Document and Entity Information - USD ($) $ in Millions	12 Months Ended
Document and Entity Information - USD ($) $ in Millions	Dec. 31, 2017	Mar. 13, 2018	Jun. 30, 2017
Document And Entity Information [Abstract]
Document Type	10-K
Amendment Flag	false
Document Period End Date	Dec. 31, 2017
Document Fiscal Year Focus	2017
Document Fiscal Period Focus	FY
Trading Symbol	SYNC
Entity Registrant Name	Synacor, Inc.
Entity Central Index Key	0001408278
Current Fiscal Year End Date	--12-31
Entity Well-known Seasoned Issuer	No
Entity Current Reporting Status	Yes
Entity Voluntary Filers	No
Entity Filer Category	Accelerated Filer
Entity Common Stock, Shares Outstanding		38,796,722
Entity Public Float			$ 116.2

Consolidated Balance Sheets - USD ($) $ in Thousands	Dec. 31, 2017	Dec. 31, 2016
CURRENT ASSETS:
Cash and cash equivalents	$ 22,476	$ 14,315
Accounts receivable—net of allowance of $99 and $263	31,696	27,386
Prepaid expenses and other current assets	4,516	4,862
Total current assets	58,688	46,563
PROPERTY AND EQUIPMENT—Net	20,505	14,406
GOODWILL	15,955	15,943
INTANGIBLE ASSETS	12,695	14,837
OTHER ASSETS	937	1,650
TOTAL ASSETS	108,780	93,399
CURRENT LIABILITIES:
Accounts payable	25,931	18,769
Accrued expenses and other current liabilities	7,075	11,684
Current portion of deferred revenue	11,605	12,149
Current portion of capital lease obligations	2,444	982
Total current liabilities	47,055	43,584
LONG-TERM PORTION OF CAPITAL LEASE OBLIGATIONS	3,371	1,014
DEFERRED REVENUE	3,682	3,917
DEFERRED INCOME TAXES	264	127
OTHER LONG-TERM LIABILITIES	63	108
LONG-TERM DEBT		5,000
Total liabilities	54,435	53,750
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, 2017 and 2016
Common stock, $0.01 par value—100,000,000 shares authorized; 39,625,980 shares issued and 38,783,760 shares outstanding at December 31, 2017; 31,626,635 shares issued and 30,881,148 shares outstanding at December 31, 2016	396	316
Treasury stock—at cost, 842,220 shares at December 31, 2017 and 745,487 shares at December 31, 2016	(1,881)	(1,547)
Additional paid-in capital	142,486	117,747
Accumulated deficit	(86,627)	(76,850)
Accumulated other comprehensive loss	(29)	(17)
Total stockholders’ equity	54,345	39,649
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY	$ 108,780	$ 93,399

Consolidated Balance Sheets (Parenthetical) - USD ($) $ in Thousands	Dec. 31, 2017	Dec. 31, 2016
Statement Of Financial Position [Abstract]
Allowance for doubtful accounts	$ 99	$ 263
Preferred stock, par value	$ 0.01	$ 0.01
Preferred stock, shares authorized	10,000,000	10,000,000
Preferred stock, shares issued	0	0
Preferred stock, shares outstanding	0	0
Common stock, par value	$ 0.01	$ 0.01
Common stock, shares authorized	100,000,000	100,000,000
Common stock, shares issued	39,625,980	31,626,635
Common stock, shares outstanding	38,783,760	30,881,148
Treasury stock, shares	842,220	745,487

Consolidated Statements of Operations - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2017	Dec. 31, 2016	Dec. 31, 2015
Income Statement [Abstract]
REVENUE	$ 140,027	$ 127,373	$ 110,245
COSTS AND OPERATING EXPENSES:
Cost of revenue (exclusive of depreciation and amortization shown separately below)	70,053	59,146	54,423
Technology and development (exclusive of depreciation and amortization shown separately below)	27,642	25,612	20,007
Sales and marketing	24,941	22,846	16,272
General and administrative (exclusive of depreciation and amortization shown separately below)	17,800	19,695	15,543
Depreciation and amortization	9,820	9,235	6,901
Total costs and operating expenses	150,256	136,534	113,146
LOSS FROM OPERATIONS	(10,229)	(9,161)	(2,901)
GAIN ON SALE OF INVESTMENT	1,987
INTEREST EXPENSE	(433)	(318)	(245)
OTHER EXPENSE, net	(2)	(42)	(16)
LOSS BEFORE INCOME TAXES AND EQUITY INTEREST	(8,677)	(9,521)	(3,162)
PROVISION FOR INCOME TAXES	1,100	1,219	239
LOSS IN EQUITY INTEREST			(73)
NET LOSS	$ (9,777)	$ (10,740)	$ (3,474)
NET LOSS PER SHARE:
Basic	$ (0.27)	$ (0.36)	$ (0.12)
Diluted	$ (0.27)	$ (0.36)	$ (0.12)
WEIGHTED AVERAGE SHARES USED TO COMPUTE NET LOSS PER SHARE:
Basic	36,381,299	30,251,685	28,213,838
Diluted	36,381,299	30,251,685	28,213,838

Consolidated Statements of Comprehensive Loss - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2017	Dec. 31, 2016	Dec. 31, 2015
Statement Of Income And Comprehensive Income [Abstract]
Net loss	$ (9,777)	$ (10,740)	$ (3,474)
Other comprehensive loss:
Change in foreign currency translation adjustment, net of tax	(12)	(19)	(18)
Comprehensive loss	$ (9,789)	$ (10,759)	$ (3,492)

Consolidated Statements of Stockholders' Equity - USD ($) $ in Thousands	Total	Common Stock [Member]	Treasury Stock [Member]	Additional Paid-In Capital [Member]	Accumulated Deficit [Member]	Accumulated Other Comprehensive Income (Loss) [Member]
Beginning balance at Dec. 31, 2014	$ 42,482	$ 279	$ (1,142)	$ 105,961	$ (62,636)	$ 20
Beginning balance, shares at Dec. 31, 2014		27,944,853	(553,144)
Exercise of common stock options	70			70
Exercise of common stock options, shares		36,135
Stock and warrants issued in acquisition	3,960	$ 24		3,936
Stock and warrants issued in acquisition, shares		2,400,000
Stock-based compensation cost	3,271			3,271
Vesting of restricted stock units	3	$ 3
Vesting of restricted stock units, shares		255,339
Treasury stock withheld to cover tax liability	$ (190)		$ (190)
Treasury stock withheld to cover tax liability, shares	(99,904)		(99,904)
Net loss	$ (3,474)				(3,474)
Other comprehensive loss	(18)					(18)
Ending balance at Dec. 31, 2015	46,104	$ 306	$ (1,332)	113,238	(66,110)	2
Ending balance, shares at Dec. 31, 2015		30,636,327	(653,048)
Exercise of common stock options	1,560	$ 8		1,552
Exercise of common stock options, shares		751,481
Stock-based compensation cost	2,957			2,957
Vesting of restricted stock units	2	$ 2
Vesting of restricted stock units, shares		238,827
Treasury stock withheld to cover tax liability	$ (215)		$ (215)
Treasury stock withheld to cover tax liability, shares	(92,439)		(92,439)
Net loss	$ (10,740)				(10,740)
Other comprehensive loss	(19)					(19)
Ending balance at Dec. 31, 2016	$ 39,649	$ 316	$ (1,547)	117,747	(76,850)	(17)
Ending balance, shares at Dec. 31, 2016	30,881,148	31,626,635	(745,487)
Issuance of common stock upon stock offering, net of offering costs	$ 20,046	$ 62		19,984
Issuance of common stock upon stock offering, net of offering costs, shares		6,187,846
Exercise of common stock options	$ 2,149	$ 9		2,140
Exercise of common stock options, shares	969,223	969,223
Stock-based compensation cost	$ 2,624			2,624
Vesting of restricted stock units		$ 3		(3)
Vesting of restricted stock units, shares		242,276
Release of stock holdback		$ 6		(6)
Release of stock holdback, shares		600,000
Treasury stock withheld to cover tax liability	$ (334)		$ (334)
Treasury stock withheld to cover tax liability, shares	(96,733)		(96,733)
Net loss	$ (9,777)				(9,777)
Other comprehensive loss	(12)					(12)
Ending balance at Dec. 31, 2017	$ 54,345	$ 396	$ (1,881)	$ 142,486	$ (86,627)	$ (29)
Ending balance, shares at Dec. 31, 2017	38,783,760	39,625,980	(842,220)

