CHEGG, INC, 10-Q filed on 8/6/2015
Quarterly Report
Document and Entity Information
6 Months Ended
Jun. 30, 2015
Jul. 31, 2015
Document And Entity Information [Abstract]
 
 
Entity Registrant Name
CHEGG, INC 
 
Entity Central Index Key
0001364954 
 
Current Fiscal Year End Date
--12-31 
 
Entity Filer Category
Accelerated Filer 
 
Document Type
10-Q 
 
Document Period End Date
Jun. 30, 2015 
 
Document Fiscal Year Focus
2015 
 
Document Fiscal Period Focus
Q2 
 
Amendment Flag
false 
 
Entity Common Stock, Shares Outstanding
 
87,655,772 
CONDENSED CONSOLIDATED BALANCE SHEETS (USD $)
In Thousands, unless otherwise specified
Jun. 30, 2015
Dec. 31, 2014
Current assets
 
 
Cash and cash equivalents
$ 35,087 
$ 56,117 1
Short-term investments
27,409 
33,346 1
Accounts receivable, net of allowance for doubtful accounts of $261 and $559 at June 30, 2015 and December 31, 2014, respectively
12,131 
14,396 1
Prepaid expenses
7,657 
3,091 1
Other current assets
16,872 
3,864 1
Total current assets
99,156 
110,814 1
Long-term investments
4,727 
1,451 1
Textbook library, net
61,260 
80,762 1
Property and equipment, net
18,569 
18,369 1
Goodwill
91,301 
91,301 1
Intangible assets, net
10,629 
13,626 1
Other assets
1,922 
1,804 1
Total assets
287,564 
318,127 1
Current liabilities
 
 
Accounts payable
3,832 
10,945 1
Deferred revenue
19,752 
24,591 1
Accrued liabilities
23,903 
31,183 1
Total current liabilities
47,487 
66,719 1
Long-term liabilities
 
 
Total other long-term liabilities
4,732 
4,365 1
Total liabilities
52,219 
71,084 1
Commitments and contingencies (Note 7)
   
   1
Stockholders' equity:
 
 
Preferred stock, $0.001 par value – 10,000,000 shares authorized, no shares issued and outstanding at June 30, 2015 and December 31, 2014, respectively
0 
0 1
Common stock, $0.001 par value 400,000,000 shares authorized at June 30, 2015 and December 31, 2014, respectively; 87,560,103 and 84,008,043 shares issued and outstanding at June 30, 2015 and December 31, 2014, respectively
88 
84 1
Additional paid-in capital
543,789 
516,845 1
Accumulated other comprehensive gain (loss)
14 
(13)1
Accumulated deficit
(308,546)
(269,873)1
Total stockholders' equity
235,345 
247,043 1
Total liabilities and stockholders' equity
$ 287,564 
$ 318,127 1
CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) (USD $)
In Thousands, except Share data, unless otherwise specified
Jun. 30, 2015
Dec. 31, 2014
Statement of Financial Position [Abstract]
 
 
Allowance for doubtful accounts receivable, current
$ 261 
$ 559 
Preferred stock, par value
$ 0.001 
$ 0.001 
Preferred stock, shares authorized
10,000,000 
10,000,000 
Preferred stock, shares issued
0 
0 
Preferred stock, shares outstanding
0 
0 
Common stock, par value
$ 0.001 
$ 0.001 
Common stock, shares authorized
400,000,000 
400,000,000 
Common stock, shares issued
87,560,103 
84,008,043 
Common stock, shares outstanding
87,560,103 
84,008,043 
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) (USD $)
In Thousands, except Per Share data, unless otherwise specified
3 Months Ended 6 Months Ended
Jun. 30, 2015
Jun. 30, 2014
Jun. 30, 2015
Jun. 30, 2014
Net revenues:
 
 
 
 
Rental
$ 32,782 
$ 42,257 
$ 70,496 
$ 89,113 
Services
29,276 
18,599 
60,643 
35,845 
Sales
5,003 
3,636 
20,794 
13,927 
Net revenues:
67,061 
64,492 
151,933 
138,885 
Cost of revenues:
 
 
 
 
Rental
21,238 
29,889 
59,793 
77,586 
Services
9,975 
4,912 
21,812 
12,568 
Sales
5,043 
3,795 
20,144 
13,927 
Cost of revenues:
36,256 
38,596 
101,749 
104,081 
Gross profit
30,805 
25,896 
50,184 
34,804 
Operating expenses:
 
 
 
 
Technology and development
13,268 
12,189 
29,412 
23,509 
Sales and marketing
12,382 
14,817 
33,774 
29,844 
General and administrative
11,943 
10,654 
23,720 
20,494 
Restructuring charges
464 
0 
2,978 
0 
Loss (gain) on liquidation of textbooks
2,445 
(2,122)
(1,740)
(3,800)
Total operating expenses
40,502 
35,538 
88,144 
70,047 
Loss from operations
(9,697)
(9,642)
(37,960)
(35,243)
Interest expense and other income, net:
 
 
 
 
Interest expense, net
(60)
(127)
(121)
(188)
Other income, net
56 
156 
132 
276 
Total interest expense and other income, net
(4)
29 
11 
88 
Loss before provision for (benefit from) income taxes
(9,701)
(9,613)
(37,949)
(35,155)
Provision for (benefit from) income taxes
430 
(1,367)
724 
(1,150)
Net loss
$ (10,131)
$ (8,246)
$ (38,673)
$ (34,005)
Net loss per share, attributable to common stockholders, basic and diluted (in dollars per share)
$ (0.12)
$ (0.10)
$ (0.45)
$ (0.41)
Weighted average shares used to compute net loss per share attributable to common stockholders, basic and diluted (in shares)
86,741 
83,209 
85,771 
82,686 
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS (Unaudited) (USD $)
In Thousands, unless otherwise specified
3 Months Ended 6 Months Ended
Jun. 30, 2015
Jun. 30, 2014
Jun. 30, 2015
Jun. 30, 2014
Statement of Comprehensive Income [Abstract]
 
 
 
 
Net loss
$ (10,131)
$ (8,246)
$ (38,673)
$ (34,005)
Other comprehensive (loss) income:
 
 
 
 
Net change in unrealized loss (gain) on available for sale investments
(17)
54 
5 
38 
Change in foreign currency translation adjustments
0 
(27)
22 
(4)
Other comprehensive (loss) income:
(17)
27 
27 
34 
Total comprehensive loss
$ (10,148)
$ (8,219)
$ (38,646)
$ (33,971)
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) (USD $)
In Thousands, unless otherwise specified
6 Months Ended
Jun. 30, 2015
Jun. 30, 2014
Cash flows from operating activities
 
 
Net loss
$ (38,673)
$ (34,005)
Adjustments to reconcile net loss to net cash provided by operating activities:
 
 
Textbook library depreciation expense
27,476 
38,130 
Amortization of warrants and deferred loan costs
70 
117 
Other depreciation and amortization expense
6,413 
4,544 
Share-based compensation expense
22,851 
15,411 
Provision for bad debts
(269)
197 
Loss (gain) on liquidation of textbooks
(1,740)
(3,800)
Loss from write-offs of textbooks
3,611 
6,805 
Deferred income taxes
0 
(1,626)
Realized gain on sale of securities
0 
(18)
Loss from disposal of property and equipment
918 
0 
Change in assets and liabilities net of effect of acquisition of businesses:
 
 
Accounts receivable
116 
(2,211)
Prepaid expenses and other current assets
(17,405)
(1,774)
Other assets
(253)
(470)
Accounts payable
(6,150)
2,988 
Deferred revenue
(4,839)
1,241 
Accrued liabilities
(5,574)
(2,803)
Other liabilities
389 
(128)
Net cash (used in) provided by operating activities
(13,059)
22,598 
Cash flows from investing activities
 
 
Purchases of textbooks
(31,275)
(52,781)
Proceeds from liquidations of textbooks
22,693 
18,737 
Purchases of marketable securities
(17,127)
(54,882)
Proceeds from sale of marketable securities
0 
38,860 
Maturities of marketable securities
19,690 
29,600 
Purchases of property and equipment
(4,146)
(2,496)
Acquisition of businesses, net of cash acquired
0 
(43,872)
Net cash used in investing activities
(10,165)
(66,834)
Cash flows from financing activities
 
 
Proceeds from issuance of common stock under employee stock plans
1,399 
1,743 
Proceeds from exercise of common stock under employee stock plans
10,530 
0 
Payment of taxes related to the net share settlement of RSUs
(7,472)
(3,588)
Repurchase of common stock
(2,263)
0 
Net cash provided by (used in) financing activities
2,194 
(1,845)
Net decrease in cash and cash equivalents
(21,030)
(46,081)
Cash and cash equivalents, beginning of period
56,117 1
76,864 
Cash and cash equivalents, end of period
35,087 
30,783 
Cash paid during the period for:
 
 
Interest
50 
31 
Income taxes
571 
445 
Non-cash investing and financing activities:
 
 
Accrued purchases of long-lived assets
3,805 
5,528 
Issuance of common stock related to prior acquisition
$ 825 
$ 1,585 
Background and Basis of Presentation
Background and Basis of Presentation
Background and Basis of Presentation

Company and Background

Chegg, Inc. (Chegg, the Company, we, us, or our), headquartered in Santa Clara, California, was incorporated as a Delaware corporation on July 29, 2005. Chegg is the leading student-first connected learning platform, empowering students to take control of their education to save time, save money, and get smarter. We are driven by our passion to help students become active consumers in the educational process. Our integrated platform offers products and services that students need throughout the college lifecycle, from choosing a college through graduation and beyond. By helping students learn more in less time and at a lower cost, we help them improve the overall return on investment in education. In 2014, nearly 7.5 million students used our platform.  

Basis of Presentation

The accompanying condensed consolidated balance sheet as of June 30, 2015, the condensed consolidated statements of operations and the condensed consolidated statements of comprehensive loss for the three and six months ended June 30, 2015 and 2014, the condensed consolidated statements of cash flows for the six months ended June 30, 2015 and 2014, and the related footnote disclosures are unaudited. In the opinion of management, the accompanying unaudited condensed consolidated financial statements contain all adjustments, including normal recurring adjustments, necessary to present fairly our financial position as of June 30, 2015, our results of operations for the three and six months ended June 30, 2015 and 2014, and cash flows for the six months ended June 30, 2015 and 2014. The results of operations for the three and six months ended June 30, 2015 and cash flows for the six months ended June 30, 2015 are not necessarily indicative of the results to be expected for the full year.

We operate in a single segment. Our fiscal year ends on December 31 and in this report we refer to the year ended December 31, 2014 as 2014.

