 |
Depreciation and amortization | 38,078 | 12,525 |
Impairment of leasehold improvements | 2,704 | 0 |
Stock-based compensation | 20,188 | 17,193 |
Deferred taxes | 0 | (3,894) |
Excess tax benefit from stock-based activity | 0 | (179) |
Other non-cash adjustments, net | 1,115 | 422 |
Changes in operating assets and liabilities, net of effects of acquisition: | ||
Accounts receivable | 24,133 | (5,062) |
Prepaid expenses and other assets | 9,892 | (12,398) |
Accounts payable | (13,631) | 13,925 |
Accrued and other liabilities | (1,489) | (1,475) |
Deferred rent | 684 | 20,471 |
Deferred revenue | 1,058 | 323 |
Net cash provided by (used in) operating activities | 2,389 | (1,964) |
INVESTING ACTIVITIES: | ||
Purchases of property, equipment and software | (10,797) | (40,286) |
Business acquisition, net | (367) | (97,444) |
Capitalized internal-use software development costs | (9,207) | (5,459) |
Changes in restricted cash | 636 | (2,203) |
Net cash used in investing activities | (19,735) | (145,392) |
FINANCING ACTIVITIES: | ||
Proceeds from the issuance of common stock, net of issuance costs | 0 | 115,403 |
Proceeds from employee stock plans, net | 3,373 | 6,467 |
Excess tax benefit from stock-based activity | 0 | 179 |
Tax withholdings related to net share settlements of restricted stock units | (974) | (241) |
Repayment of capital lease obligations | (4,337) | (559) |
Proceeds from debt facilities, net of debt issuance costs | (242) | 35,000 |
Repayment of debt | (4,500) | (11,133) |
Net cash (used in) provided by financing activities | (6,680) | 145,116 |
EFFECT OF EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS | 53 | (1) |
CHANGE IN CASH AND CASH EQUIVALENTS | (23,973) | (2,241) |
CASH AND CASH EQUIVALENTS—Beginning of period | 107,056 | 113,873 |
CASH AND CASH EQUIVALENTS—End of period | 83,083 | 111,632 |
SUPPLEMENTAL DISCLOSURES OF OTHER CASH FLOW INFORMATION: | ||
Cash paid for income taxes, net of refunds | 834 | 195 |
Cash paid for interest | 2,930 | 1,598 |
SUPPLEMENTAL DISCLOSURES OF NONCASH INVESTING AND FINANCING ACTIVITIES: | ||
Purchases of property and equipment recorded in accounts payable and accruals | 1,664 | 7,523 |
Property, plant and equipment acquired under capital lease obligations | 5,116 | 7,855 |
Vesting of early exercised options | 133 | 674 |
Stock-based compensation capitalized in internal-use software costs | 2,018 | 1,183 |
Issuance of common stock in connection with acquisition | $ 0 | $ 82,421 |
NATURE OF BUSINESS AND SUMMARY
NATURE OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 9 Months Ended |
Sep. 30, 2015 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
NATURE OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | NATURE OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Rocket Fuel Inc. (the “Company”) was incorporated as a Delaware corporation on March 25, 2008. The Company is a provider of artificial-intelligence digital advertising solutions headquartered in Redwood City. The accompanying unaudited Condensed Consolidated Financial Statements have been prepared in accordance with generally accepted accounting principles in the United States of America (“GAAP”) and the applicable rules and regulations of the Securities and Exchange Commission (“SEC”). Certain information and footnote disclosures normally included in Consolidated Financial Statements prepared in accordance with GAAP have been condensed or omitted in accordance with such rules and regulations. The Condensed Consolidated Balance Sheet data as of December 31, 2014 was derived from audited financial statements, but does not include all disclosures required by GAAP. In the opinion of management, the accompanying unaudited Condensed Consolidated Financial Statements reflect all adjustments, consisting only of normal recurring adjustments, necessary for a fair statement of our financial position and our results of operations and cash flows. These Condensed Consolidated Financial Statements should be read in conjunction with the audited Consolidated Financial Statements and notes thereto included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2014. The significant accounting policies and recent accounting pronouncements were described in Note 1 to the Consolidated Financial Statements included in the 2014 Annual Report on Form 10-K for the fiscal year ended December 31, 2014. There have been no significant changes in or updates to the accounting policies since December 31, 2014 other than as presented below. Concentration of Credit Risk —Financial instruments that potentially subject the Company to significant concentrations of credit risk consist primarily of cash and accounts receivable. A significant portion of the Company’s cash is held at four major financial institutions that the Company's management has assessed to be of high credit quality. The Company has not experienced any losses in such accounts. The Company mitigates its credit risk with respect to accounts receivable by performing credit evaluations and monitoring agencies' and advertisers' accounts receivable balances. As of September 30, 2015 and December 31, 2014, two agency holding companies and no single advertiser accounted for 10% or more of accounts receivable. With respect to revenue concentration, the Company defines a customer as an advertiser that is a distinct source of revenue and is legally bound to pay for the advertising services that the Company delivers on the advertiser’s behalf. The Company counts all advertisers within a single corporate structure as one customer even in cases where multiple brands, branches or divisions of an organization enter into separate contracts with the Company. During the three and nine months ended September 30, 2015 and 2014 , no single customer represented 10% or more of revenue. The Company also monitors the percentage of revenue from advertising agencies, even though advertising agencies that act on behalf of the Company’s advertisers are not considered customers based on the definition above. If all branches and divisions within each global advertising agency were considered to be a single agency for this purpose, two agency holding companies would have been associated with 10% or more of revenue during the three and nine months ended September 30, 2015 and 2014 . Goodwill —The Company performs an annual impairment test near the end of its fiscal year on December 1 and whenever events or changes in circumstances indicate that the carrying value of goodwill may not be recoverable. Since the Company operates its business in one reporting unit, the goodwill is tested for impairment at the enterprise level. Due to a stock price decline during the three months ended September 30, 2015, the Company’s market capitalization declined to a value below the net book value of the Company’s equity, triggering the Company to conduct a goodwill impairment test. The outcome of the goodwill impairment test resulted in a non-cash impairment of goodwill of $117.5 million , which was recorded in the Condensed Consolidated Statements of Operations for the period ended September 30, 2015. Refer to Note 12 for details of the Company's goodwill impairment test. Fair Value Measurement —The fair value of the money market funds presented as cash equivalents on our Consolidated Balance Sheets were $22.9 million as of September 30, 2015 and December 31, 2015. These are measured as level 1 inputs in the fair value hierarchy. The carrying amounts of our accounts receivable, accounts payable, accrued liabilities, term loan and revolving credit facility approximate their fair value due to their short maturities and, in the case of the term loan and revolving credit facility, their variable, market-based interest rates. Recently Issued and Adopted Accounting Pronouncements In September 2015, the Financial Accounting Standards Board ("FASB") issued accounting guidance which simplifies measurement period adjustments in a business combination under ASU 2015-16. The guidance is effective for fiscal years beginning after December 15, 2015, including interim periods within those fiscal years and early adoption is permitted. The Company early adopted the guidance in the three months ended September 30, 2015. In April 2015, the FASB issued accounting guidance which clarifies the circumstances under which a cloud computing customer would account for the arrangement as a license of internal-use software under ASC 350-40. The guidance is effective for annual periods and interim periods therein beginning after December 15, 2015. The Company utilizes cloud based applications in its administration and sales functions, and is evaluating the impact from the adoption of this guidance on its consolidated financial statements. In April 2015, the FASB issued accounting guidance which requires that debt issuance costs related to a recognized debt liability be presented in the balance sheet as a direct deduction from the carrying amount of that debt liability under ASU 2015-03. The guidance is effective for fiscal years beginning after December 15, 2015, including interim periods within those fiscal years and early adoption is permitted. The Company early adopted the guidance in the three months ended September 30, 2015. In August 2014, the FASB provided accounting guidance about management’s responsibility to evaluate whether there is substantial doubt about an entity’s ability to continue as a going concern and to provide related footnote disclosures under ASU 2014-15. The amendments are effective for the annual period ending after December 15, 2016, and for annual periods and interim periods thereafter. Early adoption is permitted. The Company is currently evaluating the impact of this ASU and expects no material modifications to its financial statements. In May 2014, the FASB issued accounting guidance 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 under ASU 2014-09. The ASU will replace most existing revenue recognition guidance in U.S. GAAP when it becomes effective. In July 2015, the FASB decided to delay the effective date of ASU 2014-09 by one year allowing early adoption as of the original effective date January 1, 2017. The deferral results in the new revenue standard being effective January 1, 2018. The Company is currently evaluating the impact of this ASU on its consolidated financial position, results of operations and cash flows. |
