Document_and_Entity_Informatio
Document and Entity Information | 6 Months Ended | |
Jun. 30, 2014 | Aug. 21, 2014 | |
Document And Entity Information Abstract | ' | ' |
Entity Registrant Name | 'RIGHTSIDE GROUP, LTD. | ' |
Entity Central Index Key | '0001589094 | ' |
Document Type | '10-Q | ' |
Document Period End Date | 30-Jun-14 | ' |
Amendment Flag | 'false | ' |
Current Fiscal Year End Date | '--12-31 | ' |
Entity Current Reporting Status | 'No | ' |
Entity Filer Category | 'Non-accelerated Filer | ' |
Entity Common Stock, Shares Outstanding | ' | 18,414,101 |
Document Fiscal Year Focus | '2014 | ' |
Document Fiscal Period Focus | 'Q2 | ' |
Balance_Sheets
Balance Sheets (USD $) | Jun. 30, 2014 | Dec. 31, 2013 |
In Thousands, unless otherwise specified | ||
Current assets | ' | ' |
Cash and cash equivalents | $51,916 | $66,833 |
Accounts receivable, net | 10,533 | 9,176 |
Prepaid expenses and other current assets | 4,124 | 4,395 |
Deferred registration costs | 73,708 | 66,273 |
Total current assets | 140,281 | 146,677 |
Deferred registration costs, less current portion | 14,037 | 12,514 |
Property and equipment, net | 12,788 | 14,456 |
Intangible assets, net | 22,149 | 15,268 |
Goodwill | 103,042 | 103,042 |
Deferred tax assets | 4,777 | 6,314 |
Deposits for gTLD applications | 23,343 | 21,252 |
Other assets | 1,710 | 1,998 |
Total assets | 322,127 | 321,521 |
Current liabilities | ' | ' |
Accounts payable | 6,267 | 7,585 |
Accrued expenses and other current liabilities | 20,133 | 18,787 |
Deferred tax liabilities | 23,828 | 24,157 |
Deferred revenue | 91,319 | 80,999 |
Total current liabilities | 141,547 | 131,528 |
Deferred revenue, less current portion | 18,428 | 16,544 |
Other liabilities | 1,058 | 693 |
Commitments and contingencies (Note 7) | ' | ' |
Equity | ' | ' |
Accumulated other comprehensive income | ' | 577 |
Parent company investment | 161,094 | 172,179 |
Total equity | 161,094 | 172,756 |
Total liabilities and equity | $322,127 | $321,521 |
Statements_of_Operations
Statements of Operations (USD $) | 3 Months Ended | 6 Months Ended | ||
In Thousands, except Per Share data, unless otherwise specified | Jun. 30, 2014 | Jun. 30, 2013 | Jun. 30, 2014 | Jun. 30, 2013 |
Income Statement [Abstract] | ' | ' | ' | ' |
Revenue | $46,689 | $48,217 | $91,241 | $94,114 |
Service costs (Exclusive of amortization of intangible assets shown separately below) | 39,796 | 35,793 | 78,062 | 71,429 |
Sales and marketing | 2,201 | 2,861 | 4,971 | 5,364 |
Product development | 3,041 | 2,682 | 6,925 | 5,245 |
General and administrative | 5,489 | 6,540 | 12,179 | 12,049 |
Amortization of intangible assets | 1,908 | 2,191 | 3,599 | 4,216 |
Gain on other assets, net | -885 | -1,229 | -5,745 | -1,229 |
Other (income) expense, net | 35 | 20 | -1,297 | 19 |
Loss before income taxes | -4,896 | -641 | -7,453 | -2,979 |
Income tax benefit (expense) | 1,406 | -40 | 42 | 564 |
Net loss | ($3,490) | ($681) | ($7,411) | ($2,415) |
Basic and diluted earnings per share | ($0.19) | ($0.04) | ($0.40) | ($0.13) |
Basic and diluted average shares outstanding | 18,413 | 18,413 | 18,413 | 18,413 |
Statements_of_Comprehensive_Lo
Statements of Comprehensive Loss (USD $) | 3 Months Ended | 6 Months Ended | ||
In Thousands, unless otherwise specified | Jun. 30, 2014 | Jun. 30, 2013 | Jun. 30, 2014 | Jun. 30, 2013 |
Statement of Comprehensive Income [Abstract] | ' | ' | ' | ' |
Net loss | ($3,490) | ($681) | ($7,411) | ($2,415) |
Other comprehensive loss: | ' | ' | ' | ' |
Realized gain on available for sale securities, net of tax expense of ($329) | ' | ' | -577 | ' |
Comprehensive loss | ($3,490) | ($681) | ($7,988) | ($2,415) |
Statements_of_Comprehensive_Lo1
Statements of Comprehensive Loss (Parenthetical) (USD $) | 6 Months Ended |
In Thousands, unless otherwise specified | Jun. 30, 2014 |
Statement of Comprehensive Income [Abstract] | ' |
Tax expense of realized gain on available for sale securities | ($329) |
Statement_of_Equity
Statement of Equity (USD $) | Parent company investment | Accumulated other comprehensive income (loss) | Total |
In Thousands | |||
Balance at the beginning of the period at Dec. 31, 2013 | $172,179 | $577 | $172,756 |
Realized gain on available for sale securities | ' | -577 | -577 |
Net decrease in parent company investment | -3,674 | ' | -3,674 |
Net loss | -7,411 | ' | -7,411 |
Balance at the end of the period at Jun. 30, 2014 | $161,094 | ' | $161,094 |
Statements_of_Cash_Flows
Statements of Cash Flows (USD $) | 6 Months Ended | |
In Thousands, unless otherwise specified | Jun. 30, 2014 | Jun. 30, 2013 |
Cash flows from operating activities | ' | ' |
Net loss | ($7,411) | ($2,415) |
Adjustments to reconcile net loss to net cash (used in) provided by operating activities: | ' | ' |
Depreciation and amortization | 7,940 | 7,488 |
Deferred income taxes | 1,537 | -569 |
Stockbbased compensation | 3,271 | 4,767 |
Gain on gTLD application withdrawals, net | -5,745 | -1,229 |
Gain on sale of marketable securities | -1,362 | ' |
Other | -271 | -584 |
Change in operating assets and liabilities: | ' | ' |
Accounts receivable, net | -885 | 1,336 |
Prepaid expenses and other current assets | -201 | -909 |
Deferred registration costs | -8,958 | -6,937 |
Deposits with registries | 294 | -647 |
Other longbterm assets | -1,024 | -1,319 |
Accounts payable | -1,318 | 1,370 |
Accrued expenses and other liabilities | 1,812 | -1,777 |
Deferred revenue | 12,204 | 8,882 |
Net cash (used in) provided by operating activities | -117 | 7,457 |
Cash flows from investing activities | ' | ' |
Purchases of property and equipment | -2,499 | -5,271 |
Purchases of intangible assets | -1,023 | -1,657 |
Payments for gTLD applications, net | -11,450 | ' |
Proceeds from gTLD withdrawals, net | 6,105 | 1,384 |
Change in restricted cash | -345 | ' |
Proceeds from sale of marketable securities | 1,362 | ' |
Other | 270 | 610 |
Net cash used in investing activities | -7,580 | -4,934 |
Cash flows from financing activities | ' | ' |
Principal payments on capital lease obligations | -101 | -107 |
Net (decrease) increase in parent company investment | -7,119 | 5,190 |
Net cash (used in) provided by financing activities | -7,220 | 5,083 |
Change in cash and cash equivalents | -14,917 | 7,606 |
Cash and cash equivalents, beginning of period | 66,833 | 40,593 |
Cash and cash equivalents, end of period | $51,916 | $48,199 |
Company_Background_and_Basis_o
Company Background and Basis of Presentation | 6 Months Ended | |||
Jun. 30, 2014 | ||||
Organization, Consolidation and Presentation of Financial Statements [Abstract] | ' | |||
Organization, Consolidation and Presentation of Financial Statements Disclosure [Text Block] | ' | |||
1. Company Background and Basis of Presentation | ||||
In February 2013, Demand Media, Inc. (“Demand Media”) announced that its board of directors authorized Demand Media to pursue the separation of its business into two distinct publicly traded entities: a new company named Rightside Group, Ltd. (“Rightside,” the “Company,” “our,” “we,” or “us”) focused on domain name services, and Demand Media, a digital media company. On August 1, 2014, Demand Media consummated a tax free distribution of all of the outstanding shares of our common stock on a pro rata basis to Demand Media stockholders (the “separation” or the “spin‑off”) as of the record date. After the spin‑off, we began operating as an independent, publicly traded company. | ||||
We were incorporated on July 11, 2013 as a direct, wholly owned subsidiary of Demand Media, a New York Stock Exchange (“NYSE”) listed company that, prior to the spin-off, was a diversified digital media and domain name services company. During the periods presented, Demand Media owned all of the outstanding shares of our capital stock. We have one class of common stock issued and outstanding, and no preferred stock is outstanding. During the periods presented, we did not have any material assets or liabilities, nor did we engage in any business or other activities, other than in connection with the spin‑off. In connection with the spin‑off, Demand Media contributed or transferred certain of the subsidiaries and assets relating to Demand Media’s domain name services business to us, and we or our subsidiaries assumed all of the liabilities relating to Demand Media’s domain name services business. | ||||
