View Filing Data

Print Document View Excel Document

Document and Entity Information - shares	3 Months Ended
Document and Entity Information - shares	Mar. 31, 2017	Apr. 28, 2017
Document and Entity Information
Entity Registrant Name	Shutterstock, Inc.
Entity Central Index Key	0001549346
Document Type	10-Q
Document Period End Date	Mar. 31, 2017
Amendment Flag	false
Current Fiscal Year End Date	--12-31
Entity Current Reporting Status	Yes
Entity Filer Category	Large Accelerated Filer
Entity Common Stock, Shares Outstanding		34,566,060
Document Fiscal Year Focus	2017
Document Fiscal Period Focus	Q1

Consolidated Balance Sheets - USD ($) $ in Thousands	Mar. 31, 2017	Dec. 31, 2016
Current assets:
Cash and cash equivalents	$ 195,395	$ 224,190
Short-term investments	54,901	54,972
Accounts receivable, net	37,962	38,107
Prepaid expenses and other current assets	28,047	22,569
Total current assets	316,305	339,838
Property and equipment, net	63,878	56,101
Intangible assets, net	29,930	30,157
Goodwill	49,689	49,271
Deferred tax assets, net	21,772	23,013
Other assets	4,986	3,398
Total assets	486,560	501,778
Current liabilities:
Accounts payable	11,699	7,305
Accrued expenses	32,569	41,106
Contributor royalties payable	23,759	20,473
Deferred revenue	126,812	122,235
Other liabilities	1,298	12,378
Total current liabilities	196,137	203,497
Deferred tax liability, net	2,023	2,147
Other non-current liabilities	12,479	9,438
Total liabilities	210,639	215,082
Commitments and contingencies (Note 6)
Stockholders’ equity:
Common stock, $0.01 par value; 200,000 shares authorized; 37,110 and 36,926 shares issued and 34,552 and 34,816 shares outstanding as of March 31, 2017 and December 31, 2016, respectively	371	369
Treasury stock, at cost; 2,558 and 2,110 shares as of March 31, 2017 and December 31, 2016, respectively	(100,027)	(77,567)
Additional paid-in capital	255,408	251,890
Accumulated comprehensive loss	(14,846)	(17,061)
Retained earnings	135,015	129,065
Total stockholders’ equity	275,921	286,696
Total liabilities and stockholders’ equity	$ 486,560	$ 501,778

Consolidated Balance Sheets (Parenthetical) - $ / shares	Mar. 31, 2017	Dec. 31, 2016
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)	37,110,000	36,926,000
Common stock, shares outstanding (in shares)	34,551,000	34,816,000
Treasury stock, shares held in treasury (in shares)	2,559,000	2,110,000

Consolidated Statements of Operations - USD ($) shares in Thousands, $ in Thousands	3 Months Ended
	Mar. 31, 2017	Mar. 31, 2016
Income Statement [Abstract]
Revenue	$ 130,224	$ 116,652
Operating expenses:
Cost of revenue	52,411	48,063
Sales and marketing	32,503	27,088
Product development	11,044	11,225
General and administrative	23,963	19,454
Total operating expenses	119,921	105,830
Income from operations	10,303	10,822
Other income (expense), net	455	(12)
Income before income taxes	10,758	10,810
Provision for income taxes	4,155	4,677
Net income	$ 6,603	$ 6,133
Net income per share:
Basic (in dollars per share)	$ 0.19	$ 0.17
Diluted (in dollars per share)	$ 0.19	$ 0.17
Weighted average shares outstanding:
Basic (in shares)	34,597	35,375
Diluted (in shares)	35,595	36,099

Consolidated Statements of Comprehensive Income - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2017	Mar. 31, 2016
Statement of Comprehensive Income [Abstract]
Net income	$ 6,603	$ 6,133
Foreign currency translation loss	2,215	1,856
Unrealized gain on investments	0	64
Other comprehensive loss	2,215	1,920
Comprehensive income	$ 8,818	$ 8,053

Consolidated Statements of Cash Flows - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2017	Mar. 31, 2016
CASH FLOWS FROM OPERATING ACTIVITIES
Net income	$ 6,603	$ 6,133
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	6,956	4,204
Impairment of Long-Lived Assets Held-for-use	0	0
Deferred taxes	1,486	1,285
Non-cash equity-based compensation	5,956	7,353
Change in fair value of contingent consideration	0	2,365
Settlement of contingent consideration liability in excess of acquisition-date fair value	(6,255)	0
Bad debt expense	135	1,183
Changes in operating assets and liabilities:
Accounts receivable	(404)	(7,691)
Prepaid expenses and other current and non-current assets	(5,628)	(3,126)
Accounts payable and other current and non-current liabilities	362	1,898
Contributor royalties payable	3,214	1,103
Deferred revenue	4,760	6,760
Net cash provided by operating activities	17,185	21,467
CASH FLOWS FROM INVESTING ACTIVITIES
Capital expenditures	(13,466)	(7,790)
Investment (purchases)/sales, net	(1,515)	(7,851)
Acquisition of digital content	(753)	(628)
Security deposit (payment)/release	2	(818)
Net cash used in investing activities	(15,732)	(17,087)
CASH FLOWS FROM FINANCING ACTIVITIES
Purchase of treasury shares	(24,977)	(27,743)
Proceeds from exercise of stock options	561	1,627
Cash paid related to settlement of employee taxes related to RSU vesting	(3,975)	0
Settlement of contingent consideration liability	(3,745)	0
Net cash (used in) provided by financing activities	(32,136)	(26,116)
Effect of foreign exchange rate changes on cash	1,888	995
Net decrease in cash and cash equivalents	(28,795)	(20,741)
Cash and cash equivalents, beginning of period	224,190	241,304
Cash and cash equivalents, end of period	195,395	220,563
Supplemental Disclosure of Cash Information:
Cash paid for income taxes	$ 2,148	$ 4,195

