Document and Entity Information
Document and Entity Information - shares | 3 Months Ended | |
Mar. 31, 2017 | Apr. 28, 2017 | |
Document and Entity Information | ||
Entity Registrant Name | Shutterstock, Inc. | |
Entity Central Index Key | 1,549,346 | |
Document Type | 10-Q | |
Document Period End Date | Mar. 31, 2017 | |
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 | 34,566,060 | |
Document Fiscal Year Focus | 2,017 | |
Document Fiscal Period Focus | Q1 |
Consolidated Balance Sheets
Consolidated Balance Sheets - USD ($) $ in Thousands | Mar. 31, 2017 | Dec. 31, 2016 |
Current assets: | ||
Cash and cash equivalents | $ 195,395 | $ 224,190 |
Short-term investments | 54,901 | 54,972 |
Accounts receivable, net | 37,962 | 38,107 |
Prepaid expenses and other current assets | 28,047 | 22,569 |
Total current assets | 316,305 | 339,838 |
Property and equipment, net | 63,878 | 56,101 |
Intangible assets, net | 29,930 | 30,157 |
Goodwill | 49,689 | 49,271 |
Deferred tax assets, net | 21,772 | 23,013 |
Other assets | 4,986 | 3,398 |
Total assets | 486,560 | 501,778 |
Current liabilities: | ||
Accounts payable | 11,699 | 7,305 |
Accrued expenses | 32,569 | 41,106 |
Contributor royalties payable | 23,759 | 20,473 |
Deferred revenue | 126,812 | 122,235 |
Other liabilities | 1,298 | 12,378 |
Total current liabilities | 196,137 | 203,497 |
Deferred tax liability, net | 2,023 | 2,147 |
Other non-current liabilities | 12,479 | 9,438 |
Total liabilities | 210,639 | 215,082 |
Commitments and contingencies (Note 6) | ||
Stockholders’ equity: | ||
Common stock, $0.01 par value; 200,000 shares authorized; 37,110 and 36,926 shares issued and 34,552 and 34,816 shares outstanding as of March 31, 2017 and December 31, 2016, respectively | 371 | 369 |
Treasury stock, at cost; 2,558 and 2,110 shares as of March 31, 2017 and December 31, 2016, respectively | (100,027) | (77,567) |
Additional paid-in capital | 255,408 | 251,890 |
Accumulated comprehensive loss | (14,846) | (17,061) |
Retained earnings | 135,015 | 129,065 |
Total stockholders’ equity | 275,921 | 286,696 |
Total liabilities and stockholders’ equity | $ 486,560 | $ 501,778 |
Consolidated Balance Sheets (Pa
Consolidated Balance Sheets (Parenthetical) - $ / shares | Mar. 31, 2017 | Dec. 31, 2016 |
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) | 37,110,000 | 36,926,000 |
Common stock, shares outstanding (in shares) | 34,551,000 | 34,816,000 |
Treasury stock, shares held in treasury (in shares) | 2,559,000 | 2,110,000 |
Consolidated Statements of Oper
Consolidated Statements of Operations - USD ($) shares in Thousands, $ in Thousands | 3 Months Ended | |
Mar. 31, 2017 | Mar. 31, 2016 | |
Income Statement [Abstract] | ||
Revenue | $ 130,224 | $ 116,652 |
Operating expenses: | ||
Cost of revenue | 52,411 | 48,063 |
Sales and marketing | 32,503 | 27,088 |
Product development | 11,044 | 11,225 |
General and administrative | 23,963 | 19,454 |
Total operating expenses | 119,921 | 105,830 |
Income from operations | 10,303 | 10,822 |
Other income (expense), net | 455 | (12) |
Income before income taxes | 10,758 | 10,810 |
Provision for income taxes | 4,155 | 4,677 |
Net income | $ 6,603 | $ 6,133 |
Net income per share: | ||
Basic (in dollars per share) | $ 0.19 | $ 0.17 |
Diluted (in dollars per share) | $ 0.19 | $ 0.17 |
Weighted average shares outstanding: | ||
Basic (in shares) | 34,597 | 35,375 |
Diluted (in shares) | 35,595 | 36,099 |
Consolidated Statements of Comp
Consolidated Statements of Comprehensive Income - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2017 | Mar. 31, 2016 | |
Statement of Comprehensive Income [Abstract] | ||
Net income | $ 6,603 | $ 6,133 |
Foreign currency translation loss | 2,215 | 1,856 |
Unrealized gain on investments | 0 | 64 |
Other comprehensive loss | 2,215 | 1,920 |
Comprehensive income | $ 8,818 | $ 8,053 |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2017 | Mar. 31, 2016 | |
CASH FLOWS FROM OPERATING ACTIVITIES | ||
Net income | $ 6,603 | $ 6,133 |
Adjustments to reconcile net income to net cash provided by operating activities: | ||
Depreciation and amortization | 6,956 | 4,204 |
Impairment of Long-Lived Assets Held-for-use | 0 | 0 |
Deferred taxes | 1,486 | 1,285 |
Non-cash equity-based compensation | 5,956 | 7,353 |
Change in fair value of contingent consideration | 0 | 2,365 |
Settlement of contingent consideration liability in excess of acquisition-date fair value | (6,255) | 0 |
Bad debt expense | 135 | 1,183 |
Changes in operating assets and liabilities: | ||
Accounts receivable | (404) | (7,691) |
Prepaid expenses and other current and non-current assets | (5,628) | (3,126) |
Accounts payable and other current and non-current liabilities | 362 | 1,898 |
Contributor royalties payable | 3,214 | 1,103 |
Deferred revenue | 4,760 | 6,760 |
Net cash provided by operating activities | 17,185 | 21,467 |
CASH FLOWS FROM INVESTING ACTIVITIES | ||
Capital expenditures | (13,466) | (7,790) |
Investment (purchases)/sales, net | (1,515) | (7,851) |
Acquisition of digital content | (753) | (628) |
Security deposit (payment)/release | 2 | (818) |
Net cash used in investing activities | (15,732) | (17,087) |
CASH FLOWS FROM FINANCING ACTIVITIES | ||
Purchase of treasury shares | (24,977) | (27,743) |
Proceeds from exercise of stock options | 561 | 1,627 |
Cash paid related to settlement of employee taxes related to RSU vesting | (3,975) | 0 |
Settlement of contingent consideration liability | (3,745) | 0 |
Net cash (used in) provided by financing activities | (32,136) | (26,116) |
Effect of foreign exchange rate changes on cash | 1,888 | 995 |
Net decrease in cash and cash equivalents | (28,795) | (20,741) |
Cash and cash equivalents, beginning of period | 224,190 | 241,304 |
Cash and cash equivalents, end of period | 195,395 | 220,563 |
Supplemental Disclosure of Cash Information: | ||
Cash paid for income taxes | $ 2,148 | $ 4,195 |
Summary of Operations and Signi
Summary of Operations and Significant Accounting Policies | 3 Months Ended |
Mar. 31, 2017 | |
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”), is a global technology company that has created a two-sided marketplace for creative professionals to license content. The Company’s library of creative content includes: (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. This service provides tools for customers to better manage creative content and brand management assets. Basis of Presentation The unaudited condensed consolidated financial statements and accompanying notes have been prepared in accordance with accounting principles generally accepted in the United States of America (“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 GAAP for complete financial statements. The interim consolidated balance sheet as of March 31, 2017 , the consolidated statements of operations and comprehensive income for the three months ended March 31, 2017 and 2016 , and the consolidated statement of cash flows for the three months ended March 31, 2017 and 2016 are unaudited. The consolidated balance sheet as of December 31, 2016 , included herein, was derived from the audited financial statements as of that date, but does not include all disclosures required by 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 March 31, 2017 and its consolidated results of operations, comprehensive income and cash flows for the three months ended March 31, 2017 and 2016 . 