The condensed consolidated financial statements and related financial information should be read in conjunction with the audited consolidated financial statements and the related notes thereto, included in our Annual Report on Form 10-K for the year ended December 31, 2014 (the Annual Report on Form 10-K) filed with the U.S. Securities and Exchange Commission (SEC).

Except for restructuring charges, which are discussed below, there have been no material changes to our significant accounting policies as compared to the significant accounting policies described in our Annual Report on Form 10-K.

We have presented revenue and cost of revenues separately for rental, service and sale beginning with our Annual Report on Form 10-K. Rental revenue includes the rental of print textbooks for which we take title and bear the risk of loss; service revenue includes Chegg Study, brand advertising, eTextbooks, tutoring, enrollment marketing, and commissions we earn from Ingram and other e-commerce partners; sale revenue includes just-in-time sale of print textbooks and the sale of other required materials. We have reclassified amounts in the prior periods to conform to the current period presentation. None of the changes impact previously reported condensed consolidated revenue, cost of revenue, operating income, or earnings per share.

Use of Estimates

The preparation of financial statements in conformity with generally accepted accounting principles in the United States (U.S. GAAP) requires management to make estimates, judgments and assumptions that affect the reported amounts of assets and liabilities; the disclosure of contingent liabilities at the date of the financial statements; and the reported amounts of revenue and expenses during the reporting periods. Significant estimates, assumptions and judgments are used for, but not limited to: revenue recognition, recoverability of accounts receivable, determination of the useful lives and salvage value assigned to our textbook library, restructuring charges, share-based compensation expense including estimated forfeitures, accounting for income taxes, useful lives assigned to long-lived assets for depreciation and amortization, impairment of goodwill and long-lived assets, and the valuation of acquired intangible assets. We base our estimates on historical experience, knowledge of current business conditions and various other factors we believe to be reasonable under the circumstances. These estimates are based on management’s knowledge about current events and expectations about actions we may undertake in the future. Actual results could differ from these estimates, and such differences could be material to our financial position and results of operations.

Restructuring Charges

Restructuring charges are primarily comprised of severance costs, contract and program termination costs, asset impairments and costs of facility consolidation and closure. Restructuring charges are recorded upon approval of a formal management plan and are included in the operating results of the period in which such plan is approved and the expense becomes estimable. To estimate restructuring charges, management utilizes assumptions of the number of employees that would be involuntarily terminated and of future costs to operate and eventually vacate duplicate facilities. Severance and other employee separation costs are accrued when it is probable that benefits will be paid and the amount is reasonably estimable. The rates used in determining severance accruals are based on our policies and practices and negotiated settlements. Restructuring charges for employee workforce reductions are recorded upon employee notification for employees whose required continuing service period is 60 days or less and ratably over the employee’s continuing service period for employees whose required continuing service period is greater than 60 days.

Recent Accounting Pronouncements

There have been no material changes to recent accounting pronouncements as compared to recent accounting pronouncements described in our Annual Report on Form 10-K.
Net Loss Per Share
Net Loss Per Share
Net Loss Per Share

Basic net loss per share is computed by dividing net loss by weighted-average number of shares of common stock outstanding during the period, less weighted-average unvested common stock subject to repurchase or forfeiture. Diluted net loss per share is computed by giving effect to all potential shares of common stock, including stock options, warrants, restricted stock units (RSUs) and performance-based restricted stock units (PSUs), to the extent dilutive. Basic and diluted net loss per share was the same for each period presented as the inclusion of all potential common shares outstanding would have been anti-dilutive.

The following table sets forth the computation of historical basic and diluted net loss per share (in thousands, except per share amounts):
 
Three Months Ended June 30,
 
Six Months Ended June 30,
 
2015
 
2014
 
2015
 
2014
Numerator:
 
 
 
 
 
 
 
Net loss
$
(10,131
)
 
$
(8,246
)
 
$
(38,673
)
 
$
(34,005
)
Denominator:
 
 
 
 
 
 
 
Weighted-average common shares outstanding
86,741

 
83,255

 
85,771

 
82,760

Less: Weighted-average unvested common shares subject to repurchase or forfeiture
—

 
(46
)
 
—

 
(74
)
Weighted-average common shares used in computing basic and diluted net loss per share
86,741

 
83,209

 
85,771

 
82,686

 
 
 
 
 
 
 
 
Net loss per share, basic and diluted.
$
(0.12
)
 
$
(0.10
)
 
$
(0.45
)
 
$
(0.41
)


The following potential shares of common stock outstanding were excluded from the computation of diluted net loss per share attributable to common stockholders because including them would have been anti-dilutive (in thousands):
 
Three Months Ended June 30,
 
Six Months Ended June 30,
 
2015
 
2014
 
2015
 
2014
Options to purchase common stock
8,849

 
15,579

 
12,011

 
14,925

RSUs and PSUs
107

 
714

 
98

 
260

Employee stock purchase plan
8

 
—

 
8

 
—

Common stock subject to repurchase or forfeiture
—

 
40

 
—

 
40

Warrants to purchase common stock
324

 
996

 
399

 
996

Total common stock equivalents
9,288

 
17,329

 
12,516

 
16,221

Cash and Cash Equivalents, Investments and Restricted Cash
Cash and Cash Equivalents, Investments and Restricted Cash
Cash and Cash Equivalents, Investments and Restricted Cash

The following table shows our cash and cash equivalents, restricted cash and investments’ adjusted cost, unrealized gain (loss) and fair value (in thousands) as of June 30, 2015 and December 31, 2014:
 
 
June 30, 2015
 
December 31, 2014
 
Cost
 
Net Unrealized Gain/(Loss)
 
Fair Value
 
Cost
 
Net Unrealized Gain/(Loss)
 
Fair Value
Cash and cash equivalents:
 
 
 
 
 
 
 
 
 
 
 
Cash
$
26,093

 
$
—

 
$
26,093

 
$
49,836

 
$
—

 
$
49,836

Money market funds
5,995

 
—

 
5,995

 
5,828

 
—

 
5,828

Commercial paper
2,999

 
—

 
2,999

 
453

 
—

 
453

Total cash and cash equivalents
$
35,087

 
$
—

 
$
35,087

 
$
56,117

 
$
—

 
$
56,117

Short-term investments:
 
 
 
 
 
 
 
 
 
 
 
Commercial paper
$
11,044

 
$
—

 
$
11,044

 
$
13,435

 
$
—

 
$
13,435

Corporate securities
16,366

 
(1
)
 
16,365

 
18,426

 
(15
)
 
18,411

Certificate of deposit
—

 
—

 
—

 
1,499

 
1

 
1,500

Total short-term investments
$
27,410

 
$
(1
)
 
$
27,409

 
$
33,360

 
$
(14
)
 
$
33,346

Long-term investments:
 
 
 
 
 
 
 
 
 
 
 
Corporate securities
$
3,736

 
$
(10
)
 
$
3,726

 
$
1,453

 
$
(2
)
 
$
1,451

Agency bond
1,001

 
—

 
1,001

 
—

 
—

 
—

Long-term corporate securities
$
4,737

 
$
(10
)
 
$
4,727

 
$
1,453

 
$
(2
)
 
$
1,451

 
 
 
 
 
 
 
 
 
 
 
 
Short-term restricted cash
$
300

 
$
—

 
$
300

 
$
300

 
$
—

 
$
300

Long-term restricted cash
1,480

 
—

 
1,480

 
1,480

 
—

 
1,480

Total restricted cash
$
1,780

 
$
—

 
$
1,780

 
$
1,780

 
$
—

 
$
1,780


 
The amortized cost and fair value of available-for-sale investments as of June 30, 2015 by contractual maturity were as follows (in thousands):

 
Cost
 
Fair Value
Due in 1 year or less
$
30,410

 
$
30,409

Due in 1-2 years
4,736

 
4,726

Investments not due at a single maturity date
5,995

 
5,995

Total
$
41,141

 
$
41,130


 
Investments not due at a single maturity date in the preceding table consist of money market fund deposits and commercial paper.

As of June 30, 2015, we considered the declines in market value of our investment portfolio to be temporary in nature and did not consider any of our investments to be other-than-temporarily impaired. We typically invest in highly-rated securities with a minimum credit rating of A- and a weighted average maturity of four months, and our investment policy generally limits the amount of credit exposure to any one issuer. The policy requires investments generally to be investment grade, with the primary objective of preserving capital and maintaining liquidity. Fair values were determined for each individual security in the investment portfolio. When evaluating an investment for other-than-temporary impairment, we review factors such as the length of time and extent to which fair value has been below its cost basis, the financial condition of the issuer and any changes thereto, changes in market interest rates and our intent to sell, or whether it is more likely than not it will be required to sell, the investment before recovery of the investment’s cost basis. During the six months ended June 30, 2015, we did not recognize any impairment charges.
Fair Value Measurement
Fair Value Measurement
Fair Value Measurement

We have established a fair value hierarchy used to determine the fair value of our financial instruments as follows:

Level 1—Inputs are unadjusted quoted prices in active markets for identical assets or liabilities.

Level 2—Inputs are quoted prices for similar assets and liabilities in active markets or inputs that are observable for the assets or liabilities, either directly or indirectly through market corroboration, for substantially the full term of the financial instruments.

Level 3—Inputs are unobservable inputs based on our own assumptions used to measure assets and liabilities at fair value; the inputs require significant management judgment or estimation.

A financial instrument’s classification within the fair value hierarchy is based on the lowest level of any input that is significant to the fair value measurement.

