LOGMEIN, INC., 10-Q filed on 7/25/2014
Quarterly Report
Document and Entity Information
6 Months Ended
Jun. 30, 2014
Jul. 18, 2014
Document And Entity Information [Abstract]
 
 
Document Type
10-Q 
 
Amendment Flag
false 
 
Document Period End Date
Jun. 30, 2014 
 
Document Fiscal Year Focus
2014 
 
Document Fiscal Period Focus
Q2 
 
Entity Registrant Name
LogMeIn, Inc. 
 
Entity Central Index Key
0001420302 
 
Current Fiscal Year End Date
--12-31 
 
Entity Filer Category
Accelerated Filer 
 
Entity Common Stock, Shares Outstanding
 
24,617,804 
Condensed Consolidated Balance Sheets (USD $)
In Thousands, unless otherwise specified
Jun. 30, 2014
Dec. 31, 2013
Current assets:
 
 
Cash and cash equivalents
$ 120,828 
$ 89,257 
Marketable securities
100,170 
100,299 
Accounts receivable (net of allowance for doubtful accounts of $269 and $279 as of December 31, 2013 and June 30, 2014, respectively)
10,601 
12,957 
Prepaid expenses and other current assets
7,537 
6,508 
Restricted cash, current portion
1,492 
23 
Deferred income tax assets
3,053 
3,053 
Total current assets
243,681 
212,097 
Property and equipment, net
13,661 
13,198 
Restricted cash, net of current portion
2,584 
3,902 
Intangibles, net
17,476 
16,886 
Goodwill
25,007 
18,712 
Other assets
5,231 
5,348 
Deferred income tax assets
9,218 
9,470 
Total assets
316,858 
279,613 
Current liabilities:
 
 
Accounts payable
5,958 
6,390 
Accrued liabilities
19,023 
20,110 
Deferred revenue, current portion
106,496 
82,496 
Total current liabilities
131,477 
108,996 
Deferred revenue, net of current portion
1,845 
2,667 
Other long-term liabilities
2,022 
611 
Total liabilities
135,344 
112,274 
Commitments and contingencies (Note 10)
   
   
Preferred stock, $0.01 par value - 5,000,000 shares authorized, 0 shares outstanding as of December 31, 2013 and June 30, 2014
Equity:
 
 
Common stock, $0.01 par value - 75,000,000 shares authorized as of December 31, 2013 and June 30, 2014; 25,371,844 and 26,092,834 shares issued as of December 31, 2013 and June 30, 2014, respectively; 24,103,201 and 24,629,180 outstanding as of December 31, 2013 and June 30, 2014, respectively
262 
254 
Additional paid-in capital
219,127 
200,235 
(Accumulated deficit) retained earnings
895 
(1,439)
Accumulated other comprehensive loss
(1,296)
(1,186)
Treasury stock, at cost - 1,268,643 and 1,463,654 shares as of December 31, 2013 and June 30, 2014, respectively
(37,474)
(30,525)
Total equity
181,514 
167,339 
Total liabilities and equity
$ 316,858 
$ 279,613 
Condensed Consolidated Balance Sheets (Parenthetical) (USD $)
In Thousands, except Share data, unless otherwise specified
Jun. 30, 2014
Dec. 31, 2013
Statement Of Financial Position [Abstract]
 
 
Allowance for doubtful accounts
$ 279 
$ 269 
Preferred stock, par value
$ 0.01 
$ 0.01 
Preferred stock, shares authorized
5,000,000 
5,000,000 
Preferred stock, shares outstanding
Common stock, par value
$ 0.01 
$ 0.01 
Common stock, shares authorized
75,000,000 
75,000,000 
Common stock, shares issued
26,092,834 
25,371,844 
Common stock, shares outstanding
24,629,180 
24,103,201 
Treasury stock, shares
1,463,654 
1,268,643 
Condensed Consolidated Statements of Operations (USD $)
In Thousands, except Share data, unless otherwise specified
3 Months Ended 6 Months Ended
Jun. 30, 2014
Jun. 30, 2013
Jun. 30, 2014
Jun. 30, 2013
Income Statement [Abstract]
 
 
 
 
Revenue
$ 54,975 
$ 40,670 
$ 103,995 
$ 78,107 
Cost of revenue
7,397 
4,776 
13,517 
9,185 
Gross profit
47,578 
35,894 
90,478 
68,922 
Operating expenses
 
 
 
 
Research and development
7,973 
6,918 
14,685 
14,309 
Sales and marketing
31,053 
22,567 
58,763 
43,135 
General and administrative
7,448 
6,352 
14,125 
17,872 
Amortization of acquired intangibles
322 
180 
525 
359 
Total operating expenses
46,796 
36,017 
88,098 
75,675 
(Loss) income from operations
782 
(123)
2,380 
(6,753)
Interest income, net
149 
155 
260 
320 
Other (expense) income
224 
(198)
196 
454 
(Loss) income before income taxes
1,155 
(166)
2,836 
(5,979)
(Provision for) benefit from income taxes
175 
(1,194)
(502)
(1,188)
Net (loss) income
$ 1,330 
$ (1,360)
$ 2,334 
$ (7,167)
Net (loss) income per share:
 
 
 
 
Basic
$ 0.05 
$ (0.06)
$ 0.10 
$ (0.29)
Diluted
$ 0.05 
$ (0.06)
$ 0.09 
$ (0.29)
Weighted average shares outstanding:
 
 
 
 
Basic
24,425,081 
24,262,417 
24,134,686 
24,485,429 
Diluted
25,159,340 
24,262,417 
24,889,730 
24,485,429 
Condensed Consolidated Statements of Comprehensive (Loss) Income (USD $)
In Thousands, unless otherwise specified
3 Months Ended 6 Months Ended
Jun. 30, 2014
Jun. 30, 2013
Jun. 30, 2014
Jun. 30, 2013
Statement Of Income And Comprehensive Income [Abstract]
 
 
 
 
Net (loss) income
$ 1,330 
$ (1,360)
$ 2,334 
$ (7,167)
Other comprehensive income (loss):
 
 
 
 
Net unrealized (losses) gains on marketable securities, net of tax
(15)
(49)
(68)
Net translation gains (losses)
19 
318 
(116)
(1,196)
Total other comprehensive income (loss)
269 
(110)
(1,264)
Comprehensive (loss) income
$ 1,334 
$ (1,091)
$ 2,224 
$ (8,431)
Condensed Consolidated Statements of Cash Flows (USD $)
In Thousands, unless otherwise specified
6 Months Ended
Jun. 30, 2014
Jun. 30, 2013
Cash flows from operating activities
 
 
Net (loss) income
$ 2,334 
$ (7,167)
Adjustments to reconcile net (loss) income to net cash provided by operating activities
 
 
Depreciation and amortization
5,499 
3,596 
Amortization of premium on investments
122 
77 
Provision for bad debts
32 
41 
Provision for deferred income taxes
268 
198 
Stock-based compensation
12,151 
10,282 
Gain on disposal of equipment
(1)
(1)
Changes in assets and liabilities:
 
 
Accounts receivable
2,575 
3,601 
Prepaid expenses and other current assets
(1,009)
(3,388)
Other assets
210 
(1,794)
Accounts payable
433 
(2,409)
Accrued liabilities
(1,327)
1,997 
Deferred revenue
23,394 
8,052 
Other long-term liabilities
721 
(174)
Net cash provided by operating activities
45,402 
12,911 
Cash flows from investing activities
 
 
Purchases of marketable securities
(19,984)
(60,381)
Proceeds from sale or disposal of marketable securities
20,000 
60,000 
Purchases of property and equipment
(4,348)
(6,456)
Intangible asset additions
(1,322)
(915)
Cash paid for acquisition, net of cash acquired
(7,434)
 
Decrease (increase) in restricted cash and deposits
(200)
125 
Net cash used in investing activities
(13,288)
(7,627)
Cash flows from financing activities
 
 
Proceeds from issuance of common stock upon option exercises
10,306 
267 
Income tax benefit from the exercise of stock options
 
Common stock withheld to satisfy income tax withholdings for restricted stock unit vesting
(3,557)
(917)
Purchase of treasury stock
(6,949)
(14,607)
Net cash used in financing activities
(200)
(15,255)
Effect of exchange rate changes on cash and cash equivalents and restricted cash
(343)
(883)
Net (decrease) increase in cash and cash equivalents
31,571 
(10,854)
Cash and cash equivalents, beginning of period
89,257 
111,932 
Cash and cash equivalents, end of period
120,828 
101,078 
Supplemental disclosure of cash flow information
 
 
Cash paid for interest
 
Cash paid for income taxes
568 
6,287 
Noncash investing and financing activities
 
 
Purchases of property and equipment included in accounts payable and accrued liabilities
687 
1,515 
Fair value of contingent consideration in connection with acquisition included in accrued liabilities and other long term liabilities
 
$ 176 
Nature of the Business
Nature of the Business

1. Nature of the Business

LogMeIn, Inc. (the “Company”) provides a portfolio of secure, easy-to-use cloud-based offerings aimed at transforming the way people work and live through secure connections to the computers, devices, data and people that make up their digital world. The Company’s product line includes AppGuru™, BoldChat®, Cubby™, join.me®, LogMeIn Pro®, LogMeIn® Central™, LogMeIn Rescue®, LogMeIn® Rescue+Mobile™, LogMeIn Backup®, LogMeIn for iOS, LogMeIn Hamachi®, Xively™ and RemotelyAnywhere®. The Company is headquartered in Boston, Massachusetts with wholly-owned subsidiaries in Hungary, The Netherlands, Australia, the United Kingdom, Brazil, Japan, Ireland, and India.

Summary of Significant Accounting Policies
Summary of Significant Accounting Policies

2. Summary of Significant Accounting Policies

Principles of Consolidation — The accompanying condensed consolidated financial statements include the results of operations of the Company and its wholly-owned subsidiaries. All intercompany transactions and balances have been eliminated in consolidation. The Company has prepared the accompanying condensed consolidated financial statements in conformity with accounting principles generally accepted in the United States of America (“GAAP”).

Unaudited Interim Condensed Consolidated Financial Statements — The accompanying condensed consolidated financial statements and the related interim information contained within the notes to the condensed consolidated financial statements are unaudited and have been prepared in accordance with GAAP and applicable rules and regulations of the Securities and Exchange Commission for interim financial information. Accordingly, they do not include all of the information and notes required by GAAP for complete financial statements. The accompanying unaudited condensed consolidated financial statements should be read along with the Company’s audited financial statements included in the Company’s Annual Report on Form 10-K, filed with the Securities and Exchange Commission on March 10, 2014. The unaudited interim condensed consolidated financial statements have been prepared on the same basis as the audited condensed consolidated financial statements and in the opinion of management, reflect all adjustments, consisting of normal and recurring adjustments, necessary for the fair presentation of the Company’s financial position, results of operations and cash flows for the interim periods presented. The results for the interim periods presented are not necessarily indicative of future results. The Company considers events or transactions that occur after the balance sheet date but before the financial statements are issued to provide additional evidence relative to certain estimates or to identify matters that require additional disclosure.

Use of Estimates — The preparation of condensed consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. By their nature, estimates are subject to an inherent degree of uncertainty. Actual results could differ from those estimates.

Marketable Securities — The Company’s marketable securities are classified as available-for-sale and are carried at fair value with the unrealized gains and losses, net of tax, reported as a component of accumulated other comprehensive income in equity. Realized gains and losses and declines in value judged to be other than temporary are included as a component of earnings based on the specific identification method. Fair value is determined based on quoted market prices. At December 31, 2013 and June 30, 2014, marketable securities consisted of U.S. government agency securities that have remaining maturities within two years and have an aggregate amortized cost of approximately $100.3 million and $100.1 million and an aggregate fair value of approximately $100.3 million and $100.2 million, including approximately $67,000 and $59,000 of unrealized gains and approximately $28,000 and $10,000 of unrealized losses, respectively.

Revenue Recognition — The Company derives revenue primarily from subscription fees related to its LogMeIn premium services and the delivery of professional services, primarily related to its Xively business.

Revenue from the Company’s LogMeIn premium services is recognized on a daily basis over the subscription term as the services are delivered, provided that there is persuasive evidence of an arrangement, the fee is fixed or determinable and collectability is deemed reasonably assured. Subscription periods range from monthly to five years, but are generally one year in duration. The Company’s software cannot be run on another entity’s hardware nor do customers have the right to take possession of the software and use it on their own or another entity’s hardware.

