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Net Income Per Share (Tables)

12 Months Ended

Dec. 31, 2019

The following table sets forth the computation of basic and diluted net income per share for fiscal years 2019, 2018 and 2017 (in thousands):



	Year Ended December 31,
	2019		2018		2017
Net income	$	20,108	$	54,687	$	16,727
Shares used to compute basic net income per share	35,285		34,935		34,627
Dilutive potential common shares:
Stock options and employee stock purchase plan shares	83		117		388
Unvested restricted stock awards	213		368		276
Shares used to compute diluted net income per share	35,581		35,420		35,291
Basic net income per share	$	0.57	$	1.57	$	0.48
Diluted net income per share	$	0.57	$	1.54	$	0.47

Potentially dilutive shares included in the calculation	917		1,285		1,384
Anti-dilutive shares excluded from the calculation	1,202		1,020		1,325

CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands	Dec. 31, 2019	Dec. 31, 2018
Current assets:
Cash and cash equivalents	$ 303,261	$ 230,852
Accounts receivable, net	47,016	41,028
Prepaid expenses and other current assets	26,703	34,841
Total current assets	376,980	306,721
Property and equipment, net	58,834	76,188
Right-of-use assets	45,453
Intangible assets, net	26,669	29,540
Goodwill	88,974	88,576
Deferred tax assets, net	14,387	12,375
Other assets	19,215	18,088
Total assets	630,512	531,488
Current liabilities:
Accounts payable	6,104	7,212
Accrued expenses	53,864	51,385
Contributor royalties payable	25,193	22,971
Deferred revenue	141,922	139,604
Other liabilities	18,811	2,131
Total current liabilities	245,894	223,303
Lease liabilities	47,313
Other non-current liabilities	9,160	21,518
Total liabilities	302,367	244,821
Commitments and contingencies (Note 16)
Stockholders’ equity:
Common stock, $0.01 par value; 200,000 shares authorized; 38,055 and 37,618 shares issued and 35,497 and 35,060 shares outstanding as of December 31, 2019 and December 31, 2018, respectively	381	376
Additional paid-in capital	312,824	291,710
Treasury stock, at cost; 2,558 shares as of December 31, 2019 and December 31, 2018	(100,027)	(100,027)
Accumulated other comprehensive loss	(6,220)	(6,471)
Retained earnings	121,187	101,079
Total stockholders’ equity	328,145	286,667
Total liabilities and stockholders’ equity	$ 630,512	$ 531,488

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017
Statement of Comprehensive Income [Abstract]
Net income	$ 20,108	$ 54,687	$ 16,727
Foreign currency translation gain / (loss)	251	(2,914)	13,504
Other comprehensive income / (loss)	251	(2,914)	13,504
Comprehensive income	$ 20,359	$ 51,773	$ 30,231

- Definition

The portion of profit or loss for the period, net of income taxes, which is attributable to the parent.

+ References + Details

Summary of Operations and Significant Accounting Policies - Employee Benefit Plans (Details) - USD ($) $ in Millions	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017
Accounting Policies [Abstract]
Employer matching contributions	$ 3.7	$ 3.2	$ 1.8

Equity-Based Compensation - Weighted Average Assumptions (Details) - Stock options - $ / shares	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Expected term (in years)	6 years 3 months 18 days	6 years 3 months 18 days	6 years 2 months 12 days
Volatility	45.40%	47.80%	50.00%
Risk-free interest rate	1.83%	2.625%	2.15%
Dividend yield	0.00%	0.00%	0.00%
Weighted average fair value per share granted (in dollars per share)	$ 18.05	$ 23.64	$ 24.19

Summary of Operations and Significant Accounting Policies

12 Months Ended

Dec. 31, 2019

Accounting Policies [Abstract]

Summary of Operations and Significant Accounting Policies

Description of Business

Shutterstock (the “Company” or “Shutterstock”) is a global technology company offering a creative platform, which provides high-quality content, tools and services to creative professionals. The content licensed by the Company’s customers includes:


•	Images - consisting of photographs, vectors and illustrations. Images are typically used in visual communications, such as websites, digital and print marketing materials, corporate communications, books, publications and other similar uses.


•	Footage - consisting of video clips, premium footage filmed by industry experts and cinema grade video effects, available in HD and 4K formats. Footage is often integrated into websites, social media, marketing campaigns and cinematic productions.


•	Music - consisting of high-quality music tracks and sound effects, which are often used to complement images and footage.

The Company licenses content to its customers. Contributors upload their content to the Company’s web properties in exchange for royalty payments based on customer download activity. The Company also offered digital asset management services through its cloud-based digital asset management platform (“Webdam”). As discussed in Note 4, on February 26, 2018, the Company completed a sale transaction, pursuant to which the buyer in the transaction acquired certain assets and assumed certain contracts and liabilities which constituted the Company’s digital asset management business (the “Sale of Webdam”).

Principles of Consolidation and Basis of Presentation

The consolidated financial statements and accompanying notes have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) and include the accounts of the Company and its wholly owned subsidiaries. All intercompany balances and transactions have been eliminated in consolidation.

Certain immaterial changes in presentation have been made to conform the prior period presentation to current period reporting.

Use of Estimates

The preparation of the consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported and disclosed in the financial statements. Actual results could differ from those estimates. Such estimates include, but are not limited to, the determination of the allowance for doubtful accounts, the volume of expected unused licenses for our subscription-based products, the assessment of recoverability of property and equipment, the fair value of acquired goodwill and intangible assets, the grant-date fair value of non-cash equity-based compensation, the assessment of recoverability of deferred tax assets, the measurement of income tax and contingent non-income tax liabilities and the determination of the incremental borrowing rate used to calculate the lease liability.

Concentration of Risk

Financial instruments that are exposed to concentration of credit risk consist primarily of cash and cash equivalents and accounts receivable balances. Cash and cash equivalents are held with financial institutions of high quality. Balances may exceed the amount of insurance provided on such deposits.

The majority of the Company’s revenues are derived from customers who license content using electronic payments at the time of a transaction. The Company’s accounts receivable are primarily from enterprise customers who require invoicing. The Company performs initial and ongoing credit reviews on these customers, which involve consideration of the customers’ financial information, their location, and other factors to assess the customers’ ability to pay. The Company also performs ongoing financial condition evaluations for its existing customers. As of December 31, 2019 and 2018, no single customer accounted for or exceeded 10% of accounts receivable.

Additionally, no single customer accounted for or exceeded 10% of revenue for the years ended December 31, 2019, 2018 or 2017.

Cash, Cash Equivalents and Restricted Cash

The following represents the Company’s cash, cash equivalents and restricted cash as of December 31, 2019 and 2018 (in thousands):



	As of December 31, 2019		As of December 31, 2018
Cash and cash equivalents	$	303,261	$	230,852
Restricted cash	2,613		2,613
Total cash, cash equivalents and restricted cash	$	305,874	$	233,465

The Company’s cash and cash equivalents consist primarily of (i) cash on hand and bank deposits and (ii) money market accounts, which are stated at cost, which approximates fair value.

The Company’s restricted cash relates to security deposits related to the lease for its headquarters in New York City, which expires in 2029. The carrying value of restricted cash approximates fair value. Restricted cash is included as a component of other assets on the Consolidated Balance Sheets.

Fair Value Measurements

The Company records its financial assets and liabilities at fair value. Fair value is determined 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 reporting date. Fair value is estimated by applying inputs which are classified into the following levels of a three-tier hierarchy as follows: Level 1 - quoted prices (unadjusted) in active markets for identical assets or liabilities; Level 2- inputs other than quoted prices included within Level 1 that are either directly or indirectly observable; and Level 3 - unobservable inputs in which little or no market activity exists, therefore requiring an entity to develop its own assumptions regarding what market participants would use in pricing.

Accounts Receivable and Allowance for Doubtful Accounts

The Company’s accounts receivable consists of customer obligations due under normal trade terms, carried at their face value less an allowance for doubtful accounts, if required. The Company determines its allowance for doubtful accounts based on an evaluation of the aging of its accounts receivable and on a customer-by-customer basis where appropriate. The Company’s reserve analysis contemplates the Company’s historical loss rate on receivables, specific customer situations and the economic environments in which the Company operates. The following table presents the changes in the Company’s allowance for doubtful accounts (in thousands):



	Year Ended December 31,
	2019			2018			2017
Balance, beginning of period	$	4,697		$	4,088		$	5,495
Add: bad debt expense	84			1,175			1,292
Less: write-offs, net of recoveries and other adjustments	(1,202		)	(566		)	(2,699		)
Balance, end of period	$	3,579		$	4,697		$	4,088

Chargeback and Sales Refund Allowance

The Company establishes a chargeback allowance and sales refund reserve allowance based on factors surrounding historical credit card chargeback trends, historical sales refund trends and other information. As of December 31, 2019 and December 31, 2018, the Company’s combined allowance for chargebacks and sales refunds was $0.3 million, which was included as a component of other current liabilities on the Consolidated Balance Sheets.

Property and Equipment

Property and equipment are stated at cost, net of accumulated depreciation and amortization. Depreciation and amortization is calculated using the straight-line method over the estimated useful lives of the related assets. Generally, the useful lives are as follows:



Equipment	3 years
Furniture and fixtures	7 years
Software	3 years
Leasehold improvements	Shorter of expected useful life or lease term

Capitalized Internal Use Software

The Company capitalizes the qualifying costs of computer software developed for internal use, which are incurred during the application development stage, and amortizes them over the software’s estimated useful life. Costs incurred in the preliminary and post-implementation stages of the Company’s products are expensed as incurred. The amounts capitalized include employee’s payroll and payroll-related costs directly associated with the development activities as well as external direct costs of services used in developing internal-use software. The Company’s policy is to amortize capitalized costs using the straight-line method over the estimated useful life, which is currently three years, beginning when the software is substantially complete and ready for its intended use.

Impairment of Long-Lived Assets

Long-lived assets, inclusive of definite lived intangible assets, are reviewed for impairment whenever events or changes in circumstances indicate that the carrying value of an asset may not be recoverable. Recoverability of assets to be held and used is measured by a comparison of the carrying value of an asset to estimated undiscounted future cash flows expected to be generated by the asset. If the carrying value of an asset exceeds its estimated undiscounted future cash flows, an impairment charge is recognized in the amount by which the carrying value of the asset exceeds the fair value of the asset. Assets to be disposed of would be separately presented in the balance sheet and reported at the lower of the carrying value or the fair value less costs to sell, and are no longer depreciated. The assets and liabilities of a disposed group classified as held for sale would be presented separately in the appropriate asset and liability sections of the balance sheet. There were no long-lived asset impairment charges in 2019, 2018 or 2017.

Goodwill and Intangible Assets

Goodwill and intangible assets acquired in a business combination and determined to have an indefinite useful life are not amortized, but instead tested for impairment at least annually on October 1 of each fiscal year or more frequently if events occur or circumstances exist that indicate that the fair value of a reporting unit may be below its carrying value. In 2018, the Company’s goodwill balance was allocated to four reporting units: Bigstock, Editorial, Images and Music. During the second quarter of 2019, due to changes in the Company’s reporting structure, which resulted in a change in the way management monitors the business, as well as key milestones achieved in the continued integration of the Company’s operations and technology platform, management concluded that the Company now operates with a single reporting unit. The Company evaluated its goodwill immediately prior and subsequent to the change in reporting units and concluded that no adjustment to the carrying value of goodwill was necessary. The aggregate goodwill for the legacy reporting units was assigned to the single content business reporting unit. Since inception through December 31, 2019, the Company has not had any goodwill or indefinite lived intangible asset impairment.

Revenue Recognition

The majority of the Company’s revenue is earned from the license of content. Content licenses are generally purchased on a monthly or annual subscription basis, whereby a customer pays for a predetermined quantity of content that may be downloaded over a specific period of time, or, on a transactional basis, whereby a customer pays for individual content licenses at the time of download. Prior to the Sale of Webdam, the Company also earned revenue from licensing hosted software services through Webdam’s cloud-based tools for businesses, which were purchased as part of a subscription.

Prior to the adoption of Accounting Standards Update (“ASU”) 2014-09, Revenue from Contracts with Customers (Topic 606) (“ASU 2014-09”) on January 1, 2018, and reflected in the reported revenue amounts for the year ended December 31, 2017, the Company recognized revenue when all of the following basic criteria were met: there was persuasive evidence of an arrangement, performance or delivery of services had occurred, the sales price was fixed or determinable, and collectability was reasonably assured. The Company considered persuasive evidence of an arrangement to be an electronic order form, or a signed contract, which contained the fixed pricing terms. Performance or delivery for content licenses was considered to have occurred upon the download of the licensed content. Subscription revenue was recognized upon each download using an effective per-license rate and revenue associated with any unused licenses was recognized at the subscription expiration. Revenue attributable to the hosted software services was recognized ratably during the license subscription.

Effective January 1, 2018, subsequent to the adoption of ASU 2014-09, the Company recognizes revenue upon the satisfaction of performance obligations, which occurs when (i) content is downloaded by a customer or (ii) hosted software services are provisioned and available to a customer. For content licenses, the Company recognizes revenue on both its subscription-based and transaction-based sales when content is downloaded, at which time the license is provided. In addition, management estimates expected unused licenses for subscription-based products and recognizes the revenue associated with the unused licenses throughout the subscription period. The estimate of unused licenses is based on historical download activity and future changes in the estimate could impact the timing of revenue recognition of the Company’s subscription products. Revenue associated with hosted software services is recognized ratably over the term of the license. ASU 2014-09 has resulted in a change in the timing of recognizing revenue on the Company’s content license subscription products. ASU 2014-09 did not impact revenue recognition on content licenses sold on a transactional basis or license revenue associated with hosted software services.

Prior to the adoption of ASU 2014-09, the Company deferred certain acquisition costs that were then amortized over a period of less than one year. Effective January 1, 2018, the Company expenses contract acquisition costs as incurred, to the extent that the amortization period would otherwise be one year or less.

Collectability is reasonably assured at the time the electronic order or contract is entered. The majority of the Company’s customers purchase products by making electronic payments at the time of the transaction with a credit card. Customer payments received in advance of revenue recognition are contract liabilities and are recorded as deferred revenue. Customers that do not pay in advance are invoiced and are required to make payments under standard credit terms. Collectability for customers who pay on credit terms allowing for payment beyond the date at which service commences, is based on a credit evaluation for certain new customers and transaction history with existing customers.

The Company recognizes revenue gross of contributor royalties because the Company is the principal in the transaction as it is the party responsible for the performance obligation and it controls the product or service before transferring it to the

customer. The Company also licenses content to customers through third-party resellers. Third-party resellers sell the Company’s products directly to customers as the principal in those transactions. Accordingly, the Company recognizes revenue net of costs paid to resellers.

The Company adopted ASU 2014-09 on January 1, 2018 using the modified retrospective approach, and prior period amounts were not restated. The effect of adoption of this guidance on the Consolidated Balance Sheet as of January 1, 2018 was to reduce (i) prepaid expenses and other current assets by $3.7 million and (ii) deferred revenues by $9.9 million, with an offsetting $6.2 million increase in 2018 opening retained earnings.

Cost of Revenue

The Company’s cost of revenue includes contributor royalties, credit card processing fees, content reviewer expenses, hosting and bandwidth expenses, content personnel salaries, non-cash equity-based compensation, amortization of content and technology intangible assets, and depreciation of network equipment, which are the direct costs related to providing content and service to customers. Additionally, the Company includes an allocation of overhead costs primarily related to payroll, insurance, and facilities expenses based on headcount.

Contributor Royalties and Internal Sales Commissions

The Company expenses contributor royalties in the period a customer download occurs and includes the corresponding contributor royalties in cost of revenue. Contributor royalties are generally paid weekly or monthly. The Company advances certain contributor royalties which are initially deferred and expensed based on the contractual royalty rate at the time of customer download or when the Company determines future recovery is not probable. For the years ended December 31, 2019, 2018 and 2017, the Company deferred $8.4 million, $6.2 million and $4.7 million, respectively, in royalty advances and amortized $9.2 million, $6.1 million and $4.9 million, respectively, in royalty advance expense which is included in cost of revenue. As of December 31, 2019 and 2018, the Company has deferred contributor royalties of $1.9 million and $2.6 million, respectively, which is included in prepaid expenses and other current assets in the Consolidated Balance Sheets.

Internal sales commissions are generally paid in the month following collection or invoicing of the commissioned receivable and is reported in sales and marketing expense. Effective January 1, 2018, upon the adoption of ASU 2014-09, the Company expenses contract acquisition costs, including internal sales commissions as incurred, to the extent that the amortization period would otherwise be one year or less. Prior to the adoption of ASU 2014-09, internal sales commissions were deferred and recognized over the expected future revenue stream which was generally up to 12 months. For the year ended December 31, 2017, the Company deferred $5.5 million, and amortized $5.0 million, in internal sales commission expense which was included in sales and marketing expense on the Consolidated Statements of Operations.

Product Development

The Company expenses product development costs as incurred, except for costs that are capitalized for certain internal software development projects. Product development costs are primarily comprised of development personnel salaries, non-cash equity-based compensation, equipment costs as well as allocated occupancy costs and related overhead.

Advertising Costs

The Company expenses the cost of advertising and promoting its products as incurred. Such costs totaled $102.3 million, $91.5 million and $76.6 million for the years ended December 31, 2019, 2018 and 2017, respectively, which are included in sales and marketing expense in the Consolidated Statements of Operations.

Leasing

The Company records rent expense on a straight-line basis over the term of the related lease. Prior to the adoption of FASB ASU 2016-02, Leases (Topic 842), as amended (“ASC 842”), the difference between the rent expense recognized and the actual payments made in accordance with the operating lease agreement was recognized as a deferred rent liability on the Company’s Consolidated Balance Sheets. As of December 31, 2018, the Company had deferred rent of $11.3 million, which is included in other non-current liabilities on the Consolidated Balance Sheet.

Effective January 1, 2019, the Company adopted ASC 842. In accordance with ASC 842, the Company first determines if an arrangement contains a lease and the classification of that lease, if applicable, at inception. This standard requires the

recognition of right-of-use (“ROU”) assets and lease liabilities for the Company’s operating leases. For contracts with lease and non-lease components, the Company has elected not to allocate the contract consideration, and to account for the lease and non-lease components as a single lease component. The Company has also elected not to recognize a lease liability or ROU asset for leases with a term of 12 months or less, and recognize lease payments for those short-term leases on a straight-line basis over the lease term in the Consolidated Statements of Operations. Operating leases are included in ROU assets, other current liabilities and lease liabilities (net of current portion) on the Consolidated Balance Sheets.

