SYNACOR, INC., 10-Q filed on 11/14/2016
Quarterly Report
Document and Entity Information
9 Months Ended
Sep. 30, 2016
Nov. 11, 2016
Document And Entity Information [Abstract]
 
 
Document Type
10-Q 
 
Amendment Flag
false 
 
Document Period End Date
Sep. 30, 2016 
 
Document Fiscal Year Focus
2016 
 
Document Fiscal Period Focus
Q3 
 
Trading Symbol
SYNC 
 
Entity Registrant Name
Synacor, Inc. 
 
Entity Central Index Key
0001408278 
 
Current Fiscal Year End Date
--12-31 
 
Entity Filer Category
Smaller Reporting Company 
 
Entity Common Stock, Shares Outstanding
 
30,555,316 
Condensed Consolidated Balance Sheets - Unaudited (USD $)
In Thousands, unless otherwise specified
Sep. 30, 2016
Dec. 31, 2015
CURRENT ASSETS:
 
 
Cash and cash equivalents
$ 15,028 
$ 15,697 
Accounts receivable, net of allowance of $157 and $372, respectively
19,993 
24,341 
Prepaid expenses and other current assets
4,599 
3,290 
Total current assets
39,620 
43,328 
PROPERTY AND EQUIPMENT, net
14,815 
14,377 
GOODWILL
15,949 
15,187 
INTANGIBLE ASSETS, net
15,376 
14,798 
OTHER LONG-TERM ASSETS
1,303 
1,336 
Total assets
87,063 
89,026 
CURRENT LIABILITIES:
 
 
Accounts payable
11,905 
9,004 
Accrued expenses and other current liabilities
13,265 
9,765 
Current portion of deferred revenue
9,946 
11,295 
Current portion of capital lease obligations
1,170 
1,574 
Total current liabilities
36,286 
31,638 
LONG-TERM PORTION OF CAPITAL LEASE OBLIGATIONS
1,151 
1,007 
LONG-TERM DEBT
5,000 
5,000 
DEFERRED REVENUE
2,878 
3,225 
OTHER LONG-TERM LIABILITIES
486 
2,052 
Total liabilities
45,801 
42,922 
COMMITMENTS AND CONTINGENCIES (Note 8)
   
   
STOCKHOLDERS' EQUITY:
 
 
Preferred stock - par value $0.01 per share; authorized 10,000,000 shares; none issued
   
   
Common stock - par value $0.01 per share; authorized 100,000,000 shares; 31,184,345 shares issued and 30,467,530 shares outstanding at September 30, 2016 and 30,636,327 shares issued and 29,983,279 shares outstanding at December 31, 2015
312 
306 
Additional paid-in capital
116,224 
113,238 
Accumulated deficit
(73,797)
(66,110)
Accumulated other comprehensive (loss) income
(17)
Treasury stock - at cost, 716,815 shares at September 30, 2016 and 653,048 shares at December 31, 2015
(1,460)
(1,332)
Total stockholders' equity
41,262 
46,104 
Total liabilities and stockholders' equity
$ 87,063 
$ 89,026 
Condensed Consolidated Balance Sheets - Unaudited (Parenthetical) (USD $)
In Thousands, except Share data, unless otherwise specified
Sep. 30, 2016
Dec. 31, 2015
Statement of Financial Position [Abstract]
 
 
Allowance for doubtful accounts
$ 157 
$ 372 
Preferred stock, par value
$ 0.01 
$ 0.01 
Preferred stock, shares authorized
10,000,000 
10,000,000 
Preferred stock, shares issued
Common stock, par value
$ 0.01 
$ 0.01 
Common stock, shares authorized
100,000,000 
100,000,000 
Common stock, shares issued
31,184,345 
30,636,327 
Common stock, shares outstanding
30,467,530 
29,983,279 
Treasury stock, shares
716,815 
653,048 
Condensed Consolidated Statements of Operations - Unaudited (USD $)
In Thousands, except Share data, unless otherwise specified
3 Months Ended 9 Months Ended
Sep. 30, 2016
Sep. 30, 2015
Sep. 30, 2016
Sep. 30, 2015
Income Statement [Abstract]
 
 
 
 
REVENUE
$ 31,721 
$ 26,351 
$ 92,457 
$ 77,797 
COSTS AND OPERATING EXPENSES:
 
 
 
 
Cost of revenue (exclusive of depreciation and amortization shown separately below)
14,611 
13,298 
41,099 
40,205 
Technology and development (exclusive of depreciation and amortization shown separately below)
6,791 
4,361 
19,255 
13,788 
Sales and marketing
5,907 
4,274 
17,177 
11,475 
General and administrative (exclusive of depreciation and amortization shown separately below)
4,871 
3,712 
15,027 
10,437 
Depreciation and amortization
2,414 
1,560 
6,782 
4,716 
Total costs and operating expenses
34,594 
27,205 
99,340 
80,621 
LOSS FROM OPERATIONS
(2,873)
(854)
(6,883)
(2,824)
OTHER (EXPENSE) INCOME, net
(38)
(32)
206 
(31)
INTEREST EXPENSE
(75)
(35)
(227)
(144)
LOSS BEFORE INCOME TAXES AND EQUITY INTEREST
(2,986)
(921)
(6,904)
(2,999)
INCOME TAX PROVISION
379 
10 
783 
30 
LOSS IN EQUITY INTEREST
 
 
 
(57)
NET LOSS
$ (3,365)
$ (931)
$ (7,687)
$ (3,086)
NET LOSS PER SHARE:
 
 
 
 
Basic
$ (0.11)
$ (0.03)
$ (0.26)
$ (0.11)
Diluted
$ (0.11)
$ (0.03)
$ (0.26)
$ (0.11)
WEIGHTED AVERAGE SHARES USED TO COMPUTE NET LOSS PER SHARE:
 
 
 
 
Basic
30,260,172 
27,924,939 
30,108,725 
27,617,125 
Diluted
30,260,172 
27,924,939 
30,108,725 
27,617,125 
Condensed Consolidated Statements of Comprehensive Loss - Unaudited (USD $)
In Thousands, unless otherwise specified
3 Months Ended 9 Months Ended
Sep. 30, 2016
Sep. 30, 2015
Sep. 30, 2016
Sep. 30, 2015
Statement of Comprehensive Income [Abstract]
 
 
 
 
Net loss
$ (3,365)
$ (931)
$ (7,687)
$ (3,086)
Other comprehensive income (loss):
 
 
 
 
Changes in foreign currency translation adjustment
112 
(27)
(19)
(33)
Comprehensive loss
$ (3,253)
$ (958)
$ (7,706)
$ (3,119)
Condensed Consolidated Statements of Cash Flows - Unaudited (USD $)
In Thousands, unless otherwise specified
9 Months Ended
Sep. 30, 2016
Sep. 30, 2015
CASH FLOWS FROM OPERATING ACTIVITIES:
 
 
Net loss
$ (7,687)
$ (3,086)
Adjustments to reconcile net loss to net cash provided by operating activities
 
 
Depreciation and amortization
6,782 
4,716 
Stock-based compensation expense
2,104 
2,352 
Reduction of estimated fair value of contingent consideration
90 
 
Loss in equity interest
 
57 
Changes in operating assets and liabilities, net of effect of acquisitions:
 
 
Accounts receivable, net
5,313 
3,169 
Prepaid expenses and other assets
(1,282)
643 
Accounts payable
1,842 
(1,003)
Accrued expenses and other liabilities
1,245 
36 
Deferred revenue
(1,696)
(706)
Net cash provided by operating activities
6,711 
6,178 
CASH FLOWS FROM INVESTING ACTIVITIES:
 
 
Acquisitions, net of cash acquired
(2,500)
(17,260)
Purchases of property and equipment
(4,246)
(2,474)
Net cash used in investing activities
(6,746)
(19,734)
CASH FLOWS FROM FINANCING ACTIVITIES:
 