                The Company’s multi-element arrangements typically include subscription and professional services, which may include development services. The Company evaluates each element within the arrangement to determine if they can be accounted for as separate units of accounting. If the delivered item or items have value to the customer on a standalone basis, either because they are sold separately by any vendor or the customer could resell the delivered item or items on a standalone basis, the Company has determined that the deliverables within these arrangements qualify for treatment as separate units of accounting. Accordingly, the Company recognizes revenue for each delivered item or items as a separate earnings process commencing when all of the significant performance obligations have been performed and when all of the revenue recognition criteria have been met. Professional services revenue recognized as a separate earnings process under multi-element arrangements has been immaterial to date. In cases where the Company has determined that the delivered items within its multi-element arrangements do not have value to the customer on a stand-alone basis, the arrangement is accounted for as a single unit of accounting and the related consideration is recognized ratably over the estimated customer life, commencing when all of the significant performance obligations have been delivered and when all of the revenue recognition criteria have been met.

 

The Company currently only offers free versions of its iPhone, iPad and Android software products. The Company had formerly sold these iPhone, iPad and Android software products as perpetually licensed software, the revenue from which was recognized when there was persuasive evidence of an arrangement, the product had been provided to the customer, the collection of the fee was probable, and the amount of fees to be paid by the customer was fixed or determinable.

Revenues are reported net of applicable sales and use tax, value-added tax, and other transaction taxes imposed on the related transaction.

Concentrations of Credit Risk and Significant Customers — The Company’s principal credit risk relates to its cash, cash equivalents, marketable securities, restricted cash, and accounts receivable. Cash, cash equivalents, and restricted cash are deposited primarily with financial institutions that management believes to be of high-credit quality and custody of its marketable securities is with an accredited financial institution. To manage accounts receivable credit risk, the Company regularly evaluates the creditworthiness of its customers and maintains allowances for potential credit losses. To date, losses resulting from uncollected receivables have not exceeded management’s expectations.

As of December 31, 2013, no customers accounted for 10% or more of accounts receivable and no customers accounted for 10% or more of revenue for the three and six months ended June 30, 2013 or 2014. As of June 30, 2014, one customer accounted for 10% of accounts receivable.

Goodwill — Goodwill is the excess of the acquisition price over the fair value of the tangible and identifiable intangible net assets acquired. The Company does not amortize goodwill, but performs an annual impairment test of goodwill on the last day of its fiscal year and whenever events and circumstances indicate that the carrying amount of goodwill may exceed its fair value. The Company operates as a single operating segment with one reporting unit and consequently evaluates goodwill for impairment based on an evaluation of the fair value of the Company as a whole. Through June 30, 2014, no impairments have occurred.

Long-Lived Assets and Intangible Assets — The Company records intangible assets at their estimated fair values at the date of acquisition. Intangible assets are amortized based upon the pattern in which their economic benefit will be realized, or if this pattern cannot be reliably determined, using the straight-line method over their estimated useful lives. The Company’s intangible assets have estimated useful lives which range from four months to seven years.

The Company reviews long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of the assets, including intangible assets, may not be recoverable. When such events occur, the Company compares the carrying amounts of the assets to their undiscounted expected future cash flows. If this comparison indicates that there is impairment, the amount of the impairment is calculated as the difference between the carrying value and fair value. Through June 30, 2014, no impairments have occurred.

Foreign Currency Translation — The functional currency of operations outside the United States of America is deemed to be the currency of the local country, unless otherwise determined that the United States dollar would serve as a more appropriate functional currency given the economic operations of the entity. Accordingly, the assets and liabilities of the Company’s foreign subsidiaries are translated into United States dollars using the period-end exchange rate, and income and expense items are translated using the average exchange rate during the period. Cumulative translation adjustments are reflected as a separate component of equity. Foreign currency transaction gains and losses are charged to operations. The Company had foreign currency losses of approximately $199,000 for the three months ended June 30, 2013 and foreign currency gains of approximately $454,000 for the six months ended June 30, 2013, respectively, and foreign currency gains of approximately $224,000 and $197,000 for the three and six months ended June 30, 2014, respectively.

Stock-Based Compensation — Stock-based compensation is measured based upon the grant date fair value and recognized as an expense on a straight-line basis in the financial statements over the vesting period of the award for those awards expected to vest. The Company uses the Black-Scholes option pricing model to estimate the grant date fair value of stock awards. The Company uses the with-or-without method to determine when it will realize excess tax benefits from stock based compensation. Under this method, the Company will realize these excess tax benefits only after it realizes the tax benefits of net operating losses from operations.

Income Taxes — Deferred income taxes are provided for the tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes, and operating loss carry-forwards and credits using enacted tax rates expected to be in effect in the years in which the differences are expected to reverse. At each balance sheet date, the Company assesses the likelihood that deferred tax assets will be realized, and recognizes a valuation allowance if it is more likely than not that some portion of the deferred tax assets will not be realized. This assessment requires judgment as to the likelihood and amounts of future taxable income by tax jurisdiction.

The Company evaluates its uncertain tax positions based on a determination of whether and how much of a tax benefit taken by the Company in its tax filings or positions is more likely than not to be realized. Potential interest and penalties associated with any uncertain tax positions are recorded as a component of income tax expense. As of December 31, 2013 and June 30, 2014, the Company has provided a liability for approximately $304,000 and $484,000 for uncertain tax positions, respectively. These uncertain tax positions would impact the Company’s effective tax rate if recognized.

Segment Data — Operating segments are identified as components of an enterprise about which separate discrete financial information is available for evaluation by the chief operating decision-maker, or decision making group, in making decisions regarding resource allocation and assessing performance. The Company, which uses consolidated financial information in determining how to allocate resources and assess performance, has determined that it operates in one segment.

 

The Company’s revenue by geography (based on customer address) is as follows (in thousands):

 

     Three Months Ended June 30,      Six Months Ended June 30,  
     2013      2014      2013      2014  

Revenues:

           

United States

   $ 26,695      $ 36,465       $ 51,483      $ 68,870   

United Kingdom

     3,643        4,918        7,106        9,325  

International - all other

     10,332        13,592        19,518        25,800  
  

 

 

    

 

 

    

 

 

    

 

 

 

Total revenue

   $ 40,670      $ 54,975       $ 78,107      $ 103,995   
  

 

 

    

 

 

    

 

 

    

 

 

 

Guarantees and Indemnification Obligations — As permitted under Delaware law, the Company has agreements whereby the Company indemnifies certain of its officers and directors for certain events or occurrences while the officer or director is, or was, serving at the Company’s request in such capacity. The term of the indemnification period is for the officer’s or director’s lifetime. As permitted under Delaware law, the Company also has similar indemnification obligations under its certificate of incorporation and by-laws. The maximum potential amount of future payments the Company could be required to make under these indemnification agreements is unlimited; however, the Company has director’s and officer’s insurance coverage that the Company believes limits its exposure and enables it to recover a portion of any future amounts paid.

The Company has entered into agreements with certain customers that contractually obligate the Company to indemnify the customer from certain claims, including claims alleging that the Company’s products infringe third-party patents, copyrights, or trademarks. The term of these indemnification obligations is generally perpetual. The maximum potential amount of future payments the Company could be required to make under these indemnification obligations is unlimited. Through June 30, 2014, the Company has not experienced any losses related to these indemnification obligations.

In November 2012, the Company filed suit against Pragmatus Telecom LLC (“Pragmatus”), seeking declaratory judgment after certain of the Company’s customers received letters from Pragmatus claiming that their use of certain LogMeIn services infringed upon three patents allegedly owned by Pragmatus. On March 29, 2013, the Company and Pragmatus entered into a License Agreement, which granted the Company a fully-paid license covering the patents at issue. The Company paid Pragmatus a one-time licensing fee in April 2013, after a portion of the fee was reimbursed in March 2013 from a designated escrow arrangement associated with a prior acquisition. The Company recorded approximately $1.2 million of expense related to this matter in general and administrative expenses in March 2013. As a result, the Company’s declaratory judgment action against Pragmatus was dismissed by the court on May 3, 2013.

Net (Loss) Income Per Share — Basic net (loss) income per share is computed by dividing net (loss) income by the weighted average number of common shares outstanding for the period. Diluted net (loss) income per share is computed by dividing net (loss) income by the sum of the weighted average number of common shares outstanding during the period and the weighted average number of potential common shares outstanding from the assumed exercise of stock options and the vesting of restricted stock units. For the three and six months ended June 30, 2013, the Company incurred a net loss and therefore, the effect of the Company’s outstanding common stock equivalents were not included in the calculation of diluted loss per share as they were anti-dilutive. Accordingly, basic and dilutive net loss per share for the period were identical.

The Company excluded the following options to purchase common shares and restricted stock units from the computation of diluted net (loss) income per share either because they had an anti-dilutive impact or because the Company had a net loss in the period (in thousands):

 

     Three Months Ended June 30,      Six Months Ended June 30,  
     2013      2014      2013      2014  

Options to purchase common shares

     2,947         50         2,947         457   

Restricted stock units

     1,134         71         1,134         408   
  

 

 

    

 

 

    

 

 

    

 

 

 

Total options and restricted stock units

     4,081            121         4,081            865   
  

 

 

    

 

 

    

 

 

    

 

 

 

 

Basic and diluted net (loss) income per share was calculated as follows (in thousands, except share and per share data):

 

     Three Months Ended
June 30, 2013
    Six Months Ended
June 30, 2013
 

Basic and diluted net loss per share:

    

Net loss

   $ (1,360   $ (7,167
  

 

 

   

 

 

 

Weighted average common shares outstanding

     24,262,417        24,485,429   
  

 

 

   

 

 

 

Basic and diluted net loss per share

   $ (0.06   $ (0.29
  

 

 

   

 

 

 

 

     Three Months Ended
June 30, 2014
     Six Months Ended
June 30, 2014
 

Basic:

     

Net income

   $ 1,330       $ 2,334   
  

 

 

    

 

 

 

Weighted average common shares outstanding, basic

     24,425,081         24,134,686   
  

 

 

    

 

 

 

Net income per share, basic

   $ 0.05       $ 0.10   
  

 

 

    

 

 

 

Diluted:

     

Net income

   $ 1,330       $ 2,334   
  

 

 

    

 

 

 

Weighted average common shares outstanding

     24,425,081         24,134,686   

Add: Options to purchase common shares and restricted stock units

     734,259         755,044   
  

 

 

    

 

 

 

Weighted average common shares outstanding, diluted

     25,159,340         24,889,730   
  

 

 

    

 

 

 

Net income per share, diluted

   $ 0.05       $ 0.09   
  

 

 

    

 

 

 

Recently Issued Accounting PronouncementsOn May 28, 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers (“ASU 2014-09”) its final standard on revenue from contracts with customers. ASU 2014-9 outlines a single comprehensive model for entities to use in accounting for revenue arising from contracts with customers and supersedes most current revenue recognition guidance, including industry-specific guidance. The core principle of the revenue model is that an entity recognizes revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. In applying the revenue model to contracts within its scope, an entity identifies the contract(s) with a customer, identifies the performance obligations in the contract, determines the transaction price, allocates the transaction price to the performance obligations in the contract and recognizes revenue when (or as) the entity satisfies a performance obligation. ASU 2014-09 applies to all contracts with customers that are within the scope of other topics in the FASB Accounting Standards Codification. Certain of ASU 2014-09’s provisions also apply to transfers of nonfinancial assets, including in-substance nonfinancial assets that are not an output of an entity’s ordinary activities (i.e., property plant and equipment; real estate; or intangible assets). Existing accounting guidance applicable to these transfers has been amended or superseded. ASU 2014-09 also requires significantly expanded disclosures about revenue recognition. ASU 2014-09 is effective for the Company on January 1, 2017. The Company is currently assessing the potential impact of the adoption of ASU 2014-09 on its condensed consolidated financial statements.