Consolidated Statements of Cash Flows - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2017	Dec. 31, 2016	Dec. 31, 2015
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss	$ (9,777)	$ (10,740)	$ (3,474)
Adjustments to reconcile net loss to net cash and cash equivalents (used in) provided by operating activities:
Depreciation and amortization	9,820	9,235	6,901
Loss on disposal of property and equipment	203
Capitalized software impairment	256	334
Stock-based compensation expense	2,490	2,771	3,115
Gain on sale of investment	(1,987)
Provision for deferred income taxes	137	143
Change in allowance for doubtful accounts	(164)
Increase in estimated value of contingent consideration	107
Loss in equity interest			73
Change in operating assets and liabilities, net of effects of acquisitions:
Accounts receivable, net	(4,146)	(2,080)	(362)
Prepaid expenses and other current assets	346	(1,572)	(547)
Other long-term assets	15	(314)	(167)
Accounts payable, accrued expenses and other current liabilities	3,261	9,286	(1,489)
Deferred revenue	(779)	1,546	3,478
Other long-term liabilities	(45)	(360)	122
Net cash (used in) provided by operating activities	(263)	8,249	7,650
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceed from the sale of investment	2,645
Purchases of property and equipment	(7,876)	(5,939)	(3,236)
Acquisition net of cash acquired		(2,500)	(17,260)
Net cash used in investing activities	(5,231)	(8,439)	(20,496)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from offering of common stock, net of underwriting costs	20,258
Payments of public offering issuance costs	(212)
(Repayments of) proceeds from bank financing	(5,000)		5,000
Repayments on capital lease obligations	(1,866)	(1,672)	(1,442)
Proceeds from exercise of common stock options	2,149	1,560	70
Purchase of treasury stock and shares received to satisfy minimum tax withholdings	(334)	(215)	(190)
Deferred acquisition payments	(1,300)	(860)	(495)
Net cash provided by (used in) financing activities	13,695	(1,187)	2,943
Effect of exchange rate changes on cash and cash equivalents	(40)	(5)
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS	8,161	(1,382)	(9,903)
CASH AND CASH EQUIVALENTS—Beginning of year	14,315	15,697	25,600
CASH AND CASH EQUIVALENTS—End of year	22,476	14,315	15,697
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Cash paid for interest	416	318	212
Cash paid for income taxes	908	737	210
SUPPLEMENTAL DISCLOSURES OF NON-CASH INVESTING AND FINANCING TRANSACTIONS:
Property, equipment and service contracts financed under capital lease obligations	5,832	982	1,173
Liability for estimated additional contingent consideration		567	1,600
Fair value of common stock and warrants in acquisition			3,960
Accrued property and equipment expenditures	529	227	21
Stock-based compensation capitalized to property and equipment	$ 134	$ 186	$ 159

The Company and Summary of Significant Accounting Policies

12 Months Ended

Dec. 31, 2017

Organization Consolidation And Presentation Of Financial Statements [Abstract]

The Company and Summary of Significant Accounting Policies

1. THE COMPANY AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Synacor, Inc., together with its consolidated subsidiaries (collectively, the “Company” or “Synacor”), is the trusted technology development, multiplatform services and revenue partner for video, internet and communications providers, device manufacturers, governments and enterprises. Synacor enables its customers to provide their consumers engaging, multiscreen experiences and advertising to their consumers that require scale, actionable data and sophisticated implementation.

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.

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		5 years
Computer software		3 years
Furniture and fixtures		7 years
Other		3–5 years

Computer hardware and software under capital 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. There have been no material impairments to long-lived assets in any of the years presented.

The components and original estimated economic lives of our amortizable intangible assets were as follows as of December 31, 2017 and 2016:

	Original Estimated Economic Life	2017			2016
		(Dollars in thousands)
Gross amortizable intangible assets:
Customer relationships	10 years	$	14,780		$	14,780
Trademark	5 years		300			300
Developed technology	5 years		2,330			2,330
Total gross amortizable intangible assets			17,410			17,410
Accumulated amortization:
Customer relationships			(3,577	)		(1,961	)
Trademark			(137	)		(78	)
Developed technology			(1,001	)		(534	)
Total accumulated amortization			(4,715	)		(2,573	)
Amortizable intangible assets, net		$	12,695		$	14,837

Future amortization expense of amortizable intangible assets will be as follows (in thousands): $2,142 in each of years ending December 31, 2018 and 2019, $2,031 in the year ending December 31, 2020, $1,411 in the year ending December 31, 2021, and $4,969 thereafter.

Goodwill —Goodwill represents the excess of the purchase price over the fair value of the net tangible and intangible assets acquired in a business combination. Goodwill is not amortized, but is tested for impairment on an annual basis and more frequently if impairment indicators are present. Goodwill is considered impaired if the carrying value of the reporting unit exceeds its estimated fair value. The Company has determined it is a single reporting unit, and estimates its fair value using a market approach. If the carrying value of the reporting unit were to exceed its estimated fair value, a goodwill impairment charge is required. This charge would be recognized in the amount by which the carrying value of the reporting unit exceeds the estimated fair value of the reporting unit. The Company conducts its annual goodwill impairment test as of October 1st. For the years ended December 31, 2017, 2016 and 2015, the Company determined goodwill was not impaired.

The change in goodwill is as follows for the years ended December 31, 2017 and 2016 (in thousands):

	Years Ended December 31,
	2017		2016
Balance, beginning of year	$	15,943	$	15,187
Technorati acquisition related goodwill (Note 2)		-		751
Foreign currency revaluation		12		5
Balance, end of year	$	15,955	$	15,943

Revenue Recognition —The Company derives revenue from two categories: 1) Managed Portals and Advertising activities, and 2) Recurring and Fee-Based. Revenue is recognized when the following criteria are met: persuasive evidence of an arrangement exists; delivery has occurred; the selling price is fixed or determinable; and collectability is reasonably assured. The following table shows the revenue in each category for the years ended December 31, 2017, 2016 and 2015 (in thousands):

	Year Ended December 31,
	2017		2016		2015
Search and digital advertising	$	83,556	$	74,889	$	78,316
Recurring and fee-based		56,471		52,484		31,929
Total revenue	$	140,027	$	127,373	$	110,245

The Company uses internet advertising to generate revenue from the traffic on its Managed Portals categorized as search advertising and digital advertising.

•

In the case of search advertising, the Company has a revenue-sharing relationship with Google, pursuant to which it includes a Google-branded search tool on its Managed Portals. When a 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, which is recognized as revenue.

•

Digital advertising includes video, image and text advertisements delivered on one of the Company’s Managed Portals, or through its advertising network. Advertising inventory is filled with advertisements sourced by the Company’s direct sales force, independent advertising sales representatives, and also advertising network partners. Revenue is generated for the Company 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 calculated on a per-impression or per-action basis. Revenue is recognized as the impressions are delivered or the actions occur, according to contractual rates.

Recurring and Fee-Based revenue represents subscription fees and other fees that the Company receives from customers for the use of its proprietary technology, including the use of, or access to, email, video solutions, Cloud ID, security services, games and other premium services and paid content. Monthly subscriber levels typically form the basis for calculating and generating Recurring and Fee-Based revenue. They are generally determined by multiplying a per-subscriber per-month fee by the number of subscribers using the particular services being offered or consumed. In other cases, the fee is fixed. Revenue is recognized from customers as the services are delivered.

The Company evaluates its relationship between search and digital advertising revenue and its Managed Portal customers in accordance with Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 605-45, Principal Agent Considerations. The Company has determined that the search and digital advertising revenue derived from the internet traffic on Managed Portals is reported on a gross basis because the Company is the primary obligor (Synacor is responsible to its customers for fulfilling search and digital advertising services and premium and other services), is involved in the service specifications, performs part of the service, has discretion in supplier selection, has latitude in establishing price and bears credit risk.

Certain Recurring and Fee-Based revenue is derived from the sale of software licenses on a perpetual or subscription basis, for which revenue is recognized upon receipt of an external agreement and delivery of the software, provided the fees are fixed and determinable, and collection is probable. For agreements that include one or more elements to be delivered at a future date, revenue is recognized using the residual method, under which the vendor-specific objective evidence (“VSOE”) of fair value of the undelivered elements is deferred, and the remaining portion of the agreement fee is recognized as license revenue. If VSOE of fair value has not been established for certain undelivered elements, revenue is deferred until those elements have been delivered or their fair values have been determined.

Effective January 1, 2018, the Company has adopted FASB ASC 606, Revenue from Contracts with Customers (ASC 606). See Applicable Recent Accounting Pronouncements below.

