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EX-32.2 - EX-32.2 - Quotient Technology Inc.coup-ex322_8.htm
EX-31.1 - EX-31.1 - Quotient Technology Inc.coup-ex311_9.htm
EX-31.2 - EX-31.2 - Quotient Technology Inc.coup-ex312_7.htm
EX-32.1 - EX-32.1 - Quotient Technology Inc.coup-ex321_10.htm

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

 

FORM 10-Q

 

(Mark One)

x

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2015

OR

¨

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from              to             

Commission File Number: 001-36331

 

Coupons.com Incorporated

(Exact Name of Registrant as Specified in Its Charter)

 

 

Delaware

 

77-0485123

(State or Other Jurisdiction of

 

(I.R.S. Employer

Incorporation or Organization)

 

Identification No.)

 

 

 

400 Logue Avenue, Mountain View, California

 

94043

(Address of Principal Executive Offices)

 

(Zip Code)

(650) 605-4600

(Registrant’s Telephone Number, Including Area Code)

 

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes  x    No  ¨

Indicate by checkmark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter time period that the registrant was required to submit and post such files).    Yes  x    No  ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See definition of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

 

Large accelerated filer

 

¨

  

Accelerated filer

 

¨

 

 

 

 

Non-accelerated filer

 

x (Do not check if a smaller reporting company)

  

Smaller reporting company

 

¨

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes  ¨    No   x

As of August 7, 2015, the registrant had 83,239,098 shares of common stock outstanding.

 

 

 

 


COUPONS.COM INCORPORATED

INDEX

REPORT ON FORM 10-Q

FOR THE QUARTER ENDED June 30, 2015

 

PART I FINANCIAL INFORMATION

 

Item 1 Financial Statements (unaudited):

  

3

 

Condensed Consolidated Balance Sheets as of June 30, 2015 and December 31, 2014

  

3

 

Condensed Consolidated Statements of Operations for the Three and Six Months Ended June 30, 2015 and 2014

  

4

 

Condensed Consolidated Statements of Comprehensive Loss for the Three and Six Months Ended June 30, 2015 and 2014

  

5

 

Condensed Consolidated Statements of Cash Flows for the Six Months Ended June 30, 2015 and 2014

  

6

 

Notes to Condensed Consolidated Financial Statements

  

7

 

Item 2 Management’s Discussion and Analysis of Financial Condition and Results of Operations

  

17

 

Item 3 Quantitative and Qualitative Disclosures About Market Risk

  

27

 

Item 4 Controls and Procedures

  

27

 

PART II OTHER INFORMATION

 

Item 1—Legal Proceedings

  

28

 

Item 1A—Risk Factors

  

28

 

Item 2—Unregistered Sales of Equity Securities and Use of Proceeds

  

49

 

Item 3—Defaults Upon Senior Securities

  

49

 

Item 4—Mine Safety Disclosures

  

49

 

Item 5—Other Information

  

49

 

Item 6—Exhibits

  

49

 

SIGNATURES

  

50

 

 

 

2


PART I - FINANCIAL INFORMATION

 

Item 1.

Financial Statements.

 

COUPONS.COM INCORPORATED

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands, except share and per share data)

(Unaudited)

 

 

June 30,

2015

 

 

December 31,

2014

 

Assets

 

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

 

Cash and cash equivalents

$

210,035

 

 

$

201,075

 

Accounts receivable, net of allowance for doubtful accounts of $245 and $408

   at June 30, 2015 and December 31, 2014, respectively

 

48,846

 

 

 

51,061

 

Prefunded coupons cash deposits

 

642

 

 

 

740

 

Deferred tax assets

 

427

 

 

 

457

 

Prepaid expenses and other current assets

 

4,677

 

 

 

2,972

 

Total current assets

 

264,627

 

 

 

256,305

 

Property and equipment, net

 

25,952

 

 

 

25,399

 

Intangible assets, net

 

10,352

 