Summary of Operations and Significant Accounting Policies	3 Months Ended
	Mar. 31, 2017
Accounting Policies [Abstract]
Summary of Operations and Significant Accounting Policies	Summary of Operations and Significant Accounting Policies Summary of Operations Shutterstock, Inc., together with its subsidiaries (collectively, the “Company” or “Shutterstock”), is a global technology company that has created a two-sided marketplace for creative professionals to license content. The Company’s library of creative content includes: (a) digital imagery, which consists of licensed photographs, vectors, illustrations and video clips that customers use in their visual communications, such as websites, digital and print marketing materials, corporate communications, books, publications and video content; and (b) commercial music, which consists of high-quality music tracks and sound effects, and is often used to complement the digital imagery. The Company licenses creative content to its customers. Contributors upload their creative content to the Company’s websites in exchange for royalty payments based on customer download activity. The Company also offers digital asset management services through its cloud-based digital asset management platform. This service provides tools for customers to better manage creative content and brand management assets. Basis of Presentation The unaudited condensed consolidated financial statements and accompanying notes have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, these financial statements do not include all information and footnotes required by GAAP for complete financial statements. The interim consolidated balance sheet as of March 31, 2017, the consolidated statements of operations and comprehensive income for the three months ended March 31, 2017 and 2016, and the consolidated statement of cash flows for the three months ended March 31, 2017 and 2016 are unaudited. The consolidated balance sheet as of December 31, 2016, included herein, was derived from the audited financial statements as of that date, but does not include all disclosures required by GAAP. These unaudited interim financial statements have been prepared on a basis consistent with the Company’s annual financial statements and, in the opinion of management, reflect all adjustments, which include only normal recurring adjustments necessary to state fairly the Company’s financial position as of March 31, 2017 and its consolidated results of operations, comprehensive income and cash flows for the three months ended March 31, 2017 and 2016. The financial data and the other financial information disclosed in the notes to the financial statements related to these periods are also unaudited. The results of operations for the three months ended March 31, 2017 are not necessarily indicative of the results to be expected for the fiscal year ending December 31, 2017 or for any other future annual or interim period. These financial statements should be read in conjunction with the Company’s audited consolidated financial statements and notes thereto as of and for the year ended December 31, 2016 included in the Company’s Annual Report on Form 10-K which was filed with the SEC on February 27, 2017. The unaudited consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries. All intercompany balances and transactions have been eliminated in consolidation. Certain 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 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 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 and the measurement of certain contingent non-income tax liabilities. Restricted Cash The Company’s restricted cash relates to security deposits for its office leases. As of March 31, 2017 and December 31, 2016, the Company had restricted cash of approximately $2.6 million in other assets that related to the lease for its headquarters in New York City, which expires in 2029. The carrying value of restricted cash approximates fair value. Allowance for Doubtful Accounts The Company’s accounts receivable consist 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. As of March 31, 2017 and December 31, 2016, the Company’s allowance for doubtful accounts was approximately $5.6 million and $5.5 million, respectively, which was included as a reduction of accounts receivable. Deferred Rent The Company records rent expense on a straight-line basis over the term of the related lease. The difference between the rent expense recognized and the actual payments made in accordance with the lease agreement is recognized as a deferred rent liability on the Company’s balance sheet. As of March 31, 2017 and December 31, 2016, the Company had deferred rent of $10.6 million and $8.6 million, respectively, which was included in other non-current liabilities. Chargeback and Sales Refund Allowance The majority of the Company’s customers purchase products by making an electronic payment with a credit card at the time of a transaction. 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 both March 31, 2017 and December 31, 2016, the Company’s combined allowance for chargebacks and sales refunds was $0.6 million, which was included in other liabilities. Recently Adopted Accounting Standard Updates In March 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2016-09, Compensation - Stock Compensation (Topic 718): Improvements to Employees Share-Based Payment Accounting (“ASU 2016-09”). This ASU changes how companies account for certain aspects of share-based payment awards to employees, including the requirement for all income tax effects related to settlements of share-based payment awards be reported in earnings as an increase or decrease to income tax expense, providing the Company an accounting policy election to either recognize forfeitures as they occur or record an estimate, and requires that all income tax-related cash flows resulting from share-based payments be reported as operating activities in the statement of cash flows. The Company adopted ASU 2016-09 on January 1, 2017. All income tax effects related to settlements of share-based payment awards will be reported as an increase or decrease to the provision for income taxes. In addition, starting January 1, 2017, the Company will account for forfeitures as they occur and, as of January 1, 2017, recognized a $0.7 million reduction to retained earnings as the cumulative effect of the change in accounting principle. The Company adopted the cash flow presentation component of ASU 2016-09 retrospectively, and accordingly, decreased cash flows from operating activities by $1.5 million and increased cash flows from financing activities by $1.5 million for the three months ended March 31, 2016. Recently Issued Accounting Standard Updates In November 2016,the FASB issued ASU 2016-18, Statements of Cash Flows (Topic 230): Restricted Cash, which requires entities to present restricted cash with cash and cash equivalents on the statement of cash flows when reconciling the total beginning and ending amounts for the periods shown on the statement of cash flows. ASU 2016-18 is effective for interim and annual periods beginning after December 15,2017, with early adoption permitted. The Company is evaluating the impact of adopting this new accounting standard on its financial statements. 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 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. The Company is evaluating the impact of adopting this new accounting standard on its financial statements. 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. The guidance is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2018 and can be applied using a modified retrospective approach for all leases entered into before the effective date. Early adoption is permitted. The Company is evaluating the impact of adopting this new accounting standard on its financial statements. In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers (Topic 606). ASU 2014-09, and its related amendments, provides a unified model to determine when and how revenue is recognized and requires certain additional disclosures around the nature, amount, timing, and uncertainty of revenue and cash flows arising from customers. The core principle is that a company should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. ASU 2014-09 will be effective for the fiscal years, and interim periods within those fiscal years, beginning after December 15, 2017, with early adoption permitted. This new guidance may be applied retrospectively to each prior period (full retrospective) or retrospectively with the cumulative effect recognized as of the date of initial application (modified retrospective). The Company expects to adopt this guidance in the first quarter of fiscal 2018 and apply the modified retrospective approach. The Company is evaluating the impact of adopting this new accounting standard on its financial statements.

Fair Value Measurements

3 Months Ended

Mar. 31, 2017

Fair Value Disclosures [Abstract]

Fair Value Measurements

The following tables present the Company’s fair value hierarchy for its assets and liabilities (in thousands):



	As of March 31, 2017
	Aggregate Fair Value		Level 1		Level 2		Level 3
Assets:
Money market accounts	$	81,753	$	81,753	$	—	$	—
Commercial paper	$	54,901	—		54,901		—
Total assets measured at fair value	$	136,654	$	81,753	$	54,901	$	—



	As of December 31, 2016
	Aggregate Fair Value		Level 1		Level 2		Level 3
Assets:
Money market accounts	$	81,623	$	81,623	$	—	$	—
Commercial paper	$	54,972	—		54,972		—
Total assets measured at fair value	$	136,595	$	81,623	$	54,972	$	—
Liabilities:
Acquisition related contingent consideration	$	10,000	$	—	$	—	$	10,000
Total liabilities measured at fair value	$	10,000	$	—	$	—	$	10,000

Money Market Accounts

Cash equivalents include money market accounts which are classified as a level 1 measurement based on quoted prices in active markets for identical assets that the Company can access at the measurement date. The total amount of money market accounts included in cash and cash equivalents was $81.8 million and $81.6 million as of March 31, 2017 and December 31, 2016, respectively.

Commercial Paper

The Company’s short-term investments consist of commercial paper with original maturities of 90 days or less. Commercial paper is classified as a level 2 measurement based on quoted market prices for identical assets, which are subject to infrequent transactions. The total amount of commercial paper included in short-term investments was $54.9 million and $55.0 million as of March 31, 2017 and December 31, 2016, respectively.

Acquisition-Related Contingent Consideration

As of December 31, 2016, the settlement amount of the contingent consideration related to the Company’s acquisition of PremiumBeat was determined to be $10.0 million and was included in other liabilities. This contingency was considered a level 3 measurement. No changes in fair value were recorded during the three months ended March 31, 2017. The contingent consideration of $10.0 million was paid in March 2017, and there was no remaining liability as of March 31, 2017.

Other Fair Value Measurements

Cash, accounts receivable, restricted cash, accounts payable, accrued expenses and deferred revenue 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 non-financial assets be recorded at fair value.

- 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

Property and Equipment

3 Months Ended

Mar. 31, 2017

Property, Plant and Equipment [Abstract]

Property and Equipment

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



	As of March 31, 2017			As of December 31, 2016
Computer equipment and software	$	74,911		$	63,711
Furniture and fixtures	3,982			3,434
Leasehold improvements	22,592			20,944
Property and equipment	101,485			88,089
Less accumulated depreciation	(37,607		)	(31,988		)
Property and equipment, net	$	63,878		$	56,101

Depreciation expense related to property and equipment was $5.6 million and $3.0 million for the three months ended March 31, 2017 and 2016, respectively. Depreciation expense is included in cost of revenue and general and administrative expense based on the nature of the asset being depreciated.

Capitalized Internal-Use Software

The Company capitalized costs related to the development of internal-use software of $6.7 million and $2.8 million for the three months ended March 31, 2017 and 2016, respectively. Capitalized amounts are included as a component of property and equipment under computer equipment and software.

The portion of total depreciation expense related to capitalized internal-use software was $2.1 million and $0.5 million for the three months ended March 31, 2017 and 2016, respectively. Depreciation expense related to capitalized internal-use software is included in cost of revenue and general and administrative expense.

