Notes to Consolidated Financial Statements
(In thousands, except share and per share data, where otherwise noted, or instances where expressed in millions)
1. Organization and Operations
TechTarget, Inc. and its subsidiaries (the “Company”) is a leading provider of specialized online content for buyers of enterprise information technology (“IT”) products and services, and a leading provider of purchase-intent marketing and sales services for enterprise technology vendors. The Company’s service offerings enable technology vendors to better identify, reach, and influence corporate IT decision makers actively researching specific IT purchases. The Company improves vendors’ ability to impact these audiences for business growth using advanced targeting, analytics, and data services complemented with customized marketing programs that integrate demand generation and brand advertising techniques. The Company operates a network of over 140 websites, each of which focuses on a specific IT sector such as storage, security, or networking. IT and business professionals have become increasingly specialized, and they have come to rely on the Company’s sector-specific websites for purchasing decision support. The Company’s content platform enables IT and business professionals to navigate the complex and rapidly changing IT landscape where purchasing decisions can have significant financial and operational consequences. At critical stages of the purchase decision process, these content offerings, through different channels, meet IT and business professionals’ needs for expert, peer, and IT vendor information and provide a platform on which IT vendors can launch targeted marketing campaigns which generate measurable return on investment. Based upon the logical clustering of members’ respective job responsibilities and the marketing focus of the products being promoted by the Company’s customers, the Company categorizes its content offerings to address the key market opportunities and audience extensions across a portfolio of distinct media groups including: Security; Networking; Storage; Data Center and Virtualization Technologies; CIO/IT Strategy; Business Applications and Analytics; Application Architecture and Development; and Channel.
2. Summary of Significant Accounting Policies
The accompanying consolidated financial statements reflect the application of certain significant accounting policies as described below and elsewhere in these Notes to Consolidated Financial Statements. The Company’s
critical accounting policies are those that affect its more significant judgments used in the preparation of its consolidated financial statements. A description of the Company’s critical accounting policies and estimates is contained in its Annual Report on Form 10-K for the fiscal year ended December 31, 2017, and in this note to the consolidated financial statements. There were no material changes to the Company’s critical accounting policies and use of estimates during the first nine months of 2018, other than those related revenue recognition resulting from the adoption of a new accounting pronouncement, as described in this Note 2 under “Revenue Recognition”.
Principles of Consolidation
The accompanying consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries, TechTarget Securities Corporation (“TSC”), TechTarget Limited, TechTarget (HK) Limited (“TTGT HK”), TechTarget (Beijing) Information Technology Consulting Co. Ltd. (“TTGT Consulting”), TechTarget (Australia) Pty Ltd., TechTarget (Singapore) Pte Ltd., E-Magine Médias SAS (“LeMagIT”) and TechTarget Germany GmbH. TSC is a Massachusetts corporation. TechTarget Limited is a subsidiary doing business principally in the United Kingdom. TTGT HK is a subsidiary incorporated in Hong Kong in order to facilitate the Company’s activities in the Asia-Pacific region. Additionally, through its wholly-owned subsidiaries, TTGT HK and TTGT Consulting, the Company effectively controls a variable interest entity (“VIE”), Keji Wangtuo Information Technology Co., Ltd., (“KWIT”), which was incorporated under the laws of the People’s Republic of China (“PRC”). In 2018, TechTarget began modifying its PRC operations and consolidating its activities with other TechTarget locations. TechTarget (Australia) Pty Ltd. and TechTarget (Singapore) Pte Ltd. are the entities through which the Company does business in Australia and Singapore, respectively; LeMagIT and TechTarget Germany GmbH, both wholly-owned subsidiaries of TechTarget Limited, are entities through which the Company does business in France and Germany, respectively.
PRC laws and regulations prohibit or restrict foreign ownership of internet-related services and advertising businesses. To comply with these foreign ownership restrictions, the Company operates its websites and provides online advertising services in the PRC through KWIT. The Company entered into certain exclusive agreements with KWIT and its shareholders through TTGT HK, which obligated TTGT HK to absorb all of the risk of loss from KWIT’s activities and entitled TTGT HK to receive all of its residual returns. In addition, the Company entered into certain agreements with the authorized parties through TTGT HK, including Management and Consulting Services, Voting Proxy, Equity Pledge and Option Agreements. TTGT HK assigned all of its rights and obligations to the newly formed wholly foreign-owned enterprise, TTGT Consulting. TTGT Consulting is established and existing under the laws of the PRC, and is wholly owned by TTGT HK.
6
Based on these contractual arrangements, the Company consolidates the financial results of KWIT as required by Accounting Standards Codifi
cation (“ASC”) subtopic 810-10, Consolidation: Overall, because the Company holds all the variable interests of KWIT through TTGT Consulting, which is the primary beneficiary of KWIT. Despite the lack of technical majority ownership, there exists a parent-
subsidiary relationship between the Company and the VIE through the aforementioned agreements, whereby the equity holders of KWIT assigned all of their voting rights underlying their equity interest in KWIT to TTGT Consulting. In addition, through the othe
r aforementioned agreements, the Company demonstrates its ability and intention to continue to exercise the ability to obtain substantially all of the profits and absorb all of the expected losses of KWIT. All significant intercompany accounts and transact
ions among the Company, its subsidiaries, and KWIT have been eliminated in consolidation.
Basis of Presentation
The accompanying unaudited consolidated financial statements have been prepared in accordance with accounting principles generally accepted (Generally Accepted Accounting Principles or
“
GAAP
”
) in the United States (
“U.S.”
) for interim financial information and with the instructions to Form 10-Q and Rule 10-01 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by accounting principles generally accepted in the U.S. for complete financial statements. All adjustments, which, in the opinion of management, are considered necessary for a fair presentation of the results of operations for the periods shown, are of a normal, recurring nature and have been reflected in the consolidated financial statements. The results of operations for the periods presented are not necessarily indicative of results to be expected for any other interim periods or for the full year. The information included in these consolidated financial statements should be read in conjunction with “Management’s Discussion and Analysis of Financial Condition and Results of Operations” contained in this report and the consolidated financial statements and accompanying notes included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2017.
Reclassifications
Historically, the Company presented online revenues and online cost of revenues separately from events revenues and events cost of revenues.
