Document_and_Entity_Informatio
Document and Entity Information | 3 Months Ended | |
Mar. 31, 2015 | Apr. 30, 2015 | |
Document And Entity Information | ||
Entity Registrant Name | MAXPOINT INTERACTIVE, INC. | |
Entity Central Index Key | 1611231 | |
Document Type | 10-Q | |
Document Period End Date | 31-Mar-15 | |
Amendment Flag | FALSE | |
Current Fiscal Year End Date | -19 | |
Entity Current Reporting Status | No | |
Entity Filer Category | Non-accelerated Filer | |
Common stock shares outstanding | 25,917,002 | |
Document Fiscal Year Focus | 2015 | |
Document Fiscal Period Focus | Q1 |
Condensed_Consolidated_Balance
Condensed Consolidated Balance Sheets (USD $) | Mar. 31, 2015 | Dec. 31, 2014 |
In Thousands, unless otherwise specified | ||
Current assets: | ||
Cash and cash equivalents | $65,333 | $12,949 |
Accounts receivable, net | 31,634 | 41,303 |
Prepaid expenses and other current assets | 1,148 | 879 |
Total current assets | 98,115 | 55,131 |
Property, equipment and software, net | 13,671 | 10,653 |
Deferred offering costs | 2,845 | |
Restricted cash | 4,651 | 4,900 |
Other long-term assets | 119 | 168 |
Total assets | 116,556 | 73,697 |
Current liabilities: | ||
Accounts payable | 14,293 | 18,141 |
Accrued expenses and other current liabilities | 11,348 | 7,796 |
Total current liabilities | 25,641 | 25,937 |
Long-term debt, net | 28,334 | 44,127 |
Other long-term liabilities | 620 | 2,316 |
Total liabilities | 54,595 | 72,380 |
Commitments and contingencies (See Note 7) | ||
Convertible preferred stock: | ||
Total convertible preferred stock | 0 | 25,476 |
Stockholders’ (deficit) equity: | ||
Common stock, $0.00005 par value; 22,000,000 shares authorized, 4,217,419 shares issued and outstanding as of December 31, 2014; 500,000,000 shares authorized, 25,777,966 shares issued and outstanding as of March 31, 2015 | 1 | 0 |
Additional paid-in capital | 98,991 | 4,732 |
Accumulated other comprehensive loss | -63 | -44 |
Accumulated deficit | -36,968 | -28,847 |
Total stockholders’ (deficit) equity | 61,961 | -24,159 |
Total liabilities, convertible preferred stock and stockholders’ (deficit) equity | 116,556 | 73,697 |
Convertible Series A Preferred Stock | ||
Convertible preferred stock: | ||
Total convertible preferred stock | 0 | 1,387 |
Convertible Series B Preferred Stock | ||
Convertible preferred stock: | ||
Total convertible preferred stock | 0 | 3,089 |
Convertible Series C Preferred Stock | ||
Convertible preferred stock: | ||
Total convertible preferred stock | 0 | 8,000 |
Convertible Series D Preferred Stock | ||
Convertible preferred stock: | ||
Total convertible preferred stock | $0 | $13,000 |
Condensed_Consolidated_Balance1
Condensed Consolidated Balance Sheets (Parenthetical) (USD $) | Mar. 31, 2015 | Dec. 31, 2014 |
Common stock | ||
Common shares par value | $0.00 | $0.00 |
Common shares authorized | 500,000,000 | 22,000,000 |
Common shares issued | 25,777,966 | 4,217,419 |
Common shares outstanding | 25,777,966 | 4,217,419 |
Convertible Series A Preferred Stock | ||
Convertible preferred stock: | ||
Par value | $0 | $0.00 |
Convertible preferred stock shares authorized | 0 | 2,486,507 |
Convertible preferred stock shares issued | 0 | 2,383,745 |
Convertible preferred stock shares outstanding | 0 | 2,383,745 |
Liquidation preference | $0 | $1,387,000 |
Convertible Series B Preferred Stock | ||
Convertible preferred stock: | ||
Par value | $0 | $0.00 |
Convertible preferred stock shares authorized | 0 | 3,649,368 |
Convertible preferred stock shares issued | 0 | 3,649,368 |
Convertible preferred stock shares outstanding | 0 | 3,649,368 |
Liquidation preference | 0 | 3,089,000 |
Convertible Series C Preferred Stock | ||
Convertible preferred stock: | ||
Par value | $0 | $0.00 |
Convertible preferred stock shares authorized | 0 | 5,406,501 |
Convertible preferred stock shares issued | 0 | 5,406,501 |
Convertible preferred stock shares outstanding | 0 | 5,406,501 |
Liquidation preference | 0 | 8,000,000 |
Convertible Series D Preferred Stock | ||
Convertible preferred stock: | ||
Par value | $0 | $0.00 |
Convertible preferred stock shares authorized | 0 | 3,409,250 |
Convertible preferred stock shares issued | 0 | 3,409,210 |
Convertible preferred stock shares outstanding | 0 | 3,409,210 |
Liquidation preference | $0 | $13,000,000 |
Condensed_Consolidated_Stateme
Condensed Consolidated Statements of Operations (USD $) | 3 Months Ended | |
In Thousands, except Share data, unless otherwise specified | Mar. 31, 2015 | Mar. 31, 2014 |
Condensed Consolidated Statements of Operations | ||
Revenue, net | $28,716 | $15,353 |
Traffic acquisition costs | 11,929 | 6,532 |
Other cost of revenue | 2,951 | 1,259 |
Gross profit | 13,836 | 7,562 |
Operating expenses: | ||
Sales and marketing | 12,803 | 6,947 |
Research and development | 4,642 | 3,002 |
General and administrative | 3,379 | 1,677 |
Total operating expenses | 20,824 | 11,626 |
Loss from operations | -6,988 | -4,064 |
Other expense (income): | ||
Interest expense | 694 | 145 |
Amortization of debt discount | 792 | |
Amortization of deferred financing costs | 129 | |
Derivative fair value adjustment related to common stock warrants | -482 | |
Total other expense | 1,133 | 145 |
Loss before income taxes | -8,121 | -4,209 |
Provision for income taxes | 0 | 0 |
Net loss | ($8,121) | ($4,209) |
Net loss per basic and diluted share of common stock | ($0.90) | ($1.11) |
Weighted-average shares used to compute net loss per basic and diluted share of common stock | 9,043,421 | 3,795,086 |
Condensed_Consolidated_Stateme1
Condensed Consolidated Statements of Comprehensive Loss (USD $) | 3 Months Ended | |
In Thousands, unless otherwise specified | Mar. 31, 2015 | Mar. 31, 2014 |
Condensed Consolidated Statements of Comprehensive Loss | ||
Net loss | ($8,121) | ($4,209) |
Other comprehensive loss: | ||
Foreign currency translation adjustments | -19 | |
Comprehensive loss | ($8,140) | ($4,209) |
Condensed_Consolidated_Stateme2
Condensed Consolidated Statements of Changes in Stockholders’ (Deficit) Equity (USD $) | Common Stock | Additional Paid-in Capital | Accumulated Other Comprehensive Loss | Accumulated Deficit | Total |
In Thousands, except Share data, unless otherwise specified | |||||
Balance—beginning of period at Dec. 31, 2014 | $0 | $4,732 | ($44) | ($28,847) | ($24,159) |
Balance ( in shares) at Dec. 31, 2014 | 4,217,419 | 4,217,419 | |||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||
Issuance of common stock from initial public offering, net of issuance costs | 65,736 | 65,736 | |||
Issuance of common stock from initial public offering, net of issuance costs (in shares) | 6,500,000 | ||||
Conversion of convertible preferred stock to common stock | 1 | 25,475 | 25,476 | ||
Conversion of convertible preferred stock to common stock (in shares) | 14,848,824 | ||||
Exercise of stock options | 490 | 490 | |||
Exercise of stock options ( in shares) | 211,723 | 211,723 | |||
Stock-based compensation | 745 | 745 | |||
Issuance of common stock warrant | 335 | 335 | |||
Warrant derivative liability reclassified to additional paid-in capital | 1,133 | 1,133 | |||
Liability-based option awards reclassified to additional paid-in capital | 288 | 288 | |||
Vesting of restricted stock subject to repurchase | 57 | 57 | |||
Foreign currency translation adjustments | -19 | -19 | |||
Net loss | -8,121 | -8,121 | |||
Balance—end of period at Mar. 31, 2015 | $1 | $98,991 | ($63) | ($36,968) | $61,961 |
Balance ( in shares) at Mar. 31, 2015 | 25,777,966 | 25,777,966 |
Condensed_Consolidated_Stateme3
Condensed Consolidated Statements of Cash Flows (USD $) | 3 Months Ended | |
In Thousands, unless otherwise specified | Mar. 31, 2015 | Mar. 31, 2014 |
Cash flows from operating activities: | ||
Net loss | ($8,121) | ($4,209) |
Adjustments to reconcile net loss to net cash (used in) provided by operating activities: | ||
Depreciation and amortization | 1,206 | 728 |
Stock-based compensation expense | 572 | 240 |
Change in fair value of warrants | -482 | |
Amortization of debt discount | 792 | |
Amortization of deferred financing costs | 129 | |
Changes in operating assets and liabilities: | ||
Accounts receivable | 9,655 | 3,897 |
Prepaid expenses and other current assets | -289 | -917 |
Security deposits | -8 | 11 |
Accounts payable | -4,955 | -1,280 |
Accrued expenses and other current liabilities | 2,877 | -592 |
Other long-term liabilities | 380 | |
Net cash (used in) provided by operating activities | 1,756 | -2,122 |
Cash flows from investing activities: | ||
Purchase of property, equipment and software | -1,561 | -405 |
Capitalized internal-use software costs | -1,510 | -714 |
Changes to restricted cash | 249 | |
Net cash used in investing activities | -2,822 | -1,119 |
Cash flows from financing activities: | ||
Proceeds from the issuance of common stock in initial public offering, net of underwriting discounts and commissions | 69,518 | |
Payments of costs related to initial public offering | -249 | |
Proceeds from debt | 6,250 | 12,816 |
Repayment of debt | -22,500 | -12,300 |
Proceeds from stock option exercises | 490 | 98 |
Payments of issuance costs related to debt | -57 | |
Net cash provided by financing activities | 53,452 | 614 |
Effect of exchange rate changes on cash and cash equivalents | -2 | |
Net (decrease) increase in cash and cash equivalents | 52,384 | -2,627 |
Cash and cash equivalents at beginning of period | 12,949 | 8,805 |
Cash and cash equivalents at end of period | 65,333 | 6,178 |
Supplemental disclosures of other cash flow information: | ||
Cash paid for interest | 673 | 138 |
Supplemental disclosures of non-cash investing and financing activities: | ||
Purchases of property, equipment and software included in accounts payable and accruals | 1,697 | 314 |
Vesting of restricted stock subject to repurchase | 57 | |
Issuance of lender warrants allocated to debt discount | 335 | |
Conversion of convertible preferred stock to common stock | 25,476 | |
Warrant derivative liability reclassified to additional paid-in capital | 1,133 | |
Liability-based option awards reclassified to additional paid-in capital | 288 | |
Deferred offering costs included in accounts payable and accruals | 2,055 | 28 |
Deferred offering costs reclassified to additional paid-in capital | $3,782 |
Description_of_Business_and_Ba
Description of Business and Basis of Presentation | 3 Months Ended |
Mar. 31, 2015 | |
Description of Business and Basis of Presentation | |
Description of Business and Basis of Presentation | 1. Description of Business and Basis of Presentation |
Organization | |
MaxPoint Interactive, Inc. (the “Company”) was incorporated in September 2006 under the state laws of Delaware. The Company is a provider of a business intelligence and marketing automation solution. The Company’s customers are located in the United States and Europe and consist primarily of enterprises with national brands in the consumer products, retail, automotive, healthcare, telecommunications and entertainment industries. The Company’s MaxPoint Intelligence Platform predicts the most likely local buyers of a specific product at a particular retail location and then executes cross‑channel digital marketing campaigns to reach these buyers on behalf of the Company’s customers. The Company is headquartered in Morrisville, North Carolina and has offices across the United States and one in the United Kingdom. | |
Authorized Common Shares | |
On February 10, 2015, the Company amended its amended and restated certificate of incorporation to increase its number of authorized common shares by 3,000,000 for a total of 25,000,000. | |
Reverse Stock-Split | |
On February 20, 2015, the Company amended its amended and restated certificate of incorporation effecting a 1‑for‑2 reverse stock split of its capital stock. The reverse stock split adjusted the authorized shares of capital stock, but did not cause an adjustment to the par value. As a result of the reverse stock split, the Company also adjusted the share amounts under its equity incentive plan and common stock warrant agreements with third parties. | |
All disclosures of shares and per share data in the condensed consolidated financial statements and related notes have been adjusted to reflect the reverse stock split for all periods presented. | |
Initial Public Offering | |
On March 11, 2015 (the “Closing Date”), the Company completed an initial public offering (“IPO”) of its common stock. The Company sold an aggregate of 6,500,000 shares of common stock under a registration statement on Form S-1, declared effective on March 5, 2015 (the “Effective Date”), at a public offering price of $11.50 per share. Net proceeds to the Company were $69.5 million, after deducting underwriting discounts and commissions, and before deducting offering expenses of $3.8 million. Upon the completion of the IPO, all outstanding shares of the Company’s convertible preferred stock were converted into an aggregate of 14,848,824 shares of common stock. | |
Summary_of_Significant_Account
Summary of Significant Accounting Policies | 3 Months Ended | |||||||
Mar. 31, 2015 | ||||||||
Summary of Significant Accounting Policies | ||||||||
Summary of Significant Accounting Policies | 2. Summary of Significant Accounting Policies | |||||||
Principles of Consolidation | ||||||||
The condensed consolidated financial statements include the accounts of the Company and its wholly‑owned subsidiary and have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”). All intercompany accounts and transactions have been eliminated in consolidation. | ||||||||
Unaudited Interim Condensed Consolidated Financial Information | ||||||||
The condensed consolidated financial statements and footnotes have been prepared in accordance with GAAP as contained in the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) and applicable rules and regulations of the Securities and Exchange Commission’s (“SEC”) Rule 10-01 of Regulation S-X for interim financial information. In the opinion of management, the interim financial information includes all adjustments of a normal recurring nature necessary for a fair presentation of financial position, the results of operations, comprehensive loss, changes in stockholders’ (deficit) equity and cash flows. The results of operations for the three months ended March 31, 2015 are not necessarily indicative of the results for the full year or the results for any future periods. These condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and related footnotes included in the Company's prospectus filed with the SEC pursuant to Rule 424(b) under the Securities Act of 1933 dated March 5, 2015. | ||||||||
Use of Estimates | ||||||||
The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts in the condensed consolidated financial statements and accompanying notes. On an ongoing basis, the Company evaluates its estimates, including those related to its allowance for doubtful accounts, the historical fair value of the Company’s common stock and assumptions used for purposes of determining stock‑based compensation, income taxes and related valuation allowances and the fair value of common stock warrants. The Company bases its estimates on its historical experience and on various other assumptions that it believes to be reasonable, the results of which form the basis for making judgments about the carrying value of assets and liabilities. Actual results could differ from those estimates. | ||||||||
Cash and Cash Equivalents | ||||||||
The Company considers all highly liquid investments with a maturity of three months or less when purchased to be cash equivalents. Cash and cash equivalents consist of cash maintained in operating accounts. | ||||||||
Restricted Cash | ||||||||
Restricted cash represents cash that is subject to contractual withdrawal restrictions and penalties. Restricted cash is classified within the consolidated balance sheets based on the timing of when the restrictions are expected to lapse. The Company presents restricted cash related to its debt agreements on the consolidated balance sheets based on timing of maturity. As of December 31, 2014 and March 31, 2015 debt‑related restricted cash balances were recorded within long‑term assets. | ||||||||
In accordance with a new loan and security agreement (the “New Loan and Security Agreement”) entered into in June 2014 and described in Note 3, the Company is required to maintain, at all times, $5.0 million, consisting of the sum of: (i) cash held at the lender (determined in accordance with the New Loan and Security Agreement); plus (ii) the unused availability amount on its revolving line of credit; plus (iii) the undrawn portion of the term loan advance related to the “Mezzanine Loan and Security Agreement.” The Company has recorded $4.7 million of restricted cash as of March 31, 2015 based on its availability under the New Loan and Security Agreement of $0.3 million as of that date. | ||||||||
