SYNACOR, INC., 10-K filed on 3/6/2020
Annual Report
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Cover Page - USD ($)
$ in Millions
12 Months Ended
Dec. 31, 2019
Mar. 03, 2020
Jun. 28, 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 001-33843    
Entity Registrant Name Synacor, Inc.    
Entity Incorporation, State or Country Code DE    
Entity Tax Identification Number 16-1542712    
Entity Address, Address Line One 40 La Riviere Drive, Suite 300    
Entity Address, City or Town Buffalo,    
Entity Address, State or Province NY    
Entity Address, Postal Zip Code 14202    
City Area Code 716    
Local Phone Number 853-1362    
Title of 12(b) Security Common Stock, $0.01 Par Value    
Trading Symbol SYNC    
Security Exchange Name NASDAQ    
Entity Well-known Seasoned Issuer No    
Entity Voluntary Filers No    
Entity Current Reporting Status Yes    
Entity Interactive Data Current Yes    
Entity Filer Category Non-accelerated Filer    
Entity Small Business true    
Entity Emerging Growth Company false    
Entity Shell Company false    
Entity Public Float     $ 49.9
Entity Common Stock, Shares Outstanding   39,288,515  
Amendment Flag false    
Document Fiscal Year Focus 2019    
Document Fiscal Period Focus FY    
Entity Central Index Key 0001408278    
Current Fiscal Year End Date --12-31    
Documents Incorporated by Reference Certain portions of the definitive Proxy Statement to be used in connection with the registrant’s 2020 Annual Meeting of Stockholders are incorporated by reference into Part III of this Form 10-K to the extent stated. That Proxy Statement will be filed within 120 days of registrant’s fiscal year ended December 31, 2019.    
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Consolidated Balance Sheets - USD ($)
$ in Thousands
Dec. 31, 2019
Dec. 31, 2018
CURRENT ASSETS:    
Cash and cash equivalents $ 10,966 $ 15,921
Accounts receivable—net of allowance of $585 and $225 20,532 25,567
Prepaid expenses and other current assets 2,989 3,779
Total current assets 34,487 45,267
PROPERTY AND EQUIPMENT, net 14,948 18,707
Operating lease, right-of-use asset 4,765  
GOODWILL 15,948 15,941
INTANGIBLE ASSETS, net 8,411 10,553
OTHER ASSETS 1,319 995
TOTAL ASSETS 79,878 91,463
CURRENT LIABILITIES:    
Accounts payable 12,583 19,174
Accrued expenses and other current liabilities 5,878 7,849
Current portion of deferred revenue 6,509 6,672
Current portion of long-term debt and finance leases 2,529 2,328
Current portion of operating lease liabilities 2,165  
Total current liabilities 29,664 36,023
LONG-TERM PORTION OF DEBT AND FINANCE LEASES 729 1,367
LONG-TERM PORTION OF OPERATING LEASE LIABILITIES 2,846  
DEFERRED REVENUE 2,366 2,214
DEFERRED INCOME TAXES 275 231
OTHER LONG-TERM LIABILITIES 334 457
Total liabilities 36,214 40,292
COMMITMENTS AND CONTINGENCIES (Note 8)
STOCKHOLDERS’ EQUITY:    
Preferred stock, $0.01 par value—10,000,000 shares authorized, no shares issued and outstanding at December 31, 2019 and 2018 0 0
Common stock, $0.01 par value—100,000,000 shares authorized; 40,075,475 shares issued and 39,201,477 shares outstanding at December 31, 2019; 39,880,054 shares issued and  39,027,572 shares outstanding at December 31, 2018 401 399
Treasury stock—at cost, 873,998 shares at December 31, 2019 and 852,482 shares at December 31, 2018 (1,931) (1,899)
Additional paid-in capital 146,460 144,739
Accumulated deficit (100,747) (91,726)
Accumulated other comprehensive loss (519) (342)
Total stockholders’ equity 43,664 51,171
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY 79,878 91,463
Allowance for doubtful accounts $ 585 $ 225
Preferred stock, par value (in dollars per share) $ 0.01 $ 0.01
Preferred stock, shares authorized (in shares) 10,000,000 10,000,000
Common stock, par value (in dollars per share) $ 0.01 $ 0.01
Common stock, shares authorized (in shares) 100,000,000 100,000,000
Preferred stock, shares outstanding (in shares) 0 0
Preferred stock, shares issued (in shares) 0 0
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Consolidated Balance Sheets (Parenthetical) - USD ($)
$ in Thousands
Dec. 31, 2019
Dec. 31, 2018
Statement of Financial Position [Abstract]    
Allowance for doubtful accounts $ 585 $ 225
Preferred stock, par value (in dollars per share) $ 0.01 $ 0.01
Preferred stock, shares authorized (in shares) 10,000,000 10,000,000
Preferred stock, shares issued (in shares) 0 0
Preferred stock, shares outstanding (in shares) 0 0
Common stock, par value (in dollars per share) $ 0.01 $ 0.01
Common stock, shares authorized (in shares) 100,000,000 100,000,000
Common stock, shares issued (in shares) 40,075,475 39,880,054
Common stock, shares outstanding (in shares) 39,201,477 39,027,572
Treasury stock (in shares) 873,998 852,482
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Consolidated Statements of Operations - USD ($)
$ in Thousands
3 Months Ended 12 Months Ended
Dec. 31, 2018
Dec. 31, 2019
Dec. 31, 2018
Income Statement [Abstract]      
REVENUE $ 143,879 $ 121,845 $ 143,879
COSTS AND OPERATING EXPENSES:      
Cost of revenue (exclusive of depreciation and amortization shown separately below) 73,304 61,990  
Technology and development (exclusive of depreciation and amortization shown separately below) 23,753 18,273  
Sales and marketing 24,116 21,790  
General and administrative (exclusive of depreciation and amortization shown separately below) 19,454 17,734  
Depreciation and amortization 9,641 9,865  
Total costs and operating expenses 150,268 129,652  
LOSS FROM OPERATIONS   (7,807) (6,389)
OTHER EXPENSE, net (212) (17)  
INTEREST EXPENSE (338) (268) (338)
LOSS BEFORE INCOME TAXES (6,939) (8,092) (6,939)
Income tax expense (benefit) 616 929 616
NET LOSS $ (7,555) $ (9,021) $ (7,555)
NET LOSS PER SHARE:      
Basic (in dollars per share) $ (0.19) $ (0.23)  
Diluted (in dollars per share) $ (0.19) $ (0.23)  
WEIGHTED AVERAGE SHARES USED TO COMPUTE NET LOSS PER SHARE:      
Basic (in shares) 38,895,301 39,090,239  
Diluted (in shares) 38,895,301 39,090,239  
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Consolidated Statements of Comprehensive Loss - USD ($)
$ in Thousands
12 Months Ended
Dec. 31, 2019
Dec. 31, 2018
Statement of Comprehensive Income [Abstract]    
Net loss $ (9,021) $ (7,555)
Other comprehensive loss:    
Changes in foreign currency translation adjustment (177) (313)
Comprehensive loss $ (9,198) $ (7,868)
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Consolidated Statements of Stockholders' Equity - USD ($)
$ in Thousands
Total
Common Stock
Treasury Stock
Additional Paid-in Capital
Accumulated Deficit
Accumulated Other Comprehensive Income (Loss)
Beginning balance (in shares) at Dec. 31, 2017   39,625,980 842,220      
Beginning balance at Dec. 31, 2017 $ 54,679 $ 396 $ (1,881) $ 142,486 $ (86,627) $ (29)
Impact of the adoption of new accounting pronouncements 2,456       2,456  
Exercise of common stock options (in shares)   226,081        
Exercise of common stock options 385 $ 2   383    
Stock-based compensation cost 1,871     1,871    
Vesting of restricted stock units (in shares)   27,993 10,262      
Vesting of restricted stock units (18) $ 1 $ (18) (1)    
Net loss (7,555)       (7,555)  
Other comprehensive loss $ (313)         (313)
Ending balance (in shares) at Dec. 31, 2018 39,027,572 39,880,054 852,482      
Ending balance at Dec. 31, 2018 $ 51,171 $ 399 $ (1,899) 144,739 (91,726) (342)
Exercise of common stock options (in shares) 39,572 39,572        
Exercise of common stock options $ 60     60    
Stock-based compensation cost 1,661     1,661    
Vesting of restricted stock units (in shares)   155,849 21,516      
Vesting of restricted stock units (30) $ 2 $ (32)      
Net loss (9,021)       (9,021)  
Other comprehensive loss $ (177)         (177)
Ending balance (in shares) at Dec. 31, 2019 39,201,477 40,075,475 873,998      
Ending balance at Dec. 31, 2019 $ 43,664 $ 401 $ (1,931) $ 146,460 $ (100,747) $ (519)
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Consolidated Statements of Cash Flows - USD ($)
$ in Thousands
12 Months Ended
Dec. 31, 2019
Dec. 31, 2018
CASH FLOWS FROM OPERATING ACTIVITIES:    
Net loss $ (9,021) $ (7,555)
Adjustments to reconcile net loss to net cash and cash equivalents provided by operating activities:    
Depreciation and amortization 11,251 9,832
Long-lived asset impairment 1,751 552
Stock-based compensation expense 1,616 1,804
Provision for deferred income taxes 44 (248)
Change in allowance for doubtful accounts 360 126
Changes in operating assets and liabilities:    
Accounts receivable, net 4,676 6,002
Prepaid expenses and other assets 526 879
Accounts payable, accrued expenses and other liabilities (8,828) (5,391)
Deferred revenue (11) (3,945)
Net cash provided by operating activities 2,459 2,056
CASH FLOWS FROM INVESTING ACTIVITIES:    
Purchases of property and equipment (3,772) (6,256)
Net cash used in investing activities (3,772) (6,256)
CASH FLOWS FROM FINANCING ACTIVITIES:    
Payments of financing issuance costs (60) 0
Repayments on long-term debt and finance leases (3,427) (2,422)
Proceeds from exercise of common stock options 60 385
Purchase of treasury stock and shares received to satisfy minimum tax withholdings (32) (18)
Net cash used in financing activities (3,459) (2,055)
Effect of exchange rate changes on cash and cash equivalents (183) (300)
NET DECREASE IN CASH AND CASH EQUIVALENTS (4,955) (6,555)
Cash and cash equivalents, beginning of period 15,921 22,476
Cash and cash equivalents, end of period 10,966 15,921
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:    
Cash paid for interest 268 337
Cash paid for income taxes 706 812
SUPPLEMENTAL DISCLOSURES OF NON-CASH INVESTING AND FINANCING TRANSACTIONS:    
Property, equipment and service contracts financed under long-term debt and finance lease obligations 3,152 357
Accrued property and equipment expenditures 408 277
Stock-based compensation capitalized to property and equipment 45 67
Increase Decrease In Operating Lease Right Of Use Asset and Liabilities, Net $ (95) $ 0
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The Company and Summary of Significant Accounting Policies
12 Months Ended
Dec. 31, 2019
Organization, Consolidation and Presentation of Financial Statements [Abstract]  
The Company and Summary of Significant Accounting Policies THE COMPANY AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Synacor, Inc., together with its consolidated subsidiaries (collectively, the “Company” or “Synacor”), is a digital technology company that provides email and collaboration software, cloud-based identity management platforms, managed web and mobile portals, and advertising solutions. The Company’s customers include communications providers, media companies, government entities and enterprises. Synacor is a trusted partner for enterprise software platforms and monetization solutions that Synacor delivers through public and private cloud software-as-a-service, software licensing, and professional services. Synacor enables clients to deepen their engagement with their consumers and users.
Basis of Presentation —The consolidated financial statements and accompanying notes have been prepared in accordance with United States generally accepted accounting principles (“U.S. GAAP”) and include the accounts of the Company and its wholly-owned subsidiaries. All intercompany balances and transactions have been eliminated in consolidation.
During the first quarter of 2019, the Company made a change to its segment reporting structure which resulted in two segments: 1) Software & Services and 2) Portal & Advertising. As a result, certain prior year amounts have been restated to conform to current year’s presentation. Historical Amounts in Note 1 – The Company and Summary of Significant Accounting Policies, Note 2 – Revenue from Contracts with Customers and Note 7 – Segment Information have been restated to reflect these changes in reportable segments.
Additionally, the Company has reclassified certain costs and expenses in the consolidated statement of operations for the year ended December 31, 2018 amounting to $0.8 million, from technology and development to cost of revenue to conform to the current period presentation. These reclassifications had no effect on previously reported total costs and operating expenses and net loss. Historical Amounts in Note 1 – The Company and Summary of Significant Accounting Policies have been restated to reflect this reclassification.
Foreign Currency The assets and liabilities of the Company’s foreign subsidiaries are translated into U.S. dollars at the rate of exchange in effect at the balance sheet date. Income and expense items are translated at the average exchange rates prevailing during the period.
Cash and Cash Equivalents and Restricted Cash—The Company considers all highly liquid investments with an original maturity of three months or less when purchased to be cash equivalents. Cash and cash equivalents that are contractually restricted from operating use are classified as restricted cash and cash equivalents. The Company had no restricted cash as of the years ended December 31, 2019 and 2018.
Accounts Receivable —The Company records accounts receivable at the invoiced amount and does not charge interest on past due invoices. An allowance for doubtful accounts is maintained to reserve for potentially uncollectible accounts receivable. The Company reviews its accounts receivable from customers that are past due to identify specific accounts with known disputes or collectability issues. In determining the amount of the reserve, the Company makes judgments about the creditworthiness of customers based on ongoing credit evaluations.
Property and Equipment —Property and equipment are stated at cost, less accumulated depreciation. Depreciation is computed using the straight-line method over the estimated useful lives of the assets as follows:
Leasehold improvements
3–10 years
Computer hardware
3–5 years
Computer software3 years
Furniture and fixtures7 years
Other
3–5 years
Computer hardware under finance leases and leasehold improvements are amortized over the shorter of the lease term or the estimated useful life of the assets.
Long-Lived Assets —The Company reviews the carrying value of its long-lived assets, exclusive of goodwill, for impairment whenever events or changes in circumstances indicate that the carrying value of these assets may not be recoverable. For purposes of evaluating and measuring impairment, the Company groups a long-lived asset or assets with other assets and liabilities at the lowest level for which identifiable cash flows are largely independent of the cash flows of other assets and liabilities. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of the assets to future undiscounted net cash flows expected to be generated by the assets. If such assets are considered impaired, the impairment is measured and recognized as the amount by which the carrying amount of the assets exceeds the fair value of the assets. See Note 3 - Property and Equipment —Net further details.
Software Development Costs —The Company capitalizes certain costs incurred for the development of internal use software, as well as the costs of developing software for sale or license to customers.  Internal use software includes the Company’s proprietary portal software and related applications, Cloud ID authentication software, and various applications used in the management of the Company’s portals. Software for sale or license to customers includes the Company’s proprietary Email/Collaboration offerings. Costs incurred during the preliminary project stage for internal software programs are expensed as incurred. External and internal costs incurred during the application development stage (subsequent to the achievement of technological feasibility on software to be sold or licensed) of new software development, as well as for upgrades and enhancements for software programs that result in additional functionality are capitalized. Software development costs capitalized for sale or license to customers and cost capitalized for the development of internal use software are amortized over the estimated useful life of the applicable software. Impairment charges are taken as a result of circumstances that indicate that the carrying values of the assets were not fully recoverable. The Company utilizes the discounted cash flow method to determine the fair value of the capitalized software assets. Impairment charges for the years ended December 31, 2019 and 2018 are included in general and administrative expense in the consolidated statement of operations.
Leases — The Company determines if an arrangement is a lease and classifies that lease as either an operating or finance lease at inception. Right-of-use (ROU) assets and liabilities are recognized at lease commencement date based on the present value of remaining lease payments over the reasonably certain lease term. For this purpose, only payments that are fixed and determinable at the time of commencement are considered. As many of the leases do not provide an implicit rate, the Company uses its incremental borrowing rate based on the information available at commencement date in determining the present value of lease payments. The incremental borrowing rate is a hypothetical rate based on factors including the Company’s credit rating. The ROU asset also includes any lease payments made prior to commencement and is recorded net of any lease incentives received. Lease terms may include options to extend or terminate the lease when it is reasonably certain that the options will be exercised.
Operating leases are included in operating lease right-of-use assets, and current and long-term operating lease liabilities on our consolidated balance sheets. Finance leases are included in property and equipment-net, and on the current and long-term portion of debt and finance leases in our consolidated balance sheets.
Other Intangible Assets —Other intangible assets consist of customer relationships, trademarks, and purchased technology. Definite-lived intangible assets are amortized on a straight-line basis. The Company reviews its definite-lived intangible assets for impairment when impairment indicators exist. The Company uses undiscounted cash flow to determine whether impairment exists and measures any impairment losses using discounted cash flow.
The components and original estimated economic lives of our amortizable intangible assets were as follows as of December 31, 2019 and 2018:
Original
Estimated
Economic Life
20192018
(Dollars in thousands)
Gross amortizable intangible assets:
Customer and publisher relationships10 years$14,780  $14,780  
Technology5 years2,330  2,330  
Trademark5 years300  300  
Total gross amortizable intangible assets17,410  17,410  
Accumulated amortization:
Customer and publisher relationships(6,809) (5,193) 
Technology(257) (197) 
Trademark(1,933) (1,467) 
Total accumulated amortization(8,999) (6,857) 
Amortizable intangible assets, net$8,411  $10,553  
Amortization of intangible assets was $2.1 million in the years ended December 31, 2019 and 2018. Future amortization expense of amortizable intangible assets will be as follows: $2.0 million in the year ending December 31, 2020, $1.4 million in the year ending December 31, 2021, $1.3 million in the year ending December 31, 2022, and 2023, $0.4 million in the year ending December 31, 2024, and $1.9 million thereafter.
Goodwill —The Company evaluates goodwill for impairment for each of its reporting units at least annually on October 1st, and whenever events occur or circumstances change, such as changes in the business climate, poor indicators of operating performance or the sale or disposition of a significant portion of a reporting unit. The Company is required to evaluate goodwill for impairment when there is a change in reporting units. During the first quarter of 2019, the Company made changes to its segment reporting structure that resulted in two reportable segments: 1) Software & Services and 2) Portal & Advertising. Previously the Company concluded that it had one reportable segment. This change resulted in two reporting units for the purpose of impairment analysis for goodwill.
Companies may perform a qualitative assessment as the initial step in the annual goodwill impairment testing process for all or selected reporting units. Companies are also allowed to bypass the qualitative analysis and perform a quantitative analysis if desired. Economic uncertainties and the length of time from the calculation of a baseline fair value are factors that we consider in determining whether to perform a quantitative test.
When the Company evaluates the potential for goodwill impairment using a qualitative assessment, the Company considers factors including, but not limited to, macroeconomic conditions, industry conditions, the competitive environment, changes in the market for our products and services, regulatory and political developments, entity specific factors such as strategy and changes in key personnel and overall financial performance. If, after completing this assessment, it is determined that it is more likely than not that the fair value of a reporting unit is less than its carrying value, we proceed to a quantitative test.
Quantitative testing requires a comparison of the fair value of each reporting unit to its carrying value. The fair value of each reporting unit is determined using a combination of an income approach and a market approach. If the carrying value of the reporting unit exceeds its fair value, goodwill is considered impaired and any loss is measured as the difference between the carrying value and fair value of the reporting unit.
The income approach uses a discounted cash flow method to estimate the fair value of our reporting units. The discounted cash flow method incorporates various assumptions, the most significant being projected revenue growth rates, operating margins and cash flows, the terminal growth rate and the discount rate. The Company projects revenue growth rates, operating margins and cash flows based on each reporting unit's current business, expected developments and operational strategies typically over a five-year period.
The market approach determines fair value based on available market pricing for comparable assets. Valuation multiples were calculated utilizing actual transaction prices and revenue or EBITDA data from target companies deemed similar to the reporting unit. Valuation multiples were then applied to certain operating statistics such as revenue or EBITDA, and an estimated control premium was applied.
If the carrying amount of the reporting unit exceeds the reporting unit’s fair value as determined using the two valuation methodologies described above, an impairment loss is recognized in the amount by which the carrying value of the reporting unit exceeds the fair value of the reporting unit. The determination of our assumptions is subjective and requires significant estimates. Changes in these estimates and assumptions could materially affect the results of our reviews for impairment of goodwill.
During the year ended December 31, 2019, in addition to the annual assessment done as of October 1st, we performed a quantitative test as of the first quarter for both reporting units due to change in segment reporting, as discussed above, and both reporting units fair value exceeded carrying value.
Furthermore, in accordance with ASC 350-20-35, the Company assesses goodwill of an entity (or a reporting unit) for impairment if an event occurs or circumstances change that indicate that the fair value of the entity (or the reporting unit) may be below its carrying amount (a triggering event). As a result of the such assessment of relevant events and circumstances, the Company performed a quantitative test for the Portal & Advertising segment as of June 30, 2019 for which the fair value exceeded the carrying value.
There were no impairment losses were recorded for goodwill during the years ended December 31, 2019, and 2018.
As noted above, in 2019, we changed our segment reporting structure which resulted in two reportable segments: 1) Software & Services and 2) Portal & Advertising.. As a result, all prior period balances for those segments were restated to reflect this change. The change in goodwill is as follows for the years ended December 31, 2019 and 2018 (in thousands):
Software & ServicesPortal & AdvertisingTotal
Balance as of Balance as of January 1, 2018$11,811  $4,144  $15,955  
Balance as of Effect of foreign currency translation(14) —  (14) 
Balance as of December 31, 2018$11,797  $4,144  $15,941  
Effect of foreign currency translation —   
Balance as of December 31, 2019$11,804  $4,144  $15,948  
Revenue Recognition — The Company recognize revenues when we transfer control of promised goods or services to our customers in an amount that reflects the consideration to which we expect to be entitled to in exchange for those goods or services. See Note 2, Revenue from Customers for further discussion on Revenue.
Cost of Revenue —Cost of revenue consists primarily of revenue sharing, content acquisition costs, co-location facility costs, royalty costs and product support costs. Revenue sharing consists of amounts accrued and paid to customers for the internet traffic on Managed Portals where the Company is the primary obligor, resulting in the generation of search and digital advertising revenue. The revenue-sharing agreements with customers are primarily variable payments based on a percentage of the search and digital advertising revenue.
Content-acquisition agreements may be based on a fixed payment schedule, on the number of subscribers per month, or a combination of both. Fixed-payment agreements are expensed on a straight-line basis over the term defined in the agreement. Agreements based on the number of subscribers are expensed on a monthly basis. Co-location facility costs consist of rent and operating costs for the Company’s data center facilities. Royalty costs consist of amounts due to third parties for the license of their applications or technology sold with or embedded in our email software. Product support costs consist of employee and operating costs directly related to the Company’s maintenance and professional services support.
Concentrations of Risk As of December 31, 2019 and 2018, the Company had concentrations equal to or exceeding 10% of the Company’s accounts receivable as follows:
Accounts Receivable
20192018
Portal & Advertising Customer A14 %15 %
For the years ended December 31, 2019 and 2018, the Company had concentrations equal to or exceeding 10% of the Company’s revenue as follows: 
Revenue
20192018
Google search 13 %
Google advertising affiliate 11 %
Portal & Advertising Customer A13 % 
* - Less than 10%
For the years ended December 31, 2019 and 2018, the following customers received revenue-share payments equal to or exceeding 10% of the Company’s cost of revenue.
Cost of Revenue
20192018
Portal & Advertising Customer B19 %29 %
Financial instruments that potentially subject the Company to significant concentrations of credit risk consist principally of cash and cash equivalents. The Company places its cash primarily in checking and money market accounts with high credit quality financial institutions, which, at times, have exceeded federally insured limits of $0.25 million. Although the Company maintains balances that exceed the federally insured limit, it has not experienced any losses related to these balances and believes credit risk to be minimal.
Technology and Development —Technology and development expenses consist primarily of compensation-related expenses incurred for the research and development of, enhancements to, and maintenance and operation of the Company’s products, equipment and related infrastructure.
Sales and Marketing —Sales and marketing expenses consist primarily of compensation-related expenses to the Company’s direct sales and marketing personnel, as well as costs related to advertising, industry conferences, promotional materials, and other sales and marketing programs. Advertising costs are expensed as incurred.  Advertising costs totaled $0.4 million in 2019, and 2018 respectively.
General and Administrative —General and administrative expenses consist primarily of compensation related expenses for executive management, finance, accounting, human resources, legal, and Corporate IT as well as professional fees and facilities costs.
Earnings (Loss) Per Share —Basic earnings (loss) per share (“EPS”) is calculated in accordance with the Financial Accounting Standards Board (“FASB”) ASC 260, Earnings per Share, using the weighted average number of common shares outstanding during each period. Diluted EPS assumes the conversion, exercise or issuance of all potential common stock equivalents unless the effect is to reduce a loss or increase the income per share. For purposes of this calculation, stock options, warrants, performance based stock units ("PSUs"), and restricted stock units (“RSUs”) are considered to be potential common shares and are only included in the calculation of diluted earnings (loss) per share when their effect is dilutive.
Stock-Based Compensation —The Company records compensation costs related to stock-based awards in accordance with FASB ASC 718, Compensation—Stock Compensation. Under the fair value recognition provisions of ASC 718, the Company measures stock-based compensation cost at the grant date based on the estimated fair value of the award. Compensation cost is recognized ratably over the requisite service period of the award. The Company utilizes the Black-Scholes option-pricing model to estimate the fair value of stock options granted. The amount of stock-based compensation expense recognized during a period is based on the portion of the awards that are ultimately expected to vest. The Company estimates pre-vesting forfeitures at the time of grant by analyzing historical data and revises those estimates in subsequent periods if actual forfeitures differ from those estimates. The total expense recognized over the vesting period will only be for those awards that ultimately vest.
Employee Benefit Plan —The Company sponsors a 401(k) profit sharing plan that covers substantially all employees. Under the plan, eligible employees are permitted to contribute a portion of gross compensation not to exceed standard limitations provided by the Internal Revenue Service. The Company maintains the right to match employee contributions, and contributed $0.2 million for the years ended December 31, 2019, and 2018.
Income Taxes Deferred income tax assets and liabilities are determined based on temporary differences between the financial statement and income tax bases of assets and liabilities and net operating loss (“NOL”) and credit carryforwards using enacted income tax rates in effect for the year in which the differences are expected to reverse. A valuation allowance is established to the extent necessary to reduce deferred income tax assets to amounts that more likely than not will be realized.
The Company accounts for uncertain tax positions using a more-likely-than-not recognition threshold based on the technical merits of the tax position taken. Tax benefits that meet the more-likely-than-not recognition threshold should be measured as the largest amount of tax benefits, determined on a cumulative probability basis, which is more likely than not to be realized upon ultimate settlement in the financial statements. It is the Company’s policy to recognize interest and penalties related to income tax matters in income tax expense. As of December 31, 2019 and 2018, accrued interest or penalties related to uncertain tax positions was insignificant.
Accounting Estimates —The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates, judgments and assumptions that affect the amounts reported and disclosed in the financial statements and the accompanying notes. The Company bases its estimates on historical experience and on various other assumptions that are believed to be reasonable, the results of which form the basis for making judgments about the carrying values of assets and liabilities. Actual results may differ from estimated amounts.
Fair Value Measurements —Fair value measurement standards apply to certain financial assets and liabilities that are measured at fair value on a recurring basis at each reporting period. The fair value of cash and cash equivalents, accounts receivable, accounts payable, accrued expenses and other current liabilities approximates their carrying value due to their short-term nature.
The provisions of FASB ASC 820, Fair Value Measurements and Disclosures , establishes a framework for measuring the fair value in accounting principles generally accepted in the U.S. and establishes a hierarchy that categorizes and prioritizes the sources to be used to estimate fair value as follows:
Level 1 —Level 1 inputs are defined as observable inputs such as quoted prices in active markets.
Level 2 —Level 2 inputs include quoted prices for similar assets and liabilities in active markets, quoted prices for identical or similar assets or liabilities in markets that are not active, inputs other than quoted prices that are observable for the asset or liability (interest rates, yield curves, etc.), and inputs that are derived principally from or corroborated by observable market data by correlation or other means (market corroborated inputs).
Level 3 —Level 3 inputs are unobservable inputs that reflect the Company’s determination of assumptions that market participants would use in pricing the asset or liability. These inputs are developed based on the best information available, including the Company’s own data.
Applicable Recent Accounting Pronouncements
Not Yet Adopted
In August 2018, the FASB issued Accounting Standards Update (“ASU”) No. 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. The Company is evaluating the impact of this new accounting standard on its financial statements.
Recently Adopted
On January 1, 2019 the Company adopted ASU No. 2016-2, Leases (Topic 842) (ASU 2016-2), as amended, which generally requires lessees to recognize operating and financing lease liabilities and corresponding right-of-use (ROU) assets on the balance sheet and to provide enhanced disclosures surrounding the amount, timing and uncertainty of cash flows arising from leasing arrangements. In July 2018, the FASB issued ASU 2018-11, Leases (Topic 842), Targeted Improvements, which provides an additional, optional transition method with which to adopt the new leases standard. This additional transition method allows for a cumulative-effect adjustment to the opening balance of retained earnings in the period of adoption, rather than in the earliest period presented in the financial statements, as originally required by ASU 2016-2. The Company adopted the standard using the additional transition method introduced by ASU 2018-11. The most significant impact was the recognition of ROU assets and lease liabilities for operating leases, while our accounting for finance leases remained substantially unchanged. For information regarding the impact of Topic 842 adoption, see Significant Accounting Policies - Leases and Note 9 — Leases. Results and disclosure requirements for reporting periods beginning after January 1, 2019 are presented under Topic 842, while prior period amounts have not been adjusted and continue to be reported in accordance with our historical accounting under Topic 840.
The Company elected the package of practical expedients permitted under the transition guidance, which allowed for the carryforward of historical lease classification, on whether a contract was or contains a lease, and of the assessment of initial direct costs for any leases that existed prior to January 1, 2019. The Company also elected to combine lease and non-lease components and to keep leases with an initial term of 12 months or less off the balance sheet and recognize the associated lease payments in the consolidated statements of income on a straight-line basis over the lease term.
On January 1, 2019, the Company recognized ROU assets of $10.2 million, with corresponding lease liabilities of $10.4 million on the consolidated balance sheet. The difference between the lease liability and the ROU asset represents the existing deferred rent liabilities balances before adoption, resulting from historical straight-lining of rent expense, which was reclassified upon adoption to reduce the measurement of the initial ROU asset. This was in addition to the $3.4 million of finance lease ROU assets previously reported in property and equipment, net as capital leases. The adoption did not impact our beginning stockholders’ equity, and did not have a material impact on the condensed statement of operations and statement of cash flows for the year ended December 31, 2019.
The Company considers the applicability and impact of all ASUs. ASUs not listed above were assessed and determined to be either not applicable, or had or are expected to have minimal impact on the Company’s financial statements and related disclosures.
v3.19.3.a.u2
Revenue from Contracts with Customers
12 Months Ended
Dec. 31, 2019
Revenue from Contract with Customer [Abstract]  
Revenue from Contracts with Customers REVENUE FROM CONTRACTS WITH CUSTOMERS
Revenue is recognized according to ASC 606, Revenue - Revenue from Contracts with Customers. The Company generates all of its revenue from contracts with customers. Many of the Company’s contracts with customers contain multiple performance obligations. For these contracts, the Company accounts for individual performance obligations separately if they are distinct. The transaction price is allocated to the separate performance obligations on a relative standalone selling price basis. Standalone selling prices of software licenses are typically estimated using the residual approach. Standalone selling prices of services are typically estimated based on observable transactions when these services are sold on a standalone basis. The Company usually expects payment within 30 to 90 days from the invoice date (fulfillment of performance obligations or per contract terms). Differences between the amount of revenue recognized and the amount invoiced are recognized as deferred revenue. None of the Company’s contracts as of December 31, 2019 or 2018 contained s significant financing component.
The following is a description of principal activities from which the Company generates revenue in each reportable segment. Revenue is recognized when control of the promised goods or services are transferred to the Company’s customers, in an amount that reflects the consideration that is expected to be received in exchange for those goods or services.