On the Consolidated Statements of Income and Comprehensive Income, the Company has combined these into a single line item for revenues and a single line item for cost of revenues, since the events product line, which
was
phased out in the first quarter of 2017, generated immaterial revenues and cost of revenues for the nine months ended September 30, 2017 and no revenues or cost of revenues in the other periods presented on the Consolidated Statements of Income and Comprehensive Income. These reclassifications are not material and had no effect on the total reported revenues or cost of revenues.
In addition, the Company historically presented depreciation expense and amortization expense as separate line items on the Consolidated Statements of Income and Comprehensive Income. Due to the immateriality of amortization expense, the Company has combined these expenses into a single line item. This reclassification had no effect on total operating expenses or net income.
Use of Estimates
The preparation of consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. On an ongoing basis, the Company evaluates its estimates, including those related to revenues, long-lived assets, goodwill, the allowance for doubtful accounts, stock-based compensation, earnouts, self-insurance accruals, and income taxes. The Company reduces its accounts receivable for an allowance for doubtful accounts based on its best estimate of the amount of probable credit losses. Estimates of the carrying value of certain assets and liabilities are based on historical experience and on various other assumptions that the Company believes to be reasonable. Actual results could differ from those estimates.
Revenue Recognition
The Company generates substantially all of its revenues from the sale of targeted marketing and sales services and advertising campaigns utilizing, which it delivers via its network of websites and data analytics solutions. Revenue is recognized when performance obligations are satisfied by transferring promised goods or services to customers, as determined by applying a five-step process consisting of: a) i
dentifying the contract, or contracts, with a customer, b) identifying the performance obligations in the contract, c) determining the transaction price, d) allocating the transaction price to the performance obligations in the contract, and e) recognizing revenue when, or as, performance
obligations are satisfied.
7
Recent Accounting Pronouncements
Recently Adopted Accounting Guidance
In May 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers (Topic 606) (“Topic 606”), which supersedes the revenue recognition requirements in ASC 605, Revenue Recognition (“Topic 605”). Topic 606 is based on the principle that revenue is recognized to depict the transfer of 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. Topic 606 provides that an entity should apply a five-step approach for recognizing revenue, as described above in this Note 2 under “Revenue Recognition.” This guidance also requires additional disclosure about the nature, amount, timing and uncertainty of revenue and cash flows arising from customer contracts, including significant judgments and changes in judgments and assets recognized from costs incurred to obtain or fulfill a contract. The Company adopted the standard effective January 1, 2018, using the modified retrospective approach. Under this method, the Company evaluated contracts that were in effect at the beginning of fiscal 2018 as if those contracts had been accounted for under Topic 606. Under the modified retrospective approach, periods prior to the adoption date were not adjusted and continue to be reported in accordance with historical, pre-Topic 606 accounting. The adoption of the standard did not have a material effect on the Company’s consolidated financial statements, systems, processes, or internal controls.
Accounting Guidance Not Yet Adopted
In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842) (“ASU 2016-02”). ASU 2016-02 establishes a right-of-use (“ROU”) model that requires a lessee to record a ROU asset and a lease liability on the balance sheet for all leases with terms longer than twelve months. Leases will be classified as either finance or operating, with classification affecting the pattern of expense recognition in the Consolidated Statements of Income and Comprehensive Income. ASU 2016-02 is effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. A modified retrospective transition approach is required for lessees for capital and operating leases existing at, or entered into after, the beginning of the earliest comparative period presented in the financial statements, with certain practical expedients available. The Company will adopt ASU 2016-02 in the first quarter of 2019 using the modified retrospective approach, and intends to elect the package of practical expedients permitted under the transition guidance.
The Company anticipates that this standard will have a material impact on its financial position, primarily due to office space operating leases, for which the Company will be required to recognize the ROU assets and lease liabilities on its Consolidated Balance Sheets.
The Company is currently evaluating the impact that this guidance will have on its consolidated financial statements and disclosures, [including changes, if any, to processes and internal controls.]
In January 2017, the FASB issued ASU No. 2017-04, Intangibles-Goodwill and Other (Topic 350), Simplifying the Test for Goodwill Impairment ("ASU 2017-04"). ASU 2017-04 eliminates the requirement to calculate the implied fair value of goodwill to measure a goodwill impairment charge (step 2 of the goodwill impairment test) and instead requires only a one-step quantitative impairment test, performed by comparing the fair value of goodwill with its carrying amount. ASU 2017-04 is effective on a prospective basis effective for goodwill impairment tests in fiscal years beginning after December 15, 2019. Early adoption is permitted for goodwill impairment tests performed on testing dates after January 1, 2017.
The Company is currently evaluating the impact that this standard will have on its consolidated financial statements and disclosures but does not expect that it will have a material impact.
In August 2018, the FASB issued ASU No. 2018-15, Intangibles-Goodwill and Other-Internal-Use Software (Subtopic 350-40): Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement that is a Service Contract, which requires implementation costs incurred by customers in cloud computing arrangements (i.e., hosting arrangements) to be capitalized under the same premises of authoritative guidance for internal-use software, and deferred over the non-cancellable term of the cloud computing arrangements plus any option renewal periods that are reasonably certain to be exercised by the customer or for which the exercise is controlled by the service provider. ASU 2018-15 is effective for fiscal years beginning after December 15, 2019, and interim periods within those fiscal years, with early adoption permitted. The Company is currently evaluating the impact of this standard on its consolidated financial statements and disclosures but does not expect that it will have a material impact
.
3. Revenues
Revenue Recognition
On January 1, 2018, the Company adopted Topic 606 and, as such, recognizes revenue when performance obligations are satisfied by transferring promised goods or services to customers in an amount the Company expects to receive in exchange for those goods or services. The Company enters into contracts that can include various combinations of its offerings, which are generally capable of being distinct and accounted for as separate performance obligations.
The Company’s offerings consist of IT Deal Alert
TM
and Core categories.
