Rightside (NAME) 10-Q 9 Aug 16 2016 Q2 Quarterly report Financial data

Document and Entity Information

Document and Entity Information - shares	6 Months Ended
	Jun. 30, 2016	Aug. 04, 2016
Document And Entity Information [Abstract]
Entity Registrant Name	RIGHTSIDE GROUP, LTD.
Entity Central Index Key	1,589,094
Document Type	10-Q
Document Period End Date	Jun. 30, 2016
Trading Symbol	NAME
Amendment Flag	false
Current Fiscal Year End Date	--12-31
Entity Filer Category	Accelerated Filer
Entity Common Stock, Shares Outstanding		19,305,711
Document Fiscal Year Focus	2,016
Document Fiscal Period Focus	Q2

Balance Sheets

Balance Sheets - USD ($) $ in Thousands	Jun. 30, 2016	Dec. 31, 2015
Current assets
Cash and cash equivalents	$ 47,809	$ 45,095
Accounts receivable, net	12,669	11,306
Prepaid expenses and other current assets	5,214	7,233
Deferred registration costs	77,915	75,435
Total current assets	143,607	139,069
Deferred registration costs, less current portion	16,298	15,700
Property and equipment, net	11,818	13,298
Intangible assets, net	52,371	54,328
Goodwill	103,042	103,042
gTLD deposits	2,540	8,139
Other assets	1,072	1,451
Total assets	330,748	335,027
Current liabilities
Accounts payable	8,300	7,262
Accrued expenses and other current liabilities	20,262	24,591
Debt	1,500	1,500
Capital lease obligation	1,101	1,193
Deferred revenue	102,326	97,593
Total current liabilities	133,489	132,139
Deferred revenue, less current portion	21,158	20,487
Debt, less current portion	21,751	21,701
Capital lease obligation, less current portion	399	811
Deferred tax liabilities, net	15,003	15,477
Other liabilities	842	1,125
Total liabilities	192,642	191,740
Commitments and contingencies (Note 7)
Stockholders’ equity
Preferred stock, $0.0001 par value per share; 20,000 shares authorized Shares issued and outstanding: 0 and 0
Common stock, $0.0001 par value per share; 100,000 shares authorized Shares issued and outstanding: 19,300 and 19,099	2	2
Additional paid-in capital	149,873	147,475
Accumulated deficit	(11,769)	(4,190)
Total stockholders’ equity	138,106	143,287
Total liabilities and stockholders’ equity	$ 330,748	$ 335,027

Balance Sheets (Parenthetical)

Balance Sheets (Parenthetical) - $ / shares	Jun. 30, 2016	Dec. 31, 2015
Statement Of Financial Position [Abstract]
Preferred stock, par value (in dollars per share)	$ 0.0001	$ 0.0001
Preferred stock, shares authorized	20,000,000	20,000,000
Preferred stock, shares issued	0	0
Preferred stock, shares outstanding	0	0
Common stock, par value (in dollars per share)	$ 0.0001	$ 0.0001
Common stock, authorized shares	100,000,000	100,000,000
Common stock, shares issued	19,300,000	19,099,000
Common stock, shares outstanding	19,300,000	19,099,000

Statements of Operations and Co

Statements of Operations and Comprehensive Loss - USD ($) shares in Thousands, $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2016	Jun. 30, 2015	Jun. 30, 2016	Jun. 30, 2015
Income Statement [Abstract]
Revenue	$ 54,037	$ 52,171	$ 109,161	$ 102,702
Cost of revenue (excluding depreciation and amortization)	40,695	40,330	82,615	79,287
Sales and marketing	2,706	2,533	5,344	5,027
Technology and development	4,741	5,267	10,625	10,382
General and administrative	5,280	4,904	10,204	9,887
Depreciation and amortization	4,203	4,094	8,249	8,080
(Gain) loss on other assets, net	(2,219)	262	(2,218)	(6,961)
Interest expense	1,218	1,226	2,453	2,470
Other income, net	(41)	(44)	(90)	(2)
Loss before income tax	(2,546)	(6,401)	(8,021)	(5,468)
Income tax benefit	(75)	(728)	(443)	(1,671)
Net and comprehensive loss	$ (2,471)	$ (5,673)	$ (7,578)	$ (3,797)
Net loss per share attributable to common stockholders:
Net loss per share attributable to common stockholders - Basic (in earnings per share)	$ (0.13)	$ (0.30)	$ (0.39)	$ (0.20)
Net loss per share attributable to common stockholders - Diluted (in earnings per share)	$ (0.13)	$ (0.30)	$ (0.39)	$ (0.20)
Weighted average number of shares outstanding:
Weighted average shares outstanding, basic	19,247	18,805	19,197	18,755
Weighted average shares outstanding, diluted	19,247	18,805	19,197	18,755