We provide domain name registration and related value‑added service subscriptions to third parties through our wholly owned subsidiaries, eNom, Incorporated (“eNom”) and Name.com. We are also a significant participant in the Internet Corporation for Assigned Names and Numbers’ (“ICANN”) substantial expansion of the number of available generic Top Level Domain (“gTLDs”), with the first gTLDs delegated in October 2013 (“New gTLD Program”). As part of the New gTLD Program, our domain name services business entered into its first registry operator agreements with ICANN becoming an accredited registry for new gTLDs, and eNom and Name.com also entered into contracts necessary to participate in the New gTLD Program. We began to provide back‑end domain name registry and related services for gTLDs owned by a third‑party domain name registry and we have operations for our own gTLDs. | ||||
Basis of Presentation | ||||
These condensed combined financial statements have been prepared on a stand‑alone basis and are derived from the condensed consolidated financial statements and accounting records of Demand Media. The condensed combined financial statements reflect our financial position, results of operations, equity and cash flows as a separate company and have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”). We reclassified our Statement of Operations to reflect a single‑step presentation. This reclassification was applied to all periods presented on a consistent basis. | ||||
On August 1, 2014, the 1,000 shares of the Company’s common stock, par value $0.0001 per share, issued and outstanding immediately prior to the separation from Demand Media, Inc. were automatically reclassified as and became 18,412,985 shares of common stock, par value $0.0001 per share. Basic and diluted earnings per share and the weighted average number of shares outstanding were retrospectively restated adjusting for such reclassification. | ||||
The accompanying condensed combined financial statements include eNom, Hot Media, Inc. and their respective subsidiaries as well as six international Demand Media subsidiaries. Rightside represented the domestic and international operations associated with Demand Media’s domain name services business. | ||||
Our condensed combined financial statements assume the allocation to us of certain Demand Media corporate expenses relating to Rightside (refer to Note 12—Transactions with Related Parties and Parent Company Investment for further information). The accounting for income taxes is computed for our company on a separate tax return basis (refer to Note 8—Income Taxes for further information). | ||||
All significant intercompany accounts and transactions, other than those with Demand Media, have been eliminated in preparing the combined financial statements. All transactions between us and Demand Media have been included in these combined financial statements and are deemed to be settled. The total net effect of the settlement of these transactions is reflected in the combined statements of cash flow as a financing activity and in the combined balance sheets as “Parent company investment.” Parent company investment in the condensed combined balance sheets represents Demand Media’s historical investment in our company, the net effect of cost allocations from transactions with Demand Media and our accumulated earnings. | ||||
The condensed financial statements include expense allocations for certain: | ||||
· | corporate functions historically provided by Demand Media, including, but not limited to, finance, legal, information technology, human resources, communications, compliance, and other shared services; | |||
· | employee benefits and incentives; and | |||
· | stock‑based compensation. | |||
These expenses have been allocated to us on a direct basis when identifiable, with the remainder allocated on a pro rata basis calculated as a percentage of our revenue, headcount or expenses to Demand Media’s consolidated results. We consider the basis on which these expenses were allocated to be a reasonable reflection of the utilization of services provided to or the benefit received by us during the periods presented. The allocations do not, however, reflect the expense that we would have incurred as an independent company for the periods presented. Actual costs that may have been incurred if we had been a stand‑alone company would depend on a number of factors, including, but not limited to, the chosen organizational structure, the costs of being a stand‑alone publicly traded company, what functions were outsourced or performed by employees and strategic decisions made in areas such as information technology and infrastructure. Following our separation from Demand Media, we will perform these functions using our own resources and purchased services. For an interim period, however, some of these functions will continue to be provided by Demand Media under a transition services agreement, which are planned to extend for a period up to 18 months. Costs incurred by Demand Media to complete the spin‑off were not allocated to us. | ||||
The condensed combined financial statements include certain assets and liabilities that have historically been held at the Demand Media corporate level but are specifically identifiable or otherwise allocable to us. | ||||
The accompanying interim condensed combined balance sheet at June 30, 2014, the condensed combined statements of operations and condensed combined statements of comprehensive income (loss) for the three and six month periods ended June 30, 2014 and 2013, the condensed combined statements of cash flows for the six month periods ended June 30, 2014 and 2013 and the condensed combined statement of stockholders’ equity for the six month period ended June 30, 2014 are unaudited. | ||||
In the opinion of management, the unaudited interim condensed combined financial statements have been prepared on the same basis as the audited combined financial statements and include all adjustments, which include only normal recurring adjustments, necessary for the fair statement of our statement of financial position as of June 30, 2014 and our results of operations for the three and six month periods ended June 30, 2014 and 2013 and our cash flows for the six month periods ended June 30, 2014 and 2013. The results for the three and six month period ended June 30, 2014 are not necessarily indicative of the results expected for the full year. The condensed combined balance sheet as of December 31, 2013 has been derived from our audited combined financial statements for the year ended December 31, 2013 included in our Form 10 as filed with the SEC on July 14, 2014. | ||||
The interim unaudited condensed combined financial statements have been prepared in accordance with GAAP, for interim financial information. They do not include all of the information and footnotes required by GAAP for complete financial statements. Therefore, these financial statements should be read in conjunction with our audited combined financial statements and notes thereto included elsewhere in our Form 10 as filed with the SEC on July 14, 2014. | ||||
Summary_of_Significant_Account
Summary of Significant Accounting Policies | 6 Months Ended |
Jun. 30, 2014 | |
Accounting Policies [Abstract] | ' |
Summary of Significant Accounting Policies | ' |
2. Summary of Significant Accounting Policies | |
Refer to our audited combined financial statements included in our Form 10 as filed with the SEC on July 14, 2014 for a complete discussion of all significant accounting policies. | |
Recent Accounting Pronouncements | |
In February 2013, the FASB issued ASU 2013-2, Comprehensive Income (Topic 220): Reporting of Amounts Reclassified out of Accumulated Other Comprehensive Income (ASU 2013-2), to improve the reporting of reclassifications out of accumulated other comprehensive income. ASU 2013-2 requires presentation, either on the face of the financial statements or in the notes, of amounts reclassified out of accumulated other comprehensive income by component and by net income line item. ASU 2013-2 is effective prospectively for fiscal years, and interim periods within those years, beginning after December 15, 2012. We adopted ASU 2013-2 in the first quarter of fiscal 2014. The adoption of ASU 2013-2 did not have a significant impact on our condensed combined financial statements, but did require additional disclosures. | |
In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers (ASU 2014-09). ASU 2014-09 outlines a new, single comprehensive model for entities to use in accounting for revenue arising from contracts with customers and supersedes most current revenue recognition guidance, including industry-specific guidance. The new model will require revenue recognition to depict the transfer of promised goods or services to customers in an amount that reflects the consideration a company expects to receive in exchange for those goods or services. The amendments in ASU 2014-09 are effective for annual reporting periods beginning after December 15, 2016, including interim periods within that reporting period and early adoption is not permitted. The standard can be applied either retrospectively to each period presented or as a cumulative-effect adjustment as of the date of adoption. We are currently assessing the impact that this updated standard will have on our condensed combined financial statements and footnote disclosures. | |