Financial instruments measured and recorded at fair value on a recurring basis as of June 30, 2015 and December 31, 2014 are classified based on the valuation technique level in the tables below (in thousands):
 
 
June 30, 2015
 
Total
 
Quoted Prices
in Active
Markets for Identical
Assets
(Level 1)
 
Significant Other
Observable Inputs (Level 2)
Assets:
 
 
 
 
 
Cash equivalents:
 
 
 
 
 
Money market funds
$
5,995

 
$
5,995

 
$
—

Commercial paper
2,999

 
—

 
2,999

Short-term investments:
 
 
 
 
 
Commercial paper
11,044

 
—

 
11,044

Corporate securities
16,365

 
—

 
16,365

Long-term investments:
 
 
 
 
 
Corporate securities
3,726

 
—

 
3,726

Agency bond
1,001

 
—

 
1,001

Total assets measured and recorded at fair value
$
41,130

 
$
5,995

 
$
35,135


 
December 31, 2014
 
Total
 
Quoted Prices
in Active
Markets for Identical
Assets
(Level 1)
 
Significant Other
Observable Inputs (Level 2)
 
Significant
Unobservable
Inputs
(Level 3)
Assets:
 
 
 
 
 
 
 
Cash equivalents:
 
 
 
 
 
 
 
Money market funds
$
5,828

 
$
5,828

 
$
—

 
$
—

Commercial paper
453

 
—

 
453

 
—

Short-term investments:
 
 
 
 
 
 
 
Commercial paper
13,435

 
—

 
13,435

 
—

Corporate securities
18,411

 
—

 
18,411

 
—

Certificate of deposit
1,500

 
—

 
1,500

 
—

Long-term investments, corporate securities
1,451

 
—

 
1,451

 
 

Total assets measured and recorded at fair value
$
41,078

 
$
5,828

 
$
35,250

 
$
—

Liabilities:
 
 
 
 
 
 
 
Put option liability
$
1,079

 
$
—

 
$
—

 
$
1,079


 
We value our marketable securities based on quoted prices in active markets for identical assets (Level 1 inputs) or inputs other than quoted prices that are observable either directly or indirectly (Level 2 inputs) in determining fair value. We classify all of our fixed income available-for-sale securities as having Level 2 inputs. The valuation techniques used to measure the fair value of our financial instruments having Level 2 inputs were derived from non-binding market consensus prices that are corroborated by observable market data, quoted market prices for similar instruments, or pricing models such as discounted cash flow techniques.

As of June 30, 2015, the put option liability (Level 3) related to a previous acquisition that provided certain employees of the acquired company with the right to require us to acquire vested common shares at a stated contractual price had been fully exercised and the shares were repurchased from employees in the first quarter of 2015. We no longer hold any Level 3 assets or liabilities as of June 30, 2015.

The methods described above may produce a fair value calculation that may not be indicative of net realizable value or reflective of future fair values. Furthermore, while we believe our valuation methods are appropriate and consistent with other market participants, the use of different methodologies or assumptions to determine the fair value of certain financial instruments could result in a different fair value measurement at the reporting date.
Intangible Assets
Intangible Assets
Intangible Assets

Intangible assets as of June 30, 2015 and December 31, 2014 consist of the following (in thousands, except weighted-average amortization period):
 
June 30, 2015
 
Weighted-Average Amortization
Period
(in months)
 
Gross
Carrying
Amount
 
Accumulated
Amortization
 
Net
Carrying
Amount
Developed technologies
52

 
$
9,417

 
$
(5,918
)
 
$
3,499

Customer lists
20

 
2,820

 
(2,051
)
 
769

Trade names
48

 
2,343

 
(627
)
 
1,716

Non-compete agreements
28

 
1,220

 
(557
)
 
663

Master service agreements
21

 
1,030

 
(648
)
 
382

Indefinite-lived trade name
—

 
3,600

 
—

 
3,600

Total intangible assets
 
 
$
20,430

 
$
(9,801
)
 
$
10,629

 
 
December 31, 2014
 
Weighted-Average Amortization
Period
(in months)
 
Gross
Carrying
Amount
 
Accumulated
Amortization
 
Impairment
 
Net
Carrying
Amount
Developed technologies
50

 
$
9,792

 
$
(5,000
)
 
$
(194
)
 
$
4,598

Customer lists
15

 
4,363

 
(1,816
)
 
(829
)
 
1,718

Trade names
44

 
3,132

 
(1,085
)
 
(39
)
 
2,008

Non-compete agreements
21

 
1,637

 
(421
)
 
(278
)
 
938

Master service agreements
21

 
1,030

 
(266
)
 
—

 
764

Corporate partnerships
0

 
243

 
(31
)
 
(212
)
 
—

Indefinite-lived trade name
—

 
3,600

 
—

 
—

 
3,600

Total intangible assets
 
 
$
23,797

 
$
(8,619
)
 
$
(1,552
)
 
$
13,626


During the three and six months ended June 30, 2015, amortization expense related to our acquired intangible assets totaled approximately $1.4 million and $3.0 million, respectively. During the three and six months ended June 30, 2014, amortization expense related to our acquired intangible assets totaled approximately $1.0 million and $1.6 million, respectively.

As of June 30, 2015, the estimated future amortization expense related to our finite-lived intangible assets is as follows (in thousands):
Remaining six months of 2015
$
1,765

2016
2,238

2017
1,701

2018
1,018

2019
307

Total
$
7,029

Debt Obligations
Debt Obligations
Debt Obligations

In August 2013, we entered into a revolving credit facility with an aggregate principal amount of $50.0 million (the Revolving Credit Facility).  In June 2014 we amended the Revolving Credit Facility to reduce the aggregate principal amount to $40.0 million with an accordion feature subject to certain financial criteria that would allow us to borrow up to $75.0 million in total. In August 2015, we amended the Revolving Credit Facility to reduce the financial covenant consolidated EBITDA requirements beginning the quarter ended June 30, 2015 and to reduce the aggregate principal amount to $30.0 million beginning the quarter ended December 31, 2015. The Revolving Credit Facility carries, at our election, a base interest rate of the greater of the Federal Funds Rate plus 0.5% or one-month LIBOR plus 1% or a LIBOR based interest rate plus additional interest of up to 4.5% depending on our leverage ratio. The Revolving Credit Facility will expire in August 2016. The Revolving Credit Facility requires us to repay the outstanding balance at expiration, or to prepay the outstanding balance, if certain reporting and financial covenants are not maintained. These financial covenants are as follows: (1) maintain specified quarterly levels of consolidated EBITDA, which is defined as net income (loss) before tax plus interest expense, provision for (benefit from) income taxes, depreciation and amortization expense, non-cash share-based compensation expense and costs and expenses not to exceed $2.0 million in closing fees related to the revolving credit facility; and (2) maintain a leverage ratio greater than 1.5 to 1.0 as of the end of each quarter, based on the ratio of the consolidated outstanding debt balance to consolidated EBITDA for the period of the four fiscal quarters most recently ended. As of June 30, 2015, we were in compliance with these financial covenants.
Commitments and Contingencies
Commitments and Contingencies
Commitments and Contingencies

We lease our office and warehouse facilities under operating leases, which expire at various dates through 2021. Our primary operating lease commitments at June 30, 2015, related to our headquarters in Santa Clara, California, our office in San Francisco, California, and our warehouse in Shepherdsville, Kentucky. We recognize rent expense on a straight-line basis over the lease period. Where leases contain escalation clauses, rent abatements, or concessions, such as rent holidays and landlord or tenant incentives or allowances, we apply them in the determination of straight-line rent expense over the lease term. On April 10, 2015, we signed an agreement to sublease effectively one half of our warehouse in Kentucky. We expect this sublease agreement to generate $0.1 million of sublease income per month through the end of November 2016. Rental expense, net of sublease income, was approximately $0.5 million and $1.4 million in the three and six months ended June 30, 2015, respectively, and $0.8 million and $1.6 million in the three and six months ended June 30, 2014, respectively.

From time to time, third parties may assert patent infringement claims against us in the form of letters, litigation, or other forms of communication. In addition, from time to time, we may be subject to other legal proceedings and claims in the ordinary course of business, including claims of alleged infringement of trademarks, copyrights and other intellectual property rights; employment claims; and general contract or other claims. We may, from time to time, also be subject to various legal or government claims, disputes, or investigations. Such matters may include, but not be limited to, claims, disputes, or investigations related to warranty, refund, breach of contract, employment, intellectual property, government regulation, or compliance or other matters.

In July 2010, the Kentucky Tax Authority issued a property tax assessment of approximately $1.0 million related to our textbook library located in our Kentucky warehouse for the 2009 and 2010 tax years under audit. In March 2011, we filed a protest with the Kentucky Board of Tax Appeals that was rejected in March 2012. In September 2012, we filed a complaint seeking declaratory rights against the Commonwealth of Kentucky in the Bullitt Circuit Court of Kentucky, and that case was subsequently dismissed in favor of administration remedies with the Kentucky Tax Authority. We received a final Notice of Tax due in October 2012 from the Kentucky Tax Authority and we appealed this notice in November 2012 with the Kentucky Board of Tax Appeals. In May 2013, we presented an Offer in Judgment to the Kentucky Tax Authority of approximately $150,000, excluding tax and penalties, an amount that we have accrued for the two years under audit. We accrued this amount as of December 31, 2012. We appealed to the Kentucky Board of Tax Appeals in July 2013 and the Board issued a ruling in favor of the Kentucky Department of Revenue in January 2014 maintaining the property tax assessment. In February 2014, we filed an appeal to the Franklin Circuit Court in Kentucky and in June 2014 the Circuit Court held in abeyance our motion to appeal. In October 2014 the Franklin Circuit Court in Kentucky issued its opinion and order reversing the Board of Tax Appeal's decision, setting aside the Kentucky Department of Revenue's tax assessments against us and further vacating all penalties and interest. The Kentucky Department of Revenue has appealed the Circuit Court ruling. Due to the preliminary status of the appeal by the Kentucky Department of Revenue and the uncertainties related to the appeal, we are unable to evaluate the likelihood of either a favorable or unfavorable outcome. We believe that it is reasonably possible that we will incur a loss; however, we cannot currently estimate a range of any possible losses we may experience in connection with this case. Accordingly, we are unable at this time to estimate the effects of this matter on our financial condition, results of operations, or cash flows.

We are not aware of any other pending legal matters or claims, individually or in the aggregate, that are expected to have a material adverse impact on our consolidated financial position, results of operations, or cash flows. However, our determination of whether a claim will proceed to litigation cannot be made with certainty, nor can the results of litigation be predicted with certainty. Nevertheless, defending any of these actions, regardless of the outcome, may be costly, time consuming, distract management personnel, and have a negative effect on our business. An adverse outcome in any of these actions, including a judgment or settlement, may cause a material adverse effect on our future business, operating results, and/or financial condition.
Guarantees and Indemnifications
Guarantees and Indemnifications
Guarantees and Indemnifications

We have agreed to indemnify our directors and officers for certain events or occurrences, subject to certain limits, while such persons are or were serving at our request in such capacity. We may terminate the indemnification agreements with these persons upon termination of employment, but termination will not affect claims for indemnification related to events occurring prior to the effective date of termination. We have a directors’ and officers’ insurance policy that limits our potential exposure up to the limits of our insurance coverage. In addition, we also have other indemnification agreements with various vendors against certain claims, liabilities, losses, and damages. The maximum amount of potential future indemnification is unlimited.