Statements of Cash Flows

Statements of Cash Flows - USD ($) $ in Thousands	6 Months Ended
	Jun. 30, 2016	Jun. 30, 2015
Cash flows from operating activities
Net loss	$ (7,578)	$ (3,797)
Adjustments to reconcile net loss to net cash provided by operating activities:
Depreciation and amortization	8,249	8,080
Amortization of discount and issuance costs on debt	899	937
Deferred income taxes	(443)	(1,671)
Stock-based compensation expense	3,096	3,137
Gain on gTLD application withdrawals, net	(1,113)	(6,961)
Gain on sale of assets	(1,105)
Other	13	(140)
Change in operating assets and liabilities:
Accounts receivable	(1,382)	(858)
Prepaid expenses and other current assets	1,269	(690)
Deferred registration costs	(3,079)	(4,953)
Other long-term assets	49	(470)
Accounts payable	1,038	672
Accrued expenses and other liabilities	(4,899)	1,343
Deferred revenue	5,405	8,211
Net cash provided by operating activities	419	2,840
Cash flows from investing activities
Purchases of property and equipment	(1,758)	(2,761)
Purchases of intangible assets	(406)	(972)
Payments, deposits and returns of deposits for gTLD applications	3,119	(10,018)
Proceeds from gTLD withdrawals	1,250	7,160
Proceeds from repayment of note receivable	750	1,500
Proceeds from sales of assets	1,105
Other	187	194
Net cash provided by (used in) investing activities	4,247	(4,897)
Cash flows from financing activities
Principal payments on capital lease obligations	(503)
Principal payments on debt	(750)	(750)
Proceeds from stock option exercises	4	46
Minimum tax withholding on restricted stock awards	(703)	(572)
Net cash used in financing activities	(1,952)	(1,276)
Change in cash and cash equivalents	2,714	(3,333)
Cash and cash equivalents, beginning of period	45,095	49,743
Cash and cash equivalents, end of period	47,809	46,410
Supplemental disclosure of cash flows
Cash paid for interest	1,484	1,519
Cash paid for income taxes	$ 78	$ 41

Company Background and Basis of

Company Background and Basis of Presentation	6 Months Ended
	Jun. 30, 2016
Organization Consolidation And Presentation Of Financial Statements [Abstract]
Company Background and Basis of Presentation	1. Company Background and Basis of Presentation Description of Business Rightside Group, Ltd. (together with its subsidiaries, “Rightside,” the “Company,” “our,” “we,” or “us”) provides domain name registration and related value‑added service subscriptions to third parties. We are also an accredited registry for new generic Top Level Domains (“gTLDs”) made available by the expansion of new gTLDs (the “New gTLD Program”) by the Internet Corporation for Assigned Names and Numbers (“ICANN”). Basis of Presentation Our consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the United States (“GAAP”). All significant intercompany accounts and transactions have been eliminated in consolidation. We will refer to our consolidated financial statements as “financial statements,” “balance sheets,” “statements of operations and comprehensive loss,” and “statements of cash flows” herein. We had no significant components of other comprehensive income (loss) during any of the periods presented, as such, a separate consolidated statement of comprehensive income (loss) is not presented. In addition, we had no significant changes in equity, as such, a consolidated statement of stockholders’ equity is not presented. Interim Financial Statements We have prepared the unaudited interim financial statements on the same basis as the audited financial statements and have included all adjustments, consisting of normal recurring adjustments and accruals, necessary for the fair presentation of our financial statements. The results for the three and six months ended June 30, 2016 are not necessarily indicative of the results expected for the full year. The unaudited interim financial statements have been prepared in accordance with GAAP. They do not include all of the information and footnotes required by GAAP for complete financial statements. The year-end balance sheet data was derived from audited financial statements, but does not include all disclosures required by GAAP. Therefore, these financial statements should be read in conjunction with our audited financial statements and notes thereto included in our Form 10-K as filed with the Securities and Exchange Commission (“SEC”) on March 11, 2016. Reclassifications Certain amounts previously presented for prior periods have been reclassified to conform to current presentation. These reclassifications did not affect consolidated net income, cash flows, or equity for the years presented. We reclassified $1.6 million of other assets, representing debt issue costs, to noncurrent debt on our balance sheets as of December 31, 2015, in accordance with our retrospective adoption of the Financial Accounting Standards Board’s (“FASB”) Accounting Standards Update (“ASU”) 2015-03. We also reclassified $0.7 million of prepaid expenses and other current assets to the current portion of deferred revenue on our balance sheets as of December 31, 2015.

Summary of Significant Accounti

Summary of Significant Accounting Policies and Accounting Pronouncements	6 Months Ended
	Jun. 30, 2016
Accounting Policies [Abstract]
Summary of Significant Accounting Policies and Accounting Pronouncements	2. Summary of Significant Accounting Policies and Accounting Pronouncements Refer to our audited financial statements included in our Form 10-K as filed with the SEC on March 11, 2016, for a complete discussion of all significant accounting policies. Adoption of New Accounting Pronouncements In April 2015, the FASB issued ASU No. 2015-05, “Intangibles – Goodwill and Other – Internal-Use Software (Subtopic 350-40): Customer’s Accounting for Fees Paid in a Cloud Computing Arrangement.” In April 2015, the FASB issued ASU 2015-03, “Interest – Imputation of Interest (Subtopic 835-30): Simplifying the Presentation of Debt Issuance Costs.” “Presentation and Subsequent Measurement of Debt Issuance Costs Associated with Line-of-Credit Arrangements.” d $0.3 million of debt issuance costs that remained classified as an other asset on our balance sheets because it is related to our line of credit agreement In January 2015, the FASB issued ASU 2015-01, “ Income Statement—Extraordinary and Unusual Items (Subtopic 225-20): Simplifying Income Statement Presentation by Eliminating the Concept of Extraordinary Items. Accounting Pronouncements Not Yet Adopted In June 2016, the FASB issued ASU 2016-13, “ Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments In March 2016, the FASB issued ASU 2016-09, “Compensation — Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting,” In February 2016, the FASB issued ASU 2016-02, “Leases (Topic 842),” In May 2014, the FASB issued ASU 2014‑09, “ Revenue from Contracts with Customers (Topic 606 Deferral of the Effective Date,” Principal versus Agent Considerations (Reporting Revenue Gross versus Net) Identifying Performance Obligations and Licensing Narrow-Scope Improvements and Practical Expedients,”