 

 

11,818

 

Goodwill

 

29,284

 

 

 

29,277

 

Other assets

 

8,398

 

 

 

9,008

 

Total assets

$

338,613

 

 

$

331,807

 

Liabilities and Stockholders’ Equity

 

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

 

Accounts payable

$

10,098

 

 

$

6,358

 

Accrued compensation and benefits

 

9,467

 

 

 

14,861

 

Other current liabilities

 

17,879

 

 

 

15,790

 

Prefunded coupons cash obligations

 

642

 

 

 

740

 

Deferred revenues

 

6,992

 

 

 

6,219

 

Debt obligation

 

7,500

 

 

 

7,500

 

Total current liabilities

 

52,578

 

 

 

51,468

 

Other non-current liabilities

 

56

 

 

 

89

 

Deferred rent

 

806

 

 

 

738

 

Deferred tax liabilities

 

2,070

 

 

 

2,624

 

Total liabilities

 

55,510

 

 

 

54,919

 

Commitments and contingencies (Note 12)

 

 

 

 

 

 

 

Stockholders’ equity:

 

 

 

 

 

 

 

Preferred stock, $0.00001 par value—10,000,000 shares authorized and no shares issued

   or outstanding at June 30, 2015 and December 31, 2014

 

 

 

 

 

Common stock, $0.00001 par value—250,000,000 shares authorized; 88,375,594 shares

   issued and 83,318,189 outstanding at June 30, 2015; 86,224,920  shares issued

   and 81,380,014 outstanding at December 31, 2014

 

1

 

 

 

1

 

Additional paid-in capital

 

552,675

 

 

 

531,018

 

Treasury stock, at cost

 

(64,017

)

 

 

(61,935

)

Accumulated other comprehensive loss

 

(18

)

 

 

(1

)

Accumulated deficit

 

(205,538

)

 

 

(192,195

)

Total stockholders’ equity

 

283,103

 

 

 

276,888

 

Total liabilities and stockholders’ equity

$

338,613

 

 

$

331,807

 

See Accompanying Notes to Condensed Consolidated Financial Statements

 

 

3


 

COUPONS.COM INCORPORATED

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except per share data)

(Unaudited)

 

 

Three Months Ended

June 30,

 

 

Six Months Ended

June 30,

 

 

2015

 

 

2014

 

 

2015

 

 

2014

 

Revenues

$

55,867

 

 

$

51,715

 

 

$

111,429

 

 

$

103,216

 

Costs and expenses:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cost of revenues

 

22,122

 

 

 

20,884

 

 

 

43,989

 

 

 

41,403

 

Sales and marketing

 

21,834

 

 

 

17,621

 

 

 

42,918

 

 

 

37,132

 

Research and development

 

11,839

 

 

 

10,981

 

 

 

24,781

 

 

 

27,248

 

General and administrative

 

7,867

 

 

 

8,857

 

 

 

16,358

 

 

 

17,907

 

Change in fair value of contingent consideration

 

2,076

 

 

 

 

 

 

1,722

 

 

 

 

Total costs and expenses

 

65,738

 

 

 

58,343

 

 

 

129,768

 

 

 

123,690

 

Loss from operations

 

(9,871

)

 

 

(6,628

)

 

 

(18,339

)

 

 

(20,474

)

Interest expense

 

(82

)

 

 

(300

)

 

 

(162

)

 

 

(602

)

Gain on sale of a right to use a web domain name

 

 

 

 

 

 

 

4,800

 

 

 

 

Other income (expense), net

 

40

 

 

 

31

 

 

 

(21

)

 

 

(107

)

Loss before income taxes

 

(9,913

)

 

 

(6,897

)

 

 

(13,722

)

 

 

(21,183

)

Benefit from income taxes

 

(571

)

 

 

 

 

 

(379

)

 

 

(244

)

Net loss

$

(9,342

)

 

$

(6,897

)

 

$

(13,343

)