PROPERTY, EQUIPMENT AND SOFTWAR
PROPERTY, EQUIPMENT AND SOFTWARE, NET | 9 Months Ended |
Sep. 30, 2015 | |
Property, Plant and Equipment [Abstract] | |
PROPERTY, EQUIPMENT AND SOFTWARE, NET | PROPERTY, EQUIPMENT AND SOFTWARE, NET Property, equipment and software, net as of September 30, 2015 and December 31, 2014 , consisted of the following (in thousands): September 30, December 31, 2015 2014 Capitalized internal-use software costs $ 34,980 $ 23,385 Computer hardware and software 54,924 46,299 Furniture and fixtures 13,582 11,674 Leasehold improvements 39,200 36,811 Total 142,686 118,169 Accumulated depreciation and amortization (55,039 ) (28,728 ) Total property, equipment and software, net $ 87,647 $ 89,441 Refer to Note 4 for details of the Company's capital leases as of September 30, 2015 and December 31, 2014 . Total depreciation and amortization expense related to property, equipment and software was $8.3 million and $4.6 million for the three months ended September 30, 2015 and 2014 , respectively, and $23.8 million and $11.4 million for the nine months ended September 30, 2015 and 2014 , respectively. Amortization expense of internal-use software costs was $2.0 million and $1.4 million for the three months ended September 30, 2015 and 2014 , respectively, and $5.5 million and $3.7 million for the nine months ended September 30, 2015 and 2014 , respectively. In addition, in the nine months ended September 30, 2015 , the Company recorded an impairment charge of $2.7 million for certain of its leasehold improvements in connection with its restructuring activities. Refer to Note 5 for details of the Company's restructuring plan. |
BUSINESS COMBINATIONS
BUSINESS COMBINATIONS | 9 Months Ended |
Sep. 30, 2015 | |
Business Combinations [Abstract] | |
BUSINESS COMBINATION | BUSINESS COMBINATIONS On September 5, 2014, the Company acquired X Plus Two Solutions, Inc., a Delaware corporation (“X Plus Two”), which wholly owns X Plus One Solutions, Inc, known in the industry as [x+1] ("[x+1]"). The acquisition of [x+1] significantly expanded the market opportunity and accelerated the Company’s entry into the digital marketing enterprise software-as-a-service ("SaaS") market. At closing, all outstanding shares of [x+1]'s capital stock and stock options were canceled in exchange for an aggregate of $98.0 million in cash and approximately 5.3 million shares of the Company’s common stock. The total purchase consideration is as follows (in thousands): Purchase consideration: Cash $ 98,045 Fair value of 5,253,084 shares common stock transferred 82,421 Total purchase price $ 180,466 The acquisition of [x+1] was accounted for in accordance with the acquisition method of accounting for business combinations with the Company as the accounting acquirer. The Company expensed the acquisition-related transaction costs in the amount of $4.9 million in general and administrative expenses. The total purchase price as shown in the table above was allocated to the tangible and identifiable intangible assets acquired and liabilities assumed based on their estimated fair values as of September 5, 2014, as set forth below. The Company finalized its estimates of fair value for certain of the acquired current assets and liabilities resulting in an adjustment of $2.1 million which was recorded during the three months ended September 30, 2015. The total purchase price was allocated as follows (in thousands): Current assets $ 29,853 Non-current assets 3,999 Current liabilities (29,354 ) Non-current liabilities (16,253 ) Net acquired tangible assets (11,755 ) Identifiable intangible assets 74,700 Goodwill 117,521 Total purchase price $ 180,466 The goodwill was primarily attributable to synergies expected to be generated from combining the Company's and [x+1]’s technology and operations. None of the goodwill recorded as part of the acquisition will be deductible for U.S. federal income tax purposes. The changes in the carrying amount of goodwill for the nine months ended September 30, 2015 are as follows (in thousands): Goodwill Balance as of December 31, 2013 $ — Goodwill acquired 114,871 Goodwill adjustments recorded during the three months ended December 31, 2014 (1) 541 Balance as of December 31, 2014 115,412 Goodwill adjustment recorded during the three months ended September 30, 2015 (1) 2,109 Goodwill impairment recorded during the three months ended September 30, 2015 (1) (117,521 ) Balance as of September 30, 2015 $ — (1) Pursuant to business combinations accounting guidance, goodwill adjustments, for the effect of changes to net assets acquired during the measurement period, may be recorded up to one year from the date of an acquisition. Goodwill adjustments were not significant to our previously reported operating results or financial position. As of September 30, 2015 Estimated Useful Life (in years) Fair Value (in thousands) Accumulated Amortization Net Book Value Developed technology 3-4 $ 42,100 $ (12,396 ) $ 29,704 Customer relationships 7-8 27,700 (3,707 ) 23,993 Trademarks 5 2,000 (2,000 ) — Non-compete agreements 2 2,900 (1,551 ) 1,349 Total $ 74,700 (19,654 ) 55,046 Total amortization expense related to intangible assets acquired in the business combination with [x+1] was $5.8 million and $14.3 million for the three and nine months ended September 30, 2015 , respectively. During the three months ended September 30, 2015 , the Company accelerated the amortization of the trademark assets recording $1.6 million in additional amortization expense due to a change of its useful life. The results of operations of [x+1] have been included in the Company's condensed consolidated statements of operations from the acquisition date. The following unaudited pro forma condensed combined financial information reflects the Company's results of operations for the periods indicated and assumes that the business had been acquired at the beginning of fiscal year 2014. The pro forma results include adjustments for amortization associated with the acquired intangible assets. The pro forma results are presented for informational purposes only and are not necessarily indicative of results that would have occurred had the acquisition taken place at the beginning of the earliest period presented, or of future results (in thousands): Three Months Ended Nine Months Ended September 30, September 30, 2014 2014 Pro forma revenue $ 119,298 $ 329,445 Pro forma revenue less media costs $ 65,614 $ 182,359 Pro forma net loss $ (19,779 ) $ (54,933 ) |
CAPITAL LEASES
CAPITAL LEASES | 9 Months Ended |
Sep. 30, 2015 | |
Leases [Abstract] | |
CAPITAL LEASES | CAPITAL LEASES Property, equipment and software includes hardware and software related to our data centers, which are acquired under capital lease agreements. The remaining future minimum lease payments under these non-cancelable capital leases as of September 30, 2015 were as follows (in thousands): Year ending December 31, Future Payments 2015 (remaining 3 months) $ 2,115 2016 8,236 2017 6,550 2018 3,169 2019 79 Total minimum lease payments $ 20,149 Less: amount representing interest and taxes (1,471 ) Less: current portion of minimum lease payments (7,421 ) Capital lease obligations, net of current portion $ 11,257 |
RESTRUCTURING COSTS
RESTRUCTURING COSTS | 9 Months Ended |
Sep. 30, 2015 | |
Restructuring and Related Activities [Abstract] | |
Restructuring Costs | NOTE 5. RESTRUCTURING COSTS In April 2015, the Company announced a plan intended to improve its operational efficiency, which included a reduction of its workforce, sublease of certain excess leased office space, among other cost reduction measures. During the three months ended June 30, 2015 , the Company incurred approximately $3.4 million in employee severance costs and $0.3 million in real estate broker costs associated with subleasing of the excess office space. The Company also incurred a $2.7 million non-cash impairment charge for leasehold improvements and certain other assets related to the subleased facility. |
DEBT
DEBT | 9 Months Ended |
Sep. 30, 2015 | |
Debt Disclosure [Abstract] | |