Intangible Assets

Intangible Assets	6 Months Ended
	Jun. 30, 2016
Intangible Assets Net Excluding Goodwill [Abstract]
Intangible Assets	3. Intangible Assets Intangible assets consisted of the following (in thousands): June 30, 2016 December 31, 2015 Gross Gross carrying Accumulated carrying Accumulated amount amortization Net amount amortization Net Owned website names $ 14,273 $ (11,473 ) $ 2,800 $ 14,977 $ (11,628 ) $ 3,349 Customer relationships 20,842 (20,152 ) 690 20,842 (19,515 ) 1,327 Technology 7,953 (7,943 ) 10 7,953 (7,934 ) 19 Non-compete agreements 207 (143 ) 64 207 (122 ) 85 Trade names 5,466 (2,624 ) 2,842 5,466 (2,465 ) 3,001 gTLDs 54,348 (8,383 ) 45,965 51,988 (5,441 ) 46,547 Total $ 103,089 $ (50,718 ) $ 52,371 $ 101,433 $ (47,105 ) $ 54,328 Amortization expense of intangible assets was $2.5 million for both of the three months ended June 30, 2016 and 2015, respectively, and $4.8 million for both of the six months ended June 30, 2016 and 2015, respectively. Estimated future amortization expense related to intangible assets held as of June 30, 2016 (in thousands): Years Ending December 31, Amount 2016 (July 1, 2016 to December 31, 2016) $ 4,240 2017 6,808 2018 6,630 2019 6,321 2020 6,078 Thereafter 22,294 Total $ 52,371

gTLD Deposits

gTLD Deposits	6 Months Ended
	Jun. 30, 2016
Deferred Costs Capitalized Prepaid And Other Assets Disclosure [Abstract]
gTLD Deposits	4. gTLD Deposits As of June 30, 2016 and December 31, 2015, our gTLD deposits were $2.5 million and $8.1 million, respectively. During the six months ended June 30, 2016, we received $3.1 million related to the settlement of certain gTLD applications under the New gTLD Program. Payments and deposits 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. These deposits would be applied to the purchase of the gTLD if we are awarded the gTLD operator rights or these deposits may be returned to us if we withdraw our interest in the gTLD application. Gains on the sale of our interest in gTLDs applications are recognized when realized, while losses are recognized when deemed probable. The withdrawal of our interest in certain gTLD applications resulted in a net gain of $1.1 million for the three months ended June 30, 2016, and the settlement of our interest in certain gTLD applications resulted in a net loss of $0.3 million for the three months ended June 30, 2015. The withdrawal of our interest in certain gTLD applications resulted in a net gain of $1.1 million and a net gain of $7.0 million for the six months ended June 30, 2016 and 2015, respectively. We recorded these gains and losses in (gain) loss on other assets, net, on the statements of operations and comprehensive loss. In April 2016, we sold the majority of our non-core registrar credentials. Registrars are required to be accredited by ICANN in order to register domain names. The registrar credentials that were sold were mainly used to increase our ability to register newly deleted domain names the instant they became available. They were part of a business on which we are no longer focusing. Instead, we continue to focus on utilizing alternative channels to obtain domain names for our Aftermarket business. The sale of these credentials resulted in a net gain of $1.1 million for the three and six months ended June 30, 2016. We recorded this gain in (gain) loss on other assets, net, on the statements of operations and comprehensive loss.

Other Balance Sheet Items

Other Balance Sheet Items	6 Months Ended
	Jun. 30, 2016
Balance Sheet Related Disclosures [Abstract]
Other Balance Sheet Items	5. Other Balance Sheet Items Prepaid expenses and other current assets consisted of the following (in thousands): June 30, December 31, 2016 2015 Prepaid expenses $ 3,204 $ 3,167 Prepaid registry fees 2,000 3,306 Note receivable 10 760 Prepaid expenses and other current assets $ 5,214 $ 7,233 Namecheap Senior Unsecured Promissory Note Receivable In October 2014, we entered into an agreement with Namecheap, Inc. (“Namecheap”), whereby Namecheap issued a Senior Unsecured Promissory Note (“Note receivable”) to us for $2.5 million. In January 2016, we entered into Amendment No. 4 of Senior Unsecured Promissory Note, which extended the maturity date of the Note receivable to June 30, 2016. As of December 31, 2015, the outstanding balance on the Note receivable was $750,000. During the six months ended June 30, 2016, Namecheap made four principal payments totaling $750,000. There was no balance that remained outstanding on the Note receivable as of June 30, 2016.

Debt

Debt	6 Months Ended
	Jun. 30, 2016
Debt Disclosure [Abstract]
Debt	6. Debt Silicon Valley Bank Credit Facility In March 2016, we entered into Amendment No. 3 to Credit Agreement (“Amendment”) with Silicon Valley Bank. The Amendment revises the terms of our existing Credit Agreement (“SVB Credit Facility”). The Amendment revises the financial condition covenants, including the consolidated net leverage ratio, minimum liquidity ratio, and minimum consolidated EBITDA. The Amendment removes the consolidated fixed charge coverage ratio, consolidated senior leverage ratio and minimum liquidity. Additionally, the Amendment approves a one-time distribution of $10.0 million for the partial prepayment of our term loan with Tennenbaum Capital Partners LLC. As of June 30, 2016, we were in compliance with all covenants.