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 months ended March 31, 2017 are not necessarily indicative of the results to be expected for the fiscal year ending December 31, 2017 or for any other future annual or interim period. These financial statements should be read in conjunction with the Company’s audited consolidated financial statements and notes thereto as of and for the year ended December 31, 2016 included in the Company’s Annual Report on Form 10-K which was filed with the SEC on February 27, 2017 . 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 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 GAAP requires management to make estimates and assumptions that affect the amounts reported in the financial statements. Actual results could differ from those estimates. Such estimates include, but are not limited to, the determination of the allowance for doubtful accounts, the assessment of recoverability of property and equipment, the fair value of acquired goodwill and intangible assets, the grant-date fair value of non-cash equity-based compensation, the assessment of recoverability of deferred tax assets and the measurement of certain contingent non-income tax liabilities. Restricted Cash The Company’s restricted cash relates to security deposits for its office leases. As of March 31, 2017 and December 31, 2016 , the Company had restricted cash of approximately $2.6 million in other assets that related to the lease for its headquarters in New York City, which expires in 2029 . 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 March 31, 2017 and December 31, 2016 , the Company’s allowance for doubtful accounts was approximately $5.6 million and $5.5 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 March 31, 2017 and December 31, 2016 , the Company had deferred rent of $10.6 million and $8.6 million , respectively, which 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 March 31, 2017 and December 31, 2016 , the Company’s combined allowance for chargebacks and sales refunds was $0.6 million , which was included in other liabilities. Recently Adopted Accounting Standard Updates In March 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2016-09, Compensation - Stock Compensation (Topic 718): Improvements to Employees Share-Based Payment Accounting (“ASU 2016-09”). This ASU changes how companies account for certain aspects of share-based payment awards to employees, including the requirement for all income tax effects related to settlements of share-based payment awards be reported in earnings as an increase or decrease to income tax expense, providing the Company an accounting policy election to either recognize forfeitures as they occur or record an estimate, and requires that all income tax-related cash flows resulting from share-based payments be reported as operating activities in the statement of cash flows. The Company adopted ASU 2016-09 on January 1, 2017. All income tax effects related to settlements of share-based payment awards will be reported as an increase or decrease to the provision for income taxes. In addition, starting January 1, 2017, the Company will account for forfeitures as they occur and, as of January 1, 2017, recognized a $0.7 million reduction to retained earnings as the cumulative effect of the change in accounting principle. The Company adopted the cash flow presentation component of ASU 2016-09 retrospectively, and accordingly, decreased cash flows from operating activities by $1.5 million and increased cash flows from financing activities by $1.5 million for the three months ended March 31, 2016. Recently Issued Accounting Standard Updates In November 2016,the FASB issued ASU 2016-18, Statements of Cash Flows (Topic 230): Restricted Cash, which requires entities to present restricted cash with cash and cash equivalents on the statement of cash flows when reconciling the total beginning and ending amounts for the periods shown on the statement of cash flows. ASU 2016-18 is effective for interim and annual periods beginning after December 15,2017, with early adoption permitted. The Company is evaluating the impact of adopting this new accounting standard on its financial statements. In June 2016, the FASB issued ASU 2016-13, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses of Financial Instruments. ASU 2016-13 replaces the current incurred loss impairment methodology with a methodology that reflects expected credit losses. The ASU is intended to provide financial statement users with more decision-useful information about the expected credit losses on financial instruments and other commitments to extend credit held by a reporting entity at each reporting date. Adoption of this guidance is required, prospectively, for annual periods beginning after December 15, 2019, with early adoption permitted for annual periods beginning after December 15, 2018. The Company is evaluating the impact of adopting this new accounting standard on its financial statements. In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842) . ASU 2016-02 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 May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers (Topic 606) . ASU 2014-09, and its related amendments, provides a unified model to determine when and how revenue is recognized and requires certain additional disclosures around the nature, amount, timing, and uncertainty of revenue and cash flows arising from customers. 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 to which the entity expects to be entitled in exchange for those goods or services. ASU 2014-09 will be effective for the fiscal years, and interim periods within those fiscal years, beginning after December 15, 2017, with early adoption permitted. This new guidance may be applied retrospectively to each prior period (full retrospective) or retrospectively with the cumulative effect recognized as of the date of initial application (modified retrospective). The Company expects to adopt this guidance in the first quarter of fiscal 2018 and apply the modified retrospective approach. The Company is evaluating the impact of adopting this new accounting standard on its financial statements. |
Fair Value Measurements
Fair Value Measurements | 3 Months Ended |
Mar. 31, 2017 | |