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, 2017 and 2016, the Company had concentrations equal to or exceeding 10% of the Company’s accounts receivable as follows:

	Accounts Receivable
	December 31, 2017			December 31, 2016
Google advertising affiliate		16	%	*
Google search		7	%	*
Advertising customer		12	%	*
* - Less than 10%

For the years ended December 31, 2017, 2016 and 2015 the Company had concentrations equal to or exceeding 10% of the Company’s revenue as follows:

	Revenue
	2017			2016			2015
Google advertising affiliate		21	%		12	%	*
Google search		15	%		12	%		28	%
* - Less than 10%

For the years ended December 31, 2017, 2016 and 2015, the following customers received revenue-share payments equal to or exceeding 10% of the Company’s cost of revenue.

	Cost of Revenue
	2017			2016			2015
Customer A		20	%	*			*
Customer B		12	%		22	%		26	%
Customer C	*			*				10	%
* - Less than 10%

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.

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, CloudID 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 are amortized over the estimated useful life of the applicable software and such amortization is included in cost of revenue. In 2017, 2016 and 2015, the Company incurred a total of $6.5 million, $4.5 million and $2.8 million of combined internal and external costs related to the application development stage. Of this amount, $2.8 millio, $0.8 million and $0 were incurred for the development of software for sale or license in 2017, 2016 and 2015, respectively. Internal and external training and maintenance costs are expensed as incurred.

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, $0.4 million and $0.1 million in 2017, 2016 and 2015, respectively.

General and Administrative —General and administrative expenses consist primarily of compensation related expenses for executive management, finance, accounting, human resources, professional fees and other administrative functions.

Earnings (Loss) Per Share —Basic earnings (loss) per share (“EPS”) is calculated in accordance with 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 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.

Business Combinations —The Company records its business combinations under the acquisition method of accounting. Under this method, the Company allocates the purchase price of each acquisition to the tangible and identifiable intangible assets acquired and liabilities assumed based on their respective fair values at the date of acquisition. The fair value of identifiable intangible assets is based upon detailed valuations that use various assumptions made by management. Any excess of the purchase price over the fair value of net tangible and identifiable intangible assets acquired is allocated to goodwill. All direct acquisition-related costs are expensed as incurred.

The following methodology and assumptions are considered relevant to the fair value judgments related to acquired intangible assets and assumed liabilities:

•

Technology and Trademark intangible assets—valued based on discounted cash flows using the relief from royalty method (a form of an income approach)

•

Customer Relationship—valued based on a multi-period excess earnings method (a form of an income approach)

•

Deferred Revenue—valued based on a cost approach using estimated costs to be incurred in connection with the continuing legal obligation associated with acquired contracts plus a reasonable profit margin.

Business assumptions, such as projections of revenue, costs to fulfill acquired contracts, applicable royalty rates, and future profitability are key assumptions included in the methods described above.

In circumstances where an acquisition involves a contingent consideration arrangement, the Company recognizes a liability equal to the fair value of the contingent payments it expects to make as of the acquisition date. The Company remeasures this liability each reporting period and records changes in the fair value through other expense in the consolidated statement of operations. Increases or decreases in the fair value of the contingent consideration liability can result from changes in discount periods and rates, as well as changes in the timing, amount of, or the likelihood of achieving the applicable contingent consideration.

Income Taxes —On December 22, 2017, the U.S. government enacted comprehensive tax legislation commonly referred to as the Tax Cuts and Jobs Act (the "Tax Act"). The Tax Act makes broad and complex changes to the U.S. tax code which may impact the Company, positively or negatively, for taxable years ended December 31, 2017 and thereafter. The impact of many provisions of the Tax Act are unclear and subject to interpretation pending further guidance from the Internal Revenue Service. The ultimate impact of the Tax Act on the Company is dependent on ongoing review and analysis.

Among other important changes in the Tax Act, the tax rate on corporations was reduced from 35% to 21%; a limitation on the deduction of interest expense was enacted; certain tangible property acquired after September 27, 2017 will qualify for 100% expensing; gain from the sale of a partnership interest by a foreign person will be subject to U.S. tax to the extent that the partnership is engaged in a trade or business; a special deduction for qualified business income from pass-through entities was added; U.S. federal income taxes on foreign earnings was eliminated (subject to several important exceptions), and new provisions designed to tax currently global intangible low-taxed income and a new base erosion anti-abuse tax were added.

The Company has made a reasonable estimate of the effects of the Tax Act on its existing deferred tax balances and the one-time transition tax. The Company has substantially completed its accounting for the revaluation of its net U.S. federal deferred tax liabilities and has recorded a tax benefit of approximately $0.2 million in the fourth quarter of 2017. The one-time transition tax under the Tax Act is based on earnings and profits ("E&P”) of the Company’s foreign subsidiaries that were previously deferred from U.S. income taxes. For the year ended December 31, 2017, the provision for income taxes includes provisional tax expense of $0.1 million related to the one-time transition tax liability of our foreign subsidiaries, and this amount is fully offset by a usage of our net operating loss.

On December 22, 2017, the SEC issued SAB 118, which expresses views of the SEC regarding ASC 740 in the reporting period that includes the enactment date of the Tax Act. SAB 118 provides a measurement period that should not extend beyond one year from the Tax Act enactment date for companies to complete the accounting under ASC 740. In accordance with SAB 118, a company must reflect the income tax effects of those aspects of the Tax Act for which the accounting under ASC 740 is complete. To the extent that a company’s accounting for certain income tax effects of the Tax Act is incomplete but it is able to determine a reasonable estimate, it must record and provisional estimate in the financial statements. The Company has not completed the calculation of the total E&P for these foreign subsidiaries and expects to refine its calculations as additional analysis is completed. In addition, the Company's estimates may be affected as additional regulatory guidance is issued with respect to the Tax Act. The Company is currently analyzing its global working capital and cash requirements and the potential tax liabilities attributable to a repatriation, including calculating any excess of the amount for financial reporting over the tax basis in our foreign subsidiaries, but has yet to determine whether it plans to change its prior assertion and repatriate. Accordingly, the Company has not recorded any deferred taxes attributable to its investments in its foreign subsidiaries. The Company will record the tax effects of any change in its prior assertion in the period that it completes its analysis and is able to make a reasonable estimate, and disclose any unrecognized deferred tax liability for temporary differences related to its foreign investments, if practicable, in the period that it is first able to make a reasonable estimate, no later than December 2018.

While the Tax Reform Act provides for a territorial tax system, beginning in 2018, it also includes two new U.S. tax base erosion provisions - the global intangible low-taxed income (“GILTI”) provisions and the base-erosion and anti-abuse tax (“BEAT”) provisions.

The GILTI provisions require the Company to include in its U.S. income tax return foreign subsidiary earnings in excess of an allowable return on the foreign subsidiary’s tangible assets. The Company expects that it will be subject to incremental U.S. tax on GILTI income beginning in 2018. Because of the complexity of the new GILTI tax rules, the Company continues to evaluate this provision of the Tax Reform Act and the application of ASC 740, Income Taxes. Under GAAP, the Company is allowed to make an accounting policy choice of either (1) treating taxes due on future U.S. inclusions in taxable income related to GILTI as a current-period expense when incurred (the “period cost method”) or (2) factoring such amounts into the Company's measurement of its deferred taxes (the “deferred method”). The Company's selection of an accounting policy with respect to the new GILTI tax rules will depend, in part, on analyzing its global income to determine whether it expects to have future U.S. inclusions in taxable income related to GILTI and, if so, what the impact is expected to be. The Company is currently in the process of analyzing its structure and, as a result, is not yet able to reasonably estimate the effect of this provision of the Tax Reform Act. Therefore, the Company has not made any adjustments related to potential GILTI tax in its consolidated financial statements and has not made a policy decision regarding whether to record deferred tax on GILTI.

The BEAT provisions in the Tax Reform Act eliminates the deduction of certain base-erosion payments made to related foreign corporations, and impose a minimum tax if greater than regular tax. The Company does not expect to be materially impacted by this tax, however, it is still in the process of analyzing the effect of this provision of the Tax Reform Act. The Company has not included any tax impact of BEAT in its consolidated financial statements for the year ended December 31, 2017.

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, 2017 and 2016, 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.

Investment — In July 2013, the Company made a $1.0 million investment (in the form of a convertible promissory note) in a privately held Delaware corporation called Blazer and Flip Flops, Inc. (“B&FF”). In March 2015, the note was converted into preferred stock of B&FF and was accounted for as a cost method investment. This investment was sold during 2017 (See Note 12).

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 carrying amounts of the Company’s capital leases approximate fair value of these obligations based upon management’s best estimates of interest rates that would be available for similar debt obligations at December 31, 2017 and 2016. The carrying value of our long-term debt approximates its fair value due to its variable interest rate. The fair value of accrued contingent consideration recorded by the Company represents the estimated fair value of the contingent consideration the Company expects to pay.