 
Repayments on capital lease obligations
(1,242)
(975)
Proceeds from bank financing
 
4,940 
Proceeds from exercise of common stock options
744 
70 
Payment of minimum tax withholdings in exchange for treasury stock shares
(128)
 
Deferred acquisition payment
 
(495)
Net cash (used in) provided by financing activities
(626)
3,540 
Effect of exchange rate changes on cash and cash equivalents
(8)
(15)
NET DECREASE IN CASH AND CASH EQUIVALENTS
(669)
(10,031)
Cash and cash equivalents, beginning of period
15,697 
25,600 
Cash and cash equivalents, end of period
15,028 
15,569 
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
 
 
Cash paid for interest
247 
144 
Cash paid for income taxes
439 
154 
SUPPLEMENTAL DISCLOSURES OF NON-CASH INVESTING AND FINANCING TRANSACTIONS:
 
 
Liability for estimated additional acquisition consideration
567 
 
Contingent consideration
 
1,600 
Fair value of common stock and warrants in acquisition
 
4,395 
Property, equipment and service center contracts financed under capital lease obligations
982 
637 
Accrued property and equipment expenditures
463 
82 
Stock-based compensation capitalized to property and equipment
142 
134 
Treasury stock received to satisfy minimum withholding liabilities
 
$ 77 
The Company and Summary of Significant Accounting Principles
The Company and Summary of Significant Accounting Principles
1. The Company and Summary of Significant Accounting Principles

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, and enterprises. Synacor delivers engaging, multiscreen experiences and advertising to their consumers that require scale, actionable data and sophisticated implementation.

Basis of Presentation

The interim unaudited condensed 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. In the opinion of the Company’s management, the interim unaudited condensed consolidated financial statements include all adjustments, which include only normal recurring adjustments, necessary for the fair presentation of the Company’s financial position for the periods presented. These interim unaudited condensed consolidated financial statements are not necessarily indicative of the results expected for the full fiscal year or for any subsequent period.

The accompanying condensed consolidated balance sheet as of December 31, 2015 was derived from the audited financial statements as of that date, but does not include all the information and footnotes required by U.S. GAAP. These financial statements should be read in conjunction with the consolidated financial statements and related notes included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2015.

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. Such estimates primarily relate to unsettled transactions and events as of the date of the financial statements. Accordingly, actual results may differ from estimated amounts.

Concentrations of Risk

As of September 30, 2016 and December 31, 2015, the Company had concentrations equal to or exceeding 10% of the Company’s accounts receivable as follows:

 

     Accounts Receivable  
     September 30,
2016
    December 31,
2015
 

Google

     13     14

 

For the three and nine months ended September 30, 2016 and 2015, the Company had concentrations equal to or exceeding 10% of the Company’s revenue as follows:

 

     Revenue  
     Three Months Ended
September 30,
    Nine Months Ended
September 30,
 
     2016     2015     2016     2015  

Google

     10     28     14     31

For the three and nine months ended September 30, 2016 and 2015, the following customers received revenue-share payments equal to or exceeding 10% of the Company’s cost of revenue. The costs represent revenue share paid to customers for their supply of Internet traffic on the Company’s start experiences:

 

     Cost of Revenue  
    

Three Months Ended

September 30,

   

Nine Months Ended

September 30,

 
     2016     2015     2016     2015  

Customer A

     22     29     26     28

Customer B

     Less than 10     10     10     10

Customer C

     Less than 10     10     Less than 10     10

Recent Accounting Pronouncements

In May 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standard Update (“ASU”) 2014-09 (ASU 2014-09) Revenue from Contracts with Customers. ASU 2014-09 supersedes the revenue recognition requirements in “Revenue Recognition (Topic 605)” and requires an entity to recognize revenue when it transfers promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled to in exchange for those goods or services. In August 2015, the FASB issued ASU 2015-14 Revenue from Contracts with Customers: Deferral of the Effective Date, which deferred the effective date of ASU 2014-09 to annual reporting periods beginning after December 15, 2017, with earlier application permitted as of annual reporting periods beginning after December 15, 2016. In March 2016, the FASB issued ASU 2016-08, Revenue from Contracts with Customers (Topic 606): Principal versus Agent Considerations (Reporting Revenue Gross versus Net), to clarify the implementation guidance on principal versus agent. In April 2016, the FASB issued ASU 2016-10, Revenue from Contracts with Customers (Topic 606): Identifying Performance Obligations and Licensing, providing additional guidance relating to identifying performance obligations under ASU 2014-09 as well as licensing.

The Company is currently in the process of assessing the financial impact of adopting these ASUs and the methods of adoption. The Company currently recognizes subscription revenue from its’ Email/Collaboration contracts over the life of the contracts (which are typically six months or longer). The Company has tentatively concluded that it is likely that this new guidance will require it to recognize a portion of the revenue from those contracts upon delivery, at the inception of the contracts, which would have the effect of accelerating recognition of revenue on such contracts, and may have a material impact on the Company’s consolidated financial statements. The standard will be effective for the Company beginning January 1, 2018, and adoption as of the original effective date of January 1, 2017 is permitted. The Company anticipates adopting the standard as of its effective date of January 1, 2018. The guidance permits two methods of adoption: retrospectively to each prior reporting period presented (full retrospective method), or retrospectively with the cumulative effect of initially applying the guidance recognized at the date of initial application (the cumulative catch-up transition method). The Company has not yet determined which transition method it will use.

 

In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842). The objective of this update is to increase transparency and comparability among organizations by recognizing lease assets and lease liabilities on the balance sheet and disclosing key information about leasing arrangements. This ASU is effective for fiscal years beginning after December 15, 2018, including interim periods within those annual periods and is to be applied utilizing a modified retrospective approach. Early adoption is permitted. The Company is in the process of assessing the impact of the adoption of this ASU on its consolidated financial statements.

In March 2016, the FASB issued ASU 2016-09, Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting. The objective of this update is to simplify several aspects of the accounting for employee share-based payment transactions, including the income tax consequences, classification of awards as either equity or liabilities, and classification on the statement of cash flows. This ASU is effective for fiscal years beginning after December 15, 2016, including interim periods within those fiscal years. Early adoption is permitted, and the ASU provides that its different provisions be applied prospectively, retrospectively, or using a modified retrospective method, depending on the provision. The Company is in the process of assessing the impact of the adoption of this ASU on its consolidated financial statements.

Acquisitions
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 expects the acquisition of Technorati to drive additional advertising demand, to accelerate its content and advertising syndication strategy by giving the Company access to over 1,000 new publishers, and to add new tools for publishers to its existing platform. The Company expects to realize 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, withheld $0.5 million of the purchase price to secure Technorati’s indemnification obligations under the Asset Purchase Agreement, and owes Technorati approximately $0.1 million in post-closing working capital adjustments. Pursuant to the terms of the Asset Purchase Agreement, Technorati shall 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 survive for 12 months following the Closing, with longer survival periods for certain fundamental representations and warranties.

Consideration and Allocation of Purchase Price –

The transaction was accounted for as a purchase in accordance with FASB Accounting Standards Codification (“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 estimated transaction consideration, as well as the preliminary 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   
  

 

 

 

While the Company has used its best estimates and assumptions to value the assets acquired and liabilities assumed, the purchase price allocation is preliminary and could change during the measurement period, not to exceed one year, if new information is obtained about the facts and circumstances that existed as of the Closing, that if known would have resulted in the recognition of additional assets or liabilities or resulted in changes in the recorded values of assets and liabilities. It is expected that acquired goodwill will be deductible for United States tax purposes. The Company will amortize technology and customer and publisher relationships over estimated useful lives of five years.

Acquisition costs of $0.1 million were incurred during the first quarter of 2016 and charged to general and administrative expense.

Zimbra –

As more fully discussed in the Company’s Annual Report on Form 10-K for the year ended December 31, 2015, 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”).

