Document and Entity Information
Document and Entity Information - shares | 6 Months Ended | |
Jun. 30, 2016 | Jul. 29, 2016 | |
Document and Entity Information | ||
Entity Registrant Name | Shutterstock, Inc. | |
Entity Central Index Key | 1,549,346 | |
Document Type | 10-Q | |
Document Period End Date | Jun. 30, 2016 | |
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 | 35,016,294 | |
Document Fiscal Year Focus | 2,016 | |
Document Fiscal Period Focus | Q2 |
Consolidated Balance Sheets
Consolidated Balance Sheets - USD ($) $ in Thousands | Jun. 30, 2016 | Dec. 31, 2015 |
Current assets: | ||
Cash and cash equivalents | $ 210,918 | $ 241,304 |
Short-term investments | 54,974 | 47,078 |
Credit card receivables | 4,172 | 2,811 |
Accounts receivable, net | 33,347 | 25,653 |
Prepaid expenses and other current assets | 18,238 | 11,713 |
Deferred tax assets, net | 7,166 | 7,116 |
Total current assets | 328,815 | 335,675 |
Property and equipment, net | 41,347 | 32,094 |
Intangible assets, net | 27,618 | 29,781 |
Goodwill | 51,423 | 50,934 |
Deferred tax assets, net | 16,367 | 18,691 |
Other assets | 2,807 | 1,946 |
Total assets | 468,377 | 469,121 |
Current liabilities: | ||
Accounts payable | 10,590 | 6,816 |
Accrued expenses | 31,247 | 30,696 |
Contributor royalties payable | 19,270 | 17,822 |
Income taxes payable | 516 | 953 |
Deferred revenue | 111,258 | 98,239 |
Other liabilities | 10,936 | 6,258 |
Total current liabilities | 183,817 | 160,784 |
Deferred tax liability, net | 2,908 | 3,778 |
Other non-current liabilities | 7,519 | 15,994 |
Total liabilities | 194,244 | 180,556 |
Commitments and contingencies | ||
Stockholders’ equity: | ||
Common stock, $0.01 par value; 200,000 shares authorized; 36,648 and 36,146 shares issued and 34,909 and 35,686 shares outstanding as of June 30, 2016 and December 31, 2015, respectively | 366 | 361 |
Treasury stock, at cost; 1,739 and 460 shares as of June 30, 2016 and December 31, 2015, respectively | (59,728) | (15,635) |
Additional paid-in capital | 232,312 | 213,851 |
Accumulated comprehensive loss | (8,636) | (6,449) |
Retained earnings | 109,819 | 96,437 |
Total stockholders’ equity | 274,133 | 288,565 |
Total liabilities and stockholders’ equity | $ 468,377 | $ 469,121 |
Consolidated Balance Sheets (Pa
Consolidated Balance Sheets (Parenthetical) - $ / shares | Jun. 30, 2016 | Dec. 31, 2015 |
Statement of Financial Position [Abstract] | ||
Common stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Common stock, shares authorized (in shares) | 200,000,000 | 200,000,000 |
Common stock, shares issued (in shares) | 36,648,000 | 36,146,000 |
Common stock, shares outstanding (in shares) | 34,909,000 | 35,686,000 |
Treasury stock, shares held in treasury (in shares) | 1,739,000 | 460,000 |
Consolidated Statements of Oper
Consolidated Statements of Operations - USD ($) shares in Thousands, $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2016 | Jun. 30, 2015 | Jun. 30, 2016 | Jun. 30, 2015 | |
Income Statement [Abstract] | ||||
Revenue | $ 124,419 | $ 104,365 | $ 241,071 | $ 201,887 |
Operating expenses: | ||||
Cost of revenue | 52,245 | 42,545 | 100,308 | 82,070 |
Sales and marketing | 31,571 | 27,429 | 58,659 | 52,534 |
Product development | 11,971 | 10,189 | 23,196 | 20,873 |
General and administrative | 18,155 | 14,536 | 37,609 | 28,508 |
Total operating expenses | 113,942 | 94,699 | 219,772 | 183,985 |
Income from operations | 10,477 | 9,666 | 21,299 | 17,902 |
Other expense, net | (212) | (57) | (224) | (2,619) |
Income before income taxes | 10,265 | 9,609 | 21,075 | 15,283 |
Provision for income taxes | 3,016 | 4,272 | 7,693 | 6,703 |
Net income | 7,249 | 5,337 | 13,382 | 8,580 |
Less: | ||||
Less: Undistributed earnings to participating stockholder | 0 | 0 | 0 | 2 |
Net income available to common stockholders | $ 7,249 | $ 5,337 | $ 13,382 | $ 8,578 |
Net income per share available to common stockholders: | ||||
Basic (in dollars per share) | $ 0.21 | $ 0.15 | $ 0.38 | $ 0.24 |
Diluted (in dollars per share) | $ 0.20 | $ 0.15 | $ 0.37 | $ 0.24 |
Weighted average shares outstanding: | ||||
Basic (in shares) | 34,957 | 35,864 | 35,166 | 35,750 |
Diluted (in shares) | 35,642 | 36,340 | 35,870 | 36,267 |
Consolidated Statements of Comp
Consolidated Statements of Comprehensive Income - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2016 | Jun. 30, 2015 | Jun. 30, 2016 | Jun. 30, 2015 | |
Statement of Comprehensive Income [Abstract] | ||||
Net income | $ 7,249 | $ 5,337 | $ 13,382 | $ 8,580 |
Foreign currency translation (loss) gain | (4,261) | 3,479 | (2,405) | 380 |
Unrealized gain on investments | 154 | 9 | 218 | 17 |
Other comprehensive (loss) income | (4,107) | 3,488 | (2,187) | 397 |
Comprehensive income | $ 3,142 | $ 8,825 | $ 11,195 | $ 8,977 |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows - USD ($) $ in Thousands | 6 Months Ended | |
Jun. 30, 2016 | Jun. 30, 2015 | |
CASH FLOWS FROM OPERATING ACTIVITIES | ||
Net income | $ 13,382 | $ 8,580 |
Adjustments to reconcile net income to net cash provided by operating activities: | ||
Depreciation and amortization | 9,005 | 6,494 |
Deferred taxes | 1,792 | (1,825) |
Non-cash equity-based compensation | 14,605 | 15,088 |
Change in fair value of contingent consideration | 2,495 | 900 |
Settlement of contingent consideration liability in excess of acquisition-date fair value | (1,640) | 0 |
Tax effect from exercise/vesting of equity awards, net | 1,363 | (1,700) |
Bad debt reserve | 2,702 | 814 |
Chargeback and sales refund reserves | (92) | 20 |
Changes in operating assets and liabilities: | ||
Credit card receivables | (1,345) | (1,356) |
Accounts receivable | (10,688) | (6,202) |
Prepaid expenses and other current and non-current assets | (4,317) | 3,056 |
Accounts payable and other current and non-current liabilities | 4,578 | 1,669 |
Contributor royalties payable | 1,598 | 2,288 |
Income taxes payable | (4,852) | (1,203) |
Deferred revenue | 13,017 | 13,476 |
Net cash provided by operating activities | 41,603 | 40,099 |
CASH FLOWS FROM INVESTING ACTIVITIES | ||
Capital expenditures | (16,294) | (6,084) |
Purchase of investments | (132,398) | (130,982) |
Sale and maturities of investments | 124,600 | 130,953 |
Acquisition of business, net of cash acquired | 0 | (62,379) |
Acquisition of digital content | (1,462) | (1,473) |
Security deposit payment | (889) | (71) |
Net cash used in investing activities | (26,443) | (70,036) |
CASH FLOWS FROM FINANCING ACTIVITIES | ||
Purchase of treasury shares | (44,468) | 0 |
Proceeds from exercise of stock options | 3,520 | 5,697 |
Proceeds from issuance of common stock under 2012 Employee Stock Purchase Plan | 809 | 1,052 |
Settlement of contingent consideration liability | (2,360) | 0 |
Tax effect from exercise/vesting of equity awards, net | (1,363) | 1,700 |
Net cash (used in) provided by financing activities | (43,862) | 8,449 |
Effect of foreign exchange rate changes on cash | (1,684) | (486) |
Net decrease in cash and cash equivalents | (30,386) | (21,974) |
Cash and cash equivalents, beginning of period | 241,304 | 233,453 |
Cash and cash equivalents, end of period | 210,918 | 211,479 |
Supplemental Disclosure of Cash Information: | ||
Cash paid for income taxes | $ 11,890 | $ 7,807 |
Summary of Operations and Signi
Summary of Operations and Significant Accounting Policies | 6 Months Ended |
Jun. 30, 2016 | |
Accounting Policies [Abstract] | |
Summary of Operations and Significant Accounting Policies | Summary of Operations and Significant Accounting Policies Summary of Operations Shutterstock, Inc., together with its subsidiaries (collectively, the “Company” or “Shutterstock”), operates a global marketplace and is a leading provider of high-quality creative content including: (a) digital imagery, which consists of licensed photographs, vectors, illustrations and video clips that customers use in their visual communications, such as websites, digital and print marketing materials, corporate communications, books, publications and video content; and (b) commercial music, which consists of high-quality music tracks and sound effects, and is often used to complement the digital imagery. The Company licenses creative content to its customers. Contributors upload their creative content to the Company’s websites in exchange for royalty payments based on customer download activity. The Company also offers digital asset management services through its cloud-based digital asset management platform, WebDAM. This service provides tools for customers to better manage creative content and brand management assets. In recent years, the Company has grown, in part, through acquisitions, most notably through the acquisition of WebDAM in 2014 and the acquisitions of Rex Features and PremiumBeat in 2015. 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. Basis of Presentation The unaudited consolidated financial statements and accompanying notes have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, these financial statements do not include all information and footnotes required by U.S. GAAP for complete financial statements. The interim consolidated balance sheet as of June 30, 2016 , the consolidated statements of operations and comprehensive income for the three and six months ended June 30, 2016 and 2015 , and the consolidated statement of cash flows for the six months ended June 30, 2016 and 2015 are unaudited. The consolidated balance sheet as of December 31, 2015 , included herein, was derived from the audited financial statements as of that date, but does not include all disclosures required by U.S. GAAP. These 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 June 30, 2016 and its consolidated results of operations, comprehensive income and cash flows for the three and six months ended June 30, 2016 and 2015 . 