Fair Value of Financial Instruments
Fair Value of Financial Instruments

3. Fair Value of Financial Instruments

The carrying value of the Company’s financial instruments, including cash equivalents, restricted cash, accounts receivable, and accounts payable, approximate their fair values due to their short maturities. The Company’s financial assets and liabilities are measured using inputs from the three levels of the fair value hierarchy. A financial asset or liability’s classification within the hierarchy is determined based on the lowest level input that is significant to the fair value measurement. The three levels are as follows:

Level 1: Unadjusted quoted prices for identical assets or liabilities in active markets accessible by the Company at the measurement date.

Level 2: Inputs include quoted prices for similar assets and liabilities in active markets, quoted prices for identical or similar assets and liabilities in markets that are not active, inputs other than quoted prices that are observable for the asset or liability, and inputs that are derived principally from or corroborated by observable market data by correlation or other means.

Level 3: Unobservable inputs that reflect the Company’s assumptions about the assumptions that market participants would use in pricing the asset or liability.

The following table summarizes the basis used to measure certain of the Company’s financial assets that are carried at fair value (in thousands):

 

     Basis of Fair Value Measurements  
     Balance      Quoted Prices
in Active
Markets for
Identical
Items
(Level 1)
     Significant
Other
Observable
Inputs
(Level 2)
     Significant
Unobservable
Inputs
(Level 3)
 

Balance at December 31, 2013

           

Cash equivalents — money market funds

   $ 28,210       $ 28,210       $ —        $ —    

Cash equivalents — bank deposits

     5,001         —          5,001         —    

Short-term marketable securities — U.S. government agency securities

     100,299         75,288         25,011         —    

Balance at June 30, 2014

           

Cash equivalents - money market funds

     27,504         27,504         —          —    

Cash equivalents - bank deposits

     5,021         —          5,021         —    

Short-term marketable securities - U.S. government agency securities

     100,170         95,168         5,002         —    

 

Bank deposits and certain U.S. government agency securities are classified within the second level of the fair value hierarchy as the fair value of those assets are determined based upon quoted prices for similar assets.

Acquisitions
Acquisitions

4. Acquisitions

On March 7, 2014, the Company acquired all of the outstanding capital stock of Ionia Corporation, or “Ionia,” a Boston, Massachusetts based systems integrator, for a cash purchase price of $7.5 million plus contingent retention-based bonuses totaling up to $4.0 million, which are expected to be paid over a two-year period from the date of acquisition. The operating results, which are comprised of approximately $0.6 million and $0.8 million of revenue for the three and six months ended June 30, 2014, respectively, as well as $1.6 million and $2.1 million of expenses during the three and six months ended June 30, 2014, are included in the condensed consolidated financial statements beginning on the acquisition date.

The acquisition has been accounted for as a business combination. The assets acquired and the liabilities assumed were recorded at their estimated fair values as of the acquisition date. The Company retained an independent third party valuation firm to calculate the fair value of the intangible assets with estimates and assumptions provided by Company management. The excess of the purchase price over the tangible net assets and identifiable intangible assets was recorded as goodwill.

The purchase price was allocated as follows (in thousands):

 

     Amount  

Cash

   $ 67   

Current assets

     296   

Other assets

     26   

Deferred revenue

     (70

Other liabilities

     (864

Customer backlog

     120   

Trade name and trademark

     10   

Customer relationships

     1,340   

Documented know-how

     280   

Goodwill

     6,295   
  

 

 

 

Total purchase price

   $ 7,500   
  

 

 

 

The pro forma results of operations for the quarter ended June 30, 2013 and 2014 assuming the Company had acquired Ionia on January 1, 2013, do not differ materially from those reported in the Company’s condensed consolidated statement of income for that quarter.

The stock purchase agreement included a contingent, retention-based bonus program provision requiring the Company to make additional payments to employees, including former Ionia stockholders now employed by the Company, on the first and second anniversaries of the acquisition, contingent upon their continued employment and achievement of certain bookings goals. The range of the contingent, retention-based bonus payments that the Company could pay is between $0 to $4.0 million. The Company has concluded that the arrangement is a compensation arrangement and is accruing the maximum payout ratably over the performance period, as it believes it is probable that the criteria will be met.

The goodwill recorded in connection with this transaction is primarily related to the expected synergies to be achieved related to the Company’s ability to leverage its Xively platform, customer base, sales force and Internet of Things business plan with Ionia’s technical expertise and customer base. All goodwill and intangibles acquired are not deductible for income tax purposes.

The Company incurred approximately $100,000 of acquisition-related costs which are included in general and administrative expense for the three and six months ended June 30, 2014.

During the second quarter of 2014, the Company finalized its purchase price accounting related to the Ionia acquisition and recorded both a deferred tax liability and a corresponding increase in goodwill of approximately $0.7 million related to the amortization of intangible assets which cannot be deducted for income tax purposes.

Goodwill and Intangible Assets
Goodwill and Intangible Assets

5. Goodwill and Intangible Assets

                The changes in the carry amounts of goodwill for the six months ended June 30, 2014 are due to the addition of goodwill resulting from the acquisition of Ionia (See Note 4 to the Condensed Consolidated Financial Statements).

Changes in goodwill for the six months ended June 30, 2014, are as follows (in thousands):

 

Balance, December 31, 2013

   $  18,712   

Goodwill related to the acquisition of Ionia

     6,295   
  

 

 

 

Balance, June 30, 2014

   $ 25,007   
  

 

 

 

 

Intangible assets consist of the following (in thousands):

 

            December 31, 2013      June 30, 2014  
     Estimated
Useful Life
     Gross
Carrying
Amount
     Accumulated
Amortization
     Net
Carrying
Amount
     Gross
Carrying
Amount
     Accumulated
Amortization
     Net Carrying
Amount
 

Trade names

     1-5 years       $ 666       $ 666       $ —        $ 676       $ 670       $ 6   

Customer base

     5-7 years         3,789         1,901         1,888         5,129         2,199         2,930   

Customer backlog

     4 months         —            —          —          120         120         —    

Domain names

     5 years         894         341         553         908         425         483   

Software

     4 years         299         299         —          299         299         —    

Technology

     3-6 years         13,963         1,835         12,128         14,363         2,856         11,507   

Technology and know-how

     3 years         3,176         2,597         579         3,176         3,125         51   

Documented know-how

     4 years         —          —          —          280         22         258   

Non-compete agreements

     5 years         162         34         128         162         53         109   

Internally developed software

     3 years         2,485         875         1,610         3,390         1,258         2,132   
     

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 
      $ 25,434       $ 8,548       $ 16,886       $ 28,503       $ 11,027       $ 17,476   
     

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

As a result of the acquisition of Ionia, the Company capitalized $120,000 of customer backlog, $280,000 of documented know-how, $10,000 of trade names, and $1.3 million of customer relationships as intangible assets. The Company is amortizing the intangible assets based upon the pattern in which their economic benefit will be realized, or if this pattern cannot be reliably determined, using the straight-line method over their estimated useful lives. The intangible assets have estimated useful lives which range from four months to seven years.

On November 6, 2013, the Company purchased a software asset for $11.5 million. This software asset is recorded as an intangible asset and classified as technology and will be amortized using the straight-line method over an estimated useful life of five years, beginning in February 2014 when the product was made available to customers. In May 2014, the Company paid the remaining $0.5 million for the statement of work in accordance with the agreement. The Company capitalized $0.4 million as completed technology and $0.1 million was expensed as consulting work.

The Company capitalized $317,000 and $413,000 during the three months ended June 30, 2013 and 2014, respectively, and $556,000 and $905,000 during the six months ended June 30, 2013 and 2014, respectively, of costs related to internally developed computer software to be sold as a service incurred during the application development stage and is amortizing these costs over the expected lives of the related services.

The Company is amortizing its intangible assets over the estimated lives noted above. Amortization expense for intangible assets was $633,000 and $1.5 million for the three months ended June 30, 2013 and 2014, respectively, and $1.2 million and $2.5 million for the six months ended June 30, 2013 and 2014, respectively. Amortization relating to software, technology and know-how, documented know-how, and internally developed software is recorded within cost of revenues and the amortization of trade name and trademark, customer base, customer backlog, domain names, and non-compete agreements is recorded within operating expenses. Future estimated amortization expense for intangible assets is as follows at June 30, 2014 (in thousands):

 

Amortization Expense (Years Ending December 31)

   Amount  

2014 (Six months ending December 31)

     2,346   

2015

     4,485   

2016

     3,939   

2017

     3,339   

2018

     2,863   

Thereafter

     504   
  

 

 

 

Total

   $ 17,476   
  

 

 

 

Accrued Liabilities
Accrued Liabilities

6. Accrued Liabilities

Accrued liabilities consisted of the following (in thousands):

 

                                                 
     December 31,
2013
     June 30,
2014
 

Marketing programs

   $ 4,631       $ 5,651   

Payroll and payroll related

     9,719         7,419   

Professional fees

     1,064         1,036   

Other accrued liabilities

     4,696         4,917   
  

 

 

    

 

 

 

Total accrued liabilities

   $ 20,110       $ 19,023   
  

 

 

    

 

 

 
Income Taxes
Income Taxes

7. Income Taxes

The Company recorded a provision for federal, state and foreign income taxes of approximately $1.2 million and a benefit of $175,000 for the three months ended June 30, 2013 and 2014, respectively, and a provision for federal, state and foreign income taxes of approximately $1.2 million and $502,000 for the six months ended June 30, 2013 and 2014, respectively. The tax provision for the three and six months ended June 30, 2014, decreased compared to the prior comparable periods as a result of a loss before income taxes incurred in the United States which offset increased profitability in certain foreign jurisdictions, primarily our Irish subsidiaries, which have significantly lower tax rates than the U.S. statutory rate.

Deferred income taxes are provided for the tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes, and operating loss carry-forwards and credits using enacted tax rates expected to be in effect in the years in which the differences are expected to reverse. At each balance sheet date, the Company assesses the likelihood that deferred tax assets will be realized, and recognizes a valuation allowance if it is more likely than not that some portion of the deferred tax assets will not be realized. This assessment requires judgment as to the likelihood and amounts of future taxable income by tax jurisdiction.

The Company files income tax returns in the U.S. federal jurisdiction and various state and foreign jurisdictions. The Company’s income tax returns since inception are open to examination by federal, state, and foreign tax authorities. The Company has recorded a liability related to uncertain tax provisions of approximately $304,000 and $484,000 as of December 31, 2013 and June 30, 2014, respectively. The Company’s policy is to record estimated interest and penalty related to the underpayment of income taxes or unrecognized tax benefits as a component of its income tax provision. The Company did not recognize any interest or penalties in its statement of operations during the three or six months ended June 30, 2013. The Company recognized approximately $5,000 of interest expense for the three months ended June 30, 2014.

Common Stock and Equity
Common Stock and Equity

8. Common Stock and Equity

In February 2013, the Company’s board of directors approved a $25 million share repurchase program. On August 13, 2013, the board of directors approved a new $50 million share repurchase program, which replaced the previous $25 million share repurchase program. Share repurchases are made from time-to-time in the open market, in privately negotiated transactions or otherwise, in accordance with applicable securities laws and regulations. The timing and amount of any share repurchases are determined by the Company’s management based on its evaluation of market conditions, the trading price of the stock, regulatory requirements and other factors. The share repurchase program may be suspended, modified or discontinued at any time at the Company’s discretion without prior notice.

For the three months ended June 30, 2013 and 2014, the Company repurchased 258,663 and 46,511 shares of its common stock at an average price of $21.76 and $43.86 per share for a total cost of approximately $5.6 million and $2.0 million, respectively. For the six months ended June 30, 2013 and 2014, the Company repurchased 760,485 and 195,011 shares of its common stock at an average price of $19.21 and $35.63 per share for a total cost of approximately $14.6 million and $6.9 million, respectively. At June 30, 2014, approximately $29.0 million remained available under the Company’s share repurchase program.

Stock Incentive Plan
Stock Incentive Plan

9. Stock Incentive Plan

The Company’s 2009 Stock Incentive Plan (“2009 Plan”) is administered by the Board of Directors and Compensation Committee, which have the authority to designate participants and determine the number and type of awards to be granted and any other terms or conditions of the awards. Options generally vest over a four-year period and expire ten years from the date of grant. Restricted stock units with service-based vesting conditions generally vest over a three-year period while restricted stock units with market-based vesting conditions generally vest over two or three-year periods. Certain stock-based awards provide for accelerated vesting if there is a change in control. On May 22, 2014, the Company’s stockholders approved an amendment to the 2009 Plan that increased the shares available to grant under the plan by 1,200,000 shares. There were 2,072,394 shares available for grant under the 2009 Plan as of June 30, 2014.