We believe the fair value of these indemnification agreements is minimal. We have not recorded any liabilities for these agreements as of June 30, 2015.
Stockholders' Equity
Stockholders' Equity
Stockholders' Equity

Share-Based Compensation

Total share-based compensation expense recorded for employees and non-employees, is as follows (in thousands):
 
Three Months Ended 
 June 30,
 
Six Months Ended 
 June 30,
 
2015
 
2014
 
2015
 
2014
Cost of revenues
$
81

 
$
134

 
$
215

 
$
312

Technology and development
1,273

 
2,635

 
5,980

 
5,017

Sales and marketing
1,034

 
2,263

 
6,088

 
3,595

General and administrative
5,443

 
3,449

 
10,568

 
6,487

Total share-based compensation expense
$
7,831

 
$
8,481

 
$
22,851

 
$
15,411


 
Fair Value of Stock Options

We estimate the fair value of each stock option award using the Black-Scholes-Merton option-pricing model, which utilizes the estimated fair value of our common stock and requires input on the following subjective assumptions:

Expected Term — The expected term for options granted to employees, officers, and directors is calculated as the midpoint between the vesting date and the end of the contractual term of the options. The expected term for options granted to consultants is determined using the remaining contractual life.

Expected Volatility — The expected volatility is based on the average volatility of public companies within our peer group as our common stock has not been publicly trading for a long enough period to rely on our own expected volatility.

Expected Dividends — The dividend assumption is based on our historical experience. To date we have not paid any dividends on our common stock.

Risk-Free Interest Rate — The risk-free interest rate used in the valuation method is the implied yield currently available on the United States treasury zero-coupon issues, with a remaining term equal to the expected life term of our options.

The following table summarizes the key assumptions used to determine the fair value of our stock options granted to employees, officers and directors:
 
Three Months Ended June 30,
 
Six Months Ended June 30,
 
2015
 
2014
 
2015
 
2014
Expected term (years)
5.50

 
6.07

 
5.50

 
6.07

Expected volatility
50.68
%
 
55.91
%
 
50.68
%
 
56.15
%
Dividend yield
—
%
 
—
%
 
—
%
 
—
%
Risk-free interest rate
1.75
%
 
1.88
%
 
1.75
%
 
1.91
%
Weighted-average grant-date fair value per share
$
3.63

 
$
3.66

 
$
3.63

 
$
3.82


Fair Value of Restricted Stock Units (RSUs) and of Performance-Based Restricted Stock Units (PSUs)

RSUs and PSUs are converted into shares of our common stock upon vesting on a one-for-one basis. Vesting of RSUs is subject to the employee’s continuing service to us, while vesting of PSUs is subject to our achievement of specified corporate financial performance objectives and also the employee's continuing service to us. The compensation expense related to RSUs and PSUs is determined using the fair value of our common stock on the date of grant and the expense is recognized on a straight-line basis over the vesting period. RSUs are typically fully vested at the end of three or four years while PSUs vest subject to the achievement of performance objectives and if achieved, typically vest over two to three years. We assess the achievement of performance objectives on a quarterly basis and adjust our share-based payment expense as appropriate.

Fair Value of Employee Stock Purchase Plan
 
Under the 2013 Employee Stock Purchase Plan (the 2013 ESPP), rights to purchase shares are generally granted during the second and fourth quarter of each year. The fair value of rights granted under the 2013 ESPP was estimated at the date of grant using the Black-Scholes-Merton option-pricing model.

Stock Option Activity

Option activity under our equity incentive plans was as follows:
 
Options Outstanding
 
Number of
Options
Outstanding
 
Weighted-
Average
Exercise
Price per
Share
 
Weighted-Average Remaining Contractual Term in Years
 
Aggregate
Intrinsic
Value
Balance at December 31, 2014
14,962,099

 
$
8.53

 
7.11
 
$
6,646,629

Granted
165,456

 
7.65

 
 
 
 
Exercised
(1,646,852
)
 
6.41

 
 
 
 
Canceled
(661,730
)
 
9.67

 
 
 
 
Balance at June 30, 2015
12,818,973

 
$
8.74

 
6.88
 
$
8,122,971



As of June 30, 2015, our total unrecognized compensation expense for stock options granted to employees, officers, directors, and consultants was approximately $16.6 million, which will be recognized over a weighted-average vesting period of approximately 1.5 years.

We recognize only the portion of the option award granted to employees that is ultimately expected to vest as compensation expense. Estimated forfeitures are determined based on historical data and management’s expectation of exercise behaviors. Forfeiture rates and the resulting compensation expense are revised in subsequent periods if actual forfeitures differ from the estimate.

No option awards were granted to consultants during the three and six months ended June 30, 2015 and 2014. Total share-based compensation expense for consultants was not significant for the three and six months ended June 30, 2015 and 2014.

There was no capitalized share-based compensation expense as of June 30, 2015 or 2014.

RSU and PSU Activity
 
 
RSUs and PSUs Outstanding
 
Number of RSUs and PSUs
Outstanding
 
Weighted Average Grant Date Fair Value
Balance at December 31, 2014
9,125,190

 
$
6.25

Granted
7,085,445

 
6.79

Released
(2,320,865
)
 
7.78

Canceled
(596,939
)
 
6.48

Balance at June 30, 2015
13,292,831

 
$
6.26


During the three and six months ended June 30, 2014, 29,502 and 1,285,261 RSUs granted prior to our initial public offering (IPO) vested and were settled for shares of our common stock, respectively.  Of those shares, we withheld 10,859 and 527,778 shares valued at approximately $0.1 million and $3.6 million, respectively, in satisfaction of tax withholding obligations for employees who elected to net settle, i.e., surrender shares of common stock to satisfy their tax obligations. Payment of taxes related to this net share settlement of RSUs is reflected as a financing activity in our condensed consolidated statements of cash flows. The shares withheld by us as a result of the net settlement are no longer considered issued and outstanding, thereby reducing our shares outstanding used to calculate earnings per share. These shares are returned to the reserves and are available for future issuance under the 2013 Equity Incentive Plan (the 2013 Plan).

In February 2015, we granted PSUs under the 2013 Plan to certain of our key employees. The PSUs entitle the employees to receive a certain number of shares of our common stock based on our satisfaction of certain financial and strategic performance targets during 2015 (the Performance Period). Based on the achievement of the performance conditions during the Performance Period for the February grants, the final settlement will range between zero and 100% of the target shares underlying the PSU awards based on a specified objective formula approved by the Compensation Committee.  If earned, these PSUs will vest annually over a two or three year period depending on the employee, with the initial vesting in February 2016.

The target number of shares underlying the PSUs that were granted to certain key employees during the six months ended June 30, 2015 totaled 2,300,824 shares and had a weighted average grant date fair value of $6.59 per share. No PSUs were granted in the three months ended June 30, 2015. As of June 30, 2015, 100% of the PSUs are expected to vest.
 
As of June 30, 2015, we had a total of approximately $53.9 million of unrecognized compensation costs related to RSUs and PSUs that is expected to be recognized over the remaining weighted average period of 1.8 years.
Income Taxes
Income Taxes
Income Taxes

We recorded an income tax provision of approximately $0.4 million and $0.7 million for the three and six months ended June 30, 2015, respectively, and an income tax benefit of approximately $1.4 million and $1.2 million for the three and six months ended June 30, 2014, respectively. The income tax provision for the three and six months ended June 30, 2015 was primarily due to state and foreign income tax expense and federal tax expense related to the tax amortization of acquired goodwill. The income tax benefit for the three and six months ended June 30, 2014 was the result of the release of valuation allowance resulting from our acquisition of InstaEDU, offset by foreign and state income tax expense.
Restructuring Charges
Restructuring Charges
Restructuring Charges

2015 Restructuring Plan

For the three and six months ended June 30, 2015, we recorded restructuring charges of $0.5 million and $3.0 million, respectively, related to the closure of our print coupon business and our Kentucky warehouse. The charges include one-time employee termination benefits for approximately 71 employees of $0.3 million and $1.1 million during the three and six months ended June 30, 2015, respectively, and lease termination and other costs of $0.2 million and $1.8 million for the three and six months ended June 30, 2015, respectively. As a result of the expanded partnership with Ingram, we expect to exit our warehouse facilities by the end of 2015. We expect to incur additional charges in 2015 under the restructuring plan related to these exit activities and related severance costs of approximately $5.3 million. Costs incurred to date related to employee termination benefits are expected to be paid within the next six months. Costs incurred to date related to the lease termination and other costs are expected to be fully paid by 2021.

The following table summarizes the activity related to the accrual for restructuring charges (in thousands):
 
Workforce Reduction Costs
 
Lease Termination and Other Costs
 
Total
Balances at January 1, 2015
$
—

 
$
—

 
$
—

Restructuring charges
1,135

 
1,843

 
2,978

Cash payments
(612
)
 
(367
)
 
(979
)
Write-offs
—

 
(338
)
 
(338
)
Balances at June 30, 2015
$
523

 
$
1,138

 
$
1,661



As of June 30, 2015, the $1.7 million liability was comprised of a short-term accrual of $1.0 million included within accrued liabilities and a long-term accrual of $0.7 million included within other liabilities on the condensed consolidated balance sheet.
Related-Party Transactions
Related-Party Transactions
Related-Party Transactions

Our Chief Executive Officer is a member of the Board of Directors of Adobe Systems (Adobe). During the three and six months ended June 30, 2015, we had purchases of $0.8 million and $0.9 million, respectively, and during the three and six months ended June 30, 2014, we had purchases of $0.3 million and $0.7 million, respectively, of products from Adobe. We had $0.1 million in revenues in the three and six months ended June 30, 2015 and $0.2 million and $1.0 million in revenues in the three and six months ended June 30, 2014, respectively, from Adobe. We had $0.1 million in payables as of December 31, 2014 to Adobe. We had $0.1 million in outstanding accounts receivables to Adobe as of June 30, 2015.

One of our board members is also a member of the Board of Directors of Cengage Learning (Cengage).  During the three and six months ended June 30, 2015, we had purchases of $1.9 million and $6.2 million, respectively, and during the three and six months ended June 30, 2014 we had purchases of $0.5 million and $6.4 million, respectively, of products from Cengage.  We had $0.1 million in payables as of December 31, 2014 to Cengage. We had $0.1 million in outstanding accounts receivables to Cengage as of December 31, 2014.

One of our board members is the Chief Executive Officer of Shutterfly Inc. (Shutterfly). During the six months ended June 30, 2015, we had purchases of $1.1 million of products from Shutterfly. We had $0.1 million and an immaterial amount in revenues in the three and six months ended June 30, 2015, respectively, and $0.1 million in revenues in the three and six months ended June 30, 2014 from Shutterfly. We had an immaterial amount in outstanding accounts receivables to Shutterfly as of June 30, 2015.