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 six months ended June 30, 2016 are not necessarily indicative of the results to be expected for the fiscal year ending December 31, 2016 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, 2015 filed with the SEC on February 24, 2016 . These financial statements should also be read in conjunction with the audited consolidated financial statements and notes thereto for the year ended December 31, 2015 . The unaudited consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries. All intercompany balances and transactions have been eliminated in consolidation. Certain immaterial changes in presentation have been made to conform the prior period presentation to current period reporting. Use of Estimates The preparation of the consolidated financial statements in conformity with U.S. 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, sales refund reserve, accruals related to self-insurance, the fair value of goodwill, intangible assets and other long-lived assets, non-cash equity-based compensation, the fair value of contingent consideration, the provision for income taxes and the amount of 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 its office leases. As of June 30, 2016 and December 31, 2015 , the Company had restricted cash of approximately $2.6 million and $1.8 million , respectively, in other assets that related to the lease for its headquarters in New York City, which expires in 2029 . In January 2016, this lease was amended to provide additional space and extend the lease term, which required an increased security deposit. The carrying value of restricted cash approximates fair value. Allowance for Doubtful Accounts The Company’s accounts receivable consist of customer obligations due under normal trade terms, carried at their face value less an allowance for doubtful accounts, if required. The Company determines its allowance for doubtful accounts based on an evaluation of the aging of its accounts receivable and on a customer-by-customer basis where appropriate. The Company’s reserve analysis contemplates the Company’s historical loss rate on receivables, specific customer situations and the economic environments in which the Company operates. As of June 30, 2016 and December 31, 2015 , the Company’s allowance for doubtful accounts was approximately $6.2 million and $3.8 million , respectively, which was included as a reduction of accounts receivable. 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 June 30, 2016 , the Company had deferred rent of $7.7 million , of which $0.7 million was included in other liabilities and $7.0 million was included in other non-current liabilities. As of December 31, 2015 , the Company had deferred rent of $8.0 million , of which $0.7 million was included in other liabilities and $7.3 million was included in other non-current liabilities. Chargeback and Sales Refund Allowance The majority of the Company’s customers purchase products by making an electronic payment with a credit card at the time of a transaction. 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 both June 30, 2016 and December 31, 2015 , the Company’s combined allowance for chargebacks and sales refunds was $0.7 million , which was included in other liabilities. Medical Self-insurance Costs The Company is partially self-insured for claims relating to employee medical benefit programs. The medical self-insurance program is administered by a third party and contains stop-loss provisions on both an individual claim basis and in aggregate. The Company records claims incurred as an expense each period, including an estimate of claims incurred but not yet reported. The Company uses claims data and historical experience, as applicable, to estimate the liability for unreported claims and believes that the methodologies used to estimate insurance liabilities result in an accurate reflection of the liabilities as of the date of the balance sheet. Contingent Consideration The Company records a liability for contingent consideration at the date of a business combination and reassesses the fair value of the liability each period until it is settled. Upon settlement of these liabilities, the portion of the contingent consideration payment that is attributable to the initial amount recorded as part of the business combination is classified as a cash flow from financing activities and the portion of the settlement that is attributable to subsequent changes in the fair value of the contingent consideration is classified as a cash flow from operating activities in the consolidated statement of cash flows. Income Taxes The Company’s income tax expense includes U.S. (federal and state) and foreign income taxes. Significant management judgment is required in projecting ordinary income in order to determine the Company’s estimated effective tax rate. The Company has 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. Quarterly, the Company will continue to evaluate its ability to realize deferred tax assets. 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. Recently Issued Accounting Standard Updates In March 2016, the Financial Accounting Standards Board (“FASB”) issued new guidance related to stock-based compensation. The new standard changes how companies account for certain aspects of share-based payment awards to employees, including the accounting for income taxes, forfeitures, and statutory tax withholding requirements, as well as the classification of certain related items in the statement of cash flows. The guidance is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2016. Early adoption is permitted. Amendments related to the timing of when excess tax benefits are recognized, minimum statutory withholding requirements, forfeitures, and intrinsic value should be applied using a modified retrospective approach; amendments related to the recognition of excess tax benefits and tax deficiencies in the income statement and the practical expedient for estimating expected term should be applied prospectively; and amendments related to the presentation of excess tax benefits on the statement of cash flows may be applied prospectively or retrospectively. The Company is evaluating the impact of adopting this new accounting standard on its financial statements. In February 2016, the FASB issued new guidance related to leases. The new standard requires that the rights and obligations created by leases with a duration greater than 12 months be recorded as assets and liabilities on the balance sheet of the lessee. The guidance is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2018 and can be applied using a modified retrospective approach for all leases entered into before the effective date. Early adoption is permitted. The Company is evaluating the impact of adopting this new accounting standard on its financial statements. In November 2015, the FASB issued new guidance related to income taxes. The new standard requires that all deferred tax assets and liabilities, and any related valuation allowance, be classified as non-current on the balance sheet. The guidance is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2016, although early adoption is permitted and can be applied either prospectively or retrospectively to all periods presented. The Company is evaluating the impact of adopting this new accounting standard on its financial statements. In May 2014, the FASB issued new accounting guidance related to revenue recognition. This new standard will replace all current U.S. 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 this guidance by one year. As a result, this new guidance will be effective for the fiscal years, and interim periods within those fiscal years, beginning after December 15, 2017. 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 of adopting this new accounting standard on its financial statements. |
Fair Value Measurements
Fair Value Measurements | 6 Months Ended |
Jun. 30, 2016 | |
Fair Value Disclosures [Abstract] | |
Fair Value Measurements | Fair Value Measurements The following tables present the Company’s fair value hierarchy for its assets and liabilities (in thousands): As of June 30, 2016 Aggregate Fair Value Level 1 Level 2 Level 3 Assets: Money market accounts $ 81,436 $ 81,436 $ — $ — Commercial paper 54,974 — 54,974 — Total assets measured at fair value $ 136,410 $ 81,436 $ 54,974 $ — Liabilities: Acquisition-related contingent consideration $ 9,570 $ — $ — $ 9,570 Total liabilities measured at fair value $ 9,570 $ — $ — $ 9,570 As of December 31, 2015 Aggregate Fair Value Level 1 Level 2 Level 3 Assets: Money market accounts $ 89,153 $ 89,153 $ — $ — Commercial paper 47,078 — 47,078 — Total assets measured at fair value $ 136,231 $ 89,153 $ 47,078 $ — Liabilities: Acquisition-related contingent consideration $ 11,075 $ — $ — $ 11,075 Total liabilities measured at fair value $ 11,075 $ — $ — $ 11,075 Money Market Accounts Cash equivalents include money market accounts and are classified as a level 1 measurement based on quoted prices in active markets for identical assets that the reporting entity can access at the measurement date. Commercial Paper The Company’s short-term investments consist of commercial paper with original maturity dates of 90 days or less, which are available to support current operations and are classified as available-for-sale securities. Commercial paper is classified as a level 2 measurement based on quoted market prices for identical assets, which are subject to infrequent transactions. Short-term investments are summarized as follows (in thousands): As of June 30, 2016 As of December 31, 2015 Commercial Paper: Amortized cost $ 54,981 $ 47,084 Unrealized gains — — Unrealized losses (7 ) (6 ) Total short-term investments measured at fair value $ 54,974 $ 47,078 Acquisition-Related Contingent Consideration The Company reassesses the fair value of contingent consideration