Cover Page
Cover Page - shares | 9 Months Ended | |
Sep. 30, 2019 | Nov. 01, 2019 | |
Cover page. | ||
Document Type | 10-Q | |
Document Quarterly Report | true | |
Document Period End Date | Sep. 30, 2019 | |
Document Transition Report | false | |
Entity File Number | 001-35669 | |
Entity Registrant Name | SHUTTERSTOCK, INC. | |
Entity Incorporation, State or Country Code | DE | |
Entity Tax Identification Number | 80-0812659 | |
Entity Address, Address Line One | 350 Fifth Avenue, 21st Floor | |
Entity Address, City or Town | New York | |
Entity Address, State or Province | NY | |
Entity Address, Postal Zip Code | 10118 | |
City Area Code | 646 | |
Local Phone Number | 710-3417 | |
Title of 12(b) Security | Common Stock, $0.01 par value per share | |
Trading Symbol | SSTK | |
Security Exchange Name | NYSE | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Filer Category | Large Accelerated Filer | |
Entity Small Business | false | |
Entity Emerging Growth Company | false | |
Entity Shell Company | false | |
Entity Common Stock, Shares Outstanding | 35,456,596 | |
Entity Central Index Key | 0001549346 | |
Amendment Flag | false | |
Current Fiscal Year End Date | --12-31 | |
Document Fiscal Year Focus | 2019 | |
Document Fiscal Period Focus | Q3 |
Consolidated Balance Sheets
Consolidated Balance Sheets - USD ($) $ in Thousands | Sep. 30, 2019 | Dec. 31, 2018 |
Current assets: | ||
Cash and cash equivalents | $ 285,396 | $ 230,852 |
Accounts receivable, net | 46,872 | 41,028 |
Prepaid expenses and other current assets | 31,709 | 34,841 |
Total current assets | 363,977 | 306,721 |
Property and equipment, net | 63,155 | 76,188 |
Right-of-use assets | 43,960 | |
Intangible assets, net | 25,679 | 29,540 |
Goodwill | 88,034 | 88,576 |
Deferred tax assets, net | 13,787 | 12,375 |
Other assets | 18,645 | 18,088 |
Total assets | 617,237 | 531,488 |
Current liabilities: | ||
Accounts payable | 4,186 | 7,212 |
Accrued expenses | 63,185 | 51,385 |
Contributor royalties payable | 25,237 | 22,971 |
Deferred revenue | 137,511 | 139,604 |
Other current liabilities | 17,739 | 2,131 |
Total current liabilities | 247,858 | 223,303 |
Deferred tax liability, net | 0 | 77 |
Lease liabilities | 46,042 | |
Other non-current liabilities | 7,084 | 21,441 |
Total liabilities | 300,984 | 244,821 |
Commitments and contingencies (Note 14) | ||
Stockholders’ equity: | ||
Common stock, $0.01 par value; 200,000 shares authorized; 38,006 and 37,618 shares issued and 35,448 and 35,060 shares outstanding as of September 30, 2019 and December 31, 2018, respectively | 380 | 376 |
Treasury stock, at cost; 2,558 shares as of September 30, 2019 and December 31, 2018 | (100,027) | (100,027) |
Additional paid-in capital | 307,815 | 291,710 |
Accumulated comprehensive loss | (8,749) | (6,471) |
Retained earnings | 116,834 | 101,079 |
Total stockholders’ equity | 316,253 | 286,667 |
Total liabilities and stockholders’ equity | $ 617,237 | $ 531,488 |
Consolidated Balance Sheets (Pa
Consolidated Balance Sheets (Parenthetical) - $ / shares | Sep. 30, 2019 | Dec. 31, 2018 |
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) | 38,006,000 | 37,618,000 |
Common stock, shares outstanding (in shares) | 35,448,000 | 35,060,000 |
Treasury stock, shares held in treasury (in shares) | 2,558,000 | 2,558,000 |
Consolidated Statements of Oper
Consolidated Statements of Operations - USD ($) shares in Thousands, $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2019 | Sep. 30, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | |
Income Statement [Abstract] | ||||
Revenue | $ 159,079 | $ 151,575 | $ 484,152 | $ 461,178 |
Operating expenses: | ||||
Cost of revenue | 68,635 | 66,461 | 206,379 | 198,842 |
Sales and marketing | 45,614 | 41,028 | 134,548 | 123,414 |
Product development | 13,533 | 14,032 | 42,113 | 47,208 |
General and administrative | 28,114 | 23,355 | 86,760 | 74,901 |
Total operating expenses | 155,896 | 144,876 | 469,800 | 444,365 |
Income from operations | 3,183 | 6,699 | 14,352 | 16,813 |
Gain on Sale of Webdam | 0 | 0 | 0 | 38,613 |
Other income / (expense), net | 465 | 217 | 1,945 | (6,000) |
Income before taxes | 3,648 | 6,916 | 16,297 | 49,426 |
(Benefit) / Provision for income taxes | (1,286) | (531) | 542 | 9,652 |
Net income | $ 4,934 | $ 7,447 | $ 15,755 | $ 39,774 |
Earnings per share: | ||||
Basic (in dollars per share) | $ 0.14 | $ 0.21 | $ 0.45 | $ 1.14 |
Diluted (in dollars per share) | $ 0.14 | $ 0.21 | $ 0.44 | $ 1.12 |
Weighted average shares outstanding: | ||||
Basic (in shares) | 35,309 | 34,991 | 35,219 | 34,897 |
Diluted (in shares) | 35,541 | 35,570 | 35,512 | 35,420 |
Consolidated Statements of Comp
Consolidated Statements of Comprehensive Income - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2019 | Sep. 30, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | |
Statement of Comprehensive Income [Abstract] | ||||
Net income | $ 4,934 | $ 7,447 | $ 15,755 | $ 39,774 |
Foreign currency translation (loss) / gain | (1,296) | 1,724 | (2,278) | (1,382) |
Other comprehensive loss | (1,296) | 1,724 | (2,278) | (1,382) |
Comprehensive income | $ 3,638 | $ 9,171 | $ 13,477 | $ 38,392 |
Consolidated Statements of Stoc
Consolidated Statements of Stockholders' Equity - USD ($) shares in Thousands, $ in Thousands | Total | Common Stock | Treasury Stock | Additional Paid-in Capital | Accumulated Other Comprehensive Loss | Retained Earnings |
Beginning balance (in shares) at Dec. 31, 2017 | 37,270 | 2,558 | ||||
Beginning balance at Dec. 31, 2017 | $ 314,585 | $ 373 | $ (100,027) | $ 272,657 | $ (3,557) | $ 145,139 |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||
Equity-based compensation | 17,994 | 17,994 | ||||
Issuance of common stock in connection with employee stock option exercises and RSU vesting | 2,441 | $ 4 | 2,437 | |||
Issuance of common stock in connection with employee stock option exercises and RSU vesting (in shares) | 427 | |||||
Common shares withheld for settlement of taxes in connection with equity-based compensation | (6,067) | $ (1) | (6,066) | |||
Common shares withheld for settlement of taxes in connection with equity-based compensation (in shares) | (124) | |||||
Payment of Special Dividend | (104,925) | (104,925) | ||||
Other comprehensive income (loss) | (1,382) | (1,382) | ||||
Net income | 39,774 | 39,774 | ||||
Ending balance at Sep. 30, 2018 | 268,598 | $ 376 | $ (100,027) | 287,022 | (4,939) | 86,166 |
Ending balance (in shares) at Sep. 30, 2018 | 37,573 | 2,558 | ||||
Beginning balance (in shares) at Jun. 30, 2018 | 37,510 | 2,558 | ||||
Beginning balance at Jun. 30, 2018 | 358,913 | $ 375 | $ (100,027) | 281,584 | (6,663) | 183,644 |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||
Equity-based compensation | 5,959 | 5,959 | ||||
Issuance of common stock in connection with employee stock option exercises and RSU vesting | 576 | $ 1 | 575 | |||
Issuance of common stock in connection with employee stock option exercises and RSU vesting (in shares) | 85 | |||||
Common shares withheld for settlement of taxes in connection with equity-based compensation | (1,096) | $ 0 | (1,096) | |||
Common shares withheld for settlement of taxes in connection with equity-based compensation (in shares) | (22) | |||||
Payment of Special Dividend | (104,925) | (104,925) | ||||
Other comprehensive income (loss) | 1,724 | 1,724 | ||||
Net income | 7,447 | 7,447 | ||||
Ending balance at Sep. 30, 2018 | 268,598 | $ 376 | $ (100,027) | 287,022 | (4,939) | 86,166 |
Ending balance (in shares) at Sep. 30, 2018 | 37,573 | 2,558 | ||||
Beginning balance (in shares) at Dec. 31, 2018 | 37,618 | 2,558 | ||||
Beginning balance at Dec. 31, 2018 | 286,667 | $ 376 | $ (100,027) | 291,710 | (6,471) | 101,079 |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||
Equity-based compensation | 17,884 | 17,884 | ||||
Issuance of common stock in connection with employee stock option exercises and RSU vesting | 4,596 | $ 6 | 4,590 | |||
Issuance of common stock in connection with employee stock option exercises and RSU vesting (in shares) | 534 | |||||
Common shares withheld for settlement of taxes in connection with equity-based compensation | (6,371) | $ (2) | (6,369) | |||
Common shares withheld for settlement of taxes in connection with equity-based compensation (in shares) | (146) | |||||
Other comprehensive income (loss) | (2,278) | (2,278) | ||||
Net income | 15,755 | 15,755 | ||||
Ending balance at Sep. 30, 2019 | 316,253 | $ 380 | $ (100,027) | 307,815 | (8,749) | 116,834 |
Ending balance (in shares) at Sep. 30, 2019 | 38,006 | 2,558 | ||||
Beginning balance (in shares) at Jun. 30, 2019 | 37,816 | 2,558 | ||||
Beginning balance at Jun. 30, 2019 | 303,921 | $ 379 | $ (100,027) | 299,122 | (7,453) | 111,900 |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||
Equity-based compensation | 5,509 | 5,509 | ||||
Issuance of common stock in connection with employee stock option exercises and RSU vesting | 4,374 | $ 2 | 4,372 | |||
Issuance of common stock in connection with employee stock option exercises and RSU vesting (in shares) | 222 | |||||
Common shares withheld for settlement of taxes in connection with equity-based compensation | (1,189) | $ (1) | (1,188) | |||
Common shares withheld for settlement of taxes in connection with equity-based compensation (in shares) | (32) | |||||
Other comprehensive income (loss) | (1,296) | (1,296) | ||||
Net income | 4,934 | 4,934 | ||||
Ending balance at Sep. 30, 2019 | $ 316,253 | $ 380 | $ (100,027) | $ 307,815 | $ (8,749) | $ 116,834 |
Ending balance (in shares) at Sep. 30, 2019 | 38,006 | 2,558 |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows - USD ($) $ in Thousands | 9 Months Ended | |
Sep. 30, 2019 | Sep. 30, 2018 | |
CASH FLOWS FROM OPERATING ACTIVITIES | ||
Net income | $ 15,755 | $ 39,774 |
Adjustments to reconcile net income to net cash provided by operating activities: | ||
Depreciation and amortization | 37,311 | 33,934 |
Deferred taxes | (1,480) | (6,249) |
Non-cash equity-based compensation | 17,884 | 17,994 |
Gain on Sale of Webdam | 0 | (38,613) |
Loss on impairment of long-term investment asset | 0 | 5,881 |
Bad debt expense | (486) | 911 |
Changes in operating assets and liabilities: | ||
Accounts receivable | (5,598) | (1,811) |
Prepaid expenses and other current and non-current assets | (655) | 6,941 |
Accounts payable and other current and non-current liabilities | 13,284 | 1,438 |
Contributor royalties payable | 2,348 | 3,351 |
Deferred revenue | (1,343) | 4,966 |
Net cash provided by operating activities | 77,020 | 68,517 |
CASH FLOWS FROM INVESTING ACTIVITIES | ||
Capital expenditures | (19,547) | (29,546) |
Acquisition of businesses, net of cash acquired | 0 | (845) |
Proceeds from Sale of Webdam, net | 2,500 | 41,804 |
Other investments / advances | 0 | (15,000) |
Acquisition of digital content | (1,896) | (2,822) |
Security deposit release | 0 | (43) |
Net cash used in investing activities | (18,943) | (6,452) |
CASH FLOWS FROM FINANCING ACTIVITIES | ||
Proceeds from exercise of stock options | 4,596 | 2,454 |
Cash paid related to settlement of employee taxes related to RSU vesting | (6,371) | (6,060) |