The terms of our contracts with the above related parties are consistent with our contracts with other independent parties.
Background and Basis of Presentation (Policies)
Basis of Presentation 
Basis of Presentation

The accompanying condensed consolidated balance sheet as of June 30, 2015, the condensed consolidated statements of operations and the condensed consolidated statements of comprehensive loss for the three and six months ended June 30, 2015 and 2014, the condensed consolidated statements of cash flows for the six months ended June 30, 2015 and 2014, and the related footnote disclosures are unaudited. In the opinion of management, the accompanying unaudited condensed consolidated financial statements contain all adjustments, including normal recurring adjustments, necessary to present fairly our financial position as of June 30, 2015, our results of operations for the three and six months ended June 30, 2015 and 2014, and cash flows for the six months ended June 30, 2015 and 2014. The results of operations for the three and six months ended June 30, 2015 and cash flows for the six months ended June 30, 2015 are not necessarily indicative of the results to be expected for the full year.

We operate in a single segment. Our fiscal year ends on December 31 and in this report we refer to the year ended December 31, 2014 as 2014.
Revenue Recognition 
We have presented revenue and cost of revenues separately for rental, service and sale beginning with our Annual Report on Form 10-K. Rental revenue includes the rental of print textbooks for which we take title and bear the risk of loss; service revenue includes Chegg Study, brand advertising, eTextbooks, tutoring, enrollment marketing, and commissions we earn from Ingram and other e-commerce partners; sale revenue includes just-in-time sale of print textbooks and the sale of other required materials. We have reclassified amounts in the prior periods to conform to the current period presentation. None of the changes impact previously reported condensed consolidated revenue, cost of revenue, operating income, or earnings per share.
Use of Estimates 
Use of Estimates

The preparation of financial statements in conformity with generally accepted accounting principles in the United States (U.S. GAAP) requires management to make estimates, judgments and assumptions that affect the reported amounts of assets and liabilities; the disclosure of contingent liabilities at the date of the financial statements; and the reported amounts of revenue and expenses during the reporting periods. Significant estimates, assumptions and judgments are used for, but not limited to: revenue recognition, recoverability of accounts receivable, determination of the useful lives and salvage value assigned to our textbook library, restructuring charges, share-based compensation expense including estimated forfeitures, accounting for income taxes, useful lives assigned to long-lived assets for depreciation and amortization, impairment of goodwill and long-lived assets, and the valuation of acquired intangible assets. We base our estimates on historical experience, knowledge of current business conditions and various other factors we believe to be reasonable under the circumstances. These estimates are based on management’s knowledge about current events and expectations about actions we may undertake in the future. Actual results could differ from these estimates, and such differences could be material to our financial position and results of operations.
Restructuring Charges 
Restructuring Charges

Restructuring charges are primarily comprised of severance costs, contract and program termination costs, asset impairments and costs of facility consolidation and closure. Restructuring charges are recorded upon approval of a formal management plan and are included in the operating results of the period in which such plan is approved and the expense becomes estimable. To estimate restructuring charges, management utilizes assumptions of the number of employees that would be involuntarily terminated and of future costs to operate and eventually vacate duplicate facilities. Severance and other employee separation costs are accrued when it is probable that benefits will be paid and the amount is reasonably estimable. The rates used in determining severance accruals are based on our policies and practices and negotiated settlements. Restructuring charges for employee workforce reductions are recorded upon employee notification for employees whose required continuing service period is 60 days or less and ratably over the employee’s continuing service period for employees whose required continuing service period is greater than 60 days.
Net Loss Per Share (Tables)
Computation of Basic and Diluted Net Loss Per Share 
The following table sets forth the computation of historical basic and diluted net loss per share (in thousands, except per share amounts):
 
Three Months Ended June 30,
 
Six Months Ended June 30,
 
2015
 
2014
 
2015
 
2014
Numerator:
 
 
 
 
 
 
 
Net loss
$
(10,131
)
 
$
(8,246
)
 
$
(38,673
)
 
$
(34,005
)
Denominator:
 
 
 
 
 
 
 
Weighted-average common shares outstanding
86,741

 
83,255

 
85,771

 
82,760

Less: Weighted-average unvested common shares subject to repurchase or forfeiture
—

 
(46
)
 
—

 
(74
)
Weighted-average common shares used in computing basic and diluted net loss per share
86,741

 
83,209

 
85,771

 
82,686

 
 
 
 
 
 
 
 
Net loss per share, basic and diluted.
$
(0.12
)
 
$
(0.10
)
 
$
(0.45
)
 
$
(0.41
)
Common Shares Outstanding Excluded from Computation of Diluted Net Loss Per Share 
The following potential shares of common stock outstanding were excluded from the computation of diluted net loss per share attributable to common stockholders because including them would have been anti-dilutive (in thousands):
 
Three Months Ended June 30,
 
Six Months Ended June 30,
 
2015
 
2014
 
2015
 
2014
Options to purchase common stock
8,849

 
15,579

 
12,011

 
14,925

RSUs and PSUs
107

 
714

 
98

 
260

Employee stock purchase plan
8

 
—

 
8

 
—

Common stock subject to repurchase or forfeiture
—

 
40

 
—

 
40

Warrants to purchase common stock
324

 
996

 
399

 
996

Total common stock equivalents
9,288

 
17,329

 
12,516

 
16,221

Cash and Cash Equivalents, Investments and Restricted Cash (Tables)
Cash and Cash Equivalents, Restricted Cash and Investments 
The following table shows our cash and cash equivalents, restricted cash and investments’ adjusted cost, unrealized gain (loss) and fair value (in thousands) as of June 30, 2015 and December 31, 2014:
 
 
June 30, 2015
 
December 31, 2014
 
Cost
 
Net Unrealized Gain/(Loss)
 
Fair Value
 
Cost
 
Net Unrealized Gain/(Loss)
 
Fair Value
Cash and cash equivalents:
 
 
 
 
 
 
 
 
 
 
 
Cash
$
26,093

 
$
—

 
$
26,093

 
$
49,836

 
$
—

 
$
49,836

Money market funds
5,995

 
—

 
5,995

 
5,828

 
—

 
5,828

Commercial paper
2,999

 
—

 
2,999

 
453

 
—

 
453

Total cash and cash equivalents
$
35,087

 
$
—

 
$
35,087

 
$
56,117

 
$
—

 
$
56,117

Short-term investments:
 
 
 
 
 
 
 
 
 
 
 
Commercial paper
$
11,044

 
$
—

 
$
11,044

 
$
13,435

 
$
—

 
$
13,435

Corporate securities
16,366

 
(1
)
 
16,365

 
18,426

 
(15
)
 
18,411

Certificate of deposit
—

 
—

 
—

 
1,499

 
1

 
1,500

Total short-term investments
$
27,410

 
$
(1
)
 
$
27,409

 
$
33,360

 
$
(14
)
 
$
33,346

Long-term investments:
 
 
 
 
 
 
 
 
 
 
 
Corporate securities
$
3,736

 
$
(10
)
 
$
3,726

 
$
1,453

 
$
(2
)
 
$
1,451

Agency bond
1,001

 
—

 
1,001

 
—

 
—

 
—

Long-term corporate securities
$
4,737

 
$
(10
)
 
$
4,727

 
$
1,453

 
$
(2
)
 
$
1,451

 
 
 
 
 
 
 
 
 
 
 
 
Short-term restricted cash
$
300

 
$
—

 
$
300

 
$
300

 
$
—

 
$
300

Long-term restricted cash
1,480

 
—

 
1,480

 
1,480

 
—

 
1,480

Total restricted cash
$
1,780

 
$
—

 
$
1,780

 
$
1,780

 
$
—

 
$
1,780

Contractual Maturity of Available-for-Sale Investments 
The amortized cost and fair value of available-for-sale investments as of June 30, 2015 by contractual maturity were as follows (in thousands):

 
Cost
 
Fair Value
Due in 1 year or less
$
30,410

 
$
30,409

Due in 1-2 years
4,736

 
4,726

Investments not due at a single maturity date
5,995

 
5,995

Total
$
41,141

 
$
41,130

Fair Value Measurement (Tables)
Financial Instruments Measured and Recorded at Fair Value on Recurring Basis
Financial instruments measured and recorded at fair value on a recurring basis as of June 30, 2015 and December 31, 2014 are classified based on the valuation technique level in the tables below (in thousands):
 
 
June 30, 2015
 
Total
 
Quoted Prices
in Active
Markets for Identical
Assets
(Level 1)
 
Significant Other
Observable Inputs (Level 2)
Assets:
 
 
 
 
 
Cash equivalents:
 
 
 
 
 
Money market funds
$
5,995

 
$
5,995

 
$
—

Commercial paper
2,999

 
—

 
2,999

Short-term investments:
 
 
 
 
 
Commercial paper
11,044

 
—

 
11,044

Corporate securities
16,365

 
—

 
16,365

Long-term investments:
 
 
 
 
 
Corporate securities
3,726

 
—

 
3,726

Agency bond
1,001

 
—

 
1,001

Total assets measured and recorded at fair value
$
41,130

 
$
5,995

 
$
35,135


 
December 31, 2014
 
Total
 
Quoted Prices
in Active
Markets for Identical
Assets
(Level 1)
 
Significant Other
Observable Inputs (Level 2)
 
Significant
Unobservable
Inputs
(Level 3)
Assets:
 
 
 
 
 
 
 
Cash equivalents:
 
 
 
 
 
 
 
Money market funds
$
5,828

 
$
5,828

 
$
—

 
$
—

Commercial paper
453

 
—

 
453

 
—

Short-term investments:
 
 
 
 
 
 
 
Commercial paper
13,435

 
—

 
13,435

 
—

Corporate securities
18,411

 
—

 
18,411

 
—

Certificate of deposit
1,500

 
—

 
1,500

 
—

Long-term investments, corporate securities
1,451

 
—

 
1,451

 
 

Total assets measured and recorded at fair value
$
41,078

 
$
5,828

 
$
35,250

 
$
—

Liabilities:
 
 
 
 
 
 
 
Put option liability
$
1,079

 
$
—

 
$
—

 
$
1,079

Intangible Assets (Tables)
Intangible Assets 
Intangible assets as of June 30, 2015 and December 31, 2014 consist of the following (in thousands, except weighted-average amortization period):
 
June 30, 2015
 
Weighted-Average Amortization
Period
(in months)
 
Gross
Carrying
Amount
 
Accumulated
Amortization
 
Net
Carrying
Amount
Developed technologies
52

 
$
9,417

 
$
(5,918
)
 
