Document and Entity Information
Document and Entity Information - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2016 | Mar. 02, 2017 | Jun. 30, 2016 | |
Document And Entity Information [Abstract] | |||
Entity Registrant Name | RIGHTSIDE GROUP, LTD. | ||
Entity Central Index Key | 1,589,094 | ||
Document Type | 10-K | ||
Document Period End Date | Dec. 31, 2016 | ||
Trading Symbol | NAME | ||
Amendment Flag | false | ||
Current Fiscal Year End Date | --12-31 | ||
Entity Well-known Seasoned Issuer | No | ||
Entity Voluntary Filers | No | ||
Entity Current Reporting Status | Yes | ||
Entity Filer Category | Accelerated Filer | ||
Entity Public Float | $ 205.3 | ||
Entity Common Stock, Shares Outstanding | 19,639,505 | ||
Document Fiscal Year Focus | 2,016 | ||
Document Fiscal Period Focus | FY |
Consolidated Balance Sheets
Consolidated Balance Sheets - USD ($) $ in Thousands | Dec. 31, 2016 | Dec. 31, 2015 |
Current assets | ||
Cash and cash equivalents | $ 31,922 | $ 45,095 |
Accounts receivable, net | 3,337 | 4,575 |
Prepaid expenses and other current assets | 2,751 | 2,897 |
Deferred registration costs | 9,063 | 8,834 |
Assets held for sale | 129,053 | 132,224 |
Total current assets | 176,126 | 193,625 |
Deferred registration costs, less current portion | 1,594 | 1,259 |
Property and equipment, net | 5,746 | 7,567 |
Intangible assets, net | 46,961 | 52,163 |
Goodwill | 70,921 | 70,921 |
Deferred tax assets, net | 2,904 | |
gTLD deposits | 2,169 | 8,139 |
Other assets | 671 | 1,353 |
Total assets | 304,188 | 337,931 |
Current liabilities | ||
Accounts payable | 1,080 | 1,400 |
Accrued expenses and other current liabilities | 8,887 | 9,998 |
Debt | 12,800 | 1,500 |
Capital lease obligation | 983 | 1,193 |
Deferred revenue | 19,475 | 17,681 |
Liabilities held for sale | 133,588 | 136,652 |
Total current liabilities | 176,813 | 168,424 |
Deferred revenue, less current portion | 4,429 | 3,214 |
Debt, less current portion | 21,701 | |
Capital lease obligation, less current portion | 0 | 811 |
Deferred tax liabilities, net | 8,102 | |
Other liabilities | 261 | 494 |
Total liabilities | 189,605 | 194,644 |
Commitments and contingencies (Note 10) | ||
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: 19,539 and 19,099 | 2 | 2 |
Additional paid-in capital | 152,421 | 147,475 |
Accumulated deficit | (37,840) | (4,190) |
Total stockholders’ equity | 114,583 | 143,287 |
Total liabilities and stockholders’ equity | $ 304,188 | $ 337,931 |
Consolidated Balance Sheets (Pa
Consolidated Balance Sheets (Parenthetical) - $ / shares | Dec. 31, 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 | 19,539,000 | 19,099,000 |
Common stock, shares outstanding | 19,539,000 | 19,099,000 |
Consolidated Statements of Oper
Consolidated Statements of Operations - USD ($) shares in Thousands, $ in Thousands | 12 Months Ended | ||
Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
Income Statement [Abstract] | |||
Revenue | $ 62,124 | $ 57,429 | $ 43,042 |
Cost of revenue (excluding depreciation and amortization) | 37,115 | 36,506 | 29,912 |
Sales and marketing | 8,066 | 8,519 | 6,216 |
Technology and development | 10,633 | 12,719 | 12,210 |
General and administrative | 19,643 | 19,204 | 19,885 |
Depreciation and amortization | 12,660 | 12,993 | 11,894 |
Gain on other assets, net | (853) | (9,403) | (22,103) |
Interest expense | 4,297 | 4,922 | 1,988 |
Loss on debt extinguishment | 4,257 | 0 | 0 |
Other expense (income), net | 12 | 18 | (1,196) |
Loss from continuing operations before income tax | (33,706) | (28,049) | (15,764) |
Income tax expense (benefit) | 7,345 | (8,178) | (8,360) |
Loss from continuing operations | (41,051) | (19,871) | (7,404) |
Income from discontinued operations, net of income tax of $4,464, $5,864 and $7,032 | 7,401 | 8,547 | 5,546 |
Net loss | $ (33,650) | $ (11,324) | $ (1,858) |
Basic (loss) income per share attributable to common stockholders: | |||
Continuing operations | $ (2.12) | $ (1.05) | $ (0.40) |
Discontinued operations | 0.38 | 0.45 | 0.30 |
Basic (loss) income per share | (1.74) | (0.60) | (0.10) |
Diluted (loss) income per share attributable to common stockholders: | |||
Continuing operations | (2.12) | (1.05) | (0.40) |
Discontinued operations | 0.38 | 0.45 | 0.30 |
Diluted (loss) income per share | $ (1.74) | $ (0.60) | $ (0.10) |
Weighted average number of shares outstanding: | |||
Weighted average shares outstanding, basic | 19,308 | 18,867 | 18,452 |
Weighted average shares outstanding, diluted | 19,308 | 18,867 | 18,452 |
Consolidated Statements of Ope5
Consolidated Statements of Operations (Parenthetical) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
Income Statement [Abstract] | |||
Income from discontinued operation, tax | $ 4,464 | $ 5,864 | $ 7,032 |
Consolidated Statements of Comp
Consolidated Statements of Comprehensive Loss - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
Statement Of Income And Comprehensive Income [Abstract] | |||
Net loss | $ (33,650) | $ (11,324) | $ (1,858) |
Other comprehensive (loss) income: | |||
Unrealized loss on available-for-sale securities | 0 | 0 | (906) |
Tax effect | 0 | 0 | 329 |
Other comprehensive loss, net of tax | 0 | 0 | (577) |
Comprehensive loss | $ (33,650) | $ (11,324) | $ (2,435) |
Consolidated Statements of Stoc
Consolidated Statements of Stockholders' Equity - USD ($) shares in Thousands, $ in Thousands | Total | Parent company investment | Common stock | Additional paid-in capital | (Accumulated deficit) retained earnings | Accumulated other comprehensive income (loss) | |
Balance at the beginning of the period at Dec. 31, 2013 | $ 172,756 | $ 172,179 | $ 577 | ||||
Realized gain on available-for-sale securities, net of tax | (577) | (577) | |||||
Net loss prior to spin-off | (8,992) | (8,992) | |||||
Net decrease in parent company investment | (28,043) | (28,043) | |||||
Capitalization at spin-off | (135,144) | $ 2 | $ 135,142 | ||||
Capitalization at Spin-off (in shares) | 18,413 | ||||||
Balance at the end of the period at Aug. 01, 2014 | 135,144 | $ 2 | 135,142 | ||||
Balance at the end of the period (in shares) at Aug. 01, 2014 | 18,413 | ||||||
Balance at the beginning of the period at Dec. 31, 2013 | 172,756 | $ 172,179 | $ 577 | ||||
Net decrease in parent company investment | 28,000 | ||||||
Net loss | (1,858) | ||||||
Balance at the end of the period at Dec. 31, 2014 | 148,845 | $ 2 | 141,709 | $ 7,134 | |||
Balance at the end of the period (in shares) at Dec. 31, 2014 | 18,661 | ||||||
Balance at the beginning of the period at Aug. 01, 2014 | 135,144 | $ 2 | 135,142 | ||||
Balance at the beginning of the period (in shares) at Aug. 01, 2014 | 18,413 | ||||||
Stock warrants issued | 4,441 | 4,441 | |||||
Stock-based compensation | 2,380 | 2,380 | |||||
Stock option exercises | 51 | 51 | |||||
Stock option exercises (in shares) | 248 | ||||||
Tax withholdings on the vesting of restricted stock units | (305) | (305) | |||||
Net income after spin-off | 7,134 | 7,134 | |||||
Balance at the end of the period at Dec. 31, 2014 | 148,845 | $ 2 | 141,709 | 7,134 | |||
Balance at the end of the period (in shares) at Dec. 31, 2014 | 18,661 | ||||||
Other | [1] | 495 | 495 | ||||
Stock-based compensation | 6,450 | 6,450 | |||||
Stock option exercises | 46 | 46 | |||||
Stock option exercises (in shares) | 438 | ||||||
Tax withholdings on the vesting of restricted stock units | (1,225) | (1,225) | |||||
Net loss | (11,324) | (11,324) | |||||
Balance at the end of the period at Dec. 31, 2015 | 143,287 | $ 2 | 147,475 | (4,190) | |||
Balance at the end of the period (in shares) at Dec. 31, 2015 | 19,099 | ||||||
Stock-based compensation | 6,649 | 6,649 | |||||
Stock option exercises | 30 | 30 | |||||
Stock option exercises (in shares) | 440 | ||||||
Tax withholdings on the vesting of restricted stock units | (1,733) | (1,733) | |||||
Net loss | (33,650) | (33,650) | |||||
Balance at the end of the period at Dec. 31, 2016 | $ 114,583 | $ 2 | $ 152,421 | $ (37,840) | |||
Balance at the end of the period (in shares) at Dec. 31, 2016 | 19,539 | ||||||
[1] | Represents an adjustment of our allocation of pre-spin net tax losses. |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
Cash flows from operating activities | |||
Net loss | $ (33,650) | $ (11,324) | $ (1,858) |
Less: Income from discontinued operations, net of tax | 7,401 | 8,547 | 5,546 |
Loss from continuing operations | (41,051) | (19,871) | (7,404) |
Adjustments to reconcile net loss to net cash provided by operating activities: | |||
Depreciation and amortization | 12,660 | 12,993 | 11,894 |
Amortization of discount and issuance costs on debt | 1,527 | 1,867 | 768 |
Deferred income taxes | 11,005 | (2,637) | (7,766) |
Stock-based compensation expense | 5,828 | 5,526 | 5,289 |
Gain on gTLD application withdrawals, net | (853) | (9,403) | (22,103) |
Gain on sale of marketable equity securities | 0 | 0 | (1,362) |
Gain on sale and disposal of assets, net | (266) | (204) | 60 |
Loss on debt extinguishment | 4,257 | 0 | 0 |
Change in operating assets and liabilities: | |||
Accounts receivable | 1,326 | 641 | (1,656) |
Prepaid expenses and other current assets | 146 | (31) | (1,141) |
Deferred registration costs | (564) | (1,601) | (766) |
Other long-term assets | 10 | (930) | (1,437) |
Accounts payable | (320) | 532 | (775) |
Accrued expenses and other liabilities | (1,324) | (41) | 3,546 |
Deferred revenue | 3,008 | 4,383 | 6,055 |
Net cash used in operating activities from continuing operations | (4,611) | (8,776) | (16,798) |
Net cash provided by operating activities from discontinued operations | 8,420 | 11,703 | 17,854 |
Net cash provided by operating activities | 3,809 | 2,927 | 1,056 |
Cash flows from investing activities | |||
Purchases of property and equipment | (2,471) | (969) | (1,912) |
Purchases of intangible assets | (719) | (1,456) | (2,104) |
Payments, deposits and returns of deposits for gTLD applications | 3,119 | (9,708) | (32,029) |
Proceeds from gTLD withdrawals | 1,375 | 9,991 | 23,461 |
Change in restricted cash | 0 | 0 | 1,563 |
Proceeds from sale of marketable equity securities | 0 | 0 | 1,362 |
Proceeds from sale of assets | 513 | 320 | 405 |
Net cash provided by (used in) investing activities from continuing operations | 1,817 | (1,822) | (9,254) |
Net cash used in investing activities from discontinued operations | (90) | (3,074) | (5,406) |
Net cash provided by (used in) investing activities | 1,727 | (4,896) | (14,660) |
Cash flows from financing activities | |||
Principal payments on capital lease obligations | (1,020) | 0 | (101) |
Proceeds from debt | 12,800 | 0 | 30,000 |
Principal payments on debt | (1,125) | (1,500) | 0 |
Issuance costs related to debt financings | 0 | 0 | (2,874) |
Repayment of debt | (27,661) | 0 | 0 |
Proceeds from stock option exercises | 30 | 46 | 51 |
Minimum tax withholding on restricted stock awards | (1,733) | (1,225) | (305) |
Payment for acquisition holdback | 0 | 0 | (1,042) |
Net decrease in parent company investment | 0 | 0 | (29,215) |
Net cash used in financing activities from continuing operations | (18,709) | (2,679) | (3,486) |
Change in cash and cash equivalents | (13,173) | (4,648) | (17,090) |
Cash and cash equivalents, beginning of period | 45,095 | 49,743 | 66,833 |
Cash and cash equivalents, end of period | 31,922 | 45,095 | 49,743 |
Supplemental disclosure of cash flows | |||
Cash paid for interest | 2,612 | 3,056 | 1,142 |
Cash paid for income taxes | 110 | 81 | 22 |
Warrants issued in connection with debt | 0 | 0 | 4,441 |
Supplemental disclosure of noncash financing activities | |||
Assets acquired under capital lease | $ 0 | $ 1,046 | $ 0 |
Company Background and Basis of
Company Background and Basis of Presentation | 12 Months Ended |
Dec. 31, 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 (the “New gTLD Program”) of new gTLDs by the Internet Corporation for Assigned Names and Numbers (“ICANN”). eNom Divestiture On January 20, 2017, we entered into a Stock Purchase Agreement with Tucows Inc. (“Tucows”) to sell eNom, Incorporated (“eNom”), our wholly-owned registrar, in exchange for $83.5 million, less a net working capital adjustment of $6.8 million, resulting in net cash at closing of $76.7 million. The purchase price is subject to customary adjustments following the closing, including a working capital adjustment to the extent such amount is greater or less than the estimated net working capital amount determined at closing. The transaction was completed on January 20, 2017. Separation from Demand Media We were incorporated on July 11, 2013 as a wholly-owned subsidiary of Demand Media. On August 1, 2014, Demand Media, Inc., now known as Leaf Group Ltd (“Demand Media”), a New York Stock Exchange listed company, separated into two independent, publicly-traded companies: Rightside, a domain name services company, and Demand Media, a digital media company (the “Separation”). The Separation was consummated through a tax-free distribution of all of the outstanding shares of our common stock on a pro rata basis to Demand Media stockholders. After the Separation, holders of Demand Media common stock on the record date received one share of Rightside common stock for every five shares of Demand Media common stock. Rightside became an independent, publicly-traded company on the NASDAQ Global Select Market using the symbol: “NAME.” In connection with the Separation, Demand Media contributed or transferred certain of the subsidiaries and assets relating to its 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 entered into various agreements, including a Transition Services Agreement, 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 Transition Services Agreement terminated in February 2016. Basis of Presentation We have prepared the accompanying financial statements in accordance with generally accepted accounting principles in the United States (“GAAP”). All intercompany accounts and transactions were eliminated in consolidation. We will refer to combined and consolidated financial statements as “financial statements,” “balance sheets,” “statement of operations,” “statement of cash flow” and “statement of stockholders’ equity” herein. Throughout these financial statements we refer to our years ended December 31, 2016, 2015, and 2014, as “2016,” “2015” and “2014.” eNom, which provides domain name registration and related value-added service subscriptions to third parties, has historically been included in Rightside’s one operating segment. In accordance with Accounting Standards Codification (“ASC”) 205-20, Discontinued Operations After The Separation on August 1, 2014 Our financial statements are presented on a consolidated basis, as we became a separate consolidated group. Our balance sheet, statement of operations, statement of stockholders’ equity and statement of cash flows include the accounts of Rightside and our wholly-owned subsidiaries. These financial statements reflect our financial position, results of operations, statement of comprehensive income (loss), equity and cash flows as a separate company and have been prepared in accordance with GAAP. Prior To The Separation on August 1, 2014 Our financial statements are presented on a combined basis as carve-out financial statements, as we were not a separate consolidated group. Our financial statements were derived from the financial statements and accounting records of Demand Media. Our financial statements assume the allocation to us of certain Demand Media corporate expenses relating to Rightside (refer to Note 15—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 11—Income Taxes for further information). All significant intercompany accounts and transactions, other than those with Demand Media, have been eliminated in preparing the financial statements. All transactions between us and Demand Media have been included in these financial statements and are deemed to be settled as of August 1, 2014. The total net effect of the settlement of these transactions is reflected in the statements of cash flow as a financing activity. These financial statements included expense allocations for certain: (1) corporate functions historically provided by Demand Media, including, but not limited to, finance, legal, information technology, human resources, communications, compliance, and other shared services; (2) employee benefits and incentives; and (3) stock-based compensation expense. 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 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. We now perform all of these functions using our own resources and purchased services. For an interim period, some of these functions were provided by Demand Media under a Transition Services Agreement, which terminated in February 2016. Reclassifications We reclassified $1.6 million of other assets, representing debt issue costs, to noncurrent debt on our balance sheet 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. Revisions Certain amounts previously presented for prior periods have been revised. These revisions did not affect consolidated net income or equity for the years presented. We corrected the classification of $0.7 million of prepaid expenses and other current assets to the current portion of deferred revenue on our balance sheet as of December 31, 2015. We also corrected the classification of deferred revenue on our balance sheet as of December 31, 2015 to correct $1.3 million from current deferred revenue to noncurrent deferred revenue. We also corrected the classification of $0.1 million of unpaid invoices on our balance sheet as of December 31, 2015 that were incorrectly reclassified as accrued expenses and other current liabilities rather than out of accounts payable. The December 31, 2015 misclassifications between prepaid expenses and other current assets and the current portion of deferred revenue also affected the statement of cash flows for the year ended December 31, 2015. The misclassification resulted in an overstatement of the prepaid expenses and other current assets outflows of $0.7 million and an overstatement of the deferred revenue inflows of $0.7 million. There was no impact on the total net cash provided by (used in) operating activities. |
Summary of Significant Accounti
Summary of Significant Accounting Policies and Accounting Pronouncements | 12 Months Ended |
Dec. 31, 2016 | |
Accounting Policies [Abstract] | |
Summary of Significant Accounting Policies and Accounting Pronouncements | 2. Summary of Significant Accounting Policies and Accounting Pronouncements Use of Estimates We prepared our financial statements in accordance with GAAP, which requires us to make estimates and use assumptions that affect the reported amounts of assets, liabilities, revenues, expenses and related disclosures at the date of the financial statements, and the reported amounts of revenue and expenses during the reporting period. We evaluate our estimates and assumptions on an ongoing basis, which form the basis for making judgments about the carrying value of assets and liabilities. We base our estimates on historical experience and other assumptions that we believe to be reasonable under the circumstances. Significant items subject to such estimates and assumptions include revenue, useful lives and impairment of property and equipment, intangible assets, goodwill, deferred income tax assets and liabilities, and valuation allowance. Actual results could differ materially from those estimates. On an ongoing basis, we evaluate our estimates compared to historical experience and trends, which form the basis for making judgments about the carrying value of assets and liabilities. Revenue Recognition We recognize revenue when four basic criteria are met: (1) persuasive evidence of a sales arrangement exists; (2) performance of services has occurred; (3) the sales price is fixed or determinable; and (4) collectability is reasonably assured. We consider persuasive evidence of a sales arrangement to be the receipt of a signed contract. We assess collectability based on a number of factors, including transaction history and the credit worthiness of a customer. If we determine that collection is not reasonably assured, revenue is not recognized until collection becomes reasonably assured, which is generally upon receipt of cash. We recognize performance incentive rebates and certain other business incentives as a reduction in revenue. We record cash received in advance of revenue recognition as deferred revenue. For arrangements with multiple deliverables, we allocate revenue to each deliverable if the delivered item(s) has value to the customer on a standalone basis and, if the arrangement includes a general right of return relative to the delivered item, delivery or performance of the undelivered item(s) is considered probable and substantially in the control of the Company. We determine the fair value of the selling price for a deliverable using a hierarchy of (1) Company specific objective and reliable evidence, then (2) third-party evidence, then (3) best estimate of selling price. We allocate any arrangement fee to each of the elements based on their relative selling prices. To the extent that we offer performance incentive rebates or certain other business incentives to our partners, those incentives will be recognized as a reduction to revenue. Domain Name Registration Fees We recognize revenue from registration fees charged to third parties in connection with new, renewed and transferred domain name registrations on a straight‑line basis over the registration term, which ranges from one to ten years. We record payments received in advance of the domain name registration term in deferred revenue in our balance sheets. The registration term and related revenue recognition commences once we confirm that the requested domain name has been recorded in the appropriate registry under accepted contractual performance standards. We defer the associated direct and incremental costs, which principally consist of registry and ICANN fees, and expense them as cost of revenue on a straight‑line basis over the registration term. Our business includes Name.com, an ICANN accredited registrar. Thus, we are the primary obligor with our registrant customers and are responsible for the fulfillment of our registrar services to those parties. As a result, we report revenue in the amount of the fees we receive directly from our registrant customers. Value‑added Services We recognize revenue from online registrar value‑added services, which include, but are not limited to, security certificates, domain name identification protection, charges associated with alternative payment methodologies, web hosting services and email services on a straight‑line basis over the period in which services are provided. We include payments received in advance of services being provided in deferred revenue. Domain Name Monetization Services Domain name monetization service revenue represents advertising revenue and primarily includes revenue derived from cost‑per‑click advertising links we place on websites owned by us, which we acquire and sell on a regular basis, and on websites owned by certain of our customers, with whom we have revenue sharing arrangements. Where we enter into revenue sharing arrangements with our customers, such as those relating to advertising on our customers’ domains, and when we are considered the primary obligor, we report the underlying revenue on a gross basis in our statements of operations, and record these revenue‑sharing payments to our customers as revenue‑sharing expenses, which are included in cost of revenue. Domain Name Sales Domain name sales revenue represents proceeds received from selling domain names from our portfolio, as well as proceeds received from selling domain names that are not renewed by customers of our registrar platform. Domain name sales are primarily conducted through our direct sales efforts as well as through third-party domain name auction platforms. While certain domain names sold are registered on our registrar platform upon sale, we have determined that sales revenue and related registration revenue represent separate units of accounting, because the domain name has value to the customers on a stand‑alone basis, where a customer could resell it separately, without the registration service, there is objective and reliable evidence of the fair value