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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 or for any subsequent period and should be read in 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 September 30, 2012, and for the three and nine months ended September 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 |
September 30, 2012 |
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45 | % | 34 | % | ||||
Platform Customer A |
11 | 13 |
Revenue | ||||||||||||||||
Three months ended September 30, |
Nine months ended September 30, |
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2011 | 2012 | 2011 | 2012 | |||||||||||||
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56 | % | 51 | % | 55 | % | 57 | % |
For the three and nine months ended September 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 September 30, |
Nine months ended September 30, |
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2011 | 2012 | 2011 | 2012 | |||||||||||||
Platform Customer A |
22 | % | 19 | % | 15 | % | 20 | % | ||||||||
Platform Customer B (1) |
11 | 16 | N/A | 17 | ||||||||||||
Platform Customer C |
15 | 13 | 19 | 13 | ||||||||||||
Platform Customer D (2) |
N/A | 12 | N/A | 12 |
Note:
(1) | For the nine months ended September 30, 2011, the revenue-share payments received by Platform Customer B was less than 10%. |
(2) | For the three and nine months ended September 30, 2011, the revenue-share payments received by Platform Customer 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, establish a framework for measuring the fair value in accounting principles generally accepted in the U.S. 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.
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.
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2. Property and Equipment—Net
Property and equipment, net consisted of the following (in thousands):
December 31, 2011 |
September 30, 2012 |
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Computer equipment (1) |
$ | 13,032 | $ | 16,640 | ||||
Computer software |
1,409 | 2,748 | ||||||
Furniture and fixtures |
1,049 | 1,050 | ||||||
Leasehold improvements |
690 | 718 | ||||||
Work in process |
— | 1,249 | ||||||
Other |
933 | 173 | ||||||
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17,113 | 22,578 | |||||||
Less accumulated depreciation (2) |
(8,812 | ) | (11,400 | ) | ||||
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Total property and equipment—net |
$ | 8,301 | $ | 11,178 | ||||
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Notes:
(1) | Includes equipment under capital lease obligations of approximately $3,442 and $5,882 as of December 31, 2011 and September 30, 2012, respectively. |
(2) | Includes $687 and $1,519 of accumulated depreciation of equipment under capital leases as of December 31, 2011 and September 30, 2012, respectively. |
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3. Accrued Expenses and Other Current Liabilities
Accrued expenses and other current liabilities consisted of the following (in thousands):
December 31, 2011 |
September 30, 2012 |
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Accrued compensation |
$ | 3,612 | $ | 3,429 | ||||
Accrued content fees |
334 | 577 | ||||||
Accrued business acquisition consideration |
— | 500 | ||||||
Unearned revenue on contracts |
255 | 191 | ||||||
Other |
1,291 | 1,596 | ||||||
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Total |
$ | 5,492 | $ | 6,293 | ||||
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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 September 30, 2012 can be summarized as follows (in thousands):
Year ending December 31: |
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2012 (remaining three months) |
$ | 654 | ||
2013 |
2,281 | |||
2014 |
1,640 | |||
2015 |
132 | |||
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Gross lease commitment |
4,707 | |||
Less interest |
(271 | ) | ||
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Net lease commitments |
$ | 4,436 | ||
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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 $49 for the three months ended September 30, 2011 and the benefit from income taxes was $40 for the three months ended September 30, 2012, resulting in an effective tax rate of 3% and 0%, respectively. Income tax expense was $55 and $660 for the nine months ended September 30, 2011 and 2012, respectively, resulting in an effective tax rate of 2% and 18%, respectively.
Due to the uncertainty at September 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 nine months ended September 30, 2011.
In the fourth quarter of 2011, the Company determined, after weighing the positive and negative evidence, that it will more likely than not be able to generate sufficient taxable income in the future and will be able to fully utilize its net operating loss carryforwards.
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 $259 and $975 for the three and nine months ended September 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 nine months ended September 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.
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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 providing personalized Internet platforms and online entertainment services to high-speed Internet consumers.
The following table sets forth revenue and long-lived tangible assets by geographic area (in thousands):
Three Months Ended September 30, |
Nine Months Ended September 30, |
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2011 | 2012 | 2011 | 2012 | |||||||||||||
Revenue |
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United States |
$ | 23,433 | $ | 28,152 | $ | 61,270 | $ | 89,307 | ||||||||
United Kingdom |
521 | 174 | 845 | 496 | ||||||||||||
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Total revenue |
$ | 23,954 | $ | 28,326 | $ | 62,115 | $ | 89,803 | ||||||||
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December 31, 2011 |
September 30, 2012 |
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Long-lived tangible assets |
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United States |
$ | 7,680 | $ | 10,722 | ||||
Netherlands |
621 | 456 | ||||||
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Total long-lived tangible assets |
$ | 8,301 | $ | 11,178 | ||||
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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 is not expected to 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 September 30, 2012 can be summarized as follows (in thousands):
Year ending December 31: |
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2012 (remaining three months) |
$ | 1,476 | ||
2013 |
4,648 | |||
2014 |
1,419 | |||
2015 |
1,080 | |||
2016 |
1,080 | |||
Due after 5 years |
360 | |||
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Total contract commitments |
$ | 10,063 | ||
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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. None have been issued to date.
