SYNACOR, INC., 10-Q filed on 8/14/2012
Quarterly Report
Document and Entity Information
6 Months Ended
Jun. 30, 2012
Jul. 31, 2012
Document and Entity Information [Abstract]
 
 
Entity Registrant Name
Synacor, Inc. 
 
Entity Central Index Key
0001408278 
 
Document Type
10-Q 
 
Document Period End Date
Jun. 30, 2012 
 
Amendment Flag
false 
 
Document Fiscal Year Focus
2012 
 
Document Fiscal Period Focus
Q2 
 
Current Fiscal Year End Date
--12-31 
 
Entity Filer Category
Non-accelerated Filer 
 
Entity Common Stock, Shares Outstanding
 
27,021,946 
Condensed Consolidated Balance Sheets (Unaudited) (USD $)
In Thousands, unless otherwise specified
Jun. 30, 2012
Dec. 31, 2011
CURRENT ASSETS:
 
 
Cash and cash equivalents
$ 35,058 
$ 10,925 
Accounts receivable - net of allowance of $25 and $25
15,507 
14,336 
Deferred income taxes
4,777 
3,534 
Prepaid expenses and other current assets
2,612 
1,811 
Total current assets
57,954 
30,606 
PROPERTY AND EQUIPMENT - Net
10,756 
8,301 
DEFERRED INCOME TAXES, NON-CURRENT
690 
2,549 
OTHER LONG-TERM ASSETS
803 
1,926 
GOODWILL
819 
 
TOTAL ASSETS
71,022 
43,382 
CURRENT LIABILITIES:
 
 
Accounts payable
12,666 
12,498 
Accrued expenses and other current liabilities
5,326 
5,492 
Current portion of bank financing
   
250 
Current portion of capital lease obligations
2,408 
1,593 
Total current liabilities
20,400 
19,833 
LONG-TERM PORTION OF CAPITAL LEASE OBLIGATIONS
2,732 
2,098 
OTHER LONG-TERM LIABILITIES
135 
71 
Total liabilities
23,267 
22,002 
COMMITMENTS AND CONTINGENCIES (Note 7)
   
   
STOCKHOLDERS' EQUITY:
 
 
Common stock, $0.01 par value-30,000,000 shares authorized, 3,052,856 issued and 2,733,356 outstanding at December 31, 2011, and 100,000,000 authorized27,230,503 issued and 26,911,003 shares outstanding at June 30, 2012
272 
31 
Treasury stock--at cost, 319,500 shares at December 31, 2011 and March 31, 2012
(569)
(569)
Preferred stock, $0.01 par value--10,000,000 shares authorized, no shares issued and outstanding at March 31, 2012
   
   
Additional paid-in capital
97,823 
45,639 
Accumulated deficit
(49,780)
(52,153)
Accumulated other comprehensive income
   
Total stockholders' equity
47,755 
21,380 
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY
71,022 
43,382 
Series A Preferred Stock [Member]
 
 
STOCKHOLDERS' EQUITY:
 
 
Convertible preferred stock
 
5,077 
Series A One Preferred Stock [Member]
 
 
STOCKHOLDERS' EQUITY:
 
 
Convertible preferred stock
 
730 
Series B Preferred Stock [Member]
 
 
STOCKHOLDERS' EQUITY:
 
 
Convertible preferred stock
 
5,401 
Series C Preferred Stock [Member]
 
 
STOCKHOLDERS' EQUITY:
 
 
Convertible preferred stock
 
$ 17,224 
Condensed Consolidated Balance Sheets (Parenthetical) (Unaudited) (USD $)
In Thousands, except Share data, unless otherwise specified
Jun. 30, 2012
Dec. 31, 2011
Allowance for doubtful accounts
$ 25 
$ 25 
Common stock, par value
$ 0.01 
$ 0.01 
Common stock, shares authorized
100,000,000 
30,000,000 
Common stock, shares issued
27,230,503 
3,052,856 
Common stock, shares outstanding
26,911,003 
2,733,356 
Preferred stock, par value
$ 0.01 
 
Preferred stock, shares authorized
10,000,000 
 
Preferred stock, shares issued
 
Preferred stock, shares outstanding
 
Treasury stock, shares
319,500 
319,500 
Series A Preferred Stock [Member]
 
 
Preferred stock, par value
$ 0.01 
$ 0.01 
Preferred stock, shares authorized
5,709,638 
Preferred stock, shares issued
5,548,508 
Preferred stock, shares outstanding
5,548,508 
Series A One Preferred Stock [Member]
 
 
Preferred stock, par value
$ 0.01 
$ 0.01 
Preferred stock, shares authorized
570,344 
Preferred stock, shares issued
570,344 
Preferred stock, shares outstanding
570,344 
Series B Preferred Stock [Member]
 
 
Preferred stock, par value
$ 0.01 
$ 0.01 
Preferred stock, shares authorized
3,500,000 
Preferred stock, shares issued
2,737,500 
Preferred stock, shares outstanding
2,737,500 
Series C Preferred Stock [Member]
 
 
Preferred stock, par value
$ 0.01 
$ 0.01 
Preferred stock, shares authorized
2,740,407 
Preferred stock, shares issued
2,740,407 
Preferred stock, shares outstanding
2,740,407 
Condensed Consolidated Statements of Operations (Unaudited) (USD $)
In Thousands, except Share data, unless otherwise specified
3 Months Ended 6 Months Ended
Jun. 30, 2012
Jun. 30, 2011
Jun. 30, 2012
Jun. 30, 2011
Condensed Consolidated Statements of Operations
 
 
 
 
INTEREST EXPENSE
$ (89)
$ (19)
$ (136)
$ (51)
REVENUE
30,807 
19,467 
61,477 
38,161 
COSTS AND OPERATING EXPENSES:
 
 
 
 
Cost of revenue (exclusive of depreciation shown separately below)
16,876 
10,078 
33,640 
20,058 
Research and development (exclusive of depreciation shown separately below)
6,123 
4,718 
12,411 
9,320 
Sales and marketing
2,399 
1,888 
4,776 
3,684 
General and administrative (exclusive of depreciation shown separately below)
2,868 
1,512 
5,708 
3,063 
Depreciation
934 
657 
1,715 
1,277 
Total costs and operating expenses
29,200 
18,853 
58,250 
37,402 
INCOME FROM OPERATIONS
1,607 
614 
3,227 
759 
OTHER INCOME (EXPENSE)
(18)
 
(18)
INCOME BEFORE INCOME TAXES
1,500 
595 
3,073 
709 
PROVISION FOR INCOME TAXES
301 
700 
NET INCOME
1,199 
592 
2,373 
703 
UNDISTRIBUTED EARNINGS ALLOCATED TO PREFERRED STOCKHOLDERS
   
541 
   
642 
NET INCOME ATTRIBUTABLE TO COMMON STOCKHOLDERS
$ 1,199 
$ 51 
$ 2,373 
$ 61 
NET INCOME PER SHARE ATTRIBUTABLE TO COMMON STOCKHOLDERS:
 
 
 
 
Basic
$ 0.04 
$ 0.03 
$ 0.11 
$ 0.03 
Diluted
$ 0.04 
$ 0.03 
$ 0.08 
$ 0.03 
WEIGHTED AVERAGE SHARES USED TO COMPUTE NET INCOME PER SHARE ATTRIBUTABLE TO COMMON STOCKHOLDERS:
 
 
 