The Company uses the Black-Scholes option-pricing model to estimate the grant date fair value of stock options. The Company estimates the expected volatility of its common stock at the date of grant based on the historical volatility of comparable public companies over the option’s expected term as well as its own stock price volatility since the Company’s IPO. The Company estimates expected term based on historical exercise activity and giving consideration to the contractual term of the options, vesting schedules, employee turnover, and expectation of employee exercise behavior. The assumed dividend yield is based upon the Company’s expectation of not paying dividends in the foreseeable future. The risk-free rate for periods within the estimated life of the stock option is based on the U.S. Treasury yield curve in effect at the time of grant. Historical employee turnover data is used to estimate pre-vesting stock option forfeiture rates. The compensation expense is amortized on a straight-line basis over the requisite service period of the stock award, which is generally four years.

The Company used the following assumptions to apply the Black-Scholes option-pricing model:

 

                                                                                                   
     Three Months Ended June 30,    Six Months Ended June 30,
     2013    2014(1)    2013    2014

Expected dividend yield

   0.00%      —%    0.00%    0.00%

Risk-free interest rate

   0.89%      —%    0.87% - 0.89%    1.48%

Expected term (in years)

   6.25         —       6.25    6.25

Volatility

   55%      —%    55%    55%

 

(1) There were no stock options granted during the three months ended June 30, 2014.

 

The following table summarizes stock option activity, including performance-based options (shares and intrinsic value in thousands):

 

     Number
of shares
    Weighted
Average
Exercise
Price
     Weighted
Average
Remaining
Contractual
Term (Years)
     Aggregate
Intrinsic Value
 

Outstanding at January 1, 2014

     2,389      $ 26.85         6.4       $ 22,330   
          

 

 

 

Granted

     35        41.03         

Exercised

     (500     20.62          $ 11,037   
          

 

 

 

Forfeited

     (75     33.36         
  

 

 

   

 

 

       

Outstanding at June 30, 2014

     1,849      $ 28.54         6.3       $ 33,444   
  

 

 

   

 

 

    

 

 

    

 

 

 

Exercisable at December 31, 2013

     1,451      $ 23.45         5.4       $ 17,855   
  

 

 

   

 

 

    

 

 

    

 

 

 

Exercisable at June 30, 2014

     1,332      $ 26.72         5.7       $ 26,522   
  

 

 

   

 

 

    

 

 

    

 

 

 

The aggregate intrinsic value was calculated based on the positive differences between the fair value of the Company’s common stock of $33.55 on December 31, 2013 and $46.62 per share on June 30, 2014, or at time of exercise, and the exercise price of the options.

The weighted average grant date fair value of stock options issued was $11.60 per share for the year ended December 31, 2013, and $21.78 for the six months ended June 30, 2014.

During the three and six months ended June 30, 2014, the Company granted 436,110 and 539,396 restricted stock units, respectively, containing time-based vesting conditions which generally lapse over a three year period.

In August 2013 and May 2014, the Company granted 74,000 and 71,000 restricted stock units with market-based vesting conditions, respectively, which were tied to the Company’s achievement of a relative total shareholder return target measured over an applicable performance period which ranges from two to three years (the “TSR Units”). The number of shares underlying these TSR Units that will vest upon the conclusion of the applicable performance periods can range from 0% of the shares awarded to 200% of the shares awarded, or up to 148,000 shares or 142,000 shares for the August 2013 grant and May 2014 grant, respectively. Vesting of such shares is also contingent upon the continued employment of the participant throughout the vesting period. All TSR Units granted by the Company are valued using a Monte Carlo simulation model. The number of awards expected to be earned is factored into the grant date Monte Carlo valuation for the TSR Unit. Compensation cost is recognized regardless of the actual number of awards that are earned based on the market condition. Expected volatility is based on the Company’s historical volatility. The risk-free interest rate is based upon U.S. Treasury securities with a term similar to the vesting term of the TSR Units.

The assumptions used in the Monte Carlo simulation model include (but are not limited to) the following:

 

     August 2013 Grant     May 2014 Grant  

Risk-free interest rate

     0.62     0.78

Volatility

     54     54

Compensation cost is recognized on a straight-line basis over the requisite service period. At June 30, 2014, all of the TSR Units granted in August 2013 and May 2014 remain outstanding.

The following table summarizes restricted stock unit activity (shares in thousands):

 

     Number of shares
Underlying Restricted
Stock Units
    Weighted Average
Grant Date Fair
Value
 

Unvested as of January 1, 2014

     1,192      $ 28.47   

Restricted stock units granted

     610        44.38   

Restricted stock units vested

     (303     26.88   

Restricted stock units forfeited

     (101     26.46   
  

 

 

   

 

 

 

Unvested as of June 30, 2014

     1,398      $ 35.90   
  

 

 

   

 

 

 

 

The Company recognized stock based compensation expense within the accompanying condensed consolidated statements of operations as summarized in the following table (in thousands):

 

     Three Months Ended June 30,      Six Months Ended June 30,  
     2013      2014      2013      2014  

Cost of revenue

   $ 181       $ 274       $ 384       $ 509   

Research and development

     1,045         1,008         2,062         1,784   

Sales and marketing

     2,146         2,796         4,227         4,857   

General and administrative

     1,745         2,635         3,609         5,001   
  

 

 

    

 

 

    

 

 

    

 

 

 
   $ 5,117       $ 6,713       $ 10,282       $ 12,151   
  

 

 

    

 

 

    

 

 

    

 

 

 

As of June 30, 2014, there was approximately $47.7 million of total unrecognized share-based compensation cost, net of estimated forfeitures, related to unvested stock awards which are expected to be recognized over a weighted average period of 2.2 years. The total unrecognized share-based compensation cost will be adjusted for future changes in estimated forfeitures.

Commitments and Contingencies
Commitments and Contingencies

10. Commitments and Contingencies

Operating Leases — The Company has operating lease agreements for offices in Massachusetts, Hungary, Australia, the United Kingdom, Ireland and India that expire through 2023.

In April 2014, the Company amended its current lease for its Budapest, Hungary office space to provide for an expansion of leased space and to extend the term of the lease. The term of the amended lease began in July 2014 and will extend through June 2019. The aggregate amount of minimum lease payments to be made over the term of the lease is approximately $7.8 million (EUR 5.7 million). The amended lease agreement required a bank guarantee of approximately $483,000 (EUR 354,000). The bank guarantee is classified as restricted cash.

Rent expense under all leases was approximately $1.6 million and $1.7 million for the three months ended June 30, 2013 and 2014, respectively, and $2.7 million and $3.4 million for the six month ended June 30, 2013 and 2014, respectively. The Company records rent expense on a straight-line basis for leases with scheduled escalation clauses or free rent periods.

The Company also enters into hosting services agreements with third-party data centers and internet service providers that are subject to annual renewal. Hosting fees incurred under these arrangements aggregated approximately $1.3 million and $1.2 million for the three months ended June 30, 2013 and 2014, respectively, and $2.3 million and $2.4 million for the six months ended June 30, 2013 and 2014, respectively.

Future minimum lease payments under non-cancelable operating leases including one year commitments associated with the Company’s hosting services arrangements are approximately as follows at June 30, 2014 (in thousands):

 

Years Ending December 31

      

2014 (Six months ending December 31)

   $ 4,959   

2015

     7,377   

2016

     6,083   

2017

     5,629   

2018

     5,930   

Thereafter

     21,494   
  

 

 

 

Total minimum lease payments

   $ 51,472   
  

 

 

 

 

Litigation — On September 8, 2010, 01 Communique Laboratory, Inc., or 01, filed a complaint that named the Company as a defendant in a lawsuit in the U.S. District Court for the Eastern District of Virginia (Civil Action No. 1:10cv1007) alleging that the Company infringed U.S. Patent No. 6,928,479, or the ‘479 Patent, which is owned by 01 and has claims directed to a particular application or system for providing a private communication portal from one computer to a second computer. The complaint sought damages in an unspecified amount and injunctive relief. On April 1, 2011, the U.S. District Court for the Eastern District of Virginia granted the Company’s motion for summary judgment of non-infringement. The court issued a written order regarding this decision on May 4, 2011. On May 13, 2011, 01 filed a notice of appeal appealing the court’s ruling granting summary judgment. On July 31, 2012, the U.S. Court of Appeals for the Federal Circuit vacated the lower court’s summary judgment of non-infringement ruling and remanded the case back to the U.S. District Court for the Eastern District of Virginia with revised claim construction. The trial commenced on March 18, 2013 and on March 26, 2013, a jury in the Eastern District of Virginia found that the Company’s products do not infringe the ‘479 Patent as previously asserted by 01. The court issued a written order regarding this decision on April 2, 2013. On June 26, 2013, the court issued a written opinion denying all pending post-trial motions, thereby preserving the jury’s non-infringement verdict. On June 26, 2013, 01 filed a notice of appeal seeking to appeal the jury’s non-infringement verdict and on July 18, 2013, the Company filed a notice of cross appeal seeking to appeal the jury’s decisions regarding invalidity and inequitable conduct. Oral arguments were heard on June 3, 2014 and on June 9, 2014, the U.S Court of Appeals for the Federal Circuit affirmed the jury’s non-infringement verdict. At this time the Company does not believe that a loss is probable and remains unable to reasonably estimate a possible loss or range of loss associated with this litigation.

On November 21, 2012, the Company filed suit against Pragmatus Telecom LLC, or Pragmatus, in the U.S. District Court for the District of Delaware (Civil Action No. 12-1507) seeking a declaratory judgment that the Company’s products do not infringe three patents allegedly owned by Pragmatus after certain of the Company’s customers received letters from Pragmatus claiming that their use of certain LogMeIn services infringed upon those patents. On March 29, 2013, the Company and Pragmatus entered into a License Agreement, which granted the Company a fully-paid license covering the patents at issue. The Company paid Pragmatus a one-time license fee in connection with the License Agreement in April 2013. As a result, the Company’s declaratory judgment action was dismissed by the court on May 3, 2013.

The Company is from time to time subject to various other legal proceedings and claims, either asserted or unasserted, which arise in the ordinary course of business. The Company routinely assesses its current litigation and/or threatened litigation as to the probability of ultimately incurring a liability, and records its best estimate of the ultimate loss in situations where the Company assesses the likelihood of loss as probable. While the outcome of these other claims cannot be predicted with certainty, management does not believe that the outcome of any of these other legal matters will have a material adverse effect on the Company’s condensed consolidated financial statements.

Summary of Significant Accounting Policies (Policies)

Principles of Consolidation — The accompanying condensed consolidated financial statements include the results of operations of the Company and its wholly-owned subsidiaries. All intercompany transactions and balances have been eliminated in consolidation. The Company has prepared the accompanying condensed consolidated financial statements in conformity with accounting principles generally accepted in the United States of America (“GAAP”).

Unaudited Interim Condensed Consolidated Financial Statements — The accompanying condensed consolidated financial statements and the related interim information contained within the notes to the condensed consolidated financial statements are unaudited and have been prepared in accordance with GAAP and applicable rules and regulations of the Securities and Exchange Commission for interim financial information. Accordingly, they do not include all of the information and notes required by GAAP for complete financial statements. The accompanying unaudited condensed consolidated financial statements should be read along with the Company’s audited financial statements included in the Company’s Annual Report on Form 10-K, filed with the Securities and Exchange Commission on March 10, 2014. The unaudited interim condensed consolidated financial statements have been prepared on the same basis as the audited condensed consolidated financial statements and in the opinion of management, reflect all adjustments, consisting of normal and recurring adjustments, necessary for the fair presentation of the Company’s financial position, results of operations and cash flows for the interim periods presented. The results for the interim periods presented are not necessarily indicative of future results. The Company considers events or transactions that occur after the balance sheet date but before the financial statements are issued to provide additional evidence relative to certain estimates or to identify matters that require additional disclosure.

Use of Estimates — The preparation of condensed consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. By their nature, estimates are subject to an inherent degree of uncertainty. Actual results could differ from those estimates.