 

Pro Forma Results

The following unaudited pro forma information presents the combined results of the Company’s operations as if the acquisition of Zimbra had been completed on January 1, 2015, the beginning of the comparable prior 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 (vi) 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 purposes 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 periods presented, nor are they indicative of future results of operations.

Set forth below is the unaudited pro forma consolidated results of operations of the Company and Zimbra for the three and nine months ended September 30, 2015 as if the Acquisition had occurred on January 1, 2015 (in thousands, except per share amounts):

 

     Three Months      Nine Months  
     Ended      Ended  
     September 30,      September 30,  
     2015      2015  

Revenue

   $ 32,434       $ 97,066   

Operating income (loss)

     8       $ (3,911

Net loss

     (276    $ (3,698

Net loss per share (basic and diluted)

   $ (0.01    $ (0.12
Fair Value Measurements
Fair Value Measurements
3. Fair Value Measurements

In August 2015, the Company and Zimbra, Inc. (now known as “TZ Holdings”) entered into an agreement under which the Company acquired certain assets relating to TZ Holdings’ email/collaboration products and services business, including certain of its foreign subsidiaries, for cash consideration of $17.3 million, 2.4 million shares of common stock and warrants to purchase 480,000 shares of common stock (collectively valued at $3.2 million). The Company also held back an additional 600,000 shares of common stock and warrants to purchase an additional 120,000 shares of common stock (collectively valued at $0.8 million) to secure TZ Holdings’ indemnification claims including pending claims.

Additionally, TZ Holdings is eligible to receive cash consideration of up to $2.0 million (the “Earn-Out Consideration”) upon the satisfaction of certain business performance milestones following the closing of the transaction, subject to and contingent upon any reduction to satisfy indemnification claims including pending claims. Should the business performance milestones be met, the payments under this arrangement will be partially due in the fourth quarter of 2016 and partially in the second quarter of 2017. The fair value of the Earn-Out Consideration was originally determined to be $1.6 million, and was adjusted to $1.5 million in the third quarter of 2016, with the adjustment credited to Sales and Marketing expense. The liability for Earn-Out Consideration is included in accrued expenses and other current liabilities in the accompanying condensed consolidated balance sheet as of September 30, 2016. Approximately $0.9 million of the liability for Earn-Out Consideration was paid to TZ Holdings subsequent to September 30, 2016.

 

The provisions of ASC Topic 820, Fair Value Measurements and Disclosures, establish a framework for measuring the fair value in accordance with U.S. GAAP and establish 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.

The Company classifies the Earn-Out Consideration within Level 3 because it is valued using unobservable inputs. There was a decrease of $0.1 million to the Company’s estimate of the fair value of the Earn-Out Consideration during the three and nine months ended September 30, 2016.

Goodwill and Other Intangible Assets
Goodwill and Other Intangible Assets
4. Goodwill and Other Intangible Assets

The change in goodwill is as follows for nine months ended September 30, 2016 (in thousands):

 

     Nine Months Ended  
     September 30, 2016  

Balance – beginning of period

   $ 15,187   

Acquisition of Technorati

     751   

Effect of foreign currency translation

     11   
  

 

 

 

Balance – end of period

   $ 15,949   
  

 

 

 

Intangible assets, net consisted of the following (in thousands):

 

     September 30,      December 31,  
     2016      2015  

Customer and publisher relationships

   $ 14,780       $ 13,400   

Technology

     2,330         1,600   

Trademark

     300         300   
  

 

 

    

 

 

 
     17,410         15,300   

Less accumulated amortization

     (2,034      (502
  

 

 

    

 

 

 

Intangible assets, net

   $ 15,376       $ 14,798   
  

 

 

    

 

 

 

Amortization of intangible assets for the three months ended September 30, 2016 and 2015 was $0.5 million and $0.1 million, respectively. Amortization of intangible assets for the nine months ended September 30, 2016 and 2015 was $1.5 million and $0.1 million, respectively.

Property and Equipment - Net
Property and Equipment - Net
5. Property and Equipment – Net

Property and equipment, net consisted of the following (in thousands):

 

     September 30,      December 31,  
     2016      2015  

Computer equipment (1)

   $ 23,542       $ 23,324   

Computer software

     18,916         14,813   

Furniture and fixtures

     2,001         1,945   

Leasehold improvements

     1,405         1,532   

Other

     252         252   
  

 

 

    

 

 

 
     46,116         41,866   

Less accumulated depreciation (2)

     (31,301      (27,489
  

 

 

    

 

 

 

Property and equipment, net

   $ 14,815       $ 14,377   
  

 

 

    

 

 

 

Depreciation expense for the three months ended September 30, 2016 and 2015 was $1.9 million and $1.5 million, respectively. Depreciation expense for the nine months ended September 30, 2016 and 2015 was $5.3 million and $4.6 million, respectively.

Notes:

 

(1) Includes equipment and software held under capital leases of $5.1 million and $4.1 million as of September 30, 2016 and December 31, 2015, respectively.
(2) Includes $3.0 million and $1.8 million of accumulated depreciation of equipment under capital leases as of September 30, 2016 and December 31, 2015, respectively.
Accrued Expenses and Other Current Liabilities
Accrued Expenses and Other Current Liabilities
6. Accrued Expenses and Other Current Liabilities

Accrued expenses and other current liabilities consisted of the following (in thousands):

 

     September 30,      December 31,  
     2016      2015  

Accrued compensation

   $ 6,167       $ 6,112   

Accrued content fees

     2,942         1,964   

Contingent consideration

     1,510         —     

Accrued business acquisition consideration

     567         —     

Other

     2,079         1,689   
  

 

 

    

 

 

 

Total

   $ 13,265       $ 9,765   
  

 

 

    

 

 

 
Information About Segment and Geographic Areas
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 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. Profitability measures by service line are not prepared or used. The Company has one business activity and there are no segment managers who are held accountable for operations, operating results or plans for levels or components below the company level. Accordingly, the Company has determined that it has a single reporting segment and operating unit structure.

 

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

 

     Three Months Ended
September 30,
     Nine Months Ended
September 30,
 
     2016      2015      2016      2015  

Revenue:

           

United States

   $ 27,169       $ 25,556       $ 79,787       $ 76,623   

International

     4,552         795         12,670         1,174   
  

 

 

    

 

 

    

 

 

    

 

 

 

Total revenue

   $ 31,721       $ 26,351       $ 92,457       $ 77,797   
  

 

 

    

 

 

    

 

 

    

 

 

 
                   September 30,      December 31,  
                   2016      2015  

Long-lived tangible assets:

           

United States

         $ 13,842       $ 12,909   

Canada

           627         726   

Other international

           346         742   
        

 

 

    

 

 

 

Total long-lived tangible assets

         $ 14,815       $ 14,377   
        

 

 

    

 

 

 
Commitments and Contingencies
Commitments and Contingencies
8. Commitments and Contingencies

Contract Commitments — The Company is obligated to make payments under various contracts with vendors and other business partners, principally for revenue-share and content arrangements. Contract commitments as of September 30, 2016 are summarized as follows (in thousands):

 

Year ending December 31,

  

2016 (remaining three months)

   $ 1,050   

2017

     2,080   

2018

     720   
  

 

 

 

Total

   $ 3,850   
  

 

 

 

Contingent Consideration

In connection with the Company’s acquisition of certain email/collaboration assets from TZ Holdings in September 2015 (see Notes 2 and 3), the Company is obligated to pay contingent cash consideration totaling up to $2.0 million upon the satisfaction of certain business performance milestones following the closing of the transaction, subject to and contingent upon any reduction to satisfy indemnification claims including pending claims. This liability is valued at $1.5 million, and at September 30, 2016 is included in accrued expenses and other current liabilities. Approximately $0.9 million of this liability was paid subsequent to September 30, 2016. Additionally, the Company held back 600,000 shares of common stock and warrants to purchase 120,000 shares of common stock (collectively valued at $0.8 million) to secure indemnification claims against TZ Holdings including pending claims.

