Document and Entity Information
Document and Entity Information - shares | 9 Months Ended | |
Sep. 30, 2015 | Nov. 04, 2015 | |
Document and Entity Information | ||
Entity Registrant Name | Shutterstock, Inc. | |
Entity Central Index Key | 1,549,346 | |
Document Type | 10-Q | |
Document Period End Date | Sep. 30, 2015 | |
Amendment Flag | false | |
Current Fiscal Year End Date | --12-31 | |
Entity Current Reporting Status | Yes | |
Entity Filer Category | Large Accelerated Filer | |
Entity Common Stock, Shares Outstanding | 36,082,717 | |
Document Fiscal Year Focus | 2,015 | |
Document Fiscal Period Focus | Q3 |
Consolidated Balance Sheets
Consolidated Balance Sheets - USD ($) $ in Thousands | Sep. 30, 2015 | Dec. 31, 2014 |
Current assets: | ||
Cash and cash equivalents | $ 229,607 | $ 233,453 |
Short-term investments | 52,491 | 54,844 |
Credit card receivables | 3,941 | 2,451 |
Accounts receivable, net | 25,631 | 15,251 |
Prepaid expenses and other current assets | 12,355 | 12,141 |
Deferred tax assets, net | 6,213 | 5,390 |
Total current assets | 330,238 | 323,530 |
Property and equipment, net | 29,877 | 26,744 |
Intangible assets, net | 30,818 | 4,934 |
Goodwill | 52,170 | 10,186 |
Deferred tax assets, net | 19,991 | 16,484 |
Other assets | 1,913 | 1,899 |
Total assets | 465,007 | 383,777 |
Current liabilities: | ||
Accounts payable | 9,045 | 5,334 |
Accrued expenses | 27,962 | 24,982 |
Contributor royalties payable | 17,614 | 11,933 |
Income taxes payable | 993 | 91 |
Deferred revenue | 94,314 | 75,789 |
Other liabilities | 4,920 | 2,198 |
Total current liabilities | 154,848 | 120,327 |
Deferred tax liability, net | 4,025 | 0 |
Other non-current liabilities | 13,234 | 12,017 |
Total liabilities | $ 172,107 | $ 132,344 |
Commitments and contingencies | ||
Stockholders’ equity: | ||
Common stock, $0.01 par value; 200,000 shares authorized; 36,076 and 35,603 shares outstanding as of September 30, 2015 and December 31, 2014, respectively | $ 360 | $ 356 |
Additional paid-in capital | 206,811 | 174,821 |
Accumulated comprehensive loss | (3,839) | (629) |
Retained earnings | 89,568 | 76,885 |
Total stockholders’ equity | 292,900 | 251,433 |
Total liabilities and stockholders’ equity | $ 465,007 | $ 383,777 |
Consolidated Balance Sheets (Pa
Consolidated Balance Sheets (Parenthetical) - $ / shares | Sep. 30, 2015 | Dec. 31, 2014 |
Statement of Financial Position [Abstract] | ||
Common stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Common stock, shares authorized | 200,000,000 | 200,000,000 |
Common stock, shares outstanding | 36,076,000 | 35,603,000 |
Consolidated Statements of Oper
Consolidated Statements of Operations - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2015 | Sep. 30, 2014 | Sep. 30, 2015 | Sep. 30, 2014 | |
Income Statement [Abstract] | ||||
Revenue | $ 107,260 | $ 83,730 | $ 309,147 | $ 236,745 |
Operating expenses: | ||||
Cost of revenue | 44,512 | 33,260 | 126,582 | 94,419 |
Sales and marketing | 27,393 | 21,122 | 79,927 | 60,890 |
Product development | 10,827 | 9,870 | 31,700 | 26,922 |
General and administrative | 16,441 | 10,265 | 44,949 | 27,816 |
Total operating expenses | 99,173 | 74,517 | 283,158 | 210,047 |
Income from operations | 8,087 | 9,213 | 25,989 | 26,698 |
Other expense, net | (767) | (373) | (3,386) | (327) |
Income before income taxes | 7,320 | 8,840 | 22,603 | 26,371 |
Provision for income taxes | 3,217 | 3,562 | 9,920 | 11,315 |
Net income | 4,103 | 5,278 | 12,683 | 15,056 |
Less: | ||||
Undistributed earnings to participating stockholder | 0 | 9 | 2 | 30 |
Net income available to common stockholders | $ 4,103 | $ 5,269 | $ 12,681 | $ 15,026 |
Net income per share available to common stockholders: | ||||
Basic (in dollars per share) | $ 0.11 | $ 0.15 | $ 0.35 | $ 0.43 |
Diluted (in dollars per share) | $ 0.11 | $ 0.15 | $ 0.35 | $ 0.42 |
Weighted average shares outstanding: | ||||
Basic (in shares) | 36,039,907 | 35,304,066 | 35,847,748 | 35,161,644 |
Diluted (in shares) | 36,270,044 | 35,931,454 | 36,269,067 | 35,883,202 |
Consolidated Statements of Comp
Consolidated Statements of Comprehensive Income - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2015 | Sep. 30, 2014 | Sep. 30, 2015 | Sep. 30, 2014 | |
Statement of Comprehensive Income [Abstract] | ||||
Net income | $ 4,103 | $ 5,278 | $ 12,683 | $ 15,056 |
Foreign currency translation loss | (3,620) | (117) | (3,240) | (105) |
Unrealized gain on investments | 13 | 2 | 30 | 24 |
Other comprehensive loss | (3,607) | (115) | (3,210) | (81) |
Comprehensive income | $ 496 | $ 5,163 | $ 9,473 | $ 14,975 |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows - USD ($) $ in Thousands | 9 Months Ended | |
Sep. 30, 2015 | Sep. 30, 2014 | |
CASH FLOWS FROM OPERATING ACTIVITIES | ||
Net income | $ 12,683 | $ 15,056 |
Adjustments to reconcile net income to net cash provided by operating activities: | ||
Depreciation and amortization | 10,363 | 5,757 |
Write-off of property and equipment | 0 | 367 |
Deferred taxes | (4,587) | (4,181) |
Non-cash equity-based compensation | 22,771 | 15,728 |
Change in fair value of contingent consideration | 1,440 | 110 |
Tax benefit from exercise/vesting of equity awards, net | (1,741) | (10,224) |
Bad debt reserve | 1,165 | 516 |
Chargeback and sales refund reserves | (215) | 170 |
Changes in operating assets and liabilities: | ||
Credit card receivables | (1,501) | (1,704) |
Accounts receivable | (8,574) | (7,374) |
Prepaid expenses and other current and non-current assets | 1,521 | 15,574 |
Accounts payable and other current and non-current liabilities | 3,680 | 7,978 |
Contributor royalties payable | 2,589 | 3,059 |
Income taxes payable | 1,365 | 0 |
Deferred revenue | 18,490 | 18,667 |
Net cash provided by operating activities | 59,449 | 59,499 |
CASH FLOWS FROM INVESTING ACTIVITIES | ||
Capital expenditures | (9,873) | (16,334) |
Purchase of investments | (203,469) | (214,506) |
Sale and maturities of investments | 205,851 | 219,239 |
Acquisition of business | (62,379) | (10,056) |
Acquisition of digital content | (2,192) | (331) |
Security deposit receipt | 93 | 145 |
Net cash used in investing activities | (71,969) | (21,843) |
CASH FLOWS FROM FINANCING ACTIVITIES | ||
Proceeds from exercise of stock options | 6,881 | 6,673 |
Proceeds from issuance of common stock under Employee Stock Purchase Plan | 1,052 | 945 |
Tax benefit from exercise/vesting of equity awards, net | 1,741 | 10,224 |
Net cash provided by financing activities | 9,674 | 17,842 |
Effect of foreign exchange rate changes on cash | (1,000) | (93) |
Net increase in cash and cash equivalents | (3,846) | 55,405 |
Cash and cash equivalents, beginning of period | 233,453 | 155,355 |
Cash and cash equivalents, end of period | 229,607 | 210,760 |
Supplemental Disclosure of Cash Information: | ||
Cash paid for income taxes | 11,737 | 235 |
Supplemental Disclosure of Non-Cash Investing and Financing Activities: | ||
Capital expenditures in accounts payable and other liabilities | $ 0 | $ 4,436 |
Summary of Operations and Signi
Summary of Operations and Significant Accounting Policies | 9 Months Ended |
Sep. 30, 2015 | |
Accounting Policies [Abstract] | |
Summary of Operations and Significant Accounting Policies | Summary of Operations and Significant Accounting Policies Summary of Operations Shutterstock, Inc. (the “Company” or “Shutterstock”) operates an industry-leading global marketplace for commercial digital content, including images, video and music. Commercial digital imagery consists of licensed photographs, illustrations and video clips that companies use in their visual communications, such as websites, digital and print marketing materials, corporate communications, books, publications and video content while commercial music consists of high-quality music tracks which are often used to complement the digital imagery. The Company licenses commercial digital imagery and music to its customers. Contributors upload their digital imagery and music tracks to the Company’s websites in exchange for a royalty payment based on customer download or usage activity. The Company is headquartered in New York City with offices in Amsterdam, Berlin, Chicago, Dallas, Denver, London, Los Angeles, Montreal, Paris, San Francisco and Silicon Valley. Principles of Consolidation The consolidated financial statements reflect the operations of the Company and its wholly-owned subsidiaries. All significant intercompany balances and transactions have been eliminated in consolidation. Certain prior year amounts have been reclassified to conform to the current presentation. Unaudited Interim Financial Statements The interim consolidated balance sheet as of September 30, 2015 , the consolidated statements of operations and comprehensive income for the three and nine months ended September 30, 2015 and 2014 and the consolidated statements of cash flows for the nine months ended September 30, 2015 and 2014 are unaudited. The unaudited interim financial statements have been prepared on a basis consistent with the Company’s annual financial statements and, in the opinion of management, reflect all adjustments, which include only normal recurring adjustments necessary to state fairly the Company’s financial position as of September 30, 2015 and its results of consolidated operations, comprehensive income and cash flows for the three and nine months ended September 30, 2015 and 2014 . The financial data and the other financial information disclosed in the notes to the financial statements related to these periods are also unaudited. The results of operations for the three and nine months ended September 30, 2015 are not necessarily indicative of the results to be expected for the fiscal year ending December 31, 2015 or for any other future annual or interim period. There have been no material changes in the significant accounting policies from those that were disclosed in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2014 filed with the SEC on February 27, 2015 . These financial statements should also be read in conjunction with the audited consolidated financial statements and notes thereto for the year ended December 31, 2014 . Certain information and note disclosures normally included in the financial statements prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) have been omitted pursuant to such rules and regulations. The consolidated balance sheet as of December 31, 2014 included herein was derived from the audited financial statements as of that date, but does not include all disclosures required by GAAP. Acquisition Activity in 2015 Rex Features (Holdings) Limited On January 19, 2015, the Company acquired all of the shares of Rex Features (Holdings) Limited (“Rex Features”) pursuant to a stock purchase agreement. The transaction was accounted for using the acquisition method and, accordingly, the results of the acquired business have been included in the Company’s results of operations from the acquisition date. Rex Features is a photographic press agency in Europe that offers media companies and advertisers images and videos, including a live feed of edited celebrity, entertainment, sports and news images and videos, along with access to a multi-decade archive of iconic images. With Rex Features’ editorial expertise and Shutterstock’s technical capabilities and position in the marketplace, the Company believes that this acquisition will strengthen its strategic position and bring a comprehensive offering to market across both editorial and commercial content. The fair value of consideration transferred in this business combination was allocated to the intangible and tangible assets acquired and liabilities assumed at the acquisition date, with the remaining unallocated amount recorded as goodwill. The allocation of the purchase price for this acquisition has been prepared on a preliminary basis, and changes to those allocations may occur as additional information becomes available. The total purchase price consisted of a cash payment of $32,727 subject to certain working capital adjustments. The aggregate purchase price was allocated to the assets acquired and liabilities assumed as follows: Assets: Cash $ 1,525 Accounts receivables 2,908 Other assets 356 Fixed assets 92 Intangible Assets: Customer relationships 13,768 Trade name 4,993 Developed technology 3,026 Photo library 484 Goodwill 14,918 Total assets acquired $ 42,070 Liabilities: Accounts payable $ (253 ) Contributor payable (2,249 ) Accrued expenses (2,387 ) Deferred tax liability (4,454 ) Total liabilities assumed $ (9,343 ) Total $ 32,727 The identifiable intangible assets have a weighted average life of approximately eight years and are being amortized on a straight-line basis. The fair value of the customer relationships was determined using a variation of the income approach known as the multiple-period excess earnings method. The fair value of the trade name was determined using the relief-from-royalty method. The fair values of the developed technology and photo library were both determined using the replacement cost method. The goodwill arising from the transaction is primarily attributable to expected operational synergies and is not deductible for income tax purposes. As a result of the acquisition, the Company recorded approximately $143 of professional fees in the nine months ended September 30, 2015 . There were no professional fees related to the acquisition in the three months ended September 30, 2015 . The professional fees are included in general and administrative expense. Arbour Interactive Inc. On January 22, 2015, the Company acquired substantially all of the assets and certain liabilities of Arbour Interactive Inc. (“PremiumBeat”) pursuant to an asset purchase agreement. The transaction was accounted for using the acquisition method and, accordingly, the results of the acquired business have been included in the Company’s results of operations from the acquisition date. PremiumBeat is a leading provider of exclusive, high-quality music and sound effects for use in videos, films, television, applications, games, and other creative projects. PremiumBeat works with composers to offer a high-quality library of exclusive music primarily to businesses, including advertising and media agencies, as well as Fortune 500 companies. The Company plans to continue to operate the acquired assets under the PremiumBeat brand but also intends to combine PremiumBeat with the existing Shutterstock Music business in order to leverage PremiumBeat’s experience in the music market. The fair value of consideration transferred in this business combination was allocated to the intangible and tangible assets acquired and liabilities assumed at the acquisition date, with the remaining unallocated amount recorded as goodwill. The allocation of the purchase price for this acquisition has been prepared on a preliminary basis, and changes to those allocations may occur as additional information becomes available. The total purchase price of $35,445 consisted of a cash payment of $31,700 and $3,745 in contingent consideration based on certain performance criteria of post-acquisition revenue related to the Company’s music business. The fair value of the contingent consideration was determined using a Black-Scholes model with subsequent changes in the fair value expensed in earnings. The Company is obligated to pay a cash payment of up to $10,000 in early 2017 contingent upon the achievement of the performance criteria. The aggregate purchase price was allocated to the assets acquired and liabilities assumed as follows: Assets: Other assets $ 963 Fixed assets 205 Intangible Assets: Customer relationships 3,000 Trade name 1,400 Music catalog 584 Developed technology 178 Goodwill 29,849 Deferred tax asset 229 Total assets acquired $ 36,408 Liabilities: Contributor payable $ (896 ) Accrued expenses (44 ) Deferred revenue (23 ) Total liabilities assumed $ (963 ) Total $ 35,445 The identifiable intangible assets have a weighted average life of approximately six years and are being amortized on a straight-line basis. The fair