to be settled in cash related to certain of the Company’s acquisitions using the Black-Scholes model until the settlement amount of the cash flow is determinable. These contingencies are considered level 3 measurements. Significant assumptions used in measuring the fair value include probabilities of achieving certain revenue milestones based on the Company’s expectations and a discount rate which is based on an unobservable input that is supported by little or no market activity. As of December 31, 2015 , the settlement amount of the contingent consideration related to the Company’s acquisition of WebDAM was determined to be $4.0 million and was included in other liabilities. No changes in fair value were recorded during the six months ended June 30, 2016 . The contingent consideration of $4.0 million was paid in April 2016, and there was no remaining liability as of June 30, 2016 . During the first quarter of fiscal 2016, the settlement amount of the contingent consideration related to the PremiumBeat acquisition was determined to be $10.0 million , which will be paid during 2017. As of June 30, 2016 , the present value of the amount to be paid was $9.6 million and was included in other liabilities. As of December 31, 2015 , the fair value of the contingent consideration was $7.1 million , and was included in other non-current liabilities. Other Fair Value Measurements 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 non-financial assets be recorded at fair value. |
Property and Equipment
Property and Equipment | 6 Months Ended |
Jun. 30, 2016 | |
Property, Plant and Equipment [Abstract] | |
Property and Equipment | Property and Equipment Property and equipment is summarized as follows (in thousands): As of June 30, 2016 As of December 31, 2015 Computer equipment and software $ 46,867 $ 37,502 Furniture and fixtures 2,837 2,933 Leasehold improvements 15,748 14,471 Property and equipment 65,452 54,906 Less accumulated depreciation (24,105 ) (22,812 ) Property and equipment, net $ 41,347 $ 32,094 Depreciation expense related to property and equipment was $3.5 million and $2.2 million for the three months ended June 30, 2016 and 2015 , respectively, and $6.5 million and $4.3 million for the six months ended June 30, 2016 and 2015 , respectively. Depreciation expense is included in cost of revenue and general and administrative expense based on the nature of the asset being depreciated. Capitalized Internal-Use Software The Company capitalized costs related to the development of internal-use software of $3.4 million and $0.2 million for the three months ended June 30, 2016 and 2015 , respectively, and $6.2 million and $0.3 million for the six months ended June 30, 2016 and 2015 , respectively. Capitalized amounts are included as a component of property and equipment under computer equipment and software. The portion of total depreciation expense related to capitalized internal-use software was $0.7 million and $0.1 million for the three months ended June 30, 2016 and 2015 , respectively, and $1.2 million and $0.2 million for the six months ended June 30, 2016 and 2015 , respectively. Depreciation expense related to capitalized internal-use software is included in cost of revenue and general and administrative expense. As of June 30, 2016 and December 31, 2015 , the Company had capitalized internal-use software of $9.0 million and $3.9 million , respectively, net of accumulated depreciation, which was included in property and equipment, net. |
Goodwill, Intangible Assets and
Goodwill, Intangible Assets and Acquisition Activity | 6 Months Ended |
Jun. 30, 2016 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Goodwill, Intangible Assets and Acquisition Activity | Goodwill, Intangible Assets and Acquisition Activity Goodwill The Company’s goodwill balance is attributable to its Bigstock, Editorial, Music and WebDAM reporting units and is tested for impairment at least annually on October 1 or upon a triggering event. Bigstock, Music and Editorial are included in the Company's “Content Business” reporting segment while WebDAM is included in the non-reportable “Other Category”. The following table summarizes the changes in the Company’s goodwill balance by reportable and non-reportable segments through June 30, 2016 (in thousands): Consolidated Content Business Other Category Balance as of December 31, 2015 $ 50,934 $ 42,171 $ 8,763 Foreign currency translation adjustment 489 489 — Balance as of June 30, 2016 $ 51,423 $ 42,660 $ 8,763 No triggering events were identified during the six months ended June 30, 2016 . Other Intangible Assets Intangible assets consisted of the following as of June 30, 2016 and December 31, 2015 (in thousands): As of June 30, 2016 As of December 31, 2015 Gross Carrying Amount Accumulated Amortization Weighted Gross Accumulated Amortizing intangible assets: Customer relationships $ 18,287 $ (3,692 ) 9 $ 19,523 $ (3,089 ) Trade name 6,837 (1,636 ) 7 7,111 (1,188 ) Developed technology 3,457 (1,566 ) 4 3,734 (1,129 ) Contributor content 6,340 (693 ) 9 5,138 (567 ) Patents 209 (46 ) 18 193 (40 ) Domain name 160 (39 ) 11 120 (25 ) Total $ 35,290 $ (7,672 ) $ 35,819 $ (6,038 ) Amortization expense was $1.3 million for both of the three months ended June 30, 2016 and 2015 and $2.5 million and $2.2 million for the six months ended June 30, 2016 and 2015 , respectively. The Company 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: $2.5 million for the remaining six months of 2016 , $5.0 million in 2017 , $4.1 million in 2018 , $3.9 million in 2019 , $3.3 million in 2020 , $2.8 million in 2021 and $5.9 million thereafter. Acquisition Activity Rex Features On January 19, 2015, the Company acquired all of the shares of Rex Features (Holdings) Limited, or Rex Features, pursuant to a stock purchase agreement. The total purchase price consisted of a cash payment of $32.7 million subject to certain working capital adjustments. 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. Goodwill related to the acquisition of Rex Features is attributable to its ability to serve as the foundation of the Company’s editorial offering, serving as a base for accelerating the growth of the offering by leveraging Rex Features’ editorial expertise and the Company’s technical capabilities and position in the marketplace, and is not deductible for tax purposes. PremiumBeat On January 22, 2015, the Company acquired substantially all of the assets and certain liabilities of Arbour Interactive, Inc., or PremiumBeat, pursuant to an asset purchase agreement. The total purchase price of $35.4 million consisted of a cash payment of $31.7 million and $3.7 million in contingent consideration based on certain performance criteria. As of June 30, 2016 , the fair value of the contingent consideration related to the PremiumBeat acquisition was $9.6 million , which represents the present value of the amount that will be paid, and is included in other liabilities. During the six months ended June 30, 2016 , the Company recorded a change in the fair value of the contingent consideration in the amount of $2.5 million , of which $0.8 million was recorded as a component of other (expense) income, net related to the passage of time and $1.7 million was recorded as a component of general and administrative expense related to a modification of the terms of the contingent consideration 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. Goodwill related to the acquisition of PremiumBeat is attributable to expected synergies from future growth and the ability to accelerate the growth of the Company’s music offering by leveraging PremiumBeat’s experience in the music market, and is deductible for tax purposes. 2015 Acquisition Activity The fair value of consideration transferred in the acquisitions of Rex Features and PremiumBeat 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 fair values of intangible assets were determined primarily using the income approach. The aggregate purchase price was allocated to the assets acquired and liabilities assumed as follows (in thousands): Acquisition Activity Assets acquired: Cash $ 1,525 Accounts receivable 2,908 Other assets 1,319 Fixed assets 297 Intangible assets (1) 27,433 Goodwill 44,767 Deferred tax asset 229 Total assets acquired $ 78,478 Liabilities assumed: Accounts payable $ (253 ) Contributor payable (3,145 ) Accrued expenses (2,431 ) Deferred revenue (23 ) Deferred tax liability (4,454 ) Total liabilities assumed $ (10,306 ) Total $ 68,172 ______________________________________________________________________________ (1) Identifiable intangible assets include customer relationships, trade names, developed technology and content libraries and are being amortized on a straight-line basis over a weighted average life of approximately eight years . As a result of the acquisitions of Rex Features and PremiumBeat, the Company recorded $0.4 million of professional fees in the six months ended June 30, 2015 . There were no professional fees related to these acquisitions in the three and six months ended June 30, 2016 or the three months ended June 30, 2015 . The professional fees are included in general and administrative expense. Pro forma results of operations have not been presented because the effect of these business combinations was not material to the Company’s pro forma consolidated results of operations for any of the periods presented. |
Accrued Expenses
Accrued Expenses | 6 Months Ended |
Jun. 30, 2016 | |
Payables and Accruals [Abstract] | |
Accrued Expenses | Accrued Expenses Accrued expenses consist of the following (in thousands): As of June 30, 2016 As of December 31, 2015 Compensation $ 8,405 $ 8,995 Non-income taxes 7,185 7,095 Royalty tax withholdings 6,590 6,439 Payroll tax withholdings 825 426 Professional fees 1,451 902 Marketing expenses 748 237 Other expenses 6,043 6,602 Total accrued expenses $ 31,247 $ 30,696 |
