Cover Page
Cover Page - shares | 3 Months Ended | |
Mar. 31, 2022 | Apr. 22, 2022 | |
Cover [Abstract] | ||
Document Type | 10-Q | |
Document Quarterly Report | true | |
Document Period End Date | Mar. 31, 2022 | |
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, $0.01 par value per share | |
Trading Symbol | SSTK | |
Security Exchange Name | NYSE | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Filer Category | Large Accelerated Filer | |
Entity Small Business | false | |
Entity Emerging Growth Company | false | |
Entity Shell Company | false | |
Entity Common Stock, Shares Outstanding | 36,237,291 | |
Entity Central Index Key | 0001549346 | |
Amendment Flag | false | |
Current Fiscal Year End Date | --12-31 | |
Document Fiscal Year Focus | 2022 | |
Document Fiscal Period Focus | Q1 |
Consolidated Balance Sheets
Consolidated Balance Sheets - USD ($) $ in Thousands | Mar. 31, 2022 | Dec. 31, 2021 |
Current assets: | ||
Cash and cash equivalents | $ 258,112 | $ 314,017 |
Accounts receivable, net of allowance of $2,125 and $1,910 | 44,774 | 47,707 |
Prepaid expenses and other current assets | 36,833 | 26,491 |
Total current assets | 339,719 | 388,215 |
Property and equipment, net | 50,206 | 48,074 |
Right-of-use assets | 32,935 | 34,570 |
Intangible assets, net | 116,859 | 123,822 |
Goodwill | 219,176 | 219,816 |
Deferred tax assets, net | 11,559 | 10,512 |
Other assets | 25,524 | 26,701 |
Total assets | 795,978 | 851,710 |
Current liabilities: | ||
Accounts payable | 7,208 | 10,092 |
Accrued expenses | 74,131 | 99,529 |
Contributor royalties payable | 29,816 | 29,004 |
Deferred revenue | 178,734 | 180,979 |
Other current liabilities | 13,997 | 14,180 |
Total current liabilities | 303,886 | 333,784 |
Deferred tax liability, net | 2,517 | 2,781 |
Lease liabilities | 35,857 | 36,966 |
Other non-current liabilities | 9,295 | 9,697 |
Total liabilities | 351,555 | 383,228 |
Commitments and contingencies (Note 13) | ||
Stockholders’ equity: | ||
Common stock, $0.01 par value; 200,000 shares authorized; 39,352 and 39,209 shares issued and 36,138 and 36,417 shares outstanding as of March 31, 2022 and December 31, 2021, respectively | 394 | 392 |
Treasury stock, at cost; 3,214 and 2,792 shares as of March 31, 2022 and December 31, 2021, respectively | (165,465) | (127,196) |
Additional paid-in capital | 373,765 | 376,537 |
Accumulated comprehensive loss | (11,674) | (10,788) |
Retained earnings | 247,403 | 229,537 |
Total stockholders’ equity | 444,423 | 468,482 |
Total liabilities and stockholders’ equity | $ 795,978 | $ 851,710 |
Consolidated Balance Sheets (Pa
Consolidated Balance Sheets (Parenthetical) - USD ($) shares in Thousands, $ in Thousands | Mar. 31, 2022 | Dec. 31, 2021 |
Statement of Financial Position [Abstract] | ||
Allowance for doubtful accounts | $ 2,125 | $ 1,910 |
Common stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Common stock, shares authorized (in shares) | 200,000 | 200,000 |
Common stock, shares issued (in shares) | 39,352 | 39,209 |
Common stock, shares outstanding (in shares) | 36,138 | 36,417 |
Treasury stock, shares held in treasury (in shares) | 3,214 | 2,792 |
Consolidated Statements of Oper
Consolidated Statements of Operations - USD ($) shares in Thousands, $ in Thousands | 3 Months Ended | |
Mar. 31, 2022 | Mar. 31, 2021 | |
Income Statement [Abstract] | ||
Revenue | $ 199,132 | $ 183,281 |
Operating expenses: | ||
Cost of revenue | 69,451 | 61,832 |
Sales and marketing | 53,329 | 41,921 |
Product development | 13,626 | 10,731 |
General and administrative | 30,808 | 30,679 |
Total operating expenses | 167,214 | 145,163 |
Income from operations | 31,918 | 38,118 |
Other income / (expense), net | 758 | (2,462) |
Income before income taxes | 32,676 | 35,656 |
Provision for income taxes | 6,104 | 6,142 |
Net income | $ 26,572 | $ 29,514 |
Earnings per share: | ||
Basic (in dollars per share) | $ 0.73 | $ 0.81 |
Diluted (in dollars per share) | $ 0.71 | $ 0.79 |
Weighted average common shares outstanding: | ||
Basic (in shares) | 36,303 | 36,336 |
Diluted (in shares) | 37,204 | 37,249 |
Consolidated Statements of Comp
Consolidated Statements of Comprehensive Income - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2022 | Mar. 31, 2021 | |
Statement of Comprehensive Income [Abstract] | ||
Net income | $ 26,572 | $ 29,514 |
Foreign currency translation (loss) / gain | (886) | 226 |
Other comprehensive (loss) / income | (886) | 226 |
Comprehensive income | $ 25,686 | $ 29,740 |
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 Income / (Loss) | Retained Earnings |
Beginning balance (in shares) at Dec. 31, 2020 | 38,803 | 2,558 | ||||
Beginning balance at Dec. 31, 2020 | $ 421,925 | $ 389 | $ (100,027) | $ 360,939 | $ (7,681) | $ 168,305 |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||
Equity-based compensation | 8,210 | 8,210 | ||||
Issuance of common stock in connection with employee stock option exercises and RSU vesting (in shares) | 357 | |||||
Issuance of common stock in connection with employee stock option exercises and RSU vesting | 1,309 | $ 4 | 1,305 | |||
Common shares withheld for settlement of taxes in connection with equity-based compensation (in shares) | (150) | |||||
Common shares withheld for settlement of taxes in connection with equity-based compensation | (13,034) | $ (2) | (13,032) | |||
Cash dividends paid | (7,646) | (7,646) | ||||
Other comprehensive income (loss) | 226 | 226 | ||||
Net income | 29,514 | 29,514 | ||||
Ending balance (in shares) at Mar. 31, 2021 | 39,010 | 2,558 | ||||
Ending balance at Mar. 31, 2021 | $ 440,504 | $ 391 | $ (100,027) | 357,422 | (7,455) | 190,173 |
Beginning balance (in shares) at Dec. 31, 2021 | 36,417 | 39,209 | 2,792 | |||
Beginning balance at Dec. 31, 2021 | $ 468,482 | $ 392 | $ (127,196) | 376,537 | (10,788) | 229,537 |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||
Equity-based compensation | 7,826 | 7,826 | ||||
Issuance of common stock in connection with employee stock option exercises and RSU vesting (in shares) | 261 | |||||
Issuance of common stock in connection with employee stock option exercises and RSU vesting | 0 | $ 3 | (3) | |||
Common shares withheld for settlement of taxes in connection with equity-based compensation (in shares) | (118) | |||||
Common shares withheld for settlement of taxes in connection with equity-based compensation | (10,596) | $ (1) | (10,595) | |||
Repurchase of treasury shares (in shares) | 422 | |||||
Repurchase of treasury shares | (38,269) | $ (38,269) | ||||
Cash dividends paid | (8,706) | (8,706) | ||||
Other comprehensive income (loss) | (886) | (886) | ||||
Net income | $ 26,572 | 26,572 | ||||
Ending balance (in shares) at Mar. 31, 2022 | 36,138 | 39,352 | 3,214 | |||
Ending balance at Mar. 31, 2022 | $ 444,423 | $ 394 | $ (165,465) | $ 373,765 | $ (11,674) | $ 247,403 |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2022 | Mar. 31, 2021 | |
CASH FLOWS FROM OPERATING ACTIVITIES | ||
Net income | $ 26,572 | $ 29,514 |
Adjustments to reconcile net income to net cash provided by operating activities: | ||
Depreciation and amortization | 15,065 | 10,091 |
Deferred taxes | (1,242) | (433) |
Non-cash equity-based compensation | 7,826 | 8,210 |
Bad debt expense | 361 | 526 |
Changes in operating assets and liabilities: | ||
Accounts receivable | 2,366 | (5,892) |
Prepaid expenses and other current and non-current assets | (1,376) | (9,306) |
Accounts payable and other current and non-current liabilities | (26,717) | (72) |