8
IT Deal Alert provides a suite of products that leverages
detailed purchase intent data that we collect about end-user IT organizations. Through proprietary scoring methodologies, we use this insight to help our customers identify and prioritize accounts. We provide this insight through Priority Engine
TM
, Target
ROI
TM
, Qualified Sales Opportunit
i
es
TM
, Deal Data
TM
, and Research
TM
. Revenue from Priority Engine allows customers access to purchase intent data through the life of the contract and is recognized ratably over the contract period. Target ROI contains Prior
ity Engine as well as other duration based demand solutions, which are discussed below, and revenue from Target ROI is recognized ratably over the contract period using the same time-based measure of progress for each of the distinct performance obligation
s included within TargetROI. Revenue from Qualified Sales Opportunities, Deal Data and Research
is recognized at the point in time when control is transferred to the customer, which occurs when the related reports are provided to the customer.
Core consists primarily of demand solutions, brand solutions, and custom content. Demand solutions offerings provide the Company’s customers the opportunity to maximize return on investment by capturing sales leads from the distribution and promotion of content to its audience. Demand solutions may contain the following components: white papers, webcasts, podcasts, videocasts and virtual trade shows, and content sponsorship, which the Company may utilize at its discretion. Brand solutions provide the Company’s customers to target audiences of IT and business professionals actively researching information related to their products and services. This can be accomplished through on-network or off-network branding as well as through the hosting of microsites. The Company will at times create custom content, such as white papers, case studies, webcasts, or videos, to our customers’ specifications through its Custom Content team.
Revenue from demand solutions is primarily recognized when the transfer of control occurs. For certain demand solutions, the Company generates revenue on a cost per lead basis and the transfer of control occurs at the point in time each lead is generated. Certain of the contracts within demand solutions are duration-based campaigns which, in the event of customer cancellation, provide the Company with an enforceable right to a proportional payment for the portion of the campaign based on services provided. Accordingly, revenue from duration-based campaigns are recognized using a time-based measure of progress, which the Company believes best depicts how it satisfies its performance obligations in these arrangements as control is continuously transferred throughout the contract period.
Revenue from brand solutions is primarily recognized when the placement of the branding impression appears. Revenue from microsites is recognized ratably over the life of the contract.
Revenue from custom content creation is recognized over the expected period of performance using a single measure of progress, typically based on hours incurred.
The Company’s offerings can be sold separately but the Company’s contracts often involve multiple offerings. The Company evaluates all contracts with customers at inception to determine whether they contain separate performance obligations.
If the contract contains a single performance obligation, the entire transaction price is allocated to that performance obligation. If the contract contains multiple performance obligations, the transaction price is allocated to each performance obligation based on a relative standalone selling price. The Company has concluded that each of the performance obligations described above is distinct.
As discussed above, certain demand generation solutions have different revenue recognition patterns. The Company evaluated the relevant contract terms associated with the individual solutions to determine the appropriate revenue recognition pattern.
To determine standalone selling price for the individual performance obligations in the arrangement, the Company uses an estimate of the observable selling prices in separate transactions. The Company establishes best estimates considering multiple factors including, but not limited to, class of client, size of transaction, available inventory, pricing strategies and market conditions. The Company uses a range of amounts to estimate stand-alone selling price when it sells the goods and services separately and needs to determine whether a discount is to be allocated based upon the relative stand-alone selling price to the various goods and services.
Disaggregation of Revenue
The following table depicts the disaggregation of revenue
according to categories consistent with how the Company evaluates its financial performance. International revenue consists of international geo-targeted campaigns, which are campaigns targeted at an audience of members outside of North America.
9
|
|
Three Months Ended September 30,
|
|
|
Percent
|
|
|
Nine Months Ended September 30,
|
|
|
Percent
|
|
|
|
2018
|
|
|
2017
|
|
|
Change
|
|
|
2018
|
|
|
2017
|
|
|
Change
|
|
|
|
($ in thousands)
|
|
|
|
|
|
|
($ in thousands)
|
|
|
|
|
|
Total by Geographic Area:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
North America:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
North America IT Deal Alert
|
|
$
|
11,921
|
|
|
$
|
9,953
|
|
|
|
20
|
%
|
|
$
|
32,316
|
|
|
$
|
26,563
|
|
|
|
22
|
%
|
North America Core
|
|
|
9,026
|
|
|
|
9,374
|
|
|
|
(4
|
)%
|
|
|
28,667
|
|
|
|
26,444
|
|
|
|
8
|
%
|
Total North America
|
|
|
20,947
|
|
|
|
19,327
|
|
|
|
8
|
%
|
|
|
60,983
|
|
|
|
53,007
|
|
|
|
15
|
%
|
International:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
International IT Deal Alert
|
|
|
4,043
|
|
|
|
3,451
|
|
|
|
17
|
%
|
|
|
11,309
|
|
|
|
8,869
|
|
|
|
28
|
%
|
International Core
|
|
|
5,752
|
|
|
|
5,234
|
|
|
|
10
|
%
|
|
|
17,221
|
|
|
|
16,209
|
|
|
|
6
|
%
|
Total International
|
|
|
9,795
|
|
|
|
8,685
|
|
|
|
13
|
%
|
|
|
28,530
|
|
|
|
25,078
|
|
|
|
14
|
%
|
Total Online by Product:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
IT Deal Alert:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
North America IT Deal Alert
|
|
$
|
11,921
|
|
|
$
|
9,953
|
|
|
|
20
|
%
|
|
$
|
32,316
|
|
|
$
|
26,563
|
|
|
|
22
|
%
|
International IT Deal Alert
|
|
|
4,043
|
|
|
|
3,451
|
|
|
|
17
|
%
|
|
|
11,309
|
|
|
|
8,869
|
|
|
|
28
|
%
|
Total IT Deal Alert
|
|
|
15,964
|
|
|
|
13,404
|
|
|
|
19
|
%
|
|
|
43,625
|
|
|
|
35,432
|
|
|
|
23
|
%
|
Core:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
North America Core
|
|
|
9,026
|
|
|
|
9,374
|
|
|
|
(4
|
)%
|
|
|
28,667
|
|
|
|
26,444
|
|
|
|
8
|
%
|
International Core
|
|
|
5,752
|
|
|
|
5,234
|
|
|
|
10
|
%
|
|
|
17,221
|
|
|
|
16,209
|
|
|
|
6
|
%
|
Total Core
|
|
|
14,778
|
|
|
|
14,608
|
|
|
|
1
|
%
|
|
|
45,888
|
|
|
|
42,653
|
|
|
|
8
|
%
|
Other
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
168
|
|
|
|
(100
|
)%
|
Total Revenues
|
|
$
|
30,742
|
|
|
$
|
28,012
|
|
|
|
10
|
%
|
|
$
|
89,513
|
|
|
$
|
78,253
|
|
|
|
14
|
%
|
Deferred Revenue and Contract Balances
Timing may differ between the satisfaction of performance obligations and the invoicing and collection of amounts related to the Company’s contracts with customers. Liabilities are recorded for amounts that are collected in advance of the satisfaction of performance obligations. Deferred revenue is included in contract liabilities on the accompanying Consolidated Balance Sheets and was $2.3 million and $4.9 million at September 30, 2018 and December 31, 2017, respectively. Additionally, certain customers may receive credits, which are accounted for as a material right. The Company estimates these amounts based on the expected amount of future services to be provided to customers and allocates a portion of the transaction price to these material rights. The Company recognizes these material rights as the material rights are exercised. The resulting amounts included in contract liabilities on the accompanying Consolidated Balance Sheets were $2.9 million and $2.7 million at September 30, 2018 and December 31, 2017, respectively. During the first nine months of 2018, revenues of $3.4 million were recognized that had been included in the contract liabilities balance at December 31, 2017.