of the registration service and no general rights of return. We evaluated each deliverable, domain name sale and domain name registration, to determine whether vendor‑specific objective evidence (“VSOE”) or third-party evidence of selling price (“TPE”) existed in order to determine the selling price for each unit of accounting. We determined that there is VSOE for domain name registrations through analysis of historical stand‑alone transactions sold by us, which have been consistently priced with limited discounts. For domain name sales, we have determined that TPE is not a practical alternative due to uniqueness of domain names compared to those sold by competitors and the availability of relevant third-party pricing information. We have not established VSOE for domain names due to the lack of pricing consistency and other factors. Accordingly, we allocate revenue to the domain name sale deliverable in the arrangement based on best estimate of the selling price (“BESP”). We determine BESP by reference to the total transaction price and an estimate of what a market participant would pay without the registration service. Based on the nature of the transaction and its elements, we believe that there are no meaningful discounts embedded in the overall arrangement. We recognize domain name sales revenue when title to the name is transferred to the buyer and the related registration fees are recognized on a straight‑line basis over the registration term. If we sell a domain name, we recognize any unamortized cost basis as a cost of revenue over the registration term. For sales of domain names generated through third-party auction platforms, we recognize revenue net of auction service fee payments. Intangible Assets Registration and Acquisition Costs of Monetized Domains We capitalize the initial registration and acquisition costs of our monetized domain names, and amortize these costs over the expected useful life of the underlying domain name on a straight line basis, which approximates the estimated pattern in which the underlying economic benefits are consumed. The expected useful lives of the monetized domain names range from 12 months to 72 months. We determine the appropriate useful life by performing an annual analysis of expected cash flows based on historical experience with domain names of similar quality and value. In order to maintain the rights to each monetized domain name acquired, we pay periodic renewal registration fees, which cover a minimum period of twelve months. We record renewal registration fees of domain name intangible assets in deferred registration costs and recognize the costs over the renewal registration period, which is included in cost of revenue. Acquired in Business Combinations We perform valuations of assets acquired and liabilities assumed on each acquisition accounted for as a business combination and allocate the purchase price of each acquired business to our respective net tangible and intangible assets. Acquired intangible assets include: trade names, non‑compete agreements, owned website names, customer relationships, and technology. We determine the appropriate useful life by performing an analysis of expected cash flows based on historical experience of the acquired businesses. Intangible assets are amortized over their estimated useful lives of three to 20 years, using the straight‑line method, which approximates the pattern in which the economic benefits are consumed. gTLDs We capitalize payments for gTLD applications and other costs directly attributable to the acquisition of gTLD registry operator rights and include them in other long-term assets. We have received and may continue to receive partial cash refunds for certain gTLD applications, and to the extent we elect to sell or withdraw certain gTLD applications throughout the process, we may also incur gains or losses on amounts invested. These gains have been recorded as gains on other assets, net, on the statements of operations. As gTLDs become available for their intended use, gTLD application fees and acquisition related costs are reclassified as finite lived intangible assets and amortized on a straight-line basis over an estimated useful life of 10 years, which approximates the pattern in which the economic benefits are consumed. Other costs incurred as part of the gTLD Initiative and not directly attributable to the acquisition of gTLD registry operator rights are expensed as incurred. Impairment of Intangible Assets We evaluate the recoverability of our finite-lived intangible assets for impairment when events or changes in circumstances indicate that the carrying amount of an asset group may not be recoverable. When such events or circumstances occur, an impairment test would be performed by comparing the estimated undiscounted future cash flows expected to result from the use of the asset group to the related asset group’s carrying value. If an asset is considered impaired, the impairment loss is measured as the amount by which the carrying value of the asset group exceeds its estimated fair value. We have not recognized any such impairment loss associated with our finite-lived intangible assets during 2016, 2015 or 2014. Goodwill Goodwill represents the excess of the purchase price of an acquired business over the fair value of the net tangible and the identifiable intangible assets. Goodwill is not amortized; rather, goodwill is tested for impairment at the reporting unit level on an annual basis during the fourth quarter, as of October 1, or more frequently, if an event occurs or circumstances change that would more likely than not reduce the fair value of the reporting unit below its carrying value. These events or circumstances could include a significant change in the Company’s business outlook, legal factors, financial performance, industry environment, or a sale or disposition of a significant portion of a reporting unit. A triggering event occurred during the fourth quarter, and as such, an interim impairment test was performed (refer to Note 6—Goodwill for further information). Application of the goodwill impairment test requires judgment, including the identification of reporting units, assignment of assets and liabilities to the reporting units, assignment of goodwill to the reporting units and the determination of fair value of the reporting units. Management has determined that we have only one reporting unit. Goodwill is tested annually for impairment using a two-step process. First, we determine if the carrying value of the reporting unit exceeds fair value, which would indicate that goodwill may be impaired. If the fair value of the reporting unit exceeds the carrying value, goodwill is not impaired and no additional steps are necessary. If, however, the fair value of the reporting unit is less than carrying value, then goodwill may be impaired and we perform the second step of the test to determine if goodwill is impaired and to measure the amount of impairment loss, if any. In the second step, we compare the implied fair value of the goodwill to its carrying amount in order to determine if there is an impairment loss. If the carrying amount of goodwill exceeds its implied fair value, then an impairment loss is recognized in an amount equal to the excess. We estimate the fair value of the reporting unit in step one using the market approach. The market approach utilizes the Company’s number of outstanding shares and the share price on the date of the annual test to determine a market capitalization value. We estimate the implied fair value of our reporting unit in step two using the discounted cash flows approach. The implied fair value is primarily based on an estimate of the cash flows expected to result from the reporting unit but may require valuations of certain internally generated and unrecognized intangible assets such as our software, technology, patents and trademarks, and then discounted using an estimated weighted-average cost of capital. These estimates and the resulting valuations require significant judgment. There were no impairment charges recorded related to goodwill during 2016, 2015 and 2014. Impairment of Long‑lived Assets We evaluate the recoverability of our long-lived assets with finite useful lives for impairment when events or changes in circumstances indicate that the carrying amount of an asset group may not be recoverable. When such events or circumstances occur, an impairment test would be performed by comparing the estimated undiscounted future cash flows expected to result from the use of the asset group to the related asset group’s carrying value. If an asset is considered impaired, the impairment loss is measured as the amount by which the carrying value of the asset group exceeds its estimated fair value. We have not recognized any such impairment loss associated with our long-lived assets during 2016, 2015 or 2014. Income Taxes For periods prior to the Separation our results were included in the federal income tax return of Demand Media, as well as certain state tax returns where Demand Media files on a combined basis. For periods during which our operations were included with Demand Media, income taxes are presented in these financial statements as if we filed our own tax returns on a separate return basis. We account for our income taxes using the liability and asset method, which requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been recognized in our financial statements or in our tax returns. In estimating future tax consequences, generally all expected future events other than enactments or changes in the tax law or rates are considered. Deferred income taxes are recognized for differences between financial reporting and tax bases of assets and liabilities at the enacted statutory tax rates in effect for the years in which the temporary differences are expected to reverse. The effect on deferred taxes of a change in tax rates is recognized in income in the period that includes the enactment date. We evaluate the realizability of our deferred tax assets and valuation allowances are provided when necessary to reduce deferred tax assets to the amounts expected to be realized. We operate in various tax jurisdictions and are subject to audit by various tax authorities. We provide tax contingencies whenever it is deemed probable that a tax asset has been impaired or a tax liability has been incurred for events such as tax claims or changes in tax laws. Tax contingencies are based upon their technical merits, and relevant tax law and the specific facts and circumstances as of each reporting period. Changes in facts and circumstances could result in material changes to the amounts recorded for such tax contingencies. We recognize a tax benefit from an uncertain tax position only if it is more likely than not that the tax position will be sustained on examination by the taxing authorities, based on the technical merits of the position. The tax benefits recognized in the financial statements from such positions are then measured based on the largest benefit that we believe has a greater than 50% likelihood of being realized upon settlement. We recognize interest and penalties accrued related to unrecognized tax benefits in our income tax (benefit) provision in the accompanying statements of operations. We allocate the total tax expense (or benefit) between continuing operations and discontinued operations utilizing the intraperiod allocation rules of ASC 740. These rules provide for allocation of total tax expense (or benefit) among the various financial statement components. We calculate our current and deferred tax provision based on estimates and assumptions that could differ from the actual results reflected in income tax returns filed in subsequent years. Adjustments based on filed returns are recorded when identified. The amount of income taxes we pay is subject to ongoing audits by federal, state and foreign tax authorities. Our estimate of the potential outcome of any uncertain tax issue is subject to management’s assessment of relevant risks, facts, and circumstances existing at that time. To the extent that our assessment of such tax positions changes, the change in estimate is recorded in the period in which the determination is made. Cash and Cash Equivalents We consider all highly liquid investments with a maturity of 90 days or less at the time of purchase to be cash equivalents. We consider funds transferred from our credit card service providers but not yet deposited into our bank accounts at the balance sheet dates, as funds in transit and these amounts are recorded as unrestricted cash, since the amounts are generally settled the day after the outstanding date. Cash and cash equivalents consist primarily of checking accounts. Accounts Receivable Since our domain name registration services are primarily conducted on a prepaid basis through credit card or internet payments processed at the time a transaction is consummated, we do not carry significant receivables related to these business activities. Accounts receivable primarily consists of amounts due from registries and registrars, as well as gTLD amounts due from our collaboration agreement with Donuts Inc. (“Donuts”), a third-party new gTLD applicant. Receivables from registries represent refundable amounts for registrations that were placed on auto-renew status by the registries, but were not explicitly renewed by a registrant as of the balance sheet dates. We record registry services accounts receivable at the amount of the registration fees paid by us to a registry for all registrations placed on auto-renew status. Subsequent to the lapse of a prior registration period, a registrant either renews the applicable domain name with us, which results in the application of the refundable amount to a consummated transaction, or the registrant lets the domain name registration expire, which results in a refund of the applicable amount from a registry to us. Deferred Revenue and Deferred Registration Costs Deferred revenue consists primarily of amounts received from customers in advance of our performance for domain name registration services and online value‑added services. We recognize deferred revenue as revenue on a systematic basis that is proportionate to the unexpired term of the related domain name registration over online value‑added service period. Deferred registration costs represent incremental direct costs paid in advance to registries, ICANN, and other third parties for domain name registrations and are recorded as a deferred cost. We record the amortization of deferred registration costs to cost of revenue on a straight‑line basis over the registration period. Property and Equipment and Software Development Costs We record property and equipment at cost and provide for depreciation and amortization using the straight-line method for financial reporting purposes over the estimated useful lives. We capitalize certain costs of internally developed software or software purchased for internal use. We capitalize software development costs when application development begins, it is probable that the project will be completed, and the software will be used as intended. We expense costs associated with preliminary project stage activities, training, maintenance, and all other post-implementation stage activities as we incur these costs. Our policy provides for the capitalization of certain payroll, benefits, and other payroll-related costs for employees who are directly associated with internal-use software development projects, as well as external direct costs of materials and services associated with developing or obtaining internal-use software. We only capitalize personnel costs that relate directly to time spent on such projects. The estimated useful lives by asset classification are as follows: • Computer hardware: 2 to 5 years • Computer software: 2 to 3 years • Internally developed software: 3 years • Furniture and equipment: 7 to 10 years • Leasehold improvements: Shorter of the estimated useful life or life of related lease During 2014, depreciation expense included the write-off of internally developed software of $0.8 million. There were no impairments related to property and equipment during 2016 and 2015. Other Long‑Term Assets ICANN approved a framework for the significant expansion of the number of gTLDs available for businesses and consumers to register as part of a domain name (“New gTLD Program”). The first new gTLDs launched in the fourth quarter of 2013. We capitalize the costs incurred to pursue the acquisition of gTLD operator rights. While there can be no assurance that gTLDs will be awarded to us, we reclassify these payments as finite‑lived intangible assets following the delegation of operator rights for each gTLD by ICANN. Payments for gTLD applications primarily represent amounts paid directly to ICANN and/or third parties in the pursuit of gTLD operator rights. When two or more applicants apply for the same gTLD, an auction process is used to determine the eventual owner. If a private auction is used, the highest bidder is required to pay the other applicants the proceeds from the auction in return for the withdrawal of their application for the gTLD. We may also receive partial cash refunds from ICANN for certain gTLD applications, and to the extent we elect to sell or withdraw of our interest in certain gTLD applications throughout the process, we may also incur gains or losses on amounts invested. Gains on the withdrawal of our interest in gTLD applications are recognized when realized, while losses are recognized when deemed probable. Potential losses are limited to the non‑refundable portion of our deposits, while gains realized during the initial ICANN rights delegation phase are based on proceeds received from third parties and may be significant as compared to our initial investment (deposit) in a particular gTLD. We expense other costs incurred by us as part of the gTLD Initiative not directly attributable to the acquisition of gTLD operator rights. We amortize capitalized costs on a straight‑line basis over the estimated useful life of the gTLD operator rights acquired commencing the date that each asset is available for its intended use. Investments 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 (expense), net. Leases We categorize leases as either operating or capital leases at their inception. We lease office space and equipment under non-cancelable operating and capital leases. The terms of our lease agreements generally provide for rental payments on a graduated basis. We record rent expense on a straight-line basis over the lease period and have accrued for rent expense incurred but not paid. Advertising Costs Advertising costs are expensed as incurred and generally consist of online advertising, sponsorships, and trade shows. Such costs are included in sales and marketing expense in our statements of operations. Advertising expense was $2.4 million, $2.6 million and $1.4 million for 2016, 2015 and 2014, respectively. Stock-based Compensation Expense We measure stock-based compensation expense at the grant date based on the fair value of the award. Our stock-based payment awards are comprised principally of restricted stock units and stock options. We recognize compensation expense on a straight-line basis over the requisite service period. The requisite service period is generally four years. The compensation cost is recognized net of estimated forfeiture activity. For awards issued to employees with service based vesting conditions the fair value is estimated using the Black-Scholes Option Pricing Method (“Black-Scholes”). The value of an award that is ultimately expected to vest is recognized as expense over the requisite service periods in our consolidated statements of operations. Stock-based compensation expense is classified in the consolidated statement of operations based on the department to which the related employee provides service. The Black-Scholes approach requires management to make assumptions and to apply judgment in determining the fair value of our awards. The most significant assumptions and judgments include the expected volatility and expected term of the award. We estimated the expected volatility of our awards from our company’s historical volatility. We calculated the weighted average expected life of our options based upon the “simplified method” as prescribed by the SEC. The risk-free interest rate is based on the implied yield currently available on U.S. Treasury notes with terms approximately equal to the expected life of the option. The expected dividend rate is zero as we currently have no history or expectation of paying cash dividends on our common stock. Foreign Currency Transactions Our foreign subsidiaries have a functional currency of U.S. dollars. We record realized and unrealized foreign currency transaction gains and losses as incurred. Foreign currency transaction gains and losses are included in other income (expense) in our statements of operations. The net effect of our foreign currency gains and losses was not significant for 2016, 2015 and 2014. 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. Assets and Liabilities Measured at Fair Value on a Nonrecurring Basis Assets and liabilities recognized or disclosed at fair value in our financial statements on a nonrecurring basis include items such as property and equipment, cost and equity method investments, and other assets. These assets are measured at fair value if determined to be impaired. The fair values of these investments are determined based on valuation techniques using the best information available and may include quoted market prices, market comparables, and discounted cash flow projections. An impairment charge is recorded when the cost of the investment exceeds its fair value and this condition is determined to be other-than-temporary. Assets and Liabilities Measured at Fair Value on a Recurring Basis Assets and liabilities recognized or disclosed at fair value in our financial statements on a recurring basis include items such as cash equivalents and short-term investments. These assets are measured at fair value at each balance sheet date. Cash equivalents consist of financial instruments that have original maturities of 90 days or less. Short-term investments consist of financial instruments with maturities greater than 90 days, but that generally mature in less than one year. Discontinued Operations Components that have been disposed of or are classified as held for sale and represent a strategic shift that has or will have a major effect on our operations or financial results are reported as discontinued operations. We reclassify the results of operations for current and prior periods into a single caption titled Income from discontinued operations, net of income tax in the consolidated statements of operations. In addition, assets and liabilities that qualify for reporting as discontinued operations are reflected in the consolidated balance sheets as Assets held for sale and Liabilities held for sale. We also classify cash flows related to discontinued operations as one line item within each category of cash flows in our consolidated statements of cash flows. Adoption of New Accounting Pronouncements In August 2015, the FASB issued ASU 2015-15, Interest – Imputation of Interest (Subtopic 835-30): Presentation and Subsequent Measurement of Debt Issuance Costs Associated with Line-of-Credit Arrangements. As of December 31, 2015, we had $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 April 2015, the FASB issued ASU 2015-05, Intangibles – Goodwill and Other – Internal-Use Software (Subtopic 350-40): Customer’s Accounting for Fees Paid in a Cloud Computing Arrangement. service contracts. In April 2015, the FASB issued ASU 2015-03, Interest – Imputation of Interest (Subtopic 835-30): Simplifying the Presentation of Debt Issuance Costs. In August 2014, the FASB issued ASU 2014-15, Presentation of Financial Statements – Going Concern (Subtopic 205-40): Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern Accounting Pronouncements Not Yet Adopted In January 2017, the FASB issued ASU 2017-04, Intangibles—Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment. In August 2016, the FASB issued ASU 2016-15, Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments. 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, including the accounting for income taxes, forfeitures, and statutory tax withholding requirements, as well as classification in the statement of cash flows 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, |