DEBT | DEBT Loan Facility —On December 31, 2014, the Company entered into a Second Amended and Restated Revolving Credit and Term Loan Agreement with certain lenders, the ("2014 Loan Facility"), which was last amended on March 13, 2015. The 2014 Loan Facility amended and restated the Company's then-existing Loan and Security Agreement, dated as of April 7, 2010, (as amended, the "2010 Loan Facility"). The 2014 Loan Facility provides for an $80.0 million revolving credit facility that matures on December 31, 2017, with a $12.0 million letter of credit subfacility and a $2.5 million swingline subfacility, and a $30.0 million secured term loan that matures on December 31, 2019. Revolving loans may be advanced under the 2014 Loan Facility in amounts up to the lesser of (i) 85% of eligible accounts receivable and (ii) $80.0 million , less the then outstanding principal amount of the term loan. If at any time the aggregate amounts outstanding exceed the allowable maximum advance, then the Company must make a repayment in an amount sufficient to eliminate the excess. If the aggregated cash balances on deposit with the lenders and certain other domestic financial institutions fall below $40.0 million , the lenders have the right to use future cash collections from accounts receivable directly to reduce the outstanding balance of the revolving credit facility. The Company is also obligated to prepay the term loan with proceeds from the occurrence of certain events. The Company may repay revolving loans and term loans under the 2014 Loan Facility in whole or in part at any time without premium or penalty, subject to certain conditions. As of September 30, 2015 , $25.5 million in term loans, $40.0 million under the revolving credit facility and letters of credit in the amount of $7.2 million were outstanding. The term loan is being repaid in quarterly principal installments of $1.5 million . The Company paid customary closing fees and pays customary commitment fees and letter of credit fees. Revolving loans bear interest, at the Company's option, at (i) a base rate determined pursuant to the terms of the 2014 Loan Facility, plus a spread of 1.625% to 2.125% , or (ii) a LIBOR rate determined pursuant to the terms of the Loan Facility, plus a spread of 2.625% to 3.125% . Term loans bear interest, at the Company's option, at (i) a base rate determined pursuant to the terms of the 2014 Loan Facility, plus a spread of 2.50% to 3.00% , or (ii) a LIBOR rate determined pursuant to the terms of the 2014 Loan Facility, plus a spread of 3.50% to 4.00% . In each case, the spread is based on the cash reflected on the Company’s balance sheet for the preceding fiscal quarter, plus an amount equal to the average unused portion of the revolving credit commitments during such fiscal quarter. The base rate is determined as the highest of (i) the prime rate announced by Comerica Bank, (ii) the federal funds rate plus a margin equal to 1.00% and (iii) the daily adjusted LIBOR rate plus a margin equal to 1.00% . Under certain circumstances, a default interest rate of 2.00% above the applicable interest rate will apply on all obligations during the existence of an event of default under the 2014 Loan Facility. The Company is required to maintain a minimum of $30.0 million of cash on deposit with the lenders and comply with certain financial covenants under the 2014 Loan Facility, including the following: EBITDA. The Company is required to maintain specified EBITDA, which is defined for this purpose, with respect to any trailing twelve month period, as an amount equal to the sum of (i) consolidated net income (loss) in accordance with GAAP, after eliminating all extraordinary nonrecurring items of income, plus (ii) depreciation and amortization; income tax expense; total interest expense; non-cash expenses or losses; stock-based compensation expense; costs and expenses from permitted acquisitions up to certain limits; costs and expenses in connection with the 2014 Loan Facility up to certain limits; certain legal fees up to certain limits incurred through December 2015; integration costs related to the [x+1] acquisition up to certain limits incurred through December 31, 2014 and any other expenses agreed with Comerica and the lenders; less (iii) all extraordinary and non-recurring revenues and gains (including income tax benefits). Liquidity ratio. Under the 2014 Loan Facility, the ratio of (i) the sum of all cash on deposit with Comerica and certain other domestic financial institutions and the aggregate amount of all eligible accounts receivable to (ii) all indebtedness owed to the lenders under the 2014 Loan Facility must be at least 1.10 to 1.00 . The terms of the 2014 Loan Facility also require the Company to comply with certain other financial and non-financial covenants. As of September 30, 2015 , the Company was in compliance with all covenants. Future Payments Future principal payments of term loan as of September 30, 2015 were as follows (in thousands): Year ending December 31, Future Payments 2015 (remaining 3 months) $ 1,500 2016 6,000 2017 6,000 2018 6,000 2019 6,000 Total 25,500 Less: current portion of term loan (6,000 ) Term loan, net of current portion $ 19,500 As of September 30, 2015 , the $40.0 million balance outstanding under the revolving credit facility had a maturity date of December 31, 2017, and because the Company has the option to draw upon the facility or repay borrowed funds at any time, the balance is shown as a current liability in the accompanying condensed consolidated balance sheets. The debt on the condensed consolidated balance sheets is shown net of $0.7 million in debt issuance costs. |
STOCKHOLDERS' EQUITY
STOCKHOLDERS' EQUITY | 9 Months Ended |
Sep. 30, 2015 | |
Stockholders' Equity Note [Abstract] | |
STOCKHOLDERS' EQUITY | STOCKHOLDERS’ EQUITY The following table summarizes information pertaining to our stock-based compensation from stock options and stock awards, which are comprised of restricted stock awards and restricted stock units (in thousands, except grant-date fair value and recognition period): Nine Months Ended September 30, Nine Months Ended September 30, 2015 2014 Stock options: Outstanding at the beginning of the period 6,291 7,411 Options granted 396 538 Options exercised (423 ) (960 ) Options forfeited (628 ) (273 ) Outstanding at the end of the period 5,636 6,716 Total intrinsic value of options exercised $ 2,619 $ 29,726 Total unrecognized compensation expense at period-end $ 14,997 $ 27,239 Weighted-average remaining recognition period at period-end (in years) 1.9 2.2 Stock awards: Outstanding at the beginning of the period 2,515 382 Stock awards granted 2,767 718 Stock awards vested (357 ) (54 ) Stock awards canceled (1,032 ) (69 ) Outstanding at the end of the period 3,893 977 Weighted-average grant-date fair value $ 13.28 $ 38.35 Total unrecognized compensation expense at period-end $ 36,013 $ 26,755 Weighted-average remaining recognition period at period-end (in years) 2.8 3.3 Employee Stock Purchase Plan —In August 2013, the Company’s board of directors adopted and the stockholders approved the Company’s 2013 Employee Stock Purchase Plan (the “ESPP”), which became effective upon adoption by the Company’s board of directors. The ESPP allows eligible employees to purchase shares of the Company’s common stock at a discount through payroll deductions of up to 15% of their eligible compensation, subject to any plan limitations. The offering periods generally start on the first trading day on or after June 1 and December 1 of each year and end on the first trading day on or before November 30 and May 31 approximately six months later. The administrator may, in its discretion, modify the terms of future offering periods. Due to the timing of the Company's initial public offering, the first offering period started on October 1, 2013 and ended on May 31, 2014. At the end of each offering period, employees are able to purchase shares at 85% of the lower of the fair market value of the Company’s common stock on the first trading day of the offering period or on the last trading day of the offering period. As of September 30, 2015 , total compensation costs related to outstanding rights to purchase shares of common stock under the ESPP offering period ending on the first trading day on or before November 30, 2015, were approximately $0.9 million , which will be recognized over the offering period. Stock-based Compensation —The fair value of options on the date of grant is estimated based on the Black-Scholes option-pricing model using the single-option award approach with the weighted-average assumptions set forth below. Expected term represents the period that the Company’s stock-based awards are expected to be outstanding and is determined based on the simplified method. Due to the lack of historical exercise activity for the Company, the simplified method calculates the expected term as the mid-point between the vesting date and the contractual expiration date of the award. Volatility is estimated using comparable public company volatility for similar option terms until a sufficient amount of historical information regarding the volatility of the Company's share price becomes available. The risk-free interest rate is determined using a U.S. Treasury rate for the period that coincides with the expected term. As the Company has never paid cash dividends, and at present, has no intention to pay cash dividends in the future, expected dividends are zero . Expected forfeitures are based on the Company’s historical experience. The fair value of restricted stock unit awards is the grant date closing price of the Company's common stock. The Company uses the straight-line method for expense recognition over the vesting period of the award or option. The assumptions used to value options granted to employees were as follows: Three Months Ended Nine Months Ended September 30, September 30, 2015 2014 2015 2014 Expected term (years) 6.3 6.3 6.3 5.5–6.3 Volatility 50.7%–58.0% 56.7%–57.6% 50.7%–58.0% 55.6%–58.0% Risk-free interest rate 1.57%–1.85% 1.84% 1.57%–1.85% 1.84%–1.97% Dividend yield — — — — The assumptions used to calculate our stock-based compensation for each stock purchase right granted under the ESPP were as follows: Three Months Ended Nine Months Ended September 30, September 30, 2015 2014 2015 2014 Expected term (years) 0.5 0.5 0.5 0.5-0.7 Volatility 73.3% 77.4% 73.3% 66.2%-77.4% Risk-free interest rate 0.07% 0.06% 0.07% 0.06%-0.07% Dividend yield — — — — Stock-based compensation allocation The following table summarizes the allocation of stock-based compensation in the accompanying condensed consolidated statements of operations (in thousands): Three Months Ended Nine Months Ended September 30, September 30, 2015 2014 2015 2014 Other cost of revenue $ 465 $ 282 $ 1,567 $ 810 Research and development 1,688 1,279 5,769 3,577 Sales and marketing 2,478 2,683 7,634 7,598 General and administrative 1,676 1,685 5,218 4,900 Total $ 6,307 $ 5,929 $ 20,188 $ 16,885 |
