Document and Entity Information
Document and Entity Information - shares | 3 Months Ended | |
Mar. 31, 2019 | May 03, 2019 | |
Document And Entity Information [Line Items] | ||
Document Type | 10-Q | |
Amendment Flag | false | |
Document Period End Date | Mar. 31, 2019 | |
Document Fiscal Year Focus | 2019 | |
Document Fiscal Period Focus | Q1 | |
Entity Registrant Name | CarGurus, Inc. | |
Trading Symbol | CARG | |
Entity Central Index Key | 0001494259 | |
Current Fiscal Year End Date | --12-31 | |
Entity Filer Category | Large Accelerated Filer | |
Entity Small Business | false | |
Entity Emerging Growth Company | false | |
Class A Common Stock | ||
Document And Entity Information [Line Items] | ||
Entity Common Stock, Shares Outstanding | 90,537,641 | |
Class B Common Stock | ||
Document And Entity Information [Line Items] | ||
Entity Common Stock, Shares Outstanding | 20,702,084 |
Unaudited Condensed Consolidate
Unaudited Condensed Consolidated Balance Sheets - USD ($) $ in Thousands | Mar. 31, 2019 | Dec. 31, 2018 |
Current assets | ||
Cash and cash equivalents | $ 29,939 | $ 34,887 |
Investments | 108,500 | 122,800 |
Accounts receivable, net of allowance for doubtful accounts of $223 and $479, respectively | 15,111 | 13,614 |
Prepaid expenses and prepaid income taxes | 9,680 | 10,144 |
Deferred contract costs | 6,591 | 5,253 |
Other current assets | 8,835 | 7,410 |
Restricted cash | 750 | 750 |
Total current assets | 179,406 | 194,858 |
Property and equipment, net | 26,550 | 24,269 |
Intangible assets | 4,407 | |
Goodwill | 15,852 | |
Operating lease right-of-use assets | 50,742 | |
Restricted cash | 1,918 | 1,921 |
Deferred tax assets | 42,714 | 38,886 |
Deferred contract costs, net of current portion | 8,446 | 7,252 |
Other long–term assets | 1,892 | 1,104 |
Total assets | 331,927 | 268,290 |
Current liabilities | ||
Accounts payable | 35,253 | 34,345 |
Accrued expenses, accrued income taxes and other current liabilities | 13,793 | 18,654 |
Deferred revenue | 8,942 | 8,811 |
Operating lease liabilities | 7,486 | 1,693 |
Total current liabilities | 65,474 | 63,503 |
Operating lease liability non-current | 52,956 | 9,395 |
Deferred tax liabilities | 1,002 | |
Other non–current liabilities | 1,486 | 1,281 |
Total liabilities | 120,918 | 74,179 |
Commitments and contingencies (Note 8) | ||
Stockholders’ equity: | ||
Additional paid-in capital | 188,954 | 184,216 |
Retained earnings | 22,297 | 9,713 |
Accumulated other comprehensive (loss) income | (353) | 71 |
Total stockholders’ equity | 211,009 | 194,111 |
Total liabilities and stockholders’ equity | 331,927 | 268,290 |
Class A Common Stock | ||
Stockholders’ equity: | ||
Common stock | 90 | 90 |
Class B Common Stock | ||
Stockholders’ equity: | ||
Common stock | $ 21 | $ 21 |
Unaudited Condensed Consolida_2
Unaudited Condensed Consolidated Balance Sheets (Parenthetical) - USD ($) $ in Thousands | Mar. 31, 2019 | Dec. 31, 2018 |
Allowance for doubtful accounts | $ 223 | $ 479 |
Class A Common Stock | ||
Common stock, par value | $ 0.001 | $ 0.001 |
Common stock, shares authorized | 500,000,000 | 500,000,000 |
Common stock, shares issued | 90,370,773 | 89,728,223 |
Common stock, shares outstanding | 90,370,773 | 89,728,223 |
Class B Common Stock | ||
Common stock, par value | $ 0.001 | $ 0.001 |
Common stock, shares authorized | 100,000,000 | 100,000,000 |
Common stock, shares issued | 20,702,084 | 20,702,084 |
Common stock, shares outstanding | 20,702,084 | 20,702,084 |
Unaudited Condensed Consolida_3
Unaudited Condensed Consolidated Income Statements - USD ($) $ in Thousands | 3 Months Ended | ||
Mar. 31, 2019 | Mar. 31, 2018 | ||
Income Statement [Abstract] | |||
Revenue | $ 135,270 | $ 98,575 | |
Cost of revenue | [1] | 7,720 | 5,569 |
Gross profit | 127,550 | 93,006 | |
Operating expenses: | |||
Sales and marketing | 91,316 | 68,845 | |
Product, technology, and development | 15,972 | 9,098 | |
General and administrative | 11,760 | 7,871 | |
Depreciation and amortization | 1,067 | 733 | |
Total operating expenses | 120,115 | 86,547 | |
Income from operations | 7,435 | 6,459 | |
Other income, net: | |||
Interest income | 744 | 291 | |
Other income (expense) | 902 | (9) | |
Total other income, net | 1,646 | 282 | |
Income before income taxes | 9,081 | 6,741 | |
(Benefit from) provision for income taxes | (3,503) | 1,246 | |
Net income | $ 12,584 | $ 5,495 | |
Net income per share attributable to common stockholders: (Note 10) | |||
Basic | $ 0.11 | $ 0.05 | |
Diluted | $ 0.11 | $ 0.05 | |
Weighted-average number of shares of common stock used in computing net income per share attributable to common stockholders: | |||
Basic | 110,800,037 | 106,942,799 | |
Diluted | 113,406,320 | 113,341,308 | |
[1] | Includes depreciation and amortization expense for the three months ended March 31, 2019 and 2018 of $560 and $504, respectively. |
Unaudited Condensed Consolida_4
Unaudited Condensed Consolidated Income Statements (Parenthetical) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2019 | Mar. 31, 2018 | |
Income Statement [Abstract] | ||
Depreciation and amortization expense | $ 560 | $ 504 |
Unaudited Condensed Consolida_5
Unaudited Condensed Consolidated Statements of Comprehensive Income - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2019 | Mar. 31, 2018 | |
Statement Of Income And Comprehensive Income [Abstract] | ||
Net income | $ 12,584 | $ 5,495 |
Other comprehensive income: | ||
Foreign currency translation adjustment | (424) | 72 |
Comprehensive income | $ 12,160 | $ 5,567 |
Unaudited Condensed Consolida_6
Unaudited Condensed Consolidated Statements of Stockholders' Equity - USD ($) $ in Thousands | Total | Class A Common Stock | Class B Common Stock | Common StockClass A Common Stock | Common StockClass B Common Stock | Additional Paid-in Capital | Accumulated Other Comprehensive Income (Loss) | Retained Earnings (Accumulated Deficit) |
Beginning balance at Dec. 31, 2017 | $ 127,025 | $ 78 | $ 28 | $ 185,190 | $ 228 | $ (58,499) | ||
Beginning balance, Shares at Dec. 31, 2017 | 77,884,754 | 28,226,104 | ||||||
Net income | 5,495 | 5,495 | ||||||
Stock–based compensation expense | 3,967 | 3,967 | ||||||
Issuance of common stock upon exercise of stock options | 80 | 80 | ||||||
Issuance of common stock upon exercise of stock options, Shares | 6,574 | 10,690 | ||||||
Cumulative adjustment from adoption of revenue recognition model | 3,042 | 3,042 | ||||||
Conversion of common stock | $ 7 | |||||||
Conversion of common stock, shares issued | 7,534,710 | |||||||
Conversion of common stock, shares converted | (7,534,710) | |||||||
Conversion of common stock, value | $ (7) | |||||||
Foreign currency translation adjustment | 72 | 72 | ||||||
Ending balance at Mar. 31, 2018 | 139,681 | $ 85 | $ 21 | 189,237 | 300 | (49,962) | ||
Ending balance, Shares at Mar. 31, 2018 | 85,426,038 | 20,702,084 | ||||||
Beginning balance at Dec. 31, 2018 | 194,111 | $ 90 | $ 21 | 184,216 | 71 | 9,713 | ||
Beginning balance, Shares at Dec. 31, 2018 | 89,728,223 | 20,702,084 | 89,728,223 | 20,702,084 | ||||
Net income | 12,584 | 12,584 | ||||||
Stock–based compensation expense | 7,995 | 7,995 | ||||||
Issuance of common stock upon exercise of stock options | 697 | 697 | ||||||
Issuance of common stock upon exercise of stock options, Shares | 447,210 | |||||||
Issuance of common stock upon vesting of restricted stock units, Shares | 297,374 | |||||||
Payment of withholding taxes on net share settlements of equity awards | (3,954) | (3,954) | ||||||
Payment of withholding taxes on net share settlements of equity awards, Shares | (102,034) | (102,034) | ||||||
Foreign currency translation adjustment | (424) | (424) | ||||||
Ending balance at Mar. 31, 2019 | $ 211,009 | $ 90 | $ 21 | $ 188,954 | $ (353) | $ 22,297 | ||
Ending balance, Shares at Mar. 31, 2019 | 90,370,773 | 20,702,084 | 90,370,773 | 20,702,084 |
Unaudited Condensed Consolida_7
Unaudited Condensed Consolidated Statements of Cash Flows - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended | |
Mar. 31, 2019 | Mar. 31, 2018 | Dec. 31, 2018 | |
Operating Activities | |||
Net income | $ 12,584 | $ 5,495 | |
Adjustments to reconcile net income to net cash provided by operating activities: | |||
Depreciation and amortization | 1,627 | 1,237 | |
Unrealized currency (gain) loss on foreign denominated transactions | (833) | 53 | |
Deferred taxes | (3,692) | (1,317) | |
Provision for doubtful accounts | 15 | 377 | |
Stock-based compensation expense | 7,686 | 3,818 | |
Amortization of deferred contract costs | 1,830 | 513 | |
Changes in operating assets and liabilities: | |||
Accounts receivable | (1,519) | 133 | |
Prepaid expenses, prepaid income taxes, and other assets | (1,760) | (507) | |
Deferred contract costs | (4,376) | (3,176) | |
Accounts payable | 3,225 | 649 | |
Accrued expenses, accrued income taxes, and other current liabilities | (4,009) | (3,651) | |
Deferred revenue | 132 | 2,811 | |
Lease obligations | (1,380) | (215) | |
Other non-current liabilities | 155 | 154 | |
Net cash provided by operating activities | 9,685 | 6,374 | |
Investing Activities | |||
Purchases of property and equipment | (5,700) | (434) | |
Capitalization of website development costs | (811) | (581) | |
Cash paid for acquisition | (19,139) | ||
Investments in certificates of deposit | (25,700) | (60,000) | |
Maturities of certificates of deposit | 40,000 | 30,000 | |
Net cash used in investing activities | (11,350) | (31,015) | |
Financing Activities | |||
Proceeds from exercise of stock options | 697 | 80 | |
Financing cash flows from finance leases | (6) | ||
Payment of initial public offering costs | (1,142) | ||
Payment of withholding taxes on net share settlements of equity awards | (3,954) | ||
Net cash used in financing activities | (3,263) | (1,062) | |
Impact of foreign currency on cash, cash equivalents, and restricted cash | (23) | 24 | |
Net decrease in cash, cash equivalents, and restricted cash | (4,951) | (25,679) | |
Cash, cash equivalents, and restricted cash at beginning of period | 37,558 | 89,552 | $ 89,552 |
Cash, cash equivalents, and restricted cash at end of period | 32,607 | 63,873 | $ 37,558 |
Supplemental disclosure of cash flow information: | |||
Cash paid for income taxes | 14 | 5 | |
Cash paid for interest | 1 | 5 | |
Unpaid purchases of property and equipment | 2,112 | 188 | |
Capitalized stock-based compensation expense in website development costs | 309 | $ 149 | |
Cash paid for operating lease liabilities | $ 3,005 |
Organization and Business Descr
Organization and Business Description | 3 Months Ended |
Mar. 31, 2019 | |
Accounting Policies [Abstract] | |
Organization and Business Description | 1. Organization and Business Description CarGurus, Inc. (the “Company”), is a global, online automotive marketplace connecting buyers and sellers of new and used cars. Using proprietary technology, search algorithms, and innovative data analytics, the Company provides information and analysis that create a differentiated automotive search experience for consumers. The Company’s marketplace empowers users worldwide with unbiased third-party validation on pricing and dealer reputation, as well as other useful information that aids them in finding “Great Deals from Top-Rated Dealers.” The Company is headquartered in Cambridge, Massachusetts and was incorporated in the State of Delaware on June 26, 2015. The Company operates principally in the United States and has also launched online marketplaces in Canada, the United Kingdom, Germany, Italy, and Spain. The Company has subsidiaries in the United States, Canada, Ireland, and the United Kingdom. The Company is subject to a number of risks and uncertainties common to companies in its and similar industries and stages of development including, but not limited to, rapid technological changes, competition from substitute products and services from larger companies, management of international activities, protection of proprietary rights, patent litigation, and dependence on key individuals. |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 3 Months Ended |
Mar. 31, 2019 | |
Accounting Policies [Abstract] | |