Software & Services

Synacor’s software and services segment is comprised of our cloud-based identity management platform and our Zimbra email & collaboration platform. Subscription fees and other fees are received from customers for the use of the Company’s proprietary technology, including the use of, or access to, email, Cloud ID, security services, games and other premium services. Monthly subscriber levels typically form the basis for generating recurring and fee-based revenue. This revenue is typically determined by multiplying a per-subscriber per-month fee by the number of subscribers using the particular services being offered or consumed, except in the case of software licenses and support, which are based on a fixed fee. Revenue earned as subscription fees and maintenance and support fees is recognized from customers as its obligation to deliver the service is satisfied, which is when the service is delivered. Revenue is also recognized from the licensing and distribution of the Company’s Email/Collaboration products and services, including licenses of intellectual property. Software license revenue is recognized up front upon delivery of the licensed product and the utility that enables the customer to access authorization keys, provided that a signed contract has been received. The Company typically sells term-based software licenses that expire, which are referred to as subscription licenses, but also sells perpetual licenses for its Email products. The software is delivered before related services are provided and is functional without professional services, updates, and technical support.

Portal & Advertising

The Company uses internet advertising to generate revenue from the traffic on its Managed Portals and Advertising solutions, categorized as search advertising and digital advertising. For search advertising, the Company has a revenue-sharing relationship with Google, pursuant to which the Company includes a Google-branded search tool on its Managed Portals. For revenue earned under this relationship the Company evaluates whether it is the principal (i.e., report revenues on a gross basis) or agent (i.e., report revenues on a net basis). When a Google consumer makes a search query using this tool, the Company delivers the query to Google and they return search results to consumers that include advertiser-sponsored links. If the consumer clicks on a sponsored link, Google receives payment from the sponsor of that link and shares a portion of that payment with the Company. The payment received from Google is recognized as revenue. Digital advertising includes video, image and text advertisements delivered on its Managed Portals. Advertising inventory is filled with advertisements sourced by the Company’s direct sales force and advertising network partners. Revenue is generated when an advertisement displays, otherwise known as an impression, or when consumers view or click an advertisement, otherwise known as an action. Digital advertising revenue is on a cost per impression or cost per action basis. Digital advertising also includes advertising fees received for the placement of syndicated digital advertisements with other digital advertising publishers, for which the Company acquires and pays for the space (inventory) on a cost per impression or cost per action basis. Revenue is recognized based on amounts received from advertising customers as the impressions are delivered or the actions occur, according to contractually-determined rates.
Disaggregation of revenue
The following table provides information about disaggregated revenue for the years ended December 31, 2019, and 2018 by the timing of revenue recognition, and includes a reconciliation of the disaggregated revenue by reportable segment (in thousands):
Year Ended December 31,
20192018
Software & Services
Products and services transferred over time$34,029  $35,938  
Products transferred at a point in time10,456  12,754  
Total Software & Services$44,485  $48,692  
Portal & Advertising
Products and services transferred over time$5,168  $7,254  
Products transferred at a point in time72,192  87,933  
Total Portal & Advertising$77,360  $95,187  
Total revenue$121,845  $143,879  
Revenue disaggregated by geography, based on the billing address of our customer, consists of the following (in thousands):
Year Ended December 31,
20192018
Revenue
United States$99,845  $119,912  
International22,000  23,967  
Total revenue$121,845  $143,879  
Remaining Performance Obligations
Deferred revenue is recorded when cash payments are received or due in advance of revenue recognition from software licenses, professional services, and maintenance agreements. The timing of revenue recognition may differ from the timing of billings to customers. The changes in deferred revenue, inclusive of both current and long-term, are as follows (in thousands):
Beginning balance - January 1, 2019$8,886  
Recognition of deferred revenue(11,814) 
Deferral of revenue11,759  
Effect of foreign currency translation44  
Ending balance-December 31, 2019$8,875  
The majority of the deferred revenue balance above relates to the maintenance and support contracts for Email software licenses. These are recognized straight-line over the life of the contract, with the majority of the balance being recognized within the next twelve months.
Practical Expedients
The Company generally expenses sales commissions when incurred because the amortization period would have been one year or less. These costs are recorded within sales and marketing expenses.
The Company does not disclose the value of unsatisfied performance obligations for (i) contracts with an original expected length of one year or less and (ii) contracts for which revenue is recognized at the amount to which the Company has the right to invoice for services performed.
v3.19.3.a.u2
Property and Equipment-Net
12 Months Ended
Dec. 31, 2019
Property, Plant and Equipment [Abstract]  
Property and Equipment-Net PROPERTY AND EQUIPMENT—NET
As of December 31, 2019 and 2018, property and equipment-net consisted of the following (in thousands):
20192018
Computer equipment$25,392  $27,294  
Computer software31,037  27,422  
Furniture and fixtures1,315  1,618  
Leasehold improvements1,116  1,256  
Work in process (primarily software development costs)187  4,584  
Other136  179  
Property and equipment, gross59,183  62,353  
Less accumulated depreciation(44,235) (43,646) 
Property and equipment, net$14,948  $18,707  
Depreciation expense totaled $9.1 million and $7.5 million for the years ended December 31, 2019, and 2018, respectively.
Property and equipment includes computer equipment held under finance leases and long-term debt obligations of $10.8 million and $8.4 million as of December 31, 2019 and 2018, respectively. Accumulated depreciation of computer equipment and software held under finance leases amounted to $6.2 million and $5.0 million as of December 31, 2019 and 2018, respectively.
The Company capitalized a total of $2.3 million and $3.6 million of costs that occurred during the application development phase, related to the development of internal-use software for the years ended December 31, 2019, and 2018, respectively. The Company capitalized a total of $1.5 million and $1.3 million of costs related to the development of software for sale or license for the years ended December 31, 2019 and 2018, respectively, that occurred after technological feasibility had been achieved.
Amortization of software for sale or license was $1.4 million and $0.2 million for the years ended December 31, 2019 and 2018, respectively, and is included in cost of revenue in the consolidated statement of operations.
During the year ended December 31, 2019, there was a loss of a major portal customer which caused the Company to assess the recoverability of certain long-lived assets. When the carrying value of long-lived assets is not recoverable from future undiscounted cash flows, the Company utilizes the discounted cash flow to determine the fair value of the assets and impairment charges are recognized when the fair value of the assets is less than their carrying value, which use unobservable inputs, or Level 3 inputs, as defined by the fair value hierarchy. Impairment charges related to the following assets were included in general and administrative expenses in the consolidated statement of operations for the years ended December 31, 2019, and 2018 (in thousands):
Year Ending December 31,20192018
Computer equipment$ $—  
Computer software1,557  552  
Furniture and fixtures102  —  
Leasehold improvements90  —  
Total$1,751  $552  
The following table sets forth long-lived tangible assets by geographic area as of December 31, 2019 and December 31, 2018 (in thousands):

20192018
Long-lived tangible assets:
United States$14,629  $18,217  
International319  490  
Total long-lived tangible assets$14,948  $18,707  
v3.19.3.a.u2
Accrued Expenses and Other Current Liabilities
12 Months Ended
Dec. 31, 2019
Payables and Accruals [Abstract]  
Accrued Expenses and Other Current Liabilities ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES
As of December 31, 2019 and 2018, accrued expenses and other current liabilities consisted of the following (in thousands):
20192018
Accrued compensation$4,209  $5,801  
Accrued content fees and other costs of revenue151  342  
Accrued taxes192  206  
Other1,326  1,500  
Total$5,878  $7,849  
Included in accrued compensation are accrued severance costs. In 2018, the Company initiated a cost reduction program ("2018 plan") to drive overall efficiency while adding capacity and streamlining the organization. The plan involved a reduction in the Company’s workforce by approximately 25 employees. In 2019, the Company initiated a similar cost reduction program ("2019 plan") in order to further streamline the organization after the loss of a major portal customer. These actions resulted in workforce reductions of approximately 50 employees, office consolidations and consolidating operations.
In the year ended December 31, 2018, the pre-tax severance charge and outplacement services resulting from the reduction in workforce, combined with the Company’s separation from its former Chief Financial Officer, amounted to $1.1 million. Severance costs charged to sales and marketing and general and administrative expenses were each $0.4 million, and $0.3 million was charged to technology and development expenses. For the year ended December 31, 2019 the pre-tax severance charge and outplacement services resulting from the reduction in workforce amounted to $0.6 million. Severance costs charged to sales and marketing was $0.2 million and $0.4 million was charged to technology and development expenses.
The following is a roll forward of the accrued severance liability for the years ended December 31, 2019 and 2018 (in thousands):
20192018
Balance at beginning of the year$274  $21  
Charged to expense607  1,111  
Cash payments related to 2018 plan(268) (858) 
Cash payments related to 2019 plan(557) —  
Balance at end of year$56  $274  
v3.19.3.a.u2
Long-Term Debt
12 Months Ended
Dec. 31, 2019
Debt Disclosure [Abstract]  
Long-Term Debt LONG-TERM DEBT
On August 7, 2019, the Company entered into a new Loan and Security Agreement, the "Loan Agreement", with Silicon Valley Bank, or the "Lender". The Lender agrees to provide a $12.0 million secured revolving line of credit, the “credit facility”. The credit facility is available for cash borrowings, subject to a Borrowing Base formula based upon eligible accounts receivable. The maturity of the Agreement is two years from the date of the Agreement.
Any borrowings under the Loan Agreement bear interest, based on an interest rate dependent on cash liquidity for the relevant period. Cash liquidity is defined as cash plus (a) the lesser of (i) the Revolving Line or (ii) the amount available under the Borrowing Base minus (b) the outstanding principal balance of any Advances. If cash liquidity is greater than $20.0 million then the interest rate is the greater of the "prime rate” as published in The Wall Street Journal (WSJ) for the relevant period plus 0.50% or 5.50%. If cash liquidity is less than $20.0 million then the interest rate is the greater of WSJ prime rate plus 1.00% or 6.00%. The Loan Agreement maintains certain reporting requirements, conditions, and covenants. The financial covenants include that the Company must maintain a Minimum Liquidity Coverage greater than or equal to 2.25:1.00. Additionally, when cash liquidity falls below $20.0 million, the Agreement includes certain trailing six month Free Cash Flow requirements, tested on a quarterly basis. Free Cash Flow is to be defined as (a) Adjusted EBITDA, minus (b) capital expenditures determined in accordance with GAAP, minus (c) capitalized software expenses, determined in accordance with GAAP, and minus (d) cash taxes, determined in accordance with GAAP.
As of December 31, 2019, there were no borrowings outstanding under the Loan Agreement, and subject to the operation of the borrowing formula, $10.8 million was available for draw under the Loan Agreement.
The Company’s obligations to the Lender are secured by a first priority security interest in all our assets, including our intellectual property. The Loan Agreement contains customary events of default, including non-payment of principal or interest, violations of covenants, material adverse changes, cross-default, bankruptcy and material judgments. Upon the occurrence of an event of default, the Lender may accelerate repayment of any outstanding balance. The Loan Agreement also contains certain financial covenants and other agreements that are customary in loan agreements of this type, including restrictions on paying dividends and making distributions to our stockholders. As of December 31, 2019, the Company was in compliance with the financial covenants.
v3.19.3.a.u2
Income Taxes
12 Months Ended
Dec. 31, 2019
Income Tax Disclosure [Abstract]  
Income Taxes INCOME TAXES
Income (loss) before income tax expense was attributable to the following jurisdictions (in thousands):
20192018
United States$(8,799) $(8,064) 
Foreign707  1,125  
Total$(8,092) $(6,939) 
The provision (benefit) for income taxes for the years ended December 31, 2019 and 2018, was comprised of the following (in thousands):
20192018
Current:
United States Federal$—  $—  
State35  42  
Foreign850  822  
Total current provision for income taxes885  864  
Deferred:
United States Federal24  (310) 
State61  62  
Foreign(41) —  
Net deferred provision for income taxes44  (248) 
Total provision for income taxes$929  $616  
The income tax effects of significant temporary differences and carryforwards that give rise to deferred income tax assets and liabilities as of December 31, 2019 and 2018 are as follows (in thousands):
20192018
Deferred income tax assets:
Stock and other compensation expense$2,252  $2,118  
Net operating losses11,787  9,310  
Research and development credits1,676  1,676  
Other federal, state and foreign carryforwards2,424  1,858  
Intangible assets1,765  1,045  
Other620  694  
Gross deferred tax assets20,524  16,701  
Valuation allowances(14,025) (11,984) 
Net deferred tax assets6,499  4,717  
Deferred income tax liabilities:
Fixed assets(5,139) (3,492) 
Intangible assets and other(1,007) (829) 
Gross deferred tax liabilities(6,146) (4,321) 
Subtotal353  396  
Less unrecognized tax benefit liability related to deferred items(628) (627) 
Net deferred tax liabilities$(275) $(231) 
There have been no additions or reductions to the unrecognized tax benefit of $0.6 million in any of the years ended December 31, 2019 and 2018. The unrecognized tax benefits at the end of December 31, 2019 and 2018 were primarily related to research and development carryforwards.
The Company does not expect any material changes to its unrecognized tax benefits within the next twelve months.
The Company recognizes interest and penalties related to uncertain tax positions in income tax expense. As of December 31, 2019 and 2018, penalties and interest were insignificant.
The Company files income tax returns in the U.S. federal jurisdiction as well as many U.S. states and foreign jurisdictions. The tax years 2016 to 2019 remain open to examination by the major jurisdictions in which the Company is subject to tax. Fiscal years outside the normal statute of limitation remain open to audit by tax authorities due to tax attributes generated in those early years which have been carried forward and may be audited in subsequent years when utilized.
Income tax expense for the years ended December 31, 2019 and 2018 differs from the expected income tax benefit calculated using the statutory U.S. Federal income tax rate as follows (dollars in thousands):
20192018
Federal income tax (benefit) expense at statutory rate$(1,699) 21 %$(1,457) 21 %
State and local taxes—net of federal benefit76  (1) 82  (1) 
Foreign taxes569  (7) 620  (9) 
Valuation allowance1,818  (21) 1,250  (18) 
Permanent differences117  (2) 164  (2) 
Other48  (1) (43) —  
Total$929  (11)%$616  (9)%
No additional U.S. income taxes or foreign withholding taxes have been provided for any additional outside basis differences inherent in the Company’s foreign entities as the Company does not have any material unremitted earnings of the subsidiaries outside of the United States.
At December 31, 2019 and December 31, 2018, the Company has federal and state NOL carryforwards of $48.2 million and $36.6 million, respectively, including $2.2 million of NOL carryforwards created by windfall tax benefits relating to stock compensation expense. The NOL generated December 31, 2017 and prior, will begin to expire in 2028. The Company has weighed all the available evidence both positive and negative and has determined that the Company more likely than not will not be able to generate sufficient taxable income in the future to be able to utilize the entire NOL in future periods. Therefore, a full valuation allowance has been recorded against the net deferred income tax asset as of December 31, 2019 and 2018.  The deferred income tax provision is primarily due to the recognition of deferred tax liabilities relating to indefinite-lived goodwill that cannot be predicted to reverse for book purposes during the Company’s loss carry forward periods.
Utilization of certain NOLs and credit carryforwards may be subject to an annual limitation due to ownership change limitations set forth in the Internal Revenue Code of 1986, as amended, or the Code, and comparable state income tax laws. Any future annual limitation may result in the expiration of NOLs and credit carryforwards before utilization. A prior ownership change and certain acquisitions resulted in the Company having NOLs subject to insignificant annual limitations. Additionally, for tax years beginning after December 31, 2017, the Tax Act limits the NOL deduction to 80% of taxable income, repeals carryback of all NOLs arising in a tax year ended after 2017, and permits indefinite carryforward for all such NOLs. NOLs arising in a tax year ended on or before 2017 can offset 100% of taxable income, are available for carryback, and expire 20 years after they arise.
v3.19.3.a.u2
Segment Information
12 Months Ended
Dec. 31, 2019
Segment Reporting [Abstract]  
Segment Information SEGMENT INFORMATION
During the first quarter of 2019, the Company made changes to its segment reporting structure that resulted in two reportable segments: 1) Software & Services and 2) Portal & Advertising. All historical amounts have been restated to reflect this change in reportable segments. Software & Services generates revenue by providing cloud-based identity management solutions and email/collaboration products. Portal & Advertising generates managed portal fees and advertising revenue from its traffic on its Managed Portals and other advertising solutions it provides for publishers.
The Company’s operations are organized and managed by type of products and services and segment information is reported accordingly. The Company’s chief operating decision maker (the “CODM”) is its Chief Executive Officer. The CODM reviews financial performance and allocates resources by reportable segment. There have been no operating segments aggregated to arrive at the Company’s reportable segments.
The accounting policies of each segment are the same as those described in the summary of significant accounting policies, refer to Note 1— Summary of Significant Accounting Policies, for further details. The Company evaluates the performance of its segments and allocates resources to them based on Segment Adjusted EBITDA. Segment Adjusted EBITDA is defined as EBITDA (earnings before interest, income taxes, depreciation and amortization) adjusted for certain non-cash items and other non-recurring income and expenses.
Revenue for all operating segments include only transactions with unaffiliated customers and there is no intersegment revenue.
The Company does not account for, and does not report to management, its assets or capital expenditures by segment other than goodwill and intangible assets used for impairment analysis purposes.
The tables below summarize the financial information for the Company’s reportable segments for the years ended December 31, 2019 and 2018 (in thousands). The “Corporate Unallocated Expenses” category, as it relates to Segment Adjusted EBITDA, primarily includes corporate overhead costs, such as rent, payroll and related benefit costs and professional services which are not directly attributable to any individual segment.