 

$

(20,939

)

Net loss per share attributable to common stockholders, basic

   and diluted

$

(0.11

)

 

$

(0.09

)

 

$

(0.16

)

 

$

(0.37

)

Weighted-average number of common shares used in computing

   net loss per share attributable to common stockholders, basic

   and diluted

 

82,980

 

 

 

77,549

 

 

 

82,575

 

 

 

56,161

 

See Accompanying Notes to Condensed Consolidated Financial Statements

 

 

 

4


COUPONS.COM INCORPORATED

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS

(In thousands)

(Unaudited)

 

 

Three Months Ended

June 30,

 

 

Six Months Ended

June 30,

 

 

2015

 

 

2014

 

 

2015

 

 

2014

 

Net loss

$

(9,342

)

 

$

(6,897

)

 

$

(13,343

)

 

$

(20,939

)

Other comprehensive income (loss):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Foreign currency translation adjustments

 

48

 

 

 

33

 

 

 

(17

)

 

 

45

 

Comprehensive loss

$

(9,294

)

 

$

(6,864

)

 

$

(13,360

)

 

$

(20,894

)

See Accompanying Notes to Condensed Consolidated Financial Statements

 

 

 

5


COUPONS.COM INCORPORATED

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

(Unaudited)

 

 

Six Months Ended

June 30,

 

 

2015

 

 

2014

 

Cash flows from operating activities:

 

 

 

 

 

 

 

Net loss

$

(13,343

)

 

$

(20,939

)

Adjustments to reconcile net loss to net cash provided by operating activities:

 

 

 

 

 

 

 

Depreciation and amortization

 

7,780

 

 

 

6,822

 

Stock-based compensation

 

17,439

 

 

 

21,253

 

Accretion of debt discount

 

 

 

 

113

 

Amortization of debt issuance costs

 

38

 

 

 

38

 

Gain on sale of a right to use a web domain name

 

(4,800

)

 

 

 

Allowance for doubtful accounts

 

(34

)

 

 

79

 

Deferred income taxes

 

(525

)

 

 

(244

)

Change in fair value of contingent consideration

 

1,722

 

 

 

 

Changes in operating assets and liabilities:

 

 

 

 

 

 

 

Accounts receivable

 

2,255

 

 

 

(1,755

)

Prepaid expenses and other current assets

 

(1,213

)

 

 

224

 

Accounts payable and other current liabilities

 

1,356

 

 

 

2,494

 

Accrued compensation and benefits

 

(5,391

)

 

 

(3,298

)

Deferred revenues

 

764

 

 

 

957

 

Other

 

2

 

 

 

313

 

Net cash provided by operating activities

 

6,050

 

 

 

6,057

 

 

 

 

 

 

 

 

 

Cash flows from investing activities:

 

 

 

 

 

 

 

Purchases of property and equipment

 

(3,961

)

 

 

(4,970

)

Acquisitions, net of acquired cash

 

 

 

 

859

 

Purchase of intangible assets

 

(35

)

 

 

(16

)

Proceeds from sale of a right to use a web domain name

 

4,800

 

 

 

 

Net cash provided by (used in) investing activities

 

804

 

 

 

(4,127

)

 

 

 

 

 

 

 

 

Cash flows from financing activities:

 

 

 

 

 

 

 

Proceeds from issuance of common stock

 

4,218

 

 

 

3,031

 

Repurchases of common stock

 

(2,082

)

 

 

 

Proceeds from initial public offering, net of offering costs

 

 

 

 

176,525

 

Exercise of warrant

 

 

 

 

1,610

 

Principal payments on capital lease obligations

 

(30

)

 

 

(28

)

Net cash provided by financing activities

 

2,106

 

 

 

181,138

 

Effect of exchange rates on cash and cash equivalents

 

 

 

 

(9

)

Net increase in cash and cash equivalents

 

8,960

 

 

 

183,059

 