Concentration of Credit Risk | ||||||||
Financial instruments that potentially subject the Company to concentrations of credit risk consist principally of cash and accounts receivable. All of the Company’s cash is held at financial institutions that management believes to be of high credit quality. The Company’s cash accounts exceed federally insured limits. The Company has not experienced any losses on cash to date. To manage accounts receivable risk, the Company evaluates and monitors the creditworthiness of its customers. | ||||||||
As of December 31, 2014 and March 31, 2015, the Company did not have any customers or advertising agencies that individually comprised a significant concentration of its accounts receivable. For the three months ended March 31, 2014 and 2015, the Company did not have any customers that individually comprised a significant concentration of its revenue. | ||||||||
Allowance for Doubtful Accounts | ||||||||
The Company extends credit to its customers without requiring collateral. Accounts receivable are stated at net realizable value. The Company utilizes the allowance method to provide for doubtful accounts based on management’s evaluation of the collectability of amounts due. The Company’s estimate is based on historical collection experience and the current status of accounts receivable. Historically, actual write‑offs for uncollectible accounts have not significantly differed from the Company’s estimates. At December 31, 2014 and March 31, 2015, the Company had reserved for $0.2 million of its accounts receivable balance, respectively. | ||||||||
The following table presents the changes in the allowance for doubtful accounts for the three months ended March 31 (in thousands): | ||||||||
2014 | 2015 | |||||||
Allowance for doubtful accounts: | ||||||||
Balance, beginning of period | $ | 716 | $ | 179 | ||||
Add: adjustment for bad debts | — | — | ||||||
Less: write-offs, net of recoveries | -10 | -6 | ||||||
Balance, end of period | $ | 706 | $ | 173 | ||||
Internal‑Use Software Development Costs | ||||||||
The Company capitalizes certain costs associated with software developed for internal use, primarily consisting of direct labor costs associated with creating the software. Software development projects generally include three stages: the preliminary project stage (all costs are expensed as incurred); the application development stage (certain costs are capitalized and certain costs are expensed as incurred); and the post‑implementation/operation stage (all costs are expensed as incurred). Costs capitalized in the application development stage primarily include costs of designing, coding, and testing the software. Capitalization of costs requires judgment in determining when a project has reached the application development stage and the period over which the Company expects to benefit from the use of that software. Once the software is placed in service, these capitalized costs are amortized using the straight‑line method over the estimated useful life of the software. | ||||||||
Internal‑use software development costs of $0.7 million and $1.5 million were capitalized during the three months ended March 31, 2014 and 2015, respectively, and are included in property, equipment and software in the condensed consolidated balance sheets. Amortization expense related to the capitalized internal‑use software was $0.4 million and $0.6 million for the three months ended March 31, 2014 and 2015, respectively, and is primarily included in other cost of revenue and research and development expense in the condensed consolidated statements of operations. The net book value of capitalized internal‑use software was $5.6 million and $6.6 million at December 31, 2014 and March 31, 2015, respectively. | ||||||||
Deferred Offering Costs | ||||||||
Deferred offering costs are expenses directly related to the IPO. These costs consist of legal, accounting, printing, and filing fees that the Company capitalized, including fees incurred by the independent registered public accounting firm directly related to the offering. The deferred offering costs were offset against the IPO proceeds on the Closing Date and were settled to additional paid-in capital. | ||||||||
Common Stock Warrants | ||||||||
In accordance with the Mezzanine Loan and Security Agreement entered into on June 12, 2014 and described in Note 3, the Company issued warrants to the lender to purchase 100,000 shares of common stock (the “Lender Warrants”) at an exercise price of $11.36 per share. The warrants are exercisable for an additional 50,000 shares of common stock at an exercise price of $11.36 per share, if the second tranche of $5.0 million was drawn prior to December 31, 2014. The fair value of the warrants on the date of grant totaled approximately $0.9 million and was recorded as a discount on long‑term debt and as a long‑term liability in the condensed consolidated balance sheets. The debt discount is being amortized over the term of the Mezzanine Loan and Security Agreement as reflected in the condensed consolidated statements of operations. On December 16, 2014 the Company borrowed the second tranche of the Mezzanine Loan and Security Agreement in the amount of $5.0 million and the portion of the warrants related to the additional 50,000 shares of common stock became exercisable on that date. As of December 31, 2014, these warrants were classified as liabilities because the Company did not meet the criteria under the relevant accounting standard for treatment as equity instruments. As a result, these warrants were remeasured to their fair value at the end of each reporting period. As described above, on February 10, 2015 the Company increased its number of authorized common shares. On that date, these outstanding warrants satisfied the criteria to be treated as equity instruments and the related liabilities were reclassified to additional paid-in capital. The change in fair value between January 1, 2015 and February 10, 2015 was recorded as a derivative fair value adjustment related to common stock warrants in the condensed consolidated statements of operations. The Company recorded approximately $0.5 million in fair value adjustments for the three months ended March 31, 2015 related to these Lender Warrants. | ||||||||
On February 12, 2015, the Company amended its Mezzanine Loan and Security Agreement, (the “Amended Mezzanine Loan and Security Agreement”), as described in Note 3. The Amended Mezzanine Loan and Security Agreement increased available borrowings by $5.0 million. An additional draw under the Amended Mezzanine Loan and Security Agreement occurred on February 12, 2015. There was no modification to the maturity date or any other significant terms of the Amended Mezzanine Loan and Security Agreement. As part of the Amended Mezzanine Loan and Security Agreement, the Company issued an additional warrant to the lender (“Additional Lender Warrant”) to purchase 50,000 shares of common stock at a price of $15.18 per share. The fair value of the Additional Lender Warrant on the date of grant totaled approximately $0.3 million and was recorded as a discount on long‑term debt and as additional paid-in capital in the condensed consolidated balance sheets as the warrant met the criteria under the relevant accounting standard for treatment as an equity instrument. The debt discount is being amortized over the term of the Amended Mezzanine Loan and Security Agreement as reflected in the condensed consolidated statements of operations. | ||||||||
Fair Value of Financial Instruments | ||||||||
The carrying amounts of certain of the Company’s financial instruments, including cash and cash equivalents, accounts receivable, accounts payable and accrued expenses and other current liabilities, approximate their respective fair values due to their short term nature. | ||||||||
The Company uses a three‑tier fair value hierarchy to classify and disclose all assets and liabilities measured at fair value on a recurring basis, as well as assets and liabilities measured at fair value on a non‑recurring basis, in periods subsequent to their initial measurement. The hierarchy requires the Company to use observable inputs when available, and to minimize the use of unobservable inputs when determining fair value. The three tiers are defined as follows: | ||||||||
· | Level 1. Observable inputs based on unadjusted quoted prices in active markets for identical assets or liabilities; | |||||||
· | Level 2. Inputs, other than quoted prices in active markets, that are observable either directly or indirectly; and | |||||||
· | Level 3. Unobservable inputs for which there is little or no market data, which require the Company to develop its own assumptions. | |||||||
The Company did not have any financial instruments that were measured at fair value on a recurring basis for the three months ended March 31, 2014. | ||||||||
The following table presents the changes in the Company’s Lender Warrants measured at fair value on a recurring basis during the three months ended March 31 (in thousands): | ||||||||
2015 | ||||||||
Balance as of January 1 | $ | 1,615 | ||||||
Change in fair value of Lender Warrants liability | -482 | |||||||
Reclassification of Lender Warrants to equity | -1,133 | |||||||
Balance as of March 31 | $ | — | ||||||
The following table presents the changes in the recorded liability associated with certain of the Company’s stock option awards which, as described in Note 6, have been accounted for as liability‑based awards during the three months ended March 31 (in thousands): | ||||||||
2015 | ||||||||
Balance as of January 1 | $ | 461 | ||||||
Change in fair value of stock options classified as liability awards | -173 | |||||||
Reclassification of stock options classified as liability awards to equity | -288 | |||||||
Balance as of March 31 | $ | — | ||||||
In order to determine the fair value of the Lender Warrants and the stock options classified as liability awards, the Company used an option pricing model. These valuations require the input of subjective assumptions, including the estimated enterprise fair value, risk‑free interest rate and expected stock price volatility. The risk‑free interest rate assumption is based upon observed interest rates for constant maturity U.S. Treasury securities consistent with the term of the instruments. The expected stock price volatility assumption is based on historical volatilities for publicly traded stock of comparable companies over the term of the instruments. | ||||||||
The following table summarizes the assumptions used for estimating the fair value of the Lender Warrants and the stock options classified as liability awards for the three months ended March 31, 2015: | ||||||||
Lender | Stock Option | |||||||
Warrants | Liability | |||||||
Awards | ||||||||
Risk-free interest rate | 1.97% | 1.46% - 1.67% | ||||||
Expected term (years) | 9.34 | 4.74 - 6.03 | ||||||
Expected volatility | 58% | 51% - 53% | ||||||
Dividend yield | —% | —% | ||||||
Foreign Currency Translation and Transactions | ||||||||
The condensed consolidated financial statements of the Company’s foreign subsidiary are measured using the local currency as the functional currency. Assets and liabilities of foreign subsidiaries are translated at exchange rates in effect as of the balance sheet date. Revenues and expenses are translated at average exchange rates in effect during the period. Translation adjustments are recorded within accumulated other comprehensive loss, a separate component of stockholders’ (deficit) equity, on the condensed consolidated balance sheets. Foreign exchange transaction gains and losses have not been material to the Company’s condensed consolidated financial statements for all periods presented. | ||||||||
Revenue Recognition | ||||||||
The Company generates revenue by delivering targeted advertising campaigns for customers through various channels, including display, mobile and video. The Company recognizes revenue when there is persuasive evidence of an arrangement, delivery has occurred or services have been provided, fees are fixed or determinable, and collection of fees is reasonably assured. Revenue arrangements are evidenced by a fully executed insertion order (“IO”). The IOs specify the delivery terms including the advertising format, the contracted number of advertising impressions to be delivered, the agreed upon rate for each delivered impression, generally on a cost‑per‑thousand basis, and the fixed period of time for delivery. The IOs typically have a term of less than three months and are cancellable at any time. The Company recognizes revenue in the period in which the impressions are served, limited to the contracted number of impressions as specified in the IO. The Company determines collectability by performing a credit evaluation for new customers and by monitoring its existing customers’ accounts receivable balances. The Company does not typically receive upfront payments from its customers and has an insignificant amount of deferred revenue. | ||||||||
In the normal course of business, the Company contracts either directly with advertisers or advertising agencies on behalf of their advertiser clients. The determination of whether revenue should be reported on a gross or net basis is based on an assessment of whether the Company is acting as the principal or an agent in the transaction. In determining whether the Company acts as the principal or an agent, the Company follows the accounting guidance for principal‑agent considerations. While no one factor is determined to be individually conclusive, indicators that an entity is acting as a principal include if the Company (i) is the primary obligor in the arrangement; (ii) has certain inventory risk; (iii) has latitude in establishing pricing; (iv) adds meaningful value to the service; (v) has discretion in supplier selection; (vi) is involved in the determination of the service specifications; or (vii) has credit risk. The Company recognizes revenue on a gross basis primarily based on the Company’s determination that it is subject to the risk of fluctuating costs from its media vendors, has latitude in establishing prices with its customers, has discretion in selecting media vendors when fulfilling a customer’s advertising campaign, and has credit risk. | ||||||||
The Company may enter into multiple element arrangements for the delivery of more than one advertising placement to be delivered at the same time, or within close proximity of one another. When entering into an arrangement that includes multiple elements, the Company determines whether the arrangement should be divided into separate units of accounting and how the arrangement consideration should be measured and allocated among the separate units of accounting. An element qualifies as a separate unit of accounting when the delivered element has standalone value to the customer. The Company sells advertising placements on a standalone basis and thus has determined that each advertising placement in multiple element arrangements represents a separate unit of accounting. | ||||||||
The Company allocates arrangement consideration in multiple element arrangements at the inception of an arrangement to all deliverables based on the relative selling price method in accordance with the selling price hierarchy, which includes: (1) vendor‑specific objective evidence (“VSOE”), if available; (2) third‑party evidence (“TPE”), if VSOE is not available; and (3) best estimate of selling price (“BESP”), if neither VSOE nor TPE is available. The Company has been unable to establish VSOE or TPE, and therefore, uses BESP in its allocation of arrangement consideration. The Company determines BESP for its deliverables by considering a number of factors including, but not limited to, the price lists used by the Company’s sales team in pricing negotiations, historical average and median pricing achieved in prior contractual customer arrangements and input from the Company’s sales operation department regarding what it believes the deliverables could be sold for on a stand‑alone basis. The Company allocates consideration based on the relative fair value of the advertising impressions and recognizes revenue as impressions are delivered, assuming all other revenue recognition criteria have been met. | ||||||||
Cost of Revenue | ||||||||
Traffic Acquisition Costs | ||||||||
Traffic acquisition costs consist of media costs for advertising impressions purchased from real‑time bidding exchanges, which are expensed as incurred. The Company is billed by the advertising exchanges on a monthly basis for actual advertising impressions acquired. | ||||||||