Commitments and Contingencies
Commitments and Contingencies | 6 Months Ended |
Jun. 30, 2016 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | Commitments and Contingencies The Company leases facilities under agreements accounted for as operating leases. Rental expense for operating leases was $1.4 million and $1.2 million for the three months ended June 30, 2016 and 2015 , respectively, and $3.0 million and $2.3 million for the six months ended June 30, 2016 and 2015 , 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. In 2016, the Company’s lease for its office facility in New York City was amended to, among other things, provide for the lease of approximately 25,000 square feet of additional office space and extend the term of the lease. In connection with the underlying lease agreement, the Company entered into a letter of credit as a security deposit for the leased facilities, which was increased to $2.6 million in connection with the January 2016 amendment. The letter of credit was collateralized by $2.6 million of cash as of June 30, 2016 , which is recorded as restricted cash and is included in other assets in the consolidated balance sheet. As amended, the lease is scheduled to expire in 2029 and aggregate future minimum payments under the amended lease are approximately $84.7 million . Capital Expenditures As of June 30, 2016 , the Company had outstanding commitments to purchase approximately $0.5 million of data servers and other equipment related to the expansion of its existing business and infrastructure. Other Obligations As of June 30, 2016 , the Company had other obligations in the amount of approximately $29.0 million , which consisted primarily of minimum royalty guarantees and unconditional purchase obligations related to contracts for infrastructure and other business services. As of June 30, 2016 , the Company’s other obligations for the remainder of 2016 and for the years ending December 31, 2017 , 2018 , 2019 and 2020 were approximately $4.8 million , $9.0 million , $7.4 million , $4.0 million and $3.8 million , 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 agreements under which it agrees to provide indemnification of varying scope and terms to customers with respect to certain matters, including, but not limited to, losses arising out of the breach of the Company’s intellectual property warranties for damages to the customer directly attributable to the Company’s breach. The Company is not responsible for any damages, costs, or losses to the extent such damages, costs or losses arise as a result of any modifications made by the customer, or the context in which an image is used. The Company’s license agreements generally cap indemnification obligations at amounts ranging from $10,000 to $250,000 , with certain exceptions for which the Company’s indemnification obligations are uncapped. As of June 30, 2016 , 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 and Indemnification Agreements The Company has entered into employment arrangements and indemnification agreements with its executive officers, directors and certain employees. These agreements specify various employment-related matters, including annual compensation, performance incentive bonuses, and severance benefits in the event of termination with or without cause. |
Shareholders' Equity and Equity
Shareholders' Equity and Equity-Based Compensation | 6 Months Ended |
Jun. 30, 2016 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |
Shareholders' Equity and Equity-Based Compensation | Stockholders’ Equity and Equity-Based Compensation Stockholders’ Equity Common Stock During the six months ended June 30, 2016 , the Company issued approximately 502,000 shares of common stock, related primarily to the exercise of stock options and the vesting of restricted stock units (“RSUs”). Treasury Stock In October 2015, the Company’s Board of Directors approved a share 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 share repurchase program is subject to the Company having available cash to fund repurchases. Under the program, the Company 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. During the six months ended June 30, 2016 , the Company repurchased approximately 1,280,000 shares of its common stock under the share repurchase program at an average per-share cost of approximately $34.44 , of which $0.4 million has not been paid as of June 30, 2016 and is included in accrued expenses. As of June 30, 2016 , the Company had $40.3 million remaining for purchases under the share repurchase program. Equity-Based Compensation The Company recognizes stock-based compensation expense for all share-based payment awards including employee stock options and RSUs granted under the 2012 Omnibus Equity Incentive Plan and sales of shares of common stock under the 2012 Employee Stock Purchase Plan (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 financial statement line item included in the accompanying consolidated statements of operations for the three and six months ended June 30, 2016 and 2015 (in thousands): Three Months Ended June 30, Six Months Ended June 30, 2016 2015 2016 2015 Cost of revenue $ 521 $ 466 $ 1,054 $ 948 Sales and marketing 1,357 1,428 2,548 2,746 Product development 2,003 1,751 4,152 4,120 General and administrative 3,371 3,935 6,851 7,274 Total $ 7,252 $ 7,580 $ 14,605 $ 15,088 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 six months ended June 30, 2016 and 2015 (in thousands): Three Months Ended June 30, Six Months Ended June 30, 2016 2015 2016 2015 Stock options $ 1,892 $ 1,777 $ 3,628 $ 3,823 RSUs 5,207 5,484 10,609 10,520 ESPP shares 153 221 325 420 RSUs related to the acquisition of WebDAM — 98 43 325 Total $ 7,252 $ 7,580 $ 14,605 $ 15,088 Stock Option Awards During the six months ended June 30, 2016 , the Company granted options to purchase approximately 438,000 shares of its common stock with a weighted average exercise price of $35.51 . As of June 30, 2016 , there were approximately 403,000 options vested and exercisable with a weighted average exercise price of $30.64 . As of June 30, 2016 , the total unrecognized compensation charge related to non-vested options was approximately $25.5 million , which is expected to be recognized through the fiscal year 2021 . Restricted Stock Units During the six months ended June 30, 2016 , the Company granted approximately 686,000 RSUs. As of June 30, 2016 there are approximately 1,304,000 non-vested RSUs outstanding. As of June 30, 2016 , the total unrecognized non-cash equity-based compensation charge related to the non-vested RSUs was approximately $48.8 million , which is expected to be recognized through fiscal year 2021 . Included in the total number of RSUs granted during the six months ended June 30, 2016 was approximately 31,000 RSUs granted and issued in satisfaction of the Company’s liability to certain WebDAM executives to provide a fixed-dollar amount of RSUs in connection with the acquisition. As of June 30, 2016 , the Company had no additional stock-based compensation awards which require liability accounting. ESPP Shares During the six months ended June 30, 2016 , approximately 26,000 shares of the Company’s common stock were issued under the 2012 ESPP. |
Employee Benefit Plans
Employee Benefit Plans | 6 Months Ended |
Jun. 30, 2016 | |
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 $0.5 million and $0.4 million for the three months ended June 30, 2016 and 2015 , respectively, and $1.0 million and $0.7 million for the six months ended June 30, 2016 and 2015 , respectively. |
Other Expense, Net
Other Expense, Net | 6 Months Ended |
Jun. 30, 2016 | |
Other Nonoperating Income (Expense) [Abstract] | |
Other Expense, Net | Other Expense, Net The following table presents a summary of the Company’s other income and expense activity included in the accompanying consolidated statements of operations for the three and six months ended June 30, 2016 and 2015 (in thousands): Three Months Ended June 30, Six Months Ended June 30, 2016 2015 2016 2015 Foreign currency gain (loss) $ (123 ) $ 313 $ 547 $ (1,761 ) Change in fair value of contingent consideration (130 ) (385 ) (844 ) (900 ) Interest income 41 15 73 42 Total expense $ (212 ) $ (57 ) $ (224 ) $ (2,619 ) |
Income Taxes
Income Taxes | 6 Months Ended |
Jun. 30, 2016 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | Income Taxes The Company’s effective tax rates were 29.4% and 44.5% for the three months ended June 30, 2016 and 2015 , respectively, and 36.5% and 43.9% for the six months ended June 30, 2016 and 2015 , respectively. The Company incurred discrete tax items, the net effect of which decreased the effective tax rate by 9.1% and increased the effective tax rate by 1.0% for the three months ended June 30, 2016 and 2015 , respectively, and decreased the effective rate by 3.3% and increased the effective rate by 1.7% for the six months ended June 30, 2016 and 2015 , respectively. The Company has computed the provision for income taxes based on the estimated annual effective tax rate 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. During the three and six months ended June 30, 2016 and 2015 , unrecognized tax benefits recorded by the Company for uncertain tax positions taken in prior years were not material. During the three and six months ended June 30, 2016, the Company recognized a tax benefit of approximately $1.2 million related to the release of reserve for uncertain tax positions 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’s accrual for interest and penalties related to unrecognized tax benefits was not material for the three and six months ended June 30, 2016 and 2015 . As of June 30, 2016 , the Company had approximately $8.7 million of undistributed earnings attributable to its foreign subsidiaries. It is the Company’s practice and intention to indefinitely reinvest the earnings of its foreign subsidiaries in those operations. The Company has not provided deferred U.S. income taxes or foreign withholding taxes on temporary differences resulting from the earnings indefinitely reinvested outside the United States. It is currently not practicable for the Company to calculate the associated unrecognized deferred tax liability. |