Cash paid for Special Dividend | 0 | (104,925) |
Net cash used in financing activities | (1,775) | (108,531) |
Effect of foreign exchange rate changes on cash | (1,758) | (553) |
Net increase in cash, cash equivalents and restricted cash | 54,544 | (47,019) |
Cash, cash equivalents and restricted cash, beginning of period | 233,465 | 256,041 |
Cash, cash equivalents and restricted cash, end of period | 288,009 | 209,022 |
Supplemental Disclosure of Cash Information: | ||
Cash paid for income taxes | $ 1,487 | $ 364 |
Summary of Operations and Signi
Summary of Operations and Significant Accounting Policies | 9 Months Ended |
Sep. 30, 2019 | |
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 offering a creative platform, which provides high-quality digital content, tools and services to creative professionals. The digital content licensed by the Company’s customers includes: (a) imagery, consisting of licensed photographs, vectors, illustrations and video clips, which is used in visual communications, such as websites, digital and print marketing materials, corporate communications, books, publications and video content; and (b) music, consisting of high-quality music tracks and sound effects, which is often used to complement digital imagery. The Company licenses content to its customers. Contributors upload their content to the Company’s web properties in exchange for royalty payments based on customer download activity. The Company also offered digital asset management services through its cloud-based digital asset management platform (“Webdam”). As discussed in Note 3, on February 26, 2018, the Company completed a sale transaction, pursuant to which the buyer in the transaction acquired certain assets and assumed certain contracts and liabilities which constituted the Company’s digital asset management business (the “Sale of Webdam”). 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, 2019 , Consolidated Statements of Operations, Comprehensive Income and Stockholders’ Equity for the three and nine months ended September 30, 2019 and 2018 , and Consolidated Statements of Cash Flows for the nine months ended September 30, 2019 and 2018 , are unaudited. The Consolidated Balance Sheet as of December 31, 2018 , 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 all normal recurring adjustments necessary to fairly state the Company’s financial position as of September 30, 2019 , its consolidated results of operations, comprehensive income and stockholders’ equity for the three and nine months ended September 30, 2019 and 2018 , and its cash flows for the nine months ended September 30, 2019 and 2018 . 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 nine months ended September 30, 2019 are not necessarily indicative of the results to be expected for the fiscal year ending December 31, 2019 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, 2018 included in the Company’s Annual Report on Form 10-K, which was filed with the SEC on February 26, 2019 . The unaudited consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries. All intercompany balances and transactions have been eliminated in consolidation. Certain immaterial changes in presentation have been made to conform the prior period presentation to current period reporting. Use of Estimates The preparation of the consolidated financial statements in conformity with 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 volume of expected unused licenses for our subscription-based products, 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, the measurement of income tax and contingent non-income tax liabilities and the determination of the incremental borrowing rate to calculate the lease liability. Cash, Cash Equivalents and Restricted Cash The following represents the Company’s cash and cash equivalents and restricted cash balances as of September 30, 2019 and December 31, 2018 (in thousands): As of September 30, 2019 As of December 31, 2018 Cash and cash equivalents $ 285,396 $ 230,852 Restricted cash 2,613 2,613 Total cash, cash equivalents and restricted cash $ 288,009 $ 233,465 The Company’s cash and cash equivalents consist primarily of (i) cash on hand and bank deposits and (ii) money market accounts. These assets are stated at cost, which approximates fair value. The Company’s restricted cash relates to security deposits related to the lease for its headquarters in New York City, which expires in 2029 . The carrying value of restricted cash approximates fair value. Restricted cash is included as a component of other assets on the Consolidated Balance Sheets. Allowance for Doubtful Accounts The Company’s accounts receivable consists 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, 2019 , the Company reduced its allowance for doubtful accounts which included a $0.5 million benefit recorded to bad debt expense and $1.1 million related to write-offs and other adjustments. As of September 30, 2019 and December 31, 2018 , the Company’s allowance for doubtful accounts was approximately $3.1 million and $4.7 million , respectively, which was included as a reduction of accounts receivable on the Consolidated Balance Sheets. Chargeback and Sales Refund Allowance 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, 2019 and December 31, 2018 , the Company’s combined allowance for chargebacks and sales refunds was $0.3 million , which was included as a component of other current liabilities on the Consolidated Balance Sheets. Revenue Recognition The majority of the Company’s revenue is earned from the license of digital content. Digital content licenses are generally purchased on a monthly or annual subscription basis, whereby a customer pays for a predetermined quantity of content that may be downloaded over a specific period of time, or, on a transactional basis, whereby a customer pays for individual content licenses at the time of download. Prior to the Sale of Webdam, the Company also earned revenue from licensing hosted software services through Webdam’s cloud-based tools for businesses, which were purchased as part of a subscription. The Company recognizes revenue upon the satisfaction of performance obligations, which occurs when (i) digital content is downloaded by a customer or (ii) hosted software services are provisioned and available to a customer. For digital content licenses, the Company recognizes revenue on both its subscription-based and transaction-based sales when content is downloaded, at which time the license is provided. In addition, management estimates expected unused licenses for subscription-based products and recognizes the revenue associated with the unused licenses throughout the subscription period. The estimate of unused licenses is based on historical download activity and future changes in the estimate could impact the timing of revenue recognition of the Company’s subscription products. Revenue associated with hosted software services is recognized ratably over the term of the license. The Company expenses contract acquisition costs as incurred, to the extent that the amortization period would otherwise be one year or less. Collectability is reasonably assured at the time the electronic order or contract is entered. The majority of the Company’s customers purchase products by making an electronic payment with a credit card at the time of a transaction. Customer payments received in advance of revenue recognition are contract liabilities and are recorded as deferred revenue. Customers that do not pay in advance are invoiced and are required to make payments under standard credit terms. Collectability for customers who pay on credit terms allowing for payment beyond the date at which service commences is based on a credit evaluation for certain new customers and transaction history with existing customers. The Company recognizes revenue gross of contributor royalties because the Company is the principal in the transaction as it is the party responsible for the performance obligation and it controls the product or service before transferring it to the customer. The Company also licenses content to customers through third-party resellers. Third-party resellers sell the Company’s products directly to customers as the principal in those transactions. Accordingly, the Company recognizes revenue net of costs paid to resellers. The Company adopted Financial Accounting Standards Board (“FASB”) Accounting Standard Update (“ASU”) 2014-09, as amended (“ASU 2014-09”), on January 1, 2018 using the modified retrospective approach, and prior period amounts were not restated. The effect of adoption of this new guidance on the Consolidated Balance Sheet as of January 1, 2018 was to reduce (i) prepaid expenses and other current assets by $3.7 million and (ii) deferred revenues by $9.9 million , with an offsetting $6.2 million increase in 2018 opening retained earnings. Leasing The Company records rent expense on a straight-line basis over the term of the related lease. Prior to the adoption of FASB ASU 2016-02, Leases (Topic 842) , as amended (“ASC 842”), the difference between the rent expense recognized and the actual payments made in accordance with the operating lease agreement was recognized as a deferred rent liability on the Company’s Consolidated Balance Sheets. As of December 31, 2018 , the Company had deferred rent of $11.3 million , which is included in other non-current liabilities on the Consolidated Balance Sheet. Effective January 1, 2019, the Company adopted ASC 842. In accordance with ASC 842, the Company first determines if an arrangement contains a lease and the classification of that lease, if applicable, at inception. This standard requires the recognition of right-of-use (“ROU”) assets and lease liabilities for the Company’s operating leases. For contracts with lease and non-lease components, the Company has elected not to allocate the contract consideration, and to account for the lease and non-lease components as a single lease component. The Company has also elected not to recognize a lease liability or ROU asset for leases with a term of 12 months or less, and recognize lease payments for those short-term leases on a straight-line basis over the lease term in the Consolidated Statements of Operations. Operating leases are included in ROU assets, other current liabilities and lease liabilities (net of current portion) on the Consolidated Balance Sheets. ROU assets represent the Company’s right to use an underlying asset for the lease term and lease liabilities represent the Company’s obligation to make lease payments under the lease. ROU assets and lease liabilities are recognized at the lease commencement date based on the present value of lease payments over the lease term. The implicit rate within the Company’s leases is generally not determinable and therefore the incremental borrowing rate at the lease commencement date is utilized to determine the present value of lease payments. The determination of the incremental borrowing rate requires judgment. Management determines the incremental borrowing rate for each lease using the Company’s