$
3,499

Customer lists
20

 
2,820

 
(2,051
)
 
769

Trade names
48

 
2,343

 
(627
)
 
1,716

Non-compete agreements
28

 
1,220

 
(557
)
 
663

Master service agreements
21

 
1,030

 
(648
)
 
382

Indefinite-lived trade name
—

 
3,600

 
—

 
3,600

Total intangible assets
 
 
$
20,430

 
$
(9,801
)
 
$
10,629

 
 
December 31, 2014
 
Weighted-Average Amortization
Period
(in months)
 
Gross
Carrying
Amount
 
Accumulated
Amortization
 
Impairment
 
Net
Carrying
Amount
Developed technologies
50

 
$
9,792

 
$
(5,000
)
 
$
(194
)
 
$
4,598

Customer lists
15

 
4,363

 
(1,816
)
 
(829
)
 
1,718

Trade names
44

 
3,132

 
(1,085
)
 
(39
)
 
2,008

Non-compete agreements
21

 
1,637

 
(421
)
 
(278
)
 
938

Master service agreements
21

 
1,030

 
(266
)
 
—

 
764

Corporate partnerships
0

 
243

 
(31
)
 
(212
)
 
—

Indefinite-lived trade name
—

 
3,600

 
—

 
—

 
3,600

Total intangible assets
 
 
$
23,797

 
$
(8,619
)
 
$
(1,552
)
 
$
13,626


Estimated Future Amortization Expense Related to Intangible Assets 
As of June 30, 2015, the estimated future amortization expense related to our finite-lived intangible assets is as follows (in thousands):
Remaining six months of 2015
$
1,765

2016
2,238

2017
1,701

2018
1,018

2019
307

Total
$
7,029

Stockholders' Equity (Tables)
Stock-Based Compensation Expense for Employees and Non-Employees 
Total share-based compensation expense recorded for employees and non-employees, is as follows (in thousands):
 
Three Months Ended 
 June 30,
 
Six Months Ended 
 June 30,
 
2015
 
2014
 
2015
 
2014
Cost of revenues
$
81

 
$
134

 
$
215

 
$
312

Technology and development
1,273

 
2,635

 
5,980

 
5,017

Sales and marketing
1,034

 
2,263

 
6,088

 
3,595

General and administrative
5,443

 
3,449

 
10,568

 
6,487

Total share-based compensation expense
$
7,831

 
$
8,481

 
$
22,851

 
$
15,411

Summary of Assumptions Used to Determine Fair Value of Stock Options Granted 
The following table summarizes the key assumptions used to determine the fair value of our stock options granted to employees, officers and directors:
 
Three Months Ended June 30,
 
Six Months Ended June 30,
 
2015
 
2014
 
2015
 
2014
Expected term (years)
5.50

 
6.07

 
5.50

 
6.07

Expected volatility
50.68
%
 
55.91
%
 
50.68
%
 
56.15
%
Dividend yield
—
%
 
—
%
 
—
%
 
—
%
Risk-free interest rate
1.75
%
 
1.88
%
 
1.75
%
 
1.91
%
Weighted-average grant-date fair value per share
$
3.63

 
$
3.66

 
$
3.63

 
$
3.82

Summary of Stock Option Activity 
Option activity under our equity incentive plans was as follows:
 
Options Outstanding
 
Number of
Options
Outstanding
 
Weighted-
Average
Exercise
Price per
Share
 
Weighted-Average Remaining Contractual Term in Years
 
Aggregate
Intrinsic
Value
Balance at December 31, 2014
14,962,099

 
$
8.53

 
7.11
 
$
6,646,629

Granted
165,456

 
7.65

 
 
 
 
Exercised
(1,646,852
)
 
6.41

 
 
 
 
Canceled
(661,730
)
 
9.67

 
 
 
 
Balance at June 30, 2015
12,818,973

 
$
8.74

 
6.88
 
$
8,122,971

Summary of Restricted Stock Unit Activity 
RSU and PSU Activity
 
 
RSUs and PSUs Outstanding
 
Number of RSUs and PSUs
Outstanding
 
Weighted Average Grant Date Fair Value
Balance at December 31, 2014
9,125,190

 
$
6.25

Granted
7,085,445

 
6.79

Released
(2,320,865
)
 
7.78

Canceled
(596,939
)
 
6.48

Balance at June 30, 2015
13,292,831

 
$
6.26


Restructuring Charges (Tables)
Schedule of Restructuring Reserve by Type of Cost
The following table summarizes the activity related to the accrual for restructuring charges (in thousands):
 
Workforce Reduction Costs
 
Lease Termination and Other Costs
 
Total
Balances at January 1, 2015
$
—

 
$
—

 
$
—

Restructuring charges
1,135

 
1,843

 
2,978

Cash payments
(612
)
 
(367
)
 
(979
)
Write-offs
—

 
(338
)
 
(338
)
Balances at June 30, 2015
$
523

 
$
1,138

 
$
1,661

Background and Basis of Presentation - Additional Information (Details)
12 Months Ended
Dec. 31, 2014
student
Organization, Consolidation and Presentation of Financial Statements [Abstract]
 
Number of students who have used our learning platform (nearly 7.5 million)
7,500,000 
Net Loss Per Share - Computation of Basic and Diluted Net Loss Per Share (Details) (USD $)
In Thousands, except Per Share data, unless otherwise specified
3 Months Ended 6 Months Ended
Jun. 30, 2015
Jun. 30, 2014
Jun. 30, 2015
Jun. 30, 2014
Numerator:
 
 
 
 
Net loss
$ (10,131)
$ (8,246)
$ (38,673)
$ (34,005)
Denominator:
 
 
 
 
Weighted-average common shares outstanding
86,741 
83,255 
85,771 
82,760 
Less: Weighted-average unvested common shares subject to repurchase or forfeiture
0 
(46)
0 
(74)
Weighted-average common shares used in computing basic and diluted net loss per share
86,741 
83,209 
85,771 
82,686 
Net loss per share, basic and diluted.
$ (0.12)
$ (0.10)
$ (0.45)
$ (0.41)
Net Loss Per Share - Common Shares Outstanding Excluded From Computation Of Diluted Net Loss Per Share (Details)
In Thousands, unless otherwise specified
3 Months Ended 6 Months Ended
Jun. 30, 2015
Jun. 30, 2014
Jun. 30, 2015
Jun. 30, 2014
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
 
 
 
 
Total common stock equivalents
9,288 
17,329 
12,516 
16,221 
Options to purchase common stock
 
 
 
 
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
 
 
 
 
Total common stock equivalents
8,849 
15,579 
12,011 
14,925 
RSUs and PSUs
 
 
 
 
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
 
 
 
 
Total common stock equivalents
107 
714 
98 
260 
Employee stock purchase plan
 
 
 
 
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
 
 
 
 
Total common stock equivalents
8 
0 
8 
0 
Common stock subject to repurchase or forfeiture
 
 
 
 
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
 
 
 
 
Total common stock equivalents
0 
40 
0 
40 
Warrants |
Common Stock
 
 
 
 
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
 
 
 
 
Total common stock equivalents
324 
996 
399 
996 
Cash and Cash Equivalents, Investments and Restricted Cash (Details) (USD $)
In Thousands, unless otherwise specified
Jun. 30, 2015
Dec. 31, 2014
Cash and Cash Equivalents
 
 
Schedule Of Available For Sale Securities [Line Items]
 
 
Cost
$ 35,087 
$ 56,117 
Net Unrealized Gain/(Loss)
0 
0 
Fair Value
35,087 
56,117 
Short-term Investments
 
 
Schedule Of Available For Sale Securities [Line Items]
 
 
Cost
27,410 
33,360 
Net Unrealized Gain/(Loss)
(1)
(14)
Fair Value
27,409 
33,346 
Short-term Investments |
Corporate securities
 
 
Schedule Of Available For Sale Securities [Line Items]
 
 
Cost
16,366 
18,426 
Net Unrealized Gain/(Loss)
(1)
(15)
Fair Value
16,365 
18,411 
Long-term Investments
 
 
Schedule Of Available For Sale Securities [Line Items]
 
 
Cost
4,737 
1,453 
Net Unrealized Gain/(Loss)
(10)
(2)
Fair Value
4,727 
1,451 
Long-term Investments |
Corporate securities
 
 
Schedule Of Available For Sale Securities [Line Items]
 
 
Cost
3,736 
1,453 
Net Unrealized Gain/(Loss)
(10)
(2)
Fair Value
3,726 
1,451 
Long-term Investments |
Agency bond
 
 
Schedule Of Available For Sale Securities [Line Items]
 
 
Cost
1,001 
0 
Net Unrealized Gain/(Loss)
0 
0 
Fair Value
1,001 
0 
Cash |
Cash and Cash Equivalents
 
 
Schedule Of Available For Sale Securities [Line Items]
 
 
Cost
26,093 
49,836 
Net Unrealized Gain/(Loss)
0 
0 
Fair Value
26,093 
49,836 
Money market funds |
Cash and Cash Equivalents
 
 
Schedule Of Available For Sale Securities [Line Items]
 
 
Cost
5,995 
5,828 
Net Unrealized Gain/(Loss)
0 
0 
Fair Value
5,995 
5,828 
Commercial paper |
Cash and Cash Equivalents
 
 
Schedule Of Available For Sale Securities [Line Items]
 
 
Cost
2,999 
453 
Net Unrealized Gain/(Loss)
0 
0 
Fair Value
2,999 
453 
Commercial paper |
Short-term Investments
 
 
Schedule Of Available For Sale Securities [Line Items]
 
 
Cost
11,044 
13,435 
Net Unrealized Gain/(Loss)
0 
0 
Fair Value
11,044 
13,435 
Certificate of deposit |
Short-term Investments
 
 
Schedule Of Available For Sale Securities [Line Items]
 
 
Cost
0 
1,499 
Net Unrealized Gain/(Loss)
0 
1 
Fair Value
0 
1,500 
Short-term restricted cash
 
 
Schedule Of Available For Sale Securities [Line Items]
 
 
Cost
300 
300 
Net Unrealized Gain/(Loss)
0 
0 
Fair Value
300 
300 
Long-term restricted cash
 
 
Schedule Of Available For Sale Securities [Line Items]
 
 
Cost
1,480 
1,480 
Net Unrealized Gain/(Loss)
0 
0 
Fair Value
1,480 
1,480 
Total restricted cash
 
 
Schedule Of Available For Sale Securities [Line Items]
 