Net Income Per Share
Net Income Per Share | 6 Months Ended |
Jun. 30, 2016 | |
Earnings Per Share [Abstract] | |
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. Any potential issuance of common shares, including those that are contingent and do not participate in dividends, is excluded from weighted average number of common shares outstanding. Income available to common stockholders is computed by deducting income allocated to participating securities, if any, including unvested shares for the restricted award holder since these unvested shares have participating rights. Diluted net income per share is computed by dividing the net income attributable to common stockholders by the weighted average common shares outstanding and all potential common shares, if they are dilutive. A reconciliation of assumed exercised shares used in calculating basic and diluted net income per share available to common stockholders follows (in thousands): Three Months Ended June 30, Six Months Ended June 30, 2016 2015 2016 2015 Basic 34,957 35,864 35,166 35,750 Stock options and ESPP shares 479 363 415 391 Unvested RSUs and restricted stock awards 206 113 289 126 Diluted 35,642 36,340 35,870 36,267 Dilutive securities included in the calculation 1,907 1,928 1,860 1,967 Anti-dilutive securities excluded from the calculation 1,259 686 1,165 688 |
Geographic Information
Geographic Information | 6 Months Ended |
Jun. 30, 2016 | |
Segment Reporting [Abstract] | |
Geographic Information | Geographic Information The following table presents the Company’s revenue based on customer location (in thousands): Three Months Ended Six Months Ended 2016 2015 2016 2015 North America $ 49,565 $ 41,189 $ 96,707 $ 78,695 Europe 41,094 34,944 80,280 69,046 Rest of the world 33,760 28,232 64,084 54,146 Total revenue $ 124,419 $ 104,365 $ 241,071 $ 201,887 The United States, included in North America in the above table, accounted for 34% of consolidated revenue for both of the three months ended June 30, 2016 and 2015 , and 35% and 34% for the six months ended June 30, 2016 and 2015 , respectively. The United Kingdom, included in Europe in the above table, accounted for 10% of total revenue for both of the three and six months ended June 30, 2016 and 11% of consolidated revenue for both of the three and six months ended June 30, 2015 . 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 (in thousands): June 30, December 31, 2016 2015 North America $ 40,373 $ 31,699 Europe 974 395 Total long-lived tangible assets $ 41,347 $ 32,094 |
Summary of Operations and Sig19
Summary of Operations and Significant Accounting Policies (Policies) | 6 Months Ended |
Jun. 30, 2016 | |
Accounting Policies [Abstract] | |
Basis of Presentation | Basis of Presentation The unaudited consolidated financial statements and accompanying notes have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, these financial statements do not include all information and footnotes required by U.S. GAAP for complete financial statements. |
Unaudited Interim Financial Statements | The interim consolidated balance sheet as of June 30, 2016 , the consolidated statements of operations and comprehensive income for the three and six months ended June 30, 2016 and 2015 , and the consolidated statement of cash flows for the six months ended June 30, 2016 and 2015 are unaudited. The consolidated balance sheet as of December 31, 2015 , included herein, was derived from the audited financial statements as of that date, but does not include all disclosures required by U.S. GAAP. These 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 June 30, 2016 and its consolidated results of operations, comprehensive income and cash flows for the three and six months ended June 30, 2016 and 2015 . 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 six months ended June 30, 2016 are not necessarily indicative of the results to be expected for the fiscal year ending December 31, 2016 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, 2015 filed with the SEC on February 24, 2016 . These financial statements should also be read in conjunction with the audited consolidated financial statements and notes thereto for the year ended December 31, 2015 . The unaudited consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries. All intercompany balances and transactions have been eliminated in consolidation. Certain immaterial changes in presentation have been made to conform the prior period presentation to current period reporting. |
Use of Estimates | Use of Estimates The preparation of the consolidated financial statements in conformity with U.S. 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, sales refund reserve, accruals related to self-insurance, the fair value of goodwill, intangible assets and other long-lived assets, non-cash equity-based compensation, the fair value of contingent consideration, the provision for income taxes and the amount of 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 its office leases. As of June 30, 2016 and December 31, 2015 , the Company had restricted cash of approximately $2.6 million and $1.8 million , respectively, in other assets that related to the lease for its headquarters in New York City, which expires in 2029 . In January 2016, this lease was amended to provide additional space and extend the lease term, which required an increased security deposit. The carrying value of restricted cash approximates fair value. |
Allowance for Doubtful Accounts | Allowance for Doubtful Accounts The Company’s accounts receivable consist of customer obligations due under normal trade terms, carried at their face value less an allowance for doubtful accounts, if required. The Company determines its allowance for doubtful accounts based on an evaluation of the aging of its accounts receivable and on a customer-by-customer basis where appropriate. The Company’s reserve analysis contemplates the Company’s historical loss rate on receivables, specific customer situations and the economic environments in which the Company operates. |
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. |
Chargeback and Sales Refund Allowance | Chargeback and Sales Refund Allowance The majority of the Company’s customers purchase products by making an electronic payment with a credit card at the time of a transaction. 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. |
Medical Self-insurance Costs | Medical Self-insurance Costs The Company is partially self-insured for claims relating to employee medical benefit programs. The medical self-insurance program is administered by a third party and contains stop-loss provisions on both an individual claim basis and in aggregate. The Company records claims incurred as an expense each period, including an estimate of claims incurred but not yet reported. The Company uses claims data and historical experience, as applicable, to estimate the liability for unreported claims and believes that the methodologies used to estimate insurance liabilities result in an accurate reflection of the liabilities as of the date of the balance sheet. |
Contingent Consideration | Contingent Consideration The Company records a liability for contingent consideration at the date of a business combination and reassesses the fair value of the liability each period until it is settled. Upon settlement of these liabilities, the portion of the contingent consideration payment that is attributable to the initial amount recorded as part of the business combination is classified as a cash flow from financing activities and the portion of the settlement that is attributable to subsequent changes in the fair value of the contingent consideration is classified as a cash flow from operating activities in the consolidated statement of cash flows. |
Income Taxes | Income Taxes The Company’s income tax expense includes U.S. (federal and state) and foreign income taxes. Significant management judgment is required in projecting ordinary income in order to determine the Company’s estimated effective tax rate. The Company has 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. Quarterly, the Company will continue to evaluate its ability to realize deferred tax assets. 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. |