In connection with the Company’s acquisition of the Technorati assets (see Note 2), the Company withheld $0.5 million of the purchase price to secure Technorati’s indemnification obligations under the Asset Purchase Agreement, with payment under this arrangement due in the first quarter of 2017. Additionally, the Company owes approximately $0.1 million in post-closing working capital adjustments. This amount is included in accrued expenses and other current liabilities at September 30, 2016.

 

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.

Stock-based Compensation
Stock-based Compensation
9. Stock-based Compensation

The Company has stock-based employee compensation plans for which compensation cost is recognized in its financial statements. The cost is measured at the grant date, based on the fair value of the award, determined using the Black-Scholes option pricing model, and is recognized as an expense over the employee’s requisite service period (generally the vesting period of the equity award).

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 tax asset. No such asset is recognized in the accompanying balance sheets as the Company has fully reserved its net deferred tax assets due to the uncertainty of future realization of those assets.

Total stock-based compensation expense included in the accompanying condensed consolidated statements of operations for the periods presented, is as follows (in thousands):

 

     Three Months Ended
September 30,
     Nine Months Ended
September 30,
 
     2016      2015      2016      2015  

Technology and development

   $ 238       $ 224       $ 681       $ 694   

Sales and marketing

     173         231         604         716   

General and administrative

     269         355         819         942   
  

 

 

    

 

 

    

 

 

    

 

 

 

Total stock-based compensation expense

   $ 680       $ 810       $ 2,104       $ 2,352   
  

 

 

    

 

 

    

 

 

    

 

 

 

Stock Option Activity – A summary of the stock option activity for the nine months ended September 30, 2016 is presented below:

 

     Number of
Shares
     Weighted
Average
Exercise
Price
     Weighted
Average
Remaining
Contractual
Term (years)
     Aggregate
Intrinsic
Value (in
thousands)
 

Outstanding at January 1, 2016

     8,695,918       $ 2.57         

Granted

     1,503,500       $ 2.20         

Exercised

     (382,781    $ 2.25         

Forfeited or expired

     (551,438    $ 2.01         
  

 

 

          

Outstanding at September 30, 2016

     9,265,199       $ 2.55         6.76       $ 5,913   
  

 

 

          

Vested and expected to vest at September 30, 2016

     8,862,505       $ 2.57         6.76       $ 5,590   
  

 

 

          

Vested and exercisable at September 30, 2016

     4,804,258       $ 2.98         4.96       $ 2,178   
  

 

 

          

Aggregate intrinsic value represents the difference between the Company’s closing stock price of its common stock and the exercise price of outstanding, in-the-money options. The Company’s closing stock price as reported on the NASDAQ Global Market as of September 30, 2016 was $2.91 per share. The total intrinsic value of options exercised for the nine months ended September 30, 2016 was $0.3 million. The weighted average fair value of options issued during the nine months ended September 30, 2016 amounted to $1.08 per option share.

As of September 30, 2016, the unrecognized compensation cost related to non-vested options granted, for which vesting is probable, and adjusted for estimated forfeitures, was approximately $4.5 million. This cost is expected to be recognized over a weighted-average period of 2.6 years. The total fair value of shares vested was $1.5 million for the nine months ended September 30, 2016.

In addition, the Company may, from time to time, grant Restricted Stock Units (“RSUs”) to its employees. A summary of RSU activity for the nine months ended September 30, 2016 is presented below:

 

     Number of
Shares
     Weighted
Average Fair
Value
 

Unvested - January 1, 2016

     437,595       $ 2.31   

Shares granted

     139,500       $ 3.63   

Shares vested

     (160,811    $ 2.53   

Forfeited or expired

     (16,712    $ 2.69   
  

 

 

    

Unvested - September 30, 2016

     399,572       $ 2.67   
  

 

 

    

Expected to vest - September 30, 2016

     381,673       $ 2.64   
  

 

 

    
Net Income (Loss) Per Common Share Data
Net Income (Loss) Per Common Share Data
10. Net Income (Loss) Per Common Share Data

Basic net income (loss) per share is computed using the weighted-average number of common shares outstanding during the period. Diluted net income (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, 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.

Stock options, warrants and RSUs are not included in the calculation of diluted net loss per share for the three and nine months ended September 30, 2016 and 2015 because the Company had a net loss for those periods. The inclusion of these equity awards would have had an antidilutive effect on the calculation of diluted loss per share. As such, the Company’s calculations of basic and diluted net loss per share are identical.

The following equivalent shares were excluded from the calculation of diluted net loss per share because their effect would have been anti-dilutive for the periods presented:

 

     Three Months Ended
September 30,
     Nine Months Ended
September 30,
 
     2016      2015      2016      2015  

Anti-dilutive equity awards:

           

Stock options and Restricted Stock Units

     9,664,771         8,223,520         9,664,771         8,223,520   

Warrants

     480,000         480,000         480,000         480,000   
Subsequent Events
Subsequent Events
11. Subsequent Events

Subsequent to September 30, 2016, the Company and certain of its subsidiaries, together with its lender, Silicon Valley Bank, amended the Company’s Loan and Security Agreement (the “Agreement”) to modify the financial covenants the Company must meet under the Agreement and the interest rate structure under the Agreement. Provided that the company’s liquidity coverage ratio (the ratio of cash plus eligible accounts receivable to borrowings under the Agreement) exceeds 2.75, borrowings bear interest at an annual rate of either 1.00% above the “prime rate” as published in The Wall Street Journal or LIBOR for the relevant period plus 3.50%, at the Company’s option. In the event that the liquidity coverage ratio is 2.75 or below, borrowings under the Agreement bear interest at an annual rate of 1.50% above the prime rate or 4.00% above LIBOR, at the Company’s option.

The Company and Summary of Significant Accounting Principles (Policies)

Basis of Presentation

The interim unaudited condensed 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. In the opinion of the Company’s management, the interim unaudited condensed consolidated financial statements include all adjustments, which include only normal recurring adjustments, necessary for the fair presentation of the Company’s financial position for the periods presented. These interim unaudited condensed consolidated financial statements are not necessarily indicative of the results expected for the full fiscal year or for any subsequent period.

The accompanying condensed consolidated balance sheet as of December 31, 2015 was derived from the audited financial statements as of that date, but does not include all the information and footnotes required by U.S. GAAP. These financial statements should be read in conjunction with the consolidated financial statements and related notes included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2015.

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. Such estimates primarily relate to unsettled transactions and events as of the date of the financial statements. Accordingly, actual results may differ from estimated amounts.

Concentrations of Risk

As of September 30, 2016 and December 31, 2015, the Company had concentrations equal to or exceeding 10% of the Company’s accounts receivable as follows:

 

     Accounts Receivable  
     September 30,
2016
    December 31,
2015
 

Google

     13     14

 

For the three and nine months ended September 30, 2016 and 2015, the Company had concentrations equal to or exceeding 10% of the Company’s revenue as follows:

 

     Revenue  
     Three Months Ended
September 30,
    Nine Months Ended
September 30,
 
     2016     2015     2016     2015  

Google

     10     28     14     31

For the three and nine months ended September 30, 2016 and 2015, the following customers received revenue-share payments equal to or exceeding 10% of the Company’s cost of revenue. The costs represent revenue share paid to customers for their supply of Internet traffic on the Company’s start experiences:

 

     Cost of Revenue  
    

Three Months Ended

September 30,

   

Nine Months Ended

September 30,

 
     2016     2015     2016     2015  

Customer A

     22     29     26     28

Customer B

     Less than 10     10     10     10

Customer C

     Less than 10     10     Less than 10     10

Recent Accounting Pronouncements

In May 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standard Update (“ASU”) 2014-09 (ASU 2014-09) Revenue from Contracts with Customers. ASU 2014-09 supersedes the revenue recognition requirements in “Revenue Recognition (Topic 605)” and requires an entity to recognize revenue when it transfers promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled to in exchange for those goods or services. In August 2015, the FASB issued ASU 2015-14 Revenue from Contracts with Customers: Deferral of the Effective Date, which deferred the effective date of ASU 2014-09 to annual reporting periods beginning after December 15, 2017, with earlier application permitted as of annual reporting periods beginning after December 15, 2016. In March 2016, the FASB issued ASU 2016-08, Revenue from Contracts with Customers (Topic 606): Principal versus Agent Considerations (Reporting Revenue Gross versus Net), to clarify the implementation guidance on principal versus agent. In April 2016, the FASB issued ASU 2016-10, Revenue from Contracts with Customers (Topic 606): Identifying Performance Obligations and Licensing, providing additional guidance relating to identifying performance obligations under ASU 2014-09 as well as licensing.