value of the customer relationships was determined using a variation of the income approach known as the multiple-period excess earnings method. The fair value of the trade name was determined using the relief-from-royalty method. The fair values of the music catalog and developed technology were both determined using the replacement cost method. The goodwill arising from the transaction is primarily attributable to expected operational synergies and is deductible for income tax purposes. As a result of the acquisition, the Company recorded approximately $244 of professional fees in the nine months ended September 30, 2015 . There were no professional fees related to the acquisition in the three months ended September 30, 2015 . The professional fees are included in general and administrative expense. Unaudited Pro Forma Consolidated Financial Information The following unaudited pro forma consolidated financial information reflects the results of operations of the Company for the three and nine months ended September 30, 2015 and 2014 , as if the Rex Features and PremiumBeat acquisitions completed during fiscal 2015 had closed on January 1, 2014, after giving effect to certain purchase accounting adjustments. These pro forma results are not necessarily indicative of what the Company’s operating results would have been had the acquisitions actually taken place at the beginning of the period. Three Months Ended September 30, Nine Months Ended September 30, 2015 2014 2015 2014 Revenue $ 107,260 $ 89,971 $ 310,419 $ 254,690 Net income $ 4,103 $ 5,041 $ 12,687 $ 15,197 Acquisition Activity in 2014 Virtual Moment, LLC On March 14, 2014, the Company acquired certain assets and certain liabilities of Virtual Moment, LLC (“WebDAM”) pursuant to an asset purchase agreement. The transaction was accounted for using the acquisition method and, accordingly, the results of the acquired business have been included in the Company’s results of operations from the acquisition date. WebDAM sells digital asset management software services through its cloud-based platform to marketing and creative enterprise organizations. WebDAM’s products help organizations manage, search, distribute and collaborate on creative digital files in order to grow their brands and reach new audiences. WebDAM’s offerings are particularly attractive to large enterprises, which make up a significant portion of its client base. The Company believes that this acquisition will strengthen its strategic position with its enterprise customers as well as broaden its product offerings to larger companies. The fair value of consideration transferred in this business combination was allocated to the intangible and tangible assets acquired and liabilities assumed at the acquisition date, with the remaining unallocated amount recorded as goodwill. The total purchase price of $12,416 consisted of a cash payment of $10,056 and $2,360 in contingent consideration based on certain performance criteria of post-acquisition revenue with subsequent changes expensed in earnings as the performance criteria is achieved. The Company is obligated to pay a cash payment of up to $4,000 in early 2016 contingent upon the achievement of the performance criteria. The fair value of the contingent consideration was determined using a Monte Carlo simulation model. The aggregate purchase price was allocated to the assets acquired and liabilities assumed as follows: Assets: Other assets $ 836 Intangible assets: Trade name 500 Customer relationships 2,800 Developed technology 600 Goodwill 8,763 Total assets acquired $ 13,499 Total liabilities assumed (1,083 ) Total $ 12,416 The identifiable intangible assets have a weighted average life of approximately seven years and are being amortized on a straight-line basis. The fair value of the customer relationships was determined using a variation of the income approach known as excess earnings method. The fair values of the trade name and developed technology were both determined using the relief-from-royalty method. The goodwill arising from the transaction is primarily attributable to expected operational synergies and is deductible for income tax purposes. As a result of the acquisition, the Company recorded approximately $300 of professional fees in the nine months ended September 30, 2014 . There were no professional fees related to the transaction in the three months ended September 30, 2014 . The professional fees are included in general and administrative expense. Pro forma results of operations have not been presented because the effect of this business combination was not material to the Company’s consolidated results of operations. Use of Estimates The preparation of the consolidated financial statements in conformity with GAAP requires the Company’s management to make a number of estimates and assumptions relating to the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the consolidated financial statements, and the reported amounts of revenue and expenses during the period. The Company evaluates its significant estimates on an ongoing basis, including, but not limited to allowance for doubtful accounts, contingent consideration, sales refund reserve, goodwill, intangibles, non-cash equity-based compensation, income tax provision and for certain non-income tax accruals. The Company bases its estimates on historical experience and on various other assumptions that it believes to be reasonable under the circumstances, the results of which form the basis for making judgments about carrying values of assets and liabilities that are not readily apparent from other sources. Actual results could differ from those estimates. Restricted Cash The Company’s restricted cash relates to security deposits for leased office locations. As of December 31, 2014 , the Company had $182 of restricted cash recorded in prepaid expenses and other current assets that related to a leased office location that was fully released as of September 30, 2015. As of September 30, 2015 and December 31, 2014 , the Company had $1,829 of restricted cash recorded in other assets that related to a leased office location that expires in 2024. The carrying value of restricted cash approximates fair value. Deferred Rent The Company records rent expense on a straight-line basis over the term of the related lease. The difference between the rent expense recognized and the actual payments made in accordance with the lease agreement is recognized as a deferred rent liability on the Company’s balance sheet. As of September 30, 2015 , the Company recorded a deferred rent balance of $8,201 , of which $704 is included in other liabilities and $7,497 is included in other non-current liabilities. As of December 31, 2014 , the Company recorded deferred rent of $8,036 , of which $693 was included in other liabilities and $7,343 was included in other non-current liabilities. Revenue Recognition The vast majority of the Company’s revenue, net of chargebacks and refunds, is generated from the license of digital content through subscription or usage based plans. The Company recognizes revenue when all of the following basic criteria are met: there is persuasive evidence of an arrangement, performance or delivery of services has occurred, the sales price is fixed or determinable, and collectability is reasonably assured. The Company considers persuasive evidence of an arrangement to be an electronic order form, or a signed contract, both of which must contain or communicate the fixed and agreed upon pricing terms. Performance or delivery is considered to have occurred upon the ratable passage of time for subscription plans, the download and in certain cases the usage of digital content or the expiration of a contract period for which there are unused downloads or credits. Collectability is reasonably assured since the majority of the Company’s customers purchase products by making electronic payments at the time of a transaction with a credit card. The Company establishes a chargeback allowance and sales refund reserve allowance based on factors surrounding historical credit card chargeback trends, historical sales refund trends and other information. As of September 30, 2015 and December 31, 2014 , the Company recorded a combined chargeback allowance and sales refund allowance of $680 and $660 , respectively, which is included in other liabilities. Collectability is assessed for customers who pay on credit based on a credit evaluation for new customers, when necessary, and transaction history with existing customers. Any cash received in advance of revenue recognition is recorded as deferred revenue. Subscription plans range in length from thirty days to one year . Revenue from subscription plans with daily limits are recognized on a straight-line basis using a daily convention method over the plan term. Revenue from subscription plans with monthly limits are recognized on a per usage basis or when the right to download expires. On Demand plans are typically for a one -year term and permit the customer to download up to a fixed amount of digital content. Revenue from On Demand products are generally recognized at the time the customer downloads the digital content on a per unit basis. Revenue related to unused digital content, if any, is recognized in full at the end of the plan term assuming no further Company obligation remains. Credit pack plans are generally for a one -year term and enable the customer to purchase a fixed number of credits which can then be utilized to pay for downloaded digital content. The number of credits utilized for each download depends on the digital content size and format. Credit pack revenue is recognized based on customer usage on a per credit basis as digital content is downloaded. Revenue related to unused credits, if any, is recognized in full at the end of the plan term assuming no further Company obligation remains. Most plans automatically renew at the end of the plan term unless the customer elects not to renew. The Company recognizes revenue from its three types of plans on a gross basis in accordance with the authoritative guidance on principal-agent considerations as the Company is the primary obligor in the arrangement, has control in establishing the product’s price, performs a detailed review of the digital content before accepting it to its collection to ensure it is of high quality before it may be purchased by the customers, can reject contributor’s images in its sole discretion, and has credit risk. Customers typically pay in advance (or upon commencement of the term) via credit card, wire or check. Fees paid or invoiced in advance are deferred and recognized as described above. Customers that do not pay in advance are invoiced and are required to make payment under standard credit terms. The Company does not generally offer refunds or a right of return to customers. There are situations in which a customer may receive a refund but the determination is made on a case-by-case basis. The Company also licenses digital content to customers through third party resellers. The Company contracts with third party resellers around the world to access markets where the Company does not have a significant presence. Third party resellers sell the Company’s products directly to end-user customers and remit a fixed amount to the Company based on the type of content sold. The terms of the reseller program indicate that the third party reseller is the primary obligor to the end-user customer and bears the risks and rewards as principal in the transaction. In assessing whether the Company’s revenue should be reported on a gross or net basis with respect to its reseller program, the Company follows the authoritative guidance of the Financial Accounting Standards Board (“FASB”) in Accounting Standards Codification (“ASC”) 605-45, “Principal Agent Considerations.” The Company recognizes revenue net of reseller commission in accordance with the type of content sold, consistent with the plan descriptions above. The Company generally does not offer refunds or a right of return to resellers. The Company also generates revenue related to WebDAM from licensing its hosted software services through its cloud-based platform and related implementation and professional services. The Company enters into multiple element revenue arrangements in which a customer purchases a combination of hosted software, implementation and optional value added professional services. The Company recognizes revenue for the hosted services monthly provided that there is persuasive evidence of an arrangement, the service has been delivered, the fees are fixed and determinable, and collection is reasonably assured. ASC 605-25 establishes a selling price hierarchy for determining the selling price of a deliverable in multiple-element arrangements, which is based on: (a) vendor-specific objective evidence; (b) third-party evidence; or (c) best estimated selling price. The hosted software services are recognized ratably over the contractual period as this service is on-going over the hosting period which is generally a one -year term. The Company recognizes any setup or implementation revenue ratably over the longer of the contractual term or the estimated customer relationship period which is currently three years . Revenue from any value-added professional services is recognized upon substantial completion. Equity-Based Compensation The Company measures and recognizes non-cash equity-based compensation expense for all equity-based awards granted to employees based on estimated fair values. The value portion of the award that is ultimately expected to vest is recognized as expense over the requisite service period. For awards with a change of control condition, an evaluation is made at the grant date and future periods as to the likelihood of the condition being met. Compensation expense is adjusted in subsequent periods for changes, if any, in the expected outcome of the change of control conditions until the vesting date. Forfeitures are estimated at the time of grant and revised, if necessary, in subsequent periods if actual forfeitures differ from those estimates. Compensation expense related to awards with a market condition is recognized ratably over the requisite service period regardless of the achievement of the market condition. The Company uses the Black Scholes option pricing model, the closing price of the Company’s common stock on the date of grant, and the Monte Carlo simulation model, if the award has a market condition, to determine the fair value of stock options and restricted stock units (“RSUs”) granted pursuant to the Value Appreciation Rights Plan (the “VAR Plan”), the 2012 Omnibus Equity Incentive Plan (the “2012 Plan”) and stock purchased pursuant to the 2012 Employee Stock Purchase Plan (the “2012 ESPP”), which are discussed further in Note 10, Equity-Based Compensation. The determination of the grant date fair value using an option-pricing model and simulation model requires judgment as well as assumptions regarding a number of other complex and subjective variables. These variables include the fair value of the Company’s common ownership interest pre-initial public offering (“IPO”), the Company’s closing market price at the grant date post-IPO, the expected unit price volatility over the expected term of the awards, awards’ exercise and cancellation behaviors, risk-free interest rates, and expected dividends, which are estimated as follows: • Fair Value of Common Membership Unit. Prior to completion of the IPO, the Company’s fair value of common ownership interest was estimated internally and approved by the Board of Managers (“BOM”) because the Company was not publicly traded. The Company’s intention upon granting VAR Plan awards was for the granted award to have an exercisable price per unit that was not less than the per unit fair value of the Company’s common equity on the date of grant. The valuations of the Company’s common equity unit were prepared in accordance with the American Institute of Certified Public Accountants