 
Basic
27,212,105 
1,974,991 
21,907,842 
1,952,574 
Diluted
29,592,108 
22,453,808 
28,261,882 
22,387,822 
Condensed Consolidated Statements of Comprehensive Income (Unaudited) (USD $)
In Thousands, unless otherwise specified
3 Months Ended 6 Months Ended
Jun. 30, 2012
Jun. 30, 2011
Jun. 30, 2012
Jun. 30, 2011
Condensed Consolidated Statements of Comprehensive Income
 
 
 
 
Net Income (Loss) Attributable to Parent
$ 1,199 
$ 592 
$ 2,373 
$ 703 
Other comprehensive income:
 
 
 
 
Change in foreign currency translation adjustment
 
 
Comprehensive income
$ 1,208 
$ 592 
$ 2,382 
$ 703 
Condensed Consolidated Statements of Cash Flows (Unaudited) (USD $)
In Thousands, unless otherwise specified
6 Months Ended
Jun. 30, 2012
Jun. 30, 2011
CASH FLOWS FROM OPERATING ACTIVITIES:
 
 
Net income
$ 2,373 
$ 703 
Adjustments to reconcile net income to net cash provided by operating activities:
 
 
Depreciation
1,715 
1,277 
Stock-based compensation expense
983 
408 
Deferred income taxes
616 
   
Change in assets and liabilities, net of effect of acquisition:
 
 
Accounts receivable, net
(1,171)
(83)
Prepaid expenses and other current assets
(528)
(82)
Other long-term assets
120 
(350)
Accounts payable
782 
(1,419)
Accrued expenses and other current liabilities
(155)
792 
Other long-term liabilities
64 
(17)
Net cash provided by operating activities
4,799 
1,229 
CASH FLOWS FROM INVESTING ACTIVITIES:
 
 
Purchases of property and equipment
(2,040)
(1,184)
Cash paid for business acquisition
(600)
   
Net cash used in investing activities
(2,640)
(1,184)
CASH FLOWS FROM FINANCING ACTIVITIES:
 
 
Repayment on bank financing
(250)
(250)
Proceeds from exercise of common stock options
639 
17 
Repayments on capital lease obligations
(1,035)
(1,085)
Initial public offering costs
(2,753)
   
Proceeds from initial public offering
25,364 
   
Net cash (used in) provided by financing activities
21,965 
(1,318)
Effect of exchange rate changes on cash and cash equivalents
   
NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS
24,133 
(1,273)
CASH AND CASH EQUIVALENTS--Beginning of period
10,925 
5,412 
CASH AND CASH EQUIVALENTS--End of period
35,058 
4,139 
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
 
 
Cash paid for interest
121 
45 
Cash paid for income taxes
83 
   
SUPPLEMENTAL DISCLOSURES OF NON-CASH INVESTING AND FINANCING TRANSACTIONS:
 
 
Property and equipment acquired under capital lease obligations
2,484 
397 
Accrued business acquisition consideration
500 
   
Accrued property and equipment expenditures
$ 152 
$ 30 
The Company and Summary of Significant Accounting Policies
The Company and Summary of Significant Accounting Policies

1. The Company and Summary of Significant Accounting Policies

Synacor, Inc., together with its wholly-owned subsidiary, Synacor Canada, Inc. (collectively, the “Company”), is a leading provider of authentication and aggregation solutions for delivery of online content and cloud-based services. The Company delivers solutions as a set of services through its hosted and managed platform, enabling cable and telecom service providers and consumer electronics manufacturers to provide the online content and cloud-based services that their consumers increasingly demand. The Company’s platform allows its customers to package a wide array of online content and cloud-based services with their high-speed Internet, communications, television and other offerings. Synacor’s customers offer the Company’s services under their own brands on Internet-enabled devices such as PCs, tablets, smartphones and connected TVs.

Initial Public Offering—In February 2012, the Company completed its initial public offering whereby 6,818,170 shares of common stock were sold to the public at a price of $5.00 per share. The Company sold 5,454,545 common shares and selling stockholders sold 1,363,625 common shares. The Company received aggregate proceeds of $25,364 from the initial public offering, net of underwriters’ discounts and commissions but before deducting offering expenses of $3,016.

In connection with the initial public offering in February 2012, the Board of Directors of the Company approved a 1-for-2 reverse stock split of the Company’s common stock. All common shares, stock options, and per share information presented in these condensed consolidated financial statements reflect the reverse stock split on a retroactive basis for all periods presented. There was no change in the par value of the Company’s common stock. The ratio by which shares of preferred stock were convertible into shares of common stock was adjusted to reflect the effects of the reverse stock split. In addition, in accordance with their rights and consistent with the conversion rates discussed in Note 8, Equity, all shares of the Company’s outstanding preferred stock were converted into common stock upon the closing of the initial public offering.

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 (“GAAP”) and include the accounts of the Company and its wholly-owned subsidiary, Synacor Canada, Inc. 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 of for any subsequent period and should be read conjunction with the audited consolidated financial statements and related notes included in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2011.

Accounting Estimates—The preparation of financial statements in conformity with GAAP in the U.S. requires management to make estimates, judgments and assumptions that affect the amounts reported and disclosed in the financial statements and the accompanying notes. We base our 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 December 31, 2011 and June 30, 2012, and for the three and six months ended June 30, 2011 and 2012, the Company had concentrations equal to or exceeding 10% of the Company’s accounts receivable and revenue as follows:

 

                 
    Accounts Receivable  
    December 31,
2011
    June 30,
2012
 

Google

    45     35

Platform Customer A

    11       13  

 

                                 
    Revenue  
    Three months ended
June 30,
    Six months ended
June 30,
 
    2011     2012     2011     2012  

Google

    54     56     55     59

 

For the three and six months ended June 30, 2011 and 2012, the following platform customers received revenue-share payments equal to or exceeding 10% of the Company’s cost of revenue. The costs represent revenue share paid to them for their supply of Internet traffic on our customer branded platforms.

 

                                 
    Cost of Revenue  
    Three months ended
June 30,
    Six months ended
June 30,
 
    2011     2012     2011     2012  

Platform Customer A

    16     20     16     20

Platform Customer B (1)

    N/A       17       N/A       17  

Platform Customer C

    21       13       22       13  

Platform Customer D (1)

    N/A       12       N/A       12  

 

Note:

(1) For the three and six months ended June 30, 2011, the revenue share payments received by Platform Customers B and D were less than 10%.

Fair Value Measurements—The provisions of the Financial Accounting Standards Board (“FASB”) Accounting Standard Codification (“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.

In May 2011, the FASB issued guidance that established a global standard for applying fair value measurement. In addition to a few updates to the measurement guidance it included enhanced disclosure requirements. The most significant change for companies reporting under GAAP is an expansion of the disclosures required for Level 3 measurements; that is, measurements based on unobservable inputs, such as a company’s own data. The Company adopted this authoritative guidance in the first quarter of 2012 and the adoption did not have a material impact on the financial statements.

The estimated fair value of the bank financing liabilities and capital lease obligations approximate their carrying value.

 

Acquisition— In January 2012, the Company acquired the assets of Carbyn, Inc., or Carbyn, an Ontario, Canada-based company. The assets acquired are principally comprised of mobile device software and technology and other intellectual property, which the Company expects to enhance its efforts in the development of next generation web applications for mobile devices. The aggregate purchase price is up to $1,100 for the acquired assets, of which $600 was paid upon consummation of the acquisition and the remaining $500 is due in April 2013 unless such amount is offset in satisfaction of certain indemnification obligations of Carbyn. In addition, the Company hired seven employees from Carbyn who have accepted employment with Synacor Canada, Inc., a newly-formed and wholly-owned subsidiary of the Company. The acquisition and its impact on the balance sheet and results of operations are not material. The purchase price was allocated to the assets acquired based on their respective fair values as of the acquisition date, with the amount exceeding the fair value recorded as goodwill of $819.