Other Cost of Revenue | ||||||||
Other cost of revenue includes third‑party data center and other advertisement‑serving costs, depreciation of data center equipment, amortization of capitalized internal‑use software cost for revenue‑producing technologies, purchases of third‑party data for specific marketing campaigns and salaries and related costs for the Company’s personnel dedicated to executing the Company’s advertising campaigns. | ||||||||
Research and Development | ||||||||
Research and development expenses include costs associated with the maintenance and ongoing development of the Company’s technology, including compensation and employee benefits and allocated costs associated with the Company’s engineering and research and development departments, as well as costs for contracted services and supplies. | ||||||||
Stock‑Based Compensation | ||||||||
The Company accounts for stock options granted to employees based on their estimated fair values on the date of grant. The fair value of each stock option granted is estimated using the Black‑Scholes option pricing model. The stock‑based compensation expense is recognized on a straight‑line basis over the requisite service period, net of estimated forfeitures. | ||||||||
The Company accounts for stock options issued to non‑employees based on the fair value of the awards determined using the Black‑Scholes option pricing model. The measurement of stock‑based compensation is subject to periodic adjustment as the underlying equity instruments vest. The stock‑based compensation expense is recognized on a straight‑line basis over the vesting schedule. | ||||||||
Income Taxes | ||||||||
Income taxes are accounted for under the asset and liability method of accounting. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the condensed consolidated financial statement carrying amounts of existing assets and liabilities and their respective tax basis, as well as for operating loss and tax credit carryforwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in the results of operations in the period when enacted. The measurement of a deferred tax asset is reduced, if necessary, by a valuation allowance if it is more likely than not that some portion or all of the deferred tax asset will not be realized. The assessment of whether or not a valuation allowance is required often requires significant judgment, including the long‑range forecast of future taxable income and the evaluation of tax planning initiatives. Adjustments to the deferred tax valuation allowances are made to earnings in the period when such assessments are made. Due to the historical losses from the Company’s operations, a full valuation allowance on deferred tax assets has been recorded. | ||||||||
Basic and Diluted Loss per Common Share | ||||||||
Historically, the Company used the two‑class method to compute net loss per common share because the Company has issued securities, other than common stock, that contractually entitled the holders to participate in dividends and earnings of the Company. The two‑class method requires earnings for the period to be allocated between common stock and participating securities based upon their respective rights to receive distributed and undistributed earnings. Each series of the Company’s convertible preferred stock were entitled to participate in distributions, when and if declared by the board of directors, that were made to common stockholders, and as a result were considered participating securities. | ||||||||
Under the two‑class method, for periods with net income, basic net income per common share is computed by dividing the net income attributable to common stockholders by the weighted average number of shares of common stock outstanding during the period. Net income attributable to common stockholders is computed by subtracting from net income the portion of current period’s earnings that the participating securities would have been entitled to receive pursuant to their dividend rights had all of the period’s earnings been distributed. No such adjustment to earnings is made during periods with a net loss, as the holders of the participating securities have no obligation to fund losses. Diluted net loss per common share is computed under the two‑class method by using the weighted average number of shares of common stock outstanding, plus, for periods with net income attributable to common stockholders, the potential effect of dilutive securities. In addition, the Company analyzed the potential dilutive effect of the outstanding participating securities under the if‑converted method when calculating diluted earnings per share in which it is assumed that the outstanding participating securities converted into common stock at the beginning of the period. The Company reported the more dilutive of the approaches (two‑class or if‑converted) as its diluted net income per share during each reporting period. Due to the net loss for the three months ended March 31, 2014, basic and diluted loss per share were the same, as the effect of potentially dilutive securities would have been anti‑dilutive. | ||||||||
As of the Closing Date, the Company calculates net loss per basic share by dividing net loss by the weighted-average number of shares outstanding during the reporting period. The Company calculates net loss per diluted share by dividing net loss by the weighted-average number of shares outstanding during the reporting period plus the effects of any dilutive common stock-based instruments. Due to the net loss for the three months ended March 31, 2015, basic and diluted loss per share were the same, as the effect of potentially dilutive securities would have been anti‑dilutive. | ||||||||
Recently Adopted Accounting Pronouncements | ||||||||
In July 2013, the FASB issued ASU 2013‑11, Presentation of an Unrecognized Tax Benefit When a Net Operating Loss Carryforward, a Similar Tax Loss, or a Tax Credit Carryforward Exists. This guidance provides financial statement presentation guidance on whether an unrecognized tax benefit must be presented as either a reduction to a deferred tax asset or separately as a liability. The Company adopted ASU 2013‑11 effective January 1, 2014. The adoption of this pronouncement did not have a material impact on the Company’s consolidated results of operations, financial position or cash flows. | ||||||||
Recent Accounting Pronouncements Not Yet Adopted | ||||||||
In May 2014, the FASB issued ASU 2014‑09, Revenue from Contracts with Customers. This guidance states that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. ASU 2014‑09 is effective for interim or annual periods beginning after December 15, 2016. The Company plans to adopt ASU 2014‑09 as of January 1, 2017. Early adoption is not permitted. The Company is currently evaluating the impact of the adoption of this guidance on its consolidated results of operations, financial position and cash flows. | ||||||||
In August 2014, the FASB issued ASU 2014‑15, Presentation of Financial Statements—Going Concern. This guidance addresses management’s responsibility to evaluate whether there is substantial doubt about an entity’s ability to continue as a going concern and to provide related footnote disclosures. Management’s evaluation should be based on relevant conditions and events that are known and reasonably knowable at the date that the financial statements are issued. ASU 2014‑15 is effective for interim or annual periods beginning after December 15, 2016. Early adoption is permitted. The Company does not expect to early adopt this guidance and is currently evaluating the impact of the adoption of this guidance on its consolidated results of operations, financial position and cash flows. | ||||||||
In February 2015, the FASB issued ASU 2015‑02, Consolidation. This guidance applies to reporting entities that are required to evaluate whether they should consolidate certain legal entities. Specifically, the amendments (1) modify whether limited partnerships and similar legal entities are variable interest entities or voting interest entities, (2) eliminate the presumption that a general partner should consolidate a limited partnership and (3) affect the consolidation analysis of reporting entities that are involved with variable interest entities, particularly those that have fee arrangements and related party relationships. The accounting standards update becomes effective in the first interim period beginning on or after December 15, 2015, and entities have the option of using the full retrospective or modified retrospective application to adopt the standard. The Company is currently evaluating the impact of the adoption of this guidance on its consolidated results of operations, financial position and cash flows. | ||||||||
In April 2015, the FASB issued ASU 2015‑03, Interest –Imputation of Interest. This accounting standards update is to simplify the presentation of debt issuance cost. The new guidance requires that debt issuance cost related to a recognized debt liability be presented in the balance sheet as a direct deduction from the carrying amount of that debt liability, consistent with the treatment of debt discounts. The accounting standards update does not affect the recognition and measurement guidance for debt issuance costs. The accounting standards update becomes effective in the first interim period beginning on or after December 15, 2015, and must be applied on a retrospective basis. The Company is currently evaluating the impact of the adoption of this guidance on its consolidated results of operations, financial position and cash flows. | ||||||||
In April 2015, the FASB issued ASU 2015‑05, Intangibles –Goodwill and Other –Internal-Use Software. This accounting standards update is to provide guidance about a customer’s accounting for fees paid in a cloud computing arrangement. The new guidance notes that if a cloud computing arrangement includes a software license, then the customer should account for the software license element of the arrangement consistent with the acquisition of other software licenses. If the cloud computing arrangement does not include a software license, the customer should account for the arrangement as a service contract. The accounting standards update becomes effective in the first interim period beginning on or after December 15, 2015, and can be applied retrospectively or prospectively. The Company is currently evaluating the impact of the adoption of this guidance on its consolidated results of operations, financial position and cash flows. | ||||||||
Debt
Debt | 3 Months Ended | |||||||
Mar. 31, 2015 | ||||||||
Debt | ||||||||
Debt | 3. Debt | |||||||
On June 12, 2014, the Company terminated its loan and security agreement with its previous lender and entered into two debt arrangements with a new lender. | ||||||||
The first debt arrangement is the New Loan and Security Agreement. The New Loan and Security Agreement includes a revolving line of credit of potential maximum aggregate advances (the “New Revolving Line of Credit”) totaling $30.0 million. The amount available is: (a) the lesser of (i) the New Revolving Line of Credit or (ii) the amount available under the borrowing base (defined as 85% of eligible accounts receivable); minus (b) the outstanding principal balance of any advances. The New Revolving Line of Credit is secured by substantially all of the Company’s assets. The New Revolving Line of Credit has a maturity date of June 12, 2016. The interest rate on outstanding amounts under the New Revolving Line of Credit is a floating rate per annum equal to the prime referenced rate plus a potential applicable margin of 1.00%. Interest is payable monthly. In addition, the Company is required to maintain, at all times, $5.0 million, consisting of the sum of: (i) cash held at the lender (determined in accordance with the New Loan and Security Agreement); plus (ii) the unused availability amount; plus (iii) the undrawn portion of the term loan advance related to the Mezzanine Loan and Security Agreement, described below. As of March 31, 2015, the Company was in compliance with this requirement. | ||||||||
The second debt arrangement is a term loan and security agreement (the “Mezzanine Loan and Security Agreement”). This Mezzanine Loan and Security Agreement includes a term loan with a total commitment of $15.0 million comprised of two separate tranches. The first tranche draw of $10.0 million occurred at closing and the second tranche of $5.0 million was drawn on December 16, 2014. The Mezzanine Loan and Security Agreement is secured by substantially all of the Company’s assets. The Mezzanine Loan and Security Agreement has a maturity date of June 12, 2017. The interest rate on outstanding amounts under the Mezzanine Loan and Security Agreement is fixed at 11.50%. Interest is payable monthly and the cumulative principal is due at maturity. The Company has the option to prepay all, but not less than all, of the principal balances of the Mezzanine Loan and Security Agreement at any time without a prepayment fee or penalty. As described in Note 2, under the Mezzanine Loan and Security Agreement, the Company has issued Lender Warrants to purchase 150,000 shares of common stock at a price of $11.36 per share. | ||||||||
The proceeds from these new debt arrangements were used to pay off existing debt from a previous lender, in addition to providing additional working capital for general corporate purposes. | ||||||||
Under the terms of the New Loan and Security Agreement and the Mezzanine Loan and Security Agreement, the Company is required to meet and maintain certain customary financial and nonfinancial covenants, one of which restricts the Company’s ability to pay any dividends or make any distribution or payment to redeem, retire or purchase any capital stock, subject to certain specified exceptions. In addition, the Company must maintain with the lender all of its primary domestic operating and other deposit and investment accounts consisting of at least 95% of the Company’s total cash and cash equivalents balance. As of March 31, 2015, the Company was in compliance with all such covenants. | ||||||||
On February 12, 2015, the Company amended its New Loan and Security Agreement (the “Amended New Loan and Security Agreement”) and its Mezzanine Loan and Security Agreement (the Amended Mezzanine Loan and Security Agreement). The amended New Revolving Line of Credit (the “Amended New Revolving Line of Credit”) was increased by $5.0 million and allows for total potential maximum aggregate advances of $35.0 million. The amount of unused availability as of March 31, 2015 was $0.3 million. The effective interest rate for the Amended New Revolving Line of Credit was 3.25% as of March 31, 2015. In addition, the Amended Mezzanine Loan and Security Agreement increased available borrowings by $5.0 million (the “2015 Term Loan”). An additional draw under the Amended Mezzanine Loan and Security Agreement occurred on February 12, 2015. There was no modification to the maturity dates or any other significant terms to either the Amended New Loan and Security Agreement or the Amended Mezzanine Loan and Security Agreement. As part of the Amended Mezzanine Loan and Security Agreement, the Company issued an additional warrant to the lender (Additional Lender Warrant) to purchase 50,000 shares of common stock at a price of $15.18 per share. The fair value of the Additional Lender Warrant on the date of grant totaled approximately $0.3 million and was recorded as a discount on long‑term debt and as additional paid-in capital in the condensed consolidated balance sheets as the warrant met the criteria under the relevant accounting standard for treatment as an equity instrument. The debt discount is being amortized over the term of the Amended Mezzanine Loan and Security Agreement as reflected in the condensed consolidated statements of operations. | ||||||||
On March 20, 2015 and March 30, 2015, the Company repaid the first and second tranches of the Amended Mezzanine Loan and Security Agreement totaling $15.0 million. Based on the repayment of these tranches, the Company reflected within the condensed consolidated statements of operations the write-off of the corresponding debt discount and deferred financing costs. As of March 31, 2015, the 2015 Term Loan of $5.0 million was the only outstanding principal balance related to the Amended Mezzanine Loan and Security Agreement. | ||||||||
Debt consisted of the following as of December 31, 2014 and March 31, 2015 (in thousands): | ||||||||
2014 | 2015 | |||||||
Amended Mezzanine Loan and Security Agreement | $ | 15,000 | $ | 5,000 | ||||