Statement on Standards for Valuation Services 1: Valuation of a Business, Business Ownership Interest, Security, or Intangible Asset . The assumptions used in the valuation model were based on future expectations combined with the Company’s judgment. In the absence of a public trading market, the Company exercised significant judgment and considered numerous objective and subjective factors to determine the fair value of the common equity unit as of the date of each VAR Plan award grant. Some but not all of these factors included operating and financial performance, current business conditions and projections, the hiring of key personnel, the Company’s history and introduction of new functionality and services, the Company’s stage of development, the likelihood of achieving a liquidity event for the common ownership interests, any adjustment necessary to recognize a lack of marketability for the common ownership interests, the market performance of comparable publicly traded companies, and U.S. and global capital market conditions. The Company also obtained independent third party valuations on a periodic basis. After October 11, 2012, the date the Company’s common stock began trading on the New York Stock Exchange (“NYSE”), the grant date fair value for stock-based awards is and has been based on the closing price of the Company’s common stock on the NYSE on the date of grant and fair value for all other purposes related to stock-based awards shall be the closing price of the Company’s common stock on the NYSE on the relevant date. • Expected Term. The expected term is estimated using the simplified method allowed under SEC guidance. • Volatility. As the Company does not have a trading history for its common ownership interest pre-IPO, the expected price volatility for the common ownership interest and common stock was estimated by taking the average historic price volatility for industry peers based on daily price observations over a period equivalent to the expected term of the VAR Plan awards and stock options granted post-IPO. Industry peers consist of several public companies similar in size, stage of life cycle and financial leverage. The Company did not rely on implied volatilities of traded options in the industry peers’ common stock because the volume of activity was relatively low. The Company intends to continue to consistently apply this process using the same or similar public companies until a sufficient amount of historical information regarding the volatility of the Company’s own common stock becomes available, or unless circumstances change such that the identified companies are no longer similar to the Company, in which case, more suitable companies whose share prices are publicly available would be utilized in the calculation. • Risk-free Interest Rate. The risk-free interest rate is based on the yields of U.S. Treasury securities with maturities similar to the expected term of each award group. • Dividend Yield. Prior to October 5, 2012, the date on which the Company reorganized from Shutterstock Images LLC, a New York limited liability company (the “LLC”), to Shutterstock, Inc., a Delaware corporation (the “Reorganization”), the Company had historically paid cash dividends or distributions to its members. Following the Reorganization, the Company has not paid cash distributions to its stockholders and it does not intend to do so for the foreseeable future. As a result, the Company used an expected dividend yield of zero . If any of the assumptions used in the Black-Scholes pricing model or Monte Carlo simulation model changes significantly, the fair value for future awards may differ materially compared with awards granted previously. The awards granted pursuant to the VAR Plan, the 2012 Plan, and the 2012 ESPP are subject to a time-based vesting requirement and certain awards granted under the 2012 Plan are also based on a market condition. The majority of stock option awards granted under the 2012 Plan vest over four years while the majority of the restricted stock units granted under the 2012 Plan vest over three years . The 2012 ESPP provides for purchase periods approximately every six months and a participant must be employed on the purchase date to participate. The VAR Plan awards had a condition that a change of control (as defined in the VAR Plan) must occur for a payment to trigger with respect to the VAR Plan awards. In connection with the Reorganization, all of the VAR Plan awards were exchanged for options to purchase shares of the Company's common stock. As a result of the completion of the IPO in October 2012, the Company began recording equity-based compensation expense using the accelerated attribution method, net of forfeitures, based on the grant date fair value of the VAR Plan awards that were exchanged for options to purchase shares of the Company's common stock as part of the Reorganization. For pre-IPO equity based awards that qualified for liability classification, the Company has elected to use the intrinsic value method to value the common membership interest in accordance with authoritative guidance on stock compensation. See Note 10, Equity-Based Compensation, for further information. Income Taxes The Company is a Delaware corporation and is therefore subject to federal and state income tax. Significant management judgment is required in projecting ordinary income in order to determine the Company’s estimated effective tax rate. The Company accounts for unrecognized tax benefits using a more-likely-than-not threshold for financial statement recognition and measurement of tax positions taken or expected to be taken in a tax return. The Company establishes reserves for tax-related uncertainties based on estimates of whether, and the extent to which, additional taxes may be due. The Company records an income tax liability, if any, for the difference between the benefit recognized and measured and the tax position taken or expected to be taken on the Company’s tax returns. To the extent that the assessment of such tax positions changes, the change in estimate is recorded in the period in which the determination is made. The reserves are adjusted in light of changing facts and circumstances, such as the outcome of a tax audit or lapses in statutes of limitations. Any reserve for uncertain tax provisions, if any, and related penalties and interest, if any, are included in the income tax provision. The Company assessed the realizability of deferred tax assets and determined that based on the available evidence, including a history of taxable income and estimates of future taxable income, it is more likely than not that the deferred tax assets will be realized. The Company will continue to evaluate its ability to realize deferred tax assets on a quarterly basis. Significant management judgment is required in determining the provision for income taxes and deferred tax assets and liabilities. In the event that actual results differ from these estimates, the Company will adjust these estimates in future periods which may result in a change in the effective tax rate in a future period. The Company is subject to compliance requirements for certain non-income taxes, including value added taxes, sales taxes and royalty withholding taxes. Where appropriate, the Company has made accruals for these taxes, which are reflected in the Company’s consolidated financial statements. Net Income Per Share Basic net income per share is computed by dividing the net |
Short Term Investments and Fair
Short Term Investments and Fair Value Measurements | 9 Months Ended |
Sep. 30, 2015 | |
Fair Value Disclosures [Abstract] | |
Short-Term Investments and Fair Value Measurements | Short Term Investments and Fair Value Measurements Short term investments are summarized as follows: As of September 30, 2015 Amortized Unrealized Unrealized Estimated Commercial paper $ 52,493 $ — $ (2 ) $ 52,491 Total $ 52,493 $ — $ (2 ) $ 52,491 As of December 31, 2014 Amortized Cost Unrealized Gains Unrealized Losses Estimated Fair Market Value Commercial paper $ 54,848 $ — $ (4 ) $ 54,844 Total $ 54,848 $ — $ (4 ) $ 54,844 The following tables present the Company’s fair value hierarchy for its assets and liabilities: As of September 30, 2015 Aggregate Fair Value Level 1 Level 2 Level 3 Assets: Money market accounts $ 83,710 $ 83,710 $ — $ — Commercial paper 52,491 — 52,491 — Total assets measured at fair value $ 136,201 $ 83,710 $ 52,491 $ — Liabilities: Acquisition related contingent consideration $ 7,331 $ — $ — $ 7,331 Total liabilities measured at fair value $ 7,331 $ — $ — $ 7,331 As of December 31, 2014 Aggregate Fair Value Level 1 Level 2 Level 3 Assets: Money market accounts $ 81,244 $ 81,244 $ — $ — Commercial paper 54,844 — 54,844 — Total assets measured at fair value $ 136,088 $ 81,244 $ 54,844 $ — Liabilities: Acquisition related contingent consideration $ 2,560 $ — $ — $ 2,560 Total liabilities measured at fair value $ 2,560 $ — $ — $ 2,560 The Company’s investments classified as level 2 are priced using quoted market prices for identical assets which are subject to infrequent transactions. Cash equivalents consist of balances in money market accounts which are classified as a level 1 measurement based on bank reporting. The Company reassesses the fair value of contingent consideration to be settled in cash related to the PremiumBeat and WebDAM acquisitions on a quarterly basis using the Black-Scholes and Monte Carlo simulation models, respectively. These contingencies are considered a level 3 measurement. Significant assumptions used in the measurement include probabilities of achieving certain milestones and discount rates which are based on unobservable inputs that are supported by little or no market activity and reflect the Company’s own assumptions in measuring fair value. As a result of a shorter discounting period, the Company recorded changes in the fair value of the contingent consideration in the amount of $540 and $1,440 during the three and nine months ended September 30, 2015 , respectively, and recorded changes in the fair value of the contingent consideration in the amount of $70 and $110 during the three and nine months ended September 30, 2014 , respectively. The Company records changes in the fair value of the contingent consideration in other (expense) income, net. As of September 30, 2015 , the fair value of the contingent consideration increased to $7,331 based on its current fair value, of which $2,850 related to the WebDAM acquisition is included in other liabilities and $4,481 related to the PremiumBeat acquisition is included in other non-current liabilities. Cash, accounts receivable, restricted cash, accounts payable, accrued expenses and deferred revenue carrying amounts approximate fair value because of the short-term nature of these instruments. The Company’s non-financial assets, which include property and equipment, intangible assets and goodwill, are not required to be measured at fair value on a recurring basis. However, if certain triggering events occur, or if an annual impairment test is required and the Company is required to evaluate the non-financial asset for impairment, a resulting asset impairment would require that the non-financial asset be recorded at the fair value. |
Revenue By Geographic Area
Revenue By Geographic Area | 9 Months Ended |
Sep. 30, 2015 | |
Segment Reporting [Abstract] | |
Revenue By Geographic Area | Revenue By Geographic Area The following table presents the Company’s revenue based on customer location: Three Months Ended Nine Months Ended 2015 2014 2015 2014 North America $ 42,153 $ 32,119 $ 120,848 $ 87,896 Europe 35,453 28,240 104,499 83,452 Rest of the world 29,654 23,371 83,800 65,397 Total revenue $ 107,260 $ 83,730 $ 309,147 $ 236,745 Included in North America is the United States which comprised 34% of total revenue for the three and nine months ended September 30, 2015 and 32% of total revenue for the three and nine months ended September 30, 2014 . Included in Europe is the United Kingdom which comprised 11% of total revenue for the three and nine months ended September 30, 2015 . For the three and nine months ended September 30, 2014 , the United Kingdom revenue was less than 10% of total revenue. No other country accounts for more than 10% of the Company’s revenue in any period presented. The Company’s long-lived tangible assets were located as follows: September 30, December 31, 2015 2014 North America $ 29,473 $ 26,651 Europe 404 93 Total long-lived tangible assets $ 29,877 $ 26,744 |
Goodwill and Intangible Assets
Goodwill and Intangible Assets | 9 Months Ended |
Sep. 30, 2015 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Goodwill and Intangible Assets | Goodwill and Intangible Assets The Company’s goodwill balance is attributable to its Bigstockphoto (“Bigstock”), Editorial (which includes goodwill related to Rex Features), Music (which includes goodwill related to PremiumBeat) and WebDAM reporting units and is tested for impairment at least annually on October 1 or upon a triggering event. The following table summarizes the changes in the Company’s goodwill balance through September 30, 2015 : Consolidated Content Business Other Category Balance as of December 31, 2014 $ 10,186 $ 1,423 $ 8,763 Goodwill related to acquisitions $ 44,767 44,767 — Foreign currency translation adjustment $ (2,783 ) (2,783 ) — Balance as of September 30, 2015 $ 52,170 $ 43,407 $ 8,763 Intangible assets consist of the following as of September 30, 2015 and December 31, 2014 : As of September 30, 2015 Gross Carrying Amount Accumulated Amortization Net Carrying Amount Contractual Weighted Average Life (Years) Amortizing intangible assets: Customer relationship $ 19,921 $ (2,546 ) $ 17,375 9 Trade name 7,261 (952 ) 6,309 7 Developed technology 3,806 (867 ) 2,939 4 Contributor content 4,403 (437 ) 3,966 9 Patents 193 (38 ) 155 17 Domain name 97 (23 ) 74 14 Total $ 35,681 $ (4,863 ) $ 30,818 As of December 31, 2014 Gross Carrying Amount Accumulated Amortization Net Carrying Amount Weighted Average Life (Years) Amortizing intangible assets: Customer relationship $ 3,400 $ (921 ) $ 2,479 6 Trade name 900 (230 ) 670 9 Developed technology 600 (68 ) 532 7 Contributor content 450 (159 ) 291 15 Patents 193 (30 ) 163 17 Domain name 97 (19 ) 78 14 Total (1) $ 5,640 $ (1,427 ) $ 4,213 ______________________________________ (1) During the year ended December 31, 2014 , the Company acquired the non-exclusive licensing rights to distribute certain digital content in perpetuity in the amount of $721 . The Company had not yet placed the digital content into service as of December 31, 2014 and therefore the amount is excluded from the corresponding table. Amortization expense was $1,269 and $167 for the three months ended September 30, 2015 and 2014 , respectively, and $3,475 and $385 for the nine months ended September 30, 2015 and 2014 , respectively. The Company also determined that there was no indication of impairment of the intangible assets for any period presented. Estimated amortization expense for the next five years is: $1,264 for the remaining three months of 2015, $5,056 in 2016 , $5,056 in 2017 , $4,055 in 2018 , $3,722 in 2019 and $11,665 thereafter. |
Property and Equipment
Property and Equipment | 9 Months Ended |
Sep. 30, 2015 | |
Property, Plant and Equipment [Abstract] | |
Property and Equipment | Property and Equipment Property and equipment is summarized as follows: September 30, December 31, 2015 2014 Computer equipment and software $ 32,163 $ 24,179 Furniture and fixtures 2,851 2,336 Leasehold improvements 14,472 13,954 Property and equipment 49,486 40,469 Less accumulated depreciation (19,609 ) (13,725 ) Property and equipment, net $ 29,877 $ 26,744 Depreciation expense amounted to $2,600 and $1,958 for the three months ended September 30, 2015 and 2014 , respectively, and $6,888 and $5,372 for the nine months ended September 30, 2015 and 2014 , respectively. Depreciation expense is included in cost of revenue and general and administrative expense based on the nature of the asset being depreciated. |