Business Divestiture
Business Divestiture | 12 Months Ended |
Dec. 31, 2016 | |
Discontinued Operations And Disposal Groups [Abstract] | |
Business Divestiture | 3. Business Divestiture Discontinued Operations In November 2016, we signed a Letter of Intent with Tucows related to the sale of eNom. On January 20, 2017, Rightside completed the divestiture (the “eNom Divestiture”) of eNom, our wholly-owned registrar, to Tucows, in exchange for $83.5 million, less a net working capital adjustment of $6.8 million, resulting in net cash at closing of $76.7 million. The purchase price is subject to customary adjustments following the closing, including a working capital adjustment to the extent such amount is greater or less than the estimated net working capital amount determined at closing. Under the Stock Purchase Agreement, we will indemnify Tucows against losses arising from, among other things, breaches of representations and warranties, breaches of covenants, any pre-closing taxes, any unpaid debt or transaction expenses and certain other specified matters. In addition, we are required to maintain certain unrestricted cash and cash equivalents balances (refer to Note 10—Commitments and Contingencies for further information). In connection with the eNom Divestiture, we and Tucows entered into a transition services agreement under which each party will compensate the other for the provision of various services to the other party, including information technology, accounting and finance, human resources and facilities services. This transition services agreement began on January 20, 2017 and ends on various dates through June 30, 2019. The eNom Divestiture met the criteria of a “discontinued operation” as defined by ASC 205-20. eNom’s assets and liabilities are classified as held for sale in the Company’s balance sheet for all periods presented and eNom’s results of operations are included in income from discontinued operations for all periods presented. The accounting standards for long-lived assets to be disposed of by sale require that the Company measure assets and liabilities of the disposal group, classified as held for sale, at the lower of its carrying amount or fair value less costs to sell, at the end of each reporting period. At December 31, 2016, the fair value of the eNom disposal group exceeded its carrying value and no adjustment to carrying value was required. Upon completion of the eNom Divestiture, we expect to recognize a gain of approximately $75.9 million. The major classes of assets and liabilities included as held for sale related to eNom are as follows (in thousands): December 31, December 31, 2016 2015 Assets Accounts receivable, net $ 6,422 $ 6,731 Prepaid expenses and other current assets 3,332 4,359 Deferred registration costs 65,982 66,601 Deferred registration costs, less current portion 14,441 14,441 Property and equipment, net 4,718 5,731 Intangible assets, net 1,955 2,165 Goodwill 32,121 32,121 Other assets 82 75 Total assets classified as held for sale $ 129,053 $ 132,224 Liabilities Accounts payable $ 5,494 $ 5,762 Accrued expenses and other current liabilities 12,988 14,693 Deferred revenue 77,082 78,597 Deferred revenue, less current portion 18,457 18,588 Deferred tax liabilities, net 19,099 18,381 Other liabilities 468 631 Total liabilities classified as held for sale 133,588 136,652 The major classes of line items constituting the loss from discontinued operations, net of income tax, in the statements of operations for eNom, are as follows (in thousands): Year Ended December 31, 2016 2015 2014 Revenue $ 155,761 $ 156,408 $ 148,935 Cost of revenue (excluding depreciation and amortization) 127,823 127,297 120,028 Sales and marketing 2,408 2,048 3,245 Technology and development 9,085 8,343 8,265 General and administrative 2,517 874 1,272 Depreciation and amortization 3,363 3,435 3,547 Gain on other assets, net (1,300 ) — — Income from discontinued operations before income tax 11,865 14,411 12,578 Income tax expense 4,464 5,864 7,032 Income from discontinued operations, net of income tax $ 7,401 $ 8,547 $ 5,546 Income from continuing operations includes $2.2 million, $1.4 million and $0.2 million for 2016, 2015 and 2014, respectively, that were previously eliminated in the consolidated financial statements. These amounts relate to transactions between eNom and our Registry services business that were eliminated upon consolidation prior to the eNom Divestiture. In April 2016, eNom sold the majority of its 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 eNom’s ability to register newly deleted domain names the instant they became available. The sale of these credentials resulted in a net gain of $1.3 million for the year ended December 31, 2016. This gain was recorded in gain on other assets, net in the table above. |
Intangible Assets
Intangible Assets | 12 Months Ended |
Dec. 31, 2016 | |
Intangible Assets Net Excluding Goodwill [Abstract] | |
Intangible Assets | 4. Intangible Assets Intangible assets consisted of the following (in thousands): December 31, 2016 December 31, 2015 Weighted Weighted Gross average Gross average carrying Accumulated useful carrying Accumulated useful amount amortization Net life amount amortization Net life (years) Owned website names $ 13,935 $ (11,198 ) $ 2,737 4 $ 15,040 $ (11,691 ) $ 3,349 4 Customer relationships 8,090 (8,037 ) 53 4 8,090 (6,763 ) 1,327 4 Technology 416 (416 ) — 2 416 (397 ) 19 2 Non-compete agreements 207 (164 ) 43 5 207 (122 ) 85 5 Trade names 1,276 (548 ) 728 13 1,276 (440 ) 836 13 gTLDs 54,348 (10,948 ) 43,400 10 51,988 (5,441 ) 46,547 10 Total $ 78,272 $ (31,311 ) $ 46,961 $ 77,017 $ (24,854 ) $ 52,163 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 of intangible assets was $8.7 million, $9.5 million, and $7.5 million for 2016, 2015 and 2014, respectively. Estimated future amortization expense related to intangible assets held at December 31, 2016 (in thousands): Years Ending December 31, Amount 2017 $ 6,872 2018 6,498 2019 6,197 2020 5,976 2021 5,860 Thereafter 15,558 Total $ 46,961 |
Property and Equipment
Property and Equipment | 12 Months Ended |
Dec. 31, 2016 | |
Property Plant And Equipment [Abstract] | |
Property and Equipment | 5. Property and Equipment Property and equipment consisted of the following (in thousands): December 31, December 31, 2016 2015 Computers and other related equipment $ 12,314 $ 14,998 Purchased and internally developed software 11,964 11,425 Furniture and fixtures 656 611 Leasehold improvements 1,037 999 Property and equipment, gross 25,971 28,033 Less: accumulated depreciation (20,225 ) (20,466 ) Property and equipment, net $ 5,746 $ 7,567 The net book value of internally developed software costs was $3.2 million and $3.7 million as of December 31, 2016 and 2015, respectively (net of $5.0 million and $3.8 million accumulated amortization, respectively). Depreciation expense, including the write-off of internally developed software of $0.8 million in 2014, was $4.0 million, $3.5 million, and $4.4 million for 2016, 2015 and 2014, respectively. Capital Lease In December 2015, we entered into an agreement to lease server equipment for a term of 24 months. The agreement included related software and support services to maintain this server equipment during the lease term. Our computers and other related equipment shown in the table above included the server equipment assets under a capital lease as follows (in thousands): December 31, December 31, 2016 2015 Computers and other related equipment $ 1,046 $ 1,046 Less: accumulated depreciation (363 ) (15 ) Assets under capital lease, net $ 683 $ 1,031 As of December 31, 2016, the expected future minimum lease payments under the capital lease were as follows (in thousands): Years Ending December 31, Amount 2017 $ 1,550 Total minimum lease payments 1,550 Less: software and support services (541 ) Net minimum lease payments 1,009 Less: imputed interest (26 ) Present value of minimum lease payments (capital lease obligation) $ 983 Current portion 983 Noncurrent portion — Depreciation expense related to the capital lease was $0.7 million for 2016. |
Goodwill
Goodwill | 12 Months Ended |
Dec. 31, 2016 | |
Goodwill And Intangible Assets Disclosure [Abstract] | |
Goodwill | 6. Goodwill As of December 31, 2016 and 2015, our goodwill balance from continuing operations was $70.9 million. Goodwill represents the excess of the purchase price of an acquired business over the fair value of the net tangible and the identifiable intangible assets. Goodwill amounts are not amortized, but rather tested for impairment at least annually during the fourth quarter. Our most recent annual impairment analysis was performed in the fourth quarter, as of September 30, 2016, using the total consolidated goodwill balance of $103.0 million. The test indicated that the fair value exceeded the carrying value of the reporting unit, and therefore no impairment was identified. If we were required to record a significant impairment charge against goodwill reflected on our balance sheet during the period in which an impairment is determined to exist, we could report a greater loss in one or more future periods. As of November 30, 2016, management determined the intent to sell the eNom business to Tucows met the held for sale criteria and we were required to perform an interim goodwill impairment assessment. In order to perform the impairment test, management first allocated the total consolidated goodwill balance between continuing operations, $70.9 million, and discontinued operations, $32.1 million, based on the relative fair values of the two components of the reporting unit. Management considered all available evidence in determining the relative fair values. Management then tested the continuing operations goodwill for impairment as of November 30, 2016 using a market approach. Based on the test performed, we determined that the fair value exceeded the carrying value and no impairment existed for goodwill from continuing operations. There were no additional known events or circumstances from November 30, 2016 through December 31, 2016 that would impact management’s conclusion. |
gTLD Deposits
gTLD Deposits | 12 Months Ended |
Dec. 31, 2016 | |
Deferred Costs Capitalized Prepaid And Other Assets Disclosure [Abstract] | |
gTLD Deposits | 7. gTLD Deposits gTLD deposits consisted of the following (in thousands): December 31, December 31, 2016 2015 gTLD deposits $ 2,169 $ 8,139 We received returns of deposits of $3.1 million and made payments and deposits of $9.7 million during 2016 and 2015, respectively, for certain gTLD applications under the New gTLD Program. Payments, deposits and returns of 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 as described in Note 10—Commitments and Contingencies. These deposits are applied to the purchase of the gTLD when we are awarded the gTLD operator rights or these deposits may be returned to us if we withdraw our interest in the gTLD application . The net gain related to the withdrawals of our interest in certain gTLD applications was $0.9 million, $9.4 million and $22.1 million for 2016, 2015 and 2014, respectively. We recorded these gains in gain on other assets, net on the statements of operations. |
Other Balance Sheet Items
Other Balance Sheet Items | 12 Months Ended |
Dec. 31, 2016 | |
Balance Sheet Related Disclosures [Abstract] | |
Other Balance Sheet Items | 8. Other Balance Sheet Items Accounts receivable consisted of the following (in thousands): December 31, December 31, 2016 2015 Accounts receivable—trade $ 2,752 $ 4,051 gTLD deposit receivable 106 19 Receivables from registries 479 505 Accounts receivable, net $ 3,337 $ 4,575 Prepaid expenses and other currents assets consisted of the following (in thousands): December 31, December 31, 2016 2015 Prepaid expenses $ 2,342 $ 2,471 Prepaid registry fees 399 416 Note receivable 10 10 Prepaid expenses and other current assets $ 2,751 $ 2,897 Accrued expenses and other current liabilities consisted of the following (in thousands): December 31, December 31, 2016 2015 Customer deposits $ 1,807 $ 2,354 Accrued payroll and related items 2,257 2,209 Commissions payable 15 20 Domain owners’ royalties payable 612 1,568 Other 4,196 3,847 Accrued expenses and other current liabilities $ 8,887 $ 9,998 |
Debt
Debt | 12 Months Ended |
Dec. 31, 2016 | |
Debt Disclosure [Abstract] | |
Debt | 9. Debt Silicon Valley Bank Credit Facility In August 2014, we entered into a $30.0 million revolving credit facility (“SVB Credit Facility”) with Silicon Valley Bank (“SVB”). Under this facility we may repay and reborrow until the maturity date in August 2017. The SVB Credit Facility includes a letter of credit sub-limit of up to $15.0 million. The SVB Credit Facility provides us with the option to select the annual interest rate on borrowings in an amount equal to: (1) a base rate determined by reference to the highest of: (a) the prime rate; (b) 0.50% per annum above the federal funds effective rate; and (c) the Eurodollar base rate for an interest period of one month plus 1.00%, plus a margin ranging from 1.00% to 1.50%, depending on our consolidated senior leverage ratio (as determined under the SVB Credit Facility), or (2) a Eurodollar base rate determined by reference to LIBOR for the interest period equivalent to such borrowing adjusted for certain reserve requirements, plus a margin ranging from 2.00% to 2.50%, depending on our consolidated senior leverage ratio (as determined under the SVB Credit Facility). In addition, we pay a 2.00% fee for the balance of letters of credit issued under the SVB Credit Facility. We pay fees on the portion of the facility that is not drawn. The unused fee is payable to SVB in arrears on a quarterly basis in an amount equal to 0.25% multiplied by the daily amount by which the aggregate commitments exceed the sum of the outstanding amount of loans and the outstanding amount of letter of credit obligations. The SVB Credit Facility allows SVB to require mandatory prepayments of outstanding borrowings from amounts otherwise required to prepay the term loan under the Tennenbaum Credit Facility. In March 2016, we entered into Amendment No. 3 to Credit Agreement (“Amendment No. 3”) with Silicon Valley Bank, which approves a one-time distribution of $10.0 million for the partial prepayment of our term loan under the Tennenbaum Credit Facility. The SVB Credit Facility contains customary representations and warranties, events of default and affirmative and negative covenants. This facility has financial covenants, including a requirement that we maintain a including a maximum consolidated net leverage ratio, minimum liquidity ratio, and minimum consolidated EBITDA. As of December 31, 2016, we were in compliance with the covenants under the SVB Credit Facility. We incurred $0.6 million in fees to establish this facility that we have capitalized on our balance sheet as deferred financing costs. We will amortize these costs on a straight-line basis into interest expense over the term of the SVB Credit Facility. As of December 31, 2016, we had letters of credit with a face amount of $10.7 million that were issued under the SVB Credit Facility. We have also drawn $12.8 million under this facility, which we fully repaid subsequent to December 31, 2016. See Note 20—Subsequent Events for further information. Tennenbaum Credit Facility In August 2014, we entered into a $30.0 million term loan credit facility with certain funds managed by Tennenbaum Capital Partners LLC (“Tennenbaum Credit Facility”). Under this facility, interest is based on a rate per year equal to LIBOR plus 8.75% and is payable quarterly. Quarterly principal payments of $375,000 on the term loan began March 31, 2015. In November 2016, we fully paid off and extinguished the aggregate outstanding principal balance of $27.4 million of our Tennenbaum Credit Facility, and recognized a loss of $4.3 million representing the difference between the reacquisition price and the net carrying amount of the extinguished debt. In connection with the Tennenbaum Credit Facility, we issued warrants to purchase up to an aggregate of 997,710 shares of common stock. The warrants have an exercise price of $15.05 per share and will be exercisable in accordance with their terms at any time on or after February 6, 2015, through August 6, 2019. The warrants contain a “cashless exercise” feature that allows the warrant holders to exercise such warrants by surrendering a number of shares underlying the portion of the warrant being exercised with a fair market value equal to the aggregate exercise price payable to us. We estimated the fair value of the warrants by using the Black-Scholes approach. Under the Black-Scholes approach our key assumptions included the following: stock price of $14.49, strike price of $15.05, volatility of 42.44%, risk-free rate of 1.67%, dividend yield of 0% and 5 year term. We used the resulting fair value to allocate the proceeds from the Tennenbaum Credit Facility between liability and equity components. Since the warrants are classified as equity, we allocated the proceeds from the debt and warrants using the relative fair value method. Under this method we allocated $4.4 million to the warrants which we recorded to equity, with the remaining portion assigned to the liability component. The excess of the principal amount of the credit facility over its carrying value of $25.6 million represents a note discount that we will amortize to interest expense over the term of the Tennenbaum Credit Facility. We incurred $3.2 million in fees to establish the Tennenbaum Credit Facility, which includes $2.3 million of deferred financing costs and $0.9 million of note discount. We capitalized these fees on our balance sheet and will amortize the fees on an effective interest method into interest expense over the term of the Tennenbaum Credit Facility. In connection with the debt extinguishment in November 2016, we wrote-off the unamortized note discount and deferred financing costs of $4.0 million. The fair value of the Tennenbaum Credit Facility was $31.5 million as of December 31, 2015. Refer to Note 16—Fair Value of Financial Instruments for further information. The following table presents our debt outstanding on the Tennenbaum Credit Facility (in thousands): December 31, December 31, 2016 2015 Principal $ 27,375 $ 28,500 Unamortized note discount and deferred financing costs — (5,299 ) Repayment of principal upon extinguishment (27,375 ) — Carrying value $ — $ 23,201 Interest expense on the Tennenbaum Credit Facility consisted of the following (in thousands): Year Ended December 31, 2016 2015 2014 Contractual interest expense $ 2,258 $ 2,760 $ 1,133 Amortization of issuance costs 395 496 203 Amortization of note discount 933 1,171 481 Loss on debt extinguishment 4,257 — — Total $ 7,843 $ 4,427 $ 1,817 Capital Lease In December 2015, we entered into a non-cancelable agreement to lease server equipment, along with the related software support and services, over a lease term of 24 months. The amount financed was $3.2 million and will be repaid in 24 equal monthly installments. We have the option to purchase the equipment at the end of the lease for an amount significantly below fair value of the equipment. As of December 31, 2016, $1.6 million of principal payments had been made. Subsequent to December 31, 2016, we fully paid off the balance on our capital lease obligation. See Note 20—Subsequent Events for further information. |
Commitments and Contingencies
Commitments and Contingencies | 12 Months Ended |
Dec. 31, 2016 | |
Commitments And Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | 10. Commitments and Contingencies Operating Leases We conduct our operations utilizing leased office facilities in various locations. Our leases expire between July 2017 and April 2022. Rent expense was $0.9 million, $0.7 million and $0.7 million for 2016, 2015 and 2014, respectively. We entered into a sublease agreement in connection with the eNom Divestiture for approximately 20,500 square feet of our headquarters in Kirkland, Washington. See Note 20—Subsequent Events for further information. Our future minimum lease payments under non-cancelable operating leases as of December 31, 2016 are as follows (in thousands): Years Ending December 31, Amount 2017 $ 1,409 2018 1,325 2019 588 2020 236 2021 240 Thereafter 80 Total $ 3,878 Letters of Credit In August 2014, we entered a revolving credit facility with SVB for $30.0 million. This facility allows for the issuance of up to $15.0 million of letters of credit. As of December 31, 2016, we have letters of credit totaling $10.7 million under the SVB Credit Facility. Subsequent to December 31, 2016, we reduced our letters of credit to $2.8 million under the SVB Credit Facility. See Note 20—Subsequent Events for further information. 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 financial statements. 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. 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 are recognized when realized, while losses are recognized when deemed probable. Separately, we extended the agreement to provide certain back‑end registry services for gTLD operator rights owned by Donuts for a period of five years, which originated with 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 Arrangements 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 indemnities 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 balance sheets. We have also agreed to customary indemnification provisions to Tucows in connection with the eNom Divestiture. We are required to maintain unrestricted cash and cash equivalents of at least $8.35 million until September 20, 2017, which amount will be reduced to $6.35 million thereafter until January 20, 2018, and further reduced to $5.35 million thereafter until April 20, 2018, subject to certain conditions set forth in the stock purchase agreement. |
Income Taxes
Income Taxes | 12 Months Ended |