estimated borrowing rate, adjusted for various factors including level of collateralization, term and currency to align with the terms of the lease. The ROU asset also includes any lease prepayments, offset by lease incentives. Certain of the Company’s leases include options to extend or terminate the lease. An option to extend the lease is considered in connection with determining the ROU asset and lease liability when the Company is reasonably certain that the option will be exercised. An option to terminate is considered unless the Company is reasonably certain the option will not be exercised. Recently Adopted Accounting Standard Updates 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. This guidance is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2018. The Company has adopted this standard as of January 1, 2019 using the modified retrospective approach for all leases entered into before the effective date. The Company has also elected the option, as permitted in ASU 2018-11, Leases (Topic 842): Targeted Improvements , whereby initial application of the new lease standard would occur at the adoption date and a cumulative-effect adjustment, if any, would be recognized to the opening balance of retained earnings in the period of adoption. For comparability purposes, the Company will continue to comply with previous disclosure requirements in accordance with existing lease guidance for all periods presented in the year of adoption. The Company has elected the practical expedients permitted under the transition guidance which enabled the Company: (1) to carry forward the historical lease classification; (2) not to reassess whether expired or existing contracts are or contain leases; and (3) not to reassess the treatment of initial direct costs for existing leases. In addition, the Company has made an accounting policy election to keep leases with an initial term of 12 months or less off the balance sheet. Upon adoption of this standard on January 1, 2019, the Company recognized a total lease liability in the amount of $58.0 million , representing the present value of the minimum rental payments remaining as of the adoption date and a right-of-use asset in the amount of $46.7 million . Recently Issued Accounting Standard Updates 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”) . ASU 2016-13, as amended, 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 August 2018, the FASB issued ASU 2018-13, Disclosure Framework - Changes to the Disclosure Requirements for Fair Value Measurements (“ASU 2018-13”), which eliminates, adds and modifies certain disclosure requirements for fair value measurements as part of the FASB’s disclosure framework project. Adoption of this guidance is required for fiscal years and interim periods within those fiscal years, beginning after December 15, 2019. The Company is evaluating the impact of adopting this new standard on its financial statements. In August 2018, the FASB issued ASU 2018-15, Customer’s Accounting For Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract |
Fair Value Measurements and Oth
Fair Value Measurements and Other Long-term Investments | 9 Months Ended |
Sep. 30, 2019 | |
Fair Value Disclosures [Abstract] | |
Fair Value Measurements and Other Long-term Investments | Fair Value Measurements and Other Long-term Investments Fair Value Measurements The Company had no assets or liabilities requiring fair value hierarchy disclosures as of September 30, 2019 or December 31, 2018 . Other Fair Value Measurements The carrying amounts of cash, accounts receivable, restricted cash, accounts payable and accrued expenses 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 the Company is required to evaluate the non-financial asset for impairment, whether due to certain triggering events or because annual impairment testing is required, a resulting asset impairment would require that the non-financial asset be recorded at fair value. Other Long-term Investments Investment in ZCool Technologies Limited (“ZCool”) On January 4, 2018, the Company invested $15.0 million in convertible preferred shares issued by ZCool (the “Preferred Shares”), which is equivalent to a 25% fully diluted equity ownership interest. ZCool’s primary business is the operation of an e-commerce platform in China whereby customers can pay to license content contributed by creative professionals. ZCool has been the exclusive distributor of Shutterstock creative content in China since 2014. ZCool is a variable interest entity that is not consolidated because the Company is not the primary beneficiary. The Preferred Shares are not deemed to be in-substance common stock and will be accounted for using the measurement alternative for equity investments with no readily determinable fair value. The Preferred Shares will be reported at cost, adjusted for impairments or any observable price changes in ordinary transactions with identical or similar investments issued by ZCool. As of September 30, 2019 and December 31, 2018 , the Company’s total investment in ZCool is approximately $15.0 million |
Sale of Digital Asset Managemen
Sale of Digital Asset Management Business | 9 Months Ended |
Sep. 30, 2019 | |
Discontinued Operations and Disposal Groups [Abstract] | |
Sale of Digital Asset Management Business | Sale of Digital Asset Management Business On February 26, 2018, the Company completed the Sale of Webdam for an aggregate purchase price of $49.1 million . Total cash received, net of $4.6 million transaction costs paid, was $44.3 million , inclusive of $2.5 million received during the nine months ended September 30, 2019 , from the release of funds from escrow. During the three months ended March 31, 2018 , the Company recognized a pre-tax gain on sale of approximately $38.6 million , which represents the excess of the net purchase price over the net assets transferred, less transaction costs. |
Property and Equipment
Property and Equipment | 9 Months Ended |
Sep. 30, 2019 | |
Property, Plant and Equipment [Abstract] | |
Property and Equipment | Property and Equipment Property and equipment is summarized as follows (in thousands): As of September 30, 2019 As of December 31, 2018 Computer equipment and software $ 158,527 $ 148,104 Furniture and fixtures 10,136 10,020 Leasehold improvements 18,868 18,822 Property and equipment 187,531 176,946 Less accumulated depreciation (124,376 ) (100,758 ) Property and equipment, net $ 63,155 $ 76,188 Depreciation expense related to property and equipment was $10.8 million and $10.3 million for the three months ended September 30, 2019 and 2018 , respectively, and $31.9 million and $29.7 million for the nine months ended September 30, 2019 and 2018 , respectively. Cost of revenues includes depreciation expense of $9.6 million and $8.7 million for three months ended September 30, 2019 and 2018 , respectively, and $28.2 million and $25.1 million for the nine months ended September 30, 2019 and 2018 , respectively. General and administrative expense includes depreciation expense of $1.2 million and $1.6 million for three months ended September 30, 2019 and 2018 , respectively, and $3.7 million and $4.6 million for the nine months ended September 30, 2019 and 2018 , respectively. Capitalized Internal-Use Software The Company capitalized costs related to the development of internal-use software of $5.6 million and $6.4 million for the three months ended September 30, 2019 and 2018 , respectively, and $17.8 million and $22.3 million for the nine months ended September 30, 2019 and 2018 , respectively. Capitalized amounts are included as a component of property and equipment under computer equipment and software on the Consolidated Balance Sheets. The portion of total depreciation expense related to capitalized internal-use software was $7.7 million and $6.6 million for the three months ended September 30, 2019 and 2018 , respectively, and $22.5 million and $18.0 million for the nine months ended September 30, 2019 and 2018 , respectively. Depreciation expense related to capitalized internal-use software is included in cost of revenue in the Consolidated Statements of Operations. As of September 30, 2019 and December 31, 2018 , the Company had capitalized internal-use software of $43.8 million and $48.5 million , respectively, net of accumulated depreciation, which was included in property and equipment, net. |
Goodwill and Intangible Assets
Goodwill and Intangible Assets | 9 Months Ended |
Sep. 30, 2019 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Goodwill and Intangible Assets | Goodwill and Intangible Assets Goodwill In 2018, the Company’s goodwill balance was allocated to four reporting units: Bigstock, Editorial, Images and Music. During the second quarter of 2019, due to changes in the Company’s reporting structure, which resulted in a change in the way management monitors the business, as well as key milestones achieved in the continued integration of the Company’s operations and technology platform, management concluded that the Company now operates with a single reporting unit. The Company evaluated its goodwill immediately prior and subsequent to the change in reporting units and concluded that no adjustment to the carrying value of goodwill was necessary. The aggregate goodwill for the legacy reporting units was assigned to the single content business reporting unit. The Company’s goodwill balance will continue to be tested for impairment annually on October 1 or upon a triggering event. The following table summarizes the changes in the Company’s goodwill balance during the nine months ended September 30, 2019 (in thousands): Goodwill Balance as of December 31, 2018 $ 88,576 Foreign currency translation adjustment (542 ) Balance as of September 30, 2019 $ 88,034 Intangible Assets Intangible assets consisted of the following as of September 30, 2019 and December 31, 2018 (in thousands): As of September 30, 2019 As of December 31, 2018 Gross Carrying Amount Accumulated Amortization Weighted Gross Accumulated Amortizing intangible assets: Customer relationships $ 16,861 $ (8,379 ) 9 $ 17,360 $ (7,135 ) Trade name 6,192 (5,556 ) 7 6,372 (3,719 ) Developed technology 4,652 (3,883 ) 4 4,940 (3,712 ) Contributor content 21,640 (6,011 ) 10 19,912 (4,653 ) Patents 259 (96 ) 18 259 (84 ) Total $ 49,604 $ (23,925 ) $ 48,843 $ (19,303 ) Amortization expense was $1.2 million and $1.4 million for the three months ended September 30, 2019 and 2018 , respectively, and $5.4 million and $4.2 million for the nine months ended September 30, 2019 and 2018 , respectively. Cost of revenue includes amortization expense of $0.5 million and $0.5 million for three months ended September 30, 2019 and 2018 , respectively, and $1.4 million and $1.3 million for the nine months ended September 30, 2019 and 2018 , respectively. General and administrative expense includes amortization expense of $0.7 million and $0.9 million for three months ended September 30, 2019 and 2018 , respectively, and $4.0 million and $2.9 million for the nine months ended September 30, 2019 and 2018 , respectively. The Company determined that there was no indication of impairment of the intangible assets for any period presented. Estimated amortization expense is: $1.6 million for the remaining three months of 2019 , $5.6 million in 2020 , $4.8 million in 2021 , $4.1 million in 2022 , $2.8 million in 2023 , $2.7 million in 2024 and $4.1 million thereafter. |
