Document and Entity Information
Document and Entity Information - shares | 9 Months Ended | |
Sep. 30, 2017 | Oct. 27, 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 | Sep. 30, 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 | 34,674,947 | |
Document Fiscal Year Focus | 2,017 | |
Document Fiscal Period Focus | Q3 |
Consolidated Balance Sheets
Consolidated Balance Sheets - USD ($) $ in Thousands | Sep. 30, 2017 | Dec. 31, 2016 |
Current assets: | ||
Cash and cash equivalents | $ 212,782 | $ 224,190 |
Short-term investments | 22,500 | 54,972 |
Accounts receivable, net | 44,896 | 38,107 |
Prepaid expenses and other current assets | 35,878 | 22,569 |
Total current assets | 316,056 | 339,838 |
Property and equipment, net | 77,770 | 56,101 |
Intangible assets, net | 43,015 | 30,157 |
Goodwill | 90,524 | 49,271 |
Deferred tax assets, net | 18,342 | 23,013 |
Other assets | 6,842 | 3,398 |
Total assets | 552,549 | 501,778 |
Current liabilities: | ||
Accounts payable | 10,210 | 7,305 |
Accrued expenses | 51,989 | 41,106 |
Contributor royalties payable | 20,072 | 20,473 |
Deferred revenue | 146,430 | 122,235 |
Other liabilities | 1,665 | 12,378 |
Total current liabilities | 230,366 | 203,497 |
Deferred tax liability, net | 1,664 | 2,147 |
Other non-current liabilities | 13,139 | 9,438 |
Total liabilities | 245,169 | 215,082 |
Commitments and contingencies (Note 6) | ||
Stockholders’ equity: | ||
Common stock, $0.01 par value; 200,000 shares authorized; 37,219 and 36,926 shares issued and 34,660 and 34,816 shares outstanding as of September 30, 2017 and December 31, 2016, respectively | 373 | 369 |
Treasury stock, at cost; 2,559 and 2,110 shares as of September 30, 2017 and December 31, 2016, respectively | (100,027) | (77,567) |
Additional paid-in capital | 268,565 | 251,890 |
Accumulated comprehensive loss | (4,601) | (17,061) |
Retained earnings | 143,070 | 129,065 |
Total stockholders’ equity | 307,380 | 286,696 |
Total liabilities and stockholders’ equity | $ 552,549 | $ 501,778 |
Consolidated Balance Sheets (Pa
Consolidated Balance Sheets (Parenthetical) - $ / shares | Sep. 30, 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) | 37,219,000 | 36,926,000 |
Common stock, shares outstanding (in shares) | 34,660,000 | 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 | 9 Months Ended | ||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | |
Income Statement [Abstract] | ||||
Revenue | $ 141,063 | $ 123,073 | $ 405,282 | $ 364,144 |
Operating expenses: | ||||
Cost of revenue | 58,812 | 50,184 | 168,512 | 150,492 |
Sales and marketing | 36,008 | 32,977 | 105,620 | 91,636 |
Product development | 13,340 | 11,604 | 37,276 | 34,800 |
General and administrative | 27,333 | 17,020 | 74,716 | 54,629 |
Total operating expenses | 135,493 | 111,785 | 386,124 | 331,557 |
Income from operations | 5,570 | 11,288 | 19,158 | 32,587 |
Other income (expense), net | 130 | 102 | 2,095 | (122) |
Income before income taxes | 5,700 | 11,390 | 21,253 | 32,465 |
Provision for income taxes | 698 | 1,999 | 6,582 | 9,692 |
Net income | $ 5,002 | $ 9,391 | $ 14,671 | $ 22,773 |
Net income per share: | ||||
Basic (in dollars per share) | $ 0.14 | $ 0.27 | $ 0.42 | $ 0.65 |
Diluted (in dollars per share) | $ 0.14 | $ 0.26 | $ 0.42 | $ 0.64 |
Weighted average shares outstanding: | ||||
Basic (in shares) | 34,643 | 35,036 | 34,607 | 35,123 |
Diluted (in shares) | 35,177 | 35,824 | 35,339 | 35,855 |
Consolidated Statements of Comp
Consolidated Statements of Comprehensive Income - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | |
Statement of Comprehensive Income [Abstract] | ||||
Net income | $ 5,002 | $ 9,391 | $ 14,671 | $ 22,773 |
Foreign currency translation gain (loss) | 4,325 | (2,236) | 12,460 | (4,641) |
Unrealized gain on investments | 0 | 34 | 0 | 252 |
Other comprehensive income (loss) | 4,325 | (2,202) | 12,460 | (4,389) |
Comprehensive income | $ 9,327 | $ 7,189 | $ 27,131 | $ 18,384 |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows - USD ($) $ in Thousands | 9 Months Ended | |
Sep. 30, 2017 | Sep. 30, 2016 | |
CASH FLOWS FROM OPERATING ACTIVITIES | ||
Net income | $ 14,671 | $ 22,773 |
Adjustments to reconcile net income to net cash provided by operating activities: | ||
Depreciation and amortization | 24,948 | 14,181 |
Deferred taxes | 4,346 | (3,453) |
Non-cash equity-based compensation | 20,128 | 21,110 |
Change in fair value of contingent consideration | 0 | 2,600 |
Settlement of contingent consideration liability in excess of acquisition-date fair value | (6,255) | (1,640) |
Bad debt expense | 981 | 3,338 |
Chargeback and sales refund reserves | 0 | (15) |
Changes in operating assets and liabilities: | ||
Accounts receivable | (5,361) | (13,565) |
Prepaid expenses and other current and non-current assets | (10,551) | (2,882) |
Accounts payable and other current and non-current liabilities | 11,282 | 12,586 |
Contributor royalties payable | (681) | 1,702 |
Deferred revenue | 18,002 | 19,443 |
Net cash provided by operating activities | 71,510 | 76,178 |
CASH FLOWS FROM INVESTING ACTIVITIES | ||
Capital expenditures | (37,626) | (26,747) |
Investment sales (purchases), net | 32,786 | (5,182) |
Acquisition of business, net of cash acquired | (49,512) | 0 |
Other investments/advances | (3,101) | 0 |
Acquisition of digital content | (2,568) | (6,214) |
Security deposit (payment)/release | 30 | (799) |
Net cash used in investing activities | (59,991) | (38,942) |
CASH FLOWS FROM FINANCING ACTIVITIES | ||
Purchase of treasury shares | (24,977) | (44,916) |
Proceeds from exercise of stock options | 1,369 | 8,235 |
Proceeds from issuance of common stock under 2012 Employee Stock Purchase Plan | 0 | 809 |
Cash paid related to settlement of employee taxes related to RSU vesting | (5,791) | 0 |
Settlement of contingent consideration liability | (3,745) | (2,360) |
Net cash (used in) provided by financing activities | (33,144) | (38,232) |
Effect of foreign exchange rate changes on cash | 10,217 | (2,311) |
Net decrease in cash and cash equivalents | (11,408) | (3,307) |
Cash and cash equivalents, beginning of period | 224,190 | 241,304 |
Cash and cash equivalents, end of period | 212,782 | 237,997 |
Supplemental Disclosure of Cash Information: | ||
Cash paid for income taxes | $ 4,137 | $ 16,316 |
Summary of Operations and Signi
Summary of Operations and Significant Accounting Policies | 9 Months Ended |