Dec. 31, 2016 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | 11. Income Taxes Prior to the Separation, our operations were included in Demand Media’s U.S. federal and state income tax returns. For periods during which our operations were included with Demand Media, income taxes are presented in these financial statements as if we filed our own tax returns on a standalone basis. These amounts may not reflect tax positions taken or to be taken by Demand Media, and have been available for use by Demand Media and may remain with Demand Media after the separation from Demand Media. Prior to the Separation, current income tax liabilities were settled with Demand Media through parent company investment. All tax amounts shown in the tables below are presented on a consolidated basis, including both continuing operations and discontinued operations. Loss before income taxes consisted of the following (in thousands): Year Ended December 31, 2016 2015 2014 Domestic $ (12,490 ) $ (10,469 ) $ (11,413 ) Foreign (9,351 ) (3,169 ) 8,227 Loss before income taxes $ (21,841 ) $ (13,638 ) $ (3,186 ) The table above includes income from discontinued operations before incomes taxes of $11.9 million, $14.4 million and $12.6 million for 2016, 2015, and 2014, respectively. The income tax (expense) benefit consists of the following (in thousands): Year Ended December 31, 2016 2015 2014 Current expense: Federal $ — $ — $ — State (35 ) (69 ) (22 ) Foreign (50 ) (47 ) (9 ) Deferred benefit (expense): Federal (11,580 ) 2,696 1,454 State (144 ) (266 ) (95 ) Total income tax (expense) benefit $ (11,809 ) $ 2,314 $ 1,328 The table above includes income tax expense from discontinued operations of $4.5 million, $5.9 million and $7.0 million for 2016, 2015, and 2014, respectively. The reconciliation of the federal statutory income tax rate of 34% to our effective income tax rate is as follows (in thousands): Year Ended December 31, 2016 2015 2014 Expected income tax benefit at U.S. statutory rate $ 7,426 $ 4,637 $ 1,083 Foreign rate differential (3,176 ) (586 ) 3,988 State tax benefit, net of federal taxes 239 222 163 Non-deductible stock-based compensation expense (452 ) (776 ) (2,343 ) Meals and entertainment (27 ) (23 ) (38 ) State rate changes (71 ) (443 ) (240 ) Valuation allowance (14,760 ) (535 ) (1,197 ) Non-deductible warrant amortization (542 ) (329 ) (135 ) Non-deductible transaction-related expenses (283 ) — — Other (163 ) 147 47 Total income tax (expense) benefit $ (11,809 ) $ 2,314 $ 1,328 The tax effects of temporary differences that give rise to significant portions of the deferred tax assets and deferred tax liabilities are presented below (in thousands): December 31, 2016 2015 Deferred tax assets Accrued liabilities not currently deductible $ 1,381 $ 1,467 Intangible assets - excess of financial statement amortization over tax basis 5,057 5,131 Indirect federal impact of deferred state taxes 645 777 Deferred revenue 7,870 7,360 Net operating losses 22,576 17,935 Stock-based compensation expense 908 863 Total deferred tax assets $ 38,437 $ 33,533 Deferred tax liabilities Deferred registration costs $ (28,642 ) $ (28,379 ) Prepaid expenses (1,886 ) (1,627 ) Goodwill not amortized for financial reporting (15,570 ) (13,893 ) Intangible assets - excess of financial basis over tax basis (750 ) (829 ) Property and equipment (1,306 ) (1,536 ) Other (346 ) (368 ) Total deferred tax liabilities (48,500 ) (46,632 ) Valuation allowance (17,138 ) (2,378 ) Net deferred tax liabilities $ (27,201 ) $ (15,477 ) The table above includes net deferred tax liabilities from discontinued operations of $19.1 million and $18.4 million for the years ended December 31, 2016 and 2015, respectively. As of December 31, 2016, we evaluated the need for a valuation allowance for our deferred tax assets. We reduce our deferred tax assets by a valuation allowance if, based on the weight of the available evidence, it is more likely than not that some portion or all of these deferred tax assets will not be realized. We have determined that it is more likely than not that we will not realize the benefit of our deferred tax assets. Accordingly a valuation allowance against our deferred tax assets of $17.1 million and $2.4 million was required at December 31, 2016 and 2015 respectively. The table below presents our deferred tax asset valuation allowance activity (in thousands): Year Ended December 31, 2016 2015 2014 Balance as of January 1, $ 2,378 $ 1,843 $ 646 Increase in valuation allowance 14,760 535 1,197 Balance as of December 31, $ 17,138 $ 2,378 $ 1,843 For the year ended December 31, 2016 the valuation allowance change primarily reflects the establishment of a $14.7 million valuation allowance on the Company’s domestic deferred tax assets, $11.6 million of which is due to the eNom Divestiture. For the year ended December 31, 2015 and 2014, the valuation allowance change reflects the additional valuation allowance on our international deferred tax assets. We had consolidated federal net operating loss (“NOL”) carryforwards of approximately $54.6 million and $42.1 million as of December 31, 2016 and 2015, respectively, of which $42.0 million and $29.5 million are attributable to continuing operations. These NOLs expire between 2023 and 2036. We also have an Irish NOL carryforward of $19.4 million that can be carried forward indefinitely. In addition, we had state NOL carryforwards of approximately $24.0 million and $17.8 million as of December 31, 2016 and 2015, respectively, of which $5.1 million and $3.4 million are attributable to continuing operations. These state NOLs expire between 2028 and 2036. Sections 382 and 383 of the Internal Revenue Code of 1986, as amended, provide for annual limitations on the utilization of net operating loss and credit carryforwards if we were to undergo an ownership change, as defined in Section 382. Currently, we do not expect the utilization of our net operating loss and tax credit carryforwards to be materially affected by usage limitations. Accounting standards related to stock‑based compensation exclude tax attributes related to the exercise of employee stock options from being realized in the financial statements until they result in a decrease to taxes payable. Therefore, we have not included unrealized stock option tax attributes in our deferred tax assets. Cumulative tax attributes excluded through 2016 were $1.4 million. The benefit of these deferred tax assets will be recorded to equity when they reduce taxes payable. There can be no guarantee that the options will be exercised or reduce taxes payable. 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 2016 or 2015 and we do not expect our uncertain tax position to change during the next twelve months. Since the Separation, we file tax returns on our own. Prior to the Separation, our results are included in Demand Media’s tax returns in U.S. federal, state and foreign jurisdictions. The tax years 2007‑2015 remain subject to examination by various taxing authorities. |
Stock-based Compensation
Stock-based Compensation | 12 Months Ended |
Dec. 31, 2016 | |
Disclosure Of Compensation Related Costs Sharebased Payments [Abstract] | |
Stock-based Compensation | 12. Stock‑based Compensation Our stock-based award plan grants restricted stock, stock options, stock bonuses, stock appreciation rights, restricted stock units (“RSUs”) and performance-based restricted stock units. On August 1, 2014, as part of the Separation and the resulting conversion of equity awards, we had 1.1 million RSUs and options outstanding. Stock option holders received one Rightside stock option for every five Demand Media stock options. Holders of RSUs received 1.71 Rightside RSUs for every five Demand Media RSUs. As of December 31, 2016, we had 2.2 million shares of common stock reserved for future grants under our equity plan. Our stock-based awards generally vest over four years and are subject to the employee’s continued employment with us. We also estimate forfeiture rates at the time of grants and revise the estimates in subsequent periods if actual forfeitures differ from our estimates. We record stock-based compensation net of estimated forfeitures. Our stock‑based compensation expense related to stock‑based awards that has been included in the following line items within the statements of operations are as follows (in thousands): Year Ended December 31, 2016 2015 2014 Cost of revenue $ 62 $ 55 $ 296 Sales and marketing 700 775 1,040 Technology and development 870 825 716 General and administrative 4,196 3,871 3,237 Total stock-based compensation expense $ 5,828 $ 5,526 $ 5,289 The table above includes allocated stock-based compensation expense of $0.8 million for 2014 for the employees of Demand Media whose cost of services was partially allocated to us prior to the Separation. The table above does not include stock-based compensation expense for discontinued operations of $0.8 million, $0.8 million and $0.5 million for 2016, 2015 and 2014, respectively. Information related to stock‑based compensation activity is as follows (in thousands): Year Ended December 31, 2016 2015 2014 Intrinsic value of options exercised $ 2 $ — $ 100 Intrinsic value of restricted stock units vested 4,896 3,744 2,804 As of December 31, 2016, we had $9.9 million of unrecognized stock-based compensation, net of estimated forfeitures, which is expected to be recognized over a weighted average period of 2.3 years. Stock Options The fair value of each option granted was determined on the grant date using the Black-Scholes approach with the following weighted-average assumptions: Year Ended December 31, 2016 2015 2014 Expected term (in years) 5.92 N/A N/A Expected volatility 47.53 % N/A N/A Expected dividend yield — % N/A N/A Risk-free interest rate 1.34 % N/A N/A Estimated weighted average grant date fair value (per share) $ 4.23 N/A N/A There were no options granted in 2015 or 2014. Expected Term: For purposes of determining the expected term of the options in the absence of sufficient historical data relating to option exercises, the Company uses the “simplified method” as prescribed by the SEC to estimate the expected term of option grants. Under this approach, the weighted-average expected life is presumed to be the average of the contractual term (10 years) and the vesting term (four years) of the Company’s stock options, taking into consideration multiple vesting tranches. Expected Volatility: The expected volatility is based on the Company’s historical stock price volatility. Expected Dividend Yield: The Company has not declared or paid any dividends and does not expect to do so in the foreseeable future, therefore, we use an expected dividend yield of zero. Any future dividend payments will be at the discretion of our board of directors. Risk-Free Interest Rate: The risk-free interest rate is based on the U.S. Treasury yield curve in effect at the time of the grant for the expected term of the option. The following table presents a summary of our stock option activity for the year ended December 31, 2016 (in thousands, except for per share amounts and contractual term): Weighted Weighted Average Average Remaining Exercise Contractual Aggregate Price Term Intrinsic Shares Per Share (in years) Value Outstanding as of December 31, 2015 84 $ 13.84 Granted 316 9.25 Exercised (1 ) 5.50 Cancelled (7 ) 14.23 Outstanding as of December 31, 2016 392 10.15 7.9 $ 18 Exercisable as of December 31, 2016 88 $ 13.60 3.2 $ 18 Restricted Stock Units The following table presents a summary of our RSU activity for the year ended December 31, 2016 (in thousands, except for per share amounts): Weighted Average Shares Share Value Outstanding as of December 31, 2015 1,266 $ 9.75 Granted 580 8.43 Vested (533 ) 10.14 Cancelled (113 ) 9.11 Outstanding as of December 31, 2016 1,200 $ 8.99 |
Employee Benefit Plan
Employee Benefit Plan | 12 Months Ended |
Dec. 31, 2016 | |
Compensation And Retirement Disclosure [Abstract] | |
Employee Benefit Plan | 13. Employee Benefit Plan We offer defined contribution plans covering eligible employees in the United States and foreign locations. The plan allows employees to voluntarily contribute a percentage of their compensation. We may, at our discretion, match a portion of employees’ eligible contributions. Our expense associated with the contribution plans was $0.3 million, $0.2 million and $0.2 million for 2016, 2015 and 2014, respectively. |
Business Segments
Business Segments | 12 Months Ended |
Dec. 31, 2016 | |
Segment Reporting [Abstract] | |
Business Segments | 14. 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 and Cayman Islands. We also have a wholly foreign-owned enterprise in China. Revenue from our Registrar services, Registry services, and Aftermarket and other services offerings are as follows (in thousands): Year Ended December 31, 2016 2015 2014 Registrar services $ 29,120 $ 24,852 $ 19,386 Registry services 11,785 8,438 1,917 Aftermarket and other 22,620 25,377 22,045 Eliminations (1,401 ) (1,238 ) (306 ) Total revenue $ 62,124 $ 57,429 $ 43,042 The amounts in the Eliminations line reflect the elimination of intercompany transactions between our Registry and Registrar services businesses. Year Ended December 31, 2016 2015 2014 United States $ 43,764 $ 41,776 $ 30,057 International 18,360 15,653 12,985 Total $ 62,124 $ 57,429 $ 43,042 No international country represented more than 10% of total revenue in any period presented. |
Transactions with Related Parti
Transactions with Related Parties and Parent Company Investment | 12 Months Ended |
Dec. 31, 2016 | |
Related Party Transactions [Abstract] | |
Transactions with Related Parties and Parent Company Investment | 15. Transactions with Related Parties and Parent Company Investment Prior to the Separation, our financial statements included 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 Separation have not been allocated to us. However, the 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. Prior to the Separation, we recorded the following costs incurred and allocated by Demand Media in our statements of operations as follows (in thousands): Year Ended December 31, 2014 Cost of revenue $ 215 Sales and marketing 1,452 Technology and development 6,684 General and administration 10,768 Depreciation and amortization 2,391 Total allocated expenses $ 21,510 The table above includes allocated stock-based compensation expense of $0.8 million for 2014 for the employees of Demand Media whose cost of services was partially allocated to us. The net decrease in the parent company investment of $28.0 million for 2014 includes cash transfers to Demand Media, net of allocated expenses, assets and liabilities. |
Fair Value of Financial Instrum
Fair Value of Financial Instruments | 12 Months Ended |
Dec. 31, 2016 | |
Fair Value Disclosures [Abstract] | |
Fair Value of Financial Instruments | 16. 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 that are not recognized at fair value in our consolidated financial statements but for which the fair value is disclosed, are summarized below (in thousands): Carrying Fair Value Measurement Using Total As of December 31, 2016 Value Level 1 Level 2 Level 3 Fair Value Assets: Note receivable $ 10 $ — $ — $ 10 $ 10 Liabilities: Debt $ 12,800 $ — $ — $ 12,800 $ 12,800 Carrying Fair Value Measurement Using Total As of December 31, 2015 Value Level 1 Level 2 Level 3 Fair Value Assets: Note receivable $ 10 $ — $ — $ 10 $ 10 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 . As of December 31, 2016, the draw on our revolving line of credit is short-term in nature and its carrying value approximates fair value. This is classified as a Level 3 measurement. As of December 31, 2015, the fair value of our Tennenbaum Credit Facility 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 December 31, 2015, 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 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 $0.5 million. 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 (3,233 ) Change in fair value of future payments on debt 2,227 Repayment of debt (30,483 ) Issuance of short-term debt 12,800 Balance as of December 31, 2016 $ 12,800 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 $ 10 Repayments on note receivable — Balance as of December 31, 2016 $ 10 |
Earnings (loss) Per Share
Earnings (loss) Per Share | 12 Months Ended |
Dec. 31, 2016 | |
Earnings Per Share [Abstract] | |
Earnings (loss) per share | 17. Earnings (loss) per share Basic and diluted earnings (loss) per share were calculated using the following (in thousands, except per share amounts): Year Ended December 31, 2016 2015 2014 Loss from continuing operations $ (41,051 ) $ (19,871 ) $ (7,404 ) Income from discontinued operations 7,401 8,547 5,546 Net loss (33,650 ) (11,324 ) (1,858 ) Weighted average number of shares outstanding: Basic 19,308 18,867 18,452 Diluted 19,308 18,867 18,452 Basic (loss) income per share attributable to common stockholders: Continuing operations $ (2.12 ) $ (1.05 ) $ (0.40 ) Discontinued operations 0.38 0.45 0.30 Basic (loss) income per share $ (1.74 ) $ (0.60 ) $ (0.10 ) Diluted (loss) income per share attributable to common stockholders: Continuing operations $ (2.12 ) $ (1.05 ) $ (0.40 ) Discontinued operations 0.38 0.45 0.30 Diluted (loss) income per share $ (1.74 ) $ (0.60 ) $ (0.10 ) On August 1, 2014, the 1,000 shares of Rightside common stock, par value $0.0001 per share, issued and outstanding immediately prior to the Separation were automatically reclassified as and became 18.4 million 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 updated to reflect these transactions. For 2016, 2015 and 2014, we excluded approximately 209,000, 48,100 and 32,600 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 2016, 2015 or 2014. |
Concentrations
Concentrations | 12 Months Ended |
Dec. 31, 2016 | |
Risks And Uncertainties [Abstract] | |
Concentrations | 18. Concentrations Credit and Business Risk Financial instruments that potentially subject us to a concentration of credit risk consist of cash and cash equivalents and accounts receivable. At December 31, 2016 and 2015, our cash and cash equivalents were maintained with one major U.S. financial institution and two foreign banks. We also used online payment processors, such as PayPal, in both periods. Deposits with these institutions at times exceed the federally insured limits, which potentially subjects us to concentration of credit risk. We have not experienced any losses related to these balances and do not believe there is unusual credit risk beyond the normal credit risk associated with commercial banking relationships. Partners comprising more than 10% of the accounts receivable balance were as follows: December 31, 2016 2015 Advertising network partner 28 % 47 % Partner A 21 14 Partner C 12 6 Significant Customers A substantial portion of our revenue is generated through arrangements with one partner noted below. We may not be successful in renewing these agreements on commercially acceptable terms, or at all, and if they are renewed, they may not be on terms as favorable as the current agreements. The percentage of revenue generated through partners representing more than 10% of revenue is as follows: Year Ended December 31, 2016 2015 2014 Advertising network partner 30 % 39 % 41 % |
Selected Quarterly Financial In
Selected Quarterly Financial Information (Unaudited) | 12 Months Ended |
Dec. 31, 2016 | |
Quarterly Financial Information Disclosure [Abstract] | |
Selected Quarterly Financial Information (Unaudited) | 19. Selected Quarterly Financial Information (Unaudited) The following unaudited quarterly financial information presents our quarterly and full year financial information (in thousands, except per share information): Three months ended Year Ended March 31 June 30 September 30 December 31 December 31 2016 Revenue $ 16,606 $ 15,774 $ 14,835 $ 14,909 $ 62,124 Loss from continuing operations before income taxes (8,197 ) (5,831 ) (9,117 ) (10,561 ) (33,706 ) Loss from continuing operations (6,251 ) (4,447 ) (6,954 ) (23,399 ) (41,051 ) Income from discontinued operations, net of income taxes 1,145 1,975 2,525 1,756 7,401 Net loss (5,106 ) (2,472 ) (4,429 ) (21,643 ) (33,650 ) Loss from continuing operations per share attributable to common stockholders: Basic $ (0.33 ) $ (0.23 ) $ (0.36 ) $ (1.20 ) $ (2.12 ) Diluted (0.33 ) (0.23 ) (0.36 ) (1.20 ) (2.12 ) 2015 Revenue $ 12,660 $ 13,349 $ 15,090 $ 16,330 $ 57,429 Loss from continuing operations before income taxes (2,442 ) (10,217 ) (7,638 ) (7,752 ) (28,049 ) Loss from continuing operations (1,730 ) (7,238 ) (5,412 ) (5,491 ) (19,871 ) Income from discontinued operations, net of income taxes 3,606 1,565 2,008 1,368 8,547 Net income (loss) 1,876 (5,673 ) (3,404 ) (4,123 ) (11,324 ) Loss from continuing operations per share attributable to common stockholders: Basic $ (0.09 ) $ (0.38 ) $ (0.29 ) $ (0.29 ) $ (1.05 ) Diluted (0.09 ) (0.38 ) (0.29 ) (0.29 ) (1.05 ) Seasonality of Quarterly Results In general, internet usage and online commerce and advertising are seasonally strongest in the fourth quarter and generally slower during the beginning of the year. We believe that these seasonal trends have affected and will continue to affect our quarterly results. We believe that our business may become more seasonal in the future. |
Subsequent Events
Subsequent Events | 12 Months Ended |
Dec. 31, 2016 | |
Subsequent Events [Abstract] | |
Subsequent Events | 20. Subsequent Events On January 20, 2017, we completed the divestiture of eNom, our wholly-owned registrar, to Tucows. See Note 3—Business Divestiture for additional information. Concurrently, we entered into a sublease agreement with eNom in connection with the eNom Divestiture for approximately 20,500 square feet of our headquarters in Kirkland, Washington. On January 20, 2017, we repaid the $12.8 million draw on our revolving line of credit with Silicon Valley Bank and entered into a Limited Consent and Amendment No. 4 to Credit Agreement (“Amendment No. 4”) with Silicon Valley Bank to release eNom as a party to the SVB Credit Facility in connection with the eNom Divestiture. In addition, Amendment No. 4 suspends the availability period for revolving loans, lowers the total commitment from $30.0 million to $15.0 million and amends certain financial covenants. We also reduced our outstanding letters of credit with Silicon Valley Bank to $2.8 million as of February 27, 2017. On January 20, 2017, we paid off the remaining balance of $1.5 million on our leased server equipment and related software support and services. On February 28, 2017, we announced that our board of directors authorized a stock repurchase program of up to $50 million of the Company’s outstanding common stock, effective immediately. The stock repurchase program will be in place for up to 24 months. |
Summary of Significant Accoun29
Summary of Significant Accounting Policies and Accounting Pronouncements (Policies) | 12 Months Ended |
Dec. 31, 2016 | |
Accounting Policies [Abstract] | |
Use of Estimates | Use of Estimates We prepared our financial statements in accordance with GAAP, which requires us to make estimates and use assumptions that affect the reported amounts of assets, liabilities, revenues, expenses and related disclosures at the date of the financial statements, and the reported amounts of revenue and expenses during the reporting period. We evaluate our estimates and assumptions on an ongoing basis, which form the basis for making judgments about the carrying value of assets and liabilities. We base our estimates on historical experience and other assumptions that we believe to be reasonable under the circumstances. Significant items subject to such estimates and assumptions include revenue, useful lives and impairment of property and equipment, intangible assets, goodwill, deferred income tax assets and liabilities, and valuation allowance. Actual results could differ materially from those estimates. On an ongoing basis, we evaluate our estimates compared to historical experience and trends, which form the basis for making judgments about the carrying value of assets and liabilities. |