Recently Issued Accounting Standard Updates | Recently Issued Accounting Standard Updates In March 2016, the Financial Accounting Standards Board (“FASB”) issued new guidance related to stock-based compensation. The new standard changes how companies account for certain aspects of share-based payment awards to employees, including the accounting for income taxes, forfeitures, and statutory tax withholding requirements, as well as the classification of certain related items in the statement of cash flows. The guidance is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2016. Early adoption is permitted. Amendments related to the timing of when excess tax benefits are recognized, minimum statutory withholding requirements, forfeitures, and intrinsic value should be applied using a modified retrospective approach; amendments related to the recognition of excess tax benefits and tax deficiencies in the income statement and the practical expedient for estimating expected term should be applied prospectively; and amendments related to the presentation of excess tax benefits on the statement of cash flows may be applied prospectively or retrospectively. The Company is evaluating the impact of adopting this new accounting standard on its financial statements. In February 2016, the FASB issued new guidance related to leases. The new standard requires that the rights and obligations created by leases with a duration greater than 12 months be recorded as assets and liabilities on the balance sheet of the lessee. The guidance is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2018 and can be applied using a modified retrospective approach for all leases entered into before the effective date. Early adoption is permitted. The Company is evaluating the impact of adopting this new accounting standard on its financial statements. In November 2015, the FASB issued new guidance related to income taxes. The new standard requires that all deferred tax assets and liabilities, and any related valuation allowance, be classified as non-current on the balance sheet. The guidance is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2016, although early adoption is permitted and can be applied either prospectively or retrospectively to all periods presented. The Company is evaluating the impact of adopting this new accounting standard on its financial statements. In May 2014, the FASB issued new accounting guidance related to revenue recognition. This new standard will replace all current U.S. 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 this guidance by one year. As a result, this new guidance will be effective for the fiscal years, and interim periods within those fiscal years, beginning after December 15, 2017. 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 of adopting this new accounting standard on its financial statements. |
Fair Value Measurements (Tables
Fair Value Measurements (Tables) | 6 Months Ended |
Jun. 30, 2016 | |
Fair Value Disclosures [Abstract] | |
Schedule of fair value measurements | The following tables present the Company’s fair value hierarchy for its assets and liabilities (in thousands): As of June 30, 2016 Aggregate Fair Value Level 1 Level 2 Level 3 Assets: Money market accounts $ 81,436 $ 81,436 $ — $ — Commercial paper 54,974 — 54,974 — Total assets measured at fair value $ 136,410 $ 81,436 $ 54,974 $ — Liabilities: Acquisition-related contingent consideration $ 9,570 $ — $ — $ 9,570 Total liabilities measured at fair value $ 9,570 $ — $ — $ 9,570 As of December 31, 2015 Aggregate Fair Value Level 1 Level 2 Level 3 Assets: Money market accounts $ 89,153 $ 89,153 $ — $ — Commercial paper 47,078 — 47,078 — Total assets measured at fair value $ 136,231 $ 89,153 $ 47,078 $ — Liabilities: Acquisition-related contingent consideration $ 11,075 $ — $ — $ 11,075 Total liabilities measured at fair value $ 11,075 $ — $ — $ 11,075 |
Schedule of short-term investments | Short-term investments are summarized as follows (in thousands): As of June 30, 2016 As of December 31, 2015 Commercial Paper: Amortized cost $ 54,981 $ 47,084 Unrealized gains — — Unrealized losses (7 ) (6 ) Total short-term investments measured at fair value $ 54,974 $ 47,078 |
Property and Equipment (Tables)
Property and Equipment (Tables) | 6 Months Ended |
Jun. 30, 2016 | |
Property, Plant and Equipment [Abstract] | |
Summary of property and equipment | Property and equipment is summarized as follows (in thousands): As of June 30, 2016 As of December 31, 2015 Computer equipment and software $ 46,867 $ 37,502 Furniture and fixtures 2,837 2,933 Leasehold improvements 15,748 14,471 Property and equipment 65,452 54,906 Less accumulated depreciation (24,105 ) (22,812 ) Property and equipment, net $ 41,347 $ 32,094 |
Goodwill, Intangible Assets a22
Goodwill, Intangible Assets and Acquisition Activity (Tables) | 6 Months Ended |
Jun. 30, 2016 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Schedule of changes in goodwill | The following table summarizes the changes in the Company’s goodwill balance by reportable and non-reportable segments through June 30, 2016 (in thousands): Consolidated Content Business Other Category Balance as of December 31, 2015 $ 50,934 $ 42,171 $ 8,763 Foreign currency translation adjustment 489 489 — Balance as of June 30, 2016 $ 51,423 $ 42,660 $ 8,763 |
Schedule of intangible assets | Intangible assets consisted of the following as of June 30, 2016 and December 31, 2015 (in thousands): As of June 30, 2016 As of December 31, 2015 Gross Carrying Amount Accumulated Amortization Weighted Gross Accumulated Amortizing intangible assets: Customer relationships $ 18,287 $ (3,692 ) 9 $ 19,523 $ (3,089 ) Trade name 6,837 (1,636 ) 7 7,111 (1,188 ) Developed technology 3,457 (1,566 ) 4 3,734 (1,129 ) Contributor content 6,340 (693 ) 9 5,138 (567 ) Patents 209 (46 ) 18 193 (40 ) Domain name 160 (39 ) 11 120 (25 ) Total $ 35,290 $ (7,672 ) $ 35,819 $ (6,038 ) |
Purchase price allocation | The aggregate purchase price was allocated to the assets acquired and liabilities assumed as follows (in thousands): Acquisition Activity Assets acquired: Cash $ 1,525 Accounts receivable 2,908 Other assets 1,319 Fixed assets 297 Intangible assets (1) 27,433 Goodwill 44,767 Deferred tax asset 229 Total assets acquired $ 78,478 Liabilities assumed: Accounts payable $ (253 ) Contributor payable (3,145 ) Accrued expenses (2,431 ) Deferred revenue (23 ) Deferred tax liability (4,454 ) Total liabilities assumed $ (10,306 ) Total $ 68,172 ______________________________________________________________________________ (1) Identifiable intangible assets include customer relationships, trade names, developed technology and content libraries and are being amortized on a straight-line basis over a weighted average life of approximately eight years . |
Accrued Expenses (Tables)
Accrued Expenses (Tables) | 6 Months Ended |
Jun. 30, 2016 | |
Payables and Accruals [Abstract] | |
Schedule of accrued expenses | Accrued expenses consist of the following (in thousands): As of June 30, 2016 As of December 31, 2015 Compensation $ 8,405 $ 8,995 Non-income taxes 7,185 7,095 Royalty tax withholdings 6,590 6,439 Payroll tax withholdings 825 426 Professional fees 1,451 902 Marketing expenses 748 237 Other expenses 6,043 6,602 Total accrued expenses $ 31,247 $ 30,696 |
Shareholders' Equity and Equi24
Shareholders' Equity and Equity-Based Compensation (Tables) | 6 Months Ended |
Jun. 30, 2016 | |
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 following table summarizes non-cash equity-based compensation expense, net of forfeitures, by financial statement line item included in the accompanying consolidated statements of operations for the three and six months ended June 30, 2016 and 2015 (in thousands): Three Months Ended June 30, Six Months Ended June 30, 2016 2015 2016 2015 Cost of revenue $ 521 $ 466 $ 1,054 $ 948 Sales and marketing 1,357 1,428 2,548 2,746 Product development 2,003 1,751 4,152 4,120 General and administrative 3,371 3,935 6,851 7,274 Total $ 7,252 $ 7,580 $ 14,605 $ 15,088 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 six months ended June 30, 2016 and 2015 (in thousands): Three Months Ended June 30, Six Months Ended June 30, 2016 2015 2016 2015 Stock options $ 1,892 $ 1,777 $ 3,628 $ 3,823 RSUs 5,207 5,484 10,609 10,520 ESPP shares 153 221 325 420 RSUs related to the acquisition of WebDAM — 98 43 325 Total $ 7,252 $ 7,580 $ 14,605 $ 15,088 |
Other Expense, Net (Tables)
Other Expense, Net (Tables) | 6 Months Ended |
Jun. 30, 2016 | |
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 income and expense activity included in the accompanying consolidated statements of operations for the three and six months ended June 30, 2016 and 2015 (in thousands): Three Months Ended June 30, Six Months Ended June 30, 2016 2015 2016 2015 Foreign currency gain (loss) $ (123 ) $ 313 $ 547 $ (1,761 ) Change in fair value of contingent consideration (130 ) (385 ) (844 ) (900 ) Interest income 41 15 73 42 Total expense $ (212 ) $ (57 ) $ (224 ) $ (2,619 ) |
Net Income Per Share (Tables)
Net Income Per Share (Tables) | 6 Months Ended |
Jun. 30, 2016 | |
Earnings Per Share [Abstract] | |
Schedule of Weighted Average Number of Shares | A reconciliation of assumed exercised shares used in calculating basic and diluted net income per share available to common stockholders follows (in thousands): Three Months Ended June 30, Six Months Ended June 30, 2016 2015 2016 2015 Basic 34,957 35,864 35,166 35,750 Stock options and ESPP shares 479 363 415 391 Unvested RSUs and restricted stock awards 206 113 289 126 Diluted 35,642 36,340 35,870 36,267 Dilutive securities included in the calculation 1,907 1,928 1,860 1,967 Anti-dilutive securities excluded from the calculation 1,259 686 1,165 688 |
Geographic Information (Tables)
Geographic Information (Tables) | 6 Months Ended |
Jun. 30, 2016 | |
Segment Reporting [Abstract] | |
Revenue from External Customers by Geographic Areas | The following table presents the Company’s revenue based on customer location (in thousands): Three Months Ended Six Months Ended 2016 2015 2016 2015 North America $ 49,565 $ 41,189 $ 96,707 $ 78,695 Europe 41,094 34,944 80,280 69,046 Rest of the world 33,760 28,232 64,084 54,146 Total revenue $ 124,419 $ 104,365 $ 241,071 $ 201,887 |
Long-lived Assets by Geographic Areas | The Company’s long-lived tangible assets were located as follows (in thousands): June 30, December 31, 2016 2015 North America $ 40,373 $ 31,699 Europe 974 395 Total long-lived tangible assets $ 41,347 $ 32,094 |
Summary of Operations and Sig28
Summary of Operations and Significant Accounting Policies (Details) - USD ($) $ in Millions | Jun. 30, 2016 | Dec. 31, 2015 |
Allowance for Doubtful Accounts | ||
Allowance for doubtful accounts | $ 6.2 | $ 3.8 |
Deferred Rent | ||
Deferred rent balance | 7.7 | 8 |
Deferred rent non-current balance | 7 | 7.3 |
Deferred rent current balance | 0.7 | 0.7 |
Chargeback and sales refund allowances | 0.7 | 0.7 |
Other assets | ||
Restricted Cash and Cash Equivalents Items [Line Items] | ||