Sep. 30, 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 September 30, 2017 , consolidated statements of operations and comprehensive income for the three and nine months ended September 30, 2017 and 2016 , and consolidated statement of cash flows for the nine months ended September 30, 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 September 30, 2017 and its consolidated results of operations, comprehensive income and cash flows for the three and nine months ended September 30, 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 and nine months ended September 30, 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. During the second quarter of 2017, the Company recorded immaterial adjustments to its unaudited condensed consolidated financial statements to: (1) reduce revenue by approximately $0.6 million and (2) increase general and administrative expense by approximately $0.1 million , related to prior periods. During the third quarter of 2017, the Company recorded an immaterial adjustment to its unaudited condensed consolidated financial statements to increase revenue by approximately $0.9 million , related to prior periods. The Company has concluded that the impact of these adjustments is not material to the results of operations or financial position for the periods in which these adjustments were recorded nor any prior quarterly or annual period financial statements. 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 September 30, 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. During the nine months ended September 30, 2017 , bad debt expense, which increased the allowance for doubtful accounts, was $1.0 million , and write-offs and other adjustments, which decreased the allowance for doubtful accounts, were $2.5 million . As of September 30, 2017 and December 31, 2016 , the Company’s allowance for doubtful accounts was approximately $4.0 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 September 30, 2017 and December 31, 2016 , the Company had deferred rent of $11.1 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 September 30, 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 $0.6 million and increased cash flows from financing activities by $0.6 million for the nine months ended September 30, 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. The balance of the Company’s restricted cash was $2.6 million as of September 30, 2017 . 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. Management is progressing with its implementation plan and is considering relevant guidance and industry interpretations as it concludes on its performance obligations, variable consideration, and timing of revenue recognition. |
Fair Value Measurements
Fair Value Measurements | 9 Months Ended |
Sep. 30, 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 September 30, 2017 Aggregate Fair Value Level 1 Level 2 Level 3 Assets: Money market accounts $ 33,141 $ 33,141 $ — $ — Commercial paper 22,500 — 22,500 — Total assets measured at fair value $ 55,641 $ 33,141 $ 22,500 $ — 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 $33.1 million and $81.6 million as of September 30, 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 $22.5 million and $55.0 million as of September 30, 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 nine months ended September 30, 2017 . The contingent consideration of $10.0 million was paid in March 2017, and there was no remaining liability as of September 30, 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 | 9 Months Ended |
Sep. 30, 2017 | |
Property, Plant and Equipment [Abstract] | |
Property and Equipment | Property and Equipment Property and equipment is summarized as follows (in thousands): As of September 30, 2017 As of December 31, 2016 Computer equipment and software $ 101,496 $ 63,711 Furniture and fixtures 9,948 3,434 Leasehold improvements 18,280 20,944 Property and equipment 129,724 88,089 Less accumulated depreciation (51,954 ) (31,988 ) Property and equipment, net $ 77,770 $ 56,101 Depreciation expense related to property and equipment was $7.9 million and $3.9 million for the three months ended September 30, 2017 and 2016 , respectively, and $19.9 million and $10.4 million for the nine months ended September 30, 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 $11.2 million and $6.5 million for the three months ended September 30, 2017 and 2016 , respectively, and $25.8 million and $12.8 million for the nine months ended September 30, 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 $4.1 million and $1.0 million for the three months ended September 30, 2017 and 2016 , respectively, and $9.2 million and $2.1 million for the nine months ended September 30, 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 September 30, 2017 and December 31, 2016 , the Company had capitalized internal-use software of $37.0 million and $20.3 million , respectively, net of accumulated depreciation, which was included in property and equipment, net. |
Goodwill, Intangible Assets and
Goodwill, Intangible Assets and Acquisition Activity | 9 Months Ended |
Sep. 30, 2017 | |
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 Image (formerly, “Bigstock”), Editorial, Music and Webdam reporting units and is tested for impairment at least annually on October 1 or upon a triggering event. Image, 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 September 30, 2017 (in thousands): Consolidated Content Business Other Category Balance as of December 31, 2016 $ 49,271 $ 40,508 $ 8,763 Goodwill related to acquisitions $ 37,834 37,834 — Foreign currency translation adjustment 3,419 3,419 — Balance as of September 30, 2017 $ 90,524 $ 81,761 $ 8,763 No triggering events were identified during the nine months ended September 30, 2017 . Intangible Assets Intangible assets consisted of the following as of September 30, 2017 and December 31, 2016 (in thousands): As of September 30, 2017 As of December 31, 2016 Gross Carrying Amount Accumulated Amortization Weighted Gross Accumulated Amortizing intangible assets: Customer relationships $ 23,314 $ (6,404 ) 9 $ 16,712 $ (4,344 ) Trade name 7,093 (3,000 ) 7 6,677 (2,030 ) Developed technology 11,399 (3,472 ) 3 3,224 (1,934 ) Contributor content 16,452 (2,648 ) 11 12,958 (1,386 ) Patents 259 (64 ) 18 227 (52 ) Domain name 160 (73 ) 12 160 (55 ) Total $ 58,677 $ (15,662 ) $ 39,958 $ (9,801 ) Amortization expense was $2.3 million and $1.2 million for the three months ended September 30, 2017 and 2016 , respectively, and $5.1 million and $3.8 million for the nine months ended September 30, 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: $2.2 million for the remaining three months of 2017 , $7.8 million in 2018 , $7.7 million in 2019 , $5.5 million in 2020 , $3.7 million in 2021 , $3.0 million in 2022 and $13.1 million thereafter. Acquisition Activity 2017 Acquisition Activity Flashstock Technology, Inc. On July 7, 2017, the Company acquired all of the shares of Flashstock Technology, Inc. (“Flashstock”) pursuant to a stock purchase agreement. The transaction was accounted for using the acquisition method and, accordingly, the results of the acquired business have been included in the Company’s results of operations from the acquisition date. Flashstock