|
|
Contract Liabilities
|
|
Year-to-Date Activity
|
|
(in thousands)
|
|
Balance at December 31, 2017
|
|
$
|
4,088
|
|
Deferral of revenue
|
|
|
4,576
|
|
Recognition of previously unearned revenue
|
|
|
(3,389
|
)
|
Balance at September 30, 2018
|
|
$
|
5,275
|
|
The Company reduced its accounts receivable by $3.5 million from $29.6 million to $26.1 million as of January 1, 2018 as a result of the adoption of Topic 606. There was a corresponding reduction of $3.5 million to its deferred revenue balance from $7.6 million to $4.1 million as of January 1, 2018 as a result of the adoption of Topic 606.
Payment terms and conditions vary by contract type, although terms generally include requirement of payment within 30 to 90 days. In instances where the timing of revenue recognition differs from the timing of invoicing, the Company has determined its contracts do not contain a financing component as they are generally less than one year. The Company increased its allowance for doubtful accounts by $0.7 million and had direct write-offs of $0.5 million, net of recoveries, during the nine months ended September 30, 2018.
10
The Company elected to apply the following practical expedients and exemptions:
|
•
|
The
Company does not disclose the value of unsatisfied performance obligations for contracts with an original expected duration of one year or less.
|
|
•
|
The Company
expenses, as incurred, contract costs consisting of sales commissions and sales bonuses because the amortization period of the contract asset that would have otherwise been recognized would have been one year or less.
|
4. Fair Value Measurements
The Company measures certain financial assets and liabilities at fair value on a recurring basis, including cash equivalents, short-term and long-term investments and contingent consideration. The fair value of these financial assets and liabilities was determined based on three levels of input as follows:
|
•
|
Level 1.
Quoted prices in active markets for identical assets and liabilities;
|
|
•
|
Level 2.
Observable inputs other than quoted prices in active markets; and
|
|
•
|
Level 3.
Unobservable inputs.
|
The fair value hierarchy of the Company’s financial assets and liabilities carried at fair value and measured on a recurring basis is as follows:
|
|
|
|
|
|
Fair Value Measurements at
Reporting Date Using
|
|
|
|
September 30,
2018
|
|
|
Quoted Prices
in Active
Markets for
Identical
Assets
(Level 1)
|
|
|
Significant
Other
Observable
Inputs
(Level 2)
|
|
|
Significant
Unobservable
Inputs
(Level 3)
|
|
Assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Money market funds
(1)
|
|
$
|
12,480
|
|
|
$
|
12,480
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Short-term investments
(2)
|
|
|
3,000
|
|
|
|
—
|
|
|
|
3,000
|
|
|
|
—
|
|
Total assets
|
|
$
|
15,480
|
|
|
$
|
12,480
|
|
|
$
|
3,000
|
|
|
$
|
—
|
|
|
|
|
|
|
|
Fair Value Measurements at
Reporting Date Using
|
|
|
|
December 31, 2017
|
|
|
Quoted Prices
in Active
Markets for
Identical
Assets
(Level 1)
|
|
|
Significant
Other
Observable
Inputs
(Level 2)
|
|
|
Significant
Unobservable
Inputs
(Level 3)
|
|
Assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Money market funds
(1)
|
|
$
|
7,155
|
|
|
$
|
7,155
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Short-term investments
(2)
|
|
|
7,650
|
|
|
|
—
|
|
|
|
7,650
|
|
|
|
—
|
|
Long-term investments
(2)
|
|
|
496
|
|
|
|
—
|
|
|
|
496
|
|
|
|
—
|
|
Total assets
|
|
$
|
15,301
|
|
|
$
|
7,155
|
|
|
$
|
8,146
|
|
|
$
|
—
|
|
(1)
|
Included in cash and cash equivalents on the accompanying Consolidated Balance Sheets; valued at quoted market prices in active markets.
|
(2)
|
Short-term and long-term investments consist of municipal bonds, corporate bonds, U.S. Treasury securities, and government agency bonds; their fair value is calculated using an interest rate yield curve for similar instruments.
|
11
5. Cash, Cash Equivalents, and Investments
Cash and cash equivalents consist of highly liquid investments with maturities of three months or less at date of purchase. Cash equivalents are carried at cost, which approximates their fair market value. Cash and cash equivalents consisted of the following:
|
|
September 30,
2018
|
|
|
December 31,
2017
|
|
Cash
|
|
$
|
16,967
|
|
|
$
|
18,811
|
|
Money market funds
|
|
|
12,480
|
|
|
|
7,155
|
|
Total cash and cash equivalents
|
|
$
|
29,447
|
|
|
$
|
25,966
|
|
The Company’s short-term and long-term investments are accounted for as available for sale securities. These investments are recorded at fair value with the related unrealized gains and losses included in accumulated other comprehensive income, a component of stockholders’ equity, net of tax. The cumulative unrealized loss, net of taxes, was $4 and $17 as of September 30, 2018 and December 31, 2017, respectively.
