LOGMEIN, INC., 10-Q filed on 4/29/2015
Quarterly Report
Document and Entity Information
3 Months Ended
Mar. 31, 2015
Apr. 24, 2015
Document And Entity Information [Abstract]
 
 
Document Type
10-Q 
 
Amendment Flag
false 
 
Document Period End Date
Mar. 31, 2015 
 
Document Fiscal Year Focus
2015 
 
Document Fiscal Period Focus
Q1 
 
Trading Symbol
LOGM 
 
Entity Registrant Name
LogMeIn, Inc. 
 
Entity Central Index Key
0001420302 
 
Current Fiscal Year End Date
--12-31 
 
Entity Filer Category
Large Accelerated Filer 
 
Entity Common Stock, Shares Outstanding
 
24,623,623 
Condensed Consolidated Balance Sheets (USD $)
In Thousands, unless otherwise specified
Mar. 31, 2015
Dec. 31, 2014
Current assets:
 
 
Cash and cash equivalents
$ 132,160 
$ 100,960 
Marketable securities
100,321 
100,209 
Accounts receivable (net of allowance for doubtful accounts of $301 and $278 as of December 31, 2014 and March 31, 2015, respectively)
12,640 
18,286 
Prepaid expenses and other current assets
13,322 
4,545 
Restricted cash, current portion
1,492 
1,492 
Deferred income tax assets
5,334 
5,403 
Total current assets
265,269 
230,895 
Property and equipment, net
15,556 
13,476 
Restricted cash, net of current portion
2,464 
2,531 
Intangibles, net
18,802 
18,983 
Goodwill
37,928 
37,928 
Other assets
5,197 
4,756 
Deferred income tax assets
9,271 
9,280 
Total assets
354,487 
317,849 
Current liabilities:
 
 
Accounts payable
10,403 
7,055 
Accrued liabilities
33,509 
29,482 
Deferred revenue, current portion
125,574 
101,672 
Total current liabilities
169,486 
138,209 
Deferred revenue, net of current portion
3,023 
3,578 
Other long-term liabilities
2,183 
2,218 
Total liabilities
174,692 
144,005 
Commitments and contingencies (Note 10)
   
   
Preferred stock, $0.01 par value - 5,000,000 shares authorized, 0 shares outstanding as of December 31, 2014 and March 31, 2015
   
   
Equity:
 
 
Common stock, $0.01 par value - 75,000,000 shares authorized as of December 31, 2014 and March 31, 2015; 26,530,977 and 26,873,108 shares issued as of December 31, 2014 and March 31, 2015, respectively; 24,418,760 and 24,667,491 outstanding as of December 31, 2014 and March 31, 2015, respectively
271 
267 
Additional paid-in capital
249,260 
237,203 
Retained Earnings
6,888 
6,516 
Accumulated other comprehensive loss
(4,535)
(3,117)
Treasury stock, at cost - 2,112,217 and 2,205,617 shares as of December 31, 2014 and March 31, 2015, respectively
(72,089)
(67,025)
Total equity
179,795 
173,844 
Total liabilities and equity
$ 354,487 
$ 317,849 
Condensed Consolidated Balance Sheets (Parenthetical) (USD $)
In Thousands, except Share data, unless otherwise specified
Mar. 31, 2015
Dec. 31, 2014
Statement of Financial Position [Abstract]
 
 
Allowance for doubtful accounts
$ 278 
$ 301 
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
26,873,108 
26,530,977 
Common stock, shares outstanding
24,667,491 
24,418,760 
Treasury stock, shares
2,205,617 
2,112,217 
Condensed Consolidated Statements of Operations (USD $)
In Thousands, except Share data, unless otherwise specified
3 Months Ended
Mar. 31, 2015
Mar. 31, 2014
Income Statement [Abstract]
 
 
Revenue
$ 61,109 
$ 49,020 
Cost of revenue
7,982 
6,120 
Gross profit
53,127 
42,900 
Operating expenses
 
 
Research and development
9,123 
6,712 
Sales and marketing
34,386 
27,710 
General and administrative
6,706 
6,677 
Legal settlements
3,600 
 
Amortization of acquired intangibles
276 
203 
Total operating expenses
54,091 
41,302 
Income from operations
(964)
1,598 
Interest income, net
174 
111 
Other (expense) income
1,225 
(28)
Income before income taxes
435 
1,681 
Provision for income taxes
(63)
(677)
Net income
$ 372 
$ 1,004 
Net income per share:
 
 
Basic
$ 0.02 
$ 0.04 
Diluted
$ 0.01 
$ 0.04 
Weighted average shares outstanding:
 
 
Basic
24,626,872 
24,123,291 
Diluted
25,557,184 
24,749,511 
Condensed Consolidated Statements of Comprehensive Income/(Loss) (USD $)
In Thousands, unless otherwise specified
3 Months Ended
Mar. 31, 2015
Mar. 31, 2014
Statement of Comprehensive Income [Abstract]
 
 
Net income
$ 372 
$ 1,004 
Other comprehensive loss:
 
 
Net unrealized gains on marketable securities, (net of tax provision of $12 and $65 for the three months ended March 31, 2014 and 2015)
114 
21 
Net translation losses
(1,532)
(135)
Total other comprehensive loss
(1,418)
(114)
Comprehensive income (loss)
$ (1,046)
$ 890 
Condensed Consolidated Statements of Comprehensive Income/(Loss) (Parenthetical) (USD $)
In Thousands, unless otherwise specified
3 Months Ended
Mar. 31, 2015
Mar. 31, 2014
Statement of Comprehensive Income [Abstract]
 
 
Net unrealized gains on marketable securities, net of tax provision
$ 65 
$ 12 
Condensed Consolidated Statements of Cash Flows (USD $)
In Thousands, unless otherwise specified
3 Months Ended
Mar. 31, 2015
Mar. 31, 2014
Cash flows from operating activities
 
 
Net income
$ 372 
$ 1,004 
Adjustments to reconcile net income to net cash provided by operating activities
 
 
Depreciation and amortization
2,877 
2,472 
Amortization of premium on investments
67 
63 
Amortization of debt issuance costs
23 
 
Provision for bad debts
19 
34 
Provision for deferred income taxes
 
265 
Gain on sales of marketable securities
(5)
 
Stock-based compensation
4,853 
5,438 
(Gain) loss on disposal of equipment
12 
(2)
Changes in assets and liabilities:
 
 
Accounts receivable
5,031 
1,519 
Prepaid expenses and other current assets
(8,691)
(916)
Other assets
194 
90 
Accounts payable
3,843 
(1,008)
Accrued liabilities
3,894 
(4,277)
Deferred revenue
27,484 
19,358 
Other long-term liabilities
333 
Net cash provided by operating activities
39,978 
24,373 
Cash flows from investing activities
 
 
Purchases of marketable securities
(19,996)
(4,985)
Proceeds from sale or disposal of marketable securities
20,000 
5,000 
Purchases of property and equipment
(3,901)
(1,780)
Intangible asset additions
(1,018)
(506)
Cash paid for acquisition, net of cash acquired
 
(7,434)
Increase in restricted cash and deposits
(50)
 
Net cash used in investing activities
(4,965)
(9,705)
Cash flows from financing activities
 
 
Proceeds from issuance of common stock upon option exercises
8,850 
5,773 
Common stock withheld to satisfy income tax withholdings for restricted stock unit vesting
(1,642)
(901)
Payment of debt issuance costs
(676)
 
Payment of contingent consideration
(226)
 
Purchase of treasury stock
(5,064)
(4,909)
Net cash (used in) provided by financing activities
1,242 
(37)
Effect of exchange rate changes on cash and cash equivalents and restricted cash
(5,055)
(152)
Net increase in cash and cash equivalents
31,200 
14,479 
Cash and cash equivalents, beginning of period
100,960 
89,257 
Cash and cash equivalents, end of period
132,160 
103,736 
Supplemental disclosure of cash flow information
 
 
Cash paid for interest
Cash paid for income taxes
1,015 
119 
Non-cash investing and financing activities
 
 
Purchases of property and equipment included in accounts payable and accrued liabilities
1,200 
1,349 
Debt issuance costs included in accounts payable and accrued liabilities
224 
 
Fair value of contingent consideration in connection with acquisition included in other long-term liabilities
$ 25 
 
Nature of the Business
Nature of the Business

1. Nature of the Business

LogMeIn, Inc. (the “Company”) provides a portfolio of cloud-based service offerings which make it possible for people and businesses to simply and securely connect to their workplace, colleagues and customers. 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®, Meldium™, Xively™ and RemotelyAnywhere®. The Company is headquartered in Boston, Massachusetts with wholly-owned subsidiaries located in Hungary, The Netherlands, Australia, the United Kingdom, Brazil, Bermuda, 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 February 20, 2015. The unaudited interim condensed consolidated financial statements have been prepared on the same basis as the audited 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 loss 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, 2014 and March 31, 2015, marketable securities consisted of U.S. government agency securities and corporate bonds that have remaining maturities within two years and have an aggregate amortized cost of $100.3 million. The marketable securities have an aggregate fair value of $100.2 million and $100.3 million, including $9,000 and $59,000 of unrealized gains and $138,000 and $10,000 of unrealized losses, respectively.

Revenue Recognition — The Company derives revenue primarily from subscription fees related to its LogMeIn premium services and, to a lesser extent, 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.