Contributor royalties payable | 1,030 | (369) |
Deferred revenue | (1,162) | 3,559 |
Net cash provided by operating activities | 22,723 | 35,828 |
CASH FLOWS FROM INVESTING ACTIVITIES | ||
Capital expenditures | (11,775) | (8,548) |
Business combination, net of cash acquired | 0 | (72,165) |
Acquisition of content | (734) | (489) |
Security deposit payment | (16) | (11) |
Net cash used in investing activities | (12,525) | (81,213) |
CASH FLOWS FROM FINANCING ACTIVITIES | ||
Repurchase of treasury shares | (38,372) | 0 |
Proceeds from exercise of stock options | 0 | 1,309 |
Cash paid related to settlement of employee taxes related to RSU vesting | (18,496) | (13,034) |
Payment of cash dividend | (8,706) | (7,646) |
Net cash used in financing activities | (65,574) | (19,371) |
Effect of foreign exchange rate changes on cash | (529) | 108 |
Net decrease in cash and cash equivalents | (55,905) | (64,648) |
Cash and cash equivalents, beginning of period | 314,017 | 428,574 |
Cash and cash equivalents, end of period | 258,112 | 363,926 |
Supplemental Disclosure of Cash Information: | ||
Cash paid for income taxes | $ 1,666 | $ 3,363 |
Summary of Operations and Signi
Summary of Operations and Significant Accounting Policies | 3 Months Ended |
Mar. 31, 2022 | |
Accounting Policies [Abstract] | |
Summary of Operations and Significant Accounting Policies | Summary of Operations and Significant Accounting Policies Summary of Operations Shutterstock, Inc. (the “Company” or “Shutterstock”) is the leading global creative platform for transformative brands and media companies. The Company’s platform brings together users and contributors of content by providing readily-searchable content that our customers pay to license and by compensating contributors as their content is licensed. Contributors upload their content to the Company’s web properties in exchange for royalty payments based on customer download activity. The Company’s key offerings include: • Images - consisting of photographs, vectors and illustrations. Images are typically used in visual communications, such as websites, digital and print marketing materials, corporate communications, books, publications and other similar uses. • Footage - consisting of video clips, premium footage filmed by industry experts and cinema grade video effects, available in HD and 4K formats. Footage is often integrated into websites, social media, marketing campaigns and cinematic productions. • Music - consisting of high-quality music tracks and sound effects, which are often used to complement images and footage. • 3 Dimensional (“3D”) Models - consisting of 3D models, used in a variety of industries such as advertising, media and video production, gaming, retail, education, design and architecture. This offering became available upon the Company’s acquisition of TurboSquid, Inc. on February 1, 2021. • Creative Design Software - consisting of the Company’s online graphic design and image editing platform. This offering became available after the Company completed the acquisition of substantially all of the assets and assumption of certain liabilities from PicMonkey, LLC on September 3, 2021. Basis of Presentation The unaudited condensed consolidated financial statements and accompanying notes have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, these financial statements do not include all information and footnotes required by GAAP for complete financial statements. The interim Consolidated Balance Sheet as of March 31, 2022, and the Consolidated Statements of Operations, Comprehensive Income, Stockholders’ Equity and Cash Flows for the three months ended March 31, 2022 and 2021 are unaudited. The Consolidated Balance Sheet as of December 31, 2021, 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 March 31, 2022, and its consolidated results of operations, comprehensive income, stockholders’ equity and cash flows for the three months ended March 31, 2022 and 2021. The financial data and the other financial information disclosed in the notes to the financial statements related to these periods are also unaudited. The results of operations for the three months ended March 31, 2022 are not necessarily indicative of the results to be expected for the fiscal year ending December 31, 2022 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, 2021 included in the Company’s Annual Report on Form 10-K, which was filed with the SEC on February 10, 2022. 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 and disclosed 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 amount 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 used to calculate the lease liability. Cash and Cash Equivalents The Company’s cash and cash equivalents consist primarily of bank deposits and money market funds. 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 (i) the aging of its accounts receivable considering historical receivables loss rates, (ii) on a customer-by-customer basis, where appropriate, and (iii) the economic environments in which the Company operates. During the three months ended March 31, 2022, the Company recorded bad debt expense of $0.4 million. As of March 31, 2022 and December 31, 2021, the Company’s allowance for doubtful accounts was approximately $2.1 million and $1.9 million, respectively. The allowance for doubtful accounts is 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 March 31, 2022 and December 31, 2021, the Company’s combined allowance for chargebacks and sales refunds was $0.4 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 content. Content licenses are generally purchased on a monthly or annual 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. Subsequent to the acquisition of PicMonkey, the Company also generates revenue from the license of creative editing tools. The Company recognizes revenue upon the satisfaction of performance obligations, which generally occurs when content is downloaded by a customer. The Company recognizes revenue on both its subscription-based and transaction-based products when content is downloaded, at which time the license is provided. In addition, the Company estimates expected unused licenses for subscription-based products and recognizes the revenue associated with the unused licenses as digital content is downloaded and licenses are obtained for such content by the customer during 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. For revenue associated with the Company’s creative editing tools, revenue is recognized on a straight-line basis over the subscription period. 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 electronic payments with a credit card at the time of the 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 |
Fair Value Measurements and Lon
Fair Value Measurements and Long-term Investments | 3 Months Ended |
Mar. 31, 2022 | |
Fair Value Disclosures [Abstract] | |