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.
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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 September 30, |
Nine Months Ended September 30, |
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2011 | 2012 | 2011 | 2012 | |||||||||||||
Research and development |
$ | 75 | $ | 146 | $ | 205 | $ | 373 | ||||||||
Sales and marketing |
51 | 119 | 141 | 292 | ||||||||||||
General and administrative |
106 | 255 | 294 | 838 | ||||||||||||
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Total stock-based compensation expense |
$ | 232 | $ | 520 | $ | 640 | $ | 1,503 | ||||||||
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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 nine months ended September 30, 2012 there were no early exercises.
A summary of the stock option activity for the nine months ended September 30, 2012 is presented below:
Number of Stock Options |
Weighted Average Exercise Price |
Aggregate Intrinsic Value (in thousands) |
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Outstanding—December 31, 2011 |
5,082,776 | $ | 2.14 | |||||||||
Granted |
1,167,575 | 7.80 | ||||||||||
Exercised |
(1,513,365 | ) | 0.65 | |||||||||
Forfeited |
(144,405 | ) | 3.53 | |||||||||
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Outstanding—September 30, 2012 |
4,592,581 | 4.02 | $ | 17,238 | ||||||||
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Vested and expected to vest—September 30, 2012 |
4,136,702 | 3.87 | $ | 16,013 | ||||||||
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Vested and exercisable—September 30, 2012 |
1,887,012 | 2.01 | $ | 10,507 | ||||||||
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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 September 30, 2012 was $7.58. The total intrinsic value of options exercised was approximately $1,061 and $10,487 for the three and nine months ended September 30, 2012, respectively.
The weighted-average remaining contractual life of the options vested and expected to vest was 7.5 years as of September 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 |
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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 | % | — | % | ||||||||||||||
July 16, 2012 |
74,850 | $ | 15.45 | 6.25 | 0.97 | % | 59 | % | — | % | ||||||||||||||
September 27, 2012 |
219,500 | $ | 7.61 | 6.25 | 1.03 | % | 59 | % | — | % |
As of September 30, 2012, the unrecognized compensation cost related to non-vested options granted, for which vesting is probable, under the plan was approximately $6,088. This cost is expected to be recognized over a weighted-average period of 3.3 years. The total fair value of shares vested was $222 and $970 during the three and nine months ended September 30, 2012, respectively.
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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 or for any subsequent period and should be read in 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 September 30, 2012, and for the three and nine months ended September 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 |
September 30, 2012 |
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45 | % | 34 | % | ||||
Platform Customer A |
11 | 13 |
Revenue | ||||||||||||||||
Three months ended September 30, |
Nine months ended September 30, |
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2011 | 2012 | 2011 | 2012 | |||||||||||||
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56 | % | 51 | % | 55 | % | 57 | % |
For the three and nine months ended September 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 September 30, |
Nine months ended September 30, |
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2011 | 2012 | 2011 | 2012 | |||||||||||||
Platform Customer A |
22 | % | 19 | % | 15 | % | 20 | % | ||||||||
Platform Customer B (1) |
11 | 16 | N/A | 17 | ||||||||||||
Platform Customer C |
15 | 13 | 19 | 13 | ||||||||||||
Platform Customer D (2) |
N/A | 12 | N/A | 12 |
Note:
(1) | For the nine months ended September 30, 2011, the revenue-share payments received by Platform Customer B was less than 10%. |
(2) | For the three and nine months ended September 30, 2011, the revenue-share payments received by Platform Customer 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, establish a framework for measuring the fair value in accounting principles generally accepted in the U.S. 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.
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.