Accrued Expenses
Accrued Expenses | 9 Months Ended |
Sep. 30, 2019 | |
Payables and Accruals [Abstract] | |
Accrued Expenses | Accrued Expenses Accrued expenses consisted of the following (in thousands): As of September 30, 2019 As of December 31, 2018 Compensation $ 18,761 $ 15,153 Non-income taxes 10,038 7,885 Royalty tax withholdings 4,305 5,618 Other expenses 30,081 22,729 Total accrued expenses $ 63,185 $ 51,385 |
Stockholders_ Equity and Equity
Stockholders’ Equity and Equity-Based Compensation | 9 Months Ended |
Sep. 30, 2019 | |
Share-based Payment Arrangement [Abstract] | |
Stockholders’ Equity and Equity-Based Compensation | Stockholders’ Equity and Equity-Based Compensation Stockholders’ Equity Common Stock During the nine months ended September 30, 2019 and 2018 , the Company issued approximately 389,000 and 303,000 shares of common stock, respectively, 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, authorizing the Company 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, authorizing the Company to repurchase up to an additional $100 million of its outstanding common stock. During the nine months ended September 30, 2019 and 2018 , the Company did not repurchase any shares of its common stock under the share repurchase program. As of September 30, 2019 , the Company had $100 million of remaining authorization for purchases under the share repurchase program. The Company expects to fund future repurchases, if any, through a combination of cash on hand, cash generated by operations and future financing transactions, if appropriate. Accordingly, the share repurchase program is subject to the Company having available cash to fund repurchases. Under the program, management is authorized to purchase shares of the Company’s common stock 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. Special Dividend On August 1, 2018, the Company’s Board of Directors declared a special cash dividend of $3.00 per share (the “Special Dividend”), which was paid on August 29, 2018 to stockholders of record at the close of business on August 15, 2018. The aggregate payment made in connection with the Special Dividend was $104.9 million . 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 Company’s Amended and Restated 2012 Omnibus Equity Incentive Plan (the “2012 Plan”), 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, 2019 and 2018 (in thousands): Three Months Ended September 30, Nine Months Ended September 30, 2019 2018 2019 2018 Cost of revenue $ 55 $ 116 $ 245 $ 430 Sales and marketing 366 404 1,623 1,546 Product development 1,395 1,295 3,822 4,510 General and administrative 3,693 4,144 12,194 11,508 Total $ 5,509 $ 5,959 $ 17,884 $ 17,994 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, 2019 and 2018 (in thousands): Three Months Ended September 30, Nine Months Ended September 30, 2019 2018 2019 2018 Stock options $ 1,327 $ 1,521 $ 4,394 $ 4,487 RSUs 4,182 4,438 13,490 13,507 Total $ 5,509 $ 5,959 $ 17,884 $ 17,994 Stock Option Awards During the nine months ended September 30, 2019 , the Company granted 83,102 options to purchase shares of its common stock with a weighted average exercise price of $39.07 . As of September 30, 2019 , there were approximately 313,000 options vested and exercisable with a weighted average exercise price of $34.82 . As of September 30, 2019 , the total unrecognized compensation charge related to non-vested options was approximately $2.3 million , which is expected to be recognized through 2023 . Restricted Stock Unit Awards On March 26, 2019, the Compensation Committee of the Board of Directors (the “Compensation Committee”) of the Company approved a performance-based restricted stock unit award (“PRSU”) under the 2012 Plan. On April 1, 2019, the Company awarded approximately 202,000 PRSUs, each with a grant date fair value of $46.69 and corresponding to one target share, to certain of the Company’s officers. The number of shares that may eventually vest will be between 0% and 150% of a recipient’s target shares, depending on both the recipient’s continued service with the Company and the extent to which performance goals will have been achieved. The value of the PRSUs is based on the Company’s stock price on the date of grant. Based upon the expected levels of achievement, stock-based compensation related to PRSUs is recognized on a straight-line basis over the requisite service period. The expected levels of achievement are reassessed over the requisite service period and, to the extent that the expected levels of achievement change, stock-based compensation is adjusted and recorded in the Consolidated Statements of Operations and the remaining unrecognized stock-based compensation is recognized over the remaining requisite service period. During the nine months ended September 30, 2019 , the Company had RSU grants (including PRSUs), net of forfeitures, of approximately 481,000 . As of September 30, 2019 , there are approximately 1,163,000 non-vested RSUs (including PRSUs) outstanding with a weighted average grant-date fair value of $45.25 . As of September 30, 2019 , the total unrecognized non-cash equity-based compensation charge related to the non-vested RSUs was approximately $29.9 million , which is expected to be recognized through 2022 . During the nine months ended September 30, 2019 , shares of common stock with an aggregate value of $6.4 million |
Revenue
Revenue | 9 Months Ended |
Sep. 30, 2019 | |
Revenue from Contract with Customer [Abstract] | |
Revenue | Revenue The Company distributes its digital content offerings through two primary channels: E-commerce: The majority of customers purchase content licenses directly through the Company’s e-commerce platforms. E-commerce customers have the flexibility to purchase a subscription plan that is paid on a monthly or annual basis or to purchase content licenses on a transactional basis. These customers generally license content under the Company’s standard or enhanced licenses, with additional licensing options available to meet customers’ individual needs. E-commerce customers typically pay the full amount of the purchase price in advance or at the time of license, generally with a credit card. Enterprise: Enterprise customers are mainly composed of creative professionals and organizations with unique content, licensing and workflow needs. These customers benefit from dedicated sales, service and research teams which provide a number of enhancements to their creative workflows including non-standard licensing rights, multi-seat access, invoicing and the ability to pay on credit terms, increased indemnification protection, multi-brand licensing packages and content licensed for use-cases outside of those available on the e-commerce platform. In addition to the Company’s digital content offerings, the Company has historically generated revenue through other channels: Other: The Company’s other sales channel includes revenue from Webdam’s digital asset management offerings which included tools to help organizations manage, search, distribute and collaborate on creative and other brand-building activities. Effective February 26, 2018, the Company completed the Sale of Webdam. See Note 3 for further information on the Sale of Webdam. The Company’s revenues by distribution channel for the three and nine months ended September 30, 2019 and 2018 are as follows (in thousands): Three Months Ended Nine Months Ended 2019 2018 2019 2018 E-commerce $ 96,233 $ 88,713 $ 291,339 $ 270,166 Enterprise 62,846 62,862 192,813 188,301 Other (1) — — — 2,711 Total Revenues $ 159,079 $ 151,575 $ 484,152 $ 461,178 (1) On February 26, 2018, the Company completed the Sale of Webdam. 2018 amounts include revenue earned during the period from January 1, 2018 through February 26, 2018. The September 30, 2019 deferred revenue balance will be earned as digital content is downloaded or upon the expiration of subscription-based products, and nearly all is expected to be earned within the next twelve months. $117.5 million of total revenue recognized for the nine months ended September 30, 2019 was reflected in deferred revenue as of December 31, 2018 . |
Other Income _ (Expense), net
Other Income / (Expense), net | 9 Months Ended |
Sep. 30, 2019 | |
Other Nonoperating Income (Expense) [Abstract] | |
Other Income / (Expense), net | Other Income / (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, 2019 and 2018 (in thousands): Three Months Ended September 30, Nine Months Ended September 30, 2019 2018 2019 2018 Foreign currency loss $ (626 ) $ (659 ) $ (1,356 ) $ (2,122 ) Impairment of long-term investment asset — — — (5,881 ) Interest income 1,091 876 3,301 2,003 Total other income / (expense) $ 465 $ 217 $ 1,945 $ (6,000 ) |
Income Taxes
Income Taxes | 9 Months Ended |
Sep. 30, 2019 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | Income Taxes The Company’s effective tax rates yielded a net benefit of 35.3% and 7.7% for the three months ended September 30, 2019 and 2018 , respectively, and a net expense of 3.3% and 19.5% for the nine months ended September 30, 2019 and 2018 , respectively. In the three and nine months ended September 30, 2019 , the impact of discrete tax items decreased the effective tax rate by 51.6% and 13.0% , respectively. In the three and nine months ended September 30, 2019 , the Company incurred a discrete tax benefit related primarily to the release of reserves for uncertain tax positions due to a lapse in the statute of limitations and the effect of the foreign-derived intangible income deduction claimed on the Company’s 2018 tax return, which was substantially completed in the third quarter of 2019. In the three months ended September 30, 2018 , the Company incurred a discrete tax benefit related primarily to the release of reserves for uncertain tax positions due to a lapse in the statute of limitations and the effect of the U.S. Research and Development tax credit claimed on the Company’s 2017 tax return, which was substantially completed in the third quarter of 2018. In the nine months ended September 30, 2018 , the Company incurred a net discrete tax expense relating primarily to the gain on the Sale of Webdam , partially offset by a discrete tax benefit related to the impairment of a long-term investment asset . The net effect of these discrete items increased the effective tax rate for the three and nine months ended September 30, 2018 by 22.0% and 5.2% , 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 the international provisions enacted as part of the Tax Cuts and Jobs Act and the U.S. Research and Development tax credit. During the three months ended September 30, 2019 and 2018 and during the nine months ended September 30, 2018 , uncertain tax positions recorded by the Company were not significant. During the nine months ended September 30, 2019 , uncertain tax positions recorded by the Company resulted in an expense of $1.0 million . To the extent the remaining uncertain tax positions 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 significant for the three and nine months ended September 30, 2019 and 2018 . During the nine months ended September 30, 2019 and 2018 , the Company paid net cash taxes of $1.5 million and $0.4 million , respectively. |