is a Toronto-based company that enables the creation of custom content through a propriety software platform. The Company believes this acquisition will strengthen the Company’s strategic position and serve as the foundation for the Company to bring a comprehensive custom content offering to market. The fair value of consideration transferred in this business combination was allocated to the intangible and tangible assets acquired and liabilities assumed at the acquisition date, with the remaining unallocated amount recorded as goodwill. The total purchase price was $51.2 million of which $50.9 million was paid with existing cash on hand in the three months ended September 30, 2017 and an estimated $0.3 million is to be paid in the fourth quarter of 2017 for the settlement of working capital adjustments. The unpaid portion of the purchase price is included in accrued expenses as of September 30, 2017. As required by the stock purchase agreement, the Company is in the process of finalizing the working capital adjustments; accordingly, management has used their best estimate in the initial purchase price allocation as of the date of these financial statements. The aggregate purchase price was allocated to the assets acquired and liabilities assumed as follows (in thousands): Assets: Cash and cash equivalents $ 1,330 Accounts receivable 2,439 Prepaid expenses and other current assets 205 Intangible Assets: Customer relationships 5,400 Developed technology 8,100 Goodwill 37,834 Total assets acquired 55,308 Liabilities: Accrued expenses (279 ) Accounts payable (99 ) Deferred tax liability, net (164 ) Deferred revenue (3,540 ) Total liabilities acquired (4,082 ) Net assets acquired $ 51,226 The identifiable intangible assets have a weighted average life of approximately six years and are being amortized on a straight-line basis. The fair value of the customer relationships was determined using a variation of the income approach known as the multiple-period excess earnings method. The fair value of the developed technology was determined using the relief-from-royalty method. The goodwill arising from the transaction is primarily attributable to expected operational synergies and approximately 9% will be deductible for income tax purposes. In connection with the acquisition, the Company recorded approximately $0.1 million and $0.8 million of professional fees in the three and nine months ended September 30, 2017, respectively. The professional fees are included in general and administrative expense. The operations of the acquired entity have been integrated into the Company’s operations from the acquisition date. The following unaudited pro forma consolidated financial information reflects the results of operations of the Company for the three and nine months ended September 30, 2017 and 2016, as if the Flashstock acquisition was had been completed on January 1, 2016, after giving effect to certain purchase accounting adjustments, primarily related to intangible assets and deferred revenue. These pro forma results have been prepared for comparative purposes only and are not necessarily indicative of what the Company’s operating results would have been, had the acquisitions actually taken place at the beginning of the period (in thousands): Three Months Ended September 30, Nine Months Ended September 30, 2017 2016 2017 2016 Revenue As reported $ 141,063 $ 123,073 $ 405,282 $ 364,144 Pro forma 141,888 123,735 409,618 365,720 Income before income taxes As reported $ 5,700 $ 11,390 $ 21,253 $ 32,465 Pro forma 6,729 10,013 19,105 28,969 The Company has performance-based bonus arrangements with certain Flashstock employees who are now employees of Shutterstock. These employees are entitled to additional compensation if: (i) the custom content business achieves certain financial targets for the 2019 calendar year and (ii) the individual is employed by Shutterstock as of December 31, 2019. These performance-based bonuses will be reported as period expenses within “Other (expense) income, net” in the consolidated statements of operations, and are not considered part of the Flashstock purchase price. 2016 Acquisition Activity The Picture Desk On September 1, 2016, the Company acquired content assets and intellectual property of The Picture Desk Limited, which includes over 700,000 images from two image collections: The Art Archive and The Kobal Collection, pursuant to an asset purchase agreement. The total purchase price consisted of a cash payment of $3.9 million including transaction costs, which has been recorded as an addition to intangible assets, of which $3.6 million has been recorded under contributor content with an estimated useful life of 15 years , and the remainder has been recorded under trade name with an estimated useful life of 7 years . |
Accrued Expenses
Accrued Expenses | 9 Months Ended |
Sep. 30, 2017 | |
Payables and Accruals [Abstract] | |
Accrued Expenses | Accrued Expenses Accrued expenses consisted of the following (in thousands): As of September 30, 2017 As of December 31, 2016 Compensation $ 19,844 $ 13,732 Non-income taxes 6,520 7,383 Royalty tax withholdings 7,587 6,921 Other expenses 18,038 13,070 Total accrued expenses $ 51,989 $ 41,106 |
Commitments and Contingencies
Commitments and Contingencies | 9 Months Ended |
Sep. 30, 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 $2.3 million and $2.1 million for the three months ended September 30, 2017 and 2016 , respectively, and $6.5 million and $5.0 million for the nine months ended September 30, 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. In addition to contractual rent amounts, the Company’s lease payments are also subject to adjustments in real estate taxes and operating expenses. 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 September 30, 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 $79.2 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 . The Transaction Party has borrowed $1.3 million under the Facility, all of which remains outstanding as of September 30, 2017 . The Company has reported this amount in other non-current assets. 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 note 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. The $1.6 million investment in the convertible note is reported in other non-current assets. Other Obligations As of September 30, 2017 , the Company had other obligations in the amount of approximately $42.1 million , which consisted primarily of minimum royalty guarantees and unconditional purchase obligations related to contracts for infrastructure and other business services. As of September 30, 2017 , the Company’s other obligations for the remainder of 2017 and for the years ending December 31, 2018 , 2019 and 2020 were approximately $5.6 million , $16.2 million , $11.7 million and $8.6 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 September 30, 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 | 9 Months Ended |