Realized gains and losses on the sale of these investments are determined using the specific identification method. There were no realized gains or losses
during the nine months ended September 30, 2018 or 2017.
Short-term and long-term investments consisted of the following:
|
|
September 30, 2018
|
|
|
|
Amortized
Cost
|
|
|
Gross
Unrealized
Gains
|
|
|
Gross
Unrealized
Losses
|
|
|
Estimated
Fair Value
|
|
Short-term and long-term investments:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S. Treasury securities
|
|
$
|
1,000
|
|
|
$
|
—
|
|
|
$
|
(2
|
)
|
|
$
|
998
|
|
Government agency bonds
|
|
|
500
|
|
|
|
—
|
|
|
|
-
|
|
|
|
500
|
|
Municipal bonds
|
|
|
1,005
|
|
|
|
—
|
|
|
|
(2
|
)
|
|
|
1,003
|
|
Corporate bonds
|
|
|
500
|
|
|
|
—
|
|
|
|
(1
|
)
|
|
|
499
|
|
Total short-term and long-term investments
|
|
$
|
3,005
|
|
|
$
|
—
|
|
|
$
|
(5
|
)
|
|
$
|
3,000
|
|
|
|
December 31, 2017
|
|
|
|
Amortized
Cost
|
|
|
Gross
Unrealized
Gains
|
|
|
Gross
Unrealized
Losses
|
|
|
Estimated
Fair Value
|
|
Short-term and long-term investments:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S. Treasury securities
|
|
$
|
1,499
|
|
|
$
|
—
|
|
|
$
|
(6
|
)
|
|
$
|
1,493
|
|
Government agency bonds
|
|
|
1,003
|
|
|
|
—
|
|
|
|
(4
|
)
|
|
|
999
|
|
Municipal bonds
|
|
|
4,169
|
|
|
|
—
|
|
|
|
(14
|
)
|
|
|
4,155
|
|
Corporate bonds
|
|
|
1,502
|
|
|
|
—
|
|
|
|
(3
|
)
|
|
|
1,499
|
|
Total short-term and long-term investments
|
|
$
|
8,173
|
|
|
$
|
—
|
|
|
$
|
(27
|
)
|
|
$
|
8,146
|
|
The Company had
six
debt securities in an unrealized loss position at September 30, 2018. All of these securities have been in such a position for no more than
25
months. The unrealized loss on those securities was approximately $5 and the fair value was $3.0 million. At December 31, 2017, the Company had
15
debt securities in an unrealized loss position, and the unrealized loss on those securities was approximately $27, and the fair value was $
8.1 million
at that date. The Company uses specific identification when reviewing these investments for impairment. Because the Company does not intend to sell the investments that are in an unrealized loss position and it is not likely that the Company will be required to sell any investments before recovery of their cost basis, the Company does not consider those investments with an unrealized loss to be other-than-temporarily impaired at September 30, 2018.
The Company’s investments have contractual maturity dates that range from
November 2018
to January 2019. All income generated from these investments is recorded as interest income.
12
6. Goodwill and Intangible Assets
The following table summarizes the Company’s intangible assets, net:
|
|
|
|
|
|
September 30, 2018
|
|
|
|
Estimated
Useful Lives
(Years)
|
|
|
Gross
Carrying
Amount
|
|
|
Accumulated
Amortization
|
|
|
Net
|
|
Customer, affiliate and advertiser relationships
|
|
|
17
|
|
|
$
|
7,128
|
|
|
$
|
(6,880
|
)
|
|
$
|
248
|
|
Developed websites, technology and patents
|
|
|
10
|
|
|
|
1,519
|
|
|
|
(945
|
)
|
|
|
574
|
|
Trademark, trade name and domain name
|
|
|
8
|
|
|
|
1,794
|
|
|
|
(1,733
|
)
|
|
|
61
|
|
Proprietary user information database and internet traffic
|
|
|
5
|
|
|
|
1,180
|
|
|
|
(1,180
|
)
|
|
|
—
|
|
Non-compete agreements
|
|
|
2
|
|
|
|
10
|
|
|
|
(1
|
)
|
|
|
9
|
|
Total intangible assets
|
|
|
|
|
|
$
|
11,631
|
|
|
$
|
(10,739
|
)
|
|
$
|
892
|
|
|
|
|
|
|
|
December 31, 2017
|
|
|
|
Estimated
Useful Lives
(Years)
|
|
|
Gross
Carrying
Amount
|
|
|
Accumulated
Amortization
|
|
|
Net
|
|
Customer, affiliate and advertiser relationships
|
|
|
5
|
|
|
$
|
6,938
|
|
|
$
|
(6,938
|
)
|
|
$
|
—
|
|
Developed websites, technology and patents
|
|
|
10
|
|
|
|
1,342
|
|
|
|
(907
|
)
|
|
|
435
|
|
Trademark, trade name and domain name
|
|
|
8
|
|
|
|
1,802
|
|
|
|
(1,731
|
)
|
|
|
71
|
|
Proprietary user information database and internet traffic
|
|
|
5
|
|
|
|
1,202
|
|
|
|
(1,202
|
)
|
|
|
—
|
|
Total intangible assets
|
|
|
|
|
|
$
|
11,284
|
|
|
$
|
(10,778
|
)
|
|
$
|
506
|
|
Intangible assets are amortized over their estimated useful lives, which range from approximately two to 17 years, using methods of amortization that are expected to reflect the estimated pattern of economic use. The remaining amortization expense will be recognized over a weighted-average period of approximately
5.19
years. Amortization expense was $0.1 million for each of the nine months ended September 30, 2018 and 2017. Amortization expense is recorded within operating expenses as the intangible assets consist of customer-related assets which generate website traffic that the Company considers to be in support of selling and marketing activities. The Company did not write off any fully amortized intangible assets in the first nine months of 2018.
On August 1, 2018, the Company acquired certain of the operating assets associated with the business-to-business contact management provider Oceanos Marketing, Inc., for total consideration of $0.6 million. The
change in the gross carrying amount of intangible assets during the nine months ended September 30, 2018 was due mainly to the Oceanos acquisition mentioned above, offset in part by foreign currency translation losses.