Fair Value Measurements and Long-term Investments | Fair Value Measurements and Long-term Investments Fair Value Measurements The Company had no assets or liabilities requiring fair value hierarchy disclosures as of March 31, 2022 or December 31, 2021, except as noted below. Cash Equivalents Cash equivalents include money market accounts and are classified as a level 1 measurement based on quoted prices in active markets for identical assets that the reporting entity can access at the measurement date. As of March 31, 2022 and December 31, 2021, the Company had cash equivalent balances of $145.1 million and $195.1 million, respectively. Other Fair Value Measurements The carrying amounts of cash and cash equivalents, accounts receivable, 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 a 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. Long-term Investments As of March 31, 2022 and December 31, 2021, the Company’s long-term investments were in equity securities with no readily determinable fair value, totaled $20.0 million, and were reported within other assets on the Consolidated Balance Sheets. The Company uses the measurement alternative for these equity investments and their carrying value is reported at cost, adjusted for impairments or any observable price changes in ordinary transactions with identical or similar investments. |
Acquisitions
Acquisitions | 3 Months Ended |
Mar. 31, 2022 | |
Business Combination and Asset Acquisition [Abstract] | |
Acquisitions | Acquisition TurboSquid, Inc. On February 1, 2021, the Company completed its acquisition of all of the outstanding shares of TurboSquid, Inc. (“TurboSquid”), for approximately $77.3 million. The total purchase price was paid with existing cash on hand in the three months ended March 31, 2021. In connection with the acquisition, the Company incurred approximately $1.6 million of transaction costs, which is included in general and administrative expenses on the Consolidated Statements of Operations. TurboSquid is a Louisiana-based company that operates a marketplace offering more than one million 3D models, a marketplace for 2D images derived from 3D objects and a digital asset management solution. The Company believes this acquisition establishes Shutterstock as the premium destination for 3D models as well as 3D models in an easy-to-use 2D format. The identifiable intangible assets, which include customer relationships, developed technology, trade names and contributor content, have weighted average useful lives of approximately 12 years, 4.7 years, 10 years and 4 years, respectively. The goodwill arising from the transaction is primarily attributable to expected operational synergies and is not deductible for income tax purposes. The TurboSquid transaction was accounted for using the acquisition method and, accordingly, the results of the acquired business have been included in the Company’s results of operations from the acquisition date. The fair value of consideration transferred in this business combination has been allocated to the intangible and tangible assets acquired and liabilities assumed at the acquisition date, with the remaining unallocated amount recorded as goodwill. The identifiable intangible assets of this acquisition are being amortized on a straight-line basis. The fair value of the customer relationships was determined using a variation of the income approach known as the multiple-period excess earnings method. The fair value of the trade names and developed technology were determined using the relief-from-royalty method, and the fair value of the contributor content was determined using the cost-to-recreate method. The aggregate purchase price for this acquisition has been allocated to the assets acquired and liabilities assumed as follows (in thousands): Assets acquired and liabilities assumed (in thousands): TurboSquid Cash and cash equivalents $ 5,165 Other assets 1,553 Property and equipment 472 Intangible assets: Customer relationships 9,000 Trade name 2,200 Developed technology 7,800 Contributor content 2,500 Intangible assets 21,500 Goodwill 59,491 Total assets acquired $ 88,181 Accounts payable, accrued expenses and other liabilities (4,685) Contributor royalties payable (2,243) Deferred tax liability (3,923) Total liabilities assumed (10,851) Net assets acquired $ 77,330 The following unaudited pro forma consolidated financial information (in thousands) reflects the results of operations of the Company for the three months ended March 31, 2021 as if the TurboSquid acquisition had been completed on January 1, 2020, after giving effect to certain purchase accounting adjustments, primarily related to intangible assets and transaction costs. These pro forma results have been prepared for comparative purposes only and are not necessarily indicative of what the Company’s operating results would have been, had the acquisitions actually taken place at the beginning of the previous annual period: Three Months Ended March 31, 2021 Revenue As Reported $ 183,281 Pro Forma 185,344 Income before income taxes As Reported $ 35,656 Pro Forma 36,957 |
Property and Equipment
Property and Equipment | 3 Months Ended |
Mar. 31, 2022 | |
Property, Plant and Equipment [Abstract] | |
Property and Equipment | Property and Equipment Property and equipment is summarized as follows (in thousands): As of March 31, 2022 As of December 31, 2021 Computer equipment and software $ 231,231 $ 221,429 Furniture and fixtures 10,241 10,238 Leasehold improvements 19,432 19,453 Property and equipment 260,904 251,120 Less accumulated depreciation (210,698) (203,046) Property and equipment, net $ 50,206 $ 48,074 Depreciation and amortization expense related to property and equipment was $8.0 million for the three months ended March 31, 2022 and 2021. Of these amounts, $7.2 million and $7.1 million are included in cost of revenue for the three months ended March 31, 2022 and 2021, respectively, and $0.8 million and $0.9 million are included in general and administrative expense for the three months ended March 31, 2022 and 2021, respectively. Depreciation and amortization expense is included in cost of revenue and general and administrative expense in the Consolidated Statements of Operations based on the nature of the asset being depreciated. Capitalized Internal-Use Software The Company capitalized costs related to the development of internal-use software of $9.5 million and $7.0 million for the three months ended March 31, 2022 and 2021, 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 $6.9 million and $6.7 million for the three months ended March 31, 2022 and 2021, respectively. Depreciation expense related to capitalized internal-use software is included in cost of revenue in the Consolidated Statements of Operations. As of March 31, 2022 and December 31, 2021, the Company had capitalized internal-use software of $41.6 million and $39.0 million, respectively, net of accumulated depreciation, which was included in property and equipment, net. |
Goodwill and Intangible Assets
Goodwill and Intangible Assets | 3 Months Ended |