Sep. 30, 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 nine months ended September 30, 2017 , the Company issued approximately 293,000 shares of common stock, primarily related 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 nine months ended September 30, 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 September 30, 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 the fair value of each award 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 nine months ended September 30, 2017 and 2016 (in thousands): Three Months Ended September 30, Nine Months Ended September 30, 2017 2016 2017 2016 Cost of revenue $ 176 $ 498 $ 608 $ 1,552 Sales and marketing 1,092 1,524 3,535 4,072 Product development 1,819 1,580 5,079 5,732 General and administrative 3,798 2,903 10,905 9,754 Total $ 6,885 $ 6,505 $ 20,128 $ 21,110 The following table summarizes non-cash equity-based compensation expense, net of forfeitures, by award type included in the accompanying consolidated statements of operations for the three and nine months ended September 30, 2017 and 2016 (in thousands): Three Months Ended September 30, Nine Months Ended September 30, 2017 2016 2017 2016 Stock options $ 1,663 $ 1,751 $ 5,087 $ 5,379 RSUs 5,222 4,602 15,041 15,254 ESPP shares — 152 — 477 Total $ 6,885 $ 6,505 $ 20,128 $ 21,110 Stock Option Awards During the nine months ended September 30, 2017 , the Company granted options to purchase approximately 86,000 shares of its common stock with a weighted average exercise price of $48.05 . As of September 30, 2017 , there were approximately 312,000 options vested and exercisable with a weighted average exercise price of $36.27 . As of September 30, 2017 , the total unrecognized compensation charge related to non-vested options was approximately $15.9 million , which is expected to be recognized through 2021 . Restricted Stock Units During the nine months ended September 30, 2017 , the Company granted approximately 366,000 RSUs, net of forfeitures. As of September 30, 2017 there are approximately 1,290,000 non-vested RSUs outstanding. As of September 30, 2017 , the total unrecognized non-cash equity-based compensation charge related to the non-vested RSUs was approximately $45.0 million , which is expected to be recognized through 2021 . During the nine months ended September 30, 2017 , shares with an aggregate value of $5.8 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 nine months ended September 30, 2017 , no shares of the Company’s common stock were issued under the 2012 ESPP. |
Employee Benefit Plans
Employee Benefit Plans | 9 Months Ended |
Sep. 30, 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 $0.7 million and $0.5 million for the three months ended September 30, 2017 and 2016 , respectively, and $1.5 million and $1.5 million for the nine months ended September 30, 2017 and 2016 , respectively. |
Other Expense, Net
Other Expense, Net | 9 Months Ended |
Sep. 30, 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 and nine months ended September 30, 2017 and 2016 (in thousands): Three Months Ended September 30, Nine Months Ended September 30, 2017 2016 2017 2016 Foreign currency gain (loss) $ (192 ) $ 192 $ 1,467 $ 739 Change in fair value of contingent consideration — (130 ) — (974 ) Interest income 322 40 628 113 Total income (expense) $ 130 $ 102 $ 2,095 $ (122 ) |
Income Taxes
Income Taxes | 9 Months Ended |
Sep. 30, 2017 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | Income Taxes The Company’s effective tax rates were 12.2% and 17.6% for the three months ended September 30, 2017 and 2016 , respectively, and 31.0% and 29.9% for the nine months ended September 30, 2017 and 2016 , respectively. In the three and nine months ended September 30, 2017 , the Company incurred a discrete benefit relating primarily to the tax effect of the domestic production activities deduction claimed on the Company’s 2016 tax return, which was substantially completed in the third quarter of 2017. The net effect of discrete items decreased the effective tax rate for the three and nine months ended September 30, 2017 by 17.5% and 2.0% , respectively. In the three and nine months ended September 30, 2016 , the Company incurred a discrete tax benefit related primarily to the Company’s completion of a study which determined the amount of the U.S. Research and Development tax credit for the years 2013 to 2015 to which it was entitled. The net effect of discrete items decreased the effective tax rate for the three and nine months ended September 30, 2016 by 22.3% and 10.0% , 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 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 and nine months ended September 30, 2017 and 2016 , unrecognized tax benefits recorded by the Company for uncertain tax positions taken in prior years increased by $0.3 million . During the three months ended September 30, 2016 , unrecognized tax benefits recorded by the Company for uncertain tax positions taken in prior years were $1.0 million . During the nine months ended September 30, 2016 , the Company’s recognized tax benefits of $1.0 million were offset by a recognized tax benefit of approximately $1.0 million related to the release of a reserve for uncertain tax positions due to a lapse in the statute of limitations, resulting in a net amount recorded that was 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 three and nine months ended September 30, 2017 and 2016 . As of September 30, 2017 , the Company had approximately $12.8 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 | 9 Months Ended |
Sep. 30, 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 September 30, Nine Months Ended September 30, 2017 2016 2017 2016 Weighted average shares outstanding: Basic 34,643 35,036 34,607 35,123 Stock options and ESPP shares 408 473 458 434 Unvested RSUs and restricted stock awards 126 315 274 298 Diluted 35,177 35,824 35,339 35,855 Dilutive securities included in the calculation 1,066 2,097 1,543 1,940 Anti-dilutive securities excluded from the calculation 1,554 856 1,244 1,061 |
Geographic Information
Geographic Information | 9 Months Ended |