ROU assets represent the Company’s right to use an underlying asset for the lease term and lease liabilities represent the Company’s obligation to make lease payments under the lease. ROU assets and lease liabilities are recognized at the lease commencement date based on the present value of lease payments over the lease term. The implicit rate within the Company’s leases is generally not determinable and therefore the incremental borrowing rate at the lease commencement date is utilized to determine the present value of lease payments. The determination of the incremental borrowing rate requires judgment. Management determines the incremental borrowing rate for each lease using the Company’s estimated borrowing rate, adjusted for various factors including level of collateralization, term and currency to align with the terms of the lease. The ROU asset also includes any lease prepayments, offset by lease incentives. Certain of the Company’s leases include options to extend or terminate the lease. An option to extend the lease is considered in connection with determining the ROU asset and lease liability when the Company is reasonably certain that the option will be exercised. An option to terminate is considered unless the Company is reasonably certain the option will not be exercised.

Equity-Based Compensation

The Company measures and recognizes non-cash equity-based compensation expense for all stock-based awards granted to employees based on estimated fair values. The value portion of the award that is ultimately expected to vest is recognized as expense over the requisite service period. Forfeitures are accounted for as they occur. For awards with a change of control condition, an evaluation is made at the grant date and future periods as to the likelihood of the condition being met. Compensation expense is adjusted in future periods for subsequent changes in the expected outcome of the change of control conditions until the vesting date. Compensation expense related to awards with a market condition is recognized ratably over the requisite service period regardless of the achievement of the market condition. Compensation expense related to awards with a performance condition is recognized ratably over the requisite service period based on the expected levels of achievement. To the extent that the expected levels of achievement change, stock-based compensation expense is adjusted and recorded in the Consolidated Statements of Operations and the remaining unrecognized stock-based compensation is recognized over the remaining requisite service period.

The Company uses the closing price of the Company’s common stock on the date of grant to determine the fair value of restricted stock units (“RSUs”) including performance-based restricted stock units (“PRSUs”). The Company uses the Black Scholes option pricing model, to determine the fair value of stock options on the date of grant. The Monte Carlo simulation model is used if the award has a market condition. All awards are granted pursuant to the 2012 Omnibus Equity Incentive Plan (the “2012 Plan”), which is discussed further in Note 10, Equity-Based Compensation.

The determination of the grant date fair value using an option-pricing model and simulation model requires judgment as well as assumptions regarding a number of other complex and subjective variables. These variables include the Company’s closing market price at the grant date, the expected stock price volatility over the expected term of the awards, awards’ exercise and cancellation behaviors, risk-free interest rates, and expected dividends, which are estimated as follows:


•	Fair Value of Common Stock. The grant date fair value for stock-based awards is based on the closing price of the Company’s common stock on the NYSE on the date of grant and fair value for all other purposes related to stock-based awards shall be the closing price of the Company’s common stock on the NYSE on the relevant date.


•	Expected Term. The expected term is estimated using the simplified method allowed under Securities and Exchange Commission (“SEC”) guidance. In certain cases for market based awards, the Company’s expected term is based on a combination of historical data and estimates of the period of time the award will be outstanding.


•	Volatility. The volatility is estimated based on historical price volatility of the Company’s common stock.


•	Risk-free Interest Rate. The risk-free interest rate is based on the yields of U.S. Treasury securities with maturities similar to the expected term of each award group.


•	Dividend Yield. The Company determines the dividend yield based on management’s expectations of future dividends. The Company used an expected dividend yield of zero for options granted through 2019.

If any of the assumptions used in the Black-Scholes pricing model or Monte Carlo simulation model changes significantly, the fair value for future awards may differ materially compared with the awards granted previously. The awards granted pursuant to the 2012 Plan are subject to a time-based vesting requirement and certain award grants may also include market based or performance based vesting conditions. Stock option awards granted under the 2012 Plan vest over three or four years while the majority of the restricted stock units granted under the 2012 Plan vest over three years.

Employee Benefit Plans

The Company offers a 401(k) defined contribution plan and provides for discretionary employer matching contributions. All matching contributions are recognized as an expense in the Statement of Operations, as incurred. The Company recorded employer matching contributions of $3.7 million, $3.2 million and $1.8 million for the years ended December 31, 2019, 2018 and 2017, respectively.

Income Taxes

The Company’s income tax expense includes U.S. (federal and state) and foreign income taxes. Deferred income tax balances reflect the effects of temporary differences between the carrying amounts of assets and liabilities and their tax basis, and are stated at enacted tax rates expected to be in effect when taxes are actually paid or recovered.

The Company accounts for unrecognized tax benefits using a more-likely-than-not threshold for financial statement recognition and measurement of tax positions taken or expected to be taken in a tax return. The Company establishes reserves for tax-related uncertainties based on estimates of whether, and the extent to which, additional taxes may be due. The Company records an income tax liability for the difference, if any, between the benefit recognized and measured and the tax position taken or expected to be taken on the Company’s tax returns. To the extent that the assessment of such tax positions changes, the change in estimate is recorded in the period in which the determination is made. The reserves are adjusted in light of changing facts and circumstances, such as the outcomes of tax audits or lapses in statutes of limitations. Any reserve for uncertain tax provisions and related penalties and interest is included in the income tax provision.

The Company assessed the realizability of deferred tax assets and determined, based on the available evidence including a history of taxable income, estimates of future taxable income and planning strategies, that it is more likely than not that the deferred tax assets will be realized. The Company will continue to evaluate its ability to realize deferred tax assets on a quarterly basis. Significant management judgment is required in determining the provision for income taxes and deferred tax assets and liabilities. In the event that actual results differ from these estimates, the Company will adjust these estimates in future periods which may result in a change in the effective tax rate in a future period.

Except as required under U.S. tax laws, the Company does not provide for U.S. taxes on the undistributed earnings and profits of its foreign subsidiaries. With the enactment of the TCJA, the Company is required to treat the undistributed earnings and profits of its foreign subsidiaries accumulated through a measurement period that should not extend more than one year beyond the date of the enactment of the TCJA as if they were repatriated to the U.S., and pay a current U.S. tax amount as a result of such “deemed” repatriation. The Company’s tax expense for the year ended December 31, 2017 included provisional amounts for such taxes. The Company has not recorded any provision for potential deferred U.S. income taxes or foreign withholding taxes that otherwise may be payable if it were to repatriate such earnings, since the Company does not intend to repatriate such amounts.

In January 2018, the FASB released guidance on the accounting for tax on the global intangible low-taxed income (“GILTI”) provisions of the TCJA. The GILTI provisions impose a tax on foreign income in excess of a deemed return on tangible assets of foreign corporations. In the first quarter of 2018, the Company elected to treat any potential GILTI inclusions as a period cost.

During 2017, the Company recorded provisional estimates for the accounting impacts of the TCJA, including the transition tax, deferred tax re-measurements, and other items, due to the uncertainty regarding how these provisions were to be implemented and additional anticipated forthcoming guidance. Management completed its analysis of the TCJA during 2018, and has not made any significant adjustments to estimates previously recorded. The Company continues to assess the impacts of the TCJA on future fiscal years and is monitoring the Internal Revenue Service guidance intended to interpret the provisions of the TCJA.

Other Non-income Taxes

The Company is subject to certain non-income taxes, including value added taxes, sales taxes and royalty withholding taxes. Where appropriate, the Company has made accruals for these taxes, which are reflected in the Company’s consolidated financial statements. These accruals are subject to statute of limitations requirements and review by governmental authorities.

Treasury Stock

The Company accounts for treasury stock under the cost method and is included as a component of stockholders’ equity. Treasury stock held by the Company may be reissued in the future. The Company’s policy is to account for reissued shares as a reduction of Treasury stock on a first-in, first-out basis.

Net Income Per Share

Basic net income per share is computed by dividing the net income attributable to common stockholders by the weighted average number of common shares outstanding during the period. Any potential issuance of common shares, including those that are contingent and do not participate in dividends, is excluded from weighted average number of common shares outstanding. Income available to common stockholders is computed by deducting income allocated to participating securities, if any, including unvested shares for the restricted award holder since these unvested shares have participating rights.

Diluted net income per share is computed by dividing the net income attributable to common stockholders by the weighted average common shares outstanding and all potential common shares, if they are dilutive.

Reportable Segments

For the year ended December 31, 2019, the Company has identified one operating segment, which has also been determined to be the Company’s primary reportable business segment. Operating segments are defined as components of an enterprise for which separate financial information is available and is evaluated regularly by the Company’s chief operating decision maker (“CODM”), or decision-making group, in deciding how to allocate resources and in assessing performance. The non-reportable segment classified in the Other Category previously included the Company’s digital asset management operating segment, which fails to meet the quantitative or qualitative thresholds for separate segment reporting and was sold on February 26, 2018.

Contingent Consideration

The Company records a liability for contingent consideration at the date of a business combination and reassesses the fair value of the liability each period until it is settled. Upon settlement of these liabilities, the portion of the contingent consideration payment that is attributable to the initial amount recorded as part of the business combination is classified as a cash flow from financing activities and the portion of the settlement that is attributable to subsequent changes in the fair value of the contingent consideration is classified as a cash flow from operating activities in the Consolidated Statement of Cash Flows.

Foreign Currency

The functional currency of the Company’s foreign subsidiaries is generally the respective local currency. Monetary assets and liabilities that are denominated in currencies other than each entity’s functional currency are remeasured into the functional currency at the period-end exchange rates and result in transactional gains and losses. The net impact of foreign currency transactional gains and losses on the Company’s results of operations were gains of $0.2 million and $2.6 million in 2019 and 2017, respectively, and a loss of $2.2 million in 2018. Translation adjustments resulting from converting the foreign subsidiaries financial statements into U.S. dollars using the period-end exchange rates for balance sheet accounts and the period average exchange rate for the Statements of Operations are recorded as a component of accumulated other comprehensive income / (loss) within stockholders’ equity.

Recently Adopted Accounting Standard Updates

In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842). ASU 2016-02 requires that the rights and obligations created by leases with a duration greater than 12 months be recorded as assets and liabilities on the balance sheet of the lessee. This guidance is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2018. The Company has adopted this standard as of January 1, 2019 using the modified retrospective approach for all leases entered into before the effective date. The Company has also elected the option, as permitted in ASU 2018-11, Leases (Topic

842): Targeted Improvements, whereby initial application of the new lease standard would occur at the adoption date and a cumulative-effect adjustment, if any, would be recognized to the opening balance of retained earnings in the period of adoption. For comparability purposes, the Company will continue to comply with previous disclosure requirements in accordance with existing lease guidance for all periods presented in the year of adoption.

The Company has elected the practical expedients permitted under the transition guidance which enabled the Company: (1) to carry forward the historical lease classification; (2) not to reassess whether expired or existing contracts are or contain leases; and (3) not to reassess the treatment of initial direct costs for existing leases. In addition, the Company has made an accounting policy election to keep leases with an initial term of 12 months or less off the balance sheet. Upon adoption of this standard on January 1, 2019, the Company recognized a total lease liability in the amount of $58.0 million, representing the present value of the minimum rental payments remaining as of the adoption date and a right-of-use asset in the amount of $46.7 million.

Recently Issued Accounting Standard Updates

In June 2016, the FASB issued ASU 2016-13, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses of Financial Instruments (“ASU 2016-13”). ASU 2016-13 replaces the current incurred loss impairment methodology with a methodology that reflects expected credit losses. The ASU is intended to provide financial statement users with more decision-useful information about the expected credit losses on financial instruments and other commitments to extend credit held by a reporting entity at each reporting date. Adoption of this guidance is required, prospectively, for annual periods beginning after December 15, 2019, with early adoption permitted for annual periods beginning after December 15, 2018. Effective January 1, 2020, the Company will adopt ASU 2016-13 on a prospective basis. Adoption of ASU 2016-13 is not expected to have a material effect on the Company’s consolidated financial statements. The Company is finalizing its evaluation of the impact of this new standard on its financial statements.

In August 2018, the FASB issued ASU 2018-13, Disclosure Framework - Changes to the Disclosure Requirements for Fair Value Measurements (“ASU 2018-13”), which eliminates, adds and modifies certain disclosure requirements for fair value measurements as part of the FASB’s disclosure framework project. Adoption of this guidance is required for fiscal years and interim periods within those fiscal years, beginning after December 15, 2019. Adoption of ASU 2018-13 is not expected to have an impact on the Company’s consolidated financial statements. The Company is finalizing its evaluation of the impact of this new standard on its financial statements.

In August 2018, the FASB issued ASU 2018-15, Customer’s Accounting For Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract (“ASU 2018-15”), which aligns the requirements for capitalizing implementation costs in a cloud computing arrangement with the requirements for capitalizing implementation costs incurred for an internal-use software license. Adoption of this guidance is required for fiscal years beginning after December 15, 2019 and interim periods within those fiscal years and early adoption is permitted. Entities are permitted to choose to adopt the new guidance (1) prospectively for eligible costs incurred on or after the date this guidance is first applied or (2) retrospectively. Effective January 1, 2020, the Company will adopt ASU 2018-15 on a prospective basis. Adoption of ASU 2018-15 is not expected to have a material effect on the Company’s consolidated financial statements. The Company is finalizing its evaluation of the impact of this new standard on its financial statements.

In December 2019, the FASB issued ASU 2019-12, Simplifying the Accounting for Income Taxes (Topic 740) (“ASU 2019-12”), which removes certain exceptions to the general principles in Topic 740 and improves consistent application of and simplifies GAAP for other areas of Topic 740 by clarifying and amending existing guidance. This ASU is effective for fiscal years beginning after December 15, 2020, and interim periods within those fiscal years, with early adoption permitted. The Company is evaluating the impact of this new standard on its financial statements.

Revenue - Narrative (Details) $ in Millions	12 Months Ended
Revenue - Narrative (Details) $ in Millions	Dec. 31, 2019 USD ($) Primary_channel
Revenue from Contract with Customer [Abstract]
Number of primary channels \| Primary_channel	2
Disposal group deferred revenue \| $	$ 136.2

Income Taxes - Tax Rate Reconciliation (Details)	12 Months Ended
Income Taxes - Tax Rate Reconciliation (Details)	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017
Income Tax Disclosure [Abstract]
U.S. income tax at federal statutory rate	21.00%	21.00%	35.00%
Tax credits	(12.60%)	(5.40%)	(4.00%)
State and local taxes, net of federal benefit	1.70%	1.90%	2.10%
Equity-based compensation	2.00%	(0.40%)	1.90%
Foreign rate differential	0.30%	0.50%	(2.30%)
Foreign-derived intangible income deduction	(12.00%)	(3.70%)	0.00%
Uncertain tax positions	12.40%	3.60%	5.20%
Valuation allowance	3.90%	0.00%	0.00%
Transition tax related to TCJA	0.00%	(0.30%)	2.60%
U.S. Federal rate change related to TCJA	0	0	0.124
Domestic production activities deduction	0.00%	0.00%	(9.80%)
Non-deductible—other	2.60%	0.10%	1.30%
Total provision for income taxes	19.30%	17.30%	44.40%

Summary of Operations and Significant Accounting Policies - Advertising Costs (Details) - USD ($) $ in Millions	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017
Advertising Costs
Advertising costs	$ 102.3	$ 91.5	$ 76.6

Stockholders' Equity	12 Months Ended
Stockholders' Equity	Dec. 31, 2019
Equity [Abstract]
Stockholders' Equity	Stockholders’ Equity Dividends On August 1, 2018, the Company’s Board of Directors declared a special cash dividend of $3.00 per share (the “Special Dividend”), which was paid on August 29, 2018 to stockholders of record at the close of business on August 15, 2018. The aggregate payment made in connection with the Special Dividend was $104.9 million. In connection with the Special Dividend, and in accordance with the terms of the Company’s Amended and Restated 2012 Omnibus Equity Incentive Plan (the “2012 Plan”), the Company adjusted outstanding equity awards in order to prevent dilution of such awards. Accordingly, the Company prevented dilution from the impact of the Special Dividend by adjusting the number of outstanding unvested RSUs and outstanding stock options, as well as the exercise price of such outstanding stock options, using a conversion ratio of 1.055, which was determined using a ratio of the closing and opening stock price of the Company’s common stock immediately prior to, and on, the ex-dividend date (the “Special Dividend Adjustment”). On February 11, 2020, the Company’s Board of Directors declared a quarterly cash dividend of $0.17 per share of outstanding common stock payable on March 19, 2020 to stockholders of record at the close of business on March 5, 2020. The Company currently expects to continue to pay comparable cash dividends on a quarterly basis in the future. Future declaration of dividends are subject to the final determination of the Board of Directors, and will be based on the Company’s future financial condition, results of operations, capital requirements, capital expenditure requirements, contractual restrictions, anticipated cash needs, business prospects, provisions of applicable law and other factors the Board of Directors may deem relevant. Common Stock The holders of common stock are entitled to one vote for each share held of record on all matters submitted to a vote of the stockholders. Subject to preferences that may be applicable to any outstanding preferred stock, holders of common stock are entitled to receive ratably such dividends as may be declared by the Board of Directors out of funds legally available for that purpose. In the event of liquidation, dissolution or winding up of the Company, the holders of common stock are entitled to share ratably in all assets remaining after payment of liabilities, subject to the prior distribution rights of any outstanding preferred stock. The common stock has no preemptive or conversion rights or other subscription rights. The outstanding shares of common stock are fully paid and non-assessable. Under the amended and restated certificate of incorporation, which became effective upon completion of the IPO, the Company’s certificate of incorporation authorized 200,000,000 shares of $0.01 per share par value common stock. Preferred Stock Under the amended and restated certificate of incorporation, which became effective upon completion of the IPO, the Company’s Board of Directors has the authority, without further action by the stockholders, to issue up to 5,000,000 shares of preferred stock, $0.01 par value, in one or more series. The Board of Directors also has the authority to designate the rights, preferences, privileges and restrictions of each such series, including dividend rights, dividend rates, conversion rights, voting rights, terms of redemption, redemption prices, liquidation preferences and the number of shares constituting any series. The issuance of preferred stock may have the effect of delaying, deferring or preventing a change in control of Shutterstock without further action by the stockholders. The issuance of preferred stock with voting and conversion rights may also adversely affect the voting power of the holders of common stock. In certain circumstances, an issuance of preferred stock could have the effect of decreasing the market price of the common stock. As of December 31, 2019, the Company has not issued and has no plans to issue any shares of preferred stock. Treasury Stock In October 2015, the Company’s Board of Directors approved a share repurchase program, authorizing the Company to purchase up to $100 million of its common stock. In February 2017, the Company’s Board of Directors approved an increase to the share repurchase program, authorizing the Company to purchase an additional $100 million of its common stock. As of December 31, 2019, the Company has repurchased approximately 2,558,000 shares of its common stock under the share repurchase program at an average per-share cost of approximately $39.09. As of December 31, 2019, there is $100 million of remaining authorization for purchases under the share repurchase program. During 2019, the Company did not repurchase any shares under the share repurchase program. The Company expects to fund repurchases through a combination of cash on hand, cash generated by operations and future financing transactions, if appropriate. Accordingly, the share repurchase program is subject to the Company having available cash to fund repurchases. Under the share repurchase program, management is authorized to purchase shares of the Company’s common stock from time to time through open market purchases or privately negotiated transactions at prevailing prices as permitted by securities laws and other legal requirements, and subject to market conditions and other factors.