The Company expects amortization expense of intangible assets to be as follows:
Years Ending December 31:
|
|
Amortization
Expense
|
|
2018 (October 1 – December 31)
|
|
$
|
38
|
|
2019
|
|
|
135
|
|
2020
|
|
|
114
|
|
2021
|
|
|
130
|
|
2022
|
|
|
160
|
|
Thereafter
|
|
|
315
|
|
Total
|
|
$
|
892
|
|
Goodwill and indefinite-lived intangible assets are not amortized but are reviewed annually for impairment or more frequently if impairment indicators arise. The Company did not have any intangible assets other than goodwill with indefinite lives as of September 30, 2018 or December 31, 2017. There were no indications of impairment as of September 30, 2018, and the Company believes that, as of the balance sheet dates presented, none of the Company’s goodwill or intangible assets was impaired.
13
7. Net Income Per Common Share
A reconciliation of the numerator and denominator used in the calculation of basic and diluted net income per common share is as follows:
|
|
For the Three Months Ended
|
|
|
For the Nine Months Ended
|
|
|
|
September 30,
|
|
|
September 30,
|
|
|
|
2018
|
|
|
2017
|
|
|
2018
|
|
|
2017
|
|
Numerator:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income
|
|
$
|
3,769
|
|
|
$
|
2,074
|
|
|
$
|
10,283
|
|
|
$
|
3,406
|
|
Denominator:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average shares of common stock and vested,
undelivered restricted stock units outstanding
|
|
|
27,827,296
|
|
|
|
27,554,586
|
|
|
|
27,627,083
|
|
|
|
27,521,244
|
|
Diluted:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average shares of common stock and vested,
undelivered restricted stock units outstanding
|
|
|
27,827,296
|
|
|
|
27,554,586
|
|
|
|
27,627,083
|
|
|
|
27,521,244
|
|
Effect of potentially dilutive shares
(1)
|
|
|
936,730
|
|
|
|
765,799
|
|
|
|
1,083,798
|
|
|
|
754,043
|
|
Total weighted average shares of common stock and vested,
undelivered restricted stock units outstanding and potentially
dilutive shares
|
|
|
28,764,026
|
|
|
|
28,320,385
|
|
|
|
28,710,881
|
|
|
|
28,275,287
|
|
Net Income Per Share:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic net income per share
|
|
$
|
0.14
|
|
|
$
|
0.08
|
|
|
$
|
0.37
|
|
|
$
|
0.12
|
|
Diluted net income per share
|
|
$
|
0.13
|
|
|
$
|
0.07
|
|
|
$
|
0.36
|
|
|
$
|
0.12
|
|
(1)
|
In calculating diluted net income per share,
0.5 million
shares related to outstanding stock options and unvested, undelivered restricted stock units were excluded for each of the three and nine months ended September 30, 2018, and 0.3 million shares related to outstanding stock options and unvested, undelivered restricted stock units were excluded for each of the three and nine months ended September 30, 2017 because including them would have been anti-dilutive.
|
8
. Term Loan Agreement
On May 9, 2016, the Company entered into a Senior Secured Credit Facilities Credit Agreement for a term loan (the “Term Loan Agreement”). Under the Term Loan Agreement, the Company borrowed and received $50.0 million in aggregate principal amount pursuant to a five-year term loan (the “Term Loan”). The borrowings under the Term Loan Agreement are secured by a lien on substantially all of the assets of the Company, including a pledge of the stock of certain of its wholly-owned subsidiaries. As of September 30, 2018, the carrying amount of the Term Loan was $24.8 million.
At the Company’s option, the Term Loan Agreement bears interest at either an annual rate of 1.50% plus the higher of (a) the Prime Rate in effect on such day and (b) the Federal Funds Effective Rate in effect on such day plus 0.50%, or the London Interbank Offered Rate (“LIBOR”) plus 2.50%. The applicable interest rate was 4.58% at September 30, 2018, representing LIBOR plus the applicable margin of 2.50%. Interest expense under the Term Loan Agreement was $1.0 million for each of the nine months ended September 30, 2018 and 2017. This includes non-cash interest expense of $84 and $81 for the nine months ended September 30, 2018 and 2017, respectively, related to the amortization of deferred issuance costs. During the nine months ended September 30, 2018, the Company made principal payments totaling $7.5 million.
The Term Loan Agreement requires the Company to maintain compliance with certain covenants, including leverage and fixed charge coverage ratio covenants. At September 30, 2018, the Company was in compliance with all covenants under the Term Loan Agreement.
14
9. Commitments and Contingencies
Operating Leases
The Company conducts its operations in leased office facilities under various noncancelable operating lease agreements that expire through December 2029.
The lease for the Company’s Newton office contains rent concessions, which the Company is receiving over the life of the lease. Certain of the Company’s operating leases include lease incentives and escalating payment amounts and are renewable for varying periods. The Company is recognizing the related rent expense on a straight-line basis over the term of each lease, taking into account the lease incentives and escalating lease payments. Total rent expense under the Company’s leases was approximately $3.0 million and $3.4 million for the nine months ended September 30, 2018 and 2017, respectively.
Future minimum lease payments under the Company’s noncancelable operating leases at September 30, 2018 are as follows:
Years Ending December 31:
|
|
Minimum
Lease
Payments
|
|
2018 (October 1 – December 31)
|
|
$
|
1,081
|
|
2019
|
|
|
4,194
|
|
2020
|
|
|
3,637
|
|
2021
|
|
|
3,730
|
|
2022
|
|
|
3,397
|
|
Thereafter
|
|
|
24,664
|
|
Total
|
|
$
|
40,703
|
|
Litigation
From time to time and in the ordinary course of business, the Company may be subject to various claims, charges, and litigation. At September 30, 2018 and December 31, 2017, the Company did not have any pending claims, charges, or litigation that it expects would have a material adverse effect on its consolidated financial position, results of operations, or cash flows
.
10. Stock-Based Compensation
Stock Option and Incentive Plans
In April 2007, the Board approved the 2007 Stock Option and Incentive Plan (the “2007 Plan”), which was approved by the stockholders of the Company and became effective upon the consummation of the Company’s IPO in May 2007. The 2007 Plan allowed the Company to grant ISOs, NSOs, stock appreciation rights, deferred stock awards, restricted stock units and other awards. Under the 2007 Plan, stock options could not be granted at less than fair market value on the date of grant, and grants generally vested over a three- to four-year period. Stock options granted under the 2007 Plan expire no later than ten years after the grant date.