Year Ended
December 31, 2019
RevenueCost of revenue (1)Segment Adjusted
EBITDA
Software & Services$44,485  $12,669  $12,531  
Portal & Advertising77,360  49,321  10,657  
Corporate Unallocated Expenses—  —  (13,685) 
Total Company$121,845  $61,990  $9,503  

Year Ended
December 31, 2018
RevenueCost of revenue (1)Segment Adjusted
EBITDA
Software & Services$48,692  $13,244  $14,305  
Portal & Advertising95,187  60,060  10,788  
Corporate Unallocated Expenses—  —  (16,629) 
Total Company$143,879  $73,304  $8,464  

Notes:
(1) Exclusive of depreciation and amortization shown separately on the consolidated statements of operations
The following table reconciles total Segment Adjusted EBITDA to Net loss:
Year Ended December 31,
20192018
(in thousands)
Total Segment Adjusted EBITDA$9,503  $8,464  
Less:
Provision for income taxes(929) (616) 
Interest expense(268) (338) 
Other expense, net(17) (212) 
Depreciation and amortization(11,251) (9,832) 
Long-lived asset impairment(1,751) (552) 
Stock-based compensation expense(1,616) (1,804) 
Gain on Sale of investment—  —  
Restructuring costs *(959) (1,111) 
Certain legal expenses **(1,098) (1,400) 
Certain professional services fees ***(635) (154) 
Net loss$(9,021) $(7,555) 