As of March 31, 2017 and December 31, 2016, the Company had capitalized internal-use software of $24.9 million and $20.3 million, respectively, net of accumulated depreciation, which was included in property and equipment, net.

Goodwill and Intangible Assets

3 Months Ended

Mar. 31, 2017

Goodwill and Intangible Assets Disclosure [Abstract]

Goodwill and Intangible Assets

Goodwill

The Company’s goodwill balance is attributable to its Bigstock, Editorial, Music and Webdam reporting units and is tested for impairment at least annually on October 1 or upon a triggering event. Bigstock, Music and Editorial are included in the Company's “Content Business” reporting segment while Webdam is included in the non-reportable “Other Category”. The following table summarizes the changes in the Company’s goodwill balance by reportable and non-reportable segments through March 31, 2017 (in thousands):



	Consolidated		Content Business		Other Category
Balance as of December 31, 2016	$	49,271	$	40,508	$	8,763
Foreign currency translation adjustment	418		418		—
Balance as of March 31, 2017	$	49,689	$	40,926	$	8,763

No triggering events were identified during the three months ended March 31, 2017.

Intangible Assets

Intangible assets consisted of the following as of March 31, 2017 and December 31, 2016 (in thousands):



	As of March 31, 2017						As of December 31, 2016
	Gross Carrying Amount		Accumulated Amortization			Weighted Average Life (Years)	Gross Carrying Amount		Accumulated Amortization
Amortizing intangible assets:
Customer relationships	$	16,904	$	(4,906	)	9	$	16,712	$	(4,344	)
Trade name	6,773		(2,289		)	7	6,677		(2,030		)
Developed technology	3,264		(2,185		)	4	3,224		(1,934		)
Contributor content	13,812		(1,745		)	11	12,958		(1,386		)
Patents	259		(56		)	18	227		(52		)
Domain name	160		(61		)	12	160		(55		)
Total	$	41,172	$	(11,242	)		$	39,958	$	(9,801	)

Amortization expense was $1.3 million and $1.2 million for the three months ended March 31, 2017 and 2016, respectively. The Company determined that there was no indication of impairment of the intangible assets for any period presented. Estimated amortization expense for the next five years is: $4.1 million for the remaining nine months of 2017, $4.6 million in 2018, $4.4 million in 2019, $3.8 million in 2020, $3.3 million in 2021, $2.5 million in 2022 and $7.3 million thereafter.

- Definition

The entire disclosure for the aggregate amount of goodwill and a description of intangible assets, which may include (a) for amortizable intangible assets (also referred to as finite-lived intangible assets), the carrying amount, the amount of any significant residual value, and the weighted-average amortization period, (b) for intangible assets not subject to amortization (also referred to as indefinite-lived intangible assets), the carrying amount, and (c) the amount of research and development assets acquired and written off in the period, including the line item in the income statement in which the amounts written off are aggregated, if not readily apparent from the income statement. Also discloses (a) for amortizable intangibles assets in total and by major class, the gross carrying amount and accumulated amortization, the total amortization expense for the period, and the estimated aggregate amortization expense for each of the five succeeding fiscal years, (b) for intangible assets not subject to amortization the carrying amount in total and by major class, and (c) for goodwill, in total and for each reportable segment, the changes in the carrying amount of goodwill during the period (including the aggregate amount of goodwill acquired, the aggregate amount of impairment losses recognized, and the amount of goodwill included in the gain (loss) on disposal of a reporting unit). If any part of goodwill has not been allocated to a reportable segment, discloses the unallocated amount and the reasons for not allocating. For each impairment loss recognized related to an intangible asset (excluding goodwill), discloses: (a) a description of the impaired intangible asset and the facts and circumstances leading to the impairment, (b) the amount of the impairment loss and the method for determining fair value, (c) the caption in the income statement or the statement of activities in which the impairment loss is aggregated, and (d) the segment in which the impaired intangible asset is reported. For each goodwill impairment loss recognized, discloses: (a) a description of the facts and circumstances leading to the impairment, (b) the amount of the impairment loss and the method of determining the fair value of the associated reporting unit, and (c) if a recognized impairment loss is an estimate not finalized and the reasons why the estimate is not final. May also disclose the nature and amount of any significant adjustments made to a previous estimate of an impairment loss.

+ References + Details

Accrued Expenses

3 Months Ended

Mar. 31, 2017

Payables and Accruals [Abstract]

Accrued Expenses

Accrued expenses consist of the following (in thousands):



	As of March 31, 2017		As of December 31, 2016
Compensation	$	9,454	$	13,732
Non-income taxes	5,419		7,383
Royalty tax withholdings	7,094		6,921
Other expenses	10,602		13,070
Total accrued expenses	$	32,569	$	41,106

Commitments and Contingencies	3 Months Ended
Commitments and Contingencies	Mar. 31, 2017
Commitments and Contingencies Disclosure [Abstract]
Commitments and Contingencies	Commitments and Contingencies The Company leases facilities under agreements accounted for as operating leases. Rental expense for operating leases was $2.1 million and $1.6 million for the three months ended March 31, 2017 and 2016, respectively. Some leases have defined escalating rent provisions, which are expensed over the term of the related lease on a straight-line basis commencing with the date of possession. Any rent allowance or abatement is netted in this calculation. All leases require payment of real estate taxes and operating expense increases. In 2016, the Company’s lease for its office facility in New York City was amended to, among other things, provide for the lease of approximately 25,000 square feet of additional office space and extend the term of the lease. In connection with the underlying lease agreement, the Company entered into a letter of credit as a security deposit for the leased facilities, which was increased to $2.6 million in connection with the 2016 amendment. The letter of credit was collateralized by $2.6 million of cash as of March 31, 2017, which is recorded as restricted cash and is included in other assets in the consolidated balance sheet. As amended, the lease is scheduled to expire in 2029 and aggregate future minimum payments under the amended lease are approximately $81.9 million. Other Commitments On October 20, 2016, the Company entered into a multi-part transaction with an unrelated third-party contributor (the “Transaction Party”). The transaction included three primary components: (a) a revolving credit facility pursuant to which the Company would be obligated to lend up to $4.6 million under certain conditions, (the “Facility”) to the Transaction Party. The Facility has a term of five years and requires the Transaction Party to make quarterly payments of principal to the Company beginning on the fourth anniversary of the Facility. The Facility bears interest at 10.0%, with all interest payments deferred until maturity, and the entire unpaid balance of principal and accrued interest due upon maturity; (b) the Company will be the exclusive distributor of the Transaction Party’s content in certain markets subject to certain limitations; and (c) the Company, at its option, may acquire the Transaction Party at any time after the third anniversary of the Facility or match any third-party acquisition offer with respect to the Transaction Party at any time until the fifth anniversary of the Facility. On March 27, 2017, the Facility was amended to reduce the maximum lending amount to $3.0 million. Simultaneously, the Company invested $1.6 million in a convertible note issued by the Transaction Party which matures on October 20, 2021. The convertible note bears interest at 10%, with all interest payments deferred until maturity, and the entire unpaid balance of principal and accrued interest due upon maturity. The principal amount of the convertible notes and any accrued and unpaid interest may be converted into equity of the Transaction Party at the Company’s option on the maturity date, or earlier upon certain events. As of March 31, 2017, there have been no borrowings under the Facility. Other Obligations As of March 31, 2017, the Company had other obligations in the amount of approximately $36.8 million, which consisted primarily of minimum royalty guarantees and unconditional purchase obligations related to contracts for infrastructure and other business services. As of March 31, 2017, the Company’s other obligations for the remainder of 2017 and for the years ending December 31, 2018, 2019 and 2020 were approximately $8.7 million, $12.0 million, $9.0 million and $7.1 million, respectively. 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, as such, no material reserves related to litigation. Indemnification and Employment Agreements In the ordinary course of business, the Company enters into contractual agreements 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 any modifications made by the customer, or the context in which an image is used. The Company’s license agreements generally cap indemnification obligations at amounts ranging from $10,000 to $250,000, with exceptions for certain products for which the Company’s indemnification obligations are uncapped. As of March 31, 2017, the Company had recorded no material liabilities related to indemnification obligations in accordance with the authoritative guidance for loss contingencies. Additionally, the Company believes that it has the appropriate insurance coverage in place to adequately cover such indemnification obligations, if necessary. Pursuant to the Company's charter documents and separate written indemnification agreements, the Company has certain indemnification obligations to its executive officers, certain employees and directors, as well as certain former officers and directors. The Company has also entered into employment agreements with its executive officers and certain employees. These agreements specify various employment-related matters, including annual compensation, performance incentive bonuses, and severance benefits in the event of termination with or without cause and in the event of a change in control.