In June 2014, the FASB issued ASU 2014-12, Compensation - Stock Compensation (Topic 718): Accounting for Share-Based Payments When the Terms of an Award Provide that a Performance Target Could be Achieved after the Requisite Service Period (ASU 2014-12), which requires that a performance target that affects vesting, and that could be achieved after the requisite service period, be treated as a performance condition. As such, the performance target should not be reflected in estimating the grant date fair value of the award. This update further clarifies that compensation cost should be recognized in the period in which it becomes probable that the performance target will be achieved and should represent the compensation cost attributable to the period(s) for which the requisite service has already been rendered. The new standard is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2015. Early adoption is permitted. We do not anticipate that the adoption of this standard will have a material impact on our condensed combined financial statements. | |
Property_and_Equipment
Property and Equipment | 6 Months Ended | ||||||||||||
Jun. 30, 2014 | |||||||||||||
Property, Plant and Equipment [Abstract] | ' | ||||||||||||
Property and Equipment | ' | ||||||||||||
3. Property and Equipment | |||||||||||||
Property and equipment consisted of the following (in thousands): | |||||||||||||
June 30, | December 31, | ||||||||||||
2014 | 2013 | ||||||||||||
Computers and other related equipment | $ | 19,513 | $ | 19,180 | |||||||||
Purchased and internally developed software | 20,985 | 19,546 | |||||||||||
Furniture and fixtures | 800 | 775 | |||||||||||
Leasehold improvements | 1,287 | 1,278 | |||||||||||
42,585 | 40,779 | ||||||||||||
Less accumulated depreciation | -29,797 | -26,323 | |||||||||||
Property and equipment, net | $ | 12,788 | $ | 14,456 | |||||||||
Depreciation and software amortization expense, which includes acceleration of depreciation, as a result of the shortening of the estimated useful lives for certain assets, which was immaterial for the three months ended June 30, 2014 and 2013, and $0.8 million for the six months ended June 30, 2014 and 2013, respectively, and is shown by classification below (in thousands): | |||||||||||||
Three months ended | Six months ended | ||||||||||||
June 30, | June 30, | ||||||||||||
2014 | 2013 | 2014 | 2013 | ||||||||||
Service costs | $ | 1,294 | $ | 1,363 | $ | 3,199 | $ | 2,644 | |||||
Sales and marketing | 17 | 26 | 35 | 53 | |||||||||
Product development | 43 | 45 | 82 | 92 | |||||||||
General and administrative | 452 | 247 | 1,025 | 484 | |||||||||
Total depreciation and amortization | $ | 1,806 | $ | 1,681 | $ | 4,341 | $ | 3,273 | |||||
Intangible_Assets
Intangible Assets | 6 Months Ended | ||||||||||||
Jun. 30, 2014 | |||||||||||||
Intangible Assets, Net (Excluding Goodwill) [Abstract] | ' | ||||||||||||
Intangible Assets | ' | ||||||||||||
4. Intangible Assets | |||||||||||||
Intangible assets consisted of the following (in thousands): | |||||||||||||
June 30, 2014 | |||||||||||||
Gross | |||||||||||||
carrying | Accumulated | ||||||||||||
amount | amortization | Net | |||||||||||
Owned website names | $ | 17,565 | $ | -11,278 | $ | 6,287 | |||||||
Customer relationships | 20,976 | -17,743 | 3,233 | ||||||||||
Technology | 7,990 | -7,905 | 85 | ||||||||||
Non-compete agreements | 207 | -60 | 147 | ||||||||||
Trade names | 5,468 | -1,992 | 3,476 | ||||||||||
gTLDs | 9,144 | -223 | 8,921 | ||||||||||
$ | 61,350 | $ | -39,201 | $ | 22,149 | ||||||||
December 31, 2013 | |||||||||||||
Gross | |||||||||||||
carrying | Accumulated | ||||||||||||
amount | amortization | Net | |||||||||||
Owned website names | $ | 18,580 | $ | -11,534 | $ | 7,046 | |||||||
Customer relationships | 20,976 | -17,119 | 3,857 | ||||||||||
Technology | 7,990 | -7,896 | 94 | ||||||||||
Non-compete agreements | 207 | -42 | 165 | ||||||||||
Trade names | 5,468 | -1,743 | 3,725 | ||||||||||
gTLDs | 381 | - | 381 | ||||||||||
$ | 53,602 | $ | -38,334 | $ | 15,268 | ||||||||
Identifiable finite‑lived intangible assets are amortized on a straight‑line basis over their estimated useful lives commencing on the date that the asset is available for its intended use. | |||||||||||||
Amortization expense by classification is shown below (in thousands): | |||||||||||||
Three months ended | Six months ended | ||||||||||||
June 30, | June 30, | ||||||||||||
2014 | 2013 | 2014 | 2013 | ||||||||||
Service costs | $ | 1,379 | $ | 1,350 | $ | 2,723 | $ | 2,618 | |||||
Sales and marketing | 323 | 768 | 601 | 1,456 | |||||||||
Product development | 4 | 5 | 9 | 9 | |||||||||
General and administrative | 202 | 68 | 266 | 133 | |||||||||
Total amortization | $ | 1,908 | $ | 2,191 | $ | 3,599 | $ | 4,216 | |||||
Other_Assets
Other Assets | 6 Months Ended | ||||||
Jun. 30, 2014 | |||||||
Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract] | ' | ||||||
Other Assets | ' | ||||||
5. Other Assets | |||||||
Other long‑term assets and gTLD deposits consisted of the following (in thousands): | |||||||
June 30, | December 31, | ||||||
2014 | 2013 | ||||||
Deposits for gTLD applications | $ | 23,343 | $ | 21,252 | |||
Other | 1,710 | 1,998 | |||||
Other assets | $ | 25,053 | $ | 23,250 | |||
We paid $11.5 million during the six months ended June 30, 2014 and $3.9 million during the year ended December 31, 2013 for certain gTLD applications under the New gTLD Program. Payments for gTLD applications represent amounts paid directly to ICANN or third parties in the pursuit of gTLD operator rights, the majority of which was paid to Donuts Inc. as described in Note 7— Commitments and Contingencies. | |||||||
The net gain related to the withdrawals of our interest in certain gTLD applications was $0.9 million for the three months ended June 30, 2014, and $5.7 million for the six months ended June 30, 2014. For the three and six month periods ended June 30, 2013, the net gain related to the withdrawals of our interest in certain gTLD applications was $1.2 million. We recorded these gains in gain on other assets, net on the condensed combined statements of operations | |||||||
Other assets include $1.2 million as of June 30, 2014 and $0.9 million as of December 31, 2013, of restricted cash comprising a collateralized letter of credit connected with our applications under the New gTLD Program. The restrictions require the cash to be maintained in a bank account for a minimum of five years from the delegation of the gTLDs. | |||||||
Other_Balance_Sheet_Items
Other Balance Sheet Items | 6 Months Ended | ||||||
Jun. 30, 2014 | |||||||
Balance Sheet Related Disclosures [Abstract] | ' | ||||||
Other Balance Sheet Items | ' | ||||||
6. Other Balance Sheet Items | |||||||
Accounts receivable consisted of the following (in thousands): | |||||||
June 30, | December 31, | ||||||
2014 | 2013 | ||||||
Accounts receivable—trade | $ | 6,655 | $ | 5,515 | |||
Receivables from registries | 3,878 | 3,661 | |||||
Accounts receivable, net | $ | 10,533 | $ | 9,176 | |||
Accrued expenses and other liabilities consisted of the following (in thousands): | |||||||
June 30, | December 31, | ||||||
2014 | 2013 | ||||||
Customer deposits | $ | 7,289 | $ | 7,065 | |||
Accrued payroll and related items | 3,012 | 3,052 | |||||
Commissions payable | 2,237 | 2,209 | |||||
Domain owners’ royalties payable | 962 | 1,193 | |||||
Other | 6,633 | 5,268 | |||||
Accrued expenses and other liabilities | $ | 20,133 | $ | 18,787 | |||
Commitments_and_Contingencies
Commitments and Contingencies | 6 Months Ended |
Jun. 30, 2014 | |
Commitments and Contingencies Disclosure [Abstract] | ' |
Commitments and Contingencies | ' |
7. Commitments and Contingencies | |
Leases | |
We conduct our operations utilizing leased office facilities in various locations and lease certain equipment under non‑cancelable operating and capital leases. Our leases expire between August 2015 and April 2019. In February 2014, we executed the First Amendment to Lease to obtain additional space for our headquarters in Kirkland, Washington and to extend the lease to April 2019. | |
Letters of Credit | |
Demand Media issued letters of credit under its Revolving Loan Facility on our behalf and as of June 30, 2014, the total letters of credit outstanding under this facility for us was $9.8 million. | |
Credit Facilities | |