Property and Equipment - Net
Property and Equipment - Net

2. Property and Equipment—Net

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

 

                 
    December 31,
2011
    June 30,
2012
 

Computer equipment (1)

  $ 13,032     $ 16,275  

Computer software

    1,409       2,661  

Furniture and fixtures

    1,049       1,049  

Leasehold improvements

    690       718  

Other

    933       474  
   

 

 

   

 

 

 
      17,113       21,177  

Less accumulated depreciation (2)

    (8,812     (10,421
   

 

 

   

 

 

 

Total property and equipment—net

  $ 8,301     $ 10,756  
   

 

 

   

 

 

 

 

Notes:

(1) Includes equipment under capital lease obligations of approximately $3,442 and $5,907 as of December 31, 2011 and June 30, 2012, respectively.
(2) Includes $687 and $1,205 of accumulated depreciation of equipment under capital leases as of December 31, 2011 and June 30, 2012, respectively.
Accrued Expenses and Other Current Liabilities
Accrued Expenses and Other Current Liabilities

3. Accrued Expenses and Other Current Liabilities

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

 

                 
    December 31,
2011
    June 30,
2012
 

Accrued compensation

  $ 3,612     $ 3,077  

Accrued content fees

    334       679  

Accrued business acquisition consolidation

    —         500  

Unearned revenue on contracts

    255       268  

Other

    1,291       802  
   

 

 

   

 

 

 

Total

  $ 5,492     $ 5,326  
   

 

 

   

 

 

 

 

Capital Lease Obligations
Capital Lease Obligations

4. Capital Lease Obligations

The Company leases certain equipment under capital lease agreements with interest rates ranging from 3% to 7%.

Capital lease commitments as of June 30, 2012 can be summarized as follows (in thousands):

 

         

Year ending December 31:

     

2012 (remaining six months)

  $ 1,308  

2013

    2,281  

2014

    1,664  

2015

    143  
   

 

 

 

Gross lease commitment

    5,396  

Less interest

    (256
   

 

 

 

Net lease commitments

  $ 5,140  
   

 

 

 
Income Taxes
Income Taxes

5. Income Taxes

In order to determine the quarterly provision for income taxes, the Company considers the estimated annual effective tax rate, which is based on expected annual income and statutory tax rates in the various jurisdictions in which the Company operates, and also the current income taxes based on actual quarterly income. Certain significant or unusual items are separately recognized in the quarter during which they occur and can be a source of variability in the effective tax rates from quarter to quarter.

The Company is subject to income tax in the United States, as well as other tax jurisdictions in which it conducts business. Earnings from non-U.S. activities are subject to local country income tax and may also be subject to current U.S. income tax.

Income tax expense was $3 and $301 for the three months ended June 30, 2011 and 2012, respectively, resulting in an effective tax rate of 0.5% and 20%, respectively. Income tax expense was $6 and $700 for the six months ended June 30, 2011 and 2012, respectively, resulting in an effective tax rate of 1% and 23%, respectively.

Due to the uncertainty at June 30, 2011 to generate sufficient taxable income in the future and utilize the net operating loss carryforwards before they expire, the Company had recorded a valuation allowance to reduce its net deferred tax asset to zero. Consequently, the Company did not incur any material income tax expense in the three and six months ended June 30, 2011.

During 2012, the Company performed an analysis of its research and development activities for periods prior to 2012. As a result, the Company recognized a tax benefit of $412 and $716 for the three and six months ended June 30, 2012, respectively. The increase in the tax benefit recorded related to an increase in the estimated amount of research and development credit expected to be claimed for historical periods. The effective tax rate for the three and six months ended June 30, 2012 is not necessarily indicative of the effective tax rate that may be expected for the fiscal year ending December 31, 2012. Factors that impact the income tax provision include, but are not limited to, stock-based compensation expense and the recognition of research and development tax benefits.

Information About Segment and Geographic Areas
Information About Segment and Geographic Areas

6. Information About Segment and Geographic Areas

The Company considers operating segments to be 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. 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 of providing personalized Internet platforms and online entertainment services to high-speed Internet subscribers.

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

 

                                 
    Three Months Ended
June 30,
    Six Months Ended
June 30,
 
    2011     2012     2011     2012  

Revenue

                               

United States

  $ 19,303     $ 30,641     $ 37,836     $ 61,155  

United Kingdom

    164       166       325       322  
   

 

 

   

 

 

   

 

 

   

 

 

 

Total revenue

  $ 19,467     $ 30,807     $ 38,161     $ 61,477  
   

 

 

   

 

 

   

 

 

   

 

 

 

 

                 
    December 31,
2011
    June 30,
2012
 

Long-lived tangible assets

               

United States

  $ 7,680     $ 10,245  

Netherlands

    621       511  
   

 

 

   

 

 

 

Total long-lived tangible assets

  $ 8,301     $ 10,756  
   

 

 

   

 

 

 
Commitments and Contingencies
Commitments and Contingencies

7. Commitments and Contingencies

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

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 June 30, 2012 can be summarized as follows (in thousands):

 

         

Year ending December 31:

     

2012 (remaining six months)

  $ 2,761  

2013

    4,773  

2014

    1,419  

2015

    1,080  

2016

    1,080  

Due after 5 years

    360  
   

 

 

 

Total contract commitments

  $ 11,473  
   

 

 

 
Equity
Equity

8. Equity

Common Stock—Effective on February 15, 2012, the Company’s board of directors and stockholders approved the Fifth Amended and Restated Certificate of Incorporation. The total number of common shares that the Company is authorized to issue is 100 million with a par value of $0.01 per share.

Preferred Stock—Effective on February 15, 2012, the Company’s board of directors and stockholders approved the Fifth Amended and Restated Certificate of Incorporation. The total number of preferred shares that the Company is authorized to issue is 10 million with a par value of $0.01 per share.

Conversion—Each share of Series A, A-1, B, and C preferred stock was convertible at the option of the holder at any time into common stock. The conversion rate was the quotient obtained by dividing the original issue price of the Series A, A-1, B, or C by the conversion price. Subsequent to the Second Certificate of Amendment to the Fourth Amended and Restated Certificate of Incorporation, the conversion price was adjusted to effect a conversion of one preferred share into one and one-half common shares, as explained in Note 1, The Company and Summary of Significant Accounting Policies. The conversion price was subject to adjustment as set forth in the Restated Certificate of Incorporation for certain dilutive issuances, splits, and combinations, as therein defined. Conversion was automatic upon either the consent of the holders of 66% of the outstanding shares of preferred stock or the effective date of a firm commitment underwritten public offering of the Company’s common stock in which the post-offering valuation on a fully diluted basis was at least $150 million and the proceeds were not less than $25 million. All shares of the Company’s outstanding preferred stock were converted into common stock in February 2012 in connection with the Company’s initial public offering.

Stock-based Compensation
Stock-based Compensation

9. Stock-based Compensation

No income tax deduction is allowed for incentive stock options. Accordingly, no deferred income tax asset is recorded for the expense related to these options. Stock option grants of non-qualified stock options result in the creation of a deferred tax asset, which is a temporary difference, until the time that the option is exercised.