Mar. 31, 2022 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Goodwill and Intangible Assets | Goodwill and Intangible Assets Goodwill The Company’s goodwill balance is attributable to its Content reporting unit and is tested for impairment annually on October 1 or upon a triggering event. No triggering events were identified during the three months ended March 31, 2022. The following table summarizes the changes in the carrying value of the Company’s goodwill balance during the three months ended March 31, 2022 (in thousands): Goodwill Balance as of December 31, 2021 $ 219,816 Foreign currency translation adjustment (640) Balance as of March 31, 2022 $ 219,176 Intangible Assets Intangible assets, all of which are subject to amortization, consisted of the following as of March 31, 2022 and December 31, 2021 (in thousands): As of March 31, 2022 As of December 31, 2021 Gross Accumulated Net Weighted Gross Accumulated Net Amortizing intangible assets: Customer relationships $ 55,109 $ (14,821) $ 40,288 11 $ 55,542 $ (13,906) $ 41,636 Trade name 11,656 (6,835) 4,821 8 11,787 (6,805) 4,982 Developed technology 67,438 (18,657) 48,781 4 67,940 (14,214) 53,726 Contributor content 38,593 (15,747) 22,846 8 37,984 (14,632) 23,352 Patents 259 (136) 123 18 259 (133) 126 Total $ 173,055 $ (56,196) $ 116,859 $ 173,512 $ (49,690) $ 123,822 Amortization expense was $7.1 million and $2.1 million for the three months ended March 31, 2022 and 2021, respectively. Of these amounts, $6.5 million and $1.2 million are included in cost of revenue for the three months ended March 31, 2022 and 2021, respectively, and $0.6 million and $0.9 million are included in general and administrative expense for the three months ended March 31, 2022 and 2021, respectively. The Company determined that there was no indication of impairment of the intangible assets for any period presented. Estimated amortization expense is: $21.2 million for the remaining nine months of 2022, $27.9 million in 2023, $20.9 million in 2024, $10.3 million in 2025, $8.3 million in 2026, $6.1 million in 2027 and $22.2 million thereafter. |
Accrued Expenses
Accrued Expenses | 3 Months Ended |
Mar. 31, 2022 | |
Payables and Accruals [Abstract] | |
Accrued Expenses | Accrued Expenses Accrued expenses consisted of the following (in thousands): As of March 31, 2022 As of December 31, 2021 Compensation $ 23,444 $ 43,529 Non-income taxes 20,557 21,488 Website hosting and marketing fees 14,977 18,314 Other expenses 15,153 16,198 Total accrued expenses $ 74,131 $ 99,529 |
Stockholders_ Equity and Equity
Stockholders’ Equity and Equity-Based Compensation | 3 Months Ended |
Mar. 31, 2022 | |
Share-based Payment Arrangement [Abstract] | |
Stockholders’ Equity and Equity-Based Compensation | Stockholders’ Equity and Equity-Based Compensation Stockholders’ Equity Common Stock The Company issued approximately 143,000 and 207,000 shares of common stock during the three months ended March 31, 2022 and 2021, respectively, related to the exercise of stock options and the vesting of Restricted Stock Units. 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. 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 share repurchase 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. During the three months ended March 31, 2022, the Company repurchased approximately 422,000 shares of its common stock at an average per share cost of $90.69. During the three months ended March 31, 2021, the Company did not repurchase any shares of its common stock under the share repurchase program. As of March 31, 2022, the Company had $34.6 million of remaining authorization for purchases under the share repurchase program. Dividends The Company declared and paid cash dividends of $0.24 per share of common stock, or $8.7 million, during the three months ended March 31, 2022, and $0.21 per share of common stock, or $7.6 million, during the three months ended March 31, 2021. On April 19, 2022, the Company’s Board of Directors declared a quarterly cash dividend of $0.24 per share of outstanding common stock payable on June 16, 2022 to stockholders of record at the close of business on June 2, 2022. Future declarations of dividends are subject to the final determination of the Board of Directors, and will depend on, among other things, the Company’s future financial condition, results of operations, capital requirements, capital expenditure requirements, contractual restrictions, anticipated cash needs, business prospects, provisions of applicable law and other factors the Board of Directors may deem relevant. Equity-Based Compensation The Company recognizes stock-based compensation expense for all equity-based compensation awards, including employee Restricted Stock Units and Performance-based Restricted Stock Units (“PRSUs” and, collectively with Restricted Stock Units, “RSUs”) and stock options 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 months ended March 31, 2022 and 2021 (in thousands): Three Months Ended March 31, 2022 2021 Cost of revenue $ 78 $ 164 Sales and marketing 928 467 Product development 1,781 1,229 General and administrative 5,039 6,350 Total $ 7,826 $ 8,210 The following table summarizes non-cash equity-based compensation expense, net of forfeitures, by award type included in the accompanying Consolidated Statements of Operations for the three months ended March 31, 2022 and 2021 (in thousands): Three Months Ended March 31, 2022 2021 Stock options $ 175 $ 175 RSUs 7,651 8,035 Total $ 7,826 $ 8,210 Stock Option Awards During the three months ended March 31, 2022, no options to purchase shares of its common stock were granted. As of March 31, 2022, there were approximately 333,000 options vested and exercisable with a weighted average exercise price of $34.68. As of March 31, 2022, the total unrecognized compensation expense related to non-vested options was approximately $0.7 million, which is expected to be recognized through 2023. Restricted Stock Unit Awards During the three months ended March 31, 2022, the Company had RSU grants, net of forfeitures, of approximately 116,000. As of March 31, 2022, there are approximately 1,035,000 non-vested RSUs outstanding with a weighted average grant-date fair value of $66.61. As of March 31, 2022, the total unrecognized non-cash equity-based compensation expense related to the non-vested RSUs was approximately $36.0 million, which is expected to be recognized through 2025. During the three months ended March 31, 2022 and 2021, shares of common stock with an aggregate value of $10.6 million and $13.0 million were withheld upon vesting of RSUs and paid in connection with related remittance of employee withholding taxes to taxing authorities. |
Revenue
Revenue | 3 Months Ended |
Mar. 31, 2022 | |
Revenue from Contract with Customer [Abstract] | |
Revenue | Revenue The Company distributes its content offerings through two primary channels: E-commerce: The majority of the Company’s customers license content directly through the Company’s self-service web properties. E-commerce customers have the flexibility to purchase a subscription plan that is paid on a monthly or annual basis or to license content 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: The Company also has a base of customers with unique content, licensing and workflow needs. These customers benefit from communication with dedicated sales professionals, service and research teams which provide a number of tailored enhancements to their creative workflows including non-standard licensing rights, multi-seat access, ability to pay on credit terms, multi-brand licensing packages, increased indemnification protection and content licensed for use-cases outside of those available on the E-commerce platform. The Company’s revenues by distribution channel for the three months ended March 31, 2022 and 2021 are as follows (in thousands): Three Months Ended March 31, 2022 2021 E-commerce $ 127,070 $ 118,400 Enterprise 72,062 64,881 Total Revenues $ 199,132 $ 183,281 The March 31, 2022 deferred revenue balance will be earned as content is downloaded or upon the expiration of subscription-based products, and nearly all is expected to be earned within the next twelve months. $82.6 million of total revenue recognized for the three months ended March 31, 2022 was reflected in deferred revenue as of December 31, 2021. |
Other Income _ (Expense), net
Other Income / (Expense), net | 3 Months Ended |