Summary of Significant Accounting Policies | 2. Summary of Significant Accounting Policies Basis of Presentation The accompanying interim condensed consolidated financial statements (the “Unaudited Condensed Consolidated Financial Statements”) are unaudited. These Unaudited Condensed Consolidated Financial Statements should be read in conjunction with the Company’s audited consolidated financial statements and the notes thereto for the year ended December 31, 2018 included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2018, filed with the on February 28, 2019 (the “2018 Annual Report”). The Unaudited Condensed Consolidated Financial Statements have been prepared pursuant to the rules and regulations of the SEC. Accordingly, certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles in the United States (“GAAP”) have been condensed or omitted pursuant to such rules and regulations. The Unaudited Condensed Consolidated Financial Statements reflect all adjustments, consisting of only normal recurring adjustments, necessary for the fair presentation of the Company’s financial position as of March 31, 2019 and December 31, 2018, results of operations, comprehensive income, changes in shareholders’ equity and cash flows for the three months ended March 31, 2019 and 2018. In the results of operations for the three months ended March 31, 2019 and 2018, the Company has separately presented interest income from other income, net due to the increase in amount during the three months ended March 31, 2019 as compared to the three months ended March 31, 2018. Additionally, the results of operations and statement of cash flows for the three months ended March 31, 2018, were adjusted due to the impact of the adoption of Accounting Standards Codification (“ASC”) Topic 606, Revenue from Contracts with Customers The accompanying Unaudited Condensed Consolidated Financial Statements reflect the application of certain significant accounting policies as described below and elsewhere in these notes to the Unaudited Condensed Consolidated Financial Statements there have been no material changes in the Company's significant accounting policies from those that were disclosed in the 2018 Annual Report, other than those resulting from the adoption of ASC 842, which is described below. Principles of Consolidation The accompanying Unaudited Condensed Consolidated Financial Statements include the accounts of CarGurus, Inc. and its subsidiaries. All intercompany balances and transactions have been eliminated in consolidation. The Company prepares its Unaudited Condensed Consolidated Financial Statements and related disclosures in conformity with GAAP. Subsequent Event Considerations The Company considers events or transactions that occur after the balance sheet date but prior to the issuance of the financial statements to provide additional evidence for certain estimates or to identify matters that require additional disclosure. Subsequent events have been evaluated as required. The Company has evaluated all subsequent events and determined that there are no material recognized or unrecognized subsequent events requiring disclosure . Use of Estimates The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosures of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenue and expenses during the reporting period. Significant estimates relied upon in preparing these Unaudited Condensed Consolidated Financial Statements Although the Company regularly assesses these estimates, actual results could differ materially from these estimates. Changes in estimates are recorded in the period in which they become known. The Company bases its estimates on historical experience and various other assumptions that it believes to be reasonable under the circumstances. Actual results may differ from management’s estimates if these results differ from historical experience, or other assumptions do not turn out to be substantially accurate, even if such assumptions are reasonable when made. Concentration of Credit Risk The Company has no significant off‑balance sheet risk, such as foreign exchange contracts, option contracts, or other foreign hedging arrangements. Financial instruments that potentially expose the Company to concentrations of credit risk consist primarily of cash, cash equivalents, investments, and trade accounts receivable. The Company maintains its cash, cash equivalents, and investments principally with accredited financial institutions of high credit standing. Although the Company deposits its cash and investments with multiple financial institutions, its deposits, at times, may exceed federally insured limits. Credit risk with respect to accounts receivable is dispersed due to the large number of customers. The Company routinely assesses the creditworthiness of its customers. The Company generally has not experienced any material losses related to receivables from individual customers, or groups of customers. The Company does not require collateral. Due to these factors, no additional credit risk beyond amounts provided for collection losses is believed by management to be probable in the Company’s accounts receivable. For the three months ended March 31, 2019 and the year ended December 31, 2018, no individual customer accounted for more than 10% of total revenue. As of March 31, 2019 , one customer accounted for 13% of net accounts receivable. As of December 31, 2018, two customers accounted for 21% and 14% of net accounts receivable, respectively. No other individual customer accounted for more than 10% of net accounts receivable at March 31, 2019 or December 31, 2018. Included in net accounts receivable at March 31, 2019 and December 31, 2018, is $7,329 and $5,815, respectively, of unbilled accounts receivable related to advertising customers billed within a quarter subsequent to services rendered. Revenue Recognition The following table summarizes revenue from contracts with customers by revenue source for the three months ended March 31, 2019 and 2018. Three Months Ended March 31, 2019 2018 Revenue by Revenue Stream Marketplace subscription revenue $ 120,843 $ 89,159 Advertising and other revenue 14,427 9,416 Total $ 135,270 $ 98,575 The Company provides disaggregation of revenue based on the marketplace subscription versus advertising and other revenue classification in the table above and based on geographic region (see Note 12) as it believes these categories best depict how the nature, amount, timing and uncertainty of revenue and cash flows are affected by economic factors. Topic 606 requires that the Company disclose the aggregate amount of transaction price that is allocated to performance obligations that have not yet been satisfied as of the relevant quarter end. However, the Company has applied the practical expedient available under Topic 606 to not disclose the amount of transaction price allocated to unsatisfied performance obligations when any such performance obligation was part of a contract having an original expected duration of one year or less. The Company does not have future obligations associated with marketplace revenue subscriptions or advertising and other services that extend beyond one year. For performance obligations not satisfied as of March 31, 2019, the nature of the performance obligations, the variable consideration and any consideration from contracts with customers not included in the transaction price is consistent with performance obligations satisfied as of March 31, 2019. The remaining duration is less than one year. Revenue recognized during the three months ended March 31, 2019 from amounts included in deferred revenue at the beginning of the period was approximately $8,792. Recent Accounting Pronouncements Adopted Lease Accounting In February 2016, the Financial Accounting Standards Board (the “FASB”) issued Accounting Standards Update (“ASU”) No. 2016-02, Leases (Topic 842) (as amended, “ASC 842”). ASC 842 requires a lessee to recognize most leases on the Unaudited Condensed Consolidated Balance Sheet but recognize expenses on the Unaudited Condensed Consolidated Income Statement in a manner similar to current practice. The update states that a lessee will recognize a lease liability for the obligation to make lease payments and a right-to-use asset for the right to use the underlying assets for the lease term. The Company adopted ASC 842 as of January 1, 2019, using the additional transition method offered through ASU No. 2018-11. This approach provides a method for recording existing leases at the adoption date and recognizing a cumulative-effect adjustment to the opening balance of retained earnings in the period of adoption. Lease Overview The Company’s operating lease obligations consist of various leases for office space in: Cambridge, Massachusetts; Detroit, Michigan; Los Angeles, California; Dublin, Ireland; and London, United Kingdom. The Detroit, Los Angeles and London leases are immaterial to the Company. On June 19, 2018, the Company entered into an operating lease in Cambridge, Massachusetts at 121 First St. for the lease of 48,393 square feet of office space with a non-cancellable lease term through 2033 with an option to extend the lease term for two additional periods of five years each. The Company subleases the fifth floor and records the sublease income in other income, net within the Unaudited Condensed Consolidated Income Statement. The sublease income is immaterial. On March 11, 2016, the Company entered into an operating lease in Cambridge, Massachusetts at 55 Cambridge Parkway for the lease of 51,923 square feet of office space with a non-cancellable lease term through 2024 with an option to extend the lease term for one additional period of five years. On October 8, 2014, the Company entered into an operating lease in Cambridge, Massachusetts at 2 Canal Park for the lease of 48,059 square feet of office space with a non-cancellable lease term through 2022 with an option to extend the lease term for one additional period of five years. Each of the three leases described above provides for leasehold improvement incentives and annual rent increases through the term of the lease. Each of the three leases above also has an associated letter of credit, which is recorded as restricted cash within the Unaudited Condensed Consolidated Balance Sheet. At March 31, 2019 and December 31, 2018, restricted cash was $2,668 and $2,671, Additionally, 121 First St. has an associated security deposit, which was recorded in other assets, net within the Unaudited Condensed Consolidated Balance Sheet. On August 12, 2013, the Company entered into an operating lease in Dublin, Ireland at Styne House, Upper Hatch St. for the lease of 13,345 square feet of office space with a non-cancellable term through 2023. The lease provided for a rent increase at the end of year five. The Company’s financing lease obligations consists of a lease for office equipment and is immaterial. Prior to adoption of ASC 842 The Company categorized leases at their inception as either operating or capital leases. On certain lease arrangements, the Company may have received rent holidays or other incentives. The Company recognized lease costs on a straight‑line basis once it achieved control of the space, without regard to deferred payment terms, such as rent holidays, that deferred the commencement date of required payments or escalating payment amounts. The Company recorded the difference between required lease payments and rent expense as deferred rent. Additionally, incentives received were treated as a reduction of costs over the term of the agreement, as they were considered an inseparable part of the lease agreement. Post adoption of ASC 842 Upon adoption, the Company elected the transition relief package, permitted within the standard, pursuant to which the Company did not reassess the classification of existing leases, whether any expired or existing contracts contain a lease, and whether existing leases have any initial direct costs. The Company also elected the practical expedient on not separating lease components from non-lease components for all leases. The Company reviews all material contacts for embedded leases to determine if they have a right-of-use asset. The Company recognizes rent expense on a straight-line basis over the lease period. The depreciable life of assets and leasehold improvement are limited by the expected lease term, unless there is a transfer of title or purchase option reasonably certain of exercise. The Company also made an accounting policy election to not recognize a lease liability or right-of-use asset on its Unaudited Condensed Consolidated Balance Sheet for leases with an initial term of twelve months or less, and instead recognize lease payments on the Unaudited Condensed Consolidated Income Statement on a straight-line basis over the lease term and variable lease payments that do not depend on an index or rate as expense in the period in which the achievement of the specified target that triggers the variable lease payments becomes probable. Adoption of the new standard resulted in the recording of net lease assets and lease liabilities of approximately $52,334 and $63,280, respectively, as of January 1, 2019. The standard did not materially impact the Unaudited Condensed Consolidated Statement of Cash Flows and had no impact on the Unaudited Condensed Consolidated Income Statement. During the three months ended March 31, 2019 and 2018, the Company recognized $2,448 and $1,672, respectively, of rent expense. The Company allocates lease costs across all departments based on headcount in the respective location. As of March 31, 2019, the weighted average remaining lease term was 9.9 years and the weighted average discount rate was 5.9%. As most of the Company’s leases do not provide an implicit rate, the Company uses an estimated incremental borrowing rate based on the information available at lease commencement in determining the present value of lease payments. The Company estimated the incremental borrowing rate based on the rate of interest the Company would have to pay to borrow a similar amount on a collateralized basis over a similar term. The Company has no historical debt transactions and a collateralized rate is estimated based on a group of peer companies. The Company uses the incremental borrowing rate on January 1, 2019 for leases that commenced prior to that date. Future minimum lease payments as of March 31, 2019 are as follows: Year Ending December 31, Operating Lease Commitments 2019 (excluding the three months ended March 31, 2019) $ 7,351 2020 11,020 2021 11,169 2022 10,862 2023 5,672 Thereafter 37,645 Total lease payments 83,719 Less imputed interest (23,277 ) Total $ 60,442 Options to extend lease terms are not included in the chart above as they are not reasonably certain of being exercised. Stock-Based Compensation In June 2018, the FASB issued ASU No. 2018-07 , Compensation—Stock Compensation (Topic 718) Compensation—Stock Compensation Internal-Use Software In August 2018, the FASB issued ASU 2018-15, Intangibles—Goodwill and Other—Internal-Use Software (Subtopic 350-40) Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract. launched an initiative designed to evaluate and enhance its enterprise applications. Recent Accounting Pronouncements Not Yet Adopted From time to time, new accounting pronouncements are issued by the FASB In January 2017, the FASB issued ASU 2017-04, Intangibles – Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment. |