On August 6, 2014, we entered into a $30.0 million term loan credit facility with certain funds managed by Tennenbaum Capital Partners, LLC, which matures in August 2019. The principal amount of the term loans is scheduled to be repaid in quarterly installments of $375,000, beginning March 31, 2015. Once repaid, term loans may not be reborrowed. All amounts outstanding under the facility are due and payable in full on the maturity date in August 2019. | |
Litigation | |
From time to time, we are party to various litigation matters incidental to the conduct of our business. There is no pending or threatened legal proceeding to which we are a party that, in our belief, is likely to have a material adverse effect on our future financial results. | |
Taxes | |
From time to time, various federal, state and other jurisdictional tax authorities undertake review of us and our filings. In evaluating the exposure associated with various tax filing positions, we accrue charges for possible exposures. We believe any adjustments that may ultimately be required as a result of any of these reviews will not be material to our condensed combined financial statements. | |
Domain Name Agreement | |
On April 1, 2011, we entered into an agreement with a customer to provide domain name registration services and manage certain domain names owned and operated by the customer (the “Domain Agreement”). In December 2013, we amended the Domain Agreement (as amended, the “Amended Domain Agreement”). The term of the Amended Domain Agreement expires on December 31, 2014, but will automatically renew for an additional one‑year period unless terminated by either party. Pursuant to the Amended Domain Agreement, we are committed to purchase approximately $0.2 million of expired domain names every calendar quarter over the remaining term of the agreement. | |
Donuts Agreement | |
As part of our initiative to pursue the acquisition of gTLD operator rights, we have entered into a gTLD acquisition agreement (“gTLD Agreement”) with Donuts Inc. (“Donuts”). The gTLD Agreement provides us with rights to acquire the operating and economic rights to certain gTLDs. These rights are shared equally with Donuts and are associated with specific gTLDs (“Covered gTLDs”) for which Donuts is the applicant under the New gTLD Program. We have the right, but not the obligation, to make further deposits with Donuts in the pursuit of acquisitions of Covered gTLDs, for example as part of the ICANN auction process. The operating and economic rights for each Covered gTLD will be determined through a process whereby we and Donuts each select gTLDs from the pool of Covered gTLDs, with the number of selections available to each party based upon the proportion of the total acquisition price of all Covered gTLDs that they funded. Gains on sale of our interest in Covered gTLDs will be recognized when realized, while losses will be recognized when deemed probable. Separately, we entered into an agreement to provide certain back‑end registry services for gTLD operator rights owned by Donuts for a period of five years commencing from the launch of Donut’s first gTLD. Outside of the collaboration, we are not an investor in Donuts nor involved in any joint venture with Donuts or its affiliates. | |
Indemnifications | |
In the normal course of business, we have made certain indemnities, commitments and guarantees under which we may be required to make payments in relation to certain transactions. Those indemnities include intellectual property indemnities to our customers, indemnities to our directors and officers to the maximum extent permitted under the laws of the State of Delaware and indemnifications related to our lease agreements. In addition, our advertiser and distribution partner agreements contain certain indemnification provisions, which are generally consistent with those prevalent in our industry. We have not incurred significant obligations under indemnification provisions historically and do not expect to incur significant obligations in the future. Accordingly, we have not recorded any liability for these indemnities, commitments and guarantees in the accompanying condensed combined balance sheets. | |
Income_Taxes
Income Taxes | 6 Months Ended |
Jun. 30, 2014 | |
Income Tax Disclosure [Abstract] | ' |
Income Taxes | ' |
8. Income Taxes | |
Our effective tax rate differs from the statutory rate primarily as a result of state taxes and nondeductible stock option expenses. The effective tax rate was 28.7% for the three months ended June 30, 2014 and (0.6)% for the six months ended June 30, 2014, compared to 6.2% for the three months ended June 30, 2013 and 18.9% for the six months ended June 30, 2013. | |
During the three months ended June 30, 2014, we recorded an income tax benefit of $1.4 million and the income tax expense was immaterial during the same period in 2013, representing an increase of $1.4 million. The increase was primarily due to increased book losses during the period. During the six months ended June 30, 2014, we recorded an immaterial income tax benefit compared to an income tax benefit of $0.6 million during the same period in 2013, representing a decreased benefit of $0.6 million. The decreased benefit was primarily due to the reversal of deferred tax assets as a result of cancelled stock options in the 2014 periods as compared to the 2013 periods. | |
We are subject to the accounting guidance for uncertain income tax positions. We believe that our income tax positions and deductions will be sustained on audit and do not anticipate any adjustments that will result in a material adverse effect on our financial condition, results of operations, or cash flow. | |
Our policy for recording interest and penalties associated with audits and uncertain tax positions is to record such items as a component of income tax expense, and amounts recognized to date are insignificant. No uncertain income tax positions were recorded during the three or six months ended June 30, 2014 or 2013, and we do not expect our uncertain tax position to change materially during the next 12 months. We file a U.S. federal and many state tax returns as well as tax returns in multiple foreign jurisdictions. All tax years since our incorporation remain subject to examination by the Internal Revenue Service and various state authorities. | |
Employee_Benefit_Plan
Employee Benefit Plan | 6 Months Ended |
Jun. 30, 2014 | |
Compensation and Retirement Disclosure [Abstract] | ' |
Employee Benefit Plan | ' |
9. Employee Benefit Plan | |
Demand Media has a defined contribution plan under Section 401(k) of the Internal Revenue Code (“401(k) Plan”) covering all our full‑time employees who meet certain eligibility requirements. Eligible employees may defer up to 90% of their pre‑tax eligible compensation, up to the annual maximum allowed by the Internal Revenue Service. Effective January 1, 2013, we began matching a portion of the employee contributions under the 401(k) Plan up to a defined maximum. During the six months ended June 30, 2014 and 2013, our contributions to our employees under the Demand Media 401(k) Plan were $0.4 million, and $0.3 million, respectively. | |
Stock_based_Compensation_Expen
Stock based Compensation Expense | 6 Months Ended | ||||||||||||
Jun. 30, 2014 | |||||||||||||
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | ' | ||||||||||||
Stock based Compensation Expense | ' | ||||||||||||
10. Stock‑based Compensation Expense | |||||||||||||
The following table summarizes the stock‑based compensation expense related to all employee and non‑employee stock‑based awards that has been included in the following line items within the condensed combined statements of operations for each of the periods presented (in thousands): | |||||||||||||
Three months ended | Six months ended | ||||||||||||
June 30, | June 30, | ||||||||||||
2014 | 2013 | 2014 | 2013 | ||||||||||
Service costs | $ | 91 | $ | 118 | $ | 183 | $ | 224 | |||||
Sales and marketing | 173 | 476 | 843 | 832 | |||||||||
Product development | 314 | 245 | 579 | 480 | |||||||||
General and administrative | 709 | 1,598 | 1,666 | 3,231 | |||||||||
Total stock-based compensation expense | $ | 1,287 | $ | 2,437 | $ | 3,271 | $ | 4,767 | |||||
On August 1, 2014, as part of the spin and the resulting conversion of equity awards, 1.2 million restricted stock units and options were outstanding. In addition in August 2014, we granted 0.4 million restricted stock units related to new employee, executive and board of director grants. | |||||||||||||
Business_Segments
Business Segments | 6 Months Ended | ||||||||||||
Jun. 30, 2014 | |||||||||||||
Segment Reporting [Abstract] | ' | ||||||||||||
Business Segments | ' | ||||||||||||
11. Business Segments | |||||||||||||