Accrued Expenses (Details) - USD ($) $ in Thousands	Dec. 31, 2019	Dec. 31, 2018
Payables and Accruals [Abstract]
Compensation	$ 20,776	$ 15,153
Non-income taxes	10,420	7,885
Royalty tax withholdings	1,315	5,618
Other expenses	21,353	22,729
Total accrued expenses	$ 53,864	$ 51,385

Segment and Geographic Information - Revenue from External Customers by Geographic Areas (Details) - USD ($) $ in Thousands	3 Months Ended								12 Months Ended
	Dec. 31, 2019	Sep. 30, 2019	Jun. 30, 2019	Mar. 31, 2019	Dec. 31, 2018	Sep. 30, 2018	Jun. 30, 2018	Mar. 31, 2018	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017
Segment Reporting Information [Line Items]
Revenue	$ 166,371	$ 159,079	$ 161,741	$ 163,332	$ 162,072	$ 151,575	$ 156,584	$ 153,019	$ 650,523	$ 623,250	$ 557,111
North America
Segment Reporting Information [Line Items]
Revenue									228,185	230,890	218,865
Europe
Segment Reporting Information [Line Items]
Revenue									217,397	207,634	181,693
Rest of the world
Segment Reporting Information [Line Items]
Revenue									$ 204,941	$ 184,726	$ 156,553

Commitments and Contingencies - Narrative (Details) - Customer Indemnifications	Dec. 31, 2019 USD ($)
Loss Contingencies [Line Items]
Maximum indemnification liability per customer	$ 10,000
Liabilities related to indemnification	$ 0

Income Taxes - Changes in Unrecognized Tax Benefits (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017
Reconciliation of unrecognized tax benefits
Balance of unrecognized tax benefits at January 1	$ 5,846	$ 2,966	$ 1,455
Gross additions for tax positions for prior years	173	332	1,412
Gross additions for tax positions for current year	3,842	3,476	273
Gross expirations	(912)	(928)	(174)
Balance of unrecognized tax benefits at December 31	$ 8,949	$ 5,846	$ 2,966

Summary of Operations and Significant Accounting Policies - Reportable Segments (Details)	12 Months Ended
	Dec. 31, 2019 segment
Accounting Policies [Abstract]
Number of operating segments	1

Equity-Based Compensation - Summary of Non-cash Equity-based Compensation Expense (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017
Non-cash equity-based compensation expense related to the 2012 Plan and 2012 ESPP
Total	$ 22,815	$ 23,869	$ 24,958
Stock options
Non-cash equity-based compensation expense related to the 2012 Plan and 2012 ESPP
Total	5,721	6,009	6,364
Restricted stock units
Non-cash equity-based compensation expense related to the 2012 Plan and 2012 ESPP
Total	17,094	17,860	18,594
Cost of revenue
Non-cash equity-based compensation expense related to the 2012 Plan and 2012 ESPP
Total	220	523	795
Sales and marketing
Non-cash equity-based compensation expense related to the 2012 Plan and 2012 ESPP
Total	1,934	2,218	4,452
Product development
Non-cash equity-based compensation expense related to the 2012 Plan and 2012 ESPP
Total	4,737	5,815	6,162
General and administrative
Non-cash equity-based compensation expense related to the 2012 Plan and 2012 ESPP
Total	$ 15,924	$ 15,313	$ 13,549

Unaudited Quarterly Financial Data

12 Months Ended

Dec. 31, 2019

Quarterly Financial Information Disclosure [Abstract]

Unaudited Quarterly Financial Data

The following table sets forth, for the periods indicated, the Company’s financial information for the eight most recent quarters ended December 31, 2019. In the Company’s opinion, this unaudited information has been prepared on a basis consistent with the annual consolidated financial statements and includes all adjustments, consisting only of normal recurring adjustments, necessary for a fair presentation of the unaudited information for the periods presented.



	Three Months Ended
	Dec 31, 2019		Sep 30, 2019			Jun 30, 2019		Mar 31, 2019		Dec 31, 2018		Sep 30, 2018			Jun 30, 2018			Mar 31, 2018

	(in thousands, except per share data)
Revenue^{(1) (2)}	$	166,371	$	159,079		$	161,741	$	163,332	$	162,072	$	151,575		$	156,584		$	153,019
Operating expenses⁽³⁾:
Cost of revenue	71,797		68,635			68,526		69,218		68,829		66,461			67,891			64,490
Sales & marketing	47,182		45,614			44,488		44,446		43,034		41,028			42,018			40,368
Product development	15,103		13,533			13,594		14,986		11,689		14,032			16,728			16,448
General and administrative	26,486		28,114			32,063		26,583		22,881		23,355			24,322			27,224
Total operating expenses	160,568		155,896			158,671		155,233		146,433		144,876			150,959			148,530
Income from operations	5,803		3,183			3,070		8,099		15,639		6,699			5,625			4,489
Gain on Sale of Webdam	—		—			—		—		—		—			—			38,613
Other income / (expense), net⁽⁴⁾	2,816		465			584		896		1,048		217			(7,019		)	802
Income / (Loss) before income taxes	8,619		3,648			3,654		8,995		16,687		6,916			(1,394		)	43,904
Provision / (Benefit) for income tax⁽⁵⁾	4,266		(1,286		)	355		1,473		1,774		(531		)	(1,140		)	11,323
Net income	$	4,353	$	4,934		$	3,299	$	7,522	$	14,913	$	7,447		$	(254	)	$	32,581
Net income per common share:
Basic	$	0.12	$	0.14		$	0.09	$	0.21	$	0.43	$	0.21		$	(0.01	)	$	0.94
Diluted	$	0.12	$	0.14		$	0.09	$	0.21	$	0.42	$	0.21		$	(0.01	)	$	0.92
Weighted average common shares outstanding:
Basic	35,478		35,309			35,232		35,114		35,047		34,991			34,913			34,784
Diluted	35,786		35,541			35,504		35,491		35,421		35,570			34,913			35,318

____________________________________________________________________________

(1)

The Company has recorded certain immaterial adjustments to its unaudited consolidated financial statements for the correction of errors related to prior periods, as follows: (i) During the third quarter of 2018, to decrease enterprise revenue by approximately $0.8 million; and (ii) During the second quarter of 2018 to increase enterprise revenue by approximately $0.4 million and to increase general and administrative expense by approximately $0.8 million. The Company has concluded that the impact of the adjustments recorded during 2018 but related to prior years is not material to the results of operations or financial position for the periods in which these adjustments were recorded nor any prior period financial statements.


(2)	Effective January 1, 2018 the Company adopted ASU 2014-09 using the modified retrospective approach. Historical revenue totals reflect those previously reported and have not been restated.


(3)	Includes non-cash equity-based compensation of $22,815 and $23,869 for the years ended December 31, 2019 and 2018, respectively.


(4)	Includes charges related to the impairment of a long-term investment asset; transaction gains and losses primarily related to cash balances of subsidiaries denominated in a currency other than the subsidiaries’ functional currencies; and interest income and expense, which is not material in any period presented.

(5)

Included in the provision for income taxes for the three months ended December 31, 2017 is approximately $3.7 million of non-cash charges related to a remeasurement of deferred tax assets related to the change in U.S. tax rates from 35% to 21% and approximately 0.8 million of cash charges related to a one-time U.S. cash tax for unrepatriated foreign earnings related to the TCJA.

Summary of Operations and Significant Accounting Policies - Capitalized Internal Use Software and Impairment of Long-Lived Assets (Details) - USD ($)	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017
Impairment of Long-Lived Assets
Impairment charges	$ 0	$ 0	$ 0
Software
Property, Plant and Equipment [Line Items]
Useful lives	3 years

Stockholders' Equity (Details)				12 Months Ended
Stockholders' Equity (Details)	Feb. 11, 2020 $ / shares	Aug. 29, 2018 USD ($)	Aug. 01, 2018 $ / shares	Dec. 31, 2019 USD ($) vote $ / shares shares	Dec. 31, 2018 USD ($) $ / shares shares	Dec. 31, 2017 USD ($)	Feb. 28, 2017 USD ($)	Oct. 31, 2015 USD ($)
Special Dividend
Cash dividend (in dollars per share)			$ 3.00
Payment of Special Dividend \| $		$ 104,900,000		$ 0	$ 104,925,000	$ 0
Conversion ratio				1.055
Common Stock
Number of votes for each share \| vote				1
Common stock, shares authorized (in shares) \| shares				200,000,000	200,000,000
Common stock, par value (in dollars per share)				$ 0.01	$ 0.01
Preferred Stock
Preferred stock, authorized shares (in shares) \| shares				5,000,000
Preferred stock, par value (in dollars per share)				$ 0.01
Treasury Stock
Number of shares acquired \| shares				2,558,000	2,558,000
Common Stock
Treasury Stock
Authorized repurchase amount \| $							$ 100,000,000	$ 100,000,000
Number of shares acquired \| shares				2,558,000
Average per-share cost (in dollars per share)				$ 39.09
Share value remaining for repurchase \| $				$ 100,000,000
Subsequent Event
Special Dividend
Cash dividend (in dollars per share)	$ 0.17

Leasing

12 Months Ended

Dec. 31, 2019

Leases [Abstract]

Leasing

The Company’s leases relate primarily to office facilities that expire on various dates from 2019 through 2029, some of which include one or more options to renew. All of the Company’s leases are classified as operating leases. Operating lease costs, including insignificant costs related to short-term leases were $11.1 million, $9.2 million and $8.5 million for the years ended December 31, 2019, 2018 and 2017, respectively.

The Company made cash payments for operating leases of $10.1 million for the year ended December 31, 2019, which were included in cash flows from operating activities within the Consolidated Statements of Cash Flows. In addition, for the year ended December 31, 2019, the Company also recorded right-of-use assets of $5.9 million obtained in exchange for lease obligations. The Company’s operating leases have a weighted average remaining lease term of 8.25 years and a weighted average discount rate of 6.2%.

Balance sheet information for the Company’s leases as of December 31, 2019, is as follows:



	December 31,
(in thousands)	2019
Right-of-use assets	$	45,453

Lease liabilities, current	$	9,573
Lease liabilities, non-current	47,313
Total lease liabilities	$	56,886

Lease Commitments

Future undiscounted lease payments for the Company’s operating lease liabilities and a reconciliation of these payments to its lease liabilities at December 31, 2019 are as follows (in thousands):



Reconciliation of future undiscounted lease payments to lease liabilities	Lease Commitments
Year ending December 31,
2020	10,013
2021	9,141
2022	8,032
2023	6,558
2024	6,845
Thereafter	33,368
Total undiscounted lease payments	73,957
Less: imputed interest	(17,071		)
Total lease liabilities	$	56,886

The Company’s most significant lease is for its headquarters in New York City, which was entered into in March 2013 and was amended in January 2016 (“ESB Lease”). As amended, the ESB Lease will expire in 2029, and the undiscounted remaining future minimum lease payments are approximately $62.0 million. The Company is also party to a $2.6 million letter of credit, as a security deposit for the ESB Lease, which is collateralized by an equivalent amount of cash, and is reported as restricted cash within other assets on the Consolidated Balance Sheets as of December 31, 2019 and 2018.

Fiscal year 2018 lease commitments in accordance with prior guidance

Future minimum lease payments under non-cancelable operating leases as of December 31, 2018 were as follows (in thousands):



Year Ending December 31,	Operating Leases
2019	$	9,913
2020	8,762
2021	7,493
2022	6,829
2023	6,082
Thereafter	39,481
Total minimum lease payments	$	78,560

Summary of Operations and Significant Accounting Policies - Leasing (Details) $ in Millions	Dec. 31, 2018 USD ($)
Accounting Policies [Abstract]
Deferred rent	$ 11.3

Summary of Operations and Significant Accounting Policies - Recently Adopted Accounting Standard Update (Details) - USD ($) $ in Thousands	Dec. 31, 2019	Jan. 01, 2019
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Total lease liabilities	$ 56,886
Right-of-use assets	$ 45,453
Accounting Standards Update 2016-02
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Total lease liabilities		$ 58,000
Right-of-use assets		$ 46,700

Fair Value Measurements and Other Long-term Investments (Details) - USD ($)		3 Months Ended	12 Months Ended
	Jan. 04, 2018	Jun. 30, 2018	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017	Mar. 31, 2017
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Loss on impairment of long-term investment		$ 5,900,000	$ 0	$ 5,881,000	$ 0
Convertible Preferred Stock \| Variable Interest Entity, Not Primary Beneficiary \| Zcool Network Technology Limited
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Purchase of convertible preferred stock	$ 15,000,000
SilverHub Media Limited
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fair value in equity method investment		$ 0
Zcool Network Technology Limited \| Convertible Preferred Stock
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Purchase of convertible preferred stock	$ 15,000,000.0
Equity ownership interest	25.00%
Convertible Note Maturing October 2021 \| Indirect Guarantee of Indebtedness \| Convertible Notes Payable
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Obligation to lend, maximum exposure						$ 1,600,000
Revolving Credit Facility \| The Facility \| Indirect Guarantee of Indebtedness
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Obligation to lend, maximum exposure						$ 3,300,000

Summary of Operations and Significant Accounting Policies - Revenue Recognition (Details) - USD ($) $ in Thousands	Dec. 31, 2019	Dec. 31, 2018	Jan. 01, 2018
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Prepaid expenses and other current assets	$ 26,703	$ 34,841
Deferred revenue	141,922	139,604
Retained earnings	$ 121,187	$ 101,079
Accounting Standards Update 2014-09
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Prepaid expenses and other current assets			$ (3,700)
Deferred revenue			(9,900)
Retained earnings			$ 6,200

Goodwill and Intangible Assets - Narrative (Details)	12 Months Ended
Goodwill and Intangible Assets - Narrative (Details)	Dec. 31, 2019 USD ($) reporting_unit	Dec. 31, 2018 USD ($) reporting_unit	Dec. 31, 2017 USD ($)	Jun. 30, 2019 USD ($)
Amortizing intangible assets
Number of reporting units \| reporting_unit	4	4
Goodwill	$ 88,974,000	$ 88,576,000
Impairment of goodwill	0	0	$ 0
Amortization expense	7,000,000.0	5,500,000	6,300,000
2020	5,500,000
2021	4,700,000
2022	4,400,000
2023	3,500,000
2024	3,300,000
Thereafter	5,300,000
Cost of Revenue
Amortizing intangible assets
Amortization expense	2,300,000	1,700,000	1,600,000
General and Administrative Expenses
Amortizing intangible assets
Amortization expense	$ 4,700,000	$ 3,800,000	$ 4,700,000
Editorial
Amortizing intangible assets
Goodwill				$ 12,900,000
Weighted average cost of capital				14.50%
Terminal growth rate				3.00%

Equity-Based Compensation - Intrinsic Value of Stock Options (Details) - USD ($) $ in Thousands	Dec. 31, 2019	Dec. 31, 2018
Share-based Payment Arrangement [Abstract]
Stock options outstanding	$ 4,000	$ 2,500
Stock options exercisable	3,000	1,800
Stock options vested and expected to vest	$ 4,000	$ 2,500

Other Income / (Expense), net

12 Months Ended

Dec. 31, 2019

Other Nonoperating Income (Expense) [Abstract]

Other Income / (Expense), net

The following table presents a summary of the Company’s other income / (expense) activity included in the accompanying Consolidated Statements of Operations (in thousands):



	Year Ended December 31,
	2019		2018			2017
Foreign currency gain / (loss)	$	540	$	(1,807	)	$	2,841
Impairment of a long-term investment asset	—		(5,881		)	—
Interest income	4,221		2,736			891
Other income / (expense), net	$	4,761	$	(4,952	)	$	3,732

Net Income Per Share (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands	3 Months Ended								12 Months Ended
	Dec. 31, 2019	Sep. 30, 2019	Jun. 30, 2019	Mar. 31, 2019	Dec. 31, 2018	Sep. 30, 2018	Jun. 30, 2018	Mar. 31, 2018	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017
Earnings Per Share [Abstract]
Net income	$ 4,353	$ 4,934	$ 3,299	$ 7,522	$ 14,913	$ 7,447	$ (254)	$ 32,581	$ 20,108	$ 54,687	$ 16,727
Shares used to compute basic net income per share (in shares)	35,478	35,309	35,232	35,114	35,047	34,991	34,913	34,784	35,285	34,935	34,627
Dilutive potential common shares:
Stock options and employee stock purchase plan shares (in shares)									83	117	388
Unvested restricted stock awards (in shares)									213	368	276
Shares used to compute diluted net income per share (in shares)	35,786	35,541	35,504	35,491	35,421	35,570	34,913	35,318	35,581	35,420	35,291
Basic net income per share (in dollars per share)	$ 0.12	$ 0.14	$ 0.09	$ 0.21	$ 0.43	$ 0.21	$ (0.01)	$ 0.94	$ 0.57	$ 1.57	$ 0.48
Diluted net income per share (in dollars per share)	$ 0.12	$ 0.14	$ 0.09	$ 0.21	$ 0.42	$ 0.21	$ (0.01)	$ 0.92	$ 0.57	$ 1.54	$ 0.47
Potentially dilutive shares included in the calculation (in shares)									917	1,285	1,384
Anti-dilutive shares excluded from the calculation (in shares)									1,202	1,020	1,325