Revenue Recognition | Revenue Recognition We recognize revenue when four basic criteria are met: (1) persuasive evidence of a sales arrangement exists; (2) performance of services has occurred; (3) the sales price is fixed or determinable; and (4) collectability is reasonably assured. We consider persuasive evidence of a sales arrangement to be the receipt of a signed contract. We assess collectability based on a number of factors, including transaction history and the credit worthiness of a customer. If we determine that collection is not reasonably assured, revenue is not recognized until collection becomes reasonably assured, which is generally upon receipt of cash. We recognize performance incentive rebates and certain other business incentives as a reduction in revenue. We record cash received in advance of revenue recognition as deferred revenue. For arrangements with multiple deliverables, we allocate revenue to each deliverable if the delivered item(s) has value to the customer on a standalone basis and, if the arrangement includes a general right of return relative to the delivered item, delivery or performance of the undelivered item(s) is considered probable and substantially in the control of the Company. We determine the fair value of the selling price for a deliverable using a hierarchy of (1) Company specific objective and reliable evidence, then (2) third-party evidence, then (3) best estimate of selling price. We allocate any arrangement fee to each of the elements based on their relative selling prices. To the extent that we offer performance incentive rebates or certain other business incentives to our partners, those incentives will be recognized as a reduction to revenue. Domain Name Registration Fees We recognize revenue from registration fees charged to third parties in connection with new, renewed and transferred domain name registrations on a straight‑line basis over the registration term, which ranges from one to ten years. We record payments received in advance of the domain name registration term in deferred revenue in our balance sheets. The registration term and related revenue recognition commences once we confirm that the requested domain name has been recorded in the appropriate registry under accepted contractual performance standards. We defer the associated direct and incremental costs, which principally consist of registry and ICANN fees, and expense them as cost of revenue on a straight‑line basis over the registration term. Our business includes Name.com, an ICANN accredited registrar. Thus, we are the primary obligor with our registrant customers and are responsible for the fulfillment of our registrar services to those parties. As a result, we report revenue in the amount of the fees we receive directly from our registrant customers. Value‑added Services We recognize revenue from online registrar value‑added services, which include, but are not limited to, security certificates, domain name identification protection, charges associated with alternative payment methodologies, web hosting services and email services on a straight‑line basis over the period in which services are provided. We include payments received in advance of services being provided in deferred revenue. Domain Name Monetization Services Domain name monetization service revenue represents advertising revenue and primarily includes revenue derived from cost‑per‑click advertising links we place on websites owned by us, which we acquire and sell on a regular basis, and on websites owned by certain of our customers, with whom we have revenue sharing arrangements. Where we enter into revenue sharing arrangements with our customers, such as those relating to advertising on our customers’ domains, and when we are considered the primary obligor, we report the underlying revenue on a gross basis in our statements of operations, and record these revenue‑sharing payments to our customers as revenue‑sharing expenses, which are included in cost of revenue. Domain Name Sales Domain name sales revenue represents proceeds received from selling domain names from our portfolio, as well as proceeds received from selling domain names that are not renewed by customers of our registrar platform. Domain name sales are primarily conducted through our direct sales efforts as well as through third-party domain name auction platforms. While certain domain names sold are registered on our registrar platform upon sale, we have determined that sales revenue and related registration revenue represent separate units of accounting, because the domain name has value to the customers on a stand‑alone basis, where a customer could resell it separately, without the registration service, there is objective and reliable evidence of the fair value of the registration service and no general rights of return. We evaluated each deliverable, domain name sale and domain name registration, to determine whether vendor‑specific objective evidence (“VSOE”) or third-party evidence of selling price (“TPE”) existed in order to determine the selling price for each unit of accounting. We determined that there is VSOE for domain name registrations through analysis of historical stand‑alone transactions sold by us, which have been consistently priced with limited discounts. For domain name sales, we have determined that TPE is not a practical alternative due to uniqueness of domain names compared to those sold by competitors and the availability of relevant third-party pricing information. We have not established VSOE for domain names due to the lack of pricing consistency and other factors. Accordingly, we allocate revenue to the domain name sale deliverable in the arrangement based on best estimate of the selling price (“BESP”). We determine BESP by reference to the total transaction price and an estimate of what a market participant would pay without the registration service. Based on the nature of the transaction and its elements, we believe that there are no meaningful discounts embedded in the overall arrangement. We recognize domain name sales revenue when title to the name is transferred to the buyer and the related registration fees are recognized on a straight‑line basis over the registration term. If we sell a domain name, we recognize any unamortized cost basis as a cost of revenue over the registration term. For sales of domain names generated through third-party auction platforms, we recognize revenue net of auction service fee payments. |
Intangible Assets | Intangible Assets Registration and Acquisition Costs of Monetized Domains We capitalize the initial registration and acquisition costs of our monetized domain names, and amortize these costs over the expected useful life of the underlying domain name on a straight line basis, which approximates the estimated pattern in which the underlying economic benefits are consumed. The expected useful lives of the monetized domain names range from 12 months to 72 months. We determine the appropriate useful life by performing an annual analysis of expected cash flows based on historical experience with domain names of similar quality and value. In order to maintain the rights to each monetized domain name acquired, we pay periodic renewal registration fees, which cover a minimum period of twelve months. We record renewal registration fees of domain name intangible assets in deferred registration costs and recognize the costs over the renewal registration period, which is included in cost of revenue. Acquired in Business Combinations We perform valuations of assets acquired and liabilities assumed on each acquisition accounted for as a business combination and allocate the purchase price of each acquired business to our respective net tangible and intangible assets. Acquired intangible assets include: trade names, non‑compete agreements, owned website names, customer relationships, and technology. We determine the appropriate useful life by performing an analysis of expected cash flows based on historical experience of the acquired businesses. Intangible assets are amortized over their estimated useful lives of three to 20 years, using the straight‑line method, which approximates the pattern in which the economic benefits are consumed. gTLDs We capitalize payments for gTLD applications and other costs directly attributable to the acquisition of gTLD registry operator rights and include them in other long-term assets. We have received and may continue to receive partial cash refunds for certain gTLD applications, and to the extent we elect to sell or withdraw certain gTLD applications throughout the process, we may also incur gains or losses on amounts invested. These gains have been recorded as gains on other assets, net, on the statements of operations. As gTLDs become available for their intended use, gTLD application fees and acquisition related costs are reclassified as finite lived intangible assets and amortized on a straight-line basis over an estimated useful life of 10 years, which approximates the pattern in which the economic benefits are consumed. Other costs incurred as part of the gTLD Initiative and not directly attributable to the acquisition of gTLD registry operator rights are expensed as incurred. Impairment of Intangible Assets We evaluate the recoverability of our finite-lived intangible assets for impairment when events or changes in circumstances indicate that the carrying amount of an asset group may not be recoverable. When such events or circumstances occur, an impairment test would be performed by comparing the estimated undiscounted future cash flows expected to result from the use of the asset group to the related asset group’s carrying value. If an asset is considered impaired, the impairment loss is measured as the amount by which the carrying value of the asset group exceeds its estimated fair value. We have not recognized any such impairment loss associated with our finite-lived intangible assets during 2016, 2015 or 2014. |
Goodwill | Goodwill Goodwill represents the excess of the purchase price of an acquired business over the fair value of the net tangible and the identifiable intangible assets. Goodwill is not amortized; rather, goodwill is tested for impairment at the reporting unit level on an annual basis during the fourth quarter, as of October 1, or more frequently, if an event occurs or circumstances change that would more likely than not reduce the fair value of the reporting unit below its carrying value. These events or circumstances could include a significant change in the Company’s business outlook, legal factors, financial performance, industry environment, or a sale or disposition of a significant portion of a reporting unit. A triggering event occurred during the fourth quarter, and as such, an interim impairment test was performed (refer to Note 6—Goodwill for further information). Application of the goodwill impairment test requires judgment, including the identification of reporting units, assignment of assets and liabilities to the reporting units, assignment of goodwill to the reporting units and the determination of fair value of the reporting units. Management has determined that we have only one reporting unit. Goodwill is tested annually for impairment using a two-step process. First, we determine if the carrying value of the reporting unit exceeds fair value, which would indicate that goodwill may be impaired. If the fair value of the reporting unit exceeds the carrying value, goodwill is not impaired and no additional steps are necessary. If, however, the fair value of the reporting unit is less than carrying value, then goodwill may be impaired and we perform the second step of the test to determine if goodwill is impaired and to measure the amount of impairment loss, if any. In the second step, we compare the implied fair value of the goodwill to its carrying amount in order to determine if there is an impairment loss. If the carrying amount of goodwill exceeds its implied fair value, then an impairment loss is recognized in an amount equal to the excess. We estimate the fair value of the reporting unit in step one using the market approach. The market approach utilizes the Company’s number of outstanding shares and the share price on the date of the annual test to determine a market capitalization value. We estimate the implied fair value of our reporting unit in step two using the discounted cash flows approach. The implied fair value is primarily based on an estimate of the cash flows expected to result from the reporting unit but may require valuations of certain internally generated and unrecognized intangible assets such as our software, technology, patents and trademarks, and then discounted using an estimated weighted-average cost of capital. These estimates and the resulting valuations require significant judgment. There were no impairment charges recorded related to goodwill during 2016, 2015 and 2014. |
Impairment of Long-lived Assets | Impairment of Long‑lived Assets We evaluate the recoverability of our long-lived assets with finite useful lives for impairment when events or changes in circumstances indicate that the carrying amount of an asset group may not be recoverable. When such events or circumstances occur, an impairment test would be performed by comparing the estimated undiscounted future cash flows expected to result from the use of the asset group to the related asset group’s carrying value. If an asset is considered impaired, the impairment loss is measured as the amount by which the carrying value of the asset group exceeds its estimated fair value. We have not recognized any such impairment loss associated with our long-lived assets during 2016, 2015 or 2014. |
Income Taxes | Income Taxes For periods prior to the Separation our results were included in the federal income tax return of Demand Media, as well as certain state tax returns where Demand Media files on a combined basis. For periods during which our operations were included with Demand Media, income taxes are presented in these financial statements as if we filed our own tax returns on a separate return basis. We account for our income taxes using the liability and asset method, which requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been recognized in our financial statements or in our tax returns. In estimating future tax consequences, generally all expected future events other than enactments or changes in the tax law or rates are considered. Deferred income taxes are recognized for differences between financial reporting and tax bases of assets and liabilities at the enacted statutory tax rates in effect for the years in which the temporary differences are expected to reverse. The effect on deferred taxes of a change in tax rates is recognized in income in the period that includes the enactment date. We evaluate the realizability of our deferred tax assets and valuation allowances are provided when necessary to reduce deferred tax assets to the amounts expected to be realized. We operate in various tax jurisdictions and are subject to audit by various tax authorities. We provide tax contingencies whenever it is deemed probable that a tax asset has been impaired or a tax liability has been incurred for events such as tax claims or changes in tax laws. Tax contingencies are based upon their technical merits, and relevant tax law and the specific facts and circumstances as of each reporting period. Changes in facts and circumstances could result in material changes to the amounts recorded for such tax contingencies. We recognize a tax benefit from an uncertain tax position only if it is more likely than not that the tax position will be sustained on examination by the taxing authorities, based on the technical merits of the position. The tax benefits recognized in the financial statements from such positions are then measured based on the largest benefit that we believe has a greater than 50% likelihood of being realized upon settlement. We recognize interest and penalties accrued related to unrecognized tax benefits in our income tax (benefit) provision in the accompanying statements of operations. We allocate the total tax expense (or benefit) between continuing operations and discontinued operations utilizing the intraperiod allocation rules of ASC 740. These rules provide for allocation of total tax expense (or benefit) among the various financial statement components. We calculate our current and deferred tax provision based on estimates and assumptions that could differ from the actual results reflected in income tax returns filed in subsequent years. Adjustments based on filed returns are recorded when identified. The amount of income taxes we pay is subject to ongoing audits by federal, state and foreign tax authorities. Our estimate of the potential outcome of any uncertain tax issue is subject to management’s assessment of relevant risks, facts, and circumstances existing at that time. To the extent that our assessment of such tax positions changes, the change in estimate is recorded in the period in which the determination is made. |
Cash and Cash Equivalents | Cash and Cash Equivalents We consider all highly liquid investments with a maturity of 90 days or less at the time of purchase to be cash equivalents. We consider funds transferred from our credit card service providers but not yet deposited into our bank accounts at the balance sheet dates, as funds in transit and these amounts are recorded as unrestricted cash, since the amounts are generally settled the day after the outstanding date. Cash and cash equivalents consist primarily of checking accounts. |
Accounts Receivable | Accounts Receivable Since our domain name registration services are primarily conducted on a prepaid basis through credit card or internet payments processed at the time a transaction is consummated, we do not carry significant receivables related to these business activities. Accounts receivable primarily consists of amounts due from registries and registrars, as well as gTLD amounts due from our collaboration agreement with Donuts Inc. (“Donuts”), a third-party new gTLD applicant. Receivables from registries represent refundable amounts for registrations that were placed on auto-renew status by the registries, but were not explicitly renewed by a registrant as of the balance sheet dates. We record registry services accounts receivable at the amount of the registration fees paid by us to a registry for all registrations placed on auto-renew status. Subsequent to the lapse of a prior registration period, a registrant either renews the applicable domain name with us, which results in the application of the refundable amount to a consummated transaction, or the registrant lets the domain name registration expire, which results in a refund of the applicable amount from a registry to us. |
Deferred Revenue and Deferred Registration Costs | Deferred Revenue and Deferred Registration Costs Deferred revenue consists primarily of amounts received from customers in advance of our performance for domain name registration services and online value‑added services. We recognize deferred revenue as revenue on a systematic basis that is proportionate to the unexpired term of the related domain name registration over online value‑added service period. Deferred registration costs represent incremental direct costs paid in advance to registries, ICANN, and other third parties for domain name registrations and are recorded as a deferred cost. We record the amortization of deferred registration costs to cost of revenue on a straight‑line basis over the registration period. |
Property and Equipment and Software Development Costs | Property and Equipment and Software Development Costs We record property and equipment at cost and provide for depreciation and amortization using the straight-line method for financial reporting purposes over the estimated useful lives. We capitalize certain costs of internally developed software or software purchased for internal use. We capitalize software development costs when application development begins, it is probable that the project will be completed, and the software will be used as intended. We expense costs associated with preliminary project stage activities, training, maintenance, and all other post-implementation stage activities as we incur these costs. Our policy provides for the capitalization of certain payroll, benefits, and other payroll-related costs for employees who are directly associated with internal-use software development projects, as well as external direct costs of materials and services associated with developing or obtaining internal-use software. We only capitalize personnel costs that relate directly to time spent on such projects. The estimated useful lives by asset classification are as follows: • Computer hardware: 2 to 5 years • Computer software: 2 to 3 years • Internally developed software: 3 years • Furniture and equipment: 7 to 10 years • Leasehold improvements: Shorter of the estimated useful life or life of related lease During 2014, depreciation expense included the write-off of internally developed software of $0.8 million. There were no impairments related to property and equipment during 2016 and 2015. |
Other Long -Term Assets | Other Long‑Term Assets ICANN approved a framework for the significant expansion of the number of gTLDs available for businesses and consumers to register as part of a domain name (“New gTLD Program”). The first new gTLDs launched in the fourth quarter of 2013. We capitalize the costs incurred to pursue the acquisition of gTLD operator rights. While there can be no assurance that gTLDs will be awarded to us, we reclassify these payments as finite‑lived intangible assets following the delegation of operator rights for each gTLD by ICANN. Payments for gTLD applications primarily represent amounts paid directly to ICANN and/or third parties in the pursuit of gTLD operator rights. When two or more applicants apply for the same gTLD, an auction process is used to determine the eventual owner. If a private auction is used, the highest bidder is required to pay the other applicants the proceeds from the auction in return for the withdrawal of their application for the gTLD. We may also receive partial cash refunds from ICANN for certain gTLD applications, and to the extent we elect to sell or withdraw of our interest in certain gTLD applications throughout the process, we may also incur gains or losses on amounts invested. Gains on the withdrawal of our interest in gTLD applications are recognized when realized, while losses are recognized when deemed probable. Potential losses are limited to the non‑refundable portion of our deposits, while gains realized during the initial ICANN rights delegation phase are based on proceeds received from third parties and may be significant as compared to our initial investment (deposit) in a particular gTLD. We expense other costs incurred by us as part of the gTLD Initiative not directly attributable to the acquisition of gTLD operator rights. We amortize capitalized costs on a straight‑line basis over the estimated useful life of the gTLD operator rights acquired commencing the date that each asset is available for its intended use. |
Investments | Investments 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 (expense), net. |
Leases | Leases We categorize leases as either operating or capital leases at their inception. We lease office space and equipment under non-cancelable operating and capital leases. The terms of our lease agreements generally provide for rental payments on a graduated basis. We record rent expense on a straight-line basis over the lease period and have accrued for rent expense incurred but not paid. |
Advertising Costs | Advertising Costs Advertising costs are expensed as incurred and generally consist of online advertising, sponsorships, and trade shows. Such costs are included in sales and marketing expense in our statements of operations. Advertising expense was $2.4 million, $2.6 million and $1.4 million for 2016, 2015 and 2014, respectively. |
Stock-based Compensation Expense | Stock-based Compensation Expense We measure stock-based compensation expense at the grant date based on the fair value of the award. Our stock-based payment awards are comprised principally of restricted stock units and stock options. We recognize compensation expense on a straight-line basis over the requisite service period. The requisite service period is generally four years. The compensation cost is recognized net of estimated forfeiture activity. For awards issued to employees with service based vesting conditions the fair value is estimated using the Black-Scholes Option Pricing Method (“Black-Scholes”). The value of an award that is ultimately expected to vest is recognized as expense over the requisite service periods in our consolidated statements of operations. Stock-based compensation expense is classified in the consolidated statement of operations based on the department to which the related employee provides service. The Black-Scholes approach requires management to make assumptions and to apply judgment in determining the fair value of our awards. The most significant assumptions and judgments include the expected volatility and expected term of the award. We estimated the expected volatility of our awards from our company’s historical volatility. We calculated the weighted average expected life of our options based upon the “simplified method” as prescribed by the SEC. The risk-free interest rate is based on the implied yield currently available on U.S. Treasury notes with terms approximately equal to the expected life of the option. The expected dividend rate is zero as we currently have no history or expectation of paying cash dividends on our common stock. |
Foreign Currency Transactions | Foreign Currency Transactions Our foreign subsidiaries have a functional currency of U.S. dollars. We record realized and unrealized foreign currency transaction gains and losses as incurred. Foreign currency transaction gains and losses are included in other income (expense) in our statements of operations. The net effect of our foreign currency gains and losses was not significant for 2016, 2015 and 2014. |