We operate in one operating segment. Our chief operating decision maker (“CODM”) manages our operations on a combined basis for purposes of evaluating financial performance and allocating resources. The CODM reviews separate revenue information for our domain name services and aftermarket services. All other financial information is reviewed by the CODM on a combined basis. Our operations are located in the United States, Ireland, Canada, Australia and Cayman Islands. Revenue generated outside of the United States is not material for any of the periods presented. | |||||||||||||
Revenue derived from our Domain name services and Aftermarket and other service offering is as follows (in thousands): | |||||||||||||
Three months ended | Six months ended | ||||||||||||
June 30, | June 30, | ||||||||||||
2014 | 2013 | 2014 | 2013 | ||||||||||
Domain name services | $ | 39,566 | $ | 34,862 | $ | 77,100 | $ | 68,332 | |||||
Aftermarket and other | 7,123 | 13,355 | 14,141 | 25,782 | |||||||||
Total revenue | $ | 46,689 | $ | 48,217 | $ | 91,241 | $ | 94,114 | |||||
Transactions_with_Related_Part
Transactions with Related Parties and Parent Company Investment | 6 Months Ended | ||||||||||||
Jun. 30, 2014 | |||||||||||||
Related Party Transactions [Abstract] | ' | ||||||||||||
Transactions with Related Parties and Parent Company Investment | ' | ||||||||||||
12. Transactions with Related Parties and Parent Company Investment | |||||||||||||
The condensed combined financial statements include direct costs of Rightside incurred by Demand Media on our behalf and an allocation of certain general corporate costs incurred by Demand Media. Direct costs include finance, legal, human resources, technology development, and other services and have been determined based on a direct basis when identifiable, with the remainder allocated on a pro rata basis calculated as a percentage of our revenue, headcount or expenses to Demand Media’s consolidated results. General corporate costs include, but are not limited to, executive oversight, accounting, internal audit, treasury, tax, and legal. The allocations of general corporate costs are based primarily on estimated time incurred and/or activities associated with us. Management believes the allocations of corporate costs from Demand Media are reasonable. Costs incurred by Demand Media to complete the spin‑off have not been allocated to us. However, the condensed combined financial statements may not include all of the costs that would have been incurred had we been a stand‑alone company during the periods presented and may not reflect our financial position, results of operations and cash flows had we been a stand‑alone company during the periods presented. Costs incurred and allocated by Demand Media were included in the condensed combined statements of operations as follows (in thousands): | |||||||||||||
Three months ended | Six months ended | ||||||||||||
June 30, | June 30, | ||||||||||||
2014 | 2013 | 2014 | 2013 | ||||||||||
Service costs | $ | 2,729 | $ | 2,675 | $ | 5,332 | $ | 5,305 | |||||
Sales and marketing | 506 | 595 | 1,419 | 1,127 | |||||||||
Product development | 1,008 | 346 | 2,100 | 716 | |||||||||
General and administration | 4,414 | 4,978 | 9,742 | 9,794 | |||||||||
Total allocated expenses | $ | 8,657 | $ | 8,594 | $ | 18,593 | $ | 16,942 | |||||
The table above includes allocated stock‑based compensation of $0.2 million and $1.5 million for the three months ended June 30, 2014 and 2013 and $0.7 million, respectively, and $3.0 million for the six months ended June 30, 2014 and 2013, respectively, for the employees of Demand Media whose cost of services was partially allocated to us. | |||||||||||||
Fair_Value_of_Financial_Instru
Fair Value of Financial Instruments | 6 Months Ended | |||
Jun. 30, 2014 | ||||
Fair Value Disclosures [Abstract] | ' | |||
Fair Value of Financial Instruments | ' | |||
13. Fair Value of Financial Instruments | ||||
Fair value represents the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. We measure our financial assets and liabilities in three levels, based on the markets in which the assets and liabilities are traded and the reliability of the assumptions used to determine fair value. | ||||
· | Level 1—valuations for assets and liabilities traded in active exchange markets, or interest in open‑end mutual funds that allow a company to sell its ownership interest back at net asset value on a daily basis. Valuations are obtained from readily available pricing sources for market transactions involving identical assets, liabilities or funds. | |||
· | Level 2—valuations for assets and liabilities traded in less active dealer, or broker markets, such as quoted prices for similar assets or liabilities or quoted prices in markets that are not active. Level 2 includes U.S. Treasury, U.S. government and agency debt securities, and certain corporate obligations. Valuations are usually obtained from third‑party pricing services for identical or comparable assets or liabilities. | |||
· | Level 3—valuations for assets and liabilities that are derived from other valuation methodologies, such as option pricing models, discounted cash flow models and similar techniques, and not based on market exchange, dealer, or broker traded transactions. Level 3 valuations incorporate certain assumptions and projections in determining the fair value assigned to such assets or liabilities. | |||
In determining fair value, we utilize valuation techniques that maximize the use of observable inputs and minimize the use of unobservable inputs to the extent possible and consider counterparty credit risk in our assessment of fair value. | ||||
We chose not to elect the fair value option for our financial assets and liabilities that had not been previously carried at fair value. Therefore, material financial assets and liabilities not carried at fair value, such as trade accounts receivable and payables, are reported at their carrying values. | ||||
The carrying amounts of our financial instruments, including cash and cash equivalents, accounts receivable, receivables from domain name registries, registry deposits, restricted cash, accounts payable, term loan, revolving credit facility, accrued liabilities and customer deposits approximate fair value because of their short maturities. Our investments in marketable securities are recorded at fair value. Certain assets, including equity investments, investments held at cost, goodwill and intangible assets are also subject to measurement at fair value on a nonrecurring basis, if they are deemed to be impaired as the result of an impairment review. | ||||
The cost of marketable securities sold is based upon the specific identification method and any realized gains or losses on the sale of investments are reflected as a component of other income or expense. For the year ended December 31, 2013, unrealized gain on marketable securities was $0.9 million. During the first quarter 2013, we sold all of our marketable securities, resulting in a reclassification of $0.9 million of unrealized gain on marketable securities from accumulated other comprehensive income to other income (expense), net. The sale of our marketable securities resulted in total realized gains of $1.4 million, which are included in other income (expense), net. | ||||
Earnings_Per_Share
Earnings Per Share | 6 Months Ended | ||||||||||||
Jun. 30, 2014 | |||||||||||||
Earnings Per Share [Abstract] | ' | ||||||||||||
Earnings per share | ' | ||||||||||||
14. Earnings per share | |||||||||||||
Basic and diluted earnings per share were calculated using the following (in thousands, except per share amounts): | |||||||||||||
Three months ended | Six months ended | ||||||||||||
June 30, | June 30, | ||||||||||||
2014 | 2013 | 2014 | 2013 | ||||||||||
Net loss | $ | -3,490 | $ | -681 | $ | -7,411 | $ | -2,415 | |||||
Basic and diluted earnings per share | $ | -0.19 | $ | -0.04 | $ | -0.4 | $ | -0.13 | |||||
Basic and diluted weighted average shares outstanding | 18,413 | 18,413 | 18,413 | 18,413 | |||||||||
Subsequent_Events
Subsequent Events | 6 Months Ended |
Jun. 30, 2014 | |
Subsequent Events [Abstract] | ' |
Subsequent Events | ' |
15. Subsequent Events | |
Separation from Demand Media | |
Immediately prior to the separation, the authorized shares of Rightside capital stock were increased from 1,000 shares to 120,000,000 shares, divided into the following classes: 100,000,000 shares of common stock, par value $0.0001 per share, and 20,000,000 shares of preferred stock, par value $0.0001 per share. The 1,000 shares of Rightside common stock, par value $0.0001 per share, that were previously issued and outstanding were automatically reclassified as and became 18,412,985 shares of common stock, par value $0.0001 per share. The separation was effected by Demand Media through a tax-free dividend involving the distribution of all Rightside Group, Ltd. common stock held by Demand Media to Demand Media’s stockholders on August 1, 2014. Upon effectiveness of the separation, holders of Demand Media common stock received one share of Rightside common stock for every five shares of Demand Media common stock they held on the record date. Following completion of the separation, Rightside Group, Ltd. became an independent, publicly traded company on the NASDAQ Global Select Market using the symbol: “NAME.” | |