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Accounts Receivable | ||||||||
December 31, 2011 |
September 30, 2012 |
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45 | % | 34 | % | ||||
Platform Customer A |
11 | 13 |
Revenue | ||||||||||||||||
Three months ended September 30, |
Nine months ended September 30, |
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2011 | 2012 | 2011 | 2012 | |||||||||||||
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56 | % | 51 | % | 55 | % | 57 | % |
Cost of Revenue | ||||||||||||||||
Three months ended September 30, |
Nine months ended September 30, |
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2011 | 2012 | 2011 | 2012 | |||||||||||||
Platform Customer A |
22 | % | 19 | % | 15 | % | 20 | % | ||||||||
Platform Customer B (1) |
11 | 16 | N/A | 17 | ||||||||||||
Platform Customer C |
15 | 13 | 19 | 13 | ||||||||||||
Platform Customer D (2) |
N/A | 12 | N/A | 12 |
Note:
(1) | For the nine months ended September 30, 2011, the revenue-share payments received by Platform Customer B was less than 10%. |
(2) | For the three and nine months ended September 30, 2011, the revenue-share payments received by Platform Customer D were less than 10% |
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December 31, 2011 |
September 30, 2012 |
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Computer equipment (1) |
$ | 13,032 | $ | 16,640 | ||||
Computer software |
1,409 | 2,748 | ||||||
Furniture and fixtures |
1,049 | 1,050 | ||||||
Leasehold improvements |
690 | 718 | ||||||
Work in process |
— | 1,249 | ||||||
Other |
933 | 173 | ||||||
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17,113 | 22,578 | |||||||
Less accumulated depreciation (2) |
(8,812 | ) | (11,400 | ) | ||||
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Total property and equipment—net |
$ | 8,301 | $ | 11,178 | ||||
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Notes:
(1) | Includes equipment under capital lease obligations of approximately $3,442 and $5,882 as of December 31, 2011 and September 30, 2012, respectively. |
(2) | Includes $687 and $1,519 of accumulated depreciation of equipment under capital leases as of December 31, 2011 and September 30, 2012, respectively. |
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December 31, 2011 |
September 30, 2012 |
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Accrued compensation |
$ | 3,612 | $ | 3,429 | ||||
Accrued content fees |
334 | 577 | ||||||
Accrued business acquisition consideration |
— | 500 | ||||||
Unearned revenue on contracts |
255 | 191 | ||||||
Other |
1,291 | 1,596 | ||||||
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Total |
$ | 5,492 | $ | 6,293 | ||||
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Year ending December 31: |
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2012 (remaining three months) |
$ | 654 | ||
2013 |
2,281 | |||
2014 |
1,640 | |||
2015 |
132 | |||
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Gross lease commitment |
4,707 | |||
Less interest |
(271 | ) | ||
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Net lease commitments |
$ | 4,436 | ||
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Three Months Ended September 30, |
Nine Months Ended September 30, |
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2011 | 2012 | 2011 | 2012 | |||||||||||||
Revenue |
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United States |
$ | 23,433 | $ | 28,152 | $ | 61,270 | $ | 89,307 | ||||||||
United Kingdom |
521 | 174 | 845 | 496 | ||||||||||||
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Total revenue |
$ | 23,954 | $ | 28,326 | $ | 62,115 | $ | 89,803 | ||||||||
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December 31, 2011 |
September 30, 2012 |
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Long-lived tangible assets |
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United States |
$ | 7,680 | $ | 10,722 | ||||
Netherlands |
621 | 456 | ||||||
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Total long-lived tangible assets |
$ | 8,301 | $ | 11,178 | ||||
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Year ending December 31: |
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2012 (remaining three months) |
$ | 1,476 | ||
2013 |
4,648 | |||
2014 |
1,419 | |||
2015 |
1,080 | |||
2016 |
1,080 | |||
Due after 5 years |
360 | |||
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Total contract commitments |
$ | 10,063 | ||
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Three Months Ended September 30, |
Nine Months Ended September 30, |
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2011 | 2012 | 2011 | 2012 | |||||||||||||
Research and development |
$ | 75 | $ | 146 | $ | 205 | $ | 373 | ||||||||
Sales and marketing |
51 | 119 | 141 | 292 | ||||||||||||
General and administrative |
106 | 255 | 294 | 838 | ||||||||||||
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Total stock-based compensation expense |
$ | 232 | $ | 520 | $ | 640 | $ | 1,503 | ||||||||
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Number of Stock Options |
Weighted Average Exercise Price |
Aggregate Intrinsic Value (in thousands) |
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Outstanding—December 31, 2011 |
5,082,776 | $ | 2.14 | |||||||||
Granted |
1,167,575 | 7.80 | ||||||||||
Exercised |
(1,513,365 | ) | 0.65 | |||||||||
Forfeited |
(144,405 | ) | 3.53 | |||||||||
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Outstanding—September 30, 2012 |
4,592,581 | 4.02 | $ | 17,238 | ||||||||
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Vested and expected to vest—September 30, 2012 |
4,136,702 | 3.87 | $ | 16,013 | ||||||||
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Vested and exercisable—September 30, 2012 |
1,887,012 | 2.01 | $ | 10,507 | ||||||||
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Grant Date |
Options Granted |
Weighted- Average Fair Value |
Expected Life of Options (In years) |
Risk-Free Interest Rate |
Expected Volatility |
Expected Dividend Yield |
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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 | % | — | % | ||||||||||||||
July 16, 2012 |
74,850 | $ | 15.45 | 6.25 | 0.97 | % | 59 | % | — | % | ||||||||||||||
September 27, 2012 |
219,500 | $ | 7.61 | 6.25 | 1.03 | % | 59 | % | — | % |
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