*"Restructuring costs" include severance expense, contract termination costs and other exit or disposal costs.
**"Certain legal expenses" include legal fees and other related expenses outside the ordinary course of business.
***“Certain professional services fees” includes fees and expenses related to merger and acquisition activities.
v3.19.3.a.u2
Commitments and Contingencies
12 Months Ended
Dec. 31, 2019
Commitments and Contingencies Disclosure [Abstract]  
Commitments and Contingencies COMMITMENTS AND CONTINGENCIES
Contract Commitments —The Company is obligated to make payments under various contracts with vendors and other business partners, principally for revenue-share arrangements. Contract commitments as of December 31, 2019 are $0.8 million in 2020.
Litigation —The Company was previously awaiting a decision of an arbitration tribunal following a binding arbitration that took place on July 30, 2018 between the Company and Maxit Technology Incorporated and Maxit Technology Holdings Limited, (collectively, “Maxit”), who were formerly the Company’s joint venture partner in China. After unsuccessful settlement discussions between the parties, on January 25, 2016, Maxit requested arbitration under the Rules of the International Chamber of Commerce. In its request for arbitration, Maxit asserted claims for breach of contract, breach of the covenant of good faith and fair dealing, breach of fiduciary duty, and negligent misrepresentation, all arising out of the Company’s alleged failure to provide capital and software as required by the joint venture agreement. In its request, Maxit sought an award of money damages based on its share of the lost potential value of the joint venture, as well as a percentage of revenue from any future sales to customers originally introduced by Maxit, interest and legal expenses. On March 18, 2019, the arbitration tribunal issued a final award finding that the Company has no liability to Maxit. The Company reversed the reserve of $0.3 million that was previously recorded related to this arbitration during the year ended December 31, 2019.
The Company and its Chief Executive Officer and former Chief Financial Officer were named as defendants in a federal securities class action lawsuit filed on April 4, 2018 in the United States District Court for the Southern District of New York. The class includes persons who purchased the Company’s shares between May 4, 2016 and March 15, 2018. The plaintiff alleged that the Company made materially false and misleading statements regarding its contract with AT&T and the timing of revenue to be derived therefrom, and that as a result, class members suffered losses because Synacor shares traded at artificially inflated prices. The plaintiff sought an unspecified amount of damages, as well as interest, attorneys’ fees and legal expenses. The plaintiff filed an amended complaint on August 2, 2018, a second amended complaint on November 2, 2018, and the Company filed a motion to dismiss on December 17, 2018. The plaintiff filed an opposition to the motion to dismiss on January 19, 2019 and the Company filed its reply to plaintiff’s opposition on February 15, 2019. On August 28, 2019, the court granted the Company's motion to dismiss but permitted the plaintiff to seek leave to replead. On October 2, 2019, the plaintiff filed a letter application seeking the court's leave to file a third amended complaint. The Company filed a letter in opposition to the plaintiff's motion on October 21, 2019. The court denied plaintiffs’ application to file an amended complaint and ordered the case closed on November 15, 2019. The Clerk of the Court entered judgment in favor of the Company and the individual defendants and closed the case on November 19, 2019. Plaintiff filed its Notice of Appeal on December 16, 2019. The Company disputes these claims and intends to defend them vigorously. The Company cannot yet determine whether it is probable that a loss will be incurred in connection with this complaint, nor can the Company reasonably estimate the potential loss, if any. Legal fees and liabilities related to this lawsuit are covered by our D&O insurance policy after the Company reaches its deductible.
In addition, the Company is, from time to time, party to litigation arising in the ordinary course of business. It does not believe that the outcome of these claims will have a material adverse effect on its consolidated financial position, results of operations or cash flows based on the status of proceedings at this time. However, these matters are subject to inherent uncertainties and the Company’s view of these matters may change in the future.
v3.19.3.a.u2
Leases
12 Months Ended
Dec. 31, 2019
Leases [Abstract]  
Leases Leases
The Company enters into various noncancelable operating lease agreements for certain of our offices, data centers, colocations and network equipment. The Company’s leases have original lease periods expiring between 2020 and 2024. Many leases include one or more options to renew. The Company does not assume renewals in its determination of the lease term unless the renewals are deemed to be reasonably assured at lease commencement. The Company’s variable lease payments are immaterial and its lease agreements do not contain any material residual value guarantees or material restrictive covenants. Operating lease costs are included in cost of revenue and general and administrative costs in the Company’s consolidated statements of operations. Finance lease amortization costs are included in depreciation and amortization, and finance lease interest costs are included in interest expense in the Company’s consolidated statements of operations.
The components of lease costs, lease term and discount rate are as follows (lease cost in thousands):
Year Ended
December 31, 2019
Finance lease cost
Amortization of right-of-use assets$3,590  
Interest237  
Operating lease cost3,666  
Total lease cost$7,493  
Weighted Average Remaining Lease Term
Operating leases2.0Years
Finance leases1.2Years
Weighted Average Discount Rate
Operating leases6.0   
Finance leases5.0   
The following is a schedule, by years, of maturities of lease liabilities as of December 31, 2019 (in thousands):
Year Ending December 31,Operating LeasesFinance Leases
2020$2,396  $2,611  
20211,615  522  
2022944  226  
2023448  —  
202436  —  
Total undiscounted cash flows$5,439  $3,359  
Less imputed interest(428) (101) 
Present value of lease liabilities$5,011  $3,258  
Supplemental cash flow information related to leases are as follows (in thousands):
Year Ended
December 31, 2019
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash outflows from operating leases$3,671  
Operating cash outflows from finance leases$237  
Financing cash outflows from finance leases$3,427  
Lease liabilities arising from obtaining right-of-use-assets:
Operating leases$175  
Finance leases$3,152  
As of December 31, 2018, prior to the adoption of Topic 842, future minimum payments under operating leases having initial or remaining non-cancelable lease terms in excess of one year, net of sublease income amounts, were as follows (in thousands):
Year Ending December 31,Operating Lease
Commitments
2019$5,276  
20203,101  
20211,594  
2022782  
2023250  
202433  
Total lease commitments$11,036  
Rent expense for operating leases was $4.6 million for 2018.
Leases Leases
The Company enters into various noncancelable operating lease agreements for certain of our offices, data centers, colocations and network equipment. The Company’s leases have original lease periods expiring between 2020 and 2024. Many leases include one or more options to renew. The Company does not assume renewals in its determination of the lease term unless the renewals are deemed to be reasonably assured at lease commencement. The Company’s variable lease payments are immaterial and its lease agreements do not contain any material residual value guarantees or material restrictive covenants. Operating lease costs are included in cost of revenue and general and administrative costs in the Company’s consolidated statements of operations. Finance lease amortization costs are included in depreciation and amortization, and finance lease interest costs are included in interest expense in the Company’s consolidated statements of operations.
The components of lease costs, lease term and discount rate are as follows (lease cost in thousands):
Year Ended
December 31, 2019
Finance lease cost
Amortization of right-of-use assets$3,590  
Interest237  
Operating lease cost3,666  
Total lease cost$7,493  
Weighted Average Remaining Lease Term
Operating leases2.0Years
Finance leases1.2Years
Weighted Average Discount Rate
Operating leases6.0   
Finance leases5.0   
The following is a schedule, by years, of maturities of lease liabilities as of December 31, 2019 (in thousands):
Year Ending December 31,Operating LeasesFinance Leases
2020$2,396  $2,611  
20211,615  522  
2022944  226  
2023448  —  
202436  —  
Total undiscounted cash flows$5,439  $3,359  
Less imputed interest(428) (101) 
Present value of lease liabilities$5,011  $3,258  
Supplemental cash flow information related to leases are as follows (in thousands):
Year Ended
December 31, 2019
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash outflows from operating leases$3,671  
Operating cash outflows from finance leases$237  
Financing cash outflows from finance leases$3,427  
Lease liabilities arising from obtaining right-of-use-assets:
Operating leases$175  
Finance leases$3,152  
As of December 31, 2018, prior to the adoption of Topic 842, future minimum payments under operating leases having initial or remaining non-cancelable lease terms in excess of one year, net of sublease income amounts, were as follows (in thousands):
Year Ending December 31,Operating Lease
Commitments
2019$5,276  
20203,101  
20211,594  
2022782  
2023250  
202433  
Total lease commitments$11,036  
Rent expense for operating leases was $4.6 million for 2018.
v3.19.3.a.u2
Equity
12 Months Ended
Dec. 31, 2019
Equity [Abstract]  
Equity EQUITY
Stock Repurchases —In February 2014, the board of directors approved a Stock Repurchase Program, which authorizes a repurchase of up to $5.0 million worth of the Company’s outstanding common stock. The Stock Repurchase Program has no expiration date, and may be suspended or discontinued at any time without notice. There were no repurchases under this program during the years ended December 31, 2019 or 2018. The Company has repurchased $0.6 million of its outstanding stock under this authorization to date.
Withhold to Cover —During the years ended December 31, 2019 or 2018, certain employees, in lieu of paying withholding taxes on the vesting of certain shares of restricted stock awards, authorized the withholding of shares of the Company’s common stock to satisfy their minimum statutory tax withholding requirements related to such vesting. These shares were recorded as treasury stock using the cost method at the per share closing price on the date of vesting.
Warrants —Warrants to purchase 600,000 shares of common stock were issued as a component of the consideration transferred for an acquisition that occurred in 2015. These warrants expired unexercised as of August 2018.
v3.19.3.a.u2
Stock-based Compensation
12 Months Ended
Dec. 31, 2019
Share-based Payment Arrangement [Abstract]  
Stock-based Compensation STOCK-BASED COMPENSATION
The Company has stock-based employee compensation plans for which compensation cost is recognized in its financial statements. The Company is authorized to grant key employees and members of our board of directors stock-based incentive awards, including options to purchase common stock, stock appreciation rights, RSUs, PSUs or other stock units. The cost is measured at the grant date, based on the fair value of the award, and is recognized as an expense over the employee’s requisite service period (generally the vesting period of the equity award). The Company utilizes the Black-Scholes option-pricing model to value stock option awards. The Company measures RSUs and PSUs using the fair market value of the restricted shares of common stock on the day the award is granted. Stock-based awards granted to employees and members of our board of directors include stock options and restricted stock units.
The following table presents the weighted-average assumptions used to estimate the fair value of options granted (excluding replacement options in conjunction with modifications described below) during the periods presented:
Years Ended December 31,
20192018
Expected dividend yield— %— %
Expected stock price volatility66.7 %49.0 %
Risk-free interest rate2.0 %2.8 %
Expected life of options (in years)5.276.25
The Company determines expected volatility uses historical volatility based on daily closing prices of the Company's common stock over periods that correlate with the expected terms of the awards. The risk-free rate is based on the United States Treasury yield curve at the time of grant for the appropriate expected term of the awards granted. Expected dividends are based on our history and expectation of dividend payouts. The Company has never declared or paid any cash dividends and does not presently plan to pay cash dividends in the foreseeable future. The expected life assumption represents the weighted-average period awards are expected to remain outstanding. The expected life assumptions are established through a review of historical exercise behavior of stock-based award grants with similar vesting periods.
The Company recorded $1.6 million and $1.8 million of stock-based compensation expense for the years ended December 31, 2019,and 2018, respectively. Expense related to stock option grants of non-qualified stock options (“NSOs”) results in a temporary tax difference, which gives rise to a deferred income tax asset.
Total stock-based compensation expense included in the accompanying consolidated statements of operations for the years ended December 31, 2019 and 2018, is as follows (in thousands):
Years Ended December 31,
20192018
Technology and development$338  $489  
Sales and marketing513  474  
General and administrative765  841  
Total stock-based compensation expense$1,616  $1,804  
Equity Incentive Plans —The Company has two stock option plans (the 2006 Stock Plan and the Amended and Restated 2012 Equity Incentive Plan), which, as of December 31, 2019, authorize the Company to grant up to 15.5 million stock options (ISOs and NSOs), stock appreciation rights, restricted stock, RSUs and PSUs. The ISOs and NSOs will be granted at a price per share not less than the fair value of the Company’s common stock at the date of grant. Options granted to date generally vest over a four-year period with 25% vesting at the end of one year and the remaining 75% vesting monthly thereafter. Options granted generally are exercisable up to 10 years. RSUs generally vest over a 3 year period with one-sixth vesting at the end of each six-month period. PSUs vest annually over a 4 year period with the number of shares earned dependent upon the Company's achievement of certain financial performance targets.
Special Purpose Recruitment Plan —During 2013, our shareholders approved the Special Purpose Recruitment Plan from which equity compensation awards are granted to newly-hired employees. One million shares of common stock were reserved for issuance and have all been granted under this plan.
Stock Option Activity —A summary of stock option activity for the year ended December 31, 2019 is as follows:
Number of
Shares
Weighted
Average
Exercise
Price
Aggregate
Intrinsic
Value (in
thousands)
Weighted
Average
Remaining
Contractual
Term (years)
Outstanding at January 1, 20197,669,093  $2.51  
Granted461,400  1.61  
Exercised(39,572) 1.49  
Forfeited(314,748) 2.25  
Expired(479,427) 2.37  
Outstanding—December 31, 20197,296,746  $2.48  $36  5.40
Expected to vest—December 31, 20197,251,440  $2.48  $35  5.37
Vested and exercisable—December 31, 20196,036,172  $2.53  $32  4.78
Aggregate intrinsic value represents the difference between the closing stock price of the Company’s common stock and the exercise price of outstanding, in-the-money options. The Company’s closing stock price as reported on the Nasdaq as of December 31, 2019 was $1.52. The total intrinsic value of options exercised was $10 thousand and $91 thousand for the years ended December 31, 2019 and 2018, and respectively. The weighted-average grant date fair value of options granted was $0.97 per share and $1.02 per share for the years ended December 31, 2019 and 2018, respectively.
As of December 31, 2019, total unrecognized compensation cost, adjusted for estimated forfeitures, related to unvested stock options was $1.4 million, which is expected to be recognized over a weighted-average period of 2.12 years.
RSU Activity —A summary of RSU activity for the year ended December 31, 2019 is as follows:
Number of SharesWeighted Average
Fair Value
Unvested—January 1, 2019
11,346  $3.60  
Granted845,361  1.56  
Vested(155,849) 2.04  
Forfeited(23,504) 1.76  
Unvested—December 31, 2019
677,354  $1.54  
As of December 31, 2019, total unrecognized compensation cost, adjusted for estimated forfeitures, related to RSUs was $0.7 million. This cost is expected to be recognized over a weighted-average remaining period of 2.31 years.
PSU Activity  — During the year ended December 31, 2019, certain employees were granted PSUs with an aggregate target award of 297,789 shares of our common stock at a weighted average fair value of 1.36. The PSUs vest annually over four years from the grant date based on continuous service, with the number of shares earned dependent upon the Company's achievement of certain financial performance targets measured over the period from January 1, 2019 through December 31, 2022. The number of shares earned can range from 0% to 150% of the target award.
As of December 31, 2019, total unrecognized compensation cost, adjusted for estimated forfeitures, related to PSUs was $0.3 million. This cost is expected to be recognized over a weighted-average remaining period of 3.01 years.
v3.19.3.a.u2
Net Loss Per Common Share Data
12 Months Ended
Dec. 31, 2019
Earnings Per Share [Abstract]  
Net Loss Per Common Share Data NET LOSS PER COMMON SHARE DATA
Basic net loss per share is computed using the weighted-average number of common shares outstanding during the period. Diluted net loss per share is computed using the weighted-average number of common shares and, if dilutive, potential common shares outstanding during the period. The Company’s potential common shares consist of the incremental common shares issuable upon the exercise of stock options, warrants, and to a lesser extent, shares issuable upon the release of RSUs and PSUs. The dilutive effect of these potential common shares is reflected in diluted earnings per share by application of the treasury stock method.
The following equivalent shares were excluded from the calculation of diluted net loss per share because their effect would have been antidilutive for the periods presented:
Year Ended December 31,
20192018
Anti-dilutive equity awards:
Stock options7,553,379  8,400,936  
Restricted stock units447,886  34,150  
Performance based stock units119,116  —  
Warrants—  400,000  
v3.19.3.a.u2
Subsequent Events
12 Months Ended
Dec. 31, 2019
Subsequent Events [Abstract]  
Subsequent Events SUBSEQUENT EVENTS
On February 11, 2020, the Company, Qumu Corporation, a Minnesota corporation (“Qumu”), and Quantum Merger Sub I, Inc., a Minnesota corporation and a direct, wholly owned subsidiary of Synacor (“Merger Sub”), entered into an Agreement and Plan of Merger and Reorganization (the “Merger Agreement”) for a proposed “merger of equals” transaction, pursuant to which, and subject to the conditions in the Merger Agreement, Merger Sub will merge with and into Qumu (the “Merger”), with Qumu surviving the Merger as a wholly owned subsidiary of the Company. The respective boards of directors of the Company and Qumu have each unanimously approved the Merger Agreement. The Company expects the Merger will be completed in the second quarter of calendar year 2020.
Pursuant to the Merger Agreement, each issued and outstanding share of common stock, par value $0.01 per share, of Qumu will be converted into the right to receive 1.61 newly issued shares of common stock, par value $0.01 per share, of Synacor. No fractional shares of Synacor Common Stock will be issued in the Merger, and Qumu stockholders will receive cash in lieu of fractional shares as part of the Qumu Common Stock Merger Consideration, as specified in the Merger Agreement.
The Merger Agreement provides that, upon the closing of the Merger, the board of directors of Synacor (the “New Synacor Board”) will initially be set at seven authorized directors. Two directors will come from Qumu’s existing board of directors and four directors, including Synacor Chief Executive Officer Himesh Bhise, will come from Synacor’s existing board of directors. It is anticipated that one additional director with software experience relevant to the operations of Synacor will be selected by the New Synacor Board, which such director will be subject to the approval of the New Synacor Board including at least one of the two directors from Qumu.
The closing of the Merger is subject to customary closing conditions, including (i) the absence of any adverse law or order promulgated, entered, enforced, enacted or issued by any governmental entity that makes illegal or prohibits the Merger, (ii) the Securities and Exchange Commission (the “SEC”) shall have declared effective the Form S-4 Registration Statement of Synacor which will contain the joint proxy statement/prospectus of the parties in connection with the Merger, (iii) the approval of the Merger Agreement by the affirmative vote of the holders of a majority of the outstanding shares of Qumu Common Stock entitled to vote thereon, (iv) the approval of the issuance of shares of Synacor Common Stock pursuant to the Merger Agreement by the affirmative vote of a majority of votes present or represented by proxy at Synacor’s stockholder meeting in connection with the Merger, (v) the authorization for listing on The Nasdaq Stock Market, subject to official notice of issuance, of the shares of Synacor Common Stock to be issued in the Merger, (vi) the receipt of certain opinions from legal counsel regarding the intended tax treatment of the Merger, (vii) subject to certain materiality exceptions, the accuracy of certain representations and warranties of each of Qumu and Synacor contained in the Merger Agreement and the compliance by each party with the covenants contained in the Merger Agreement, and (viii) the absence of a material adverse effect with respect to each of Qumu and Synacor.
The Merger Agreement also contains a non-solicitation provision pursuant to which neither Qumu nor Synacor is permitted to solicit, initiate, induce or knowingly encourage or facilitate, any acquisition proposal from third parties or to engage in discussions or negotiations with third parties regarding any acquisition proposal. Notwithstanding this limitation, prior to a party’s requisite shareholder approval, such party may under certain circumstances provide information to and participate in discussions or negotiations with third parties with respect to an acquisition proposal that its board of directors has determined in good faith constitutes or is reasonably likely to lead to a superior proposal. Each party’s board of directors may change its recommendation to its shareholders (subject to the other party’s right to terminate the Merger Agreement following such change in recommendation) in response to a superior proposal or an intervening event if the board of directors determines in good faith that the failure to take such action would reasonably be expected to be inconsistent with the directors’ fiduciary duties under the Minnesota Business Corporation Act or the General Corporation Law of the State of Delaware, as applicable.
If the Merger Agreement is terminated under certain circumstances as indicated in the Merger Agreement Qumu or Synacor may be required to pay the other party a termination fee of $2.0 million.
v3.19.3.a.u2
The Company and Summary of Significant Accounting Policies (Policies)
12 Months Ended
Dec. 31, 2019
Organization, Consolidation and Presentation of Financial Statements [Abstract]  
Basis of Presentation Basis of Presentation —The consolidated financial statements and accompanying notes have been prepared in accordance with United States generally accepted accounting principles (“U.S. GAAP”) and include the accounts of the Company and its wholly-owned subsidiaries. All intercompany balances and transactions have been eliminated in consolidation.
Foreign Currency Foreign Currency The assets and liabilities of the Company’s foreign subsidiaries are translated into U.S. dollars at the rate of exchange in effect at the balance sheet date. Income and expense items are translated at the average exchange rates prevailing during the period.
Cash and Cash Equivalents and Restricted Cash Cash and Cash Equivalents and Restricted Cash—The Company considers all highly liquid investments with an original maturity of three months or less when purchased to be cash equivalents. Cash and cash equivalents that are contractually restricted from operating use are classified as restricted cash and cash equivalents. The Company had no restricted cash as of the years ended December 31, 2019 and 2018.
Accounts Receivable Accounts Receivable —The Company records accounts receivable at the invoiced amount and does not charge interest on past due invoices. An allowance for doubtful accounts is maintained to reserve for potentially uncollectible accounts receivable. The Company reviews its accounts receivable from customers that are past due to identify specific accounts with known disputes or collectability issues. In determining the amount of the reserve, the Company makes judgments about the creditworthiness of customers based on ongoing credit evaluations.
Property and Equipment
Property and Equipment —Property and equipment are stated at cost, less accumulated depreciation. Depreciation is computed using the straight-line method over the estimated useful lives of the assets as follows:
Leasehold improvements
3–10 years
Computer hardware
3–5 years
Computer software3 years
Furniture and fixtures7 years
Other
3–5 years
Computer hardware under finance leases and leasehold improvements are amortized over the shorter of the lease term or the estimated useful life of the assets.
Long-Lived Assets Long-Lived Assets —The Company reviews the carrying value of its long-lived assets, exclusive of goodwill, for impairment whenever events or changes in circumstances indicate that the carrying value of these assets may not be recoverable. For purposes of evaluating and measuring impairment, the Company groups a long-lived asset or assets with other assets and liabilities at the lowest level for which identifiable cash flows are largely independent of the cash flows of other assets and liabilities. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of the assets to future undiscounted net cash flows expected to be generated by the assets. If such assets are considered impaired, the impairment is measured and recognized as the amount by which the carrying amount of the assets exceeds the fair value of the assets.
Software Development Costs Software Development Costs —The Company capitalizes certain costs incurred for the development of internal use software, as well as the costs of developing software for sale or license to customers.  Internal use software includes the Company’s proprietary portal software and related applications, Cloud ID authentication software, and various applications used in the management of the Company’s portals. Software for sale or license to customers includes the Company’s proprietary Email/Collaboration offerings. Costs incurred during the preliminary project stage for internal software programs are expensed as incurred. External and internal costs incurred during the application development stage (subsequent to the achievement of technological feasibility on software to be sold or licensed) of new software development, as well as for upgrades and enhancements for software programs that result in additional functionality are capitalized. Software development costs capitalized for sale or license to customers and cost capitalized for the development of internal use software are amortized over the estimated useful life of the applicable software. Impairment charges are taken as a result of circumstances that indicate that the carrying values of the assets were not fully recoverable. The Company utilizes the discounted cash flow method to determine the fair value of the capitalized software assets. Impairment charges for the years ended December 31, 2019 and 2018 are included in general and administrative expense in the consolidated statement of operations.
Leases
Leases — The Company determines if an arrangement is a lease and classifies that lease as either an operating or finance lease at inception. Right-of-use (ROU) assets and liabilities are recognized at lease commencement date based on the present value of remaining lease payments over the reasonably certain lease term. For this purpose, only payments that are fixed and determinable at the time of commencement are considered. As many of the leases do not provide an implicit rate, the Company uses its incremental borrowing rate based on the information available at commencement date in determining the present value of lease payments. The incremental borrowing rate is a hypothetical rate based on factors including the Company’s credit rating. The ROU asset also includes any lease payments made prior to commencement and is recorded net of any lease incentives received. Lease terms may include options to extend or terminate the lease when it is reasonably certain that the options will be exercised.
Operating leases are included in operating lease right-of-use assets, and current and long-term operating lease liabilities on our consolidated balance sheets. Finance leases are included in property and equipment-net, and on the current and long-term portion of debt and finance leases in our consolidated balance sheets.
Other Intangible Assets Other Intangible Assets —Other intangible assets consist of customer relationships, trademarks, and purchased technology. Definite-lived intangible assets are amortized on a straight-line basis. The Company reviews its definite-lived intangible assets for impairment when impairment indicators exist. The Company uses undiscounted cash flow to determine whether impairment exists and measures any impairment losses using discounted cash flow.
Goodwill
Goodwill —The Company evaluates goodwill for impairment for each of its reporting units at least annually on October 1st, and whenever events occur or circumstances change, such as changes in the business climate, poor indicators of operating performance or the sale or disposition of a significant portion of a reporting unit. The Company is required to evaluate goodwill for impairment when there is a change in reporting units. During the first quarter of 2019, the Company made changes to its segment reporting structure that resulted in two reportable segments: 1) Software & Services and 2) Portal & Advertising. Previously the Company concluded that it had one reportable segment. This change resulted in two reporting units for the purpose of impairment analysis for goodwill.
Companies may perform a qualitative assessment as the initial step in the annual goodwill impairment testing process for all or selected reporting units. Companies are also allowed to bypass the qualitative analysis and perform a quantitative analysis if desired. Economic uncertainties and the length of time from the calculation of a baseline fair value are factors that we consider in determining whether to perform a quantitative test.
When the Company evaluates the potential for goodwill impairment using a qualitative assessment, the Company considers factors including, but not limited to, macroeconomic conditions, industry conditions, the competitive environment, changes in the market for our products and services, regulatory and political developments, entity specific factors such as strategy and changes in key personnel and overall financial performance. If, after completing this assessment, it is determined that it is more likely than not that the fair value of a reporting unit is less than its carrying value, we proceed to a quantitative test.
Quantitative testing requires a comparison of the fair value of each reporting unit to its carrying value. The fair value of each reporting unit is determined using a combination of an income approach and a market approach. If the carrying value of the reporting unit exceeds its fair value, goodwill is considered impaired and any loss is measured as the difference between the carrying value and fair value of the reporting unit.
The income approach uses a discounted cash flow method to estimate the fair value of our reporting units. The discounted cash flow method incorporates various assumptions, the most significant being projected revenue growth rates, operating margins and cash flows, the terminal growth rate and the discount rate. The Company projects revenue growth rates, operating margins and cash flows based on each reporting unit's current business, expected developments and operational strategies typically over a five-year period.
The market approach determines fair value based on available market pricing for comparable assets. Valuation multiples were calculated utilizing actual transaction prices and revenue or EBITDA data from target companies deemed similar to the reporting unit. Valuation multiples were then applied to certain operating statistics such as revenue or EBITDA, and an estimated control premium was applied.
If the carrying amount of the reporting unit exceeds the reporting unit’s fair value as determined using the two valuation methodologies described above, an impairment loss is recognized in the amount by which the carrying value of the reporting unit exceeds the fair value of the reporting unit. The determination of our assumptions is subjective and requires significant estimates. Changes in these estimates and assumptions could materially affect the results of our reviews for impairment of goodwill.
During the year ended December 31, 2019, in addition to the annual assessment done as of October 1st, we performed a quantitative test as of the first quarter for both reporting units due to change in segment reporting, as discussed above, and both reporting units fair value exceeded carrying value.
Furthermore, in accordance with ASC 350-20-35, the Company assesses goodwill of an entity (or a reporting unit) for impairment if an event occurs or circumstances change that indicate that the fair value of the entity (or the reporting unit) may be below its carrying amount (a triggering event). As a result of the such assessment of relevant events and circumstances, the Company performed a quantitative test for the Portal & Advertising segment as of June 30, 2019 for which the fair value exceeded the carrying value.
Revenue Recognition Revenue Recognition — The Company recognize revenues when we transfer control of promised goods or services to our customers in an amount that reflects the consideration to which we expect to be entitled to in exchange for those goods or services. See Note 2, Revenue from Customers for further discussion on Revenue.
Cost of Revenue Cost of Revenue —Cost of revenue consists primarily of revenue sharing, content acquisition costs, co-location facility costs, royalty costs and product support costs. Revenue sharing consists of amounts accrued and paid to customers for the internet traffic on Managed Portals where the Company is the primary obligor, resulting in the generation of search and digital advertising revenue. The revenue-sharing agreements with customers are primarily variable payments based on a percentage of the search and digital advertising revenue.Content-acquisition agreements may be based on a fixed payment schedule, on the number of subscribers per month, or a combination of both. Fixed-payment agreements are expensed on a straight-line basis over the term defined in the agreement. Agreements based on the number of subscribers are expensed on a monthly basis. Co-location facility costs consist of rent and operating costs for the Company’s data center facilities. Royalty costs consist of amounts due to third parties for the license of their applications or technology sold with or embedded in our email software. Product support costs consist of employee and operating costs directly related to the Company’s maintenance and professional services support.
Concentrations of Risk Financial instruments that potentially subject the Company to significant concentrations of credit risk consist principally of cash and cash equivalents. The Company places its cash primarily in checking and money market accounts with high credit quality financial institutions, which, at times, have exceeded federally insured limits of $0.25 million. Although the Company maintains balances that exceed the federally insured limit, it has not experienced any losses related to these balances and believes credit risk to be minimal.
Technology and Development Technology and Development —Technology and development expenses consist primarily of compensation-related expenses incurred for the research and development of, enhancements to, and maintenance and operation of the Company’s products, equipment and related infrastructure.
Sales and Marketing Sales and Marketing —Sales and marketing expenses consist primarily of compensation-related expenses to the Company’s direct sales and marketing personnel, as well as costs related to advertising, industry conferences, promotional materials, and other sales and marketing programs. Advertising costs are expensed as incurred.
General and Administrative General and Administrative —General and administrative expenses consist primarily of compensation related expenses for executive management, finance, accounting, human resources, legal, and Corporate IT as well as professional fees and facilities costs.
Earnings (Loss) Per Share Earnings (Loss) Per Share —Basic earnings (loss) per share (“EPS”) is calculated in accordance with the Financial Accounting Standards Board (“FASB”) ASC 260, Earnings per Share, using the weighted average number of common shares outstanding during each period. Diluted EPS assumes the conversion, exercise or issuance of all potential common stock equivalents unless the effect is to reduce a loss or increase the income per share. For purposes of this calculation, stock options, warrants, performance based stock units ("PSUs"), and restricted stock units (“RSUs”) are considered to be potential common shares and are only included in the calculation of diluted earnings (loss) per share when their effect is dilutive.
Stock-based Compensation Stock-Based Compensation —The Company records compensation costs related to stock-based awards in accordance with FASB ASC 718, Compensation—Stock Compensation. Under the fair value recognition provisions of ASC 718, the Company measures stock-based compensation cost at the grant date based on the estimated fair value of the award. Compensation cost is recognized ratably over the requisite service period of the award. The Company utilizes the Black-Scholes option-pricing model to estimate the fair value of stock options granted. The amount of stock-based compensation expense recognized during a period is based on the portion of the awards that are ultimately expected to vest. The Company estimates pre-vesting forfeitures at the time of grant by analyzing historical data and revises those estimates in subsequent periods if actual forfeitures differ from those estimates. The total expense recognized over the vesting period will only be for those awards that ultimately vest.Employee Benefit Plan —The Company sponsors a 401(k) profit sharing plan that covers substantially all employees. Under the plan, eligible employees are permitted to contribute a portion of gross compensation not to exceed standard limitations provided by the Internal Revenue Service.
Income Taxes
Income Taxes Deferred income tax assets and liabilities are determined based on temporary differences between the financial statement and income tax bases of assets and liabilities and net operating loss (“NOL”) and credit carryforwards using enacted income tax rates in effect for the year in which the differences are expected to reverse. A valuation allowance is established to the extent necessary to reduce deferred income tax assets to amounts that more likely than not will be realized.
The Company accounts for uncertain tax positions using a more-likely-than-not recognition threshold based on the technical merits of the tax position taken. Tax benefits that meet the more-likely-than-not recognition threshold should be measured as the largest amount of tax benefits, determined on a cumulative probability basis, which is more likely than not to be realized upon ultimate settlement in the financial statements. It is the Company’s policy to recognize interest and penalties related to income tax matters in income tax expense. As of December 31, 2019 and 2018, accrued interest or penalties related to uncertain tax positions was insignificant.
Accounting Estimates Accounting Estimates —The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates, judgments and assumptions that affect the amounts reported and disclosed in the financial statements and the accompanying notes. The Company bases its estimates on historical experience and on various other assumptions that are believed to be reasonable, the results of which form the basis for making judgments about the carrying values of assets and liabilities. Actual results may differ from estimated amounts.
Fair Value Measurements
Fair Value Measurements —Fair value measurement standards apply to certain financial assets and liabilities that are measured at fair value on a recurring basis at each reporting period. The fair value of cash and cash equivalents, accounts receivable, accounts payable, accrued expenses and other current liabilities approximates their carrying value due to their short-term nature.
The provisions of FASB ASC 820, Fair Value Measurements and Disclosures , establishes a framework for measuring the fair value in accounting principles generally accepted in the U.S. and establishes a hierarchy that categorizes and prioritizes the sources to be used to estimate fair value as follows:
Level 1 —Level 1 inputs are defined as observable inputs such as quoted prices in active markets.
Level 2 —Level 2 inputs include quoted prices for similar assets and liabilities in active markets, quoted prices for identical or similar assets or liabilities in markets that are not active, inputs other than quoted prices that are observable for the asset or liability (interest rates, yield curves, etc.), and inputs that are derived principally from or corroborated by observable market data by correlation or other means (market corroborated inputs).
Level 3 —Level 3 inputs are unobservable inputs that reflect the Company’s determination of assumptions that market participants would use in pricing the asset or liability. These inputs are developed based on the best information available, including the Company’s own data.
Applicable Recent Accounting Pronouncements
Applicable Recent Accounting Pronouncements
Not Yet Adopted
In August 2018, the FASB issued Accounting Standards Update (“ASU”) No. 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. The Company is evaluating the impact of this new accounting standard on its financial statements.
Recently Adopted
On January 1, 2019 the Company adopted ASU No. 2016-2, Leases (Topic 842) (ASU 2016-2), as amended, which generally requires lessees to recognize operating and financing lease liabilities and corresponding right-of-use (ROU) assets on the balance sheet and to provide enhanced disclosures surrounding the amount, timing and uncertainty of cash flows arising from leasing arrangements. In July 2018, the FASB issued ASU 2018-11, Leases (Topic 842), Targeted Improvements, which provides an additional, optional transition method with which to adopt the new leases standard. This additional transition method allows for a cumulative-effect adjustment to the opening balance of retained earnings in the period of adoption, rather than in the earliest period presented in the financial statements, as originally required by ASU 2016-2. The Company adopted the standard using the additional transition method introduced by ASU 2018-11. The most significant impact was the recognition of ROU assets and lease liabilities for operating leases, while our accounting for finance leases remained substantially unchanged. For information regarding the impact of Topic 842 adoption, see Significant Accounting Policies - Leases and Note 9 — Leases. Results and disclosure requirements for reporting periods beginning after January 1, 2019 are presented under Topic 842, while prior period amounts have not been adjusted and continue to be reported in accordance with our historical accounting under Topic 840.
The Company elected the package of practical expedients permitted under the transition guidance, which allowed for the carryforward of historical lease classification, on whether a contract was or contains a lease, and of the assessment of initial direct costs for any leases that existed prior to January 1, 2019. The Company also elected to combine lease and non-lease components and to keep leases with an initial term of 12 months or less off the balance sheet and recognize the associated lease payments in the consolidated statements of income on a straight-line basis over the lease term.
On January 1, 2019, the Company recognized ROU assets of $10.2 million, with corresponding lease liabilities of $10.4 million on the consolidated balance sheet. The difference between the lease liability and the ROU asset represents the existing deferred rent liabilities balances before adoption, resulting from historical straight-lining of rent expense, which was reclassified upon adoption to reduce the measurement of the initial ROU asset. This was in addition to the $3.4 million of finance lease ROU assets previously reported in property and equipment, net as capital leases. The adoption did not impact our beginning stockholders’ equity, and did not have a material impact on the condensed statement of operations and statement of cash flows for the year ended December 31, 2019.
The Company considers the applicability and impact of all ASUs. ASUs not listed above were assessed and determined to be either not applicable, or had or are expected to have minimal impact on the Company’s financial statements and related disclosures.
v3.19.3.a.u2
The Company and Summary of Significant Accounting Policies (Tables)
12 Months Ended
Dec. 31, 2019
Organization, Consolidation and Presentation of Financial Statements [Abstract]  
Useful Lives of Property and Equipment Property and equipment are stated at cost, less accumulated depreciation. Depreciation is computed using the straight-line method over the estimated useful lives of the assets as follows:
Leasehold improvements
3–10 years
Computer hardware
3–5 years
Computer software3 years
Furniture and fixtures7 years
Other
3–5 years
Summary of Components and Original Estimated Economic Lives of Amortizable Intangible Assets
The components and original estimated economic lives of our amortizable intangible assets were as follows as of December 31, 2019 and 2018:
Original
Estimated
Economic Life
20192018
(Dollars in thousands)
Gross amortizable intangible assets:
Customer and publisher relationships10 years$14,780  $14,780  
Technology5 years2,330  2,330  
Trademark5 years300  300  
Total gross amortizable intangible assets17,410  17,410  
Accumulated amortization:
Customer and publisher relationships(6,809) (5,193) 
Technology(257) (197) 
Trademark(1,933) (1,467) 
Total accumulated amortization(8,999) (6,857) 
Amortizable intangible assets, net$8,411  $10,553  
Schedule of Change in Goodwill The change in goodwill is as follows for the years ended December 31, 2019 and 2018 (in thousands):
Software & ServicesPortal & AdvertisingTotal
Balance as of Balance as of January 1, 2018$11,811  $4,144  $15,955  
Balance as of Effect of foreign currency translation(14) —  (14) 
Balance as of December 31, 2018$11,797  $4,144  $15,941  
Effect of foreign currency translation —   
Balance as of December 31, 2019$11,804  $4,144  $15,948  
Schedule of Concentrations Equal to or Exceeding 10% of Company's Accounts Receivable, Revenue, and Cost of Revenue As of December 31, 2019 and 2018, the Company had concentrations equal to or exceeding 10% of the Company’s accounts receivable as follows:
Accounts Receivable
20192018
Portal & Advertising Customer A14 %15 %
For the years ended December 31, 2019 and 2018, the Company had concentrations equal to or exceeding 10% of the Company’s revenue as follows: 
Revenue
20192018
Google search 13 %
Google advertising affiliate 11 %
Portal & Advertising Customer A13 % 
* - Less than 10%
For the years ended December 31, 2019 and 2018, the following customers received revenue-share payments equal to or exceeding 10% of the Company’s cost of revenue.
Cost of Revenue
20192018
Portal & Advertising Customer B19 %29 %
v3.19.3.a.u2
Revenue from Contracts with Customers (Tables)
12 Months Ended
Dec. 31, 2019
Revenue from Contract with Customer [Abstract]  
Schedule of Disaggregated Revenue by Reportable Segment
The following table provides information about disaggregated revenue for the years ended December 31, 2019, and 2018 by the timing of revenue recognition, and includes a reconciliation of the disaggregated revenue by reportable segment (in thousands):
Year Ended December 31,
20192018
Software & Services
Products and services transferred over time$34,029  $35,938  
Products transferred at a point in time10,456  12,754  
Total Software & Services$44,485  $48,692  
Portal & Advertising
Products and services transferred over time$5,168  $7,254  
Products transferred at a point in time72,192  87,933  
Total Portal & Advertising$77,360  $95,187  
Total revenue$121,845  $143,879  
Schedule of Revenue By Geographic Area
Revenue disaggregated by geography, based on the billing address of our customer, consists of the following (in thousands):
Year Ended December 31,
20192018
Revenue
United States$99,845  $119,912  
International22,000  23,967  
Total revenue$121,845  $143,879  
Schedule of Contract with Customer, Asset and Liability The changes in deferred revenue, inclusive of both current and long-term, are as follows (in thousands):
Beginning balance - January 1, 2019$8,886  
Recognition of deferred revenue(11,814) 
Deferral of revenue11,759  
Effect of foreign currency translation44  
Ending balance-December 31, 2019$8,875  
v3.19.3.a.u2
Property and Equipment-Net (Tables)
12 Months Ended
Dec. 31, 2019
Property, Plant and Equipment [Abstract]  
Schedule of Property and Equipment
As of December 31, 2019 and 2018, property and equipment-net consisted of the following (in thousands):
20192018
Computer equipment$25,392  $27,294  
Computer software31,037  27,422  
Furniture and fixtures1,315  1,618  
Leasehold improvements1,116  1,256  
Work in process (primarily software development costs)187  4,584  
Other136  179  
Property and equipment, gross59,183  62,353  
Less accumulated depreciation(44,235) (43,646) 
Property and equipment, net$14,948  $18,707  
Schedule of Impaired Intangible Assets Impairment charges related to the following assets were included in general and administrative expenses in the consolidated statement of operations for the years ended December 31, 2019, and 2018 (in thousands):
Year Ending December 31,20192018
Computer equipment$ $—  
Computer software1,557  552  
Furniture and fixtures102  —  
Leasehold improvements90  —  
Total$1,751  $552  
Schedule of Revenue and Long Lived Tangible Assets by Geographic Area
The following table sets forth long-lived tangible assets by geographic area as of December 31, 2019 and December 31, 2018 (in thousands):