As part of the separation, we entered into various agreements with Demand Media which provide for the allocation between Rightside and Demand Media of certain assets, liabilities, and obligations, and govern the relationship between Rightside and Demand Media after the separation. The agreements became effective as of August 1, 2014 and include the following: Separation and Distribution Agreement, Transition Services Agreement, Employee Matters Agreement and Tax Matters Agreement. | |
As of June 30, 2014 our principal sources of liquidity were our cash and cash equivalents in the amount of $51.9 million. As part of our separation from Demand Media, cash and cash equivalents were allocated between the two companies, resulting in Rightside having cash of $26.1 million as of August 1, 2014 and Demand Media assuming all of the outstanding debt. | |
Credit Facilities | |
On August 1, 2014, we entered into a $30.0 million senior secured revolving credit facility with Silicon Valley Bank, including a subfacility of $15.0 million available for the issuance of letters of credit, which was amended on August 12, 2014 and which matures in August 2017. | |
On August 6, 2014, we entered into a $30.0 million term loan credit facility with certain funds managed by Tennenbaum Capital Partners, LLC, which matures in August 2019. In connection with this agreement, we also issued 997,710 common stock warrants which will be recorded as debt discount and amortized to interest expense over the term of the agreement. | |
Property_and_Equipment_Tables
Property and Equipment (Tables) | 6 Months Ended | ||||||||||||
Jun. 30, 2014 | |||||||||||||
Property, Plant and Equipment [Abstract] | ' | ||||||||||||
Schedule of property and equipment | ' | ||||||||||||
Property and equipment consisted of the following (in thousands): | |||||||||||||
June 30, | December 31, | ||||||||||||
2014 | 2013 | ||||||||||||
Computers and other related equipment | $ | 19,513 | $ | 19,180 | |||||||||
Purchased and internally developed software | 20,985 | 19,546 | |||||||||||
Furniture and fixtures | 800 | 775 | |||||||||||
Leasehold improvements | 1,287 | 1,278 | |||||||||||
42,585 | 40,779 | ||||||||||||
Less accumulated depreciation | -29,797 | -26,323 | |||||||||||
Property and equipment, net | $ | 12,788 | $ | 14,456 | |||||||||
Depreciation expense and amortization expense by classification | ' | ||||||||||||
Depreciation and software amortization expense, which includes acceleration of depreciation, as a result of the shortening of the estimated useful lives for certain assets, which was immaterial for the three months ended June 30, 2014 and 2013, and $0.8 million for the six months ended June 30, 2014 and 2013, respectively, and is shown by classification below (in thousands): | |||||||||||||
Three months ended | Six months ended | ||||||||||||
June 30, | June 30, | ||||||||||||
2014 | 2013 | 2014 | 2013 | ||||||||||
Service costs | $ | 1,294 | $ | 1,363 | $ | 3,199 | $ | 2,644 | |||||
Sales and marketing | 17 | 26 | 35 | 53 | |||||||||
Product development | 43 | 45 | 82 | 92 | |||||||||
General and administrative | 452 | 247 | 1,025 | 484 | |||||||||
Total depreciation and amortization | $ | 1,806 | $ | 1,681 | $ | 4,341 | $ | 3,273 | |||||
Intangible_Assets_Tables
Intangible Assets (Tables) | 6 Months Ended | ||||||||||||
Jun. 30, 2014 | |||||||||||||
Intangible Assets, Net (Excluding Goodwill) [Abstract] | ' | ||||||||||||
Schedule of intangible assets | ' | ||||||||||||
Intangible assets consisted of the following (in thousands): | |||||||||||||
June 30, 2014 | |||||||||||||
Gross | |||||||||||||
carrying | Accumulated | ||||||||||||
amount | amortization | Net | |||||||||||
Owned website names | $ | 17,565 | $ | -11,278 | $ | 6,287 | |||||||
Customer relationships | 20,976 | -17,743 | 3,233 | ||||||||||
Technology | 7,990 | -7,905 | 85 | ||||||||||
Non-compete agreements | 207 | -60 | 147 | ||||||||||
Trade names | 5,468 | -1,992 | 3,476 | ||||||||||
gTLDs | 9,144 | -223 | 8,921 | ||||||||||
$ | 61,350 | $ | -39,201 | $ | 22,149 | ||||||||
December 31, 2013 | |||||||||||||
Gross | |||||||||||||
carrying | Accumulated | ||||||||||||
amount | amortization | Net | |||||||||||
Owned website names | $ | 18,580 | $ | -11,534 | $ | 7,046 | |||||||
Customer relationships | 20,976 | -17,119 | 3,857 | ||||||||||
Technology | 7,990 | -7,896 | 94 | ||||||||||
Non-compete agreements | 207 | -42 | 165 | ||||||||||
Trade names | 5,468 | -1,743 | 3,725 | ||||||||||
gTLDs | 381 | - | 381 | ||||||||||
$ | 53,602 | $ | -38,334 | $ | 15,268 | ||||||||
Amortization expense by classification | ' | ||||||||||||
Amortization expense by classification is shown below (in thousands): | |||||||||||||
Three months ended | Six months ended | ||||||||||||
June 30, | June 30, | ||||||||||||
2014 | 2013 | 2014 | 2013 | ||||||||||
Service costs | $ | 1,379 | $ | 1,350 | $ | 2,723 | $ | 2,618 | |||||
Sales and marketing | 323 | 768 | 601 | 1,456 | |||||||||
Product development | 4 | 5 | 9 | 9 | |||||||||
General and administrative | 202 | 68 | 266 | 133 | |||||||||
Total amortization | $ | 1,908 | $ | 2,191 | $ | 3,599 | $ | 4,216 | |||||
Other_Assets_Tables
Other Assets (Tables) | 6 Months Ended | ||||||
Jun. 30, 2014 | |||||||
Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract] | ' | ||||||
Schedule of other assets | ' | ||||||
Other long‑term assets and gTLD deposits consisted of the following (in thousands): | |||||||
June 30, | December 31, | ||||||
2014 | 2013 | ||||||
Deposits for gTLD applications | $ | 23,343 | $ | 21,252 | |||
Other | 1,710 | 1,998 | |||||
Other assets | $ | 25,053 | $ | 23,250 | |||
Other_Balance_Sheet_Items_Tabl
Other Balance Sheet Items (Tables) | 6 Months Ended | ||||||
Jun. 30, 2014 | |||||||
Balance Sheet Related Disclosures [Abstract] | ' | ||||||
Schedule of accounts receivable | ' | ||||||
Accounts receivable consisted of the following (in thousands): | |||||||
June 30, | December 31, | ||||||
2014 | 2013 | ||||||
Accounts receivable—trade | $ | 6,655 | $ | 5,515 | |||
Receivables from registries | 3,878 | 3,661 | |||||
Accounts receivable, net | $ | 10,533 | $ | 9,176 | |||
Tabular disclosure of the components of accrued and other current liabilities. | ' | ||||||
Accrued expenses and other liabilities consisted of the following (in thousands): | |||||||
June 30, | December 31, | ||||||
2014 | 2013 | ||||||
Customer deposits | $ | 7,289 | $ | 7,065 | |||
Accrued payroll and related items | 3,012 | 3,052 | |||||
Commissions payable | 2,237 | 2,209 | |||||
Domain owners’ royalties payable | 962 | 1,193 | |||||
Other | 6,633 | 5,268 | |||||
Accrued expenses and other liabilities | $ | 20,133 | $ | 18,787 | |||
Stock_based_Compensation_Expen1
Stock based Compensation Expense (Tables) | 6 Months Ended | ||||||||||||
Jun. 30, 2014 | |||||||||||||
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | ' | ||||||||||||
Schedule of stock-based compensation expense related to all employee and non-employee stock-based awards | ' | ||||||||||||
The following table summarizes the stock‑based compensation expense related to all employee and non‑employee stock‑based awards that has been included in the following line items within the condensed combined statements of operations for each of the periods presented (in thousands): | |||||||||||||
Three months ended | Six months ended | ||||||||||||
June 30, | June 30, | ||||||||||||
2014 | 2013 | 2014 | 2013 | ||||||||||
Service costs | $ | 91 | $ | 118 | $ | 183 | $ | 224 | |||||
Sales and marketing | 173 | 476 | 843 | 832 | |||||||||
Product development | 314 | 245 | 579 | 480 | |||||||||
General and administrative | 709 | 1,598 | 1,666 | 3,231 | |||||||||
Total stock-based compensation expense | $ | 1,287 | $ | 2,437 | $ | 3,271 | $ | 4,767 | |||||
Business_Segments_Tables
Business Segments (Tables) | 6 Months Ended | ||||||||||||
Jun. 30, 2014 | |||||||||||||
Segment Reporting [Abstract] | ' | ||||||||||||
Schedule of revenue derived from segments | ' | ||||||||||||
Revenue derived from our Domain name services and Aftermarket and other service offering is as follows (in thousands): | |||||||||||||
Three months ended | Six months ended | ||||||||||||
June 30, | June 30, | ||||||||||||
2014 | 2013 | 2014 | 2013 | ||||||||||