Acquisitions
Acquisitions | 3 Months Ended |
Mar. 31, 2019 | |
Business Combinations [Abstract] | |
Acquisitions | 3. Acquisitions On January 8, 2019, the Company, through CarGurus UK Limited, a company incorporated in England & Wales and a wholly owned subsidiary of CarGurus Ireland Limited (a company incorporated in Ireland and a wholly owned subsidiary of the Company) (the “Purchaser”), completed its acquisition of PistonHeads, a UK-based automotive website (“PistonHeads”), by acquiring the entire issued share capital of Haymarket New4 Ltd. (a company incorporated in England & Wales and now known as PistonHeads Holdco Limited, “NewCo”) from Haymarket Media Group Ltd., a company incorporated in England & Wales (the “Seller”), on the terms and subject to the conditions set forth in the Put and Call Option Agreement dated December 3, 2018, by and among the Purchaser, the Seller and Haymarket Group Limited, a company incorporated in England & Wales. The PistonHeads website hosts used car classifieds, articles and forums. The Purchaser paid an aggregate of 15,000 GBP, or approximately $19,139, to acquire the business, inclusive of 1,000 GBP, or approximately $1,276, being held in escrow to secure post-closing claims, subject to the terms and conditions of an escrow agreement between the Purchaser and the Seller. Upon completion of the acquisition, NewCo became a wholly owned subsidiary of the Purchaser. The business combination is intended to expand the Company’s consumer audience in the UK. As of March 31, 2019, the Company has incurred total acquisition-related costs of $649 related to the transaction. The acquisition has been accounted for as a business combination under the acquisition method and, accordingly, the total purchase price is allocated to the intangible assets and goodwill. Acquired tangible assets and assumed liabilities are immaterial. The following table presents the preliminary purchase price allocation recorded in the Company's Unaudited Condensed Consolidated Balance Sheet as of the acquisition date: Estimated Fair Value at Date of Acquisition Intangible assets (1) $ 4,466 Goodwill (2) 15,521 Deferred tax liabilities (3) (848 ) Total purchase price $ 19,139 (1) Identifiable definite-lived intangible assets were comprised of brand and customer relationships of $3,445 and $1,021, respectively, with estimated useful lives of 11 years and 3 years, respectively, which will be amortized on a straight-line basis over their estimated useful lives. (2) The goodwill represents the excess value of the purchase price over intangible assets acquired. The goodwill in this transaction is primarily attributable to future customer growth in the UK market as a result of acquiring an established platform and applying the Company’s technology to help improve the website experience on such platform; thus, helping to drive additional traffic to the PistonHeads website in the future. All goodwill is assigned to the International segment. The acquisition of PistonHeads was a stock acquisition and g (3) The deferred tax liability corresponds to the acquired intangible assets which do not have tax basis. As a result of the deferred tax liability, an adjustment was recorded to goodwill to account for the tax effect of the deferred tax liability. Actual and pro forma results for these acquisitions have not been presented as the financial impact to the Company’s Unaudited Condensed Consolidated Financial Statements is not material. |
Fair Value of Financial Instrum
Fair Value of Financial Instruments Including Cash, Cash Equivalents and Investments | 3 Months Ended |
Mar. 31, 2019 | |
Fair Value Disclosures [Abstract] | |
Fair Value of Financial Instruments Including Cash, Cash Equivalents and Investments | 4. Fair Value of Financial Instruments Including Cash, Cash Equivalents and Investments The following tables present, for each of the fair value levels, the Company’s assets that are measured at fair value on a recurring basis at March 31, 2019 and at December 31, 2018: At March 31, 2019 Quoted Prices in Active Markets for Identical Assets (Level 1 Inputs) Significant Other Observable Inputs (Level 2 Inputs) Significant Unobservable Inputs (Level 3 Inputs) Total Assets: Money market funds $ 19 $ — $ — $ 19 Investments: Certificates of deposit — 108,500 — 108,500 Total $ 19 $ 108,500 $ — $ 108,519 At December 31, 2018 Quoted Prices in Active Markets for Identical Assets (Level 1 Inputs) Significant Other Observable Inputs (Level 2 Inputs) Significant Unobservable Inputs (Level 3 Inputs) Total Assets: Money market funds $ 24 $ — $ — $ 24 Investments: Certificates of deposit — 122,800 — 122,800 Total $ 24 $ 122,800 $ — $ 122,824 Certificates of deposit at March 31, 2019 and December 31, 2018 had maturity dates of one year or less. The Company measures eligible assets and liabilities at fair value with changes in value recognized in earnings. There were no liabilities that were measured at fair value for the three months ended March 31, 2019. Fair value treatment may be elected either upon initial recognition of an eligible asset or liability or, for an existing asset or liability, if an event triggers a new basis of accounting. The Company did not elect to remeasure any of its existing financial assets or liabilities, and did not elect the fair value option for any financial assets and liabilities transacted in the three months ended March 31, 2019 or the year ended December 31, 2018. The Company considers all highly liquid investments with an original maturity of 90 days or less at the date of purchase to be cash equivalents. Investments not classified as cash equivalents with maturities one year or less from the balance sheet date are classified as short-term investments, while investments with maturities in excess of one year from the balance sheet date are classified as long-term investments. Management determines the appropriate classification of investments at the time of purchase, and re-evaluates such determination at each balance sheet date. Cash and cash equivalents primarily consist of cash on deposit with banks, and amounts held in interest-bearing money market accounts. Cash equivalents are carried at cost, which approximates their fair market value. The following is a summary of cash, cash equivalents, and investments as of March 31, 2019 At March 31, 2019 Amortized Cost Gross Unrealized Gains Gross Unrealized Losses Estimated Fair Value Cash and cash equivalents due in 90 days or less $ 29,939 $ — $ — $ 29,939 Investments: Certificates of deposit due in one year or less 108,500 — — 108,500 Total cash, cash equivalents, and investments $ 138,439 $ — $ — $ 138,439 At December 31, 2018 Amortized Cost Gross Unrealized Gains Gross Unrealized Losses Estimated Fair Value Cash and cash equivalents due in 90 days or less $ 34,887 $ — $ — $ 34,887 Investments: Certificates of deposit due in one year or less 122,800 — — 122,800 Total cash, cash equivalents, and investments $ 157,687 $ — $ — $ 157,687 |
Property and Equipment, Net
Property and Equipment, Net | 3 Months Ended |
Mar. 31, 2019 | |
Property Plant And Equipment [Abstract] | |
Property and Equipment, Net | 5. Property and Equipment, Net Property and equipment consists of the following: At March 31, 2019 At December 31, 2018 Computer equipment $ 4,917 $ 4,208 Capitalized software 252 252 Website development costs 8,027 6,907 Furniture and fixtures 6,539 4,584 Leasehold improvements 19,642 10,821 Construction in progress — 8,971 Finance lease right-of-use assets 107 — 39,484 35,743 Less accumulated depreciation (12,934 ) (11,474 ) Property and equipment, net $ 26,550 $ 24,269 Depreciation and amortization expense, which includes amortization expense associated with capitalized website was $1,472 and $5,029 for the three months ended and , respectively. The increase of $8,821 in leasehold improvements and the decrease of $8,971 in construction in progress at March 31, 2019 is primarily due to costs incurred to build out the Company’s new leased facility. The facility became occupied subsequent to December 31, 2018 at which time the assets ceased to be classified as construction in progress and became classified as leasehold improvement. |
Goodwill and Other Intangible A
Goodwill and Other Intangible Assets | 3 Months Ended |
Mar. 31, 2019 | |
Goodwill And Intangible Assets Disclosure [Abstract] | |
Goodwill and Other Intangible Assets | 6. Goodwill and other intangible assets Goodwill The changes in the carrying value of goodwill were as follows: Balance at December 31, 2018 $ — PistonHeads acquisition 15,521 Foreign currency translation adjustment 331 Balance at March 31, 2019 $ 15,852 The Company did not have a goodwill balance prior to the closing of the PistonHeads acquisition on January 8, 2019. The Company tests goodwill for impairment at least annually or whenever events or changes in circumstances indicate that the carrying value may not be recoverable. Other Intangible Assets Intangible assets as of March 31, 2019 consist of the following: Weighted Average Remaining Useful Life (years) Gross Carrying Amount Accumulated Amortization Net Carrying Amount Brand 10.8 $ 3,518 $ 74 $ 3,444 Customer relationships 2.8 1,044 81 963 Total $ 4,562 $ 155 $ 4,407 The Company did not have intangible assets prior to the closing of the PistonHeads acquisition on January 8, 2019. T The estimated useful life of brand and customer relationships is 11 years and 3 years, respectively. The Company evaluates the useful lives of these assets on an annual basis and tests for impairment whenever events or changes in circumstances occur that could impact the recoverability of these assets. Estimated amortization expense of intangible assets for future periods as of March 31, 2019, is as follows: Year Ending December 31, Amortization Expense Remainder of 2019 $ 502 2020 667 2021 667 2022 326 2023 320 2024 and thereafter 1,925 Total $ 4,407 |
Accrued Expenses, Accrued Incom
Accrued Expenses, Accrued Income Taxes and Other Current Liabilities | 3 Months Ended |
Mar. 31, 2019 | |
Accrued Liabilities Current [Abstract] | |
Accrued Expenses, Accrued Income Taxes and Other Current Liabilities | 7. Accrued expenses, accrued income taxes and other current liabilities Accrued expenses, accrued income taxes and other current liabilities consist of the following: At March 31, 2019 At December 31, 2018 Accrued bonus $ 3,000 $ 8,266 Accrued commissions 3,530 2,878 Other accrued expenses, accrued income taxes and other current liabilities 7,263 7,510 $ 13,793 $ 18,654 |
Commitments and Contingencies
Commitments and Contingencies | 3 Months Ended |
Mar. 31, 2019 | |
Commitments And Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | 8. Commitments and Contingencies Operating Leases As of March 31, 2019 Legal Matters From time to time the Company may become involved in legal proceedings or be subject to claims arising in the ordinary course of its business. The Company is not presently subject to any pending or threatened litigation that it believes, if determined adversely to the Company, individually, or taken together, would reasonably be expected to have a material adverse effect on its business or financial results. Guarantees and Indemnification Obligations In the ordinary course of business, the Company enters into agreements with its customers that include commercial provisions with respect to licensing, infringement, indemnification, and other common provisions. The Company does not, in the ordinary course, agree to indemnification obligations for the Company under its contracts with customers. Based on historical experience and information known at March 31, 2019 and December 31, 2018, |
Stock-based Compensation
Stock-based Compensation | 3 Months Ended |
Mar. 31, 2019 | |
Disclosure Of Compensation Related Costs Sharebased Payments [Abstract] | |