The Company is currently in the process of assessing the financial impact of adopting these ASUs and the methods of adoption. The Company currently recognizes subscription revenue from its’ Email/Collaboration contracts over the life of the contracts (which are typically six months or longer). The Company has tentatively concluded that it is likely that this new guidance will require it to recognize a portion of the revenue from those contracts upon delivery, at the inception of the contracts, which would have the effect of accelerating recognition of revenue on such contracts, and may have a material impact on the Company’s consolidated financial statements. The standard will be effective for the Company beginning January 1, 2018, and adoption as of the original effective date of January 1, 2017 is permitted. The Company anticipates adopting the standard as of its effective date of January 1, 2018. The guidance permits two methods of adoption: retrospectively to each prior reporting period presented (full retrospective method), or retrospectively with the cumulative effect of initially applying the guidance recognized at the date of initial application (the cumulative catch-up transition method). The Company has not yet determined which transition method it will use.

 

In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842). The objective of this update is to increase transparency and comparability among organizations by recognizing lease assets and lease liabilities on the balance sheet and disclosing key information about leasing arrangements. This ASU is effective for fiscal years beginning after December 15, 2018, including interim periods within those annual periods and is to be applied utilizing a modified retrospective approach. Early adoption is permitted. The Company is in the process of assessing the impact of the adoption of this ASU on its consolidated financial statements.

In March 2016, the FASB issued ASU 2016-09, Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting. The objective of this update is to simplify several aspects of the accounting for employee share-based payment transactions, including the income tax consequences, classification of awards as either equity or liabilities, and classification on the statement of cash flows. This ASU is effective for fiscal years beginning after December 15, 2016, including interim periods within those fiscal years. Early adoption is permitted, and the ASU provides that its different provisions be applied prospectively, retrospectively, or using a modified retrospective method, depending on the provision. The Company is in the process of assessing the impact of the adoption of this ASU on its consolidated financial statements.

The Company and Summary of Significant Accounting Principles (Tables)
Schedule of Concentrations Equal to or Exceeding 10% of Company's Accounts Receivable, Revenue, and Cost of Revenue

As of September 30, 2016 and December 31, 2015, the Company had concentrations equal to or exceeding 10% of the Company’s accounts receivable as follows:

 

     Accounts Receivable  
     September 30,
2016
    December 31,
2015
 

Google

     13     14

 

For the three and nine months ended September 30, 2016 and 2015, the Company had concentrations equal to or exceeding 10% of the Company’s revenue as follows:

 

     Revenue  
     Three Months Ended
September 30,
    Nine Months Ended
September 30,
 
     2016     2015     2016     2015  

Google

     10     28     14     31

For the three and nine months ended September 30, 2016 and 2015, the following customers received revenue-share payments equal to or exceeding 10% of the Company’s cost of revenue. The costs represent revenue share paid to customers for their supply of Internet traffic on the Company’s start experiences:

 

     Cost of Revenue  
    

Three Months Ended

September 30,

   

Nine Months Ended

September 30,

 
     2016     2015     2016     2015  

Customer A

     22     29     26     28

Customer B

     Less than 10     10     10     10

Customer C

     Less than 10     10     Less than 10     10
Acquisitions (Tables)

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   
  

 

 

 

Set forth below is the unaudited pro forma consolidated results of operations of the Company and Zimbra for the three and nine months ended September 30, 2015 as if the Acquisition had occurred on January 1, 2015 (in thousands, except per share amounts):

 

     Three Months      Nine Months  
     Ended      Ended  
     September 30,      September 30,  
     2015      2015  

Revenue

   $ 32,434       $ 97,066   

Operating income (loss)

     8       $ (3,911

Net loss

     (276    $ (3,698

Net loss per share (basic and diluted)

   $ (0.01    $ (0.12
Goodwill and Other Intangible Assets (Tables)

The change in goodwill is as follows for nine months ended September 30, 2016 (in thousands):

 

     Nine Months Ended  
     September 30, 2016  

Balance – beginning of period

   $ 15,187   

Acquisition of Technorati

     751   

Effect of foreign currency translation

     11   
  

 

 

 

Balance – end of period

   $ 15,949   
  

 

 

 

Intangible assets, net consisted of the following (in thousands):

 

     September 30,      December 31,  
     2016      2015  

Customer and publisher relationships

   $ 14,780       $ 13,400   

Technology

     2,330         1,600   

Trademark

     300         300   
  

 

 

    

 

 

 
     17,410         15,300   

Less accumulated amortization

     (2,034      (502
  

 

 

    

 

 

 

Intangible assets, net

   $ 15,376       $ 14,798   
  

 

 

    

 

 

 
Property and Equipment - Net (Tables)
Schedule of Property and Equipment

Property and equipment, net consisted of the following (in thousands):

 

     September 30,      December 31,  
     2016      2015  

Computer equipment (1)

   $ 23,542       $ 23,324   

Computer software

     18,916         14,813   

Furniture and fixtures

     2,001         1,945   

Leasehold improvements

     1,405         1,532   

Other

     252         252   
  

 

 

    

 

 

 
     46,116         41,866   

Less accumulated depreciation (2)

     (31,301      (27,489
  

 

 

    

 

 

 

Property and equipment, net

   $ 14,815       $ 14,377   
  

 

 

    

 

 

 

Notes:

 

(1) Includes equipment and software held under capital leases of $5.1 million and $4.1 million as of September 30, 2016 and December 31, 2015, respectively.
(2) Includes $3.0 million and $1.8 million of accumulated depreciation of equipment under capital leases as of September 30, 2016 and December 31, 2015, respectively.
Accrued Expenses and Other Current Liabilities (Tables)
Schedule of Accrued Expenses and Other Current Liabilities

Accrued expenses and other current liabilities consisted of the following (in thousands):

 

     September 30,      December 31,  
     2016      2015  

Accrued compensation

   $ 6,167       $ 6,112   

Accrued content fees

     2,942         1,964   

Contingent consideration

     1,510         —     

Accrued business acquisition consideration

     567         —     

Other

     2,079         1,689   
  

 

 

    

 

 

 

Total

   $ 13,265       $ 9,765   
  

 

 

    

 

 

 
Information About Segment and Geographic Areas (Tables)
Schedule of Revenue and Long Lived Tangible Assets by Geographic Area

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

 

     Three Months Ended
September 30,
     Nine Months Ended
September 30,
 
     2016      2015      2016      2015  

Revenue:

           

United States

   $ 27,169       $ 25,556       $ 79,787       $ 76,623   

International

     4,552         795         12,670         1,174   
  

 

 

    

 

 

    

 

 

    

 

 

 

Total revenue

   $ 31,721       $ 26,351       $ 92,457       $ 77,797   
  

 

 

    

 

 

    

 

 

    

 

 

 
                   September 30,      December 31,  
                   2016      2015  

Long-lived tangible assets:

           

United States

         $ 13,842       $ 12,909   

Canada

           627         726   

Other international

           346         742   
        

 

 

    

 

 

 

Total long-lived tangible assets

         $ 14,815       $ 14,377   
        

 

 

    

 

 

 
Commitments and Contingencies (Tables)
Schedule of Contract Commitments

Contract commitments as of September 30, 2016 are summarized as follows (in thousands):