 
Cost
1,780 
1,780 
Net Unrealized Gain/(Loss)
0 
0 
Fair Value
$ 1,780 
$ 1,780 
Cash and Cash Equivalents, Investments and Restricted Cash - Contractual Maturity of Available-for-Sale Investments (Details) (USD $)
In Thousands, unless otherwise specified
6 Months Ended
Jun. 30, 2015
Amortized Cost
 
Due in 1 year or less
$ 30,410 
Due in 1 year or less
4,736 
Investments not due at a single maturity date
5,995 
Total
41,141 
Fair Value
 
Due in 1 year or less
30,409 
Due in 1 year or less
4,726 
Investments not due at a single maturity date
5,995 
Total
$ 41,130 
Weighted average maturity of investment securities
4 months 
Fair Value Measurement - Financial Instruments Measured and Recorded at Fair Value on Recurring Basis (Details) (USD $)
In Thousands, unless otherwise specified
Jun. 30, 2015
Dec. 31, 2014
Assets:
 
 
Short-term investments
$ 27,409 
$ 33,346 1
Fair Value on Recurring Basis
 
 
Assets:
 
 
Total assets measured and recorded at fair value
41,130 
41,078 
Liabilities:
 
 
Put option liability
 
1,079 
Fair Value on Recurring Basis |
Corporate securities
 
 
Assets:
 
 
Short-term investments
16,365 
18,411 
Long-term investments
3,726 
1,451 
Fair Value on Recurring Basis |
Agency bond
 
 
Assets:
 
 
Long-term investments
1,001 
 
Fair Value on Recurring Basis |
Money market funds
 
 
Assets:
 
 
Cash equivalents
5,995 
5,828 
Fair Value on Recurring Basis |
Commercial paper
 
 
Assets:
 
 
Cash equivalents
2,999 
453 
Short-term investments
11,044 
13,435 
Fair Value on Recurring Basis |
Certificate of deposit
 
 
Assets:
 
 
Short-term investments
 
1,500 
Fair Value on Recurring Basis |
Quoted Prices in Active Markets for Identical Assets (Level 1)
 
 
Assets:
 
 
Total assets measured and recorded at fair value
5,995 
5,828 
Fair Value on Recurring Basis |
Quoted Prices in Active Markets for Identical Assets (Level 1) |
Money market funds
 
 
Assets:
 
 
Cash equivalents
5,995 
5,828 
Fair Value on Recurring Basis |
Significant Other Observable Inputs (Level 2)
 
 
Assets:
 
 
Total assets measured and recorded at fair value
35,135 
35,250 
Fair Value on Recurring Basis |
Significant Other Observable Inputs (Level 2) |
Corporate securities
 
 
Assets:
 
 
Short-term investments
16,365 
18,411 
Long-term investments
3,726 
1,451 
Fair Value on Recurring Basis |
Significant Other Observable Inputs (Level 2) |
Agency bond
 
 
Assets:
 
 
Long-term investments
1,001 
 
Fair Value on Recurring Basis |
Significant Other Observable Inputs (Level 2) |
Commercial paper
 
 
Assets:
 
 
Cash equivalents
2,999 
453 
Short-term investments
11,044 
13,435 
Fair Value on Recurring Basis |
Significant Other Observable Inputs (Level 2) |
Certificate of deposit
 
 
Assets:
 
 
Short-term investments
 
1,500 
Fair Value on Recurring Basis |
Significant Unobservable Inputs (Level 3)
 
 
Liabilities:
 
 
Put option liability
 
$ 1,079 
Intangible Assets (Details) (USD $)
In Thousands, unless otherwise specified
6 Months Ended 12 Months Ended
Jun. 30, 2015
Dec. 31, 2014
Finite Lived Intangible Assets [Line Items]
 
 
Accumulated Amortization
$ (9,801)
$ (8,619)
Impairment
 
(1,552)
Net Carrying Amount
7,029 
 
Indefinite-lived trade name
3,600 
3,600 
Total intangible assets, gross carrying amount
20,430 
23,797 
Intangible assets, net
10,629 
13,626 1
Developed technologies
 
 
Finite Lived Intangible Assets [Line Items]
 
 
Weighted-Average Amortization Period (in months)
52 months 
50 months 
Gross Carrying Amount
9,417 
9,792 
Accumulated Amortization
(5,918)
(5,000)
Impairment
 
(194)
Net Carrying Amount
3,499 
4,598 
Customer lists
 
 
Finite Lived Intangible Assets [Line Items]
 
 
Weighted-Average Amortization Period (in months)
20 months 
15 months 
Gross Carrying Amount
2,820 
4,363 
Accumulated Amortization
(2,051)
(1,816)
Impairment
 
(829)
Net Carrying Amount
769 
1,718 
Trade names
 
 
Finite Lived Intangible Assets [Line Items]
 
 
Weighted-Average Amortization Period (in months)
48 months 
44 months 
Gross Carrying Amount
2,343 
3,132 
Accumulated Amortization
(627)
(1,085)
Impairment
 
(39)
Net Carrying Amount
1,716 
2,008 
Non-compete agreements
 
 
Finite Lived Intangible Assets [Line Items]
 
 
Weighted-Average Amortization Period (in months)
28 months 
21 months 
Gross Carrying Amount
1,220 
1,637 
Accumulated Amortization
(557)
(421)
Impairment
 
(278)
Net Carrying Amount
663 
938 
Master service agreements
 
 
Finite Lived Intangible Assets [Line Items]
 
 
Weighted-Average Amortization Period (in months)
21 months 
21 months 
Gross Carrying Amount
1,030 
1,030 
Accumulated Amortization
(648)
(266)
Impairment
 
0 
Net Carrying Amount
382 
764 
Corporate partnerships
 
 
Finite Lived Intangible Assets [Line Items]
 
 
Weighted-Average Amortization Period (in months)
 
0 years 
Gross Carrying Amount
 
243 
Accumulated Amortization
 
(31)
Impairment
 
(212)
Net Carrying Amount
 
$ 0 
Intangible Assets - Additional Information (Details) (Acquisition-Related Intangible Assets, USD $)
In Millions, unless otherwise specified
3 Months Ended 6 Months Ended
Jun. 30, 2015
Jun. 30, 2014
Jun. 30, 2015
Jun. 30, 2014
Acquisition-Related Intangible Assets
 
 
 
 
Finite Lived Intangible Assets [Line Items]
 
 
 
 
Amortization expense of acquisition related to acquired intangible assets
$ 1.4 
$ 1.0 
$ 3.0 
$ 1.6 
Intangible Assets - Estimated Future Amortization Expense Related to Intangible Assets (Details) (USD $)
In Thousands, unless otherwise specified
Jun. 30, 2015
Intangible Assets, Net (Excluding Goodwill) [Abstract]
 
Remaining six months of 2015
$ 1,765 
2016
2,238 
2017
1,701 
2018
1,018 
2019
307 
Net Carrying Amount
$ 7,029 
Debt Obligations - Additional Information (Details) (Revolving Credit Facility, USD $)
6 Months Ended 6 Months Ended
Jun. 30, 2015
Jun. 30, 2014
Aug. 31, 2013
Jun. 30, 2015
Base Interest Rate
Jun. 30, 2015
One-Month LIBOR
Jun. 30, 2015
LIBOR Rate
Oct. 1, 2015
Scenario, Forecast
Debt Instrument [Line Items]
 
 
 
 
 
 
 
Line of credit facility, current borrowing capacity
 
$ 40,000,000.0 
$ 50,000,000.0 
 
 
 
$ 30,000,000.0 
Credit facility, maximum borrowing capacity
75,000,000.0 
 
 
 
 
 
 
Marginal interest rate
 
 
 
0.50% 
1.00% 
4.50% 
 
Consolidated EBITDA
$ 2,000,000.0 
 
 
 
 
 
 
Ratio of total debt outstanding to EBITDA
1.5 
 
 
 
 
 
 
Commitments and Contingencies - Additional Information (Details) (USD $)
3 Months Ended 6 Months Ended
Jun. 30, 2015
Jun. 30, 2014
Jun. 30, 2015
Jun. 30, 2014
Apr. 10, 2015
Dec. 31, 2012
Jul. 31, 2010
Commitments and Contingencies Disclosure [Abstract]
 
 
 
 
 
 
 
Rental expense
$ 500,000 
$ 800,000 
$ 1,400,000 
$ 1,600,000 
 
 
 
Future sublease income per month (through November 2016)
 
 
 
 
100,000 
 
 
Property tax assessment
 
 
 
 
 
 
1,000,000 
Offer to the tax authority excluding tax and penalties
 
 
 
 
 
$ 150,000 
 
Stockholders' Equity - Additional Information (Details) (USD $)
3 Months Ended 6 Months Ended 3 Months Ended 6 Months Ended 3 Months Ended 6 Months Ended 1 Months Ended 6 Months Ended 1 Months Ended 6 Months Ended
Jun. 30, 2015
Jun. 30, 2014
Jun. 30, 2015
Jun. 30, 2014
Jun. 30, 2015
Maximum
Jun. 30, 2015
Restricted Stock Units (RSUs)
Jun. 30, 2014
Restricted Stock Units (RSUs)
Jun. 30, 2014
Restricted Stock Units (RSUs)
Jun. 30, 2015
Restricted Stock Units (RSUs)
Minimum
Jun. 30, 2015
Restricted Stock Units (RSUs)
Maximum
Jun. 30, 2015
Stock Options
Jun. 30, 2015
Performance-based restricted stock units
Jun. 30, 2015
Performance-based restricted stock units
Feb. 28, 2014
Performance-based restricted stock units
Minimum
Jun. 30, 2015
Performance-based restricted stock units
Minimum
Feb. 28, 2014
Performance-based restricted stock units
Maximum
Jun. 30, 2015
Performance-based restricted stock units
Maximum
Jun. 30, 2015
Restricted Stock Units (RSUs) and Performance Share Units (PSUs)
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Vesting period of stock awards
 
 
 
 
 
 
 
 
3 years 
4 years 
 
 
 
 
2 years 
 
3 years 
 
Unrecognized compensation expense for stock options granted to employees, officers, directors, and consultants
$ 16,600,000 
 
$ 16,600,000 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Weighted average vesting period for recognition of compensation expense
 
 
 
 
 
 
 
 
 
 
1 year 6 months 0 days 
 
 
 
 
 
 
1 year 9 months 18 days 
Share-based compensation expense
7,831,000 
8,481,000 
22,851,000 
15,411,000 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Pre-IPO shares settled
 
 
 
 
 
 
29,502 
1,285,261 
 
 
 
 
 
 
 
 
 
 
Shares withheld
 
 
 
 
 
 
10,859 
527,778 
 
 
 