Marketable Securities — The Company’s marketable securities are classified as available-for-sale and are carried at fair value with the unrealized gains and losses, net of tax, reported as a component of accumulated other comprehensive income in equity. Realized gains and losses and declines in value judged to be other than temporary are included as a component of earnings based on the specific identification method. Fair value is determined based on quoted market prices. At December 31, 2013 and June 30, 2014, marketable securities consisted of U.S. government agency securities that have remaining maturities within two years and have an aggregate amortized cost of approximately $100.3 million and $100.1 million and an aggregate fair value of approximately $100.3 million and $100.2 million, including approximately $67,000 and $59,000 of unrealized gains and approximately $28,000 and $10,000 of unrealized losses, respectively.

Revenue Recognition — The Company derives revenue primarily from subscription fees related to its LogMeIn premium services and the delivery of professional services, primarily related to its Xively business.

Revenue from the Company’s LogMeIn premium services is recognized on a daily basis over the subscription term as the services are delivered, provided that there is persuasive evidence of an arrangement, the fee is fixed or determinable and collectability is deemed reasonably assured. Subscription periods range from monthly to five years, but are generally one year in duration. The Company’s software cannot be run on another entity’s hardware nor do customers have the right to take possession of the software and use it on their own or another entity’s hardware.

                The Company’s multi-element arrangements typically include subscription and professional services, which may include development services. The Company evaluates each element within the arrangement to determine if they can be accounted for as separate units of accounting. If the delivered item or items have value to the customer on a standalone basis, either because they are sold separately by any vendor or the customer could resell the delivered item or items on a standalone basis, the Company has determined that the deliverables within these arrangements qualify for treatment as separate units of accounting. Accordingly, the Company recognizes revenue for each delivered item or items as a separate earnings process commencing when all of the significant performance obligations have been performed and when all of the revenue recognition criteria have been met. Professional services revenue recognized as a separate earnings process under multi-element arrangements has been immaterial to date. In cases where the Company has determined that the delivered items within its multi-element arrangements do not have value to the customer on a stand-alone basis, the arrangement is accounted for as a single unit of accounting and the related consideration is recognized ratably over the estimated customer life, commencing when all of the significant performance obligations have been delivered and when all of the revenue recognition criteria have been met.

 

The Company currently only offers free versions of its iPhone, iPad and Android software products. The Company had formerly sold these iPhone, iPad and Android software products as perpetually licensed software, the revenue from which was recognized when there was persuasive evidence of an arrangement, the product had been provided to the customer, the collection of the fee was probable, and the amount of fees to be paid by the customer was fixed or determinable.

Revenues are reported net of applicable sales and use tax, value-added tax, and other transaction taxes imposed on the related transaction.

Concentrations of Credit Risk and Significant Customers — The Company’s principal credit risk relates to its cash, cash equivalents, marketable securities, restricted cash, and accounts receivable. Cash, cash equivalents, and restricted cash are deposited primarily with financial institutions that management believes to be of high-credit quality and custody of its marketable securities is with an accredited financial institution. To manage accounts receivable credit risk, the Company regularly evaluates the creditworthiness of its customers and maintains allowances for potential credit losses. To date, losses resulting from uncollected receivables have not exceeded management’s expectations.

As of December 31, 2013, no customers accounted for 10% or more of accounts receivable and no customers accounted for 10% or more of revenue for the three and six months ended June 30, 2013 or 2014. As of June 30, 2014, one customer accounted for 10% of accounts receivable.

Goodwill — Goodwill is the excess of the acquisition price over the fair value of the tangible and identifiable intangible net assets acquired. The Company does not amortize goodwill, but performs an annual impairment test of goodwill on the last day of its fiscal year and whenever events and circumstances indicate that the carrying amount of goodwill may exceed its fair value. The Company operates as a single operating segment with one reporting unit and consequently evaluates goodwill for impairment based on an evaluation of the fair value of the Company as a whole. Through June 30, 2014, no impairments have occurred.

Long-Lived Assets and Intangible Assets — The Company records intangible assets at their estimated fair values at the date of acquisition. Intangible assets are amortized based upon the pattern in which their economic benefit will be realized, or if this pattern cannot be reliably determined, using the straight-line method over their estimated useful lives. The Company’s intangible assets have estimated useful lives which range from four months to seven years.

The Company reviews long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of the assets, including intangible assets, may not be recoverable. When such events occur, the Company compares the carrying amounts of the assets to their undiscounted expected future cash flows. If this comparison indicates that there is impairment, the amount of the impairment is calculated as the difference between the carrying value and fair value. Through June 30, 2014, no impairments have occurred.

Foreign Currency Translation — The functional currency of operations outside the United States of America is deemed to be the currency of the local country, unless otherwise determined that the United States dollar would serve as a more appropriate functional currency given the economic operations of the entity. Accordingly, the assets and liabilities of the Company’s foreign subsidiaries are translated into United States dollars using the period-end exchange rate, and income and expense items are translated using the average exchange rate during the period. Cumulative translation adjustments are reflected as a separate component of equity. Foreign currency transaction gains and losses are charged to operations. The Company had foreign currency losses of approximately $199,000 for the three months ended June 30, 2013 and foreign currency gains of approximately $454,000 for the six months ended June 30, 2013, respectively, and foreign currency gains of approximately $224,000 and $197,000 for the three and six months ended June 30, 2014, respectively.

Stock-Based Compensation — Stock-based compensation is measured based upon the grant date fair value and recognized as an expense on a straight-line basis in the financial statements over the vesting period of the award for those awards expected to vest. The Company uses the Black-Scholes option pricing model to estimate the grant date fair value of stock awards. The Company uses the with-or-without method to determine when it will realize excess tax benefits from stock based compensation. Under this method, the Company will realize these excess tax benefits only after it realizes the tax benefits of net operating losses from operations.

Income Taxes — Deferred income taxes are provided for the tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes, and operating loss carry-forwards and credits using enacted tax rates expected to be in effect in the years in which the differences are expected to reverse. At each balance sheet date, the Company assesses the likelihood that deferred tax assets will be realized, and recognizes a valuation allowance if it is more likely than not that some portion of the deferred tax assets will not be realized. This assessment requires judgment as to the likelihood and amounts of future taxable income by tax jurisdiction.

The Company evaluates its uncertain tax positions based on a determination of whether and how much of a tax benefit taken by the Company in its tax filings or positions is more likely than not to be realized. Potential interest and penalties associated with any uncertain tax positions are recorded as a component of income tax expense. As of December 31, 2013 and June 30, 2014, the Company has provided a liability for approximately $304,000 and $484,000 for uncertain tax positions, respectively. These uncertain tax positions would impact the Company’s effective tax rate if recognized.

Segment Data — Operating segments are identified as components of an enterprise about which separate discrete financial information is available for evaluation by the chief operating decision-maker, or decision making group, in making decisions regarding resource allocation and assessing performance. The Company, which uses consolidated financial information in determining how to allocate resources and assess performance, has determined that it operates in one segment.

 

The Company’s revenue by geography (based on customer address) is as follows (in thousands):

 

     Three Months Ended June 30,      Six Months Ended June 30,  
     2013      2014      2013      2014  

Revenues:

           

United States

   $ 26,695      $ 36,465       $ 51,483      $ 68,870   

United Kingdom

     3,643        4,918        7,106        9,325  

International - all other

     10,332        13,592        19,518        25,800  
  

 

 

    

 

 

    

 

 

    

 

 

 

Total revenue

   $ 40,670      $ 54,975       $ 78,107      $ 103,995   
  

 

 

    

 

 

    

 

 

    

 

 

 

Guarantees and Indemnification Obligations — As permitted under Delaware law, the Company has agreements whereby the Company indemnifies certain of its officers and directors for certain events or occurrences while the officer or director is, or was, serving at the Company’s request in such capacity. The term of the indemnification period is for the officer’s or director’s lifetime. As permitted under Delaware law, the Company also has similar indemnification obligations under its certificate of incorporation and by-laws. The maximum potential amount of future payments the Company could be required to make under these indemnification agreements is unlimited; however, the Company has director’s and officer’s insurance coverage that the Company believes limits its exposure and enables it to recover a portion of any future amounts paid.

The Company has entered into agreements with certain customers that contractually obligate the Company to indemnify the customer from certain claims, including claims alleging that the Company’s products infringe third-party patents, copyrights, or trademarks. The term of these indemnification obligations is generally perpetual. The maximum potential amount of future payments the Company could be required to make under these indemnification obligations is unlimited. Through June 30, 2014, the Company has not experienced any losses related to these indemnification obligations.

In November 2012, the Company filed suit against Pragmatus Telecom LLC (“Pragmatus”), seeking declaratory judgment after certain of the Company’s customers received letters from Pragmatus claiming that their use of certain LogMeIn services infringed upon three patents allegedly owned by Pragmatus. On March 29, 2013, the Company and Pragmatus entered into a License Agreement, which granted the Company a fully-paid license covering the patents at issue. The Company paid Pragmatus a one-time licensing fee in April 2013, after a portion of the fee was reimbursed in March 2013 from a designated escrow arrangement associated with a prior acquisition. The Company recorded approximately $1.2 million of expense related to this matter in general and administrative expenses in March 2013. As a result, the Company’s declaratory judgment action against Pragmatus was dismissed by the court on May 3, 2013.

Net (Loss) Income Per Share — Basic net (loss) income per share is computed by dividing net (loss) income by the weighted average number of common shares outstanding for the period. Diluted net (loss) income per share is computed by dividing net (loss) income by the sum of the weighted average number of common shares outstanding during the period and the weighted average number of potential common shares outstanding from the assumed exercise of stock options and the vesting of restricted stock units. For the three and six months ended June 30, 2013, the Company incurred a net loss and therefore, the effect of the Company’s outstanding common stock equivalents were not included in the calculation of diluted loss per share as they were anti-dilutive. Accordingly, basic and dilutive net loss per share for the period were identical.

The Company excluded the following options to purchase common shares and restricted stock units from the computation of diluted net (loss) income per share either because they had an anti-dilutive impact or because the Company had a net loss in the period (in thousands):

 

     Three Months Ended June 30,      Six Months Ended June 30,  
     2013      2014      2013      2014  

Options to purchase common shares

     2,947         50         2,947         457   

Restricted stock units

     1,134         71         1,134         408   
  

 

 

    

 

 

    

 

 

    

 

 

 

Total options and restricted stock units

     4,081            121         4,081            865   
  

 

 

    

 

 

    

 

 

    

 

 

 

 

Basic and diluted net (loss) income per share was calculated as follows (in thousands, except share and per share data):

 

     Three Months Ended
June 30, 2013
    Six Months Ended
June 30, 2013
 

Basic and diluted net loss per share:

    

Net loss

   $ (1,360   $ (7,167
  

 

 

   

 

 

 

Weighted average common shares outstanding

     24,262,417        24,485,429   
  

 

 

   

 

 

 

Basic and diluted net loss per share

   $ (0.06   $ (0.29
  

 

 

   

 

 

 

 

     Three Months Ended
June 30, 2014
     Six Months Ended
June 30, 2014
 

Basic:

     

Net income

   $ 1,330       $ 2,334   
  

 

 

    

 

 

 

Weighted average common shares outstanding, basic

     24,425,081         24,134,686   
  

 

 

    

 

 

 

Net income per share, basic

   $ 0.05       $ 0.10   
  

 

 

    

 

 

 

Diluted:

     

Net income

   $ 1,330       $ 2,334   
  

 

 

    

 

 

 

Weighted average common shares outstanding

     24,425,081         24,134,686   

Add: Options to purchase common shares and restricted stock units

     734,259         755,044   
  

 

 

    

 

 

 

Weighted average common shares outstanding, diluted

     25,159,340         24,889,730   
  

 

 

    

 

 

 

Net income per share, diluted

   $ 0.05       $ 0.09   
  

 

 

    

 

 

 

Recently Issued Accounting Pronouncements—On May 28, 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers (“ASU 2014-09”) its final standard on revenue from contracts with customers. ASU 2014-9 outlines a single comprehensive model for entities to use in accounting for revenue arising from contracts with customers and supersedes most current revenue recognition guidance, including industry-specific guidance. The core principle of the revenue model is that an entity recognizes revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. In applying the revenue model to contracts within its scope, an entity identifies the contract(s) with a customer, identifies the performance obligations in the contract, determines the transaction price, allocates the transaction price to the performance obligations in the contract and recognizes revenue when (or as) the entity satisfies a performance obligation. ASU 2014-09 applies to all contracts with customers that are within the scope of other topics in the FASB Accounting Standards Codification. Certain of ASU 2014-09’s provisions also apply to transfers of nonfinancial assets, including in-substance nonfinancial assets that are not an output of an entity’s ordinary activities (i.e., property plant and equipment; real estate; or intangible assets). Existing accounting guidance applicable to these transfers has been amended or superseded. ASU 2014-09 also requires significantly expanded disclosures about revenue recognition. ASU 2014-09 is effective for the Company on January 1, 2017. The Company is currently assessing the potential impact of the adoption of ASU 2014-09 on its condensed consolidated financial statements.