 

Year ending December 31,

  

2016 (remaining three months)

   $ 1,050   

2017

     2,080   

2018

     720   
  

 

 

 

Total

   $ 3,850   
  

 

 

 
Stock-based Compensation (Tables)

Total stock-based compensation expense included in the accompanying condensed consolidated statements of operations for the periods presented, is as follows (in thousands):

 

     Three Months Ended
September 30,
     Nine Months Ended
September 30,
 
     2016      2015      2016      2015  

Technology and development

   $ 238       $ 224       $ 681       $ 694   

Sales and marketing

     173         231         604         716   

General and administrative

     269         355         819         942   
  

 

 

    

 

 

    

 

 

    

 

 

 

Total stock-based compensation expense

   $ 680       $ 810       $ 2,104       $ 2,352   
  

 

 

    

 

 

    

 

 

    

 

 

 

Stock Option Activity – A summary of the stock option activity for the nine months ended September 30, 2016 is presented below:

 

     Number of
Shares
     Weighted
Average
Exercise
Price
     Weighted
Average
Remaining
Contractual
Term (years)
     Aggregate
Intrinsic
Value (in
thousands)
 

Outstanding at January 1, 2016

     8,695,918       $ 2.57         

Granted

     1,503,500       $ 2.20         

Exercised

     (382,781    $ 2.25         

Forfeited or expired

     (551,438    $ 2.01         
  

 

 

          

Outstanding at September 30, 2016

     9,265,199       $ 2.55         6.76       $ 5,913   
  

 

 

          

Vested and expected to vest at September 30, 2016

     8,862,505       $ 2.57         6.76       $ 5,590   
  

 

 

          

Vested and exercisable at September 30, 2016

     4,804,258       $ 2.98         4.96       $ 2,178   
  

 

 

          

 A summary of RSU activity for the nine months ended September 30, 2016 is presented below:

 

     Number of
Shares
     Weighted
Average Fair
Value
 

Unvested - January 1, 2016

     437,595       $ 2.31   

Shares granted

     139,500       $ 3.63   

Shares vested

     (160,811    $ 2.53   

Forfeited or expired

     (16,712    $ 2.69   
  

 

 

    

Unvested - September 30, 2016

     399,572       $ 2.67   
  

 

 

    

Expected to vest - September 30, 2016

     381,673       $ 2.64   
  

 

 

    
Net Income (Loss) Per Common Share Data (Tables)
Schedule of Equivalent Shares Excluded from Calculation of Diluted Net Income (Loss) Per Share

The following equivalent shares were excluded from the calculation of diluted net loss per share because their effect would have been anti-dilutive for the periods presented:

 

     Three Months Ended
September 30,
     Nine Months Ended
September 30,
 
     2016      2015      2016      2015  

Anti-dilutive equity awards:

           

Stock options and Restricted Stock Units

     9,664,771         8,223,520         9,664,771         8,223,520   

Warrants

     480,000         480,000         480,000         480,000   
The Company and Summary of Significant Accounting Principles - Schedule of Concentrations Equal to or Exceeding 10% of Company's Accounts Receivable, Revenue, and Cost of Revenue (Detail) (Customer Concentration Risk [Member])
3 Months Ended 9 Months Ended 12 Months Ended 3 Months Ended 9 Months Ended 3 Months Ended 9 Months Ended 3 Months Ended 9 Months Ended 3 Months Ended 9 Months Ended
Sep. 30, 2016
Revenue [Member]
Google [Member]
Sep. 30, 2015
Revenue [Member]
Google [Member]
Sep. 30, 2016
Revenue [Member]
Google [Member]
Sep. 30, 2015
Revenue [Member]
Google [Member]
Sep. 30, 2016
Accounts Receivable [Member]
Google [Member]
Dec. 31, 2015
Accounts Receivable [Member]
Google [Member]
Sep. 30, 2016
Cost of Revenue [Member]
Customer A [Member]
Sep. 30, 2015
Cost of Revenue [Member]
Customer A [Member]
Sep. 30, 2016
Cost of Revenue [Member]
Customer A [Member]
Sep. 30, 2015
Cost of Revenue [Member]
Customer A [Member]
Sep. 30, 2015
Cost of Revenue [Member]
Customer B [Member]
Sep. 30, 2016
Cost of Revenue [Member]
Customer B [Member]
Sep. 30, 2015
Cost of Revenue [Member]
Customer B [Member]
Sep. 30, 2015
Cost of Revenue [Member]
Customer C [Member]
Sep. 30, 2015
Cost of Revenue [Member]
Customer C [Member]
Sep. 30, 2016
Cost of Revenue [Member]
Maximum [Member]
Customer B [Member]
Sep. 30, 2016
Cost of Revenue [Member]
Maximum [Member]
Customer C [Member]
Sep. 30, 2016
Cost of Revenue [Member]
Maximum [Member]
Customer C [Member]
Concentration Risk [Line Items]
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Concentration risk, percentage
10.00% 
28.00% 
14.00% 
31.00% 
13.00% 
14.00% 
22.00% 
29.00% 
26.00% 
28.00% 
10.00% 
10.00% 
10.00% 
10.00% 
10.00% 
10.00% 
10.00% 
10.00% 
Acquisitions - Additional Information (Detail) (USD $)
9 Months Ended 1 Months Ended 3 Months Ended 0 Months Ended 9 Months Ended 0 Months Ended 9 Months Ended
Sep. 30, 2016
Sep. 30, 2016
Customer and Publisher Relationships [Member]
Sep. 30, 2016
Technology [Member]
Aug. 31, 2015
TZ Holdings, Inc [Member]
Mar. 31, 2016
TZ Holdings, Inc [Member]
General and Administrative [Member]
Feb. 19, 2016
Technorati [Member]
Sep. 30, 2016
Technorati [Member]
Employees
Feb. 19, 2016
Technorati [Member]
Feb. 19, 2016
Technorati [Member]
Minimum [Member]
Publishers
Sep. 30, 2016
Zimbra [Member]
Business Acquisition [Line Items]
 
 
 
 
 
 
 
 
 
 
Business acquisition purchase price
 
 
 
 
 
$ 3,000,000 
 
 
 
 
Acquisition completion date
 
 
 
 
 
Feb. 26, 2016 
 
 
 
Sep. 14, 2015 
Number of business new publishers
 
 
 
 
 
 
 
 
1,000 
 
Number of employees employed by acquiree
 
 
 
 
 
 
10 
 
 
 
Cash consideration
 
 
 
17,300,000 
 
2,500,000 
2,500,000 
 
 
 
Cash withheld to secure indemnification obligations
 
 
 
 
 
 
500,000 
500,000 
 
 
Post closing working capital adjustments
 
 
 
 
 
100,000 
100,000 
 
 
 
Finite lived intangible assets, useful life
 
5 years 
5 years 
 
 
 
 
 
 
 
Acquisition costs
 
 
 
 
$ 100,000 
 
 
 
 
 
Acquisition agreement date
 
 
 
 
 
 
 
 
 
Aug. 18, 2015 
Business acquisition pro forma information description
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. 
 