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 March 31, 2017 Aggregate Fair Value Level 1 Level 2 Level 3 Assets: Money market accounts $ 81,753 $ 81,753 $ — $ — Commercial paper $ 54,901 — 54,901 — Total assets measured at fair value $ 136,654 $ 81,753 $ 54,901 $ — As of December 31, 2016 Aggregate Fair Value Level 1 Level 2 Level 3 Assets: Money market accounts $ 81,623 $ 81,623 $ — $ — Commercial paper $ 54,972 — 54,972 — Total assets measured at fair value $ 136,595 $ 81,623 $ 54,972 $ — Liabilities: Acquisition related contingent consideration $ 10,000 $ — $ — $ 10,000 Total liabilities measured at fair value $ 10,000 $ — $ — $ 10,000 Money Market Accounts Cash equivalents include money market accounts which are classified as a level 1 measurement based on quoted prices in active markets for identical assets that the Company can access at the measurement date. The total amount of money market accounts included in cash and cash equivalents was $81.8 million and $81.6 million as of March 31, 2017 and December 31, 2016 , respectively. Commercial Paper The Company’s short-term investments consist of commercial paper with original maturities of 90 days or less. Commercial paper is classified as a level 2 measurement based on quoted market prices for identical assets, which are subject to infrequent transactions. The total amount of commercial paper included in short-term investments was $54.9 million and $55.0 million as of March 31, 2017 and December 31, 2016 , respectively. Acquisition-Related Contingent Consideration As of December 31, 2016 , the settlement amount of the contingent consideration related to the Company’s acquisition of PremiumBeat was determined to be $10.0 million and was included in other liabilities. This contingency was considered a level 3 measurement. No changes in fair value were recorded during the three months ended March 31, 2017 . The contingent consideration of $10.0 million was paid in March 2017, and there was no remaining liability as of March 31, 2017 . 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 | 3 Months Ended |
Mar. 31, 2017 | |
Property, Plant and Equipment [Abstract] | |
Property and Equipment | Property and Equipment Property and equipment is summarized as follows (in thousands): As of March 31, 2017 As of December 31, 2016 Computer equipment and software $ 74,911 $ 63,711 Furniture and fixtures 3,982 3,434 Leasehold improvements 22,592 20,944 Property and equipment 101,485 88,089 Less accumulated depreciation (37,607 ) (31,988 ) Property and equipment, net $ 63,878 $ 56,101 Depreciation expense related to property and equipment was $5.6 million and $3.0 million for the three months ended March 31, 2017 and 2016 , 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 $6.7 million and $2.8 million for the three months ended March 31, 2017 and 2016 , 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 $2.1 million and $0.5 million for the three months ended March 31, 2017 and 2016 , respectively. Depreciation expense related to capitalized internal-use software is included in cost of revenue and general and administrative expense. As of March 31, 2017 and December 31, 2016 , the Company had capitalized internal-use software of $24.9 million and $20.3 million , respectively, net of accumulated depreciation, which was included in property and equipment, net. |
Goodwill and Intangible Assets
Goodwill and Intangible Assets | 3 Months Ended |
Mar. 31, 2017 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Goodwill and Intangible Assets | Goodwill and Intangible Assets 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 March 31, 2017 (in thousands): Consolidated Content Business Other Category Balance as of December 31, 2016 $ 49,271 $ 40,508 $ 8,763 Foreign currency translation adjustment 418 418 — Balance as of March 31, 2017 $ 49,689 $ 40,926 $ 8,763 No triggering events were identified during the three months ended March 31, 2017 . Intangible Assets Intangible assets consisted of the following as of March 31, 2017 and December 31, 2016 (in thousands): As of March 31, 2017 As of December 31, 2016 Gross Carrying Amount Accumulated Amortization Weighted Gross Accumulated Amortizing intangible assets: Customer relationships $ 16,904 $ (4,906 ) 9 $ 16,712 $ (4,344 ) Trade name 6,773 (2,289 ) 7 6,677 (2,030 ) Developed technology 3,264 (2,185 ) 4 3,224 (1,934 ) Contributor content 13,812 (1,745 ) 11 12,958 (1,386 ) Patents 259 (56 ) 18 227 (52 ) Domain name 160 (61 ) 12 160 (55 ) Total $ 41,172 $ (11,242 ) $ 39,958 $ (9,801 ) Amortization expense was $1.3 million and $1.2 million for the three months ended March 31, 2017 and 2016 , 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: $4.1 million for the remaining nine months of 2017 , $4.6 million in 2018 , $4.4 million in 2019 , $3.8 million in 2020 , $3.3 million in 2021 , $2.5 million in 2022 and $7.3 million thereafter. |
Accrued Expenses
Accrued Expenses | 3 Months Ended |
Mar. 31, 2017 | |
Payables and Accruals [Abstract] | |
Accrued Expenses | Accrued Expenses Accrued expenses consist of the following (in thousands): As of March 31, 2017 As of December 31, 2016 Compensation $ 9,454 $ 13,732 Non-income taxes 5,419 7,383 Royalty tax withholdings 7,094 6,921 Other expenses 10,602 13,070 Total accrued expenses $ 32,569 $ 41,106 |
Commitments and Contingencies
Commitments and Contingencies | 3 Months Ended |
Mar. 31, 2017 | |
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 $2.1 million and $1.6 million for the three months ended March 31, 2017 and 2016 , 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 2016 amendment. The letter of credit was collateralized by $2.6 million of cash as of March 31, 2017 , 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 $81.9 million . Other Commitments On October 20, 2016, the Company entered into a multi-part transaction with an unrelated third-party contributor (the “Transaction Party”). The transaction included three primary components: (a) a revolving credit facility pursuant to which the Company would be obligated to lend up to $4.6 million under certain conditions, (the “Facility”) to the Transaction Party. The Facility has a term of five years and requires the Transaction Party to make quarterly payments of principal to the Company beginning on the fourth anniversary of the Facility. The Facility bears interest at 10.0% , with all interest payments deferred until maturity, and the entire unpaid balance of principal and accrued interest due upon maturity; (b) the Company will be the exclusive distributor of the Transaction Party’s content in certain markets subject to certain limitations; and (c) the Company, at its option, may acquire the Transaction Party at any time after the third anniversary of the Facility or match any third-party acquisition offer with respect to the Transaction Party at any time until the fifth anniversary of the Facility. On March 27, 2017, the Facility was amended to reduce the maximum lending amount to $3.0 million . Simultaneously, the Company invested $1.6 million in a convertible note issued by the Transaction Party which matures on October 20, 2021. The convertible note bears interest at 10% , with all interest payments deferred until maturity, and the entire unpaid balance of principal and accrued interest due upon maturity. The principal amount of the convertible notes and any accrued and unpaid interest may be converted into equity of the Transaction Party at the Company’s option on the maturity date, or earlier upon certain events. As of March 31, 2017 , there have been no borrowings under the Facility. Other Obligations As of March 31, 2017 , the Company had other obligations in the amount of approximately $36.8 million , which consisted primarily of minimum royalty guarantees and unconditional purchase obligations related to contracts for infrastructure and other business services. As of March 31, 2017 , the Company’s other obligations for the remainder of 2017 and for the years ending December 31, 2018 , 2019 and 2020 were approximately $8.7 million , $12.0 million , $9.0 million and $7.1 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 and Employment Agreements 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 exceptions for certain products for which the Company’s indemnification obligations are uncapped. As of March 31, 2017 , 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. Pursuant to the Company's charter documents and separate written indemnification agreements, the Company has certain indemnification obligations to its executive officers, certain employees and directors, as well as certain former officers and directors. The Company has also entered into employment agreements with its executive officers 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 and in the event of a change in control. |