Stockholders’ Equity and Equity-Based Compensation

3 Months Ended

Mar. 31, 2017

Disclosure of Compensation Related Costs, Share-based Payments [Abstract]

Stockholders’ Equity and Equity-Based Compensation

Stockholders’ Equity

Common Stock

During the three months ended March 31, 2017, the Company issued approximately 184,000 shares of common stock, related primarily to the exercise of stock options and the vesting of restricted stock units (“RSUs”).

Treasury Stock

In October 2015, the Company’s Board of Directors approved a share repurchase program, pursuant to which the Company is authorized 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, pursuant to which the Company is authorized to repurchase up to an additional $100 million of its outstanding common stock. The Company expects to fund future repurchases through a combination of cash on hand, cash generated by operations and future financing transactions, if needed. Accordingly, the Company’s share repurchase program is subject to the Company having available cash to fund repurchases. Under the program, the Company is authorized to purchase shares 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.

During the three months ended March 31, 2017, the Company repurchased approximately 449,000 shares of its common stock under the share repurchase program at an average per-share cost of approximately $50.04. As of March 31, 2017, the Company had $100.0 million remaining for purchases under the share repurchase program.

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 Omnibus Equity Incentive Plan and sales of shares of common stock under the 2012 Employee Stock Purchase Plan (the “2012 ESPP”) based on each award’s fair value on the grant date.

The following table summarizes non-cash equity-based compensation expense, net of forfeitures, by financial statement line item included in the accompanying consolidated statements of operations for the three months ended March 31, 2017 and 2016 (in thousands):



	Three Months Ended March 31,
	2017		2016
Cost of revenue	$	208	$	533
Sales and marketing	1,218		1,191
Product development	1,256		2,149
General and administrative	3,274		3,480
Total	$	5,956	$	7,353

The following table summarizes non-cash equity-based compensation expense, net of forfeitures, by award type included in the accompanying consolidated statements of operations for the three months ended March 31, 2017 and 2016 (in thousands):



	Three Months Ended March 31,
	2017		2016
Stock options	$	1,566	$	1,736
RSUs	4,390		5,445
ESPP shares	—		172
Total	$	5,956	$	7,353

Stock Option Awards

During the three months ended March 31, 2017, the Company granted options to purchase approximately 79,000 shares of its common stock with a weighted average exercise price of $48.57. As of March 31, 2017, there were approximately 309,000 options vested and exercisable with a weighted average exercise price of $35.11. As of March 31, 2017, the total unrecognized compensation charge related to non-vested options was approximately $20.7 million, which is expected to be recognized through the fiscal year 2021.

Restricted Stock Units

During the three months ended March 31, 2017, the Company granted approximately 464,000 RSUs. As of March 31, 2017 there are approximately 1,353,000 non-vested RSUs outstanding. As of March 31, 2017, the total unrecognized non-cash equity-based compensation charge related to the non-vested RSUs was approximately $52.2 million, which is expected to be recognized through fiscal year 2021.

During the three months ended March 31, 2017, shares with an aggregate value of $4.0 million were withheld upon vesting of RSUs and in connection with related remittance to taxing authorities.

ESPP Shares

In December 2016, the Company’s Board of Directors suspended the 2012 ESPP. During the three months ended March 31, 2017, no shares of the Company’s common stock were issued under the 2012 ESPP.

- Definition

The entire disclosure for compensation-related costs for equity-based compensation, which may include disclosure of policies, compensation plan details, allocation of equity compensation, incentive distributions, equity-based arrangements to obtain goods and services, deferred compensation arrangements, employee stock ownership plan details and employee stock purchase plan details.

+ References + Details

Employee Benefit Plans	3 Months Ended
Employee Benefit Plans	Mar. 31, 2017
Compensation and Retirement Disclosure [Abstract]
Employee Benefit Plans	Employee Benefit Plans The Company has a 401(k) defined contribution plan and provides for annual discretionary employer matching contributions not to exceed 3% of employees’ base compensation per year. Matching contributions are fully vested and non-forfeitable at all times. The Company recorded expenses related to employer matching contributions of $0.4 million and $0.5 million for the three months ended March 31, 2017 and 2016, respectively.

Other Expense, Net

3 Months Ended

Mar. 31, 2017

Other Nonoperating Income (Expense) [Abstract]

Other Expense, Net

The following table presents a summary of the Company’s other income and expense activity included in the accompanying consolidated statements of operations for the three months ended March 31, 2017 and 2016 (in thousands):



	Three Months Ended March 31,
	2017		2016
Foreign currency gain (loss)	$	365	$	670
Change in fair value of contingent consideration	—		(714		)
Interest income	90		32
Total income (expense)	$	455	$	(12	)

Income Taxes	3 Months Ended
Income Taxes	Mar. 31, 2017
Income Tax Disclosure [Abstract]
Income Taxes	Income Taxes The Company’s effective tax rates were 38.6% and 43.3% for the three months ended March 31, 2017 and 2016, respectively. In the three months ended March 31, 2017, the Company incurred discrete tax items relating primarily to withholding tax incurred on income earned in foreign jurisdictions, the net effect of which increased the effective tax rate by 5.0%. In the three months ended March 31, 2016, we incurred a discrete tax expense related primarily to a change in our state apportionment percentage which increased the effective tax rate by 2.2%. The Company has computed the provision for income taxes based on the estimated annual effective tax rate and the application of discrete items, if any, in the applicable period. The estimated annual effective tax rate differs from the statutory tax rate due primarily to an increase of income in foreign jurisdictions with lower statutory rates. During the three months ended March 31, 2017 and 2016, unrecognized tax benefits recorded by the Company for uncertain tax positions taken in prior years were not material. To the extent the remaining unrecognized tax benefits are ultimately recognized, the Company’s effective tax rate may be impacted in future periods. The Company recognizes interest expense and tax penalties related to unrecognized tax benefits in income tax expense in the consolidated statements of operations. The Company’s accrual for interest and penalties related to unrecognized tax benefits was not material for the each of three months ended March 31, 2017 and 2016. As of March 31, 2017, the Company had approximately $8.1 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. It is currently not practicable for the Company to calculate the associated unrecognized deferred tax liability.

Net Income Per Share

3 Months Ended

Mar. 31, 2017

Earnings Per Share [Abstract]

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.