NET LOSS PER SHARE
NET LOSS PER SHARE | 9 Months Ended |
Sep. 30, 2015 | |
Earnings Per Share [Abstract] | |
NET LOSS PER SHARE | NET LOSS PER SHARE Basic net loss per share is calculated by dividing net loss by the weighted-average number of shares of common stock outstanding during the period, less shares subject to repurchase, and excludes any dilutive effects of employee stock-based awards. Because the Company had net losses for the three and nine months ended September 30, 2015 and 2014 , all these potentially dilutive shares of common stock were determined to be anti-dilutive and accordingly were not included in the calculation of diluted net loss per share. The following table sets forth the computation of net loss per share of common stock (in thousands, except per share amounts): Three Months Ended Nine Months Ended September 30, September 30, 2015 2014 2015 2014 Net loss $ (136,591 ) $ (22,831 ) $ (197,864 ) $ (43,815 ) Weighted-average shares used to compute basic and diluted net loss per share 42,763 37,230 42,350 35,490 Basic and diluted net loss per share $ (3.19 ) $ (0.61 ) $ (4.67 ) $ (1.23 ) Common stock equivalents excluded from net loss per diluted share because their effect would have been anti-dilutive 9,754 7,937 9,754 7,937 |
INCOME TAXES
INCOME TAXES | 9 Months Ended |
Sep. 30, 2015 | |
Income Tax Disclosure [Abstract] | |
INCOME TAXES | INCOME TAXES The Company is subject to income tax in the United States as well as other tax jurisdictions in which it conducts business. Earnings from non-U.S. activities are subject to local country income tax. The Company does not provide for federal income taxes on the undistributed earnings of its foreign subsidiaries as such earnings are intended to be reinvested indefinitely. The Company recorded income tax provision of $0.2 million and an income tax benefit of $4.1 million for the three months ended September 30, 2015 and 2014 , respectively. The Company recorded income tax provision of $0.9 million and an income tax benefit of $3.6 million for the nine months ended September 30, 2015 and 2014 , respectively. The tax provision for the three and nine months ended September 30, 2015 is primarily due to foreign and state income tax expense. The tax benefit for the three and nine months ended September 30, 2014 is primarily due to a partial release of valuation allowance against the Company’s deferred tax assets limited to the amount of the net deferred tax liabilities generated from intangibles acquired from the [x+1] acquisition, partially offset by provisions for foreign and state income taxes. Due to uncertainty as to the realization of benefits from deferred tax assets, including net operating loss carry-forwards, research and development and other tax credits, the Company has provided certain valuation allowance against such assets as of September 30, 2015 and December 31, 2014. |
COMMITMENTS AND CONTINGENCIES
COMMITMENTS AND CONTINGENCIES | 9 Months Ended |
Sep. 30, 2015 | |
Commitments and Contingencies Disclosure [Abstract] | |
COMMITMENTS AND CONTINGENCIES | COMMITMENTS AND CONTINGENCIES Operating Leases —The Company has operating lease agreements for office space for administrative, research and development and sales and marketing activities in the United States that expire at various dates through 2025. The Company recognizes rent expense on a straight-line basis over the lease term and records the difference between cash rent payments and the recognition of rent expense as a deferred rent liability. Rent expense was $3.9 million for both the three months ended September 30, 2015 and 2014 , and $11.9 million and $10.8 million for the nine months ended September 30, 2015 and 2014 , respectively. The approximate remaining future minimum cash lease payments under these non-cancelable operating leases as of September 30, 2015 were as follows (in thousands): Year ending December 31, Future Payments 2015 (remaining 3 months) $ 5,203 2016 20,833 2017 19,788 2018 18,648 2019 21,147 Thereafter 43,657 $ 129,276 Please refer to Note 4 for details of the Company's capital lease commitments as of September 30, 2015 . Letters of Credit Bank Guarantees and Restricted Cash —As of September 30, 2015 and December 31, 2014 , the Company had irrevocable letters of credit for facilities leases of $7.2 million and $6.8 million , respectively. The letters of credit have various expiration dates, with the latest being December 2023. As of September 30, 2015 , the Company had $2.2 million in cash reserved to support bank guarantees for certain office lease agreements. These amounts are classified as restricted cash on the Company's condensed consolidated balance sheets. Indemnification Agreements —In the ordinary course of business, the Company enters into agreements providing for indemnification of varying scope and terms to customers, vendors, lessors, business partners, and other parties with respect to certain matters, including, but not limited to, losses arising out of breach of such agreements, services to be provided by the Company or from intellectual property infringement claims made by third parties. In addition, the Company has entered into indemnification agreements with directors and certain officers and employees that will require the Company, among other things, to indemnify them against certain liabilities that may arise by reason of their status or service as directors, officers or employees. No demands have been made upon the Company to provide indemnification under such agreements, and thus there are no claims that the Company is aware of that could have a material effect on the Company’s condensed consolidated balance sheets, condensed consolidated statements of operations, condensed consolidated statements of comprehensive loss, or condensed consolidated statements of cash flows. Legal Proceedings —The Company is involved from time to time in claims, proceedings, and litigation, including the following: On September 3, 2014 and September 10, 2014, respectively, two purported class actions were filed in the Northern District of California against the Company and certain of its officers and directors. The actions are Shah v. Rocket Fuel Inc., et al. , Case No. 4:14-cv-03998, and Mehrotra v. Rocket Fuel Inc., et al. , Case No. 4:14-cv-04114. The underwriters in the Company's initial public offering on September 19, 2013 (the “IPO”) and its secondary offering on February 5, 2013 (the “Secondary Offering”) are also named as defendants. These actions were consolidated and a consolidated complaint, In re Rocket Fuel Securities Litigation , was filed on February 27, 2015. The consolidated complaint alleges that the defendants made false and misleading statements about the ability of the Company's technology to detect and eliminate fraudulent web traffic, and about Rocket Fuel’s future prospects. The consolidated complaint also alleges that the Company's registration statements and prospectuses for the IPO and the Secondary Offering contained false and misleading statements on these topics. The consolidated complaint purports to assert claims for violations of Sections 10(b) and 20(a) of the Securities Exchange Act of 1934, as amended, and SEC Rule 10b-5, and for violations of Sections 11 and 15 of the Securities Act of 1933, as amended (the “Securities Act”), on behalf of those who purchased the Company's common stock between September 20, 2013 and August 5, 2014, inclusive, as well as those who purchased stock in its initial public offering on September 19, 2013, and a claim for violation of Section 12(a)(2) of the Securities Act in connection with the Secondary Offering. The consolidated complaint seeks monetary damages in an unspecified amount. All defendants moved to dismiss the consolidated complaint on April 13, 2015. No decision had been made yet on that motion. On March 23, 2015, a purported shareholder derivative complaint for breach of fiduciary duty, waste of corporate assets, and unjust enrichment was filed in San Mateo, California Superior Court against certain of the Company's current and former officers and its board of directors at that time. The action is Davydov v. George H. John , et.al, Case No. CIV 53304. This state court action has been stayed pending the outcome of the defendants’ motions to dismiss in In re Rocket Fuel Securities Litigation . On October 6, 2015, a purported verified shareholder derivative complaint was filed in the Northern District of California. The action is Victor Veloso v. George H. John et al. , Case No. 4:15-cv-04625-PJH. The complaint, which is based on substantially the same facts as the In re Rocket Fuel Securities Litigation, names its board of directors at that time and certain current and former executives as defendants and has been related to the In re Rocket Fuel Securities Litigation . We intend to vigorously defend ourselves against these actions. The outcomes of the Company's legal proceedings are inherently unpredictable, subject to significant uncertainties, and could be material to its consolidated financial position, results of operations or cash flows by an unfavorable resolution of these actions. At present, we are unable to reasonably estimate a possible range of loss for these actions. Legal fees are expensed in the period in which they are incurred. |