Commitments and Contingencies

Commitments and Contingencies	6 Months Ended
	Jun. 30, 2016
Commitments And Contingencies Disclosure [Abstract]
Commitments and Contingencies	7. Commitments and Contingencies 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, could have a material adverse effect on our future financial results.

Income Taxes

Income Taxes	6 Months Ended
	Jun. 30, 2016
Income Tax Disclosure [Abstract]
Income Taxes	8. Income Taxes Our effective tax rate differs from the U.S. Federal statutory rate primarily as a result of state taxes, non-deductible stock option expenses and implementing a domestic valuation allowance. The effective tax rate was 2.9% and 11.4% for the three months ended June 30, 2016 and 2015, respectively, and was 5.5% and 30.6% for the six months ended June 30, 2016 and 2015, respectively. We recorded an income tax benefit of $0.1 million during three months ended June 30, 2016, compared to $0.7 million during the same period in 2015. The decreased benefit was primarily due to an increase in stock-based compensation shortfall and the impact of implementing a valuation allowance on projected excess deferred tax assets in the current period. We recorded an income tax benefit of $0.4 million during the six months ended June 30, 2016, compared to $1.7 million during the same period in 2015. The decreased benefit was primarily due to an increase in stock-based compensation shortfall and the impact of implementing a valuation allowance on projected excess deferred tax assets in the current period. We currently have a net deferred tax liability related to our U.S. activities. However, projected future growth in our deferred tax assets indicates that we will have net deferred tax assets in the U.S. by the end of the current year, which will require a valuation allowance as it is more likely than not that those net deferred tax assets will not be realized. When calculating the annual effective income tax rate for the three and six months ended June 30, 2016, we have included the anticipated valuation allowance in the effective tax rate to ensure that the tax benefit recorded on the year-to-date losses would not exceed the amount expected to be generated during the current year. 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 flows. 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 and six months ended June 30, 2016 or 2015, and we do not expect our uncertain tax position to change materially during the next 12 months. We file a U.S. federal tax return as well as tax returns in many states and multiple foreign jurisdictions. All tax years since our incorporation remain subject to examination by the Internal Revenue Service and various state authorities.

Fair Value of Financial Instrum

Fair Value of Financial Instruments	6 Months Ended
	Jun. 30, 2016
Fair Value Disclosures [Abstract]
Fair Value of Financial Instruments	9. Fair Value of Financial Instruments 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. Financial assets and financial liabilities are classified in their entirety based on the lowest level of input that is significant to the fair value measurements. 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. Our assessment of the significance of a particular input to the fair value measurements requires judgment, and may affect the valuation of the assets and liabilities being measured and their placement within the fair value hierarchy. Assets and liabilities not carried at fair value in our financial statements, but for which the fair value is disclosed, are summarized below (in thousands): Carrying Fair Value Measurement Using Total As of June 30, 2016 Value Level 1 Level 2 Level 3 Fair Value Assets: Note receivable $ 10 $ — $ — $ 10 $ 10 Liabilities: Debt $ 23,251 $ — $ — $ 30,324 $ 30,324 Carrying Fair Value Measurement Using Total As of December 31, 2015 Value Level 1 Level 2 Level 3 Fair Value Assets: Note receivable $ 760 $ — $ — $ 760 $ 760 Liabilities: Debt $ 23,201 $ — $ — $ 31,489 $ 31,489 Our note receivable is short-term in nature and its carrying value approximates fair value. This is classified as a Level 3 measurement. The fair value of our debt is estimated based on the discounted cash flow approach, using the current cost of debt available to us with similar loan terms and remaining maturities. As of June 30, 2016, the current cost of debt available to us was 6%. Because these estimates utilize significant unobservable inputs, we classify our debt as a Level 3 measurement. The current cost of debt is considered a significant unobservable input used in the fair value measurement of our debt. This significant unobservable input would have a direct impact on the fair value of our debt if it were adjusted. Consequently, significant increases or decreases in the cost of debt would result in a significantly higher or lower fair value. At June 30, 2016 and December 31, 2015, a hypothetical 10% increase or decrease in the cost of debt would change the fair value of our debt, classified as Level 3 within the fair value hierarchy, by $0.4 million and $0.5 million, respectively. The following table presents a reconciliation of our debt measured at fair value using unobservable inputs (Level 3) (in thousands): Amount Balance as of December 31, 2015 $ 31,489 Principal and interest payments on debt (2,036 ) Change in fair value of future payments on debt 871 Balance as of June 30, 2016 $ 30,324 The following table presents a reconciliation of our note receivable measured at fair value using unobservable inputs (Level 3) (in thousands): Amount Balance as of December 31, 2015 $ 760 Repayments on note receivable (750 ) Balance as of June 30, 2016 $ 10

Business Segments

Business Segments	6 Months Ended
	Jun. 30, 2016
Segment Reporting [Abstract]
Business Segments	10. Business Segments We follow the authoritative literature that established annual and interim reporting standards for an entity’s operating segments and related disclosures about its products and services, geographic regions and major customers. We operate in one operating segment. Our chief operating decision maker (“CODM”) manages our operations on a global basis for purposes of evaluating financial performance and allocating resources. The CODM reviews separate revenue information for our Registrar services, Registry services, and Aftermarket and other services. All other financial information is reviewed by the CODM on a global basis. Our operations are located in the United States, Ireland, Canada, Australia and Cayman Islands. Revenue derived from our Registrar services, Registry services, and Aftermarket and other offerings are as follows (in thousands): Three Months Ended Six Months Ended June 30, June 30, 2016 2015 2016 2015 Registrar services $ 44,157 $ 43,281 $ 88,175 $ 85,280 Registry services 2,932 1,925 5,571 3,530 Aftermarket and other 7,839 7,544 17,108 14,876 Eliminations (891 ) (579 ) (1,693 ) (984 ) Total revenue $ 54,037 $ 52,171 $ 109,161 $ 102,702 Amounts in the eliminations line reflect the elimination of intercompany charges between our Registrar and Registry services businesses. Revenue by geographic location is as follows (in thousands): Three Months Ended Six Months Ended June 30, June 30, 2016 2015 2016 2015 United States $ 39,294 $ 37,828 $ 79,723 $ 74,440 International 14,743 14,343 29,438 28,262 Total $ 54,037 $ 52,171 $ 109,161 $ 102,702 No international country represented more than 10% of total revenue in any period presented.

