SUMMARY OF OPERATIONS AND SIGNIFICANT ACCOUNTING POLICIES (Tables)

6 Months Ended

Jun. 30, 2012

Summary of Stock-Based Compensation Expense Related to Employee Stock Options

The following table summarizes stock-based compensation expense related to employee stock options under ASC 718-10 included in Company’s Statements of Income for the three and six months ended June 30, 2012 and 2011:

	Three Months Ended June 30,				Six Months Ended June 30,
	2012		2011		2012		2011
Cost of revenue	$	388	$	248	$	701	$	546
Product development expense		789		441		1,399		881
Sales and marketing expense		739		443		1,291		779
General and administrative expense		722		547		1,403		1,008
Total stock based compensation included in operating expenses	$	2,638	$	1,679	$	4,794	$	3,214

Weighted Average Assumptions of Fair Value Options Using Black-Scholes Option-Pricing Model

and six months ended June 30, 2011 was $7.07 and $6.97, respectively. The fair value of each option grant is estimated on the date of grant using the Black-Scholes option-pricing model with the following weighted average assumptions:

	Three Months Ended June 30,						Six Months Ended June 30,
	2012			2011			2012			2011
Dividend yield		0.0	%		0.0	%		0.0	%		0.0	%
Risk-free interest rate		0.72% - 0.84	%		2.9% - 3.5	%		0.72% - 0.87	%		2.9% - 3.7	%
Expected life (in years)		5.0			5.0			5.0			5.0
Historical volatility		60.6% -60.7	%		60.7% - 61.5	%		60.3% -60.8	%		60.7% - 61.5	%

Summary of Stock Option Activity and Weighted Average Exercise Prices

A summary of the Company’s stock option activity and weighted average exercise prices follows:

	Options			Weighted Average Exercise Price
Options outstanding at December 31, 2011		8,843,413		$	7.91
Options granted		1,120,300			14.15
Options exercised		(1,388,890	)		4.81
Options cancelled		(363,083	)		9.00
Options outstanding at June 30, 2012		8,211,740			9.24
Options exercisable at June 30, 2012		2,774,457		$	5.89

Summary of Status of Nonvested Shares

A summary of the status of the Company’s nonvested shares as of December 31, 2011, and changes during the six months ended June 30, 2012 is as follows:

	Shares			Weighted Average Grant Date Fair Value
Nonvested Shares at December 31, 2011		6,038,014		$	5.04
Granted		1,120,300			7.24
Vested		(1,362,573	)		4.14
Cancelled		(358,458	)		4.73
Nonvested Shares at June 30, 2012		5,437,283		$	5.76

Reconciliation of Shares Used in Calculating Basic and Diluted Earnings Per Share

A reconciliation of shares used in calculating basic and diluted earnings per share follows:

	Three Months Ended June 30,				Six Months Ended June 30,
	2012		2011		2012		2011
Basic		55,146,901		52,735,556		54,786,499		52,409,769
Effect of assumed exercised options		2,003,355		2,817,691		1,862,661		2,715,961
Diluted		57,150,256		55,553,247		56,649,160		55,125,730

Summary of Financial Information by Segment

Summarized financial information by segment for the three months ended June 30, 2012, based on the Company’s internal financial reporting system utilized by the Company’s chief operating decision makers, follows:

	Consolidated		Corporate			Business		Consumer
Revenue:
Hosted services — Business	$	32,151	$	—		$	32,151	$	—
Hosted services — Consumer		3,961		—			—		3,961
Professional services		2,393		—			2,393		—
Total revenue		38,505		—			34,544		3,961
Cost of revenue		8,492		—			7,939		553
Sales and marketing		13,017		—			11,624		1,393
Amortization of intangibles		11		—			11		—
Unallocated corporate expenses		16,561		16,561			—		—
Operating income (loss)	$	424	$	(16,561	)	$	14,970	$	2,015

Summarized financial information by segment for the three months ended June 30, 2011, based on the Company’s internal financial reporting system utilized by the Company’s chief operating decision makers, follows:

	Consolidated		Corporate			Business		Consumer
Revenue:
Hosted services — Business	$	26,736	$	—		$	26,736	$	—
Hosted services — Consumer		3,735		—			—		3,735
Professional services		1,380		—			1,380		—
Total revenue		31,851		—			28,116		3,735
Cost of revenue		8,685		—			7,688		997
Sales and marketing		9,379		—			7,822		1,557
Amortization of intangibles		11		—			11		—
Unallocated corporate expenses		10,402		10,402			—		—
Operating income (loss)	$	3,374	$	(10,402	)	$	12,595	$	1,181