20192018
Long-lived tangible assets:
United States$14,629  $18,217  
International319  490  
Total long-lived tangible assets$14,948  $18,707  
The tables below summarize the financial information for the Company’s reportable segments for the years ended December 31, 2019 and 2018 (in thousands). The “Corporate Unallocated Expenses” category, as it relates to Segment Adjusted EBITDA, primarily includes corporate overhead costs, such as rent, payroll and related benefit costs and professional services which are not directly attributable to any individual segment.

Year Ended
December 31, 2019
RevenueCost of revenue (1)Segment Adjusted
EBITDA
Software & Services$44,485  $12,669  $12,531  
Portal & Advertising77,360  49,321  10,657  
Corporate Unallocated Expenses—  —  (13,685) 
Total Company$121,845  $61,990  $9,503  

Year Ended
December 31, 2018
RevenueCost of revenue (1)Segment Adjusted
EBITDA
Software & Services$48,692  $13,244  $14,305  
Portal & Advertising95,187  60,060  10,788  
Corporate Unallocated Expenses—  —  (16,629) 
Total Company$143,879  $73,304  $8,464  

Notes:
(1) Exclusive of depreciation and amortization shown separately on the consolidated statements of operations
v3.19.3.a.u2
Accrued Expenses and Other Current Liabilities (Tables)
12 Months Ended
Dec. 31, 2019
Payables and Accruals [Abstract]  
Schedule of Accrued Expenses and Other Current Liabilities
As of December 31, 2019 and 2018, accrued expenses and other current liabilities consisted of the following (in thousands):
20192018
Accrued compensation$4,209  $5,801  
Accrued content fees and other costs of revenue151  342  
Accrued taxes192  206  
Other1,326  1,500  
Total$5,878  $7,849  
Summary of Accrued Severance Costs
20192018
Balance at beginning of the year$274  $21  
Charged to expense607  1,111  
Cash payments related to 2018 plan(268) (858) 
Cash payments related to 2019 plan(557) —  
Balance at end of year$56  $274  
v3.19.3.a.u2
Income Taxes (Tables)
12 Months Ended
Dec. 31, 2019
Income Tax Disclosure [Abstract]  
Schedule of Income (Loss) Before Income Tax Expense
Income (loss) before income tax expense was attributable to the following jurisdictions (in thousands):
20192018
United States$(8,799) $(8,064) 
Foreign707  1,125  
Total$(8,092) $(6,939) 
Schedule of Provision (Benefit) for Income Taxes
The provision (benefit) for income taxes for the years ended December 31, 2019 and 2018, was comprised of the following (in thousands):
20192018
Current:
United States Federal$—  $—  
State35  42  
Foreign850  822  
Total current provision for income taxes885  864  
Deferred:
United States Federal24  (310) 
State61  62  
Foreign(41) —  
Net deferred provision for income taxes44  (248) 
Total provision for income taxes$929  $616  
Schedule of Deferred Tax Assets and Liabilities
The income tax effects of significant temporary differences and carryforwards that give rise to deferred income tax assets and liabilities as of December 31, 2019 and 2018 are as follows (in thousands):
20192018
Deferred income tax assets:
Stock and other compensation expense$2,252  $2,118  
Net operating losses11,787  9,310  
Research and development credits1,676  1,676  
Other federal, state and foreign carryforwards2,424  1,858  
Intangible assets1,765  1,045  
Other620  694  
Gross deferred tax assets20,524  16,701  
Valuation allowances(14,025) (11,984) 
Net deferred tax assets6,499  4,717  
Deferred income tax liabilities:
Fixed assets(5,139) (3,492) 
Intangible assets and other(1,007) (829) 
Gross deferred tax liabilities(6,146) (4,321) 
Subtotal353  396  
Less unrecognized tax benefit liability related to deferred items(628) (627) 
Net deferred tax liabilities$(275) $(231) 
Schedule of Income Tax Rate Reconciliation
Income tax expense for the years ended December 31, 2019 and 2018 differs from the expected income tax benefit calculated using the statutory U.S. Federal income tax rate as follows (dollars in thousands):
20192018
Federal income tax (benefit) expense at statutory rate$(1,699) 21 %$(1,457) 21 %
State and local taxes—net of federal benefit76  (1) 82  (1) 
Foreign taxes569  (7) 620  (9) 
Valuation allowance1,818  (21) 1,250  (18) 
Permanent differences117  (2) 164  (2) 
Other48  (1) (43) —  
Total$929  (11)%$616  (9)%
v3.19.3.a.u2
Segment Information - Summary of Financial Information for Reportable Segments (Tables)
12 Months Ended
Dec. 31, 2019
Segment Reporting [Abstract]  
Schedule of Revenue and Long Lived Tangible Assets by Geographic Area
The following table sets forth long-lived tangible assets by geographic area as of December 31, 2019 and December 31, 2018 (in thousands):

20192018
Long-lived tangible assets:
United States$14,629  $18,217  
International319  490  
Total long-lived tangible assets$14,948  $18,707  
The tables below summarize the financial information for the Company’s reportable segments for the years ended December 31, 2019 and 2018 (in thousands). The “Corporate Unallocated Expenses” category, as it relates to Segment Adjusted EBITDA, primarily includes corporate overhead costs, such as rent, payroll and related benefit costs and professional services which are not directly attributable to any individual segment.

Year Ended
December 31, 2019
RevenueCost of revenue (1)Segment Adjusted
EBITDA
Software & Services$44,485  $12,669  $12,531  
Portal & Advertising77,360  49,321  10,657  
Corporate Unallocated Expenses—  —  (13,685) 
Total Company$121,845  $61,990  $9,503  

Year Ended
December 31, 2018
RevenueCost of revenue (1)Segment Adjusted
EBITDA
Software & Services$48,692  $13,244  $14,305  
Portal & Advertising95,187  60,060  10,788  
Corporate Unallocated Expenses—  —  (16,629) 
Total Company$143,879  $73,304  $8,464  

Notes:
(1) Exclusive of depreciation and amortization shown separately on the consolidated statements of operations
Reconciliation of Operating Profit (Loss) from Segments to Consolidated
The following table reconciles total Segment Adjusted EBITDA to Net loss:
Year Ended December 31,
20192018
(in thousands)
Total Segment Adjusted EBITDA$9,503  $8,464  
Less:
Provision for income taxes(929) (616) 
Interest expense(268) (338) 
Other expense, net(17) (212) 
Depreciation and amortization(11,251) (9,832) 
Long-lived asset impairment(1,751) (552) 
Stock-based compensation expense(1,616) (1,804) 
Gain on Sale of investment—  —  
Restructuring costs *(959) (1,111) 
Certain legal expenses **(1,098) (1,400) 
Certain professional services fees ***(635) (154) 
Net loss$(9,021) $(7,555) 