Discount on Amended Mezzanine Loan and Security Agreement | -773 | -316 | ||||||
Amended New Revolving Line of Credit | 29,900 | 23,650 | ||||||
Long-term debt, net | $ | 44,127 | $ | 28,334 | ||||
Common_and_Preferred_Stock
Common and Preferred Stock | 3 Months Ended | ||||
Mar. 31, 2015 | |||||
Common and Preferred Stock | |||||
Common and Preferred Stock | 4. Common and Preferred Stock | ||||
As described in Note 1, on the Closing Date, the Company completed an IPO of its common stock. As part of the consummation of this transaction, the Company amended and restated its amended and restated certificate of incorporation. Effective as of the Closing Date, the Company is authorized to issue 510,000,000 total shares, consisting of 500,000,000 shares of common stock and 10,000,000 shares of preferred stock. Both the common stock and preferred stock have a par value of $0.00005 per share. | |||||
Liquidation Rights | |||||
In the event of any liquidation or dissolution of the Company, the holders of common stock are entitled to the remaining assets and funds of the Company legally available for distribution, subject to the rights of the holders of preferred stock. | |||||
Dividend and Voting Rights | |||||
The holders of common stock are entitled to receive dividends, as and if declared by the Company, subject to the rights of the holders of preferred stock. Holders of common stock have the right to one vote per share. | |||||
Common Stock Reserved for Issuance | |||||
The Company’s shares of common stock reserved for issuance as of December 31, 2014 and March 31, 2015 were as follows: | |||||
2014 | 2015 | ||||
Series A convertible preferred stock | 2,383,745 | — | |||
Series B convertible preferred stock | 3,649,368 | — | |||
Series C convertible preferred stock | 5,406,501 | — | |||
Series D convertible preferred stock | 3,409,210 | — | |||
Lender Warrants and Additional Lender Warrant to purchase common stock | 150,000 | 200,000 | |||
Stock options outstanding | 3,425,117 | (1) | 3,354,197 | ||
Possible future issuance under equity incentive plan | — | 2,797,795 | |||
Possible future issuance under employee stock purchase plan | — | 375,000 | |||
Total shares reserved | 18,423,941 | 6,726,992 | |||
-1 | As described in Note 6, as of December 31, 2014, the Company had exceeded its common shares authorized when considering the number of possible shares that may be issuable after consideration of all existing instruments that could be settled in shares. On February 10, 2015, the Company increased its number of authorized common shares to 25,000,000. Those awards which had been accounted for as liability awards were reclassified to equity as of that date. | ||||
Preferred Stock | |||||
Effective as of the Closing Date, shares of preferred stock may be issued from time to time in one or more series. The board of directors is authorized to provide for the issuance, out of the unissued shares of preferred stock, of one or more series of preferred stock, by establishing the number of shares to be included in such series, voting powers, preferences, participation, or other special rights, if any, of the shares of each such series and any qualifications, limitations or restrictions thereof. | |||||
Convertible_Preferred_Stock
Convertible Preferred Stock | 3 Months Ended | |||||||||||||||
Mar. 31, 2015 | ||||||||||||||||
Convertible Preferred Stock | ||||||||||||||||
Convertible Preferred Stock | 5. Convertible Preferred Stock | |||||||||||||||
As described in Note 1, on the Closing Date, the Company completed an IPO of its common stock. Upon the completion of the IPO, all outstanding shares of the Company’s convertible preferred stock were automatically converted into an aggregate of 14,848,824 shares of common stock. | ||||||||||||||||
The following table summarizes the issuances of convertible preferred stock subject to conversion as of the IPO completion: | ||||||||||||||||
Number of Shares | Number of Shares | Original Issue and | ||||||||||||||
Authorized | Outstanding | Conversion Price | ||||||||||||||
per Share | ||||||||||||||||
Series A convertible preferred stock | 2,486,507 | 2,383,745 | $ | 0.582 | ||||||||||||
Series B convertible preferred stock | 3,649,368 | 3,649,368 | $ | 0.84656 | ||||||||||||
Series C convertible preferred stock | 5,406,501 | 5,406,501 | $ | 1.4798 | ||||||||||||
Series D convertible preferred stock | 3,409,250 | 3,409,210 | $ | 3.8132 | ||||||||||||
Total convertible preferred stock | 14,951,626 | 14,848,824 | ||||||||||||||
Summary of Activity | ||||||||||||||||
The following table presents a summary of activity for the convertible preferred stock issued and outstanding for the three months ended March 31, 2015 (in thousands): | ||||||||||||||||
Convertible Preferred Stock | ||||||||||||||||
Series A | Series B | Series C | Series D | Total Amount | ||||||||||||
Balance, December 31, 2014 | $ | 1,387 | $ | 3,089 | $ | 8,000 | $ | 13,000 | $ | 25,476 | ||||||
Conversion to common stock upon IPO | -1,387 | -3,089 | -8,000 | -13,000 | -25,476 | |||||||||||
Balance, March 31, 2015 | $ | — | $ | — | $ | — | $ | — | $ | — | ||||||
StockBased_Compensation
Stock-Based Compensation | 3 Months Ended | |||||||||||
Mar. 31, 2015 | ||||||||||||
Stock-Based Compensation | ||||||||||||
Stock-Based Compensation | 6. Stock-Based Compensation | |||||||||||
Equity Incentive Plans | ||||||||||||
Prior to the IPO, the Company had a stock-based compensation plan, the 2010 Equity Incentive Plan (the “2010 Plan”) under which the Company granted options to purchase shares of common stock to employees, directors, and consultants. | ||||||||||||
In January 2015, the Company’s board of directors adopted the 2015 Equity Incentive Plan (the “2015 Plan”), which was subsequently ratified by its stockholders in February 2015. The 2015 Plan became effective immediately on adoption although no awards were to be made under it until the Effective Date. The 2015 Plan is the successor to and continuation of the 2010 Plan. As of the Effective Date, no additional awards were to be granted under the 2010 Plan, but all stock awards granted under the 2010 Plan remain subject to their existing terms. The number of shares of the Company’s common stock reserved for issuance under the 2015 Plan equaled the sum of 2,500,000 shares plus up to 4,537,868 shares reserved for issuance under the 2010 Plan. Of this amount, 2,797,795 shares are available for future grants to employees, non-employee directors, consultants and advisors as of March 31, 2015. | ||||||||||||
The 2015 Plan provides for the grant of the following awards: (i) incentive and nonstatutory stock options, (ii) stock appreciation rights, (iii) restricted shares, (iv) stock units, and (v) performance cash awards. The number of shares reserved for issuance under the 2015 Plan will be increased automatically on the first business day of each of the Company’s fiscal years, commencing in 2016, by a number equal to the least of: (1) 1,750,000 shares, (2) 5% of the shares of common stock outstanding on the last business day of the prior fiscal year, or (3) the number of shares determined by the Company’s board of directors. | ||||||||||||
The compensation committee of the Company’s board of directors administers the 2015 Plan. The compensation committee has complete discretion to make all decisions relating to the 2015 Plan and outstanding awards. The Company’s board of directors may amend or terminate the 2015 Plan at any time. If the Company’s board of directors amends the 2015 Plan, it does not need stockholder approval of the amendment unless required by applicable law, regulation or rules. The 2015 Plan will terminate automatically 10 years after the later of the date when the Company’s board of directors adopted the 2015 Plan or approved the latest share increase that was also approved by the Company’s stockholders. | ||||||||||||
The terms of the stock options, including the exercise price per share and vesting provisions, are determined by the board of directors. Historically, stock options were granted at exercise prices not less than the estimated fair market value of the Company’s common stock at the date of grant based upon numerous objective and subjective factors including: third‑party valuations, preferred stock transactions with third‑parties, current operating and financial performance, management estimates and future expectations. Subsequent to the completion of the IPO, the fair value of the Company's common stock on the grant date is equal to the most recent New York Stock Exchange closing price of the Company's stock. Stock option grants typically vest upon the expiration of an initial one year cliff and vest monthly thereafter over the remaining thirty‑six months assuming continuing service, and expire ten years from the grant date. | ||||||||||||
The Plan allows for grants of stock options that may be exercised before the options have vested at the discretion and determination of the board of directors. Shares issued as a result of the early exercise of stock options are subject to repurchase by the Company upon termination of service. As of December 31, 2014 and March 31, 2015, there were 5,000 and no shares, respectively, subject to the Company’s right of repurchase. Payments received from early exercises are recorded in accrued expenses and other current liabilities on the condensed consolidated balance sheets and reclassified to additional paid-in capital as the options vest. | ||||||||||||
Stock‑based compensation expense is included in the following line items in the condensed consolidated statements of operations for the three months ended March 31 (in thousands): | ||||||||||||
2014 | 2015 (1) | |||||||||||
Other cost of revenue | $ | 2 | $ | 13 | ||||||||
Sales and marketing | 71 | 150 | ||||||||||
Research and development | 104 | 175 | ||||||||||
General and administrative | 63 | 234 | ||||||||||
$ | 240 | $ | 572 | |||||||||
(1)Stock‑based compensation expense included a favorable $0.2 million fair value adjustment related to stock option liability awards prior to reclassification to additional paid-in capital during the three months ended March 31, 2015. | ||||||||||||
The Company values stock options using the Black‑Scholes option‑pricing model, which requires the input of subjective assumptions, including the risk‑free interest rate, expected life, expected stock price volatility and dividend yield. The risk‑free interest rate assumption is based upon observed interest rates for constant maturity U.S. Treasury securities consistent with the expected term of the Company’s employee stock options. The expected life represents the period of time the stock options are expected to be outstanding and is based on the simplified method. The Company uses the simplified method due to the lack of sufficient historical exercise data to provide a reasonable basis upon which to otherwise estimate the expected life of the stock options. Expected volatility is based on historical volatilities for publicly traded stock of comparable companies over the estimated expected life of the stock options. The Company assumes no dividend yield, which is consistent with the Company’s history of not paying dividends. | ||||||||||||
The following table summarizes the assumptions used for estimating the fair value of stock options granted to employees for the three months ended March 31: | ||||||||||||
2014 | 2015 | |||||||||||
Risk-free interest rate | 1.3% - 2.0% | 1.67% | ||||||||||
Expected term (years) | 4.00 - 6.08 | 6.03 | ||||||||||
Expected volatility | 56% - 60% | 53% | ||||||||||
Dividend yield | — % | — % | ||||||||||
The following table summarizes the Company’s stock option activity for the three months ended March 31, 2015: | ||||||||||||
Weighted | ||||||||||||
Weighted | Average | |||||||||||
Average | Remaining | |||||||||||
Number of | Exercise | Contractual | Aggregate | |||||||||
Options | Price | Term | Intrinsic Value | |||||||||
(in years) | (in thousands) | |||||||||||
Outstanding balance at January 1, 2015 | 3,425,117 | $ | 7.51 | 8.36 | $ | 26,260 | ||||||
Granted | 163,250 | 15.18 | ||||||||||
Exercised | -211,723 | 2.32 | ||||||||||
Cancelled | -22,447 | 10.13 | ||||||||||
Outstanding balance at March 31, 2015 | 3,354,197 | $ | 8.20 | 8.23 | $ | 11,339 | ||||||
Exercisable at March 31, 2015 | 1,341,391 | $ | 3.49 | 7.05 | $ | 8,667 | ||||||
Vested and expected to vest at March 31, 2015 | 2,847,379 | $ | 7.83 | 8.09 | $ | 10,332 | ||||||
The weighted average grant date fair value for the Company’s stock options granted during the three months ended March 31, 2014 and 2015 was $5.49 and $7.78 per share, respectively. The total compensation cost related to unvested stock options not yet recognized as of March 31, 2015 was $9.8 million and will be recognized over a weighted average period of approximately 2.18 years. The aggregate intrinsic value of stock options exercised during the three months ended March 31, 2014 and 2015 was $1.0 million and $2.4 million, respectively. | ||||||||||||
During the year ended December 31, 2014, the number of stock options granted by the Company exceeded the number of shares authorized for issuance and not already committed for other purposes, such as convertible preferred stock, warrants, and previously granted stock option awards. As a result, those options granted during the year ended December 31, 2014 that exceeded the authorized limit were accounted for as liability‑based awards and recorded in other long‑term liabilities on the condensed consolidated balance sheets as of December 31, 2014. During the year ended December 31, 2014, the Company granted 610,675 options, cumulatively, in excess of its common shares authorized. Of these, 597,425 were outstanding as of December 31, 2014. The Company recorded a liability of $0.5 million on its condensed consolidated balance sheets as of December 31, 2014 related to these liability‑based equity awards. The fair value of the liability‑based awards was estimated each reporting period, and the estimate of fair value was reflected in the amount of stock‑based compensation expense recorded during the period. Changes in fair value are recorded in stock‑based compensation expense for the period. For the three months ended March 31, 2014, the Company did not exceed the number of shares authorized for issuance and not already committed for other purposes, and did not have a fair value adjustment for liability-based awards. | ||||||||||||
As described in Note 1, on February 10, 2015, the Company increased its number of authorized common shares by 3,000,000 shares. As the number of shares authorized was in excess of those committed for other purposes as of that date, the liability-based awards described above were reclassified to equity-based awards at fair value and reclassified to additional paid-in capital. The favorable fair value adjustment for liability-based awards for the three months ended March 31, 2015 was $0.2 million. The reclassification from other long‑term liabilities to additional paid-in capital on the condensed consolidated balance sheets was $0.3 million as of February 10, 2015. See Note 2 for the assumptions used in determining the fair value adjustment related to these liability-based awards. | ||||||||||||
Employee Stock Purchase Plan | ||||||||||||
In January 2015, the Company’s board of directors adopted the 2015 Employee Stock Purchase Plan (the “2015 ESPP”), which was subsequently ratified by its stockholders in February 2015. The 2015 ESPP began as of the Effective Date. | ||||||||||||
The Company has reserved 375,000 shares of its common stock for issuance under the 2015 ESPP. The number of shares reserved for issuance under the 2015 ESPP will automatically be increased on the first business day of each of the Company’s fiscal years, commencing in 2016, by a number equal to the least of: (1) 250,000 shares, (2) 1% of the shares of common stock outstanding on the last business day of the prior fiscal year, or (3) the number of shares determined by the Company’s board of directors. | ||||||||||||
All Company employees are eligible to participate if they are employed for more than 20 hours per week and for more than five months per year. Eligible employees may begin participating in the 2015 ESPP at the start of any offering period. Each offering period will last a number of months determined by the compensation committee of the board of directors, not to exceed 27 months. A new offering period will begin periodically, as determined by the compensation committee. Offering periods may overlap or may be consecutive. Unless otherwise determined by the compensation committee, two offering periods of six months’ duration will begin in each year on May 1 and November 1. However, the first offering period started on the Effective Date and ends on October 31, 2015, with the first purchase date occurring on or about October 31, 2015. | ||||||||||||