 

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
June 30,
    Six Months Ended
June 30,
 
    2011     2012     2011     2012  

Research and development

  $ 59     $ 120     $ 130     $ 227  

Sales and marketing

    41       99       90       173  

General and administrative

    86       206       188       583  
   

 

 

   

 

 

   

 

 

   

 

 

 

Total stock-based compensation expense

  $ 186     $ 425     $ 408     $ 983  
   

 

 

   

 

 

   

 

 

   

 

 

 

Stock Option Plans—The Company has adopted three stock option plans, which authorize the grant of up to 8,296,777 options to officers and other key employees to purchase the Company’s common stock, subject to the terms of the plans. The options generally vest ratably over four years. The options are generally exercisable after the date of grant, and typically expire 10 years from their respective grant dates or earlier if employment is terminated. In connection with the early exercise of stock options, the Company has the right, but not the obligation, to repurchase unvested shares of common stock upon termination of the individual’s service to the Company at the original price per share. During the six months ended June 30, 2012 there were no early exercises.

A summary of the stock option activity for the six months ended June 30, 2012 is presented below:

 

                         
    Number of
Stock
Options
    Weighted
Average
Exercise
Price
    Aggregate
Intrinsic Value (in
thousands)
 

Outstanding—December 31, 2011

    5,082,776     $ 2.14          

Granted

    873,225       7.19          

Exercised

    (1,327,966     0.48          

Forfeited

    (118,892     3.23          
   

 

 

                 

Outstanding—June 30, 2012

    4,509,143       3.57     $ 45,678  
   

 

 

                 

Vested and expected to vest—June 30, 2012

    4,084,871       3.46     $ 41,829  
   

 

 

                 

Vested and exercisable—June 30, 2012

    2,270,319       2.01     $ 26,540  
   

 

 

                 

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 as of June 30, 2012 was $13.70. The total intrinsic value of options exercised was approximately $375 and $17,556 for the three and six months ended June 30, 2012, respectively.

The weighted-average remaining contractual life of the options vested and expected to vest was 7.5 years as of June 30, 2012.

The per-share fair value of each stock option was determined on the date of grant using the Black-Scholes option pricing model using the following assumptions:

 

                                                 

Grant Date

  Options
Granted
    Weighted-
Average
Fair Value
    Expected
Life of
Options
(In years)
    Risk-Free
Interest
Rate
    Expected
Volatility
    Expected
Dividend
Yield
 

January 6, 2012

    238,000     $ 5.96       6.25       1.40     53     —  

April 15, 2012

    548,725     $ 7.10       6.25       1.61     61     —  

May 24, 2012

    86,500     $ 11.14       6.25       1.20     61     —  

As of June 30, 2012, the unrecognized compensation cost related to non-vested options granted, for which vesting is probable, under the plan was approximately $5,170. This cost is expected to be recognized over a weighted-average period of 2.2 years. The total fair value of shares vested was $325 and $748 during the three and six months ended June 30, 2012, respectively.

Net Income Per Common Share Data
Net Income Per Common Share Data

10. Net Income Per Common Share Data

Basic and diluted net income per common share for the three and six months ended June 30, 2011 is presented in conformity with the two-class method required for participating securities. The Company determined that its Series A, A-1, B, and C convertible preferred stock represented participating securities because they participated with common stock in dividends and unallocated income. Historically, the Company has not paid dividends. The holders of the Series A, A-1, B, and C convertible preferred stock did not have a contractual obligation to share in the losses of the Company. The Company considered its preferred stock to be participating securities and, in accordance with the two-class method, earnings allocated to preferred stock and the related number of outstanding shares of preferred stock have been excluded from the computation of basic and diluted net income per common share.

The following table presents the calculation of basic and diluted net income per share for the three- and six-month periods ended June 30, 2011 and 2012 (in thousands, except share and per share amounts):

 

                                 
    Three Months Ended,
June 30,
    Six Months Ended,
June 30,
 
    2011     2012     2011     2012  

Net income

  $ 592     $ 1,199     $ 703     $ 2,373  

Less: undistributed earnings allocated to preferred stockholders

    (541     —         (642     —    
   

 

 

   

 

 

   

 

 

   

 

 

 

Net income attributable to common stockholders

  $ 51     $ 1,199     $ 61     $ 2,373  
   

 

 

   

 

 

   

 

 

   

 

 

 

Weighted-average common shares used to compute net income per share attributable to common stockholders

    1,974,991       27,212,105       1,952,574       21,907,842  
   

 

 

   

 

 

   

 

 

   

 

 

 

Basic net income per share attributable to common stockholders

  $ 0.03     $ 0.04     $ 0.03     $ 0.11  
   

 

 

   

 

 

   

 

 

   

 

 

 

Diluted net income per share attributable to common stockholders:

                               

Net income

  $ 51     $ 1,199     $ 61     $ 2,373  

Add: Undistributed earnings allocated to preferred stockholders

    541       —         642       —    
   

 

 

   

 

 

   

 

 

   

 

 

 

Net income attributable to common stockholders

  $ 592     $ 1,199     $ 703     $ 2,373  
   

 

 

   

 

 

   

 

 

   

 

 

 

Number of shares used in basic calculation

    1,974,991       27,212,105       1,952,574       21,907,842  

Weighted-average effect of dilutive securities

                               

Add:

                               

Conversion of preferred stock (as-if converted basis)

    17,395,136       —         17,395,136       3,918,684  

Stock options

    3,083,681       2,380,003       3,040,112       2,435,356  
   

 

 

   

 

 

   

 

 

   

 

 

 

Number of shares used in diluted calculation

    22,453,808       29,592,108       22,387,822       28,261,882  
   

 

 

   

 

 

   

 

 

   

 

 

 

Diluted net income per share attributable to common stockholders

  $ 0.03     $ 0.04     $ 0.03     $ 0.08  
   

 

 

   

 

 

   

 

 

   

 

 

 

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

 

                                 
    Three Months Ended
June 30,
    Six Months Ended
June 30,
 
    2011     2012     2011     2012  

Antidilutive equity awards

                               

Stock options

    267       86,500       58,767       86,500  
   

 

 

   

 

 

   

 

 

   

 

 

 

* * * * * *

The Company and Summary of Significant Accounting Policies (Policies)

Initial Public Offering—In February 2012, the Company completed its initial public offering whereby 6,818,170 shares of common stock were sold to the public at a price of $5.00 per share. The Company sold 5,454,545 common shares and selling stockholders sold 1,363,625 common shares. The Company received aggregate proceeds of $25,364 from the initial public offering, net of underwriters’ discounts and commissions but before deducting offering expenses of $3,016.

In connection with the initial public offering in February 2012, the Board of Directors of the Company approved a 1-for-2 reverse stock split of the Company’s common stock. All common shares, stock options, and per share information presented in these condensed consolidated financial statements reflect the reverse stock split on a retroactive basis for all periods presented. There was no change in the par value of the Company’s common stock. The ratio by which shares of preferred stock were convertible into shares of common stock was adjusted to reflect the effects of the reverse stock split. In addition, in accordance with their rights and consistent with the conversion rates discussed in Note 8, Equity, all shares of the Company’s outstanding preferred stock were converted into common stock upon the closing of the initial public offering.

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 (“GAAP”) and include the accounts of the Company and its wholly-owned subsidiary, Synacor Canada, Inc. 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 of for any subsequent period and should be read conjunction with the audited consolidated financial statements and related notes included in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2011.