*"Restructuring costs" include severance expense, contract termination costs and other exit or disposal costs.
**"Certain legal expenses" include legal fees and other related expenses outside the ordinary course of business.
***“Certain professional services fees” includes fees and expenses related to merger and acquisition activities.
v3.19.3.a.u2
Leases (Tables)
12 Months Ended
Dec. 31, 2019
Leases [Abstract]  
Components of Lease Costs
The components of lease costs, lease term and discount rate are as follows (lease cost in thousands):
Year Ended
December 31, 2019
Finance lease cost
Amortization of right-of-use assets$3,590  
Interest237  
Operating lease cost3,666  
Total lease cost$7,493  
Weighted Average Remaining Lease Term
Operating leases2.0Years
Finance leases1.2Years
Weighted Average Discount Rate
Operating leases6.0   
Finance leases5.0   
Supplemental cash flow information related to leases are as follows (in thousands):
Year Ended
December 31, 2019
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash outflows from operating leases$3,671  
Operating cash outflows from finance leases$237  
Financing cash outflows from finance leases$3,427  
Lease liabilities arising from obtaining right-of-use-assets:
Operating leases$175  
Finance leases$3,152  
Lessee, Operating Lease, Liability, Maturity
The following is a schedule, by years, of maturities of lease liabilities as of December 31, 2019 (in thousands):
Year Ending December 31,Operating LeasesFinance Leases
2020$2,396  $2,611  
20211,615  522  
2022944  226  
2023448  —  
202436  —  
Total undiscounted cash flows$5,439  $3,359  
Less imputed interest(428) (101) 
Present value of lease liabilities$5,011  $3,258  
Finance Lease, Liability, Maturity
The following is a schedule, by years, of maturities of lease liabilities as of December 31, 2019 (in thousands):
Year Ending December 31,Operating LeasesFinance Leases
2020$2,396  $2,611  
20211,615  522  
2022944  226  
2023448  —  
202436  —  
Total undiscounted cash flows$5,439  $3,359  
Less imputed interest(428) (101) 
Present value of lease liabilities$5,011  $3,258  
Schedule of Operating Lease Commitments
As of December 31, 2018, prior to the adoption of Topic 842, future minimum payments under operating leases having initial or remaining non-cancelable lease terms in excess of one year, net of sublease income amounts, were as follows (in thousands):
Year Ending December 31,Operating Lease
Commitments
2019$5,276  
20203,101  
20211,594  
2022782  
2023250  
202433  
Total lease commitments$11,036  
v3.19.3.a.u2
Stock-based Compensation (Tables)
12 Months Ended
Dec. 31, 2019
Share-based Payment Arrangement [Abstract]  
Schedule of Weighted Average Assumptions Used to Estimate the Fair Value of Options Granted
The following table presents the weighted-average assumptions used to estimate the fair value of options granted (excluding replacement options in conjunction with modifications described below) during the periods presented:
Years Ended December 31,
20192018
Expected dividend yield— %— %
Expected stock price volatility66.7 %49.0 %
Risk-free interest rate2.0 %2.8 %
Expected life of options (in years)5.276.25
Schedule of Total Stock Based Compensation Expense
Total stock-based compensation expense included in the accompanying consolidated statements of operations for the years ended December 31, 2019 and 2018, is as follows (in thousands):
Years Ended December 31,
20192018
Technology and development$338  $489  
Sales and marketing513  474  
General and administrative765  841  
Total stock-based compensation expense$1,616  $1,804  
Summary of Stock Option Activity
Stock Option Activity —A summary of stock option activity for the year ended December 31, 2019 is as follows:
Number of
Shares
Weighted
Average
Exercise
Price
Aggregate
Intrinsic
Value (in
thousands)
Weighted
Average
Remaining
Contractual
Term (years)
Outstanding at January 1, 20197,669,093  $2.51  
Granted461,400  1.61  
Exercised(39,572) 1.49  
Forfeited(314,748) 2.25  
Expired(479,427) 2.37  
Outstanding—December 31, 20197,296,746  $2.48  $36  5.40
Expected to vest—December 31, 20197,251,440  $2.48  $35  5.37
Vested and exercisable—December 31, 20196,036,172  $2.53  $32  4.78
Summary of RSU Activity
RSU Activity —A summary of RSU activity for the year ended December 31, 2019 is as follows:
Number of SharesWeighted Average
Fair Value
Unvested—January 1, 2019
11,346  $3.60  
Granted845,361  1.56  
Vested(155,849) 2.04  
Forfeited(23,504) 1.76  
Unvested—December 31, 2019
677,354  $1.54  
v3.19.3.a.u2
Net Loss Per Common Share Data (Tables)
12 Months Ended
Dec. 31, 2019
Earnings Per Share [Abstract]  
Schedule of Equivalent Shares Excluded from Calculation of Diluted Net Loss Per Share
The following equivalent shares were excluded from the calculation of diluted net loss per share because their effect would have been antidilutive for the periods presented:
Year Ended December 31,
20192018
Anti-dilutive equity awards:
Stock options7,553,379  8,400,936  
Restricted stock units447,886  34,150  
Performance based stock units119,116  —  
Warrants—  400,000  
v3.19.3.a.u2
The Company and Summary of Significant Accounting Policies - Basis of Presentation and Cash, Cash Equivalents And Restricted Cash (Details) - USD ($)
12 Months Ended
Dec. 31, 2018
Dec. 31, 2019
Error Corrections and Prior Period Adjustments Restatement [Line Items]    
Restricted cash $ 0 $ 0
Restatement Adjustment    
Error Corrections and Prior Period Adjustments Restatement [Line Items]    
Cost of revenue $ 800,000  
v3.19.3.a.u2
The Company and Summary of Significant Accounting Policies - Useful Lives of Property and Equipment (Details)
12 Months Ended
Dec. 31, 2019
Computer Software  
Property, Plant and Equipment [Line Items]  
Property and equipment, useful life 3 years
Furniture and Fixtures  
Property, Plant and Equipment [Line Items]  
Property and equipment, useful life 7 years
Maximum | Leasehold Improvements  
Property, Plant and Equipment [Line Items]  
Property and equipment, useful life 10 years
Maximum | Computer Hardware  
Property, Plant and Equipment [Line Items]  
Property and equipment, useful life 5 years
Maximum | Other  
Property, Plant and Equipment [Line Items]  
Property and equipment, useful life 5 years
Minimum | Leasehold Improvements  
Property, Plant and Equipment [Line Items]  
Property and equipment, useful life 3 years
Minimum | Computer Hardware  
Property, Plant and Equipment [Line Items]  
Property and equipment, useful life 3 years
Minimum | Other  
Property, Plant and Equipment [Line Items]  
Property and equipment, useful life 3 years
v3.19.3.a.u2
The Company and Summary of Significant Accounting Policies - Summary of Components and Original Estimated Economic Lives of Amortizable Intangible Assets (Details) - USD ($)
$ in Thousands
12 Months Ended
Dec. 31, 2019
Dec. 31, 2018
Finite-Lived Intangible Assets [Line Items]    
Total gross amortizable intangible assets $ 17,410 $ 17,410
Total accumulated amortization (8,999) (6,857)
Amortizable intangible assets, net $ 8,411 10,553
Customer and publisher relationships    
Finite-Lived Intangible Assets [Line Items]    
Original Estimated Economic Life 10 years  
Total gross amortizable intangible assets $ 14,780 14,780
Total accumulated amortization $ (6,809) (5,193)
Technology    
Finite-Lived Intangible Assets [Line Items]    
Original Estimated Economic Life 5 years  
Total gross amortizable intangible assets $ 2,330 2,330
Total accumulated amortization $ (1,933) (1,467)
Trademark    
Finite-Lived Intangible Assets [Line Items]    
Original Estimated Economic Life 5 years  
Total gross amortizable intangible assets $ 300 300
Total accumulated amortization $ (257) $ (197)
v3.19.3.a.u2
The Company and Summary of Significant Accounting Policies - Other Intangible Assets (Details) - USD ($)
$ in Millions
12 Months Ended
Dec. 31, 2019
Dec. 31, 2018
Organization, Consolidation and Presentation of Financial Statements [Abstract]    
Amortization of intangible assets $ 2.1 $ 2.1
Amortizable intangible assets 2020 2.0  
Amortizable intangible assets 2021 1.4  
Amortizable intangible assets 2022 1.3  
Amortizable intangible assets 2023 1.3  
Amortizable intangible assets 2024 0.4  
Amortizable intangible assets, thereafter $ 1.9  
v3.19.3.a.u2
The Company and Summary of Significant Accounting Policies - Schedule of Change in Goodwill (Details)
$ in Thousands
12 Months Ended
Dec. 31, 2019
USD ($)
segment
Dec. 31, 2018
USD ($)
segment
Organization, Consolidation and Presentation of Financial Statements [Abstract]    
Balance, beginning of year $ 15,941 $ 15,955
Effect of foreign currency translation 7 (14)
Balance, end of year $ 15,948 $ 15,941
Goodwill [Line Items]    
Number of reportable segments | segment 2 1
Software & Services    
Organization, Consolidation and Presentation of Financial Statements [Abstract]    
Balance, beginning of year $ 11,797 $ 11,811
Effect of foreign currency translation 7 (14)
Balance, end of year 11,804 11,797
Portal & Advertising    
Organization, Consolidation and Presentation of Financial Statements [Abstract]    
Balance, beginning of year 4,144 4,144
Effect of foreign currency translation 0 0
Balance, end of year $ 4,144 $ 4,144
v3.19.3.a.u2
The Company and Summary of Significant Accounting Policies - Schedule of Concentrations Equal to or Exceeding 10% of Company's Accounts Receivable, Revenue, and Cost of Revenue (Details)
12 Months Ended
Dec. 31, 2019
Dec. 31, 2018
Credit Concentration Risk | Accounts Receivable | Portal And Advertising    
Concentration Risk [Line Items]    
Concentration risk, percentage 14.00% 15.00%
Product Concentration Risk | Revenue | Portal And Advertising    
Concentration Risk [Line Items]    
Concentration risk, percentage 13.00%  
Product Concentration Risk | Revenue | Google Search    
Concentration Risk [Line Items]    
Concentration risk, percentage   13.00%
Product Concentration Risk | Revenue | Google Advertising Affiliate    
Concentration Risk [Line Items]    
Concentration risk, percentage   11.00%
Customer Concentration Risk | Cost of Revenue | Portal & Advertising Customer B    
Concentration Risk [Line Items]    
Concentration risk, percentage 19.00% 29.00%
v3.19.3.a.u2
The Company and Summary of Significant Accounting Policies - Sales and Marketing (Details) - USD ($)
$ in Millions
12 Months Ended
Dec. 31, 2019
Dec. 31, 2018
Organization, Consolidation and Presentation of Financial Statements [Abstract]    
Advertising costs $ 0.4 $ 0.4
v3.19.3.a.u2
The Company and Summary of Significant Accounting Policies - Applicable Recent Accounting Pronouncements (Details) - USD ($)
$ in Thousands
Dec. 31, 2019
Jan. 01, 2019
Organization, Consolidation and Presentation of Financial Statements [Abstract]    
Operating lease, right-of-use asset $ 4,765 $ 10,200
Present value of lease liabilities $ 5,011  
Finance lease, right-of-use asset   $ 3,400
v3.19.3.a.u2
Revenue from Contracts with Customers - Additional Information (Detail)
12 Months Ended
Dec. 31, 2019
Revenue from Contract with Customer [Abstract]  
Revenue, performance obligation, description of timing The Company usually expects payment within 30 to 90 days from the invoice date (fulfillment of performance obligations or per contract terms).
v3.19.3.a.u2
Revenue from Contracts with Customers Revenue from Contract with Customer - Summary of Timing of Revenue Recognition, Includes Reconciliation of Disaggregated by Reportable Segment (Detail) - USD ($)
$ in Thousands
3 Months Ended 12 Months Ended
Dec. 31, 2018
Dec. 31, 2019
Dec. 31, 2018
Disaggregation of Revenue [Line Items]      
Total revenue $ 143,879 $ 121,845 $ 143,879
Software & Services      
Disaggregation of Revenue [Line Items]      
Total revenue   44,485 48,692
Software & Services | Products and services transferred over time      
Disaggregation of Revenue [Line Items]      
Total revenue   34,029 35,938
Software & Services | Products transferred at a point in time      
Disaggregation of Revenue [Line Items]      
Total revenue   10,456 12,754
Portal & Advertising      
Disaggregation of Revenue [Line Items]      
Total revenue   77,360 95,187
Portal & Advertising | Products and services transferred over time      
Disaggregation of Revenue [Line Items]      
Total revenue   5,168 7,254
Portal & Advertising | Products transferred at a point in time      
Disaggregation of Revenue [Line Items]      
Total revenue   $ 72,192 $ 87,933
v3.19.3.a.u2
Revenue from Contracts with Customers - Schedule of Revenue Disaggregated by Geographic Segment (Detail) - USD ($)
$ in Thousands
3 Months Ended 12 Months Ended
Dec. 31, 2018
Dec. 31, 2019
Dec. 31, 2018
Disaggregation of Revenue [Line Items]      
Total revenue $ 143,879 $ 121,845 $ 143,879
United States      
Disaggregation of Revenue [Line Items]      
Total revenue   99,845 119,912
International      
Disaggregation of Revenue [Line Items]      
Total revenue   $ 22,000 $ 23,967
v3.19.3.a.u2
Revenue from Contracts with Customers - Schedule of Changes in Deferred Revenue, Inclusive of Both Current and Long-term (Detail)
$ in Thousands
12 Months Ended
Dec. 31, 2019
USD ($)
Movement in Deferred Revenue [Roll Forward]  
Beginning balance $ 8,886
Recognition of deferred revenue (11,814)
Deferral of revenue 11,759
Effect of foreign currency translation 44
Ending balance $ 8,875
v3.19.3.a.u2
Revenue from Contracts with Customers - Remaining Performance Obligations - Additional Information (Detail)
Dec. 31, 2019
Maintenance and Support Contracts for Email Software Licenses | Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date: 2020-01-01  
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items]  
Revenue, remaining performance obligation, expected timing of satisfaction, period 12 months
v3.19.3.a.u2
Property and Equipment-Net - Schedule of Property and Equipment (Details) - USD ($)
$ in Thousands
Dec. 31, 2019
Dec. 31, 2018
Property, Plant and Equipment [Line Items]    
Property and equipment gross   $ 62,353
Less accumulated depreciation   (43,646)
Total property and equipment—net $ 14,948 18,707
Property and equipment, gross 59,183  
Less accumulated depreciation 44,235  
Property and equipment, net 14,948  
Computer Equipment    
Property, Plant and Equipment [Line Items]    
Property and equipment gross   27,294
Property and equipment, gross 25,392  
Computer Software    
Property, Plant and Equipment [Line Items]    
Property and equipment gross   27,422
Property and equipment, gross 31,037  
Furniture and Fixtures    
Property, Plant and Equipment [Line Items]    
Property and equipment gross   1,618
Property and equipment, gross 1,315  
Leasehold Improvements    
Property, Plant and Equipment [Line Items]    
Property and equipment gross   1,256
Property and equipment, gross 1,116  
Work in Process    
Property, Plant and Equipment [Line Items]    
Property and equipment gross   4,584
Property and equipment, gross 187  
Other    
Property, Plant and Equipment [Line Items]    
Property and equipment gross   $ 179
Property and equipment, gross $ 136  
v3.19.3.a.u2
Property and Equipment-Net - Additional Information (Details) - USD ($)
$ in Thousands
12 Months Ended
Dec. 31, 2019
Dec. 31, 2018
Jan. 01, 2019
Property, Plant and Equipment [Line Items]      
Depreciation expense $ 9,100 $ 7,500  
Finance lease, right-of-use asset     $ 3,400
Property and equipment gross   62,353  
Finance lease, right-of-use, amortization 3,590    
Accumulated depreciation of equipment under capital leases   43,646  
Long-lived asset impairment 1,751 552  
Assets Held Under Finance Leases      
Property, Plant and Equipment [Line Items]      
Property and equipment gross   8,400  
Accumulated depreciation of equipment under capital leases   5,000  
Software Development For Internal Use      
Property, Plant and Equipment [Line Items]      
Capitalized computer software, period increase (decrease) 2,300 3,600  
Software Development for Sale or License to Customers      
Property, Plant and Equipment [Line Items]      
Capitalized computer software, period increase (decrease) 1,500 1,300  
Software Development for Sale or License to Customers | Depreciation and Amortization      
Property, Plant and Equipment [Line Items]      
Amortization costs sale or license 1,400 200  
Computer Equipment      
Property, Plant and Equipment [Line Items]      
Finance lease, right-of-use asset 10,800    
Property and equipment gross   $ 27,294  
Finance lease, right-of-use, amortization $ 6,200    
v3.19.3.a.u2
Property and Equipment-Net - Schedule of Impairment Intangible Assets (Details) - USD ($)
$ in Thousands
12 Months Ended
Dec. 31, 2019
Dec. 31, 2018
Property, Plant and Equipment [Line Items]    
Impairment Charge on Reclassified Assets $ 1,751 $ 552
Computer Equipment    
Property, Plant and Equipment [Line Items]    
Impairment Charge on Reclassified Assets 2 0
Computer Software    
Property, Plant and Equipment [Line Items]    
Impairment Charge on Reclassified Assets 1,557 552
Furniture and Fixtures    
Property, Plant and Equipment [Line Items]    
Impairment Charge on Reclassified Assets 102 0
Leasehold Improvements    
Property, Plant and Equipment [Line Items]    
Impairment Charge on Reclassified Assets $ 90 $ 0
v3.19.3.a.u2
Property and Equipment-Net - Schedule of Long Lived Tangible Assets by Geographic Area (Detail) - USD ($)
$ in Thousands
Dec. 31, 2019
Dec. 31, 2018
Revenues from External Customers and Long-Lived Assets [Line Items]    
PROPERTY AND EQUIPMENT, net $ 14,948 $ 18,707
United States    
Revenues from External Customers and Long-Lived Assets [Line Items]    
PROPERTY AND EQUIPMENT, net 14,629 18,217
International    
Revenues from External Customers and Long-Lived Assets [Line Items]    
PROPERTY AND EQUIPMENT, net $ 319 $ 490
v3.19.3.a.u2
Accrued Expenses and Other Current Liabilities - Schedule of Accrued Expenses and Other Current Liabilities (Details) - USD ($)
$ in Thousands
Dec. 31, 2019
Dec. 31, 2018
Payables and Accruals [Abstract]    
Accrued compensation $ 4,209 $ 5,801
Accrued content fees and other cost of revenue 151 342
Accrued taxes 192 206
Other 1,326 1,500
Total $ 5,878 $ 7,849
v3.19.3.a.u2
Accrued Expenses and Other Current Liabilities - Additional Information (Details)
$ in Thousands
12 Months Ended
Dec. 31, 2019
USD ($)
employee
Dec. 31, 2018
USD ($)
employee
Payables and Accruals [Abstract]    
Number of employees reduced | employee 50 25
Accrued Expenses And Other Current Liabilities [Line Items]    
Severance costs $ 607 $ 1,111
Charged to expense 607 1,111
Sales and Marketing Expenses    
Accrued Expenses And Other Current Liabilities [Line Items]    
Severance costs 200 400