Stock-based Compensation | 9. Stock-based Compensation For the three months ended March 31, 2019 and 2018, total stock-based compensation expense was $7,686 and $3,818, respectively. The following two tables show stock compensation expense by award type and where the stock compensation expense is recorded in the Company’s : Three Months Ended March 31, 2019 2018 Options $ 51 $ 65 RSUs 7,635 3,753 Total stock-based compensation expense $ 7,686 $ 3,818 Three Months Ended March 31, 2019 2018 Cost of revenue $ 81 $ 89 Sales and marketing expense 2,312 1,010 Product, technology, and development expense 3,183 1,661 General and administrative expense 2,110 1,058 Total $ 7,686 $ 3,818 Excluded from stock-based compensation expense is $309 and $149 of capitalized website development costs in the three months ended March 31, 2019 and 2018, respectively. During the three months ended March 31, 2019, the Company withheld 102,034 shares of Class A common stock to satisfy employee tax withholding requirements due to net share settlement. The shares withheld remain in the authorized, but unissued pool under the Company’s Omnibus Equity Compensation Plan and can be reissued by the Company. Total payments of $3,954 for the employees’ tax obligations to the taxing authorities due to net share settlements are reflected as a financing activity within the Unaudited Condensed Consolidated Statements of Cash Flows |
Earnings Per Share
Earnings Per Share | 3 Months Ended |
Mar. 31, 2019 | |
Earnings Per Share [Abstract] | |
Earnings Per Share | 10. Earnings Per Share Net income per share for the three months ended March 31, 2019 and 2018 is computed by dividing net income by the weighted-average number of common shares outstanding during the reporting period. The Company computes the weighted-average number of common shares outstanding during the reporting period using the total number of shares of Class A common stock and Class B common stock outstanding as of the last day of the previous year end reporting period plus the weighted-average of any additional shares issued and outstanding during the reporting period. The Company has two classes of common stock authorized: Class A common stock and Class B common stock. The rights of the holders of Class A and Class B common stock are identical, except with respect to voting and conversion. Each share of Class A common stock is entitled to one vote per share and each share of Class B common stock is entitled to ten votes per share. Each share of Class B common stock is convertible into one share of Class A common stock at the option of the holder at any time or automatically upon certain events described in the Company’s , including on either the death or voluntary termination of the Company’s Chief Executive Officer. The Company allocates undistributed earnings attributable to common stock between the common stock classes on a one‑to‑one basis when computing net income per share. As a result, basic and diluted net income per share of Class A common stock and per share of Class B common stock are equivalent. During the three months ended March 31, 2019, no holders of Class B common stock converted shares of Class B common stock to Class A common stock. During , holders of Class B common stock converted 7,534,710 shares of Class B common stock to Class A common stock. Diluted net income per share gives effect to all potentially dilutive securities. Potential dilutive securities for the three months ended March 31, 2019 and 2018 consist of shares of common stock issuable upon the exercise of stock options and shares of common stock issuable upon the vesting of restricted stock units (“RSUs”). The dilutive effect of these common stock equivalents is reflected in diluted earnings per share by application of the treasury stock method. For the three months ended March 31, 2019 and 2018, diluted net income per share was calculated by dividing net income by the weighted-average number of shares of common stock outstanding during the period plus the dilutive impact of stock options and shares of common stock issuable upon the vesting of RSUs. The following table presents a reconciliation of the numerator and denominator used in the calculation of basic and diluted net income per share: Three Months Ended March 31, 2019 2018 Numerator: Net income $ 12,584 $ 5,495 Denominator: Weighted-average number of shares of common stock used in computing net income per share attributable to common stockholders — basic 110,800,037 106,942,799 Dilutive effect of share equivalents resulting from stock options 1,450,076 4,772,154 Dilutive effect of share equivalents resulting from unvested restricted stock units 1,156,207 1,626,355 Weighted-average number of shares of common stock used in computing net income per share — diluted 113,406,320 113,341,308 Net income per share attributable to common stockholders: Basic $ 0.11 $ 0.05 Diluted $ 0.11 $ 0.05 There were no anti-dilutive securities for the three months ended March 31, 2018. The following potentially dilutive common stock equivalents have been excluded from the calculation of diluted weighted-average shares outstanding for the three months ended March 31, 2019, as their effect would have been anti-dilutive for the period presented: Three Months Ended March 31, 2019 Restricted stock units outstanding 858,417 |
Income Taxes
Income Taxes | 3 Months Ended |
Mar. 31, 2019 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | 11. Income Taxes During the three months ended March 31, 2019, the Company recorded an income tax benefit of $3,503, representing an effective tax rate of (38.6)%. The effective tax rate for the three months ended March 31, 2019 was lower than the statutory tax rate of 21% principally due to excess stock deductions from the taxable compensation of share-based awards and federal and state research and development tax credits, partially offset by state and local income taxes. During the three months ended March 31, 2018, the Company recorded income tax expense of $1,246, representing an effective tax rate of 18.5%. The effective tax rate for the three months ended March 31, 2018 was lower than the statutory tax rate of 21% principally due to federal and state research and development tax credits and excess stock deductions from the taxable compensation of share-based awards, partially offset by state and local income taxes. In 2018, the Internal Revenue Service commenced a federal income tax audit with respect to the Company’s 2016 tax year. In 2019, the Internal Revenue Service commenced a federal employment tax audit with respect to the 2016 calendar year. |
Segment and Geographic Informat
Segment and Geographic Information | 3 Months Ended |
Mar. 31, 2019 | |
Segment Reporting [Abstract] | |
Segment and Geographic Information | 12. Segment and Geographic Information The Company has two reportable segments, United States and International. Segment information is presented in the same manner as the Company’s chief operating decision maker (the “CODM”) reviews the Company’s operating results in assessing performance and allocating resources. The CODM reviews revenue and operating income (loss) for each reportable segment as a proxy for the operating performance of the Company’s United States and International operations. The Company’s Chief Executive Officer is the CODM on behalf of both reportable segments. The United States segment derives revenues from marketplace subscriptions, advertising services, and other revenues from customers within the United States. The International segment derives revenues from marketplace subscriptions, advertising services, and other revenues from customers outside of the United States. A majority of the Company’s operational overhead expenses, including technology and personnel costs, and other general and administrative costs associated with running the Company’s business, are incurred in the United States and not allocated to the International segment. Assets and costs discretely incurred by reportable segments, including depreciation and amortization, are included in the calculation of reportable segment income (loss) from operations. Segment operating income (loss) does not reflect the transfer pricing adjustments related to the Company’s foreign subsidiaries, which are recorded for statutory reporting purposes. Asset information is assessed and reviewed on a global basis. Information regarding the Company’s operations by segment and geographical area is presented as follows: Three Months Ended March 31, 2019 2018 Segment revenue: United States $ 128,403 $ 95,060 International 6,867 3,515 Total revenue $ 135,270 $ 98,575 Three Months Ended March 31, 2019 2018 Segment income (loss) from operations: United States $ 17,381 $ 13,933 International (9,946 ) (7,474 ) Total income from operations $ 7,435 $ 6,459 As of March 31, 2019 |
Summary of Significant Accoun_2
Summary of Significant Accounting Policies (Policies) | 3 Months Ended |
Mar. 31, 2019 | |
Accounting Policies [Abstract] | |
Basis of Presentation | Basis of Presentation The accompanying interim condensed consolidated financial statements (the “Unaudited Condensed Consolidated Financial Statements”) are unaudited. These Unaudited Condensed Consolidated Financial Statements should be read in conjunction with the Company’s audited consolidated financial statements and the notes thereto for the year ended December 31, 2018 included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2018, filed with the on February 28, 2019 (the “2018 Annual Report”). The Unaudited Condensed Consolidated Financial Statements have been prepared pursuant to the rules and regulations of the SEC. Accordingly, certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles in the United States (“GAAP”) have been condensed or omitted pursuant to such rules and regulations. The Unaudited Condensed Consolidated Financial Statements reflect all adjustments, consisting of only normal recurring adjustments, necessary for the fair presentation of the Company’s financial position as of March 31, 2019 and December 31, 2018, results of operations, comprehensive income, changes in shareholders’ equity and cash flows for the three months ended March 31, 2019 and 2018. In the results of operations for the three months ended March 31, 2019 and 2018, the Company has separately presented interest income from other income, net due to the increase in amount during the three months ended March 31, 2019 as compared to the three months ended March 31, 2018. Additionally, the results of operations and statement of cash flows for the three months ended March 31, 2018, were adjusted due to the impact of the adoption of Accounting Standards Codification (“ASC”) Topic 606, Revenue from Contracts with Customers The accompanying Unaudited Condensed Consolidated Financial Statements reflect the application of certain significant accounting policies as described below and elsewhere in these notes to the Unaudited Condensed Consolidated Financial Statements there have been no material changes in the Company's significant accounting policies from those that were disclosed in the 2018 Annual Report, other than those resulting from the adoption of ASC 842, which is described below. |
Principles of Consolidation | Principles of Consolidation The accompanying Unaudited Condensed Consolidated Financial Statements include the accounts of CarGurus, Inc. and its subsidiaries. All intercompany balances and transactions have been eliminated in consolidation. The Company prepares its Unaudited Condensed Consolidated Financial Statements and related disclosures in conformity with GAAP. |
Subsequent Event Considerations | Subsequent Event Considerations The Company considers events or transactions that occur after the balance sheet date but prior to the issuance of the financial statements to provide additional evidence for certain estimates or to identify matters that require additional disclosure. Subsequent events have been evaluated as required. The Company has evaluated all subsequent events and determined that there are no material recognized or unrecognized subsequent events requiring disclosure . |
Use of Estimates | Use of Estimates The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosures of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenue and expenses during the reporting period. Significant estimates relied upon in preparing these Unaudited Condensed Consolidated Financial Statements Although the Company regularly assesses these estimates, actual results could differ materially from these estimates. Changes in estimates are recorded in the period in which they become known. The Company bases its estimates on historical experience and various other assumptions that it believes to be reasonable under the circumstances. Actual results may differ from management’s estimates if these results differ from historical experience, or other assumptions do not turn out to be substantially accurate, even if such assumptions are reasonable when made. |