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 — In May 2014, the FASB issued Accounting Standards Update (“ASU”) 2014-09, Revenue from Contracts with Customers (ASC 606), which was subsequently updated by ASU 2015-14, 2016-08, 2016-10 and 2016-12, and requires an entity to recognize the amount of revenue to which it expects to be entitled for the transfer of promised goods or services to customers. Companies are permitted to adopt ASC 606 using a full retrospective or modified retrospective method. The Company adopted the standard on January 1, 2018 using a modified retrospective method.

While the Company continues to assess all potential impacts of the standard, it is currently anticipated that the standard will not have a material impact on its consolidated statements of operations and consolidated statements of cash flows. However, the Company anticipates that the standard will have a material impact on the consolidated balance sheets with the primary impact being a reduction in deferred revenue relating to subscription licenses from its Email/Collaboration contracts. The Company currently recognizes subscription license revenue from these contracts over the subscription term of the contracts (which are typically six months or longer). The Company has concluded that, because its performance obligations have been satisfied in full upon delivery of the license, that revenue allocated to the license performance obligation in such contracts will be recognized upon delivery rather than ratably over the term of the subscription. The Company projects that approximately $2.5 million of deferred revenue from subscription license contracts will be recorded as a reduction of the Company’s accumulated deficit as of January 1, 2018, and following that date, revenue for such performance obligations will be recognized upon delivery of the license.

Although it is expected that the annual revenue impacts on the consolidated statements of operations will not be material, the timing of a portion of revenue may shift between periods due primarily to the accounting for software term licenses, which will be recognized predominantly at the time of delivery rather than ratably over the contract period. Accounting for the majority of the Company’s revenue, which is related to search and advertising, software perpetual licenses, hosted email, CloudID, professional services and maintenance and support activities, will remain substantially unchanged. Additionally, incremental costs to obtain customer contracts will be capitalized and amortized over a benefit period, which is the shorter of customer or product life. The Company will elect a practical expedient to exclude contracts with a benefit period of a year or less from this deferral requirement. The annual cost impact of the deferral and amortization on the consolidated statements of operations is not expected to be material.

As ASC 606 is principle-based, interpretation of those principles may vary from company to company based upon their unique circumstances. New information may arise that could change the Company’s current understanding and interpretation of the standard and its impact on the Company. The Company will continue to monitor industry activities and additional guidance provided by regulators and standard setters and will recognize the implementation of such guidance accordingly, if applicable.

In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842), which amends lease accounting by lessors and lessees. This new standard will require, among other things, that lessees recognize a right-to-use asset and related lease liability for all significant financing and operating leases, and specifies where in the statement of cash flows the related lease payments are to be presented. The standard is effective for years beginning after December 15, 2018, including interim periods within those years (beginning in calendar year 2019 for the Company), and early adoption is permitted. Adoption of ASU 2016-02 is required to be applied on a modified retrospective basis. The Company is currently in the process of evaluating the impact the adoption of ASU 2016-02 will have on its consolidated financial statements, but currently expects that most of its operating lease commitments will be subject to the new standard and recognized as operating lease liabilities and right-of-use assets upon the adoption of ASU 2016-02, which will increase the total assets and total liabilities that it reports as compared to amounts reported prior to adoption. The Company will adopt the standard on the required effective date, which for the Company will be January 1, 2019.

In August 2016, the FASB ASU 2016-15, Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments, which provides guidance related to cash flows presentation and is effective for annual reporting periods beginning after December 15, 2017, subject to early adoption, which is permitted using a retrospective transition approach. ASU 2016-15 is intended to standardize the classification of certain cash receipts and cash payments in the Statement of Cash Flows, and is effective for the Company in its first quarter of fiscal 2018. The Company will adopt ASU 2016-15 in the first quarter of fiscal 2018 and is currently completing its evaluation of the impact of the pending adoption on its consolidated financial statements.

Recently Adopted

In March 2016, the FASB issued ASU 2016-09, Compensation - Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting, which changes how companies account for certain aspects of stock-based awards to employees, including the accounting for income taxes, forfeitures, and statutory tax withholding requirements, as well as the classification in the statement of cash flows. Effective January 1, 2017, the Company adopted ASU 2016-09. The standard eliminated the requirement to defer recognition of excess tax benefits related to employee share-based awards until they are realized through a reduction to income taxes payable. The Company applied the modified retrospective method, and there was no net cumulative-effect adjustment to retained earnings on January 1, 2017 as the increase of $0.7 million in deferred income tax assets for previously unrecognized excess tax benefits was fully offset by a valuation allowance. As permitted by the ASU, the Company will continue to use an estimated forfeiture rate in determining stock-based compensation expense.

In January 2017, the FASB issued ASU 2017-04, Simplifying the Test for Goodwill Impairment (Topic 350), to simplify the accounting for goodwill impairment. The guidance removes Step 2 of the goodwill impairment test. A goodwill impairment is now measured as the amount by which a reporting unit’s carrying value exceeds its fair value, limited to the amount of goodwill allocated to that reporting unit. ASU 2017-04 is effective for interim and annual periods beginning after December 15, 2019, with early adoption permitted for any impairment tests performed after January 1, 2017. The Company adopted the new guidance on a prospective basis during the first quarter of 2017. The adoption of this ASU did not have a significant impact on the Company’s consolidated financial statements.

Acquisitions

12 Months Ended

Dec. 31, 2017

Business Combinations [Abstract]

Acquisitions

2. ACQUISITIONS

Technorati –

On February 19, 2016, the Company entered into an Asset Purchase Agreement to acquire substantially all of the assets of Technorati, Inc. (“Technorati”), an advertising technology company, for $3.0 million in cash (the “Purchase Price”). The Company completed the acquisition on February 26, 2016 (the “Closing”).

The Company’s motivations for completing the acquisition included the expectation that the acquisition would drive additional advertising demand, accelerate its content and advertising syndication strategy by giving the Company access to over 1,000 new publishers, and adding new tools for publishers to its existing platform. The Company also anticipated synergies and economies of scale by combining Technorati’s publisher network, proprietary SmartWrapper solution and other advertising technology with its existing network of Managed Portals and Advertising solutions.

The assets acquired include Technorati’s intellectual property and advertising technology platforms, customer and publisher relationships, accounts receivable and equipment. The Company also assumed certain obligations of Technorati, including post-Closing obligations under contracts assigned to the Company and the payment of outstanding liabilities to its publishers. Ten of Technorati’s employees commenced employment with Synacor.

The Company paid $2.5 million of the Purchase Price at the Closing and withheld $0.5 million of the Purchase Price to secure Technorati’s indemnification obligations under the Asset Purchase Agreement. As of December 31, 2016, the Company owed Technorati approximately $0.1 million in post-closing working capital adjustments. Pursuant to the terms of the Asset Purchase Agreement, Technorati was obligated to indemnify the Company for breaches of its representations and warranties, breaches of covenants and certain other matters. The representations and warranties set forth in the Asset Purchase Agreement generally survived for 12 months following the Closing, with longer survival periods for certain fundamental representations and warranties. There were no claims for such breaches.

Consideration and Allocation of Purchase Price –

The transaction was accounted for as a purchase of a business in accordance with FASB ASC Topic 805, Business Combinations. Under this guidance, the fair value of the consideration was determined and the assets acquired and liabilities assumed have been recorded at their estimated fair values as of the date of acquisition. The excess of the consideration over the estimated fair values has been recorded as goodwill.

The transaction consideration, as well as the allocation of the purchase price to the assets acquired and liabilities assumed as of the date of the acquisition are presented in the table below. Management is responsible for determining, as of the Closing, the fair value of tangible and identifiable intangible assets acquired and liabilities assumed, and the estimated useful lives for any depreciable and amortizable assets. Management considered a number of factors, including reference to a valuation analysis performed solely for the purpose of this allocation in accordance with ASC Topic 805. The Company’s estimates are based on assumptions believed to be reasonable, but which are inherently uncertain and unpredictable. This analysis required the use of management’s assumptions, which would not reflect unanticipated events and circumstances that may occur.

Consideration (in thousands):


Cash consideration	$	2,500
Fair value of indemnification holdback		500
Fair value of post-closing working capital adjustment		67
Total consideration	$	3,067

Purchase price allocation (in thousands):


Assets acquired:
Accounts receivable	$	965
Property and equipment		96
Customer and publisher relationships		1,380
Technology		730
Goodwill		751
Total assets acquired		3,922
Liabilities assumed:
Accounts payable and accrued expenses		855
Net assets acquired	$	3,067

It is expected that acquired goodwill will be deductible for United States tax purposes. The Company is amortizing technology and customer and publisher relationships over estimated useful lives of five years.