Accounting Estimates—The preparation of financial statements in conformity with GAAP in the U.S. requires management to make estimates, judgments and assumptions that affect the amounts reported and disclosed in the financial statements and the accompanying notes. We base our 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 December 31, 2011 and June 30, 2012, and for the three and six months ended June 30, 2011 and 2012, the Company had concentrations equal to or exceeding 10% of the Company’s accounts receivable and revenue as follows:

 

                 
    Accounts Receivable  
    December 31,
2011
    June 30,
2012
 

Google

    45     35

Platform Customer A

    11       13  

 

                                 
    Revenue  
    Three months ended
June 30,
    Six months ended
June 30,
 
    2011     2012     2011     2012  

Google

    54     56     55     59

 

For the three and six months ended June 30, 2011 and 2012, the following platform customers received revenue-share payments equal to or exceeding 10% of the Company’s cost of revenue. The costs represent revenue share paid to them for their supply of Internet traffic on our customer branded platforms.

 

                                 
    Cost of Revenue  
    Three months ended
June 30,
    Six months ended
June 30,
 
    2011     2012     2011     2012  

Platform Customer A

    16     20     16     20

Platform Customer B (1)

    N/A       17       N/A       17  

Platform Customer C

    21       13       22       13  

Platform Customer D (1)

    N/A       12       N/A       12  

 

Note:

(1) For the three and six months ended June 30, 2011, the revenue share payments received by Platform Customers B and D were less than 10%.

Fair Value Measurements—The provisions of the Financial Accounting Standards Board (“FASB”) Accounting Standard Codification (“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.

In May 2011, the FASB issued guidance that established a global standard for applying fair value measurement. In addition to a few updates to the measurement guidance it included enhanced disclosure requirements. The most significant change for companies reporting under GAAP is an expansion of the disclosures required for Level 3 measurements; that is, measurements based on unobservable inputs, such as a company’s own data. The Company adopted this authoritative guidance in the first quarter of 2012 and the adoption did not have a material impact on the financial statements.

The estimated fair value of the bank financing liabilities and capital lease obligations approximate their carrying value.

Acquisition— In January 2012, the Company acquired the assets of Carbyn, Inc., or Carbyn, an Ontario, Canada-based company. The assets acquired are principally comprised of mobile device software and technology and other intellectual property, which the Company expects to enhance its efforts in the development of next generation web applications for mobile devices. The aggregate purchase price is up to $1,100 for the acquired assets, of which $600 was paid upon consummation of the acquisition and the remaining $500 is due in April 2013 unless such amount is offset in satisfaction of certain indemnification obligations of Carbyn. In addition, the Company hired seven employees from Carbyn who have accepted employment with Synacor Canada, Inc., a newly-formed and wholly-owned subsidiary of the Company. The acquisition and its impact on the balance sheet and results of operations are not material. The purchase price was allocated to the assets acquired based on their respective fair values as of the acquisition date, with the amount exceeding the fair value recorded as goodwill of $819.

The Company and Summary of Significant Accounting Policies (Tables)
                 
    Accounts Receivable  
    December 31,
2011
    June 30,
2012
 

Google

    45     35

Platform Customer A

    11       13  

 

                                 
    Revenue  
    Three months ended
June 30,
    Six months ended
June 30,
 
    2011     2012     2011     2012  

Google

    54     56     55     59
                                 
    Cost of Revenue  
    Three months ended
June 30,
    Six months ended
June 30,
 
    2011     2012     2011     2012  

Platform Customer A

    16     20     16     20

Platform Customer B (1)

    N/A       17       N/A       17  

Platform Customer C

    21       13       22       13  

Platform Customer D (1)

    N/A       12       N/A       12  

 

Note:

(1) For the three and six months ended June 30, 2011, the revenue share payments received by Platform Customers B and D were less than 10%.
Property and Equipment - Net (Tables)
Schedule of property and equipment
                 
    December 31,
2011
    June 30,
2012
 

Computer equipment (1)

  $ 13,032     $ 16,275  

Computer software

    1,409       2,661  

Furniture and fixtures

    1,049       1,049  

Leasehold improvements

    690       718  

Other

    933       474  
   

 

 

   

 

 

 
      17,113       21,177  

Less accumulated depreciation (2)

    (8,812     (10,421
   

 

 

   

 

 

 

Total property and equipment—net

  $ 8,301     $ 10,756  
   

 

 

   

 

 

 

 

Notes:

(1) Includes equipment under capital lease obligations of approximately $3,442 and $5,907 as of December 31, 2011 and June 30, 2012, respectively.
(2) Includes $687 and $1,205 of accumulated depreciation of equipment under capital leases as of December 31, 2011 and June 30, 2012, respectively.
Accrued Expenses and Other Current Liabilities (Tables)
Schedule of accrued expenses and other current liabilities
                 
    December 31,
2011
    June 30,
2012
 

Accrued compensation

  $ 3,612     $ 3,077  

Accrued content fees

    334       679  

Accrued business acquisition consolidation

    —         500  

Unearned revenue on contracts

    255       268  

Other

    1,291       802  
   

 

 

   

 

 

 

Total

  $ 5,492     $ 5,326  
   

 

 

   

 

 

 
Capital Lease Obligations (Tables)
Schedule of capital lease commitments
         

Year ending December 31:

     

2012 (remaining six months)

  $ 1,308  

2013

    2,281  

2014

    1,664  

2015

    143  
   

 

 

 

Gross lease commitment

    5,396  

Less interest

    (256
   

 

 

 

Net lease commitments

  $ 5,140  
   

 

 

 
Information About Segment and Geographic Areas (Tables)
Schedule of revenue and long-lived tangible assets by geographic area
                                 
    Three Months Ended
June 30,
    Six Months Ended
June 30,
 
    2011     2012     2011     2012  

Revenue

                               

United States

  $ 19,303     $ 30,641     $ 37,836     $ 61,155  

United Kingdom

    164       166       325       322  
   

 

 

   

 

 

   

 

 

   

 

 

 

Total revenue

  $ 19,467     $ 30,807     $ 38,161     $ 61,477  
   

 

 

   

 

 

   

 

 

   

 

 

 

 

                 
    December 31,
2011
    June 30,
2012
 

Long-lived tangible assets

               

United States

  $ 7,680     $ 10,245  

Netherlands

    621       511  
   

 

 

   

 

 

 

Total long-lived tangible assets

  $ 8,301     $ 10,756  
   

 

 

   

 

 

 
Commitments and Contingencies (Tables)
Schedule of contract commitments
         

Year ending December 31:

     

2012 (remaining six months)

  $ 2,761  

2013

    4,773  

2014

    1,419  

2015

    1,080  

2016

    1,080  

Due after 5 years

    360  
   

 

 

 

Total contract commitments

  $ 11,473  
   

 

 

 
Stock-based Compensation (Tables)
                                 
    Three Months Ended
June 30,
    Six Months Ended
June 30,
 
    2011     2012     2011     2012  

Research and development

  $ 59     $ 120     $ 130     $ 227  

Sales and marketing

    41       99       90       173  

General and administrative

    86       206       188       583  
   

 

 

   

 

 

   

 

 

   

 

 

 

Total stock-based compensation expense

  $ 186     $ 425     $ 408     $ 983  
   

 

 

   

 

 

   

 

 

   

 

 

 
                         
    Number of
Stock
Options
    Weighted
Average
Exercise
Price
    Aggregate
Intrinsic Value (in
thousands)
 

Outstanding—December 31, 2011

    5,082,776     $ 2.14          

Granted

    873,225       7.19          

Exercised

    (1,327,966     0.48          

Forfeited

    (118,892     3.23          
   

 

 

                 

Outstanding—June 30, 2012

    4,509,143       3.57     $ 45,678  
   

 

 

                 

Vested and expected to vest—June 30, 2012

    4,084,871       3.46     $ 41,829  
   

 

 

                 