The compensation committee of the Company’s board of directors will administer the 2015 ESPP. The board of directors or the compensation committee may amend or terminate the 2015 ESPP at any time. | ||||||||||||
Commitments_and_Contingencies
Commitments and Contingencies | 3 Months Ended |
Mar. 31, 2015 | |
Commitments and Contingencies | |
Commitments and Contingencies | 7. Commitments and Contingencies |
Purchase Commitments | |
The Company has $2.7 million of non‑cancelable contractual commitments as of March 31, 2015, primarily related to third‑party data centers and other support services. Of these commitments, $2.1 million and $0.6 million are due within the next year and within one to three years, respectively. | |
Litigation | |
The Company is subject to various legal matters in the ordinary course of business. In the opinion of management, there are currently no such known matters that will have a material effect on the financial condition, results of operations or cash flows of the Company. | |
Indemnification Agreements | |
In the ordinary course of business, the Company may provide indemnifications of varying scope and terms to customers, vendors, lessors, business partners and other parties with respect to certain matters, including, but not limited to, losses arising out of breach of such agreements, services to be provided by the Company or from intellectual property infringement claims made by third parties. In addition, the Company has entered into indemnification agreements with directors and certain officers and employees that will require the Company, among other things, to indemnify them against certain liabilities that may arise by reason of their status or service as directors, officers or employees. No demands have been made upon the Company to provide indemnification under such agreements, and thus there are no claims that the Company is aware of that could have a material effect on the Company’s financial position, results of operations or cash flows. | |
Earnings_Per_Share
Earnings Per Share | 3 Months Ended | |||||
Mar. 31, 2015 | ||||||
Earnings Per Share | ||||||
Earnings Per Share | 8. Earnings Per Share | |||||
Diluted loss per share is the same as basic loss per share for the three months ended March 31, 2014 and 2015 because the effects of potentially dilutive items were anti-dilutive given the Company’s net losses in those periods. The following securities have been excluded from the calculation of weighted average common shares outstanding because the effect is anti-dilutive for the three months ended March 31: | ||||||
2014 | 2015 | |||||
Convertible preferred stock: | ||||||
Series A | 2,383,745 | — | ||||
Series B | 3,649,368 | — | ||||
Series C | 5,406,501 | — | ||||
Series D | 3,409,210 | — | ||||
Common stock subject to repurchase | 3,145 | — | ||||
Lender Warrants and Additional Lender Warrant to purchase common stock | — | 200,000 | ||||
Stock options | 2,561,595 | 3,354,197 | ||||
Subsequent_Events
Subsequent Events | 3 Months Ended |
Mar. 31, 2015 | |
Subsequent Events | |
Subsequent Events | 9. Subsequent Events |
On April 1, 2015, the Company repaid the 2015 Term Loan which represented the remaining $5.0 million principal balance on the Amended Mezzanine Loan and Security Agreement. As of that date, the Company had no outstanding principal balances related to this agreement. | |
Summary_of_Significant_Account1
Summary of Significant Accounting Policies (Policies) | 3 Months Ended | |||||||
Mar. 31, 2015 | ||||||||
Summary of Significant Accounting Policies | ||||||||
Principles of Consolidation | Principles of Consolidation | |||||||
The condensed consolidated financial statements include the accounts of the Company and its wholly‑owned subsidiary and have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”). All intercompany accounts and transactions have been eliminated in consolidation. | ||||||||
Unaudited Interim Condensed Consolidated Financial Information | Unaudited Interim Condensed Consolidated Financial Information | |||||||
The condensed consolidated financial statements and footnotes have been prepared in accordance with GAAP as contained in the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) and applicable rules and regulations of the Securities and Exchange Commission’s (“SEC”) Rule 10-01 of Regulation S-X for interim financial information. In the opinion of management, the interim financial information includes all adjustments of a normal recurring nature necessary for a fair presentation of financial position, the results of operations, comprehensive loss, changes in stockholders’ (deficit) equity and cash flows. The results of operations for the three months ended March 31, 2015 are not necessarily indicative of the results for the full year or the results for any future periods. These condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and related footnotes included in the Company's prospectus filed with the SEC pursuant to Rule 424(b) under the Securities Act of 1933 dated March 5, 2015. | ||||||||
Use of Estimates | Use of Estimates | |||||||
The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts in the condensed consolidated financial statements and accompanying notes. On an ongoing basis, the Company evaluates its estimates, including those related to its allowance for doubtful accounts, the historical fair value of the Company’s common stock and assumptions used for purposes of determining stock‑based compensation, income taxes and related valuation allowances and the fair value of common stock warrants. The Company bases its estimates on its historical experience and on various other assumptions that it believes to be reasonable, the results of which form the basis for making judgments about the carrying value of assets and liabilities. Actual results could differ from those estimates. | ||||||||
Cash and Cash Equivalents | Cash and Cash Equivalents | |||||||
The Company considers all highly liquid investments with a maturity of three months or less when purchased to be cash equivalents. Cash and cash equivalents consist of cash maintained in operating accounts. | ||||||||
Restricted Cash | Restricted Cash | |||||||
Restricted cash represents cash that is subject to contractual withdrawal restrictions and penalties. Restricted cash is classified within the consolidated balance sheets based on the timing of when the restrictions are expected to lapse. The Company presents restricted cash related to its debt agreements on the consolidated balance sheets based on timing of maturity. As of December 31, 2014 and March 31, 2015 debt‑related restricted cash balances were recorded within long‑term assets. | ||||||||
In accordance with a new loan and security agreement (the “New Loan and Security Agreement”) entered into in June 2014 and described in Note 3, the Company is required to maintain, at all times, $5.0 million, consisting of the sum of: (i) cash held at the lender (determined in accordance with the New Loan and Security Agreement); plus (ii) the unused availability amount on its revolving line of credit; plus (iii) the undrawn portion of the term loan advance related to the “Mezzanine Loan and Security Agreement.” The Company has recorded $4.7 million of restricted cash as of March 31, 2015 based on its availability under the New Loan and Security Agreement of $0.3 million as of that date. | ||||||||
Concentration of Credit Risk | Concentration of Credit Risk | |||||||
Financial instruments that potentially subject the Company to concentrations of credit risk consist principally of cash and accounts receivable. All of the Company’s cash is held at financial institutions that management believes to be of high credit quality. The Company’s cash accounts exceed federally insured limits. The Company has not experienced any losses on cash to date. To manage accounts receivable risk, the Company evaluates and monitors the creditworthiness of its customers. | ||||||||
As of December 31, 2014 and March 31, 2015, the Company did not have any customers or advertising agencies that individually comprised a significant concentration of its accounts receivable. For the three months ended March 31, 2014 and 2015, the Company did not have any customers that individually comprised a significant concentration of its revenue. | ||||||||
Allowance for Doubtful Accounts | Allowance for Doubtful Accounts | |||||||
The Company extends credit to its customers without requiring collateral. Accounts receivable are stated at net realizable value. The Company utilizes the allowance method to provide for doubtful accounts based on management’s evaluation of the collectability of amounts due. The Company’s estimate is based on historical collection experience and the current status of accounts receivable. Historically, actual write‑offs for uncollectible accounts have not significantly differed from the Company’s estimates. At December 31, 2014 and March 31, 2015, the Company had reserved for $0.2 million of its accounts receivable balance, respectively. | ||||||||
The following table presents the changes in the allowance for doubtful accounts for the three months ended March 31 (in thousands): | ||||||||
2014 | 2015 | |||||||
Allowance for doubtful accounts: | ||||||||
Balance, beginning of period | $ | 716 | $ | 179 | ||||
Add: adjustment for bad debts | — | — | ||||||
Less: write-offs, net of recoveries | -10 | -6 | ||||||
Balance, end of period | $ | 706 | $ | 173 | ||||
Internal-Use Software Development Costs | Internal‑Use Software Development Costs | |||||||
The Company capitalizes certain costs associated with software developed for internal use, primarily consisting of direct labor costs associated with creating the software. Software development projects generally include three stages: the preliminary project stage (all costs are expensed as incurred); the application development stage (certain costs are capitalized and certain costs are expensed as incurred); and the post‑implementation/operation stage (all costs are expensed as incurred). Costs capitalized in the application development stage primarily include costs of designing, coding, and testing the software. Capitalization of costs requires judgment in determining when a project has reached the application development stage and the period over which the Company expects to benefit from the use of that software. Once the software is placed in service, these capitalized costs are amortized using the straight‑line method over the estimated useful life of the software. | ||||||||
Internal‑use software development costs of $0.7 million and $1.5 million were capitalized during the three months ended March 31, 2014 and 2015, respectively, and are included in property, equipment and software in the condensed consolidated balance sheets. Amortization expense related to the capitalized internal‑use software was $0.4 million and $0.6 million for the three months ended March 31, 2014 and 2015, respectively, and is primarily included in other cost of revenue and research and development expense in the condensed consolidated statements of operations. The net book value of capitalized internal‑use software was $5.6 million and $6.6 million at December 31, 2014 and March 31, 2015, respectively. | ||||||||
Deferred Offering Costs | Deferred Offering Costs | |||||||
Deferred offering costs are expenses directly related to the IPO. These costs consist of legal, accounting, printing, and filing fees that the Company capitalized, including fees incurred by the independent registered public accounting firm directly related to the offering. The deferred offering costs were offset against the IPO proceeds on the Closing Date and were settled to additional paid-in capital. | ||||||||
Common Stock Warrants | Common Stock Warrants | |||||||
In accordance with the Mezzanine Loan and Security Agreement entered into on June 12, 2014 and described in Note 3, the Company issued warrants to the lender to purchase 100,000 shares of common stock (the “Lender Warrants”) at an exercise price of $11.36 per share. The warrants are exercisable for an additional 50,000 shares of common stock at an exercise price of $11.36 per share, if the second tranche of $5.0 million was drawn prior to December 31, 2014. The fair value of the warrants on the date of grant totaled approximately $0.9 million and was recorded as a discount on long‑term debt and as a long‑term liability in the condensed consolidated balance sheets. The debt discount is being amortized over the term of the Mezzanine Loan and Security Agreement as reflected in the condensed consolidated statements of operations. On December 16, 2014 the Company borrowed the second tranche of the Mezzanine Loan and Security Agreement in the amount of $5.0 million and the portion of the warrants related to the additional 50,000 shares of common stock became exercisable on that date. As of December 31, 2014, these warrants were classified as liabilities because the Company did not meet the criteria under the relevant accounting standard for treatment as equity instruments. As a result, these warrants were remeasured to their fair value at the end of each reporting period. As described above, on February 10, 2015 the Company increased its number of authorized common shares. On that date, these outstanding warrants satisfied the criteria to be treated as equity instruments and the related liabilities were reclassified to additional paid-in capital. The change in fair value between January 1, 2015 and February 10, 2015 was recorded as a derivative fair value adjustment related to common stock warrants in the condensed consolidated statements of operations. The Company recorded approximately $0.5 million in fair value adjustments for the three months ended March 31, 2015 related to these Lender Warrants. | ||||||||
On February 12, 2015, the Company amended its Mezzanine Loan and Security Agreement, (the “Amended Mezzanine Loan and Security Agreement”), as described in Note 3. The Amended Mezzanine Loan and Security Agreement increased available borrowings by $5.0 million. An additional draw under the Amended Mezzanine Loan and Security Agreement occurred on February 12, 2015. There was no modification to the maturity date or any other significant terms of the Amended Mezzanine Loan and Security Agreement. As part of the Amended Mezzanine Loan and Security Agreement, the Company issued an additional warrant to the lender (“Additional Lender Warrant”) to purchase 50,000 shares of common stock at a price of $15.18 per share. The fair value of the Additional Lender Warrant on the date of grant totaled approximately $0.3 million and was recorded as a discount on long‑term debt and as additional paid-in capital in the condensed consolidated balance sheets as the warrant met the criteria under the relevant accounting standard for treatment as an equity instrument. The debt discount is being amortized over the term of the Amended Mezzanine Loan and Security Agreement as reflected in the condensed consolidated statements of operations. | ||||||||
Fair Value of Financial Instruments | Fair Value of Financial Instruments | |||||||
The carrying amounts of certain of the Company’s financial instruments, including cash and cash equivalents, accounts receivable, accounts payable and accrued expenses and other current liabilities, approximate their respective fair values due to their short term nature. | ||||||||
The Company uses a three‑tier fair value hierarchy to classify and disclose all assets and liabilities measured at fair value on a recurring basis, as well as assets and liabilities measured at fair value on a non‑recurring basis, in periods subsequent to their initial measurement. The hierarchy requires the Company to use observable inputs when available, and to minimize the use of unobservable inputs when determining fair value. The three tiers are defined as follows: | ||||||||
· | Level 1. Observable inputs based on unadjusted quoted prices in active markets for identical assets or liabilities; | |||||||
· | Level 2. Inputs, other than quoted prices in active markets, that are observable either directly or indirectly; and | |||||||
· | Level 3. Unobservable inputs for which there is little or no market data, which require the Company to develop its own assumptions. | |||||||
The Company did not have any financial instruments that were measured at fair value on a recurring basis for the three months ended March 31, 2014. | ||||||||