 

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, 2014, one customer accounted for 15% of accounts receivable and there were no customers that represented 10% or more of revenue. For the three months ended March 31, 2014 and 2015, no customers accounted for more than 10% of revenue. As of March 31, 2015, one customer accounted for more than 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 impairment test of goodwill annually or 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. As of December 31, 2014, the fair value of the Company as a whole significantly exceeded the carrying amount of the Company. Through March 31, 2015, no impairments have occurred.

Long-Lived Assets and Intangible Assets — The Company records intangible assets at their respective estimated fair values at the date of acquisition. Intangible assets are being 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, which range from four months to eight 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. The Company did not record any impairments for the quarter ended March 31, 2015.

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 $28,000 for the three months ended March 31, 2014, and foreign currency gains of approximately $1.3 million for the three months ended March 31, 2015 included in other (expense) income in the condensed consolidated statements of operations.

Stock-Based Compensation — The Company values all stock-based compensation, including grants of stock options and restricted stock units, at fair value on the date of grant and recognizes the expense over the requisite service period, which is generally the vesting period of the award, for those awards expected to vest, on a straight-line basis. 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 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, 2014 and March 31, 2015, the Company has provided a liability for approximately $652,000 and $738,000 for uncertain tax positions. 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 and reviewed regularly 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 March 31,  
     2014      2015  

Revenue:

     

United States

   $ 32,405       $ 42,629   

United Kingdom

     4,407         4,885   

International - all other

     12,208         13,595   
  

 

 

    

 

 

 

Total revenue

$ 49,020    $ 61,109   
  

 

 

    

 

 

 

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 March 31, 2015, the Company has not experienced any losses related to these indemnification obligations.

Net Income Per Share — Basic net income per share is computed by dividing net income by the weighted average number of common shares outstanding for the period. Diluted net income per share is computed by dividing net 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.

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

 

     Three Months Ended March 31,  
     2014      2015  

Options to purchase common shares

     933         39   

Restricted stock units

     173         —     
  

 

 

    

 

 

 

Total options and restricted stock units

  1,106      39   
  

 

 

    

 

 

 

 

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

 

     Three Months Ended
March 31, 2014
 

Basic:

  

Net income

   $ 1,004   
  

 

 

 

Weighted average common shares outstanding, basic

  24,123,291   
  

 

 

 

Net income, basic

$ 0.04   
  

 

 

 

Diluted:

Net income

$ 1,004   
  

 

 

 

Weighted average common shares outstanding, basic

  24,123,291   

Add: Common stock equivalents

  626,220   
  

 

 

 

Weighted average common shares outstanding, diluted

  24,749,511   
  

 

 

 

Net income, diluted

$ 0.04   
  

 

 

 

 

     Three Months Ended
March 31, 2015
 

Basic:

  

Net income

   $ 372   
  

 

 

 

Weighted average common shares outstanding, basic

  24,626,872   
  

 

 

 

Net income, basic

$ 0.02   
  

 

 

 

Diluted:

Net income

$ 372   
  

 

 

 

Weighted average common shares outstanding, basic

  24,626,872   

Add: Common stock equivalents

  930,312   
  

 

 

 

Weighted average common shares outstanding, diluted

  25,557,184   
  

 

 

 

Net income, diluted

$ 0.01   
  

 

 

 

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 FASB voted on April 1, 2015 to propose a deferral of the effective date of the new revenue standard by one year. The FASB’s proposed deferral is not a final decision. The Company is currently assessing the potential impact of the adoption of ASU 2014-09 on its condensed consolidated financial statements.

On June 19, 2014, the FASB issued ASU 2014-12, Stock Compensation (“ASU 2014-12”), providing guidance on accounting for share-based payment awards when the terms of an award provide that a performance target could be achieved after the requisite service period. The update clarifies that performance targets that can be achieved after the requisite service period of a share-based payment award be treated as performance conditions that affect vesting. These awards should be accounted for under Accounting Standards Codification Topic 718, Compensation — Stock Compensation, and existing guidance should be applied as it relates to awards with performance conditions that affect vesting. The update is effective for the Company for the interim and annual periods beginning after December 15, 2015. The Company is currently evaluating the impact of the adoption of this standard, if any, on its consolidated financial statements.

 

On August 27, 2014, the FASB issued ASU 2014-15, Presentation of Financial Statements — Going Concern: Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern (“ASU 2014-15”). The standard requires that the Company evaluates, at each interim and annual reporting period, whether there are conditions or events that raise substantial doubt about its ability to continue as a going concern within one year after the date the financial statements are issued, and provide related disclosures. ASU 2014-15 is effective for annual periods ending after December 15, 2016, and for annual and interim periods thereafter, and early adoption is permitted. The Company does not expect to early adopt ASU 2014-15, which will be effective for its fiscal year ending December 31, 2016. The Company does not believe the standard will have a material impact on its consolidated financial statements.

On January 9, 2015, the FASB issued ASU 2015-01, Simplifying Income Statement Presentation by Eliminating the Concept of Extraordinary Items (“ASU 2015-01”). The standard eliminates the requirement of Extraordinary Items to be separately classified on the income statement. ASU 2015-01 is effective for annual periods ending after December 15, 2015, and for annual and interim periods thereafter, and early adoption is permitted. The Company does not expect to early adopt ASU 2015-01, which will be effective for its fiscal year ending December 31, 2016. The Company does not believe the standard will have a material impact on its consolidated financial statements.

On February 18, 2015, the FASB issued ASU 2015-02, Consolidation: Amendments to the Consolidation Analysis (“ASU 2015-02”). The standard amends the consolidation requirements in ASC 810. ASU 2015-02 is effective for fiscal periods beginning after December 15, 2015 for public companies, and early adoption is permitted. The Company does not expect to early adopt ASU 2015-02, which will be effective for its fiscal year ending December 31, 2016. The Company does not believe the standard will have a material impact on its consolidated financial statements.

On April 7, 2015, the FASB issued ASU 2015-03, Interest- Imputation of Interest: Simplifying the Presentation of Debt Issuance Costs (“ASU 2015-03”). The standard requires an entity to present debt issuance costs on the balance sheets as a direct deduction from the related debt liability rather than as an asset, and the amortization is reported as interest expense. ASU 2015-03 is effective for fiscal periods beginning after December 15, 2015, and interim periods beginning after December 15, 2016. Early adoption is permitted for entities for financial statements that have not been previously issued. The Company does not expect to early adopt ASU 2015-03, which will be effective for its fiscal year ending December 31, 2016. The Company does not believe the standard will have a material impact on its consolidated financial statements.

On April 15, 2015, the FASB issued ASU 2015-05, Intangibles—Goodwill and Other—Internal-Use Software: Customer’s Accounting for Fees Paid in a Cloud Computing Arrangement (“ASU 2015-05”). The standard clarifies the circumstances under which a cloud computing customer would account for the arrangement as a license of internal-use software under ASC 350-40. ASU 2015-05 is effective for annual periods (and interim periods therein) beginning after December 15, 2015, and interim and annual periods beginning after December 15, 2016, and early adoption is permitted. The Company does not expect to early adopt ASU 2015-05, which will be effective for its fiscal year ending December 31, 2016. The Company does not believe the standard will have a material impact on its 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 are supported by little or no market activity and that are significant to the fair value of the assets or liabilities.

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

 

     Fair Value Measurements at December 31, 2014 Using  
     Level 1      Level 2      Level 3      Total  

Financial Assets:

           

Cash equivalents — money market funds

   $ 13,139       $ —         $ —         $ 13,139   

Cash equivalents — bank deposits

     —           5,003         —           5,003   

Short-term marketable securities —

           

U.S. government agency securities

     59,903         19,950         —           79,853   

Corporate bond securities

     —           20,356         —           20,356   

Contingent consideration liability

     —           —           249         249   
  

 

 

    

 

 

    

 

 

    

 

 

 

Total

$ 73,042    $ 45,309    $ 249    $ 118,600   
  

 

 

    

 

 

    

 

 

    

 

 

 

 

     Fair Value Measurements at March 31, 2015 Using    
     Level 1      Level 2      Level 3      Total  

Financial Assets:

           

Cash equivalents — money market funds

   $ 17,523       $ —         $ —         $ 17,523   

Cash equivalents — bank deposits

     —           5,003         —           5,003   

Short-term marketable securities —

           

U.S. government agency securities

     50,022         29,987         —           80,009   

Corporate bond securities

     —           20,312         —           20,312   

Contingent consideration liability

     —           —           25         25   
  

 

 

    

 

 

    

 

 

    

 

 

 

Total

$ 67,545    $ 55,302    $   25    $ 122,872   
  

 

 

    

 

 

    

 

 

    

 

 

 

 

Bank deposits, corporate bonds, 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.

The Level 3 liability consists of contingent consideration related to the August 27, 2014 acquisition of Meldium and the September 5, 2014 acquisition of a San Francisco-based collaboration software provider, each described in Note 4 below. The fair value of the contingent consideration was estimated by applying a probability based model, which utilizes significant inputs that are unobservable in the market. Key assumptions include a 12% discount rate and an assumption that the earn-out will be achieved. The current portion of contingent consideration is included in Accrued liabilities and the non-current portion is included in Other long-term liabilities. A reconciliation of the beginning and ending Level 3 liability is as follows:

 

     Three months ended
March 31,
 
     2015  

Balance beginning of period

   $ 249  

Additions to Level 3

     —    

Payments

     (226 )

Change in fair value of contingent consideration liability

     2  
  

 

 

 

Balance end of period

$ 25  
  

 

 

 
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 Company paid $2.0 million in March 2015 and expects to pay the remainder in March 2016. The operating results, of which there was approximately $221,000 of revenue and $471,000 of expenses during the three months ended March 31, 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 assist in the determination of 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 March 31, 2014, assuming the Company had acquired Ionia on January 1, 2014, 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 intangible assets acquired are not deductible for income tax purposes.