Fair Value of Financial Instruments | 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. Assets and Liabilities Measured at Fair Value on a Nonrecurring Basis Assets and liabilities recognized or disclosed at fair value in our financial statements on a nonrecurring basis include items such as property and equipment, cost and equity method investments, and other assets. These assets are measured at fair value if determined to be impaired. The fair values of these investments are determined based on valuation techniques using the best information available and may include quoted market prices, market comparables, and discounted cash flow projections. An impairment charge is recorded when the cost of the investment exceeds its fair value and this condition is determined to be other-than-temporary. Assets and Liabilities Measured at Fair Value on a Recurring Basis Assets and liabilities recognized or disclosed at fair value in our financial statements on a recurring basis include items such as cash equivalents and short-term investments. These assets are measured at fair value at each balance sheet date. Cash equivalents consist of financial instruments that have original maturities of 90 days or less. Short-term investments consist of financial instruments with maturities greater than 90 days, but that generally mature in less than one year. 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. |
Discontinued Operations | Discontinued Operations Components that have been disposed of or are classified as held for sale and represent a strategic shift that has or will have a major effect on our operations or financial results are reported as discontinued operations. We reclassify the results of operations for current and prior periods into a single caption titled Income from discontinued operations, net of income tax in the consolidated statements of operations. In addition, assets and liabilities that qualify for reporting as discontinued operations are reflected in the consolidated balance sheets as Assets held for sale and Liabilities held for sale. We also classify cash flows related to discontinued operations as one line item within each category of cash flows in our consolidated statements of cash flows. |
Adoption of New Accounting Pronouncements | Adoption of New Accounting Pronouncements In August 2015, the FASB issued ASU 2015-15, Interest – Imputation of Interest (Subtopic 835-30): Presentation and Subsequent Measurement of Debt Issuance Costs Associated with Line-of-Credit Arrangements. As of December 31, 2015, we had $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 April 2015, the FASB issued ASU 2015-05, Intangibles – Goodwill and Other – Internal-Use Software (Subtopic 350-40): Customer’s Accounting for Fees Paid in a Cloud Computing Arrangement. service contracts. In April 2015, the FASB issued ASU 2015-03, Interest – Imputation of Interest (Subtopic 835-30): Simplifying the Presentation of Debt Issuance Costs. In August 2014, the FASB issued ASU 2014-15, Presentation of Financial Statements – Going Concern (Subtopic 205-40): Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern |
Accounting Pronouncements Not Yet Adopted | Accounting Pronouncements Not Yet Adopted In January 2017, the FASB issued ASU 2017-04, Intangibles—Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment. In August 2016, the FASB issued ASU 2016-15, Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments. 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, including the accounting for income taxes, forfeitures, and statutory tax withholding requirements, as well as classification in the statement of cash flows 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, |
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. |
Business Divestiture (Tables)
Business Divestiture (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Discontinued Operations And Disposal Groups [Abstract] | |
Schedule of Major Class of Assets and Liabilities Included as Held For Sale and Loss from Discontinued Operations, Net of Income Tax | The major classes of assets and liabilities included as held for sale related to eNom are as follows (in thousands): December 31, December 31, 2016 2015 Assets Accounts receivable, net $ 6,422 $ 6,731 Prepaid expenses and other current assets 3,332 4,359 Deferred registration costs 65,982 66,601 Deferred registration costs, less current portion 14,441 14,441 Property and equipment, net 4,718 5,731 Intangible assets, net 1,955 2,165 Goodwill 32,121 32,121 Other assets 82 75 Total assets classified as held for sale $ 129,053 $ 132,224 Liabilities Accounts payable $ 5,494 $ 5,762 Accrued expenses and other current liabilities 12,988 14,693 Deferred revenue 77,082 78,597 Deferred revenue, less current portion 18,457 18,588 Deferred tax liabilities, net 19,099 18,381 Other liabilities 468 631 Total liabilities classified as held for sale 133,588 136,652 The major classes of line items constituting the loss from discontinued operations, net of income tax, in the statements of operations for eNom, are as follows (in thousands): Year Ended December 31, 2016 2015 2014 Revenue $ 155,761 $ 156,408 $ 148,935 Cost of revenue (excluding depreciation and amortization) 127,823 127,297 120,028 Sales and marketing 2,408 2,048 3,245 Technology and development 9,085 8,343 8,265 General and administrative 2,517 874 1,272 Depreciation and amortization 3,363 3,435 3,547 Gain on other assets, net (1,300 ) — — Income from discontinued operations before income tax 11,865 14,411 12,578 Income tax expense 4,464 5,864 7,032 Income from discontinued operations, net of income tax $ 7,401 $ 8,547 $ 5,546 |
Intangible Assets (Tables)
Intangible Assets (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Intangible Assets Net Excluding Goodwill [Abstract] | |
Schedule of Intangible Assets | Intangible assets consisted of the following (in thousands): December 31, 2016 December 31, 2015 Weighted Weighted Gross average Gross average carrying Accumulated useful carrying Accumulated useful amount amortization Net life amount amortization Net life (years) Owned website names $ 13,935 $ (11,198 ) $ 2,737 4 $ 15,040 $ (11,691 ) $ 3,349 4 Customer relationships 8,090 (8,037 ) 53 4 8,090 (6,763 ) 1,327 4 Technology 416 (416 ) — 2 416 (397 ) 19 2 Non-compete agreements 207 (164 ) 43 5 207 (122 ) 85 5 Trade names 1,276 (548 ) 728 13 1,276 (440 ) 836 13 gTLDs 54,348 (10,948 ) 43,400 10 51,988 (5,441 ) 46,547 10 Total $ 78,272 $ (31,311 ) $ 46,961 $ 77,017 $ (24,854 ) $ 52,163 |
Estimated Future Amortization Expense | Estimated future amortization expense related to intangible assets held at December 31, 2016 (in thousands): Years Ending December 31, Amount 2017 $ 6,872 2018 6,498 2019 6,197 2020 5,976 2021 5,860 Thereafter 15,558 Total $ 46,961 |
Property and Equipment (Tables)
Property and Equipment (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Property Plant And Equipment [Abstract] | |
Schedule of Property and Equipment | Property and equipment consisted of the following (in thousands): December 31, December 31, 2016 2015 Computers and other related equipment $ 12,314 $ 14,998 Purchased and internally developed software 11,964 11,425 Furniture and fixtures 656 611 Leasehold improvements 1,037 999 Property and equipment, gross 25,971 28,033 Less: accumulated depreciation (20,225 ) (20,466 ) Property and equipment, net $ 5,746 $ 7,567 |
Schedule of Server Equipment Assets Under Capital Lease | Our computers and other related equipment shown in the table above included the server equipment assets under a capital lease as follows (in thousands) December 31, December 31, 2016 2015 Computers and other related equipment $ 1,046 $ 1,046 Less: accumulated depreciation (363 ) (15 ) Assets under capital lease, net $ 683 $ 1,031 |
Schedule of Expected Future Minimum Lease Payments Under Capital Lease | As of December 31, 2016, the expected future minimum lease payments under the capital lease were as follows (in thousands): Years Ending December 31, Amount 2017 $ 1,550 Total minimum lease payments 1,550 Less: software and support services (541 ) Net minimum lease payments 1,009 Less: imputed interest (26 ) Present value of minimum lease payments (capital lease obligation) $ 983 Current portion 983 Noncurrent portion — |
gTLD Deposits (Tables)
gTLD Deposits (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Deferred Costs Capitalized Prepaid And Other Assets Disclosure [Abstract] | |
Schedule of gTLD Deposits | gTLD deposits consisted of the following (in thousands): December 31, December 31, 2016 2015 gTLD deposits $ 2,169 $ 8,139 |
Other Balance Sheet Items (Tabl
Other Balance Sheet Items (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Balance Sheet Related Disclosures [Abstract] | |
Schedule of Accounts Receivable | Accounts receivable consisted of the following (in thousands): December 31, December 31, 2016 2015 Accounts receivable—trade $ 2,752 $ 4,051 gTLD deposit receivable 106 19 Receivables from registries 479 505 Accounts receivable, net $ 3,337 $ 4,575 |
Schedule of Prepaid and Other Current Assets | Prepaid expenses and other currents assets consisted of the following (in thousands): December 31, December 31, 2016 2015 Prepaid expenses $ 2,342 $ 2,471 Prepaid registry fees 399 416 Note receivable 10 10 Prepaid expenses and other current assets $ 2,751 $ 2,897 |
Schedule of Accrued Expenses and Other Current Liabilities | Accrued expenses and other current liabilities consisted of the following (in thousands): December 31, December 31, 2016 2015 Customer deposits $ 1,807 $ 2,354 Accrued payroll and related items 2,257 2,209 Commissions payable 15 20 Domain owners’ royalties payable 612 1,568 Other 4,196 3,847 Accrued expenses and other current liabilities $ 8,887 $ 9,998 |
Debt (Tables)
Debt (Tables) - Tennenbaum | 12 Months Ended |
Dec. 31, 2016 | |
Schedule of Debt Outstanding | The following table presents our debt outstanding on the Tennenbaum Credit Facility (in thousands): December 31, December 31, 2016 2015 Principal $ 27,375 $ 28,500 Unamortized note discount and deferred financing costs — (5,299 ) Repayment of principal upon extinguishment (27,375 ) — Carrying value $ — $ 23,201 |
Schedule of Interest Expense | Interest expense on the Tennenbaum Credit Facility consisted of the following (in thousands): Year Ended December 31, 2016 2015 2014 Contractual interest expense $ 2,258 $ 2,760 $ 1,133 Amortization of issuance costs 395 496 203 Amortization of note discount 933 1,171 481 Loss on debt extinguishment 4,257 — — Total $ 7,843 $ 4,427 $ 1,817 |
Commitments and Contingencies (
Commitments and Contingencies (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Commitments And Contingencies Disclosure [Abstract] | |
Schedule of Future Minimum Lease Payments Under Non-Cancelable Operating Leases | We entered into a sublease agreement in connection with the eNom Divestiture for approximately 20,500 square feet of our headquarters in Kirkland, Washington. See Note 20—Subsequent Events for further information. Our future minimum lease payments under non-cancelable operating leases as of December 31, 2016 are as follows (in thousands): Years Ending December 31, Amount 2017 $ 1,409 2018 1,325 2019 588 2020 236 2021 240 Thereafter 80 Total $ 3,878 |
Income Taxes (Tables)
Income Taxes (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Income Tax Disclosure [Abstract] | |
Schedule of Income (Loss) Before Income Taxes | Loss before income taxes consisted of the following (in thousands): Year Ended December 31, 2016 2015 2014 Domestic $ (12,490 ) $ (10,469 ) $ (11,413 ) Foreign (9,351 ) (3,169 ) 8,227 Loss before income taxes $ (21,841 ) $ (13,638 ) $ (3,186 ) |
Schedule of Income Tax Benefit (Expense) | The income tax (expense) benefit consists of the following (in thousands): Year Ended December 31, 2016 2015 2014 Current expense: Federal $ — $ — $ — State (35 ) (69 ) (22 ) Foreign (50 ) (47 ) (9 ) Deferred benefit (expense): Federal (11,580 ) 2,696 1,454 State (144 ) (266 ) (95 ) Total income tax (expense) benefit $ (11,809 ) $ 2,314 $ 1,328 |
Schedule of the Reconciliation of the Effective Tax Rate | The reconciliation of the federal statutory income tax rate of 34% to our effective income tax rate is as follows (in thousands): Year Ended December 31, 2016 2015 2014 Expected income tax benefit at U.S. statutory rate $ 7,426 $ 4,637 $ 1,083 Foreign rate differential (3,176 ) (586 ) 3,988 State tax benefit, net of federal taxes 239 222 163 Non-deductible stock-based compensation expense (452 ) (776 ) (2,343 ) Meals and entertainment (27 ) (23 ) (38 ) State rate changes (71 ) (443 ) (240 ) Valuation allowance (14,760 ) (535 ) (1,197 ) Non-deductible warrant amortization (542 ) (329 ) (135 ) Non-deductible transaction-related expenses (283 ) — — Other (163 ) 147 47 Total income tax (expense) benefit $ (11,809 ) $ 2,314 $ 1,328 |
Schedule of Deferred Tax Assets and Liabilities | The tax effects of temporary differences that give rise to significant portions of the deferred tax assets and deferred tax liabilities are presented below (in thousands): December 31, 2016 2015 Deferred tax assets Accrued liabilities not currently deductible $ 1,381 $ 1,467 Intangible assets - excess of financial statement amortization over tax basis 5,057 5,131 Indirect federal impact of deferred state taxes 645 777 Deferred revenue 7,870 7,360 Net operating losses 22,576 17,935 Stock-based compensation expense 908 863 Total deferred tax assets $ 38,437 $ 33,533 Deferred tax liabilities Deferred registration costs $ (28,642 ) $ (28,379 ) Prepaid expenses (1,886 ) (1,627 ) Goodwill not amortized for financial reporting (15,570 ) (13,893 ) Intangible assets - excess of financial basis over tax basis (750 ) (829 ) Property and equipment (1,306 ) (1,536 ) Other (346 ) (368 ) Total deferred tax liabilities (48,500 ) (46,632 ) Valuation allowance (17,138 ) (2,378 ) Net deferred tax liabilities $ (27,201 ) $ (15,477 ) |
Schedule of Deferred Tax Asset Valuation Allowance Activity | The table below presents our deferred tax asset valuation allowance activity (in thousands): Year Ended December 31, 2016 2015 2014 Balance as of January 1, $ 2,378 $ 1,843 $ 646 Increase in valuation allowance 14,760 535 1,197 Balance as of December 31, $ 17,138 $ 2,378 $ 1,843 |
Stock based Compensation (Table
Stock based Compensation (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Disclosure Of Compensation Related Costs Sharebased Payments [Abstract] | |
Schedule of Stock-based Compensation Expense Related to All Employee and Non-employee Stock-based Awards | Our stock‑based compensation expense related to stock‑based awards that has been included in the following line items within the statements of operations are as follows (in thousands): Year Ended December 31, 2016 2015 2014 Cost of revenue $ 62 $ 55 $ 296 Sales and marketing 700 775 1,040 Technology and development 870 825 716 General and administrative 4,196 3,871 3,237 Total stock-based compensation expense $ 5,828 $ 5,526 $ 5,289 |
Schedule of Additional Information Related to Stock-based Compensation Activity | Information related to stock‑based compensation activity is as follows (in thousands): Year Ended December 31, 2016 2015 2014 Intrinsic value of options exercised $ 2 $ — $ 100 Intrinsic value of restricted stock units vested 4,896 3,744 2,804 |
Schedule of Fair Value Option Granted Weighted Average Assumptions | The fair value of each option granted was determined on the grant date using the Black-Scholes approach with the following weighted-average assumptions: Year Ended December 31, 2016 2015 2014 Expected term (in years) 5.92 N/A N/A Expected volatility 47.53 % N/A N/A Expected dividend yield — % N/A N/A Risk-free interest rate 1.34 % N/A N/A Estimated weighted average grant date fair value (per share) $ 4.23 N/A N/A |
Summary of Stock Options Activity | The following table presents a summary of our stock option activity for the year ended December 31, 2016 (in thousands, except for per share amounts and contractual term): Weighted Weighted Average Average Remaining Exercise Contractual Aggregate Price Term Intrinsic Shares Per Share (in years) Value Outstanding as of December 31, 2015 84 $ 13.84 Granted 316 9.25 Exercised (1 ) 5.50 Cancelled (7 ) 14.23 Outstanding as of December 31, 2016 392 10.15 7.9 $ 18 Exercisable as of December 31, 2016 88 $ 13.60 3.2 $ 18 |
Schedule of RSU Activity | The following table presents a summary of our RSU activity for the year ended December 31, 2016 (in thousands, except for per share amounts): Weighted Average Shares Share Value Outstanding as of December 31, 2015 1,266 $ 9.75 Granted 580 8.43 Vested (533 ) 10.14 Cancelled (113 ) 9.11 Outstanding as of December 31, 2016 1,200 $ 8.99 |
Business Segments (Tables)
Business Segments (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Segment Reporting [Abstract] | |
Schedule of Revenue Derived from Segments | Revenue from our Registrar services, Registry services, and Aftermarket and other services offerings are as follows (in thousands): Year Ended December 31, 2016 2015 2014 Registrar services $ 29,120 $ 24,852 $ 19,386 Registry services 11,785 8,438 1,917 Aftermarket and other 22,620 25,377 22,045 Eliminations (1,401 ) (1,238 ) (306 ) Total revenue $ 62,124 $ 57,429 $ 43,042 |
Schedule of Revenue By Location | The amounts in the Eliminations line reflect the elimination of intercompany transactions between our Registry and Registrar services businesses. Year Ended December 31, 2016 2015 2014 United States $ 43,764 $ 41,776 $ 30,057 International 18,360 15,653 12,985 Total $ 62,124 $ 57,429 $ 43,042 |
Transactions with Related Par40
Transactions with Related Parties and Parent Company Investment (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Related Party Transactions [Abstract] | |
Schedule of Costs Incurred and Allocated by Demand Media | Prior to the Separation, we recorded the following costs incurred and allocated by Demand Media in our statements of operations as follows (in thousands): Year Ended December 31, 2014 Cost of revenue $ 215 Sales and marketing 1,452 Technology and development 6,684 General and administration 10,768 Depreciation and amortization 2,391 Total allocated expenses $ 21,510 |
Fair Value of Financial Instr41
Fair Value of Financial Instruments (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Fair Value Disclosures [Abstract] | |
Schedule of Assets and Liabilities Measured at Fair Value | Assets and liabilities that are not recognized at fair value in our consolidated financial statements but for which the fair value is disclosed, are summarized below (in thousands): Carrying Fair Value Measurement Using Total As of December 31, 2016 Value Level 1 Level 2 Level 3 Fair Value Assets: Note receivable $ 10 $ — $ — $ 10 $ 10 Liabilities: Debt $ 12,800 $ — $ — $ 12,800 $ 12,800 Carrying Fair Value Measurement Using Total As of December 31, 2015 Value Level 1 Level 2 Level 3 Fair Value Assets: Note receivable $ 10 $ — $ — $ 10 $ 10 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 (3,233 ) Change in fair value of future payments on debt 2,227 Repayment of debt (30,483 ) Issuance of short-term debt 12,800 Balance as of December 31, 2016 $ 12,800 |
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 $ 10 Repayments on note receivable — Balance as of December 31, 2016 $ 10 |
Earnings (loss) Per Share (Tabl
Earnings (loss) Per Share (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Earnings Per Share [Abstract] | |
Schedule of earnings (loss) per share | Basic and diluted earnings (loss) per share were calculated using the following (in thousands, except per share amounts): Year Ended December 31, 2016 2015 2014 Loss from continuing operations $ (41,051 ) $ (19,871 ) $ (7,404 ) Income from discontinued operations 7,401 8,547 5,546 Net loss (33,650 ) (11,324 ) (1,858 ) Weighted average number of shares outstanding: Basic 19,308 18,867 18,452 Diluted 19,308 18,867 18,452 Basic (loss) income per share attributable to common stockholders: Continuing operations $ (2.12 ) $ (1.05 ) $ (0.40 ) Discontinued operations 0.38 0.45 0.30 Basic (loss) income per share $ (1.74 ) $ (0.60 ) $ (0.10 ) Diluted (loss) income per share attributable to common stockholders: Continuing operations $ (2.12 ) $ (1.05 ) $ (0.40 ) Discontinued operations 0.38 0.45 0.30 Diluted (loss) income per share $ (1.74 ) $ (0.60 ) $ (0.10 ) |
Concentrations (Tables)
Concentrations (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Accounts receivable | Credit concentration risk | |
Concentration Risk [Line Items] | |
Schedule of Concentrations by Risk | Partners comprising more than 10% of the accounts receivable balance were as follows: December 31, 2016 2015 Advertising network partner 28 % 47 % Partner A 21 14 Partner C 12 6 |
Revenues | Customer risk | |
Concentration Risk [Line Items] | |
Schedule of Concentrations by Risk | The percentage of revenue generated through partners representing more than 10% of revenue is as follows: Year Ended December 31, 2016 2015 2014 Advertising network partner 30 % 39 % 41 % |
Selected Quarterly Financial 44
Selected Quarterly Financial Information (Unaudited) (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Quarterly Financial Information Disclosure [Abstract] | |
Schedule of Quarterly and Full Year Financial Information | The following unaudited quarterly financial information presents our quarterly and full year financial information (in thousands, except per share information): Three months ended Year Ended March 31 June 30 September 30 December 31 December 31 2016 Revenue $ 16,606 $ 15,774 $ 14,835 $ 14,909 $ 62,124 Loss from continuing operations before income taxes (8,197 ) (5,831 ) (9,117 ) (10,561 ) (33,706 ) Loss from continuing operations (6,251 ) (4,447 ) (6,954 ) (23,399 ) (41,051 ) Income from discontinued operations, net of income taxes 1,145 1,975 2,525 1,756 7,401 Net loss (5,106 ) (2,472 ) (4,429 ) (21,643 ) (33,650 ) Loss from continuing operations per share attributable to common stockholders: Basic $ (0.33 ) $ (0.23 ) $ (0.36 ) $ (1.20 ) $ (2.12 ) Diluted (0.33 ) (0.23 ) (0.36 ) (1.20 ) (2.12 ) 2015 Revenue $ 12,660 $ 13,349 $ 15,090 $ 16,330 $ 57,429 Loss from continuing operations before income taxes (2,442 ) (10,217 ) (7,638 ) (7,752 ) (28,049 ) Loss from continuing operations (1,730 ) (7,238 ) (5,412 ) (5,491 ) (19,871 ) Income from discontinued operations, net of income taxes 3,606 1,565 2,008 1,368 8,547 Net income (loss) 1,876 (5,673 ) (3,404 ) (4,123 ) (11,324 ) Loss from continuing operations per share attributable to common stockholders: Basic $ (0.09 ) $ (0.38 ) $ (0.29 ) $ (0.29 ) $ (1.05 ) Diluted (0.09 ) (0.38 ) (0.29 ) (0.29 ) (1.05 ) |
Company Background and Basis 45
Company Background and Basis of Presentation - Additional Information (Details) $ in Thousands | Jan. 20, 2017USD ($) | Aug. 01, 2014item | Dec. 31, 2016USD ($)itemsegment | Dec. 31, 2015USD ($) | Dec. 31, 2014USD ($) |
Organization Consolidation And Presentation Of Financial Statements [Line Items] | |||||
Number of publicly traded entities after spin-off | item | 2 | ||||
Number of classes of common stock | item | 1 | ||||
Separation conversion ratio - one share of Rightside common stock for every five shares of Demand Media | 0.20 | ||||
Service agreement expiration period | 2016-02 | ||||
Number of Operating Segments | segment | 1 | ||||
Reclassification of prepaid expenses and other current assets to current portion of deferred revenue | $ 700 | ||||
Deferred revenue, current | $ 19,475 | 17,681 | |||
Deferred revenue, less current portion | 4,429 | 3,214 | |||
Accrued expenses and other current liabilities | 8,887 | 9,998 | |||
Accounts payable | 1,080 | 1,400 | |||
Prepaid expenses and other current assets | (146) | 31 | $ 1,141 | ||
Deferred revenue | $ 3,008 | 4,383 | $ 6,055 | ||
Restatement Adjustment | |||||
Organization Consolidation And Presentation Of Financial Statements [Line Items] | |||||
Deferred revenue, current | (1,300) | ||||
Deferred revenue, less current portion | 1,300 | ||||
Accrued expenses and other current liabilities | 100 | ||||
Accounts payable | (100) | ||||
Prepaid expenses and other current assets | 700 | ||||
Deferred revenue | 700 | ||||
ASU 2015-03 | |||||
Organization Consolidation And Presentation Of Financial Statements [Line Items] | |||||
Reclassification of other assets, representing debt issue cost to noncurrent debt | $ 1,600 | ||||
E Nom Divestiture | Subsequent Event | |||||
Organization Consolidation And Presentation Of Financial Statements [Line Items] | |||||
Proceeds from divestiture of businesses | $ 83,500 | ||||
Working capital adjustment, net | 6,800 | ||||
Proceeds from divestiture of businesses, net | $ 76,700 |