The following table presents the changes in the Company’s Lender Warrants measured at fair value on a recurring basis during the three months ended March 31 (in thousands): | ||||||||
2015 | ||||||||
Balance as of January 1 | $ | 1,615 | ||||||
Change in fair value of Lender Warrants liability | -482 | |||||||
Reclassification of Lender Warrants to equity | -1,133 | |||||||
Balance as of March 31 | $ | — | ||||||
The following table presents the changes in the recorded liability associated with certain of the Company’s stock option awards which, as described in Note 6, have been accounted for as liability‑based awards during the three months ended March 31 (in thousands): | ||||||||
2015 | ||||||||
Balance as of January 1 | $ | 461 | ||||||
Change in fair value of stock options classified as liability awards | -173 | |||||||
Reclassification of stock options classified as liability awards to equity | -288 | |||||||
Balance as of March 31 | $ | — | ||||||
In order to determine the fair value of the Lender Warrants and the stock options classified as liability awards, the Company used an option pricing model. These valuations require the input of subjective assumptions, including the estimated enterprise fair value, risk‑free interest rate and expected stock price volatility. The risk‑free interest rate assumption is based upon observed interest rates for constant maturity U.S. Treasury securities consistent with the term of the instruments. The expected stock price volatility assumption is based on historical volatilities for publicly traded stock of comparable companies over the term of the instruments. | ||||||||
The following table summarizes the assumptions used for estimating the fair value of the Lender Warrants and the stock options classified as liability awards for the three months ended March 31, 2015: | ||||||||
Lender | Stock Option | |||||||
Warrants | Liability | |||||||
Awards | ||||||||
Risk-free interest rate | 1.97% | 1.46% - 1.67% | ||||||
Expected term (years) | 9.34 | 4.74 - 6.03 | ||||||
Expected volatility | 58% | 51% - 53% | ||||||
Dividend yield | —% | —% | ||||||
Foreign Currency Translation and Transactions | Foreign Currency Translation and Transactions | |||||||
The condensed consolidated financial statements of the Company’s foreign subsidiary are measured using the local currency as the functional currency. Assets and liabilities of foreign subsidiaries are translated at exchange rates in effect as of the balance sheet date. Revenues and expenses are translated at average exchange rates in effect during the period. Translation adjustments are recorded within accumulated other comprehensive loss, a separate component of stockholders’ (deficit) equity, on the condensed consolidated balance sheets. Foreign exchange transaction gains and losses have not been material to the Company’s condensed consolidated financial statements for all periods presented. | ||||||||
Revenue Recognition | Revenue Recognition | |||||||
The Company generates revenue by delivering targeted advertising campaigns for customers through various channels, including display, mobile and video. The Company recognizes revenue when there is persuasive evidence of an arrangement, delivery has occurred or services have been provided, fees are fixed or determinable, and collection of fees is reasonably assured. Revenue arrangements are evidenced by a fully executed insertion order (“IO”). The IOs specify the delivery terms including the advertising format, the contracted number of advertising impressions to be delivered, the agreed upon rate for each delivered impression, generally on a cost‑per‑thousand basis, and the fixed period of time for delivery. The IOs typically have a term of less than three months and are cancellable at any time. The Company recognizes revenue in the period in which the impressions are served, limited to the contracted number of impressions as specified in the IO. The Company determines collectability by performing a credit evaluation for new customers and by monitoring its existing customers’ accounts receivable balances. The Company does not typically receive upfront payments from its customers and has an insignificant amount of deferred revenue. | ||||||||
In the normal course of business, the Company contracts either directly with advertisers or advertising agencies on behalf of their advertiser clients. The determination of whether revenue should be reported on a gross or net basis is based on an assessment of whether the Company is acting as the principal or an agent in the transaction. In determining whether the Company acts as the principal or an agent, the Company follows the accounting guidance for principal‑agent considerations. While no one factor is determined to be individually conclusive, indicators that an entity is acting as a principal include if the Company (i) is the primary obligor in the arrangement; (ii) has certain inventory risk; (iii) has latitude in establishing pricing; (iv) adds meaningful value to the service; (v) has discretion in supplier selection; (vi) is involved in the determination of the service specifications; or (vii) has credit risk. The Company recognizes revenue on a gross basis primarily based on the Company’s determination that it is subject to the risk of fluctuating costs from its media vendors, has latitude in establishing prices with its customers, has discretion in selecting media vendors when fulfilling a customer’s advertising campaign, and has credit risk. | ||||||||
The Company may enter into multiple element arrangements for the delivery of more than one advertising placement to be delivered at the same time, or within close proximity of one another. When entering into an arrangement that includes multiple elements, the Company determines whether the arrangement should be divided into separate units of accounting and how the arrangement consideration should be measured and allocated among the separate units of accounting. An element qualifies as a separate unit of accounting when the delivered element has standalone value to the customer. The Company sells advertising placements on a standalone basis and thus has determined that each advertising placement in multiple element arrangements represents a separate unit of accounting. | ||||||||
The Company allocates arrangement consideration in multiple element arrangements at the inception of an arrangement to all deliverables based on the relative selling price method in accordance with the selling price hierarchy, which includes: (1) vendor‑specific objective evidence (“VSOE”), if available; (2) third‑party evidence (“TPE”), if VSOE is not available; and (3) best estimate of selling price (“BESP”), if neither VSOE nor TPE is available. The Company has been unable to establish VSOE or TPE, and therefore, uses BESP in its allocation of arrangement consideration. The Company determines BESP for its deliverables by considering a number of factors including, but not limited to, the price lists used by the Company’s sales team in pricing negotiations, historical average and median pricing achieved in prior contractual customer arrangements and input from the Company’s sales operation department regarding what it believes the deliverables could be sold for on a stand‑alone basis. The Company allocates consideration based on the relative fair value of the advertising impressions and recognizes revenue as impressions are delivered, assuming all other revenue recognition criteria have been met. | ||||||||
Cost of Revenue | Cost of Revenue | |||||||
Traffic Acquisition Costs | ||||||||
Traffic acquisition costs consist of media costs for advertising impressions purchased from real‑time bidding exchanges, which are expensed as incurred. The Company is billed by the advertising exchanges on a monthly basis for actual advertising impressions acquired. | ||||||||
Other Cost of Revenue | ||||||||
Other cost of revenue includes third‑party data center and other advertisement‑serving costs, depreciation of data center equipment, amortization of capitalized internal‑use software cost for revenue‑producing technologies, purchases of third‑party data for specific marketing campaigns and salaries and related costs for the Company’s personnel dedicated to executing the Company’s advertising campaigns. | ||||||||
Research and Development | Research and Development | |||||||
Research and development expenses include costs associated with the maintenance and ongoing development of the Company’s technology, including compensation and employee benefits and allocated costs associated with the Company’s engineering and research and development departments, as well as costs for contracted services and supplies. | ||||||||
Stock-Based Compensation | Stock‑Based Compensation | |||||||
The Company accounts for stock options granted to employees based on their estimated fair values on the date of grant. The fair value of each stock option granted is estimated using the Black‑Scholes option pricing model. The stock‑based compensation expense is recognized on a straight‑line basis over the requisite service period, net of estimated forfeitures. | ||||||||
The Company accounts for stock options issued to non‑employees based on the fair value of the awards determined using the Black‑Scholes option pricing model. The measurement of stock‑based compensation is subject to periodic adjustment as the underlying equity instruments vest. The stock‑based compensation expense is recognized on a straight‑line basis over the vesting schedule. | ||||||||
Income Taxes | Income Taxes | |||||||
Income taxes are accounted for under the asset and liability method of accounting. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the condensed consolidated financial statement carrying amounts of existing assets and liabilities and their respective tax basis, as well as for operating loss and tax credit carryforwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in the results of operations in the period when enacted. The measurement of a deferred tax asset is reduced, if necessary, by a valuation allowance if it is more likely than not that some portion or all of the deferred tax asset will not be realized. The assessment of whether or not a valuation allowance is required often requires significant judgment, including the long‑range forecast of future taxable income and the evaluation of tax planning initiatives. Adjustments to the deferred tax valuation allowances are made to earnings in the period when such assessments are made. Due to the historical losses from the Company’s operations, a full valuation allowance on deferred tax assets has been recorded. | ||||||||
Basic and Diluted Loss per Common Share | Basic and Diluted Loss per Common Share | |||||||
Historically, the Company used the two‑class method to compute net loss per common share because the Company has issued securities, other than common stock, that contractually entitled the holders to participate in dividends and earnings of the Company. The two‑class method requires earnings for the period to be allocated between common stock and participating securities based upon their respective rights to receive distributed and undistributed earnings. Each series of the Company’s convertible preferred stock were entitled to participate in distributions, when and if declared by the board of directors, that were made to common stockholders, and as a result were considered participating securities. | ||||||||
Under the two‑class method, for periods with net income, basic net income per common share is computed by dividing the net income attributable to common stockholders by the weighted average number of shares of common stock outstanding during the period. Net income attributable to common stockholders is computed by subtracting from net income the portion of current period’s earnings that the participating securities would have been entitled to receive pursuant to their dividend rights had all of the period’s earnings been distributed. No such adjustment to earnings is made during periods with a net loss, as the holders of the participating securities have no obligation to fund losses. Diluted net loss per common share is computed under the two‑class method by using the weighted average number of shares of common stock outstanding, plus, for periods with net income attributable to common stockholders, the potential effect of dilutive securities. In addition, the Company analyzed the potential dilutive effect of the outstanding participating securities under the if‑converted method when calculating diluted earnings per share in which it is assumed that the outstanding participating securities converted into common stock at the beginning of the period. The Company reported the more dilutive of the approaches (two‑class or if‑converted) as its diluted net income per share during each reporting period. Due to the net loss for the three months ended March 31, 2014, basic and diluted loss per share were the same, as the effect of potentially dilutive securities would have been anti‑dilutive. | ||||||||
As of the Closing Date, the Company calculates net loss per basic share by dividing net loss by the weighted-average number of shares outstanding during the reporting period. The Company calculates net loss per diluted share by dividing net loss by the weighted-average number of shares outstanding during the reporting period plus the effects of any dilutive common stock-based instruments. Due to the net loss for the three months ended March 31, 2015, basic and diluted loss per share were the same, as the effect of potentially dilutive securities would have been anti‑dilutive. | ||||||||
Recently Adopted Accounting Pronouncements | Recently Adopted Accounting Pronouncements | |||||||
In July 2013, the FASB issued ASU 2013‑11, Presentation of an Unrecognized Tax Benefit When a Net Operating Loss Carryforward, a Similar Tax Loss, or a Tax Credit Carryforward Exists. This guidance provides financial statement presentation guidance on whether an unrecognized tax benefit must be presented as either a reduction to a deferred tax asset or separately as a liability. The Company adopted ASU 2013‑11 effective January 1, 2014. The adoption of this pronouncement did not have a material impact on the Company’s consolidated results of operations, financial position or cash flows. | ||||||||
Recent Accounting Pronouncements Not Yet Adopted | ||||||||
In May 2014, the FASB issued ASU 2014‑09, Revenue from Contracts with Customers. This guidance states that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. ASU 2014‑09 is effective for interim or annual periods beginning after December 15, 2016. The Company plans to adopt ASU 2014‑09 as of January 1, 2017. Early adoption is not permitted. The Company is currently evaluating the impact of the adoption of this guidance on its consolidated results of operations, financial position and cash flows. | ||||||||
In August 2014, the FASB issued ASU 2014‑15, Presentation of Financial Statements—Going Concern. This guidance addresses management’s responsibility to evaluate whether there is substantial doubt about an entity’s ability to continue as a going concern and to provide related footnote disclosures. Management’s evaluation should be based on relevant conditions and events that are known and reasonably knowable at the date that the financial statements are issued. ASU 2014‑15 is effective for interim or annual periods beginning after December 15, 2016. Early adoption is permitted. The Company does not expect to early adopt this guidance and is currently evaluating the impact of the adoption of this guidance on its consolidated results of operations, financial position and cash flows. | ||||||||
In February 2015, the FASB issued ASU 2015‑02, Consolidation. This guidance applies to reporting entities that are required to evaluate whether they should consolidate certain legal entities. Specifically, the amendments (1) modify whether limited partnerships and similar legal entities are variable interest entities or voting interest entities, (2) eliminate the presumption that a general partner should consolidate a limited partnership and (3) affect the consolidation analysis of reporting entities that are involved with variable interest entities, particularly those that have fee arrangements and related party relationships. The accounting standards update becomes effective in the first interim period beginning on or after December 15, 2015, and entities have the option of using the full retrospective or modified retrospective application to adopt the standard. The Company is currently evaluating the impact of the adoption of this guidance on its consolidated results of operations, financial position and cash flows. | ||||||||