The Company recorded a long-term deferred tax liability of approximately $700,000 related to the amortization of intangible assets which cannot be deducted for tax purposes and is included in the accompanying table above as Other liabilities.

On August 27, 2014, the Company acquired BBA, Inc., d/b/a Meldium, a San Francisco, California-based provider of single sign-on password management software, through a merger transaction for a cash purchase price of $10.6 million plus contingent bonuses totaling up to $4.6 million, which are expected to be paid over a two-year period from the date of acquisition. The Company paid approximately $1.0 million of contingent payments during the three months ended March 31, 2015.

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 assist in the determination of 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 following table summarizes the fair value (in thousands) of the assets acquired and liabilities assumed at the date of acquisition:

 

     Amount  

Cash

   $ 120   

Current assets

     90   

Other assets

     436   

Deferred revenue

     (5

Other liabilities

     (935

Completed technology

     1,580   

Trade name and trademark

     30   

Customer relationships

     100   

Goodwill

     9,437   
  

 

 

 

Total purchase price

  10,853   
  

 

 

 

Liability for contingent consideration

  (216 )
  

 

 

 

Cash paid

$ 10,637   
  

 

 

 

The merger agreement included a contingent, retention-based bonus program requiring the Company to make additional payments to employees, including former Meldium stockholders now employed by the Company, in the first quarter of 2015 and on the first and second anniversaries of the date of acquisition, contingent upon their continued employment and achievement of certain product integration goals. The range of the contingent, retention-based bonus payments that the Company could pay is between $0 to $4.3 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 contingent bonus program also includes payments to non-employee stockholders for an amount between $0 and $226,000, which the Company has concluded is contingent consideration and is part of the purchase price. This contingent liability was recorded at its fair value of $216,000 at the acquisition date. The Company re-measured the fair value of the contingent consideration at each subsequent reporting period and recognized any adjustments to fair value as part of earnings.

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 IT management offerings, customer base, sales force and IT management business plan with Meldium’s product, technical expertise and customer base. All goodwill and intangible assets acquired are not deductible for income tax purposes.

The Company recorded both a current and a long-term deferred tax asset of approximately $88,000 and $433,000, respectively, primarily related to net operating losses that were acquired as a part of the acquisition and are shown in the accompanying table above as Current assets and Other assets, respectively. The Company also recorded a long-term deferred tax liability of approximately $694,000 related to the amortization of intangible assets which cannot be deducted for tax purposes and are included in the accompanying table above as Other liabilities.

On September 5, 2014, the Company acquired all of the outstanding capital stock of a San Francisco, California-based collaboration software provider, for a cash purchase price of $4.5 million plus contingent bonuses totaling up to $1.5 million, which are expected to be paid two years from the date of acquisition.

This 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 assist in the determination of 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 following table summarizes the fair value (in thousands) of the assets acquired and liabilities assumed at the date of acquisition:

 

     Amount  

Cash

   $ 2  

Current assets

     13  

Other assets

     404  

Other liabilities

     (439

Completed technology

     960  

Trade name and trademark

     100  

Goodwill

     3,484  
  

 

 

 

Total purchase price

  4,524  

Liability for contingent consideration

  (24 )
  

 

 

 

Cash paid

$ 4,500  
  

 

 

 

The stock purchase agreement included a contingent, retention-based bonus program provision requiring the Company to make additional payments to employees, including former stockholders now employed by the Company, on the second anniversary of the acquisition, contingent upon their continued employment and achievement of certain product integration goals. The range of the contingent, retention-based bonus payments that the Company could pay is between $0 to $1.5 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 contingent bonus program also includes payments to non-employee stockholders for an amount between $0 and $30,000, which the Company has concluded is contingent consideration and is part of the purchase price. This contingent liability was recorded at its fair value of $24,000 at the acquisition date. The Company continues to re-measure the fair value of the contingent consideration at each subsequent reporting period and recognizes any adjustments to fair value as part of earnings.

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 join.me product, customer base, sales force and join.me business plan with the collaboration software provider’s product, technical expertise and customer base. All goodwill and intangible assets acquired are not deductible for income tax purposes.

The Company recorded a long-term deferred tax asset of approximately $402,000 related to net operating losses that were acquired as a part of the acquisition, which is included in the accompanying table above as Other assets. The Company also recorded a long-term deferred tax liability of approximately $430,000 related to the amortization of intangible assets which cannot be deducted for tax purposes and is included in the accompanying table above as Other liabilities.

The Company incurred approximately $100,000 of acquisition-related costs which are included in general and administrative expense for the three months ended March 31, 2014.

Goodwill and Intangible Assets
Goodwill and Intangible Assets

5. Goodwill and Intangible Assets

There was no change in the carrying amount of goodwill for the three months ended March 31, 2015.

 

Intangible assets consist of the following (in thousands):

 

            December 31, 2014      March 31, 2015  
     Estimated
Useful Life
     Gross
Carrying
Amount
     Accumulated
Amortization
     Net
Carrying
Amount
     Gross
Carrying
Amount
     Accumulated
Amortization
     Net Carrying
Amount
 

Trade names and trademarks

     1-5 years       $ 806       $ 682       $ 124       $ 806       $ 713       $ 93   

Customer relationships

     5-8 years         5,229         2,546         2,683         5,229         2,737         2,492   

Customer backlog

     4 months         120         120         —           120         120         —    

Domain names

     5 years         907         507         400         904         547         357   

Software

     4 years         299         299         —           299         299         —    

Completed technology

     3-8 years         16,903         3,981         12,922         16,903         4,673         12,230   

Technology and know-how

     3 years         3,176         3,176         —           3,176         3,176         —    

Documented know-how

     4 years         280         57         223         280         75         205   

Non-Compete agreements

     5 years         162         71         91         162         82         80   

Internally developed software

     3 years         4,591         2,051         2,540         5,609         2,264         3,345   
     

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 
$ 32,473    $ 13,490    $ 18,983    $ 33,488    $ 14,686    $ 18,802   
     

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

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 name and trademark, and $1.3 million of customer relationships as intangible assets. As a result of the acquisition of Meldium, the Company capitalized $1.6 million of completed technology, $30,000 of trade name and trademark, and $100,000 of customer relationships. As a result of the acquisition of the San Francisco-based collaboration software provider, the Company capitalized $960,000 of completed technology and $100,000 of trade name and trademark. Changes in the gross carrying amount of domain names are due to foreign currency translation adjustments. 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 eight years.

On November 6, 2013, the Company purchased a software asset for $11.5 million which is classified as technology. During 2014, the Company incurred an additional $500,000 to develop this technology. The technology will be incorporated into certain Company products, and is being amortized straight-line over its estimated useful life of 5 years.

The Company capitalized $491,000 and $1.0 million during the three months ended March 31, 2014 and 2015, 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 $1.0 million and $1.2 million for the three months ended March 31, 2014 and 2015, 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 March 31, 2015 (in thousands):

 

Amortization Expense (Years Ending December 31)

   Amount  

2015 (Nine months ending December 31)

     4,003   

2016

     4,948   

2017

     4,607   

2018

     3,612   

2019

     1,096   

Thereafter

     536   
  

 

 

 

Total

$ 18,802   
  

 

 

 
Accrued Liabilities
Accrued Liabilities

6. Accrued Liabilities

Accrued liabilities consisted of the following (in thousands):

 

     December 31,
2014
     March 31,
2015
 

Marketing programs

   $ 7,626      $ 7,031  

Payroll and payroll related

     14,873        8,335  

Professional fees

     1,961        2,566  

Legal settlements

     —           8,300   

Other accrued liabilities

     5,022        7,277  
  

 

 

    

 

 

 

Total accrued liabilities

$ 29,482   $ 33,509   
  

 

 

    

 

 

Income Taxes
Income Taxes

7. Income Taxes

The Company recorded a provision for federal, state and foreign income taxes of approximately $677,000 and $63,000 for the three months ended March 31, 2014 and 2015, respectively. The decrease in the tax provision recorded for the three months ended March 31, 2015 is primarily due to a decrease in pre-tax income as compared to the three months ended March 31, 2014. Our effective income tax rates were approximately 40% and 15% for the three months ended March 31, 2014 and 2015, respectively. The effective tax rate decreased due to an increase in forecasted pre-tax income in foreign jurisdictions, primarily our Irish subsidiaries, which have lower statutory tax rates than the 35% 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 from 2007 are open to examination by federal, state, and foreign tax authorities. The Company has recorded a liability related to uncertain tax positions of approximately $652,000 and $738,000 as of December 31, 2014 and March 31, 2015, respectively. The Company’s policy is to record estimated interest and penalties related to the underpayment of income taxes or unrecognized tax benefits as a component of its income tax provision. The Company recognized approximately $1,000 and $2,000 of interest expense for the three months ended March 31, 2014 and March 31, 2015, respectively.

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. On October 20, 2014, the Board of Directors approved a new $75 million share repurchase program. This new share repurchase program is in addition to the Company’s existing $50 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 March 31, 2014 and 2015, the Company repurchased 148,500 and 93,400 shares of its common stock at an average price of $33.05 and $54.22 per share for a total cost of approximately $4.9 million and $5.1 million, respectively. At March 31, 2015, approximately $69.4 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. As of March 31, 2015, there were 2,108,371 shares available for grant under the 2009 Plan.