Mar. 31, 2022 | |
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 months ended March 31, 2022 and 2021 (in thousands): Three Months Ended March 31, 2022 2021 Foreign currency gain / (loss) $ 734 $ (2,510) Interest income, net 24 48 Total other income / (expense) $ 758 $ (2,462) |
Income Taxes
Income Taxes | 3 Months Ended |
Mar. 31, 2022 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | Income Taxes The Company’s effective tax rates were 18.7% and 17.2% for the three months ended March 31, 2022 and 2021, respectively. For the three months ended March 31, 2022, the net effect of discrete items decreased the effective tax rate by 0.2%. Excluding these items, the Company’s effective tax rate would have been 18.9% for the three months ended March 31, 2022. For the three months ended March 31, 2021, the net effect of discrete items decreased the effective tax rate by 1.8%. Excluding these items, the Company’s effective tax rate would have been 19.0% for the three months ended March 31, 2021. The Company has computed the provision for income taxes based on the estimated annual effective tax rate excluding loss jurisdictions with no tax benefit and the application of discrete items, if any, in the applicable period. During the three months ended March 31, 2022 and 2021, uncertain tax positions recorded by the Company were not material. 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 material for the three months ended March 31, 2022 and 2021. |
Net Income Per Share
Net Income Per Share | 3 Months Ended |
Mar. 31, 2022 | |
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 months ended March 31, 2022 and 2021 (in thousands): Three Months Ended March 31, 2022 2021 Net income $ 26,572 $ 29,514 Shares used to compute basic net income per share 36,303 36,336 Dilutive potential common shares Stock options 233 224 Unvested restricted stock awards 668 689 Shares used to compute diluted net income per share 37,204 37,249 Basic net income per share $ 0.73 $ 0.81 Diluted net income per share $ 0.71 $ 0.79 Dilutive shares included in the calculation 1,409 1,436 Anti-dilutive shares excluded from the calculation 56 18 |
Geographic Information
Geographic Information | 3 Months Ended |
Mar. 31, 2022 | |
Segment Reporting [Abstract] | |
Geographic Information | Geographic Information The following table presents the Company’s revenue based on customer location (in thousands): Three Months Ended March 31, 2022 2021 North America $ 79,943 $ 64,309 Europe 62,553 62,277 Rest of the world 56,636 56,695 Total revenue $ 199,132 $ 183,281 The United States, included in North America in the above table, accounted for 37% and 32% of consolidated revenue for the three months ended March 31, 2022 and 2021, 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): As of March 31, As of December 31, 2022 2021 North America $ 41,946 $ 40,465 Europe 8,142 7,460 Rest of the world 118 149 Total long-lived tangible assets $ 50,206 $ 48,074 The United States, included in North America in the above table, accounted for 76% of total long-lived tangible assets as of March 31, 2022 and December 31, 2021. Ireland, included in Europe in the above table, accounted for 12% and 11% of total long-lived tangible assets as of March 31, 2022 and December 31, 2021, respectively. No other country accounts for more than 10% of the Company’s long-lived tangible assets in any period presented. |
Commitments and Contingencies
Commitments and Contingencies | 3 Months Ended |
Mar. 31, 2022 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | Commitments and Contingencies Unconditional purchase obligations and other obligations As of March 31, 2022, the Company had total other non-lease obligations in the amount of approximately $110.3 million, which consisted primarily of minimum royalty guarantees and unconditional purchase obligations related to contracts for infrastructure and other business services. As of March 31, 2022, the Company’s other obligations for the remainder of 2022 and for the years ending December 31, 2023, 2024, 2025 and 2026 were approximately $44.3 million, $35.4 million, $26.3 million, $4.0 million and $0.3 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 the modifications made by the customer, or the context in which an image is used. The standard maximum aggregate obligation and liability to any one customer for all claims is generally limited to ten thousand dollars. The Company offers certain of its customers greater levels of indemnification, including unlimited indemnification. As of March 31, 2022, the Company had recorded no material liabilities related to indemnification 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 entered into employment arrangements and indemnification agreements with certain executive officers and with certain employees. The agreements specify various employment-related matters, including annual compensation, performance incentive bonuses, and severance benefits in the event of termination with or without cause. |
Summary of Operations and Sig_2
Summary of Operations and Significant Accounting Policies (Policies) | 3 Months Ended |
Mar. 31, 2022 | |
Accounting Policies [Abstract] | |
Basis of Presentation | Basis of PresentationThe unaudited condensed consolidated financial statements and accompanying notes have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, these financial statements do not include all information and footnotes required by GAAP for complete financial statements. |
Unaudited Interim Financial Statements | The interim Consolidated Balance Sheet as of March 31, 2022, and the Consolidated Statements of Operations, Comprehensive Income, Stockholders’ Equity and Cash Flows for the three months ended March 31, 2022 and 2021 are unaudited. The Consolidated Balance Sheet as of December 31, 2021, 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 March 31, 2022, and its consolidated results of operations, comprehensive income, stockholders’ equity and cash flows for the three months ended March 31, 2022 and 2021. The financial data and the other financial information disclosed in the notes to the financial statements related to these periods are also unaudited. The results of operations for the three months ended March 31, 2022 are not necessarily indicative of the results to be expected for the fiscal year ending December 31, 2022 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, 2021 included in the Company’s Annual Report on Form 10-K, which was filed with the SEC on February 10, 2022. The unaudited consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries. All intercompany balances and transactions have been eliminated in consolidation. Certain immaterial changes in presentation have been made to conform the prior period presentation to current period reporting. |
Use of Estimates | Use of EstimatesThe preparation of the consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported and disclosed 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 amount 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 used to calculate the lease liability. |
Cash and Cash Equivalents | Cash and Cash EquivalentsThe Company’s cash and cash equivalents consist primarily of bank deposits and money market funds. |
Allowance for Doubtful Accounts | Allowance for Doubtful AccountsThe 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 (i) the aging of its accounts receivable considering historical receivables loss rates, (ii) on a customer-by-customer basis, where appropriate, and (iii) the economic environments in which the Company operates. |