In April 2015, the FASB issued ASU 2015‑03, Interest –Imputation of Interest. This accounting standards update is to simplify the presentation of debt issuance cost. The new guidance requires that debt issuance cost related to a recognized debt liability be presented in the balance sheet as a direct deduction from the carrying amount of that debt liability, consistent with the treatment of debt discounts. The accounting standards update does not affect the recognition and measurement guidance for debt issuance costs. The accounting standards update becomes effective in the first interim period beginning on or after December 15, 2015, and must be applied on a retrospective basis. The Company is currently evaluating the impact of the adoption of this guidance on its consolidated results of operations, financial position and cash flows. | ||||||||
In April 2015, the FASB issued ASU 2015‑05, Intangibles –Goodwill and Other –Internal-Use Software. This accounting standards update is to provide guidance about a customer’s accounting for fees paid in a cloud computing arrangement. The new guidance notes that if a cloud computing arrangement includes a software license, then the customer should account for the software license element of the arrangement consistent with the acquisition of other software licenses. If the cloud computing arrangement does not include a software license, the customer should account for the arrangement as a service contract. The accounting standards update becomes effective in the first interim period beginning on or after December 15, 2015, and can be applied retrospectively or prospectively. The Company is currently evaluating the impact of the adoption of this guidance on its consolidated results of operations, financial position and cash flows. | ||||||||
Summary_of_Significant_Account2
Summary of Significant Accounting Policies (Tables) | 3 Months Ended | |||||||
Mar. 31, 2015 | ||||||||
Summary of Significant Accounting Policies | ||||||||
Schedule of changes in the allowance for doubtful accounts | The following table presents the changes in the allowance for doubtful accounts for the three months ended March 31 (in thousands): | |||||||
2014 | 2015 | |||||||
Allowance for doubtful accounts: | ||||||||
Balance, beginning of period | $ | 716 | $ | 179 | ||||
Add: adjustment for bad debts | — | — | ||||||
Less: write-offs, net of recoveries | -10 | -6 | ||||||
Balance, end of period | $ | 706 | $ | 173 | ||||
Schedule of changes in level 3 instruments | The following table presents the changes in the Company’s Lender Warrants measured at fair value on a recurring basis during the three months ended March 31 (in thousands): | |||||||
2015 | ||||||||
Balance as of January 1 | $ | 1,615 | ||||||
Change in fair value of Lender Warrants liability | -482 | |||||||
Reclassification of Lender Warrants to equity | -1,133 | |||||||
Balance as of March 31 | $ | — | ||||||
The following table presents the changes in the recorded liability associated with certain of the Company’s stock option awards which, as described in Note 6, have been accounted for as liability‑based awards during the three months ended March 31 (in thousands): | ||||||||
2015 | ||||||||
Balance as of January 1 | $ | 461 | ||||||
Change in fair value of stock options classified as liability awards | -173 | |||||||
Reclassification of stock options classified as liability awards to equity | -288 | |||||||
Balance as of March 31 | $ | — | ||||||
Schedule of assumptions used | The following table summarizes the assumptions used for estimating the fair value of the Lender Warrants and the stock options classified as liability awards for the three months ended March 31, 2015: | |||||||
Lender | Stock Option | |||||||
Warrants | Liability | |||||||
Awards | ||||||||
Risk-free interest rate | 1.97% | 1.46% - 1.67% | ||||||
Expected term (years) | 9.34 | 4.74 - 6.03 | ||||||
Expected volatility | 58% | 51% - 53% | ||||||
Dividend yield | —% | —% | ||||||
Debt_Tables
Debt (Tables) | 3 Months Ended | |||||||
Mar. 31, 2015 | ||||||||
Debt | ||||||||
Schedule of debt | Debt consisted of the following as of December 31, 2014 and March 31, 2015 (in thousands): | |||||||
2014 | 2015 | |||||||
Amended Mezzanine Loan and Security Agreement | $ | 15,000 | $ | 5,000 | ||||
Discount on Amended Mezzanine Loan and Security Agreement | -773 | -316 | ||||||
Amended New Revolving Line of Credit | 29,900 | 23,650 | ||||||
Long-term debt, net | $ | 44,127 | $ | 28,334 | ||||
Common_and_Preferred_Stock_Tab
Common and Preferred Stock (Tables) | 3 Months Ended | ||||
Mar. 31, 2015 | |||||
Common and Preferred Stock | |||||
Schedule of Common stock reserved for issuance | The Company’s shares of common stock reserved for issuance as of December 31, 2014 and March 31, 2015 were as follows: | ||||
2014 | 2015 | ||||
Series A convertible preferred stock | 2,383,745 | — | |||
Series B convertible preferred stock | 3,649,368 | — | |||
Series C convertible preferred stock | 5,406,501 | — | |||
Series D convertible preferred stock | 3,409,210 | — | |||
Lender Warrants and Additional Lender Warrant to purchase common stock | 150,000 | 200,000 | |||
Stock options outstanding | 3,425,117 | (1) | 3,354,197 | ||
Possible future issuance under equity incentive plan | — | 2,797,795 | |||
Possible future issuance under employee stock purchase plan | — | 375,000 | |||
Total shares reserved | 18,423,941 | 6,726,992 | |||
-1 | As described in Note 6, as of December 31, 2014, the Company had exceeded its common shares authorized when considering the number of possible shares that may be issuable after consideration of all existing instruments that could be settled in shares. On February 10, 2015, the Company increased its number of authorized common shares to 25,000,000. Those awards which had been accounted for as liability awards were reclassified to equity as of that date. | ||||
Convertible_Preferred_Stock_Ta
Convertible Preferred Stock (Tables) | 3 Months Ended | |||||||||||||||
Mar. 31, 2015 | ||||||||||||||||
Convertible Preferred Stock | ||||||||||||||||
Schedule of issuances of convertible preferred stock | The following table summarizes the issuances of convertible preferred stock subject to conversion as of the IPO completion: | |||||||||||||||
Number of Shares | Number of Shares | Original Issue and | ||||||||||||||
Authorized | Outstanding | Conversion Price | ||||||||||||||
per Share | ||||||||||||||||
Series A convertible preferred stock | 2,486,507 | 2,383,745 | $ | 0.582 | ||||||||||||
Series B convertible preferred stock | 3,649,368 | 3,649,368 | $ | 0.84656 | ||||||||||||
Series C convertible preferred stock | 5,406,501 | 5,406,501 | $ | 1.4798 | ||||||||||||
Series D convertible preferred stock | 3,409,250 | 3,409,210 | $ | 3.8132 | ||||||||||||
Total convertible preferred stock | 14,951,626 | 14,848,824 | ||||||||||||||
Summary of activity for the convertible preferred stock | The following table presents a summary of activity for the convertible preferred stock issued and outstanding for the three months ended March 31, 2015 (in thousands): | |||||||||||||||
Convertible Preferred Stock | ||||||||||||||||
Series A | Series B | Series C | Series D | Total Amount | ||||||||||||
Balance, December 31, 2014 | $ | 1,387 | $ | 3,089 | $ | 8,000 | $ | 13,000 | $ | 25,476 | ||||||
Conversion to common stock upon IPO | -1,387 | -3,089 | -8,000 | -13,000 | -25,476 | |||||||||||
Balance, March 31, 2015 | $ | — | $ | — | $ | — | $ | — | $ | — | ||||||
StockBased_Compensation_Tables
Stock-Based Compensation (Tables) | 3 Months Ended | |||||||||||
Mar. 31, 2015 | ||||||||||||
Stock-Based Compensation | ||||||||||||
Schedule of stock-based compensation expense | Stock‑based compensation expense is included in the following line items in the condensed consolidated statements of operations for the three months ended March 31 (in thousands): | |||||||||||
2014 | 2015 (1) | |||||||||||
Other cost of revenue | $ | 2 | $ | 13 | ||||||||
Sales and marketing | 71 | 150 | ||||||||||
Research and development | 104 | 175 | ||||||||||
General and administrative | 63 | 234 | ||||||||||
$ | 240 | $ | 572 | |||||||||
(1)Stock‑based compensation expense included a favorable $0.2 million fair value adjustment related to stock option liability awards prior to reclassification to additional paid-in capital during the three months ended March 31, 2015. | ||||||||||||
Summary of the assumptions used for estimating the fair value of stock options granted to employees | The following table summarizes the assumptions used for estimating the fair value of stock options granted to employees for the three months ended March 31: | |||||||||||
2014 | 2015 | |||||||||||
Risk-free interest rate | 1.3% - 2.0% | 1.67% | ||||||||||
Expected term (years) | 4.00 - 6.08 | 6.03 | ||||||||||
Expected volatility | 56% - 60% | 53% | ||||||||||
Dividend yield | — % | — % | ||||||||||
Summary of stock option activity | The following table summarizes the Company’s stock option activity for the three months ended March 31, 2015: | |||||||||||
Weighted | ||||||||||||
Weighted | Average | |||||||||||
Average | Remaining | |||||||||||
Number of | Exercise | Contractual | Aggregate | |||||||||
Options | Price | Term | Intrinsic Value | |||||||||
(in years) | (in thousands) | |||||||||||
Outstanding balance at January 1, 2015 | 3,425,117 | $ | 7.51 | 8.36 | $ | 26,260 | ||||||
Granted | 163,250 | 15.18 | ||||||||||
Exercised | -211,723 | 2.32 | ||||||||||
Cancelled | -22,447 | 10.13 | ||||||||||
Outstanding balance at March 31, 2015 | 3,354,197 | $ | 8.20 | 8.23 | $ | 11,339 | ||||||
Exercisable at March 31, 2015 | 1,341,391 | $ | 3.49 | 7.05 | $ | 8,667 | ||||||
Vested and expected to vest at March 31, 2015 | 2,847,379 | $ | 7.83 | 8.09 | $ | 10,332 | ||||||
Earnings_Per_Share_Tables
Earnings Per Share (Tables) | 3 Months Ended | |||||
Mar. 31, 2015 | ||||||
Earnings Per Share | ||||||
Summary of anti-dilutive securities which are excluded from the calculation of weighted average common shares outstanding | The following securities have been excluded from the calculation of weighted average common shares outstanding because the effect is anti-dilutive for the three months ended March 31: | |||||
2014 | 2015 | |||||
Convertible preferred stock: | ||||||
Series A | 2,383,745 | — | ||||
Series B | 3,649,368 | — | ||||
Series C | 5,406,501 | — | ||||
Series D | 3,409,210 | — | ||||
Common stock subject to repurchase | 3,145 | — | ||||
Lender Warrants and Additional Lender Warrant to purchase common stock | — | 200,000 | ||||
Stock options | 2,561,595 | 3,354,197 | ||||
Description_of_Business_and_Ba1
Description of Business and Basis of Presentation (Details) (USD $) | 0 Months Ended | 3 Months Ended | 0 Months Ended | ||
In Thousands, except Share data, unless otherwise specified | Feb. 20, 2015 | Mar. 31, 2015 | Mar. 11, 2015 | Feb. 10, 2015 | Dec. 31, 2014 |
item | |||||
Description of Business and Basis of Presentation. | |||||
Number of offices in the United Kingdom | 1 | ||||
Increase in common shares authorized | 3,000,000 | ||||
Common shares authorized | 500,000,000 | 500,000,000 | 25,000,000 | 22,000,000 | |
Stock split conversion ratio | 0.5 | ||||
Proceeds from the issuance of common stock in initial public offering, net of underwriting discounts and commissions | $69,518 | ||||
Deferred offering costs reclassified to additional paid-in capital | 3,782 | ||||
Initial Public Offering | |||||
Description of Business and Basis of Presentation. | |||||
Shares issued during period | 6,500,000 | ||||
Shares issued price per share | $11.50 | ||||
Proceeds from the issuance of common stock in initial public offering, net of underwriting discounts and commissions | 69,518 | ||||
Deferred offering costs reclassified to additional paid-in capital | $3,782 | ||||
Shares issued upon conversion | 14,848,824 |
Summary_of_Significant_Account3
Summary of Significant Accounting Policies - Restricted Cash (Details) (USD $) | Mar. 31, 2015 | Dec. 31, 2014 | Jun. 12, 2014 |
Restricted cash | |||
Restricted cash | $4,651,000 | $4,900,000 | |
Amended New Loan and Security Agreement | |||
Restricted cash | |||
Minimum amount required to be maintained by the company at all times | 5,000,000 | 5,000,000 | |
Restricted cash | 4,700,000 | ||
Available borrowing capacity | $300,000 |
Summary_of_Significant_Account4
Summary of Significant Accounting Policies - Allowance for Doubtful Accounts (Details) (USD $) | 3 Months Ended | |
In Thousands, unless otherwise specified | Mar. 31, 2015 | Mar. 31, 2014 |
Allowance for doubtful accounts: | ||
Balance, beginning of period | $179 | $716 |
Less: write-offs, net of recoveries | -6 | -10 |
Balance, end of period | $173 | $706 |
Summary_of_Significant_Account5
Summary of Significant Accounting Policies - Internal-Use Software Development Costs (Details) (Internal-Use Software Development Costs, USD $) | 3 Months Ended | ||
In Millions, unless otherwise specified | Mar. 31, 2015 | Mar. 31, 2014 | Dec. 31, 2014 |
Internal-Use Software Development Costs | |||
Internal-Use Software Development Costs | |||
Capitalized development costs | $1.50 | $0.70 | |
Amortization expense | 0.6 | 0.4 | |
Net book value | $6.60 | $5.60 |
Summary_of_Significant_Account6
Summary of Significant Accounting Policies - Common Stock Warrants (Details) (USD $) | 3 Months Ended | ||||
Mar. 31, 2015 | Dec. 31, 2014 | Jun. 12, 2014 | Dec. 16, 2014 | Feb. 12, 2015 | |
Common Stock Warrants | |||||
Fair value adjustment of warrant | $482,000 | ||||
Amended Mezzanine Loan and Security Agreement | |||||
Common Stock Warrants | |||||
Number of shares of common stock that may be purchased based on lender warrants issued | 150,000 | ||||
Fair value adjustment of warrant | 482,000 | ||||
Amended Term Loan - First Tranche | Amended Mezzanine Loan and Security Agreement | |||||
Common Stock Warrants | |||||
Number of shares of common stock that may be purchased based on lender warrants issued | 100,000 | ||||
Exercise price of warrants (in dollars per share) | $11.36 | ||||
Fair value of warrants | 900,000 | ||||
Total face amount of debt | 10,000,000 | ||||
Amended Term Loan - Second Tranche | Amended Mezzanine Loan and Security Agreement | |||||
Common Stock Warrants | |||||
Number of shares of common stock that may be purchased based on lender warrants issued | 50,000 | ||||
Exercise price of warrants (in dollars per share) | $11.36 | ||||
Borrowing capacity remaining | 5,000,000 | ||||
Total face amount of debt | 5,000,000 | ||||
Amended Term Loan - 2015 Term Loan | Amended Mezzanine Loan and Security Agreement | |||||
Common Stock Warrants | |||||
Number of shares of common stock that may be purchased based on lender warrants issued | 50,000 | ||||
Exercise price of warrants (in dollars per share) | $15.18 | ||||
Fair value of warrants | 300,000 | ||||
Total face amount of debt | $5,000,000 |
Summary_of_Significant_Account7
Summary of Significant Accounting Policies - Fair Value (Details) (USD $) | 3 Months Ended |
In Thousands, unless otherwise specified | Mar. 31, 2015 |
Stock Option Liability Awards | |
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward] | |
Balance as of January 1 | $461 |
Change in fair value | -173 |
Reclassification of liabilities to equity | -288 |
Stock Option Liability Awards | Minimum | |
Assumptions used for estimating fair value | |
Risk-free interest rate | 1.46% |
Expected term (years) | 4 years 8 months 27 days |
Expected volatility | 51.00% |
Stock Option Liability Awards | Maximum | |
Assumptions used for estimating fair value | |
Risk-free interest rate | 1.67% |
Expected term (years) | 6 years 11 days |
Expected volatility | 53.00% |
Lender Warrants | Amended Mezzanine Loan and Security Agreement | |
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward] | |
Balance as of January 1 | 1,615 |
Change in fair value | -482 |
Reclassification of liabilities to equity | ($1,133) |
Assumptions used for estimating fair value | |
Risk-free interest rate | 1.97% |
Expected term (years) | 9 years 4 months 2 days |
Expected volatility | 58.00% |
Debt_Agreement_Terms_Details
Debt - Agreement Terms (Details) (USD $) | 3 Months Ended | 0 Months Ended | |||||
Mar. 31, 2015 | Mar. 31, 2014 | Jun. 12, 2014 | Mar. 30, 2015 | Dec. 31, 2014 | Feb. 12, 2015 | Dec. 16, 2014 | |
Debt | |||||||
Number of debt arrangements | 2 | ||||||
Long-term debt, net | $28,334,000 | $44,127,000 | |||||
Repayment of debt | 22,500,000 | 12,300,000 | |||||
Amended New Loan and Security Agreement | |||||||
Debt | |||||||
Maximum borrowing capacity | 30,000,000 | 35,000,000 | |||||
Percentage of accounts receivable used in calculation of amount available under the borrowing base | 85.00% | ||||||
Available borrowing capacity | 300,000 | ||||||
Minimum amount required to be maintained by the company at all times | 5,000,000 | 5,000,000 | |||||