Loss Per Share

Loss Per Share	6 Months Ended
	Jun. 30, 2016
Earnings Per Share [Abstract]
Loss Per Share	11. Loss Per Share Basic and diluted loss per share were calculated using the following (in thousands, except per share amounts): Three Months Ended Six Months Ended June 30, June 30, 2016 2015 2016 2015 Net loss $ (2,471 ) $ (5,673 ) $ (7,578 ) $ (3,797 ) Weighted average number of shares outstanding: Basic 19,247 18,805 19,197 18,755 Diluted 19,247 18,805 19,197 18,755 Net loss per share attributable to common stockholders: Basic $ (0.13 ) $ (0.30 ) $ (0.39 ) $ (0.20 ) Diluted (0.13 ) (0.30 ) (0.39 ) (0.20 ) For the three months ended June 30, 2016 and 2015, we excluded approximately 224 thousand and 79 thousand shares, respectively, of restricted stock units and stock options from the calculation of diluted weighted average shares outstanding as their inclusion would have been antidilutive. For the six months ended June 30, 2016 and 2015, we excluded approximately 169 thousand and 36 thousand shares, respectively, of restricted stock units and stock options from the calculation of diluted weighted average shares outstanding as their inclusion would have been antidilutive. The $15.05 exercise price per share on the stock warrants related to the Tennenbaum Credit Facility did not have a dilutive effect for any period presented.

Summary of Significant Accoun17

Summary of Significant Accounting Policies and Accounting Pronouncements (Policies)	6 Months Ended
	Jun. 30, 2016
Accounting Policies [Abstract]
Reclassifications	Reclassifications Certain amounts previously presented for prior periods have been reclassified to conform to current presentation. These reclassifications did not affect consolidated net income, cash flows, or equity for the years presented. We reclassified $1.6 million of other assets, representing debt issue costs, to noncurrent debt on our balance sheets as of December 31, 2015, in accordance with our retrospective adoption of the Financial Accounting Standards Board’s (“FASB”) Accounting Standards Update (“ASU”) 2015-03. We also reclassified $0.7 million of prepaid expenses and other current assets to the current portion of deferred revenue on our balance sheets as of December 31, 2015.
Adoption of New Accounting Pronouncements	Adoption of New Accounting Pronouncements In April 2015, the FASB issued ASU No. 2015-05, “Intangibles – Goodwill and Other – Internal-Use Software (Subtopic 350-40): Customer’s Accounting for Fees Paid in a Cloud Computing Arrangement.” In April 2015, the FASB issued ASU 2015-03, “Interest – Imputation of Interest (Subtopic 835-30): Simplifying the Presentation of Debt Issuance Costs.” “Presentation and Subsequent Measurement of Debt Issuance Costs Associated with Line-of-Credit Arrangements.” d $0.3 million of debt issuance costs that remained classified as an other asset on our balance sheets because it is related to our line of credit agreement In January 2015, the FASB issued ASU 2015-01, “ Income Statement—Extraordinary and Unusual Items (Subtopic 225-20): Simplifying Income Statement Presentation by Eliminating the Concept of Extraordinary Items.
Accounting Pronouncements Not Yet Adopted	Accounting Pronouncements Not Yet Adopted In June 2016, the FASB issued ASU 2016-13, “ Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments In March 2016, the FASB issued ASU 2016-09, “Compensation — Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting,” In February 2016, the FASB issued ASU 2016-02, “Leases (Topic 842),” In May 2014, the FASB issued ASU 2014‑09, “ Revenue from Contracts with Customers (Topic 606 Deferral of the Effective Date,” Principal versus Agent Considerations (Reporting Revenue Gross versus Net) Identifying Performance Obligations and Licensing Narrow-Scope Improvements and Practical Expedients,”
Fair Value of Financial Instruments	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. Financial assets and financial liabilities are classified in their entirety based on the lowest level of input that is significant to the fair value measurements. 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. Our assessment of the significance of a particular input to the fair value measurements requires judgment, and may affect the valuation of the assets and liabilities being measured and their placement within the fair value hierarchy.
Segment Reporting	We follow the authoritative literature that established annual and interim reporting standards for an entity’s operating segments and related disclosures about its products and services, geographic regions and major customers.