A reconciliation of assumed exercised shares used in calculating basic and diluted net income per share follows (in thousands):



	Three Months Ended March 31,
	2017	2016
Weighted average shares outstanding:
Basic	34,597	35,375
Stock options and ESPP shares	495	352
Unvested RSUs and restricted stock awards	503	372
Diluted	35,595	36,099

Dilutive securities included in the calculation	1,927	1,814
Anti-dilutive securities excluded from the calculation	1,082	1,071

Geographic Information

3 Months Ended

Mar. 31, 2017

Segment Reporting [Abstract]

Geographic Information

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



	Three Months Ended March 31,
	2017		2016
North America	$	52,798	$	47,142
Europe	42,573		39,186
Rest of the world	34,853		30,324
Total revenue	$	130,224	$	116,652

The United States, included in North America in the above table, accounted for 36% and 35% of consolidated revenue for the three months ended March 31, 2017 and 2016, respectively. The United Kingdom, included in Europe in the above table, accounted for 9% and 11% of total revenue for the three months ended March 31, 2017 and 2016, respectively. 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):



	March 31,		December 31,
	2017		2016
North America	$	62,698	$	54,913
Europe	1,101		1,141
Rest of the world	79		47
Total long-lived tangible assets	$	63,878	$	56,101

The United States, included in North America in the above table, accounted for 95% of total long-lived tangible assets as of March 31, 2017 and December 31, 2016.

- Definition

The entire disclosure for reporting segments including data and tables. Reportable segments include those that meet any of the following quantitative thresholds a) it's reported revenue, including sales to external customers and intersegment sales or transfers is 10 percent or more of the combined revenue, internal and external, of all operating segments b) the absolute amount of its reported profit or loss is 10 percent or more of the greater, in absolute amount of 1) the combined reported profit of all operating segments that did not report a loss or 2) the combined reported loss of all operating segments that did report a loss c) its assets are 10 percent or more of the combined assets of all operating segments.

+ References

Reference 1: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 280
-SubTopic 10
-Section 50
-Paragraph 34
-URI http://asc.fasb.org/extlink&oid=68060357&loc=d3e8981-108599

Reference 2: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 280
-SubTopic 10
-Section 50
-Paragraph 41
-URI http://asc.fasb.org/extlink&oid=68060357&loc=d3e9038-108599

Reference 3: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 280
-SubTopic 10
-Section 50
-Paragraph 33
-URI http://asc.fasb.org/extlink&oid=68060357&loc=d3e8971-108599

Reference 4: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 280
-SubTopic 10
-Section 50
-Paragraph 12
-URI http://asc.fasb.org/extlink&oid=68060357&loc=d3e8595-108599

Reference 5: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 280
-SubTopic 10
-Section 50
-Paragraph 1
-URI http://asc.fasb.org/extlink&oid=68060357&loc=d3e8380-108599

Reference 6: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 280
-SubTopic 10
-Section 50
-Paragraph 32
-URI http://asc.fasb.org/extlink&oid=68060357&loc=d3e8933-108599

Reference 7: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 280
-SubTopic 10
-Section 50
-Paragraph 26
-URI http://asc.fasb.org/extlink&oid=68060357&loc=d3e8844-108599

Reference 8: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 280
-SubTopic 10
-Section 50
-Paragraph 35
-URI http://asc.fasb.org/extlink&oid=68060357&loc=d3e8984-108599

Reference 9: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 280
-SubTopic 10
-Section 50
-Paragraph 40
-URI http://asc.fasb.org/extlink&oid=68060357&loc=d3e9031-108599

Reference 10: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 280
-SubTopic 10
-Section 50
-Paragraph 42
-URI http://asc.fasb.org/extlink&oid=68060357&loc=d3e9054-108599

Reference 11: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 280
-SubTopic 10
-Section 50
-Paragraph 10
-URI http://asc.fasb.org/extlink&oid=68060357&loc=d3e8538-108599

Reference 12: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 280
-SubTopic 10
-Section 50
-Paragraph 29
-URI http://asc.fasb.org/extlink&oid=68060357&loc=d3e8864-108599

Reference 13: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 280
-SubTopic 10
-Section 50
-Paragraph 31
-URI http://asc.fasb.org/extlink&oid=68060357&loc=d3e8924-108599

Reference 14: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 280
-SubTopic 10
-Section 50
-Paragraph 30
-URI http://asc.fasb.org/extlink&oid=68060357&loc=d3e8906-108599

+ Details

Summary of Operations and Significant Accounting Policies (Policies)	3 Months Ended
	Mar. 31, 2017
Accounting Policies [Abstract]
Basis of Presentation	Basis of Presentation The unaudited condensed consolidated financial statements and accompanying notes have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, these financial statements do not include all information and footnotes required by GAAP for complete financial statements.
Unaudited Interim Financial Statements	The interim consolidated balance sheet as of March 31, 2017, the consolidated statements of operations and comprehensive income for the three months ended March 31, 2017 and 2016, and the consolidated statement of cash flows for the three months ended March 31, 2017 and 2016 are unaudited. The consolidated balance sheet as of December 31, 2016, included herein, was derived from the audited financial statements as of that date, but does not include all disclosures required by GAAP. These unaudited interim financial statements have been prepared on a basis consistent with the Company’s annual financial statements and, in the opinion of management, reflect all adjustments, which include only normal recurring adjustments necessary to state fairly the Company’s financial position as of March 31, 2017 and its consolidated results of operations, comprehensive income and cash flows for the three months ended March 31, 2017 and 2016. The financial data and the other financial information disclosed in the notes to the financial statements related to these periods are also unaudited. The results of operations for the three months ended March 31, 2017 are not necessarily indicative of the results to be expected for the fiscal year ending December 31, 2017 or for any other future annual or interim period. These financial statements should be read in conjunction with the Company’s audited consolidated financial statements and notes thereto as of and for the year ended December 31, 2016 included in the Company’s Annual Report on Form 10-K which was filed with the SEC on February 27, 2017. The unaudited consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries. All intercompany balances and transactions have been eliminated in consolidation. Certain changes in presentation have been made to conform the prior period presentation to current period reporting.
Use of Estimates	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 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 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 and the measurement of certain contingent non-income tax liabilities.
Restricted Cash	Restricted Cash The Company’s restricted cash relates to security deposits for its office leases. As of March 31, 2017 and December 31, 2016, the Company had restricted cash of approximately $2.6 million in other assets that related to the lease for its headquarters in New York City, which expires in 2029. The carrying value of restricted cash approximates fair value.
Allowance for Doubtful Accounts	Allowance for Doubtful Accounts The Company’s accounts receivable consist 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.
Deferred Rent	Deferred Rent The Company records rent expense on a straight-line basis over the term of the related lease. The difference between the rent expense recognized and the actual payments made in accordance with the lease agreement is recognized as a deferred rent liability on the Company’s balance sheet.
Chargeback and Sales Refund Allowance	Chargeback and Sales Refund Allowance The majority of the Company’s customers purchase products by making an electronic payment with a credit card at the time of a transaction. 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.
Recently Adopted and Issued Accounting Standard Updates	Recently Adopted Accounting Standard Updates In March 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2016-09, Compensation - Stock Compensation (Topic 718): Improvements to Employees Share-Based Payment Accounting (“ASU 2016-09”). This ASU changes how companies account for certain aspects of share-based payment awards to employees, including the requirement for all income tax effects related to settlements of share-based payment awards be reported in earnings as an increase or decrease to income tax expense, providing the Company an accounting policy election to either recognize forfeitures as they occur or record an estimate, and requires that all income tax-related cash flows resulting from share-based payments be reported as operating activities in the statement of cash flows. The Company adopted ASU 2016-09 on January 1, 2017. All income tax effects related to settlements of share-based payment awards will be reported as an increase or decrease to the provision for income taxes. In addition, starting January 1, 2017, the Company will account for forfeitures as they occur and, as of January 1, 2017, recognized a $0.7 million reduction to retained earnings as the cumulative effect of the change in accounting principle. The Company adopted the cash flow presentation component of ASU 2016-09 retrospectively, and accordingly, decreased cash flows from operating activities by $1.5 million and increased cash flows from financing activities by $1.5 million for the three months ended March 31, 2016. Recently Issued Accounting Standard Updates In November 2016,the FASB issued ASU 2016-18, Statements of Cash Flows (Topic 230): Restricted Cash, which requires entities to present restricted cash with cash and cash equivalents on the statement of cash flows when reconciling the total beginning and ending amounts for the periods shown on the statement of cash flows. ASU 2016-18 is effective for interim and annual periods beginning after December 15,2017, with early adoption permitted. The Company is evaluating the impact of adopting this new accounting standard on its financial statements. 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 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. The Company is evaluating the impact of adopting this new accounting standard on its financial statements. 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. The guidance is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2018 and can be applied using a modified retrospective approach for all leases entered into before the effective date. Early adoption is permitted. The Company is evaluating the impact of adopting this new accounting standard on its financial statements. In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers (Topic 606). ASU 2014-09, and its related amendments, provides a unified model to determine when and how revenue is recognized and requires certain additional disclosures around the nature, amount, timing, and uncertainty of revenue and cash flows arising from customers. The core principle is that a company should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. ASU 2014-09 will be effective for the fiscal years, and interim periods within those fiscal years, beginning after December 15, 2017, with early adoption permitted. This new guidance may be applied retrospectively to each prior period (full retrospective) or retrospectively with the cumulative effect recognized as of the date of initial application (modified retrospective). The Company expects to adopt this guidance in the first quarter of fiscal 2018 and apply the modified retrospective approach. The Company is evaluating the impact of adopting this new accounting standard on its financial statements.