Net Income Per Share
Net Income Per Share | 9 Months Ended |
Sep. 30, 2019 | |
Earnings Per Share [Abstract] | |
Net Income Per Share | Net Income Per Share Basic net income per share is computed using the weighted average number of shares of common stock outstanding for the period, excluding unvested RSUs and stock options. Diluted net income per share is based upon the weighted average shares of common stock outstanding for the period plus dilutive potential shares of common stock, including unvested RSUs and stock options using the treasury stock method. The following table sets forth the computation of basic and diluted net income per share for the three and nine months ended September 30, 2019 and 2018 (in thousands): Three Months Ended September 30, Nine Months Ended September 30, 2019 2018 2019 2018 Net income $ 4,934 $ 7,447 $ 15,755 $ 39,774 Shares used to compute basic net income per share 35,309 34,991 35,219 34,897 Dilutive potential common shares Stock options 65 148 91 125 Unvested restricted stock awards 167 431 202 398 Shares used to compute diluted net income per share 35,541 35,570 35,512 35,420 Basic net income per share $ 0.14 $ 0.21 $ 0.45 $ 1.14 Diluted net income per share $ 0.14 $ 0.21 $ 0.44 $ 1.12 Dilutive securities included in the calculation 844 1,477 942 1,403 Anti-dilutive securities excluded from the calculation 1,322 774 1,222 924 |
Geographic Information
Geographic Information | 9 Months Ended |
Sep. 30, 2019 | |
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 2019 2018 2019 2018 North America $ 56,151 $ 57,078 $ 171,322 $ 170,092 Europe 51,683 49,033 160,815 154,258 Rest of the world 51,245 45,464 152,015 136,828 Total revenue $ 159,079 $ 151,575 $ 484,152 $ 461,178 The United States, included in North America in the above table, accounted for 32% and 34% of consolidated revenue for the three and nine months ended September 30, 2019 and 2018 , 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, 2019 2018 North America $ 57,432 $ 71,758 Europe 5,665 4,371 Rest of the world 58 59 Total long-lived tangible assets $ 63,155 $ 76,188 The United States, included in North America in the above table, accounted for 82% and 88% of total long-lived tangible assets as of September 30, 2019 and December 31, 2018 , respectively. No other country accounts for more than 10% of the Company’s long-lived tangible assets in any period presented. |
Leases
Leases | 9 Months Ended |
Sep. 30, 2019 | |
Leases [Abstract] | |
Leases | Leases The Company’s leases relate primarily to office facilities that expire on various dates from 2019 through 2029 , some of which include one or more options to renew. All of the Company’s leases are classified as operating leases. Operating lease costs, including insignificant costs related to short-term leases, were $2.8 million and $2.2 million for the three months ended September 30, 2019 and 2018 , respectively and $8.2 million and $7.0 million for the nine months ended September 30, 2019 and 2018 , respectively. Additional information related to the Company’s leases as of and for the nine months ended September 30, 2019 , is as follows: (in thousands, except lease term and discount rate) September 30, 2019 Balance sheet information ROU assets $ 43,960 Lease liabilities, current $ 9,280 Lease liabilities, non-current 46,042 Total lease liabilities $ 55,322 Supplemental data Weighted average remaining lease term 8.8 years Weighted average discount rate 6.2 % Cash paid for amounts included in lease liabilities $ 7,414 ROU assets obtained in exchange for lease obligations $ 2,286 Future undiscounted lease payments for the Company’s operating lease liabilities and a reconciliation of these payments to its lease liabilities at September 30, 2019 are as follows (in thousands): Reconciliation of future undiscounted lease payments to lease liabilities September 30, 2019 Year ending December 31, 2019 (remaining) $ 2,589 2020 9,347 2021 8,061 2022 7,038 2023 6,198 2024 6,503 Thereafter 33,075 Total undiscounted lease payments 72,811 Less: imputed interest (17,489 ) Total lease liabilities $ 55,322 The Company’s most significant lease is for its headquarters in New York City, which was entered into in March 2013 and was amended in January 2016 (“ESB Lease”). As amended, the ESB Lease will expire in 2029, and the undiscounted remaining future minimum lease payments are approximately $63.4 million . The Company is also party to a $2.6 million letter of credit, as a security deposit for the ESB Lease, which is collateralized by an equivalent amount of cash, and is reported as restricted cash within other assets on the Consolidated Balance Sheets as of September 30, 2019 and December 31, 2018 . Fiscal year 2018 lease commitments in accordance with prior guidance Future minimum lease payments under non-cancelable operating leases as of December 31, 2018 were as follows (in thousands): Year Ending December 31, Operating 2019 $ 9,913 2020 8,762 2021 7,493 2022 6,829 2023 6,082 Thereafter 39,481 Total minimum lease payments $ 78,560 |
Commitments and Contingencies
Commitments and Contingencies | 9 Months Ended |
Sep. 30, 2019 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | Commitments and Contingencies As of September 30, 2019 , the Company had total other non-lease obligations in the amount of approximately $53.2 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, 2019 , the Company’s other non-lease obligations for the remainder of 2019 and for the years ending December 31, 2020 , 2021 and 2022 were approximately $5.1 million , $30.7 million , $13.7 million and $3.8 million , respectively. Legal Matters From time to time, the Company may become party to litigation in the ordinary course of business, including direct claims brought by or against the Company with respect to intellectual property, contracts, employment and other matters, as well as claims brought against the Company’s customers for whom the Company has a contractual indemnification obligation. The Company assesses the likelihood of any adverse judgments or outcomes with respect to these matters and determines loss contingency assessments on a gross basis after assessing the probability of incurrence of a loss and whether a loss is reasonably estimable. In addition, the Company considers other relevant factors that could impact its ability to reasonably estimate a loss. A determination of the amount of reserves required, if any, for these contingencies is made after analyzing each matter. The Company reviews reserves, if any, at least quarterly and may change the amount of any such reserve in the future due to new developments or changes in strategy in handling these matters. Although the results of litigation and threats of litigation, investigations and claims cannot be predicted with certainty, the Company currently believes that the final outcome of these matters will not have a material adverse effect on its business, consolidated financial position, results of operations, or cash flows. Regardless of the outcome, litigation can have an adverse impact on the Company because of defense and settlement costs, diversion of management resources and other factors. The Company currently has no material active litigation matters and, accordingly, no material reserves related to litigation. Indemnification and Employment Agreements In the ordinary course of business, the Company enters into contractual arrangements under which it agrees to provide indemnification of varying scope and terms to customers with respect to certain matters, including, 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 content is used. The standard maximum aggregate obligation and liability to any one customer for any single claim is generally limited to ten thousand dollars but can range to $250,000 , with certain exceptions for which our indemnification obligation are uncapped. As of September 30, 2019 , 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 in the event of a change in control or otherwise, with or without cause. |
Summary of Operations and Sig_2
Summary of Operations and Significant Accounting Policies (Policies) | 9 Months Ended |
Sep. 30, 2019 | |
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, 2019 , Consolidated Statements of Operations, Comprehensive Income and Stockholders’ Equity for the three and nine months ended September 30, 2019 and 2018 , and Consolidated Statements of Cash Flows for the nine months ended September 30, 2019 and 2018 , are unaudited. The Consolidated Balance Sheet as of December 31, 2018 , 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 all normal recurring adjustments necessary to fairly state the Company’s financial position as of September 30, 2019 , its consolidated results of operations, comprehensive income and stockholders’ equity for the three and nine months ended September 30, 2019 and 2018 , and its cash flows for the nine months ended September 30, 2019 and 2018 . 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 nine months ended September 30, 2019 are not necessarily indicative of the results to be expected for the fiscal year ending December 31, 2019 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, 2018 included in the Company’s Annual Report on Form 10-K, which was filed with the SEC on February 26, 2019 |
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 volume of expected unused licenses for our subscription-based products, 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, the measurement of income tax and contingent non-income tax liabilities and the determination of the incremental borrowing rate to calculate the lease liability. |
Cash, Cash Equivalents and Restricted Cash | The Company’s cash and cash equivalents consist primarily of (i) cash on hand and bank deposits and (ii) money market accounts. These assets are stated at cost, which approximates fair value. The Company’s restricted cash relates to security deposits related to the lease for its headquarters in New York City, which expires in 2029 . The carrying value of restricted cash approximates fair value. Restricted cash is included as a component of other assets on the Consolidated Balance Sheets. |
Allowance for Doubtful Accounts | Allowance for Doubtful Accounts |