The indemnification holdback and post-closing working capital adjustments totaled $0.6 million, were accrued in accrued expenses and other current liabilities at December 31, 2016, and were paid to the seller in 2017.

The Company is not able to determine the amount of revenue and earnings recognized in the post-acquisition period as a result of integration activities.

Zimbra –

On August 18, 2015 the Company and Sync Holdings, LLC, its wholly-owned subsidiary, entered into an Asset Purchase Agreement (the “Asset Purchase Agreement”) with Zimbra, Inc. (now known as TZ Holdings) to acquire certain assets related to TZ Holdings’ email/collaboration products and services business, including certain of its wholly-owned foreign subsidiaries. The business acquired by the Company pursuant to the Asset Purchase Agreement is referred to herein as “Zimbra” or the “Purchased Business.” The Purchased Business includes software for email/collaboration, calendaring, file sharing, activity streams and social networks, among other things. The Zimbra software is used globally by service providers, governments and companies. The Company completed the acquisition (the “Acquisition”) on September 14, 2015 (the “Closing”).

Purchase Price —The total purchase price paid (including the fair value of the contingent consideration described below) for the Purchased Business was approximately $22.9 million. At the Closing, in consideration for the Purchased Business, the Company paid TZ Holdings $17.3 million in cash and issued to TZ Holdings 2.4 million shares of its common stock (such shares, the “Closing Stock Consideration”), valued at $3.1 million, and warrants to purchase 480,000 shares of common stock (the “Closing Warrants”). Additionally, TZ Holdings was eligible to receive additional consideration, estimated at $2.5 million, consisting of contingent cash consideration, warrants and additional shares of common stock, as described below.

Contingent Consideration — TZ Holdings was eligible to receive up to an additional $2.0 million (the “Earn Out Consideration”) in cash upon the satisfaction of certain business performance milestones related to Zimbra after the Closing, subject to and contingent upon any reduction to satisfy indemnification claims (including pending claims), as further described in the Asset Purchase Agreement. The fair value of this contingent consideration was determined to be $1.6 million and was included in consideration paid as of the acquisition date. Of this amount, $0.9 million was paid in 2016, and the remaining $0.7 million was paid in 2017. This Company’s liability for estimated unpaid Earn Out Consideration was included in accrued expenses and other current liabilities at December 31, 2016.

Holdback —In addition to the Earn Out Consideration, the Company held back an additional 600,000 shares of common stock (the “Holdback Stock” and together with the Closing Stock Consideration, the “Stock Consideration”) and warrants to purchase an additional 120,000 shares of common stock (the “Holdback Warrants” and together with the Closing Warrants, the “Warrants”) to secure TZ Holdings’ indemnification obligations under the Asset Purchase Agreement. Any Holdback Shares and Holdback Warrants not used to satisfy indemnification claims (including pending claims) were to be released to TZ Holdings eighteen months following the Closing. The Company recorded the Holdback Stock and the Holdback Warrants based on its estimated fair value at the Closing. Both the Holdback Stock and the Warrants were released to TZ Holdings in 2017.

Additionally, the Company assumed certain obligations of TZ Holdings, including the performance of TZ Holdings’ post-closing obligations under contracts assigned to the Company.

Consideration:

Cash consideration	$	17,310
Fair value of 2,400,000 shares of common stock issued on September 14, 2015		3,132
Fair value of Closing and Holdback Warrants (warrants to purchase an aggregate of 600,000 shares of common stock)		45
Fair value of the Holdback Stock (600,000 shares of common stock) on September 14, 2015		783
Fair value of contingent consideration		1,600
Total purchase price	$	22,870

In connection with the Acquisition, TZ Holdings agreed not to sell, transfer or otherwise dispose of any portion of the Stock Consideration until the first anniversary of the Closing. Upon the first anniversary of the Closing, the restrictions were to begin to lapse with respect to 1/6th of the Stock Consideration, and upon the completion of each of the five months thereafter, the restrictions were to lapse with respect to an additional 1/6th of the Stock Consideration. Following the lapse of such restrictions, TZ Holdings may transfer the Stock Consideration solely to its stockholders.

Allocation of Purchase Price —The purchase price allocation was determined in accordance with the accounting treatment of a business combination in accordance with the FASB ASC Topic 805, Business Combinations. Under the guidance, the fair value of the consideration was determined and the assets acquired and liabilities assumed have been recorded at their fair values at the date of acquisition. The excess of the purchase price over the estimated fair values has been recorded as goodwill.

The allocation of purchase price to the assets acquired and liabilities assumed as the date of the acquisition is presented in the table below. Management is responsible for determining the fair value of the tangible and identifiable intangible assets acquired and liabilities assumed as of the Closing. Management considered a number of factors, including reference to an analysis under FASB ASC Topic 805 solely for the purpose of allocating the purchase price to the assets acquired and liabilities assumed. The Company’s estimates are based upon assumptions believed to be reasonable, but which are inherently uncertain and unpredictable. These valuations require the use of management’s assumptions, which would not reflect unanticipated events and circumstances that occur.

Assets acquired:
Cash and cash equivalents	$	50
Accounts receivable		3,500
Prepaid expenses and other current assets		451
Property and equipment		1,194
Other long-term assets		68
Goodwill		13,622
Intangible assets		15,300
Total assets acquired		34,185

Liabilities assumed:
Accounts payable		134
Accrued expenses and other current liabilities		409
Deferred revenue		10,400
Capital lease obligations		317
Other long-term liabilities		55
Total liabilities assumed		11,315
Net assets acquired	$	22,870

During the fiscal year 2015, acquisition costs of $0.5 million were recorded in general and administrative expenses in the consolidated statement of operations.

Pro Forma Results —The following unaudited pro forma information presents the combined results of operations as if the acquisition of Zimbra had been completed on January 1, 2014, the beginning of the comparable prior annual reporting periods. The unaudited pro forma results include adjustments to reflect: (i) the carve-out of revenue and expenses relating to the portion of the Zimbra business not acquired; (ii) the elimination of depreciation and amortization from Zimbra’s historical financial statements and the inclusion of depreciation and amortization based on the fair values of acquired property, plant and equipment and intangible assets; (iii) the fair value of deferred revenue liabilities assumed; (iv) recognition of the post-acquisition share-based compensation expense related to stock options that were granted to Zimbra employees who accepted employment with Synacor; (v) the elimination of intercompany revenue and expenses between Zimbra and Synacor; and (iv) the elimination of acquisition-related expenses.

The unaudited pro forma results do not reflect any cost saving synergies from operating efficiencies or the effect of the incremental costs incurred in integrating the two companies. Accordingly, these unaudited pro forma results are presented for informational purpose only and are not necessarily indicative of what the actual results of operations of the combined company would have been if the acquisition had occurred at the beginning of the period presented, nor are they indicative of future results of operations

Set forth below are the unaudited pro forma consolidated results of operations of the Company and Zimbra for the year ended December 31, 2015, presented as if the Acquisition had occurred as of January 1, 2015, the beginning of the earliest year presented (in thousands, except per share amounts):

Revenue	$	130,077
Operating loss	$	(2,944	)
Net loss	$	(4,608	)
Net loss per share:
Basic	$	(0.16	)
Diluted	$	(0.16	)

Property and Equipment-Net

12 Months Ended

Dec. 31, 2017

Property Plant And Equipment [Abstract]

Property and Equipment-Net

3. PROPERTY AND EQUIPMENT—NET

As of December 31, 2017 and 2016, property and equipment-net consisted of the following (in thousands):

	2017			2016
Computer equipment	$	28,845		$	23,438
Computer software		23,690			15,198
Furniture and fixtures		1,497			2,062
Leasehold improvements		1,215			1,463
Work in process		3,758			4,572
Other		159			249
		59,164			46,982
Less accumulated depreciation		(38,659	)		(32,576	)
Total property and equipment—net	$	20,505		$	14,406

Property and equipment includes computer equipment and software held under capital leases of $11.1 million and $5.2 million as of December 31, 2017 and 2016, respectively. Accumulated depreciation of computer equipment and software held under capital leases amounted to $5.4 million and $3.4 million as of December 31, 2017 and 2016, respectively.

Depreciation expense was $7.6 million, $7.2 million, and $6.4 million for the years ended December 31, 2017, 2016, and 2015, respectively. Impairments of internally-developed software totaling $0.3 million were recorded in each of 2017 and 2016 and charged to general and administrative expense.