Stockholders_ Equity and Equity
Stockholders’ Equity and Equity-Based Compensation | 3 Months Ended |
Mar. 31, 2017 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |
Stockholders’ Equity and Equity-Based Compensation | Stockholders’ Equity and Equity-Based Compensation Stockholders’ Equity Common Stock During the three months ended March 31, 2017 , the Company issued approximately 184,000 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. In February 2017, the Company’s Board of Directors approved an increase to the share repurchase program, pursuant to which the Company is authorized to repurchase up to an additional $100 million of its outstanding common stock. The Company expects to fund future 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 three months ended March 31, 2017 , the Company repurchased approximately 449,000 shares of its common stock under the share repurchase program at an average per-share cost of approximately $50.04 . As of March 31, 2017 , the Company had $100.0 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 months ended March 31, 2017 and 2016 (in thousands): Three Months Ended March 31, 2017 2016 Cost of revenue $ 208 $ 533 Sales and marketing 1,218 1,191 Product development 1,256 2,149 General and administrative 3,274 3,480 Total $ 5,956 $ 7,353 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 months ended March 31, 2017 and 2016 (in thousands): Three Months Ended March 31, 2017 2016 Stock options $ 1,566 $ 1,736 RSUs 4,390 5,445 ESPP shares — 172 Total $ 5,956 $ 7,353 Stock Option Awards During the three months ended March 31, 2017 , the Company granted options to purchase approximately 79,000 shares of its common stock with a weighted average exercise price of $48.57 . As of March 31, 2017 , there were approximately 309,000 options vested and exercisable with a weighted average exercise price of $35.11 . As of March 31, 2017 , the total unrecognized compensation charge related to non-vested options was approximately $20.7 million , which is expected to be recognized through the fiscal year 2021 . Restricted Stock Units During the three months ended March 31, 2017 , the Company granted approximately 464,000 RSUs. As of March 31, 2017 there are approximately 1,353,000 non-vested RSUs outstanding. As of March 31, 2017 , the total unrecognized non-cash equity-based compensation charge related to the non-vested RSUs was approximately $52.2 million , which is expected to be recognized through fiscal year 2021 . During the three months ended March 31, 2017 , shares with an aggregate value of $4.0 million were withheld upon vesting of RSUs and in connection with related remittance to taxing authorities. ESPP Shares In December 2016, the Company’s Board of Directors suspended the 2012 ESPP. During the three months ended March 31, 2017 , no shares of the Company’s common stock were issued under the 2012 ESPP. |
Employee Benefit Plans
Employee Benefit Plans | 3 Months Ended |
Mar. 31, 2017 | |
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 expenses related to employer matching contributions of $0.4 million and $0.5 million for the three months ended March 31, 2017 and 2016 , respectively. |
Other Expense, Net
Other Expense, Net | 3 Months Ended |
Mar. 31, 2017 | |
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 months ended March 31, 2017 and 2016 (in thousands): Three Months Ended March 31, 2017 2016 Foreign currency gain (loss) $ 365 $ 670 Change in fair value of contingent consideration — (714 ) Interest income 90 32 Total income (expense) $ 455 $ (12 ) |
Income Taxes
Income Taxes | 3 Months Ended |
Mar. 31, 2017 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | Income Taxes The Company’s effective tax rates were 38.6% and 43.3% for the three months ended March 31, 2017 and 2016 , respectively. In the three months ended March 31, 2017 , the Company incurred discrete tax items relating primarily to withholding tax incurred on income earned in foreign jurisdictions, the net effect of which increased the effective tax rate by 5.0% . In the three months ended March 31, 2016, we incurred a discrete tax expense related primarily to a change in our state apportionment percentage which increased the effective tax rate by 2.2% . 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 estimated annual effective tax rate differs from the statutory tax rate due primarily to an increase of income in foreign jurisdictions with lower statutory rates. During the three months ended March 31, 2017 and 2016, unrecognized tax benefits recorded by the Company for uncertain tax positions taken in prior years were not material. 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 each of three months ended March 31, 2017 and 2016 . As of March 31, 2017 , the Company had approximately $8.1 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 | 3 Months Ended |
Mar. 31, 2017 | |
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 follows (in thousands): Three Months Ended March 31, 2017 2016 Weighted average shares outstanding: Basic 34,597 35,375 Stock options and ESPP shares 495 352 Unvested RSUs and restricted stock awards 503 372 Diluted 35,595 36,099 Dilutive securities included in the calculation 1,927 1,814 Anti-dilutive securities excluded from the calculation 1,082 1,071 |
Geographic Information
Geographic Information | 3 Months Ended |
Mar. 31, 2017 | |
Segment Reporting [Abstract] | |
Geographic Information | Geographic Information The following table presents the Company’s revenue based on customer location (in thousands): Three Months Ended 2017 2016 North America $ 52,798 $ 47,142 Europe 42,573 39,186 Rest of the world 34,853 30,324 Total revenue $ 130,224 $ 116,652 The United States, included in North America in the above table, accounted for 36% and 35% of consolidated revenue for the three months ended March 31, 2017 and 2016 , respectively. The United Kingdom, included in Europe in the above table, accounted for 9% and 11% of total revenue for the three months ended March 31, 2017 and 2016 , respectively. 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): March 31, December 31, 2017 2016 North America $ 62,698 $ 54,913 Europe 1,101 1,141 Rest of the world 79 47 Total long-lived tangible assets $ 63,878 $ 56,101 The United States, included in North America in the above table, accounted for 95% of total long-lived tangible assets as of March 31, 2017 and December 31, 2016 . |