Chargeback and Sales Refund Allowance and Revenue Recognition | Chargeback and Sales Refund Allowance 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, 2019 and December 31, 2018 , the Company’s combined allowance for chargebacks and sales refunds was $0.3 million , which was included as a component of other current liabilities on the Consolidated Balance Sheets. Revenue Recognition The majority of the Company’s revenue is earned from the license of digital content. Digital content licenses are generally purchased on a monthly or annual subscription basis, whereby a customer pays for a predetermined quantity of content that may be downloaded over a specific period of time, or, on a transactional basis, whereby a customer pays for individual content licenses at the time of download. Prior to the Sale of Webdam, the Company also earned revenue from licensing hosted software services through Webdam’s cloud-based tools for businesses, which were purchased as part of a subscription. The Company recognizes revenue upon the satisfaction of performance obligations, which occurs when (i) digital content is downloaded by a customer or (ii) hosted software services are provisioned and available to a customer. For digital content licenses, the Company recognizes revenue on both its subscription-based and transaction-based sales when content is downloaded, at which time the license is provided. In addition, management estimates expected unused licenses for subscription-based products and recognizes the revenue associated with the unused licenses throughout the subscription period. The estimate of unused licenses is based on historical download activity and future changes in the estimate could impact the timing of revenue recognition of the Company’s subscription products. Revenue associated with hosted software services is recognized ratably over the term of the license. The Company expenses contract acquisition costs as incurred, to the extent that the amortization period would otherwise be one year or less. Collectability is reasonably assured at the time the electronic order or contract is entered. The majority of the Company’s customers purchase products by making an electronic payment with a credit card at the time of a transaction. Customer payments received in advance of revenue recognition are contract liabilities and are recorded as deferred revenue. Customers that do not pay in advance are invoiced and are required to make payments under standard credit terms. Collectability for customers who pay on credit terms allowing for payment beyond the date at which service commences is based on a credit evaluation for certain new customers and transaction history with existing customers. The Company recognizes revenue gross of contributor royalties because the Company is the principal in the transaction as it is the party responsible for the performance obligation and it controls the product or service before transferring it to the customer. The Company also licenses content to customers through third-party resellers. Third-party resellers sell the Company’s products directly to customers as the principal in those transactions. Accordingly, the Company recognizes revenue net of costs paid to resellers. |
Leasing | Leasing The Company records rent expense on a straight-line basis over the term of the related lease. Prior to the adoption of FASB ASU 2016-02, Leases (Topic 842) , as amended (“ASC 842”), the difference between the rent expense recognized and the actual payments made in accordance with the operating lease agreement was recognized as a deferred rent liability on the Company’s Consolidated Balance Sheets. As of December 31, 2018 , the Company had deferred rent of $11.3 million , which is included in other non-current liabilities on the Consolidated Balance Sheet. Effective January 1, 2019, the Company adopted ASC 842. In accordance with ASC 842, the Company first determines if an arrangement contains a lease and the classification of that lease, if applicable, at inception. This standard requires the recognition of right-of-use (“ROU”) assets and lease liabilities for the Company’s operating leases. For contracts with lease and non-lease components, the Company has elected not to allocate the contract consideration, and to account for the lease and non-lease components as a single lease component. The Company has also elected not to recognize a lease liability or ROU asset for leases with a term of 12 months or less, and recognize lease payments for those short-term leases on a straight-line basis over the lease term in the Consolidated Statements of Operations. Operating leases are included in ROU assets, other current liabilities and lease liabilities (net of current portion) on the Consolidated Balance Sheets. ROU assets represent the Company’s right to use an underlying asset for the lease term and lease liabilities represent the Company’s obligation to make lease payments under the lease. ROU assets and lease liabilities are recognized at the lease commencement date based on the present value of lease payments over the lease term. The implicit rate within the Company’s leases is generally not determinable and therefore the incremental borrowing rate at the lease commencement date is utilized to determine the present value of lease payments. The determination of the incremental borrowing rate requires judgment. Management determines the incremental borrowing rate for each lease using the Company’s estimated borrowing rate, adjusted for various factors including level of collateralization, term and currency to align with the terms of the lease. The ROU asset also includes any lease prepayments, offset by lease incentives. Certain of the Company’s leases include options to extend or terminate the lease. An option to extend the lease is considered in connection with determining the ROU asset and lease liability when the Company is reasonably certain that the option will be exercised. An option to terminate is considered unless the Company is reasonably certain the option will not be exercised. |
Recently Adopted and Issued Accounting Standard Updates | Recently Adopted Accounting Standard Updates 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. This guidance is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2018. The Company has adopted this standard as of January 1, 2019 using the modified retrospective approach for all leases entered into before the effective date. The Company has also elected the option, as permitted in ASU 2018-11, Leases (Topic 842): Targeted Improvements , whereby initial application of the new lease standard would occur at the adoption date and a cumulative-effect adjustment, if any, would be recognized to the opening balance of retained earnings in the period of adoption. For comparability purposes, the Company will continue to comply with previous disclosure requirements in accordance with existing lease guidance for all periods presented in the year of adoption. The Company has elected the practical expedients permitted under the transition guidance which enabled the Company: (1) to carry forward the historical lease classification; (2) not to reassess whether expired or existing contracts are or contain leases; and (3) not to reassess the treatment of initial direct costs for existing leases. In addition, the Company has made an accounting policy election to keep leases with an initial term of 12 months or less off the balance sheet. Upon adoption of this standard on January 1, 2019, the Company recognized a total lease liability in the amount of $58.0 million , representing the present value of the minimum rental payments remaining as of the adoption date and a right-of-use asset in the amount of $46.7 million . Recently Issued Accounting Standard Updates 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”) . ASU 2016-13, as amended, 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 August 2018, the FASB issued ASU 2018-13, Disclosure Framework - Changes to the Disclosure Requirements for Fair Value Measurements (“ASU 2018-13”), which eliminates, adds and modifies certain disclosure requirements for fair value measurements as part of the FASB’s disclosure framework project. Adoption of this guidance is required for fiscal years and interim periods within those fiscal years, beginning after December 15, 2019. The Company is evaluating the impact of adopting this new standard on its financial statements. In August 2018, the FASB issued ASU 2018-15, Customer’s Accounting For Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract |
Summary of Operations and Sig_3
Summary of Operations and Significant Accounting Policies (Tables) | 9 Months Ended |
Sep. 30, 2019 | |
Accounting Policies [Abstract] | |
Schedule of Restricted Cash | The following represents the Company’s cash and cash equivalents and restricted cash balances as of September 30, 2019 and December 31, 2018 (in thousands): As of September 30, 2019 As of December 31, 2018 Cash and cash equivalents $ 285,396 $ 230,852 Restricted cash 2,613 2,613 Total cash, cash equivalents and restricted cash $ 288,009 $ 233,465 |
Schedule of Cash and Cash Equivalents | The following represents the Company’s cash and cash equivalents and restricted cash balances as of September 30, 2019 and December 31, 2018 (in thousands): As of September 30, 2019 As of December 31, 2018 Cash and cash equivalents $ 285,396 $ 230,852 Restricted cash 2,613 2,613 Total cash, cash equivalents and restricted cash $ 288,009 $ 233,465 |
Property and Equipment (Tables)
Property and Equipment (Tables) | 9 Months Ended |
Sep. 30, 2019 | |
Property, Plant and Equipment [Abstract] | |
Summary of property and equipment | Property and equipment is summarized as follows (in thousands): As of September 30, 2019 As of December 31, 2018 Computer equipment and software $ 158,527 $ 148,104 Furniture and fixtures 10,136 10,020 Leasehold improvements 18,868 18,822 Property and equipment 187,531 176,946 Less accumulated depreciation (124,376 ) (100,758 ) Property and equipment, net $ 63,155 $ 76,188 |
Goodwill and Intangible Assets
Goodwill and Intangible Assets (Tables) | 9 Months Ended |
Sep. 30, 2019 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Schedule of changes in goodwill | The following table summarizes the changes in the Company’s goodwill balance during the nine months ended September 30, 2019 (in thousands): Goodwill Balance as of December 31, 2018 $ 88,576 Foreign currency translation adjustment (542 ) Balance as of September 30, 2019 $ 88,034 |
Schedule of intangible assets | Intangible assets consisted of the following as of September 30, 2019 and December 31, 2018 (in thousands): As of September 30, 2019 As of December 31, 2018 Gross Carrying Amount Accumulated Amortization Weighted Gross Accumulated Amortizing intangible assets: Customer relationships $ 16,861 $ (8,379 ) 9 $ 17,360 $ (7,135 ) Trade name 6,192 (5,556 ) 7 6,372 (3,719 ) Developed technology 4,652 (3,883 ) 4 4,940 (3,712 ) Contributor content 21,640 (6,011 ) 10 19,912 (4,653 ) Patents 259 (96 ) 18 259 (84 ) Total $ 49,604 $ (23,925 ) $ 48,843 $ (19,303 ) |
Accrued Expenses (Tables)
Accrued Expenses (Tables) | 9 Months Ended |
Sep. 30, 2019 | |
Payables and Accruals [Abstract] | |
Schedule of accrued expenses | Accrued expenses consisted of the following (in thousands): As of September 30, 2019 As of December 31, 2018 Compensation $ 18,761 $ 15,153 Non-income taxes 10,038 7,885 Royalty tax withholdings 4,305 5,618 Other expenses 30,081 22,729 Total accrued expenses $ 63,185 $ 51,385 |