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 March 31, 2022 and December 31, 2021, the Company’s combined allowance for chargebacks and sales refunds was $0.4 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 content. Content licenses are generally purchased on a monthly or annual 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. Subsequent to the acquisition of PicMonkey, the Company also generates revenue from the license of creative editing tools. The Company recognizes revenue upon the satisfaction of performance obligations, which generally occurs when content is downloaded by a customer. The Company recognizes revenue on both its subscription-based and transaction-based products when content is downloaded, at which time the license is provided. In addition, the Company estimates expected unused licenses for subscription-based products and recognizes the revenue associated with the unused licenses as digital content is downloaded and licenses are obtained for such content by the customer during 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. For revenue associated with the Company’s creative editing tools, revenue is recognized on a straight-line basis over the subscription period. 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 electronic payments with a credit card at the time of the 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 |
Acquisitions (Tables)
Acquisitions (Tables) | 3 Months Ended |
Mar. 31, 2022 | |
Business Combination and Asset Acquisition [Abstract] | |
Schedule of Aggregate Purchase Price Allocation to Assets Acquired and Liabilities Assumed | The aggregate purchase price for this acquisition has been allocated to the assets acquired and liabilities assumed as follows (in thousands): Assets acquired and liabilities assumed (in thousands): TurboSquid Cash and cash equivalents $ 5,165 Other assets 1,553 Property and equipment 472 Intangible assets: Customer relationships 9,000 Trade name 2,200 Developed technology 7,800 Contributor content 2,500 Intangible assets 21,500 Goodwill 59,491 Total assets acquired $ 88,181 Accounts payable, accrued expenses and other liabilities (4,685) Contributor royalties payable (2,243) Deferred tax liability (3,923) Total liabilities assumed (10,851) Net assets acquired $ 77,330 |
Business Acquisition, Pro Forma Information | The following unaudited pro forma consolidated financial information (in thousands) reflects the results of operations of the Company for the three months ended March 31, 2021 as if the TurboSquid acquisition had been completed on January 1, 2020, after giving effect to certain purchase accounting adjustments, primarily related to intangible assets and transaction costs. These pro forma results have been prepared for comparative purposes only and are not necessarily indicative of what the Company’s operating results would have been, had the acquisitions actually taken place at the beginning of the previous annual period: Three Months Ended March 31, 2021 Revenue As Reported $ 183,281 Pro Forma 185,344 Income before income taxes As Reported $ 35,656 Pro Forma 36,957 |
Property and Equipment (Tables)
Property and Equipment (Tables) | 3 Months Ended |
Mar. 31, 2022 | |
Property, Plant and Equipment [Abstract] | |
Summary of Property and Equipment | Property and equipment is summarized as follows (in thousands): As of March 31, 2022 As of December 31, 2021 Computer equipment and software $ 231,231 $ 221,429 Furniture and fixtures 10,241 10,238 Leasehold improvements 19,432 19,453 Property and equipment 260,904 251,120 Less accumulated depreciation (210,698) (203,046) Property and equipment, net $ 50,206 $ 48,074 |
Goodwill and Intangible Assets
Goodwill and Intangible Assets (Tables) | 3 Months Ended |
Mar. 31, 2022 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Schedule of Changes in Goodwill | The following table summarizes the changes in the carrying value of the Company’s goodwill balance during the three months ended March 31, 2022 (in thousands): Goodwill Balance as of December 31, 2021 $ 219,816 Foreign currency translation adjustment (640) Balance as of March 31, 2022 $ 219,176 |
Schedule of Intangible Assets | Intangible assets, all of which are subject to amortization, consisted of the following as of March 31, 2022 and December 31, 2021 (in thousands): As of March 31, 2022 As of December 31, 2021 Gross Accumulated Net Weighted Gross Accumulated Net Amortizing intangible assets: Customer relationships $ 55,109 $ (14,821) $ 40,288 11 $ 55,542 $ (13,906) $ 41,636 Trade name 11,656 (6,835) 4,821 8 11,787 (6,805) 4,982 Developed technology 67,438 (18,657) 48,781 4 67,940 (14,214) 53,726 Contributor content 38,593 (15,747) 22,846 8 37,984 (14,632) 23,352 Patents 259 (136) 123 18 259 (133) 126 Total $ 173,055 $ (56,196) $ 116,859 $ 173,512 $ (49,690) $ 123,822 |
Accrued Expenses (Tables)
Accrued Expenses (Tables) | 3 Months Ended |
Mar. 31, 2022 | |
Payables and Accruals [Abstract] | |
Schedule of Accrued Expenses | Accrued expenses consisted of the following (in thousands): As of March 31, 2022 As of December 31, 2021 Compensation $ 23,444 $ 43,529 Non-income taxes 20,557 21,488 Website hosting and marketing fees 14,977 18,314 Other expenses 15,153 16,198 Total accrued expenses $ 74,131 $ 99,529 |
Stockholders_ Equity and Equi_2
Stockholders’ Equity and Equity-Based Compensation (Tables) | 3 Months Ended |
Mar. 31, 2022 | |
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 months ended March 31, 2022 and 2021 (in thousands): Three Months Ended March 31, 2022 2021 Cost of revenue $ 78 $ 164 Sales and marketing 928 467 Product development 1,781 1,229 General and administrative 5,039 6,350 Total $ 7,826 $ 8,210 The following table summarizes non-cash equity-based compensation expense, net of forfeitures, by award type included in the accompanying Consolidated Statements of Operations for the three months ended March 31, 2022 and 2021 (in thousands): Three Months Ended March 31, 2022 2021 Stock options $ 175 $ 175 RSUs 7,651 8,035 Total $ 7,826 $ 8,210 |
Revenue (Tables)
Revenue (Tables) | 3 Months Ended |
Mar. 31, 2022 | |
Revenue from Contract with Customer [Abstract] | |
Disaggregation of Revenue | The Company’s revenues by distribution channel for the three months ended March 31, 2022 and 2021 are as follows (in thousands): Three Months Ended March 31, 2022 2021 E-commerce $ 127,070 $ 118,400 Enterprise 72,062 64,881 Total Revenues $ 199,132 $ 183,281 |
Other Income _ (Expense), net (
Other Income / (Expense), net (Tables) | 3 Months Ended |
Mar. 31, 2022 | |
Other Nonoperating Income (Expense) [Abstract] | |
Summary of the Company's Other (Expense) Income, Net Activity | The following table presents a summary of the Company’s other income and expense activity included in the accompanying Consolidated Statements of Operations for the three months ended March 31, 2022 and 2021 (in thousands): Three Months Ended March 31, 2022 2021 Foreign currency gain / (loss) $ 734 $ (2,510) Interest income, net 24 48 Total other income / (expense) $ 758 $ (2,462) |
Net Income Per Share (Tables)
Net Income Per Share (Tables) | 3 Months Ended |
Mar. 31, 2022 | |