Summary of Significant Accoun46
Summary of Significant Accounting Policies and Accounting Pronouncements - Additional Information (Details) | 3 Months Ended | 12 Months Ended | ||
Dec. 31, 2016USD ($) | Dec. 31, 2016USD ($)Unit | Dec. 31, 2015USD ($) | Dec. 31, 2014USD ($) | |
Summary Of Significant Accounting Policies And Recent Accounting Pronouncements [Line Items] | ||||
Website renewal period | 12 months | |||
Impairment loss of finite-lived intangible assets | $ 0 | $ 0 | $ 0 | |
Number of reporting Units | Unit | 1 | |||
Goodwill impairment | $ 0 | $ 0 | 0 | 0 |
Impairment of property plant and equipment | 0 | 0 | ||
Advertising expense | $ 2,400,000 | 2,600,000 | 1,400,000 | |
Share based compensation service period | 4 years | |||
Share based compensation expected dividend rate | 0.00% | |||
Cash dividends | $ 0 | |||
ASU 2015-15 | Pro Forma | ||||
Summary Of Significant Accounting Policies And Recent Accounting Pronouncements [Line Items] | ||||
Debt issuance costs classified as other assets | 300,000 | |||
ASU 2015-03 | Pro Forma | ||||
Summary Of Significant Accounting Policies And Recent Accounting Pronouncements [Line Items] | ||||
Debt issuance costs classified as other assets | $ 1,600,000 | |||
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. | |||
Internally developed software | ||||
Summary Of Significant Accounting Policies And Recent Accounting Pronouncements [Line Items] | ||||
Useful life | 3 years | |||
Impairment of property plant and equipment | $ 800,000 | |||
Monetized domain names | ||||
Summary Of Significant Accounting Policies And Recent Accounting Pronouncements [Line Items] | ||||
Acquired finite-lived intangible assets useful life | 4 years | 4 years | ||
gTLD deposit receivable | ||||
Summary Of Significant Accounting Policies And Recent Accounting Pronouncements [Line Items] | ||||
Acquired finite-lived intangible assets useful life | 10 years | 10 years | ||
Finite lived useful life | 10 years | |||
Minimum | ||||
Summary Of Significant Accounting Policies And Recent Accounting Pronouncements [Line Items] | ||||
Registration term | 1 year | |||
Acquired finite-lived intangible assets useful life | 3 years | |||
Minimum | Computer hardware | ||||
Summary Of Significant Accounting Policies And Recent Accounting Pronouncements [Line Items] | ||||
Useful life | 2 years | |||
Minimum | Computer software | ||||
Summary Of Significant Accounting Policies And Recent Accounting Pronouncements [Line Items] | ||||
Useful life | 2 years | |||
Minimum | Furniture and equipment | ||||
Summary Of Significant Accounting Policies And Recent Accounting Pronouncements [Line Items] | ||||
Useful life | 7 years | |||
Minimum | Monetized domain names | ||||
Summary Of Significant Accounting Policies And Recent Accounting Pronouncements [Line Items] | ||||
Acquired finite-lived intangible assets useful life | 12 months | |||
Maximum | ||||
Summary Of Significant Accounting Policies And Recent Accounting Pronouncements [Line Items] | ||||
Registration term | 10 years | |||
Acquired finite-lived intangible assets useful life | 20 years | |||
Maximum | Computer hardware | ||||
Summary Of Significant Accounting Policies And Recent Accounting Pronouncements [Line Items] | ||||
Useful life | 5 years | |||
Maximum | Computer software | ||||
Summary Of Significant Accounting Policies And Recent Accounting Pronouncements [Line Items] | ||||
Useful life | 3 years | |||
Maximum | Furniture and equipment | ||||
Summary Of Significant Accounting Policies And Recent Accounting Pronouncements [Line Items] | ||||
Useful life | 10 years | |||
Maximum | Monetized domain names | ||||
Summary Of Significant Accounting Policies And Recent Accounting Pronouncements [Line Items] | ||||
Acquired finite-lived intangible assets useful life | 72 months |
Business Divestiture - Addition
Business Divestiture - Additional Information (Details) - USD ($) $ in Thousands | Jan. 20, 2017 | Dec. 31, 2016 | Sep. 30, 2016 | Jun. 30, 2016 | Mar. 31, 2016 | Dec. 31, 2015 | Sep. 30, 2015 | Jun. 30, 2015 | Mar. 31, 2015 | Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 |
Income Statement Balance Sheet And Additional Disclosures By Disposal Groups Including Discontinued Operations [Line Items] | ||||||||||||
Income from continuing operations | $ (23,399) | $ (6,954) | $ (4,447) | $ (6,251) | $ (5,491) | $ (5,412) | $ (7,238) | $ (1,730) | $ (41,051) | $ (19,871) | $ (7,404) | |
E Nom Divestiture | ||||||||||||
Income Statement Balance Sheet And Additional Disclosures By Disposal Groups Including Discontinued Operations [Line Items] | ||||||||||||
Expected gain on disposal of discontinued operation | 75,900 | |||||||||||
Gain on other assets, net | 1,300 | 0 | 0 | |||||||||
E Nom Divestiture | Previously Eliminated | ||||||||||||
Income Statement Balance Sheet And Additional Disclosures By Disposal Groups Including Discontinued Operations [Line Items] | ||||||||||||
Income from continuing operations | $ 2,200 | $ 1,400 | $ 200 | |||||||||
E Nom Divestiture | Subsequent Event | ||||||||||||
Income Statement Balance Sheet And Additional Disclosures By Disposal Groups Including Discontinued Operations [Line Items] | ||||||||||||
Proceeds from divestiture of businesses | $ 83,500 | |||||||||||
Working capital adjustment, net | 6,800 | |||||||||||
Proceeds from divestiture of businesses, net | $ 76,700 |
Business Divestiture - Schedule
Business Divestiture - Schedule of Major Class of Assets and Liabilities included as Held For Sale (Details) - E Nom Divestiture - Discontinued Operations, Held for sale - USD ($) $ in Thousands | Dec. 31, 2016 | Dec. 31, 2015 |
Income Statement Balance Sheet And Additional Disclosures By Disposal Groups Including Discontinued Operations [Line Items] | ||
Accounts receivable, net | $ 6,422 | $ 6,731 |
Prepaid expenses and other current assets | 3,332 | 4,359 |
Deferred registration costs | 65,982 | 66,601 |
Deferred registration costs, less current portion | 14,441 | 14,441 |
Property and equipment, net | 4,718 | 5,731 |
Intangible assets, net | 1,955 | 2,165 |
Goodwill | 32,121 | 32,121 |
Other assets | 82 | 75 |
Total assets classified as held for sale | 129,053 | 132,224 |
Accounts payable | 5,494 | 5,762 |
Accrued expenses and other current liabilities | 12,988 | 14,693 |
Deferred revenue | 77,082 | 78,597 |
Deferred revenue, less current portion | 18,457 | 18,588 |
Deferred tax liabilities, net | 19,099 | 18,381 |
Other liabilities | 468 | 631 |
Total liabilities classified as held for sale | $ 133,588 | $ 136,652 |
Business Divestiture - Schedu49
Business Divestiture - Schedule of Major Class of Line Items Constituting the Loss From Discontinued Operations, Net of Income Tax (Details) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended | |||||||||
Dec. 31, 2016 | Sep. 30, 2016 | Jun. 30, 2016 | Mar. 31, 2016 | Dec. 31, 2015 | Sep. 30, 2015 | Jun. 30, 2015 | Mar. 31, 2015 | Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
Income Statement Balance Sheet And Additional Disclosures By Disposal Groups Including Discontinued Operations [Line Items] | |||||||||||
Income from discontinued operations before income tax | $ 11,865 | $ 14,411 | $ 12,578 | ||||||||
Income from discontinued operation, tax | 4,464 | 5,864 | 7,032 | ||||||||
Income from discontinued operations, net of income tax | $ 1,756 | $ 2,525 | $ 1,975 | $ 1,145 | $ 1,368 | $ 2,008 | $ 1,565 | $ 3,606 | 7,401 | 8,547 | 5,546 |
E Nom Divestiture | |||||||||||
Income Statement Balance Sheet And Additional Disclosures By Disposal Groups Including Discontinued Operations [Line Items] | |||||||||||
Revenue | 155,761 | 156,408 | 148,935 | ||||||||
Cost of revenue (excluding depreciation and amortization) | 127,823 | 127,297 | 120,028 | ||||||||
Sales and marketing | 2,408 | 2,048 | 3,245 | ||||||||
Technology and development | 9,085 | 8,343 | 8,265 | ||||||||
General and administrative | 2,517 | 874 | 1,272 | ||||||||
Depreciation and amortization | 3,363 | 3,435 | 3,547 | ||||||||
Gain on other assets, net | (1,300) | 0 | 0 | ||||||||
Income from discontinued operations before income tax | 11,865 | 14,411 | 12,578 | ||||||||
Income from discontinued operation, tax | 4,464 | 5,864 | 7,032 | ||||||||
Income from discontinued operations, net of income tax | $ 7,401 | $ 8,547 | $ 5,546 |
Intangible Assets - Schedule of
Intangible Assets - Schedule of Intangible Assets (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2016 | Dec. 31, 2015 | |
Finite-Lived Intangible Assets [Line Items] | ||
Gross carrying amount | $ 78,272 | $ 77,017 |
Accumulated amortization | (31,311) | (24,854) |
Total | 46,961 | 52,163 |
Owned website names | ||
Finite-Lived Intangible Assets [Line Items] | ||
Gross carrying amount | 13,935 | 15,040 |
Accumulated amortization | (11,198) | (11,691) |
Total | $ 2,737 | $ 3,349 |
Weighted average useful life (years) | 4 years | 4 years |
Customer relationships | ||
Finite-Lived Intangible Assets [Line Items] | ||
Gross carrying amount | $ 8,090 | $ 8,090 |
Accumulated amortization | (8,037) | (6,763) |
Total | $ 53 | $ 1,327 |
Weighted average useful life (years) | 4 years | 4 years |
Technology | ||
Finite-Lived Intangible Assets [Line Items] | ||
Gross carrying amount | $ 416 | $ 416 |
Accumulated amortization | $ (416) | (397) |
Total | $ 19 | |
Weighted average useful life (years) | 2 years | 2 years |
Noncompete agreements | ||
Finite-Lived Intangible Assets [Line Items] | ||
Gross carrying amount | $ 207 | $ 207 |
Accumulated amortization | (164) | (122) |
Total | $ 43 | $ 85 |
Weighted average useful life (years) | 5 years | 5 years |
Trade names | ||
Finite-Lived Intangible Assets [Line Items] | ||
Gross carrying amount | $ 1,276 | $ 1,276 |
Accumulated amortization | (548) | (440) |
Total | $ 728 | $ 836 |
Weighted average useful life (years) | 13 years | 13 years |
gTLDs | ||
Finite-Lived Intangible Assets [Line Items] | ||
Gross carrying amount | $ 54,348 | $ 51,988 |
Accumulated amortization | (10,948) | (5,441) |
Total | $ 43,400 | $ 46,547 |
Weighted average useful life (years) | 10 years | 10 years |
Intangible Assets - Additional
Intangible Assets - Additional Information (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
Intangible Assets Net Excluding Goodwill [Abstract] | |||
Amortization expense of intangible assets | $ 8.7 | $ 9.5 | $ 7.5 |
Intangible Assets - Estimated F
Intangible Assets - Estimated Future Amortization Expense (Details) - USD ($) $ in Thousands | Dec. 31, 2016 | Dec. 31, 2015 |
Finite-Lived Intangible Assets, Net, Amortization Expense, Rolling Maturity [Abstract] | ||
2,017 | $ 6,872 | |
2,018 | 6,498 | |
2,019 | 6,197 | |
2,020 | 5,976 | |
2,021 | 5,860 | |
Thereafter | 15,558 | |
Total | $ 46,961 | $ 52,163 |
Property and Equipment - Schedu
Property and Equipment - Schedule of Property and Equipment (Details) - USD ($) $ in Thousands | Dec. 31, 2016 | Dec. 31, 2015 |
Property, Plant and Equipment [Line Items] | ||
Property and equipment, gross | $ 25,971 | $ 28,033 |
Less: accumulated depreciation | (20,225) | (20,466) |
Property and equipment, net | 5,746 | 7,567 |
Computers and other related equipment | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment, gross | 12,314 | 14,998 |
Purchased and internally developed software | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment, gross | 11,964 | 11,425 |
Furniture and equipment | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment, gross | 656 | 611 |
Leasehold improvements | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment, gross | $ 1,037 | $ 999 |
Property and Equipment - Additi
Property and Equipment - Additional Information (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
Property, Plant and Equipment [Line Items] | |||
Property and equipment, net | $ 5,746 | $ 7,567 | |
Less accumulated depreciation | 20,225 | 20,466 | |
Depreciation expense | $ 4,000 | 3,500 | $ 4,400 |
Capital lease term | 24 months | ||
Internally developed software | |||
Property, Plant and Equipment [Line Items] | |||
Property and equipment, net | $ 3,200 | 3,700 | |
Less accumulated depreciation | 5,000 | $ 3,800 | |
Internally developed software | Impairment included in depreciation expense | |||
Property, Plant and Equipment [Line Items] | |||
Depreciation expense | $ 800 | ||
Capital lease | |||
Property, Plant and Equipment [Line Items] | |||
Depreciation expense | $ 700 |
Property and Equipment - Sche55
Property and Equipment - Schedule of Server Equipment Assets Under Capital Lease (Details) - Computers and other related equipment - USD ($) $ in Thousands | Dec. 31, 2016 | Dec. 31, 2015 |
Capital Leased Assets [Line Items] | ||
Assets under capital lease, gross | $ 1,046 | $ 1,046 |
Less: accumulated depreciation | (363) | (15) |
Assets under capital lease, net | $ 683 | $ 1,031 |
Property and Equipment - Sche56
Property and Equipment - Schedule of Expected Future Minimum Lease Payments Under Capital Lease (Details) - USD ($) $ in Thousands | Dec. 31, 2016 | Dec. 31, 2015 |
Capital Leases Future Minimum Payments Net Present Value [Abstract] | ||
2,017 | $ 1,550 | |
Total minimum lease payments | 1,550 | $ 3,200 |
Less: software and support services | (541) | |
Net minimum lease payments | 1,009 | |
Less: imputed interest | (26) | |
Present value of minimum lease payments (capital lease obligation) | 983 | |
Current portion | 983 | 1,193 |
Noncurrent portion | $ 0 | $ 811 |
Goodwill - Additional Informati
Goodwill - Additional Information (Details) - USD ($) | 3 Months Ended | 12 Months Ended | ||||
Dec. 31, 2016 | Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | Nov. 30, 2016 | Sep. 30, 2016 | |
Goodwill And Intangible Assets Disclosure [Abstract] | ||||||
Goodwill from continuing operations | $ 70,921,000 | $ 70,921,000 | $ 70,921,000 | $ 70,900,000 | $ 103,000,000 | |
Goodwill from discontinued operations | $ 32,100,000 | |||||
Goodwill impairment | $ 0 | $ 0 | $ 0 | $ 0 |
gTLD Deposits - Schedule of gTL
gTLD Deposits - Schedule of gTLD Deposits (Details) - USD ($) $ in Thousands | Dec. 31, 2016 | Dec. 31, 2015 |
Deferred Costs Capitalized Prepaid And Other Assets Disclosure [Abstract] | ||
gTLD deposits | $ 2,169 | $ 8,139 |
gTLD Deposits - Additional Info
gTLD Deposits - Additional Information (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
Deferred Costs Capitalized Prepaid And Other Assets Disclosure [Line Items] | |||
Receipts and payments for gTLD applications | $ 3,119 | $ (9,708) | $ (32,029) |
Gain (loss) on other assets, net | 853 | 9,403 | 22,103 |
gTLDs | |||
Deferred Costs Capitalized Prepaid And Other Assets Disclosure [Line Items] | |||
Gain (loss) on other assets, net | $ 900 | $ 9,400 | $ 22,100 |
Other Balance Sheet Items - Sch
Other Balance Sheet Items - Schedule of Accounts Receivable (Details) - USD ($) $ in Thousands | Dec. 31, 2016 | Dec. 31, 2015 |
Accounts receivable | ||
Accounts receivable, net | $ 3,337 | $ 4,575 |
Accounts receivable - trade | ||
Accounts receivable | ||
Accounts receivable | 2,752 | 4,051 |
gTLD deposit receivable | ||
Accounts receivable | ||
Accounts receivable | 106 | 19 |
Receivables from registries | ||
Accounts receivable | ||
Accounts receivable | $ 479 | $ 505 |
Other Balance Sheet Items - S61
Other Balance Sheet Items - Schedule of Prepaid and Other Current Assets (Details) - USD ($) $ in Thousands | Dec. 31, 2016 | Dec. 31, 2015 |
Prepaid Expense, Current [Abstract] | ||
Prepaid expenses | $ 2,342 | $ 2,471 |
Prepaid registry fees | 399 | 416 |
Note receivable | 10 | 10 |
Prepaid expenses and other current assets | $ 2,751 | $ 2,897 |
Other Balance Sheet Items - S62
Other Balance Sheet Items - Schedule of Accrued Expenses and Other Current Liabilities (Details) - USD ($) $ in Thousands | Dec. 31, 2016 | Dec. 31, 2015 |
Deferred Costs Capitalized Prepaid And Other Assets Disclosure [Abstract] | ||
Customer deposits | $ 1,807 | $ 2,354 |
Accrued payroll and related items | 2,257 | 2,209 |
Commissions payable | 15 | 20 |
Domain owners’ royalties payable | 612 | 1,568 |
Other | 4,196 | 3,847 |
Accrued expenses and other current liabilities | $ 8,887 | $ 9,998 |
Debt - Additional Information (
Debt - Additional Information (Details) - USD ($) | Nov. 30, 2016 | Aug. 31, 2014 | Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 |
Credit facilities disclosures | |||||
Loss on debt extinguishment | $ 4,257,000 | $ 0 | $ 0 | ||
Principal amount of credit facility | 12,800,000 | 23,201,000 | |||
Debt, fair value | $ 12,800,000 | 31,489,000 | |||
Capital lease term | 24 months | ||||
Amount financed under capital lease | $ 1,550,000 | 3,200,000 | |||
Principal payments on capital lease obligations | $ 1,020,000 | 0 | 101,000 | ||
Tennenbaum Credit Facility Warrants | |||||
Credit facilities disclosures | |||||
Warrants exercise price | $ 15.05 | ||||
Warrants stock price | 14.49 | ||||
Warrants strike price | $ 15.05 | ||||
Warrants volatility rate | 42.44% | ||||
Risk free rate | 1.67% | ||||
Warrants dividend yield percentage | 0.00% | ||||
Warrants expected term | 5 years | ||||
Warrant equity component | $ 4,400,000 | ||||
Maximum | Tennenbaum Credit Facility Warrants | |||||
Credit facilities disclosures | |||||
Warrants to purchase common stock (in shares) | 997,710 | ||||
Term Loan Credit Facility | Tennenbaum Credit Facility Warrants | |||||
Credit facilities disclosures | |||||
Credit facility fee | $ 3,200,000 | ||||
Silicon Valley Bank | |||||
Credit facilities disclosures | |||||
Credit facility maturity date | 2017-08 | ||||
Silicon Valley Bank | Revolving Credit Facility | |||||
Credit facilities disclosures | |||||
Credit facility borrowing capacity | $ 30,000,000 | ||||
Unused borrowing capacity fee | 0.25% | ||||
Credit facility fee | $ 600,000 | ||||
Silicon Valley Bank | Revolving Credit Facility | Federal Funds Effective Swap Rate | |||||
Credit facilities disclosures | |||||
Annual interest rate on credit facility borrowings | 0.50% | ||||
Silicon Valley Bank | Revolving Credit Facility | Eurodollar | |||||
Credit facilities disclosures | |||||
Annual interest rate on credit facility borrowings | 1.00% | ||||
Silicon Valley Bank | Revolving Credit Facility | Eurodollar | Minimum | |||||
Credit facilities disclosures | |||||
Annual interest rate on credit facility borrowings | 1.00% | ||||
Silicon Valley Bank | Revolving Credit Facility | Eurodollar | Maximum | |||||
Credit facilities disclosures | |||||
Annual interest rate on credit facility borrowings | 1.50% | ||||
Silicon Valley Bank | Revolving Credit Facility | London Interbank Offered Rate (LIBOR) | Minimum | |||||
Credit facilities disclosures | |||||
Annual interest rate on credit facility borrowings | 2.00% | ||||
Silicon Valley Bank | Revolving Credit Facility | London Interbank Offered Rate (LIBOR) | Maximum | |||||
Credit facilities disclosures | |||||
Annual interest rate on credit facility borrowings | 2.50% | ||||
Silicon Valley Bank | Letter of Credit Subfacility | |||||
Credit facilities disclosures | |||||
Credit facility borrowing capacity | $ 15,000,000 | ||||
Unused borrowing capacity fee | 2.00% | ||||
Letters of credit issued | $ 10,700,000 | ||||
Line of credit, amount drawn | 12,800,000 | ||||
Silicon Valley Bank | Term Loan Credit Facility | |||||
Credit facilities disclosures | |||||
Debt instrument restrictive covenant relief for term loan payment | 10,000,000 | ||||
Tennenbaum | |||||
Credit facilities disclosures | |||||
Loss on debt extinguishment | 4,257,000 | 0 | $ 0 | ||
Principal amount of credit facility | $ 25,600,000 | 0 | 23,201,000 | ||
Deferred finance cost | 2,300,000 | ||||
Deferred financing discount | $ 900,000 | ||||
Tennenbaum | Term Loan Credit Facility | |||||
Credit facilities disclosures | |||||
Term loan borrowing | $ 30,000,000 | ||||
Beginning date for required repayments | Mar. 31, 2015 | ||||
Quarterly principal payment | $ 375,000 | ||||
Extinguishment of debt amount | $ 27,400,000 | ||||
Loss on debt extinguishment | 4,300,000 | ||||
Write-off of unamortized note discount and deferred financing costs | $ 4,000,000 | ||||
Tennenbaum | Term Loan Credit Facility | London Interbank Offered Rate (LIBOR) | |||||
Credit facilities disclosures | |||||
Annual interest rate on credit facility borrowings | 8.75% | ||||
Tennenbaum | |||||
Credit facilities disclosures | |||||
Debt, fair value | $ 31,500,000 |
Debt - Schedule of Debt Outstan
Debt - Schedule of Debt Outstanding (Details) - USD ($) $ in Thousands | Dec. 31, 2016 | Dec. 31, 2015 | Aug. 31, 2014 |
Class Of Warrant Or Right [Line Items] | |||
Carrying value | $ 12,800 | $ 23,201 | |
Tennenbaum | |||
Class Of Warrant Or Right [Line Items] | |||
Principal | 27,375 | 28,500 | |
Unamortized note discount and deferred financing costs | 0 | (5,299) | |
Repayment of principal upon extinguishment | (27,375) | 0 | |
Carrying value | $ 0 | $ 23,201 | $ 25,600 |
Debt - Schedule of Interest Exp
Debt - Schedule of Interest Expense (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
Class Of Warrant Or Right [Line Items] | |||
Loss on debt extinguishment | $ 4,257 | $ 0 | $ 0 |
Total | 4,297 | 4,922 | 1,988 |
Tennenbaum | |||
Class Of Warrant Or Right [Line Items] | |||
Contractual interest expense | 2,258 | 2,760 | 1,133 |
Amortization of issuance costs | 395 | 496 | 203 |
Amortization of note discount | 933 | 1,171 | 481 |
Loss on debt extinguishment | 4,257 | 0 | 0 |
Total | $ 7,843 | $ 4,427 | $ 1,817 |
Commitments and Contingencies -
Commitments and Contingencies - Additional Information (Details) | 12 Months Ended | |||||
Dec. 31, 2016USD ($) | Dec. 31, 2015USD ($) | Dec. 31, 2014USD ($) | Feb. 27, 2017USD ($) | Jan. 20, 2017ft² | Aug. 31, 2014USD ($) | |
Leases and Letters of Credit | ||||||
Rent expense | $ 900,000 | $ 700,000 | $ 700,000 | |||
Donuts Agreement | ||||||
Leases and Letters of Credit | ||||||
Contract term | 5 years | |||||
Silicon Valley Bank | Revolving Credit Facility | ||||||
Leases and Letters of Credit | ||||||
Credit facility borrowing capacity | $ 30,000,000 | |||||
Silicon Valley Bank | Letter of Credit Subfacility | ||||||
Leases and Letters of Credit | ||||||
Credit facility borrowing capacity | $ 15,000,000 | |||||
Letters of credit issued | $ 10,700,000 | |||||
Subsequent Event | Silicon Valley Bank | Letter of Credit Subfacility | ||||||
Leases and Letters of Credit | ||||||
Letters of credit issued | $ 2,800,000 | |||||
E Nom Divestiture | Indemnifications Arrangements | ||||||
Leases and Letters of Credit | ||||||
Unrestricted cash and cash equivalents, minimum required balance, until September 20, 2017 | 8,350,000 | |||||
Unrestricted cash and cash equivalents, minimum required balance, thereafter until January 20, 2018 | 6,350,000 | |||||
Unrestricted cash and cash equivalents, minimum required balance, thereafter until April 20, 2018 | $ 5,350,000 | |||||
E Nom Divestiture | Subsequent Event | ||||||
Leases and Letters of Credit | ||||||
Area of sublease | ft² | 20,500 | |||||
Earliest Tax Year | ||||||
Leases and Letters of Credit | ||||||
Lease expiration date | Apr. 30, 2022 | |||||
Latest Tax Year | ||||||
Leases and Letters of Credit | ||||||
Lease expiration date | Jul. 31, 2017 |
Commitments and Contingencies67
Commitments and Contingencies - Schedule of Future Minimum Lease Payments Under Non-Cancelable Operating Leases (Details) $ in Thousands | Dec. 31, 2016USD ($) |
Commitments And Contingencies Disclosure [Abstract] | |
2,017 | $ 1,409 |
2,018 | 1,325 |
2,019 | 588 |
2,020 | 236 |
2,021 | 240 |
Thereafter | 80 |
Total | $ 3,878 |
Income Taxes - Schedule of Inco
Income Taxes - Schedule of Income (Loss) Before Income Taxes (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
Income Tax Disclosure [Abstract] | |||
Domestic | $ (12,490) | $ (10,469) | $ (11,413) |
Foreign | (9,351) | (3,169) | 8,227 |
Loss before income taxes | $ (21,841) | $ (13,638) | $ (3,186) |
Income Taxes - Additional Infor
Income Taxes - Additional Information (Details) - USD ($) | 12 Months Ended | |||
Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | |
Operating Loss Carryforwards [Line Items] | ||||
Income from discontinued operations before income taxes | $ 11,865,000 | $ 14,411,000 | $ 12,578,000 | |
Income from discontinued operation, tax | $ 4,464,000 | 5,864,000 | 7,032,000 | |
Effective income tax rate | 34.00% | |||
Valuation allowance | $ 17,138,000 | 2,378,000 | 1,843,000 | $ 646,000 |
Cumulative unrealized stock option tax attributes excluded from deferred tax assets | 1,400,000 | |||