Summary of Significant Accounting Policies (Tables)

The Company’s revenue by geography (based on customer address) is as follows (in thousands):

 

     Three Months Ended June 30,      Six Months Ended June 30,  
     2013      2014      2013      2014  

Revenues:

           

United States

   $ 26,695      $ 36,465       $ 51,483      $ 68,870   

United Kingdom

     3,643        4,918        7,106        9,325  

International - all other

     10,332        13,592        19,518        25,800  
  

 

 

    

 

 

    

 

 

    

 

 

 

Total revenue

   $ 40,670      $ 54,975       $ 78,107      $ 103,995   
  

 

 

    

 

 

    

 

 

    

 

 

 

The Company excluded the following options to purchase common shares and restricted stock units from the computation of diluted net (loss) income per share either because they had an anti-dilutive impact or because the Company had a net loss in the period (in thousands):

 

     Three Months Ended June 30,      Six Months Ended June 30,  
     2013      2014      2013      2014  

Options to purchase common shares

     2,947         50         2,947         457   

Restricted stock units

     1,134         71         1,134         408   
  

 

 

    

 

 

    

 

 

    

 

 

 

Total options and restricted stock units

     4,081            121         4,081            865   
  

 

 

    

 

 

    

 

 

    

 

 

 

Basic and diluted net (loss) income per share was calculated as follows (in thousands, except share and per share data):

 

     Three Months Ended
June 30, 2013
    Six Months Ended
June 30, 2013
 

Basic and diluted net loss per share:

    

Net loss

   $ (1,360   $ (7,167
  

 

 

   

 

 

 

Weighted average common shares outstanding

     24,262,417        24,485,429   
  

 

 

   

 

 

 

Basic and diluted net loss per share

   $ (0.06   $ (0.29
  

 

 

   

 

 

 

 

     Three Months Ended
June 30, 2014
     Six Months Ended
June 30, 2014
 

Basic:

     

Net income

   $ 1,330       $ 2,334   
  

 

 

    

 

 

 

Weighted average common shares outstanding, basic

     24,425,081         24,134,686   
  

 

 

    

 

 

 

Net income per share, basic

   $ 0.05       $ 0.10   
  

 

 

    

 

 

 

Diluted:

     

Net income

   $ 1,330       $ 2,334   
  

 

 

    

 

 

 

Weighted average common shares outstanding

     24,425,081         24,134,686   

Add: Options to purchase common shares and restricted stock units

     734,259         755,044   
  

 

 

    

 

 

 

Weighted average common shares outstanding, diluted

     25,159,340         24,889,730   
  

 

 

    

 

 

 

Net income per share, diluted

   $ 0.05       $ 0.09   
  

 

 

    

 

 

 
Fair Value of Financial Instruments (Tables)
Summary of Company's Financial Assets Carried at Fair Value

The following table summarizes the basis used to measure certain of the Company’s financial assets that are carried at fair value (in thousands):

 

     Basis of Fair Value Measurements  
     Balance      Quoted Prices
in Active
Markets for
Identical
Items
(Level 1)
     Significant
Other
Observable
Inputs
(Level 2)
     Significant
Unobservable
Inputs
(Level 3)
 

Balance at December 31, 2013

           

Cash equivalents — money market funds

   $ 28,210       $ 28,210       $ —        $ —    

Cash equivalents — bank deposits

     5,001         —          5,001         —    

Short-term marketable securities — U.S. government agency securities

     100,299         75,288         25,011         —    

Balance at June 30, 2014

           

Cash equivalents - money market funds

     27,504         27,504         —          —    

Cash equivalents - bank deposits

     5,021         —          5,021         —    

Short-term marketable securities - U.S. government agency securities

     100,170         95,168         5,002         —    
Acquisitions (Tables) (Ionia [Member])
Purchase Price Allocation

The purchase price was allocated as follows (in thousands):

 

     Amount  

Cash

   $ 67   

Current assets

     296   

Other assets

     26   

Deferred revenue

     (70

Other liabilities

     (864

Customer backlog

     120   

Trade name and trademark

     10   

Customer relationships

     1,340   

Documented know-how

     280   

Goodwill

     6,295   
  

 

 

 

Total purchase price

   $ 7,500   
  

 

 

 
Goodwill and Intangible Assets (Tables)

Changes in goodwill for the six months ended June 30, 2014, are as follows (in thousands):

 

Balance, December 31, 2013

   $  18,712   

Goodwill related to the acquisition of Ionia

     6,295   
  

 

 

 

Balance, June 30, 2014

   $ 25,007   
  

 

 

 

Intangible assets consist of the following (in thousands):

 

            December 31, 2013      June 30, 2014  
     Estimated
Useful Life
     Gross
Carrying
Amount
     Accumulated
Amortization
     Net
Carrying
Amount
     Gross
Carrying
Amount
     Accumulated
Amortization
     Net Carrying
Amount
 

Trade names

     1-5 years       $ 666       $ 666       $ —        $ 676       $ 670       $ 6   

Customer base

     5-7 years         3,789         1,901         1,888         5,129         2,199         2,930   

Customer backlog

     4 months         —            —          —          120         120         —    

Domain names

     5 years         894         341         553         908         425         483   

Software

     4 years         299         299         —          299         299         —    

Technology

     3-6 years         13,963         1,835         12,128         14,363         2,856         11,507   

Technology and know-how

     3 years         3,176         2,597         579         3,176         3,125         51   

Documented know-how

     4 years         —          —          —          280         22         258   

Non-compete agreements

     5 years         162         34         128         162         53         109   

Internally developed software

     3 years         2,485         875         1,610         3,390         1,258         2,132   
     

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 
      $ 25,434       $ 8,548       $ 16,886       $ 28,503       $ 11,027       $ 17,476   
     

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

operating expenses. Future estimated amortization expense for intangible assets is as follows at June 30, 2014 (in thousands):

 

Amortization Expense (Years Ending December 31)

   Amount  

2014 (Six months ending December 31)

     2,346   

2015

     4,485   

2016

     3,939   

2017

     3,339   

2018

     2,863   

Thereafter

     504   
  

 

 

 

Total

   $ 17,476   
  

 

 

 
Accrued Liabilities (Tables)
Summary of Accrued Liabilities

Accrued liabilities consisted of the following (in thousands):

 

                                                 
     December 31,
2013
     June 30,
2014
 

Marketing programs

   $ 4,631       $ 5,651   

Payroll and payroll related

     9,719         7,419   

Professional fees

     1,064         1,036   

Other accrued liabilities

     4,696         4,917   
  

 

 

    

 

 

 

Total accrued liabilities

   $ 20,110       $ 19,023   
  

 

 

    

 

 

 
Stock Incentive Plan (Tables)

The Company used the following assumptions to apply the Black-Scholes option-pricing model:  

                                                                                                   
   Three Months Ended June 30,    Six Months Ended June 30,
   2013    2014(1)    2013    2014

Expected dividend yield

   0.00%      —%    0.00%    0.00%

Risk-free interest rate

   0.89%      —%    0.87% - 0.89%    1.48%

Expected term (in years)

   6.25         —       6.25    6.25

Volatility

   55%      —%    55%    55%
(1) There were no stock options granted during the three months ended June 30, 2014.

The following table summarizes stock option activity, including performance-based options (shares and intrinsic value in thousands):

 

     Number
of shares
    Weighted
Average
Exercise
Price
     Weighted
Average
Remaining
Contractual
Term (Years)
     Aggregate
Intrinsic Value
 

Outstanding at January 1, 2014

     2,389      $ 26.85         6.4       $ 22,330   
          

 

 

 

Granted

     35        41.03         

Exercised

     (500     20.62          $ 11,037   
          

 

 

 

Forfeited

     (75     33.36         
  

 

 

   

 

 

       

Outstanding at June 30, 2014

     1,849      $ 28.54         6.3       $ 33,444   
  

 

 

   

 

 

    

 

 

    

 

 

 

Exercisable at December 31, 2013

     1,451      $ 23.45         5.4       $ 17,855   
  

 

 

   

 

 

    

 

 

    

 

 

 

Exercisable at June 30, 2014

     1,332      $ 26.72         5.7       $ 26,522   
  

 

 

   

 

 

    

 

 

    

 

 

 

The assumptions used in the Monte Carlo simulation model include (but are not limited to) the following:

 

     August 2013 Grant     May 2014 Grant  

Risk-free interest rate

     0.62     0.78

Volatility

     54     54

The following table summarizes restricted stock unit activity (shares in thousands):

 

     Number of shares
Underlying Restricted
Stock Units
    Weighted Average
Grant Date Fair
Value
 

Unvested as of January 1, 2014

     1,192      $ 28.47   

Restricted stock units granted

     610        44.38   

Restricted stock units vested

     (303     26.88   

Restricted stock units forfeited

     (101     26.46   
  

 

 

   

 

 

 

Unvested as of June 30, 2014

     1,398      $ 35.90   
  

 

 

   

 

 

 

The Company recognized stock based compensation expense within the accompanying condensed consolidated statements of operations as summarized in the following table (in thousands):

 

     Three Months Ended June 30,      Six Months Ended June 30,  
     2013      2014      2013      2014  

Cost of revenue

   $ 181       $ 274       $ 384       $ 509   

Research and development

     1,045         1,008         2,062         1,784   

Sales and marketing

     2,146         2,796         4,227         4,857   

General and administrative

     1,745         2,635         3,609         5,001   
  

 

 

    

 

 

    

 

 

    

 

 

 
   $ 5,117       $ 6,713       $ 10,282       $ 12,151   
  

 

 

    

 

 

    

 

 

    

 

 

 
Commitments and Contingencies (Tables)
Schedule of Minimum Future Lease Payments Receivable

Future minimum lease payments under non-cancelable operating leases including one year commitments associated with the Company’s hosting services arrangements are approximately as follows at June 30, 2014 (in thousands):

 

Years Ending December 31

      

2014 (Six months ending December 31)

   $ 4,959   

2015

     7,377   

2016

     6,083   

2017

     5,629   

2018

     5,930   

Thereafter

     21,494   
  

 

 

 

Total minimum lease payments

   $ 51,472   
  

 

 

 
Summary of Significant Accounting Policies - Additional Information (Detail) (USD $)
3 Months Ended 6 Months Ended 3 Months Ended 6 Months Ended
Jun. 30, 2014
Customer
Jun. 30, 2013
Customer
Jun. 30, 2014
Customer
Segment
Jun. 30, 2013
Customer
Dec. 31, 2013
Customer
Nov. 30, 2012
Patents
Mar. 31, 2013
License Agreements [Member]
Jun. 30, 2014
Minimum [Member]
Jun. 30, 2014
Maximum [Member]
Jun. 30, 2014
Weighted Average [Member]
Organization And Summary Of Significant Accounting Policies [Line Items]
 
 
 
 
 
 
 
 
 
 
Marketable securities, maturities remaining
 
 
2 years 
 
 
 
 
 
 
 
Marketable securities, amortized cost
$ 100,100,000 
 
$ 100,100,000 
 
$ 100,300,000 
 
 
 
 
 
Marketable securities
100,170,000 
 
100,170,000 
 
100,299,000 
 
 
 
 
 
Marketable securities, unrealized gains
59,000 
 
59,000 
 
67,000 
 
 
 
 
 
Marketable securities, unrealized losses
10,000 
 
10,000 
 
28,000 
 
 
 
 
 
Revenue subscription period
 
 
 
 
 
 
 
1 month 
5 years 
1 year 
Accounts receivable, customers accounted description
 
 
10% or more of accounts receivable 
 
 
 