Summary of Operations and Sig19
Summary of Operations and Significant Accounting Policies (Policies) | 3 Months Ended |
Mar. 31, 2017 | |
Accounting Policies [Abstract] | |
Basis of Presentation | Basis of Presentation The unaudited condensed consolidated financial statements and accompanying notes have been prepared in accordance with accounting principles generally accepted in the United States of America (“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 GAAP for complete financial statements. |
Unaudited Interim Financial Statements | The interim consolidated balance sheet as of March 31, 2017 , the consolidated statements of operations and comprehensive income for the three months ended March 31, 2017 and 2016 , and the consolidated statement of cash flows for the three months ended March 31, 2017 and 2016 are unaudited. The consolidated balance sheet as of December 31, 2016 , included herein, was derived from the audited financial statements as of that date, but does not include all disclosures required by 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 March 31, 2017 and its consolidated results of operations, comprehensive income and cash flows for the three months ended March 31, 2017 and 2016 . 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 months ended March 31, 2017 are not necessarily indicative of the results to be expected for the fiscal year ending December 31, 2017 or for any other future annual or interim period. These financial statements should be read in conjunction with the Company’s audited consolidated financial statements and notes thereto as of and for the year ended December 31, 2016 included in the Company’s Annual Report on Form 10-K which was filed with the SEC on February 27, 2017 . 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 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 GAAP requires management to make estimates and assumptions that affect the amounts reported in the financial statements. Actual results could differ from those estimates. Such estimates include, but are not limited to, the determination of the allowance for doubtful accounts, the assessment of recoverability of property and equipment, the fair value of acquired goodwill and intangible assets, the grant-date fair value of non-cash equity-based compensation, the assessment of recoverability of deferred tax assets and the measurement of certain contingent non-income tax liabilities. |
Restricted Cash | Restricted Cash The Company’s restricted cash relates to security deposits for its office leases. As of March 31, 2017 and December 31, 2016 , the Company had restricted cash of approximately $2.6 million in other assets that related to the lease for its headquarters in New York City, which expires in 2029 . 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. |
Recently Adopted and Issued Accounting Standard Updates | Recently Adopted Accounting Standard Updates In March 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2016-09, Compensation - Stock Compensation (Topic 718): Improvements to Employees Share-Based Payment Accounting (“ASU 2016-09”). This ASU changes how companies account for certain aspects of share-based payment awards to employees, including the requirement for all income tax effects related to settlements of share-based payment awards be reported in earnings as an increase or decrease to income tax expense, providing the Company an accounting policy election to either recognize forfeitures as they occur or record an estimate, and requires that all income tax-related cash flows resulting from share-based payments be reported as operating activities in the statement of cash flows. The Company adopted ASU 2016-09 on January 1, 2017. All income tax effects related to settlements of share-based payment awards will be reported as an increase or decrease to the provision for income taxes. In addition, starting January 1, 2017, the Company will account for forfeitures as they occur and, as of January 1, 2017, recognized a $0.7 million reduction to retained earnings as the cumulative effect of the change in accounting principle. The Company adopted the cash flow presentation component of ASU 2016-09 retrospectively, and accordingly, decreased cash flows from operating activities by $1.5 million and increased cash flows from financing activities by $1.5 million for the three months ended March 31, 2016. Recently Issued Accounting Standard Updates In November 2016,the FASB issued ASU 2016-18, Statements of Cash Flows (Topic 230): Restricted Cash, which requires entities to present restricted cash with cash and cash equivalents on the statement of cash flows when reconciling the total beginning and ending amounts for the periods shown on the statement of cash flows. ASU 2016-18 is effective for interim and annual periods beginning after December 15,2017, with early adoption permitted. The Company is evaluating the impact of adopting this new accounting standard on its financial statements. In June 2016, the FASB issued ASU 2016-13, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses of Financial Instruments. ASU 2016-13 replaces the current incurred loss impairment methodology with a methodology that reflects expected credit losses. The ASU is intended to provide financial statement users with more decision-useful information about the expected credit losses on financial instruments and other commitments to extend credit held by a reporting entity at each reporting date. Adoption of this guidance is required, prospectively, for annual periods beginning after December 15, 2019, with early adoption permitted for annual periods beginning after December 15, 2018. The Company is evaluating the impact of adopting this new accounting standard on its financial statements. In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842) . ASU 2016-02 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 May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers (Topic 606) . ASU 2014-09, and its related amendments, provides a unified model to determine when and how revenue is recognized and requires certain additional disclosures around the nature, amount, timing, and uncertainty of revenue and cash flows arising from customers. 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 to which the entity expects to be entitled in exchange for those goods or services. ASU 2014-09 will be effective for the fiscal years, and interim periods within those fiscal years, beginning after December 15, 2017, with early adoption permitted. This new guidance may be applied retrospectively to each prior period (full retrospective) or retrospectively with the cumulative effect recognized as of the date of initial application (modified retrospective). The Company expects to adopt this guidance in the first quarter of fiscal 2018 and apply the modified retrospective approach. The Company is evaluating the impact of adopting this new accounting standard on its financial statements. |
Fair Value Measurements (Tables
Fair Value Measurements (Tables) | 3 Months Ended |
Mar. 31, 2017 | |