Intangible Assets (Tables)

Intangible Assets (Tables)	6 Months Ended
	Jun. 30, 2016
Intangible Assets Net Excluding Goodwill [Abstract]
Schedule of Intangible Assets	Intangible assets consisted of the following (in thousands): June 30, 2016 December 31, 2015 Gross Gross carrying Accumulated carrying Accumulated amount amortization Net amount amortization Net Owned website names $ 14,273 $ (11,473 ) $ 2,800 $ 14,977 $ (11,628 ) $ 3,349 Customer relationships 20,842 (20,152 ) 690 20,842 (19,515 ) 1,327 Technology 7,953 (7,943 ) 10 7,953 (7,934 ) 19 Non-compete agreements 207 (143 ) 64 207 (122 ) 85 Trade names 5,466 (2,624 ) 2,842 5,466 (2,465 ) 3,001 gTLDs 54,348 (8,383 ) 45,965 51,988 (5,441 ) 46,547 Total $ 103,089 $ (50,718 ) $ 52,371 $ 101,433 $ (47,105 ) $ 54,328
Estimated Future Amortization Expense	Estimated future amortization expense related to intangible assets held as of June 30, 2016 (in thousands): Years Ending December 31, Amount 2016 (July 1, 2016 to December 31, 2016) $ 4,240 2017 6,808 2018 6,630 2019 6,321 2020 6,078 Thereafter 22,294 Total $ 52,371

Other Balance Sheet Items (Tabl

Other Balance Sheet Items (Tables)	6 Months Ended
	Jun. 30, 2016
Balance Sheet Related Disclosures [Abstract]
Schedule of Prepaid and Other Current Assets	Prepaid expenses and other current assets consisted of the following (in thousands): June 30, December 31, 2016 2015 Prepaid expenses $ 3,204 $ 3,167 Prepaid registry fees 2,000 3,306 Note receivable 10 760 Prepaid expenses and other current assets $ 5,214 $ 7,233

Fair Value of Financial Instr20

Fair Value of Financial Instruments (Tables)	6 Months Ended
	Jun. 30, 2016
Fair Value Disclosures [Abstract]
Schedule of Assets and Liabilities Measured at Fair Value	Assets and liabilities not carried at fair value in our financial statements, but for which the fair value is disclosed, are summarized below (in thousands): Carrying Fair Value Measurement Using Total As of June 30, 2016 Value Level 1 Level 2 Level 3 Fair Value Assets: Note receivable $ 10 $ — $ — $ 10 $ 10 Liabilities: Debt $ 23,251 $ — $ — $ 30,324 $ 30,324 Carrying Fair Value Measurement Using Total As of December 31, 2015 Value Level 1 Level 2 Level 3 Fair Value Assets: Note receivable $ 760 $ — $ — $ 760 $ 760 Liabilities: Debt $ 23,201 $ — $ — $ 31,489 $ 31,489
Schedule of Reconciliation of Debt Fair Value Using Unobservable Inputs	The following table presents a reconciliation of our debt measured at fair value using unobservable inputs (Level 3) (in thousands): Amount Balance as of December 31, 2015 $ 31,489 Principal and interest payments on debt (2,036 ) Change in fair value of future payments on debt 871 Balance as of June 30, 2016 $ 30,324
Schedule of Reconciliation of Note Receivable Fair Value Using Unobservable Inputs	The following table presents a reconciliation of our note receivable measured at fair value using unobservable inputs (Level 3) (in thousands): Amount Balance as of December 31, 2015 $ 760 Repayments on note receivable (750 ) Balance as of June 30, 2016 $ 10

Business Segments (Tables)

Business Segments (Tables)	6 Months Ended
	Jun. 30, 2016
Segment Reporting [Abstract]
Schedule of revenue derived from segments	Revenue derived from our Registrar services, Registry services, and Aftermarket and other offerings are as follows (in thousands): Three Months Ended Six Months Ended June 30, June 30, 2016 2015 2016 2015 Registrar services $ 44,157 $ 43,281 $ 88,175 $ 85,280 Registry services 2,932 1,925 5,571 3,530 Aftermarket and other 7,839 7,544 17,108 14,876 Eliminations (891 ) (579 ) (1,693 ) (984 ) Total revenue $ 54,037 $ 52,171 $ 109,161 $ 102,702
Schedule of revenue by location	Revenue by geographic location is as follows (in thousands): Three Months Ended Six Months Ended June 30, June 30, 2016 2015 2016 2015 United States $ 39,294 $ 37,828 $ 79,723 $ 74,440 International 14,743 14,343 29,438 28,262 Total $ 54,037 $ 52,171 $ 109,161 $ 102,702

Loss Per Share (Tables)

Loss Per Share (Tables)	6 Months Ended
	Jun. 30, 2016
Earnings Per Share [Abstract]
Schedule of loss per share	Basic and diluted loss per share were calculated using the following (in thousands, except per share amounts): Three Months Ended Six Months Ended June 30, June 30, 2016 2015 2016 2015 Net loss $ (2,471 ) $ (5,673 ) $ (7,578 ) $ (3,797 ) Weighted average number of shares outstanding: Basic 19,247 18,805 19,197 18,755 Diluted 19,247 18,805 19,197 18,755 Net loss per share attributable to common stockholders: Basic $ (0.13 ) $ (0.30 ) $ (0.39 ) $ (0.20 ) Diluted (0.13 ) (0.30 ) (0.39 ) (0.20 )

Company Background and Basis 23

Company Background and Basis of Presentation - Additional Information (Details) $ in Millions	Dec. 31, 2015USD ($)
Organization Consolidation And Presentation Of Financial Statements [Line Items]
Reclassification of prepaid expenses and other current assets to current portion of deferred revenue	$ 0.7
ASU 2015-03
Organization Consolidation And Presentation Of Financial Statements [Line Items]
Reclassification of other assets, representing debt issue cost to noncurrent debt	$ 1.6

Summary of Significant Accoun24

Summary of Significant Accounting Policies and Accounting Pronouncements (Details) - USD ($) $ in Millions	6 Months Ended
	Jun. 30, 2016	Dec. 31, 2015
ASU 2015-03 | Pro Forma
Summary Of Significant Accounting Policies And Recent Accounting Pronouncements [Line Items]
Debt issuance costs classified as other assets		$ 1.6
ASU 2015-15 | Pro Forma
Summary Of Significant Accounting Policies And Recent Accounting Pronouncements [Line Items]
Debt issuance costs classified as other assets		$ 0.3
ASU 2016-02
Summary Of Significant Accounting Policies And Recent Accounting Pronouncements [Line Items]
Description Of Lessee Leasing Arrangements Operating Leases	The new standard brings substantially all leases on the balance sheets for operating lease arrangements with lease terms greater than 12 months for lessees.