SEGMENTS
SEGMENTS | 9 Months Ended |
Sep. 30, 2015 | |
Segment Reporting [Abstract] | |
SEGMENTS | SEGMENTS The Company considers operating segments to be components of the Company's business for which separate financial information is available that is evaluated regularly by the Company’s chief operating decision maker in deciding how to allocate resources and in assessing performance. The chief operating decision maker for the Company is the Chief Executive Officer. The Chief Executive Officer reviews financial information presented on a consolidated basis for purposes of allocating resources and evaluating financial performance. The Company has one business activity, and there are no segment managers who are held accountable for operations, operating results or plans for levels or components below the consolidated unit level. Accordingly, the Company has determined that it has a single operating and reportable segment. The following table summarizes total revenue generated through sales personnel located in the respective locations (in thousands): Three Months Ended Nine Months Ended September 30, September 30, 2015 2014 2015 2014 North America $ 93,415 $ 85,948 $ 283,330 $ 226,519 All Other Countries 18,421 16,150 52,905 42,618 Total revenue $ 111,836 $ 102,098 $ 336,235 $ 269,137 The following table summarizes total long-lived assets in the respective locations (in thousands): September 30, December 31, 2015 2014 North America $ 82,134 $ 85,355 All Other Countries 5,513 4,086 Total long-lived assets $ 87,647 $ 89,441 |
GOODWILL
GOODWILL | 9 Months Ended |
Sep. 30, 2015 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
GOODWILL | GOODWILL Due to a stock price decline during the three months ended September 30, 2015, the Company’s market capitalization declined to a value below the net book value of the Company’s equity, triggering the Company to test its goodwill for impairment. The Company first tested its intangible assets (other than goodwill) as of September 30, 2015 and determined that these assets were not impaired. Goodwill is tested for impairment in a two-step process. The first step is to determine if there is an indication of impairment by comparing the estimated fair value of the reporting unit to its carrying value including goodwill. Goodwill is considered impaired if the reporting unit’s carrying value exceeds its estimated fair value. Upon indication of impairment, a second step is performed to determine the amount of the impairment by comparing the implied fair value of the reporting unit’s goodwill with the carrying value of the goodwill. Since the Company operates its business in one reporting unit, goodwill is tested for impairment at the enterprise level. In the first step of the goodwill impairment test, the Company estimated the fair value of its reporting unit using the market approach. Under the market approach, the Company utilized the market capitalization of its publicly-traded shares and comparable company information to determine revenue multiples which were used to determine the fair value of the reporting unit. Based on this approach, the Company determined that there is an indication of impairment as the carrying value including goodwill exceeded the estimated fair value of the reporting unit. In the second step of the goodwill impairment test the Company estimated the fair value of its assets and liabilities to determine the implied fair value of goodwill, and then compared the implied fair value of the goodwill to its carrying value. The outcome of this second step resulted in a non-cash impairment of goodwill of $117.5 million , which was recorded in the Condensed Consolidated Statements of Operations for the period ended September 30, 2015. The inputs used to measure the estimated fair value of goodwill are classified as a Level 3 fair value measurement due to the significance of unobservable inputs based on company specific information. |
NATURE OF BUSINESS AND SUMMAR20
NATURE OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies) | 9 Months Ended |
Sep. 30, 2015 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Concentration of Credit Risk | Concentration of Credit Risk —Financial instruments that potentially subject the Company to significant concentrations of credit risk consist primarily of cash and accounts receivable. A significant portion of the Company’s cash is held at four major financial institutions that the Company's management has assessed to be of high credit quality. The Company has not experienced any losses in such accounts. The Company mitigates its credit risk with respect to accounts receivable by performing credit evaluations and monitoring agencies' and advertisers' accounts receivable balances. As of September 30, 2015 and December 31, 2014, two agency holding companies and no single advertiser accounted for 10% or more of accounts receivable. With respect to revenue concentration, the Company defines a customer as an advertiser that is a distinct source of revenue and is legally bound to pay for the advertising services that the Company delivers on the advertiser’s behalf. The Company counts all advertisers within a single corporate structure as one customer even in cases where multiple brands, branches or divisions of an organization enter into separate contracts with the Company. During the three and nine months ended September 30, 2015 and 2014 , no single customer represented 10% or more of revenue. The Company also monitors the percentage of revenue from advertising agencies, even though advertising agencies that act on behalf of the Company’s advertisers are not considered customers based on the definition above. |
Goodwill | Goodwill —The Company performs an annual impairment test near the end of its fiscal year on December 1 and whenever events or changes in circumstances indicate that the carrying value of goodwill may not be recoverable. Since the Company operates its business in one reporting unit, the goodwill is tested for impairment at the enterprise level. Due to a stock price decline during the three months ended September 30, 2015, the Company’s market capitalization declined to a value below the net book value of the Company’s equity, triggering the Company to conduct a goodwill impairment test. The outcome of the goodwill impairment test resulted in a non-cash impairment of goodwill of $117.5 million , which was recorded in the Condensed Consolidated Statements of Operations for the period ended September 30, 2015. Refer to Note 12 for details of the Company's goodwill impairment test. |
Recently Issued and Adopted Accounting Pronouncements | Recently Issued and Adopted Accounting Pronouncements In September 2015, the Financial Accounting Standards Board ("FASB") issued accounting guidance which simplifies measurement period adjustments in a business combination under ASU 2015-16. The guidance is effective for fiscal years beginning after December 15, 2015, including interim periods within those fiscal years and early adoption is permitted. The Company early adopted the guidance in the three months ended September 30, 2015. In April 2015, the FASB issued accounting guidance which clarifies the circumstances under which a cloud computing customer would account for the arrangement as a license of internal-use software under ASC 350-40. The guidance is effective for annual periods and interim periods therein beginning after December 15, 2015. The Company utilizes cloud based applications in its administration and sales functions, and is evaluating the impact from the adoption of this guidance on its consolidated financial statements. In April 2015, the FASB issued accounting guidance which requires that debt issuance costs related to a recognized debt liability be presented in the balance sheet as a direct deduction from the carrying amount of that debt liability under ASU 2015-03. The guidance is effective for fiscal years beginning after December 15, 2015, including interim periods within those fiscal years and early adoption is permitted. The Company early adopted the guidance in the three months ended September 30, 2015. In August 2014, the FASB provided accounting guidance about management’s responsibility to evaluate whether there is substantial doubt about an entity’s ability to continue as a going concern and to provide related footnote disclosures under ASU 2014-15. The amendments are effective for the annual period ending after December 15, 2016, and for annual periods and interim periods thereafter. Early adoption is permitted. The Company is currently evaluating the impact of this ASU and expects no material modifications to its financial statements. In May 2014, the FASB issued accounting guidance 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 under ASU 2014-09. The ASU will replace most existing revenue recognition guidance in U.S. GAAP when it becomes effective. In July 2015, the FASB decided to delay the effective date of ASU 2014-09 by one year allowing early adoption as of the original effective date January 1, 2017. The deferral results in the new revenue standard being effective January 1, 2018. The Company is currently evaluating the impact of this ASU on its consolidated financial position, results of operations and cash flows. |