Cash and cash equivalents at beginning of period

 

201,075

 

 

 

38,972

 

Cash and cash equivalents at end of period

$

210,035

 

 

$

222,031

 

See Accompanying Notes to Condensed Consolidated Financial Statements

 

 

 

6


COUPONS.COM INCORPORATED

Notes to Condensed Consolidated Financial Statements

(Unaudited)

 

1. Description of Business

Coupons.com Incorporated (the “Company”) connects great brands and retailers with consumers by delivering digital promotions and media to consumers. Many brands from leading consumer packaged goods companies (“CPGs”) and many of the leading grocery, drug, dollar channel, club and mass merchandise retailers use the Company’s digital platform to engage consumers at the critical moments when they are choosing which products they will buy and where they will shop. The Company delivers digital coupons, including coupon codes, and media through its platform. The Company’s platform includes web, mobile and social channels, as well as those of the Company’s CPGs, retailers and its extensive network of publishers that display the Company’s coupon and media offerings on their websites and mobile applications. Consumers select coupons by either printing them for physical redemption at retailers or saving them to retailer loyalty accounts for automatic digital redemption.

2. Summary of Significant Accounting Policies

Basis of Presentation and Consolidation

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles (“U.S. GAAP”) and applicable rules and regulations of the Securities and Exchange Commission (“SEC”) regarding interim financial reporting. Certain information and note disclosures normally included in the financial statements prepared in accordance with U.S. GAAP have been condensed or omitted pursuant to such rules and regulations. As such, the information included in this Quarterly Report on Form 10-Q should be read in conjunction with the audited consolidated financial statements and accompanying notes included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2014.

The Company’s condensed consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries. All significant intercompany transactions and balances have been eliminated. The accompanying unaudited condensed consolidated financial statements reflect all normal recurring adjustments necessary to present fairly the financial position, results of operations, comprehensive loss, and cash flows for the interim periods, but are not necessarily indicative of the results of operations to be anticipated for the full year ending December 31, 2015 or for any other period.

There have been no changes to the Company’s significant accounting policies described in the Annual Report on Form 10-K that have had a material impact on its condensed consolidated financial statements and related notes.

Use of Estimates

The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent liabilities at the date of the financial statements as well as the reported amounts of revenues and expenses during the reporting period. Actual results may differ from the Company’s estimates, and such differences may be material to the accompanying condensed consolidated financial statements.

Reclassifications

Certain prior period financial statement amounts have been reclassified to conform to current period presentation.

Recently Issued Accounting Pronouncements

In April 2015, the Financial Accounting Standards Board (“FASB”) issued new guidance or Accounting Standards Update (“ASU”) 2015-03-Interest—Imputation of Interest (Subtopic 835-30) to simplify the presentation of debt issuance costs. This update requires that debt issuance costs be presented in the balance sheet as a direct deduction from the carrying amount of the associated debt liability, consistent with the required presentation for debt discounts. This update is effective for interim and annual periods beginning after December 15, 2015. The adoption of this standard will change the Company’s current practice of presenting debt issuance costs as an asset and will result in the reduction of total assets and total liabilities in an amount equal to the balance of unamortized debt issuance costs at each balance sheet date.

7


In August 2014, the FASB issued ASU 2014-15—Presentation of Financial Statements — Going Concern (Subtopic 205-40), related to the disclosures around going concern. The new standard provides guidance around 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. The new standard is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2016. Early adoption is permitted.

In May 2014, the FASB issued ASU 2014-09—Revenue from Contracts with Customers (Topic 606), amended the existing accounting standards to achieve consistent application of revenue recognition. The amendments are based on the principle that revenue should be recognized 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. Additionally, the standard requires reporting companies to also disclose the nature, amount, timing, and uncertainty of revenue and cash flows arising from contracts with customers. In July 2015, the FASB agreed to delay the effective date of this amendment by one year, accordingly, the Company is required to adopt the amendments in the first quarter of 2018. The amendments may be applied retrospectively to each prior period presented or retrospectively with the cumulative effect recognized as of the date of initial application.   Early adoption is permitted, but not before the original effective date of the amendment.