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 March 31, 2017 Aggregate Fair Value Level 1 Level 2 Level 3 Assets: Money market accounts $ 81,753 $ 81,753 $ — $ — Commercial paper $ 54,901 — 54,901 — Total assets measured at fair value $ 136,654 $ 81,753 $ 54,901 $ — As of December 31, 2016 Aggregate Fair Value Level 1 Level 2 Level 3 Assets: Money market accounts $ 81,623 $ 81,623 $ — $ — Commercial paper $ 54,972 — 54,972 — Total assets measured at fair value $ 136,595 $ 81,623 $ 54,972 $ — Liabilities: Acquisition related contingent consideration $ 10,000 $ — $ — $ 10,000 Total liabilities measured at fair value $ 10,000 $ — $ — $ 10,000 |
Property and Equipment (Tables)
Property and Equipment (Tables) | 3 Months Ended |
Mar. 31, 2017 | |
Property, Plant and Equipment [Abstract] | |
Summary of property and equipment | Property and equipment is summarized as follows (in thousands): As of March 31, 2017 As of December 31, 2016 Computer equipment and software $ 74,911 $ 63,711 Furniture and fixtures 3,982 3,434 Leasehold improvements 22,592 20,944 Property and equipment 101,485 88,089 Less accumulated depreciation (37,607 ) (31,988 ) Property and equipment, net $ 63,878 $ 56,101 |
Goodwill and Intangible Assets
Goodwill and Intangible Assets (Tables) | 3 Months Ended |
Mar. 31, 2017 | |
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 March 31, 2017 (in thousands): Consolidated Content Business Other Category Balance as of December 31, 2016 $ 49,271 $ 40,508 $ 8,763 Foreign currency translation adjustment 418 418 — Balance as of March 31, 2017 $ 49,689 $ 40,926 $ 8,763 |
Schedule of intangible assets | Intangible assets consisted of the following as of March 31, 2017 and December 31, 2016 (in thousands): As of March 31, 2017 As of December 31, 2016 Gross Carrying Amount Accumulated Amortization Weighted Gross Accumulated Amortizing intangible assets: Customer relationships $ 16,904 $ (4,906 ) 9 $ 16,712 $ (4,344 ) Trade name 6,773 (2,289 ) 7 6,677 (2,030 ) Developed technology 3,264 (2,185 ) 4 3,224 (1,934 ) Contributor content 13,812 (1,745 ) 11 12,958 (1,386 ) Patents 259 (56 ) 18 227 (52 ) Domain name 160 (61 ) 12 160 (55 ) Total $ 41,172 $ (11,242 ) $ 39,958 $ (9,801 ) |
Accrued Expenses (Tables)
Accrued Expenses (Tables) | 3 Months Ended |
Mar. 31, 2017 | |
Payables and Accruals [Abstract] | |
Schedule of accrued expenses | Accrued expenses consist of the following (in thousands): As of March 31, 2017 As of December 31, 2016 Compensation $ 9,454 $ 13,732 Non-income taxes 5,419 7,383 Royalty tax withholdings 7,094 6,921 Other expenses 10,602 13,070 Total accrued expenses $ 32,569 $ 41,106 |
Stockholders_ Equity and Equi24
Stockholders’ Equity and Equity-Based Compensation (Tables) | 3 Months Ended |
Mar. 31, 2017 | |
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 months ended March 31, 2017 and 2016 (in thousands): Three Months Ended March 31, 2017 2016 Cost of revenue $ 208 $ 533 Sales and marketing 1,218 1,191 Product development 1,256 2,149 General and administrative 3,274 3,480 Total $ 5,956 $ 7,353 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 months ended March 31, 2017 and 2016 (in thousands): Three Months Ended March 31, 2017 2016 Stock options $ 1,566 $ 1,736 RSUs 4,390 5,445 ESPP shares — 172 Total $ 5,956 $ 7,353 |
Other Expense, Net (Tables)
Other Expense, Net (Tables) | 3 Months Ended |
Mar. 31, 2017 | |
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 months ended March 31, 2017 and 2016 (in thousands): Three Months Ended March 31, 2017 2016 Foreign currency gain (loss) $ 365 $ 670 Change in fair value of contingent consideration — (714 ) Interest income 90 32 Total income (expense) $ 455 $ (12 ) |
Net Income Per Share (Tables)
Net Income Per Share (Tables) | 3 Months Ended |
Mar. 31, 2017 | |
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 follows (in thousands): Three Months Ended March 31, 2017 2016 Weighted average shares outstanding: Basic 34,597 35,375 Stock options and ESPP shares 495 352 Unvested RSUs and restricted stock awards 503 372 Diluted 35,595 36,099 Dilutive securities included in the calculation 1,927 1,814 Anti-dilutive securities excluded from the calculation 1,082 1,071 |
Geographic Information (Tables)
Geographic Information (Tables) | 3 Months Ended |
Mar. 31, 2017 | |
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 2017 2016 North America $ 52,798 $ 47,142 Europe 42,573 39,186 Rest of the world 34,853 30,324 Total revenue $ 130,224 $ 116,652 |
Long-lived Assets by Geographic Areas | The Company’s long-lived tangible assets were located as follows (in thousands): March 31, December 31, 2017 2016 North America $ 62,698 $ 54,913 Europe 1,101 1,141 Rest of the world 79 47 Total long-lived tangible assets $ 63,878 $ 56,101 |
Summary of Operations and Sig28
Summary of Operations and Significant Accounting Policies (Details) - USD ($) $ in Thousands | 3 Months Ended | ||
Mar. 31, 2017 | Mar. 31, 2016 | Dec. 31, 2016 | |
Restricted Cash and Cash Equivalents Items [Line Items] | |||
Net cash provided by operating activities | $ 17,185 | $ 21,467 | |
Net cash (used in) provided by financing activities | (32,136) | (26,116) | |
Allowance for Doubtful Accounts | |||
Allowance for doubtful accounts | 5,600 | $ 5,500 | |
Deferred Rent | |||
Deferred rent non-current balance | 10,600 | 8,600 | |
Chargeback and Sales Refund Allowance | |||
Chargeback and sales refund allowances | 600 | 600 | |
Other Assets | |||
Restricted Cash and Cash Equivalents Items [Line Items] | |||
Restricted cash related to security deposits for leased office location that expires in 2024 | $ 2,600 | 2,600 | |
New Accounting Pronouncement, Early Adoption, Effect | Accounting Standards Update 2016-09, Excess Tax Benefit Component | |||
Restricted Cash and Cash Equivalents Items [Line Items] | |||
Net cash provided by operating activities | (1,500) | ||
Net cash (used in) provided by financing activities | $ 1,500 | ||
New Accounting Pronouncement, Early Adoption, Effect | Accounting Standards Update 2016-09, Excess Tax Benefit Component | Retained Earnings | |||
Restricted Cash and Cash Equivalents Items [Line Items] | |||
Reduction to retained earnings | $ 700 |
Fair Value Measurements - Sched
Fair Value Measurements - Schedule of fair value measurements (Details) - Estimate of Fair Value Measurement - Recurring Basis - USD ($) $ in Thousands | Mar. 31, 2017 | Dec. 31, 2016 |
Assets: | ||
Total assets measured at fair value | $ 136,654 | $ 136,595 |
Liabilities: | ||
Total liabilities measured at fair value | 10,000 | |
Acquisition related contingent consideration | ||
Liabilities: | ||
Total liabilities measured at fair value | 10,000 | |
Money market accounts | ||
Assets: | ||
Total assets measured at fair value | 81,753 | 81,623 |
Commercial paper | ||
Assets: | ||
Total assets measured at fair value | 54,901 | 54,972 |
Level 1 | ||
Assets: | ||
Total assets measured at fair value | 81,753 | 81,623 |
Liabilities: | ||
Total liabilities measured at fair value | 0 | |
Level 1 | Acquisition related contingent consideration | ||
Liabilities: | ||
Total liabilities measured at fair value | 0 | |
Level 1 | Money market accounts | ||
Assets: | ||