Additionally, beginning with awards made in August 2015, the Company had the option to direct a net issuance of shares for satisfaction of tax liability with respect to vesting of awards and delivery of shares. Prior to August 2015, this choice of settlement method was solely at the discretion of the award recipient.
At the inception of the plan, t
he Company reserved for issuance an aggregate of 2,911,667 shares of common stock under the 2007 Plan, which expired in May 2017. The 2007 Plan was subject to an automatic annual increase of shares on January 1 of each year, beginning on January 1, 2008, equal to the lesser of (a) 2% of the outstanding number of shares of common stock (on a fully-diluted basis) on the immediately preceding December 31 and (b) such lower number of shares as may be determined by the compensation committee of the Board. The number of shares available for issuance under the 2007 Plan was subject to adjustment in the event of a stock split, stock dividend or other change in capitalization. Approximately 8,224,334 shares were added to the 2007 Plan in accordance with the automatic annual increase and other provisions. No new awards may be granted under the 2007 Plan; however, the shares of common stock remaining in the 2007 Plan are available for issuance in connection with previously awarded grants under the 2007 Plan.
There are 523,500 shares of common stock that remain subject to outstanding stock grants under the 2007 Plan as of September 30, 2018.
In March 2017, the Board approved the 2017 Stock Option and Incentive Plan (the “2017 Plan”), which was approved by the stockholders of the Company at the 2017 Annual Meeting and became effective June 16, 2017. The 2017 Plan replaces the Company’s 2007 Plan. On that date, approximately 3,000,000 shares of Common Stock were reserved for issuance under the 2017 Plan and, generally, shares that are forfeited or canceled from awards under the 2017 Plan also will be available for future awards. Under the 2017 Plan, the Company may grant restricted stock and restricted stock units, non-qualified stock options, stock appreciation rights,
15
performance awards, and other stock-base
d and cash-based awards.
Grants generally vest in equal tranches over a three-year period. Stock options granted under the 2017 Plan expire no later than ten years after the grant date.
Shares of stock issued pursuant to restricted stock awards are restric
ted in that they are not transferable until they vest. Stock underlying awards of restricted stock units are not issued until the units vest. Non-qualified stock options cannot be exercised until they vest. Under the 2017 Plan, all stock options and stock
appreciation rights must be granted with an exercise price that is at least equal to the fair market value of the stock on the date of grant. The 2017 Plan broadly prohibits the repricing of options and stock appreciation rights without stockholder approva
l and requires that no dividends or dividend equivalents be paid with respect to options or stock appreciation rights. The 2017 Plan further provides that, in the event any dividends or dividend equivalents are declared with respect to restricted stock, re
stricted stock units, other stock-based awards and performance awards (referred to as “full-value awards”), they would be subject to the same vesting and forfeiture provisions as the underlying award. There is a total of
1,014,761
shares of common stock th
at remain subject to outstanding stock grants under the 2017 Plan as of September 30, 2018.
Accounting for Stock-Based Compensation
The Company uses the Black-Scholes option pricing model to calculate the grant date fair value of an award.
The expected volatility of options granted has been determined using a weighted average of the historical volatility of the Company’s stock for a period equal to the expected life of the option. The expected life of options has been determined utilizing the “simplified” method. The risk-free interest rate is based on a zero coupon U.S. treasury instrument whose term is consistent with the expected life of the stock options. The Company has not paid and does not anticipate paying cash dividends on its shares of common stock; therefore, the expected dividend yield is assumed to be zero. The Company applied an estimated annual forfeiture rate based on historical averages in determining the expense recorded in each period.
A summary of the stock option activity under the Company’s plans for the nine months ended September 30, 2018 is presented below:
Year-to-Date Activity
|
|
Options
Outstanding
|
|
|
Weighted-
Average
Exercise Price
Per Share
|
|
|
Weighted-
Average
Remaining
Contractual
Term in
Years
|
|
|
Aggregate
Intrinsic
Value
|
|
Options outstanding at December 31, 2017
|
|
|
344,090
|
|
|
$
|
6.41
|
|
|
|
|
|
|
|
|
|
Granted
|
|
|
20,000
|
|
|
$
|
28.42
|
|
|
|
|
|
|
|
|
|
Exercised
|
|
|
(168,090
|
)
|
|
$
|
5.69
|
|
|
|
|
|
|
$
|
2,627
|
|
Forfeited
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cancelled
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Options outstanding at September 30, 2018
|
|
|
196,000
|
|
|
$
|
9.27
|
|
|
|
4.35
|
|
|
$
|
2,169
|
|
Options exercisable at September 30, 2018
|
|
|
176,000
|
|
|
$
|
7.10
|
|
|
|
3.74
|
|
|
$
|
2,169
|
|
Options vested or expected to vest at September 30, 2018
|
|
|
194,108
|
|
|
$
|
9.09
|
|
|
|
4.29
|
|
|
$
|
2,169
|
|
The total intrinsic value of options exercised (i.e. the difference between the market price at exercise and the price paid by the employee to exercise the options) was $2.6 million and $0.4 million during the nine months ended September 30, 2018 and September 30, 2017, respectively. The total amount of cash received from exercise of these options was approximately $1.0 million and $0.6 million during the nine months ended September 30, 2018 and 2017, respectively.
16
Restricted Stock Units
Restricted stock units are valued at the market price of a share of the Company’s common stock on the date of the grant. A summary of the restricted stock unit activity under the Company’s plans for the nine months ended September 30, 2018 is presented below:
Year-to-Date Activity
|
|
Shares
|
|
|
Weighted-
Average
Grant Date
Fair Value
Per Share
|
|
|
Aggregate
Intrinsic
Value
|
|
Nonvested outstanding at December 31, 2017
|
|
|
1,414,000
|
|
|
$
|
9.37
|
|
|
|
|
|
Granted
|
|
|
527,734
|
|
|
$
|
28.03
|
|
|
|
|
|
Vested
|
|
|
(693,473
|
)
|
|
$
|
9.15
|
|
|
|
|
|
Forfeited
|
|
|
(6,000
|
)
|
|
$
|
9.57
|
|
|
|
|
|
Nonvested outstanding at September 30, 2018
|
|
|
1,242,261
|
|
|
$
|
17.42
|
|
|
$
|
23,976
|
|
There were 693,473 and 759,866 restricted stock units with a total grant-date fair value of $6.3 million and $6.2, that vested during the three months ended September 30, 2018 and 2017, respectively.