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 months ended March 31, 2022 and 2021 (in thousands): Three Months Ended March 31, 2022 2021 Net income $ 26,572 $ 29,514 Shares used to compute basic net income per share 36,303 36,336 Dilutive potential common shares Stock options 233 224 Unvested restricted stock awards 668 689 Shares used to compute diluted net income per share 37,204 37,249 Basic net income per share $ 0.73 $ 0.81 Diluted net income per share $ 0.71 $ 0.79 Dilutive shares included in the calculation 1,409 1,436 Anti-dilutive shares excluded from the calculation 56 18 |
Geographic Information (Tables)
Geographic Information (Tables) | 3 Months Ended |
Mar. 31, 2022 | |
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 March 31, 2022 2021 North America $ 79,943 $ 64,309 Europe 62,553 62,277 Rest of the world 56,636 56,695 Total revenue $ 199,132 $ 183,281 |
Long-lived Assets by Geographic Areas | The Company’s long-lived tangible assets were located as follows (in thousands): As of March 31, As of December 31, 2022 2021 North America $ 41,946 $ 40,465 Europe 8,142 7,460 Rest of the world 118 149 Total long-lived tangible assets $ 50,206 $ 48,074 |
Summary of Operations and Sig_3
Summary of Operations and Significant Accounting Policies - Allowance for Doubtful Accounts and Chargeback and Sales Refund Allowance (Details) - USD ($) $ in Thousands | 3 Months Ended | ||
Mar. 31, 2022 | Mar. 31, 2021 | Dec. 31, 2021 | |
Accounting Policies [Abstract] | |||
Bad debt expense | $ 361 | $ 526 | |
Allowance for doubtful accounts | 2,125 | $ 1,910 | |
Chargeback and sales refund allowances | $ 400 | $ 400 |
Fair Value Measurements and Oth
Fair Value Measurements and Other Long-term Investments (Details) - USD ($) $ in Millions | Mar. 31, 2022 | Dec. 31, 2021 |
Fair Value Disclosures [Abstract] | ||
Cash equivalents | $ 145.1 | $ 195.1 |
Long-term investments | $ 20 | $ 20 |
Acquisitions - Narrative (Detai
Acquisitions - Narrative (Details) $ in Millions | Feb. 01, 2021USD ($) |
Customer relationships | |
Business Acquisition [Line Items] | |
Estimated useful life | 12 years |
Developed technology | |
Business Acquisition [Line Items] | |
Estimated useful life | 4 years 8 months 12 days |
Trade name | |
Business Acquisition [Line Items] | |
Estimated useful life | 10 years |
Contributor content | |
Business Acquisition [Line Items] | |
Estimated useful life | 4 years |
TurboSquid, Inc. | |
Business Acquisition [Line Items] | |
Purchase price | $ 77.3 |
Transaction costs | $ 1.6 |
Acquisitions - Schedule of Acqu
Acquisitions - Schedule of Acquisitions (Details) - USD ($) $ in Thousands | Mar. 31, 2022 | Dec. 31, 2021 | Feb. 01, 2021 |
Assets acquired and liabilities assumed (in thousands): | |||
Goodwill | $ 219,176 | $ 219,816 | |
TurboSquid, Inc. | |||
Assets acquired and liabilities assumed (in thousands): | |||
Cash and cash equivalents | $ 5,165 | ||
Other assets | 1,553 | ||
Property and equipment | 472 | ||
Intangible assets | 21,500 | ||
Goodwill | 59,491 | ||
Total assets acquired | 88,181 | ||
Accounts payable, accrued expenses and other liabilities | (4,685) | ||
Contributor royalties payable | (2,243) | ||
Deferred tax liability | (3,923) | ||
Total liabilities assumed | (10,851) | ||
Net assets acquired | 77,330 | ||
TurboSquid, Inc. | Customer relationships | |||
Assets acquired and liabilities assumed (in thousands): | |||
Intangible assets | 9,000 | ||
TurboSquid, Inc. | Trade name | |||
Assets acquired and liabilities assumed (in thousands): | |||
Intangible assets | 2,200 | ||
TurboSquid, Inc. | Developed technology | |||
Assets acquired and liabilities assumed (in thousands): | |||
Intangible assets | 7,800 | ||
TurboSquid, Inc. | Contributor content | |||
Assets acquired and liabilities assumed (in thousands): | |||
Intangible assets | $ 2,500 |
Acquisitions - Pro Forma (Detai
Acquisitions - Pro Forma (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2022 | Mar. 31, 2021 | |
Business Acquisition [Line Items] | ||
Revenue - As Reported | $ 199,132 | $ 183,281 |
Income before income taxes - As Reported | $ 32,676 | 35,656 |
TurboSquid, Inc. | ||
Business Acquisition [Line Items] | ||
Revenue - As Reported | 183,281 | |
Revenue - Pro Forma | 185,344 | |
Income before income taxes - As Reported | 35,656 | |
Income before income taxes - Pro Forma | $ 36,957 |
Property and Equipment (Details
Property and Equipment (Details) - USD ($) $ in Thousands | 3 Months Ended | ||
Mar. 31, 2022 | Mar. 31, 2021 | Dec. 31, 2021 | |
Property and Equipment | |||
Property and equipment | $ 260,904 | $ 251,120 | |
Less accumulated depreciation | (210,698) | (203,046) | |
Property and equipment, net | 50,206 | 48,074 | |
Capitalized amount | 9,500 | $ 7,000 | |
Amortization expense | 6,900 | 6,700 | |
Internal use software | 41,600 | 39,000 | |
Computer equipment and software | |||
Property and Equipment | |||
Property and equipment | 231,231 | 221,429 | |
Furniture and fixtures | |||
Property and Equipment | |||
Property and equipment | 10,241 | 10,238 | |
Leasehold improvements | |||
Property and Equipment | |||
Property and equipment | 19,432 | $ 19,453 | |
Property And Equipment | |||
Property and Equipment | |||
Depreciation | 8,000 | 8,000 | |
Cost of revenue | |||
Property and Equipment | |||
Depreciation | 7,200 | 7,100 | |
Selling, General and Administrative Expenses | |||
Property and Equipment | |||
Depreciation | $ 800 | $ 900 |
Goodwill and Intangible Asset_2
Goodwill and Intangible Assets - Changes in Goodwill (Details) $ in Thousands | 3 Months Ended |
Mar. 31, 2022USD ($) | |
Changes in goodwill | |
Balance at the beginning of the period | $ 219,816 |
Foreign currency translation adjustment | (640) |
Balance at the end of the period | $ 219,176 |
Goodwill and Intangible Asset_3
Goodwill and Intangible Assets - Intangible Assets (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2022 | Dec. 31, 2021 | |
Amortizing intangible assets | ||
Gross Carrying Amount | $ 173,055 | $ 173,512 |
Accumulated Amortization | (56,196) | (49,690) |
Net Carrying Amount | 116,859 | 123,822 |
Customer relationships | ||
Amortizing intangible assets | ||
Gross Carrying Amount | 55,109 | 55,542 |
Accumulated Amortization | (14,821) | (13,906) |
Net Carrying Amount | $ 40,288 | 41,636 |
Weighted Average Life (Years) | 11 years | |
Trade name | ||
Amortizing intangible assets | ||
Gross Carrying Amount | $ 11,656 | 11,787 |
Accumulated Amortization | (6,835) | (6,805) |
Net Carrying Amount | $ 4,821 | 4,982 |
Weighted Average Life (Years) | 8 years | |
Developed technology | ||
Amortizing intangible assets | ||
Gross Carrying Amount | $ 67,438 | 67,940 |
Accumulated Amortization | (18,657) | (14,214) |
Net Carrying Amount | $ 48,781 | 53,726 |
Weighted Average Life (Years) | 4 years | |
Contributor content | ||
Amortizing intangible assets | ||
Gross Carrying Amount | $ 38,593 | 37,984 |
Accumulated Amortization | (15,747) | (14,632) |
Net Carrying Amount | $ 22,846 | 23,352 |
Weighted Average Life (Years) | 8 years | |
Patents | ||
Amortizing intangible assets | ||
Gross Carrying Amount | $ 259 | 259 |
Accumulated Amortization | (136) | (133) |
Net Carrying Amount | $ 123 | $ 126 |
Weighted Average Life (Years) | 18 years |
Goodwill and Intangible Asset_4
Goodwill and Intangible Assets - Narrative (Details) - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2022 | Mar. 31, 2021 | |
Amortizing intangible assets | ||
Amortization expense | $ 7.1 | $ 2.1 |
Remainder of 2022 | 21.2 | |
2023 | 27.9 | |
2024 | 20.9 | |
2025 | 10.3 | |
2026 | 8.3 | |
2027 | 6.1 | |
Thereafter | 22.2 | |
Cost of revenue | ||
Amortizing intangible assets | ||
Amortization expense | 6.5 | 1.2 |