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 option, which is generally four years.

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

 

     Three Months Ended March 31,  
     2014     2015(1)  

Expected dividend yield

     0.00     —  

Risk-free interest rate

     1.48     —  

Expected option life (years)

     6.25        —     

Expected volatility

     55     —  

 

(1) There were no stock options granted during the three months ended March 31, 2015.

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, 2015

     1,407      $ 30.02        6.2      $ 27,186  
           

 

 

 

Granted

  —       —    

Exercised

  (261 )   33.93   $ 5,023  
           

 

 

 

Forfeited

  (12 )   38.75  
  

 

 

    

 

 

       

Outstanding at March 31, 2015

  1,134   $ 29.02     6.0   $ 30,576  
  

 

 

    

 

 

    

 

 

    

 

 

 

Exercisable at December 31, 2014

  957   $ 28.24     5.7   $ 20,190  
  

 

 

    

 

 

    

 

 

    

 

 

 

Exercisable at March 31, 2015

  874   $ 28.62     5.5   $ 23,919  
  

 

 

    

 

 

    

 

 

    

 

 

 

The aggregate intrinsic value was calculated based on the positive differences between the fair value of the Company’s common stock of $49.34 per share on December 31, 2014 and $55.99 per share on March 31, 2015, or at time of exercise, and the exercise price of the options.

The weighted average grant date fair value of stock options issued was $21.78 per share for the year ended December 31, 2014. There were no stock options granted during the three months ended March 31, 2015.

 

During the three months ended March 31, 2015, the Company granted 242,126 restricted stock units, which contained time-based vesting conditions. Restricted stock units with time-based vesting conditions are valued on the grant date using the grant date closing price of the underlying shares. The Company recognizes the expense on a straight-line basis over the requisite service period of the restricted stock unit, which is generally three years.

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 and 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. In the three months ended March 31, 2015, 20,000 shares from the August 2013 grant and 25,000 shares from the May 2014 grant were forfeited. At March 31, 2015, 54,000 and 46,000 shares of the TSR Units granted in August 2013 and May 2014 remain outstanding, respectively.

The following table summarizes restricted stock unit activity, including performance-based restricted stock units (shares in thousands):

 

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

Unvested as of January 1, 2015

     1,279      $ 37.42  

Restricted stock units granted

     242        48.69  

Restricted stock units vested

     (112 )      33.47  

Restricted stock units forfeited

     (138 )      42.36  
  

 

 

    

 

 

 

Unvested as of March 31, 2015

  1,271   $ 39.38  
  

 

 

    

 

 

 

 

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 March 31,  
     2014      2015  

Cost of revenue

   $ 235       $ 354   

Research and development

     776         1,328   

Sales and marketing

     2,061         2,030   

General and administrative

     2,366         1,141   
  

 

 

    

 

 

 
$ 5,438    $ 4,853   
  

 

 

    

 

 

 

As of March 31, 2015, there was approximately $36.8 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 2.0 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 the United States, Hungary, Australia, the United Kingdom, Ireland and India that expire through 2028.

In March 2015, the Company entered into a lease for new office space in Bangalore, India. The term of the new office space begins in March 2015 and extends through April 2020. The aggregate amount of minimum lease payments to be made over the term of the lease is approximately $569,000 (INR 35.6 million). The lease required a security deposit of approximately $48,500 (INR 3.0 million). The security deposit is classified as a long-term deposit.

In December 2014, the Company entered into a lease for new office space in Boston, Massachusetts. The landlord is obligated to rehabilitate the existing building and the Company expects that the lease term will begin in November 2015 and extend through April 2028. The aggregate amount of minimum lease payments to be made over the term of the lease is approximately $47.0 million. Pursuant to the terms of the lease, the landlord is responsible for making certain improvements to the leased space up to an agreed upon cost to the landlord. Any excess costs for these improvements will be billed by the landlord to the Company as additional rent. The Company estimates these excess costs to be approximately $7.0 million. The lease required a security deposit of approximately $3.3 million in the form of an irrevocable, unsecured standby letter of credit. The lease includes an option to extend the original term of the lease for two successive five year periods.

In December 2014, the Company entered into a lease for new office space in San Francisco, California. The term of the new office space began in February 2015 and extends through December 2019. The aggregate amount of minimum lease payments to be made over the term of the lease is approximately $2.4 million. The lease required a security deposit of approximately $41,000. The security deposit is classified as a long-term deposit.

Rent expense under all leases was approximately $1.7 million and $1.9 million for the three months ended March 31, 2014 and 2015, 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 $1.1 million and $1.5 million for the three months ended March 31, 2014 and 2015, 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 March 31, 2015 (in thousands):

 

Years Ending December 31

      

2015 (Nine months ending December 31)

   $ 7,893  

2016

     9,945  

2017

     10,291  

2018

     10,324  

2019

     9,786  

Thereafter

     53,128  
  

 

 

 

Total minimum lease payments

$ 101,367  
  

 

 

 

Litigation — 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.

On August 26, 2014, Sensory Technologies, LLC, or Sensory, filed a complaint against the Company in the U.S. District Court for the Southern District of Indiana (Case No. 1:14-cv-1406). The complaint alleged, among other things, that the Company infringed upon Sensory’s JOIN® trademark, which was registered to Sensory under U.S. Trademark Registration No. 3622883. The complaint sought damages in an unspecified amount and injunctive relief. On April 24, 2015, the Company entered into a Settlement Agreement with Sensory, whereby Sensory agreed to assign the JOIN® trademark to the Company and the parties agreed to mutually release each other from any and all claims related to the case. In connection with the Settlement Agreement, the Company agreed to pay Sensory a one-time fee of $8.3 million, approximately $4.7 million of which is expected to be reimbursed by the Company’s insurance provider. The Company believes that the JOIN® trademark has de minimis value and therefore has expensed $3.6 million in the accompanying financial statements as legal settlement expense. As a result of the Settlement Agreement, on April 27, 2015, the parties filed a joint motion with the U.S. District Court for the Southern District of Indiana and the case was dismissed with prejudice.

On August 28, 2014, a putative class action complaint was filed against the Company in the U.S. District Court for the Eastern District of California (Case No. 1:14-cv-01355) by an individual on behalf of himself and on behalf of all other similarly situated individuals, or collectively, the Plaintiffs. After the Company filed a motion to dismiss the complaint on January 30, 2015, the Plaintiffs filed an amended complaint on February 17, 2015. The amended complaint includes claims made under California’s False Advertising Act and Unfair Competition Law and relates to the Company’s sale of its Ignition for iOS application, or the App, and the Plaintiffs’ continued use of the App. The Plaintiffs’ complaint seeks restitution, damages in an unspecified amount, attorney’s fees and costs, and unspecified equitable and injunctive relief. The Company believes it has meritorious defenses to the claims and intends to defend the lawsuit vigorously. Given the inherent unpredictability of litigation and the fact that this litigation is still in its early stages, the Company is unable to predict the outcome of this litigation or reasonably estimate a possible loss or range of loss associated with this litigation at this time.

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. 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 consolidated financial statements.

Accumulated Other Comprehensive Loss
Accumulated Other Comprehensive Loss

11. Accumulated Other Comprehensive Loss

The changes in accumulated other comprehensive income for the three months ended March 31, 2015 consisted of the following (in thousands):

 

    Unrealized Gain (Loss) on
Marketable Securities
    Foreign Currency
Translation Adjustment
                  Total                 

Balance at December 31, 2014

  $ (82   $ (3,035   $ (3,117

Other comprehensive income (loss)

    114        (1,532     (1,418
 

 

 

   

 

 

   

 

 

 

Balance at March 31, 2015

$ 32    $ (4,567 $ (4,535
 

 

 

   

 

 

   

 

 

 

There were no material reclassifications as of March 31, 2015.

Credit Facility
Credit Facility

12. Credit Facility

On February 18, 2015, the Company entered into a multi-currency credit agreement with a syndicate of banks, financial institutions and other lending entities (the “Credit Facility”), pursuant to which a secured revolving credit facility up to $100 million in the aggregate, which may be made available in U.S. Dollars and certain other freely traded currencies, shall be available to the Company. The Credit Facility may be increased by up to an additional $50 million if the existing or additional lenders are willing to make such increased commitments. The Credit Facility shall be available to the Company on a revolving basis during the period commencing on February 18, 2015 through February 18, 2020. The Company may prepay the loans or terminate or reduce the commitments in whole or in part at any time, without premium or penalty, subject to certain conditions and costs in the case of Eurodollar rate loans. The Company and its subsidiaries expect to use the Credit Facility for general corporate purposes, including, but not limited to, the potential acquisition of complementary products or businesses, share repurchases, as well as for working capital.

The currencies that are currently available for borrowing under the Credit Facility are U.S Dollars, Euros, and British Pound Sterling. Additional currencies may be added with the approval of all lenders under the Credit Facility. The maximum amount of borrowings in currencies other than U.S. Dollars is $20 million. Interest rates for U.S. Dollar loans under the Credit Facility are determined, at the option of the Company, by reference to a Eurodollar rate or a base rate, and range from 1.50% to 2.00% above the Eurodollar rate for Eurodollar-based borrowings or from 0.50% to 1.00% above the defined base rate for base rate borrowings, in each case based upon the Company’s total leverage ratio. Interest rates for loans in currencies other than U.S. Dollars range from 1.50% to 2.00% above the respective London interbank offered interest rates for those currencies, also based on the Company’s total leverage ratio. The quarterly commitment fee on the undrawn portion of the Credit Facility ranges from 0.20% to 0.30% per annum, based upon the Company’s total leverage ratio.