Accrued Expenses and Other Current Liabilities

12 Months Ended

Dec. 31, 2017

Payables And Accruals [Abstract]

Accrued Expenses and Other Current Liabilities

4. ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES

As of December 31, 2017 and 2016, accrued expenses and other current liabilities consisted of the following (in thousands):

	2017		2016
Accrued compensation	$	4,361	$	6,860
Accrued content fees and other cost of revenue		655		1,788
Accrued taxes		426		—
Accrued business acquisition consideration		—		1,193
Other		1,633		1,843
Total	$	7,075	$	11,684

Long-Term Debt	12 Months Ended
Long-Term Debt	Dec. 31, 2017
Debt Disclosure [Abstract]
Long-Term Debt	5. LONG-TERM DEBT In September 2013, the Company entered into a Loan and Security Agreement, with Silicon Valley Bank (“SVB”), which was most recently amended in June 2017 (as amended, the “Loan Agreement”). The Loan Agreement provides for a $12.0 million secured revolving line of credit with a stated maturity of September 2018. The credit facility is available for cash borrowings, subject to a formula based upon eligible accounts receivable. As of December 31, 2017, there were no borrowings outstanding under the Loan Agreement, and subject to the operation of the borrowing formula, $12.0 million was available for draw under the Loan Agreement. Borrowings under the Loan Agreement bear interest, at the Company’s election, at an annual rate based on either the “prime rate” as published in The Wall Street Journal or LIBOR for the relevant period. If the Company’s liquidity coverage ratio (the ratio of cash plus eligible accounts receivable to borrowings under the Agreement) exceeds 2.75 to 1, LIBOR-based advances bear interest at LIBOR plus 3.5% and prime rate advances bear interest at the prime rate plus 1.0%. If the Company’s liquidity coverage ratio falls below 2.75 to 1, LIBOR-based advances bear interest at LIBOR plus 4.0% and prime rate advances bear interest at the prime rate plus 1.5%. For LIBOR advances, interest is payable (i) on the last day of a LIBOR interest period or (ii) on the last day of each calendar quarter. For prime rate advances, interest is payable (a) on the first day of each month and (b) on each date a prime rate advance is converted into a LIBOR advance. The Company’s obligations to SVB 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, SVB 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, 2017, the Company was in compliance with the financial covenants.

Income Taxes

12 Months Ended

Dec. 31, 2017

Income Tax Disclosure [Abstract]

Income Taxes

6. INCOME TAXES

Deferred income tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to reverse. As a result of the reduction in the U.S. corporate income rate from 35% to 21% under the Tax Act, the Company revalued its deferred income tax assets and liabilities at December 31, 2017, recording a net reduction of both the Company’s deferred income tax liability at December 31, 2017 and income tax provision for the year ended December 31, 2017 in the amount of $0.2 million. The one-time transition tax liability of foreign subsidiaries, calculated based on earning and profits (“E&P”) that were previously deferred from U. S. income taxes, was $0. The Company has not fully completed the calculation of the E&P and expects it may refine its calculations as additional analysis is completed.

Loss from continuing operations before income taxes included loss from domestic operations of $(9.6) million, $(10.2) million and $(2.9) million for the years ended December 31, 2017, 2016 and 2015, and income (loss) from foreign operations of $0.9 million, $0.7 million $(0.3) million for the same years.

The provision for income taxes for the years ended December 31, 2017, 2016 and 2015, was comprised of the following (in thousands):

	2017		2016		2015
Current:
United States Federal	$	—	$	—	$	(1	)
State		30		40		45
Foreign		933		1,036		195
Total current provision for income taxes		963		1,076		239
Deferred:
United States Federal		74		95		—
State		63		48		—
Net deferred provision for income taxes		137		143		—
Total provision for income taxes	$	1,100	$	1,219	$	239

The income tax effects of significant temporary differences and carryforwards that give rise to deferred income tax assets and liabilities as of December 31, 2017 and 2016 are as follows (in thousands):

	2017			2016
Deferred income tax assets:
Stock and other compensation expense	$	3,345		$	4,576
Net operating losses		7,059			5,907
Research and development credits		1,676			1,676
Other federal, state and foreign carryforwards		1,151			1,151
Fixed assets		—			246
Intangible assets		570			557
Other		408			838
Gross deferred tax assets		14,209			14,951
Valuation allowances		(13,301	)		(14,030	)
		908			921
Deferred income tax liabilities:
Fixed assets		(16	)		(29	)
Intangible assets and other		(529	)		(392	)
Gross deferred tax liabilities		(545	)		(421	)
Subtotal		363			500
Less unrecognized tax benefit liability related to deferred items		(627	)		(627	)
Net deferred tax liabilities	$	(264	)	$	(127	)

A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows (in thousands):

	2017		2016		2015
Balance—beginning of year	$	627	$	627	$	627
Additions for tax positions of prior years		—		—		—
Reductions for tax positions of prior years		—		—		—
Balance—end of year	$	627	$	627	$	627

The unrecognized tax benefits at the end of 2017, 2016 and 2015 were primarily related to research and development carryforwards.

If the $0.6 million of unrecognized tax benefits as of December 31, 2017 were recognized, approximately $0.6 million would decrease the effective tax rate in the period in which each of the benefits is recognized. The remaining amount would be offset by the reversal of related deferred income tax assets on which an unrecognized tax benefit liability is placed. 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, 2017 and 2016, 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 2004 to 2017 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. The Company’s 2016 U.S. Federal income tax return is currently under examination; the Company is not currently under examination in any other major taxing jurisdictions.

Income tax expense for the years ended December 31, 2017, 2016 and 2015 differs from the expected income tax benefit calculated using the statutory U.S. Federal income tax rate as follows (dollars in thousands):

	2017					2016					2015
Federal income tax (benefit) expense at statutory rate	$	(2,950	)	34	%	$	(3,237	)	34	%	$	(1,075	)	34	%
State and local taxes—net of federal benefit		64		(1	)		75		(1	)		30		(1	)
Foreign taxes		466		(6	)		1,036		(11	)		195		(6	)
Impact of United States federal tax rate change		4,965		(57	)		—		—			—		—
Impact of United States federal tax rate change - valuation allowance		(5,205	)	60			—		—			—		—
Valuation allowance		3,596		(41	)		3,299		(34	)		928		(29	)
Permanent differences		(103	)	1			3		—			144		(5	)
Other		267		(3	)		43		(1	)		17		(1	)
Total	$	1,100		(13	)%	$	1,219		(13	)%	$	239		(8	)%

At December 31, 2017, the Company has federal and state NOL carryforwards of approximately $26.8 million and $25.1 million, respectively, including approximately $2.2 million of NOL carryforwards created by windfall tax benefits relating to stock compensation expense. The NOLs will begin to expire in 2027. The Company has weighed the positive and negative evidence, including cumulative pre-tax losses, and determined that it is more likely than not that the deferred income tax assets, primarily related to the NOLs, will not be realized and, therefore, a full valuation allowance has been recorded against the net deferred income tax assets as of December 31, 2017 and 2016.

Information About Segment and Geographic Areas

12 Months Ended

Dec. 31, 2017

Segment Reporting [Abstract]

Information About Segment and Geographic Areas

7. INFORMATION ABOUT SEGMENT AND GEOGRAPHIC AREAS

Operating segments are components of the Company in which separate financial information is available that is evaluated regularly by the Company’s chief operating decision maker in deciding how to allocate resources and in assessing performance. The chief operating decision maker for the Company is the Chief Executive Officer. The Chief Executive Officer reviews operating results and financial information presented on a total Company basis, accompanied by information about revenue by major service line for purposes of allocating resources and evaluating financial performance. Accordingly, the Company has determined that it has a single reporting segment and operating unit structure.

The following table sets forth revenue and long-lived tangible assets by geographic area (in thousands):

	Years Ended December 31,
	2017		2016		2015
Revenue:
United States	$	118,764	$	110,071	$	105,228
International		21,263		17,302		5,017
Total revenue	$	140,027	$	127,373	$	110,245

	As of December 31,
	2017		2016
Long-lived tangible assets:
United States	$	19,775	$	13,519
International		730		887
Total long-lived tangible assets	$	20,505	$	14,406

Commitments and Contingencies

12 Months Ended

Dec. 31, 2017

Commitments And Contingencies Disclosure [Abstract]

Commitments and Contingencies

8. COMMITMENTS AND CONTINGENCIES

Lease Commitments —The Company leases office space and data center space under operating lease agreements and certain equipment under capital lease agreements with interest rates ranging from 3% to 7%.

Rent expense for operating leases was approximately $3.5 million, $3.1 million and $2.6 million for 2017, 2016 and 2015, respectively.