Intangible Assets - Schedule of

Intangible Assets - Schedule of Intangible Assets (Details) - USD ($) $ in Thousands	Jun. 30, 2016	Dec. 31, 2015
Finite-Lived Intangible Assets [Line Items]
Gross carrying amount	$ 103,089	$ 101,433
Accumulated amortization	(50,718)	(47,105)
Total	52,371	54,328
Owned website names
Finite-Lived Intangible Assets [Line Items]
Gross carrying amount	14,273	14,977
Accumulated amortization	(11,473)	(11,628)
Total	2,800	3,349
Customer relationships
Finite-Lived Intangible Assets [Line Items]
Gross carrying amount	20,842	20,842
Accumulated amortization	(20,152)	(19,515)
Total	690	1,327
Technology
Finite-Lived Intangible Assets [Line Items]
Gross carrying amount	7,953	7,953
Accumulated amortization	(7,943)	(7,934)
Total	10	19
Noncompete agreements
Finite-Lived Intangible Assets [Line Items]
Gross carrying amount	207	207
Accumulated amortization	(143)	(122)
Total	64	85
Trade names
Finite-Lived Intangible Assets [Line Items]
Gross carrying amount	5,466	5,466
Accumulated amortization	(2,624)	(2,465)
Total	2,842	3,001
gTLDs
Finite-Lived Intangible Assets [Line Items]
Gross carrying amount	54,348	51,988
Accumulated amortization	(8,383)	(5,441)
Total	$ 45,965	$ 46,547

Intangible Assets - Additional

Intangible Assets - Additional Information (Details) - USD ($) $ in Millions	3 Months Ended		6 Months Ended
	Jun. 30, 2016	Jun. 30, 2015	Jun. 30, 2016	Jun. 30, 2015
Intangible Assets Net Excluding Goodwill [Abstract]
Amortization expense of intangible assets	$ 2.5	$ 2.5	$ 4.8	$ 4.8

Intangible Assets - Estimated F

Intangible Assets - Estimated Future Amortization Expense (Details) - USD ($) $ in Thousands	Jun. 30, 2016	Dec. 31, 2015
Finite-Lived Intangible Assets, Net, Amortization Expense, Rolling Maturity [Abstract]
2016 (July 1, 2016 to December 31, 2016)	$ 4,240
2,017	6,808
2,018	6,630
2,019	6,321
2,020	6,078
Thereafter	22,294
Total	$ 52,371	$ 54,328

gTLD Deposits - Additional Info

gTLD Deposits - Additional Information (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2016	Jun. 30, 2015	Jun. 30, 2016	Jun. 30, 2015	Dec. 31, 2015
Deferred Costs Capitalized Prepaid And Other Assets Disclosure [Line Items]
gTLD deposits	$ 2,540		$ 2,540		$ 8,139
Receipts and payments for gTLD applications			3,119	$ (10,018)
Gain (loss) on other assets, net	2,219	$ (262)	2,218	6,961
Registrar Credentials
Deferred Costs Capitalized Prepaid And Other Assets Disclosure [Line Items]
Gain (loss) on other assets, net	1,105		1,105
gTLDs
Deferred Costs Capitalized Prepaid And Other Assets Disclosure [Line Items]
Gain (loss) on other assets, net	$ 1,100	$ (300)	$ 1,100	$ 7,000

Other Balance Sheet Items - Sch

Other Balance Sheet Items - Schedule of Prepaid and Other Current Assets (Details) - USD ($) $ in Thousands	Jun. 30, 2016	Dec. 31, 2015
Prepaid Expense, Current [Abstract]
Prepaid expenses	$ 3,204	$ 3,167
Prepaid registry fees	2,000	3,306
Note receivable	10	760
Prepaid expenses and other current assets	$ 5,214	$ 7,233

Other Balance Sheet Items - Add

Other Balance Sheet Items - Additional Information (Details)	6 Months Ended
	Jun. 30, 2016USD ($)item	Jun. 30, 2015USD ($)	Dec. 31, 2015USD ($)	Oct. 31, 2014USD ($)
Accounts receivable
Note receivable	$ 10,000		$ 760,000
Proceeds from repayment of note receivable	750,000	$ 1,500,000
Namecheap
Accounts receivable
Note receivable	$ 0		$ 750,000	$ 2,500,000
Number of payment received | item	4
Proceeds from repayment of note receivable	$ 750,000

Debt - Additional Information (

Debt - Additional Information (Details)	Jun. 30, 2016USD ($)
Silicon Valley Bank | Line of Credit
Line Of Credit Facility [Line Items]
Debt instrument restrictive covenant relief for term loan payment	$ 10,000,000