PROPERTY, EQUIPMENT AND SOFTW21
PROPERTY, EQUIPMENT AND SOFTWARE, NET (Tables) | 9 Months Ended |
Sep. 30, 2015 | |
Property, Plant and Equipment [Abstract] | |
Schedule of property, equipment and software | Property, equipment and software, net as of September 30, 2015 and December 31, 2014 , consisted of the following (in thousands): September 30, December 31, 2015 2014 Capitalized internal-use software costs $ 34,980 $ 23,385 Computer hardware and software 54,924 46,299 Furniture and fixtures 13,582 11,674 Leasehold improvements 39,200 36,811 Total 142,686 118,169 Accumulated depreciation and amortization (55,039 ) (28,728 ) Total property, equipment and software, net $ 87,647 $ 89,441 |
BUSINESS COMBINATIONS BUSINESS
BUSINESS COMBINATIONS BUSINESS COMBINATIONS (Tables) | 9 Months Ended |
Sep. 30, 2015 | |
Business Combinations [Abstract] | |
Schedule of Consideration For Business Acquisitions | The total purchase consideration is as follows (in thousands): Purchase consideration: Cash $ 98,045 Fair value of 5,253,084 shares common stock transferred 82,421 Total purchase price $ 180,466 |
Schedule of the Total Purchase Price Allocation | The total purchase price was allocated as follows (in thousands): Current assets $ 29,853 Non-current assets 3,999 Current liabilities (29,354 ) Non-current liabilities (16,253 ) Net acquired tangible assets (11,755 ) Identifiable intangible assets 74,700 Goodwill 117,521 Total purchase price $ 180,466 |
Schedule of Changes in the Carrying Amount of Goodwill | The changes in the carrying amount of goodwill for the nine months ended September 30, 2015 are as follows (in thousands): Goodwill Balance as of December 31, 2013 $ — Goodwill acquired 114,871 Goodwill adjustments recorded during the three months ended December 31, 2014 (1) 541 Balance as of December 31, 2014 115,412 Goodwill adjustment recorded during the three months ended September 30, 2015 (1) 2,109 Goodwill impairment recorded during the three months ended September 30, 2015 (1) (117,521 ) Balance as of September 30, 2015 $ — (1) Pursuant to business combinations accounting guidance, goodwill adjustments, for the effect of changes to net assets acquired during the measurement period, may be recorded up to one year from the date of an acquisition. Goodwill adjustments were not significant to our previously reported operating results or financial position. |
Schedule of Finite-Lived Intangible Assets Acquired | As of September 30, 2015 Estimated Useful Life (in years) Fair Value (in thousands) Accumulated Amortization Net Book Value Developed technology 3-4 $ 42,100 $ (12,396 ) $ 29,704 Customer relationships 7-8 27,700 (3,707 ) 23,993 Trademarks 5 2,000 (2,000 ) — Non-compete agreements 2 2,900 (1,551 ) 1,349 Total $ 74,700 (19,654 ) 55,046 |
Pro Forma Information | The pro forma results are presented for informational purposes only and are not necessarily indicative of results that would have occurred had the acquisition taken place at the beginning of the earliest period presented, or of future results (in thousands): Three Months Ended Nine Months Ended September 30, September 30, 2014 2014 Pro forma revenue $ 119,298 $ 329,445 Pro forma revenue less media costs $ 65,614 $ 182,359 Pro forma net loss $ (19,779 ) $ (54,933 ) |
CAPITAL LEASES (Tables)
CAPITAL LEASES (Tables) | 9 Months Ended |
Sep. 30, 2015 | |
Leases [Abstract] | |
Schedule of approximate remaining future minimum lease payments under non-cancelable capital leases | The remaining future minimum lease payments under these non-cancelable capital leases as of September 30, 2015 were as follows (in thousands): Year ending December 31, Future Payments 2015 (remaining 3 months) $ 2,115 2016 8,236 2017 6,550 2018 3,169 2019 79 Total minimum lease payments $ 20,149 Less: amount representing interest and taxes (1,471 ) Less: current portion of minimum lease payments (7,421 ) Capital lease obligations, net of current portion $ 11,257 |
DEBT (Tables)
DEBT (Tables) | 9 Months Ended |
Sep. 30, 2015 | |
Debt Disclosure [Abstract] | |
Schedule of future principal payments of long-term debt | Future principal payments of term loan as of September 30, 2015 were as follows (in thousands): Year ending December 31, Future Payments 2015 (remaining 3 months) $ 1,500 2016 6,000 2017 6,000 2018 6,000 2019 6,000 Total 25,500 Less: current portion of term loan (6,000 ) Term loan, net of current portion $ 19,500 |
STOCKHOLDERS' EQUITY (Tables)
STOCKHOLDERS' EQUITY (Tables) | 9 Months Ended |
Sep. 30, 2015 | |
Stockholders' Equity Note [Abstract] | |
Summary of option award activity | The following table summarizes information pertaining to our stock-based compensation from stock options and stock awards, which are comprised of restricted stock awards and restricted stock units (in thousands, except grant-date fair value and recognition period): Nine Months Ended September 30, Nine Months Ended September 30, 2015 2014 Stock options: Outstanding at the beginning of the period 6,291 7,411 Options granted 396 538 Options exercised (423 ) (960 ) Options forfeited (628 ) (273 ) Outstanding at the end of the period 5,636 6,716 Total intrinsic value of options exercised $ 2,619 $ 29,726 Total unrecognized compensation expense at period-end $ 14,997 $ 27,239 Weighted-average remaining recognition period at period-end (in years) 1.9 2.2 Stock awards: Outstanding at the beginning of the period 2,515 382 Stock awards granted 2,767 718 Stock awards vested (357 ) (54 ) Stock awards canceled (1,032 ) (69 ) Outstanding at the end of the period 3,893 977 Weighted-average grant-date fair value $ 13.28 $ 38.35 Total unrecognized compensation expense at period-end $ 36,013 $ 26,755 Weighted-average remaining recognition period at period-end (in years) 2.8 3.3 |
Schedule of assumptions used to value stock-based awards granted to employees | The assumptions used to value options granted to employees were as follows: Three Months Ended Nine Months Ended September 30, September 30, 2015 2014 2015 2014 Expected term (years) 6.3 6.3 6.3 5.5–6.3 Volatility 50.7%–58.0% 56.7%–57.6% 50.7%–58.0% 55.6%–58.0% Risk-free interest rate 1.57%–1.85% 1.84% 1.57%–1.85% 1.84%–1.97% Dividend yield — — — — |
Schedule of assumptions used to calculate stock-based compensation for each stock purchase right granted under the ESPP | The assumptions used to calculate our stock-based compensation for each stock purchase right granted under the ESPP were as follows: Three Months Ended Nine Months Ended September 30, September 30, 2015 2014 2015 2014 Expected term (years) 0.5 0.5 0.5 0.5-0.7 Volatility 73.3% 77.4% 73.3% 66.2%-77.4% Risk-free interest rate 0.07% 0.06% 0.07% 0.06%-0.07% Dividend yield — — — — The assumptions used to calculate our stock-based compensation for each stock purchase right granted under the ESPP were as follows: Three Months Ended Nine Months Ended September 30, September 30, 2015 2014 2015 2014 Expected term (years) 0.5 0.5 0.5 0.5-0.7 Volatility 73.3% 77.4% 73.3% 66.2%-77.4% Risk-free interest rate 0.07% 0.06% 0.07% 0.06%-0.07% Dividend yield — — — — Stock-based compensation allocation The following table summarizes the allocation of stock-based compensation in the accompanying condensed consolidated statements of operations (in thousands): Three Months Ended Nine Months Ended September 30, September 30, 2015 2014 2015 2014 Other cost of revenue $ 465 $ 282 $ 1,567 $ 810 Research and development 1,688 1,279 5,769 3,577 Sales and marketing 2,478 2,683 7,634 7,598 General and administrative 1,676 1,685 5,218 4,900 Total $ 6,307 $ 5,929 $ 20,188 $ 16,885 |
NET LOSS PER SHARE (Tables)
NET LOSS PER SHARE (Tables) | 9 Months Ended |
Sep. 30, 2015 | |
Earnings Per Share [Abstract] | |
Schedule of computation of net loss per common share | The following table sets forth the computation of net loss per share of common stock (in thousands, except per share amounts): Three Months Ended Nine Months Ended September 30, September 30, 2015 2014 2015 2014 Net loss $ (136,591 ) $ (22,831 ) $ (197,864 ) $ (43,815 ) Weighted-average shares used to compute basic and diluted net loss per share 42,763 37,230 42,350 35,490 Basic and diluted net loss per share $ (3.19 ) $ (0.61 ) $ (4.67 ) $ (1.23 ) Common stock equivalents excluded from net loss per diluted share because their effect would have been anti-dilutive 9,754 7,937 9,754 7,937 |
COMMITMENTS AND CONTINGENCIES (
COMMITMENTS AND CONTINGENCIES (Tables) | 9 Months Ended |
Sep. 30, 2015 | |
Commitments and Contingencies Disclosure [Abstract] | |
Schedule of future minimum lease payments under non-cancelable operating leases | The approximate remaining future minimum cash lease payments under these non-cancelable operating leases as of September 30, 2015 were as follows (in thousands): Year ending December 31, Future Payments 2015 (remaining 3 months) $ 5,203 2016 20,833 2017 19,788 2018 18,648 2019 21,147 Thereafter 43,657 $ 129,276 |
SEGMENTS (Tables)
SEGMENTS (Tables) | 9 Months Ended |
Sep. 30, 2015 | |
Segment Reporting [Abstract] | |
Schedule of total revenue generated through sales personnel located in the respective locations | The following table summarizes total revenue generated through sales personnel located in the respective locations (in thousands): Three Months Ended Nine Months Ended September 30, September 30, 2015 2014 2015 2014 North America $ 93,415 $ 85,948 $ 283,330 $ 226,519 All Other Countries 18,421 16,150 52,905 42,618 Total revenue $ 111,836 $ 102,098 $ 336,235 $ 269,137 |