Sep. 30, 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 Nine Months Ended 2017 2016 2017 2016 North America $ 55,827 $ 49,221 $ 161,396 $ 145,928 Europe 45,075 39,382 131,712 119,662 Rest of the world 40,161 34,470 112,174 98,554 Total revenue $ 141,063 $ 123,073 $ 405,282 $ 364,144 The United States, included in North America in the above table, accounted for 36% of consolidated revenue for the three months ended September 30, 2017 and 2016 , and 36% of total revenue for the nine months ended September 30, 2017 and 2016 . The United Kingdom, included in Europe in the above table, accounted for 9% of total revenue for the three months ended September 30, 2017 and 2016 , and 9% and 10% of total revenue for the nine months ended September 30, 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): September 30, December 31, 2017 2016 North America $ 75,771 $ 54,913 Europe 1,925 1,141 Rest of the world 74 47 Total long-lived tangible assets $ 77,770 $ 56,101 The United States, included in North America in the above table, accounted for 95% of total long-lived tangible assets as of September 30, 2017 and December 31, 2016 . |
Summary of Operations and Sig19
Summary of Operations and Significant Accounting Policies (Policies) | 9 Months Ended |
Sep. 30, 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 September 30, 2017 , consolidated statements of operations and comprehensive income for the three and nine months ended September 30, 2017 and 2016 , and consolidated statement of cash flows for the nine months ended September 30, 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 September 30, 2017 and its consolidated results of operations, comprehensive income and cash flows for the three and nine months ended September 30, 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 and nine months ended September 30, 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. During the second quarter of 2017, the Company recorded immaterial adjustments to its unaudited condensed consolidated financial statements to: (1) reduce revenue by approximately $0.6 million and (2) increase general and administrative expense by approximately $0.1 million , related to prior periods. During the third quarter of 2017, the Company recorded an immaterial adjustment to its unaudited condensed consolidated financial statements to increase revenue by approximately $0.9 million , related to prior periods. The Company has concluded that the impact of these adjustments is not material to the results of operations or financial position for the periods in which these adjustments were recorded nor any prior quarterly or annual period financial statements. 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 September 30, 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. During the nine months ended September 30, 2017 , bad debt expense, which increased the allowance for doubtful accounts, was $1.0 million , and write-offs and other adjustments, which decreased the allowance for doubtful accounts, were $2.5 million . |
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 $0.6 million and increased cash flows from financing activities by $0.6 million for the nine months ended September 30, 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. The balance of the Company’s restricted cash was $2.6 million as of September 30, 2017 . 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. Management is progressing with its implementation plan and is considering relevant guidance and industry interpretations as it concludes on its performance obligations, variable consideration, and timing of revenue recognition. |
Fair Value Measurements (Tables
Fair Value Measurements (Tables) | 9 Months Ended |
Sep. 30, 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 September 30, 2017 Aggregate Fair Value Level 1 Level 2 Level 3 Assets: Money market accounts $ 33,141 $ 33,141 $ — $ — Commercial paper 22,500 — 22,500 — Total assets measured at fair value $ 55,641 $ 33,141 $ 22,500 $ — 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) | 9 Months Ended |
Sep. 30, 2017 | |
Property, Plant and Equipment [Abstract] | |
Summary of property and equipment | Property and equipment is summarized as follows (in thousands): As of September 30, 2017 As of December 31, 2016 Computer equipment and software $ 101,496 $ 63,711 Furniture and fixtures 9,948 3,434 Leasehold improvements 18,280 20,944 Property and equipment 129,724 88,089 Less accumulated depreciation (51,954 ) (31,988 ) Property and equipment, net $ 77,770 $ 56,101 |
Goodwill, Intangible Assets a22
Goodwill, Intangible Assets and Acquisition Activity (Tables) | 9 Months Ended |
Sep. 30, 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 September 30, 2017 (in thousands): Consolidated Content Business Other Category Balance as of December 31, 2016 $ 49,271 $ 40,508 $ 8,763 Goodwill related to acquisitions $ 37,834 37,834 — Foreign currency translation adjustment 3,419 3,419 — Balance as of September 30, 2017 $ 90,524 $ 81,761 $ 8,763 |
Schedule of intangible assets | Intangible assets consisted of the following as of September 30, 2017 and December 31, 2016 (in thousands): As of September 30, 2017 As of December 31, 2016 Gross Carrying Amount Accumulated Amortization Weighted Gross Accumulated Amortizing intangible assets: Customer relationships $ 23,314 $ (6,404 ) 9 $ 16,712 $ (4,344 ) Trade name 7,093 (3,000 ) 7 6,677 (2,030 ) Developed technology 11,399 (3,472 ) 3 3,224 (1,934 ) Contributor content 16,452 (2,648 ) 11 12,958 (1,386 ) Patents 259 (64 ) 18 227 (52 ) Domain name 160 (73 ) 12 160 (55 ) Total $ 58,677 $ (15,662 ) $ 39,958 $ (9,801 ) |
Purchase price allocation | The aggregate purchase price was allocated to the assets acquired and liabilities assumed as follows (in thousands): Assets: Cash and cash equivalents $ 1,330 Accounts receivable 2,439 Prepaid expenses and other current assets 205 Intangible Assets: Customer relationships 5,400 Developed technology 8,100 Goodwill 37,834 Total assets acquired 55,308 Liabilities: Accrued expenses (279 ) Accounts payable (99 ) Deferred tax liability, net (164 ) Deferred revenue (3,540 ) Total liabilities acquired (4,082 ) Net assets acquired $ 51,226 |
Pro forma information | The following unaudited pro forma consolidated financial information reflects the results of operations of the Company for the three and nine months ended September 30, 2017 and 2016, as if the Flashstock acquisition was had been completed on January 1, 2016, after giving effect to certain purchase accounting adjustments, primarily related to intangible assets and deferred revenue. These pro forma results have been prepared for comparative purposes only and are not necessarily indicative of what the Company’s operating results would have been, had the acquisitions actually taken place at the beginning of the period (in thousands): Three Months Ended September 30, Nine Months Ended September 30, 2017 2016 2017 2016 Revenue As reported $ 141,063 $ 123,073 $ 405,282 $ 364,144 Pro forma 141,888 123,735 409,618 365,720 Income before income taxes As reported $ 5,700 $ 11,390 $ 21,253 $ 32,465 Pro forma 6,729 10,013 19,105 28,969 |
Accrued Expenses (Tables)
Accrued Expenses (Tables) | 9 Months Ended |
Sep. 30, 2017 | |
Payables and Accruals [Abstract] | |