Restricted cash related to security deposits for leased office location that expires in 2024 | $ 2.6 | $ 1.8 |
Fair Value Measurements (Detail
Fair Value Measurements (Details) - Estimate of Fair Value Measurement - Recurring Basis - USD ($) $ in Thousands | Jun. 30, 2016 | Dec. 31, 2015 |
Assets: | ||
Total assets measured at fair value | $ 136,410 | $ 136,231 |
Liabilities: | ||
Total liabilities measured at fair value | 9,570 | 11,075 |
Acquisition-related contingent consideration | ||
Liabilities: | ||
Total liabilities measured at fair value | 9,570 | 11,075 |
Money market accounts | ||
Assets: | ||
Total assets measured at fair value | 81,436 | 89,153 |
Commercial Paper | ||
Assets: | ||
Total assets measured at fair value | 54,974 | 47,078 |
Level 1 | ||
Assets: | ||
Total assets measured at fair value | 81,436 | 89,153 |
Liabilities: | ||
Total liabilities measured at fair value | 0 | 0 |
Level 1 | Money market accounts | ||
Assets: | ||
Total assets measured at fair value | 81,436 | 89,153 |
Level 2 | ||
Assets: | ||
Total assets measured at fair value | 54,974 | 47,078 |
Liabilities: | ||
Total liabilities measured at fair value | 0 | 0 |
Level 2 | Commercial Paper | ||
Assets: | ||
Total assets measured at fair value | 54,974 | 47,078 |
Level 3 | ||
Assets: | ||
Total assets measured at fair value | 0 | 0 |
Liabilities: | ||
Total liabilities measured at fair value | 9,570 | 11,075 |
Level 3 | Acquisition-related contingent consideration | ||
Liabilities: | ||
Total liabilities measured at fair value | $ 9,570 | $ 11,075 |
Fair Value Measurements (Deta30
Fair Value Measurements (Details 2) - USD ($) $ in Thousands | Jun. 30, 2016 | Dec. 31, 2015 |
Short term investments and fair value measurements | ||
Total short-term investments measured at fair value | $ 54,974 | $ 47,078 |
Commercial Paper: | ||
Short term investments and fair value measurements | ||
Amortized cost | 54,981 | 47,084 |
Unrealized gains | 0 | 0 |
Unrealized losses | (7) | (6) |
Total short-term investments measured at fair value | $ 54,974 | $ 47,078 |
Fair Value Measurements (Deta31
Fair Value Measurements (Details 3) - USD ($) | 1 Months Ended | 6 Months Ended | |||
Apr. 30, 2016 | Jun. 30, 2016 | Jun. 30, 2015 | Mar. 31, 2016 | Dec. 31, 2015 | |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||||
Contingent consideration paid | $ (2,495,000) | $ (900,000) | |||
Arbour Interactive Inc (PremiumBeat) | Acquisition-related contingent consideration | |||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||||
Fair value included in other non-current liabilities | $ 7,100,000 | ||||
Arbour Interactive Inc (PremiumBeat) | Acquisition-related contingent consideration | Level 3 | |||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||||
Fair value contingent consideration | 9,600,000 | ||||
Estimate of Fair Value Measurement | Virtual Moment, LLC (WebDAM) | Acquisition-related contingent consideration | Recurring Basis | Level 3 | |||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||||
Contingent consideration paid | $ 4,000,000 | 0 | |||
Estimate of Fair Value Measurement | Arbour Interactive Inc (PremiumBeat) | Recurring Basis | |||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||||
Contingent consideration paid | (2,500,000) | ||||
Estimate of Fair Value Measurement | Other Current Liabilities | Virtual Moment, LLC (WebDAM) | Acquisition-related contingent consideration | Recurring Basis | Level 3 | |||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||||
Contingent consideration | $ 0 | $ 4,000,000 | |||
Estimate of Fair Value Measurement | Other Current Liabilities | Arbour Interactive Inc (PremiumBeat) | Acquisition-related contingent consideration | Recurring Basis | Level 3 | |||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||||
Contingent consideration | $ 10,000,000 |
Property and Equipment (Details
Property and Equipment (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | |||
Jun. 30, 2016 | Jun. 30, 2015 | Jun. 30, 2016 | Jun. 30, 2015 | Dec. 31, 2015 | |
Property and Equipment | |||||
Property and equipment | $ 65,452 | $ 65,452 | $ 54,906 | ||
Less accumulated depreciation | (24,105) | (24,105) | (22,812) | ||
Property and equipment, net | 41,347 | 41,347 | 32,094 | ||
Depreciation expense | 3,500 | $ 6,500 | 2,200 | $ 4,300 | |
Capitalized amount | 3,400 | 6,200 | 200 | 300 | |
Amortization expense | 700 | $ 100 | 1,200 | $ 200 | |
Internal use software | 9,000 | 9,000 | 3,900 | ||
Computer equipment and software | |||||
Property and Equipment | |||||
Property and equipment | 46,867 | 46,867 | 37,502 | ||
Furniture and fixtures | |||||
Property and Equipment | |||||
Property and equipment | 2,837 | 2,837 | 2,933 | ||
Leasehold improvements | |||||
Property and Equipment | |||||
Property and equipment | $ 15,748 | $ 15,748 | $ 14,471 |
Goodwill, Intangible Assets a33
Goodwill, Intangible Assets and Acquisition Activity (Details) $ in Thousands | 6 Months Ended |
Jun. 30, 2016USD ($) | |
Changes in goodwill | |
Balance at the beginning of the period | $ 50,934 |
Foreign currency translation adjustment | 489 |
Balance at the end of the period | 51,423 |
Content Business | |
Changes in goodwill | |
Balance at the beginning of the period | 42,171 |
Foreign currency translation adjustment | 489 |
Balance at the end of the period | 42,660 |
Other Category | |
Changes in goodwill | |
Balance at the beginning of the period | 8,763 |
Foreign currency translation adjustment | 0 |
Balance at the end of the period | $ 8,763 |
Goodwill, Intangible Assets a34
Goodwill, Intangible Assets and Acquisition Activity (Details 2) - USD ($) $ in Thousands | 6 Months Ended | |
Jun. 30, 2016 | Dec. 31, 2015 | |
Amortizing intangible assets: | ||
Gross Carrying Amount | $ 35,290 | $ 35,819 |
Accumulated Amortization | (7,672) | (6,038) |
Customer relationships | ||
Amortizing intangible assets: | ||
Gross Carrying Amount | 18,287 | 19,523 |
Accumulated Amortization | $ (3,692) | (3,089) |
Customer relationships | Contractual Weighted Average Life (Years) | ||
Amortizing intangible assets: | ||
Weighted Average Life (Years) | 9 years | |
Trade name | ||
Amortizing intangible assets: | ||
Gross Carrying Amount | $ 6,837 | 7,111 |
Accumulated Amortization | $ (1,636) | (1,188) |
Trade name | Contractual Weighted Average Life (Years) | ||
Amortizing intangible assets: | ||
Weighted Average Life (Years) | 7 years | |
Developed technology | ||
Amortizing intangible assets: | ||
Gross Carrying Amount | $ 3,457 | 3,734 |
Accumulated Amortization | $ (1,566) | (1,129) |
Developed technology | Contractual Weighted Average Life (Years) | ||
Amortizing intangible assets: | ||
Weighted Average Life (Years) | 4 years | |
Contributor content | ||
Amortizing intangible assets: | ||
Gross Carrying Amount | $ 6,340 | 5,138 |
Accumulated Amortization | $ (693) | (567) |
Contributor content | Contractual Weighted Average Life (Years) | ||
Amortizing intangible assets: | ||
Weighted Average Life (Years) | 9 years | |
Patents | ||
Amortizing intangible assets: | ||
Gross Carrying Amount | $ 209 | 193 |
Accumulated Amortization | $ (46) | (40) |
Patents | Contractual Weighted Average Life (Years) | ||
Amortizing intangible assets: | ||
Weighted Average Life (Years) | 18 years | |
Domain name | ||
Amortizing intangible assets: | ||
Gross Carrying Amount | $ 160 | 120 |
Accumulated Amortization | $ (39) | $ (25) |
Domain name | Contractual Weighted Average Life (Years) | ||
Amortizing intangible assets: | ||
Weighted Average Life (Years) | 11 years |
Goodwill, Intangible Assets a35
Goodwill, Intangible Assets and Acquisition Activity (Details 3) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2016 | Jun. 30, 2015 | Jun. 30, 2016 | Jun. 30, 2015 | |
Goodwill and Intangible Assets Disclosure [Abstract] | ||||
Amortization expense | $ 1.3 | $ 1.3 | $ 2.5 | $ 2.2 |
Remainder of 2016 | 2.5 | 2.5 | ||
2,017 | 5 | 5 | ||
2,018 | 4.1 | 4.1 | ||
2,019 | 3.9 | 3.9 | ||
2,020 | 3.3 | 3.3 | ||
2,021 | 2.8 | 2.8 | ||
Thereafter | $ 5.9 | $ 5.9 |
Goodwill, Intangible Assets a36
Goodwill, Intangible Assets and Acquisition Activity (Details 4) - USD ($) | Jan. 22, 2015 | Jan. 19, 2015 | Jun. 30, 2016 | Jun. 30, 2015 | Jun. 30, 2016 | Jun. 30, 2015 |
Business Acquisition [Line Items] | ||||||
Cash payment | $ 0 | $ 62,379,000 | ||||
Change in fair value of contingent consideration | 2,495,000 | 900,000 | ||||
Rex Features | ||||||
Business Acquisition [Line Items] | ||||||
Purchase price | $ 32,700,000 | |||||
Arbour Interactive Inc (PremiumBeat) | ||||||
Business Acquisition [Line Items] | ||||||
Purchase price | $ 35,400,000 | |||||
Cash payment | 31,700,000 | |||||
Contingent consideration | $ 3,700,000 | |||||
Other Liabilities | Arbour Interactive Inc (PremiumBeat) | ||||||
Business Acquisition [Line Items] | ||||||
Contingent consideration | $ 9,600,000 | 9,600,000 | ||||
Other Nonoperating Income (Expense) | ||||||
Business Acquisition [Line Items] | ||||||
Change in fair value of contingent consideration | 130,000 | $ 385,000 | 844,000 | 900,000 | ||
General and administrative | ||||||
Business Acquisition [Line Items] | ||||||
Professional fees | $ 0 | $ 0 | 0 | $ 400,000 | ||
Estimate of Fair Value Measurement | Recurring Basis | Arbour Interactive Inc (PremiumBeat) | ||||||
Business Acquisition [Line Items] | ||||||
Change in fair value of contingent consideration | 2,500,000 | |||||
Estimate of Fair Value Measurement | Other Nonoperating Income (Expense) | Recurring Basis | Arbour Interactive Inc (PremiumBeat) | ||||||
Business Acquisition [Line Items] | ||||||
Change in fair value of contingent consideration | 800,000 | |||||
Estimate of Fair Value Measurement | General and administrative | Recurring Basis | Arbour Interactive Inc (PremiumBeat) | ||||||
Business Acquisition [Line Items] | ||||||
Change in fair value of contingent consideration | $ 1,700,000 |