Domain name services | $ | 39,566 | $ | 34,862 | $ | 77,100 | $ | 68,332 | |||||
Aftermarket and other | 7,123 | 13,355 | 14,141 | 25,782 | |||||||||
Total revenue | $ | 46,689 | $ | 48,217 | $ | 91,241 | $ | 94,114 | |||||
Transactions_with_Related_Part1
Transactions with Related Parties and Parent Company Investment (Tables) | 6 Months Ended | ||||||||||||
Jun. 30, 2014 | |||||||||||||
Related Party Transactions [Abstract] | ' | ||||||||||||
Schedule of costs incurred and allocated by Demand Media | ' | ||||||||||||
Costs incurred and allocated by Demand Media were included in the condensed combined statements of operations as follows (in thousands): | |||||||||||||
Three months ended | Six months ended | ||||||||||||
June 30, | June 30, | ||||||||||||
2014 | 2013 | 2014 | 2013 | ||||||||||
Service costs | $ | 2,729 | $ | 2,675 | $ | 5,332 | $ | 5,305 | |||||
Sales and marketing | 506 | 595 | 1,419 | 1,127 | |||||||||
Product development | 1,008 | 346 | 2,100 | 716 | |||||||||
General and administration | 4,414 | 4,978 | 9,742 | 9,794 | |||||||||
Total allocated expenses | $ | 8,657 | $ | 8,594 | $ | 18,593 | $ | 16,942 | |||||
Earnings_Per_Share_Tables
Earnings Per Share (Tables) | 6 Months Ended | ||||||||||||
Jun. 30, 2014 | |||||||||||||
Earnings Per Share [Abstract] | ' | ||||||||||||
Schedule of Earnings Per Share, Basic and Diluted [Table Text Block] | ' | ||||||||||||
Basic and diluted earnings per share were calculated using the following (in thousands, except per share amounts): | |||||||||||||
Three months ended | Six months ended | ||||||||||||
June 30, | June 30, | ||||||||||||
2014 | 2013 | 2014 | 2013 | ||||||||||
Net loss | $ | -3,490 | $ | -681 | $ | -7,411 | $ | -2,415 | |||||
Basic and diluted earnings per share | $ | -0.19 | $ | -0.04 | $ | -0.4 | $ | -0.13 | |||||
Basic and diluted weighted average shares outstanding | 18,413 | 18,413 | 18,413 | 18,413 | |||||||||
Company_Background_and_Basis_o1
Company Background and Basis of Presentation (Details) (USD $) | 6 Months Ended | ||
Jun. 30, 2014 | Aug. 01, 2014 | Jul. 31, 2014 | |
item | |||
subsidiary | |||
Organization, Consolidation and Presentation of Financial Statements [Abstract] | ' | ' | ' |
Number of publicly traded entities after spin-off | 2 | ' | ' |
Number of classes of common stock | 1 | ' | ' |
Preferred shares outstanding | 0 | ' | ' |
Shares issued | ' | 18,412,985 | 1,000 |
Shares outstanding | ' | 18,412,985 | 1,000 |
Par value (in dollars per share) | ' | $0.00 | $0.00 |
Number of International Demand Media Subsidiaries | 6 | ' | ' |
Duration of the transition services agreement | '18 months | ' | ' |
Property_and_Equipment_Details
Property and Equipment (Details) (USD $) | 3 Months Ended | 6 Months Ended | |||
Jun. 30, 2014 | Jun. 30, 2013 | Jun. 30, 2014 | Jun. 30, 2013 | Dec. 31, 2013 | |
Property, Plant and Equipment [Line Items] | ' | ' | ' | ' | ' |
Property and equipment, gross | $42,585,000 | ' | $42,585,000 | ' | $40,779,000 |
Less accumulated depreciation | -29,797,000 | ' | -29,797,000 | ' | -26,323,000 |
Property and equipment, net | 12,788,000 | ' | 12,788,000 | ' | 14,456,000 |
Accelerated Depreciation included in the depreciation and software amortization expense | ' | ' | 800,000 | 800,000 | ' |
Depreciation and amortization | 1,806,000 | 1,681,000 | 4,341,000 | 3,273,000 | ' |
Service costs | ' | ' | ' | ' | ' |
Property, Plant and Equipment [Line Items] | ' | ' | ' | ' | ' |
Depreciation and amortization | 1,294,000 | 1,363,000 | 3,199,000 | 2,644,000 | ' |
Sales and marketing | ' | ' | ' | ' | ' |
Property, Plant and Equipment [Line Items] | ' | ' | ' | ' | ' |
Depreciation and amortization | 17,000 | 26,000 | 35,000 | 53,000 | ' |
Product development | ' | ' | ' | ' | ' |
Property, Plant and Equipment [Line Items] | ' | ' | ' | ' | ' |
Depreciation and amortization | 43,000 | 45,000 | 82,000 | 92,000 | ' |
General and administrative | ' | ' | ' | ' | ' |
Property, Plant and Equipment [Line Items] | ' | ' | ' | ' | ' |
Depreciation and amortization | 452,000 | 247,000 | 1,025,000 | 484,000 | ' |
Computers and other equipment | ' | ' | ' | ' | ' |
Property, Plant and Equipment [Line Items] | ' | ' | ' | ' | ' |
Property and equipment, gross | 19,513,000 | ' | 19,513,000 | ' | 19,180,000 |
Purchased and internally developed software | ' | ' | ' | ' | ' |
Property, Plant and Equipment [Line Items] | ' | ' | ' | ' | ' |
Property and equipment, gross | 20,985,000 | ' | 20,985,000 | ' | 19,546,000 |
Furniture and fixtures | ' | ' | ' | ' | ' |
Property, Plant and Equipment [Line Items] | ' | ' | ' | ' | ' |
Property and equipment, gross | 800,000 | ' | 800,000 | ' | 775,000 |
Leasehold improvements | ' | ' | ' | ' | ' |
Property, Plant and Equipment [Line Items] | ' | ' | ' | ' | ' |
Property and equipment, gross | $1,287,000 | ' | $1,287,000 | ' | $1,278,000 |
Intangible_Assets_Details
Intangible Assets (Details) (USD $) | 3 Months Ended | 6 Months Ended | |||
In Thousands, unless otherwise specified | Jun. 30, 2014 | Jun. 30, 2013 | Jun. 30, 2014 | Jun. 30, 2013 | Dec. 31, 2013 |
Finite-Lived Intangible Assets [Line Items] | ' | ' | ' | ' | ' |
Gross carrying amount | $61,350 | ' | $61,350 | ' | $53,602 |
Accumulated amortization | -39,201 | ' | -39,201 | ' | -38,334 |
Net | 22,149 | ' | 22,149 | ' | 15,268 |
Amortization of intangible assets | 1,908 | 2,191 | 3,599 | 4,216 | ' |
Owned website names | ' | ' | ' | ' | ' |
Finite-Lived Intangible Assets [Line Items] | ' | ' | ' | ' | ' |
Gross carrying amount | 17,565 | ' | 17,565 | ' | 18,580 |
Accumulated amortization | -11,278 | ' | -11,278 | ' | -11,534 |
Net | 6,287 | ' | 6,287 | ' | 7,046 |
Customer relationships | ' | ' | ' | ' | ' |
Finite-Lived Intangible Assets [Line Items] | ' | ' | ' | ' | ' |
Gross carrying amount | 20,976 | ' | 20,976 | ' | 20,976 |
Accumulated amortization | -17,743 | ' | -17,743 | ' | -17,119 |
Net | 3,233 | ' | 3,233 | ' | 3,857 |
Technology | ' | ' | ' | ' | ' |
Finite-Lived Intangible Assets [Line Items] | ' | ' | ' | ' | ' |
Gross carrying amount | 7,990 | ' | 7,990 | ' | 7,990 |
Accumulated amortization | -7,905 | ' | -7,905 | ' | -7,896 |
Net | 85 | ' | 85 | ' | 94 |
Noncompete agreements | ' | ' | ' | ' | ' |
Finite-Lived Intangible Assets [Line Items] | ' | ' | ' | ' | ' |
Gross carrying amount | 207 | ' | 207 | ' | 207 |
Accumulated amortization | -60 | ' | -60 | ' | -42 |
Net | 147 | ' | 147 | ' | 165 |
Trade names | ' | ' | ' | ' | ' |
Finite-Lived Intangible Assets [Line Items] | ' | ' | ' | ' | ' |
Gross carrying amount | 5,468 | ' | 5,468 | ' | 5,468 |
Accumulated amortization | -1,992 | ' | -1,992 | ' | -1,743 |
Net | 3,476 | ' | 3,476 | ' | 3,725 |
gTLDs | ' | ' | ' | ' | ' |
Finite-Lived Intangible Assets [Line Items] | ' | ' | ' | ' | ' |
Gross carrying amount | 9,144 | ' | 9,144 | ' | 381 |
Accumulated amortization | -223 | ' | -223 | ' | ' |
Net | 8,921 | ' | 8,921 | ' | 381 |
Service costs | ' | ' | ' | ' | ' |
Finite-Lived Intangible Assets [Line Items] | ' | ' | ' | ' | ' |
Amortization of intangible assets | 1,379 | 1,350 | 2,723 | 2,618 | ' |
Sales and marketing | ' | ' | ' | ' | ' |
Finite-Lived Intangible Assets [Line Items] | ' | ' | ' | ' | ' |
Amortization of intangible assets | 323 | 768 | 601 | 1,456 | ' |
Product development | ' | ' | ' | ' | ' |
Finite-Lived Intangible Assets [Line Items] | ' | ' | ' | ' | ' |
Amortization of intangible assets | 4 | 5 | 9 | 9 | ' |
General and administrative | ' | ' | ' | ' | ' |
Finite-Lived Intangible Assets [Line Items] | ' | ' | ' | ' | ' |
Amortization of intangible assets | $202 | $68 | $266 | $133 | ' |
Other_Assets_Details
Other Assets (Details) (USD $) | Jun. 30, 2014 | Dec. 31, 2013 |
In Thousands, unless otherwise specified | ||
Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract] | ' | ' |
Deposits for gTLD applications | $23,343 | $21,252 |
Other | 1,710 | 1,998 |
Other Assets | $25,053 | $23,250 |
Other_Assets_Details1
Other Assets (Details) (USD $) | 3 Months Ended | 6 Months Ended | 12 Months Ended | ||
Jun. 30, 2014 | Jun. 30, 2013 | Jun. 30, 2014 | Jun. 30, 2013 | Dec. 31, 2013 | |
Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract] | ' | ' | ' | ' | ' |
Payments made for gTLD applications | ' | ' | $11,500,000 | ' | $3,900,000 |
Gain on gTLD application withdrawals, net | 885,000 | 1,229,000 | 5,745,000 | 1,229,000 | ' |
Restricted cash and cash equivalents | $1,200,000 | ' | $1,200,000 | ' | $900,000 |
Restricted cash restriction period | ' | ' | '5 years | ' | ' |
Other_Balance_Sheet_Items_Deta
Other Balance Sheet Items (Details) (USD $) | Jun. 30, 2014 | Dec. 31, 2013 |
In Thousands, unless otherwise specified | ||
Accounts receivable | ' | ' |
Accounts receivable, net | $10,533 | $9,176 |
Accounts receivable - trade | ' | ' |
Accounts receivable | ' | ' |