Fair Value Measurements (Tables)

3 Months Ended

Mar. 31, 2017

Fair Value Disclosures [Abstract]

Schedule of fair value measurements

The following tables present the Company’s fair value hierarchy for its assets and liabilities (in thousands):



	As of March 31, 2017
	Aggregate Fair Value		Level 1		Level 2		Level 3
Assets:
Money market accounts	$	81,753	$	81,753	$	—	$	—
Commercial paper	$	54,901	—		54,901		—
Total assets measured at fair value	$	136,654	$	81,753	$	54,901	$	—



	As of December 31, 2016
	Aggregate Fair Value		Level 1		Level 2		Level 3
Assets:
Money market accounts	$	81,623	$	81,623	$	—	$	—
Commercial paper	$	54,972	—		54,972		—
Total assets measured at fair value	$	136,595	$	81,623	$	54,972	$	—
Liabilities:
Acquisition related contingent consideration	$	10,000	$	—	$	—	$	10,000
Total liabilities measured at fair value	$	10,000	$	—	$	—	$	10,000

- Definition

Tabular disclosure of financial instruments measured at fair value, including those classified in shareholders' equity measured on a recurring or nonrecurring basis. Disclosures include, but are not limited to, fair value measurements recorded and the reasons for the measurements, level within the fair value hierarchy in which the fair value measurements are categorized and transfers between levels 1 and 2. Nonrecurring fair value measurements are those that are required or permitted in the statement of financial position in particular circumstances.

+ References + Details

Property and Equipment (Tables)

3 Months Ended

Mar. 31, 2017

Property, Plant and Equipment [Abstract]

Summary of property and equipment

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



	As of March 31, 2017			As of December 31, 2016
Computer equipment and software	$	74,911		$	63,711
Furniture and fixtures	3,982			3,434
Leasehold improvements	22,592			20,944
Property and equipment	101,485			88,089
Less accumulated depreciation	(37,607		)	(31,988		)
Property and equipment, net	$	63,878		$	56,101

Goodwill and Intangible Assets (Tables)

3 Months Ended

Mar. 31, 2017

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 through March 31, 2017 (in thousands):



	Consolidated		Content Business		Other Category
Balance as of December 31, 2016	$	49,271	$	40,508	$	8,763
Foreign currency translation adjustment	418		418		—
Balance as of March 31, 2017	$	49,689	$	40,926	$	8,763

Schedule of intangible assets

Intangible assets consisted of the following as of March 31, 2017 and December 31, 2016 (in thousands):



	As of March 31, 2017						As of December 31, 2016
	Gross Carrying Amount		Accumulated Amortization			Weighted Average Life (Years)	Gross Carrying Amount		Accumulated Amortization
Amortizing intangible assets:
Customer relationships	$	16,904	$	(4,906	)	9	$	16,712	$	(4,344	)
Trade name	6,773		(2,289		)	7	6,677		(2,030		)
Developed technology	3,264		(2,185		)	4	3,224		(1,934		)
Contributor content	13,812		(1,745		)	11	12,958		(1,386		)
Patents	259		(56		)	18	227		(52		)
Domain name	160		(61		)	12	160		(55		)
Total	$	41,172	$	(11,242	)		$	39,958	$	(9,801	)

Accrued Expenses (Tables)

3 Months Ended

Mar. 31, 2017

Payables and Accruals [Abstract]

Schedule of accrued expenses

Accrued expenses consist of the following (in thousands):



	As of March 31, 2017		As of December 31, 2016
Compensation	$	9,454	$	13,732
Non-income taxes	5,419		7,383
Royalty tax withholdings	7,094		6,921
Other expenses	10,602		13,070
Total accrued expenses	$	32,569	$	41,106

Stockholders’ Equity and Equity-Based Compensation (Tables)

3 Months Ended

Mar. 31, 2017

Disclosure of Compensation Related Costs, Share-based Payments [Abstract]

Summary of non-cash equity-based compensation expense included in the Company's statement of operations



	Three Months Ended March 31,
	2017		2016
Cost of revenue	$	208	$	533
Sales and marketing	1,218		1,191
Product development	1,256		2,149
General and administrative	3,274		3,480
Total	$	5,956	$	7,353



	Three Months Ended March 31,
	2017		2016
Stock options	$	1,566	$	1,736
RSUs	4,390		5,445
ESPP shares	—		172
Total	$	5,956	$	7,353

Other Expense, Net (Tables)

3 Months Ended

Mar. 31, 2017

Other Nonoperating Income (Expense) [Abstract]

Summary of the Company's other (expense) income, net activity



	Three Months Ended March 31,
	2017		2016
Foreign currency gain (loss)	$	365	$	670
Change in fair value of contingent consideration	—		(714		)
Interest income	90		32
Total income (expense)	$	455	$	(12	)

Net Income Per Share (Tables)

3 Months Ended

Mar. 31, 2017

Earnings Per Share [Abstract]

Schedule of Weighted Average Number of Shares

A reconciliation of assumed exercised shares used in calculating basic and diluted net income per share follows (in thousands):



	Three Months Ended March 31,
	2017	2016
Weighted average shares outstanding:
Basic	34,597	35,375
Stock options and ESPP shares	495	352
Unvested RSUs and restricted stock awards	503	372
Diluted	35,595	36,099

Dilutive securities included in the calculation	1,927	1,814
Anti-dilutive securities excluded from the calculation	1,082	1,071

Geographic Information (Tables)

3 Months Ended

Mar. 31, 2017

Segment Reporting [Abstract]

Revenue from External Customers by Geographic Areas

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



	Three Months Ended March 31,
	2017		2016
North America	$	52,798	$	47,142
Europe	42,573		39,186
Rest of the world	34,853		30,324
Total revenue	$	130,224	$	116,652

Long-lived Assets by Geographic Areas

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



	March 31,		December 31,
	2017		2016
North America	$	62,698	$	54,913
Europe	1,101		1,141
Rest of the world	79		47
Total long-lived tangible assets	$	63,878	$	56,101