The Credit Facility contains customary affirmative and negative covenants, including covenants that limit or restrict the Company and its subsidiaries’ ability to, among other things, incur indebtedness, grant liens, merge or consolidate, dispose of assets, change the nature of its business, make investments and acquisitions, pay dividends or make distributions, or enter into certain transactions with affiliates, in each case subject to customary and other exceptions for a credit facility of this size and type, each as further described in the Credit Facility. The Credit Facility also imposes limits on capital expenditures of the Company and its subsidiaries and requires the Company to maintain a maximum total leverage ratio and a minimum interest coverage ratio, each as further defined in the Credit Facility.

As of March 31, 2015, no amounts had been drawn against the Credit Facility.

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 February 20, 2015. The unaudited interim financial statements have been prepared on the same basis as the audited 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 loss 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, 2014 and March 31, 2015, marketable securities consisted of U.S. government agency securities and corporate bonds that have remaining maturities within two years and have an aggregate amortized cost of $100.3 million. The marketable securities have an aggregate fair value of $100.2 million and $100.3 million, including $9,000 and $59,000 of unrealized gains and $138,000 and $10,000 of unrealized losses, respectively.

Revenue Recognition — The Company derives revenue primarily from subscription fees related to its LogMeIn premium services and, to a lesser extent, 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.

 

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, 2014, one customer accounted for 15% of accounts receivable and there were no customers that represented 10% or more of revenue. For the three months ended March 31, 2014 and 2015, no customers accounted for more than 10% of revenue. As of March 31, 2015, one customer accounted for more than 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 impairment test of goodwill annually or 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. As of December 31, 2014, the fair value of the Company as a whole significantly exceeded the carrying amount of the Company. Through March 31, 2015, no impairments have occurred.

Long-Lived Assets and Intangible Assets — The Company records intangible assets at their respective estimated fair values at the date of acquisition. Intangible assets are being 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, which range from four months to eight 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. The Company did not record any impairments for the quarter ended March 31, 2015.

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 $28,000 for the three months ended March 31, 2014, and foreign currency gains of approximately $1.3 million for the three months ended March 31, 2015 included in other (expense) income in the condensed consolidated statements of operations

Stock-Based Compensation — The Company values all stock-based compensation, including grants of stock options and restricted stock units, at fair value on the date of grant and recognizes the expense over the requisite service period, which is generally the vesting period of the award, for those awards expected to vest, on a straight-line basis. 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 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, 2014 and March 31, 2015, the Company has provided a liability for approximately $652,000 and $738,000 for uncertain tax positions. 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 and reviewed regularly 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 March 31,  
     2014      2015  

Revenue:

     

United States

   $ 32,405       $ 42,629   

United Kingdom

     4,407         4,885   

International - all other

     12,208         13,595   
  

 

 

    

 

 

 

Total revenue

$ 49,020    $ 61,109   
  

 

 

    

 

 

 

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 March 31, 2015, the Company has not experienced any losses related to these indemnification obligations.

Net Income Per Share — Basic net income per share is computed by dividing net income by the weighted average number of common shares outstanding for the period. Diluted net income per share is computed by dividing net 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.

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

 

     Three Months Ended March 31,  
     2014      2015  

Options to purchase common shares

     933         39   

Restricted stock units

     173         —     
  

 

 

    

 

 

 

Total options and restricted stock units

  1,106      39   
  

 

 

    

 

 

 

 

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

 

     Three Months Ended
March 31, 2014
 

Basic:

  

Net income

   $ 1,004   
  

 

 

 

Weighted average common shares outstanding, basic

  24,123,291   
  

 

 

 

Net income, basic

$ 0.04   
  

 

 

 

Diluted:

Net income

$ 1,004   
  

 

 

 

Weighted average common shares outstanding, basic

  24,123,291   

Add: Common stock equivalents

  626,220   
  

 

 

 

Weighted average common shares outstanding, diluted

  24,749,511   
  

 

 

 

Net income, diluted

$ 0.04   
  

 

 

 

 

     Three Months Ended
March 31, 2015
 

Basic:

  

Net income

   $ 372   
  

 

 

 

Weighted average common shares outstanding, basic

  24,626,872   
  

 

 

 

Net income, basic

$ 0.02   
  

 

 

 

Diluted:

Net income

$ 372   
  

 

 

 

Weighted average common shares outstanding, basic

  24,626,872   

Add: Common stock equivalents

  930,312   
  

 

 

 

Weighted average common shares outstanding, diluted

  25,557,184   
  

 

 

 

Net income, diluted

$ 0.01   
  

 

 

 

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 FASB voted on April 1, 2015 to propose a deferral of the effective date of the new revenue standard by one year. The FASB’s proposed deferral is not a final decision. The Company is currently assessing the potential impact of the adoption of ASU 2014-09 on its condensed consolidated financial statements.

On June 19, 2014, the FASB issued ASU 2014-12, Stock Compensation (“ASU 2014-12”), providing guidance on accounting for share-based payment awards when the terms of an award provide that a performance target could be achieved after the requisite service period. The update clarifies that performance targets that can be achieved after the requisite service period of a share-based payment award be treated as performance conditions that affect vesting. These awards should be accounted for under Accounting Standards Codification Topic 718, Compensation — Stock Compensation, and existing guidance should be applied as it relates to awards with performance conditions that affect vesting. The update is effective for the Company for the interim and annual periods beginning after December 15, 2015. The Company is currently evaluating the impact of the adoption of this standard, if any, on its consolidated financial statements.

 

On August 27, 2014, the FASB issued ASU 2014-15, Presentation of Financial Statements — Going Concern: Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern (“ASU 2014-15”). The standard requires that the Company evaluates, at each interim and annual reporting period, whether there are conditions or events that raise substantial doubt about its ability to continue as a going concern within one year after the date the financial statements are issued, and provide related disclosures. ASU 2014-15 is effective for annual periods ending after December 15, 2016, and for annual and interim periods thereafter, and early adoption is permitted. The Company does not expect to early adopt ASU 2014-15, which will be effective for its fiscal year ending December 31, 2016. The Company does not believe the standard will have a material impact on its consolidated financial statements.

On January 9, 2015, the FASB issued ASU 2015-01, Simplifying Income Statement Presentation by Eliminating the Concept of Extraordinary Items (“ASU 2015-01”). The standard eliminates the requirement of Extraordinary Items to be separately classified on the income statement. ASU 2015-01 is effective for annual periods ending after December 15, 2015, and for annual and interim periods thereafter, and early adoption is permitted. The Company does not expect to early adopt ASU 2015-01, which will be effective for its fiscal year ending December 31, 2016. The Company does not believe the standard will have a material impact on its consolidated financial statements.

On February 18, 2015, the FASB issued ASU 2015-02, Consolidation: Amendments to the Consolidation Analysis (“ASU 2015-02”). The standard amends the consolidation requirements in ASC 810. ASU 2015-02 is effective for fiscal periods beginning after December 15, 2015 for public companies, and early adoption is permitted. The Company does not expect to early adopt ASU 2015-02, which will be effective for its fiscal year ending December 31, 2016. The Company does not believe the standard will have a material impact on its consolidated financial statements.

On April 7, 2015, the FASB issued ASU 2015-03, Interest- Imputation of Interest: Simplifying the Presentation of Debt Issuance Costs (“ASU 2015-03”). The standard requires an entity to present debt issuance costs on the balance sheets as a direct deduction from the related debt liability rather than as an asset, and the amortization is reported as interest expense. ASU 2015-03 is effective for fiscal periods beginning after December 15, 2015, and interim periods beginning after December 15, 2016. Early adoption is permitted for entities for financial statements that have not been previously issued. The Company does not expect to early adopt ASU 2015-03, which will be effective for its fiscal year ending December 31, 2016. The Company does not believe the standard will have a material impact on its consolidated financial statements.

On April 15, 2015, the FASB issued ASU 2015-05, Intangibles—Goodwill and Other—Internal-Use Software: Customer’s Accounting for Fees Paid in a Cloud Computing Arrangement (“ASU 2015-05”). The standard clarifies the circumstances under which a cloud computing customer would account for the arrangement as a license of internal-use software under ASC 350-40. ASU 2015-05 is effective for annual periods (and interim periods therein) beginning after December 15, 2015, and interim and annual periods beginning after December 15, 2016, and early adoption is permitted. The Company does not expect to early adopt ASU 2015-05, which will be effective for its fiscal year ending December 31, 2016. The Company does not believe the standard will have a material impact on its 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 March 31,  
     2014      2015  

Revenue:

     

United States

   $ 32,405       $ 42,629   

United Kingdom

     4,407         4,885   

International - all other

     12,208         13,595   
  

 

 

    

 

 

 

Total revenue

$ 49,020    $ 61,109   
  

 

 

    

 

 

 

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

 

     Three Months Ended March 31,  
     2014      2015  

Options to purchase common shares

     933         39   

Restricted stock units

     173         —     
  

 

 

    

 

 

 

Total options and restricted stock units

  1,106      39   
  

 

 

    

 

 

 

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

 

     Three Months Ended
March 31, 2014
 

Basic:

  

Net income

   $ 1,004   
  

 

 

 

Weighted average common shares outstanding, basic

  24,123,291   
  

 

 

 

Net income, basic

$ 0.04   
  

 

 

 

Diluted:

Net income

$ 1,004   
  

 

 

 