 
 
 
 
 
 
 
Cash remitted to tax authorities related to RSU settlement
 
 
7,472,000 
3,588,000 
 
100,000 
 
3,600,000 
 
 
 
 
 
 
 
 
 
 
Performance based restricted stock unit award granted to executive officers
 
 
 
 
 
 
 
 
 
 
 
0 
2,300,824 
 
 
 
 
7,085,445 
Performance based restricted stock unit award granted weighted average grant date fair value
 
 
 
 
 
 
 
 
 
 
 
 
$ 6.59 
 
 
 
 
$ 6.79 
Settlement of performance based restricted stock unit awards percentage
 
 
 
 
100.00% 
 
 
 
 
 
 
 
 
0.00% 
 
100.00% 
 
 
Awards forfeited
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
596,939 
Unrecognized compensation costs related to restricted stock units
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
$ 53,900,000 
Stockholders' Equity - Share-based Compensation Expense (Details) (USD $)
In Thousands, unless otherwise specified
3 Months Ended 6 Months Ended
Jun. 30, 2015
Jun. 30, 2014
Jun. 30, 2015
Jun. 30, 2014
Employee Service Share Based Compensation Allocation Of Recognized Period Costs [Line Items]
 
 
 
 
Share-based compensation expense
$ 7,831 
$ 8,481 
$ 22,851 
$ 15,411 
Cost of revenues
 
 
 
 
Employee Service Share Based Compensation Allocation Of Recognized Period Costs [Line Items]
 
 
 
 
Share-based compensation expense
81 
134 
215 
312 
Technology and development
 
 
 
 
Employee Service Share Based Compensation Allocation Of Recognized Period Costs [Line Items]
 
 
 
 
Share-based compensation expense
1,273 
2,635 
5,980 
5,017 
Sales and marketing
 
 
 
 
Employee Service Share Based Compensation Allocation Of Recognized Period Costs [Line Items]
 
 
 
 
Share-based compensation expense
1,034 
2,263 
6,088 
3,595 
General and administrative
 
 
 
 
Employee Service Share Based Compensation Allocation Of Recognized Period Costs [Line Items]
 
 
 
 
Share-based compensation expense
$ 5,443 
$ 3,449 
$ 10,568 
$ 6,487 
Stockholders' Equity - Summary of Assumptions (Details) (Stock Options, USD $)
3 Months Ended 6 Months Ended
Jun. 30, 2015
Jun. 30, 2014
Jun. 30, 2015
Jun. 30, 2014
Stock Options
 
 
 
 
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
 
 
 
 
Expected term (years)
5 years 6 months 
6 years 0 months 26 days 
5 years 6 months 
6 years 0 months 26 days 
Expected volatility
50.68% 
55.91% 
50.68% 
56.15% 
Dividend yield
0.00% 
0.00% 
0.00% 
0.00% 
Risk-free interest rate
1.75% 
1.88% 
1.75% 
1.91% 
Weighted-average grant-date fair value per share (in dollars per share)
$ 3.63 
$ 3.66 
$ 3.63 
$ 3.82 
Stockholders' Equity - Summary of Stock Option Activity (Details) (USD $)
6 Months Ended 12 Months Ended
Jun. 30, 2015
Dec. 31, 2014
Number of Options Outstanding
 
 
Number of Options Outstanding, Beginning
14,962,099 
 
Number of Options, Granted
165,456 
 
Number of Options, Exercised
(1,646,852)
 
Number of Options, Canceled
(661,730)
 
Number of Options Outstanding, Ending
12,818,973 
14,962,099 
Weighted-Average Exercise Price per Share
 
 
Weighted Average Exercise Price per Share, Outstanding, Beginning
$ 8.53 
 
Weighted Average Exercise Price per Share, Granted
$ 7.65 
 
Weighted-Average Exercise Price per Share, Exercised
$ 6.41 
 
Weighted-Average Exercise Price per Share, Canceled
$ 9.67 
 
Weighted Average Exercise Price per Share, Outstanding, Ending
$ 8.74 
$ 8.53 
Options outstanding, weighted-average remaining contractual term in years
6 years 10 months 17 days 
7 years 1 month 9 days 
Options outstanding, aggregate intrinsic value
$ 8,122,971 
$ 6,646,629 
Stockholders' Equity - Summary of Restricted Stock Unit Activity (Details) (Restricted Stock Units (RSUs) and Performance Share Units (PSUs), USD $)
6 Months Ended
Jun. 30, 2015
Restricted Stock Units (RSUs) and Performance Share Units (PSUs)
 
Restricted Stock Units Outstanding
 
Number of Restricted Stock Units Outstanding, Beginning
9,125,190 
Number of Restricted Stock Units, Granted
7,085,445 
Number of Restricted Stock Units, Released
(2,320,865)
Number of Restricted Stock Units, Canceled
(596,939)
Number of Restricted Stock Units Outstanding, Ending
13,292,831 
Weighted-Average Grant Date Fair Value
 
Weighted Average Grant Date Fair Value, Beginning balance
$ 6.25 
Weighted Average Grant Date Fair Value, Granted
$ 6.79 
Weighted Average Grant Date Fair Value, Released
$ 7.78 
Weighted Average Grant Date Fair Value, Canceled
$ 6.48 
Weighted Average Grant Date Fair Value, Ending balance
$ 6.26 
Income Taxes - Additional Information (Details) (USD $)
In Thousands, unless otherwise specified
3 Months Ended 6 Months Ended
Jun. 30, 2015
Jun. 30, 2014
Jun. 30, 2015
Jun. 30, 2014
Income Tax Disclosure [Abstract]
 
 
 
 
Provision for (benefit from) income taxes
$ 430 
$ (1,367)
$ 724 
$ (1,150)
Restructuring Charges (Details) (USD $)
In Thousands, unless otherwise specified
3 Months Ended 6 Months Ended
Jun. 30, 2015
Jun. 30, 2014
Jun. 30, 2015
Jun. 30, 2014
Restructuring Reserve [Roll Forward]
 
 
 
 
Restructuring charges
$ 464 
$ 0 
$ 2,978 
$ 0 
2015 Restructuring Plan
 
 
 
 
Restructuring Reserve [Roll Forward]
 
 
 
 
Balances at January 1, 2015
 
 
0 
 
Restructuring charges
500 
 
2,978 
 
Cash payments
 
 
(979)
 
Write-offs
 
 
(338)
 
Balances at June 30, 2015
1,661 
 
1,661 
 
2015 Restructuring Plan |
Workforce Reduction Costs
 
 
 
 
Restructuring Reserve [Roll Forward]
 
 
 
 
Balances at January 1, 2015
 
 
0 
 
Restructuring charges
300 
 
1,135 
 
Cash payments
 
 
(612)
 
Write-offs
 
 
0 
 
Balances at June 30, 2015
523 
 
523 
 
2015 Restructuring Plan |
Lease Termination and Other Costs
 
 
 
 
Restructuring Reserve [Roll Forward]
 
 
 
 
Balances at January 1, 2015
 
 
0 
 
Restructuring charges
200 
 
1,843 
 
Cash payments
 
 
(367)
 
Write-offs
 
 
(338)
 
Balances at June 30, 2015
$ 1,138 
 
$ 1,138 
 
Restructuring Charges - Narrative (Details) (USD $)
3 Months Ended 6 Months Ended 3 Months Ended 6 Months Ended 3 Months Ended 6 Months Ended 3 Months Ended 6 Months Ended
Jun. 30, 2015
Jun. 30, 2014
Jun. 30, 2015
Jun. 30, 2014
Jun. 30, 2015
2015 Restructuring Plan
Jun. 30, 2015
2015 Restructuring Plan
Dec. 31, 2014
2015 Restructuring Plan
Jun. 30, 2015
Workforce Reduction Costs
2015 Restructuring Plan
Jun. 30, 2015
Workforce Reduction Costs
2015 Restructuring Plan
position
Dec. 31, 2014
Workforce Reduction Costs
2015 Restructuring Plan
Jun. 30, 2015
Lease Termination and Other Costs
2015 Restructuring Plan
Jun. 30, 2015
Lease Termination and Other Costs
2015 Restructuring Plan
Dec. 31, 2014
Lease Termination and Other Costs
2015 Restructuring Plan
Jun. 30, 2015
Minimum
Employee Severance
2015 Restructuring Plan
Restructuring Cost and Reserve [Line Items]
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Restructuring charges
$ 464,000 
$ 0 
$ 2,978,000 
$ 0 
$ 500,000 
$ 2,978,000 
 
$ 300,000 
$ 1,135,000 
 
$ 200,000 
$ 1,843,000 
 
 
Number of positions eliminated
 
 
 
 
 
 
 
 
71 
 
 
 
 
 
Expected cost remaining
 
 
 
 
 
 
 
 
 
 
 
 
 
5,300,000 
Restructuring reserve
 
 
 
 
1,661,000 
1,661,000 
0 
523,000 
523,000 
0 
1,138,000 
1,138,000 
0 
 
Restructuring reserve, current
 
 
 
 
1,000,000 
1,000,000 
 
 
 
 
 
 
 
 
Restructuring reserve, noncurrent
 
 
 
 
$ 700,000 
$ 700,000 
 
 
 
 
 
 
 
 
Related-Party Transactions - Additional Information (Details) (USD $)
In Millions, unless otherwise specified
3 Months Ended 6 Months Ended
Jun. 30, 2015
Jun. 30, 2014
Jun. 30, 2015
Jun. 30, 2014
Dec. 31, 2014
Adobe Systems
 
 
 
 
 
Related Party Transaction [Line Items]
 
 
 
 
 
Purchases from related party
$ 0.8 
$ 0.3 
$ 0.9 
$ 0.7 
 
Revenue from related parties
0.1 
0.2 
 
1.0 
 
Due to related parties
 
 
 
 
0.1 
Due from related parties
0.1 
 
0.1 
 
 
Board of Directors of Cengage Learning, or Cengage
 
 
 
 
 
Related Party Transaction [Line Items]
 
 
 
 
 
Purchases from related party
1.9 
0.5 
6.2 
6.4 
 
Due to related parties
 
 
 
 
0.1 
Due from related parties
 
 
 
 
0.1 
Number of board members appointed to Board of Directors of related party
 
 
1 
 
 
Shutterfly Inc (Shutterfly)
 
 
 
 
 
Related Party Transaction [Line Items]
 
 
 
 
 
Purchases from related party
1.1 
 
 
 
 
Revenue from related parties
$ 0.1 
$ 0.1 
$ 0 
$ 0.1 
 
Number of board members appointed to chief executive officer of related party
 
 
1