 
 
 
 
 
 
 
 
Acquisitions - Schedule of Consideration (Detail) (USD $)
In Thousands, unless otherwise specified
9 Months Ended 0 Months Ended 9 Months Ended
Sep. 30, 2016
Sep. 30, 2015
Feb. 19, 2016
Technorati [Member]
Sep. 30, 2016
Technorati [Member]
Business Acquisition, Contingent Consideration [Line Items]
 
 
 
 
Cash consideration
 
 
$ 2,500 
$ 2,500 
Fair value of indemnification holdback
 
 
 
500 
Fair value of post-closing working capital adjustment
 
 
 
67 
Total consideration
$ 2,500 
$ 17,260 
 
$ 3,067 
Acquisitions - Summary of Assets Acquired and Liabilities Assumed (Detail) (USD $)
In Thousands, unless otherwise specified
Sep. 30, 2016
Dec. 31, 2015
Business Acquisition [Line Items]
 
 
GOODWILL
$ 15,949 
$ 15,187 
Technorati [Member]
 
 
Business Acquisition [Line Items]
 
 
Accounts receivable
965 
 
Property and equipment
96 
 
Customer and publisher relationships
1,380 
 
Technology
730 
 
GOODWILL
751 
 
Total assets acquired
3,922 
 
Accounts payable and accrued expenses
855 
 
Net assets acquired
$ 3,067 
 
Acquisitions - Summary of Proforma Consolidated Result of Operations (Detail) (USD $)
In Thousands, except Per Share data, unless otherwise specified
3 Months Ended 9 Months Ended
Sep. 30, 2015
Sep. 30, 2015
Business Combinations [Abstract]
 
 
Revenue
$ 32,434 
$ 97,066 
Operating income (loss)
(3,911)
Net loss
$ (276)
$ (3,698)
Net loss per share (basic and diluted)
$ (0.01)
$ (0.12)
Fair Value Measurements - Additional Information (Detail) (USD $)
1 Months Ended 3 Months Ended 9 Months Ended
Aug. 31, 2015
Sep. 30, 2016
Sep. 30, 2016
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
 
 
 
Change in fair value of contingent consideration
 
$ 100,000 
$ 100,000 
TZ Holdings, Inc [Member]
 
 
 
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
 
 
 
Cash consideration
17,300,000 
 
 
Maximum contingent cash consideration
2,000,000 
2,000,000 
2,000,000 
Business acquisition hold back, value
800,000 
800,000 
800,000 
Contingent consideration paid
 
 
900,000 
Contingent consideration at fair value
 
1,600,000 
1,600,000 
Contingent consideration at fair value adjustment
 
1,500,000 
 
TZ Holdings, Inc [Member] |
Common Stock [Member]
 
 
 
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
 
 
 
Business acquisition equity Interest Issued, number of Shares
2,400,000 
 
 
Business acquisition equity Interest Issued, value
$ 3,200,000 
 
 
Number of shares held back
600,000 
 
600,000 
TZ Holdings, Inc [Member] |
Warrants [Member]
 
 
 
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
 
 
 
Business acquisition equity Interest Issued, number of Shares
480,000 
 
 
Number of shares held back
120,000 
 
120,000 
Goodwill and Other Intangible Assets - Schedule of Change in Goodwill (Detail) (USD $)
In Thousands, unless otherwise specified
9 Months Ended
Sep. 30, 2016
Goodwill and Intangible Assets Disclosure [Abstract]
 
Balance - beginning of period
$ 15,187 
Acquisition of Technorati
751 
Effect of foreign currency translation
11 
Balance - end of period
$ 15,949 
Goodwill and Other Intangible Assets - Schedule of Intangible Assets, Net (Detail) (USD $)
In Thousands, unless otherwise specified
Sep. 30, 2016
Dec. 31, 2015
Finite-Lived Intangible Assets [Line Items]
 
 
Total gross amortizable intangible assets
$ 17,410 
$ 15,300 
Less accumulated amortization
(2,034)
(502)
Intangible assets, net
15,376 
14,798 
Customer and Publisher Relationships [Member]
 
 
Finite-Lived Intangible Assets [Line Items]
 
 
Total gross amortizable intangible assets
14,780 
13,400 
Technology [Member]
 
 
Finite-Lived Intangible Assets [Line Items]
 
 
Total gross amortizable intangible assets
2,330 
1,600 
Trademark [Member]
 
 
Finite-Lived Intangible Assets [Line Items]
 
 
Total gross amortizable intangible assets
$ 300 
$ 300 
Goodwill and Other Intangible Assets - Additional Information (Detail) (USD $)
In Millions, unless otherwise specified
3 Months Ended 9 Months Ended
Sep. 30, 2016
Sep. 30, 2015
Sep. 30, 2016
Sep. 30, 2015
Intangible Liability Disclosure [Abstract]
 
 
 
 
Amortization of intangible assets
$ 0.5 
$ 0.1 
$ 1.5 
$ 0.1 
Property and Equipment-Net - Schedule of Property and Equipment (Detail) (USD $)
In Thousands, unless otherwise specified
Sep. 30, 2016
Dec. 31, 2015
Property, Plant and Equipment [Line Items]
 
 
Property and equipment gross
$ 46,116 
$ 41,866 
Less accumulated depreciation
(31,301)
(27,489)
Property and equipment, net
14,815 
14,377 
Computer Software [Member]
 
 
Property, Plant and Equipment [Line Items]
 
 
Property and equipment gross
18,916 
14,813 
Computer Equipment [Member]
 
 
Property, Plant and Equipment [Line Items]
 
 
Property and equipment gross
23,542 
23,324 
Furniture and Fixtures [Member]
 
 
Property, Plant and Equipment [Line Items]
 
 
Property and equipment gross
2,001 
1,945 
Leasehold Improvements [Member]
 
 
Property, Plant and Equipment [Line Items]
 
 
Property and equipment gross
1,405 
1,532 
Other [Member]
 
 
Property, Plant and Equipment [Line Items]
 
 
Property and equipment gross
$ 252 
$ 252 
Property and Equipment-Net - Additional Information (Detail) (USD $)
In Millions, unless otherwise specified
3 Months Ended 9 Months Ended
Sep. 30, 2016
Sep. 30, 2015
Sep. 30, 2016
Sep. 30, 2015
Property, Plant and Equipment [Abstract]
 
 
 
 
Depreciation expense
$ 1.9 
$ 1.5 
$ 5.3 
$ 4.6 
Property and Equipment-Net - Schedule of Property and Equipment (Parenthetical) (Detail) (USD $)
In Thousands, unless otherwise specified
Sep. 30, 2016
Dec. 31, 2015
Property, Plant and Equipment [Line Items]
 
 
Property and equipment gross
$ 46,116 
$ 41,866 
Accumulated depreciation of equipment under capital leases
31,301 
27,489 
Capital Lease Obligations [Member]
 
 
Property, Plant and Equipment [Line Items]
 
 
Accumulated depreciation of equipment under capital leases
3,000 
1,800 
Computer Equipment and Software [Member] |
Capital Lease Obligations [Member]
 
 
Property, Plant and Equipment [Line Items]
 
 
Property and equipment gross
$ 5,100 
$ 4,100 
Accrued Expenses and Other Current Liabilities - Schedule of Accrued Expenses and Other Current Liabilities (Detail) (USD $)
In Thousands, unless otherwise specified
Sep. 30, 2016
Dec. 31, 2015
Accounts Payable and Accrued Liabilities, Current [Abstract]
 
 
Accrued compensation
$ 6,167 
$ 6,112 
Accrued content fees
2,942 
1,964 
Contingent consideration
1,510 
 
Accrued business acquisition consideration
567 
 
Other
2,079 
1,689 
Total
$ 13,265 
$ 9,765 
Information About Segment and Geographic Areas - Additional Information (Detail)
9 Months Ended
Sep. 30, 2016
Managers
Segment
Revenues From External Customers And Long Lived Assets [Abstract]
 
Number of reportable segments
Number of operating units
Number of segment managers accountable for operations below the Company level
Information About Segment and Geographic Areas - Schedule of Revenue and Long Lived Tangible Assets by Geographic Area (Detail) (USD $)
In Thousands, unless otherwise specified
3 Months Ended 9 Months Ended
Sep. 30, 2016
Sep. 30, 2015
Sep. 30, 2016
Sep. 30, 2015
Dec. 31, 2015
Revenues from External Customers and Long-Lived Assets [Line Items]
 
 
 
 
 
REVENUE
$ 31,721 
$ 26,351 
$ 92,457 
$ 77,797 
 
Long-lived tangible assets
14,815 
 
14,815 
 
14,377 
United States [Member]
 
 
 
 
 