Accrued Expenses
Accrued Expenses | 9 Months Ended |
Sep. 30, 2015 | |
Payables and Accruals [Abstract] | |
Accrued Expenses | Accrued Expenses Accrued expenses consist of the following: September 30, December 31, 2015 2014 Compensation $ 8,649 $ 8,312 Royalty tax withholdings 6,699 5,987 Non-income taxes 6,107 4,670 Payroll tax withholdings 611 478 Professional fees 916 1,708 Marketing expenses 460 794 Other expenses 4,520 3,033 Total accrued expenses $ 27,962 $ 24,982 |
Income Taxes
Income Taxes | 9 Months Ended |
Sep. 30, 2015 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | Income Taxes The Company’s effective tax rates for the three months ended September 30, 2015 and 2014 are 39.2% and 40.3% , respectively. The Company’s effective tax rates for the nine months ended September 30, 2015 and 2014 are 41.9% and 42.9% , respectively. The Company's effective tax rate excludes losses from jurisdictions for which no tax benefit can be recognized. For the three and nine months ended September 30, 2015, the inclusion of these losses would increase the effective tax rate by 4.8% and 2.0% , respectively. The Company incurred discrete tax items, the net effect of which decreased the effective tax rate by 1.4% and increased the effective tax rate by 0.6% for the three and nine months ended September 30, 2015 , respectively. The Company has computed the provision for income taxes based on the estimated annual effective tax rates and the application of discrete items, if any, in the applicable period. The effective tax rate differs from the statutory tax rate due primarily to non-deductible expenses related to non-cash equity-based compensation and meals and entertainment. During the three and nine months ended September 30, 2015 , the Company recorded unrecognized tax benefits in the amount of $0 and $11 for uncertain tax positions taken in prior years. During the three and nine months ended September 30, 2014 , the Company did not record additional unrecognized tax benefits. During the three and nine months ended September 30, 2015, the Company recognized a tax benefit in the amount of $491 related to the release of the reserve for a prior year's uncertain tax position due to a lapse in the statute of limitations. To the extent the remaining unrecognized tax benefits are ultimately recognized, the Company’s effective tax rate may be impacted in future periods. The Company recognizes interest expense and tax penalties related to unrecognized tax benefits in income tax expense in the consolidated statements of operations. The Company accrued interest and penalties related to unrecognized tax benefits in the amount of $16 and $25 for the three months ended September 30, 2015 and 2014 , respectively, and $70 and $72 for the nine months ended September 30, 2015 and 2014 , respectively. It is the Company’s practice and intention to indefinitely reinvest the earnings of its foreign subsidiaries in those operations. As of September 30, 2015 , the excess of the amount for financial reporting over the tax basis of investment in these foreign subsidiaries is insignificant and the unrecognized deferred tax liability is not material. |
Commitments and Contingencies
Commitments and Contingencies | 9 Months Ended |
Sep. 30, 2015 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | Commitments and Contingencies The Company leases facilities under agreements accounted for as operating leases. Rental expense, inclusive of operating leases, for the three months ended September 30, 2015 and 2014 was $1,229 and $999 , respectively, and for the nine months ended September 30, 2015 and 2014 was $3,555 and $3,167 , respectively. Some leases have defined escalating rent provisions, which are expensed over the term of the related lease on a straight-line basis commencing with the date of possession. Any rent allowance or abatement is netted in this calculation. All leases require payment of real estate taxes and operating expense increases. On March 21, 2013, the Company entered into an operating lease agreement to lease its new office facility in New York, New York. In connection with the lease agreement, the Company entered into a letter of credit in the amount of $1,829 as a security deposit for the leased facilities. The letter of credit was collateralized by $1,829 of cash as of September 30, 2015 and December 31, 2014 , and as such, is considered to be restricted cash and is included in other assets in the consolidated balance sheet. The lease term is eleven years from the commencement date and aggregate future minimum payments under the lease, as amended, are approximately $34,900 . Capital Expenditures As of September 30, 2015 , the Company had no significant purchase commitments related to capital expenditures. As of December 31, 2014 , the Company had committed to purchase approximately $1,400 of data server equipment related to expansion of the existing business. Other Obligations As of September 30, 2015 and December 31, 2014 , the Company had other obligations in the amount of approximately $26,000 and $9,400 , respectively, which consisted primarily of minimum royalty guarantees and unconditional purchase obligations related to contracts for infrastructure services. As of September 30, 2015 , the Company’s other obligations for the remainder of 2015 and for the years ending December 31, 2016, 2017, 2018, 2019 and 2020 were approximately $3,900 , $7,800 , $5,100 , $2,700 , $3,000 and $3,500 respectively. Legal Matters From time to time, the Company may become party to litigation in the ordinary course of business, including direct claims brought by or against the Company with respect to intellectual property, contracts, employment and other matters, as well as claims brought against the Company’s customers for whom the Company has a contractual indemnification obligation. The Company assesses the likelihood of any adverse judgments or outcomes with respect to these matters and determines loss contingency assessments on a gross basis after assessing the probability of incurrence of a loss and whether a loss is reasonably estimable. In addition, the Company considers other relevant factors that could impact its ability to reasonably estimate a loss. A determination of the amount of reserves required, if any, for these contingencies is made after analyzing each matter. The Company reviews reserves, if any, at least quarterly and may change the amount of any such reserve in the future due to new developments or changes in strategy in handling these matters. Although the results of litigation and threats of litigation, investigations and claims cannot be predicted with certainty, the Company currently believes that the final outcome of these matters will not have a material adverse effect on its business, consolidated financial position, results of operations, or cash flows. Regardless of the outcome, litigation can have an adverse impact on the Company because of defense and settlement costs, diversion of management resources and other factors. The Company currently has no material active litigation matters and, as such, no material reserves related to litigation. Indemnification In the ordinary course of business, the Company enters into contractual arrangements under which it agrees to provide indemnification of varying scope and terms to customers with respect to certain matters, including losses which are directly attributable to a breach of Company’s warranties covering third party intellectual property, publicity and privacy rights. The Company is not responsible for any damages, costs, or losses to the extent such damages, costs or losses arise as a result of the modifications made by the customer, or the context in which an image is used. The maximum aggregate obligation and liability for all claims related to a single downloaded image, video clip or music track ranges from the purchase price of such downloaded content to unlimited indemnification. As of September 30, 2015 and December 31, 2014 , the Company had recorded no material liabilities related to indemnification obligations in accordance with the authoritative guidance for loss contingencies. Additionally, the Company believes that it has the appropriate insurance coverage in place to adequately cover such indemnification obligations, if necessary. Employment Agreements The Company has entered into employment agreements and indemnification agreements with certain executive officers and employees. The agreements specify various employment-related matters, including annual compensation, performance incentive bonuses, and severance benefits in the event of termination with or without cause. |
Employee Benefit Plans
Employee Benefit Plans | 9 Months Ended |
Sep. 30, 2015 | |
Compensation and Retirement Disclosure [Abstract] | |
Employee Benefit Plans | Employee Benefit Plans The Company has a 401(k) defined contribution plan and provides for annual discretionary employer matching contributions not to exceed 3% of employees’ base compensation per year. Matching contributions are fully vested and non-forfeitable at all times. The Company recorded employer matching contributions of $372 and $264 for the three months ended September 30, 2015 and 2014 , respectively, and $1,049 and $710 for the nine months ended September 30, 2015 and 2014 , respectively. |
Shareholders' Equity and Equity
Shareholders' Equity and Equity-Based Compensation | 9 Months Ended |
Sep. 30, 2015 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |
Shareholders' Equity and Equity-Based Compensation | Shareholders' Equity and Equity-Based Compensation The Company recognizes stock-based compensation expense for all share-based payment awards including employee stock options, restricted stock awards and RSUs granted under the 2012 Plan (and formerly under the VAR Plan) and sales of shares of common stock under the 2012 ESPP based on each award's fair value on the grant date. The following table summarizes non-cash equity-based compensation expense, net of forfeitures, by line item included in the accompanying consolidated statements of operations for the three and nine months ended September 30, 2015 and 2014 : Three Months Ended September 30, Nine Months Ended September 30, 2015 2014 2015 2014 Cost of revenue $ 496 $ 336 $ 1,444 $ 953 Sales and marketing 1,364 819 4,110 2,689 Product development 1,743 1,805 5,863 4,529 General and administrative 4,080 3,375 11,354 7,557 Total $ 7,683 $ 6,335 $ 22,771 $ 15,728 The following table summarizes non-cash equity-based compensation expense, net of forfeitures, by award type included in the accompanying consolidated statements of operations for the three and nine months ended September 30, 2015 and 2014 : Three Months Ended September 30, Nine Months Ended September 30, 2015 2014 2015 2014 Stock options $ 2,663 $ 2,197 $ 6,486 $ 5,926 Restricted stock units 4,724 3,234 15,244 7,516 ESPP shares 169 225 589 598 Restricted stock units related to the acquisition of WebDAM 127 420 452 911 Restricted stock awards — 259 — 777 Total $ 7,683 $ 6,335 $ 22,771 $ 15,728 Stock Option Awards The following table presents a summary of the Company’s stock option awards activity for the nine months ended September 30, 2015 : Plan Options Weighted Average Exercise Price Options outstanding at December 31, 2014 1,771,440 $ 41.61 Options granted 1,250 17.00 Options exercised (312,330 ) 18.87 Options cancelled or forfeited (105,779 ) 43.14 Options outstanding at September 30, 2015 1,354,581 $ 46.71 Vested and exercisable at September 30, 2015 541,048 $ 26.77 The approximate intrinsic value of the total stock options outstanding at September 30, 2015 and at December 31, 2014 is as follows: September 30, December 31, 2015 2014 Total options outstanding $ 7,400 $ 48,700 Total options exercisable $ 5,500 $ 29,800 Total options vested and expected to vest $ 7,400 $ 50,600 The following weighted average assumptions were used in the fair value calculation of stock options granted during the nine months ended September 30, 2015 and 2014: Nine Months Ended September 30, 2015 2014 Expected term (in years) 2 6.3 - 10 Volatility 48 % 49 % Risk-free interest rate 0.7 % 2.1% - 2.8% Dividend yield — — As of September 30, 2015 , the total unrecognized compensation charge related to 2012 Plan non-vested options was approximately $21,500 , which was expected to be recognized through the fiscal year ending December 31, 2020. Restricted Stock Units and Restricted Stock Awards The following table presents a summary of the Company’s RSU activity for the nine months ended September 30, 2015 : Plan Options Weighted Average Fair Value Non-vested balance at December 31, 2014 652,897 $ 81.45 Units granted 761,564 57.60 Units vested (177,191 ) 78.96 Units cancelled or forfeited (223,710 ) 78.02 Non-vested balance at September 30, 2015 1,013,560 $ 64.72 In connection with the Reorganization, membership interests in the LLC were exchanged for restricted and unrestricted shares of the Company’s common stock. The Amended and Restated Restricted Stock Agreement entered into by the Company with an executive governs the terms of the restricted stock inclusive of service vesting terms. As the restricted shares vest, the awards' restrictions will be removed. Charges related to restricted stock awards are included in general and administrative expense. In connection with the WebDAM acquisition, in order to retain the services of certain former WebDAM employees, the Company granted RSUs that vest over two years from the date of acquisition. As these equity awards are subject to post-acquisition employment, the Company accounts for them as compensation expense. A portion of these equity awards are accounted for as liability-classified awards because the obligations are based on fixed monetary amounts that are known at the inception of the obligation to be settled with a variable number of shares of the Company’s common stock when the equity awards vest. As of September 30, 2015 , the total unrecognized non-cash equity-based compensation charge related to the 2012 Plan non-vested restricted stock and RSUs was approximately $53,400 , which is expected to be recognized through fiscal year 2020. Employee Stock Purchase Plan As of September 30, 2015 , 153,133 shares of the Company’s common stock have been issued under the 2012 ESPP. Stock Repurchase Program In October 2015, the Company's Board of Directors has approved a stock repurchase program, pursuant to which the Company is authorized to purchase up to $100 million of its common stock. The Company expects to fund repurchases through a combination of cash on hand, cash generated by operations and future financing transactions, if needed. Accordingly, the Company's stock repurchase program is subject to the Company having available cash to fund repurchases. Under the program, management is authorized to purchase shares from time to time through open market purchases or privately negotiated transactions at prevailing prices as permitted by securities laws and other legal requirements, and subject to market conditions and other factors. |
Other Expense, Net
Other Expense, Net | 9 Months Ended |
Sep. 30, 2015 | |
Other Nonoperating Income (Expense) [Abstract] | |
Other (Expense) Income, Net | Other Expense, Net The following table presents a summary of the Company’s other (expense) income activity included in the accompanying consolidated statements of operations for the three and nine months ended September 30, 2015 and 2014 : Three Months Ended September 30, Nine Months Ended September 30, 2015 2014 2015 2014 Foreign currency loss $ (244 ) $ (323 ) $ (1,951 ) $ (279 ) Change in fair value of contingent consideration (540 ) (70 ) (1,440 ) (110 ) Interest income 17 20 5 62 Total expense $ (767 ) $ (373 ) $ (3,386 ) $ (327 ) |
Summary of Operations and Sig18
Summary of Operations and Significant Accounting Policies (Policies) | 9 Months Ended |
Sep. 30, 2015 | |
Accounting Policies [Abstract] | |
