Acquisitions | 4. Acquisitions There were no acquisitions during the six months ended June 30, 2018 2017 Acquisitions On October 10, 2017, the Company acquired all of the issued and outstanding equity interests of Eat24, LLC (“Eat24”), a wholly owned subsidiary of Yelp Inc., for approximately $281.8 million, including $281.4 million in net cash paid and $0.3 million of other non-cash consideration. Of such amount, $28.8 million will be held in escrow for an 18-month period after closing to secure the Company’s indemnification rights under the purchase agreement. Eat24 provides online and mobile food ordering for restaurants and diners across the United States. The acquisition expanded the breadth and depth of the Company’s national network of restaurant partners and active diners. The Company granted RSU awards to acquired Eat24 employees in replacement of their unvested equity awards as of the closing date. Approximately $0.3 million of the fair value of the replacement RSU awards granted to acquired Eat24 employees was attributable to the pre-combination services of the Eat24 awardees and was included in the $281.8 million purchase price. This amount is reflected within goodwill in the purchase price allocation. As of the acquisition date, post-combination expense of approximately $4.1 million is expected to be recognized related to the replacement awards over the remaining post-combination service period. On August 23, 2017, the Company acquired substantially all of the assets and certain expressly specified liabilities of A&D Network Solutions, Inc. and Dashed, Inc. (collectively, “Foodler”). The purchase price for Foodler was $51.2 million in cash, net of cash acquired of $0.1 million. Foodler is an independent online food-ordering company with an established diner base in the Northeast United States. The acquisition expanded the breadth and depth of the Company’s restaurant network, active diners and delivery network. The results of operations of Eat24 and Foodler have been included in the Company’s financial statements since October 10, 2017 and August 23, 2017, respectively. The excess of the consideration transferred in the acquisitions over the net amounts assigned to the fair value of the assets were recorded as goodwill, which represents the value of increasing the breadth and depth of the Company’s network of restaurants and diners. The total goodwill related to the acquisitions of Eat24 and Foodler of $153.4 million is expected to be deductible for income tax purposes. The assets acquired and liabilities assumed of Eat24 and Foodler were recorded at their estimated fair values as of the respective closing dates of October 10, 2017 and August 23, 2017. The following table summarizes the final purchase price allocation acquisition-date fair values of the assets and liabilities acquired in connection with the Eat24 and Foodler acquisitions: Eat24 Foodler Total (in thousands) Cash $ 40 $ 86 $ 126 Accounts receivable 8,267 307 8,574 Prepaid expenses and other current assets 221 — 221 Property and equipment 1,113 — 1,113 Restaurant relationships 126,232 35,217 161,449 Diner acquisition 35,226 1,354 36,580 Trademarks 2,225 74 2,299 Developed technology 2,559 1,955 4,514 Goodwill 135,955 17,452 153,407 Accounts payable and accrued expenses (30,082 ) (5,237 ) (35,319 ) Total purchase price plus cash acquired 281,756 51,208 332,964 Fair value of replacement RSUs attributable to pre-combination service (274 ) — (274 ) Cash acquired (40 ) (86 ) (126 ) Net cash paid $ 281,442 $ 51,122 $ 332,564 Additional Information The estimated fair values of the intangible assets acquired were determined based on a combination of the income, cost, and market approaches to measure the fair value of the restaurant relationships, diner acquisition, developed technology and trademarks. The fair value of the trademarks was measured based on the relief from royalty method. The cost approach, specifically the cost to recreate method, was used to value the developed technology and diner acquisition. The income approach, specifically the multi-period excess earnings method, was used to value the restaurant relationships. These fair value measurements were based on significant inputs not observable in the market and thus represent Level 3 measurements within the fair value hierarchy. The Company incurred certain expenses directly and indirectly related to acquisitions which were recognized in general and administrative expenses within the condensed consolidated statements of operations for the three months ended June 30, 2018 and 2017 of $1.2 Pro Forma The following unaudited pro forma information presents a summary of the operating results of the Company for the three and six months ended June 30, 2017 as if the acquisitions of Eat24 and Foodler had occurred as of January 1 of the year prior to acquisition: Three Months Ended June 30, 2017 Six Months Ended June 30, 2017 (in thousands, except per share data) Revenues $ 180,854 $ 358,504 Net income 9,740 21,866 Net income per share attributable to common shareholders: Basic $ 0.11 $ 0.25 Diluted $ 0.11 $ 0.25 The pro forma adjustments that reflect the amortization that would have been recognized for intangible assets, elimination of transaction costs incurred, stock-based compensation expense for replacement awards, interest expense for transaction financings and other adjustments, as well as the pro forma tax impact of such adjustments for the three and six months ended June 30, 2017 were as follows: Three Months Ended June 30, 2017 Six Months Ended June 30, 2017 (in thousands) Depreciation and amortization $ 2,743 $ 6,366 Transaction costs (725 ) (1,134 ) Stock-based compensation (756 ) (1,382 ) Interest expense 1,214 2,431 Other 1,463 2,830 Income tax benefit (1,635 ) (3,781 ) The unaudited pro forma revenues and net income are not intended to represent or be indicative of the Company’s condensed consolidated results of operations or financial condition that would have been reported had the acquisitions been completed as of the beginning of the |