Summarized financial information by segment for the six months ended June 30, 2012, based on the Company’s internal financial reporting system utilized by the Company’s chief operating decision makers, follows:

	Consolidated		Corporate			Business		Consumer
Revenue:
Hosted services — Business	$	63,390	$	—		$	63,390	$	—
Hosted services — Consumer		7,809		—			—		7,809
Professional services		4,065		—			4,065		—
Total revenue		75,264		—			67,455		7,809
Cost of revenue		16,414		—			15,306		1,108
Sales and marketing		24,107		—			21,114		2,993
Amortization of intangibles		87		—			87		—
Unallocated corporate expenses		29,344		29,344			—		—
Operating income (loss)	$	5,312	$	(29,344	)	$	30,948	$	3,708

Summarized financial information by segment for the six months ended June 30, 2011, based on the Company’s internal financial reporting system utilized by the Company’s chief operating decision makers, follows:

	Consolidated		Corporate			Business		Consumer
Revenue:
Hosted services — Business	$	52,321	$	—		$	52,321	$	—
Hosted services — Consumer		7,393		—			—		7,393
Professional services		2,520		—			2,520		—
Total revenue		62,234		—			54,841		7,393
Cost of revenue		16,780		—			14,875		1,905
Sales and marketing		18,239		—			15,137		3,102
Amortization of intangibles		22		—			22		—
Unallocated corporate expenses		18,739		18,739			—		—
Operating income (loss)	$	8,454	$	(18,739	)	$	24,807	$	2,386

Revenues Attributable to Domestic and Foreign Operations

Revenues attributable to domestic and foreign operations for the three months ended June 30, 2012 and 2011, follows:

	June 30,
	2012		2011
United States	$	29,225	$	24,311
United Kingdom		5,245		4,299
Other countries		4,035		3,241
Total revenue	$	38,505	$	31,851

Revenues attributable to domestic and foreign operations for the six months ended June 30, 2012 and 2011, follows:

	June 30,
	2012		2011
United States	$	57,380	$	47,945
United Kingdom		10,121		7,994
Other countries		7,763		6,295
Total revenue	$	75,264	$	62,234

Long-Lived Assets by Geographic Region

Long-lived assets by geographic region follows:

	June 30, 2012		December 31, 2011
United States	$	31,835	$	28,626
Israel		23,883		13,167
United Kingdom		2,179		2,249
Total long-lived assets	$	57,897	$	44,042

Changes in Carrying Amount of Goodwill

The changes in the carrying amount of goodwill for the six months ended June 30, 2012 are as follows:

	Total		Business		Consumer
Balance as of December 31, 2011	$	24,090	$	16,066	$	8,024
Adjustments to goodwill:
Look.io acquisition (see Note 3)		1,082		1,082		—
Contingent earnout payments (see Note 3)		77		77		—
Balance as of June 30, 2012	$	25,249	$	17,225	$	8,024

The changes in the carrying amount of goodwill for the year ended December 31, 2011 are as follows:

	Total		Business		Consumer
Balance as of December 31, 2010	$	24,015	$	15,991	$	8,024
Adjustments to goodwill:
Contingent earnout payments (see Note 3)		75		75		—
Balance as of December 31, 2011	$	24,090	$	16,066	$	8,024

Summary of Intangible Assets

Intangible assets are summarized as follows (see Note 3):

Acquired Intangible Assets

	As of June 30, 2012
	Gross Carrying Amount		Weighted Average Amortization Period		Accumulated Amortization
Amortizing intangible assets:
Technology	$	19,882		3.6 years	$	5,607
Customer contracts		2,400		3.0 years		2,400
Trade names		630		3.0 years		630
Non-compete agreements		410		1.2 years		410
Patents		475		11.0 years		125
Other		235		3.0 years		235
Total	$	24,032			$	9,407

	As of December 31, 2011
	Gross Carrying Amount		Weighted Average Amortization Period		Accumulated Amortization
Amortizing intangible assets:
Technology	$	6,199		3.8 years	$	5,474
Customer contracts		2,400		3.0 years		2,400
Trade names		630		3.0 years		630
Non-compete agreements		410		1.2 years		410
Patents		475		11.0 years		105
Other		235		3.0 years		235
Total	$	10,349			$	9,254