Goodwill, Intangible Assets a37
Goodwill, Intangible Assets and Acquisition Activity (Details 5) - USD ($) $ in Thousands | 6 Months Ended | ||
Jun. 30, 2015 | Jun. 30, 2016 | Dec. 31, 2015 | |
Business Acquisition [Line Items] | |||
Goodwill | $ 51,423 | $ 50,934 | |
Rex Features and Arbour Interactive Inc | |||
Business Acquisition [Line Items] | |||
Cash | 1,525 | ||
Accounts receivable | 2,908 | ||
Other assets | 1,319 | ||
Fixed assets | 297 | ||
Intangible assets(1) | 27,433 | ||
Goodwill | 44,767 | ||
Deferred tax asset | 229 | ||
Total assets acquired | 78,478 | ||
Accounts payable | (253) | ||
Contributor payable | (3,145) | ||
Accrued expenses | (2,431) | ||
Deferred revenue | (23) | ||
Deferred tax liability | (4,454) | ||
Total liabilities assumed | (10,306) | ||
Total | $ 68,172 | ||
Weighted average life (in yers) | 8 years |
Accrued Expenses (Details)
Accrued Expenses (Details) - USD ($) $ in Thousands | Jun. 30, 2016 | Dec. 31, 2015 |
Payables and Accruals [Abstract] | ||
Compensation | $ 8,405 | $ 8,995 |
Non-income taxes | 7,185 | 7,095 |
Royalty tax withholdings | 6,590 | 6,439 |
Payroll tax withholdings | 825 | 426 |
Professional fees | 1,451 | 902 |
Marketing expenses | 748 | 237 |
Other expenses | 6,043 | 6,602 |
Total accrued expenses | $ 31,247 | $ 30,696 |
Commitments and Contingencies (
Commitments and Contingencies (Details) ft² in Thousands, $ in Millions | 3 Months Ended | 6 Months Ended | |||
Jun. 30, 2016USD ($)ft² | Jun. 30, 2015USD ($) | Jun. 30, 2016USD ($)ft² | Jun. 30, 2015USD ($) | Dec. 31, 2015USD ($) | |
Operating leases | |||||
Rental expense inclusive of operating leases | $ 1.4 | $ 1.2 | $ 3 | $ 2.3 | |
Letter of credit as a security deposit for the leased facilities | 2.6 | 2.6 | |||
Future minimum lease payments under non-cancelable operating leases | |||||
Total minimum lease payments | 84.7 | 84.7 | |||
Other assets | |||||
Operating leases | |||||
Letter of credit collateralized as restricted cash | $ 2.6 | $ 2.6 | $ 1.8 | ||
New York CIty Office Space | |||||
Operating leases | |||||
Area of additional office space (sq ft) | ft² | 25 | 25 |
Commitments and Contingencies40
Commitments and Contingencies (Details 2) | 6 Months Ended |
Jun. 30, 2016USD ($) | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitment to purchase data server equipment | $ 500,000 |
Other obligations | 29,000,000 |
Maturity of unconditional purchase obligations | |
Remainder of 2016 | 4,800,000 |
2,017 | 9,000,000 |
2,018 | 7,400,000 |
2,019 | 4,000,000 |
2,020 | 3,800,000 |
Indemnifications | |
Minimum aggregate obligation and liability | 10,000 |
Maximum aggregate obligation and liability | 250,000 |
Material indemnification obligation | $ 0 |
Shareholders' Equity and Equi41
Shareholders' Equity and Equity-Based Compensation (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2016 | Jun. 30, 2015 | Jun. 30, 2016 | Jun. 30, 2015 | |
Non-cash equity-based compensation expense related to the 2012 Plan and 2012 ESPP | ||||
Recognized compensation charge | $ 7,252 | $ 7,580 | $ 14,605 | $ 15,088 |
Cost of revenue | ||||
Non-cash equity-based compensation expense related to the 2012 Plan and 2012 ESPP | ||||
Recognized compensation charge | 521 | 466 | 1,054 | 948 |
Sales and marketing | ||||
Non-cash equity-based compensation expense related to the 2012 Plan and 2012 ESPP | ||||
Recognized compensation charge | 1,357 | 1,428 | 2,548 | 2,746 |
Product development | ||||
Non-cash equity-based compensation expense related to the 2012 Plan and 2012 ESPP | ||||
Recognized compensation charge | 2,003 | 1,751 | 4,152 | 4,120 |
General and administrative | ||||
Non-cash equity-based compensation expense related to the 2012 Plan and 2012 ESPP | ||||
Recognized compensation charge | $ 3,371 | $ 3,935 | $ 6,851 | $ 7,274 |
Shareholders' Equity and Equi42
Shareholders' Equity and Equity-Based Compensation (Details 2) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2016 | Jun. 30, 2015 | Jun. 30, 2016 | Jun. 30, 2015 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Non-cash stock-based compensation expense, net of estimated forfeitures | $ 7,252 | $ 7,580 | $ 14,605 | $ 15,088 |
Stock Option | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Non-cash stock-based compensation expense, net of estimated forfeitures | 1,892 | 1,777 | 3,628 | 3,823 |
Restricted stock units | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Non-cash stock-based compensation expense, net of estimated forfeitures | 5,207 | 5,484 | 10,609 | 10,520 |
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 | 153 | 221 | 325 | 420 |
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 | $ 0 | $ 98 | $ 43 | $ 325 |
Shareholders' Equity and Equi43
Shareholders' Equity and Equity-Based Compensation (Details 3) - USD ($) $ / shares in Units, shares in Thousands | 6 Months Ended | ||
Jun. 30, 2016 | Dec. 31, 2015 | Oct. 31, 2015 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Number of shares repurchased | 1,739 | 460 | |
Common Stock | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Number of shares issued | 502 | ||
Authorized repurchase amount | $ 100,000,000 | ||
Number of shares repurchased | 1,280 | ||
Per-share cost (in dollars per share) | $ 34.44 | ||
Amount not paid | $ 400,000 | ||
Purchase amount remaining | $ 40,300,000 | ||
Restricted stock units | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Number of units granted | 686 | ||
Number of units outstanding | 1,304 | ||
Value Appreciation Rights Plan | Stock Option | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Number of stock options granted | 438 | ||
Weighted average exercise price (in dollars per share) | $ 35.51 | ||
Number of options vested and exercisable | 403 | ||
Weighted average exercise price of options vested and exercisable (in dollars per share) | $ 30.64 | ||
2012 Plan | Stock Option | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Unrecognized compensation charge, 2012 plan non-vested options | $ 25,500,000 | ||
2012 Plan | Restricted stock units | |||
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 | $ 48,800,000 | ||
2012 ESPP | Employee stock purchase plan | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Number of shares issued | 26 | ||
Virtual Moment, LLC (WebDAM) | Restricted stock units | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Number of units granted | 31 |
Employee Benefit Plans (Details
Employee Benefit Plans (Details) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2016 | Jun. 30, 2015 | Jun. 30, 2016 | Jun. 30, 2015 | |
Compensation and Retirement Disclosure [Abstract] | ||||
Annual discretionary employer matching contributions (as a percent) | 3.00% | |||
Employer matching contributions | $ 0.5 | $ 0.4 | $ 1 | $ 0.7 |
Other Expense, Net (Details)
Other Expense, Net (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2016 | Jun. 30, 2015 | Jun. 30, 2016 | Jun. 30, 2015 | |
Business Acquisition [Line Items] | ||||
Foreign currency gain (loss) | $ (123) | $ 313 | $ 547 | $ (1,761) |
Change in fair value of contingent consideration | (2,495) | (900) | ||
Interest income | 41 | 15 | 73 | 42 |
Other expense, net | (212) | (57) | (224) | (2,619) |
Other Nonoperating Income (Expense) | ||||
Business Acquisition [Line Items] | ||||
Change in fair value of contingent consideration | $ (130) | $ (385) | $ (844) | $ (900) |
Income Taxes (Details)
Income Taxes (Details) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2016 | Jun. 30, 2015 | Jun. 30, 2016 | Jun. 30, 2015 | |
Income Tax Disclosure [Abstract] | ||||
Effective tax rate (as a percent) | 29.40% | 44.50% | 36.50% | 43.90% |
Increase in effective tax rate | 9.10% | (1.00%) | 3.30% | (1.70%) |
Recognized tax benefit | $ (1.2) | $ (1.2) | ||
Undistributed earnings | $ 8.7 | $ 8.7 |
Net Income Per Share (Details)
Net Income Per Share (Details) - shares shares in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2016 | Jun. 30, 2015 | Jun. 30, 2016 | Jun. 30, 2015 | |
Earnings Per Share [Abstract] | ||||
Basic (in shares) | 34,957 | 35,864 | 35,166 | 35,750 |
Stock options and ESPP shares (in shares) | 479 | 363 | 415 | 391 |
Unvested RSUs and restricted stock awards (in shares) | 206 | 113 | 289 | 126 |
Diluted (in shares) | 35,642 | 36,340 | 35,870 | 36,267 |
Dilutive securities included in the calculation (in shares) | 1,907 | 1,928 | 1,860 | 1,967 |
Anti-dilutive securities excluded from the calculation (in shares) | 1,259 | 686 | 1,165 | 688 |
Geographic Information (Details
Geographic Information (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | |||
Jun. 30, 2016 | Jun. 30, 2015 | Jun. 30, 2016 | Jun. 30, 2015 | Dec. 31, 2015 | |
Geographic revenue based on customer location and long-lived tangible assets | |||||
Revenue | $ 124,419 | $ 104,365 | $ 241,071 | $ 201,887 | |
Long-lived tangible assets | 41,347 | 41,347 | $ 32,094 | ||
North America | |||||
Geographic revenue based on customer location and long-lived tangible assets | |||||
Revenue | 49,565 | $ 41,189 | 96,707 | $ 78,695 | |
Long-lived tangible assets | $ 40,373 | $ 40,373 | 31,699 | ||
United States | Total revenue | Geographic concentration | |||||
Geographic revenue based on customer location and long-lived tangible assets | |||||
Concentration risk percentage | 34.00% | 34.00% | 35.00% | 34.00% | |
Europe | |||||
Geographic revenue based on customer location and long-lived tangible assets | |||||
Revenue | $ 41,094 | $ 34,944 | $ 80,280 | $ 69,046 | |
Long-lived tangible assets | $ 974 | $ 974 | $ 395 | ||
United Kingdom | Total revenue | Geographic concentration | |||||
Geographic revenue based on customer location and long-lived tangible assets | |||||
Concentration risk percentage | 10.00% | 11.00% | 10.00% | 11.00% | |
Rest of the world | |||||
Geographic revenue based on customer location and long-lived tangible assets | |||||
Revenue | $ 33,760 | $ 28,232 | $ 64,084 | $ 54,146 |