Stockholders_ Equity and Equi_2
Stockholders’ Equity and Equity-Based Compensation (Tables) | 9 Months Ended |
Sep. 30, 2019 | |
Share-based Payment Arrangement [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, 2019 and 2018 (in thousands): Three Months Ended September 30, Nine Months Ended September 30, 2019 2018 2019 2018 Cost of revenue $ 55 $ 116 $ 245 $ 430 Sales and marketing 366 404 1,623 1,546 Product development 1,395 1,295 3,822 4,510 General and administrative 3,693 4,144 12,194 11,508 Total $ 5,509 $ 5,959 $ 17,884 $ 17,994 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, 2019 and 2018 (in thousands): Three Months Ended September 30, Nine Months Ended September 30, 2019 2018 2019 2018 Stock options $ 1,327 $ 1,521 $ 4,394 $ 4,487 RSUs 4,182 4,438 13,490 13,507 Total $ 5,509 $ 5,959 $ 17,884 $ 17,994 |
Revenue (Tables)
Revenue (Tables) | 9 Months Ended |
Sep. 30, 2019 | |
Revenue from Contract with Customer [Abstract] | |
Disaggregation of Revenue | The Company’s revenues by distribution channel for the three and nine months ended September 30, 2019 and 2018 are as follows (in thousands): Three Months Ended Nine Months Ended 2019 2018 2019 2018 E-commerce $ 96,233 $ 88,713 $ 291,339 $ 270,166 Enterprise 62,846 62,862 192,813 188,301 Other (1) — — — 2,711 Total Revenues $ 159,079 $ 151,575 $ 484,152 $ 461,178 (1) On February 26, 2018, the Company completed the Sale of Webdam. 2018 amounts include revenue earned during the period from January 1, 2018 through February 26, 2018. |
Other Income _ (Expense), net (
Other Income / (Expense), net (Tables) | 9 Months Ended |
Sep. 30, 2019 | |
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, 2019 and 2018 (in thousands): Three Months Ended September 30, Nine Months Ended September 30, 2019 2018 2019 2018 Foreign currency loss $ (626 ) $ (659 ) $ (1,356 ) $ (2,122 ) Impairment of long-term investment asset — — — (5,881 ) Interest income 1,091 876 3,301 2,003 Total other income / (expense) $ 465 $ 217 $ 1,945 $ (6,000 ) |
Net Income Per Share (Tables)
Net Income Per Share (Tables) | 9 Months Ended |
Sep. 30, 2019 | |
Earnings Per Share [Abstract] | |
Schedule of Weighted Average Number of Shares | The following table sets forth the computation of basic and diluted net income per share for the three and nine months ended September 30, 2019 and 2018 (in thousands): Three Months Ended September 30, Nine Months Ended September 30, 2019 2018 2019 2018 Net income $ 4,934 $ 7,447 $ 15,755 $ 39,774 Shares used to compute basic net income per share 35,309 34,991 35,219 34,897 Dilutive potential common shares Stock options 65 148 91 125 Unvested restricted stock awards 167 431 202 398 Shares used to compute diluted net income per share 35,541 35,570 35,512 35,420 Basic net income per share $ 0.14 $ 0.21 $ 0.45 $ 1.14 Diluted net income per share $ 0.14 $ 0.21 $ 0.44 $ 1.12 Dilutive securities included in the calculation 844 1,477 942 1,403 Anti-dilutive securities excluded from the calculation 1,322 774 1,222 924 |
Geographic Information (Tables)
Geographic Information (Tables) | 9 Months Ended |
Sep. 30, 2019 | |
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 2019 2018 2019 2018 North America $ 56,151 $ 57,078 $ 171,322 $ 170,092 Europe 51,683 49,033 160,815 154,258 Rest of the world 51,245 45,464 152,015 136,828 Total revenue $ 159,079 $ 151,575 $ 484,152 $ 461,178 |
Long-lived Assets by Geographic Areas | The Company’s long-lived tangible assets were located as follows (in thousands): September 30, December 31, 2019 2018 North America $ 57,432 $ 71,758 Europe 5,665 4,371 Rest of the world 58 59 Total long-lived tangible assets $ 63,155 $ 76,188 |
Leases (Tables)
Leases (Tables) | 9 Months Ended |
Sep. 30, 2019 | |
Leases [Abstract] | |
Schedule of Supplemental Information for Leases | Additional information related to the Company’s leases as of and for the nine months ended September 30, 2019 , is as follows: (in thousands, except lease term and discount rate) September 30, 2019 Balance sheet information ROU assets $ 43,960 Lease liabilities, current $ 9,280 Lease liabilities, non-current 46,042 Total lease liabilities $ 55,322 Supplemental data Weighted average remaining lease term 8.8 years Weighted average discount rate 6.2 % Cash paid for amounts included in lease liabilities $ 7,414 ROU assets obtained in exchange for lease obligations $ 2,286 |
Schedule of Maturity of Operating Lease Liabilities | Future undiscounted lease payments for the Company’s operating lease liabilities and a reconciliation of these payments to its lease liabilities at September 30, 2019 are as follows (in thousands): Reconciliation of future undiscounted lease payments to lease liabilities September 30, 2019 Year ending December 31, 2019 (remaining) $ 2,589 2020 9,347 2021 8,061 2022 7,038 2023 6,198 2024 6,503 Thereafter 33,075 Total undiscounted lease payments 72,811 Less: imputed interest (17,489 ) Total lease liabilities $ 55,322 |
Schedule of Future Minimum Lease Payments | Future minimum lease payments under non-cancelable operating leases as of December 31, 2018 were as follows (in thousands): Year Ending December 31, Operating 2019 $ 9,913 2020 8,762 2021 7,493 2022 6,829 2023 6,082 Thereafter 39,481 Total minimum lease payments $ 78,560 |
Summary of Operations and Sig_4
Summary of Operations and Significant Accounting Policies (Details) - USD ($) $ in Thousands | 9 Months Ended | ||||
Sep. 30, 2019 | Sep. 30, 2018 | Jan. 01, 2019 | Dec. 31, 2018 | Jan. 01, 2018 | |
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||||
Prepaid expenses and other current assets | $ 31,709 | $ 34,841 | |||
Deferred revenue | 137,511 | 139,604 | |||
Retained earnings | 116,834 | 101,079 | |||
Bad debt expense | (486) | $ 911 | |||
Write-offs and other adjustments | 1,100 | ||||
Allowance for doubtful accounts | 3,100 | 4,700 | |||
Chargeback and sales refund allowances | 300 | 300 | |||
Deferred rent non-current balance | $ 11,300 | ||||
Total lease liability | 55,322 | $ 58,000 | |||
Right-of-use assets | $ 43,960 | $ 46,700 | |||
Accounting Standards Update 2014-09 | |||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||||
Prepaid expenses and other current assets | $ (3,700) | ||||
Deferred revenue | (9,900) | ||||
Retained earnings | $ 6,200 |
Summary of Operations and Sig_5
Summary of Operations and Significant Accounting Policies - Schedule of Cash and Cash Equivalents (Details) - USD ($) $ in Thousands | Sep. 30, 2019 | Dec. 31, 2018 | Sep. 30, 2018 | Dec. 31, 2017 |
Accounting Policies [Abstract] | ||||
Cash and cash equivalents | $ 285,396 | $ 230,852 | ||
Restricted cash | 2,613 | 2,613 | ||
Total cash, cash equivalents and restricted cash | $ 288,009 | $ 233,465 | $ 209,022 | $ 256,041 |
Fair Value Measurements and O_2
Fair Value Measurements and Other Long-term Investments (Details) - Variable Interest Entity, Not Primary Beneficiary - Zcool Network Technology Limited - USD ($) $ in Millions | Jan. 04, 2018 | Sep. 30, 2019 | Dec. 31, 2018 |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Variable interest investment | $ 15 | $ 15 | |
Convertible Preferred Stock | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Investment value | $ 15 | ||
Equity ownership percent | 25.00% |
Sale of Digital Asset Managem_2
Sale of Digital Asset Management Business (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||||
Sep. 30, 2019 | Sep. 30, 2018 | Mar. 31, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | Feb. 26, 2018 | |
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | ||||||
Cash received | $ 2,500 | $ 41,804 | ||||
Gain on sale of Webdam | $ 0 | $ 0 | 0 | $ 38,613 | ||
Webdam | ||||||
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | ||||||
Gain on sale of Webdam | $ 38,600 | |||||
Webdam | Disposal Group, Not Discontinued Operations | ||||||
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | ||||||
Purchase price | $ 49,100 | |||||
Transaction costs | 4,600 | |||||
Cash received | 44,300 | |||||
Escrow deposit | $ 2,500 |
Property and Equipment (Details
Property and Equipment (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2019 | Sep. 30, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | Dec. 31, 2018 | |
Property and Equipment | |||||
Property and equipment | $ 187,531 | $ 187,531 | $ 176,946 | ||
Less accumulated depreciation | (124,376) | (124,376) | (100,758) | ||
Property and equipment, net | 63,155 | 63,155 | 76,188 | ||
Depreciation expense | 10,800 | $ 10,300 | 31,900 | $ 29,700 | |
Capitalized amount | 5,600 | 6,400 | 17,800 | 22,300 | |
Amortization expense | 7,700 | 6,600 | 22,500 | 18,000 | |
Internal use software | 43,800 | 43,800 | 48,500 | ||
Computer equipment and software | |||||
Property and Equipment | |||||
Property and equipment | 158,527 | 158,527 | 148,104 | ||
Furniture and fixtures | |||||
Property and Equipment | |||||
Property and equipment | 10,136 | 10,136 | 10,020 | ||
Leasehold improvements | |||||
Property and Equipment | |||||
Property and equipment | 18,868 | 18,868 | $ 18,822 | ||
Cost Of Goods And Services Sold | |||||
Property and Equipment | |||||
Depreciation expense | 9,600 | 8,700 | 28,200 | 25,100 | |
Selling, General and Administrative Expenses | |||||
Property and Equipment | |||||
Depreciation expense | $ 1,200 | $ 1,600 | $ 3,700 | $ 4,600 |
Goodwill and Intangible Asset_2
Goodwill and Intangible Assets - Changes in Goodwill (Details) $ in Thousands | 9 Months Ended |
Sep. 30, 2019USD ($) | |
Changes in goodwill | |
Balance at the beginning of the period | $ 88,576 |
Foreign currency translation adjustment | (542) |
Balance at the end of the period | $ 88,034 |
Goodwill and Intangible Asset_3
Goodwill and Intangible Assets - Intangible Assets (Details) - USD ($) $ in Thousands | 9 Months Ended | |
Sep. 30, 2019 | Dec. 31, 2018 | |
Amortizing intangible assets | ||
Gross Carrying Amount | $ 49,604 | $ 48,843 |
Accumulated Amortization | (23,925) | (19,303) |
Customer relationships | ||
Amortizing intangible assets | ||
Gross Carrying Amount | 16,861 | 17,360 |
Accumulated Amortization | $ (8,379) | (7,135) |
Weighted Average Life (Years) | 9 years | |
Trade name | ||
Amortizing intangible assets | ||
Gross Carrying Amount | $ 6,192 | 6,372 |
Accumulated Amortization | $ (5,556) | (3,719) |
Weighted Average Life (Years) | 7 years | |
Developed technology | ||
Amortizing intangible assets | ||
Gross Carrying Amount | $ 4,652 | 4,940 |
Accumulated Amortization | $ (3,883) | (3,712) |
Weighted Average Life (Years) | 4 years | |
Contributor content | ||
Amortizing intangible assets | ||
Gross Carrying Amount | $ 21,640 | 19,912 |
Accumulated Amortization | $ (6,011) | (4,653) |
Weighted Average Life (Years) | 10 years | |
Patents | ||
Amortizing intangible assets | ||
Gross Carrying Amount | $ 259 | 259 |
Accumulated Amortization | $ (96) | (84) |
Weighted Average Life (Years) | 18 years | |
Domain name | ||
Amortizing intangible assets | ||
Gross Carrying Amount | $ 0 | 0 |
Accumulated Amortization | $ 0 | $ 0 |
Goodwill and Intangible Asset_4
Goodwill and Intangible Assets - Narrative (Details) $ in Millions | 3 Months Ended | 9 Months Ended | 12 Months Ended | ||