Concentration of Credit Risk | Concentration of Credit Risk The Company has no significant off‑balance sheet risk, such as foreign exchange contracts, option contracts, or other foreign hedging arrangements. Financial instruments that potentially expose the Company to concentrations of credit risk consist primarily of cash, cash equivalents, investments, and trade accounts receivable. The Company maintains its cash, cash equivalents, and investments principally with accredited financial institutions of high credit standing. Although the Company deposits its cash and investments with multiple financial institutions, its deposits, at times, may exceed federally insured limits. Credit risk with respect to accounts receivable is dispersed due to the large number of customers. The Company routinely assesses the creditworthiness of its customers. The Company generally has not experienced any material losses related to receivables from individual customers, or groups of customers. The Company does not require collateral. Due to these factors, no additional credit risk beyond amounts provided for collection losses is believed by management to be probable in the Company’s accounts receivable. For the three months ended March 31, 2019 and the year ended December 31, 2018, no individual customer accounted for more than 10% of total revenue. As of March 31, 2019 , one customer accounted for 13% of net accounts receivable. As of December 31, 2018, two customers accounted for 21% and 14% of net accounts receivable, respectively. No other individual customer accounted for more than 10% of net accounts receivable at March 31, 2019 or December 31, 2018. Included in net accounts receivable at March 31, 2019 and December 31, 2018, is $7,329 and $5,815, respectively, of unbilled accounts receivable related to advertising customers billed within a quarter subsequent to services rendered. |
Revenue Recognition | Revenue Recognition The following table summarizes revenue from contracts with customers by revenue source for the three months ended March 31, 2019 and 2018. Three Months Ended March 31, 2019 2018 Revenue by Revenue Stream Marketplace subscription revenue $ 120,843 $ 89,159 Advertising and other revenue 14,427 9,416 Total $ 135,270 $ 98,575 The Company provides disaggregation of revenue based on the marketplace subscription versus advertising and other revenue classification in the table above and based on geographic region (see Note 12) as it believes these categories best depict how the nature, amount, timing and uncertainty of revenue and cash flows are affected by economic factors. Topic 606 requires that the Company disclose the aggregate amount of transaction price that is allocated to performance obligations that have not yet been satisfied as of the relevant quarter end. However, the Company has applied the practical expedient available under Topic 606 to not disclose the amount of transaction price allocated to unsatisfied performance obligations when any such performance obligation was part of a contract having an original expected duration of one year or less. The Company does not have future obligations associated with marketplace revenue subscriptions or advertising and other services that extend beyond one year. For performance obligations not satisfied as of March 31, 2019, the nature of the performance obligations, the variable consideration and any consideration from contracts with customers not included in the transaction price is consistent with performance obligations satisfied as of March 31, 2019. The remaining duration is less than one year. Revenue recognized during the three months ended March 31, 2019 from amounts included in deferred revenue at the beginning of the period was approximately $8,792. |
Recent Accounting Pronouncements Adopted | Recent Accounting Pronouncements Adopted Lease Accounting In February 2016, the Financial Accounting Standards Board (the “FASB”) issued Accounting Standards Update (“ASU”) No. 2016-02, Leases (Topic 842) (as amended, “ASC 842”). ASC 842 requires a lessee to recognize most leases on the Unaudited Condensed Consolidated Balance Sheet but recognize expenses on the Unaudited Condensed Consolidated Income Statement in a manner similar to current practice. The update states that a lessee will recognize a lease liability for the obligation to make lease payments and a right-to-use asset for the right to use the underlying assets for the lease term. The Company adopted ASC 842 as of January 1, 2019, using the additional transition method offered through ASU No. 2018-11. This approach provides a method for recording existing leases at the adoption date and recognizing a cumulative-effect adjustment to the opening balance of retained earnings in the period of adoption. Lease Overview The Company’s operating lease obligations consist of various leases for office space in: Cambridge, Massachusetts; Detroit, Michigan; Los Angeles, California; Dublin, Ireland; and London, United Kingdom. The Detroit, Los Angeles and London leases are immaterial to the Company. On June 19, 2018, the Company entered into an operating lease in Cambridge, Massachusetts at 121 First St. for the lease of 48,393 square feet of office space with a non-cancellable lease term through 2033 with an option to extend the lease term for two additional periods of five years each. The Company subleases the fifth floor and records the sublease income in other income, net within the Unaudited Condensed Consolidated Income Statement. The sublease income is immaterial. On March 11, 2016, the Company entered into an operating lease in Cambridge, Massachusetts at 55 Cambridge Parkway for the lease of 51,923 square feet of office space with a non-cancellable lease term through 2024 with an option to extend the lease term for one additional period of five years. On October 8, 2014, the Company entered into an operating lease in Cambridge, Massachusetts at 2 Canal Park for the lease of 48,059 square feet of office space with a non-cancellable lease term through 2022 with an option to extend the lease term for one additional period of five years. Each of the three leases described above provides for leasehold improvement incentives and annual rent increases through the term of the lease. Each of the three leases above also has an associated letter of credit, which is recorded as restricted cash within the Unaudited Condensed Consolidated Balance Sheet. At March 31, 2019 and December 31, 2018, restricted cash was $2,668 and $2,671, Additionally, 121 First St. has an associated security deposit, which was recorded in other assets, net within the Unaudited Condensed Consolidated Balance Sheet. On August 12, 2013, the Company entered into an operating lease in Dublin, Ireland at Styne House, Upper Hatch St. for the lease of 13,345 square feet of office space with a non-cancellable term through 2023. The lease provided for a rent increase at the end of year five. The Company’s financing lease obligations consists of a lease for office equipment and is immaterial. Prior to adoption of ASC 842 The Company categorized leases at their inception as either operating or capital leases. On certain lease arrangements, the Company may have received rent holidays or other incentives. The Company recognized lease costs on a straight‑line basis once it achieved control of the space, without regard to deferred payment terms, such as rent holidays, that deferred the commencement date of required payments or escalating payment amounts. The Company recorded the difference between required lease payments and rent expense as deferred rent. Additionally, incentives received were treated as a reduction of costs over the term of the agreement, as they were considered an inseparable part of the lease agreement. Post adoption of ASC 842 Upon adoption, the Company elected the transition relief package, permitted within the standard, pursuant to which the Company did not reassess the classification of existing leases, whether any expired or existing contracts contain a lease, and whether existing leases have any initial direct costs. The Company also elected the practical expedient on not separating lease components from non-lease components for all leases. The Company reviews all material contacts for embedded leases to determine if they have a right-of-use asset. The Company recognizes rent expense on a straight-line basis over the lease period. The depreciable life of assets and leasehold improvement are limited by the expected lease term, unless there is a transfer of title or purchase option reasonably certain of exercise. The Company also made an accounting policy election to not recognize a lease liability or right-of-use asset on its Unaudited Condensed Consolidated Balance Sheet for leases with an initial term of twelve months or less, and instead recognize lease payments on the Unaudited Condensed Consolidated Income Statement on a straight-line basis over the lease term and variable lease payments that do not depend on an index or rate as expense in the period in which the achievement of the specified target that triggers the variable lease payments becomes probable. Adoption of the new standard resulted in the recording of net lease assets and lease liabilities of approximately $52,334 and $63,280, respectively, as of January 1, 2019. The standard did not materially impact the Unaudited Condensed Consolidated Statement of Cash Flows and had no impact on the Unaudited Condensed Consolidated Income Statement. During the three months ended March 31, 2019 and 2018, the Company recognized $2,448 and $1,672, respectively, of rent expense. The Company allocates lease costs across all departments based on headcount in the respective location. As of March 31, 2019, the weighted average remaining lease term was 9.9 years and the weighted average discount rate was 5.9%. As most of the Company’s leases do not provide an implicit rate, the Company uses an estimated incremental borrowing rate based on the information available at lease commencement in determining the present value of lease payments. The Company estimated the incremental borrowing rate based on the rate of interest the Company would have to pay to borrow a similar amount on a collateralized basis over a similar term. The Company has no historical debt transactions and a collateralized rate is estimated based on a group of peer companies. The Company uses the incremental borrowing rate on January 1, 2019 for leases that commenced prior to that date. Future minimum lease payments as of March 31, 2019 are as follows: Year Ending December 31, Operating Lease Commitments 2019 (excluding the three months ended March 31, 2019) $ 7,351 2020 11,020 2021 11,169 2022 10,862 2023 5,672 Thereafter 37,645 Total lease payments 83,719 Less imputed interest (23,277 ) Total $ 60,442 Options to extend lease terms are not included in the chart above as they are not reasonably certain of being exercised. Stock-Based Compensation In June 2018, the FASB issued ASU No. 2018-07 , Compensation—Stock Compensation (Topic 718) Compensation—Stock Compensation Internal-Use Software In August 2018, the FASB issued ASU 2018-15, Intangibles—Goodwill and Other—Internal-Use Software (Subtopic 350-40) Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract. launched an initiative designed to evaluate and enhance its enterprise applications. |
Lease Accounting | Lease Accounting In February 2016, the Financial Accounting Standards Board (the “FASB”) issued Accounting Standards Update (“ASU”) No. 2016-02, Leases (Topic 842) (as amended, “ASC 842”). ASC 842 requires a lessee to recognize most leases on the Unaudited Condensed Consolidated Balance Sheet but recognize expenses on the Unaudited Condensed Consolidated Income Statement in a manner similar to current practice. The update states that a lessee will recognize a lease liability for the obligation to make lease payments and a right-to-use asset for the right to use the underlying assets for the lease term. The Company adopted ASC 842 as of January 1, 2019, using the additional transition method offered through ASU No. 2018-11. This approach provides a method for recording existing leases at the adoption date and recognizing a cumulative-effect adjustment to the opening balance of retained earnings in the period of adoption. Lease Overview The Company’s operating lease obligations consist of various leases for office space in: Cambridge, Massachusetts; Detroit, Michigan; Los Angeles, California; Dublin, Ireland; and London, United Kingdom. The Detroit, Los Angeles and London leases are immaterial to the Company. On June 19, 2018, the Company entered into an operating lease in Cambridge, Massachusetts at 121 First St. for the lease of 48,393 square feet of office space with a non-cancellable lease term through 2033 with an option to extend the lease term for two additional periods of five years each. The Company subleases the fifth floor and records the sublease income in other income, net within the Unaudited Condensed Consolidated Income Statement. The sublease income is immaterial. On March 11, 2016, the Company entered into an operating lease in Cambridge, Massachusetts at 55 Cambridge Parkway for the lease of 51,923 square feet of office space with a non-cancellable lease term through 2024 with an option to extend the lease term for one additional period of five years. On October 8, 2014, the Company entered into an operating lease in Cambridge, Massachusetts at 2 Canal Park for the lease of 48,059 square feet of office space with a non-cancellable lease term through 2022 with an option to extend the lease term for one additional period of five years. Each of the three leases described above provides for leasehold improvement incentives and annual rent increases through the term of the lease. Each of the three leases above also has an associated letter of credit, which is recorded as restricted cash within the Unaudited Condensed Consolidated Balance Sheet. At March 31, 2019 and December 31, 2018, restricted cash was $2,668 and $2,671, Additionally, 121 First St. has an associated security deposit, which was recorded in other assets, net within