Schedule of accrued expenses | Accrued expenses consisted of the following (in thousands): As of September 30, 2017 As of December 31, 2016 Compensation $ 19,844 $ 13,732 Non-income taxes 6,520 7,383 Royalty tax withholdings 7,587 6,921 Other expenses 18,038 13,070 Total accrued expenses $ 51,989 $ 41,106 |
Stockholders_ Equity and Equi24
Stockholders’ Equity and Equity-Based Compensation (Tables) | 9 Months Ended |
Sep. 30, 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 and nine months ended September 30, 2017 and 2016 (in thousands): Three Months Ended September 30, Nine Months Ended September 30, 2017 2016 2017 2016 Cost of revenue $ 176 $ 498 $ 608 $ 1,552 Sales and marketing 1,092 1,524 3,535 4,072 Product development 1,819 1,580 5,079 5,732 General and administrative 3,798 2,903 10,905 9,754 Total $ 6,885 $ 6,505 $ 20,128 $ 21,110 The following table summarizes non-cash equity-based compensation expense, net of forfeitures, by award type included in the accompanying consolidated statements of operations for the three and nine months ended September 30, 2017 and 2016 (in thousands): Three Months Ended September 30, Nine Months Ended September 30, 2017 2016 2017 2016 Stock options $ 1,663 $ 1,751 $ 5,087 $ 5,379 RSUs 5,222 4,602 15,041 15,254 ESPP shares — 152 — 477 Total $ 6,885 $ 6,505 $ 20,128 $ 21,110 |
Other Expense, Net (Tables)
Other Expense, Net (Tables) | 9 Months Ended |
Sep. 30, 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 and nine months ended September 30, 2017 and 2016 (in thousands): Three Months Ended September 30, Nine Months Ended September 30, 2017 2016 2017 2016 Foreign currency gain (loss) $ (192 ) $ 192 $ 1,467 $ 739 Change in fair value of contingent consideration — (130 ) — (974 ) Interest income 322 40 628 113 Total income (expense) $ 130 $ 102 $ 2,095 $ (122 ) |
Net Income Per Share (Tables)
Net Income Per Share (Tables) | 9 Months Ended |
Sep. 30, 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 September 30, Nine Months Ended September 30, 2017 2016 2017 2016 Weighted average shares outstanding: Basic 34,643 35,036 34,607 35,123 Stock options and ESPP shares 408 473 458 434 Unvested RSUs and restricted stock awards 126 315 274 298 Diluted 35,177 35,824 35,339 35,855 Dilutive securities included in the calculation 1,066 2,097 1,543 1,940 Anti-dilutive securities excluded from the calculation 1,554 856 1,244 1,061 |
Geographic Information (Tables)
Geographic Information (Tables) | 9 Months Ended |
Sep. 30, 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 Nine Months Ended 2017 2016 2017 2016 North America $ 55,827 $ 49,221 $ 161,396 $ 145,928 Europe 45,075 39,382 131,712 119,662 Rest of the world 40,161 34,470 112,174 98,554 Total revenue $ 141,063 $ 123,073 $ 405,282 $ 364,144 |
Long-lived Assets by Geographic Areas | The Company’s long-lived tangible assets were located as follows (in thousands): September 30, December 31, 2017 2016 North America $ 75,771 $ 54,913 Europe 1,925 1,141 Rest of the world 74 47 Total long-lived tangible assets $ 77,770 $ 56,101 |
Summary of Operations and Sig28
Summary of Operations and Significant Accounting Policies (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||||
Sep. 30, 2017 | Jun. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | Dec. 31, 2016 | |
Restricted Cash and Cash Equivalents Items [Line Items] | ||||||
Revenue impacts | $ (141,063) | $ (123,073) | $ (405,282) | $ (364,144) | ||
Increase general and administrative expense | 27,333 | $ 17,020 | 74,716 | 54,629 | ||
Allowance for Doubtful Accounts | ||||||
Bad debt expense | 981 | 3,338 | ||||
Write-offs and other adjustments | 2,474 | |||||
Allowance for doubtful accounts | 4,000 | 4,000 | $ 5,500 | |||
Deferred Rent | ||||||
Deferred rent non-current balance | 11,100 | 11,100 | 8,600 | |||
Chargeback and Sales Refund Allowance | ||||||
Chargeback and sales refund allowances | 600 | 600 | 600 | |||
Recently Adopted Accounting Standard Updates | ||||||
Net cash provided by operating activities | 71,510 | 76,178 | ||||
Net cash (used in) provided by financing activities | (33,144) | (38,232) | ||||
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 | 2,600 | |||
New Accounting Pronouncement, Early Adoption, Effect | Accounting Standards Update 2016-09, Excess Tax Benefit Component | ||||||
Recently Adopted Accounting Standard Updates | ||||||
Net cash provided by operating activities | (600) | |||||
Net cash (used in) provided by financing activities | $ 600 | |||||
New Accounting Pronouncement, Early Adoption, Effect | Accounting Standards Update 2016-09, Excess Tax Benefit Component | Retained Earnings | ||||||
Recently Adopted Accounting Standard Updates | ||||||
Reduction to retained earnings | $ 700 | |||||
Restatement Adjustment [Member] | ||||||
Restricted Cash and Cash Equivalents Items [Line Items] | ||||||
Revenue impacts | $ 900 | $ 600 | ||||
Increase general and administrative expense | $ 100 |
Fair Value Measurements - Sched
Fair Value Measurements - Schedule of fair value measurements (Details) - Estimate of Fair Value Measurement - Recurring Basis - USD ($) $ in Thousands | Sep. 30, 2017 | Dec. 31, 2016 |
Assets: | ||
Total assets measured at fair value | $ 55,641 | $ 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 | 33,141 | 81,623 |
Commercial paper | ||
Assets: | ||
Total assets measured at fair value | 22,500 | 54,972 |
Level 1 | ||
Assets: | ||
Total assets measured at fair value | 33,141 | 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 | 33,141 | 81,623 |
Level 1 | Commercial paper | ||
Assets: | ||
Total assets measured at fair value | 0 | 0 |
Level 2 | ||
Assets: | ||
Total assets measured at fair value | 22,500 | 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 | 22,500 | 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 ($) | 9 Months Ended | |||
Sep. 30, 2017 | Sep. 30, 2016 | Mar. 31, 2017 | Dec. 31, 2016 | |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||||
Change in fair value of contingent consideration | $ 0 | $ 2,600,000 | ||
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 | 55,641,000 | $ 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 | 0 | $ 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 | 33,141,000 | 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 | 22,500,000 | 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 | 9 Months Ended | |||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | Dec. 31, 2016 | |
Property and Equipment | |||||
Property and equipment | $ 129,724 | $ 129,724 | $ 88,089 | ||
Less accumulated depreciation | (51,954) | (51,954) | (31,988) | ||
Property and equipment, net | 77,770 | 77,770 | 56,101 | ||
Depreciation expense | 7,900 | $ 3,900 | 19,900 | $ 10,400 | |
Capitalized amount | 11,200 | 6,500 | 25,800 | 12,800 | |
Amortization expense | 4,100 | $ 1,000 | 9,200 | $ 2,100 | |
Internal use software | 37,000 | 37,000 | 20,300 | ||