 
 
 
 
Accounts receivable, number of customers accounted
 
 
 
 
 
 
 
Revenue, customers accounted description
 
 
10% or more of revenue 
 
 
 
 
 
 
 
Revenue, number of customers accounted
 
 
 
 
 
 
Number of reporting unit
 
 
 
 
 
 
 
 
 
Goodwill impairments
 
 
 
 
 
 
 
 
 
Intangible assets, estimated useful lives
 
 
 
 
 
 
 
4 months 
7 years 
 
Long-lived asset impairment
 
 
 
 
 
 
 
 
 
Foreign currency gains
224,000 
 
197,000 
454,000 
 
 
 
 
 
 
Foreign currency losses
 
199,000 
 
 
 
 
 
 
 
 
Uncertain tax positions
484,000 
 
484,000 
 
304,000 
 
 
 
 
 
Number of patents involved in infringement lawsuit
 
 
 
 
 
 
 
 
 
General and administrative expense
$ 7,448,000 
$ 6,352,000 
$ 14,125,000 
$ 17,872,000 
 
 
$ 1,200,000 
 
 
 
Summary of Significant Accounting Policies - Schedule of Revenue by Geographic Areas (Detail) (USD $)
In Thousands, unless otherwise specified
3 Months Ended 6 Months Ended
Jun. 30, 2014
Jun. 30, 2013
Jun. 30, 2014
Jun. 30, 2013
Revenue from External Customer [Line Items]
 
 
 
 
Revenue
$ 54,975 
$ 40,670 
$ 103,995 
$ 78,107 
United States [Member]
 
 
 
 
Revenue from External Customer [Line Items]
 
 
 
 
Revenue
36,465 
26,695 
68,870 
51,483 
United Kingdom [Member]
 
 
 
 
Revenue from External Customer [Line Items]
 
 
 
 
Revenue
4,918 
3,643 
9,325 
7,106 
International - All Other [Member]
 
 
 
 
Revenue from External Customer [Line Items]
 
 
 
 
Revenue
$ 13,592 
$ 10,332 
$ 25,800 
$ 19,518 
Summary of Significant Accounting Policies - Schedule of Options to Purchase Common Shares and Restricted Stock Units (Detail)
In Thousands, unless otherwise specified
3 Months Ended 6 Months Ended
Jun. 30, 2014
Jun. 30, 2013
Jun. 30, 2014
Jun. 30, 2013
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
 
 
 
 
Total options and restricted stock units
121 
4,081 
865 
4,081 
Options to Purchase Common Shares [Member]
 
 
 
 
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
 
 
 
 
Total options and restricted stock units
50 
2,947 
457 
2,947 
Restricted Stock Units [Member]
 
 
 
 
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
 
 
 
 
Total options and restricted stock units
71 
1,134 
408 
1,134 
Summary of Significant Accounting Policies - Reconciliation of Basic and Diluted Net (Loss) Income per Share (Detail) (USD $)
In Thousands, except Share data, unless otherwise specified
3 Months Ended 6 Months Ended
Jun. 30, 2014
Jun. 30, 2013
Jun. 30, 2014
Jun. 30, 2013
Basic and diluted net loss per share:
 
 
 
 
Net income (loss)
$ 1,330 
$ (1,360)
$ 2,334 
$ (7,167)
Weighted average common shares outstanding
 
24,262,417 
 
24,485,429 
Basic and diluted net loss per share
 
$ (0.06)
 
$ (0.29)
Basic:
 
 
 
 
Net income
1,330 
(1,360)
2,334 
(7,167)
Weighted average common shares outstanding, basic
24,425,081 
24,262,417 
24,134,686 
24,485,429 
Net income per share, basic
$ 0.05 
$ (0.06)
$ 0.10 
$ (0.29)
Diluted:
 
 
 
 
Net income
$ 1,330 
$ (1,360)
$ 2,334 
$ (7,167)
Weighted average common shares outstanding
24,425,081 
24,262,417 
24,134,686 
24,485,429 
Add: Options to purchase common shares and restricted stock units
734,259 
 
755,044 
 
Weighted average common shares outstanding, diluted
25,159,340 
24,262,417 
24,889,730 
24,485,429 
Net income per share, diluted
$ 0.05 
$ (0.06)
$ 0.09 
$ (0.29)
Fair Value of Financial Instruments - Summary of Company's Financial Assets Carried at Fair Value (Detail) (Recurring [Member], USD $)
In Thousands, unless otherwise specified
Jun. 30, 2014
Dec. 31, 2013
Money Market Funds [Member]
 
 
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
 
 
Cash equivalents
$ 27,504 
$ 28,210 
Bank Deposits [Member]
 
 
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
 
 
Cash equivalents
5,021 
5,001 
U.S. Government Agency Securities [Member]
 
 
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
 
 
Short-term marketable securities - U.S. government agency securities
100,170 
100,299 
Quoted Prices in Active Markets for Identical Items (Level 1) [Member] |
Money Market Funds [Member]
 
 
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
 
 
Cash equivalents
27,504 
28,210 
Quoted Prices in Active Markets for Identical Items (Level 1) [Member] |
U.S. Government Agency Securities [Member]
 
 
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
 
 
Short-term marketable securities - U.S. government agency securities
95,168 
75,288 
Significant Other Observable Inputs (Level 2) [Member] |
Bank Deposits [Member]
 
 
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
 
 
Cash equivalents
5,021 
5,001 
Significant Other Observable Inputs (Level 2) [Member] |
U.S. Government Agency Securities [Member]
 
 
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
 
 
Short-term marketable securities - U.S. government agency securities
$ 5,002 
$ 25,011 
Acquisitions - Additional Information (Detail) (USD $)
3 Months Ended 6 Months Ended 0 Months Ended 3 Months Ended 6 Months Ended
Jun. 30, 2014
Jun. 30, 2013
Jun. 30, 2014
Jun. 30, 2013
Mar. 7, 2014
Ionia [Member]
Jun. 30, 2014
Ionia [Member]
Jun. 30, 2014
Ionia [Member]
Mar. 7, 2014
Ionia [Member]
Business Acquisition [Line Items]
 
 
 
 
 
 
 
 
Initial cash payment
 
 
 
 
$ 7,500,000 
 
 
 
Contingent payments
 
 
 
 
 
 
 
4,000,000 
Maturity period for contingent payment
 
 
 
 
 
 
2 years 
 
Operating revenues
54,975,000 
40,670,000 
103,995,000 
78,107,000 
 
600,000 
800,000 
 
Operating expenses
46,796,000 
36,017,000 
88,098,000 
75,675,000 
 
1,600,000 
2,100,000 
 
Range of contingent payments, Minimum
 
 
 
 
 
 
Range of contingent payments, Maximum
 
 
 
 
 
4,000,000 
4,000,000 
 
Acquisition-related costs
 
 
 
 
 
100,000 
100,000 
 
Increase in goodwill
 
 
 
 
 
700,000 
 
 
Deferred tax liability, intangible assets
 
 
 
 
 
$ 700,000 
$ 700,000 
 
Acquisitions - Purchase Price Allocation (Detail) (USD $)
In Thousands, unless otherwise specified
Jun. 30, 2014
Dec. 31, 2013
Business Acquisition [Line Items]
 
 
Goodwill
$ 25,007 
$ 18,712 
Ionia [Member]
 
 
Business Acquisition [Line Items]
 
 
Cash
67 
 
Current assets
296 
 
Other assets
26 
 
Deferred revenue
(70)
 
Other liabilities
(864)
 
Goodwill
6,295 
 
Total purchase price
7,500 
 
Ionia [Member] |
Customer Backlog [Member]
 
 
Business Acquisition [Line Items]
 
 
Business acquisition, Intangible assets
120 
 
Ionia [Member] |
Trade Name and Trademark [Member]
 
 
Business Acquisition [Line Items]
 
 
Business acquisition, Intangible assets
10 
 
Ionia [Member] |
Customer Relationships [Member]
 
 
Business Acquisition [Line Items]
 
 
Business acquisition, Intangible assets
1,340 
 
Ionia [Member] |
Documented Know-how [Member]
 
 
Business Acquisition [Line Items]
 
 
Business acquisition, Intangible assets
$ 280 
 
Goodwill and Intangible Assets - Changes in Goodwill (Detail) (USD $)
In Thousands, unless otherwise specified
6 Months Ended
Jun. 30, 2014
Goodwill And Intangible Assets Disclosure [Abstract]
 
Beginning balance
$ 18,712 
Goodwill related to the acquisition of Ionia
6,295 
Ending balance
$ 25,007 
Goodwill and Intangible Assets - Intangible Assets (Detail) (USD $)
In Thousands, unless otherwise specified
6 Months Ended 12 Months Ended 6 Months Ended 12 Months Ended
Jun. 30, 2014
Dec. 31, 2013
Jun. 30, 2014
Trade Names [Member]
Dec. 31, 2013
Trade Names [Member]
Jun. 30, 2014
Customer Base [Member]
Dec. 31, 2013
Customer Base [Member]
Jun. 30, 2014
Customer Backlog [Member]
Jun. 30, 2014
Domain Names [Member]
Dec. 31, 2013
Domain Names [Member]
Jun. 30, 2014
Software [Member]
Dec. 31, 2013
Software [Member]
Jun. 30, 2014
Technology [Member]
Dec. 31, 2013
Technology [Member]
Jun. 30, 2014
Technology and Know-how [Member]
Dec. 31, 2013
Technology and Know-how [Member]
Jun. 30, 2014
Documented Know-how [Member]
Jun. 30, 2014
Non-compete Agreements [Member]
Dec. 31, 2013
Non-compete Agreements [Member]
Jun. 30, 2014
Internally Developed Software [Member]
Dec. 31, 2013
Internally Developed Software [Member]
Jun. 30, 2014
Minimum [Member]
Dec. 31, 2013
Minimum [Member]
Trade Names [Member]
Dec. 31, 2013
Minimum [Member]
Customer Base [Member]
Dec. 31, 2013
Minimum [Member]
Technology [Member]
Jun. 30, 2014
Maximum [Member]
Dec. 31, 2013
Maximum [Member]
Trade Names [Member]
Dec. 31, 2013
Maximum [Member]
Customer Base [Member]
Dec. 31, 2013
Maximum [Member]
Customer Backlog [Member]
Dec. 31, 2013
Maximum [Member]
Domain Names [Member]
Dec. 31, 2013
Maximum [Member]
Software [Member]
Dec. 31, 2013
Maximum [Member]
Technology [Member]
Dec. 31, 2013
Maximum [Member]
Technology and Know-how [Member]
Dec. 31, 2013
Maximum [Member]
Documented Know-how [Member]
Dec. 31, 2013
Maximum [Member]
Non-compete Agreements [Member]
Dec. 31, 2013
Maximum [Member]
Internally Developed Software [Member]
Finite-Lived Intangible Assets [Line Items]
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Intangible assets, estimated useful life
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
4 months 
1 year 
5 years 
3 years 
7 years 
5 years 
7 years 
4 months 
5 years 
4 years 
6 years 
3 years 
4 years 
5 years 
3 years 
Gross Carrying Amount
$ 28,503 
$ 25,434 
$ 676 
$ 666 
$ 5,129 
$ 3,789 
$ 120 
$ 908 
$ 894 
$ 299 
$ 299 
$ 14,363 
$ 13,963 
$ 3,176 
$ 3,176 
$ 280 
$ 162 
$ 162 
$ 3,390 
$ 2,485 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Accumulated Amortization
11,027 
8,548 
670 
666 
2,199 
1,901 
120 
425 
341 
299 
299 
2,856 
1,835 
3,125 
2,597 
22 
53 
34 
1,258 
875 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net Carrying Amount
$ 17,476 
$ 16,886 
$ 6 
 