the Unaudited Condensed Consolidated Balance Sheet. On August 12, 2013, the Company entered into an operating lease in Dublin, Ireland at Styne House, Upper Hatch St. for the lease of 13,345 square feet of office space with a non-cancellable term through 2023. The lease provided for a rent increase at the end of year five. The Company’s financing lease obligations consists of a lease for office equipment and is immaterial. Prior to adoption of ASC 842 The Company categorized leases at their inception as either operating or capital leases. On certain lease arrangements, the Company may have received rent holidays or other incentives. The Company recognized lease costs on a straight‑line basis once it achieved control of the space, without regard to deferred payment terms, such as rent holidays, that deferred the commencement date of required payments or escalating payment amounts. The Company recorded the difference between required lease payments and rent expense as deferred rent. Additionally, incentives received were treated as a reduction of costs over the term of the agreement, as they were considered an inseparable part of the lease agreement. Post adoption of ASC 842 Upon adoption, the Company elected the transition relief package, permitted within the standard, pursuant to which the Company did not reassess the classification of existing leases, whether any expired or existing contracts contain a lease, and whether existing leases have any initial direct costs. The Company also elected the practical expedient on not separating lease components from non-lease components for all leases. The Company reviews all material contacts for embedded leases to determine if they have a right-of-use asset. The Company recognizes rent expense on a straight-line basis over the lease period. The depreciable life of assets and leasehold improvement are limited by the expected lease term, unless there is a transfer of title or purchase option reasonably certain of exercise. The Company also made an accounting policy election to not recognize a lease liability or right-of-use asset on its Unaudited Condensed Consolidated Balance Sheet for leases with an initial term of twelve months or less, and instead recognize lease payments on the Unaudited Condensed Consolidated Income Statement on a straight-line basis over the lease term and variable lease payments that do not depend on an index or rate as expense in the period in which the achievement of the specified target that triggers the variable lease payments becomes probable. Adoption of the new standard resulted in the recording of net lease assets and lease liabilities of approximately $52,334 and $63,280, respectively, as of January 1, 2019. The standard did not materially impact the Unaudited Condensed Consolidated Statement of Cash Flows and had no impact on the Unaudited Condensed Consolidated Income Statement. During the three months ended March 31, 2019 and 2018, the Company recognized $2,448 and $1,672, respectively, of rent expense. The Company allocates lease costs across all departments based on headcount in the respective location. As of March 31, 2019, the weighted average remaining lease term was 9.9 years and the weighted average discount rate was 5.9%. As most of the Company’s leases do not provide an implicit rate, the Company uses an estimated incremental borrowing rate based on the information available at lease commencement in determining the present value of lease payments. The Company estimated the incremental borrowing rate based on the rate of interest the Company would have to pay to borrow a similar amount on a collateralized basis over a similar term. The Company has no historical debt transactions and a collateralized rate is estimated based on a group of peer companies. The Company uses the incremental borrowing rate on January 1, 2019 for leases that commenced prior to that date. Future minimum lease payments as of March 31, 2019 are as follows: Year Ending December 31, Operating Lease Commitments 2019 (excluding the three months ended March 31, 2019) $ 7,351 2020 11,020 2021 11,169 2022 10,862 2023 5,672 Thereafter 37,645 Total lease payments 83,719 Less imputed interest (23,277 ) Total $ 60,442 Options to extend lease terms are not included in the chart above as they are not reasonably certain of being exercised. |
Stock-Based Compensation | Stock-Based Compensation In June 2018, the FASB issued ASU No. 2018-07 , Compensation—Stock Compensation (Topic 718) Compensation—Stock Compensation |
Internal-Use Software | Internal-Use Software In August 2018, the FASB issued ASU 2018-15, Intangibles—Goodwill and Other—Internal-Use Software (Subtopic 350-40) Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract. launched an initiative designed to evaluate and enhance its enterprise applications. |
Recent Accounting Pronouncements Not Yet Adopted | Recent Accounting Pronouncements Not Yet Adopted From time to time, new accounting pronouncements are issued by the FASB In January 2017, the FASB issued ASU 2017-04, Intangibles – Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment. |
Fair Value of Financial Instruments Including Cash, Cash Equivalents and Investments | The Company measures eligible assets and liabilities at fair value with changes in value recognized in earnings. There were no liabilities that were measured at fair value for the three months ended March 31, 2019. Fair value treatment may be elected either upon initial recognition of an eligible asset or liability or, for an existing asset or liability, if an event triggers a new basis of accounting. The Company did not elect to remeasure any of its existing financial assets or liabilities, and did not elect the fair value option for any financial assets and liabilities transacted in the three months ended March 31, 2019 or the year ended December 31, 2018. The Company considers all highly liquid investments with an original maturity of 90 days or less at the date of purchase to be cash equivalents. Investments not classified as cash equivalents with maturities one year or less from the balance sheet date are classified as short-term investments, while investments with maturities in excess of one year from the balance sheet date are classified as long-term investments. Management determines the appropriate classification of investments at the time of purchase, and re-evaluates such determination at each balance sheet date. |
Earnings Per Share | Net income per share for the three months ended March 31, 2019 and 2018 is computed by dividing net income by the weighted-average number of common shares outstanding during the reporting period. The Company computes the weighted-average number of common shares outstanding during the reporting period using the total number of shares of Class A common stock and Class B common stock outstanding as of the last day of the previous year end reporting period plus the weighted-average of any additional shares issued and outstanding during the reporting period. The Company has two classes of common stock authorized: Class A common stock and Class B common stock. The rights of the holders of Class A and Class B common stock are identical, except with respect to voting and conversion. Each share of Class A common stock is entitled to one vote per share and each share of Class B common stock is entitled to ten votes per share. Each share of Class B common stock is convertible into one share of Class A common stock at the option of the holder at any time or automatically upon certain events described in the Company’s , including on either the death or voluntary termination of the Company’s Chief Executive Officer. The Company allocates undistributed earnings attributable to common stock between the common stock classes on a one‑to‑one basis when computing net income per share. As a result, basic and diluted net income per share of Class A common stock and per share of Class B common stock are equivalent. |
Summary of Significant Accoun_3
Summary of Significant Accounting Policies (Tables) | 3 Months Ended |
Mar. 31, 2019 | |
Accounting Policies [Abstract] | |
Summary of Revenue from Contracts with Customers by Revenue | The following table summarizes revenue from contracts with customers by revenue source for the three months ended March 31, 2019 and 2018. Three Months Ended March 31, 2019 2018 Revenue by Revenue Stream Marketplace subscription revenue $ 120,843 $ 89,159 Advertising and other revenue 14,427 9,416 Total $ 135,270 $ 98,575 |
Summary of Future Minimum Lease Payments | Future minimum lease payments as of March 31, 2019 are as follows: Year Ending December 31, Operating Lease Commitments 2019 (excluding the three months ended March 31, 2019) $ 7,351 2020 11,020 2021 11,169 2022 10,862 2023 5,672 Thereafter 37,645 Total lease payments 83,719 Less imputed interest (23,277 ) Total $ 60,442 |
Acquisitions (Tables)
Acquisitions (Tables) | 3 Months Ended |
Mar. 31, 2019 | |
Business Combinations [Abstract] | |
Summary of Preliminary Purchase Price Allocation | . The following table presents the preliminary purchase price allocation recorded in the Company's Unaudited Condensed Consolidated Balance Sheet as of the acquisition date: Estimated Fair Value at Date of Acquisition Intangible assets (1) $ 4,466 Goodwill (2) 15,521 Deferred tax liabilities (3) (848 ) Total purchase price $ 19,139 (1) Identifiable definite-lived intangible assets were comprised of brand and customer relationships of $3,445 and $1,021, respectively, with estimated useful lives of 11 years and 3 years, respectively, which will be amortized on a straight-line basis over their estimated useful lives. (2) The goodwill represents the excess value of the purchase price over intangible assets acquired. The goodwill in this transaction is primarily attributable to future customer growth in the UK market as a result of acquiring an established platform and applying the Company’s technology to help improve the website experience on such platform; thus, helping to drive additional traffic to the PistonHeads website in the future. All goodwill is assigned to the International segment. The acquisition of PistonHeads was a stock acquisition and g (3) The deferred tax liability corresponds to the acquired intangible assets which do not have tax basis. As a result of the deferred tax liability, an adjustment was recorded to goodwill to account for the tax effect of the deferred tax liability. |
Fair Value of Financial Instr_2
Fair Value of Financial Instruments Including Cash, Cash Equivalents and Investments (Tables) | 3 Months Ended |
Mar. 31, 2019 | |
Fair Value Disclosures [Abstract] | |
Schedule of Fair Value Levels, Assets Measured at Fair Value on Recurring Basis | The following tables present, for each of the fair value levels, the Company’s assets that are measured at fair value on a recurring basis at March 31, 2019 and at December 31, 2018: At March 31, 2019 Quoted Prices in Active Markets for Identical Assets (Level 1 Inputs) Significant Other Observable Inputs (Level 2 Inputs) Significant Unobservable Inputs (Level 3 Inputs) Total Assets: Money market funds $ 19 $ — $ — $ 19 Investments: Certificates of deposit — 108,500 — 108,500 Total $ 19 $ 108,500 $ — $ 108,519 At December 31, 2018 Quoted Prices in Active Markets for Identical Assets (Level 1 Inputs) Significant Other Observable Inputs (Level 2 Inputs) Significant Unobservable Inputs (Level 3 Inputs) Total Assets: Money market funds $ 24 $ — $ — $ 24 Investments: Certificates of deposit — 122,800 — 122,800 Total $ 24 $ 122,800 $ — $ 122,824 |
Schedule of Cash, Cash Equivalents, and Investments | The following is a summary of cash, cash equivalents, and investments as of March 31, 2019 At March 31, 2019 Amortized Cost Gross Unrealized Gains Gross Unrealized Losses Estimated Fair Value Cash and cash equivalents due in 90 days or less $ 29,939 $ — $ — $ 29,939 Investments: Certificates of deposit due in one year or less 108,500 — — 108,500 Total cash, cash equivalents, and investments $ 138,439 $ — $ — $ 138,439 At December 31, 2018 Amortized Cost Gross Unrealized Gains Gross Unrealized Losses Estimated Fair Value Cash and cash equivalents due in 90 days or less $ 34,887 $ — $ — $ 34,887 Investments: Certificates of deposit due in one year or less 122,800 — — 122,800 Total cash, cash equivalents, and investments $ 157,687 $ — $ — $ 157,687 |
Property and Equipment, Net (Ta
Property and Equipment, Net (Tables) | 3 Months Ended |
Mar. 31, 2019 | |
Property Plant And Equipment [Abstract] | |
Schedule of Property and Equipment | Property and equipment consists of the following: At March 31, 2019 At December 31, 2018 Computer equipment $ 4,917 $ 4,208 Capitalized software 252 252 Website development costs 8,027 6,907 Furniture and fixtures 6,539 4,584 Leasehold improvements 19,642 10,821 Construction in progress — 8,971 Finance lease right-of-use assets 107 — 39,484 35,743 Less accumulated depreciation (12,934 ) (11,474 ) Property and equipment, net $ 26,550 $ 24,269 |
Goodwill and Other Intangible_2
Goodwill and Other Intangible Assets (Tables) | 3 Months Ended |
Mar. 31, 2019 | |
Goodwill And Intangible Assets Disclosure [Abstract] | |
Summary of Changes in Carrying Value of Goodwill | The changes in the carrying value of goodwill were as follows: Balance at December 31, 2018 $ — PistonHeads acquisition 15,521 Foreign currency translation adjustment 331 Balance at March 31, 2019 $ 15,852 |