The Company is currently evaluating the impact of these amendments.

3. Fair Value Measurements

The fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.  Fair value is estimated by applying the following hierarchy, which prioritizes the inputs used to measure fair value into three levels and bases the categorization within the hierarchy upon the lowest level of input that is available and significant to the fair value measurement:

Level 1—Quoted prices in active markets for identical assets or liabilities.

Level 2—Observable inputs other than quoted prices in active markets for identical assets and liabilities, quoted prices for identical or similar assets or liabilities in inactive markets, or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities.

Level 3—Inputs that are generally unobservable and typically reflect management’s estimate of assumptions that market participants would use in pricing the asset or liability.

8


The Company’s fair value hierarchy for its financial assets and liabilities that are measured at fair value on a recurring basis are as follows (in thousands):

 

 

June 30, 2015

 

 

Level 1

 

 

Level 2

 

 

Level 3

 

 

Total

 

Assets:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Money market funds (1)

$

14,935

 

 

$

 

 

$

 

 

$

14,935

 

Total

$

14,935

 

 

$

 

 

$

 

 

$

14,935

 

Liabilities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Contingent consideration (2)

$

 

 

$

 

 

$

2,770

 

 

$

2,770

 

Total

$

 

 

$

 

 

$

2,770

 

 

$

2,770

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

December 31, 2014

 

 

Level 1

 

 

Level 2

 

 

Level 3

 

 

Total

 

Assets:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Money market funds (1)

$

14,928

 

 

$

 

 

$

 

 

$

14,928

 

Total

$

14,928

 

 

$

 

 

$

 

 

$

14,928

 

Liabilities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Contingent consideration (2)

$

 

 

$

 

 

$

1,048

 

 

$

1,048

 

Total

$

 

 

$

 

 

$

1,048

 

 

$

1,048

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(1) Included in cash and cash equivalents

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(2) Included in other current liabilities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

The valuation technique used to measure the fair value of money market funds included using quoted prices in active markets for identical assets or liabilities.

The fair value of contingent consideration was estimated using a Monte Carlo simulation and was based on significant inputs not observable in the market, thus classified as a Level 3 instrument. The inputs include the Company’s stock price, maximum earn-out shares, historical and projected financial results of Eckim, LLC. (“Eckim”), historical volatility of the Company's stock price and risk-free interest rate.

The following table represents the change in the contingent consideration (in thousands):

 

 

 

 

 

 

 

 

Level 3

 

Balance as of December 31, 2014

 

 

 

 

 

 

$

1,048

 

Change in fair value

 

 

 

 

 

 

 

1,722

 

Balance as of June 30, 2015

 

 

 

 

 

 

$

2,770

 

 

For the three and six months ended June 30, 2015, the Company recorded a loss of $2.1 million and $1.7 million, respectively, due to the changes in fair value of the contingent consideration. The change in fair value of the contingent consideration during the period was primarily driven by the increase in the likelihood of achieving the revenue and profit milestones.  No gain or loss from change in fair value of the contingent consideration was recognized during the three and six months ended June 30, 2014.  Gains and losses as a result of the changes in the fair value of the contingent consideration are included as a component of operations in the accompanying condensed consolidated statements of operations.