Lease commitments over the next five years as of December 31, 2017 can be summarized as follows (in thousands):

Years Ending December 31,	Operating Lease Commitments
2018	$	5,643
2019		4,380
2020		2,761
2021		1,368
2022		715
2023 and thereafter		195
Total lease commitments	$	15,062

Years Ending December 31,	Capital Lease Commitments
2018	$	2,712
2019		2,350
2020		1,152
Total minimum capital lease commitments		6,214
Less-amount representing interest		399
Total capital lease obligations		5,815
Less-current portion of capital lease obligations		2,444
Long-term portion of capital lease obligations	$	3,371

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, 2017 can be summarized as follows (in thousands):

Years Ending December 31,	Contract Commitments
2018	$	2,672
2019		2,553
2020		603
Total contract commitments	$	5,828

Litigation —From time to time, the Company is a party to legal actions. In the opinion of management, the outcome of these matters is not expected to have a material impact on the consolidated financial statements of the Company.

Equity

12 Months Ended

Dec. 31, 2017

Equity [Abstract]

Equity

9. EQUITY

Stock Offering — In April 2017, the Company completed an underwritten public offering (the “Offering”) of its common stock in which it sold 5,715,000 shares at a price of $3.50 per share. Subsequently, in May 2017, and as part of the Offering, the Company completed the sale of 472,846 additional shares of its common stock at the same price upon the exercise of the underwriters’ over-allotment option, for a total of 6,187,846 shares. The Offering resulted in total net proceeds of $20.0 million, after deducting underwriting discounts and commissions totaling $1.4 million and other offering expenses totaling $0.2 million.

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 in 2017, 2016 or 2015. The Company repurchased $0.6 million of its outstanding stock under this authorization.

Withhold to Cover —During the years ended December 31, 2017, 2016 and 2015, 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. Shares and cost of the Company’s common stock withheld to cover minimum statutory tax withholding requirements during the years ended December 31, 2017, 2016 and 2015 were as follows:

	Years Ended December 31,
	2017		2016		2015
Shares withheld		96,733		92,439		99,904
Cost (in thousands)	$	334	$	215	$	190

Warrants —Warrants to purchase 600,000 shares of common stock were issued as a component of the consideration transferred for the acquisition of the Zimbra assets (see Note 2). These warrants are exercisable at $3.00 per share, have a three-year life, and expire in August 2018.

Stock-based Compensation

12 Months Ended

Dec. 31, 2017

Disclosure Of Compensation Related Costs Sharebased Payments [Abstract]

Stock-based Compensation

10. STOCK-BASED COMPENSATION

The fair value of options granted to employees is estimated on the grant date using the Black-Scholes option valuation model. This valuation model for stock-based compensation expense requires the Company to make assumptions and judgments about the variables used in the calculation, including the fair value of the Company’s common stock, the expected term (the period of time that the options granted are expected to be outstanding), the volatility of the Company’s common stock, a risk-free interest rate and expected dividends. The Company also estimates forfeitures of unvested stock options. To the extent actual forfeitures differ from the estimates, the difference will be recorded as a cumulative adjustment in the period estimates are revised. No compensation cost is recorded for options that do not vest. The Company uses the simplified calculation of expected life described in the SEC’s Staff Accounting Bulletin No. 107, Share-Based Payment, and volatility is based on the blended average historic price volatility for Synacor Inc. and its industry peers based on daily price observations over a period equivalent to the expected term of the stock option grants. Industry peers consist of several public companies in the technology industry, some larger and some similar in size, at a similar stage of life cycle and having similar financial leverage. The risk-free rate is based on the U.S. Treasury yield curve in effect at the time of grant for periods corresponding with the expected life of the option. The Company uses an expected dividend yield of zero, as it does not anticipate paying any dividends in the foreseeable future. Expected forfeitures are based on the Company’s historical experience.

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,
	2017			2016			2015
Volatility		49	%		49	%		52	%
Expected dividend yield		—	%		—	%		—	%
Risk-free rate		2.0	%		1.4	%		1.7	%
Expected term (in years)		6.25			6.25			6.25

The Company recorded $2.5 million, $2.8 million, and $3.1 million of stock-based compensation expense for the years ended December 31, 2017, 2016, and 2015, respectively. No income tax deduction is allowed for incentive stock options (“ISOs”). Accordingly, no deferred income tax asset is recorded for the potential tax deduction related to these options. Expense related to stock option grants of non-qualified stock options (“NSOs”) results in a temporary 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, 2017, 2016 and 2015, is as follows (in thousands):

	Years Ended December 31,
	2017		2016		2015
Technology and development	$	744		921	$	936
Sales and marketing		636		784		942
General and administrative		1,110		1,066		1,237
Total stock-based compensation expense	$	2,490	$	2,771	$	3,115

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, 2017, authorize the Company to grant up to 10,615,572 stock options (ISOs and NSOs), stock appreciation rights, restricted stock, RSUs and performance cash awards. 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 three year period with one-sixth vesting at the end of each six-month period.

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, 2017 is as follows:

	Number of Stock Options			Weighted Average Exercise Price		Aggregate Intrinsic Value (in thousands)		Weighted Average Remaining Contractual Term (in years)
Outstanding—January 1, 2017		8,756,174		$	2.53
Granted		1,559,000			3.17
Exercised		(969,223	)		2.22
Forfeited		(464,815	)		2.31
Expired		(402,923	)		4.64
Outstanding—December 31, 2017		8,478,213		$	2.60	$	1,222		6.99
Expected to vest—December 31, 2017		8,211,433		$	2.59	$	1,181		6.93
Vested and exercisable—December 31, 2017		5,165,238		$	2.59	$	636		6.09

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, 2017 was $2.30. The total intrinsic value of options exercised was $1.1 million, $0.7 million, and less than $0.1 million for the years ended December 31, 2017, 2016 and 2015, respectively. The weighted-average grant date fair value of options granted was $1.56 per share, $1.13 per share, and $0.95 per share for the years ended December 31, 2017, 2016 and 2015, respectively.

As of December 31, 2017, total unrecognized compensation cost, adjusted for estimated forfeitures, related to nonvested stock options was approximately $3.9 million, which is expected to be recognized over a weighted-average period of 2.5 years.

RSU Activity —A summary of RSU activity for the year ended December 31, 2017 is as follows:

	Number of RSUs			Weighted Average Fair Value
Unvested—January 1, 2017		319,889		$	2.71
Granted		—			—
Released		(242,276	)	$	2.47
Forfeited		(25,930	)	$	3.15
Unvested—December 31, 2017		51,683		$	3.62
Unvested expected to vest —December 31, 2017		51,683		$	3.62

As of December 31, 2017, total unrecognized compensation cost, adjusted for estimated forfeitures, related to RSUs was $0.2 million, which is expected to be recognized over the next 1.35 years.

Net Loss Per Common Share Data

12 Months Ended

Dec. 31, 2017

Earnings Per Share [Abstract]

Net Loss Per Common Share Data

11. 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. The dilutive effect of these potential common shares is reflected in diluted earnings per share by application of the treasury stock method.

The following table presents the calculation of basic and diluted net loss per share for the years ended December 31, 2017, 2016 and 2015 (in thousands, except share and per share amounts):

	Year Ended December 31,
	2017			2016			2015
Basic net loss per share:
Numerator:
Net loss	$	(9,777	)	$	(10,740	)	$	(3,474	)
Denominator:
Weighted-average common shares outstanding		36,381,299			30,251,685			28,213,838
Basic net loss per share	$	(0.27	)	$	(0.36	)	$	(0.12	)
Diluted net loss per share:
Numerator:
Net loss	$	(9,777	)	$	(10,740	)	$	(3,474	)
Denominator:
Number of shares used in the basic computation		36,381,299			30,251,685			28,213,838
Add weighted-average effect of dilutive securities:
Stock options, RSUs and warrants		—			—			—
Number of shares used in diluted calculation		36,381,299			30,251,685			28,213,838
Dilutive net loss per share	$	(0.27	)	$	(0.36	)	$	(0.12	)

Stock options, warrants and RSUs are not included in the calculation of diluted net loss per share for the years ended December 31, 2017, 2016 and 2015 because the Company had a net loss for those years. The inclusion of these equity awards would have had an antidilutive effect on the 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,
	2017		2016		2015
Antidilutive Equity Awards:
Stock options and RSUs		8,529,896		9,076,063		9,133,513
Warrants		480,000		480,000		480,000

Sale of Investment	12 Months Ended
Sale of Investment	Dec. 31, 2017
Investments All Other Investments [Abstract]
Sale of Investment	12. SALE OF INVESTMENT In July 2013, the Company made a $1.0 million strategic investment in the form of a convertible promissory note (the “note”) in Blazer and Flip Flops, Inc. (“B&FF”), doing business as “The Experience Engine”, a privately-held Delaware corporation. The Company desired to gain access to the expertise of B&FF’s principals in integrating its customers’ systems with their customers’ devices, including smartphones and tablets. In March 2015, the note was converted into preferred stock of B&FF and was subsequently accounted for as a cost method investment. In August 2017, B&FF was acquired by accesso Technology Group, plc, a U.K. public company, and the Company received, in connection with the sale of its investment in B&FF, cash consideration of $2.2 million and stock in the acquiring company valued at approximately $0.4 million. This stock was sold in September 2017 for $0.5 million. In addition, the Company stands to receive contingent consideration of cash and stock totaling $0.5 million, which was held back to secure B&FF’s indemnification obligations under the purchase and sale agreement. These amounts have been valued at $0.3 million, and may be received after the 18-month indemnification period expires. The Company recorded a gain on sale of investment of $2.0 million in the year ended December 31, 2017.