Computer equipment and software | |||||
Property and Equipment | |||||
Property and equipment | 101,496 | 101,496 | 63,711 | ||
Furniture and fixtures | |||||
Property and Equipment | |||||
Property and equipment | 9,948 | 9,948 | 3,434 | ||
Leasehold improvements | |||||
Property and Equipment | |||||
Property and equipment | $ 18,280 | $ 18,280 | $ 20,944 |
Goodwill, Intangible Assets a32
Goodwill, Intangible Assets and Acquisition Activity - Changes in goodwill (Details) $ in Thousands | 9 Months Ended |
Sep. 30, 2017USD ($) | |
Changes in goodwill | |
Balance at the beginning of the period | $ 49,271 |
Goodwill related to acquisitions | 37,834 |
Foreign currency translation adjustment | 3,419 |
Balance at the end of the period | 90,524 |
Content Business | |
Changes in goodwill | |
Balance at the beginning of the period | 40,508 |
Goodwill related to acquisitions | 37,834 |
Foreign currency translation adjustment | 3,419 |
Balance at the end of the period | 81,761 |
Other Category | |
Changes in goodwill | |
Balance at the beginning of the period | 8,763 |
Goodwill related to acquisitions | 0 |
Foreign currency translation adjustment | 0 |
Balance at the end of the period | $ 8,763 |
Goodwill, Intangible Assets a33
Goodwill, Intangible Assets and Acquisition Activity - Intangible Assets (Details) - USD ($) $ in Thousands | 9 Months Ended | |
Sep. 30, 2017 | Dec. 31, 2016 | |
Amortizing intangible assets: | ||
Gross Carrying Amount | $ 58,677 | $ 39,958 |
Accumulated Amortization | (15,662) | (9,801) |
Customer relationships | ||
Amortizing intangible assets: | ||
Gross Carrying Amount | 23,314 | 16,712 |
Accumulated Amortization | $ (6,404) | (4,344) |
Weighted Average Life | 9 years | |
Trade name | ||
Amortizing intangible assets: | ||
Gross Carrying Amount | $ 7,093 | 6,677 |
Accumulated Amortization | $ (3,000) | (2,030) |
Weighted Average Life | 7 years | |
Developed technology | ||
Amortizing intangible assets: | ||
Gross Carrying Amount | $ 11,399 | 3,224 |
Accumulated Amortization | $ (3,472) | (1,934) |
Weighted Average Life | 3 years | |
Contributor content | ||
Amortizing intangible assets: | ||
Gross Carrying Amount | $ 16,452 | 12,958 |
Accumulated Amortization | $ (2,648) | (1,386) |
Weighted Average Life | 11 years | |
Patents | ||
Amortizing intangible assets: | ||
Gross Carrying Amount | $ 259 | 227 |
Accumulated Amortization | $ (64) | (52) |
Weighted Average Life | 18 years | |
Domain name | ||
Amortizing intangible assets: | ||
Gross Carrying Amount | $ 160 | 160 |
Accumulated Amortization | $ (73) | $ (55) |
Weighted Average Life | 12 years |
Goodwill, Intangible Assets a34
Goodwill, Intangible Assets and Acquisition Activity - Narrative (Details) $ in Thousands | Jul. 07, 2017USD ($) | Sep. 01, 2016USD ($)image | Dec. 31, 2017USD ($) | Sep. 30, 2017USD ($) | Sep. 30, 2016USD ($) | Sep. 30, 2017USD ($) | Sep. 30, 2016USD ($) | Sep. 01, 2016image_collection | Sep. 01, 2016USD ($) |
Business Acquisition [Line Items] | |||||||||
Amortization expense | $ 2,300 | $ 1,200 | $ 5,100 | $ 3,800 | |||||
Remainder of 2017 | 2,200 | 2,200 | |||||||
2,018 | 7,800 | 7,800 | |||||||
2,019 | 7,700 | 7,700 | |||||||
2,020 | 5,500 | 5,500 | |||||||
2,021 | 3,700 | 3,700 | |||||||
2,022 | 3,000 | 3,000 | |||||||
Thereafter | 13,100 | 13,100 | |||||||
Cash payments | 49,512 | $ 0 | |||||||
Flashstock Technologies Limited | |||||||||
Business Acquisition [Line Items] | |||||||||
Acquisition price | $ 51,200 | ||||||||
Cash payments | 50,900 | ||||||||
Weighted average life | 6 years | ||||||||
Deductible percent of goodwill | 9.00% | ||||||||
Professional fees | $ 100 | $ 800 | |||||||
The Picture Desk | |||||||||
Business Acquisition [Line Items] | |||||||||
Cash payments | $ 3,900 | ||||||||
Images acquired (over 700,000 images) | 700,000 | 2 | |||||||
Subsequent Event | Flashstock Technologies Limited | |||||||||
Business Acquisition [Line Items] | |||||||||
Cash payments | $ 300 | ||||||||
Trade name | The Picture Desk | |||||||||
Business Acquisition [Line Items] | |||||||||
Weighted average life | 7 years | ||||||||
Intangible assets | $ 3,600 | ||||||||
Images | The Picture Desk | |||||||||
Business Acquisition [Line Items] | |||||||||
Weighted average life | 15 years |
Goodwill, Intangible Assets a35
Goodwill, Intangible Assets and Acquisition Activity - Purchase price allocation (Details) - USD ($) $ in Thousands | Sep. 30, 2017 | Jul. 07, 2017 | Dec. 31, 2016 |
Intangible Assets: | |||
Goodwill | $ 90,524 | $ 49,271 | |
Flashstock Technologies Limited | |||
Assets: | |||
Cash and cash equivalents | $ 1,330 | ||
Accounts receivable | 2,439 | ||
Prepaid expenses and other current assets | 205 | ||
Intangible Assets: | |||
Goodwill | 37,834 | ||
Total assets acquired | 55,308 | ||
Liabilities: | |||
Accrued expenses | (279) | ||
Accounts payable | (99) | ||
Deferred tax liability, net | (164) | ||
Deferred revenue | (3,540) | ||
Total liabilities acquired | (4,082) | ||
Net assets acquired | 51,226 | ||
Customer relationships | Flashstock Technologies Limited | |||
Intangible Assets: | |||
Intangible assets | 5,400 | ||
Developed technology | Flashstock Technologies Limited | |||
Intangible Assets: | |||
Intangible assets | $ 8,100 |
Goodwill, Intangible Assets a36
Goodwill, Intangible Assets and Acquisition Activity - Pro forma information (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | |
Revenue | ||||
As reported | $ 141,063 | $ 123,073 | $ 405,282 | $ 364,144 |
Income before income taxes | ||||
As reported | 5,700 | 11,390 | 21,253 | 32,465 |
Flashstock Technologies Limited | ||||
Revenue | ||||
As reported | 141,063 | 123,073 | 405,282 | 364,144 |
Pro forma | 141,888 | 123,735 | 409,618 | 365,720 |
Income before income taxes | ||||
As reported | 5,700 | 11,390 | 21,253 | 32,465 |
Pro forma | $ 6,729 | $ 10,013 | $ 19,105 | $ 28,969 |
Accrued Expenses (Details)
Accrued Expenses (Details) - USD ($) $ in Thousands | Sep. 30, 2017 | Dec. 31, 2016 |
Payables and Accruals [Abstract] | ||
Compensation | $ 19,844 | $ 13,732 |
Non-income taxes | 6,520 | 7,383 |
Royalty tax withholdings | 7,587 | 6,921 |
Other expenses | 18,038 | 13,070 |
Total accrued expenses | $ 51,989 | $ 41,106 |
Commitments and Contingencies -
Commitments and Contingencies - Leases (Details) ft² in Thousands, $ in Millions | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2017USD ($) | Sep. 30, 2016USD ($) | Sep. 30, 2017USD ($) | Sep. 30, 2016USD ($) | Dec. 31, 2016ft² | |
Operating leases | |||||
Rental expense inclusive of operating leases | $ 2.3 | $ 2.1 | $ 6.5 | $ 5 | |
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 | 79.2 | 79.2 | |||
Other assets | |||||
Operating leases | |||||
Letter of credit collateralized as restricted cash | $ 2.6 | $ 2.6 | |||
New York CIty Office Space | |||||
Operating leases | |||||