Charged to expense 200 400
Technology and Development Expenses    
Accrued Expenses And Other Current Liabilities [Line Items]    
Severance costs 400 300
Charged to expense $ 400 $ 300
v3.19.3.a.u2
Accrued Expenses and Other Current Liabilities - Summary of Accrued Severance Costs (Details) - USD ($)
$ in Thousands
12 Months Ended
Dec. 31, 2019
Dec. 31, 2018
Restructuring Reserve [Roll Forward]    
Balance at January 1, 2018 $ 274 $ 21
Charged to expense 607 1,111
Balance at December 31, 2018 56 274
2018 Restructuring Plan    
Restructuring Reserve [Roll Forward]    
Cash payments (268) (858)
2019 Restructuring Plan    
Restructuring Reserve [Roll Forward]    
Cash payments $ (557) $ 0
v3.19.3.a.u2
Long-term Debt - Additional Information (Details) - Revolving Credit Facility - Line of Credit - USD ($)
Aug. 07, 2019
Dec. 31, 2019
Debt Instrument [Line Items]    
Maximum borrowing capacity $ 12,000,000.0  
Debt instrument, term 2 years  
Line Of Credit, Cash Liquidity $ 20,000,000.0  
Liquidity coverage ratio 225.00%  
Amount outstanding   $ 0
Remaining borrowing capacity   $ 10,800,000
Prime Rate | Minimum    
Debt Instrument [Line Items]    
Interest rate over variable rate when liquidity coverage ratio exceeds 2.75 0.50%  
Prime Rate | Maximum    
Debt Instrument [Line Items]    
Interest rate over variable rate when liquidity coverage ratio exceeds 2.75 5.50%  
v3.19.3.a.u2
Income Taxes - Schedule of Income (Loss) Before Income Tax Expense (Details) - USD ($)
$ in Thousands
3 Months Ended 12 Months Ended
Dec. 31, 2018
Dec. 31, 2019
Dec. 31, 2018
Income Tax Disclosure [Abstract]      
United States   $ (8,799) $ (8,064)
Foreign   707 1,125
LOSS BEFORE INCOME TAXES $ (6,939) $ (8,092) $ (6,939)
v3.19.3.a.u2
Income Taxes - Schedule of Provision (benefit) for Income Taxes (Details) - USD ($)
$ in Thousands
3 Months Ended 12 Months Ended
Dec. 31, 2018
Dec. 31, 2019
Dec. 31, 2018
Current:      
United States Federal   $ 0 $ 0
State   35 42
Foreign   850 822
Total current provision for income taxes   885 864
Deferred:      
United States Federal   24 (310)
State   61 62
Foreign   (41) 0
Net deferred provision for income taxes   44 (248)
Total provision for income taxes $ 616 $ 929 $ 616
v3.19.3.a.u2
Income Taxes - Schedule of Deferred Tax Assets and Liabilities (Details) - USD ($)
$ in Thousands
Dec. 31, 2019
Dec. 31, 2018
Dec. 31, 2017
Deferred income tax assets:      
Stock and other compensation expense $ 2,252 $ 2,118  
Net operating losses 11,787 9,310  
Research and development credits 1,676 1,676  
Other federal, state and foreign carryforwards 2,424 1,858  
Intangible assets 1,765 1,045  
Other 620 694  
Gross deferred tax assets 20,524 16,701  
Valuation allowances (14,025) (11,984)  
Deferred tax assets, net of valuation allowance 6,499 4,717  
Deferred income tax liabilities:      
Fixed assets (5,139) (3,492)  
Intangible assets and other (1,007) (829)  
Gross deferred tax liabilities (6,146) (4,321)  
Subtotal 353 396  
Less unrecognized tax benefit liability related to deferred items (628) (627) $ (600)
Net deferred tax liabilities $ (275) $ (231)  
v3.19.3.a.u2
Income Taxes - Additional Information (Details) - USD ($)
$ in Thousands
Dec. 31, 2019
Dec. 31, 2018
Dec. 31, 2017
Operating Loss Carryforwards [Line Items]      
Unrecognized tax benefits $ 628 $ 627 $ 600
NOL carryforwards created by windfall tax benefits 2,200 2,200  
Federal Jurisdiction      
Operating Loss Carryforwards [Line Items]      
Net operating loss carryforwards 48,200 48,200  
State Jurisdiction      
Operating Loss Carryforwards [Line Items]      
Net operating loss carryforwards $ 36,600 $ 36,600  
v3.19.3.a.u2
Income Taxes - Schedule of Effective Income Tax Expense (Details) - USD ($)
$ in Thousands
3 Months Ended 12 Months Ended
Dec. 31, 2018
Dec. 31, 2019
Dec. 31, 2018
Income tax expense (benefit), continuing operations, income tax reconciliation      
Federal income tax (benefit) expense at statutory rate, amount   $ (1,699) $ (1,457)
State and local taxes-net of federal benefit, amount   76 82
Foreign taxes, amount   569 620
Valuation allowance, amount   1,818 1,250
Permanent differences, amount   117 164
Other, amount   48 (43)
Total provision for income taxes $ 616 $ 929 $ 616
Effective income tax rate, continuing operations, tax rate reconciliation      
Federal income tax (benefit) expense at statutory rate   21.00% 21.00%
State and local taxes—net of federal benefit   (1.00%) (1.00%)
Foreign taxes   (7.00%) (9.00%)
Valuation allowance   (21.00%) (18.00%)
Permanent differences   (2.00%) (2.00%)
Other   (1.00%) 0.00%
Total   (11.00%) (9.00%)
v3.19.3.a.u2
Segment Information - Additional Information (Details) - segment
12 Months Ended
Dec. 31, 2019
Dec. 31, 2018
Segment Reporting [Abstract]    
Number of reportable segments 2 1
v3.19.3.a.u2
Segment Information - Schedule of Revenue and Long Lived Tangible Assets by Geographic Area (Details) - USD ($)
$ in Thousands
3 Months Ended 12 Months Ended
Dec. 31, 2018
Dec. 31, 2019
Dec. 31, 2018
Segment Reporting Information [Line Items]      
Total revenue $ 143,879 $ 121,845 $ 143,879
Cost of revenue (exclusive of depreciation and amortization shown separately below) $ 73,304 61,990  
Total Segment Adjusted EBITDA   9,503 8,464
Software & Services      
Segment Reporting Information [Line Items]      
Total revenue   44,485 48,692
Portal & Advertising      
Segment Reporting Information [Line Items]      
Total revenue   77,360 95,187
Operating Segments      
Segment Reporting Information [Line Items]      
Total revenue   121,845 143,879
Cost of revenue (exclusive of depreciation and amortization shown separately below)   61,990 73,304
Total Segment Adjusted EBITDA   9,503 8,464
Operating Segments | Software & Services      
Segment Reporting Information [Line Items]      
Total revenue   44,485 48,692
Cost of revenue (exclusive of depreciation and amortization shown separately below)   12,669 13,244
Total Segment Adjusted EBITDA   12,531 14,305
Operating Segments | Portal & Advertising      
Segment Reporting Information [Line Items]      
Total revenue   77,360 95,187
Cost of revenue (exclusive of depreciation and amortization shown separately below)   49,321 60,060
Total Segment Adjusted EBITDA   10,657 10,788
Corporate Unallocated Expenses      
Segment Reporting Information [Line Items]      
Total Segment Adjusted EBITDA   $ 13,685 $ 16,629
v3.19.3.a.u2
Segment Information - Reconciliation of Total Segment Adjusted EBITDA to Net Loss (Detail) - USD ($)
$ in Thousands
3 Months Ended 12 Months Ended
Dec. 31, 2018
Dec. 31, 2019
Dec. 31, 2018
Segment Reporting [Abstract]      
Total Segment Adjusted EBITDA   $ 9,503 $ 8,464
Provision for income taxes $ (616) (929) (616)
Interest expense (338) (268) (338)
Other expense, net   (17) (212)
Depreciation and amortization   (11,251) (9,832)
Long-lived asset impairment   (1,751) (552)
Stock-based compensation expense   (1,616) (1,804)
Gain on Sale of investment   0 0
Restructuring costs   (959) (1,111)
Certain legal expenses   (1,098) (1,400)
Certain professional service fees   (635) (154)
NET LOSS $ (7,555) $ (9,021) $ (7,555)
v3.19.3.a.u2
Commitments and Contingencies - Additional Information (Details)
$ in Millions
Dec. 31, 2019
USD ($)
Commitments and Contingencies Disclosure [Abstract]  
Contractual obligation $ 0.8
Loss Contingency Estimate Of Possible Loss Reserves Reserved $ 0.3
v3.19.3.a.u2
Leases - Schedule of Components of Lease Costs, Lease Term and Discount Rate (Detail)
$ in Thousands
12 Months Ended
Dec. 31, 2019
USD ($)
Leases [Abstract]  
Finance lease, right-of-use, amortization $ 3,590
Finance Lease, interest 237
Operating lease cost 3,666
Total lease cost $ 7,493
Operating Lease, Weighted Average Remaining Lease Term 2 years
Finance Lease, Weighted Average Remaining Lease Term 1 year 2 months 12 days
Operating Lease, Weighted Average Discount Rate, Percent 6.00%
Finance Lease, Weighted Average Discount Rate, Percent 5.00%
v3.19.3.a.u2
Leases - Schedule of Maturities of Operating and Finance Leases Liabilities (Detail)
$ in Thousands
Dec. 31, 2019
USD ($)
Lessee, Operating Lease, Liability, Payment, Due [Abstract]  
2020 $ 2,396
2021 1,615
2022 944
2023 448
2024 36
Total undiscounted cash flows 5,439
Less imputed interest (428)
Present value of lease liabilities 5,011
Finance Lease, Liability, Payment, Due [Abstract]  
2020 2,611
2021 522
2022 226
2023 0
2024 0
Total undiscounted cash flows 3,359
Less imputed interest (101)
Present value of lease liabilities $ 3,258
v3.19.3.a.u2
Leases - Schedule of Supplemental Cash Flow Information Related to Leases (Detail)
$ in Thousands
12 Months Ended
Dec. 31, 2019
USD ($)
Cash paid for amounts included in the measurement of lease liabilities:  
Operating Lease, Payments $ 3,671
Finance Lease, Interest Payment on Liability 237
Finance Lease, Principal Payments 3,427
Lease liabilities arising from obtaining right-of-use-assets:  
Operating leases 175
Finance leases $ 3,152
v3.19.3.a.u2
Leases - Schedule of Operating Lease Commitments (Detail)
$ in Thousands
Dec. 31, 2018
USD ($)
Operating Leases, Future Minimum Payments Due, Fiscal Year Maturity [Abstract]  
2019 $ 5,276
2020 3,101
2021 1,594
2022 782
2023 250
2024 33
Total lease commitments $ 11,036
v3.19.3.a.u2
Leases - Narrative (Details)
$ in Millions
12 Months Ended
Dec. 31, 2018
USD ($)
Leases [Abstract]  
Rent expense for operating leases $ 4.6
v3.19.3.a.u2
Equity - Additional Information (Details) - USD ($)
12 Months Ended
Dec. 31, 2019
Feb. 28, 2014
Class of Stock [Line Items]    
Shares authorized to be repurchased, amount $ 600,000 $ 5,000,000.0
Share repurchases (in shares) 600,000  
v3.19.3.a.u2
Stock-based Compensation - Schedule of Weighted-Average Assumptions Used to Estimate the Fair Value of Options Granted (Details)
12 Months Ended
Dec. 31, 2019
Dec. 31, 2018
Share-based Payment Arrangement [Abstract]    
Expected dividend yield 0.00% 0.00%
Volatility 66.70% 49.00%
Risk-free rate 2.00% 2.80%
Expected term (in years) 5 years 3 months 7 days 6 years 3 months
v3.19.3.a.u2
Stock-based Compensation - Schedule of Total Stock Based Compensation Expense (Details) - USD ($)
$ in Thousands
12 Months Ended
Dec. 31, 2019
Dec. 31, 2018
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items]    
Total stock-based compensation expense $ 1,616 $ 1,804
Technology and Development    
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items]    
Total stock-based compensation expense 338 489
Sales and Marketing    
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items]    
Total stock-based compensation expense 513 474
General and Administrative    
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items]    
Total stock-based compensation expense $ 765 $ 841
v3.19.3.a.u2
Stock-based Compensation - Additional Information (Details) - USD ($)
$ / shares in Units, $ in Thousands
3 Months Ended 12 Months Ended
Dec. 31, 2019
Dec. 31, 2019
Dec. 31, 2018
Dec. 31, 2013
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]        
Stock based compensation expense   $ 1,616 $ 1,804  
Employee stock option plans to purchase common stock, authorized (in shares) 15,500,000 15,500,000    
Closing stock price as reported on the Nasdaq $ 1.52 $ 1.52    
Total intrinsic value of options exercised   $ 10 $ 91  
Weighted average grant date fair value of options granted   $ 0.97 $ 1.02  
Total unrecognized compensation cost, adjusted for estimated forfeitures, related to nonvested stock options $ 1,400 $ 1,400    
Expected weighted average period to recognize total unrecognized compensation cost   2 years 1 month 13 days    
Special Purpose Recruitment Plan        
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]        
Common shares reserved for issuance (in shares)       1,000,000
Stock Options        
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]        
Duration in which options vest ratable   4 years    
Stock Options | Share-based Payment Arrangement, Tranche One        
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]        
Duration in which options vest ratable   10 years    
Percent of shares vested   25000000.00%    
Stock Options | Share-based Payment Arrangement, Tranche Two        
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]        
Percent of shares vested   25000000.00%    
Stock Options | Share-based Payment Arrangement, Tranche Three        
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]        
Percent of shares vested   25000000.00%    
Stock Options | Share-based Payment Arrangement, Tranche Four        
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]        
Percent of shares vested   25000000.00%    
Stock Options | Vesting after Year One        
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]        
Percent of shares vested   75000000.00%    
Stock Options | Vesting After Year Two        
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]        
Percent of shares vested   75000000.00%    
Stock Options | Vesting After Year Three        
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]        
Percent of shares vested   75000000.00%    
Stock Options | Vesting After Year Four        
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]        
Percent of shares vested   75000000.00%    
Restricted Stock Units (RSUs)        
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]        
Duration in which options vest ratable   3 years    
Expected weighted average period to recognize total unrecognized compensation cost   2 years 3 months 21 days    
Unrecognized compensation cost, adjusted for estimated forfeitures 700 $ 700    
Granted (in shares)   845,361    
Granted (in dollars per share)   $ 1.56    
Phantom Share Units (PSUs)        
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]        
Expected weighted average period to recognize total unrecognized compensation cost   3 years 3 days    
Unrecognized compensation cost, adjusted for estimated forfeitures $ 300 $ 300    
Granted (in shares) 297,789      
Granted (in dollars per share)   $ 1.36    
Phantom Share Units (PSUs) | Minimum        
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]        
Percent of shares vested   0.00%    
Phantom Share Units (PSUs) | Maximum        
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]        
Percent of shares vested   150.00%    
v3.19.3.a.u2
Stock-based Compensation - Summary of Stock Option Activity (Details)
$ / shares in Units, $ in Thousands
12 Months Ended
Dec. 31, 2019
USD ($)
$ / shares
shares
Number of Shares  
Outstanding number of stock options beginning balance (in shares) | shares 7,669,093
Number of stock options granted (in shares) | shares 461,400
Number of stock options exercised (in shares) | shares (39,572)
Number of stock options forfeited (in shares) | shares (314,748)
Number of stock options expired (in shares) | shares (479,427)
Outstanding number of stock options ending balance (in shares) | shares 7,296,746
Number of stock options expected to vest (in shares) | shares 7,251,440
Number of stock options vested and exercisable (in shares) | shares 6,036,172
Weighted Average Exercise Price  
Outstanding, weighted average exercise price, beginning balance (in dollars per share) | $ / shares $ 2.51
Weighted average exercise price, granted (in dollars per share) | $ / shares 1.61
Weighted average exercise price, exercised (in dollars per share) | $ / shares 1.49
Weighted average exercise price, forfeited (in dollars per share) | $ / shares 2.25
Weighted average exercise price, expired in dollars per share) | $ / shares 2.37
Outstanding, weighted average exercise price, ending balance (in dollars per share) | $ / shares 2.48
Expected to vest, weighted average exercise price (in dollars per share) | $ / shares 2.48
Vested and exercisable, weighted average exercise price (in dollars per share) | $ / shares $ 2.53
Aggregate intrinsic value, outstanding | $ $ 36
Aggregate intrinsic value, expected to vest | $ 35
Aggregate intrinsic value, vested and exercisable | $ $ 32
Weighted average remaining contractual term, outstanding 5 years 4 months 24 days
Weighted average remaining contractual term, expected to vest 5 years 4 months 13 days
Weighted average remaining contractual term, vested and exercisable 4 years 9 months 10 days
v3.19.3.a.u2
Stock-based Compensation - Summary of RSU Activity (Details) - RSU
12 Months Ended
Dec. 31, 2019
$ / shares
shares
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested, Number of Shares [Roll Forward]  
Beginning unvested balance (in shares) | shares 11,346
Granted (in shares) | shares 845,361
Vested (in shares) | shares (155,849)
Forfeited (in shares) | shares (23,504)
Ending unvested balance (in shares) | shares 677,354
Weighted Average Exercise Price  
Beginning unvested balance (in dollars per share) | $ / shares $ 3.60
Granted (in dollars per share) | $ / shares 1.56
Vested (in dollars per share) | $ / shares 2.04
Forfeited (in dollars per share) | $ / shares 1.76
Ending invested balance (in dollars per share) | $ / shares $ 1.54
v3.19.3.a.u2
Net Loss Per Common Share Data - Schedule of Equivalent Shares Excluded from Calculation of Diluted Net Loss Per Share (Details) - shares
12 Months Ended
Dec. 31, 2019
Dec. 31, 2018
Warrants    
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]    
Antidilutive Equity Awards 0 400,000
Stock Options    
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]    
Antidilutive Equity Awards 7,553,379 8,400,936
Restricted Stock Units (RSUs)    
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]    
Antidilutive Equity Awards 447,886 34,150
Performance based stock units    
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]    
Antidilutive Equity Awards 119,116 0
v3.19.3.a.u2
Sale of Investment - Additional Information (Details) - USD ($)
$ in Thousands
12 Months Ended
Dec. 31, 2019
Dec. 31, 2018
Sale of Investment [Line Items]    
Gain on Sale of investment $ 0 $ 0
v3.19.3.a.u2
Employee Benefit Plan - Additional Information (Details) - USD ($)
$ in Millions
12 Months Ended
Dec. 31, 2019
Dec. 31, 2018
401 (K) Profit Sharing Plan    
Defined Contribution Plan Disclosure [Line Items]    
401(K) Plan, cost recognized for matching contributions $ 0.2 $ 0.2
v3.19.3.a.u2
Subsequent Events (Details) - USD ($)
$ / shares in Units, $ in Millions
Feb. 11, 2020
Dec. 31, 2019
Dec. 31, 2018
Subsequent Events [Abstract]      
Common stock, par value (in dollars per share)   $ 0.01 $ 0.01
Subsequent Event | Qumu Corporation Merger [Member]      
Subsequent Event [Line Items]      
Business acquisition, share price $ 0.01    
Newly issued shares 1.61    
Business acquisition, transaction costs $ 2.0