Label	Element	Value
Stockholders' Equity, Including Portion Attributable to Noncontrolling Interest, Adjusted Balance	us-gaap_StockholdersEquityIncludingPortionAttributableToNoncontrollingInterestAdjustedBalance1	$ 320,763,000
Cumulative Effect of New Accounting Principle in Period of Adoption	us-gaap_CumulativeEffectOfNewAccountingPrincipleInPeriodOfAdoption	6,178,000
Additional Paid-in Capital [Member]
Stockholders' Equity, Including Portion Attributable to Noncontrolling Interest, Adjusted Balance	us-gaap_StockholdersEquityIncludingPortionAttributableToNoncontrollingInterestAdjustedBalance1	272,657,000
Retained Earnings [Member]
Stockholders' Equity, Including Portion Attributable to Noncontrolling Interest, Adjusted Balance	us-gaap_StockholdersEquityIncludingPortionAttributableToNoncontrollingInterestAdjustedBalance1	151,317,000
Cumulative Effect of New Accounting Principle in Period of Adoption	us-gaap_CumulativeEffectOfNewAccountingPrincipleInPeriodOfAdoption	6,178,000
AOCI Attributable to Parent [Member]
Stockholders' Equity, Including Portion Attributable to Noncontrolling Interest, Adjusted Balance	us-gaap_StockholdersEquityIncludingPortionAttributableToNoncontrollingInterestAdjustedBalance1	(3,557,000)
Treasury Stock [Member]
Stockholders' Equity, Including Portion Attributable to Noncontrolling Interest, Adjusted Balance	us-gaap_StockholdersEquityIncludingPortionAttributableToNoncontrollingInterestAdjustedBalance1	(100,027,000)
Common Stock [Member]
Stockholders' Equity, Including Portion Attributable to Noncontrolling Interest, Adjusted Balance	us-gaap_StockholdersEquityIncludingPortionAttributableToNoncontrollingInterestAdjustedBalance1	$ 373,000

Summary of Operations and Significant Accounting Policies - Contributor Royalties and Internal Sales Commissions (Details) - USD ($) $ in Millions	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017
Deferred Revenue Arrangement [Line Items]
Deferred royalty advances	$ 8.4	$ 6.2	$ 4.7
Amortization of advance royalty	9.2	6.1	$ 4.9
Maximum period over which internal sales commissions get deferred and recognized			12 months
Amortized internal sales commission expense			$ (5.0)
Prepaid expenses and other current assets
Deferred Revenue Arrangement [Line Items]
Deferred contributor royalties	$ 1.9	$ 2.6
Sales Commission
Deferred Revenue Arrangement [Line Items]
Deferred internal sales commissions			$ 5.5

Segment and Geographic Information - Long-lived Assets by Geographic Areas (Details) - USD ($) $ in Thousands	Dec. 31, 2019	Dec. 31, 2018
Revenues from External Customers and Long-Lived Assets [Line Items]
Total long-lived tangible assets	$ 58,834	$ 76,188
North America
Revenues from External Customers and Long-Lived Assets [Line Items]
Total long-lived tangible assets	51,954	71,758
Europe
Revenues from External Customers and Long-Lived Assets [Line Items]
Total long-lived tangible assets	6,541	4,371
Rest of the world
Revenues from External Customers and Long-Lived Assets [Line Items]
Total long-lived tangible assets	$ 339	$ 59

Unaudited Quarterly Financial Data (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands	3 Months Ended									12 Months Ended
	Dec. 31, 2019	Sep. 30, 2019	Jun. 30, 2019	Mar. 31, 2019	Dec. 31, 2018	Sep. 30, 2018	Jun. 30, 2018	Mar. 31, 2018	Dec. 31, 2017	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017
Error Corrections and Prior Period Adjustments Restatement [Line Items]
Revenue	$ 166,371	$ 159,079	$ 161,741	$ 163,332	$ 162,072	$ 151,575	$ 156,584	$ 153,019		$ 650,523	$ 623,250	$ 557,111
Operating expenses:
Cost of revenue	71,797	68,635	68,526	69,218	68,829	66,461	67,891	64,490		278,176	267,671	233,102
Sales & marketing	47,182	45,614	44,488	44,446	43,034	41,028	42,018	40,368		181,730	166,448	146,464
Product development	15,103	13,533	13,594	14,986	11,689	14,032	16,728	16,448		57,216	58,897	52,486
General and administrative	26,486	28,114	32,063	26,583	22,881	23,355	24,322	27,224		113,246	97,782	98,710
Total operating expenses	160,568	155,896	158,671	155,233	146,433	144,876	150,959	148,530		630,368	590,798	530,762
Income from operations	5,803	3,183	3,070	8,099	15,639	6,699	5,625	4,489		20,155	32,452	26,349
Gain on Sale of Webdam	0	0	0	0	0	0	0	38,613		0	38,613	0
Other income / (expense), net	2,816	465	584	896	1,048	217	(7,019)	802		4,761	(4,952)	3,732
Income before income taxes	8,619	3,648	3,654	8,995	16,687	6,916	(1,394)	43,904		24,916	66,113	30,081
Provision / (Benefit) for income tax	4,266	(1,286)	355	1,473	1,774	(531)	(1,140)	11,323		4,808	11,426	13,354
Net income	$ 4,353	$ 4,934	$ 3,299	$ 7,522	$ 14,913	$ 7,447	$ (254)	$ 32,581		$ 20,108	$ 54,687	$ 16,727
Net income per common share:
Basic (in dollars per share)	$ 0.12	$ 0.14	$ 0.09	$ 0.21	$ 0.43	$ 0.21	$ (0.01)	$ 0.94		$ 0.57	$ 1.57	$ 0.48
Diluted (in dollars per share)	$ 0.12	$ 0.14	$ 0.09	$ 0.21	$ 0.42	$ 0.21	$ (0.01)	$ 0.92		$ 0.57	$ 1.54	$ 0.47
Weighted average shares outstanding:
Basic (in shares)	35,478	35,309	35,232	35,114	35,047	34,991	34,913	34,784		35,285	34,935	34,627
Diluted (in shares)	35,786	35,541	35,504	35,491	35,421	35,570	34,913	35,318		35,581	35,420	35,291
Equity-based compensation										$ 22,815	$ 23,869	$ 24,958
Impact of remeasuring deferred tax balances									$ 3,700
Transition tax expense									$ 800
Restatement Adjustment
Operating expenses:
General and administrative							$ 800
Enterprise
Error Corrections and Prior Period Adjustments Restatement [Line Items]
Revenue										$ 258,282	$ 254,809	$ 208,713
Enterprise \| Restatement Adjustment
Error Corrections and Prior Period Adjustments Restatement [Line Items]
Revenue						$ (800)	$ 400

Goodwill and Intangible Assets

12 Months Ended

Dec. 31, 2019

Goodwill and Intangible Assets Disclosure [Abstract]

Goodwill and Intangible Assets

Goodwill

In 2018, the Company’s goodwill balance was allocated to four reporting units: Bigstock, Editorial, Images and Music. During the second quarter of 2019, due to changes in the Company’s reporting structure and the achievement of key milestones in the continued integration of the Company’s operations and technology platform, management changed the way it monitors the business and concluded that the Company operates with a single reporting unit.

As a result of the change in reporting units, in the second quarter of 2019, the Company evaluated its goodwill for impairment immediately prior and subsequent to the change in reporting units. The evaluation utilized a qualitative assessment of its Bigstock, Images and Music reporting units to determine whether a quantitative assessment was necessary and determined

there were no indicators of potential impairment. For its Editorial reporting unit, which represented approximately $12.9 million of the goodwill balance at the assessment date, management performed a quantitative goodwill impairment assessment which included a discounted cash flow analysis and incorporated various estimates and assumptions. The most significant of these assumptions were projected revenue growth rates, future royalty rates, a discount rate of 14.5% and a terminal growth rate of 3%. These estimates were based on the Company’s historical experience and projections of future activity, factoring in customer demand and a cost structure necessary to achieve related revenue.

Management concluded that, at the time of the change in reporting units, no adjustment to the carrying value of the goodwill balance was necessary, and the aggregate goodwill for the legacy reporting units was assigned to the single content business reporting unit.

The following table summarizes the changes in the Company’s goodwill balance by reportable and non-reportable segments for the year ended December 31, 2019 (in thousands):



	Goodwill
Balance as of December 31, 2018	$	88,576
Foreign currency translation adjustment	398
Balance as of December 31, 2019	$	88,974

The Company performed its annual goodwill assessment as of October 1, 2019 and concluded that the fair value of its reporting unit was greater than its carrying amount, and therefore, no adjustment to the carrying value of goodwill was necessary. The Company utilized a qualitative assessment of its content business reporting unit to determine whether a quantitative assessment was necessary and determined there were no indicators of potential impairment.

There were no impairments of goodwill in any of the periods presented in the consolidated financial statements.

Intangible Assets

Intangible assets, all of which are subject to amortization, consist of the following as of December 31, 2019 and 2018 (in thousands):



	As of December 31, 2019								As of December 31, 2018
	Gross Carrying Amount		Accumulated Amortization			Net Carrying Amount		Weighted Average Life (Years)	Gross Carrying Amount		Accumulated Amortization			Net Carrying Amount
Customer relationships	$	17,729	$	(9,294	)	$	8,435	9	$	17,360	$	(7,135	)	$	10,225
Trade name	6,517		(5,941		)	576		7	6,372		(3,719		)	2,653
Developed technology	4,841		(4,226		)	615		4	4,940		(3,712		)	1,228
Contributor content	23,510		(6,626		)	16,884		10	19,912		(4,653		)	15,259
Patents	259		(100		)	159		18	259		(84		)	175
Total	$	52,856	$	(26,187	)	$	26,669		$	48,843	$	(19,303	)	$	29,540

Amortization expense related to the intangible assets was $7.0 million, $5.5 million and $6.3 million for the years ended December 31, 2019, 2018 and 2017, respectively. Of these amounts, $2.3 million, $1.7 million and $1.6 million are included in cost of revenue for the years ended December 31, 2019, 2018 and 2017, respectively, and $4.7 million, $3.8 million and $4.7 million are included in general and administrative expense for the years ended December 31, 2019, 2018 and 2017, respectively.

The Company determined that there was no indication of impairment for the intangible assets for all periods presented. Estimated amortization expense for the next five years is: $5.5 million in 2020, $4.7 million in 2021, $4.4 million in 2022, $3.5 million in 2023, $3.3 million in 2024 and $5.3 million thereafter.

Commitments and Contingencies - Schedule of Other Non-Lease Obligations (Details) $ in Thousands	Dec. 31, 2019 USD ($)
Other Obligations
2020	$ 35,757
2021	15,438
2022	4,042
2023	0
2024	0
Thereafter	0
Total non-lease unconditional obligations	$ 55,237

Income Taxes - Deferred Tax Assets and Liabilities (Details) - USD ($) $ in Thousands	Dec. 31, 2019	Dec. 31, 2018
Deferred tax assets:
Non-cash equity-based compensation	$ 9,806	$ 9,383
Intangible amortization	2,252	3,252
Non-income tax accruals	2,647	3,087
Lease liabilities	12,645	0
Deferred rent	0	2,537
Other liabilities	6,508	6,523
Gross deferred tax assets	33,858	24,782
Valuation allowance	(965)	0
Net deferred tax assets	32,893	24,782
Deferred tax liabilities:
Right-of-use assets	(10,125)	0
Depreciation and amortization	(8,381)	(12,484)
Net deferred tax assets	$ 14,387	$ 12,298

Segment and Geographic Information

12 Months Ended

Dec. 31, 2019

Segment Reporting [Abstract]

Segment and Geographic Information

Segment Financial Information

The following table summarizes segment information for the years ended December 31, 2019, 2018 and 2017 (in thousands):



	Content Segment		Other and Corporate			Consolidated
December 31, 2019
Revenue	$	650,523	$	—		$	650,523
Operating Expenses⁽²⁾	517,122		113,246			630,368
Income from Operations	133,401		(113,246		)	20,155
December 31, 2018
Revenue	620,539		2,711			623,250
Operating Expenses⁽²⁾	490,985		99,813			590,798
Income from Operations	129,554		(97,102		)	32,452
December 31, 2017
Revenue ⁽¹⁾	541,088		16,023			557,111
Operating Expenses⁽²⁾	417,507		113,255			530,762
Income from Operations	$	123,581	$	(97,232	)	$	26,349


(1)	Effective January 1, 2018 the Company adopted ASU 2014-09 using the modified retrospective approach. Historical revenue totals reflect those previously reported and have not been restated.

(2)

Other and corporate operating expenses include unallocated corporate expenses of approximately $113.2 million, $97.8 million and $96.5 million for the years ended December 31, 2019, 2018, and 2017, respectively. Unallocated corporate expenses primarily relate to shared operational support functions and general and administrative functions of human resources, legal, finance and information technology.

Asset information on a segment basis is not disclosed as this information is not separately identified or internally reported to the Company’s CODM.

Geographic Financial Information

The following represents the Company’s geographic revenue based on customer location (in thousands):



	Year Ended December 31,
	2019		2018		2017
North America	$	228,185	$	230,890	$	218,865
Europe	217,397		207,634		181,693
Rest of the world	204,941		184,726		156,553
Total revenue	$	650,523	$	623,250	$	557,111

Included in North America is the United States which comprises approximately 32% of total revenue for the year ended December 31, 2019, and 34% of total revenue for the years ended December 31, 2018 and 2017. Included in Europe is the United Kingdom which accounts for approximately 8% of total revenue for the year ended December 31, 2019. No other country accounts for more than 10% of the Company’s revenue in any period presented.

The Company’s long-lived tangible assets were located as follows (in thousands):



	December 31,
	2019		2018
North America	$	51,954	$	71,758
Europe	6,541		4,371
Rest of world	339		59
Total long-lived tangible assets	$	58,834	$	76,188

Included in North America is the United States, which comprises 79% and 88% of total long-lived tangible assets as of December 31, 2019 and 2018, respectively.

Leasing - Balance Sheet Information (Details) $ in Thousands	Dec. 31, 2019 USD ($)
Leases [Abstract]
Right-of-use assets	$ 45,453
Lease liabilities, current	9,573
Lease liabilities, non-current	47,313
Total lease liabilities	$ 56,886

Accrued Expenses

12 Months Ended

Dec. 31, 2019

Payables and Accruals [Abstract]

Accrued Expenses

Accrued expenses consisted of the following (in thousands):



	December 31,
	2019		2018
Compensation	$	20,776	$	15,153
Non-income taxes	10,420		7,885
Royalty tax withholdings	1,315		5,618
Other expenses	21,353		22,729
Total accrued expenses	$	53,864	$	51,385

Income Taxes - Income (Loss) Before Income Taxes (Details) - USD ($) $ in Thousands	3 Months Ended								12 Months Ended
	Dec. 31, 2019	Sep. 30, 2019	Jun. 30, 2019	Mar. 31, 2019	Dec. 31, 2018	Sep. 30, 2018	Jun. 30, 2018	Mar. 31, 2018	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017
Income Tax Disclosure [Abstract]
Domestic									$ 25,549	$ 68,596	$ 24,558
Foreign									(633)	(2,483)	5,523
Income before income taxes	$ 8,619	$ 3,648	$ 3,654	$ 8,995	$ 16,687	$ 6,916	$ (1,394)	$ 43,904	$ 24,916	$ 66,113	$ 30,081

Summary of Operations and Significant Accounting Policies - Foreign Currency (Details) - USD ($) $ in Millions	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017
Accounting Policies [Abstract]
Foreign currency transactional gains (losses)	$ 0.2	$ (2.2)	$ 2.6

Unaudited Quarterly Financial Data (Tables)

12 Months Ended

Dec. 31, 2019

Quarterly Financial Information Disclosure [Abstract]

Schedule of Quarterly Financial Data



	Three Months Ended
	Dec 31, 2019		Sep 30, 2019			Jun 30, 2019		Mar 31, 2019		Dec 31, 2018		Sep 30, 2018			Jun 30, 2018			Mar 31, 2018

	(in thousands, except per share data)
Revenue^{(1) (2)}	$	166,371	$	159,079		$	161,741	$	163,332	$	162,072	$	151,575		$	156,584		$	153,019
Operating expenses⁽³⁾:
Cost of revenue	71,797		68,635			68,526		69,218		68,829		66,461			67,891			64,490
Sales & marketing	47,182		45,614			44,488		44,446		43,034		41,028			42,018			40,368
Product development	15,103		13,533			13,594		14,986		11,689		14,032			16,728			16,448
General and administrative	26,486		28,114			32,063		26,583		22,881		23,355			24,322			27,224
Total operating expenses	160,568		155,896			158,671		155,233		146,433		144,876			150,959			148,530
Income from operations	5,803		3,183			3,070		8,099		15,639		6,699			5,625			4,489
Gain on Sale of Webdam	—		—			—		—		—		—			—			38,613
Other income / (expense), net⁽⁴⁾	2,816		465			584		896		1,048		217			(7,019		)	802
Income / (Loss) before income taxes	8,619		3,648			3,654		8,995		16,687		6,916			(1,394		)	43,904
Provision / (Benefit) for income tax⁽⁵⁾	4,266		(1,286		)	355		1,473		1,774		(531		)	(1,140		)	11,323
Net income	$	4,353	$	4,934		$	3,299	$	7,522	$	14,913	$	7,447		$	(254	)	$	32,581
Net income per common share:
Basic	$	0.12	$	0.14		$	0.09	$	0.21	$	0.43	$	0.21		$	(0.01	)	$	0.94
Diluted	$	0.12	$	0.14		$	0.09	$	0.21	$	0.42	$	0.21		$	(0.01	)	$	0.92
Weighted average common shares outstanding:
Basic	35,478		35,309			35,232		35,114		35,047		34,991			34,913			34,784
Diluted	35,786		35,541			35,504		35,491		35,421		35,570			34,913			35,318

____________________________________________________________________________

(1)


(2)	Effective January 1, 2018 the Company adopted ASU 2014-09 using the modified retrospective approach. Historical revenue totals reflect those previously reported and have not been restated.


(3)	Includes non-cash equity-based compensation of $22,815 and $23,869 for the years ended December 31, 2019 and 2018, respectively.


(4)	Includes charges related to the impairment of a long-term investment asset; transaction gains and losses primarily related to cash balances of subsidiaries denominated in a currency other than the subsidiaries’ functional currencies; and interest income and expense, which is not material in any period presented.