Summary of Operations and Significant Accounting Policies (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2017	Mar. 31, 2016	Dec. 31, 2016
Restricted Cash and Cash Equivalents Items [Line Items]
Net cash provided by operating activities	$ 17,185	$ 21,467
Net cash (used in) provided by financing activities	(32,136)	(26,116)
Allowance for Doubtful Accounts
Allowance for doubtful accounts	5,600		$ 5,500
Deferred Rent
Deferred rent non-current balance	10,600		8,600
Chargeback and Sales Refund Allowance
Chargeback and sales refund allowances	600		600
Other Assets
Restricted Cash and Cash Equivalents Items [Line Items]
Restricted cash related to security deposits for leased office location that expires in 2024	$ 2,600		2,600
New Accounting Pronouncement, Early Adoption, Effect \| Accounting Standards Update 2016-09, Excess Tax Benefit Component
Restricted Cash and Cash Equivalents Items [Line Items]
Net cash provided by operating activities		(1,500)
Net cash (used in) provided by financing activities		$ 1,500
New Accounting Pronouncement, Early Adoption, Effect \| Accounting Standards Update 2016-09, Excess Tax Benefit Component \| Retained Earnings
Restricted Cash and Cash Equivalents Items [Line Items]
Reduction to retained earnings			$ 700

Fair Value Measurements - Schedule of fair value measurements (Details) - Estimate of Fair Value Measurement - Recurring Basis - USD ($) $ in Thousands	Mar. 31, 2017	Dec. 31, 2016
Assets:
Total assets measured at fair value	$ 136,654	$ 136,595
Liabilities:
Total liabilities measured at fair value		10,000
Acquisition related contingent consideration
Liabilities:
Total liabilities measured at fair value		10,000
Money market accounts
Assets:
Total assets measured at fair value	81,753	81,623
Commercial paper
Assets:
Total assets measured at fair value	54,901	54,972
Level 1
Assets:
Total assets measured at fair value	81,753	81,623
Liabilities:
Total liabilities measured at fair value		0
Level 1 \| Acquisition related contingent consideration
Liabilities:
Total liabilities measured at fair value		0
Level 1 \| Money market accounts
Assets:
Total assets measured at fair value	81,753	81,623
Level 1 \| Commercial paper
Assets:
Total assets measured at fair value	0	0
Level 2
Assets:
Total assets measured at fair value	54,901	54,972
Liabilities:
Total liabilities measured at fair value		0
Level 2 \| Acquisition related contingent consideration
Liabilities:
Total liabilities measured at fair value		0
Level 2 \| Money market accounts
Assets:
Total assets measured at fair value	0	0
Level 2 \| Commercial paper
Assets:
Total assets measured at fair value	54,901	54,972
Level 3
Assets:
Total assets measured at fair value	0	0
Liabilities:
Total liabilities measured at fair value		10,000
Level 3 \| Acquisition related contingent consideration
Liabilities:
Total liabilities measured at fair value		10,000
Level 3 \| Money market accounts
Assets:
Total assets measured at fair value	0	0
Level 3 \| Commercial paper
Assets:
Total assets measured at fair value	$ 0	$ 0

Fair Value Measurements - Narrative (Details) - USD ($)	3 Months Ended
Fair Value Measurements - Narrative (Details) - USD ($)	Mar. 31, 2017	Mar. 31, 2016	Dec. 31, 2016
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Change in fair value of contingent consideration	$ 0	$ 2,365,000
Estimate of Fair Value Measurement \| Recurring Basis
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total assets measured at fair value	136,654,000		$ 136,595,000
Estimate of Fair Value Measurement \| Recurring Basis \| Level 3
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total assets measured at fair value	0		0
Estimate of Fair Value Measurement \| Recurring Basis \| Arbour Interactive Inc (PremiumBeat) \| Acquisition related contingent consideration \| Level 3
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Change in fair value of contingent consideration	0
Estimate of Fair Value Measurement \| Recurring Basis \| Other Current Liabilities \| Arbour Interactive Inc (PremiumBeat) \| Acquisition related contingent consideration \| Level 3
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fair value included in other non-current liabilities			10,000,000
Contingent consideration	10,000,000
Estimate of Fair Value Measurement \| Recurring Basis \| Money market accounts
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total assets measured at fair value	81,753,000		81,623,000
Estimate of Fair Value Measurement \| Recurring Basis \| Money market accounts \| Level 3
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total assets measured at fair value	0		0
Estimate of Fair Value Measurement \| Recurring Basis \| Commercial paper
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total assets measured at fair value	54,901,000		54,972,000
Estimate of Fair Value Measurement \| Recurring Basis \| Commercial paper \| Level 3
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total assets measured at fair value	$ 0		$ 0

Property and Equipment (Details) - USD ($) $ in Thousands	3 Months Ended
Property and Equipment (Details) - USD ($) $ in Thousands	Mar. 31, 2017	Mar. 31, 2016	Dec. 31, 2016
Property and Equipment
Property and equipment	$ 101,485		$ 88,089
Less accumulated depreciation	(37,607)		(31,988)
Property and equipment, net	63,878		56,101
Depreciation expense	5,600	$ 3,000
Capitalized amount	6,700	2,800
Amortization expense	2,100	$ 500
Internal use software	24,900		20,300
Computer equipment and software
Property and Equipment
Property and equipment	74,911		63,711
Furniture and fixtures
Property and Equipment
Property and equipment	3,982		3,434
Leasehold improvements
Property and Equipment
Property and equipment	$ 22,592		$ 20,944

Goodwill and Intangible Assets - Changes in goodwill (Details) $ in Thousands	3 Months Ended
	Mar. 31, 2017 USD ($)
Changes in goodwill
Balance at the beginning of the period	$ 49,271
Foreign currency translation adjustment	418
Balance at the end of the period	49,689
Content Business
Changes in goodwill
Balance at the beginning of the period	40,508
Foreign currency translation adjustment	418
Balance at the end of the period	40,926
Other Category
Changes in goodwill
Balance at the beginning of the period	8,763
Foreign currency translation adjustment	0
Balance at the end of the period	$ 8,763

Goodwill and Intangible Assets - Intangible Assets (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2017	Dec. 31, 2016
Amortizing intangible assets:
Gross Carrying Amount	$ 41,172	$ 39,958
Accumulated Amortization	(11,242)	(9,801)
Customer relationships
Amortizing intangible assets:
Gross Carrying Amount	16,904	16,712
Accumulated Amortization	$ (4,906)	(4,344)
Weighted Average Life	9 years
Trade name
Amortizing intangible assets:
Gross Carrying Amount	$ 6,773	6,677
Accumulated Amortization	$ (2,289)	(2,030)
Weighted Average Life	7 years
Developed technology
Amortizing intangible assets:
Gross Carrying Amount	$ 3,264	3,224
Accumulated Amortization	$ (2,185)	(1,934)
Weighted Average Life	4 years
Contributor content
Amortizing intangible assets:
Gross Carrying Amount	$ 13,812	12,958
Accumulated Amortization	$ (1,745)	(1,386)
Weighted Average Life	11 years
Patents
Amortizing intangible assets:
Gross Carrying Amount	$ 259	227
Accumulated Amortization	$ (56)	(52)
Weighted Average Life	18 years
Domain name
Amortizing intangible assets:
Gross Carrying Amount	$ 160	160
Accumulated Amortization	$ (61)	$ (55)
Weighted Average Life	12 years

Goodwill and Intangible Assets - Narrative (Details) - USD ($) $ in Millions	3 Months Ended
	Mar. 31, 2017	Mar. 31, 2016
Goodwill and Intangible Assets Disclosure [Abstract]
Amortization expense	$ 1.3	$ 1.2
Remainder of 2017	4.1
2018	4.6
2019	4.4
2020	3.8
2021	3.3
2022	2.5
Thereafter	$ 7.3

Accrued Expenses (Details) - USD ($) $ in Thousands	Mar. 31, 2017	Dec. 31, 2016
Payables and Accruals [Abstract]
Compensation	$ 9,454	$ 13,732
Non-income taxes	5,419	7,383
Royalty tax withholdings	7,094	6,921
Other expenses	10,602	13,070
Total accrued expenses	$ 32,569	$ 41,106