Principles of Consolidation | Principles of Consolidation The consolidated financial statements reflect the operations of the Company and its wholly-owned subsidiaries. All significant intercompany balances and transactions have been eliminated in consolidation. Certain prior year amounts have been reclassified to conform to the current presentation. |
Unaudited Interim Financial Statements | Unaudited Interim Financial Statements The interim consolidated balance sheet as of September 30, 2015 , the consolidated statements of operations and comprehensive income for the three and nine months ended September 30, 2015 and 2014 and the consolidated statements of cash flows for the nine months ended September 30, 2015 and 2014 are unaudited. The unaudited interim financial statements have been prepared on a basis consistent with the Company’s annual financial statements and, in the opinion of management, reflect all adjustments, which include only normal recurring adjustments necessary to state fairly the Company’s financial position as of September 30, 2015 and its results of consolidated operations, comprehensive income and cash flows for the three and nine months ended September 30, 2015 and 2014 . The financial data and the other financial information disclosed in the notes to the financial statements related to these periods are also unaudited. The results of operations for the three and nine months ended September 30, 2015 are not necessarily indicative of the results to be expected for the fiscal year ending December 31, 2015 or for any other future annual or interim period. There have been no material changes in the significant accounting policies from those that were disclosed in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2014 filed with the SEC on February 27, 2015 . These financial statements should also be read in conjunction with the audited consolidated financial statements and notes thereto for the year ended December 31, 2014 . Certain information and note disclosures normally included in the financial statements prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) have been omitted pursuant to such rules and regulations. The consolidated balance sheet as of December 31, 2014 included herein was derived from the audited financial statements as of that date, but does not include all disclosures required by GAAP. |
Use of Estimates | Use of Estimates The preparation of the consolidated financial statements in conformity with GAAP requires the Company’s management to make a number of estimates and assumptions relating to the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the consolidated financial statements, and the reported amounts of revenue and expenses during the period. The Company evaluates its significant estimates on an ongoing basis, including, but not limited to allowance for doubtful accounts, contingent consideration, sales refund reserve, goodwill, intangibles, non-cash equity-based compensation, income tax provision and for certain non-income tax accruals. The Company bases its estimates on historical experience and on various other assumptions that it believes to be reasonable under the circumstances, the results of which form the basis for making judgments about carrying values of assets and liabilities that are not readily apparent from other sources. Actual results could differ from those estimates. |
Restricted Cash | Restricted Cash The Company’s restricted cash relates to security deposits for leased office locations. As of December 31, 2014 , the Company had $182 of restricted cash recorded in prepaid expenses and other current assets that related to a leased office location that was fully released as of September 30, 2015. As of September 30, 2015 and December 31, 2014 , the Company had $1,829 of restricted cash recorded in other assets that related to a leased office location that expires in 2024. The carrying value of restricted cash approximates fair value. |
Deferred Rent | Deferred Rent The Company records rent expense on a straight-line basis over the term of the related lease. The difference between the rent expense recognized and the actual payments made in accordance with the lease agreement is recognized as a deferred rent liability on the Company’s balance sheet. |
Revenue Recognition | Revenue Recognition The vast majority of the Company’s revenue, net of chargebacks and refunds, is generated from the license of digital content through subscription or usage based plans. The Company recognizes revenue when all of the following basic criteria are met: there is persuasive evidence of an arrangement, performance or delivery of services has occurred, the sales price is fixed or determinable, and collectability is reasonably assured. The Company considers persuasive evidence of an arrangement to be an electronic order form, or a signed contract, both of which must contain or communicate the fixed and agreed upon pricing terms. Performance or delivery is considered to have occurred upon the ratable passage of time for subscription plans, the download and in certain cases the usage of digital content or the expiration of a contract period for which there are unused downloads or credits. Collectability is reasonably assured since the majority of the Company’s customers purchase products by making electronic payments at the time of a transaction with a credit card. The Company establishes a chargeback allowance and sales refund reserve allowance based on factors surrounding historical credit card chargeback trends, historical sales refund trends and other information. As of September 30, 2015 and December 31, 2014 , the Company recorded a combined chargeback allowance and sales refund allowance of $680 and $660 , respectively, which is included in other liabilities. Collectability is assessed for customers who pay on credit based on a credit evaluation for new customers, when necessary, and transaction history with existing customers. Any cash received in advance of revenue recognition is recorded as deferred revenue. Subscription plans range in length from thirty days to one year . Revenue from subscription plans with daily limits are recognized on a straight-line basis using a daily convention method over the plan term. Revenue from subscription plans with monthly limits are recognized on a per usage basis or when the right to download expires. On Demand plans are typically for a one -year term and permit the customer to download up to a fixed amount of digital content. Revenue from On Demand products are generally recognized at the time the customer downloads the digital content on a per unit basis. Revenue related to unused digital content, if any, is recognized in full at the end of the plan term assuming no further Company obligation remains. Credit pack plans are generally for a one -year term and enable the customer to purchase a fixed number of credits which can then be utilized to pay for downloaded digital content. The number of credits utilized for each download depends on the digital content size and format. Credit pack revenue is recognized based on customer usage on a per credit basis as digital content is downloaded. Revenue related to unused credits, if any, is recognized in full at the end of the plan term assuming no further Company obligation remains. Most plans automatically renew at the end of the plan term unless the customer elects not to renew. The Company recognizes revenue from its three types of plans on a gross basis in accordance with the authoritative guidance on principal-agent considerations as the Company is the primary obligor in the arrangement, has control in establishing the product’s price, performs a detailed review of the digital content before accepting it to its collection to ensure it is of high quality before it may be purchased by the customers, can reject contributor’s images in its sole discretion, and has credit risk. Customers typically pay in advance (or upon commencement of the term) via credit card, wire or check. Fees paid or invoiced in advance are deferred and recognized as described above. Customers that do not pay in advance are invoiced and are required to make payment under standard credit terms. The Company does not generally offer refunds or a right of return to customers. There are situations in which a customer may receive a refund but the determination is made on a case-by-case basis. The Company also licenses digital content to customers through third party resellers. The Company contracts with third party resellers around the world to access markets where the Company does not have a significant presence. Third party resellers sell the Company’s products directly to end-user customers and remit a fixed amount to the Company based on the type of content sold. The terms of the reseller program indicate that the third party reseller is the primary obligor to the end-user customer and bears the risks and rewards as principal in the transaction. In assessing whether the Company’s revenue should be reported on a gross or net basis with respect to its reseller program, the Company follows the authoritative guidance of the Financial Accounting Standards Board (“FASB”) in Accounting Standards Codification (“ASC”) 605-45, “Principal Agent Considerations.” The Company recognizes revenue net of reseller commission in accordance with the type of content sold, consistent with the plan descriptions above. The Company generally does not offer refunds or a right of return to resellers. The Company also generates revenue related to WebDAM from licensing its hosted software services through its cloud-based platform and related implementation and professional services. The Company enters into multiple element revenue arrangements in which a customer purchases a combination of hosted software, implementation and optional value added professional services. The Company recognizes revenue for the hosted services monthly provided that there is persuasive evidence of an arrangement, the service has been delivered, the fees are fixed and determinable, and collection is reasonably assured. ASC 605-25 establishes a selling price hierarchy for determining the selling price of a deliverable in multiple-element arrangements, which is based on: (a) vendor-specific objective evidence; (b) third-party evidence; or (c) best estimated selling price. The hosted software services are recognized ratably over the contractual period as this service is on-going over the hosting period which is generally a one -year term. The Company recognizes any setup or implementation revenue ratably over the longer of the contractual term or the estimated customer relationship period which is currently three years . Revenue from any value-added professional services is recognized upon substantial completion. |
Equity-Based Compensation | Equity-Based Compensation The Company measures and recognizes non-cash equity-based compensation expense for all equity-based awards granted to employees based on estimated fair values. The value portion of the award that is ultimately expected to vest is recognized as expense over the requisite service period. For awards with a change of control condition, an evaluation is made at the grant date and future periods as to the likelihood of the condition being met. Compensation expense is adjusted in subsequent periods for changes, if any, in the expected outcome of the change of control conditions until the vesting date. Forfeitures are estimated at the time of grant and revised, if necessary, in subsequent periods if actual forfeitures differ from those estimates. Compensation expense related to awards with a market condition is recognized ratably over the requisite service period regardless of the achievement of the market condition. The Company uses the Black Scholes option pricing model, the closing price of the Company’s common stock on the date of grant, and the Monte Carlo simulation model, if the award has a market condition, to determine the fair value of stock options and restricted stock units (“RSUs”) granted pursuant to the Value Appreciation Rights Plan (the “VAR Plan”), the 2012 Omnibus Equity Incentive Plan (the “2012 Plan”) and stock purchased pursuant to the 2012 Employee Stock Purchase Plan (the “2012 ESPP”), which are discussed further in Note 10, Equity-Based Compensation. The determination of the grant date fair value using an option-pricing model and simulation model requires judgment as well as assumptions regarding a number of other complex and subjective variables. These variables include the fair value of the Company’s common ownership interest pre-initial public offering (“IPO”), the Company’s closing market price at the grant date post-IPO, the expected unit price volatility over the expected term of the awards, awards’ exercise and cancellation behaviors, risk-free interest rates, and expected dividends, which are estimated as follows: • Fair Value of Common Membership Unit. Prior to completion of the IPO, the Company’s fair value of common ownership interest was estimated internally and approved by the Board of Managers (“BOM”) because the Company was not publicly traded. The Company’s intention upon granting VAR Plan awards was for the granted award to have an exercisable price per unit that was not less than the per unit fair value of the Company’s common equity on the date of grant. The valuations of the Company’s common equity unit were prepared in accordance with the American Institute of Certified Public Accountants Statement on Standards for Valuation Services 1: Valuation of a Business, Business Ownership Interest, Security, or Intangible Asset . The assumptions used in the valuation model were based on future expectations combined with the Company’s judgment. In the absence of a public trading market, the Company exercised significant judgment and considered numerous objective and subjective factors to determine the fair value of the common equity unit as of the date of each VAR Plan award grant. Some but not all of these factors included operating and financial performance, current business conditions and projections, the hiring of key personnel, the Company’s history and introduction of new functionality and services, the Company’s stage of development, the likelihood of achieving a liquidity event for the common ownership interests, any adjustment necessary to recognize a lack of marketability for the common ownership interests, the market performance of comparable publicly traded companies, and U.S. and global capital market conditions. The Company also obtained independent third party valuations on a periodic basis. After October 11, 2012, the date the Company’s common stock began trading on the New York Stock Exchange (“NYSE”), the grant date fair value for stock-based awards is and has been based on the closing price of the Company’s common stock on the NYSE on the date of grant and fair value for all other purposes related to stock-based awards shall be the closing price of the Company’s common stock on the NYSE on the relevant date. • Expected Term. The expected term is estimated using the simplified method allowed under SEC guidance. • Volatility. As the Company does not have a trading history for its common ownership interest pre-IPO, the expected price volatility for the common ownership interest and common stock was estimated by taking the average historic price volatility for industry peers based on daily price observations over a period equivalent to the expected term of the VAR Plan awards and stock options granted post-IPO. Industry peers consist of several public companies similar in size, stage of life cycle and financial leverage. The Company did not rely on implied volatilities of traded options in the industry peers’ common stock because the volume of activity was relatively low. The Company intends to continue to consistently apply this process using the same or similar public companies until a sufficient amount of historical information regarding the volatility of the Company’s own common stock becomes available, or unless circumstances change such that the identified companies are no longer similar to