(5)

Income Taxes (Tables)

12 Months Ended

Dec. 31, 2019

Income Tax Disclosure [Abstract]

Schedule of Geographical Income (Loss) Before Income Taxes

The Company’s geographical breakdown of its income / (loss) before income taxes is as follows (in thousands):



	Year Ended December 31,
	2019			2018			2017
Domestic	$	25,549		$	68,596		$	24,558
Foreign	(633		)	(2,483		)	5,523
Income before income taxes	$	24,916		$	66,113		$	30,081

Summary of Consolidated Provision (Benefit) for Income Taxes

The following table summarizes the consolidated provision for income taxes (in thousands):



	Year Ended December 31,
	2019			2018			2017
Current provision (benefit):
Federal	$	2,824		$	7,670		$	(4,813	)
State and local	1,127			4,800			112
Foreign	2,882			5,226			5,564
Deferred provision (benefit):
Federal	(2,337		)	(2,901		)	14,578
State and local	(52		)	(164		)	523
Foreign	364			(3,205		)	(2,610		)
Provision for income taxes	$	4,808		$	11,426		$	13,354

Schedule of Tax Rate Reconciliation

The provision for income taxes differs from statutory income tax rate as follows:



	Year Ended December 31,
	2019		2018		2017
U.S. income tax at federal statutory rate	21.0	%	21.0	%	35.0	%
Tax credits	(12.6	)	(5.4	)	(4.0	)
State and local taxes, net of federal benefit	1.7		1.9		2.1
Equity-based compensation	2.0		(0.4	)	1.9
Foreign rate differential	0.3		0.5		(2.3	)
Foreign-derived intangible income deduction	(12.0	)	(3.7	)	—
Uncertain tax positions	12.4		3.6		5.2
Valuation allowance	3.9		—		—
Transition tax related to TCJA	—		(0.3	)	2.6
U.S. Federal rate change related to TCJA	—		—		12.4
Domestic production activities deduction	—		—		(9.8	)
Non-deductible—other	2.6		0.1		1.3
Total provision for income taxes	19.3	%	17.3	%	44.4	%

Schedule of Deferred Tax Assets and Liabilities

The tax effect of the Company’s temporary differences that give rise to deferred tax assets and liabilities are presented below (in thousands):



	Year Ended December 31,
	2019			2018
Deferred tax assets:
Non-cash equity-based compensation	$	9,806		$	9,383
Intangible amortization	2,252			3,252
Non-income tax accruals	2,647			3,087
Lease liabilities	12,645			—
Deferred rent	—			2,537
Other liabilities	6,508			6,523
Gross deferred tax assets	33,858			24,782
Valuation allowance	(965		)	—
Net deferred tax assets	32,893			24,782
Deferred tax liabilities:
Right-of-use assets	(10,125		)	—
Depreciation and amortization	(8,381		)	(12,484		)
Net deferred tax assets	$	14,387		$	12,298

Summary of Changes in Unrecognized Tax Benefits

The following table summarizes changes to the Company’s unrecognized tax benefits as follows (in thousands):



	Year Ended December 31,
	2019			2018			2017
Balance of unrecognized tax benefits at January 1	$	5,846		$	2,966		$	1,455
Gross additions for tax positions for prior years	173			332			1,412
Gross additions for tax positions for current year	3,842			3,476			273
Gross expirations	(912		)	(928		)	(174		)
Balance of unrecognized tax benefits at December 31	$	8,949		$	5,846		$	2,966

Segment and Geographic Information - Schedule of Segment Reporting Information, by Segment (Details) - USD ($) $ in Thousands	3 Months Ended								12 Months Ended
	Dec. 31, 2019	Sep. 30, 2019	Jun. 30, 2019	Mar. 31, 2019	Dec. 31, 2018	Sep. 30, 2018	Jun. 30, 2018	Mar. 31, 2018	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017
Segment Reporting Information [Line Items]
Revenue	$ 166,371	$ 159,079	$ 161,741	$ 163,332	$ 162,072	$ 151,575	$ 156,584	$ 153,019	$ 650,523	$ 623,250	$ 557,111
Operating Expenses	160,568	155,896	158,671	155,233	146,433	144,876	150,959	148,530	630,368	590,798	530,762
Income from operations	$ 5,803	$ 3,183	$ 3,070	$ 8,099	$ 15,639	$ 6,699	$ 5,625	$ 4,489	20,155	32,452	26,349
Unallocated corporate expenses									113,200	97,800	96,500
Operating Segments \| Content Segment
Segment Reporting Information [Line Items]
Revenue									650,523	620,539	541,088
Operating Expenses									517,122	490,985	417,507
Income from operations									133,401	129,554	123,581
Other and Corporate
Segment Reporting Information [Line Items]
Revenue									0	2,711	16,023
Operating Expenses									113,246	99,813	113,255
Income from operations									$ (113,246)	$ (97,102)	$ (97,232)

Summary of Operations and Significant Accounting Policies - Accounts Receivable and Allowance for Doubtful Accounts (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017
Allowance for doubtful accounts:
Balance, beginning of period	$ 4,697	$ 4,088	$ 5,495
Add: bad debt expense	84	1,175	1,292
Less: write-offs, net of recoveries and other adjustments	(1,202)	(566)	(2,699)
Balance, end of period	$ 3,579	$ 4,697	$ 4,088

Cover Page - USD ($)	12 Months Ended
Cover Page - USD ($)	Dec. 31, 2019	Feb. 07, 2020	Jun. 30, 2019
Cover page.
Document Type	10-K
Document Annual Report	true
Document Period End Date	Dec. 31, 2019
Document Transition Report	false
Entity File Number	001-35669
Entity Registrant Name	Shutterstock, Inc.
Entity Incorporation, State or Country Code	DE
Entity Tax Identification Number	80-0812659
Entity Address, Address Line One	350 Fifth Avenue, 21st Floor
Entity Address, City or Town	New York
Entity Address, State or Province	NY
Entity Address, Postal Zip Code	10118
City Area Code	646
Local Phone Number	710-3417
Title of 12(b) Security	Common Stock, $0.01 par value per share
Trading Symbol	SSTK
Security Exchange Name	NYSE
Entity Well-known Seasoned Issuer	Yes
Entity Voluntary Filers	No
Entity Current Reporting Status	Yes
Entity Interactive Data Current	Yes
Entity Filer Category	Large Accelerated Filer
Entity Small Business	false
Entity Emerging Growth Company	false
Entity Shell Company	false
Entity Public Float			$ 746,376,332
Entity Common Stock, Shares Outstanding		35,504,867
Entity Central Index Key	0001549346
Amendment Flag	false
Current Fiscal Year End Date	--12-31
Document Fiscal Year Focus	2019
Document Fiscal Period Focus	FY
Documents Incorporated by Reference	The information required by Part III of this Annual Report on Form 10-K, to the extent not set forth herein, is incorporated herein by reference from the registrant’s definitive proxy statement relating to the Annual Meeting of Stockholders to be held in 2020, which definitive proxy statement shall be filed with the Securities and Exchange Commission within 120 days after the end of the fiscal year to which this Annual Report on Form 10-K relates. Except as expressly incorporated by reference, the registrant’s proxy statement shall not be deemed to be part of this report.

Revenue (Tables)

12 Months Ended

Dec. 31, 2019

Revenue from Contract with Customer [Abstract]

Disaggregation of Revenue

The following table summarizes the Company’s revenue by distribution channel for the years ended December 31, 2019, 2018 and 2017 (in thousands):



	Year Ended December 31,
	2019		2018		2017
E-commerce	$	392,241	$	365,730	$	332,376
Enterprise	258,282		254,809		208,713
Other ⁽¹⁾	—		2,711		16,022
Total Revenues ⁽²⁾	$	650,523	$	623,250	$	557,111

(1)As previously discussed in Note 4, on February 26, 2018, the Company completed the Sale of Webdam. 2018 amounts include revenue earned during the period from January 1, 2018 through February 26, 2018.

(2)As previously discussed in Note 1, the Company adopted ASU 2014-09 effective January 1, 2018 using the modified retrospective approach. Historical revenue amounts reflect those previously reported and have not been restated.

Net Income Per Share

12 Months Ended

Dec. 31, 2019

Earnings Per Share [Abstract]

Net Income Per Share

Basic net income per share is computed using the weighted average number of common shares outstanding for the period, excluding unvested RSUs and stock options. Diluted net income per share is based upon the weighted average common shares outstanding for the period plus dilutive potential common shares, including unvested RSUs and stock options using the treasury stock method.

The following table sets forth the computation of basic and diluted net income per share for fiscal years 2019, 2018 and 2017 (in thousands):



	Year Ended December 31,
	2019		2018		2017
Net income	$	20,108	$	54,687	$	16,727
Shares used to compute basic net income per share	35,285		34,935		34,627
Dilutive potential common shares:
Stock options and employee stock purchase plan shares	83		117		388
Unvested restricted stock awards	213		368		276
Shares used to compute diluted net income per share	35,581		35,420		35,291
Basic net income per share	$	0.57	$	1.57	$	0.48
Diluted net income per share	$	0.57	$	1.54	$	0.47

Potentially dilutive shares included in the calculation	917		1,285		1,384
Anti-dilutive shares excluded from the calculation	1,202		1,020		1,325

Income Taxes - Consolidated Provision for Income Taxes (Details) - USD ($) $ in Thousands	3 Months Ended								12 Months Ended
	Dec. 31, 2019	Sep. 30, 2019	Jun. 30, 2019	Mar. 31, 2019	Dec. 31, 2018	Sep. 30, 2018	Jun. 30, 2018	Mar. 31, 2018	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017
Current provision (benefit):
Federal									$ 2,824	$ 7,670	$ (4,813)
State and local									1,127	4,800	112
Foreign									2,882	5,226	5,564
Deferred provision (benefit):
Federal									(2,337)	(2,901)	14,578
State and local									(52)	(164)	523
Foreign									364	(3,205)	(2,610)
Provision for income taxes	$ 4,266	$ (1,286)	$ 355	$ 1,473	$ 1,774	$ (531)	$ (1,140)	$ 11,323	$ 4,808	$ 11,426	$ 13,354

CONSOLIDATED BALANCE SHEETS (Parenthetical) - $ / shares	Dec. 31, 2019	Dec. 31, 2018
Statement of Financial Position [Abstract]
Common stock, par value (in dollars per share)	$ 0.01	$ 0.01
Common stock, shares authorized (in shares)	200,000,000	200,000,000
Common stock, shares issued (in shares)	38,055,000	37,618,000
Common stock, shares outstanding (in shares)	35,497,000	35,060,000
Treasury stock, shares (in shares)	2,558,000	2,558,000

CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017
CASH FLOWS FROM OPERATING ACTIVITIES
Net income	$ 20,108	$ 54,687	$ 16,727
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	49,915	45,652	35,490
Deferred taxes	(2,025)	(6,270)	12,491
Non-cash equity-based compensation	22,815	23,869	24,958
Settlement of contingent consideration liability in excess of acquisition-date fair value	0	0	(6,255)
Gain on Sale of Webdam	0	(38,613)	0
Loss on impairment of long-term investment	0	5,881	0
Bad debt expense	84	1,175	1,292
Changes in operating assets and liabilities:
Accounts receivable	(6,169)	2,641	(10,015)
Prepaid expenses and other current and non-current assets	4,246	113	(6,734)
Accounts payable and other current and non-current liabilities	8,360	6,388	12,044
Contributor royalties payable	2,168	3,021	(685)
Deferred revenue	3,144	3,658	28,724
Net cash provided by operating activities	102,646	102,202	108,037
CASH FLOWS FROM INVESTING ACTIVITIES
Capital expenditures	(26,081)	(34,890)	(55,062)
Investment sales, net	0	0	55,286
Acquisitions of businesses, net of cash acquired	0	(845)	(49,571)
Proceeds from Sale of Webdam, net	2,500	41,804	0
Other investments / advances	0	(15,000)	(5,087)
Acquisition of content	(3,344)	(3,838)	(2,961)
Security deposit (payment) / release	(309)	(58)	30
Net cash used in investing activities	(27,234)	(12,827)	(57,365)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from exercise of stock options	5,365	2,454	1,682
Cash paid related to settlement of employee taxes related to RSU vesting	(7,061)	(7,268)	(6,848)
Cash paid for Special Dividend	0	(104,925)	0
Settlement of contingent consideration liability	0	0	(3,745)
Repurchase of treasury shares	0	0	(24,977)
Net cash used in financing activities	(1,696)	(109,739)	(33,888)
Effect of foreign exchange rate changes on cash	(1,307)	(2,212)	12,454
Net increase / (decrease) in cash, cash equivalents and restricted cash	72,409	(22,576)	29,238
Cash, cash equivalents and restricted cash, beginning of period	233,465	256,041	226,803
Cash, cash equivalents and restricted cash, end of period	305,874	233,465	256,041
Supplemental Disclosure of Cash Information:
Cash paid for income taxes	$ 1,902	$ 580	$ 4,984

Leasing (Tables)

12 Months Ended

Dec. 31, 2019

Leases [Abstract]

Balance Sheet Information for Leases

Balance sheet information for the Company’s leases as of December 31, 2019, is as follows:



	December 31,
(in thousands)	2019
Right-of-use assets	$	45,453

Lease liabilities, current	$	9,573
Lease liabilities, non-current	47,313
Total lease liabilities	$	56,886

Schedule of Maturity of Operating Lease Liabilities

Future undiscounted lease payments for the Company’s operating lease liabilities and a reconciliation of these payments to its lease liabilities at December 31, 2019 are as follows (in thousands):



Reconciliation of future undiscounted lease payments to lease liabilities	Lease Commitments
Year ending December 31,
2020	10,013
2021	9,141
2022	8,032
2023	6,558
2024	6,845
Thereafter	33,368
Total undiscounted lease payments	73,957
Less: imputed interest	(17,071		)
Total lease liabilities	$	56,886

Schedule of Future Minimum Lease Payments

Future minimum lease payments under non-cancelable operating leases as of December 31, 2018 were as follows (in thousands):



Year Ending December 31,	Operating Leases
2019	$	9,913
2020	8,762
2021	7,493
2022	6,829
2023	6,082
Thereafter	39,481
Total minimum lease payments	$	78,560

Summary of Operations and Significant Accounting Policies (Policies)

12 Months Ended

Dec. 31, 2019

Accounting Policies [Abstract]

Principles of Consolidation and Basis of Presentation

Certain immaterial changes in presentation have been made to conform the prior period presentation to current period reporting.

Use of Estimates

Concentration of Risk

Cash, Cash Equivalents and Restricted Cash

The following represents the Company’s cash, cash equivalents and restricted cash as of December 31, 2019 and 2018 (in thousands):



	As of December 31, 2019		As of December 31, 2018
Cash and cash equivalents	$	303,261	$	230,852
Restricted cash	2,613		2,613
Total cash, cash equivalents and restricted cash	$	305,874	$	233,465

The Company’s cash and cash equivalents consist primarily of (i) cash on hand and bank deposits and (ii) money market accounts, which are stated at cost, which approximates fair value.

Fair Value Measurements

Accounts Receivable and Allowance for Doubtful Accounts

Chargeback and Sales Refund Allowance, Revenue Recognition and Cost of Revenue

Chargeback and Sales Refund Allowance

Revenue Recognition

Cost of Revenue

Property and Equipment



Equipment	3 years
Furniture and fixtures	7 years
Software	3 years
Leasehold improvements	Shorter of expected useful life or lease term

Capitalized Internal Use Software

Impairment of Long-Lived Assets

Goodwill and Intangible Assets

Contributor Royalties and Internal Sales Commissions

Product Development

Advertising Costs

The Company expenses the cost of advertising and promoting its products as incurred.

Leasing

Equity-Based Compensation


•	Fair Value of Common Stock. The grant date fair value for stock-based awards is based on the closing price of the Company’s common stock on the NYSE on the date of grant and fair value for all other purposes related to stock-based awards shall be the closing price of the Company’s common stock on the NYSE on the relevant date.


•	Expected Term. The expected term is estimated using the simplified method allowed under Securities and Exchange Commission (“SEC”) guidance. In certain cases for market based awards, the Company’s expected term is based on a combination of historical data and estimates of the period of time the award will be outstanding.


•	Volatility. The volatility is estimated based on historical price volatility of the Company’s common stock.


•	Risk-free Interest Rate. The risk-free interest rate is based on the yields of U.S. Treasury securities with maturities similar to the expected term of each award group.


•	Dividend Yield. The Company determines the dividend yield based on management’s expectations of future dividends. The Company used an expected dividend yield of zero for options granted through 2019.

Employee Benefit Plans

Income Taxes and Other Non-income Taxes

Income Taxes

Other Non-income Taxes

Treasury Stock

Net Income Per Share

Reportable Segments

Contingent Consideration

Foreign Currency

Recently Adopted and Issued Accounting Standard Updates

Recently Adopted Accounting Standard Updates

Recently Issued Accounting Standard Updates

Other Income / (Expense), net (Tables)

12 Months Ended

Dec. 31, 2019

Other Nonoperating Income (Expense) [Abstract]

Summary of Other Income / (Expense) Activity

The following table presents a summary of the Company’s other income / (expense) activity included in the accompanying Consolidated Statements of Operations (in thousands):



	Year Ended December 31,
	2019		2018			2017
Foreign currency gain / (loss)	$	540	$	(1,807	)	$	2,841
Impairment of a long-term investment asset	—		(5,881		)	—
Interest income	4,221		2,736			891
Other income / (expense), net	$	4,761	$	(4,952	)	$	3,732

Equity-Based Compensation

12 Months Ended

Dec. 31, 2019

Share-based Payment Arrangement [Abstract]

Equity-Based Compensation

The Company recognizes stock-based compensation expense for all share-based payment awards including employee stock options and RSUs granted under the 2012 Plan based on the fair value of each award on the grant date.

The following table summarizes non-cash equity-based compensation expense, net of forfeitures, by line item included in the Company’s Consolidated Statements of Operations for the years ended December 31, 2019, 2018 and 2017 (in thousands):



	Year Ended December 31,
	2019		2018		2017
Cost of revenue	$	220	$	523	$	795
Sales and marketing	1,934		2,218		4,452
Product development	4,737		5,815		6,162
General and administrative	15,924		15,313		13,549
Total	$	22,815	$	23,869	$	24,958

The following table summarizes non-cash equity-based compensation expense, net of forfeitures, by award type included in the Company’s Consolidated Statements of Operations for the years ended December 31, 2019, 2018 and 2017 (in thousands):



	Year Ended December 31,
	2019		2018		2017
Stock options	$	5,721	$	6,009	$	6,364
Restricted stock units	17,094		17,860		18,594
Total	$	22,815	$	23,869	$	24,958

2012 Omnibus Equity Incentive Plan

On October 10, 2012, the Company’s 2012 Plan became effective. The 2012 Plan provides for the grant of incentive stock options to Company employees, and for the grant of non-statutory stock options, stock appreciation rights, restricted stock, restricted stock units, performance units and performance shares to employees, directors and consultants. The maximum aggregate number of shares that may be issued under the 2012 Plan was initially 6,750,000 shares of common stock. The number of shares available for issuance under the 2012 Plan will be increased annually commencing January 1, 2013 by an amount equal to the lesser of 1,500,000 shares of common stock, 3% of the outstanding shares of common stock as of the last day of the immediately preceding fiscal year, or such other amount as determined by the Company’s Board of Directors. Any awards issued under the 2012 Plan that are forfeited by the participant will become available for future grant under the 2012 Plan. The number of shares of common stock available under the 2012 Plan was automatically increased by approximately 1,052,000 and 1,041,000 shares on January 1, 2019 and 2018, respectively, pursuant to the automatic increase provisions of the 2012 Plan.