Uncertain income tax positions | 0 | 0 | ||
Domestic Deferred Tax Assets | ||||
Operating Loss Carryforwards [Line Items] | ||||
Valuation allowance | 14,700,000 | |||
E Nom Divestiture | ||||
Operating Loss Carryforwards [Line Items] | ||||
Income from discontinued operations before income taxes | 11,865,000 | 14,411,000 | 12,578,000 | |
Income from discontinued operation, tax | 4,464,000 | 5,864,000 | $ 7,032,000 | |
E Nom Divestiture | Domestic Deferred Tax Assets | ||||
Operating Loss Carryforwards [Line Items] | ||||
Valuation allowance | 11,600,000 | |||
Irish | ||||
Operating Loss Carryforwards [Line Items] | ||||
NOL carryforwards | 19,400,000 | |||
Federal | ||||
Operating Loss Carryforwards [Line Items] | ||||
NOL carryforwards | $ 54,600,000 | 42,100,000 | ||
Federal | Minimum | ||||
Operating Loss Carryforwards [Line Items] | ||||
Operating loss carryforwards expiration year | 2,023 | |||
Federal | Maximum | ||||
Operating Loss Carryforwards [Line Items] | ||||
Operating loss carryforwards expiration year | 2,036 | |||
State | ||||
Operating Loss Carryforwards [Line Items] | ||||
NOL carryforwards | $ 24,000,000 | 17,800,000 | ||
State | Minimum | ||||
Operating Loss Carryforwards [Line Items] | ||||
Operating loss carryforwards expiration year | 2,028 | |||
State | Maximum | ||||
Operating Loss Carryforwards [Line Items] | ||||
Operating loss carryforwards expiration year | 2,036 | |||
Discontinued Operations | ||||
Operating Loss Carryforwards [Line Items] | ||||
Net deferred tax liabilities | $ 19,100,000 | 18,400,000 | ||
Continuing Operations | Federal | ||||
Operating Loss Carryforwards [Line Items] | ||||
NOL carryforwards | 42,000,000 | 29,500,000 | ||
Continuing Operations | State | ||||
Operating Loss Carryforwards [Line Items] | ||||
NOL carryforwards | $ 5,100,000 | $ 3,400,000 |
Income Taxes - Schedule of In70
Income Taxes - Schedule of Income Tax Benefit (Expense) (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
Current expense: | |||
Federal | $ 0 | $ 0 | $ 0 |
State | (35) | (69) | (22) |
Foreign | (50) | (47) | (9) |
Deferred benefit (expense): | |||
Federal | (11,580) | 2,696 | 1,454 |
State | (144) | (266) | (95) |
Total income tax (expense) benefit | $ (11,809) | $ 2,314 | $ 1,328 |
Income Taxes - Schedule of the
Income Taxes - Schedule of the Reconciliation of the Effective Tax Rate (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
Reconciliation of effective income tax rate | |||
Expected income tax benefit at U.S. statutory rate | $ 7,426 | $ 4,637 | $ 1,083 |
Foreign rate differential | (3,176) | (586) | 3,988 |
State tax benefit, net of federal taxes | 239 | 222 | 163 |
Non-deductible stock-based compensation expense | (452) | (776) | (2,343) |
Meals and entertainment | (27) | (23) | (38) |
State rate changes | (71) | (443) | (240) |
Valuation allowance | (14,760) | (535) | (1,197) |
Non-deductible warrant amortization | (542) | (329) | (135) |
Non-deductible transaction-related expenses | (283) | 0 | 0 |
Other | (163) | 147 | 47 |
Total income tax (expense) benefit | $ (11,809) | $ 2,314 | $ 1,328 |
Income Taxes - Schedule of Defe
Income Taxes - Schedule of Deferred Tax Assets and Liabilities (Details) - USD ($) $ in Thousands | Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 |
Deferred tax assets | ||||
Accrued liabilities not currently deductible | $ 1,381 | $ 1,467 | ||
Intangible assets - excess of financial statement amortization over tax basis | 5,057 | 5,131 | ||
Indirect federal impact of deferred state taxes | 645 | 777 | ||
Deferred revenue | 7,870 | 7,360 | ||
Net operating losses | 22,576 | 17,935 | ||
Stock-based compensation expense | 908 | 863 | ||
Total deferred tax assets | 38,437 | 33,533 | ||
Deferred tax liabilities | ||||
Deferred registration costs | (28,642) | (28,379) | ||
Prepaid expenses | (1,886) | (1,627) | ||
Goodwill not amortized for financial reporting | (15,570) | (13,893) | ||
Intangible assets - excess of financial basis over tax basis | (750) | (829) | ||
Property and equipment | (1,306) | (1,536) | ||
Other | (346) | (368) | ||
Total deferred tax liabilities | (48,500) | (46,632) | ||
Valuation allowance | (17,138) | (2,378) | $ (1,843) | $ (646) |
Net deferred tax liabilities | $ (27,201) | $ (15,477) |
Income Taxes - Schedule of De73
Income Taxes - Schedule of Deferred Tax Asset Valuation Allowance Activity (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
Income Tax Disclosure [Abstract] | |||
Balance as of January 1, | $ 2,378 | $ 1,843 | $ 646 |
Increase in valuation allowance | 14,760 | 535 | 1,197 |
Balance as of December 31, | $ 17,138 | $ 2,378 | $ 1,843 |
Stock-based Compensation - Addi
Stock-based Compensation - Additional Information (Details) - USD ($) $ in Thousands | Aug. 01, 2014 | Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 |
Schedule Of Employee Service Share Based Compensation Allocation Of Recognized And Unrecognized Period Costs [Line Items] | ||||
Stock options received in spin-off conversion | 1 | |||
RSUs received in Spin-Off conversion | 1.71 | |||
Allocated share-based compensation expense | $ 5,828 | $ 5,526 | $ 5,289 | |
Stock-based compensation expense for discontinued operations | $ 800 | $ 800 | $ 500 | |
Expected term of the options, description | For purposes of determining the expected term of the options in the absence of sufficient historical data relating to option exercises, the Company uses the “simplified method” as prescribed by the SEC to estimate the expected term of option grants. Under this approach, the weighted-average expected life is presumed to be the average of the contractual term (10 years) and the vesting term (four years) of the Company’s stock options, taking into consideration multiple vesting tranches. | |||
Expected dividend yield | 0.00% | |||
Restricted Stock Units (RSUs) | ||||
Schedule Of Employee Service Share Based Compensation Allocation Of Recognized And Unrecognized Period Costs [Line Items] | ||||
Unrecognized stock based compensation, net of forfeitures | $ 9,900 | |||
Nonvested awards period of recognition | 2 years 3 months 18 days | |||
Stock Option | ||||
Schedule Of Employee Service Share Based Compensation Allocation Of Recognized And Unrecognized Period Costs [Line Items] | ||||
Shared based compensation vesting period | 4 years | |||
Options granted | 316,000 | 0 | 0 | |
Share based compensation weighted average contractual term | 10 years | |||
Demand Media | ||||
Schedule Of Employee Service Share Based Compensation Allocation Of Recognized And Unrecognized Period Costs [Line Items] | ||||
Stock options given up in spin-off conversion | 5 | |||
RSUs Given Up in Spin-Off conversion | 5 | |||
Allocated share-based compensation expense | $ 800 | |||
Equity Plan | ||||
Schedule Of Employee Service Share Based Compensation Allocation Of Recognized And Unrecognized Period Costs [Line Items] | ||||
Restricted stock units and options outstanding | 1,100,000 | |||
Common stock reserved for future grants | 2,200,000 | |||
Shared based compensation vesting period | 4 years |
Stock-based Compensation - Sche
Stock-based Compensation - Schedule of Stock-based Compensation Expense Related to All Employee and Non-employee Stock-based Awards (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
Employee Service Share Based Compensation Allocation Of Recognized Period Costs [Line Items] | |||
Total stock-based compensation expense | $ 5,828 | $ 5,526 | $ 5,289 |
Cost of revenue | |||
Employee Service Share Based Compensation Allocation Of Recognized Period Costs [Line Items] | |||
Total stock-based compensation expense | 62 | 55 | 296 |
Sales and marketing | |||
Employee Service Share Based Compensation Allocation Of Recognized Period Costs [Line Items] | |||
Total stock-based compensation expense | 700 | 775 | 1,040 |
Technology and development | |||
Employee Service Share Based Compensation Allocation Of Recognized Period Costs [Line Items] | |||
Total stock-based compensation expense | 870 | 825 | 716 |
General and administrative | |||
Employee Service Share Based Compensation Allocation Of Recognized Period Costs [Line Items] | |||
Total stock-based compensation expense | $ 4,196 | $ 3,871 | $ 3,237 |
Stock-based Compensation - Sc76
Stock-based Compensation - Schedule of Additional Information Related to Stock-based Compensation Activity (Details) - Stock Options and Restricted Stock Units - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | |||
Intrinsic value of options exercised | $ 2 | $ 0 | $ 100 |
Intrinsic value of restricted stock units vested | $ 4,896 | $ 3,744 | $ 2,804 |
Stock-based Compensation - Sc77
Stock-based Compensation - Schedule of Fair Value Option Granted Weighted Average Assumptions (Details) | 12 Months Ended |
Dec. 31, 2016$ / shares | |
Disclosure Of Compensation Related Costs Sharebased Payments [Abstract] | |
Expected term (in years) | 5 years 11 months 1 day |
Expected volatility | 47.53% |
Expected dividend yield | 0.00% |
Risk-free interest rate | 1.34% |
Estimated weighted average grant date fair value (per share) | $ 4.23 |
Stock-based Compensation - Summ
Stock-based Compensation - Summary of Stock Options Activity (Details) - Stock Option - USD ($) $ / shares in Units, $ in Thousands | 12 Months Ended | ||
Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
Shares | |||
Outstanding beginning balance | 84,000 | ||
Granted | 316,000 | 0 | 0 |
Exercised | (1,000) | ||
Cancelled | (7,000) | ||
Outstanding ending balance | 392,000 | 84,000 | |
Exercisable | 88,000 | ||
Weighted Average Exercise Price | |||
Weighted average exercise price outstanding beginning balance | $ 13.84 | ||
Weighted average exercise price granted | 9.25 | ||
Weighted average exercise price exercised | 5.50 | ||
Weighted average exercise price cancelled | 14.23 | ||
Weighted average exercise price outstanding ending balance | 10.15 | $ 13.84 | |
Weighted average exercise price exercisable | $ 13.60 | ||
Additional Disclosures | |||
Weighted average remaining contractual term outstanding | 7 years 10 months 24 days | ||
Weighted average remaining contractual term exercisable | 3 years 2 months 12 days | ||
Aggregate intrinsic value outstanding end of period | $ 18 | ||
Aggregate intrinsic value exercisable | $ 18 |
Stock-based Compensation - Sc79
Stock-based Compensation - Schedule of RSU Activity (Details) - Restricted Stock Units (RSUs) shares in Thousands | 12 Months Ended |
Dec. 31, 2016$ / sharesshares | |
Shares | |
Outstanding beginning balance | shares | 1,266 |
Granted | shares | 580 |
Vested | shares | (533) |
Cancelled | shares | (113) |
Outstanding ending balance | shares | 1,200 |
Weighted Average Share Value | |
Weighted average share value outstanding beginning balance | $ / shares | $ 9.75 |
Weighted average share value granted | $ / shares | 8.43 |
Weighted average share value vested | $ / shares | 10.14 |
Weighted average share value cancelled | $ / shares | 9.11 |
Weighted average share value outstanding ending balance | $ / shares | $ 8.99 |
Employee Benefit Plan - Additio
Employee Benefit Plan - Additional Information (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
Compensation And Retirement Disclosure [Abstract] | |||
Contribution plan expense | $ 0.3 | $ 0.2 | $ 0.2 |
Business Segments - Additional
Business Segments - Additional Information (Details) | 12 Months Ended |
Dec. 31, 2016segment | |
Segment Reporting [Abstract] | |
Number of Operating Segments | 1 |
Business Segments - Schedule of
Business Segments - Schedule of Revenue Derived From Segments (Details) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended | |||||||||
Dec. 31, 2016 | Sep. 30, 2016 | Jun. 30, 2016 | Mar. 31, 2016 | Dec. 31, 2015 | Sep. 30, 2015 | Jun. 30, 2015 | Mar. 31, 2015 | Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
Segment Reporting Information [Line Items] | |||||||||||
Total Revenue | $ 14,909 | $ 14,835 | $ 15,774 | $ 16,606 | $ 16,330 | $ 15,090 | $ 13,349 | $ 12,660 | $ 62,124 | $ 57,429 | $ 43,042 |
Eliminations | |||||||||||
Segment Reporting Information [Line Items] | |||||||||||
Total Revenue | (1,401) | (1,238) | (306) | ||||||||
Registrar services | |||||||||||
Segment Reporting Information [Line Items] | |||||||||||
Total Revenue | 29,120 | 24,852 | 19,386 | ||||||||
Registry services | |||||||||||
Segment Reporting Information [Line Items] | |||||||||||
Total Revenue | 11,785 | 8,438 | 1,917 | ||||||||
Aftermarket and other | |||||||||||
Segment Reporting Information [Line Items] | |||||||||||
Total Revenue | $ 22,620 | $ 25,377 | $ 22,045 |
Business Segments - Schedule 83
Business Segments - Schedule of Elimination of Intercompany Transactions between Registry and Registrar Services Businesses (Details) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended | |||||||||
Dec. 31, 2016 | Sep. 30, 2016 | Jun. 30, 2016 | Mar. 31, 2016 | Dec. 31, 2015 | Sep. 30, 2015 | Jun. 30, 2015 | Mar. 31, 2015 | Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
Segment Reporting Information [Line Items] | |||||||||||
Total Revenue | $ 14,909 | $ 14,835 | $ 15,774 | $ 16,606 | $ 16,330 | $ 15,090 | $ 13,349 | $ 12,660 | $ 62,124 | $ 57,429 | $ 43,042 |
United States | |||||||||||
Segment Reporting Information [Line Items] | |||||||||||
Total Revenue | 43,764 | 41,776 | 30,057 | ||||||||
International | |||||||||||
Segment Reporting Information [Line Items] | |||||||||||
Total Revenue | $ 18,360 | $ 15,653 | $ 12,985 |
Transactions with Related Par84
Transactions with Related Parties and Parent Company Investment - Schedule of Costs Incurred and Allocated by Demand Media (Details) - Demand Media $ in Thousands | 12 Months Ended |
Dec. 31, 2014USD ($) | |
Related Party Transaction [Line Items] | |
Allocated expenses | $ 21,510 |
Cost of revenue | |
Related Party Transaction [Line Items] | |
Allocated expenses | 215 |
Sales and marketing | |
Related Party Transaction [Line Items] | |
Allocated expenses | 1,452 |
Technology and development | |
Related Party Transaction [Line Items] | |
Allocated expenses | 6,684 |
General and administrative | |
Related Party Transaction [Line Items] | |
Allocated expenses | 10,768 |
Depreciation and amortization | |
Related Party Transaction [Line Items] | |
Allocated expenses | $ 2,391 |
Transactions with Related Par85
Transactions with Related Parties and Parent Company Investment - Additional Information (Details) - USD ($) $ in Thousands | 7 Months Ended | 12 Months Ended | ||
Aug. 01, 2014 | Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
Related Party Transaction [Line Items] | ||||
Total stock-based compensation expense | $ 5,828 | $ 5,526 | $ 5,289 | |
Net decrease in parent company investment | $ (28,043) | 28,000 | ||
Demand Media | ||||
Related Party Transaction [Line Items] | ||||
Total stock-based compensation expense | $ 800 |
Fair Value of Financial Instr86
Fair Value of Financial Instruments - Schedule of Assets and Liabilities Measured at Fair Value (Details) - USD ($) $ in Thousands | Dec. 31, 2016 | Dec. 31, 2015 |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Note receivable, carrying value | $ 10 | $ 10 |
Debt, carrying value | 12,800 | 23,201 |
Note receivable, fair value | 10 | 10 |
Debt, fair value | 12,800 | 31,489 |
Level 1 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Note receivable, fair value | 0 | 0 |
Debt, fair value | 0 | 0 |
Level 2 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Note receivable, fair value | 0 | 0 |
Debt, fair value | 0 | 0 |
Level 3 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Note receivable, fair value | 10 | 10 |
Debt, fair value | $ 12,800 | $ 31,489 |
Fair Value of Financial Instr87
Fair Value of Financial Instruments - Additional Information (Details) - Level 3 $ in Millions | 12 Months Ended |
Dec. 31, 2015USD ($) | |
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% |
Change in fair value of debt | $ 0.5 |
Fair Value of Financial Instr88
Fair Value of Financial Instruments - Schedule of Reconciliation of Debt Fair Value Using Unobservable Inputs (Details) - Level 3 $ in Thousands | 12 Months Ended |
Dec. 31, 2016USD ($) | |
Reconciliation of debt measured at fair value using unobservable inputs (Level 3) | |
Beginning balance | $ 31,489 |
Principal and interest payments on debt | (3,233) |
Change in fair value of future payments on debt | 2,227 |
Repayment of debt | (30,483) |
Issuance of short-term debt | 12,800 |
Ending balance | $ 12,800 |
Fair Value of Financial Instr89
Fair Value of Financial Instruments - Schedule of Reconciliation of Note Receivable Fair Value Using Unobservable Inputs (Details) $ in Thousands | 12 Months Ended |
Dec. 31, 2016USD ($) | |
Reconciliation of note receivable measured at fair value using unobservable inputs (Level 3) | |
Beginning balance | $ 10 |
Ending balance | 10 |
Level 3 | |
Reconciliation of note receivable measured at fair value using unobservable inputs (Level 3) | |
Beginning balance | 10 |
Repayments on note receivable | 0 |
Ending balance | $ 10 |
Earnings (loss) Per Share - Sch
Earnings (loss) Per Share - Schedule of Earnings (Loss) Per Share (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands | 3 Months Ended | 12 Months Ended | |||||||||
Dec. 31, 2016 | Sep. 30, 2016 | Jun. 30, 2016 | Mar. 31, 2016 | Dec. 31, 2015 | Sep. 30, 2015 | Jun. 30, 2015 | Mar. 31, 2015 | Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
Earnings Per Share [Abstract] | |||||||||||
Loss from continuing operations | $ (23,399) | $ (6,954) | $ (4,447) | $ (6,251) | $ (5,491) | $ (5,412) | $ (7,238) | $ (1,730) | $ (41,051) | $ (19,871) | $ (7,404) |
Income from discontinued operations | 1,756 | 2,525 | 1,975 | 1,145 | 1,368 | 2,008 | 1,565 | 3,606 | 7,401 | 8,547 | 5,546 |
Net loss | $ (21,643) | $ (4,429) | $ (2,472) | $ (5,106) | $ (4,123) | $ (3,404) | $ (5,673) | $ 1,876 | $ (33,650) | $ (11,324) | $ (1,858) |
Weighted average number of shares outstanding: | |||||||||||
Weighted average shares outstanding, basic | 19,308 | 18,867 | 18,452 | ||||||||
Weighted average shares outstanding, diluted | 19,308 | 18,867 | 18,452 | ||||||||
Basic (loss) income per share attributable to common stockholders: | |||||||||||
Continuing operations | $ (1.20) | $ (0.36) | $ (0.23) | $ (0.33) | $ (0.29) | $ (0.29) | $ (0.38) | $ (0.09) | $ (2.12) | $ (1.05) | $ (0.40) |
Discontinued operations | 0.38 | 0.45 | 0.30 | ||||||||
Basic (loss) income per share | (1.74) | (0.60) | (0.10) | ||||||||
Diluted (loss) income per share attributable to common stockholders: | |||||||||||
Continuing operations | $ (1.20) | $ (0.36) | $ (0.23) | $ (0.33) | $ (0.29) | $ (0.29) | $ (0.38) | $ (0.09) | (2.12) | (1.05) | (0.40) |
Discontinued operations | 0.38 | 0.45 | 0.30 | ||||||||
Diluted (loss) income per share | $ (1.74) | $ (0.60) | $ (0.10) |
Earnings (loss) Per Share - Add
Earnings (loss) Per Share - Additional Information (Details) - $ / shares | 12 Months Ended | ||||
Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | Aug. 01, 2014 | Jul. 31, 2014 | |
Earnings Loss Per Share [Line Items] | |||||
Common stock, shares issued | 19,539,000 | 19,099,000 | 18,400,000 | 1,000 | |
Shares outstanding | 19,539,000 | 19,099,000 | 18,400,000 | 1,000 | |
Common stock, par value (in dollars per share) | $ 0.0001 | $ 0.0001 | $ 0.0001 | $ 0.0001 | |
Antidilutive Securities Excluded from Computation of Earnings Per Share, Amount | 209,000 | 48,100 | 32,600 | ||
Tennenbaum Credit Facility Warrants | |||||
Earnings Loss Per Share [Line Items] | |||||
Warrants exercise price | $ 15.05 | $ 15.05 | $ 15.05 |
Concentrations - Additional Inf
Concentrations - Additional Information (Details) | 12 Months Ended |
Dec. 31, 2016itemCustomer | |
Cash And Cash Equivalents And Marketable Securities | Credit concentration risk | U.S. financial institutions | |
Concentration Risk [Line Items] | |
Number of financial institutions where deposits are held | 1 |
Cash And Cash Equivalents And Marketable Securities | Credit concentration risk | Foreign Banks | |
Concentration Risk [Line Items] | |
Number of financial institutions where deposits are held | 2 |
Revenues | Customer risk | |
Concentration Risk [Line Items] | |
Number of partners | Customer | 1 |
Concentrations - Schedule of Co
Concentrations - Schedule of Concentrations by Risk (Details) | 12 Months Ended | ||
Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
Accounts receivable | Credit concentration risk | Advertising network partner | |||
Concentration Risk [Line Items] | |||
Concentration percentage | 28.00% | 47.00% | |
Accounts receivable | Credit concentration risk | Partner A | |||
Concentration Risk [Line Items] | |||
Concentration percentage | 21.00% | 14.00% | |
Accounts receivable | Credit concentration risk | Partner C | |||
Concentration Risk [Line Items] | |||
Concentration percentage | 12.00% | 6.00% | |
Sales Revenue Net | Customer risk | Advertising network partner | |||
Concentration Risk [Line Items] | |||
Concentration percentage | 30.00% | 39.00% | 41.00% |
Selected Quarterly Financial 94
Selected Quarterly Financial Information (Unaudited) - Schedule of Quarterly and Full Year Financial Information (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 12 Months Ended | |||||||||
Dec. 31, 2016 | Sep. 30, 2016 | Jun. 30, 2016 | Mar. 31, 2016 | Dec. 31, 2015 | Sep. 30, 2015 | Jun. 30, 2015 | Mar. 31, 2015 | Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
Quarterly Financial Information Disclosure [Abstract] | |||||||||||
Revenue | $ 14,909 | $ 14,835 | $ 15,774 | $ 16,606 | $ 16,330 | $ 15,090 | $ 13,349 | $ 12,660 | $ 62,124 | $ 57,429 | $ 43,042 |
Loss from continuing operations before income taxes | (10,561) | (9,117) | (5,831) | (8,197) | (7,752) | (7,638) | (10,217) | (2,442) | (33,706) | (28,049) | (15,764) |
Loss from continuing operations | (23,399) | (6,954) | (4,447) | (6,251) | (5,491) | (5,412) | (7,238) | (1,730) | (41,051) | (19,871) | (7,404) |
Income from discontinued operations | 1,756 | 2,525 | 1,975 | 1,145 | 1,368 | 2,008 | 1,565 | 3,606 | 7,401 | 8,547 | 5,546 |
Net loss | $ (21,643) | $ (4,429) | $ (2,472) | $ (5,106) | $ (4,123) | $ (3,404) | $ (5,673) | $ 1,876 | $ (33,650) | $ (11,324) | $ (1,858) |
Loss from continuing operations per share attributable to common stockholders: | |||||||||||
Basic | $ (1.20) | $ (0.36) | $ (0.23) | $ (0.33) | $ (0.29) | $ (0.29) | $ (0.38) | $ (0.09) | $ (2.12) | $ (1.05) | $ (0.40) |
Diluted | $ (1.20) | $ (0.36) | $ (0.23) | $ (0.33) | $ (0.29) | $ (0.29) | $ (0.38) | $ (0.09) | $ (2.12) | $ (1.05) | $ (0.40) |
Subsequent Events - Additional
Subsequent Events - Additional Information (Details) | Feb. 28, 2017USD ($) | Jan. 20, 2017USD ($)ft² | Dec. 31, 2016USD ($) | Dec. 31, 2015USD ($) | Dec. 31, 2014USD ($) | Feb. 27, 2017USD ($) | Aug. 31, 2014USD ($) |
Subsequent Event [Line Items] | |||||||
Principal payments on capital lease obligations | $ 1,020,000 | $ 0 | $ 101,000 | ||||
Silicon Valley Bank | Revolving Credit Facility | |||||||
Subsequent Event [Line Items] | |||||||
Credit facility borrowing capacity | $ 30,000,000 | ||||||
Silicon Valley Bank | Letter of Credit Subfacility | |||||||
Subsequent Event [Line Items] | |||||||
Credit facility borrowing capacity | $ 15,000,000 | ||||||
Letters of credit issued | $ 10,700,000 | ||||||
Subsequent Event | |||||||
Subsequent Event [Line Items] | |||||||
Stock repurchase program, authorized amount | $ 50,000,000 | ||||||
Stock repurchase program, period | 24 months | ||||||
Subsequent Event | Leased Server Equipment and Related Software Support and Services | |||||||
Subsequent Event [Line Items] | |||||||
Principal payments on capital lease obligations | $ 1,500,000 | ||||||
Subsequent Event | Silicon Valley Bank | |||||||
Subsequent Event [Line Items] | |||||||
Repayments of revolving line of credit | $ 12,800,000 | ||||||
Subsequent Event | Silicon Valley Bank | Letter of Credit Subfacility | |||||||
Subsequent Event [Line Items] | |||||||
Letters of credit issued | $ 2,800,000 | ||||||
Subsequent Event | E Nom Divestiture | |||||||
Subsequent Event [Line Items] | |||||||
Area of sublease | ft² | 20,500 | ||||||
Subsequent Event | Maximum | Silicon Valley Bank | Revolving Credit Facility | |||||||
Subsequent Event [Line Items] | |||||||
Credit facility borrowing capacity | $ 30,000,000 | ||||||
Subsequent Event | Minimum | Silicon Valley Bank | Revolving Credit Facility | |||||||
Subsequent Event [Line Items] | |||||||
Credit facility borrowing capacity | $ 15,000,000 |