As of September 30, 2018, there was $20.1 million of total unrecognized compensation expense related to stock options and restricted stock units, which is expected to be recognized over a weighted average period of
2.0
years.
11. Stockholders’ Equity
Reserved Common Stock
As of September 30, 2018, the Company has reserved 7,840,711 shares of common stock for use in settling outstanding options and unvested restricted stock units that have not been issued as well as future awards available for grant under the 2017 Plan.
Common Stock Repurchase Program
In June 2016, the Company announced that the Board had authorized a $20.0 million stock repurchase program (the “Repurchase Program”), whereby the Company was authorized to repurchase the Company’s common stock from time to time on the open market or in privately negotiated transactions at prices and in the manner determined by the Board. On May 5, 2017, the Company’s Board reauthorized the common stock repurchase program to allow the Company to use the remaining balance of the unused authorization under the Repurchase Program after its original expiration in June 2017. The reauthorized program allows the Company to repurchase its common stock from time to time on the open market or in privately negotiated transactions at prices and in the manner that may be determined by management. The reauthorized program has no time limit and may be suspended at any time. Additionally, the Company may establish, from time to time, 10b5-1 trading plans that will provide flexibility as it buys back its shares. Pursuant to the Repurchase Program, the Company repurchased 211,729 and 543,328 shares of common stock for an aggregate purchase price of $4.0 million and $5.2 million in the nine months ended September 30, 2018 and 2017, respectively. The Repurchase Program expired in August 2018 and the Company is announcing an additional stock repurchase program of $25.0 million over a two-year period beginning in November 2018.
Repurchased shares are recorded under the cost method and are reflected as treasury stock in the accompanying Consolidated Balance Sheets.
All share repurchases were funded with cash on hand.
12. Income Taxes
The Company’s effective income tax rate before discrete items was 27.4% and 44.7% for the nine months ended September 30, 2018 and 2017, respectively. The Company recognized income tax benefits for discrete items of $2.2 million
and $0.8 million during the nine months ended September 30, 2018 and 2017, respectively. The Company measures its interim period tax expense using an estimated annual effective tax rate and adjustments for discrete taxable events that occur during the interim period. The estimated annual
effective income tax rate is based upon the Company’s estimations of annual pre-tax income, the geographic mix of pre-tax income, and its interpretations of tax laws. The Company updates the estimate of its annual effective tax rate at the end of each quarterly period. The Company’s practice is to recognize interest and/or penalties related to income tax matters in income tax expense.
In December 2017, the legislation commonly referred to as the Tax Cuts and Jobs Act of 2017 (the “Act”) was signed into law making significant changes to the Internal Revenue Code. Changes include, but are not limited to, a corporate tax rate decrease from
17
35% to 21% effective for tax years beginning after December 31, 2017 and a one-time transition tax on the mandatory deemed repatriation of cumulative foreign earnings as of December 31, 2017.
On December 22, 2017, Staff Accounting Bulletin No. 118 was issued to address the application of U.S. GAAP in situations when a registrant does not have the necessary information available, prepared or analyzed (including computations) in reasonable detail to complete the accounting for certain income tax effects of the Act. In the first quarter of 2018, the Company obtained additional information affecting the provisional amount initially recorded for the transition tax for the three months ended December 31, 2017. As a result, the Company recorded an immaterial adjustment to the transition tax. Additional analysis of historical foreign earnings is necessary to complete the calculation of the transition tax. Any subsequent adjustment to the amount will be recorded to current tax expense in the quarter of 2018 when the analysis is complete.
In the first quarter of 2017,
the Company adopted ASU 2016-09, which requires that all excess tax benefits and tax deficiencies related to stock-based compensation be recognized as income tax expense or benefit in the Consolidated Statements of Income and Comprehensive Income in the period incurred.
The Company recognized $2.1 million and $
0
.5 million of income tax benefits from excess deductions net of shortfalls during the nine months ended September 30, 2018 and 2017, respectively.
As part of adopting ASU 2016-09, the Company recorded deferred tax assets for the federal and state excess tax benefit net operating losses in the amount of $0.2 million, with an offsetting entry to retained earnings.
13. Segment Information
The Company views its operations and manages its business as one operating segment based on factors such as how the Company manages its operations and how its executive management team reviews results and makes decisions on how to allocate resources and assess performance.
Geographic Data
Net sales to unaffiliated customers by geographic area were as follows:
|
|
Three Months Ended
September 30,
|
|
|
Nine Months Ended
September 30,
|
|
|
|
2018
|
|
|
2017
|
|
|
2018
|
|
|
2017
|
|
United States
|
|
$
|
22,799
|
|
|
$
|
20,971
|
|
|
$
|
65,755
|
|
|
$
|
56,955
|
|
United Kingdom
|
|
|
3,571
|
|
|
|
2,922
|
|
|
|
10,824
|
|
|
|
8,563
|
|
Other international
|
|
|
4,372
|
|
|
|
4,119
|
|
|
|
12,934
|
|
|
|
12,735
|
|
Total
|
|
$
|
30,742
|
|
|
$
|
28,012
|
|
|
$
|
89,513
|
|
|
$
|
78,253
|
|
Long-lived assets by geographic area were as follows:
|
|
September 30,
2018
|
|
|
December 31,
2017
|
|
United States
|
|
$
|
100,451
|
|
|
$
|
98,683
|
|
International
|
|
|
5,130
|
|
|
|
5,402
|
|
Total
|
|
$
|
105,581
|
|
|
$
|
104,085
|
|
Net sales to unaffiliated customers by geographic area is based on the customers’ current billing addresses, and does not consider the geo-targeted (target audience) location of the campaign. Long-lived assets are comprised of property and equipment, net; goodwill; and intangible assets, net.
No single country outside of the U.S. accounted for 10% or more of the Company’s long-lived assets during either of these periods.
18