Stock Option Awards

The following is a summary of stock option awards and weighted average exercise price per option:



	Plan Options		Weighted Average Exercise Price
Options outstanding at December 31, 2018	1,128,564		$	54.46
Options granted	83,102		39.07
Options exercised	(172,937	)	31.03
Options canceled or expired	(49,244	)	50.51
Options outstanding at December 31, 2019	989,485		$	57.45

Options exercisable at December 31, 2019	293,063		$	34.37

Intrinsic value of stock options is calculated as the excess of market price of the Company’s common stock over the strike price of the stock options, multiplied by the number of stock options. The intrinsic value of the Company’s stock options is as follows (in thousands):



	As of December 31,
	2019		2018
Stock options outstanding	$	4,000	$	2,500
Stock options exercisable	3,000		1,800
Stock options vested and expected to vest	$	4,000	$	2,500

The intrinsic value of stock options exercised for the years ended December 31, 2019, 2018 and 2017 was approximately $1.1 million, $2.0 million and $1.6 million, respectively.

The following weighted average assumptions were used in the fair value calculation for the years ended December 31, 2019, 2018 and 2017:



	Year Ended Year Ended December 31,
	2019			2018			2017
Expected term (in years)	6.3			6.3			6.2
Volatility	45.4		%	47.8		%	50.0		%
Risk-free interest rate	1.83		%	2.625		%	2.15		%
Dividend yield	—			—			—
Valuation Data:
Weighted average fair value per share granted	$	18.05		$	23.64		$	24.19

On April 24, 2014, the Company granted 500,000 stock options with a market-based condition to its Chief Executive Officer (“CEO”). The stock options have an exercise price of $80.94 per share and will not vest or become exercisable unless (i) the CEO remains continuously employed by the Company until the fifth anniversary of the date of grant and (ii) the average 90-day closing price of the Company’s common stock equals or exceeds $161.88 per share for any 90 consecutive calendar days during the period commencing on the fifth anniversary of the date of grant and ending on the tenth anniversary of the date of grant, inclusive provided that the CEO remains continuously employed by the Company until the date of satisfaction of such condition. The derived requisite service period was determined to be six years based on a valuation technique. The total fair value of the grant is $21.6 million and is being recognized over the derived requisite service period. In the event that the market condition remains unsatisfied upon completion of the requisite service period, no charge will be reversed. In conjunction with the Special Dividend Adjustment, the Company adjusted the number of stock options to approximately 527,000 from 500,000 and the exercise price of each option to $76.73, from $80.94 pursuant to the anti-dilution provisions of the 2012 Plan. The market-based conditions required for vesting remain unchanged.

As of December 31, 2019, the total unrecognized compensation charge related to 2012 Plan non-vested options is approximately $3.0 million, which is expected to be recognized through fiscal year 2023.

Restricted Stock Units Awards (including PRSUs)

On March 26, 2019, the Compensation Committee of the Board of Directors (the “Compensation Committee”) of the Company approved a PRSU under the 2012 Plan. On April 1, 2019, the Company awarded approximately 202,000 PRSUs, each with a grant date fair value of $46.69 and corresponding to one target share, to certain of the Company’s officers. The number of shares that may eventually vest will be between 0% and 150% of a recipient’s target shares, depending on both the recipient’s continued service with the Company and the extent to which performance goals will have been achieved.

The following table presents a summary of the Company’s RSUs activity (including PRSUs) for the year ended December 31, 2019:



	Plan RSUs		Weighted Average Fair Value
Non-vested balance at December 31, 2018	1,063,325		$	44.23
Units granted	864,990		44.72
Units vested	(427,743	)	42.27
Units canceled or forfeited	(386,893	)	45.17
Non-vested balance at December 31, 2019	1,113,679		$	45.03

Non-vested and deferred balance at December 31, 2019	1,143,088		$	45.23

On April 24, 2014, the Company granted 100,000 restricted stock units with a market-based condition to its CEO. The restricted stock units will vest only if (i) the reporting person remains continuously employed by the Company until the fifth anniversary of the date of grant and (ii) the average 90-day closing price of the Company's common stock equals or exceeds $161.88 for any 90 consecutive calendar days during the period commencing on the fifth anniversary of the date of grant and ending on the tenth anniversary of the date of grant, inclusive; provided that the reporting person remains continuously employed by the Company until the date of satisfaction of such condition. The derived requisite service period was determined to be six years based on a valuation technique. The total fair value of the grant is $5.8 million and is being recognized over the derived requisite service period. In the event that the market condition remains unsatisfied upon completion of the requisite

service period, no charge will be reversed. In conjunction with the Special Dividend Adjustment, the Company adjusted the number of restricted stock units to approximately 105,000 from 100,000, pursuant to the anti-dilution provisions of the 2012 Plan. The market-based conditions required for vesting remain unchanged.

As of December 31, 2019, the total unrecognized compensation charge related to the restricted stock units is approximately $26.1 million, which is expected to be recognized through fiscal 2022.

Summary of Operations and Significant Accounting Policies (Tables)

12 Months Ended

Dec. 31, 2019

Accounting Policies [Abstract]

Schedule of Cash and Cash Equivalents

The following represents the Company’s cash, cash equivalents and restricted cash as of December 31, 2019 and 2018 (in thousands):



	As of December 31, 2019		As of December 31, 2018
Cash and cash equivalents	$	303,261	$	230,852
Restricted cash	2,613		2,613
Total cash, cash equivalents and restricted cash	$	305,874	$	233,465

Schedule of Restricted Cash

The following represents the Company’s cash, cash equivalents and restricted cash as of December 31, 2019 and 2018 (in thousands):



	As of December 31, 2019		As of December 31, 2018
Cash and cash equivalents	$	303,261	$	230,852
Restricted cash	2,613		2,613
Total cash, cash equivalents and restricted cash	$	305,874	$	233,465

Schedule of Changes in the Allowance for Doubtful Accounts

The following table presents the changes in the Company’s allowance for doubtful accounts (in thousands):



	Year Ended December 31,
	2019			2018			2017
Balance, beginning of period	$	4,697		$	4,088		$	5,495
Add: bad debt expense	84			1,175			1,292
Less: write-offs, net of recoveries and other adjustments	(1,202		)	(566		)	(2,699		)
Balance, end of period	$	3,579		$	4,697		$	4,088

Summary of Property and Equipment

Generally, the useful lives are as follows:



Equipment	3 years
Furniture and fixtures	7 years
Software	3 years
Leasehold improvements	Shorter of expected useful life or lease term

Property and equipment is summarized as follows (in thousands):



	December 31,
	2019			2018
Computer equipment and software	$	165,950		$	148,104
Furniture and fixtures	10,199			10,020
Leasehold improvements	19,203			18,822
Property and equipment	195,352			176,946
Less: accumulated depreciation	(136,518		)	(100,758		)
Property and equipment, net	$	58,834		$	76,188

Revenue

12 Months Ended

Dec. 31, 2019

Revenue from Contract with Customer [Abstract]

Revenue

The Company distributes its content offerings through two primary channels:

E-commerce: The majority of the Company’s customers license content directly through the Company’s self-service web properties. E-commerce customers have the flexibility to purchase a subscription-based plan that is paid on a monthly or annual basis or to license content on a transactional basis. These customers generally license content under the Company’s standard or enhanced licenses, with additional licensing options available to meet customers’ individual needs. E-commerce customers typically pay the full amount of the purchase price in advance or at the time of license, generally with a credit card.

Enterprise: The Company also has a base of customers with unique content, licensing and workflow needs. These customers benefit from communication with dedicated sales professionals, service and research teams which provide a number of tailored enhancements to their creative workflows including non-standard licensing rights, multi-seat access, ability to pay on credit terms, multi-brand licensing packages, increased indemnification protection and content licensed for use-cases outside of those available on the e-commerce platform.

In addition to the Company’s content offerings, the Company has historically generated revenue through other channels:

Other: The Company’s Other sales channel previously included revenue from Webdam’s digital asset management offerings which provided tools to help organizations manage, search, distribute and collaborate on creative and other brand-building activities. Effective February 26, 2018, the Company completed the Sale of Webdam. See Note 4 for further information on the Sale of Webdam.

The following table summarizes the Company’s revenue by distribution channel for the years ended December 31, 2019, 2018 and 2017 (in thousands):



	Year Ended December 31,
	2019		2018		2017
E-commerce	$	392,241	$	365,730	$	332,376
Enterprise	258,282		254,809		208,713
Other ⁽¹⁾	—		2,711		16,022
Total Revenues ⁽²⁾	$	650,523	$	623,250	$	557,111

The December 31, 2019 deferred revenue balance will be earned as content is downloaded or upon the expiration of subscription-based products, and nearly all is expected to be earned within the next twelve months. $136.2 million of total revenue recognized for the year ended December 31, 2019 was reflected in deferred revenue as of January 1, 2019.

Commitments and Contingencies

12 Months Ended

Dec. 31, 2019

Commitments and Contingencies Disclosure [Abstract]

Commitments and Contingencies

Other Non-Lease Obligations

As of December 31, 2019, the Company’s other unconditional cash obligations, consisting primarily of unconditional purchase obligations related to contracts for cloud-based services, infrastructure and other business services as well as minimum royalty guarantees in connection with certain content licenses, are as follows:



Year Ending December 31,	Other Obligations
2020	$	35,757
2021	15,438
2022	4,042
2023	—
2024	—
Thereafter	—
Total non-lease unconditional obligations	$	55,237

Legal Matters

From time to time, the Company may become party to litigation in the ordinary course of business, including direct claims brought by or against the Company with respect to intellectual property, contracts, employment and other matters, as well as claims brought against the Company’s customers for whom the Company has a contractual indemnification obligation. The Company assesses the likelihood of any adverse judgments or outcomes with respect to these matters and determines loss contingency assessments on a gross basis after assessing the probability of incurrence of a loss and whether a loss is reasonably estimable. In addition, the Company considers other relevant factors that could impact its ability to reasonably estimate a loss. A determination of the amount of reserves required, if any, for these contingencies is made after analyzing each matter. The Company reviews reserves, if any, at least quarterly and may change the amount of any such reserve in the future due to new developments or changes in strategy in handling these matters. Although the results of litigation and threats of litigation, investigations and claims cannot be predicted with certainty, the Company currently believes that the final outcome of these matters will not have a material adverse effect on its business, consolidated financial position, results of operations, or cash flows. Regardless of the outcome, litigation can have an adverse impact on the Company because of defense and settlement costs, diversion of management resources and other factors. The Company currently has no material active litigation matters and, accordingly, no material reserves related to litigation.

Customer Indemnifications

In the ordinary course of business, the Company enters into contractual arrangements under which it agrees to provide indemnification of varying scope and terms to customers with respect to certain matters, including, but not limited to, losses arising out of the breach of the Company’s intellectual property warranties for damages to the customer directly attributable to the Company’s breach. The Company is not responsible for any damages, costs, or losses to the extent such damages, costs or losses arise as a result of the modifications made by the customer, or the context in which an image is used. The standard maximum aggregate obligation and liability to any one customer for all claims is generally limited to ten thousand dollars. The Company offers certain of its customers greater levels of indemnification, including unlimited indemnification. As of December 31, 2019, the Company has recorded no liabilities related to indemnification for loss contingencies. Additionally, the Company believes that it has the appropriate insurance coverage in place to adequately cover such indemnification obligations, if necessary.

Employment Agreements and Indemnification Agreements

The Company has entered into employment arrangements and indemnification agreements with certain executive officers and with certain employees. The agreements specify various employment-related matters, including annual compensation, performance incentive bonuses, and severance benefits in the event of termination with or without cause.

CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) shares in Thousands, $ in Thousands	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017
Income Statement [Abstract]
Revenue	$ 650,523	$ 623,250	$ 557,111
Operating expenses:
Cost of revenue	278,176	267,671	233,102
Sales and marketing	181,730	166,448	146,464
Product development	57,216	58,897	52,486
General and administrative	113,246	97,782	98,710
Total operating expenses	630,368	590,798	530,762
Income from operations	20,155	32,452	26,349
Gain on Sale of Webdam	0	38,613	0
Other income / (expense), net	4,761	(4,952)	3,732
Income before income taxes	24,916	66,113	30,081
Provision for income taxes	4,808	11,426	13,354
Net income	$ 20,108	$ 54,687	$ 16,727
Earnings per share:
Basic (in dollars per share)	$ 0.57	$ 1.57	$ 0.48
Diluted (in dollars per share)	$ 0.57	$ 1.54	$ 0.47
Weighted average shares outstanding:
Basic (in shares)	35,285	34,935	34,627
Diluted (in shares)	35,581	35,420	35,291

Acquisition Activity - Schedule of Acquisition (Details) - USD ($) $ in Thousands	Dec. 31, 2019	Dec. 31, 2018	Jul. 07, 2017
Intangible Assets:
Goodwill	$ 88,974	$ 88,576
FlashStock Technology, Inc.
Assets:
Cash and cash equivalents			$ 1,330
Accounts receivable			3,105
Prepaid expenses and other current assets			155
Intangible Assets:
Goodwill			46,217
Total assets acquired			56,007
Liabilities:
Accrued expenses			(279)
Accounts payable			(99)
Deferred tax liability, net			(333)
Deferred revenue			(3,550)
Total liabilities acquired			(4,261)
Net assets acquired			51,746
FlashStock Technology, Inc. \| Customer relationships
Intangible Assets:
Intangible assets			3,000
FlashStock Technology, Inc. \| Developed technology
Intangible Assets:
Intangible assets			$ 2,200

Other Income / (Expense), net (Details) - USD ($) $ in Thousands	3 Months Ended								12 Months Ended
	Dec. 31, 2019	Sep. 30, 2019	Jun. 30, 2019	Mar. 31, 2019	Dec. 31, 2018	Sep. 30, 2018	Jun. 30, 2018	Mar. 31, 2018	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017
Other Nonoperating Income (Expense) [Abstract]
Foreign currency gain / (loss)									$ 540	$ (1,807)	$ 2,841
Impairment of a long-term investment asset									0	(5,881)	0
Interest income									4,221	2,736	891
Other income / (expense), net	$ 2,816	$ 465	$ 584	$ 896	$ 1,048	$ 217	$ (7,019)	$ 802	$ 4,761	$ (4,952)	$ 3,732

Equity-Based Compensation - Narrative (Details) - USD ($) $ / shares in Units, $ in Millions							12 Months Ended
	Apr. 01, 2019	Jan. 01, 2019	Aug. 01, 2018	Jan. 01, 2018	Apr. 24, 2014	Oct. 10, 2012	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Intrinsic value of total stock options exercised							$ 1.1	$ 2.0	$ 1.6
Options granted (in shares)							83,102
Options granted (in dollars per share)							$ 39.07
Stock options
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Unrecognized compensation charge							$ 3.0
Stock options \| Chief Executive Officer
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Options granted (in shares)			527,000		500,000
Options granted (in dollars per share)			$ 76.73		$ 80.94
Closing price of the common stock (in dollars per share)					$ 161.88
Consideration period for awards granted					90 days
Service period for amortization of awards					6 years
Total fair value of the grant					$ 21.6
PRSUs
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Units granted (in shares)	202,000
Weighted average grant date fair value (in dollars per share)	$ 46.69
PRSUs \| Minimum
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Award vesting rights percentage	0.00%
PRSUs \| Maximum
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Award vesting rights percentage	150.00%
Restricted stock units
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Unrecognized compensation charge							$ 26.1
Units granted (in shares)							864,990
Weighted average grant date fair value (in dollars per share)							$ 45.03	$ 44.23
Restricted stock units \| Chief Executive Officer
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Closing price of the common stock (in dollars per share)					$ 161.88
Consideration period for awards granted					90 days
Total fair value of the grant					$ 5.8
Units granted (in shares)			105,000		100,000
2012 Plan
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Maximum number of shares/notional units available for issuance (shares)						6,750,000
Annual increase in shares available for issuance (shares)						1,500,000
Annual increase in the shares available for issuance as a percentage of common stock outstanding as of the last day of immediately preceding fiscal year						3.00%
2012 Plan \| Stock options
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Automatic increase (in shares)		1,052,000		1,041,000

Income Taxes

12 Months Ended

Dec. 31, 2019

Income Tax Disclosure [Abstract]

Income Taxes

The Company’s geographical breakdown of its income / (loss) before income taxes is as follows (in thousands):



	Year Ended December 31,
	2019			2018			2017
Domestic	$	25,549		$	68,596		$	24,558
Foreign	(633		)	(2,483		)	5,523
Income before income taxes	$	24,916		$	66,113		$	30,081

The following table summarizes the consolidated provision for income taxes (in thousands):



	Year Ended December 31,
	2019			2018			2017
Current provision (benefit):
Federal	$	2,824		$	7,670		$	(4,813	)
State and local	1,127			4,800			112
Foreign	2,882			5,226			5,564
Deferred provision (benefit):
Federal	(2,337		)	(2,901		)	14,578
State and local	(52		)	(164		)	523
Foreign	364			(3,205		)	(2,610		)
Provision for income taxes	$	4,808		$	11,426		$	13,354

The provision for income taxes differs from statutory income tax rate as follows:



	Year Ended December 31,
	2019		2018		2017
U.S. income tax at federal statutory rate	21.0	%	21.0	%	35.0	%
Tax credits	(12.6	)	(5.4	)	(4.0	)
State and local taxes, net of federal benefit	1.7		1.9		2.1
Equity-based compensation	2.0		(0.4	)	1.9
Foreign rate differential	0.3		0.5		(2.3	)
Foreign-derived intangible income deduction	(12.0	)	(3.7	)	—
Uncertain tax positions	12.4		3.6		5.2
Valuation allowance	3.9		—		—
Transition tax related to TCJA	—		(0.3	)	2.6
U.S. Federal rate change related to TCJA	—		—		12.4
Domestic production activities deduction	—		—		(9.8	)
Non-deductible—other	2.6		0.1		1.3
Total provision for income taxes	19.3	%	17.3	%	44.4	%

On December 22, 2017, the U.S. enacted the TCJA, which lowered the Company’s U.S. statutory federal income tax rate from 35% to 21% effective January 1, 2018, while also imposing a one-time “transition tax” on undistributed earnings of foreign subsidiaries. The Company’s effective tax rate for the year ended December 31, 2017 includes an expense of $3.7 million related to the impact of remeasuring the Company’s deferred tax balances to reflect the new tax rate and an expense of $0.8 million for the transition tax.