Vested and exercisable—June 30, 2012

    2,270,319       2.01     $ 26,540  
   

 

 

                 
                                                 

Grant Date

  Options
Granted
    Weighted-
Average
Fair Value
    Expected
Life of
Options
(In years)
    Risk-Free
Interest
Rate
    Expected
Volatility
    Expected
Dividend
Yield
 

January 6, 2012

    238,000     $ 5.96       6.25       1.40     53     —  

April 15, 2012

    548,725     $ 7.10       6.25       1.61     61     —  

May 24, 2012

    86,500     $ 11.14       6.25       1.20     61     —  
Net Income Per Common Share Data (Tables)
                                 
    Three Months Ended,
June 30,
    Six Months Ended,
June 30,
 
    2011     2012     2011     2012  

Net income

  $ 592     $ 1,199     $ 703     $ 2,373  

Less: undistributed earnings allocated to preferred stockholders

    (541     —         (642     —    
   

 

 

   

 

 

   

 

 

   

 

 

 

Net income attributable to common stockholders

  $ 51     $ 1,199     $ 61     $ 2,373  
   

 

 

   

 

 

   

 

 

   

 

 

 

Weighted-average common shares used to compute net income per share attributable to common stockholders

    1,974,991       27,212,105       1,952,574       21,907,842  
   

 

 

   

 

 

   

 

 

   

 

 

 

Basic net income per share attributable to common stockholders

  $ 0.03     $ 0.04     $ 0.03     $ 0.11  
   

 

 

   

 

 

   

 

 

   

 

 

 

Diluted net income per share attributable to common stockholders:

                               

Net income

  $ 51     $ 1,199     $ 61     $ 2,373  

Add: Undistributed earnings allocated to preferred stockholders

    541       —         642       —    
   

 

 

   

 

 

   

 

 

   

 

 

 

Net income attributable to common stockholders

  $ 592     $ 1,199     $ 703     $ 2,373  
   

 

 

   

 

 

   

 

 

   

 

 

 

Number of shares used in basic calculation

    1,974,991       27,212,105       1,952,574       21,907,842  

Weighted-average effect of dilutive securities

                               

Add:

                               

Conversion of preferred stock (as-if converted basis)

    17,395,136       —         17,395,136       3,918,684  

Stock options

    3,083,681       2,380,003       3,040,112       2,435,356  
   

 

 

   

 

 

   

 

 

   

 

 

 

Number of shares used in diluted calculation

    22,453,808       29,592,108       22,387,822       28,261,882  
   

 

 

   

 

 

   

 

 

   

 

 

 

Diluted net income per share attributable to common stockholders

  $ 0.03     $ 0.04     $ 0.03     $ 0.08  
   

 

 

   

 

 

   

 

 

   

 

 

 
                                 
    Three Months Ended
June 30,
    Six Months Ended
June 30,
 
    2011     2012     2011     2012  

Antidilutive equity awards

                               

Stock options

    267       86,500       58,767       86,500  
   

 

 

   

 

 

   

 

 

   

 

 

 
The Company and Summary of Significant Accounting Policies (Details)
6 Months Ended 12 Months Ended 6 Months Ended 12 Months Ended 3 Months Ended 6 Months Ended
Jun. 30, 2012
Accounts Receivable [Member]
Google [Member]
Dec. 31, 2011
Accounts Receivable [Member]
Google [Member]
Jun. 30, 2012
Accounts Receivable [Member]
Platform Customer A [Member]
Dec. 31, 2011
Accounts Receivable [Member]
Platform Customer A [Member]
Jun. 30, 2012
Revenue [Member]
Google [Member]
Jun. 30, 2011
Revenue [Member]
Google [Member]
Jun. 30, 2012
Revenue [Member]
Google [Member]
Jun. 30, 2011
Revenue [Member]
Google [Member]
Schedule of Concentrations Equal to or Exceeding 10% of the Company's Accounts Receivable and Revenue
 
 
 
 
 
 
 
 
Concentration risk, percentage
35.00% 
45.00% 
13.00% 
11.00% 
56.00% 
54.00% 
59.00% 
55.00% 
The Company and Summary of Significant Accounting Policies (Details 1)
6 Months Ended 12 Months Ended 3 Months Ended 6 Months Ended 3 Months Ended 6 Months Ended 3 Months Ended 6 Months Ended 3 Months Ended 6 Months Ended
Jun. 30, 2012
Platform Customer A [Member]
Accounts Receivable [Member]
Dec. 31, 2011
Platform Customer A [Member]
Accounts Receivable [Member]
Jun. 30, 2012
Platform Customer A [Member]
Cost of Revenue [Member]
Jun. 30, 2011
Platform Customer A [Member]
Cost of Revenue [Member]
Jun. 30, 2012
Platform Customer A [Member]
Cost of Revenue [Member]
Jun. 30, 2011
Platform Customer A [Member]
Cost of Revenue [Member]
Jun. 30, 2012
Platform Customer B [Member]
Cost of Revenue [Member]
Jun. 30, 2012
Platform Customer B [Member]
Cost of Revenue [Member]
Jun. 30, 2012
Platform Customer C [Member]
Cost of Revenue [Member]
Jun. 30, 2011
Platform Customer C [Member]
Cost of Revenue [Member]
Jun. 30, 2012
Platform Customer C [Member]
Cost of Revenue [Member]
Jun. 30, 2011
Platform Customer C [Member]
Cost of Revenue [Member]
Jun. 30, 2012
Platform Customer D [Member]
Cost of Revenue [Member]
Jun. 30, 2012
Platform Customer D [Member]
Cost of Revenue [Member]
Schedule of concentrations equal to or exceeding 10% of the Company's accounts receivable and revenue
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Concentration risk, percentage
13.00% 
11.00% 
20.00% 
16.00% 
20.00% 
16.00% 
17.00% 
17.00% 
13.00% 
21.00% 
13.00% 
22.00% 
12.00% 
12.00% 
The Company and Summary of Significant Accounting Policies (Details Textual) (USD $)
In Thousands, except Share data, unless otherwise specified
1 Months Ended 6 Months Ended 3 Months Ended 6 Months Ended 3 Months Ended 6 Months Ended 3 Months Ended 6 Months Ended 3 Months Ended 6 Months Ended 3 Months Ended 6 Months Ended 3 Months Ended 6 Months Ended 3 Months Ended 6 Months Ended 2 Months Ended
Jan. 31, 2012
Jun. 30, 2012
Person
Jun. 30, 2011
Dec. 31, 2011
Dec. 31, 2010
Jun. 30, 2011
Platform Customer B [Member]
Jun. 30, 2011
Platform Customer B [Member]
Jun. 30, 2012
Platform Customer B [Member]
Cost of Revenue [Member]
Jun. 30, 2012
Platform Customer B [Member]
Cost of Revenue [Member]
Jun. 30, 2011
Platform Customer D [Member]
Jun. 30, 2011
Platform Customer D [Member]
Jun. 30, 2012
Platform Customer D [Member]
Cost of Revenue [Member]
Jun. 30, 2012
Platform Customer D [Member]
Cost of Revenue [Member]
Jun. 30, 2012
Minimum [Member]
Accounts Receivable [Member]
Jun. 30, 2011
Minimum [Member]
Accounts Receivable [Member]
Jun. 30, 2012
Minimum [Member]
Accounts Receivable [Member]
Jun. 30, 2011
Minimum [Member]
Accounts Receivable [Member]
Jun. 30, 2012
Minimum [Member]
Revenue [Member]
Jun. 30, 2011
Minimum [Member]
Revenue [Member]
Jun. 30, 2012
Minimum [Member]
Revenue [Member]
Jun. 30, 2011
Minimum [Member]
Revenue [Member]
Jun. 30, 2012
Minimum [Member]
Cost of Revenue [Member]
Jun. 30, 2011
Minimum [Member]
Cost of Revenue [Member]
Jun. 30, 2012
Minimum [Member]
Cost of Revenue [Member]
Jun. 30, 2011
Minimum [Member]
Cost of Revenue [Member]
Feb. 29, 2012
IPO [Member]
Subsidiary, Sale of Stock [Line Items]
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Concentration risk, percentage
 