Total assets measured at fair value | 81,753 | 81,623 |
Level 1 | Commercial paper | ||
Assets: | ||
Total assets measured at fair value | 0 | 0 |
Level 2 | ||
Assets: | ||
Total assets measured at fair value | 54,901 | 54,972 |
Liabilities: | ||
Total liabilities measured at fair value | 0 | |
Level 2 | Acquisition related contingent consideration | ||
Liabilities: | ||
Total liabilities measured at fair value | 0 | |
Level 2 | Money market accounts | ||
Assets: | ||
Total assets measured at fair value | 0 | 0 |
Level 2 | Commercial paper | ||
Assets: | ||
Total assets measured at fair value | 54,901 | 54,972 |
Level 3 | ||
Assets: | ||
Total assets measured at fair value | 0 | 0 |
Liabilities: | ||
Total liabilities measured at fair value | 10,000 | |
Level 3 | Acquisition related contingent consideration | ||
Liabilities: | ||
Total liabilities measured at fair value | 10,000 | |
Level 3 | Money market accounts | ||
Assets: | ||
Total assets measured at fair value | 0 | 0 |
Level 3 | Commercial paper | ||
Assets: | ||
Total assets measured at fair value | $ 0 | $ 0 |
Fair Value Measurements - Narra
Fair Value Measurements - Narrative (Details) - USD ($) | 3 Months Ended | ||
Mar. 31, 2017 | Mar. 31, 2016 | Dec. 31, 2016 | |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Change in fair value of contingent consideration | $ 0 | $ 2,365,000 | |
Estimate of Fair Value Measurement | Recurring Basis | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Total assets measured at fair value | 136,654,000 | $ 136,595,000 | |
Estimate of Fair Value Measurement | Recurring Basis | Level 3 | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Total assets measured at fair value | 0 | 0 | |
Estimate of Fair Value Measurement | Recurring Basis | Arbour Interactive Inc (PremiumBeat) | Acquisition related contingent consideration | Level 3 | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Change in fair value of contingent consideration | 0 | ||
Estimate of Fair Value Measurement | Recurring Basis | Other Current Liabilities | 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 included in other non-current liabilities | 10,000,000 | ||
Contingent consideration | 10,000,000 | ||
Estimate of Fair Value Measurement | Recurring Basis | Money market accounts | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Total assets measured at fair value | 81,753,000 | 81,623,000 | |
Estimate of Fair Value Measurement | Recurring Basis | Money market accounts | Level 3 | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Total assets measured at fair value | 0 | 0 | |
Estimate of Fair Value Measurement | Recurring Basis | Commercial paper | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Total assets measured at fair value | 54,901,000 | 54,972,000 | |
Estimate of Fair Value Measurement | Recurring Basis | Commercial paper | Level 3 | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Total assets measured at fair value | $ 0 | $ 0 |
Property and Equipment (Details
Property and Equipment (Details) - USD ($) $ in Thousands | 3 Months Ended | ||
Mar. 31, 2017 | Mar. 31, 2016 | Dec. 31, 2016 | |
Property and Equipment | |||
Property and equipment | $ 101,485 | $ 88,089 | |
Less accumulated depreciation | (37,607) | (31,988) | |
Property and equipment, net | 63,878 | 56,101 | |
Depreciation expense | 5,600 | $ 3,000 | |
Capitalized amount | 6,700 | 2,800 | |
Amortization expense | 2,100 | $ 500 | |
Internal use software | 24,900 | 20,300 | |
Computer equipment and software | |||
Property and Equipment | |||
Property and equipment | 74,911 | 63,711 | |
Furniture and fixtures | |||
Property and Equipment | |||
Property and equipment | 3,982 | 3,434 | |
Leasehold improvements | |||
Property and Equipment | |||
Property and equipment | $ 22,592 | $ 20,944 |
Goodwill and Intangible Asset32
Goodwill and Intangible Assets - Changes in goodwill (Details) $ in Thousands | 3 Months Ended |
Mar. 31, 2017USD ($) | |
Changes in goodwill | |
Balance at the beginning of the period | $ 49,271 |
Foreign currency translation adjustment | 418 |
Balance at the end of the period | 49,689 |
Content Business | |
Changes in goodwill | |
Balance at the beginning of the period | 40,508 |
Foreign currency translation adjustment | 418 |
Balance at the end of the period | 40,926 |
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 and Intangible Asset33
Goodwill and Intangible Assets - Intangible Assets (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2017 | Dec. 31, 2016 | |
Amortizing intangible assets: | ||
Gross Carrying Amount | $ 41,172 | $ 39,958 |
Accumulated Amortization | (11,242) | (9,801) |
Customer relationships | ||
Amortizing intangible assets: | ||
Gross Carrying Amount | 16,904 | 16,712 |
Accumulated Amortization | $ (4,906) | (4,344) |
Weighted Average Life | 9 years | |
Trade name | ||
Amortizing intangible assets: | ||
Gross Carrying Amount | $ 6,773 | 6,677 |
Accumulated Amortization | $ (2,289) | (2,030) |
Weighted Average Life | 7 years | |
Developed technology | ||
Amortizing intangible assets: | ||
Gross Carrying Amount | $ 3,264 | 3,224 |
Accumulated Amortization | $ (2,185) | (1,934) |
Weighted Average Life | 4 years | |
Contributor content | ||
Amortizing intangible assets: | ||
Gross Carrying Amount | $ 13,812 | 12,958 |
Accumulated Amortization | $ (1,745) | (1,386) |
Weighted Average Life | 11 years | |
Patents | ||
Amortizing intangible assets: | ||
Gross Carrying Amount | $ 259 | 227 |
Accumulated Amortization | $ (56) | (52) |
Weighted Average Life | 18 years | |
Domain name | ||
Amortizing intangible assets: | ||
Gross Carrying Amount | $ 160 | 160 |
Accumulated Amortization | $ (61) | $ (55) |
Weighted Average Life | 12 years |
Goodwill and Intangible Asset34
Goodwill and Intangible Assets - Narrative (Details) - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2017 | Mar. 31, 2016 | |
Goodwill and Intangible Assets Disclosure [Abstract] | ||
Amortization expense | $ 1.3 | $ 1.2 |
Remainder of 2017 | 4.1 | |
2,018 | 4.6 | |
2,019 | 4.4 | |
2,020 | 3.8 | |
2,021 | 3.3 | |
2,022 | 2.5 | |
Thereafter | $ 7.3 |
Accrued Expenses (Details)
Accrued Expenses (Details) - USD ($) $ in Thousands | Mar. 31, 2017 | Dec. 31, 2016 |
Payables and Accruals [Abstract] | ||
Compensation | $ 9,454 | $ 13,732 |
Non-income taxes | 5,419 | 7,383 |
Royalty tax withholdings | 7,094 | 6,921 |
Other expenses | 10,602 | 13,070 |
Total accrued expenses | $ 32,569 | $ 41,106 |
Commitments and Contingencies (
Commitments and Contingencies (Details) ft² in Thousands, $ in Millions | 3 Months Ended | |||
Mar. 31, 2017USD ($) | Mar. 31, 2016USD ($) | Dec. 31, 2016ft² | Jan. 31, 2016USD ($) | |
Operating leases | ||||
Rental expense inclusive of operating leases | $ 2.1 | $ 1.6 | ||
Letter of credit as a security deposit for the leased facilities | $ 2.6 | |||
Future minimum lease payments under non-cancelable operating leases | ||||
Total minimum lease payments | $ 81.9 | |||
Other assets | ||||
Operating leases | ||||
Letter of credit collateralized as restricted cash | $ 2.6 | |||
New York CIty Office Space | ||||
Operating leases | ||||
Area of additional office space (sq ft) | ft² | 25 |
Commitments and Contingencies -