Summary of Other Intangible Assets | Intangible assets as of March 31, 2019 consist of the following: Weighted Average Remaining Useful Life (years) Gross Carrying Amount Accumulated Amortization Net Carrying Amount Brand 10.8 $ 3,518 $ 74 $ 3,444 Customer relationships 2.8 1,044 81 963 Total $ 4,562 $ 155 $ 4,407 |
Summary of Estimated Amortization Expense of Intangible Assets | Estimated amortization expense of intangible assets for future periods as of March 31, 2019, is as follows: Year Ending December 31, Amortization Expense Remainder of 2019 $ 502 2020 667 2021 667 2022 326 2023 320 2024 and thereafter 1,925 Total $ 4,407 |
Accrued Expenses, Accrued Inc_2
Accrued Expenses, Accrued Income Taxes and Other Current Liabilities (Tables) | 3 Months Ended |
Mar. 31, 2019 | |
Accrued Liabilities Current [Abstract] | |
Schedule of Accrued Expenses, Accrued Income Taxes and Other Current Liabilities | Accrued expenses, accrued income taxes and other current liabilities consist of the following: At March 31, 2019 At December 31, 2018 Accrued bonus $ 3,000 $ 8,266 Accrued commissions 3,530 2,878 Other accrued expenses, accrued income taxes and other current liabilities 7,263 7,510 $ 13,793 $ 18,654 |
Stock-based Compensation (Table
Stock-based Compensation (Tables) | 3 Months Ended |
Mar. 31, 2019 | |
Disclosure Of Compensation Related Costs Sharebased Payments [Abstract] | |
Summary of Stock-based Compensation Expense by Award Type | Three Months Ended March 31, 2019 2018 Options $ 51 $ 65 RSUs 7,635 3,753 Total stock-based compensation expense $ 7,686 $ 3,818 |
Summary of Allocation of Stock-based Compensation Expense | Three Months Ended March 31, 2019 2018 Cost of revenue $ 81 $ 89 Sales and marketing expense 2,312 1,010 Product, technology, and development expense 3,183 1,661 General and administrative expense 2,110 1,058 Total $ 7,686 $ 3,818 |
Earnings Per Share (Tables)
Earnings Per Share (Tables) | 3 Months Ended |
Mar. 31, 2019 | |
Earnings Per Share [Abstract] | |
Schedule of Reconciliation of Numerator and Denominator Used in Calculation of Basic and Diluted Net Income Per Share | The following table presents a reconciliation of the numerator and denominator used in the calculation of basic and diluted net income per share: Three Months Ended March 31, 2019 2018 Numerator: Net income $ 12,584 $ 5,495 Denominator: Weighted-average number of shares of common stock used in computing net income per share attributable to common stockholders — basic 110,800,037 106,942,799 Dilutive effect of share equivalents resulting from stock options 1,450,076 4,772,154 Dilutive effect of share equivalents resulting from unvested restricted stock units 1,156,207 1,626,355 Weighted-average number of shares of common stock used in computing net income per share — diluted 113,406,320 113,341,308 Net income per share attributable to common stockholders: Basic $ 0.11 $ 0.05 Diluted $ 0.11 $ 0.05 |
Schedule of Potentially Dilutive Common Stock Equivalents Excluded from Calculation of Diluted Weighted-average Shares Outstanding | There were no anti-dilutive securities for the three months ended March 31, 2018. The following potentially dilutive common stock equivalents have been excluded from the calculation of diluted weighted-average shares outstanding for the three months ended March 31, 2019, as their effect would have been anti-dilutive for the period presented: Three Months Ended March 31, 2019 Restricted stock units outstanding 858,417 |
Segment and Geographic Inform_2
Segment and Geographic Information (Tables) | 3 Months Ended |
Mar. 31, 2019 | |
Segment Reporting [Abstract] | |
Summary of Operations by Segment and Geographical Area | Information regarding the Company’s operations by segment and geographical area is presented as follows: Three Months Ended March 31, 2019 2018 Segment revenue: United States $ 128,403 $ 95,060 International 6,867 3,515 Total revenue $ 135,270 $ 98,575 Three Months Ended March 31, 2019 2018 Segment income (loss) from operations: United States $ 17,381 $ 13,933 International (9,946 ) (7,474 ) Total income from operations $ 7,435 $ 6,459 |
Organization and Business Des_2
Organization and Business Description - Additional Information (Details) | 3 Months Ended |
Mar. 31, 2019 | |
Organization Consolidation And Presentation Of Financial Statements [Abstract] | |
State of incorporation | Delaware |
Date of incorporation | Jun. 26, 2015 |
Summary of Significant Accoun_4
Summary of Significant Accounting Policies - Additional Information (Details) $ in Thousands | Aug. 12, 2013ft² | Mar. 31, 2019USD ($)Customer | Mar. 31, 2018USD ($) | Dec. 31, 2018USD ($)Customer | Jan. 01, 2019USD ($) | Jun. 19, 2018ft² | Mar. 11, 2016ft² | Oct. 08, 2014ft² |
Summary Of Significant Accounting Policies [Line Items] | ||||||||
Description of significant off-balance sheet risk | The Company has no significant offbalance sheet risk, such as foreign exchange contracts, option contracts, or other foreign hedging arrangements. | |||||||
Revenue recognized | $ 8,792 | |||||||
Restricted cash | 2,668 | $ 2,671 | ||||||
Net lease assets | 50,742 | |||||||
Lease liabilities | 60,442 | |||||||
Rent expense | $ 2,448 | $ 1,672 | ||||||
Weighted average remaining lease term | 9 years 10 months 24 days | |||||||
Weighted average discount rate | 5.90% | |||||||
Implementation costs associated with service contracts | $ 876 | |||||||
ASC 842 | ||||||||
Summary Of Significant Accounting Policies [Line Items] | ||||||||
Net lease assets | $ 52,334 | |||||||
Lease liabilities | $ 63,280 | |||||||
Cambridge, Massachusetts at 121 First St. | ||||||||
Summary Of Significant Accounting Policies [Line Items] | ||||||||
Operating lease of office space | ft² | 48,393 | |||||||
Operating lease, option to extend | option to extend the lease term for two additional periods of five years each | |||||||
Cambridge, Massachusetts at 55 Cambridge Parkway | ||||||||
Summary Of Significant Accounting Policies [Line Items] | ||||||||
Operating lease of office space | ft² | 51,923 | |||||||
Operating lease, option to extend | option to extend the lease term for one additional period of five years | |||||||
Cambridge, Massachusetts at 2 Canal Park | ||||||||
Summary Of Significant Accounting Policies [Line Items] | ||||||||
Operating lease of office space | ft² | 48,059 | |||||||
Operating lease, option to extend | option to extend the lease term for one additional period of five years | |||||||
Dublin, Ireland | ||||||||
Summary Of Significant Accounting Policies [Line Items] | ||||||||
Operating lease of office space | ft² | 13,345 | |||||||
Operating lease, rent increasing year | 5 years | |||||||
Sales Revenue, Net | Concentration of Credit Risk | ||||||||
Summary Of Significant Accounting Policies [Line Items] | ||||||||
Concentration of credit risk, percentage | 10.00% | 10.00% | ||||||
Number of major customers | Customer | 0 | 0 | ||||||
Net Accounts Receivable | Advertising Customers | ||||||||
Summary Of Significant Accounting Policies [Line Items] | ||||||||
Unbilled accounts receivable | $ 7,329 | $ 5,815 | ||||||
Net Accounts Receivable | Concentration of Credit Risk | ||||||||
Summary Of Significant Accounting Policies [Line Items] | ||||||||
Number of major customers | Customer | 0 | 0 | ||||||
Net Accounts Receivable | Concentration of Credit Risk | Customer One | ||||||||
Summary Of Significant Accounting Policies [Line Items] | ||||||||
Concentration of credit risk, percentage | 13.00% | 21.00% | ||||||
Net Accounts Receivable | Concentration of Credit Risk | Customer Two | ||||||||
Summary Of Significant Accounting Policies [Line Items] | ||||||||
Concentration of credit risk, percentage | 14.00% |
Summary of Significant Accoun_5
Summary of Significant Accounting Policies - Summary of Revenue from Contracts with Customers by Revenue (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2019 | Mar. 31, 2018 | |
Revenue by Revenue Stream [Abstract] | ||
Revenue | $ 135,270 | $ 98,575 |
Marketplace Subscription Revenue | ||
Revenue by Revenue Stream [Abstract] | ||
Revenue | 120,843 | 89,159 |
Advertising and Other Revenue | ||
Revenue by Revenue Stream [Abstract] | ||
Revenue | $ 14,427 | $ 9,416 |
Summary of Significant Accoun_6
Summary of Significant Accounting Policies - Summary of Future Minimum Lease Payments (Details) $ in Thousands | Mar. 31, 2019USD ($) |
Operating Lease Commitments | |
2019 (excluding the three months ended March 31, 2019) | $ 7,351 |
2020 | 11,020 |
2021 | 11,169 |
2022 | 10,862 |
2023 | 5,672 |
Thereafter | 37,645 |
Total lease payments | 83,719 |
Less imputed interest | (23,277) |
Total | $ 60,442 |
Acquisitions - Additional Infor
Acquisitions - Additional Information (Details) £ in Thousands, $ in Thousands | Jan. 08, 2019USD ($) | Jan. 08, 2019GBP (£) | Mar. 31, 2019USD ($) |
Business Acquisition [Line Items] | |||
Payments to acquire business | $ 19,139 | ||
PistonHeads Holdco Limited | United Kingdom | Put and Call Option Agreement | |||
Business Acquisition [Line Items] | |||
Payments to acquire business | $ 19,139 | £ 15,000 | |
Acquisition-related costs incurred | $ 649 | ||
Business acquisition completed date | Jan. 8, 2019 | Jan. 8, 2019 | |
PistonHeads Holdco Limited | United Kingdom | Escrow Agreement | |||
Business Acquisition [Line Items] | |||
Payments to acquire business | $ 1,276 | £ 1,000 |
Acquisitions - Summary of Preli
Acquisitions - Summary of Preliminary Purchase Price Allocation (Details) - USD ($) $ in Thousands | Mar. 31, 2019 | Jan. 08, 2019 | |
Business Acquisition [Line Items] | |||
Goodwill | $ 15,852 | ||
PistonHeads Holdco Limited | |||
Business Acquisition [Line Items] | |||
Intangible assets | [1] | $ 4,466 | |
Goodwill | [2] | 15,521 | |
Deferred tax liabilities | [3] | (848) | |
Total purchase price | $ 19,139 | ||
[1] | Identifiable definite-lived intangible assets were comprised of brand and customer relationships of $3,445 and $1,021, respectively, with estimated useful lives of 11 years and 3 years, respectively, which will be amortized on a straight-line basis over their estimated useful lives. | ||
[2] | The goodwill represents the excess value of the purchase price over intangible assets acquired. The goodwill in this transaction is primarily attributable to future customer growth in the UK market as a result of acquiring an established platform and applying the Company’s technology to help improve the website experience on such platform; thus, helping to drive additional traffic to the PistonHeads website in the future. All goodwill is assigned to the International segment. The acquisition of PistonHeads was a stock acquisition and goodwill is not deductible for tax purposes. The deferred tax liability corresponds to the acquired intangible assets which do not have tax basis. As a result of the deferred tax liability, an adjustment was recorded to goodwill to account for the tax effect of the deferred tax liability. | ||
[3] | The deferred tax liability corresponds to the acquired intangible assets which do not have tax basis. As a result of the deferred tax liability, an adjustment was recorded to goodwill to account for the tax effect of the deferred tax liability. |
Acquisitions - Summary of Pre_2
Acquisitions - Summary of Preliminary Purchase Price Allocation (Parenthetical) (Details) - USD ($) $ in Thousands | Jan. 08, 2019 | Mar. 31, 2019 | |
PistonHeads Holdco Limited | |||
Business Acquisition [Line Items] | |||
Intangible assets | [1] | $ 4,466 | |
Brand | |||
Business Acquisition [Line Items] | |||
Estimated useful lives | 11 years | ||
Brand | PistonHeads Holdco Limited | |||
Business Acquisition [Line Items] | |||
Intangible assets | $ 3,445 | ||
Estimated useful lives | 11 years | ||
Customer Relationships | |||
Business Acquisition [Line Items] | |||
Estimated useful lives | 3 years | ||
Customer Relationships | PistonHeads Holdco Limited | |||
Business Acquisition [Line Items] | |||
Intangible assets | $ 1,021 | ||
Estimated useful lives | 3 years | ||
[1] | Identifiable definite-lived intangible assets were comprised of brand and customer relationships of $3,445 and $1,021, respectively, with estimated useful lives of 11 years and 3 years, respectively, which will be amortized on a straight-line basis over their estimated useful lives. |
Fair Value of Financial Instr_3
Fair Value of Financial Instruments Including Cash, Cash Equivalents and Investments - Schedule of Fair Value Levels, Assets Measured at Fair Value on Recurring Basis (Details) - USD ($) $ in Thousands | Mar. 31, 2019 | Dec. 31, 2018 |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Cash equivalents: | $ 29,939 | $ 34,887 |
Investments: | 108,500 | 122,800 |
Fair Value, Measurements, Recurring | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Investments: | $ 108,500 | $ 122,800 |
Debt Securities, Held-to-maturity, Type [Extensible List] | us-gaap:CertificatesOfDepositMember | us-gaap:CertificatesOfDepositMember |
Total | $ 108,519 | $ 122,824 |
Fair Value, Measurements, Recurring | Quoted Prices in Active Markets for Identical Assets (Level 1 Inputs) | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Total | 19 | 24 |
Fair Value, Measurements, Recurring | Significant Other Observable Inputs (Level 2 Inputs) | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Investments: | $ 108,500 | $ 122,800 |