9


4. Allowance for Doubtful Accounts

The summary of activity in the allowance for doubtful accounts is as follows (in thousands):

 

 

Three Months Ended

June 30,

 

 

Six Months Ended

June 30,

 

 

2015

 

 

2014

 

 

2015

 

 

2014

 

Balance at beginning of period

$

407

 

 

$

347

 

 

$

408

 

 

$

332

 

Bad debt expense (credit)

 

(43

)

 

 

65

 

 

 

(34

)

 

 

79

 

Recoveries (write-offs), net

 

(119

)

 

 

(12

)

 

 

(129

)

 

 

(11

)

Balance at end of period

$

245

 

 

$

400

 

 

$

245

 

 

$

400

 

 

5. Balance Sheet Components

Property and Equipment, Net

Property and equipment consist of the following (in thousands):

 

 

June 30,

2015

 

 

December 31,

2014

 

Software

$

31,996

 

 

$

30,791

 

Computer equipment

 

18,130

 

 

 

17,325

 

Leasehold improvements

 

2,706

 

 

 

2,393

 

Furniture and fixtures

 

1,957

 

 

 

1,645

 

Total

 

54,789

 

 

 

52,154

 

Accumulated depreciation and amortization

 

(34,645

)

 

 

(28,783

)

Projects in process

 

5,808

 

 

 

2,028

 

Property and equipment, net

$

25,952

 

 

$

25,399

 

Depreciation and amortization expense of property and equipment was $3.2 million and $6.3 million for the three and six months ended June 30, 2015, respectively, and $3.3 million and $6.2 million for the three and six months ended June 30, 2014, respectively.

During the three and six months ended June 30, 2015, the Company capitalized internal use software development and enhancement costs related to the Coupons.com Retailer iQ platform (“Retailer iQ”) of $0.5 million and $0.9 million, respectively, compared to $0.9 million and $2.2 million during the three and six months ended June 30, 2014, respectively. During the three and six months ended June 30, 2015, the Company recognized $2.3 million and $4.6 million respectively, of amortization expense related to Retailer iQ in cost of revenues, and $2.0 million and $3.4 million during the three and six months ended June 30, 2014, respectively.  The unamortized capitalized development and enhancement costs related to Retailer iQ was $15.3 million and $19.0 million as of June 30, 2015 and December 31, 2014, respectively.

Accrued Compensation and Benefits

Accrued compensation and benefits consist of the following (in thousands):

 

 

June 30,

2015

 

 

December 31,

2014

 

Bonus

$

3,878

 

 

$

6,909

 

Vacation

 

2,338

 

 

 

2,427

 

Commissions

 

2,175

 

 

 

3,458

 

Payroll and related expenses

 

1,076

 

 

 

2,067

 

Accrued compensation and benefits

$

9,467

 

 

$

14,861

 

 

10


Other Current Liabilities

Other current liabilities consist of the following (in thousands):

 

 

June 30,

2015

 

 

December 31,

2014

 

Distribution fees

$

6,229

 

 

$

5,805

 

Marketing expenses

 

2,904

 

 

 

3,415

 

Contingent consideration

 

2,770

 

 

 

1,048

 

Accrued property and equipment

 

1,986

 

 

 

687

 

Legal and professional fees

 

803

 

 

 

1,699

 

Deferred rent

 

247

 

 

 

536

 

Other

 

2,940

 

 

 

2,600

 

Other current liabilities

$

17,879

 

 

$

15,790

 

 

6. Goodwill and Intangible Assets

Goodwill represents the excess of the consideration paid over the fair value of the net tangible and identifiable intangible assets acquired in a business combination. The change in the carrying value of goodwill is as follows (in thousands):

 

 

Goodwill

 

Balance as of December 31, 2014

$

29,277

 

Foreign currency translation

 

7

 

Balance as of June 30, 2015

$

29,284

 

 

Intangible assets consist of the following (in thousands):

 

 

June 30,

2015

Gross

 

 

Accumulated

Amortization

 

 

Foreign

Currency

Translation

 

 

June 30,

2015

Net

 

 

Weighted

Average

Amortization

Period

(Years)

Customer relationships

$

7,164

 

 

$

(2,629

)

 

$

24

 

 

$

4,559

 

 

4

Domain names

 

5,004

 

 

 

(3,127

)

 

 

 

 

 

1,877

 

 

4

Developed technologies

 

4,117

 

 

 

(1,213

)