Commitments and Contingencies - Other Commitments (Details) - Indirect Guarantee of Indebtedness - USD ($) | Oct. 20, 2016 | Mar. 31, 2017 | Mar. 27, 2017 |
Revolving Credit Facility | The Facility | |||
Other Commitments [Line Items] | |||
Maximum lending amount | $ 4,600,000 | $ 3,000,000 | |
Facility term | P5Y | ||
Interest rate percent | 10.00% | ||
Borrowings made | $ 0 | ||
Convertible Notes Payable | Convertible Note Maturing October 2021 | |||
Other Commitments [Line Items] | |||
Maximum lending amount | $ 1,600,000 | ||
Interest rate percent | 10.00% |
Commitments and Contingencies38
Commitments and Contingencies - Other Obligations and Indemnification (Details) | Mar. 31, 2017USD ($) |
Commitments and Contingencies Disclosure [Abstract] | |
Other obligations | $ 36,800,000 |
Maturity of unconditional purchase obligations | |
Remainder of 2017 | 8,700,000 |
2,018 | 12,000,000 |
2,019 | 9,000,000 |
2,020 | 7,100,000 |
2,021 | 0 |
Indemnifications | |
Minimum aggregate obligation and liability | 10,000 |
Maximum aggregate obligation and liability | 250,000 |
Material indemnification obligation | $ 0 |
Stockholders_ Equity and Equi39
Stockholders’ Equity and Equity-Based Compensation - Narrative (Details) - USD ($) | 3 Months Ended | |||
Mar. 31, 2017 | Feb. 28, 2017 | Dec. 31, 2016 | Oct. 31, 2015 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Shares repurchased (in shares) | 2,559,000 | 2,110,000 | ||
Common Stock | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Shares issued (in shares) | 184,000 | |||
Authorized purchase amount (up to) | $ 100,000,000 | |||
Authorized increase in purchase amount | $ 100,000,000 | |||
Shares repurchased (in shares) | 449,000 | |||
Average per share cost (in dollars per share) | $ 50.04 | |||
Value remaining for repurchase | $ 100,000,000 | |||
Stock options | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Shares granted for purchase (in shares) | 79,000 | |||
Weighted average exercise price (in dollars per share) | $ 48.57 | |||
Options vested and exercisable (in shares) | 309,000 | |||
Options vested and exercisable, weighted average exercise price (in dollars per share) | $ 35.11 | |||
Unrecognized compensation charge | $ 20,700,000 | |||
RSUs | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Number of shares granted (in shares) | 464,000 | |||
Nonvested shares outstanding (in shares) | 1,353,000 | |||
Unrecognized non-cash equity-based compensation charge | $ 52,200,000 | |||
Aggregate value withheld upon vesting | $ 4,000,000 | |||
ESPP shares | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Shares issued (in shares) | 0 |
Stockholders_ Equity and Equi40
Stockholders’ Equity and Equity-Based Compensation - Summary of non-cash equity-based compensation expense included in the Company's statement of operations (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2017 | Mar. 31, 2016 | |
Non-cash equity-based compensation expense related to the 2012 Plan and 2012 ESPP | ||
Non-cash equity-based compensation | $ 5,956 | $ 7,353 |
Stock options | ||
Non-cash equity-based compensation expense related to the 2012 Plan and 2012 ESPP | ||
Non-cash equity-based compensation | 1,566 | 1,736 |
RSUs | ||
Non-cash equity-based compensation expense related to the 2012 Plan and 2012 ESPP | ||
Non-cash equity-based compensation | 4,390 | 5,445 |
ESPP shares | ||
Non-cash equity-based compensation expense related to the 2012 Plan and 2012 ESPP | ||
Non-cash equity-based compensation | 0 | 172 |
Cost of revenue | ||
Non-cash equity-based compensation expense related to the 2012 Plan and 2012 ESPP | ||
Non-cash equity-based compensation | 208 | 533 |
Sales and marketing | ||
Non-cash equity-based compensation expense related to the 2012 Plan and 2012 ESPP | ||
Non-cash equity-based compensation | 1,218 | 1,191 |
Product development | ||
Non-cash equity-based compensation expense related to the 2012 Plan and 2012 ESPP | ||
Non-cash equity-based compensation | 1,256 | 2,149 |
General and administrative | ||
Non-cash equity-based compensation expense related to the 2012 Plan and 2012 ESPP | ||
Non-cash equity-based compensation | $ 3,274 | $ 3,480 |
Employee Benefit Plans (Details
Employee Benefit Plans (Details) - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2017 | Mar. 31, 2016 | |
Compensation and Retirement Disclosure [Abstract] | ||
Annual discretionary employer matching contributions (as a percent) | 3.00% | |
Employer matching contributions | $ 0.4 | $ 0.5 |
Other Expense, Net (Details)
Other Expense, Net (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2017 | Mar. 31, 2016 | |
Other Nonoperating Income (Expense) [Abstract] | ||
Foreign currency gain (loss) | $ 365 | $ 670 |
Change in fair value of contingent consideration | 0 | (714) |
Interest income | 90 | 32 |
Total income (expense) | $ 455 | $ (12) |
Income Taxes (Details)
Income Taxes (Details) - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2017 | Mar. 31, 2016 | |
Income Tax Disclosure [Abstract] | ||
Effective tax rate (as a percent) | 38.60% | 43.30% |
Increase (decrease) in effective tax rate | (5.00%) | 2.20% |
Unrecognized tax benefits | $ 0.1 | |
Undistributed earnings | $ 8.1 |
Net Income Per Share (Details)
Net Income Per Share (Details) - shares shares in Thousands | 3 Months Ended | |
Mar. 31, 2017 | Mar. 31, 2016 | |
Weighted Average Number of Shares Outstanding, Basic [Abstract] | ||
Basic (in shares) | 34,597 | 35,375 |
Stock options and ESPP shares (in shares) | 495 | 352 |
Unvested RSUs and restricted stock awards (in shares) | 503 | 372 |
Diluted (in shares) | 35,595 | 36,099 |
Dilutive securities included in the calculation (in shares) | 1,927 | 1,814 |
Anti-dilutive securities excluded from the calculation (in shares) | 1,082 | 1,071 |
Geographic Information (Details
Geographic Information (Details) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended | |
Mar. 31, 2017 | Mar. 31, 2016 | Dec. 31, 2016 | |
Geographic revenue based on customer location and long-lived tangible assets | |||
Revenue | $ 130,224 | $ 116,652 | |
Long-lived tangible assets | 63,878 | $ 56,101 | |
North America | |||
Geographic revenue based on customer location and long-lived tangible assets | |||
Revenue | 52,798 | 47,142 | |
Long-lived tangible assets | $ 62,698 | $ 54,913 | |
United States | Total revenue | Geographic concentration | |||
Geographic revenue based on customer location and long-lived tangible assets | |||
Concentration risk percentage | 36.00% | ||
United States | Long-Lived Tangible Assets | Geographic concentration | |||
Geographic revenue based on customer location and long-lived tangible assets | |||
Concentration risk percentage | 95.00% | 95.00% | |
Europe | |||
Geographic revenue based on customer location and long-lived tangible assets | |||
Revenue | $ 42,573 | $ 39,186 | |
Long-lived tangible assets | $ 1,101 | $ 1,141 | |
United Kingdom | Total revenue | Geographic concentration | |||
Geographic revenue based on customer location and long-lived tangible assets | |||
Concentration risk percentage | 9.00% | 11.00% | |
Rest of the world | |||
Geographic revenue based on customer location and long-lived tangible assets | |||
Revenue | $ 34,853 | $ 30,324 | |
Long-lived tangible assets | $ 79 | $ 47 |