Weighted average common shares outstanding, basic

  24,123,291   

Add: Common stock equivalents

  626,220   
  

 

 

 

Weighted average common shares outstanding, diluted

  24,749,511   
  

 

 

 

Net income, diluted

$ 0.04   
  

 

 

 

 

     Three Months Ended
March 31, 2015
 

Basic:

  

Net income

   $ 372   
  

 

 

 

Weighted average common shares outstanding, basic

  24,626,872   
  

 

 

 

Net income, basic

$ 0.02   
  

 

 

 

Diluted:

Net income

$ 372   
  

 

 

 

Weighted average common shares outstanding, basic

  24,626,872   

Add: Common stock equivalents

  930,312   
  

 

 

 

Weighted average common shares outstanding, diluted

  25,557,184   
  

 

 

 

Net income, diluted

$ 0.01   
  

 

 

 

 

Fair Value of Financial Instruments (Tables)

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

 

                                                                                   
     Fair Value Measurements at December 31, 2014 Using  
     Level 1      Level 2      Level 3      Total  

Financial Assets:

           

Cash equivalents — money market funds

   $ 13,139       $ —         $ —         $ 13,139   

Cash equivalents — bank deposits

     —           5,003         —           5,003   

Short-term marketable securities —

           

U.S. government agency securities

     59,903         19,950         —           79,853   

Corporate bond securities

     —           20,356         —           20,356   

Contingent consideration liability

     —           —           249         249   
  

 

 

    

 

 

    

 

 

    

 

 

 

Total

$ 73,042    $ 45,309    $ 249    $ 118,600   
  

 

 

    

 

 

    

 

 

    

 

 

 

 

                                                                                   
     Fair Value Measurements at March 31, 2015 Using    
     Level 1      Level 2      Level 3      Total  

Financial Assets:

           

Cash equivalents — money market funds

   $ 17,523       $ —         $ —         $ 17,523   

Cash equivalents — bank deposits

     —           5,003         —           5,003   

Short-term marketable securities —

           

U.S. government agency securities

     50,022         29,987         —           80,009   

Corporate bond securities

     —           20,312         —           20,312   

Contingent consideration liability

     —           —           25         25   
  

 

 

    

 

 

    

 

 

    

 

 

 

Total

$ 67,545    $ 55,302    $   25    $ 122,872   
  

 

 

    

 

 

    

 

 

    

 

 

 

A reconciliation of the beginning and ending Level 3 liability is as follows:

 

     Three months ended
March 31,
 
     2015  

Balance beginning of period

   $ 249  

Additions to Level 3

     —    

Payments

     (226 )

Change in fair value of contingent consideration liability

     2  
  

 

 

 

Balance end of period

$ 25  
  

 

 

 
Acquisitions (Tables)

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 following table summarizes the fair value (in thousands) of the assets acquired and liabilities assumed at the date of acquisition:

 

     Amount  

Cash

   $ 120   

Current assets

     90   

Other assets

     436   

Deferred revenue

     (5

Other liabilities

     (935

Completed technology

     1,580   

Trade name and trademark

     30   

Customer relationships

     100   

Goodwill

     9,437   
  

 

 

 

Total purchase price

  10,853   
  

 

 

 

Liability for contingent consideration

  (216 )
  

 

 

 

Cash paid

$ 10,637   
  

 

 

 

The following table summarizes the fair value (in thousands) of the assets acquired and liabilities assumed at the date of acquisition:

 

     Amount  

Cash

   $ 2  

Current assets

     13  

Other assets

     404  

Other liabilities

     (439

Completed technology

     960  

Trade name and trademark

     100  

Goodwill

     3,484  
  

 

 

 

Total purchase price

  4,524  

Liability for contingent consideration

  (24 )
  

 

 

 

Cash paid

$ 4,500  
  

 

 

 
Goodwill and Intangible Assets (Tables)

Intangible assets consist of the following (in thousands):

 

            December 31, 2014      March 31, 2015  
     Estimated
Useful Life
     Gross
Carrying
Amount
     Accumulated
Amortization
     Net
Carrying
Amount
     Gross
Carrying
Amount
     Accumulated
Amortization
     Net Carrying
Amount
 

Trade names and trademarks

     1-5 years       $ 806       $ 682       $ 124       $ 806       $ 713       $ 93   

Customer relationships

     5-8 years         5,229         2,546         2,683         5,229         2,737         2,492   

Customer backlog

     4 months         120         120         —           120         120         —    

Domain names

     5 years         907         507         400         904         547         357   

Software

     4 years         299         299         —           299         299         —    

Completed technology

     3-8 years         16,903         3,981         12,922         16,903         4,673         12,230   

Technology and know-how

     3 years         3,176         3,176         —           3,176         3,176         —    

Documented know-how

     4 years         280         57         223         280         75         205   

Non-Compete agreements

     5 years         162         71         91         162         82         80   

Internally developed software

     3 years         4,591         2,051         2,540         5,609         2,264         3,345   
     

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 
$ 32,473    $ 13,490    $ 18,983    $ 33,488    $ 14,686    $ 18,802   
     

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Future estimated amortization expense for intangible assets is as follows at March 31, 2015 (in thousands):

 

Amortization Expense (Years Ending December 31)

   Amount  

2015 (Nine months ending December 31)

     4,003   

2016

     4,948   

2017

     4,607   

2018

     3,612   

2019

     1,096   

Thereafter

     536   
  

 

 

 

Total

$ 18,802   
  

 

 

 
Accrued Liabilities (Tables)
Summary of Accrued Liabilities

Accrued liabilities consisted of the following (in thousands):

 

     December 31,
2014
     March 31,
2015
 

Marketing programs

   $ 7,626      $ 7,031  

Payroll and payroll related

     14,873        8,335  

Professional fees

     1,961        2,566  

Legal settlements

     —           8,300   

Other accrued liabilities

     5,022        7,277  
  

 

 

    

 

 

 

Total accrued liabilities

$ 29,482   $ 33,509   
  

 

 

    

 

 

Stock Incentive Plan (Tables)

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

 

     Three Months Ended March 31,  
     2014     2015(1)  

Expected dividend yield

     0.00     —  

Risk-free interest rate

     1.48     —  

Expected option life (years)

     6.25        —     

Expected volatility

     55     —  

 

(1) There were no stock options granted during the three months ended March 31, 2015.

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, 2015

     1,407      $ 30.02        6.2      $ 27,186  
           

 

 

 

Granted

  —       —    

Exercised

  (261 )   33.93   $ 5,023  
           

 

 

 

Forfeited

  (12 )   38.75  
  

 

 

    

 

 

       

Outstanding at March 31, 2015

  1,134   $ 29.02     6.0   $ 30,576  
  

 

 

    

 

 

    

 

 

    

 

 

 

Exercisable at December 31, 2014

  957   $ 28.24     5.7   $ 20,190  
  

 

 

    

 

 

    

 

 

    

 

 

 

Exercisable at March 31, 2015

  874   $ 28.62     5.5   $ 23,919  
  

 

 

    

 

 

    

 

 

    

 

 

 

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, including performance-based restricted stock units (shares in thousands):

 

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

Unvested as of January 1, 2015

     1,279      $ 37.42  

Restricted stock units granted

     242        48.69  

Restricted stock units vested

     (112 )      33.47  

Restricted stock units forfeited

     (138 )      42.36  
  

 

 

    

 

 

 

Unvested as of March 31, 2015

  1,271   $ 39.38  
  

 

 

    

 

 

 

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 March 31,  
     2014      2015  

Cost of revenue

   $ 235       $ 354   

Research and development

     776         1,328   

Sales and marketing

     2,061         2,030   

General and administrative

     2,366         1,141   
  

 

 

    

 

 

 
$ 5,438    $ 4,853   
  

 

 

    

 

 

 
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 March 31, 2015 (in thousands):

 

Years Ending December 31

      

2015 (Nine months ending December 31)

   $ 7,893  

2016

     9,945  

2017

     10,291  

2018

     10,324  

2019

     9,786  

Thereafter

     53,128  
  

 

 

 

Total minimum lease payments

$ 101,367  
  

 

 

Accumulated Other Comprehensive Loss (Tables)
Schedule of Changes in Accumulated Other Comprehensive Income

The changes in accumulated other comprehensive income for the three months ended March 31, 2015 consisted of the following (in thousands):

 

    Unrealized Gain (Loss) on
Marketable Securities
    Foreign Currency
Translation Adjustment
                  Total                 

Balance at December 31, 2014

  $ (82   $ (3,035   $ (3,117

Other comprehensive income (loss)

    114        (1,532     (1,418
 

 

 

   

 

 

   

 

 

 

Balance at March 31, 2015

$ 32    $ (4,567 $ (4,535
 

 

 

   

 

 

   

 

 

 

Summary of Significant Accounting Policies - Additional Information (Detail) (USD $)
3 Months Ended 12 Months Ended
Mar. 31, 2015
Mar. 31, 2014
Dec. 31, 2014
Organization And Summary Of Significant Accounting Policies [Line Items]
 
 
 
Marketable securities, maturities remaining
2 years 
 
 
Marketable securities, amortized cost
$ 100,300,000 
 
$ 100,300,000 
Marketable securities
100,321,000 
 
100,209,000 
Marketable securities, unrealized gains
59,000 
 
9,000 
Marketable securities, unrealized losses
10,000 
 
138,000 
Number of reporting unit
 
 
Goodwill impairments
 
 
Long-lived asset impairment
 
 
Foreign currency losses
 
28,000 
 
Foreign currency gains
1,300,000 
 
 
Uncertain tax positions
$ 738,000 
 
$ 652,000 
Accounts Receivable [Member]
 
 
 
Organization And Summary Of Significant Accounting Policies [Line Items]
 
 
 
Percentage outstanding for major customer
10.00% 
 
15.00% 
Accounts receivable, number of major customers
 
Accounts receivable, customers accounted description
10% of accounts receivable. 
 