$ 2,930 
$ 1,888 
 
$ 483 
$ 553 
 
 
$ 11,507 
$ 12,128 
$ 51 
$ 579 
$ 258 
$ 109 
$ 128 
$ 2,132 
$ 1,610 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Goodwill and Intangible Assets - Additional Information (Detail) (USD $)
3 Months Ended 6 Months Ended 12 Months Ended 12 Months Ended 0 Months Ended 1 Months Ended 12 Months Ended
Jun. 30, 2014
Jun. 30, 2013
Jun. 30, 2014
Jun. 30, 2013
Jun. 30, 2014
Minimum [Member]
Jun. 30, 2014
Maximum [Member]
Jun. 30, 2014
Ionia [Member]
Minimum [Member]
Jun. 30, 2014
Ionia [Member]
Maximum [Member]
Dec. 31, 2013
Customer Backlog [Member]
Maximum [Member]
Jun. 30, 2014
Customer Backlog [Member]
Ionia [Member]
Dec. 31, 2013
Documented Know-how [Member]
Maximum [Member]
Jun. 30, 2014
Documented Know-how [Member]
Ionia [Member]
Jun. 30, 2014
Trade names [Member]
Ionia [Member]
Jun. 30, 2014
Customer Relationships [Member]
Ionia [Member]
Nov. 6, 2013
Technology [Member]
May 31, 2014
Technology [Member]
Dec. 31, 2013
Technology [Member]
Minimum [Member]
Dec. 31, 2013
Technology [Member]
Maximum [Member]
Finite-Lived Intangible Assets [Line Items]
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Intangible assets acquired
 
 
 
 
 
 
 
 
 
$ 120,000 
 
$ 280,000 
$ 10,000 
$ 1,340,000 
 
 
 
 
Intangible assets, estimated useful life
 
 
 
 
4 months 
7 years 
4 months 
7 years 
4 months 
 
4 years 
 
 
 
 
 
3 years 
6 years 
Asset purchased
 
 
 
 
 
 
 
 
 
 
 
 
 
 
11,500,000 
 
 
 
Estimated useful life period
 
 
 
 
 
 
 
 
 
 
 
 
 
 
5 years 
 
 
 
Payment for software
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
500,000 
 
 
Internally developed software
413,000 
317,000 
905,000 
556,000 
 
 
 
 
 
 
 
 
 
 
 
400,000 
 
 
Expenses related to technology
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
100,000 
 
 
Total amortization of intangible assets
$ 1,500,000 
$ 633,000.0 
$ 2,500,000 
$ 1,200,000 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Goodwill and Intangible Assets - Future Estimated Amortization Expense (Detail) (USD $)
In Thousands, unless otherwise specified
Jun. 30, 2014
Dec. 31, 2013
Intangible Liability Disclosure [Abstract]
 
 
2014 (Six months ending December 31)
$ 2,346 
 
2015
4,485 
 
2016
3,939 
 
2017
3,339 
 
2018
2,863 
 
Thereafter
504 
 
Net Carrying Amount
$ 17,476 
$ 16,886 
Accrued Liabilities - Summary of Accrued Liabilities (Detail) (USD $)
In Thousands, unless otherwise specified
Jun. 30, 2014
Dec. 31, 2013
Payables And Accruals [Abstract]
 
 
Marketing programs
$ 5,651 
$ 4,631 
Payroll and payroll related
7,419 
9,719 
Professional fees
1,036 
1,064 
Other accrued liabilities
4,917 
4,696 
Total accrued liabilities
$ 19,023 
$ 20,110 
Income Taxes - Additional Information (Detail) (USD $)
3 Months Ended 6 Months Ended
Jun. 30, 2014
Jun. 30, 2013
Jun. 30, 2014
Jun. 30, 2013
Dec. 31, 2013
Income Tax Disclosure [Abstract]
 
 
 
 
 
Provision for (benefit from) income taxes
$ (175,000)
$ 1,194,000 
$ 502,000 
$ 1,188,000 
 
Uncertain tax provisions
484,000 
 
484,000 
 
304,000 
Interest expense
$ 5,000 
$ 0 
 
$ 0 
 
Common Stock and Equity - Additional Information (Detail) (USD $)
0 Months Ended 1 Months Ended 3 Months Ended 6 Months Ended
Aug. 13, 2013
Feb. 28, 2013
Jun. 30, 2014
Jun. 30, 2013
Jun. 30, 2014
Jun. 30, 2013
Equity [Abstract]
 
 
 
 
 
 
Share repurchase program
$ 50,000,000 
$ 25,000,000 
 
 
 
 
Number of shares repurchased
 
 
46,511 
258,663 
195,011 
760,485 
Average price of repurchased shares
 
 
$ 43.86 
$ 21.76 
$ 35.63 
$ 19.21 
Total cost of shares repurchased
 
 
2,000,000 
5,600,000 
6,900,000 
14,600,000 
Amount available under share repurchase program
 
 
 
 
$ 29,000,000 
 
Stock Incentive Plan - Additional Information (Detail) (USD $)
In Millions, except Share data, unless otherwise specified
6 Months Ended 12 Months Ended 1 Months Ended 6 Months Ended 3 Months Ended 6 Months Ended
Jun. 30, 2014
Dec. 31, 2013
May 31, 2014
Minimum [Member]
Aug. 31, 2013
Minimum [Member]
May 31, 2014
Maximum [Member]
Aug. 31, 2013
Maximum [Member]
May 31, 2014
Market-based Restricted Stock Units [Member]
Aug. 31, 2013
Market-based Restricted Stock Units [Member]
Jun. 30, 2014
Stock Options [Member]
Jun. 30, 2014
Restricted Stock Units [Member]
Jun. 30, 2014
Restricted Stock Units [Member]
Service-based Restricted Stock Units [Member]
Jun. 30, 2014
Restricted Stock Units [Member]
Market-based Restricted Stock Units [Member]
Minimum [Member]
Jun. 30, 2014
Restricted Stock Units [Member]
Market-based Restricted Stock Units [Member]
Maximum [Member]
Jun. 30, 2014
Time-based Restricted Stock Units [Member]
Jun. 30, 2014
Time-based Restricted Stock Units [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Period of options vested
 
 
 
 
 
 
 
 
4 years 
 
3 years 
2 years 
3 years 
 
 
Period of expiration
 
 
 
 
 
 
 
 
10 years 
 
 
 
 
 
 
Increase in shares available to grant
1,200,000 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Shares available for grant
2,072,394 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Requisite service period of compensation expense
4 years 
 
2 years 
2 years 
3 years 
3 years 
 
 
 
 
 
 
 
 
 
Fair value of common stock
$ 46.62 
$ 33.55 
 
 
 
 
 
 
 
 
 
 
 
 
 
Weighted average grant date fair value
$ 21.78 
$ 11.60 
 
 
 
 
 
 
 
 
 
 
 
 
 
Number of restricted stock units, granted
 
 
 
 
 
 
71,000 
74,000 
 
610,000 
 
 
 
436,110 
539,396 
Restricted stock units, vesting period
 
 
 
 
 
 
 
 
 
 
 
 
 
3 years 
3 years 
Total shareholder return shares, percentage
 
 
0.00% 
0.00% 
200.00% 
200.00% 
 
 
 
 
 
 
 
 
 
Total shareholder return shares
 
 
 
 
142,000 
148,000 
 
 
 
 
 
 
 
 
 
Unrecognized share-based compensation cost
$ 47.7 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Share-based compensation cost not yet recognized period for recognition
2 years 2 months 12 days 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Stock Incentive Plan - Summary of Assumptions to Apply Black-Scholes Option-Pricing Model (Detail)
3 Months Ended 6 Months Ended
Jun. 30, 2014
Jun. 30, 2013
Jun. 30, 2014
Jun. 30, 2013
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
 
 
 
 
Expected dividend yield
 
0.00% 
0.00% 
0.00% 
Risk-free interest rate
 
0.89% 
1.48% 
 
Expected term (in years)
0 years 
6 years 3 months 
6 years 3 months 
6 years 3 months 
Volatility
 
55.00% 
55.00% 
55.00% 
Minimum [Member]
 
 
 
 
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
 
 
 
 
Risk-free interest rate
 
 
 
0.87% 
Maximum [Member]
 
 
 
 
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
 
 
 
 
Risk-free interest rate
 
 
 
0.89% 
Stock Incentive Plan - Summary of Assumptions to Apply Black-Scholes Option-Pricing Model (Parenthetical) (Detail)
In Thousands, unless otherwise specified
3 Months Ended 6 Months Ended
Jun. 30, 2014
Jun. 30, 2014
Disclosure Of Compensation Related Costs Sharebased Payments [Abstract]
 
 
Stock options granted
35 
Stock Incentive Plan - Summary of Stock Option Activity (Detail) (USD $)
In Thousands, except Per Share data, unless otherwise specified
3 Months Ended 6 Months Ended 12 Months Ended
Jun. 30, 2014
Jun. 30, 2014
Dec. 31, 2013
Disclosure Of Compensation Related Costs Sharebased Payments [Abstract]
 
 
 
Number of shares, Outstanding, Beginning balance
 
2,389 
 
Number of shares, Granted
35 
 
Number of shares, Exercised
 
(500)
 
Number of shares, Forfeited
 
(75)
 
Number of shares, Outstanding, Ending balance
1,849 
1,849 
2,389 
Number of shares, Exercisable, Ending balance
1,332 
1,332 
1,451 
Weighted Average Exercise Price, Outstanding, Beginning balance
 
$ 26.85 
 
Weighted Average Exercise Price, Granted
 
$ 41.03 
 
Weighted Average Exercise Price, Exercised
 
$ 20.62 
 
Weighted Average Exercise Price, Forfeited
 
$ 33.36 
 
Weighted Average Exercise Price, Outstanding, Ending balance
$ 28.54 
$ 28.54 
$ 26.85 
Weighted Average Exercise Price, Exercisable, Ending balance
$ 26.72 
$ 26.72 
$ 23.45 
Weighted Average Remaining Contractual Term (Years), Outstanding
 
6 years 3 months 18 days 
6 years 4 months 24 days 
Weighted Average Remaining Contractual Term (Years), Exercisable
 
5 years 8 months 12 days 
5 years 4 months 24 days 
Aggregate Intrinsic Value, Outstanding, Beginning balance
 
$ 22,330 
 
Aggregate Intrinsic Value, Exercised
 
11,037 
 
Aggregate Intrinsic Value, Outstanding, Ending balance
33,444 
33,444 
22,330 
Aggregate Intrinsic Value, Exercisable, Ending balance
$ 26,522 
$ 26,522 
$ 17,855 
Stock Incentive Plan - Summary of Assumptions Used in Monte Carlo Simulation Model (Detail)
3 Months Ended 6 Months Ended 1 Months Ended
Jun. 30, 2013
Jun. 30, 2014
Jun. 30, 2013
May 31, 2014
Market-based Restricted Stock Units [Member]
Grant [Member]
Aug. 31, 2013
Market-based Restricted Stock Units [Member]
Grant [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
 
 
 
 
 
Risk-free interest rate
0.89% 
1.48% 
 
0.78% 
0.62% 
Volatility
55.00% 
55.00% 
55.00% 
54.00% 
54.00% 
Stock Incentive Plan - Schedule of Restricted Stock Unit Activity (Detail) (Restricted Stock Units [Member], USD $)
6 Months Ended
Jun. 30, 2014
Restricted Stock Units [Member]
 
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
 
Number of shares Underlying Restricted Stock Units, Unvested, Beginning balance
1,192,000 
Number of shares Underlying Restricted Stock Units, granted
610,000 
Number of shares Underlying Restricted Stock Units, vested
(303,000)
Number of shares Underlying Restricted Stock Units, forfeited
(101,000)
Number of shares Underlying Restricted Stock Units, Unvested, Ending balance
1,398,000 
Weighted Average Grant Date Fair Value, Beginning balance
$ 28.47 
Weighted Average Grant Date Fair Value, granted
$ 44.38 
Weighted Average Grant Date Fair Value, vested
$ 26.88 
Weighted Average Grant Date Fair Value, forfeited
$ 26.46 
Weighted Average Grant Date Fair Value, Ending balance
$ 35.90 
Stock Incentive Plan - Schedule of Stock Based Compensation Allocated to Expense (Detail) (USD $)
In Thousands, unless otherwise specified
3 Months Ended 6 Months Ended
Jun. 30, 2014
Jun. 30, 2013
Jun. 30, 2014
Jun. 30, 2013
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
 
 
 
 
Stock based compensation expense
$ 6,713 
$ 5,117 
$ 12,151 
$ 10,282 
Cost of Revenue [Member]
 
 
 
 
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
 
 
 
 
Stock based compensation expense
274 
181 
509 
384 
Research and Development [Member]