 

 

 

 

 

2,904

 

 

4

Patents

 

1,050

 

 

 

(628

)

 

 

 

 

 

422

 

 

6

Vendor relationships

 

890

 

 

 

(334

)

 

 

 

 

 

556

 

 

3

Trade names

 

167

 

 

 

(135

)

 

 

2

 

 

 

34

 

 

1

 

$

18,392

 

 

$

(8,066

)

 

$

26

 

 

$

10,352

 

 

4

 

 

December 31,

2014

Gross

 

 

Accumulated

Amortization

 

 

Foreign

Currency

Translation

 

 

December 31,

2014

Net

 

 

Weighted

Average

Amortization

Period

(Years)

Customer relationships

$

7,164

 

 

$

(1,978

)

 

$

21

 

 

$

5,207

 

 

4

Domain names

 

4,968

 

 

 

(2,836

)

 

 

 

 

 

2,132

 

 

4

Developed technologies

 

4,117

 

 

 

(834

)

 

 

 

 

 

3,283

 

 

5

Patents

 

1,050

 

 

 

(570

)

 

 

 

 

 

480

 

 

6

Vendor relationships

 

890

 

 

 

(223

)

 

 

 

 

 

667

 

 

3

Trade names

 

167

 

 

 

(121

)

 

 

3

 

 

 

49

 

 

2

 

$

18,356

 

 

$

(6,562

)

 

$

24

 

 

$

11,818

 

 

4

 

11


Amortization expense related to intangible assets subject to amortization was $0.7 million and $1.5 million for the three and six months ended June 30, 2015, respectively and $0.3 million and $0.6 million during the three and six months ended June 30, 2014, respectively. Estimated future amortization expense of intangible assets as of June 30, 2015 is as follows (in thousands):

 

 

Total

 

2015, remaining six months

$

1,476

 

2016

 

2,814

 

2017

 

2,494

 

2018

 

2,249

 

2019

 

1,213

 

2020 and beyond

 

106

 

Total estimated amortization expense

$

10,352

 

 

7. Debt Obligation

In September 2013, the Company entered into an agreement with a commercial bank to establish an accounts receivable based revolving line of credit. The maximum amount available for borrowing under the revolving credit facility is the lesser of $25.0 million (which can be increased to $30.0 million if certain conditions are met) or an amount equal to 85% of certain eligible accounts, which excludes accounts that are over 60 days outstanding from the original due date. The revolving line of credit has a maturity date of September 30, 2016 and may be repaid and redrawn at any time prior to the maturity date. Interest is charged at a floating interest rate based on the daily three month LIBOR, plus % applicable margin. In May 2014, the Company entered into an amendment, which revised the applicable margin from 2.75% to 2.00% per annum and the financial reporting intervals from monthly to quarterly reporting.  Interest was 2.375% at June 30, 2015. The Company is also required to pay a commitment fee on the unused portion of the revolving credit facility equal to 0.25% per annum. As of June 30, 2015 and December 31, 2014, $7.5 million was outstanding under the revolving line of credit. The revolving credit facility is secured by substantially all of the Company’s assets, and is subject to certain financial and non-financial covenants, including financial reporting. As of June 30, 2015, the Company was in compliance with the financial and non-financial covenants under the credit and security agreement.

8. Stock-based Compensation

2013 Equity Incentive Plan

In October 2013, the Company adopted the 2013 Equity Incentive Plan (the “2013 Plan”), which became effective in March 2014 and serves as the successor to the Company’s 2006 Stock Plan (the “2006 Plan”).  Under the 2013 Plan, the Company may grant stock options, stock appreciation rights, restricted stock and restricted stock units, performance shares and units to employees, directors and consultants.