Accounts receivable, net | 6,655 | 5,515 |
Receivables from registries | ' | ' |
Accounts receivable | ' | ' |
Accounts receivable, net | $3,878 | $3,661 |
Other_Balance_Sheet_Items_Deta1
Other Balance Sheet Items (Details) (USD $) | Jun. 30, 2014 | Dec. 31, 2013 |
In Thousands, unless otherwise specified | ||
Balance Sheet Related Disclosures [Abstract] | ' | ' |
Customer deposits | $7,289 | $7,065 |
Accrued payroll and related items | 3,012 | 3,052 |
Commissions payable | 2,237 | 2,209 |
Domain owners' royalties payable | 962 | 1,193 |
Other | 6,633 | 5,268 |
Accrued expenses and other liabilities | $20,133 | $18,787 |
Commitments_and_Contingencies_
Commitments and Contingencies (Details) (USD $) | Jun. 30, 2014 | Aug. 06, 2014 | Aug. 06, 2014 |
Demand Media | Tennenbaum Capital Partners LLC | Tennenbaum Capital Partners LLC | |
Letter of Credit | Term loan | Term loan | |
Leases and Letters of Credit | ' | ' | ' |
Letters of credit outstanding | $9,800,000 | ' | ' |
Debt instrument amount | ' | ' | 30,000,000 |
Debt Instrument, Periodic Payment | ' | $375,000 | ' |
Commitments_and_Contingencies_1
Commitments and Contingencies (Details) (USD $) | 1 Months Ended | |
In Millions, unless otherwise specified | Dec. 31, 2013 | Jun. 30, 2014 |
Domain Name Agreement | ' | ' |
Other Commitments [Line Items] | ' | ' |
Contract term | '1 year | ' |
Quarterly purchase obligation | ' | $0.20 |
Donuts Agreement | ' | ' |
Other Commitments [Line Items] | ' | ' |
Contract term | '5 years | ' |
Income_Taxes_Details
Income Taxes (Details) (USD $) | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2014 | Jun. 30, 2013 | Jun. 30, 2014 | Jun. 30, 2013 | |
Income Tax Disclosure [Abstract] | ' | ' | ' | ' |
Effective Income Tax Rate Reconciliation, Percent | 28.70% | 6.20% | -0.60% | 18.90% |
Income Tax Expense (Benefit) | ($1,406,000) | $40,000 | ($42,000) | ($564,000) |
Increase in income tax expense | 1,400,000 | ' | -600,000 | ' |
Liability for uncertain tax positions | $0 | $0 | $0 | $0 |
Employee_Benefit_Plan_Details
Employee Benefit Plan (Details) (USD $) | 6 Months Ended | |
In Millions, unless otherwise specified | Jun. 30, 2014 | Jun. 30, 2013 |
Defined contribution plan | ' | ' |
Defined Contribution Plan, Maximum Annual Contributions Per Employee, Percent | 90.00% | ' |
Demand Media 401k Plan | ' | ' |
Defined contribution plan | ' | ' |
Contributions | $0.40 | $0.30 |
Recovered_Sheet1
Stock Based Compensation Expense (Details) (USD $) | 0 Months Ended | 3 Months Ended | 6 Months Ended | 0 Months Ended | 3 Months Ended | 6 Months Ended | 3 Months Ended | 6 Months Ended | 3 Months Ended | 6 Months Ended | 3 Months Ended | 6 Months Ended | ||||||||||
In Thousands, except Share data in Millions, unless otherwise specified | Aug. 01, 2014 | Jun. 30, 2014 | Jun. 30, 2013 | Jun. 30, 2014 | Jun. 30, 2013 | Aug. 25, 2014 | Jun. 30, 2014 | Jun. 30, 2013 | Jun. 30, 2014 | Jun. 30, 2013 | Jun. 30, 2014 | Jun. 30, 2013 | Jun. 30, 2014 | Jun. 30, 2013 | Jun. 30, 2014 | Jun. 30, 2013 | Jun. 30, 2014 | Jun. 30, 2013 | Jun. 30, 2014 | Jun. 30, 2013 | Jun. 30, 2014 | Jun. 30, 2013 |
Restricted stock units | Service costs | Service costs | Service costs | Service costs | Sales and marketing | Sales and marketing | Sales and marketing | Sales and marketing | Product development | Product development | Product development | Product development | General and administrative | General and administrative | General and administrative | General and administrative | ||||||
Stock-based Compensation Expense | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Allocated Share-based Compensation Expense | ' | $1,287 | $2,437 | $3,271 | $4,767 | ' | $91 | $118 | $183 | $224 | $173 | $476 | $843 | $832 | $314 | $245 | $579 | $480 | $709 | $1,598 | $1,666 | $3,231 |
Options converted in spin | 1.2 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Restricted stock units granted | ' | ' | ' | ' | ' | 0.4 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Business_Segments_Details
Business Segments (Details) (USD $) | 3 Months Ended | 6 Months Ended | ||
In Thousands, unless otherwise specified | Jun. 30, 2014 | Jun. 30, 2013 | Jun. 30, 2014 | Jun. 30, 2013 |
segment | ||||
Business Segments | ' | ' | ' | ' |
Number of Operating Segments | ' | ' | 1 | ' |
Total Revenue | $46,689 | $48,217 | $91,241 | $94,114 |
Domain name services | ' | ' | ' | ' |
Business Segments | ' | ' | ' | ' |
Total Revenue | 39,566 | 34,862 | 77,100 | 68,332 |
Aftermarket and other | ' | ' | ' | ' |
Business Segments | ' | ' | ' | ' |
Total Revenue | $7,123 | $13,355 | $14,141 | $25,782 |
Transactions_with_Related_Part2
Transactions with Related Parties and Parent Company Investment (Details) (Demand Media, USD $) | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2014 | Jun. 30, 2013 | Jun. 30, 2014 | Jun. 30, 2013 | |
Related Party Transaction [Line Items] | ' | ' | ' | ' |
Allocated expenses | $8,657,000 | $8,594,000 | $18,593,000 | $16,942,000 |
Allocated stock-based compensation expense | 200,000 | 1,500,000 | 700,000 | 3,000,000 |
Service costs | ' | ' | ' | ' |
Related Party Transaction [Line Items] | ' | ' | ' | ' |
Allocated expenses | 2,729,000 | 2,675,000 | 5,332,000 | 5,305,000 |
Sales and marketing | ' | ' | ' | ' |
Related Party Transaction [Line Items] | ' | ' | ' | ' |
Allocated expenses | 506,000 | 595,000 | 1,419,000 | 1,127,000 |
Product development | ' | ' | ' | ' |
Related Party Transaction [Line Items] | ' | ' | ' | ' |
Allocated expenses | 1,008,000 | 346,000 | 2,100,000 | 716,000 |
General and administrative | ' | ' | ' | ' |
Related Party Transaction [Line Items] | ' | ' | ' | ' |
Allocated expenses | $4,414,000 | $4,978,000 | $9,742,000 | $9,794,000 |
Recovered_Sheet2
Fair Value Of Financial Instruments (Details) (USD $) | 3 Months Ended | 6 Months Ended | 12 Months Ended |
In Millions, unless otherwise specified | Mar. 31, 2014 | Jun. 30, 2014 | Dec. 31, 2013 |
Fair Value Disclosures [Abstract] | ' | ' | ' |
Unrealized gains on marketable securities | ' | ' | $0.90 |
Reclassification of unrealized gain on marketable securities | 0.9 | ' | ' |
Total realized gain on sale of marketable securities | ' | $1.40 | ' |
Earnings_Per_Share_Details
Earnings Per Share (Details) (USD $) | 3 Months Ended | 6 Months Ended | ||
In Thousands, except Per Share data, unless otherwise specified | Jun. 30, 2014 | Jun. 30, 2013 | Jun. 30, 2014 | Jun. 30, 2013 |
Earnings Per Share [Abstract] | ' | ' | ' | ' |
Net loss | ($3,490) | ($681) | ($7,411) | ($2,415) |
Basic and diluted earnings per share | ($0.19) | ($0.04) | ($0.40) | ($0.13) |
Basic and diluted average shares outstanding | 18,413 | 18,413 | 18,413 | 18,413 |
Subsequent_Events_Details
Subsequent Events (Details) (USD $) | Aug. 01, 2014 | Jul. 31, 2014 | Jun. 30, 2014 | Dec. 31, 2013 | Jun. 30, 2013 | Dec. 31, 2012 | Aug. 01, 2014 | Aug. 01, 2014 | Aug. 01, 2014 | Aug. 06, 2014 | Aug. 01, 2014 | Jul. 31, 2014 | Aug. 01, 2014 | Jul. 31, 2014 |
Subsequent Event | Subsequent Event | Subsequent Event | Subsequent Event | Subsequent Event | Subsequent Event | Subsequent Event | Subsequent Event | |||||||
Revolving Credit Facility | Letter of Credit | Term Loan Credit Facility | Term Loan Credit Facility | Spinoff | Spinoff | Spinoff | Spinoff | |||||||
company | ||||||||||||||
Subsequent events | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
capital stock authorized | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 120,000,000 | 1,000 | ' | ' |
Common stock shares authorized | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 100,000,000 | ' |
Common stock par value (in dollars per share) | $0.00 | $0.00 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | $0.00 | ' |
Preferred stock shares authorized | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 20,000,000 | ' |
Preferred stock par value (in dollars per share) | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | $0.00 | ' |
Shares issued | 18,412,985 | 1,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 18,412,985 | 1,000 |
Shares outstanding | 18,412,985 | 1,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 18,412,985 | 1,000 |
Stock dividend conversion ratio | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 0.2 | ' | ' | ' |
Cash and Cash Equivalents, at Carrying Value | ' | ' | $51,916,000 | $66,833,000 | $48,199,000 | $40,593,000 | ' | ' | ' | ' | ' | ' | $26,100,000 | ' |
Number of companies involved in the spinoff | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 2 | ' |
Maximum borrowing capacity | ' | ' | ' | ' | ' | ' | 30,000,000 | 15,000,000 | ' | ' | ' | ' | ' | ' |
Debt instrument amount | ' | ' | ' | ' | ' | ' | ' | ' | ' | $30,000,000 | ' | ' | ' | ' |
Warrants issued | ' | ' | ' | ' | ' | ' | ' | ' | 997,710 | ' | ' | ' | ' | ' |