the Company, in which case, more suitable companies whose share prices are publicly available would be utilized in the calculation. • Risk-free Interest Rate. The risk-free interest rate is based on the yields of U.S. Treasury securities with maturities similar to the expected term of each award group. • Dividend Yield. Prior to October 5, 2012, the date on which the Company reorganized from Shutterstock Images LLC, a New York limited liability company (the “LLC”), to Shutterstock, Inc., a Delaware corporation (the “Reorganization”), the Company had historically paid cash dividends or distributions to its members. Following the Reorganization, the Company has not paid cash distributions to its stockholders and it does not intend to do so for the foreseeable future. As a result, the Company used an expected dividend yield of zero . If any of the assumptions used in the Black-Scholes pricing model or Monte Carlo simulation model changes significantly, the fair value for future awards may differ materially compared with awards granted previously. The awards granted pursuant to the VAR Plan, the 2012 Plan, and the 2012 ESPP are subject to a time-based vesting requirement and certain awards granted under the 2012 Plan are also based on a market condition. The majority of stock option awards granted under the 2012 Plan vest over four years while the majority of the restricted stock units granted under the 2012 Plan vest over three years . The 2012 ESPP provides for purchase periods approximately every six months and a participant must be employed on the purchase date to participate. The VAR Plan awards had a condition that a change of control (as defined in the VAR Plan) must occur for a payment to trigger with respect to the VAR Plan awards. In connection with the Reorganization, all of the VAR Plan awards were exchanged for options to purchase shares of the Company's common stock. As a result of the completion of the IPO in October 2012, the Company began recording equity-based compensation expense using the accelerated attribution method, net of forfeitures, based on the grant date fair value of the VAR Plan awards that were exchanged for options to purchase shares of the Company's common stock as part of the Reorganization. For pre-IPO equity based awards that qualified for liability classification, the Company has elected to use the intrinsic value method to value the common membership interest in accordance with authoritative guidance on stock compensation. See Note 10, Equity-Based Compensation, for further information. |
Income Taxes | Income Taxes The Company is a Delaware corporation and is therefore subject to federal and state income tax. Significant management judgment is required in projecting ordinary income in order to determine the Company’s estimated effective tax rate. The Company accounts for unrecognized tax benefits using a more-likely-than-not threshold for financial statement recognition and measurement of tax positions taken or expected to be taken in a tax return. The Company establishes reserves for tax-related uncertainties based on estimates of whether, and the extent to which, additional taxes may be due. The Company records an income tax liability, if any, for the difference between the benefit recognized and measured and the tax position taken or expected to be taken on the Company’s tax returns. To the extent that the assessment of such tax positions changes, the change in estimate is recorded in the period in which the determination is made. The reserves are adjusted in light of changing facts and circumstances, such as the outcome of a tax audit or lapses in statutes of limitations. Any reserve for uncertain tax provisions, if any, and related penalties and interest, if any, are included in the income tax provision. The Company assessed the realizability of deferred tax assets and determined that based on the available evidence, including a history of taxable income and estimates of future taxable income, it is more likely than not that the deferred tax assets will be realized. The Company will continue to evaluate its ability to realize deferred tax assets on a quarterly basis. Significant management judgment is required in determining the provision for income taxes and deferred tax assets and liabilities. In the event that actual results differ from these estimates, the Company will adjust these estimates in future periods which may result in a change in the effective tax rate in a future period. The Company is subject to compliance requirements for certain non-income taxes, including value added taxes, sales taxes and royalty withholding taxes. Where appropriate, the Company has made accruals for these taxes, which are reflected in the Company’s consolidated financial statements. |
Net Income Per Share | Net Income Per Share Basic net income per share is computed by dividing the net income attributable to common stockholders by the weighted average number of common shares outstanding during the period. The Company applies the two-class method for calculating and presenting income per share. Under the two-class method, net income is allocated between shares of common stock and other participating securities based on their contractual participating rights to share in the earnings as if all of the earnings for the period have been distributed. Participating securities are defined as securities that participate in dividends with common stock according to a pre-determined formula or a contractual obligation to share in the income of the entity. Any potential issuance of common shares, including those that are contingent and do not participate in dividends, are excluded from weighted average number of common shares outstanding. Undistributed net income (loss) for a given period is apportioned to participating stockholders based on the weighted average number of shares for each class of securities outstanding during the applicable period as a percentage of the combined weighted average number of these securities outstanding during the period. Income available to common stockholders is computed by deducting from net income: (1) dividends paid to preferred stockholders, (2) accretion to redemption value on preferred members' shares and (3) income allocated to participating securities including unvested shares for the restricted award holders (as these unvested shares have participating rights). Diluted net income per share is computed by dividing the net income available to common stockholders adjusted for any changes in income that would result from the assumed conversion of the potential common shares by the weighted average common shares outstanding and all potential common shares, if they are dilutive. |
Recently Issued Accounting Standard Updates | Recently Issued Accounting Standard Updates In May 2014, the FASB issued new accounting guidance related to revenue recognition (“ASU 2014-09”). This new standard will replace all current GAAP guidance on this topic and will eliminate all industry-specific guidance. The new revenue recognition standard provides a unified model to determine when and how revenue is recognized. The core principle is that a company should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration for which the entity expects to be entitled in exchange for those goods or services. On July 9, 2015, the FASB approved the deferral of the effective date of ASU 2014-09 by one year. As a result, ASU 2014-09 will be effective for the Company’s fiscal year beginning January 1, 2018. The Company may choose to adopt the standard as of the original effective date for annual reporting periods beginning after December 15, 2016; if it does so, the Company is required to apply the standard beginning in the first interim period within the year of adoption. The Company is evaluating the impact, if any, of adopting this new accounting standard on its financial statements. |
Summary of Operations and Sig19
Summary of Operations and Significant Accounting Policies (Tables) | 9 Months Ended |
Sep. 30, 2015 | |
Acquisition Activity | |
Schedule of unaudited pro forma consolidated financial information | The following unaudited pro forma consolidated financial information reflects the results of operations of the Company for the three and nine months ended September 30, 2015 and 2014 , as if the Rex Features and PremiumBeat acquisitions completed during fiscal 2015 had closed on January 1, 2014, after giving effect to certain purchase accounting adjustments. These pro forma results are not necessarily indicative of what the Company’s operating results would have been had the acquisitions actually taken place at the beginning of the period. Three Months Ended September 30, Nine Months Ended September 30, 2015 2014 2015 2014 Revenue $ 107,260 $ 89,971 $ 310,419 $ 254,690 Net income $ 4,103 $ 5,041 $ 12,687 $ 15,197 |
Net Income Per Share | |
Schedule of reconciliation of assumed exercised shares used in calculating basic and diluted net income (loss) share available to common stockholders | A reconciliation of assumed exercised shares used in calculating basic and diluted net income per share available to common stockholders follows: Three Months Ended September 30, Nine Months Ended September 30, 2015 2014 2015 2014 Basic 36,039,907 35,304,066 35,847,748 35,161,644 Stock options and employee stock purchase plan shares 230,137 552,282 337,018 627,845 Unvested restricted stock awards and RSUs — 75,106 84,301 93,713 Diluted 36,270,044 35,931,454 36,269,067 35,883,202 Dilutive securities included in the calculation 681,292 2,136,637 1,538,384 2,161,146 Anti-dilutive securities excluded from the calculation 1,793,106 617,250 1,056,039 472,977 |
Rex Features | |
Acquisition Activity | |
Schedule of preliminary aggregate purchase price allocated to assets acquired and liabilities assumed | The aggregate purchase price was allocated to the assets acquired and liabilities assumed as follows: Assets: Cash $ 1,525 Accounts receivables 2,908 Other assets 356 Fixed assets 92 Intangible Assets: Customer relationships 13,768 Trade name 4,993 Developed technology 3,026 Photo library 484 Goodwill 14,918 Total assets acquired $ 42,070 Liabilities: Accounts payable $ (253 ) Contributor payable (2,249 ) Accrued expenses (2,387 ) Deferred tax liability (4,454 ) Total liabilities assumed $ (9,343 ) Total $ 32,727 |
Arbour Interactive Inc (PremiumBeat) | |
Acquisition Activity | |
Schedule of preliminary aggregate purchase price allocated to assets acquired and liabilities assumed | The aggregate purchase price was allocated to the assets acquired and liabilities assumed as follows: Assets: Other assets $ 963 Fixed assets 205 Intangible Assets: Customer relationships 3,000 Trade name 1,400 Music catalog 584 Developed technology 178 Goodwill 29,849 Deferred tax asset 229 Total assets acquired $ 36,408 Liabilities: Contributor payable $ (896 ) Accrued expenses (44 ) Deferred revenue (23 ) Total liabilities assumed $ (963 ) Total $ 35,445 |
Virtual Moment, LLC (WebDAM) | |
Acquisition Activity | |
Schedule of preliminary aggregate purchase price allocated to assets acquired and liabilities assumed | The aggregate purchase price was allocated to the assets acquired and liabilities assumed as follows: Assets: Other assets $ 836 Intangible assets: Trade name 500 Customer relationships 2,800 Developed technology 600 Goodwill 8,763 Total assets acquired $ 13,499 Total liabilities assumed (1,083 ) Total $ 12,416 |
Short Term Investments and Fa20
Short Term Investments and Fair Value Measurements (Tables) | 9 Months Ended |
Sep. 30, 2015 | |
Fair Value Disclosures [Abstract] | |
Schedule of short-term investments | Short term investments are summarized as follows: As of September 30, 2015 Amortized Unrealized Unrealized Estimated Commercial paper $ 52,493 $ — $ (2 ) $ 52,491 Total $ 52,493 $ — $ (2 ) $ 52,491 As of December 31, 2014 Amortized Cost Unrealized Gains Unrealized Losses Estimated Fair Market Value Commercial paper $ 54,848 $ — $ (4 ) $ 54,844 Total $ 54,848 $ — $ (4 ) $ 54,844 |
Schedule of fair value measurements | The following tables present the Company’s fair value hierarchy for its assets and liabilities: As of September 30, 2015 Aggregate Fair Value Level 1 Level 2 Level 3 Assets: Money market accounts $ 83,710 $ 83,710 $ — $ — Commercial paper 52,491 — 52,491 — Total assets measured at fair value $ 136,201 $ 83,710 $ 52,491 $ — Liabilities: Acquisition related contingent consideration $ 7,331 $ — $ — $ 7,331 Total liabilities measured at fair value $ 7,331 $ — $ — $ 7,331 As of December 31, 2014 Aggregate Fair Value Level 1 Level 2 Level 3 Assets: Money market accounts $ 81,244 $ 81,244 $ — $ — Commercial paper 54,844 — 54,844 — Total assets measured at fair value $ 136,088 $ 81,244 $ 54,844 $ — Liabilities: Acquisition related contingent consideration $ 2,560 $ — $ — $ 2,560 Total liabilities measured at fair value $ 2,560 $ — $ — $ 2,560 |
Revenue By Geographic Area (Tab
Revenue By Geographic Area (Tables) | 9 Months Ended |
Sep. 30, 2015 | |
Segment Reporting [Abstract] | |
Revenue from External Customers by Geographic Areas | The following table presents the Company’s revenue based on customer location: Three Months Ended Nine Months Ended 2015 2014 2015 2014 North America $ 42,153 $ 32,119 $ 120,848 $ 87,896 Europe 35,453 28,240 104,499 83,452 Rest of the world 29,654 23,371 83,800 65,397 Total revenue $ 107,260 $ 83,730 $ 309,147 $ 236,745 |
Long-lived Assets by Geographic Areas | The Company’s long-lived tangible assets were located as follows: September 30, December 31, 2015 2014 North America $ 29,473 $ 26,651 Europe 404 93 Total long-lived tangible assets $ 29,877 $ 26,744 |
Goodwill and Intangible Assets
Goodwill and Intangible Assets (Tables) | 9 Months Ended |
Sep. 30, 2015 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Schedule of changes in goodwill | The following table summarizes the changes in the Company’s goodwill balance through September 30, 2015 : Consolidated Content Business Other Category Balance as of December 31, 2014 $ 10,186 $ 1,423 $ 8,763 Goodwill related to acquisitions $ 44,767 44,767 — Foreign currency translation adjustment $ (2,783 ) (2,783 ) — Balance as of September 30, 2015 $ 52,170 $ 43,407 $ 8,763 |
Schedule of intangible assets | Intangible assets consist of the following as of September 30, 2015 and December 31, 2014 : As of September 30, 2015 Gross Carrying Amount Accumulated Amortization Net Carrying Amount Contractual Weighted Average Life (Years) Amortizing intangible assets: Customer relationship $ 19,921 $ (2,546 ) $ 17,375 9 Trade name 7,261 (952 ) 6,309 7 Developed technology 3,806 (867 ) 2,939 4 Contributor content 4,403 (437 ) 3,966 9 Patents 193 (38 ) 155 17 Domain name 97 (23 ) 74 14 Total $ 35,681 $ (4,863 ) $ 30,818 As of December 31, 2014 Gross Carrying Amount Accumulated Amortization Net Carrying Amount Weighted Average Life (Years) Amortizing intangible assets: Customer relationship $ 3,400 $ (921 ) $ 2,479 6 Trade name 900 (230 ) 670 9 Developed technology 600 (68 ) 532 7 Contributor content 450 (159 ) 291 15 Patents 193 (30 ) 163 17 Domain name 97 (19 ) 78 14 Total (1) $ 5,640 $ (1,427 ) $ 4,213 ______________________________________ (1) During the year ended December 31, 2014 , the Company acquired the non-exclusive licensing rights to distribute certain digital content in perpetuity in the amount of $721 . The Company had not yet placed the digital content into service as of December 31, 2014 and therefore the amount is excluded from the corresponding table. |
Property and Equipment (Tables)
Property and Equipment (Tables) | 9 Months Ended |
Sep. 30, 2015 | |
Property, Plant and Equipment [Abstract] | |
Summary of property and equipment | Property and equipment is summarized as follows: September 30, December 31, 2015 2014 Computer equipment and software $ 32,163 $ 24,179 Furniture and fixtures 2,851 2,336 Leasehold improvements 14,472 13,954 Property and equipment 49,486 40,469 Less accumulated depreciation (19,609 ) (13,725 ) Property and equipment, net $ 29,877 $ 26,744 |