The tax effect of the Company’s temporary differences that give rise to deferred tax assets and liabilities are presented below (in thousands):



	Year Ended December 31,
	2019			2018
Deferred tax assets:
Non-cash equity-based compensation	$	9,806		$	9,383
Intangible amortization	2,252			3,252
Non-income tax accruals	2,647			3,087
Lease liabilities	12,645			—
Deferred rent	—			2,537
Other liabilities	6,508			6,523
Gross deferred tax assets	33,858			24,782
Valuation allowance	(965		)	—
Net deferred tax assets	32,893			24,782
Deferred tax liabilities:
Right-of-use assets	(10,125		)	—
Depreciation and amortization	(8,381		)	(12,484		)
Net deferred tax assets	$	14,387		$	12,298

The non-cash equity-based compensation for the Company includes a deferred tax asset of $5.9 million associated with the performance-based grant of stock options and restricted stock units to the Company’s Chief Executive Officer. In addition, the $1.0 million valuation allowance relates to certain foreign net operating loss carryforwards, where the Company has determined that there is sufficient uncertainty regarding the future realization of these net operating losses.

The following table summarizes changes to the Company’s unrecognized tax benefits as follows (in thousands):



	Year Ended December 31,
	2019			2018			2017
Balance of unrecognized tax benefits at January 1	$	5,846		$	2,966		$	1,455
Gross additions for tax positions for prior years	173			332			1,412
Gross additions for tax positions for current year	3,842			3,476			273
Gross expirations	(912		)	(928		)	(174		)
Balance of unrecognized tax benefits at December 31	$	8,949		$	5,846		$	2,966

The total amount of gross unrecognized tax benefits as of December 31, 2019, was $8.5 million, which, if recognized, would impact the Company’s effective tax rate in future periods. The liability for unrecognized tax benefits is included in other non-current liabilities on the Consolidated Balance Sheets.

The Company recognizes interest expense and tax penalties related to unrecognized tax benefits as a component of income tax expense in the Consolidated Statements of Operations. Interest and penalties included in the Company’s provision for income taxes were not material in all the periods presented.

The Company and its subsidiaries file income tax returns in the U.S. and various foreign jurisdictions. The Company is currently under examination by the U.S. Internal Revenue Service for tax year 2017, the German Tax Office for years 2013 - 2015, New York City for years 2015 - 2017 and Illinois for years 2015 and 2016. The Company is no longer subject to U.S. federal tax examinations for years before 2016, or state and local tax examinations by tax authorities for years before 2014. The Company anticipates that the total unrecognized tax benefits to reverse in the next fiscal year will not be material.

As of December 31, 2019, the Company has $13.7 million in tax net operating loss carryforwards in foreign tax jurisdictions which are available to reduce future income taxes and the majority of this amount relates to jurisdictions with an indefinite carryforward period.

As of December 31, 2019, the Company had approximately $12.4 million of undistributed earnings attributable to its foreign subsidiaries. It is the Company’s practice and intention to indefinitely reinvest the earnings of its foreign subsidiaries in those operations. The Company has not provided deferred U.S. income taxes or foreign withholding taxes on temporary differences resulting from the earnings indefinitely reinvested outside the United States. An estimate of the associated unrecognized deferred tax liability related to these undistributed earnings is not material.

Property and Equipment - Summary of Property and Equipment (Details) - USD ($) $ in Thousands	Dec. 31, 2019	Dec. 31, 2018
Property and Equipment
Property and equipment	$ 195,352	$ 176,946
Less: accumulated depreciation	(136,518)	(100,758)
Property and equipment, net	58,834	76,188
Computer equipment and software
Property and Equipment
Property and equipment	165,950	148,104
Furniture and fixtures
Property and Equipment
Property and equipment	10,199	10,020
Leasehold improvements
Property and Equipment
Property and equipment	$ 19,203	$ 18,822

Property and Equipment (Tables)

12 Months Ended

Dec. 31, 2019

Property, Plant and Equipment [Abstract]

Summary of Property and Equipment

Generally, the useful lives are as follows:



Equipment	3 years
Furniture and fixtures	7 years
Software	3 years
Leasehold improvements	Shorter of expected useful life or lease term

Property and equipment is summarized as follows (in thousands):



	December 31,
	2019			2018
Computer equipment and software	$	165,950		$	148,104
Furniture and fixtures	10,199			10,020
Leasehold improvements	19,203			18,822
Property and equipment	195,352			176,946
Less: accumulated depreciation	(136,518		)	(100,758		)
Property and equipment, net	$	58,834		$	76,188

Fair Value Measurements and Other Long-term Investments	12 Months Ended
Fair Value Measurements and Other Long-term Investments	Dec. 31, 2019
Fair Value Disclosures [Abstract]
Fair Value Measurements and Other Long-term Investments	Fair Value Measurements and Other Long-term Investments Fair Value Measurements The Company had no assets or liabilities requiring fair value hierarchy disclosures as of December 31, 2019 and 2018. Other Fair Value Measurements Cash, accounts receivable, restricted cash, accounts payable and accrued expenses carrying amounts approximate fair value because of the short-term nature of these instruments. The Company’s non-financial assets, which include property and equipment, intangible assets and goodwill, are not required to be measured at fair value on a recurring basis. However, if certain triggering events occur, or if an annual impairment test is required and the Company is required to evaluate the non-financial asset for impairment, a resulting asset impairment would require that the non-financial asset be recorded at the fair value. Other Long-term Investments Long-term Lending Facility and Note Receivable On October 20, 2016, the Company entered into a multi-part transaction, as amended in March 2017, with SilverHub Media Limited (“SHM”), an unrelated third-party contributor. The amended transaction included the following components: (a) a revolving credit facility pursuant to which the Company would be obligated to lend up to $3.3 million under certain conditions, (the “Facility”) to SHM, which was fully drawn as of November 2017; (b) a $1.6 million investment in a convertible note issued by SHM, which had a maturity date of October 20, 2021; (c) a distribution agreement, under which the Company is the exclusive distributor of SHM’s content in certain markets subject to certain limitations; and (d) an option to acquire SHM at any time after the third anniversary of the Facility or to match any third-party acquisition offer with respect to SHM at any time until the fifth anniversary of the Facility. In June 2018, SHM breached certain provisions of the distribution agreement, which constituted an event of default under the Facility. As a result of the occurrence of one or more events of default, the Company provided notice to SHM to demand immediate payment of all outstanding borrowings under the Facility and the convertible note, including accrued interest. SHM was unable to pay the outstanding borrowings and accrued interest and therefore, an administrator was appointed and SHM entered into United Kingdom administration (bankruptcy) proceedings. The Company has determined that its investments in SHM, including the Facility, the convertible note, accrued interest and a minor equity investment, experienced an other-than-temporary impairment and therefore, the Company recorded a $5.9 million impairment charge during the three months ended June 30, 2018 in order to reduce the fair value of the Company’s investment in SHM to zero. This charge was recorded in Other income / (expense), net in the Consolidated Statements of Operations. The investment was previously reported within Other assets on the Consolidated Balance Sheet. Investment in ZCool Technologies Limited (“ZCool”) On January 4, 2018, the Company invested $15.0 million in convertible preferred shares issued by ZCool (the “Preferred Shares”), which is equivalent to a 25% fully diluted equity ownership interest. ZCool’s primary business is the operation of an e-commerce platform in China whereby customers can pay to license content contributed by creative professionals. ZCool and its affiliates have been the exclusive distributor of Shutterstock content in China since 2014. ZCool is a variable interest entity that is not consolidated because the Company is not the primary beneficiary. The Preferred Shares are not deemed to be in-substance common stock and will be accounted for using the measurement alternative for equity investments with no readily determinable fair value. The Preferred Shares will be reported at cost, adjusted for impairments or any observable price changes in ordinary transactions with identical or similar investments issued by ZCool. As of December 31, 2018, the Company’s total investment in ZCool is approximately $15 million, which is reported within Other assets on the Consolidated Balance Sheet.

- Definition

The entire disclosure for the fair value of financial instruments (as defined), including financial assets and financial liabilities (collectively, as defined), and the measurements of those instruments as well as disclosures related to the fair value of non-financial assets and liabilities. Such disclosures about the financial instruments, assets, and liabilities would include: (1) the fair value of the required items together with their carrying amounts (as appropriate); (2) for items for which it is not practicable to estimate fair value, disclosure would include: (a) information pertinent to estimating fair value (including, carrying amount, effective interest rate, and maturity, and (b) the reasons why it is not practicable to estimate fair value; (3) significant concentrations of credit risk including: (a) information about the activity, region, or economic characteristics identifying a concentration, (b) the maximum amount of loss the entity is exposed to based on the gross fair value of the related item, (c) policy for requiring collateral or other security and information as to accessing such collateral or security, and (d) the nature and brief description of such collateral or security; (4) quantitative information about market risks and how such risks are managed; (5) for items measured on both a recurring and nonrecurring basis information regarding the inputs used to develop the fair value measurement; and (6) for items presented in the financial statement for which fair value measurement is elected: (a) information necessary to understand the reasons for the election, (b) discussion of the effect of fair value changes on earnings, (c) a description of [similar groups] items for which the election is made and the relation thereof to the balance sheet, the aggregate carrying value of items included in the balance sheet that are not eligible for the election; (7) all other required (as defined) and desired information.

+ References + Details

Sale of Webdam	12 Months Ended
Sale of Webdam	Dec. 31, 2019
Discontinued Operations and Disposal Groups [Abstract]
Sale of Webdam	Sale of Webdam Sale of Digital Asset Management Business On February 26, 2018, the Company completed the Sale of Webdam for an aggregate purchase price of $49.1 million. Total cash received, net of $4.6 million transaction costs paid, was $44.3 million, inclusive of $2.5 million received during the year ended December 31, 2019, from the release of funds from escrow. During 2018, the Company recognized a pre-tax gain on sale of approximately $38.6 million, which represents the excess of the net purchase price over the net assets transferred, less transaction costs.

Sale of Webdam (Details) - USD ($) $ in Thousands	3 Months Ended								12 Months Ended
Sale of Webdam (Details) - USD ($) $ in Thousands	Dec. 31, 2019	Sep. 30, 2019	Jun. 30, 2019	Mar. 31, 2019	Dec. 31, 2018	Sep. 30, 2018	Jun. 30, 2018	Mar. 31, 2018	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017	Feb. 26, 2018
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]
Total cash received, net of transaction costs paid									$ 2,500	$ 41,804	$ 0
Gain on sale of Webdam	$ 0	$ 0	$ 0	$ 0	$ 0	$ 0	$ 0	$ 38,613	0	$ 38,613	$ 0
Webdam \| Disposal Group, Disposed of by Sale, Not Discontinued Operations
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]
Asset purchase price												$ 49,100
Transaction costs paid									4,600
Total cash received, net of transaction costs paid									44,300
Escrow deposits									$ 2,500
Gain on sale of Webdam								$ 38,600

Leasing - Future Minimum Lease Payments - ASC 840 (Details) $ in Thousands	Dec. 31, 2018 USD ($)
Year Ending December 31,
2019	$ 9,913
2020	8,762
2021	7,493
2022	6,829
2023	6,082
Thereafter	39,481
Total minimum lease payments	$ 78,560

Summary of Operations and Significant Accounting Policies - Goodwill and Intangible Assets (Details) - reporting_unit	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018
Accounting Policies [Abstract]
Number of reporting units	4	4

Goodwill and Intangible Assets (Tables)

12 Months Ended

Dec. 31, 2019

Goodwill and Intangible Assets Disclosure [Abstract]

Schedule of Changes in Goodwill

The following table summarizes the changes in the Company’s goodwill balance by reportable and non-reportable segments for the year ended December 31, 2019 (in thousands):



	Goodwill
Balance as of December 31, 2018	$	88,576
Foreign currency translation adjustment	398
Balance as of December 31, 2019	$	88,974

Schedule of Intangible Assets

Intangible assets, all of which are subject to amortization, consist of the following as of December 31, 2019 and 2018 (in thousands):



	As of December 31, 2019								As of December 31, 2018
	Gross Carrying Amount		Accumulated Amortization			Net Carrying Amount		Weighted Average Life (Years)	Gross Carrying Amount		Accumulated Amortization			Net Carrying Amount
Customer relationships	$	17,729	$	(9,294	)	$	8,435	9	$	17,360	$	(7,135	)	$	10,225
Trade name	6,517		(5,941		)	576		7	6,372		(3,719		)	2,653
Developed technology	4,841		(4,226		)	615		4	4,940		(3,712		)	1,228
Contributor content	23,510		(6,626		)	16,884		10	19,912		(4,653		)	15,259
Patents	259		(100		)	159		18	259		(84		)	175
Total	$	52,856	$	(26,187	)	$	26,669		$	48,843	$	(19,303	)	$	29,540

Acquisition Activity - Narrative (Details) - USD ($) $ in Thousands		3 Months Ended	12 Months Ended
	Jul. 07, 2017	Mar. 31, 2018	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017
Business Acquisition [Line Items]
Cash payment			$ 0	$ 845	$ 49,571
Equity-based compensation expense			22,815	23,869	24,958
General and administrative
Business Acquisition [Line Items]
Equity-based compensation expense			15,924	15,313	13,549
FlashStock Technology, Inc.
Business Acquisition [Line Items]
Purchase price	$ 51,700
Cash payment		$ 800			50,900
Estimated useful life	7 years
Portion of goodwill deductible for income tax purposes	26.00%
Professional fees					800
FlashStock Technology, Inc. \| General and administrative
Business Acquisition [Line Items]
Equity-based compensation expense			$ 3,400	$ 3,100	$ 1,300

Acquisition Activity (Tables)

12 Months Ended

Dec. 31, 2019

Business Combinations [Abstract]

Schedule of Aggregate Purchase Price Allocation to Assets Acquired and Liabilities Assumed

The aggregate purchase price was allocated to the assets acquired and liabilities assumed as follows (in thousands):



Assets:
Cash and cash equivalents	$	1,330
Accounts receivable	3,105
Prepaid expenses and other current assets	155
Intangible Assets:
Customer relationships	3,000
Developed technology	2,200
Goodwill	46,217
Total assets acquired	56,007
Liabilities:
Accrued expenses	(279		)
Accounts payable	(99		)
Deferred tax liability, net	(333		)
Deferred revenue	(3,550		)
Total liabilities acquired	(4,261		)
Net assets acquired	$	51,746

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY - USD ($) shares in Thousands, $ in Thousands	Total	Common Stock	Treasury Stock	Additional Paid-in Capital	Accumulated Other Comprehensive Loss	Retained Earnings
Balance (in shares) at Dec. 31, 2016		36,926	2,110
Balance at Dec. 31, 2016	$ 287,022	$ 369	$ (77,567)	$ 252,869	$ (17,061)	$ 128,412
Increase (Decrease) in Stockholders' Equity
Equity-based compensation	24,958			24,958
Issuance of common stock in connection with employee stock option exercises and RSU vesting (in shares)		503
Issuance of common stock in connection with employee stock option exercises and RSU vesting	1,682	$ 6		1,676
Common shares withheld for settlement of taxes in connection with equity-based compensation (in shares)		(159)
Common shares withheld for settlement of taxes in connection with equity-based compensation	(6,848)	$ (2)		(6,846)
Repurchase of Treasury Shares (in shares)			448
Repurchase of Treasury Shares	(22,460)		$ (22,460)
Other comprehensive income (loss)	13,504				13,504
Net income	16,727					16,727
Balance (in shares) at Dec. 31, 2017		37,270	2,558
Balance at Dec. 31, 2017	314,585	$ 373	$ (100,027)	272,657	(3,557)	145,139
Increase (Decrease) in Stockholders' Equity
Equity-based compensation	23,869			23,869
Issuance of common stock in connection with employee stock option exercises and RSU vesting (in shares)		498
Issuance of common stock in connection with employee stock option exercises and RSU vesting	2,455	$ 5		2,450
Common shares withheld for settlement of taxes in connection with equity-based compensation (in shares)		(150)
Common shares withheld for settlement of taxes in connection with equity-based compensation	(7,268)	$ (2)		(7,266)
Payment of Special Dividend	(104,925)					(104,925)
Other comprehensive income (loss)	(2,914)				(2,914)
Net income	54,687					54,687
Balance (in shares) at Dec. 31, 2018		37,618	2,558
Balance at Dec. 31, 2018	286,667	$ 376	$ (100,027)	291,710	(6,471)	101,079
Increase (Decrease) in Stockholders' Equity
Equity-based compensation	22,815			22,815
Issuance of common stock in connection with employee stock option exercises and RSU vesting (in shares)		601
Issuance of common stock in connection with employee stock option exercises and RSU vesting	5,365	$ 6		5,359
Common shares withheld for settlement of taxes in connection with equity-based compensation (in shares)		(164)
Common shares withheld for settlement of taxes in connection with equity-based compensation	(7,061)	$ (1)		(7,060)
Other comprehensive income (loss)	251				251
Net income	20,108					20,108
Balance (in shares) at Dec. 31, 2019		38,055	2,558
Balance at Dec. 31, 2019	$ 328,145	$ 381	$ (100,027)	$ 312,824	$ (6,220)	$ 121,187

Summary of Operations and Significant Accounting Policies - Cash, Cash Equivalents and Restricted Cash (Details) - USD ($) $ in Thousands	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017	Dec. 31, 2016
Accounting Policies [Abstract]
Cash and cash equivalents	$ 303,261	$ 230,852
Restricted cash	2,613	2,613
Total cash, cash equivalents and restricted cash	$ 305,874	$ 233,465	$ 256,041	$ 226,803

Equity-Based Compensation (Tables)

12 Months Ended

Dec. 31, 2019

Share-based Payment Arrangement [Abstract]

Summary of Non-cash Equity-based Compensation Expense



	Year Ended December 31,
	2019		2018		2017
Cost of revenue	$	220	$	523	$	795
Sales and marketing	1,934		2,218		4,452
Product development	4,737		5,815		6,162
General and administrative	15,924		15,313		13,549
Total	$	22,815	$	23,869	$	24,958