 
 
 
 
 
 
17.00% 
17.00% 
 
 
12.00% 
12.00% 
10.00% 
10.00% 
10.00% 
10.00% 
10.00% 
10.00% 
10.00% 
10.00% 
10.00% 
10.00% 
10.00% 
10.00% 
 
Number of common stock sold to the public
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
6,818,170 
Sale of stock, price per share
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
$ 5.00 
Shares sold by company
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
5,454,545 
Shares sold by selling stockholders
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
1,363,625 
Proceeds from IPO, net of underwriters discounts and commissions
 
$ 25,364 
   
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
$ 25,364 
Offeringe expenses
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
3,016 
Percentage of revenue share paid out of company's cost-of-revenue
 
 
 
 
 
Less Than 10% 
Less Than 10% 
 
 
Less Than 10% 
Less Than 10% 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Company' s cash and cash equivalents
 
35,058 
4,139 
10,925 
5,412 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Employees hired from related party
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
The Company and Summary of Significant Accounting Policies (Textual) [Abstract]
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Aggregate purchase price for the acquired assets
1,100 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Amount paid upon consummation of the acquisition
600 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Payment remaining, due in April 2013
 
500 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Surplus amount recorded as goodwill
$ 819 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Property and Equipment - Net (Details) (USD $)
In Thousands, unless otherwise specified
Jun. 30, 2012
Dec. 31, 2011
Schedule of Property and Equipment
 
 
Property and equipment-gross
$ 21,177 
$ 17,113 
Total property and equipment-net
10,756 
8,301 
Less accumulated depreciation
(10,421)
(8,812)
Computer equipment [Member]
 
 
Schedule of Property and Equipment
 
 
Property and equipment-gross
16,275 
13,032 
Computer software [Member]
 
 
Schedule of Property and Equipment
 
 
Property and equipment-gross
2,661 
1,409 
Furniture and fixtures [Member]
 
 
Schedule of Property and Equipment
 
 
Property and equipment-gross
1,049 
1,049 
Leasehold improvements [Member]
 
 
Schedule of Property and Equipment
 
 
Property and equipment-gross
718 
690 
Other [Member]
 
 
Schedule of Property and Equipment
 
 
Property and equipment-gross
$ 474 
$ 933 
Property and Equipment - Net (Details Textual) (USD $)
In Thousands, unless otherwise specified
Jun. 30, 2012
Dec. 31, 2011
Property and Equipment - Net (Textual) [Abstract]
 
 
Property and equipment-gross
$ 21,177 
$ 17,113 
Accumulated depreciation of equipment
10,421 
8,812 
Capital Lease Obligations [Member]
 
 
Property and Equipment - Net (Textual) [Abstract]
 
 
Accumulated depreciation of equipment
1,205 
687 
Computer equipment [Member]
 
 
Property and Equipment - Net (Textual) [Abstract]
 
 
Property and equipment-gross
16,275 
13,032 
Computer equipment [Member] |
Capital Lease Obligations [Member]
 
 
Property and Equipment - Net (Textual) [Abstract]
 
 
Property and equipment-gross
$ 5,907 
$ 3,442 
Accrued Expenses and Other Current Liabilities (Details) (USD $)
In Thousands, unless otherwise specified
Jun. 30, 2012
Dec. 31, 2011
Schedule of Accrued Expenses and Other Current Liabilities
 
 
Accrued compensation
$ 3,077 
$ 3,612 
Accrued content fees
679 
334 
Accrued business acquisition consolidation
500 
   
Unearned revenue on contracts
268 
255 
Other
802 
1,291 
Total
$ 5,326 
$ 5,492 
Capital Lease Obligations (Details) (USD $)
In Thousands, unless otherwise specified
Jun. 30, 2012
Schedule of Capital Lease Commitments
 
2012 (remaining six months)
$ 1,308 
2013
2,281 
2014
1,664 
Less interest
(256)
2015
143 
Gross lease commitment
5,396 
Net lease commitments
$ 5,140 
Capital Lease Obligations (Details Textual)
6 Months Ended
Jun. 30, 2012
Minimum [Member]
 
Capital Lease Obligations (Textual) [Abstract]
 
Interest rate of equipment capital lease
3.00% 
Maximum [Member]
 
Capital Lease Obligations (Textual) [Abstract]
 
Interest rate of equipment capital lease
7.00% 
Income Taxes (Details Textual) (USD $)
3 Months Ended 6 Months Ended
Jun. 30, 2012
Jun. 30, 2011
Jun. 30, 2012
Jun. 30, 2011
Income Taxes (Textual) [Abstract]
 
 
 
 
Income tax expense
$ 301,000 
$ 3,000 
$ 700,000 
$ 6,000 
Effective tax rate
20.00% 
0.50% 
23.00% 
0.10% 
Tax benefit by research and development
716,000 
412,000 
716,000 
412,000 
Valuation allowance to reduce deferred tax asset
 
$ 0 
 
$ 0 
Information About Segment and Geographic Areas (Details) (USD $)
In Thousands, unless otherwise specified
3 Months Ended 6 Months Ended
Jun. 30, 2012
Jun. 30, 2011
Jun. 30, 2012
Jun. 30, 2011
Dec. 31, 2011
Schedule of revenue and long-lived tangible assets by geographic area
 
 
 
 
 
Revenue
$ 30,807 
$ 19,467 
$ 61,477 
$ 38,161 
 
Long-lived tangible assets
10,756 
 
10,756 
 
8,301 
United States [Member]
 
 
 
 
 
Schedule of revenue and long-lived tangible assets by geographic area
 
 
 
 
 
Revenue
30,558 
19,303 
61,073 
37,836 
 
Long-lived tangible assets
10,245 
 
10,245 
 
7,680 
United Kingdom [Member]
 
 
 
 
 
Schedule of revenue and long-lived tangible assets by geographic area
 
 
 
 
 
Revenue
166 
164 
322 
325 
 
Netherlands [Member]
 
 
 
 
 
Schedule of revenue and long-lived tangible assets by geographic area
 
 
 
 
 
Long-lived tangible assets
$ 511 
 
$ 511 
 
$ 621 
Commitments and Contingencies (Details) (USD $)
In Thousands, unless otherwise specified
Jun. 30, 2012
Schedule of contract commitments
 
2012 (remaining six months)
$ 2,761 
2013
4,773 
2014
1,419 
2015
1,080 
2016
1,080 
Due after 5 years
360 
Total contract commitments
$ 11,473 
Equity (Details) (USD $)
In Millions, except Share data, unless otherwise specified
6 Months Ended
Jun. 30, 2012
Feb. 15, 2012
Dec. 31, 2011
Equity (Textual) [Abstract]
 
 
 
Common stock, shares authorized
100,000,000 
100,000,000 
30,000,000 
Common stock, par value
$ 0.01 
$ 0.01 
$ 0.01 
Preferred stock, shares authorized
10,000,000 
10,000,000 
 