Sep. 30, 2019USD ($) | Sep. 30, 2018USD ($) | Sep. 30, 2019USD ($) | Sep. 30, 2018USD ($) | Dec. 31, 2018reporting_unit | |
Amortizing intangible assets | |||||
Number of reporting units | reporting_unit | 4 | ||||
Amortization expense | $ 1.2 | $ 1.4 | $ 5.4 | $ 4.2 | |
Remainder of 2019 | 1.6 | 1.6 | |||
2020 | 5.6 | 5.6 | |||
2021 | 4.8 | 4.8 | |||
2022 | 4.1 | 4.1 | |||
2023 | 2.8 | 2.8 | |||
2024 | 2.7 | 2.7 | |||
Thereafter | 4.1 | 4.1 | |||
Cost Of Goods And Services Sold | |||||
Amortizing intangible assets | |||||
Amortization expense | 0.5 | 0.5 | 1.4 | 1.3 | |
Selling, General and Administrative Expenses | |||||
Amortizing intangible assets | |||||
Amortization expense | $ 0.7 | $ 0.9 | $ 4 | $ 2.9 |
Accrued Expenses (Details)
Accrued Expenses (Details) - USD ($) $ in Thousands | Sep. 30, 2019 | Dec. 31, 2018 |
Payables and Accruals [Abstract] | ||
Compensation | $ 18,761 | $ 15,153 |
Non-income taxes | 10,038 | 7,885 |
Royalty tax withholdings | 4,305 | 5,618 |
Other expenses | 30,081 | 22,729 |
Total accrued expenses | $ 63,185 | $ 51,385 |
Stockholders_ Equity and Equi_3
Stockholders’ Equity and Equity-Based Compensation - Narrative (Details) - USD ($) | Apr. 01, 2019 | Aug. 29, 2018 | Aug. 01, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | Feb. 28, 2017 | Oct. 31, 2015 |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||
Special cash dividend, declared (in usd per share) | $ 3 | ||||||
Cash paid for Special Dividend | $ 104,900,000 | $ 0 | $ 104,925,000 | ||||
Value of shares withheld | $ 6,371,000 | $ 6,060,000 | |||||
Common Stock | |||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||
Shares issued (in shares) | 389,000 | 303,000 | |||||
Authorized purchase amount (up to) | $ 100,000,000 | $ 100,000,000 | |||||
Value remaining for repurchase | $ 100,000,000 | ||||||
Stock options | |||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||
Options granted (in shares) | 83,102 | ||||||
Options granted, weighted average exercise price (in dollars per share) | $ 39.07 | ||||||
Options vested and exercisable (in shares) | 313,000 | ||||||
Options vested and exercisable, weighted average exercise price (in dollars per share) | $ 34.82 | ||||||
Unrecognized compensation charge | $ 2,300,000 | ||||||
PRSUs | |||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||
Number of shares granted (in shares) | 202,000 | ||||||
Weighted average grant-date fair value (in usd per share) | $ 46.69 | ||||||
RSUs | |||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||
Number of shares granted (in shares) | 481,000 | ||||||
Weighted average grant-date fair value (in usd per share) | $ 45.25 | ||||||
Nonvested shares outstanding (in shares) | 1,163,000 | ||||||
Unrecognized non-cash equity-based compensation charge | $ 29,900,000 | ||||||
Value of shares withheld | $ 6,400,000 | ||||||
Minimum | PRSUs | |||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||
Vesting percentage | 0.00% | ||||||
Maximum | PRSUs | |||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||
Vesting percentage | 150.00% |
Stockholders_ Equity and Equi_4
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, 2019 | Sep. 30, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | |
Non-cash equity-based compensation expense related to the 2012 Plan and 2012 ESPP | ||||
Non-cash equity-based compensation | $ 5,509 | $ 5,959 | $ 17,884 | $ 17,994 |
Stock options | ||||
Non-cash equity-based compensation expense related to the 2012 Plan and 2012 ESPP | ||||
Non-cash equity-based compensation | 1,327 | 1,521 | 4,394 | 4,487 |
RSUs | ||||
Non-cash equity-based compensation expense related to the 2012 Plan and 2012 ESPP | ||||
Non-cash equity-based compensation | 4,182 | 4,438 | 13,490 | 13,507 |
Cost of revenue | ||||
Non-cash equity-based compensation expense related to the 2012 Plan and 2012 ESPP | ||||
Non-cash equity-based compensation | 55 | 116 | 245 | 430 |
Sales and marketing | ||||
Non-cash equity-based compensation expense related to the 2012 Plan and 2012 ESPP | ||||
Non-cash equity-based compensation | 366 | 404 | 1,623 | 1,546 |
Product development | ||||
Non-cash equity-based compensation expense related to the 2012 Plan and 2012 ESPP | ||||
Non-cash equity-based compensation | 1,395 | 1,295 | 3,822 | 4,510 |
General and administrative | ||||
Non-cash equity-based compensation expense related to the 2012 Plan and 2012 ESPP | ||||
Non-cash equity-based compensation | $ 3,693 | $ 4,144 | $ 12,194 | $ 11,508 |
Revenue (Details)
Revenue (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2019 | Sep. 30, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | |
Segment Reporting Information [Line Items] | ||||
Total revenue | $ 159,079 | $ 151,575 | $ 484,152 | $ 461,178 |
Disposal group deferred revenue | 117,500 | |||
E-commerce | ||||
Segment Reporting Information [Line Items] | ||||
Total revenue | 96,233 | 88,713 | 291,339 | 270,166 |
Enterprise | ||||
Segment Reporting Information [Line Items] | ||||
Total revenue | 62,846 | 62,862 | 192,813 | 188,301 |
Other | ||||
Segment Reporting Information [Line Items] | ||||
Total revenue | $ 0 | $ 0 | $ 0 | $ 2,711 |
Other Income _ (Expense), net_2
Other Income / (Expense), net (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2019 | Sep. 30, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | |
Other Nonoperating Income (Expense) [Abstract] | ||||
Foreign currency loss | $ (626) | $ (659) | $ (1,356) | $ (2,122) |
Impairment of long-term investment asset | 0 | 0 | 0 | (5,881) |
Interest income | 1,091 | 876 | 3,301 | 2,003 |
Total other income / (expense) | $ 465 | $ 217 | $ 1,945 | $ (6,000) |
Income Taxes (Details)
Income Taxes (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2019 | Sep. 30, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | |
Income Tax Disclosure [Abstract] | ||||
Effective tax rate (as a percent) | (35.30%) | (7.70%) | 3.30% | 19.50% |
Effective tax rate change | (51.60%) | 22.00% | (13.00%) | 5.20% |
Uncertain tax positions recorded | $ 1,000 | |||
Cash paid for income taxes | $ 1,487 | $ 364 | ||
Proceeds from net tax refunds | $ 400 |
Net Income Per Share (Details)
Net Income Per Share (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2019 | Sep. 30, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | |
Earnings Per Share [Abstract] | ||||
Net income | $ 4,934 | $ 7,447 | $ 15,755 | $ 39,774 |
Shares used to compute basic net income per share (in shares) | 35,309 | 34,991 | 35,219 | 34,897 |
Dilutive potential common shares | ||||
Stock options (in shares) | 65 | 148 | 91 | 125 |
Unvested restricted stock awards (in shares) | 167 | 431 | 202 | 398 |
Shares used to compute diluted net income per share (in shares) | 35,541 | 35,570 | 35,512 | 35,420 |
Basic net income per share (in dollars per share) | $ 0.14 | $ 0.21 | $ 0.45 | $ 1.14 |
Diluted net income per share (in dollars per share) | $ 0.14 | $ 0.21 | $ 0.44 | $ 1.12 |
Dilutive securities included in the calculation (in shares) | 844 | 1,477 | 942 | 1,403 |
Anti-dilutive securities excluded from the calculation (in shares) | 1,322 | 774 | 1,222 | 924 |
Geographic Information (Details
Geographic Information (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | 12 Months Ended | ||
Sep. 30, 2019 | Sep. 30, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | Dec. 31, 2018 | |
Geographic revenue based on customer location and long-lived tangible assets | |||||
Revenue | $ 159,079 | $ 151,575 | $ 484,152 | $ 461,178 | |
Total long-lived tangible assets | 63,155 | 63,155 | $ 76,188 | ||
North America | |||||
Geographic revenue based on customer location and long-lived tangible assets | |||||
Revenue | 56,151 | $ 57,078 | 171,322 | 170,092 | |
Total long-lived tangible assets | $ 57,432 | $ 57,432 | $ 71,758 | ||
United States | Revenue benchmark | Geographic concentration | |||||
Geographic revenue based on customer location and long-lived tangible assets | |||||
Concentration risk percentage | 32.00% | 34.00% | |||
United States | Total long-lived tangible assets | Geographic concentration | |||||
Geographic revenue based on customer location and long-lived tangible assets | |||||
Concentration risk percentage | 82.00% | 88.00% | |||
Europe | |||||
Geographic revenue based on customer location and long-lived tangible assets | |||||
Revenue | $ 51,683 | $ 49,033 | $ 160,815 | 154,258 | |
Total long-lived tangible assets | 5,665 | 5,665 | $ 4,371 | ||
Rest of the world | |||||
Geographic revenue based on customer location and long-lived tangible assets | |||||
Revenue | 51,245 | $ 45,464 | 152,015 | $ 136,828 | |
Total long-lived tangible assets | $ 58 | $ 58 | $ 59 |
Leases (Details)
Leases (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2019 | Sep. 30, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | Dec. 31, 2018 | |
Lessee, Lease, Description [Line Items] | |||||
Rental expense inclusive of operating leases | $ 2,800 | $ 2,200 | $ 8,200 | $ 7,000 | |
Total minimum lease payments | $ 78,560 | ||||
Letter of credit as a security deposit for the leased facilities | 2,600 | 2,600 | $ 2,600 | ||
ESB Lease | |||||
Lessee, Lease, Description [Line Items] | |||||
Total minimum lease payments | $ 63,400 | $ 63,400 |
Leases - Lease Information (Det
Leases - Lease Information (Details) - USD ($) $ in Thousands | 9 Months Ended | |
Sep. 30, 2019 | Jan. 01, 2019 | |
Balance sheet information | ||
ROU assets | $ 43,960 | $ 46,700 |
Lease liabilities, current | 9,280 | |
Lease liabilities, non-current | 46,042 | |
Total lease liabilities | $ 55,322 | $ 58,000 |
Weighted average remaining lease term | 8 years 9 months 18 days | |
Weighted average discount rate | 6.20% | |
Cash paid for amounts included in lease liabilities | $ 7,414 | |
ROU assets obtained in exchange for lease obligations | $ 2,286 |
Leases - Maturities of Lease Li
Leases - Maturities of Lease Liabilities (Details) - USD ($) $ in Thousands | Sep. 30, 2019 | Jan. 01, 2019 |
Leases [Abstract] | ||
2019 (remaining) | $ 2,589 | |
2020 | 9,347 | |
2021 | 8,061 | |
2022 | 7,038 | |
2023 | 6,198 | |
2024 | 6,503 | |
Thereafter | 33,075 | |
Total undiscounted lease payments | 72,811 | |
Less: imputed interest | (17,489) | |
Total lease liabilities | $ 55,322 | $ 58,000 |
Leases - Future Minimum Lease P
Leases - Future Minimum Lease Payments - ASC 840 (Details) $ in Thousands | Dec. 31, 2018USD ($) |
Leases [Abstract] | |
2019 | $ 9,913 |
2020 | 8,762 |
2021 | 7,493 |
2022 | 6,829 |
2023 | 6,082 |
Thereafter | 39,481 |
Total minimum lease payments | $ 78,560 |
Commitments and Contingencies -
Commitments and Contingencies - Narrative (Details) | Sep. 30, 2019USD ($) |
Other Commitments [Line Items] | |
Other obligations | $ 53,200,000 |
Maturity of unconditional purchase obligations | |
Remainder of 2019 | 5,100,000 |
2020 | 30,700,000 |
2021 | 13,700,000 |
2022 | 3,800,000 |
Indemnifications | |
Material indemnification obligation | 0 |
Minimum | |
Indemnifications | |
Maximum aggregate obligation and liability for customer | 10,000 |
Maximum | |
Indemnifications | |
Maximum aggregate obligation and liability for customer | $ 250,000 |