Revenues from External Customers and Long-Lived Assets [Line Items]
 
 
 
 
 
REVENUE
27,169 
25,556 
79,787 
76,623 
 
Long-lived tangible assets
13,842 
 
13,842 
 
12,909 
Canada [Member]
 
 
 
 
 
Revenues from External Customers and Long-Lived Assets [Line Items]
 
 
 
 
 
Long-lived tangible assets
627 
 
627 
 
726 
Other International [Member]
 
 
 
 
 
Revenues from External Customers and Long-Lived Assets [Line Items]
 
 
 
 
 
Long-lived tangible assets
346 
 
346 
 
742 
International [Member]
 
 
 
 
 
Revenues from External Customers and Long-Lived Assets [Line Items]
 
 
 
 
 
REVENUE
$ 4,552 
$ 795 
$ 12,670 
$ 1,174 
 
Commitments and Contingencies - Schedule of Contract Commitments (Detail) (USD $)
In Thousands, unless otherwise specified
Sep. 30, 2016
Contractual Obligation, Fiscal Year Maturity [Abstract]
 
2016 (remaining three months)
$ 1,050 
2017
2,080 
2018
720 
Total
$ 3,850 
Commitments and Contingencies - Additional Information (Detail) (USD $)
9 Months Ended 1 Months Ended 9 Months Ended 1 Months Ended 9 Months Ended 0 Months Ended 9 Months Ended
Sep. 30, 2016
TZ Holdings, Inc [Member]
Aug. 31, 2015
TZ Holdings, Inc [Member]
Aug. 31, 2015
TZ Holdings, Inc [Member]
Common Stock [Member]
Sep. 30, 2016
TZ Holdings, Inc [Member]
Common Stock [Member]
Aug. 31, 2015
TZ Holdings, Inc [Member]
Warrants [Member]
Sep. 30, 2016
TZ Holdings, Inc [Member]
Warrants [Member]
Feb. 19, 2016
Technorati [Member]
Sep. 30, 2016
Technorati [Member]
Feb. 19, 2016
Technorati [Member]
Commitments And Contingencies Disclosure [Line Items]
 
 
 
 
 
 
 
 
 
Maximum contingent cash consideration
$ 2,000,000 
$ 2,000,000 
 
 
 
 
 
 
 
Number of shares held back
 
 
600,000 
600,000 
120,000 
120,000 
 
 
 
Contingent consideration at fair value
1,500,000 
 
 
 
 
 
 
 
 
Business acquisition holdback, value
800,000 
800,000 
 
 
 
 
 
 
 
Contingent consideration paid
900,000 
 
 
 
 
 
 
 
 
Cash withheld to secure indemnification obligations
 
 
 
 
 
 
 
500,000 
500,000 
Business acquisition post-closing working capital adjustments
 
 
 
 
 
 
$ 100,000 
$ 100,000 
 
Stock-based Compensation - Schedule of Total Stock Based Compensation Expense (Detail) (USD $)
In Thousands, unless otherwise specified
3 Months Ended 9 Months Ended
Sep. 30, 2016
Sep. 30, 2015
Sep. 30, 2016
Sep. 30, 2015
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items]
 
 
 
 
Total stock-based compensation expense
$ 680 
$ 810 
$ 2,104 
$ 2,352 
Technology and Development [Member]
 
 
 
 
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items]
 
 
 
 
Total stock-based compensation expense
238 
224 
681 
694 
Sales and Marketing [Member]
 
 
 
 
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items]
 
 
 
 
Total stock-based compensation expense
173 
231 
604 
716 
General and Administrative [Member]
 
 
 
 
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items]
 
 
 
 
Total stock-based compensation expense
$ 269 
$ 355 
$ 819 
$ 942 
Stock-based Compensation - Summary of Stock Option Activity (Detail) (USD $)
In Thousands, except Share data, unless otherwise specified
9 Months Ended
Sep. 30, 2016
Disclosure of Compensation Related Costs, Share-based Payments [Abstract]
 
Outstanding number of stock options beginning balance
8,695,918 
Number of shares granted
1,503,500 
Number of shares exercised
(382,781)
Number of shares forfeited or expired
(551,438)
Outstanding number of shares ending balance
9,265,199 
Outstanding number of shares vested and expected to vest
8,862,505 
Outstanding number of shares vested and exercisable
4,804,258 
Outstanding, weighted average exercise price, beginning balance
$ 2.57 
Weighted average exercise price, granted
$ 2.20 
Weighted average exercise price, exercised
$ 2.25 
Weighted average exercise price, forfeited or expired
$ 2.01 
Outstanding, weighted average exercise price, ending balance
$ 2.55 
Vested and expected to vest, weighted average exercise price, ending balance
$ 2.57 
Vested and exercisable, weighted average exercise price, ending balance
$ 2.98 
Weighted average remaining contractual term (in years), outstanding
6 years 9 months 4 days 
Weighted average remaining contractual term (in years),vested and expected to vest
6 years 9 months 4 days 
Weighted average remaining contractual term (in years), vested and exercisable
4 years 11 months 16 days 
Aggregate intrinsic value, outstanding
$ 5,913 
Aggregate intrinsic value,vested and expected to vest
5,590 
Aggregate intrinsic value, vested and exercisable
$ 2,178 
Stock-based Compensation - Additional Information (Detail) (USD $)
In Millions, except Per Share data, unless otherwise specified
9 Months Ended
Sep. 30, 2016
Disclosure of Compensation Related Costs, Share-based Payments [Abstract]
 
Closing stock price as reported on the NASDAQ
$ 2.91 
Weighted average fair value of options issued
$ 1.08 
Total intrinsic value of options exercised
$ 0.3 
Unrecognized compensation cost related to non-vested options granted
4.5 
Expected weighted average period to recognize total unrecognized compensation cost
2 years 7 months 6 days 
Total fair value of shares vested
$ 1.5 
Stock-based Compensation - Summary of RSU Activity (Detail) (USD $)
9 Months Ended
Sep. 30, 2016
Disclosure of Compensation Related Costs, Share-based Payments [Abstract]
 
Unvested-Beginning Balance
437,595 
Shares granted
139,500 
Shares vested
(160,811)
Forfeited or expired
(16,712)
Unvested-Ending Balance
399,572 
Expected to vest - September 30, 2016
381,673 
Unvested-Beginning Balance
$ 2.31 
Shares granted
$ 3.63 
Shares vested
$ 2.53 
Forfeited or expired
$ 2.69 
Unvested-Ending Balance
$ 2.67 
Expected to vest - September 30, 2016
$ 2.64 
Net Income (Loss) Per Common Share Data - Schedule of Equivalent Shares Excluded from Calculation of Diluted Net Income (Loss) Per Share (Detail)
3 Months Ended 9 Months Ended
Sep. 30, 2016
Sep. 30, 2015
Sep. 30, 2016
Sep. 30, 2015
Stock Options and Restricted Stock Units [Member]
 
 
 
 
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
 
 
 
 
Antidilutive equity awards
9,664,771 
8,223,520 
9,664,771 
8,223,520 
Warrants [Member]
 
 
 
 
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
 
 
 
 
Antidilutive equity awards
480,000 
480,000 
480,000 
480,000 
Subsequent Events - Additional Information (Detail) (Subsequent Event [Member])
1 Months Ended
Nov. 14, 2016
Liquidity Coverage Ratio Exceeds 2.75 [Member]
 
Subsequent Event [Line Items]
 
Liquidity coverage ratio
275.00% 
Annual interest rate above prime rate
1.00% 
Liquidity Coverage Ratio Exceeds 2.75 [Member] |
LIBOR [Member]
 
Subsequent Event [Line Items]
 
Debt instrument interest rate
3.50% 
Liquidity Coverage Ratio Below Or 2.75 [Member]
 
Subsequent Event [Line Items]
 
Liquidity coverage ratio
275.00% 
Annual interest rate above prime rate
1.50% 
Debt instrument interest rate
4.00%