Preferred stock, par value
$ 0.01 
$ 0.01 
 
Conversion price adjustment
one preferred share into one and one-half common shares 
 
 
Automatic Conversion of Shares [Member]
 
 
 
Conversion of Stock [Line Items]
 
 
 
Percentage of Outstanding Shares of Preferred Shareholders Required
66.00% 
 
 
Minimum post-offering valuation on a fully diluted basis required
$ 150 
 
 
Minimum Proceeds Required
$ 25 
 
 
Stock-based Compensation (Details) (USD $)
In Thousands, unless otherwise specified
3 Months Ended 6 Months Ended
Jun. 30, 2012
Jun. 30, 2011
Jun. 30, 2012
Jun. 30, 2011
Schedule of total stock-based compensation expense
 
 
 
 
Total stock-based compensation expense
$ 425 
$ 186 
$ 983 
$ 408 
Research and development [Member]
 
 
 
 
Schedule of total stock-based compensation expense
 
 
 
 
Total stock-based compensation expense
120 
59 
227 
130 
Sales and marketing [Member]
 
 
 
 
Schedule of total stock-based compensation expense
 
 
 
 
Total stock-based compensation expense
99 
41 
173 
90 
General and administrative [Member]
 
 
 
 
Schedule of total stock-based compensation expense
 
 
 
 
Total stock-based compensation expense
$ 206 
$ 86 
$ 583 
$ 188 
Stock-based Compensation (Details 1) (USD $)
In Thousands, except Share data, unless otherwise specified
6 Months Ended
Jun. 30, 2012
Summary of the status of options granted under all options
 
Outstanding number of stock options beginning balance
5,082,776 
Number of stock options granted
873,225 
Number of stock options exercised
(1,327,966)
Number of stock options forfeited
(118,892)
Outstanding number of stock options ending balance
4,509,143 
Outstanding number of stock options expected to vest
4,084,871 
Outstanding number of stock options vested and exercisable
2,270,319 
Outstanding, Weighted Average Exercise Price, Beginning
$ 2.14 
Weighted Average Exercise Price Granted
$ 7.19 
Weighted Average Exercise Price Exercised
$ 0.48 
Weighted Average Exercise Price Forfeited
$ 3.23 
Outstanding, Weighted Average Exercise Price, Ending Balance
$ 3.57 
Expected to vest, Weighted Average Exercise Price Ending Balance
$ 3.46 
Vested and exercisable, Weighted Average Exercise Price Ending Balance
$ 2.01 
Aggregate intrinsic value for outstanding-June 30,2012
$ 45,678 
Aggregate intrinsic value for outstanding, expected to vest-June 30,2012
41,829 
Aggregate intrinsic value for outstanding, exercisable-June 30,2012
$ 26,540 
Stock-based Compensation (Details 2) (Black-scholes option-pricing model [Member], USD $)
6 Months Ended
Jun. 30, 2012
January 6, 2012 [Member]
 
Summary of the Option Grants and assumptions Used In the Black-Scholes option-Pricing Model to Value the options
 
Grant Date
Jan. 06, 2012 
Options Granted
238,000 
Weighted-Average Fair Value
$ 5.96 
Expected Life of Options (In years)
6 years 3 months 
Risk-Free Interest Rate
1.40% 
Expected Volatility
53.00% 
Expected Dividend Yield
   
April 15, 2012 [Member]
 
Summary of the Option Grants and assumptions Used In the Black-Scholes option-Pricing Model to Value the options
 
Grant Date
Apr. 15, 2012 
Options Granted
548,725 
Weighted-Average Fair Value
$ 7.10 
Expected Life of Options (In years)
6 years 3 months 
Risk-Free Interest Rate
1.61% 
Expected Volatility
61.00% 
Expected Dividend Yield
   
May 24, 2012 [Member]
 
Summary of the Option Grants and assumptions Used In the Black-Scholes option-Pricing Model to Value the options
 
Grant Date
May 24, 2012 
Options Granted
86,500 
Weighted-Average Fair Value
$ 11.14 
Expected Life of Options (In years)
6 years 3 months 
Risk-Free Interest Rate
1.20% 
Expected Volatility
61.00% 
Expected Dividend Yield
   
Stock-based Compensation (Details Textual) (USD $)
3 Months Ended 6 Months Ended
Jun. 30, 2012
Mar. 31, 2012
Mar. 31, 2011
Jun. 30, 2012
Jun. 30, 2011
Stock-based compensation (Textual) [Abstract]
 
 
 
 
 
Stock-based compensation expense
 
$ 0 
$ 0 
$ 983,000 
$ 408,000 
Employee stock option plans to purchase common stock, authorized
8,296,777 
 
 
8,296,777 
 
Duration in which options vest ratable
 
 
 
4 years 
 
Employee stock option plans to purchase common stock, expiry period
 
 
 
10 years 
 
Options exercised under early exercise of option plan
 
 
 
 
Weighted-average remaining contractual life of the options outstanding and expected to vest
 
 
 
7 years 6 months 
 
Total intrinsic value of options exercised
375,000 
 
 
17,556,000 
 
Unrecognized compensation cost related to non-vested options granted
5,170,000 
 
 
5,170,000 
 
Expected weighted average period to recognize unrecognized compensation cost
 
 
 
2 years 2 months 12 days 
 
Total fair value of shares vested
325,000 
 
 
748,000 
 
Tax deduction allowed for incentive stock options
 
 
 
 
Deferred income tax asset for the expense related to options
 
 
 
 
Closing stock price as reported on the NASDAQ
$ 13.70 
 
 
$ 13.70 
 
Net Income Per Common Share Data (Details) (USD $)
In Thousands, except Share data, unless otherwise specified
3 Months Ended 6 Months Ended
Jun. 30, 2012
Jun. 30, 2011
Jun. 30, 2012
Jun. 30, 2011
Basic and Diluted Net Income Per Share
 
 
 
 
Net income
$ 1,199 
$ 592 
$ 2,373 
$ 703 
Less: undistributed earnings allocated to preferred stockholders
   
(541)
   
(642)
Net income attributable to common stockholders
1,199 
51 
2,373 
61 
Number of shares used in basic calculation
27,212,105 
1,974,991 
21,907,842 
1,952,574 
Basic net income per share attributable to common stockholders
$ 0.04 
$ 0.03 
$ 0.11 
$ 0.03 
Diluted net income per share attributable to common stockholders:
 
 
 
 
Net income
1,199 
51 
2,373 
61 
Add: Undistributed earnings allocated to preferred stockholders
   
541 
   
642 
Net income attributable to common stockholders
$ 1,199 
$ 592 
$ 2,373 
$ 703 
Number of shares used in basic calculation
27,212,105 
1,974,991 
21,907,842 
1,952,574 
Weighted-average effect of dilutive securities
 
 
 
 
Add: Conversion of preferred stock (as-if converted basis)
   
17,395,136 
3,918,684 
17,395,136 
Add: Stock options
2,380,003 
3,083,681 
2,435,356 
3,040,112 
Number of shares used in diluted calculation
29,592,108 
22,453,808 
28,261,882 
22,387,822 
Diluted net income per share attributable to common stockholders
$ 0.04 
$ 0.03 
$ 0.08 
$ 0.03 
Net Income Per Comon Share Data (Details 1) (Stock options [Member])
3 Months Ended 6 Months Ended
Jun. 30, 2012
Jun. 30, 2011
Jun. 30, 2012
Jun. 30, 2011
Stock options [Member]
 
 
 
 
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
 
 
 
 
Antidilutive equity awards
86,500 
267 
86,500 
58,767