Debt Securities, Held-to-maturity, Type [Extensible List] | us-gaap:CertificatesOfDepositMember | us-gaap:CertificatesOfDepositMember |
Total | $ 108,500 | $ 122,800 |
Fair Value, Measurements, Recurring | Money Market Funds | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Cash equivalents: | 19 | 24 |
Fair Value, Measurements, Recurring | Money Market Funds | Quoted Prices in Active Markets for Identical Assets (Level 1 Inputs) | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Cash equivalents: | $ 19 | $ 24 |
Fair Value of Financial Instr_4
Fair Value of Financial Instruments Including Cash, Cash Equivalents and Investments - Additional Information (Details) - USD ($) | 3 Months Ended | 12 Months Ended |
Mar. 31, 2019 | Dec. 31, 2018 | |
Fair Value Disclosures [Abstract] | ||
Maturity period of certificates of deposit | 1 year | 1 year |
Maturity of certificates of deposit, description | Certificates of deposit at March 31, 2019 and December 31, 2018 had maturity dates of one year or less. | |
Liabilities, fair value | $ 0 |
Fair Value of Financial Instr_5
Fair Value of Financial Instruments Including Cash, Cash Equivalents and Investments - Schedule of Cash, Cash Equivalents, and Investments (Details) - USD ($) $ in Thousands | Mar. 31, 2019 | Dec. 31, 2018 |
Fair Value Disclosures [Abstract] | ||
Cash and cash equivalents due in 90 days or less, Amortized Cost | $ 29,939 | $ 34,887 |
Certificates of deposit due in one year or less, Amortized Cost | 108,500 | 122,800 |
Total cash, cash equivalents, and investments, Amortized Cost | 138,439 | 157,687 |
Cash and cash equivalents due in 90 days or less, Estimated Fair Value | 29,939 | 34,887 |
Certificates of deposit due in one year or less, Estimated Fair Value | 108,500 | 122,800 |
Total cash, cash equivalents, and investments, Estimated Fair Value | $ 138,439 | $ 157,687 |
Property and Equipment, Net - S
Property and Equipment, Net - Schedule of Property and Equipment (Details) - USD ($) $ in Thousands | Mar. 31, 2019 | Dec. 31, 2018 |
Property Plant And Equipment [Line Items] | ||
Property and equipment, gross | $ 39,484 | $ 35,743 |
Less accumulated depreciation | (12,934) | (11,474) |
Property and equipment, net | 26,550 | 24,269 |
Computer Equipment | ||
Property Plant And Equipment [Line Items] | ||
Property and equipment, gross | 4,917 | 4,208 |
Capitalized Software | ||
Property Plant And Equipment [Line Items] | ||
Property and equipment, gross | 252 | 252 |
Website Development Costs | ||
Property Plant And Equipment [Line Items] | ||
Property and equipment, gross | 8,027 | 6,907 |
Furniture and Fixtures | ||
Property Plant And Equipment [Line Items] | ||
Property and equipment, gross | 6,539 | 4,584 |
Leasehold Improvements | ||
Property Plant And Equipment [Line Items] | ||
Property and equipment, gross | 19,642 | 10,821 |
Construction in Progress | ||
Property Plant And Equipment [Line Items] | ||
Property and equipment, gross | $ 8,971 | |
Finance Lease Right-of-use Assets | ||
Property Plant And Equipment [Line Items] | ||
Property and equipment, gross | $ 107 |
Property and Equipment, Net - A
Property and Equipment, Net - Additional Information (Details) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended | |
Mar. 31, 2019 | Mar. 31, 2018 | Dec. 31, 2018 | |
Property Plant And Equipment [Line Items] | |||
Depreciation and amortization | $ 1,627 | $ 1,237 | |
Capitalized Website Development Costs | |||
Property Plant And Equipment [Line Items] | |||
Depreciation and amortization | 1,472 | $ 5,029 | |
Leasehold Improvements | |||
Property Plant And Equipment [Line Items] | |||
Increase (decrease) in property and equipment | 8,821 | ||
Construction in Progress | |||
Property Plant And Equipment [Line Items] | |||
Increase (decrease) in property and equipment | $ (8,971) |
Goodwill and Other Intangible_3
Goodwill and Other Intangible Assets - Summary of Changes in Carrying Value of Goodwill (Details) $ in Thousands | 3 Months Ended |
Mar. 31, 2019USD ($) | |
Goodwill And Intangible Assets Disclosure [Abstract] | |
PistonHeads acquisition | $ 15,521 |
Foreign currency translation adjustment | 331 |
Balance at March 31, 2019 | $ 15,852 |
Goodwill and Other Intangible_4
Goodwill and Other Intangible Assets - Summary of Other Intangible Assets (Details) $ in Thousands | 3 Months Ended |
Mar. 31, 2019USD ($) | |
Finite Lived Intangible Assets [Line Items] | |
Gross Carrying Amount | $ 4,562 |
Accumulated Amortization | 155 |
Net Carrying Amount | $ 4,407 |
Brand | |
Finite Lived Intangible Assets [Line Items] | |
Weighted Average Remaining Useful Life (years) | 10 years 9 months 18 days |
Gross Carrying Amount | $ 3,518 |
Accumulated Amortization | 74 |
Net Carrying Amount | $ 3,444 |
Customer Relationships | |
Finite Lived Intangible Assets [Line Items] | |
Weighted Average Remaining Useful Life (years) | 2 years 9 months 18 days |
Gross Carrying Amount | $ 1,044 |
Accumulated Amortization | 81 |
Net Carrying Amount | $ 963 |
Goodwill and Other Intangible_5
Goodwill and Other Intangible Assets - Additional Information (Details) $ in Thousands | 3 Months Ended |
Mar. 31, 2019USD ($) | |
Goodwill [Line Items] | |
Amortization expense of intangible assets | $ 155 |
Brand | |
Goodwill [Line Items] | |
Estimated useful life | 11 years |
Customer Relationships | |
Goodwill [Line Items] | |
Estimated useful life | 3 years |
Goodwill and Other Intangible_6
Goodwill and Other Intangible Assets - Summary of Estimated Amortization Expense of Intangible Assets (Details) $ in Thousands | Mar. 31, 2019USD ($) |
Goodwill And Intangible Assets Disclosure [Abstract] | |
Remainder of 2019 | $ 502 |
2020 | 667 |
2021 | 667 |
2022 | 326 |
2023 | 320 |
2024 and thereafter | 1,925 |
Net Carrying Amount | $ 4,407 |
Accrued Expenses, Accrued Inc_3
Accrued Expenses, Accrued Income Taxes and Other Current Liabilities - Schedule of Accrued Expenses, Accrued Income Taxes and Other Current Liabilities (Details) - USD ($) $ in Thousands | Mar. 31, 2019 | Dec. 31, 2018 |
Accrued Liabilities Current [Abstract] | ||
Accrued bonus | $ 3,000 | $ 8,266 |
Accrued commissions | 3,530 | 2,878 |
Other accrued expenses, accrued income taxes and other current liabilities | 7,263 | 7,510 |
Accrued expenses, accrued income taxes and other current liabilities, Total | $ 13,793 | $ 18,654 |
Commitments and Contingencies -
Commitments and Contingencies - Additional Information (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2019 | Mar. 31, 2018 | |
Commitments And Contingencies Disclosure [Abstract] | ||
Unpaid property and equipment costs | $ 2,112 | $ 188 |
Finance lease obligations | $ 101 |
Stock-based Compensation - Addi
Stock-based Compensation - Additional Information (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2019 | Mar. 31, 2018 | |
Employee Service Share Based Compensation Allocation Of Recognized Period Costs [Line Items] | ||
Total stock-based compensation expense | $ 7,686 | $ 3,818 |
Capitalized website development costs excluded from stock-based compensation expense | 309 | $ 149 |
Total payments for employees’ tax obligations to taxing authorities due to net share settlements | $ 3,954 | |
Class A Common Stock | ||
Employee Service Share Based Compensation Allocation Of Recognized Period Costs [Line Items] | ||
Employee tax withholding requirements due to net share settlement | 102,034 |
Stock-based Compensation - Summ
Stock-based Compensation - Summary of Stock-based Compensation Expense by Award Type (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2019 | Mar. 31, 2018 | |
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | ||
Total stock-based compensation expense | $ 7,686 | $ 3,818 |
Stock Options | ||
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | ||
Total stock-based compensation expense | 51 | 65 |
RSUs | ||
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | ||
Total stock-based compensation expense | $ 7,635 | $ 3,753 |
Stock-based Compensation - Su_2
Stock-based Compensation - Summary of Allocation of Stock-based Compensation Expense (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2019 | Mar. 31, 2018 | |
Employee Service Share Based Compensation Allocation Of Recognized Period Costs [Line Items] | ||
Total stock-based compensation expense | $ 7,686 | $ 3,818 |
Cost of Revenue | ||
Employee Service Share Based Compensation Allocation Of Recognized Period Costs [Line Items] | ||
Total stock-based compensation expense | 81 | 89 |
Sales and Marketing Expense | ||
Employee Service Share Based Compensation Allocation Of Recognized Period Costs [Line Items] | ||
Total stock-based compensation expense | 2,312 | 1,010 |
Product, Technology, and Development Expense | ||
Employee Service Share Based Compensation Allocation Of Recognized Period Costs [Line Items] | ||
Total stock-based compensation expense | 3,183 | 1,661 |
General and Administrative Expense | ||
Employee Service Share Based Compensation Allocation Of Recognized Period Costs [Line Items] | ||
Total stock-based compensation expense | $ 2,110 | $ 1,058 |
Earnings Per Share - Additional
Earnings Per Share - Additional Information (Details) | 3 Months Ended | |
Mar. 31, 2019Voteshares | Mar. 31, 2018shares | |
Earnings Per Share Basic [Line Items] | ||
Conversion of stock, description | Each share of Class B common stock is convertible into one share of Class A common stock at the option of the holder at any time or automatically upon certain events described in the Company’s amended and restated certificate of incorporation, including on either the death or voluntary termination of the Company’s Chief Executive Officer. | |
Undistributed earnings ratio used to calculate allocation to class of stock | 100.00% | |
Antidilutive securities | 0 | |
Class A Common Stock | ||
Earnings Per Share Basic [Line Items] | ||
Right to voting | one vote per share | |
Number of votes entitled to stockholders per share | Vote | 1 | |
Conversion of stock | 0 | 7,534,710 |
Class B Common Stock | ||
Earnings Per Share Basic [Line Items] | ||
Right to voting | ten votes per share | |
Number of votes entitled to stockholders per share | Vote | 10 | |
Class of share converted to another class | one share of Class A common stock | |
Conversion of stock | 1 |
Earnings Per Share - Schedule o
Earnings Per Share - Schedule of Reconciliation of Numerator and Denominator Used in Calculation of Basic and Diluted Net Income Per Share (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | |
Mar. 31, 2019 | Mar. 31, 2018 | |
Numerator: | ||
Net income | $ 12,584 | $ 5,495 |
Denominator: | ||
Weighted-average number of shares of common stock used in computing net income per share attributable to common stockholders — basic | 110,800,037 | 106,942,799 |
Dilutive effect of share equivalents resulting from stock options | 1,450,076 | 4,772,154 |
Dilutive effect of share equivalents resulting from unvested restricted stock units | 1,156,207 | 1,626,355 |
Weighted-average number of shares of common stock used in computing net income per share — diluted | 113,406,320 | 113,341,308 |
Net income per share attributable to common stockholders: | ||
Basic | $ 0.11 | $ 0.05 |
Diluted | $ 0.11 | $ 0.05 |
Earnings Per Share - Schedule_2
Earnings Per Share - Schedule of Potentially Dilutive Common Stock Equivalents Excluded from Calculation of Diluted Weighted-average Shares Outstanding (Details) - shares | 3 Months Ended | |
Mar. 31, 2019 | Mar. 31, 2018 | |
Antidilutive Securities Excluded From Computation Of Earnings Per Share [Line Items] | ||
Potentially dilutive common stock equivalents excluded from calculation of diluted weighted-average shares outstanding | 0 | |
Restricted Stock Units Outstanding | ||
Antidilutive Securities Excluded From Computation Of Earnings Per Share [Line Items] | ||
Potentially dilutive common stock equivalents excluded from calculation of diluted weighted-average shares outstanding | 858,417 |
Income Taxes - Additional Infor
Income Taxes - Additional Information (Details) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended | |
Mar. 31, 2019 | Mar. 31, 2018 | Dec. 31, 2018 | |
Income Tax Disclosure [Line Items] | |||
Income tax expense (benefit) | $ (3,503) | $ 1,246 | |
Effective income tax rate | (38.60%) | 18.50% | |
Internal Revenue Service (IRS) | Federal | |||
Income Tax Disclosure [Line Items] | |||
Income tax examination year under examination | 2016 |
Segment and Geographic Inform_3
Segment and Geographic Information - Additional Information (Details) | 3 Months Ended |
Mar. 31, 2019Segment | |
Segment Reporting [Abstract] | |
Number of reportable segments | 2 |
Segment and Geographic Inform_4
Segment and Geographic Information - Summary of Operations by Segment and Geographical Area (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2019 | Mar. 31, 2018 | |
Segment revenue: | ||
Revenue | $ 135,270 | $ 98,575 |
Segment income (loss) from operations: | ||
Total income from operations | 7,435 | 6,459 |
United States | ||
Segment revenue: | ||
Revenue | 128,403 | 95,060 |
Segment income (loss) from operations: | ||
Total income from operations | 17,381 | 13,933 |
International | ||
Segment revenue: | ||
Revenue | 6,867 | 3,515 |
Segment income (loss) from operations: | ||
Total income from operations | $ (9,946) | $ (7,474) |