15% of accounts receivable 
Sales Revenue, Net [Member]
 
 
 
Organization And Summary Of Significant Accounting Policies [Line Items]
 
 
 
Percentage outstanding for major customer
10.00% 
10.00% 
 
Revenue, number of customers accounted
Revenue, customers accounted description
10% or more of revenue 
10% or more of revenue 
10% or more of revenue 
Minimum [Member]
 
 
 
Organization And Summary Of Significant Accounting Policies [Line Items]
 
 
 
Revenue subscription period
1 month 
 
 
Intangible assets, estimated useful life
4 months 
 
 
Maximum [Member]
 
 
 
Organization And Summary Of Significant Accounting Policies [Line Items]
 
 
 
Revenue subscription period
5 years 
 
 
Intangible assets, estimated useful life
8 years 
 
 
Weighted Average [Member]
 
 
 
Organization And Summary Of Significant Accounting Policies [Line Items]
 
 
 
Revenue subscription period
1 year 
 
 
Summary of Significant Accounting Policies - Schedule of Revenue by Geographic Areas (Detail) (USD $)
3 Months Ended
Mar. 31, 2015
Mar. 31, 2014
Revenue from External Customer [Line Items]
 
 
Revenue
$ 61,109,000 
$ 49,020,000 
United States [Member]
 
 
Revenue from External Customer [Line Items]
 
 
Revenue
42,629,000 
32,405,000 
United Kingdom [Member]
 
 
Revenue from External Customer [Line Items]
 
 
Revenue
4,885,000 
4,407,000 
International - All Other [Member]
 
 
Revenue from External Customer [Line Items]
 
 
Revenue
$ 13,595,000 
$ 12,208,000 
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
Mar. 31, 2015
Mar. 31, 2014
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
 
 
Total options and restricted stock units
39 
1,106 
Options to Purchase Common Shares [Member]
 
 
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
 
 
Total options and restricted stock units
39 
933 
Restricted Stock Units [Member]
 
 
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
 
 
Total options and restricted stock units
 
173 
Summary of Significant Accounting Policies - Reconciliation of Basic and Diluted Net Income per Share (Detail) (USD $)
In Thousands, except Share data, unless otherwise specified
3 Months Ended
Mar. 31, 2015
Mar. 31, 2014
Basic:
 
 
Net income
$ 372 
$ 1,004 
Weighted average common shares outstanding, basic
24,626,872 
24,123,291 
Net income, basic
$ 0.02 
$ 0.04 
Diluted:
 
 
Net income
$ 372 
$ 1,004 
Weighted average common shares outstanding, basic
24,626,872 
24,123,291 
Add: Common stock equivalents
930,312 
626,220 
Weighted average common shares outstanding, diluted
25,557,184 
24,749,511 
Net income, diluted
$ 0.01 
$ 0.04 
Fair Value of Financial Instruments - Summary of Company's Financial Assets Carried at Fair Value (Detail) (USD $)
Mar. 31, 2015
Dec. 31, 2014
Recurring [Member]
 
 
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
 
 
Contingent consideration liability
$ 25,000 
$ 249,000 
Total
122,872,000 
118,600,000 
Recurring [Member] |
Money Market Funds [Member]
 
 
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
 
 
Cash equivalents
17,523,000 
13,139,000 
Recurring [Member] |
Bank Deposits [Member]
 
 
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
 
 
Cash equivalents
5,003,000 
5,003,000 
Recurring [Member] |
U.S. Government Agency Securities [Member]
 
 
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
 
 
Short-term marketable securities
80,009,000 
79,853,000 
Recurring [Member] |
Corporate Bond Securities [Member]
 
 
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
 
 
Short-term marketable securities
20,312,000 
20,356,000 
Quoted Prices in Active Markets for Identical Items (Level 1) [Member] |
Recurring [Member]
 
 
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
 
 
Total
67,545,000 
73,042,000 
Quoted Prices in Active Markets for Identical Items (Level 1) [Member] |
Recurring [Member] |
Money Market Funds [Member]
 
 
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
 
 
Cash equivalents
17,523,000 
13,139,000 
Quoted Prices in Active Markets for Identical Items (Level 1) [Member] |
Recurring [Member] |
U.S. Government Agency Securities [Member]
 
 
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
 
 
Short-term marketable securities
50,022,000 
59,903,000 
Significant Other Observable Inputs (Level 2) [Member] |
Recurring [Member]
 
 
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
 
 
Total
55,302,000 
45,309,000 
Significant Other Observable Inputs (Level 2) [Member] |
Recurring [Member] |
Bank Deposits [Member]
 
 
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
 
 
Cash equivalents
5,003,000 
5,003,000 
Significant Other Observable Inputs (Level 2) [Member] |
Recurring [Member] |
U.S. Government Agency Securities [Member]
 
 
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
 
 
Short-term marketable securities
29,987,000 
19,950,000 
Significant Other Observable Inputs (Level 2) [Member] |
Recurring [Member] |
Corporate Bond Securities [Member]
 
 
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
 
 
Short-term marketable securities
20,312,000 
20,356,000 
Significant Unobservable Inputs (Level 3) [Member]
 
 
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
 
 
Contingent consideration liability
25,000 
249,000 
Significant Unobservable Inputs (Level 3) [Member] |
Recurring [Member]
 
 
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
 
 
Contingent consideration liability
25,000 
249,000 
Total
$ 25,000 
$ 249,000 
Fair Value of Financial Instruments - Additional Information (Detail)
3 Months Ended
Mar. 31, 2015
Debt Instrument Fair Value Carrying Value [Abstract]
 
Fair value, discount rate
12.00% 
Fair Value of Financial Instruments - Reconciliation of Beginning and Ending Level 3 Liability (Detail) (USD $)
3 Months Ended
Mar. 31, 2015
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]
 
Additions to Level 3
$ 0 
Significant Unobservable Inputs (Level 3) [Member]
 
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]
 
Balance beginning of period
249,000 
Payments
(226,000)
Change in fair value of contingent consideration liability
2,000 
Balance end of period
$ 25,000 
Acquisitions - Additional Information (Detail) (USD $)
3 Months Ended 0 Months Ended 3 Months Ended 0 Months Ended 3 Months Ended 0 Months Ended 3 Months Ended
Mar. 31, 2015
Mar. 31, 2014
Dec. 31, 2014
Aug. 27, 2014
BBA, Inc., "Meldium" [Member]
Mar. 31, 2015
BBA, Inc., "Meldium" [Member]
Aug. 27, 2014
BBA, Inc., "Meldium" [Member]
Mar. 31, 2015
BBA, Inc., "Meldium" [Member]
Non-Employee Stockholder [Member]
Sep. 5, 2014
San Francisco, California-based Collaboration Software Provider [Member]
Mar. 31, 2015
San Francisco, California-based Collaboration Software Provider [Member]
Sep. 5, 2014
San Francisco, California-based Collaboration Software Provider [Member]
Mar. 31, 2015
San Francisco, California-based Collaboration Software Provider [Member]
Non-Employee Stockholder [Member]
Mar. 7, 2014
Ionia Corp [Member]
Mar. 31, 2015
Ionia Corp [Member]
Mar. 31, 2014
Ionia Corp [Member]
Mar. 7, 2014
Ionia Corp [Member]
Business Acquisition [Line Items]
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Initial cash payment
 
 
 
$ 10,600,000 
$ 10,637,000 
 
 
$ 4,500,000 
$ 4,500,000 
 
 
$ 7,500,000 
 
 
 
Contingent liability
 
 
 
 
216,000 
4,600,000 
216,000 
 
24,000 
1,500,000 
24,000 
 
 
 
4,000,000 
Maturity period for contingent payment
 
 
 
 
2 years 
 
 
 
2 years 
 
 
 
2 years 
 
 
Contingent payments
 
 
 
 
1,000,000 
 
 
 
 
 
 
 
2,000,000 
 
 
Operating revenues
61,109,000 
49,020,000 
 
 
 
 
 
 
 
 
 
 
 
221,000 
 
Operating expenses
54,091,000 
41,302,000 
 
 
 
 
 
 
 
 
 
 
 
471,000 
 
Range of contingent payments, Minimum
 
 
 
 
 
 
 
 
 
 
Range of contingent payments, Maximum
 
 
 
 
4,300,000 
 
226,000 
 
1,500,000 
 
30,000 
 
4,000,000 
 
 
Deferred tax liability, intangible assets
700,000 
 
 
 
694,000 
 
 
 
430,000 
 
 
 
 
 
 
Deferred income tax assets
5,334,000 
 
5,403,000 
 
88,000 
 
 
 
 
 
 
 
 
 
 
Deferred tax asset related to operating losses
9,271,000 
 
9,280,000 
 
433,000 
 
 
 
402,000 
 
 
 
 
 
 
Acquisition-related costs
 
$ 100,000 
 
 
 
 
 
 
 
 
 
 
 
 
 