Accrued Expenses (Tables)
Accrued Expenses (Tables) | 9 Months Ended |
Sep. 30, 2015 | |
Payables and Accruals [Abstract] | |
Schedule of accrued expenses | Accrued expenses consist of the following: September 30, December 31, 2015 2014 Compensation $ 8,649 $ 8,312 Royalty tax withholdings 6,699 5,987 Non-income taxes 6,107 4,670 Payroll tax withholdings 611 478 Professional fees 916 1,708 Marketing expenses 460 794 Other expenses 4,520 3,033 Total accrued expenses $ 27,962 $ 24,982 |
Shareholders' Equity and Equi25
Shareholders' Equity and Equity-Based Compensation (Tables) | 9 Months Ended |
Sep. 30, 2015 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |
Summary of non-cash equity-based compensation expense included in the Company's statement of operations | The approximate intrinsic value of the total stock options outstanding at September 30, 2015 and at December 31, 2014 is as follows: September 30, December 31, 2015 2014 Total options outstanding $ 7,400 $ 48,700 Total options exercisable $ 5,500 $ 29,800 Total options vested and expected to vest $ 7,400 $ 50,600 The following table summarizes non-cash equity-based compensation expense, net of forfeitures, by line item included in the accompanying consolidated statements of operations for the three and nine months ended September 30, 2015 and 2014 : Three Months Ended September 30, Nine Months Ended September 30, 2015 2014 2015 2014 Cost of revenue $ 496 $ 336 $ 1,444 $ 953 Sales and marketing 1,364 819 4,110 2,689 Product development 1,743 1,805 5,863 4,529 General and administrative 4,080 3,375 11,354 7,557 Total $ 7,683 $ 6,335 $ 22,771 $ 15,728 The following table summarizes non-cash equity-based compensation expense, net of forfeitures, by award type included in the accompanying consolidated statements of operations for the three and nine months ended September 30, 2015 and 2014 : Three Months Ended September 30, Nine Months Ended September 30, 2015 2014 2015 2014 Stock options $ 2,663 $ 2,197 $ 6,486 $ 5,926 Restricted stock units 4,724 3,234 15,244 7,516 ESPP shares 169 225 589 598 Restricted stock units related to the acquisition of WebDAM 127 420 452 911 Restricted stock awards — 259 — 777 Total $ 7,683 $ 6,335 $ 22,771 $ 15,728 |
Schedule of stock options awards activity | The following table presents a summary of the Company’s stock option awards activity for the nine months ended September 30, 2015 : Plan Options Weighted Average Exercise Price Options outstanding at December 31, 2014 1,771,440 $ 41.61 Options granted 1,250 17.00 Options exercised (312,330 ) 18.87 Options cancelled or forfeited (105,779 ) 43.14 Options outstanding at September 30, 2015 1,354,581 $ 46.71 Vested and exercisable at September 30, 2015 541,048 $ 26.77 |
Schedule of weighted average assumptions used in the fair value calculation | The following weighted average assumptions were used in the fair value calculation of stock options granted during the nine months ended September 30, 2015 and 2014: Nine Months Ended September 30, 2015 2014 Expected term (in years) 2 6.3 - 10 Volatility 48 % 49 % Risk-free interest rate 0.7 % 2.1% - 2.8% Dividend yield — — |
Schedule of restricted stock unit ("RSUs") activity | The following table presents a summary of the Company’s RSU activity for the nine months ended September 30, 2015 : Plan Options Weighted Average Fair Value Non-vested balance at December 31, 2014 652,897 $ 81.45 Units granted 761,564 57.60 Units vested (177,191 ) 78.96 Units cancelled or forfeited (223,710 ) 78.02 Non-vested balance at September 30, 2015 1,013,560 $ 64.72 |
Other Expense, Net (Tables)
Other Expense, Net (Tables) | 9 Months Ended |
Sep. 30, 2015 | |
Other Nonoperating Income (Expense) [Abstract] | |
Summary of the Company's other (expense) income, net activity | The following table presents a summary of the Company’s other (expense) income activity included in the accompanying consolidated statements of operations for the three and nine months ended September 30, 2015 and 2014 : Three Months Ended September 30, Nine Months Ended September 30, 2015 2014 2015 2014 Foreign currency loss $ (244 ) $ (323 ) $ (1,951 ) $ (279 ) Change in fair value of contingent consideration (540 ) (70 ) (1,440 ) (110 ) Interest income 17 20 5 62 Total expense $ (767 ) $ (373 ) $ (3,386 ) $ (327 ) |
Summary of Operations and Sig27
Summary of Operations and Significant Accounting Policies (Details) - USD ($) $ in Thousands | Jan. 22, 2015 | Jan. 19, 2015 | Mar. 14, 2014 | Sep. 30, 2015 | Sep. 30, 2014 | Sep. 30, 2015 | Sep. 30, 2014 | Dec. 31, 2014 |
Acquisition Activity | ||||||||
Cash payment | $ 62,379 | $ 10,056 | ||||||
Intangible Assets: | ||||||||
Goodwill | $ 52,170 | 52,170 | $ 10,186 | |||||
2015 Acquisitions | ||||||||
Pro forma consolidated financial information | ||||||||
Revenue | 107,260 | $ 89,971 | 310,419 | 254,690 | ||||
Net income | 4,103 | 5,041 | 12,687 | 15,197 | ||||
Rex Features | ||||||||
Acquisition Activity | ||||||||
Total purchase price | $ 32,727 | |||||||
Assets: | ||||||||
Cash | 1,525 | |||||||
Accounts receivables | 2,908 | |||||||
Other assets | 356 | |||||||
Fixed assets | 92 | |||||||
Intangible Assets: | ||||||||
Goodwill | 14,918 | |||||||
Total assets acquired | 42,070 | |||||||
Liabilities: | ||||||||
Accounts payable | (253) | |||||||
Contributor payable | (2,249) | |||||||
Accrued expenses | (2,387) | |||||||
Deferred tax liability | (4,454) | |||||||
Total liabilities assumed | (9,343) | |||||||
Total | $ 32,727 | |||||||
Weighted average life of identifiable intangible assets | 8 years | |||||||
Rex Features | Customer relationships | ||||||||
Intangible Assets: | ||||||||
Intangible assets | $ 13,768 | |||||||
Rex Features | Trade name | ||||||||
Intangible Assets: | ||||||||
Intangible assets | 4,993 | |||||||
Rex Features | Developed technology | ||||||||
Intangible Assets: | ||||||||
Intangible assets | 3,026 | |||||||
Rex Features | Photo library | ||||||||
Intangible Assets: | ||||||||
Intangible assets | $ 484 | |||||||
Rex Features | General and administrative | ||||||||
Liabilities: | ||||||||
Professional fees | 0 | 143 | ||||||
Arbour Interactive Inc (PremiumBeat) | ||||||||
Acquisition Activity | ||||||||
Total purchase price | $ 35,445 | |||||||
Cash payment | 31,700 | |||||||
Contingent consideration | 3,745 | |||||||
Cash payment contingent upon achievement of performance criteria | 10,000 | |||||||
Assets: | ||||||||
Other assets | 963 | |||||||
Fixed assets | 205 | |||||||
Intangible Assets: | ||||||||
Goodwill (tax deductible) | 29,849 | |||||||
Deferred tax asset | 229 | |||||||
Total assets acquired | 36,408 | |||||||
Liabilities: | ||||||||
Contributor payable | (896) | |||||||
Accrued expenses | (44) | |||||||
Deferred revenue | (23) | |||||||
Total liabilities assumed | (963) | |||||||
Total | $ 35,445 | |||||||
Weighted average life of identifiable intangible assets | 6 years | |||||||
Arbour Interactive Inc (PremiumBeat) | Customer relationships | ||||||||
Intangible Assets: | ||||||||
Intangible assets | $ 3,000 | |||||||
Arbour Interactive Inc (PremiumBeat) | Trade name | ||||||||
Intangible Assets: | ||||||||
Intangible assets | 1,400 | |||||||
Arbour Interactive Inc (PremiumBeat) | Developed technology | ||||||||
Intangible Assets: | ||||||||
Intangible assets | 178 | |||||||
Arbour Interactive Inc (PremiumBeat) | Music catalog | ||||||||
Intangible Assets: | ||||||||
Intangible assets | $ 584 | |||||||
Arbour Interactive Inc (PremiumBeat) | General and administrative | ||||||||
Liabilities: | ||||||||
Professional fees | $ 0 | $ 244 | ||||||
Virtual Moment, LLC (WebDAM) | ||||||||
Acquisition Activity | ||||||||
Total purchase price | $ 12,416 | |||||||
Cash payment | 10,056 | |||||||
Contingent consideration | 2,360 | |||||||
Cash payment contingent upon achievement of performance criteria | 4,000 | |||||||
Assets: | ||||||||
Other assets | 836 | |||||||
Intangible Assets: | ||||||||
Goodwill (tax deductible) | 8,763 | |||||||
Total assets acquired | 13,499 | |||||||
Liabilities: | ||||||||
Total liabilities assumed | (1,083) | |||||||
Total | $ 12,416 | |||||||
Weighted average life of identifiable intangible assets | 7 years | |||||||
Virtual Moment, LLC (WebDAM) | Customer relationships | ||||||||
Intangible Assets: | ||||||||
Intangible assets | $ 2,800 | |||||||
Virtual Moment, LLC (WebDAM) | Trade name | ||||||||
Intangible Assets: | ||||||||
Intangible assets | 500 | |||||||
Virtual Moment, LLC (WebDAM) | Developed technology | ||||||||
Intangible Assets: | ||||||||
Intangible assets | $ 600 | |||||||
Virtual Moment, LLC (WebDAM) | General and administrative | ||||||||
Liabilities: | ||||||||
Professional fees | $ 0 | $ 300 |
Summary of Operations and Sig28
Summary of Operations and Significant Accounting Policies (Details 2) - USD ($) $ in Thousands | Sep. 30, 2015 | Dec. 31, 2014 |
Restricted Cash | ||
Restricted cash related to security deposits for leased office locations that expires in next twelve months | $ 182 | |
Deferred Rent | ||
Deferred rent balance | $ 8,201 | 8,036 |
Deferred rent current balance | 704 | 693 |
Deferred rent non-current balance | 7,497 | 7,343 |
Other assets | ||
Restricted Cash | ||
Restricted cash related to security deposits for leased office location that expires in 2024 | $ 1,829 | $ 1,829 |
Summary of Operations and Sig29
Summary of Operations and Significant Accounting Policies (Details 3) $ in Thousands | 9 Months Ended | |
Sep. 30, 2015USD ($)plan | Dec. 31, 2014USD ($) | |
Revenue recognition | ||
Chargeback and sales refund allowances | $ | $ 680 | $ 660 |
Number of subscription or usage based plans | 3 | |
Period of revenue recognition for undelivered elements | 1 year | |
Estimated customer relationship period | 3 years | |
Subscription plans | Minimum | ||
Revenue recognition | ||
Plan term | 30 days | |
Subscription plans | Maximum | ||
Revenue recognition | ||
Plan term | 1 year | |
On Demand plans | ||
Revenue recognition | ||
Plan term | 1 year | |
Credit-pack plans | ||
Revenue recognition | ||
Plan term | 1 year |
Summary of Operations and Sig30
Summary of Operations and Significant Accounting Policies (Details 4) | 9 Months Ended | |
Sep. 30, 2015 | Sep. 30, 2014 | |
Stock Option | ||
Equity-Based Compensation | ||
Expected dividend yield (as a percent) | 0.00% | 0.00% |
VAR Plan | ||
Equity-Based Compensation | ||
Expected dividend yield (as a percent) | 0.00% | |
2012 Plan | Stock Option | ||
Equity-Based Compensation | ||
Vesting period | 4 years | |
2012 Plan | Restricted stock units | ||
Equity-Based Compensation | ||
Vesting period | 3 years | |
2012 ESPP | Employee stock purchase plan | ||
Equity-Based Compensation | ||
Vesting period | 6 months |
Summary of Operations and Sig31
Summary of Operations and Significant Accounting Policies (Details 5) - shares | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2015 | Sep. 30, 2014 | Sep. 30, 2015 | Sep. 30, 2014 | |
Net Income Per Share | ||||
Number of shares to purchase, the effect of which is included in diluted net income available to common stockholders | 681,292 | 2,136,637 | 1,538,384 | 2,161,146 |
Anti-dilutive shares excluded from diluted net income available to common stockholders | 1,793,106 | 617,250 | 1,056,039 | 472,977 |
Reconciliation of assumed exercised shares used in calculating basic and diluted net income (loss) share available to common shareholders | ||||
Basic (in shares) | 36,039,907 | 35,304,066 | 35,847,748 | 35,161,644 |
Stock options and employee stock purchase plan shares (in shares) | 230,137 | 552,282 | 337,018 | 627,845 |
Unvested restricted stock awards (in shares) | 0 | 75,106 | 84,301 | 93,713 |
Diluted (in shares) | 36,270,044 | 35,931,454 | 36,269,067 | 35,883,202 |
Short Term Investments and Fa32
Short Term Investments and Fair Value Measurements (Details) - USD ($) $ in Thousands | Sep. 30, 2015 | Dec. 31, 2014 |
Short term investments and fair value measurements | ||
Amortized Cost | $ 52,493 | $ 54,848 |
Unrealized Gains | 0 | 0 |
Unrealized Losses | (2) | (4) |
Estimated Fair Market Value | 52,491 | 54,844 |
Commercial paper | ||
Short term investments and fair value measurements | ||
Amortized Cost | 52,493 | 54,848 |
Unrealized Gains | 0 | 0 |
Unrealized Losses | (2) | (4) |
Estimated Fair Market Value | $ 52,491 | $ 54,844 |
Short Term Investments and Fa33
Short Term Investments and Fair Value Measurements (Details 2) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2015 | Sep. 30, 2014 | Sep. 30, 2015 | Sep. 30, 2014 | Dec. 31, 2014 | |
Contingent consideration | |||||
Changes in fair value of contingent consideration | $ 540 | $ 70 | $ 1,440 | $ 110 | |
Estimate of Fair Value Measurement | Recurring Basis | |||||
Assets: | |||||
Total assets measured at fair value | 136,201 | 136,201 | $ 136,088 | ||
Liabilities: | |||||
Total liabilities measured at fair value | 7,331 | 7,331 | 2,560 | ||
Estimate of Fair Value Measurement | Recurring Basis | Other Nonoperating Income (Expense) | |||||
Contingent consideration | |||||
Changes in fair value of contingent consideration | 540 | $ 70 | 1,440 | $ 110 | |
Estimate of Fair Value Measurement | Recurring Basis | Acquisition related contingent consideration | |||||
Liabilities: | |||||
Total liabilities measured at fair value | 7,331 | 7,331 | 2,560 | ||
Contingent consideration | |||||
Fair value of contingent consideration | 7,331 | 7,331 | |||
Estimate of Fair Value Measurement | Recurring Basis | Money market accounts | |||||
Assets: | |||||
Total assets measured at fair value | 83,710 | 83,710 | 81,244 | ||
Estimate of Fair Value Measurement | Recurring Basis | Commercial Paper | |||||
Assets: | |||||
Total assets measured at fair value | 52,491 | 52,491 | 54,844 | ||
Estimate of Fair Value Measurement | Recurring Basis | Level 1 | |||||
Assets: | |||||
Total assets measured at fair value | 83,710 | 83,710 | 81,244 | ||
Liabilities: | |||||
Total liabilities measured at fair value | 0 | 0 | 0 | ||
Estimate of Fair Value Measurement | Recurring Basis | Level 1 | Acquisition related contingent consideration | |||||
Liabilities: | |||||
Total liabilities measured at fair value | 0 | 0 | 0 | ||
Estimate of Fair Value Measurement | Recurring Basis | Level 1 | Money market accounts | |||||
Assets: | |||||
Total assets measured at fair value | 83,710 | 83,710 | 81,244 | ||
Estimate of Fair Value Measurement | Recurring Basis | Level 1 | Commercial Paper | |||||
Assets: | |||||
Total assets measured at fair value | 0 | ||||
Estimate of Fair Value Measurement | Recurring Basis | Level 2 | |||||
Assets: | |||||
Total assets measured at fair value | 52,491 | 52,491 | 54,844 | ||
Liabilities: | |||||
Total liabilities measured at fair value | 0 | 0 | 0 | ||
Estimate of Fair Value Measurement | Recurring Basis | Level 2 | Acquisition related contingent consideration | |||||
Liabilities: | |||||
Total liabilities measured at fair value | 0 | 0 | 0 | ||
Estimate of Fair Value Measurement | Recurring Basis | Level 2 | Money market accounts | |||||
Assets: | |||||
Total assets measured at fair value | 0 | ||||
Estimate of Fair Value Measurement | Recurring Basis | Level 2 | Commercial Paper | |||||
Assets: | |||||
Total assets measured at fair value | 52,491 | 52,491 | 54,844 | ||
Estimate of Fair Value Measurement | Recurring Basis | Level 3 | |||||
Assets: | |||||
Total assets measured at fair value | 0 | 0 | 0 | ||
Liabilities: | |||||
Total liabilities measured at fair value | 7,331 | 7,331 | 2,560 | ||
Estimate of Fair Value Measurement | Recurring Basis | Level 3 | Acquisition related contingent consideration | |||||
Liabilities: | |||||
Total liabilities measured at fair value | 7,331 | 7,331 | 2,560 | ||
Estimate of Fair Value Measurement | Recurring Basis | Level 3 | Acquisition related contingent consideration | Virtual Moment, LLC (WebDAM) | Other liabilities | |||||
Contingent consideration | |||||
Fair value of contingent consideration | 2,850 | 2,850 | |||
Estimate of Fair Value Measurement | Recurring Basis | Level 3 | Acquisition related contingent consideration | Arbour Interactive Inc (PremiumBeat) | Other non-current liabilities | |||||