Minimum percentage of the Company’s total cash and cash equivalents balance required to be maintained with lender | 95.00% | ||||||
Increase to borrowing capacity | 5,000,000 | ||||||
Effective interest rate | 3.25% | ||||||
Amended New Loan and Security Agreement | Prime | |||||||
Debt | |||||||
Reference rate | prime | ||||||
Potential interest rate margin (as a percent) | 1.00% | ||||||
Amended Mezzanine Loan and Security Agreement | |||||||
Debt | |||||||
Debt instrument maximum borrowing capacity | 15,000,000 | ||||||
Number of tranches | 2 | ||||||
Long-term debt, gross | 5,000,000 | 15,000,000 | |||||
Interest rate on outstanding amounts (as a percent) | 11.50% | ||||||
Number of shares of common stock that may be purchased based on lender warrants issued | 150,000 | ||||||
Minimum percentage of the Company’s total cash and cash equivalents balance required to be maintained with lender | 95.00% | ||||||
Repayment of debt | 15,000,000 | ||||||
Amended Term Loan - First Tranche | Amended Mezzanine Loan and Security Agreement | |||||||
Debt | |||||||
Total face amount of debt | 10,000,000 | ||||||
Number of shares of common stock that may be purchased based on lender warrants issued | 100,000 | ||||||
Exercise price of warrants (in dollars per share) | 11.36 | ||||||
Fair value of warrants | 900,000 | ||||||
Amended Term Loan - Second Tranche | Amended Mezzanine Loan and Security Agreement | |||||||
Debt | |||||||
Total face amount of debt | 5,000,000 | ||||||
Borrowing capacity remaining | 5,000,000 | ||||||
Number of shares of common stock that may be purchased based on lender warrants issued | 50,000 | ||||||
Exercise price of warrants (in dollars per share) | $11.36 | ||||||
Amended Term Loan - 2015 Term Loan | Amended Mezzanine Loan and Security Agreement | |||||||
Debt | |||||||
Total face amount of debt | 5,000,000 | ||||||
Long-term debt, gross | 5,000,000 | ||||||
Number of shares of common stock that may be purchased based on lender warrants issued | 50,000 | ||||||
Exercise price of warrants (in dollars per share) | $15.18 | ||||||
Fair value of warrants | $300,000 |
Debt_Summary_Details
Debt - Summary (Details) (USD $) | Mar. 31, 2015 | Dec. 31, 2014 |
In Thousands, unless otherwise specified | ||
Debt Instrument [Line Items] | ||
Long-term debt, net | $28,334 | $44,127 |
Amended Mezzanine Loan and Security Agreement | ||
Debt Instrument [Line Items] | ||
Long-term debt, gross | 5,000 | 15,000 |
Discount on Amended Mezzanine Loan and Security Agreement | -316 | -773 |
Amended New Loan and Security Agreement | ||
Debt Instrument [Line Items] | ||
Amended New Revolving Line of Credit | $23,650 | $29,900 |
Common_and_Preferred_Stock_Aut
Common and Preferred Stock - Authorized (Details) (USD $) | Mar. 31, 2015 | Mar. 11, 2015 | Feb. 10, 2015 | Dec. 31, 2014 |
item | ||||
Common and Preferred Stock | ||||
Total shares authorized | 510,000,000 | |||
Common shares authorized | 500,000,000 | 500,000,000 | 25,000,000 | 22,000,000 |
Preferred shares authorized | 10,000,000 | |||
Common shares par value | $0.00 | $0.00 | $0.00 | |
Preferred shares par value | $0.00 | |||
Number of votes per common stock share | 1 |
Common_and_Preferred_Stock_Com
Common and Preferred Stock - Common Stock Reserved for Future Issuance (Details) | Mar. 31, 2015 | Mar. 11, 2015 | Feb. 10, 2015 | Dec. 31, 2014 |
Common Stock Reserved for Issuance | ||||
Total shares reserved | 6,726,992 | 18,423,941 | ||
Common shares authorized | 500,000,000 | 500,000,000 | 25,000,000 | 22,000,000 |
Equity Incentive Plans | ||||
Common Stock Reserved for Issuance | ||||
Total shares reserved | 2,797,795 | |||
2015 Employee Stock Purchase Plan | ||||
Common Stock Reserved for Issuance | ||||
Total shares reserved | 375,000 | |||
Convertible Series A Preferred Stock | ||||
Common Stock Reserved for Issuance | ||||
Total shares reserved | 2,383,745 | |||
Convertible Series B Preferred Stock | ||||
Common Stock Reserved for Issuance | ||||
Total shares reserved | 3,649,368 | |||
Convertible Series C Preferred Stock | ||||
Common Stock Reserved for Issuance | ||||
Total shares reserved | 5,406,501 | |||
Convertible Series D Preferred Stock | ||||
Common Stock Reserved for Issuance | ||||
Total shares reserved | 3,409,210 | |||
Lender and Additional Lender Warrants | ||||
Common Stock Reserved for Issuance | ||||
Total shares reserved | 200,000 | 150,000 | ||
Stock options | ||||
Common Stock Reserved for Issuance | ||||
Total shares reserved | 3,354,197 | 3,425,117 |
Convertible_Preferred_Stock_De
Convertible Preferred Stock (Details) (USD $) | 3 Months Ended | ||
In Thousands, except Share data, unless otherwise specified | Mar. 31, 2015 | Mar. 11, 2015 | Dec. 31, 2014 |
Convertible Preferred Stock | |||
Convertible preferred stock shares authorized | 14,951,626 | ||
Convertible preferred stock shares outstanding | 14,848,824 | ||
Convertible preferred stock beginning balance | $25,476 | ||
Conversion to common stock upon IPO | -25,476 | ||
Convertible preferred stock ending balance | 0 | ||
Convertible Series A Preferred Stock | |||
Convertible Preferred Stock | |||
Convertible preferred stock shares authorized | 0 | 2,486,507 | 2,486,507 |
Convertible preferred stock shares outstanding | 0 | 2,383,745 | 2,383,745 |
Conversion price (in dollars per share) | $0.58 | ||
Convertible preferred stock beginning balance | 1,387 | ||
Conversion to common stock upon IPO | -1,387 | ||
Convertible preferred stock ending balance | 0 | ||
Convertible Series B Preferred Stock | |||
Convertible Preferred Stock | |||
Convertible preferred stock shares authorized | 0 | 3,649,368 | 3,649,368 |
Convertible preferred stock shares outstanding | 0 | 3,649,368 | 3,649,368 |
Conversion price (in dollars per share) | $0.85 | ||
Convertible preferred stock beginning balance | 3,089 | ||
Conversion to common stock upon IPO | -3,089 | ||
Convertible preferred stock ending balance | 0 | ||
Convertible Series C Preferred Stock | |||
Convertible Preferred Stock | |||
Convertible preferred stock shares authorized | 0 | 5,406,501 | 5,406,501 |
Convertible preferred stock shares outstanding | 0 | 5,406,501 | 5,406,501 |
Conversion price (in dollars per share) | $1.48 | ||
Convertible preferred stock beginning balance | 8,000 | ||
Conversion to common stock upon IPO | -8,000 | ||
Convertible preferred stock ending balance | 0 | ||
Convertible Series D Preferred Stock | |||
Convertible Preferred Stock | |||
Convertible preferred stock shares authorized | 0 | 3,409,250 | 3,409,250 |
Convertible preferred stock shares outstanding | 0 | 3,409,210 | 3,409,210 |
Conversion price (in dollars per share) | $3.81 | ||
Convertible preferred stock beginning balance | 13,000 | ||
Conversion to common stock upon IPO | -13,000 | ||
Convertible preferred stock ending balance | $0 | ||
Initial Public Offering | |||
Convertible Preferred Stock | |||
Shares issued upon conversion | 14,848,824 |
StockBased_Compensation_Plan_T
Stock-Based Compensation - Plan Terms (Details) | 3 Months Ended | 1 Months Ended | |
Mar. 31, 2015 | Jan. 31, 2015 | Dec. 31, 2014 | |
Stock-Based compensation | |||
Shares available for issuance | 6,726,992 | 18,423,941 | |
Award terms | |||
Shares outstanding | 3,354,197 | 3,425,117 | |
Stock options | |||
Stock-Based compensation | |||
Shares available for issuance | 3,354,197 | 3,425,117 | |
Stock Options Subject to Right of Repurchase | |||
Award terms | |||
Shares outstanding | 5,000 | ||
Equity Incentive Plans | |||
Stock-Based compensation | |||
Shares available for future grants | 2,797,795 | ||
Shares available for issuance | 2,797,795 | ||
Equity Incentive Plans | Stock options | |||
Award terms | |||
Term of grant (in years) | 10 years | ||
Equity Incentive Plans | Stock options | One Year Cliff | |||
Award terms | |||
Vesting period | 1 year | ||
Equity Incentive Plans | Stock options | Monthly | |||
Award terms | |||
Vesting period | 36 months | ||
2015 Equity Incentive Plan | |||
Stock-Based compensation | |||
Initial shares available for grant from equity incentive plan | 2,500,000 | ||
Plan terms | |||
Number of shares option, minimum annual increase in number of shares reserved for issuance | 1,750,000 | ||
Percentage of common stock outstanding option, minimum annual increase in number of shares reserved for issuance (as a percent) | 5.00% | ||
Plan term (in years) | 10 years | ||
2010 Equity Incentive Plan | Maximum | |||
Stock-Based compensation | |||
Maximum shares available for grant transferred between equity incentive plans. | 4,537,868 |
StockBased_Compensation_Alloca
Stock-Based Compensation - Allocation of Stock-Based Compensation Expense (Details) (USD $) | 3 Months Ended | |
Mar. 31, 2015 | Mar. 31, 2014 | |
Share-based compensation expense by statement of operations line item | ||
Share-based compensation expense | $572,000 | $240,000 |
Equity Incentive Plans | ||
Share-based compensation expense by statement of operations line item | ||
Change in fair value included in total share based compensation | 200,000 | |
Other cost of revenue | ||
Share-based compensation expense by statement of operations line item | ||
Share-based compensation expense | 13,000 | 2,000 |
Sales and marketing | ||
Share-based compensation expense by statement of operations line item | ||
Share-based compensation expense | 150,000 | 71,000 |
Research and development | ||
Share-based compensation expense by statement of operations line item | ||
Share-based compensation expense | 175,000 | 104,000 |
General and administrative | ||
Share-based compensation expense by statement of operations line item | ||
Share-based compensation expense | $234,000 | $63,000 |
StockBased_Compensation_Fair_V
Stock-Based Compensation - Fair Value Assumptions (Details) (Employee Stock Options) | 3 Months Ended | |
Mar. 31, 2015 | Mar. 31, 2014 | |
Fair Value Assumptions using Black-Scholes option pricing model | ||
Risk free interest rate | 1.67% | |
Risk free interest rate, minimum | 1.30% | |
Risk free interest rate, maximum | 2.00% | |
Expected term (years) | 6 years 11 days | |
Expected volatility | 53.00% | |
Expected volatility, minimum | 56.00% | |
Expected volatility, maximum | 60.00% | |
Minimum | ||
Fair Value Assumptions using Black-Scholes option pricing model | ||
Expected term (years) | 4 years | |
Maximum | ||
Fair Value Assumptions using Black-Scholes option pricing model | ||
Expected term (years) | 6 years 29 days |
StockBased_Compensation_Stock_
Stock-Based Compensation - Stock Option Activity (Details) (USD $) | 3 Months Ended | 12 Months Ended | |
Mar. 31, 2015 | Mar. 31, 2014 | Dec. 31, 2014 | |
Number of Options | |||
Outstanding balance at beginning of period (in shares) | 3,425,117 | ||
Granted (in shares) | 163,250 | ||
Exercised (in shares) | -211,723 | ||
Cancelled (in shares) | -22,447 | ||
Outstanding balance at end of period (in shares) | 3,354,197 | 3,425,117 | |
Exercisable at end of period (in shares) | 1,341,391 | ||
Vested and expected to vest at end of period (in shares) | 2,847,379 | ||
Weighted Average Exercise Price | |||
Outstanding balance at beginning of period (in dollars per share) | $7.51 | ||
Granted (in dollars per share) | $15.18 | ||
Exercised (in dollars per share) | $2.32 | ||
Cancelled (in dollars per share) | $10.13 | ||
Outstanding balance at end of period (in dollars per share) | $8.20 | $7.51 | |
Exercisable at end of period (in dollars per share) | $3.49 | ||
Vested and expected to vest at end of period (in dollars per share) | $7.83 | ||
Weighted Average Remaining Contractual Term | |||
Outstanding balance at end of period (in years) | 8 years 2 months 23 days | 8 years 4 months 10 days | |
Exercisable at end of period (in years) | 7 years 18 days | ||
Vested and expected to vest at end of period (in years) | 8 years 1 month 2 days | ||
Aggregate Intrinsic Value | |||
Outstanding balance at beginning of period | $26,260,000 | ||
Outstanding balance at end of period | 11,339,000 | 26,260,000 | |
Exercisable at end of period | 8,667,000 | ||
Vested and expected to vest at end of period | 10,332,000 | ||
Additional information | |||
Weighted average grant date fair value (in dollars per share) | $7.78 | $5.49 | |
Unrecognized compensation cost related to nonvested share-based compensation arrangements | 9,800,000 | ||
Intrinsic value of options exercised | $2,400,000 | $1,000,000 | |
Stock options | |||
Additional information | |||
Expected weighted-average period for recognition of unrecognized stock-based compensation costs (in years) | 2 years 2 months 5 days |
StockBased_Compensation_Additi
Stock-Based Compensation - Additional Disclosures (Details) (USD $) | 0 Months Ended | 3 Months Ended | 12 Months Ended |
Feb. 10, 2015 | Mar. 31, 2015 | Dec. 31, 2014 | |
Award terms | |||
Increase in common shares authorized | 3,000,000 | ||
Reclassification from other long-term liabilities to equity | $288,000 | ||
Equity Incentive Plans | |||
Award terms | |||
Options granted that were accounted for as liability based awards | 610,675 | ||
Options outstanding that were accounted for as liability based awards | 597,425 | ||
Accrued share-based compensation | 500,000 | ||
Change in fair value included in total share based compensation | 200,000 | ||
Reclassification from other long-term liabilities to equity | $288,000 |
StockBased_Compensation_Employ
Stock-Based Compensation - Employee Stock Purchase Plan (Details) | 3 Months Ended | |
Mar. 31, 2015 | Dec. 31, 2014 | |
period | ||
Employee Stock Purchase Plan | ||
Total shares reserved | 6,726,992 | 18,423,941 |
2015 Employee Stock Purchase Plan | ||
Employee Stock Purchase Plan | ||
Total shares reserved | 375,000 | |
Number of shares option, minimum annual increase in number of shares reserved for issuance | 250,000 | |
Percentage of common stock outstanding option, minimum annual increase in number of shares reserved for issuance (as a percent) | 1.00% | |
Number of employment hours requirement per week during requisite service period | 20 hours | |
Offering period, maximum | 27 months | |
Number of offering periods under terms of plan | 2 | |
Offering periods beginning on May 1 and November 1 | 6 months | |
2015 Employee Stock Purchase Plan | Minimum | ||
Employee Stock Purchase Plan | ||
Requisite service period for award eligibility per year | 5 months |
Commitments_and_Contingencies_
Commitments and Contingencies (Details) (USD $) | Mar. 31, 2015 |
In Millions, unless otherwise specified | |
Commitments and Contingencies | |
Total contractual commitments | $2.70 |
Commitments due within next year | 2.1 |
Commitments due within one to three years | $0.60 |
Earnings_Per_Share_Details
Earnings Per Share (Details) | 3 Months Ended | |
Mar. 31, 2015 | Mar. 31, 2014 | |
Convertible Series A Preferred Stock | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Anti-dilutive securities excluded from the calculation of weighted average common shares outstanding | 0 | 2,383,745 |
Convertible Series B Preferred Stock | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Anti-dilutive securities excluded from the calculation of weighted average common shares outstanding | 0 | 3,649,368 |
Convertible Series C Preferred Stock | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Anti-dilutive securities excluded from the calculation of weighted average common shares outstanding | 0 | 5,406,501 |
Convertible Series D Preferred Stock | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Anti-dilutive securities excluded from the calculation of weighted average common shares outstanding | 0 | 3,409,210 |
Common Stock Subject To Repurchase | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Anti-dilutive securities excluded from the calculation of weighted average common shares outstanding | 0 | 3,145 |
Lender and Additional Lender Warrants | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Anti-dilutive securities excluded from the calculation of weighted average common shares outstanding | 200,000 | 0 |
Stock options | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Anti-dilutive securities excluded from the calculation of weighted average common shares outstanding | 3,354,197 | 2,561,595 |
Subsequent_Events_Details
Subsequent Events (Details) (USD $) | 3 Months Ended | 0 Months Ended | ||
In Thousands, unless otherwise specified | Mar. 31, 2015 | Mar. 31, 2014 | Mar. 30, 2015 | Apr. 01, 2015 |
Subsequent Event [Line Items] | ||||
Repayment of debt | $22,500 | $12,300 | ||
Amended Mezzanine Loan and Security Agreement | ||||
Subsequent Event [Line Items] | ||||
Repayment of debt | 15,000 | |||
Amended Term Loan - 2015 Term Loan | Amended Mezzanine Loan and Security Agreement | Subsequent Event [Member] | ||||
Subsequent Event [Line Items] | ||||
Repayment of debt | $5,000 |