Employee Benefit Plan	12 Months Ended
Employee Benefit Plan	Dec. 31, 2017
Postemployment Benefits [Abstract]
Employee Benefit Plan	13. 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 $0.3 million in matching funds during the year ended December 31, 2017. No matching contributions were made during the years ended December 31, 2016 or 2015.

The Company and Summary of Significant Accounting Policies (Policies)

12 Months Ended

Dec. 31, 2017

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.

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		5 years
Computer software		3 years
Furniture and fixtures		7 years
Other		3–5 years

Computer hardware and software under capital 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. There have been no material impairments to long-lived assets in any of the years presented.

The components and original estimated economic lives of our amortizable intangible assets were as follows as of December 31, 2017 and 2016:

	Original Estimated Economic Life	2017			2016
		(Dollars in thousands)
Gross amortizable intangible assets:
Customer relationships	10 years	$	14,780		$	14,780
Trademark	5 years		300			300
Developed technology	5 years		2,330			2,330
Total gross amortizable intangible assets			17,410			17,410
Accumulated amortization:
Customer relationships			(3,577	)		(1,961	)
Trademark			(137	)		(78	)
Developed technology			(1,001	)		(534	)
Total accumulated amortization			(4,715	)		(2,573	)
Amortizable intangible assets, net		$	12,695		$	14,837

Future amortization expense of amortizable intangible assets will be as follows (in thousands): $2,142 in each of years ending December 31, 2018 and 2019, $2,031 in the year ending December 31, 2020, $1,411 in the year ending December 31, 2021, and $4,969 thereafter.

Goodwill

Goodwill —Goodwill represents the excess of the purchase price over the fair value of the net tangible and intangible assets acquired in a business combination. Goodwill is not amortized, but is tested for impairment on an annual basis and more frequently if impairment indicators are present. Goodwill is considered impaired if the carrying value of the reporting unit exceeds its estimated fair value. The Company has determined it is a single reporting unit, and estimates its fair value using a market approach. If the carrying value of the reporting unit were to exceed its estimated fair value, a goodwill impairment charge is required. This charge would be recognized in the amount by which the carrying value of the reporting unit exceeds the estimated fair value of the reporting unit. The Company conducts its annual goodwill impairment test as of October 1st. For the years ended December 31, 2017, 2016 and 2015, the Company determined goodwill was not impaired.

The change in goodwill is as follows for the years ended December 31, 2017 and 2016 (in thousands):

	Years Ended December 31,
	2017		2016
Balance, beginning of year	$	15,943	$	15,187
Technorati acquisition related goodwill (Note 2)		-		751
Foreign currency revaluation		12		5
Balance, end of year	$	15,955	$	15,943

Revenue Recognition

Revenue Recognition —The Company derives revenue from two categories: 1) Managed Portals and Advertising activities, and 2) Recurring and Fee-Based. Revenue is recognized when the following criteria are met: persuasive evidence of an arrangement exists; delivery has occurred; the selling price is fixed or determinable; and collectability is reasonably assured. The following table shows the revenue in each category for the years ended December 31, 2017, 2016 and 2015 (in thousands):

	Year Ended December 31,
	2017		2016		2015
Search and digital advertising	$	83,556	$	74,889	$	78,316
Recurring and fee-based		56,471		52,484		31,929
Total revenue	$	140,027	$	127,373	$	110,245

The Company uses internet advertising to generate revenue from the traffic on its Managed Portals categorized as search advertising and digital advertising.

•

In the case of search advertising, the Company has a revenue-sharing relationship with Google, pursuant to which it includes a Google-branded search tool on its Managed Portals. When a 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, which is recognized as revenue.

•

Digital advertising includes video, image and text advertisements delivered on one of the Company’s Managed Portals, or through its advertising network. Advertising inventory is filled with advertisements sourced by the Company’s direct sales force, independent advertising sales representatives, and also advertising network partners. Revenue is generated for the Company 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 calculated on a per-impression or per-action basis. Revenue is recognized as the impressions are delivered or the actions occur, according to contractual rates.

Recurring and Fee-Based revenue represents subscription fees and other fees that the Company receives from customers for the use of its proprietary technology, including the use of, or access to, email, video solutions, Cloud ID, security services, games and other premium services and paid content. Monthly subscriber levels typically form the basis for calculating and generating Recurring and Fee-Based revenue. They are generally determined by multiplying a per-subscriber per-month fee by the number of subscribers using the particular services being offered or consumed. In other cases, the fee is fixed. Revenue is recognized from customers as the services are delivered.

The Company evaluates its relationship between search and digital advertising revenue and its Managed Portal customers in accordance with Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 605-45, Principal Agent Considerations. The Company has determined that the search and digital advertising revenue derived from the internet traffic on Managed Portals is reported on a gross basis because the Company is the primary obligor (Synacor is responsible to its customers for fulfilling search and digital advertising services and premium and other services), is involved in the service specifications, performs part of the service, has discretion in supplier selection, has latitude in establishing price and bears credit risk.

Certain Recurring and Fee-Based revenue is derived from the sale of software licenses on a perpetual or subscription basis, for which revenue is recognized upon receipt of an external agreement and delivery of the software, provided the fees are fixed and determinable, and collection is probable. For agreements that include one or more elements to be delivered at a future date, revenue is recognized using the residual method, under which the vendor-specific objective evidence (“VSOE”) of fair value of the undelivered elements is deferred, and the remaining portion of the agreement fee is recognized as license revenue. If VSOE of fair value has not been established for certain undelivered elements, revenue is deferred until those elements have been delivered or their fair values have been determined.

Effective January 1, 2018, the Company has adopted FASB ASC 606, Revenue from Contracts with Customers (ASC 606). See Applicable Recent Accounting Pronouncements below.

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

Concentrations of Risk — As of December 31, 2017 and 2016, the Company had concentrations equal to or exceeding 10% of the Company’s accounts receivable as follows:

	Accounts Receivable
	December 31, 2017			December 31, 2016
Google advertising affiliate		16	%	*
Google search		7	%	*
Advertising customer		12	%	*
* - Less than 10%

For the years ended December 31, 2017, 2016 and 2015 the Company had concentrations equal to or exceeding 10% of the Company’s revenue as follows:

	Revenue
	2017			2016			2015
Google advertising affiliate		21	%		12	%	*
Google search		15	%		12	%		28	%
* - Less than 10%

For the years ended December 31, 2017, 2016 and 2015, the following customers received revenue-share payments equal to or exceeding 10% of the Company’s cost of revenue.

	Cost of Revenue
	2017			2016			2015
Customer A		20	%	*			*
Customer B		12	%		22	%		26	%
Customer C	*			*				10	%
* - Less than 10%

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.

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, CloudID 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 are amortized over the estimated useful life of the applicable software and such amortization is included in cost of revenue. In 2017, 2016 and 2015, the Company incurred a total of $6.5 million, $4.5 million and $2.8 million of combined internal and external costs related to the application development stage. Of this amount, $2.8 millio, $0.8 million and $0 were incurred for the development of software for sale or license in 2017, 2016 and 2015, respectively. Internal and external training and maintenance costs are expensed as incurred.

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. Advertising costs totaled $0.4 million, $0.4 million and $0.1 million in 2017, 2016 and 2015, respectively.

General and Administrative

General and Administrative —General and administrative expenses consist primarily of compensation related expenses for executive management, finance, accounting, human resources, professional fees and other administrative functions.

Earnings (Loss) Per Share

Earnings (Loss) Per Share —Basic earnings (loss) per share (“EPS”) is calculated in accordance with 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 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.

Business Combinations