Income Taxes - Additional Infor

Income Taxes - Additional Information (Details) - USD ($)	3 Months Ended		6 Months Ended
	Jun. 30, 2016	Jun. 30, 2015	Jun. 30, 2016	Jun. 30, 2015
Income Tax Disclosure [Abstract]
Effective income tax rate	2.90%	11.40%	5.50%	30.60%
Income tax benefit	$ (75,000)	$ (728,000)	$ (443,000)	$ (1,671,000)
Uncertain income tax positions	$ 0	$ 0	$ 0	$ 0

Fair Value of Financial Instr33

Fair Value of Financial Instruments - Schedule of Assets and Liabilities Measured at Fair Value (Details) - USD ($) $ in Thousands	Jun. 30, 2016	Dec. 31, 2015
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Note receivable, carrying value	$ 10	$ 760
Debt, carrying value	23,251	23,201
Note receivable, fair value	10	760
Debt, fair value	30,324	31,489
Level 3
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Note receivable, fair value	10	760
Debt, fair value	$ 30,324	$ 31,489

Fair Value of Financial Instr34

Fair Value of Financial Instruments - Additional Information (Details) - Level 3 - USD ($) $ in Millions	6 Months Ended	12 Months Ended
	Jun. 30, 2016	Dec. 31, 2015
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Current cost of debt	6.00%
Percentage of change in cost of debt	10.00%	10.00%
Change in fair value of debt	$ 0.4	$ 0.5

Fair Value of Financial Instr35

Fair Value of Financial Instruments - Schedule of Reconciliation of Debt Fair Value Using Unobservable Inputs (Details) - Level 3 $ in Thousands	6 Months Ended
	Jun. 30, 2016USD ($)
Reconciliation of debt measured at fair value using unobservable inputs (Level 3)
Beginning balance	$ 31,489
Principal and interest payments on debt	(2,036)
Change in fair value of future payments on debt	871
Ending balance	$ 30,324

Fair Value of Financial Instr36

Fair Value of Financial Instruments - Schedule of Reconciliation of Note Receivable Fair Value Using Unobservable Inputs (Details) - USD ($) $ in Thousands	6 Months Ended
	Jun. 30, 2016	Jun. 30, 2015
Reconciliation of note receivable measured at fair value using unobservable inputs (Level 3)
Beginning balance	$ 760
Repayments on note receivable	(750)	$ (1,500)
Ending balance	10
Level 3
Reconciliation of note receivable measured at fair value using unobservable inputs (Level 3)
Beginning balance	760
Repayments on note receivable	(750)
Ending balance	$ 10

Business Segments - Additional

Business Segments - Additional Information (Details) - segment	3 Months Ended		6 Months Ended
	Jun. 30, 2016	Jun. 30, 2015	Jun. 30, 2016	Jun. 30, 2015
Segment Reporting Information [Line Items]
Number of Operating Segments			1
International | Customer Concentration Risk | Sales Revenue Net
Segment Reporting Information [Line Items]
Concentration percentage	10.00%	10.00%	10.00%	10.00%

Business Segments - Schedule of

Business Segments - Schedule of Revenue Derived From Segments (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2016	Jun. 30, 2015	Jun. 30, 2016	Jun. 30, 2015
Segment Reporting Information [Line Items]
Total Revenue	$ 54,037	$ 52,171	$ 109,161	$ 102,702
Eliminations
Segment Reporting Information [Line Items]
Total Revenue	(891)	(579)	(1,693)	(984)
Registrar services | Operating segment
Segment Reporting Information [Line Items]
Total Revenue	44,157	43,281	88,175	85,280
Registry services | Operating segment
Segment Reporting Information [Line Items]
Total Revenue	2,932	1,925	5,571	3,530
Aftermarket and other | Operating segment
Segment Reporting Information [Line Items]
Total Revenue	$ 7,839	$ 7,544	$ 17,108	$ 14,876

Business Segments - Schedule 39

Business Segments - Schedule of Revenue by Location (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2016	Jun. 30, 2015	Jun. 30, 2016	Jun. 30, 2015
Segment Reporting Information [Line Items]
Total Revenue	$ 54,037	$ 52,171	$ 109,161	$ 102,702
United States
Segment Reporting Information [Line Items]
Total Revenue	39,294	37,828	79,723	74,440
International
Segment Reporting Information [Line Items]
Total Revenue	$ 14,743	$ 14,343	$ 29,438	$ 28,262

Loss Per Share - Schedule of Lo

Loss Per Share - Schedule of Loss Per Share (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2016	Jun. 30, 2015	Jun. 30, 2016	Jun. 30, 2015
Earnings Per Share [Abstract]
Net loss	$ (2,471)	$ (5,673)	$ (7,578)	$ (3,797)
Weighted average number of shares outstanding:
Weighted average shares outstanding, basic	19,247	18,805	19,197	18,755
Weighted average shares outstanding, diluted	19,247	18,805	19,197	18,755
Net loss per share attributable to common stockholders:
Net loss per share attributable to common stockholders - Basic (in earnings per share)	$ (0.13)	$ (0.30)	$ (0.39)	$ (0.20)
Net loss per share attributable to common stockholders - Diluted (in earnings per share)	$ (0.13)	$ (0.30)	$ (0.39)	$ (0.20)

Loss Per Share - Additional Inf

Loss Per Share - Additional Information (Details) - $ / shares shares in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2016	Jun. 30, 2015	Jun. 30, 2016	Jun. 30, 2015
Earnings Loss Per Share [Line Items]
Antidilutive Securities Excluded from Computation of Earnings Per Share, Amount	224	79	169	36
Tennenbaum Credit Facility Warrants
Earnings Loss Per Share [Line Items]
Warrants exercise price	$ 15.05	$ 15.05	$ 15.05	$ 15.05