Selling, General and Administrative Expenses | ||
Amortizing intangible assets | ||
Amortization expense | $ 0.6 | $ 0.9 |
Accrued Expenses (Details)
Accrued Expenses (Details) - USD ($) $ in Thousands | Mar. 31, 2022 | Dec. 31, 2021 |
Payables and Accruals [Abstract] | ||
Compensation | $ 23,444 | $ 43,529 |
Non-income taxes | 20,557 | 21,488 |
Website hosting and marketing fees | 14,977 | 18,314 |
Other expenses | 15,153 | 16,198 |
Total accrued expenses | $ 74,131 | $ 99,529 |
Stockholders_ Equity and Equi_3
Stockholders’ Equity and Equity-Based Compensation - Narrative (Details) - USD ($) | Apr. 19, 2022 | Apr. 01, 2022 | Mar. 31, 2022 | Mar. 31, 2021 | Feb. 28, 2017 | Oct. 31, 2015 |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||
Shares issued (in shares) | 143,000 | 207,000 | ||||
Payment of cash dividend (in dollars per share) | $ 0.24 | $ 0.21 | ||||
Cash dividend paid | $ 8,700,000 | $ 7,600,000 | ||||
Value of shares withheld | $ 18,496,000 | $ 13,034,000 | ||||
Subsequent Event | ||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||
Quarterly cash dividend, declared (in usd per share) | $ 0.24 | |||||
Common Stock | ||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||
Authorized purchase amount (up to) | $ 100,000,000 | $ 100,000,000 | ||||
Repurchase of treasury shares (in shares) | 422,000 | 0 | ||||
Shares repurchased, average per share cost (in dollars per share) | $ 90.69 | |||||
Value remaining for repurchase | $ 34,600,000 | |||||
Stock options | ||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||
Options granted (in shares) | 0 | |||||
Options vested and exercisable (in shares) | 333,000 | |||||
Options vested and exercisable, weighted average exercise price (in dollars per share) | $ 34.68 | |||||
Unrecognized compensation charge | $ 700,000 | |||||
RSUs | ||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||
Number of shares granted (in shares) | 116,000 | |||||
Nonvested shares outstanding (in shares) | 1,035,000 | |||||
Weighted average grant-date fair value (in usd per share) | $ 66.61 | |||||
Unrecognized non-cash equity-based compensation charge | $ 36,000,000 | |||||
Value of shares withheld | $ 10,600,000 | $ 13,000,000 | ||||
RSUs | Subsequent Event | ||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||
Number of shares granted (in shares) | 591,000 | |||||
Grant date fair value | $ 54,100,000 |
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 | |
Mar. 31, 2022 | Mar. 31, 2021 | |
Non-cash equity-based compensation expense | ||
Non-cash equity-based compensation | $ 7,826 | $ 8,210 |
Stock options | ||
Non-cash equity-based compensation expense | ||
Non-cash equity-based compensation | 175 | 175 |
RSUs | ||
Non-cash equity-based compensation expense | ||
Non-cash equity-based compensation | 7,651 | 8,035 |
Cost of revenue | ||
Non-cash equity-based compensation expense | ||
Non-cash equity-based compensation | 78 | 164 |
Sales and marketing | ||
Non-cash equity-based compensation expense | ||
Non-cash equity-based compensation | 928 | 467 |
Product development | ||
Non-cash equity-based compensation expense | ||
Non-cash equity-based compensation | 1,781 | 1,229 |
General and administrative | ||
Non-cash equity-based compensation expense | ||
Non-cash equity-based compensation | $ 5,039 | $ 6,350 |
Revenue (Details)
Revenue (Details) $ in Thousands | 3 Months Ended | |
Mar. 31, 2022USD ($)channel | Mar. 31, 2021USD ($) | |
Segment Reporting Information [Line Items] | ||
Number of primary channels for content offerings | channel | 2 | |
Total revenue | $ 199,132 | $ 183,281 |
Disposal group deferred revenue | 82,600 | |
E-commerce | ||
Segment Reporting Information [Line Items] | ||
Total revenue | 127,070 | 118,400 |
Enterprise | ||
Segment Reporting Information [Line Items] | ||
Total revenue | $ 72,062 | $ 64,881 |
Other Income _ (Expense), net_2
Other Income / (Expense), net (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2022 | Mar. 31, 2021 | |
Other Nonoperating Income (Expense) [Abstract] | ||
Foreign currency gain / (loss) | $ 734 | $ (2,510) |
Interest income, net | 24 | 48 |
Total other income / (expense) | $ 758 | $ (2,462) |
Income Taxes (Details)
Income Taxes (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2022 | Mar. 31, 2021 | |
Income Tax Disclosure [Abstract] | ||
Effective tax rate, expense | 18.70% | 17.20% |
Effective tax rate increase (decrease) due to windfall tax benefits associated with equity-based compensation | 0.20% | |
Effective tax rate, excluding discrete items | 18.90% | 19.00% |
Decrease in effective tax rate, loss jurisdiction | 1.80% | |
Cash paid for income taxes | $ 1,666 | $ 3,363 |
Net Income Per Share (Details)
Net Income Per Share (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands | 3 Months Ended | |
Mar. 31, 2022 | Mar. 31, 2021 | |
Earnings Per Share [Abstract] | ||
Net income | $ 26,572 | $ 29,514 |
Shares used to compute basic net income per share (in shares) | 36,303 | 36,336 |
Dilutive potential common shares | ||
Stock options (in shares) | 233 | 224 |
Unvested restricted stock awards (in shares) | 668 | 689 |
Shares used to compute diluted net income per share (in shares) | 37,204 | 37,249 |
Basic net income per share (in dollars per share) | $ 0.73 | $ 0.81 |
Diluted net income per share (in dollars per share) | $ 0.71 | $ 0.79 |
Dilutive securities included in the calculation (in shares) | 1,409 | 1,436 |
Anti-dilutive securities excluded from the calculation (in shares) | 56 | 18 |
Geographic Information (Details
Geographic Information (Details) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended | |
Mar. 31, 2022 | Mar. 31, 2021 | Dec. 31, 2021 | |
Geographic revenue based on customer location and long-lived tangible assets | |||
Revenue | $ 199,132 | $ 183,281 | |
Total long-lived tangible assets | 50,206 | $ 48,074 | |
North America | |||
Geographic revenue based on customer location and long-lived tangible assets | |||
Revenue | 79,943 | $ 64,309 | |
Total long-lived tangible assets | $ 41,946 | $ 40,465 | |
United States | Revenue benchmark | Geographic concentration | |||
Geographic revenue based on customer location and long-lived tangible assets | |||
Concentration risk percentage | 37.00% | 32.00% | |
United States | Total long-lived tangible assets | Geographic concentration | |||
Geographic revenue based on customer location and long-lived tangible assets | |||
Concentration risk percentage | 76.00% | 76.00% | |
Europe | |||
Geographic revenue based on customer location and long-lived tangible assets | |||
Revenue | $ 62,553 | $ 62,277 | |
Total long-lived tangible assets | $ 8,142 | $ 7,460 | |
IRELAND | Total long-lived tangible assets | Geographic concentration | |||
Geographic revenue based on customer location and long-lived tangible assets | |||
Concentration risk percentage | 12.00% | 11.00% | |
Rest of the world | |||
Geographic revenue based on customer location and long-lived tangible assets | |||
Revenue | $ 56,636 | $ 56,695 | |
Total long-lived tangible assets | $ 118 | $ 149 |
Commitments and Contingencies -
Commitments and Contingencies - Narrative (Details) | Mar. 31, 2022USD ($) |
Other Commitments [Line Items] | |
Other obligations | $ 110,300,000 |
Maturity of unconditional purchase obligations | |
Remainder of 2022 | 44,300,000 |
2023 | 35,400,000 |
2024 | 26,300,000 |
2025 | 4,000,000 |
2026 | 300,000 |
Indemnification Agreement | |
Indemnifications | |
Maximum possible loss per customer | $ 10,000 |