Contingent consideration | |||||
Fair value of contingent consideration | $ 4,481 | $ 4,481 | |||
Estimate of Fair Value Measurement | Recurring Basis | Level 3 | Money market accounts | |||||
Assets: | |||||
Total assets measured at fair value | 0 | ||||
Estimate of Fair Value Measurement | Recurring Basis | Level 3 | Commercial Paper | |||||
Assets: | |||||
Total assets measured at fair value | $ 0 |
Revenue By Geographic Area (Det
Revenue By Geographic Area (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2015 | Sep. 30, 2014 | Sep. 30, 2015 | Sep. 30, 2014 | Dec. 31, 2014 | |
Geographic revenue based on customer location and long-lived tangible assets | |||||
Revenue | $ 107,260 | $ 83,730 | $ 309,147 | $ 236,745 | |
Long-lived tangible assets | 29,877 | 29,877 | $ 26,744 | ||
North America | |||||
Geographic revenue based on customer location and long-lived tangible assets | |||||
Revenue | 42,153 | $ 32,119 | 120,848 | $ 87,896 | |
Long-lived tangible assets | $ 29,473 | $ 29,473 | 26,651 | ||
United States | Total revenue | Geographic concentration | |||||
Geographic revenue based on customer location and long-lived tangible assets | |||||
Concentration risk percentage | 34.00% | 32.00% | 34.00% | 32.00% | |
Europe | |||||
Geographic revenue based on customer location and long-lived tangible assets | |||||
Revenue | $ 35,453 | $ 28,240 | $ 104,499 | $ 83,452 | |
Long-lived tangible assets | $ 404 | $ 404 | $ 93 | ||
United Kingdom | Total revenue | Geographic concentration | |||||
Geographic revenue based on customer location and long-lived tangible assets | |||||
Concentration risk percentage | 11.00% | 11.00% | |||
Rest of the world | |||||
Geographic revenue based on customer location and long-lived tangible assets | |||||
Revenue | $ 29,654 | $ 23,371 | $ 83,800 | $ 65,397 |
Goodwill and Intangible Asset35
Goodwill and Intangible Assets (Details) $ in Thousands | 9 Months Ended |
Sep. 30, 2015USD ($) | |
Changes in goodwill | |
Balance at the beginning of the period | $ 10,186 |
Goodwill related to acquisitions | 44,767 |
Foreign currency translation adjustment | (2,783) |
Balance at the end of the period | 52,170 |
Content Business | |
Changes in goodwill | |
Balance at the beginning of the period | 1,423 |
Goodwill related to acquisitions | 44,767 |
Foreign currency translation adjustment | (2,783) |
Balance at the end of the period | 43,407 |
Other Category | |
Changes in goodwill | |
Balance at the beginning of the period | 8,763 |
Goodwill related to acquisitions | 0 |
Foreign currency translation adjustment | 0 |
Balance at the end of the period | $ 8,763 |
Goodwill and Intangible Asset36
Goodwill and Intangible Assets (Details 2) - USD ($) $ in Thousands | 9 Months Ended | 12 Months Ended |
Sep. 30, 2015 | Dec. 31, 2014 | |
Amortizing intangible assets: | ||
Gross Carrying Amount | $ 35,681 | |
Accumulated Amortization | (4,863) | |
Net Carrying Amount | 30,818 | $ 4,934 |
Customer relationships | ||
Amortizing intangible assets: | ||
Gross Carrying Amount | 19,921 | 3,400 |
Accumulated Amortization | (2,546) | (921) |
Net Carrying Amount | $ 17,375 | $ 2,479 |
Customer relationships | Contractual Weighted Average Life (Years) | ||
Amortizing intangible assets: | ||
Contractual Weighted Average Life (Years) | 9 years | 6 years |
Trade name | ||
Amortizing intangible assets: | ||
Gross Carrying Amount | $ 7,261 | $ 900 |
Accumulated Amortization | (952) | (230) |
Net Carrying Amount | $ 6,309 | $ 670 |
Trade name | Contractual Weighted Average Life (Years) | ||
Amortizing intangible assets: | ||
Contractual Weighted Average Life (Years) | 7 years | 9 years |
Developed technology | ||
Amortizing intangible assets: | ||
Gross Carrying Amount | $ 3,806 | $ 600 |
Accumulated Amortization | (867) | (68) |
Net Carrying Amount | $ 2,939 | $ 532 |
Developed technology | Contractual Weighted Average Life (Years) | ||
Amortizing intangible assets: | ||
Contractual Weighted Average Life (Years) | 4 years | 7 years |
Contributor content | ||
Amortizing intangible assets: | ||
Gross Carrying Amount | $ 4,403 | $ 450 |
Accumulated Amortization | (437) | (159) |
Net Carrying Amount | $ 3,966 | $ 291 |
Contributor content | Contractual Weighted Average Life (Years) | ||
Amortizing intangible assets: | ||
Contractual Weighted Average Life (Years) | 9 years | 15 years |
Digital content | ||
Amortizing intangible assets: | ||
Acquisition of digital content | $ 721 | |
Patents | ||
Amortizing intangible assets: | ||
Gross Carrying Amount | $ 193 | 193 |
Accumulated Amortization | (38) | (30) |
Net Carrying Amount | $ 155 | $ 163 |
Patents | Contractual Weighted Average Life (Years) | ||
Amortizing intangible assets: | ||
Contractual Weighted Average Life (Years) | 17 years | 17 years |
Domain name | ||
Amortizing intangible assets: | ||
Gross Carrying Amount | $ 97 | $ 97 |
Accumulated Amortization | (23) | (19) |
Net Carrying Amount | $ 74 | $ 78 |
Domain name | Contractual Weighted Average Life (Years) | ||
Amortizing intangible assets: | ||
Contractual Weighted Average Life (Years) | 14 years | 14 years |
Intangible assets excluding digital content | ||
Amortizing intangible assets: | ||
Gross Carrying Amount | $ 5,640 | |
Accumulated Amortization | (1,427) | |
Net Carrying Amount | $ 4,213 |
Goodwill and Intangible Asset37
Goodwill and Intangible Assets Goodwill and Intangible Assets (Details 3) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2015 | Sep. 30, 2014 | Sep. 30, 2015 | Sep. 30, 2014 | |
Finite-Lived Intangible Assets, Net, Amortization Expense, Fiscal Year Maturity [Abstract] | ||||
Amortization expense | $ 1,269 | $ 167 | $ 3,475 | $ 385 |
Remainder of 2015 | 1,264 | 1,264 | ||
2,016 | 5,056 | 5,056 | ||
2,017 | 5,056 | 5,056 | ||
2,018 | 4,055 | 4,055 | ||
2,019 | 3,722 | 3,722 | ||
Thereafter | $ 11,665 | $ 11,665 |
Property and Equipment (Details
Property and Equipment (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2015 | Sep. 30, 2014 | Sep. 30, 2015 | Sep. 30, 2014 | Dec. 31, 2014 | |
Property and Equipment | |||||
Property and equipment | $ 49,486 | $ 49,486 | $ 40,469 | ||
Less accumulated depreciation | (19,609) | (19,609) | (13,725) | ||
Property and equipment, net | 29,877 | 29,877 | 26,744 | ||
Depreciation expense | 2,600 | $ 1,958 | 6,888 | $ 5,372 | |
Computer equipment and software | |||||
Property and Equipment | |||||
Property and equipment | 32,163 | 32,163 | 24,179 | ||
Furniture and fixtures | |||||
Property and Equipment | |||||
Property and equipment | 2,851 | 2,851 | 2,336 | ||
Leasehold improvements | |||||
Property and Equipment | |||||
Property and equipment | $ 14,472 | $ 14,472 | $ 13,954 |
Accrued Expenses (Details)
Accrued Expenses (Details) - USD ($) $ in Thousands | Sep. 30, 2015 | Dec. 31, 2014 |
Payables and Accruals [Abstract] | ||
Compensation | $ 8,649 | $ 8,312 |
Royalty tax withholdings | 6,699 | 5,987 |
Non-income taxes | 6,107 | 4,670 |
Payroll tax withholdings | 611 | 478 |
Professional fees | 916 | 1,708 |
Marketing expenses | 460 | 794 |
Other expenses | 4,520 | 3,033 |
Total accrued expenses | $ 27,962 | $ 24,982 |
Income Taxes (Details)
Income Taxes (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2015 | Sep. 30, 2014 | Sep. 30, 2015 | Sep. 30, 2014 | |
Income Tax Disclosure [Abstract] | ||||
Effective tax rate (as a percent) | 39.20% | 40.30% | 41.90% | 42.90% |
Impact on effective tax rate from losses from jurisdictions where no benefit is recognized | 4.80% | 2.00% | ||
State and local taxes, net of federal benefit (as a percent) | 1.40% | 0.60% | ||
Unrecognized tax benefits | $ 0 | $ 11 | ||
Recognized tax benefit | 491 | 491 | ||
Unrecognized tax benefits, interest and penalties accrued | $ 16 | $ 25 | $ 70 | $ 72 |
Commitments and Contingencies (
Commitments and Contingencies (Details) - USD ($) $ in Thousands | Mar. 21, 2013 | Sep. 30, 2015 | Sep. 30, 2014 | Sep. 30, 2015 | Sep. 30, 2014 | Dec. 31, 2014 |
Operating leases | ||||||
Rental expense inclusive of operating leases | $ 1,229 | $ 999 | $ 3,555 | $ 3,167 | ||
Letter of credit as a security deposit for the leased facilities | $ 1,829 | |||||
Term of lease | 11 years | |||||
Future minimum lease payments under non-cancelable operating leases | ||||||
Total minimum lease payments | $ 34,900 | |||||
Other assets | ||||||
Operating leases | ||||||
Letter of credit collateralized as restricted cash | $ 1,829 | $ 1,829 | $ 1,829 |
Commitments and Contingencies42
Commitments and Contingencies (Details 2) - USD ($) | 12 Months Ended | |
Dec. 31, 2014 | Sep. 30, 2015 | |
Commitments and Contingencies Disclosure [Abstract] | ||
Commitment to purchase data server equipment | $ 1,400,000 | |
Other obligations | 9,400,000 | $ 26,000,000 |
Maturity of unconditional purchase obligations | ||
Remainder of 2015 | 3,900,000 | |
2,016 | 7,800,000 | |
2,017 | 5,100,000 | |
2,018 | 2,700,000 | |
2,019 | 3,000,000 | |
2,020 | 3,500,000 | |
Indemnifications | ||
Material indemnification obligation | $ 0 | $ 0 |
Employee Benefit Plans (Details
Employee Benefit Plans (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2015 | Sep. 30, 2014 | Sep. 30, 2015 | Sep. 30, 2014 | |
Compensation and Retirement Disclosure [Abstract] | ||||
Annual discretionary employer matching contributions (as a percent) | 3.00% | |||
Employer matching contributions | $ 372 | $ 264 | $ 1,049 | $ 710 |
Shareholders' Equity and Equi44
Shareholders' Equity and Equity-Based Compensation (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2015 | Sep. 30, 2014 | Sep. 30, 2015 | Sep. 30, 2014 | |
Non-cash equity-based compensation expense related to the 2012 Plan and 2012 ESPP | ||||
Recognized compensation charge | $ 7,683 | $ 6,335 | $ 22,771 | $ 15,728 |
Cost of revenue | ||||
Non-cash equity-based compensation expense related to the 2012 Plan and 2012 ESPP | ||||
Recognized compensation charge | 496 | 336 | 1,444 | 953 |
Sales and marketing | ||||
Non-cash equity-based compensation expense related to the 2012 Plan and 2012 ESPP | ||||
Recognized compensation charge | 1,364 | 819 | 4,110 | 2,689 |
Product development | ||||
Non-cash equity-based compensation expense related to the 2012 Plan and 2012 ESPP | ||||
Recognized compensation charge | 1,743 | 1,805 | 5,863 | 4,529 |
General and administrative | ||||
Non-cash equity-based compensation expense related to the 2012 Plan and 2012 ESPP | ||||
Recognized compensation charge | $ 4,080 | $ 3,375 | $ 11,354 | $ 7,557 |
Shareholders' Equity and Equi45
Shareholders' Equity and Equity-Based Compensation (Details 2) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2015 | Sep. 30, 2014 | Sep. 30, 2015 | Sep. 30, 2014 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Non-cash stock-based compensation expense, net of estimated forfeitures | $ 7,683 | $ 6,335 | $ 22,771 | $ 15,728 |
Stock Option | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Non-cash stock-based compensation expense, net of estimated forfeitures | 2,663 | 2,197 | 6,486 | 5,926 |
Restricted stock units | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Non-cash stock-based compensation expense, net of estimated forfeitures | 4,724 | 3,234 | 15,244 | 7,516 |
Restricted stock | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Non-cash stock-based compensation expense, net of estimated forfeitures | 0 | 259 | 0 | 777 |
2012 ESPP | Employee stock purchase plan | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Non-cash stock-based compensation expense net of estimated forfeitures recognized in connection with one-time acceleration charge | 169 | 225 | 589 | 598 |
Virtual Moment, LLC (WebDAM) | Restricted stock units | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Non-cash stock-based compensation expense, net of estimated forfeitures | $ 127 | $ 420 | $ 452 | $ 911 |
Shareholders' Equity and Equi46
Shareholders' Equity and Equity-Based Compensation (Details 3) - Stock Option - USD ($) | 9 Months Ended | ||
Sep. 30, 2015 | Sep. 30, 2014 | Dec. 31, 2014 | |
Plan Options | |||
Options outstanding at the beginning of the period (in shares) | 1,771,440 | ||
Options granted (in shares) | 1,250 | ||
Options exercised (in shares) | (312,330) | ||
Options cancelled or forfeited (in shares) | (105,779) | ||
Options outstanding at the end of the period (in shares) | 1,354,581 | ||
Vested and exercisable at the end of the period (in shares) | 541,048 | ||
Weighted Average Exercise Price | |||
Options outstanding at the beginning of the period (in dollars per unit) | $ 41.61 | ||
Options granted (in dollars per share) | 17 | ||
Options exercised (in dollars per share) | 18.87 | ||
Options cancelled or forfeited (in dollars per share) | 43.14 | ||
Options outstanding at the end of the period (in dollars per unit) | 46.71 | ||
Vested and exercisable at the end of the period (in dollars per share) | $ 26.77 | ||
Intrinsic values | |||
Intrinsic value of total options outstanding | $ 7,400,000 | $ 48,700,000 | |
Intrinsic value of total options exercisable | 5,500,000 | 29,800,000 | |
Intrinsic value of total options vested and expected to vest | $ 7,400,000 | $ 50,600,000 | |
Weighted average assumptions used in fair value calculation | |||
Expected term (in years) | 2 years | ||
Volatility (as a percent) | 48.00% | 49.00% | |
Risk-free interest rate (as a percent) | 0.70% | ||
Dividend yield | 0.00% | 0.00% | |
Minimum | |||
Weighted average assumptions used in fair value calculation | |||
Expected term (in years) | 6 years 3 months 18 days | ||
Risk-free interest rate (as a percent) | 2.10% | ||
Maximum | |||
Weighted average assumptions used in fair value calculation | |||
Expected term (in years) | 10 years | ||
Risk-free interest rate (as a percent) | 2.80% |
Shareholders' Equity and Equi47
Shareholders' Equity and Equity-Based Compensation (Details 4) - Restricted stock units | 9 Months Ended |
Sep. 30, 2015$ / sharesshares | |
Plan Options | |
Non-vested balance at the beginning of the period (in shares) | shares | 652,897 |
Units granted (in shares) | shares | 761,564 |
Units vested (in shares) | shares | (177,191) |
Units cancelled or forfeited (in shares) | shares | (223,710) |
Non-vested balance at the end of the period (in shares) | shares | 1,013,560 |
Weighted Average Fair Value | |
Non-vested balance at the beginning of the period (in dollars per share) | $ 81.45 |
Units granted (in dollars per share) | 57.60 |
Units vested (in dollars per share) | 78.96 |
Units cancelled or forfeited (in dollars per share) | 78.02 |
Non-vested balance at the end of the period (in dollars per share) | $ 64.72 |
Shareholders' Equity and Equi48
Shareholders' Equity and Equity-Based Compensation (Details 5) | 9 Months Ended |
Sep. 30, 2015USD ($)shares | |
2012 Plan | Stock Option | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Unrecognized compensation charge, 2012 plan non-vested options | $ 21,500,000 |
Vesting period | 4 years |
2012 Plan | Restricted stock units | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Vesting period | 3 years |
2012 Plan | Restricted Stock Units and Restricted Stock Awards | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Unrecognized non-cash equity-based compensation charge, 2012 Plan non-vested restricted stock and RSU | $ 53,400,000 |
2012 ESPP | Employee stock purchase plan | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Vesting period | 6 months |
Common stock issued, shares | shares | 153,133 |
Virtual Moment, LLC (WebDAM) | Restricted stock units | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Vesting period | 2 years |
Common Stock | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Authorized repurchase amount | $ 100,000,000 |
Other Expense, Net (Details)
Other Expense, Net (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2015 | Sep. 30, 2014 | Sep. 30, 2015 | Sep. 30, 2014 | |
Other Nonoperating Income (Expense) [Abstract] | ||||
Foreign currency loss | $ (244) | $ (323) | $ (1,951) | $ (279) |
Change in fair value of contingent consideration | (540) | (70) | (1,440) | (110) |
Interest income | 17 | 20 | 5 | 62 |
Total expense | $ (767) | $ (373) | $ (3,386) | $ (327) |