Schedule of total long-lived assets in the respective locations | The following table summarizes total long-lived assets in the respective locations (in thousands): September 30, December 31, 2015 2014 North America $ 82,134 $ 85,355 All Other Countries 5,513 4,086 Total long-lived assets $ 87,647 $ 89,441 |
NATURE OF BUSINESS AND SUMMAR29
NATURE OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details) $ in Thousands | 3 Months Ended | 9 Months Ended | 12 Months Ended | |||||
Sep. 30, 2015USD ($)agencycustomer | Mar. 31, 2015agency | Mar. 31, 2015advertiser | Sep. 30, 2014USD ($)agency | Sep. 30, 2015USD ($) | Sep. 30, 2014USD ($)agency | Dec. 31, 2014USD ($)agencyadvertiser | Dec. 31, 2012customer | |
Concentration of credit risk | ||||||||
Impairment of goodwill | $ 117,521 | $ 0 | $ 117,521 | $ 0 | ||||
Money market funds (included in cash and cash equivalents) | Level 1 | ||||||||
Concentration of credit risk | ||||||||
Assets, fair value disclosure | $ 22,900 | $ 22,900 | $ 22,900 | |||||
Accounts receivable | Customer concentration | ||||||||
Concentration of credit risk | ||||||||
Number of customers | 2 | 2 | 0 | 2 | 2 | 0 | ||
Revenue | Customer concentration | ||||||||
Concentration of credit risk | ||||||||
Number of customers | 0 | 2 | 2 | 0 |
PROPERTY, EQUIPMENT AND SOFTW30
PROPERTY, EQUIPMENT AND SOFTWARE, NET (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||||
Sep. 30, 2015 | Jun. 30, 2015 | Sep. 30, 2014 | Sep. 30, 2015 | Sep. 30, 2014 | Dec. 31, 2014 | |
Property, equipment and software | ||||||
Property, equipment, and software, gross | $ 142,686 | $ 142,686 | $ 118,169 | |||
Accumulated depreciation and amortization | (55,039) | (55,039) | (28,728) | |||
Total property, equipment and software, net | 87,647 | 87,647 | 89,441 | |||
Depreciation and amortization | 8,300 | $ 4,600 | 38,078 | $ 12,525 | ||
Depreciation | 23,800 | 11,400 | ||||
Amortization expense | 2,000 | $ 1,400 | 5,500 | 3,700 | ||
Impairment of leasehold improvements | $ 2,700 | 2,704 | $ 0 | |||
Capitalized internal-use software costs | ||||||
Property, equipment and software | ||||||
Property, equipment, and software, gross | 34,980 | 34,980 | 23,385 | |||
Computer hardware and software | ||||||
Property, equipment and software | ||||||
Property, equipment, and software, gross | 54,924 | 54,924 | 46,299 | |||
Furniture and fixtures | ||||||
Property, equipment and software | ||||||
Property, equipment, and software, gross | 13,582 | 13,582 | 11,674 | |||
Leasehold improvements | ||||||
Property, equipment and software | ||||||
Property, equipment, and software, gross | $ 39,200 | $ 39,200 | $ 36,811 |
BUSINESS COMBINATIONS - Narrati
BUSINESS COMBINATIONS - Narrative (Details) - x Plus 1 - USD ($) $ in Thousands | Sep. 05, 2014 | Sep. 30, 2015 | Sep. 30, 2015 |
Business Acquisition [Line Items] | |||
Amortization of Intangible Assets | $ 5,800 | $ 14,300 | |
Cash payment | $ 98,045 | ||
Shares issued | 5,253,084 | ||
Acquisition costs | $ 4,900 | ||
Trademarks | |||
Business Acquisition [Line Items] | |||
Amortization of Intangible Assets | $ 1,600 |
BUSINESS COMBINATIONS - Purchas
BUSINESS COMBINATIONS - Purchase Consideration (Details) - x Plus 1 $ in Thousands | Sep. 05, 2014USD ($) |
Business Acquisition [Line Items] | |
Cash | $ 98,045 |
Fair value of 5,253,084 shares common stock transferred | 82,421 |
Total purchase price | $ 180,466 |
BUSINESS COMBINATIONS - Schedul
BUSINESS COMBINATIONS - Schedule of Purchase Price Allocation (Details) - USD ($) $ in Thousands | Sep. 30, 2015 | Dec. 31, 2014 | Sep. 05, 2014 | Dec. 31, 2013 |
Business Acquisition [Line Items] | ||||
Goodwill | $ 0 | $ 115,412 | ||
x Plus 1 | ||||
Business Acquisition [Line Items] | ||||
Current assets | $ 29,853 | |||
Non-current assets | 3,999 | |||
Current liabilities | (29,354) | |||
Non-current liabilities | (16,253) | |||
Net acquired tangible assets | (11,755) | |||
Identifiable intangible assets | 74,700 | |||
Goodwill | $ 0 | $ 115,412 | 117,521 | $ 0 |
Total preliminary purchase price | $ 180,466 |
BUSINESS COMBINATIONS - Sched34
BUSINESS COMBINATIONS - Schedule of Changed in Goodwill (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | 12 Months Ended | ||
Sep. 30, 2015 | Sep. 30, 2014 | Sep. 30, 2015 | Sep. 30, 2014 | Dec. 31, 2014 | |
Goodwill [Roll Forward] | |||||
Beginning balance | $ 115,412 | ||||
Impairment of goodwill | $ (117,521) | $ 0 | (117,521) | $ 0 | |
Ending balance | 0 | 0 | $ 115,412 | ||
x Plus 1 | |||||
Goodwill [Roll Forward] | |||||
Beginning balance | 115,412 | $ 0 | 0 | ||
Goodwill acquired | 114,871 | ||||
Goodwill, purchase accounting adjustments | 2,109 | 541 | |||
Impairment of goodwill | (117,521) | ||||
Ending balance | $ 0 | $ 0 | $ 115,412 |
BUSINESS COMBINATIONS - Sched35
BUSINESS COMBINATIONS - Schedule of Acquired Finite-Lived Intangible Assets (Details) - x Plus 1 $ in Thousands | 9 Months Ended |
Sep. 30, 2015USD ($) | |
Acquired Finite-Lived Intangible Assets [Line Items] | |
Preliminary Fair Value | $ 74,700 |
Accumulated Amortization | (19,654) |
Net Book Value | 55,046 |
Developed technology | |
Acquired Finite-Lived Intangible Assets [Line Items] | |
Preliminary Fair Value | 42,100 |
Accumulated Amortization | (12,396) |
Net Book Value | $ 29,704 |
Developed technology | Minimum | |
Acquired Finite-Lived Intangible Assets [Line Items] | |
Estimated Useful Life | 3 years |
Developed technology | Maximum | |
Acquired Finite-Lived Intangible Assets [Line Items] | |
Estimated Useful Life | 4 years |
Customer relationships | |
Acquired Finite-Lived Intangible Assets [Line Items] | |
Preliminary Fair Value | $ 27,700 |
Accumulated Amortization | (3,707) |
Net Book Value | $ 23,993 |
Customer relationships | Minimum | |
Acquired Finite-Lived Intangible Assets [Line Items] | |
Estimated Useful Life | 7 years |
Customer relationships | Maximum | |
Acquired Finite-Lived Intangible Assets [Line Items] | |
Estimated Useful Life | 8 years |
Trademarks | |
Acquired Finite-Lived Intangible Assets [Line Items] | |
Estimated Useful Life | 5 years |
Preliminary Fair Value | $ 2,000 |
Accumulated Amortization | (2,000) |
Net Book Value | $ 0 |
Non-compete agreements | |
Acquired Finite-Lived Intangible Assets [Line Items] | |
Estimated Useful Life | 2 years |
Preliminary Fair Value | $ 2,900 |
Accumulated Amortization | (1,551) |
Net Book Value | $ 1,349 |
BUSINESS COMBINATIONS - Pro For
BUSINESS COMBINATIONS - Pro Forma (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended |
Sep. 30, 2015 | Sep. 30, 2015 | |
Business Acquisition [Line Items] | ||
Pro forma revenue less media costs | $ 65,614 | $ 182,359 |
x Plus 1 | ||
Business Acquisition [Line Items] | ||
Pro forma revenue | 119,298 | 329,445 |
Pro forma net loss | $ (19,779) | $ (54,933) |
CAPITAL LEASES (Details)
CAPITAL LEASES (Details) - USD ($) $ in Thousands | Sep. 30, 2015 | Dec. 31, 2014 |
Approximate remaining future minimum lease payments under non-cancelable capital leases | ||
2015 (remaining 3 months) | $ 2,115 | |
2,016 | 8,236 | |
2,017 | 6,550 | |
2,018 | 3,169 | |
2,019 | 79 | |
Total minimum lease payments | 20,149 | |
Less: amount representing interest and taxes | (1,471) | |
Less: current portion of minimum lease payments | (7,421) | $ (5,482) |
Capital lease obligations, net of current portion | $ 11,257 | $ 12,341 |
RESTRUCTURING COSTS (Details)
RESTRUCTURING COSTS (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | |
Jun. 30, 2015 | Sep. 30, 2015 | Sep. 30, 2014 | |
Restructuring Cost and Reserve [Line Items] | |||
Impairment of leasehold improvements | $ 2,700 | $ 2,704 | $ 0 |
One-time Termination Benefits [Member] | |||
Restructuring Cost and Reserve [Line Items] | |||
Restructuring charges | 3,400 | ||
Facility Closing [Member] | |||
Restructuring Cost and Reserve [Line Items] | |||
Restructuring charges | $ 300 |
DEBT (Details)
DEBT (Details) - USD ($) | 9 Months Ended | |
Sep. 30, 2015 | Dec. 31, 2014 | |
Debt | ||
Revolving credit facility, net | $ 39,720,000 | $ 39,705,000 |
Amount outstanding | $ 40,000,000 | |
Applicable margin over variable rate basis (as a percent) | 2.00% | |
Liquidity ratio | 1.10 | |
Future principal payments of long-term debt | ||
2015 (remaining 3 months) | $ 1,500,000 | |
2,016 | 6,000,000 | |
2,017 | 6,000,000 | |
2,018 | 6,000,000 | |
2,019 | 6,000,000 | |
Total | 25,500,000 | |
Term loan, net of current portion | 19,047,000 | $ 23,335,000 |
Unamortized discounts | $ 700,000 | |
Federal funds rate | ||
Debt | ||
Applicable margin over variable rate basis (as a percent) | 1.00% | |
Daily adjusting LIBOR rate | ||
Debt | ||
Applicable margin over variable rate basis (as a percent) | 1.00% | |
Revolving line of credit, as amended in June 2013 | ||
Debt | ||
Revolving credit facility, net | $ 80,000,000 | |
Maximum amount available for borrowing expressed as a percentage of certain eligible accounts | 85.00% | |
Amount outstanding | $ 40,000,000 | |
Letter of credit subfacility | ||
Debt | ||
Revolving credit facility, net | 12,000,000 | |
Aggregate minimum cash on deposit | 40,000,000 | |
Amount outstanding | 7,200,000 | |
Periodic payment | 1,500,000 | |
Debt Instrument, Required Cash on Deposit | 30,000,000 | |
Swing line subfacility | ||
Debt | ||
Revolving credit facility, net | 2,500,000 | |
Revolving line of credit amended in March 2012 | ||
Debt | ||
Revolving credit facility, net | 30,000,000 | |
Amount outstanding | $ 25,500,000 | |
Revolving line of credit | Base rate | ||
Debt | ||
Applicable margin over variable rate basis (as a percent) | 2.125% | |
Revolving line of credit | Base rate | Minimum | ||
Debt | ||
Applicable margin over variable rate basis (as a percent) | 1.625% | |
Revolving line of credit | LIBOR | Minimum | ||
Debt | ||