Commitments and Contingencies (Details) ft² in Thousands, $ in Millions	3 Months Ended
	Mar. 31, 2017 USD ($)	Mar. 31, 2016 USD ($)	Dec. 31, 2016 ft²	Jan. 31, 2016 USD ($)
Operating leases
Rental expense inclusive of operating leases	$ 2.1	$ 1.6
Letter of credit as a security deposit for the leased facilities				$ 2.6
Future minimum lease payments under non-cancelable operating leases
Total minimum lease payments				$ 81.9
Other assets
Operating leases
Letter of credit collateralized as restricted cash	$ 2.6
New York CIty Office Space
Operating leases
Area of additional office space (sq ft) \| ft²			25

Commitments and Contingencies - Other Commitments (Details) - Indirect Guarantee of Indebtedness - USD ($)	Oct. 20, 2016	Mar. 31, 2017	Mar. 27, 2017
Revolving Credit Facility \| The Facility
Other Commitments [Line Items]
Maximum lending amount	$ 4,600,000.0		$ 3,000,000.0
Facility term	P5Y
Interest rate percent	10.00%
Borrowings made		$ 0
Convertible Notes Payable \| Convertible Note Maturing October 2021
Other Commitments [Line Items]
Maximum lending amount			$ 1,600,000.0
Interest rate percent			10.00%

Commitments and Contingencies - Other Obligations and Indemnification (Details)	Mar. 31, 2017 USD ($)
Commitments and Contingencies Disclosure [Abstract]
Other obligations	$ 36,800,000
Maturity of unconditional purchase obligations
Remainder of 2017	8,700,000
2018	12,000,000
2019	9,000,000
2020	7,100,000
2021	0
Indemnifications
Minimum aggregate obligation and liability	10,000
Maximum aggregate obligation and liability	250,000
Material indemnification obligation	$ 0

Stockholders’ Equity and Equity-Based Compensation - Narrative (Details) - USD ($)	3 Months Ended
	Mar. 31, 2017	Feb. 28, 2017	Dec. 31, 2016	Oct. 31, 2015
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Shares repurchased (in shares)	2,559,000		2,110,000
Common Stock
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Shares issued (in shares)	184,000
Authorized purchase amount (up to)				$ 100,000,000
Authorized increase in purchase amount		$ 100,000,000
Shares repurchased (in shares)	449,000
Average per share cost (in dollars per share)	$ 50.04
Value remaining for repurchase	$ 100,000,000
Stock options
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Shares granted for purchase (in shares)	79,000
Weighted average exercise price (in dollars per share)	$ 48.57
Options vested and exercisable (in shares)	309,000
Options vested and exercisable, weighted average exercise price (in dollars per share)	$ 35.11
Unrecognized compensation charge	$ 20,700,000
RSUs
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Number of shares granted (in shares)	464,000
Nonvested shares outstanding (in shares)	1,353,000
Unrecognized non-cash equity-based compensation charge	$ 52,200,000
Aggregate value withheld upon vesting	$ 4,000,000
ESPP shares
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Shares issued (in shares)	0

Stockholders’ Equity and Equity-Based Compensation - Summary of non-cash equity-based compensation expense included in the Company's statement of operations (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2017	Mar. 31, 2016
Non-cash equity-based compensation expense related to the 2012 Plan and 2012 ESPP
Non-cash equity-based compensation	$ 5,956	$ 7,353
Stock options
Non-cash equity-based compensation expense related to the 2012 Plan and 2012 ESPP
Non-cash equity-based compensation	1,566	1,736
RSUs
Non-cash equity-based compensation expense related to the 2012 Plan and 2012 ESPP
Non-cash equity-based compensation	4,390	5,445
ESPP shares
Non-cash equity-based compensation expense related to the 2012 Plan and 2012 ESPP
Non-cash equity-based compensation	0	172
Cost of revenue
Non-cash equity-based compensation expense related to the 2012 Plan and 2012 ESPP
Non-cash equity-based compensation	208	533
Sales and marketing
Non-cash equity-based compensation expense related to the 2012 Plan and 2012 ESPP
Non-cash equity-based compensation	1,218	1,191
Product development
Non-cash equity-based compensation expense related to the 2012 Plan and 2012 ESPP
Non-cash equity-based compensation	1,256	2,149
General and administrative
Non-cash equity-based compensation expense related to the 2012 Plan and 2012 ESPP
Non-cash equity-based compensation	$ 3,274	$ 3,480

Employee Benefit Plans (Details) - USD ($) $ in Millions	3 Months Ended
Employee Benefit Plans (Details) - USD ($) $ in Millions	Mar. 31, 2017	Mar. 31, 2016
Compensation and Retirement Disclosure [Abstract]
Annual discretionary employer matching contributions (as a percent)	3.00%
Employer matching contributions	$ 0.4	$ 0.5

Other Expense, Net (Details) - USD ($) $ in Thousands	3 Months Ended
Other Expense, Net (Details) - USD ($) $ in Thousands	Mar. 31, 2017	Mar. 31, 2016
Other Nonoperating Income (Expense) [Abstract]
Foreign currency gain (loss)	$ 365	$ 670
Change in fair value of contingent consideration	0	(714)
Interest income	90	32
Total income (expense)	$ 455	$ (12)

Income Taxes (Details) - USD ($) $ in Millions	3 Months Ended
Income Taxes (Details) - USD ($) $ in Millions	Mar. 31, 2017	Mar. 31, 2016
Income Tax Disclosure [Abstract]
Effective tax rate (as a percent)	38.60%	43.30%
Increase (decrease) in effective tax rate	(5.00%)	2.20%
Unrecognized tax benefits	$ 0.1
Undistributed earnings	$ 8.1

Net Income Per Share (Details) - shares shares in Thousands	3 Months Ended
Net Income Per Share (Details) - shares shares in Thousands	Mar. 31, 2017	Mar. 31, 2016
Weighted Average Number of Shares Outstanding, Basic [Abstract]
Basic (in shares)	34,597	35,375
Stock options and ESPP shares (in shares)	495	352
Unvested RSUs and restricted stock awards (in shares)	503	372
Diluted (in shares)	35,595	36,099
Dilutive securities included in the calculation (in shares)	1,927	1,814
Anti-dilutive securities excluded from the calculation (in shares)	1,082	1,071

Geographic Information (Details) - USD ($) $ in Thousands	3 Months Ended		12 Months Ended
Geographic Information (Details) - USD ($) $ in Thousands	Mar. 31, 2017	Mar. 31, 2016	Dec. 31, 2016
Geographic revenue based on customer location and long-lived tangible assets
Revenue	$ 130,224	$ 116,652
Long-lived tangible assets	63,878		$ 56,101
North America
Geographic revenue based on customer location and long-lived tangible assets
Revenue	52,798	47,142
Long-lived tangible assets	$ 62,698		$ 54,913
United States \| Total revenue \| Geographic concentration
Geographic revenue based on customer location and long-lived tangible assets
Concentration risk percentage	36.00%
United States \| Long-Lived Tangible Assets \| Geographic concentration
Geographic revenue based on customer location and long-lived tangible assets
Concentration risk percentage	95.00%		95.00%
Europe
Geographic revenue based on customer location and long-lived tangible assets
Revenue	$ 42,573	$ 39,186
Long-lived tangible assets	$ 1,101		$ 1,141
United Kingdom \| Total revenue \| Geographic concentration
Geographic revenue based on customer location and long-lived tangible assets
Concentration risk percentage	9.00%	11.00%
Rest of the world
Geographic revenue based on customer location and long-lived tangible assets
Revenue	$ 34,853	$ 30,324
Long-lived tangible assets	$ 79		$ 47