Acquisitions - Purchase Price Allocation (Detail) (USD $)
0 Months Ended 0 Months Ended 3 Months Ended 0 Months Ended 3 Months Ended
Mar. 31, 2015
Dec. 31, 2014
Mar. 7, 2014
Ionia Corp [Member]
Mar. 31, 2015
Ionia Corp [Member]
Mar. 7, 2014
Ionia Corp [Member]
Mar. 31, 2015
Ionia Corp [Member]
Customer Backlog [Member]
Mar. 31, 2015
Ionia Corp [Member]
Trade Name and Trademark [Member]
Mar. 31, 2015
Ionia Corp [Member]
Customer Relationships [Member]
Mar. 31, 2015
Ionia Corp [Member]
Documented Know-how [Member]
Aug. 27, 2014
BBA, Inc., "Meldium" [Member]
Mar. 31, 2015
BBA, Inc., "Meldium" [Member]
Aug. 27, 2014
BBA, Inc., "Meldium" [Member]
Mar. 31, 2015
BBA, Inc., "Meldium" [Member]
Trade Name and Trademark [Member]
Mar. 31, 2015
BBA, Inc., "Meldium" [Member]
Customer Relationships [Member]
Mar. 31, 2015
BBA, Inc., "Meldium" [Member]
Completed Technology [Member]
Sep. 5, 2014
San Francisco, California-based Collaboration Software Provider [Member]
Mar. 31, 2015
San Francisco, California-based Collaboration Software Provider [Member]
Sep. 5, 2014
San Francisco, California-based Collaboration Software Provider [Member]
Mar. 31, 2015
San Francisco, California-based Collaboration Software Provider [Member]
Trade Name and Trademark [Member]
Mar. 31, 2015
San Francisco, California-based Collaboration Software Provider [Member]
Completed Technology [Member]
Business Acquisition [Line Items]
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash
 
 
 
$ 67,000 
 
 
 
 
 
 
$ 120,000 
 
 
 
 
 
$ 2,000 
 
 
 
Current assets
 
 
 
296,000 
 
 
 
 
 
 
90,000 
 
 
 
 
 
13,000 
 
 
 
Other assets
 
 
 
26,000 
 
 
 
 
 
 
436,000 
 
 
 
 
 
404,000 
 
 
 
Deferred revenue
 
 
 
(70,000)
 
 
 
 
 
 
(5,000)
 
 
 
 
 
 
 
 
 
Other liabilities
 
 
 
(864,000)
 
 
 
 
 
 
(935,000)
 
 
 
 
 
(439,000)
 
 
 
Business acquisition, Intangible assets
 
 
 
 
 
120,000 
10,000 
1,340,000 
280,000 
 
 
 
30,000 
100,000 
1,580,000 
 
 
 
100,000 
960,000 
Goodwill
37,928,000 
37,928,000 
 
6,295,000 
 
 
 
 
 
 
9,437,000 
 
 
 
 
 
3,484,000 
 
 
 
Total purchase price
 
 
 
7,500,000 
 
 
 
 
 
 
10,853,000 
 
 
 
 
 
4,524,000 
 
 
 
Liability for contingent consideration
 
 
 
 
(4,000,000)
 
 
 
 
 
(216,000)
(4,600,000)
 
 
 
 
(24,000)
(1,500,000)
 
 
Cash paid
 
 
$ 7,500,000 
 
 
 
 
 
 
$ 10,600,000 
$ 10,637,000 
 
 
 
 
$ 4,500,000 
$ 4,500,000 
 
 
 
Goodwill and Intangible Assets - Additional Information (Detail) (USD $)
3 Months Ended 12 Months Ended 12 Months Ended 12 Months Ended 12 Months Ended 0 Months Ended 3 Months Ended 12 Months Ended
Mar. 31, 2015
Mar. 31, 2014
Mar. 31, 2015
Minimum [Member]
Mar. 31, 2015
Maximum [Member]
Mar. 31, 2015
Ionia Corp [Member]
Minimum [Member]
Mar. 31, 2015
Ionia Corp [Member]
Maximum [Member]
Mar. 31, 2015
BBA, Inc., "Meldium" [Member]
Minimum [Member]
Mar. 31, 2015
BBA, Inc., "Meldium" [Member]
Maximum [Member]
Mar. 31, 2015
San Francisco, California-based Collaboration Software Provider [Member]
Minimum [Member]
Mar. 31, 2015
San Francisco, California-based Collaboration Software Provider [Member]
Maximum [Member]
Dec. 31, 2014
Customer Backlog [Member]
Maximum [Member]
Mar. 31, 2015
Customer Backlog [Member]
Ionia Corp [Member]
Dec. 31, 2014
Documented Know-how [Member]
Maximum [Member]
Mar. 31, 2015
Documented Know-how [Member]
Ionia Corp [Member]
Dec. 31, 2014
Trade Name and Trademark [Member]
Minimum [Member]
Dec. 31, 2014
Trade Name and Trademark [Member]
Maximum [Member]
Mar. 31, 2015
Trade Name and Trademark [Member]
Ionia Corp [Member]
Mar. 31, 2015
Trade Name and Trademark [Member]
BBA, Inc., "Meldium" [Member]
Mar. 31, 2015
Trade Name and Trademark [Member]
San Francisco, California-based Collaboration Software Provider [Member]
Dec. 31, 2014
Customer Relationships [Member]
Minimum [Member]
Dec. 31, 2014
Customer Relationships [Member]
Maximum [Member]
Mar. 31, 2015
Customer Relationships [Member]
Ionia Corp [Member]
Mar. 31, 2015
Customer Relationships [Member]
BBA, Inc., "Meldium" [Member]
Nov. 6, 2013
Completed Technology [Member]
Mar. 31, 2015
Completed Technology [Member]
Dec. 31, 2014
Completed Technology [Member]
Dec. 31, 2014
Completed Technology [Member]
Minimum [Member]
Dec. 31, 2014
Completed Technology [Member]
Maximum [Member]
Mar. 31, 2015
Completed Technology [Member]
BBA, Inc., "Meldium" [Member]
Mar. 31, 2015
Completed Technology [Member]
San Francisco, California-based Collaboration Software Provider [Member]
Finite-Lived Intangible Assets [Line Items]
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Changes in carrying amount of goodwill
$ 0 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Business acquisition, Intangible assets
 
 
 
 
 
 
 
 
 
 
 
120,000 
 
280,000 
 
 
10,000 
30,000 
100,000 
 
 
1,340,000 
100,000 
 
 
 
 
 
1,580,000 
960,000 
Intangible assets, estimated useful life
 
 
4 months 
8 years 
4 months 
8 years 
4 months 
8 years 
4 months 
8 years 
4 months 
 
4 years 
 
1 year 
5 years 
 
 
 
5 years 
8 years 
 
 
 
 
 
3 years 
8 years 
 
 
Asset purchased
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
11,500,000 
 
 
 
 
 
 
Estimated useful life period
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
5 years 
 
 
 
 
 
Additional payment incurred for software
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
500,000 
 
 
 
 
Internally developed software
1,000,000 
491,000 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Total amortization of intangible assets
$ 1,200,000 
$ 1,000,000 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Goodwill and Intangible Assets - Intangible Assets (Detail) (USD $)
In Thousands, unless otherwise specified
3 Months Ended 12 Months Ended 3 Months Ended 12 Months Ended
Mar. 31, 2015
Dec. 31, 2014
Mar. 31, 2015
Trade Name and Trademark [Member]
Dec. 31, 2014
Trade Name and Trademark [Member]
Mar. 31, 2015
Customer Relationships [Member]
Dec. 31, 2014
Customer Relationships [Member]
Mar. 31, 2015
Customer Backlog [Member]
Dec. 31, 2014
Customer Backlog [Member]
Mar. 31, 2015
Domain Names [Member]
Dec. 31, 2014
Domain Names [Member]
Mar. 31, 2015
Software [Member]
Dec. 31, 2014
Software [Member]
Mar. 31, 2015
Completed Technology [Member]
Dec. 31, 2014
Completed Technology [Member]
Mar. 31, 2015
Technology and Know-how [Member]
Dec. 31, 2014
Technology and Know-how [Member]
Mar. 31, 2015
Documented Know-how [Member]
Dec. 31, 2014
Documented Know-how [Member]
Mar. 31, 2015
Non-compete Agreements [Member]
Dec. 31, 2014
Non-compete Agreements [Member]
Mar. 31, 2015
Internally Developed Software [Member]
Dec. 31, 2014
Internally Developed Software [Member]
Mar. 31, 2015
Minimum [Member]
Dec. 31, 2014
Minimum [Member]
Trade Name and Trademark [Member]
Dec. 31, 2014
Minimum [Member]
Customer Relationships [Member]
Dec. 31, 2014
Minimum [Member]
Completed Technology [Member]
Mar. 31, 2015
Maximum [Member]
Dec. 31, 2014
Maximum [Member]
Trade Name and Trademark [Member]
Dec. 31, 2014
Maximum [Member]
Customer Relationships [Member]
Dec. 31, 2014
Maximum [Member]
Customer Backlog [Member]
Dec. 31, 2014
Maximum [Member]
Domain Names [Member]
Dec. 31, 2014
Maximum [Member]
Software [Member]
Dec. 31, 2014
Maximum [Member]
Completed Technology [Member]
Dec. 31, 2014
Maximum [Member]
Technology and Know-how [Member]
Dec. 31, 2014
Maximum [Member]
Documented Know-how [Member]
Dec. 31, 2014
Maximum [Member]
Non-compete Agreements [Member]
Dec. 31, 2014
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 
8 years 
5 years 
8 years 
4 months 
5 years 
4 years 
8 years 
3 years 
4 years 
5 years