Stock Options

The fair value of each option was estimated on the date of grant for the period presented using the following assumptions:

 

 

Three Months Ended

June 30,

 

Six Months Ended

June 30,

 

 

2015

 

 

2014

 

2015

 

 

2014

 

Expected life (in years)

5.50 - 6.08

 

 

 

5.50 - 6.08

 

 

 

6.08

 

Risk-free interest rate

1.82% - 1.89%

 

 

 

1.82% - 1.89%

 

 

 

2.33%

 

Volatility

 

55%

 

 

 

 

55%

 

 

 

55%

 

Dividend yield

 

 

 

 

 

 

 

The weighted-average grant-date fair value of options granted was $6.72 per share during the three and six months ended June 30, 2015 and $8.60 per share during the six months ended June 30, 2014.  There were no option grants during the three months ended June 30, 2014.

12


Restricted Stock Units

The fair value of RSUs equals the market value of the Company’s common stock on the date of the grant. The RSUs are excluded from issued and outstanding shares until they are vested.

A summary of the Company’s stock option and RSUs award activity under the 2013 Plan is as follows:

 

 

 

 

 

 

Options Outstanding

 

 

RSUs Outstanding

 

 

Shares

Available

for Grant

 

 

Number of

Shares

 

 

Weighted

Average

Exercise

Price

 

 

Weighted

Average

Remaining

Contractual

Term (Years)

 

 

Aggregate

Intrinsic

Value

(in thousands)

 

 

Number of

Shares

 

 

Weighted

Average

Grant

Date Fair

Value

 

Balance as of December 31, 2014

 

1,825,112

 

 

 

9,494,763

 

 

$

7.00

 

 

 

6.57

 

 

$

107,913

 

 

 

6,809,415

 

 

$

12.66

 

Increase in shares authorized

 

3,255,200

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Options granted

 

(53,680

)

 

 

53,680

 

 

 

13.04

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Options exercised

 

 

 

 

(822,045

)

 

 

3.89

 

 

 

 

 

 

 

7,828

 

 

 

 

 

 

 

 

 

Options canceled or expired

 

14,562

 

 

 

(14,562

)

 

 

7.73

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

RSUs granted

 

(2,641,120

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2,641,120

 

 

 

14.22

 

RSUs released

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(1,233,379

)

 

 

11.93

 

RSUs canceled or expired

 

873,049

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(873,049

)

 

 

13.83

 

Balance as of June 30, 2015

 

3,273,123

 

 

 

8,711,836

 

 

 

7.32

 

 

 

6.19

 

 

 

45,201

 

 

 

7,344,107

 

 

 

13.31

 

Vested and expected to vest as of

   June 30, 2015

 

 

 

 

 

8,320,312

 

 

 

7.06

 

 

 

6.10

 

 

 

44,375

 

 

 

 

 

 

 

 

 

Vested and exercisable as of

   June 30, 2015

 

 

 

 

 

6,643,537

 

 

 

5.48

 

 

 

5.57

 

 

 

45,201

 

 

 

 

 

 

 

 

 

 

The aggregate intrinsic value disclosed in the table above is based on the difference between the exercise price of the options and the fair value of the Company’s common stock.

The aggregate total fair value of shares which vested during the three and six months ended June 30, 2015  was $1.0 million and $2.2 million, respectively, and during the three and six months ended June 30, 2014 was $0.9 million and $1.9 million, respectively.

Employee Stock Purchase Plan

Eligible employees can enroll and elect to contribute up to 15% of their base compensation through payroll withholdings in each offering period, subject to certain limitations. Each offering period is six months in duration, with the exception of the initial offering period which commenced in March 2014 and ended in November 2014. The purchase price of the stock is the lower of 85% of the fair market value on (a) the first day of the offering period or (b) the purchase date.

The fair value of the option feature is estimated using the Black-Scholes model for the period presented based on the following assumptions:

 

 

Six Months Ended June 30,

 

 

2015

 

 

2014

 

Expected life (in years)

 

0.50

 

 

 

0.62

 

Risk-free interest rate

 

0.08%

 

 

 

0.08%

 

Volatility

 

63%