Applicable margin over variable rate basis (as a percent) | 2.625% | |
Revolving line of credit | LIBOR | Maximum | ||
Debt | ||
Applicable margin over variable rate basis (as a percent) | 3.125% | |
Term loans | ||
Future principal payments of long-term debt | ||
Less: current portion of term loan | $ (6,000,000) | |
Term loan, net of current portion | $ 19,500,000 | |
Term loans | Base rate | Minimum | ||
Debt | ||
Applicable margin over variable rate basis (as a percent) | 2.50% | |
Term loans | Base rate | Maximum | ||
Debt | ||
Applicable margin over variable rate basis (as a percent) | 3.00% | |
Term loans | LIBOR | Minimum | ||
Debt | ||
Applicable margin over variable rate basis (as a percent) | 3.50% | |
Term loans | LIBOR | Maximum | ||
Debt | ||
Applicable margin over variable rate basis (as a percent) | 4.00% |
STOCKHOLDERS' EQUITY - Schedul
STOCKHOLDERS' EQUITY - Schedule of Share-based Compensation (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands | 9 Months Ended | 12 Months Ended | ||
Sep. 30, 2015 | Sep. 30, 2014 | Dec. 31, 2014 | Dec. 31, 2013 | |
Additional Disclosures [Abstract] | ||||
Total unrecognized compensation expense at period-end | $ 900 | |||
Options | ||||
Number of Shares Outstanding | ||||
Balance at the beginning of the period (in shares) | 6,291 | 7,411 | 7,411 | |
Options granted (shares) | 396 | 538 | ||
Options exercised (in shares) | (423) | (960) | ||
Options forfeited (in shares) | (628) | (273) | ||
Balance at the end of the period (in shares) | 5,636 | 6,716 | 6,291 | 7,411 |
Additional Disclosures [Abstract] | ||||
Total intrinsic value of options exercised | $ 2,619 | $ 29,726 | ||
Total unrecognized compensation expense at period-end | $ 14,997 | $ 27,239 | ||
Weighted-average remaining recognition period at period-end (in years) | 1 year 10 months 17 days | 2 years 2 months 19 days | ||
Restricted stock units (RSUs) and restricted stock awards (RSAs) | ||||
Number of Shares Outstanding | ||||
Balance at the beginning of the period (in shares) | 2,515 | 382 | 382 | |
Options granted (shares) | 2,767 | 718 | ||
Options exercised (in shares) | (357) | (54) | ||
Options forfeited (in shares) | (1,032) | (69) | ||
Balance at the end of the period (in shares) | 3,893 | 977 | 2,515 | 382 |
Additional Disclosures [Abstract] | ||||
Weighted-average grant-date fair value (dollars per share) | $ 13.28 | $ 38.35 | ||
Total unrecognized compensation expense at period-end | $ 36,013 | $ 26,755 | ||
Weighted-average remaining recognition period at period-end (in years) | 2 years 9 months 29 days | 3 years 3 months 29 days |
- Additional Information (Detai
- Additional Information (Details) | 9 Months Ended |
Sep. 30, 2015USD ($) | |
STOCKHOLDERS' EQUITY (DEFICIT) | |
Total unrecognized compensation expense at period-end | $ 900,000 |
Expected dividend payments | $ 0 |
Employee stock purchase plan | |
STOCKHOLDERS' EQUITY (DEFICIT) | |
Maximum employee subscription rate | 15.00% |
Purchase price of common stock, percent | 85.00% |
STOCKHOLDERS' EQUITY - Valuati
STOCKHOLDERS' EQUITY - Valuation Assumptions (Details) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2015 | Sep. 30, 2014 | Sep. 30, 2015 | Sep. 30, 2014 | |
Employee stock purchase plan | ||||
Assumptions used to calculate stock-based compensation for each stock purchase right granted under the Employee Stock Purchase Plan (ESPP) | ||||
Expected volatility rate, minimum | 73.30% | 77.40% | 73.30% | 66.20% |
Expected volatility rate, maximum | 73.30% | 77.40% | 73.30% | 77.40% |
Risk free interest rate, minimum | 0.07% | 0.06% | 0.07% | 0.06% |
Risk free interest rate, maximum | 0.07% | 0.06% | 0.07% | 0.07% |
Dividend yield | 0.00% | 0.00% | 0.00% | 0.00% |
Options | ||||
Assumptions used to calculate stock-based compensation for each stock purchase right granted under the Employee Stock Purchase Plan (ESPP) | ||||
Expected volatility rate, minimum | 50.70% | 56.70% | 50.70% | 55.60% |
Expected volatility rate, maximum | 58.00% | 57.60% | 58.00% | 58.00% |
Risk free interest rate, minimum | 1.57% | 1.84% | 1.57% | 1.84% |
Risk free interest rate, maximum | 1.85% | 1.84% | 1.85% | 1.97% |
Dividend yield | 0.00% | 0.00% | 0.00% | 0.00% |
Minimum | Employee stock purchase plan | ||||
Assumptions used to calculate stock-based compensation for each stock purchase right granted under the Employee Stock Purchase Plan (ESPP) | ||||
Expected term (years) | 6 months | 6 months | 6 months | 6 months |
Minimum | Options | ||||
Assumptions used to calculate stock-based compensation for each stock purchase right granted under the Employee Stock Purchase Plan (ESPP) | ||||
Expected term (years) | 6 years 3 months 18 days | 6 years 3 months 18 days | 6 years 3 months 18 days | 5 years 6 months |
Maximum | Employee stock purchase plan | ||||
Assumptions used to calculate stock-based compensation for each stock purchase right granted under the Employee Stock Purchase Plan (ESPP) | ||||
Expected term (years) | 6 months | 6 months | 6 months | 8 months 12 days |
Maximum | Options | ||||
Assumptions used to calculate stock-based compensation for each stock purchase right granted under the Employee Stock Purchase Plan (ESPP) | ||||
Expected term (years) | 6 years 3 months 18 days | 6 years 3 months 18 days | 6 years 3 months 18 days | 6 years 3 months 18 days |
STOCKHOLDERS' EQUITY - Sched43
STOCKHOLDERS' EQUITY - Schedule of Allocated Share-based Compensation Expense (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2015 | Sep. 30, 2014 | Sep. 30, 2015 | Sep. 30, 2014 | |
Allocation of stock-based compensation and restricted stock for employees and non-employees | ||||
Allocated share-based compensation expense | $ 6,307 | $ 5,929 | $ 20,188 | $ 16,885 |
Other cost of revenue | ||||
Allocation of stock-based compensation and restricted stock for employees and non-employees | ||||
Allocated share-based compensation expense | 465 | 282 | 1,567 | 810 |
Research and development | ||||
Allocation of stock-based compensation and restricted stock for employees and non-employees | ||||
Allocated share-based compensation expense | 1,688 | 1,279 | 5,769 | 3,577 |
Sales and marketing | ||||
Allocation of stock-based compensation and restricted stock for employees and non-employees | ||||
Allocated share-based compensation expense | 2,478 | 2,683 | 7,634 | 7,598 |
General and administrative | ||||
Allocation of stock-based compensation and restricted stock for employees and non-employees | ||||
Allocated share-based compensation expense | $ 1,676 | $ 1,685 | $ 5,218 | $ 4,900 |
NET LOSS PER SHARE (Details)
NET LOSS PER SHARE (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands | 3 Months Ended | 9 Months Ended | 12 Months Ended | ||||
Sep. 30, 2015 | Sep. 30, 2014 | Sep. 30, 2015 | Sep. 30, 2014 | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 | |
Computation of net loss per common share | |||||||
Net loss | $ (136,591) | $ (22,831) | $ (197,864) | $ (43,815) | $ (64,311) | $ (20,932) | $ (10,343) |
Weighted-average shares used to compute basic and diluted net loss per share (shares) | 42,763 | 37,230 | 42,350 | 35,490 | |||
Basic and diluted net loss per share (in dollars per share) | $ (3.19) | $ (0.61) | $ (4.67) | $ (1.23) | |||
Anti-dilutive securities that were excluded from the calculation of diluted net loss per share attributable to common stockholders (in shares) | 9,754 | 7,937 | 9,754 | 7,937 |
INCOME TAXES (Details)
INCOME TAXES (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2015 | Sep. 30, 2014 | Sep. 30, 2015 | Sep. 30, 2014 | |
Income Tax Disclosure [Abstract] | ||||
Income tax (benefit) provision | $ 213 | $ (4,120) | $ 942 | $ (3,625) |
COMMITMENTS AND CONTINGENCIES46
COMMITMENTS AND CONTINGENCIES (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2015 | Sep. 30, 2014 | Sep. 30, 2015 | Sep. 30, 2014 | Dec. 31, 2014 | |
Operating Leases | |||||
Rent expense | $ 3,900 | $ 3,900 | $ 11,900 | $ 10,800 | |
Future minimum lease payments under non-cancelable operating leases | |||||
2015 (remaining 3 months) | 5,203 | 5,203 | |||
2,016 | 20,833 | 20,833 | |||
2,017 | 19,788 | 19,788 | |||
2,018 | 18,648 | 18,648 | |||
2,019 | 21,147 | 21,147 | |||
Thereafter | 43,657 | 43,657 | |||
Total future payments | 129,276 | 129,276 | |||
Letters of Credit and Bank Guarantees | |||||
Irrevocable letters of credit outstanding | 7,200 | 7,200 | $ 6,800 | ||
Bank guarantees for security deposits | $ 2,235 | $ 2,235 | $ 2,915 |
SEGMENTS (Details)
SEGMENTS (Details) $ in Thousands | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2015USD ($) | Sep. 30, 2014USD ($) | Sep. 30, 2015USD ($)managerbusiness_activity | Sep. 30, 2014USD ($) | Dec. 31, 2014USD ($) | |
Segments | |||||
Number of business activities | business_activity | 1 | ||||
Number of segment managers held accountable for operations, operating results or plans for levels or components below the consolidated unit level | manager | 0 | ||||
Total revenue | $ 111,836 | $ 102,098 | $ 336,235 | $ 269,137 | |
Total long-lived assets | 87,647 | 87,647 | $ 89,441 | ||
North America | |||||
Segments | |||||
Total revenue | 93,415 | 85,948 | 283,330 | 226,519 | |
Total long-lived assets | 82,134 | 82,134 | 85,355 | ||
All Other Countries | |||||
Segments | |||||
Total revenue | 18,421 | $ 16,150 | 52,905 | $ 42,618 | |
Total long-lived assets | $ 5,513 | $ 5,513 | $ 4,086 |
GOODWILL (Details)
GOODWILL (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2015 | Sep. 30, 2014 | Sep. 30, 2015 | Sep. 30, 2014 | |
Goodwill and Intangible Assets Disclosure [Abstract] | ||||
Impairment of goodwill | $ 117,521 | $ 0 | $ 117,521 | $ 0 |