	Year Ended December 31,
	2019		2018		2017
Stock options	$	5,721	$	6,009	$	6,364
Restricted stock units	17,094		17,860		18,594
Total	$	22,815	$	23,869	$	24,958



	As of December 31,
	2019		2018
Stock options outstanding	$	4,000	$	2,500
Stock options exercisable	3,000		1,800
Stock options vested and expected to vest	$	4,000	$	2,500

Schedule of Stock Option Awards Activity and Weighted Average Exercise Price per Share

The following is a summary of stock option awards and weighted average exercise price per option:



	Plan Options		Weighted Average Exercise Price
Options outstanding at December 31, 2018	1,128,564		$	54.46
Options granted	83,102		39.07
Options exercised	(172,937	)	31.03
Options canceled or expired	(49,244	)	50.51
Options outstanding at December 31, 2019	989,485		$	57.45

Options exercisable at December 31, 2019	293,063		$	34.37

Schedule of Weighted Average Assumptions

The following weighted average assumptions were used in the fair value calculation for the years ended December 31, 2019, 2018 and 2017:



	Year Ended Year Ended December 31,
	2019			2018			2017
Expected term (in years)	6.3			6.3			6.2
Volatility	45.4		%	47.8		%	50.0		%
Risk-free interest rate	1.83		%	2.625		%	2.15		%
Dividend yield	—			—			—
Valuation Data:
Weighted average fair value per share granted	$	18.05		$	23.64		$	24.19

Schedule of Restricted Stock Units (RSUs) Activity

The following table presents a summary of the Company’s RSUs activity (including PRSUs) for the year ended December 31, 2019:



	Plan RSUs		Weighted Average Fair Value
Non-vested balance at December 31, 2018	1,063,325		$	44.23
Units granted	864,990		44.72
Units vested	(427,743	)	42.27
Units canceled or forfeited	(386,893	)	45.17
Non-vested balance at December 31, 2019	1,113,679		$	45.03

Non-vested and deferred balance at December 31, 2019	1,143,088		$	45.23

Segment and Geographic Information - Narrative (Details) - Geographic Concentration Risk	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017
Revenue Benchmark \| United States
Concentration Risk [Line Items]
Revenue percent	32.00%	34.00%	34.00%
Revenue Benchmark \| United Kingdom
Concentration Risk [Line Items]
Revenue percent	8.00%
Long-Lived Tangible Assets \| United States
Concentration Risk [Line Items]
Revenue percent	79.00%	88.00%

Summary of Operations and Significant Accounting Policies - Chargeback and Sales Refund Allowance (Details) $ in Millions	Dec. 31, 2019 USD ($)
Accounting Policies [Abstract]
Chargeback and sales refund allowance	$ 0.3

Income Taxes - Narrative (Details) - USD ($) $ in Thousands	3 Months Ended
Income Taxes - Narrative (Details) - USD ($) $ in Thousands	Dec. 31, 2017	Dec. 31, 2019	Dec. 31, 2018
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Impact of remeasuring deferred tax balances	$ 3,700
Transition tax expense	$ 800
Deferred tax assets		$ 9,806	$ 9,383
Valuation allowance, foreign net operating loss carryforwards		1,000
Impact on effective tax rate on recognition of unrecognized tax benefits		8,500
Operating loss carryforwards		13,700
Undistributed earnings attributable to foreign subsidiaries		12,400
Performance Shares And Restricted Stock Units (RSUs) \| Chief Executive Officer
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Deferred tax assets		$ 5,900

Goodwill and Intangible Assets - Schedule of Intangible Assets (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018
Amortizing intangible assets:
Gross Carrying Amount	$ 52,856	$ 48,843
Accumulated Amortization	(26,187)	(19,303)
Net Carrying Amount	26,669	29,540
Customer relationships
Amortizing intangible assets:
Gross Carrying Amount	17,729	17,360
Accumulated Amortization	(9,294)	(7,135)
Net Carrying Amount	$ 8,435	10,225
Weighted Average Life (Years)	9 years
Trade name
Amortizing intangible assets:
Gross Carrying Amount	$ 6,517	6,372
Accumulated Amortization	(5,941)	(3,719)
Net Carrying Amount	$ 576	2,653
Weighted Average Life (Years)	7 years
Developed technology
Amortizing intangible assets:
Gross Carrying Amount	$ 4,841	4,940
Accumulated Amortization	(4,226)	(3,712)
Net Carrying Amount	$ 615	1,228
Weighted Average Life (Years)	4 years
Contributor content
Amortizing intangible assets:
Gross Carrying Amount	$ 23,510	19,912
Accumulated Amortization	(6,626)	(4,653)
Net Carrying Amount	$ 16,884	15,259
Weighted Average Life (Years)	10 years
Patents
Amortizing intangible assets:
Gross Carrying Amount	$ 259	259
Accumulated Amortization	(100)	(84)
Net Carrying Amount	$ 159	$ 175
Weighted Average Life (Years)	18 years

Segment and Geographic Information (Tables)

12 Months Ended

Dec. 31, 2019

Segment Reporting [Abstract]

Summarized Segment Information

The following table summarizes segment information for the years ended December 31, 2019, 2018 and 2017 (in thousands):



	Content Segment		Other and Corporate			Consolidated
December 31, 2019
Revenue	$	650,523	$	—		$	650,523
Operating Expenses⁽²⁾	517,122		113,246			630,368
Income from Operations	133,401		(113,246		)	20,155
December 31, 2018
Revenue	620,539		2,711			623,250
Operating Expenses⁽²⁾	490,985		99,813			590,798
Income from Operations	129,554		(97,102		)	32,452
December 31, 2017
Revenue ⁽¹⁾	541,088		16,023			557,111
Operating Expenses⁽²⁾	417,507		113,255			530,762
Income from Operations	$	123,581	$	(97,232	)	$	26,349


(1)	Effective January 1, 2018 the Company adopted ASU 2014-09 using the modified retrospective approach. Historical revenue totals reflect those previously reported and have not been restated.

(2)

Schedule of Geographic Revenue

The following represents the Company’s geographic revenue based on customer location (in thousands):



	Year Ended December 31,
	2019		2018		2017
North America	$	228,185	$	230,890	$	218,865
Europe	217,397		207,634		181,693
Rest of the world	204,941		184,726		156,553
Total revenue	$	650,523	$	623,250	$	557,111

Schedule of Long-lived Tangible Assets

The Company’s long-lived tangible assets were located as follows (in thousands):



	December 31,
	2019		2018
North America	$	51,954	$	71,758
Europe	6,541		4,371
Rest of world	339		59
Total long-lived tangible assets	$	58,834	$	76,188

Summary of Operations and Significant Accounting Policies - Equity-Based Compensation (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Restricted cash	$ 2,613	$ 2,613
2012 Plan \| Restricted stock units
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Vesting period	3 years
Minimum \| 2012 Plan \| Stock options
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Vesting period	3 years
Maximum \| 2012 Plan \| Stock options
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Vesting period	4 years

Property and Equipment - Narrative (Details) - USD ($)	12 Months Ended
Property and Equipment - Narrative (Details) - USD ($)	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017
Property and Equipment
Depreciation and amortization expense	$ 42,900,000	$ 40,100,000	$ 29,200,000
Loss on disposal	0	0	0
Capitalized costs	23,600,000	27,700,000	39,200,000
Amortization expense	30,300,000	24,900,000	14,100,000
Capitalized internal-use software	41,800,000	48,500,000
Cost of revenue
Property and Equipment
Depreciation and amortization expense	38,100,000	34,000,000.0	23,400,000
General and Administrative Expenses
Property and Equipment
Depreciation and amortization expense	$ 4,800,000	$ 6,100,000	$ 5,800,000

Acquisition Activity

12 Months Ended

Dec. 31, 2019

Business Combinations [Abstract]

Acquisition Activity

Acquisition Activity in 2017

Flashstock Technology, Inc.

On July 7, 2017, the Company acquired all of the shares of Flashstock Technology, Inc. (“Flashstock”) pursuant to a stock purchase agreement. The transaction was accounted for using the acquisition method and, accordingly, the results of the acquired business have been included in the Company’s results of operations commencing from the acquisition date.

Flashstock is a Toronto-based company that enables the creation of custom content through a propriety software platform. The Company believes this acquisition will strengthen its strategic position and facilitate a comprehensive custom content offering in the market.

The fair value of consideration transferred in this business combination was allocated to the intangible and tangible assets acquired and liabilities assumed at the acquisition date, with the remaining unallocated amount recorded as goodwill. The Company considered the intangible assets acquired in the transaction, and determined customer relationships and acquired developed technology meet the separability criteria.

The total purchase price was $51.7 million of which $50.9 million was paid with existing cash on hand during the year ended December 31, 2017, and $0.8 million which was paid in the first quarter of 2018 for the settlement of working capital adjustments. The unpaid portion of the purchase price was included in accrued expenses as of December 31, 2017.

The aggregate purchase price was allocated to the assets acquired and liabilities assumed as follows (in thousands):



Assets:
Cash and cash equivalents	$	1,330
Accounts receivable	3,105
Prepaid expenses and other current assets	155
Intangible Assets:
Customer relationships	3,000
Developed technology	2,200
Goodwill	46,217
Total assets acquired	56,007
Liabilities:
Accrued expenses	(279		)
Accounts payable	(99		)
Deferred tax liability, net	(333		)
Deferred revenue	(3,550		)
Total liabilities acquired	(4,261		)
Net assets acquired	$	51,746

Fair value adjustments relating to this acquisition were finalized as of December 31, 2017, which were within the allowable measurement period.

The identifiable intangible assets have a weighted average life of approximately seven years and are being amortized on a straight-line basis. The fair value of the customer relationships was determined using a variation of the income approach known as the multiple-period excess earnings method. The fair value of the developed technology was determined using the relief-from-royalty method.

The goodwill arising from the transaction is primarily attributable to assembled workforce, future growth opportunities in the custom content market, potential economies of scale arising from the combined entity’s ability to leverage the Company’s existing global sales and marketing reach, and potential synergies arising from the addition of custom content offerings for the Company’s existing customer base. Approximately 26% of goodwill will be deductible for income tax purposes.

In connection with the acquisition, the Company recorded approximately $0.8 million of professional fees in the year ended December 31, 2017. The professional fees are included in general and administrative expense in the Statement of Operations.

The Company has performance-based bonus arrangements with certain Flashstock employees who are now employees of Shutterstock. These employees are entitled to additional compensation if: (i) the custom content business achieves certain financial targets for the 2019 calendar year and (ii) the individual is employed by Shutterstock as of December 31, 2019. Expense recorded related to these performance-based bonuses amounted to $3.4 million, $3.1 million and $1.3 million for the years ended December 31, 2019, 2018 and 2017, respectively. These items are reported as period expenses within general and administrative expenses in the Consolidated Statements of Operations and are expected to be paid in 2020. These expenses are not considered part of the Flashstock purchase price.

Commitments and Contingencies (Tables)

12 Months Ended

Dec. 31, 2019

Commitments and Contingencies Disclosure [Abstract]

Schedule of Other Non-Lease Obligations



Year Ending December 31,	Other Obligations
2020	$	35,757
2021	15,438
2022	4,042
2023	—
2024	—
Thereafter	—
Total non-lease unconditional obligations	$	55,237

Revenue - Revenue by Distribution Channel (Details) - USD ($) $ in Thousands	3 Months Ended								12 Months Ended
	Dec. 31, 2019	Sep. 30, 2019	Jun. 30, 2019	Mar. 31, 2019	Dec. 31, 2018	Sep. 30, 2018	Jun. 30, 2018	Mar. 31, 2018	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017
Disaggregation of Revenue [Line Items]
Total Revenues	$ 166,371	$ 159,079	$ 161,741	$ 163,332	$ 162,072	$ 151,575	$ 156,584	$ 153,019	$ 650,523	$ 623,250	$ 557,111
E-commerce
Disaggregation of Revenue [Line Items]
Total Revenues									392,241	365,730	332,376
Enterprise
Disaggregation of Revenue [Line Items]
Total Revenues									258,282	254,809	208,713
Other
Disaggregation of Revenue [Line Items]
Total Revenues									$ 0	$ 2,711	$ 16,022

Goodwill and Intangible Assets - Changes in Goodwill (Details) $ in Thousands	12 Months Ended
	Dec. 31, 2019 USD ($)
Changes in goodwill
December 31, 2018	$ 88,576
Foreign currency translation adjustment	398
December 31, 2019	$ 88,974

Accrued Expenses (Tables)

12 Months Ended

Dec. 31, 2019

Payables and Accruals [Abstract]

Schedule of Accrued Expenses

Accrued expenses consisted of the following (in thousands):



	December 31,
	2019		2018
Compensation	$	20,776	$	15,153
Non-income taxes	10,420		7,885
Royalty tax withholdings	1,315		5,618
Other expenses	21,353		22,729
Total accrued expenses	$	53,864	$	51,385

Property and Equipment

12 Months Ended

Dec. 31, 2019

Property, Plant and Equipment [Abstract]

Property and Equipment

Property and equipment is summarized as follows (in thousands):



	December 31,
	2019			2018
Computer equipment and software	$	165,950		$	148,104
Furniture and fixtures	10,199			10,020
Leasehold improvements	19,203			18,822
Property and equipment	195,352			176,946
Less: accumulated depreciation	(136,518		)	(100,758		)
Property and equipment, net	$	58,834		$	76,188

Depreciation and amortization expense related to property and equipment amounted to $42.9 million, $40.1 million and $29.2 million, for the years ended December 31, 2019, 2018 and 2017, respectively. Of these amounts, $38.1 million, $34.0 million and $23.4 million are included in cost of revenue for the years ended December 31, 2019, 2018 and 2017, respectively, and $4.8 million, $6.1 million and $5.8 million are included in general and administrative expense for the years ended December 31, 2019, 2018 and 2017, respectively.

Depreciation and amortization expense is included in cost of revenue and general and administrative expense based on the nature of the asset. There was no loss on disposal for the years ended December 31, 2019, 2018 and 2017, respectively.

Capitalized Internal-Use Software

The Company capitalized costs related to the development of internal-use software of $23.6 million, $27.7 million and $39.2 million for the years ended December 31, 2019, 2018 and 2017, respectively. Capitalized amounts are included as a component of property and equipment under computer equipment and software. During 2019, 2018 and 2017, the Company invested significantly in its product development and hosting infrastructure to enhance its customer experience and increase the efficiency with which management deploys new products and features.

The portion of total depreciation expense related to capitalized internal-use software was $30.3 million, $24.9 million and $14.1 million for the years ended December 31, 2019, 2018 and 2017, respectively. Depreciation expense related to capitalized internal-use software is included in cost of revenue and general and administrative expense based on the nature of the asset.

As of December 31, 2019 and 2018, the Company had capitalized internal-use software of $41.8 million and $48.5 million, respectively, net of accumulated depreciation, which was included in property and equipment, net.

Summary of Operations and Significant Accounting Policies - Property and Equipment (Details)	12 Months Ended
	Dec. 31, 2019
Equipment
Property and Equipment
Useful lives	3 years
Furniture and fixtures
Property and Equipment
Useful lives	7 years
Software
Property and Equipment
Useful lives	3 years

Leasing - Maturities of Lease Liabilities (Details) $ in Thousands	Dec. 31, 2019 USD ($)
Reconciliation of future undiscounted lease payments to lease liabilities
2020	$ 10,013
2021	9,141
2022	8,032
2023	6,558
2024	6,845
Thereafter	33,368
Total undiscounted lease payments	73,957
Less: imputed interest	(17,071)
Total lease liabilities	$ 56,886

Equity-Based Compensation - Summary of RSUs Activity (Details) - Restricted stock units	12 Months Ended
	Dec. 31, 2019 $ / shares shares
Plan RSUs
Non-vested balance at the beginning of the period (in shares) \| shares	1,063,325
Units granted (in shares) \| shares	864,990
Units vested (in shares) \| shares	(427,743)
Units cancelled or forfeited (in shares) \| shares	(386,893)
Non-vested balance at the end of the period (in shares) \| shares	1,113,679
Non-vested and deferred balance (in dollars per share) \| shares	1,143,088
Weighted Average Fair Value
Non-vested balance at the beginning of the period (in dollars per share) \| $ / shares	$ 44.23
Units granted (in dollars per share) \| $ / shares	44.72
Units vested (in dollars per share) \| $ / shares	42.27
Units cancelled or forfeited (in dollars per share) \| $ / shares	45.17
Non-vested balance at the end of the period (in dollars per share) \| $ / shares	45.03
Non-vested and deferred balance (in shares) \| $ / shares	$ 45.23

Leasing - Narrative (Details) - USD ($) $ in Thousands	12 Months Ended
Leasing - Narrative (Details) - USD ($) $ in Thousands	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017
Lessee, Lease, Description [Line Items]
Operating lease costs, including insignificant costs related to short-term leases	$ 11,100
Operating lease costs, including insignificant costs related to short-term leases		$ 9,200	$ 8,500
Cash paid for amounts included in lease liabilities	10,100
ROU assets obtained in exchange for lease obligations	$ 5,900
Weighted average remaining lease term	8 years 3 months
Weighted average discount rate	6.20%
Total minimum lease payments	$ 73,957
Letter of credit as a security deposit for the leased facilities	2,600	$ 2,600
ESB Lease
Lessee, Lease, Description [Line Items]
Total minimum lease payments	$ 62,000

Equity-Based Compensation - Summary of Stock Option Awards and Weighted Average Exercise Price per Option (Details)	12 Months Ended
	Dec. 31, 2019 $ / shares shares
Plan Options
Options outstanding at the beginning of the period (in shares) \| shares	1,128,564
Options granted (in shares) \| shares	83,102
Options exercised (in shares) \| shares	(172,937)
Options cancelled or expired (in shares) \| shares	(49,244)
Options outstanding at the end of the period (in shares) \| shares	989,485
Options exercisable at the end of the period (in shares) \| shares	293,063
Weighted Average Exercise Price
Options outstanding at the beginning of the period (in dollars per unit) \| $ / shares	$ 54.46
Options granted (in dollars per share) \| $ / shares	39.07
Options exercised (in dollars per share) \| $ / shares	31.03
Options cancelled or expired (in dollars per share) \| $ / shares	50.51
Options outstanding at the end of the period (in dollars per unit) \| $ / shares	57.45
Options exercisable at the end of the period (in dollars per shares) \| $ / shares	$ 34.37