Area of additional office space (sq ft) | ft² | 25 |
Commitments and Contingencies39
Commitments and Contingencies - Other Commitments (Details) - Indirect Guarantee of Indebtedness - USD ($) | Oct. 20, 2016 | Sep. 30, 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 | $ 1,300,000 | ||
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 Contingencies40
Commitments and Contingencies - Other Obligations and Indemnification and Employment Agreements (Details) | Sep. 30, 2017USD ($) |
Commitments and Contingencies Disclosure [Abstract] | |
Other obligations | $ 42,100,000 |
Maturity of unconditional purchase obligations | |
Remainder of 2017 | 5,600,000 |
2,018 | 16,200,000 |
2,019 | 11,700,000 |
2,020 | 8,600,000 |
Indemnifications | |
Minimum aggregate obligation and liability | 10,000 |
Maximum aggregate obligation and liability | 250,000 |
Material indemnification obligation | $ 0 |
Stockholders_ Equity and Equi41
Stockholders’ Equity and Equity-Based Compensation - Narrative (Details) - USD ($) | 9 Months Ended | |||
Sep. 30, 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) | 293,000 | |||
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) | 86,000 | |||
Weighted average exercise price (in dollars per share) | $ 48.05 | |||
Options vested and exercisable (in shares) | 312,000 | |||
Options vested and exercisable, weighted average exercise price (in dollars per share) | $ 36.27 | |||
Unrecognized compensation charge | $ 15,900,000 | |||
RSUs | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Number of shares granted (in shares) | 366,000 | |||
Nonvested shares outstanding (in shares) | 1,290,000 | |||
Unrecognized non-cash equity-based compensation charge | $ 45,000,000 | |||
Aggregate value withheld upon vesting | $ 5,800,000 | |||
ESPP shares | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Shares issued (in shares) | 0 |
Stockholders_ Equity and Equi42
Stockholders’ Equity and Equity-Based Compensation - Summary of non-cash equity-based compensation (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | |
Non-cash equity-based compensation expense related to the 2012 Plan and 2012 ESPP | ||||
Non-cash equity-based compensation | $ 6,885 | $ 6,505 | $ 20,128 | $ 21,110 |
Stock options | ||||
Non-cash equity-based compensation expense related to the 2012 Plan and 2012 ESPP | ||||
Non-cash equity-based compensation | 1,663 | 1,751 | 5,087 | 5,379 |
RSUs | ||||
Non-cash equity-based compensation expense related to the 2012 Plan and 2012 ESPP | ||||
Non-cash equity-based compensation | 5,222 | 4,602 | 15,041 | 15,254 |
ESPP shares | ||||
Non-cash equity-based compensation expense related to the 2012 Plan and 2012 ESPP | ||||
Non-cash equity-based compensation | 0 | 152 | 0 | 477 |
Cost of revenue | ||||
Non-cash equity-based compensation expense related to the 2012 Plan and 2012 ESPP | ||||
Non-cash equity-based compensation | 176 | 498 | 608 | 1,552 |
Sales and marketing | ||||
Non-cash equity-based compensation expense related to the 2012 Plan and 2012 ESPP | ||||
Non-cash equity-based compensation | 1,092 | 1,524 | 3,535 | 4,072 |
Product development | ||||
Non-cash equity-based compensation expense related to the 2012 Plan and 2012 ESPP | ||||
Non-cash equity-based compensation | 1,819 | 1,580 | 5,079 | 5,732 |
General and administrative | ||||
Non-cash equity-based compensation expense related to the 2012 Plan and 2012 ESPP | ||||
Non-cash equity-based compensation | $ 3,798 | $ 2,903 | $ 10,905 | $ 9,754 |
Employee Benefit Plans (Details
Employee Benefit Plans (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | |
Compensation and Retirement Disclosure [Abstract] | ||||
Annual discretionary employer matching contributions (as a percent) | 3.00% | |||
Employer matching contributions | $ 0.7 | $ 0.5 | $ 1.5 | $ 1.5 |
Other Expense, Net (Details)
Other Expense, Net (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | |
Other Nonoperating Income (Expense) [Abstract] | ||||
Foreign currency gain (loss) | $ (192) | $ 192 | $ 1,467 | $ 739 |
Change in fair value of contingent consideration | 0 | (130) | 0 | (974) |
Interest income | 322 | 40 | 628 | 113 |
Total income (expense) | $ 130 | $ 102 | $ 2,095 | $ (122) |
Income Taxes (Details)
Income Taxes (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | |
Income Tax Disclosure [Abstract] | ||||
Effective tax rate (as a percent) | 12.20% | 17.60% | 31.00% | 29.90% |
Increase (decrease) in effective tax rate | (17.50%) | (22.30%) | (2.00%) | (10.00%) |
Increase in uncertain tax positions | $ 0.3 | $ 1 | ||
Unrecognized tax benefits | $ 1 | 1 | ||
Tax benefit related to release of reserve | $ 1 | |||
Undistributed earnings | $ 12.8 | $ 12.8 |
Net Income Per Share (Details)
Net Income Per Share (Details) - shares shares in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | |
Weighted average shares outstanding: | ||||
Basic (in shares) | 34,643 | 35,036 | 34,607 | 35,123 |
Stock options and ESPP shares (in shares) | 408 | 473 | 458 | 434 |
Unvested RSUs and restricted stock awards (in shares) | 126 | 315 | 274 | 298 |
Diluted (in shares) | 35,177 | 35,824 | 35,339 | 35,855 |
Dilutive securities included in the calculation (in shares) | 1,066 | 2,097 | 1,543 | 1,940 |
Anti-dilutive securities excluded from the calculation (in shares) | 1,554 | 856 | 1,244 | 1,061 |
Geographic Information (Details
Geographic Information (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | 12 Months Ended | ||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | Dec. 31, 2016 | |
Geographic revenue based on customer location and long-lived tangible assets | |||||
Total revenue | $ 141,063 | $ 123,073 | $ 405,282 | $ 364,144 | |
Total long-lived tangible assets | 77,770 | 77,770 | $ 56,101 | ||
North America | |||||
Geographic revenue based on customer location and long-lived tangible assets | |||||
Total revenue | 55,827 | $ 49,221 | 161,396 | $ 145,928 | |
Total long-lived tangible assets | $ 75,771 | $ 75,771 | $ 54,913 | ||
United States | Total revenue | Geographic concentration | |||||
Geographic revenue based on customer location and long-lived tangible assets | |||||
Concentration risk percentage | 36.00% | 36.00% | 36.00% | 36.00% | |
United States | Total 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 | |||||
Total revenue | $ 45,075 | $ 39,382 | $ 131,712 | $ 119,662 | |
Total long-lived tangible assets | $ 1,925 | $ 1,925 | $ 1,141 | ||
United Kingdom | Total revenue | Geographic concentration | |||||
Geographic revenue based on customer location and long-lived tangible assets | |||||
Concentration risk percentage | 9.00% | 9.00% | 9.00% | 10.00% | |
Rest of the world | |||||
Geographic revenue based on customer location and long-lived tangible assets | |||||
Total revenue | $ 40,161 | $ 34,470 | $ 112,174 | $ 98,554 | |
Total long-lived tangible assets | $ 74 | $ 74 | $ 47 |