State of Delaware | 27-2992077 |
(State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) |
401 Congress Avenue, Suite 1850 Austin, Texas | 78701 |
(Address of principal executive offices) | (Zip Code) |
Large accelerated filer | ¨ | Accelerated filer | ¨ | |
Non-accelerated filer | x | (Do not check if a smaller reporting company) | Smaller reporting company | ¨ |
Emerging growth company | ¨ |
Class | Shares Outstanding at May 5, 2017 | |
Common Stock, $0.0001 par value | 18,437,943 |
Page | ||
Condensed Consolidated Balance Sheets as of March 31, 2017 and December 31, 2016 | ||
Condensed Consolidated Statements of Operations for the Three months ended March 31, 2017 and March 31, 2016 | ||
Condensed Consolidated Statements of Comprehensive Loss for the Three months ended March 31, 2017 and March 31, 2016 | ||
Condensed Consolidated Statements of Cash Flows for the Three Months Ended March 31, 2017 and March 31, 2016 | ||
March 31, 2017 | December 31, 2016 | ||||||
(unaudited) | (audited) | ||||||
Assets | |||||||
Current assets: | |||||||
Cash and cash equivalents | $ | 19,417 | $ | 28,758 | |||
Accounts receivable (net of allowance of $622 and $658 at March 31, 2017 and December 31, 2016, respectively) | 12,157 | 15,254 | |||||
Prepaid and other | 3,589 | 3,287 | |||||
Total current assets | 35,163 | 47,299 | |||||
Canadian tax credits receivable | 1,101 | 978 | |||||
Property and equipment, net | 4,355 | 4,356 | |||||
Intangible assets, net | 34,933 | 28,512 | |||||
Goodwill | 82,803 | 69,097 | |||||
Other assets | 355 | 346 | |||||
Total assets | $ | 158,710 | $ | 150,588 | |||
Liabilities and stockholders’ equity | |||||||
Current liabilities: | |||||||
Accounts payable | $ | 1,945 | $ | 1,268 | |||
Accrued compensation | 3,640 | 2,541 | |||||
Accrued expenses and other | 6,902 | 5,505 | |||||
Deferred revenue | 26,328 | 23,552 | |||||
Due to sellers | 1,057 | 4,642 | |||||
Current maturities of notes payable (includes unamortized discount of $334 and $329 at March 31, 2017 and December 31, 2016, respectively) | 2,685 | 2,190 | |||||
Total current liabilities | 42,557 | 39,698 | |||||
Canadian tax credit liability to sellers | — | 361 | |||||
Notes payable, less current maturities (includes unamortized discount of $1,106 and $1,113 at March 31, 2017 and December 31, 2016, respectively) | 54,491 | 45,739 | |||||
Deferred revenue | 227 | 247 | |||||
Noncurrent deferred tax liability, net | 3,600 | 3,404 | |||||
Other long-term liabilities | 1,956 | 2,126 | |||||
Total liabilities | 102,831 | 91,575 | |||||
Stockholders’ equity: | |||||||
Common stock, $0.0001 par value; 50,000,000 shares authorized: 18,391,917 and 17,785,288 shares issued and outstanding as of March 31, 2017 and December 31, 2016, respectively | 2 | 2 | |||||
Additional paid-in capital | 126,968 | 124,566 | |||||
Accumulated other comprehensive loss | (3,074 | ) | (3,152 | ) | |||
Accumulated deficit | (68,017 | ) | (62,403 | ) | |||
Total stockholders’ equity | 55,879 | 59,013 | |||||
Total liabilities and stockholders’ equity | $ | 158,710 | $ | 150,588 |
Three Months Ended March 31, | |||||||
2017 | 2016 | ||||||
Revenue: | |||||||
Subscription and support | $ | 18,135 | $ | 15,241 | |||
Perpetual license | 694 | 318 | |||||
Total product revenue | 18,829 | 15,559 | |||||
Professional services | 1,923 | 2,023 | |||||
Total revenue | 20,752 | 17,582 | |||||
Cost of revenue: | |||||||
Subscription and support | 5,893 | 5,226 | |||||
Professional services | 1,135 | 1,624 | |||||
Total cost of revenue | 7,028 | 6,850 | |||||
Gross profit | 13,724 | 10,732 | |||||
Operating expenses: | |||||||
Sales and marketing | 3,221 | 3,069 | |||||
Research and development | 3,477 | 3,910 | |||||
Refundable Canadian tax credits | (117 | ) | (109 | ) | |||
General and administrative | 5,904 | 4,123 | |||||
Depreciation and amortization | 1,164 | 1,472 | |||||
Acquisition-related expenses | 3,691 | 2,428 | |||||
Total operating expenses | 17,340 | 14,893 | |||||
Loss from operations | (3,616 | ) | (4,161 | ) | |||
Other expense: | |||||||
Interest expense, net | (935 | ) | (561 | ) | |||
Other expense, net | (112 | ) | (748 | ) | |||
Total other expense | (1,047 | ) | (1,309 | ) | |||
Loss before provision for income taxes | (4,663 | ) | (5,470 | ) | |||
Provision for income taxes | (951 | ) | (103 | ) | |||
Net loss | $ | (5,614 | ) | $ | (5,573 | ) | |
Net loss per common share: | |||||||
Net loss per common share, basic and diluted | $ | (0.33 | ) | $ | (0.36 | ) | |
Weighted-average common shares outstanding, basic and diluted | 16,971,393 | 15,432,405 |
Three Months Ended March 31, | ||||||||
2017 | 2016 | |||||||
Net loss | $ | (5,614 | ) | $ | (5,573 | ) | ||
Foreign currency translation adjustment | 78 | 476 | ||||||
Comprehensive loss | $ | (5,536 | ) | $ | (5,097 | ) |
Three Months Ended March 31, | ||||||||
2017 | 2016 | |||||||
Operating activities | ||||||||
Net loss | $ | (5,614 | ) | $ | (5,573 | ) | ||
Adjustments to reconcile net loss to net cash provided by operating activities: | ||||||||
Depreciation and amortization | 2,398 | 2,515 | ||||||
Deferred income taxes | 178 | (36 | ) | |||||
Foreign currency re-measurement (gain) loss | (59 | ) | (359 | ) | ||||
Non-cash interest and other expense | 75 | 64 | ||||||
Non-cash stock compensation expense | 2,304 | 694 | ||||||
Loss on disposal of business | — | 731 | ||||||
Changes in operating assets and liabilities, net of purchase business combinations: | ||||||||
Accounts receivable | 3,935 | 1,070 | ||||||
Prepaids and other | 6 | 150 | ||||||
Accounts payable | 460 | (623 | ) | |||||
Accrued expenses and other liabilities | 1,211 | (85 | ) | |||||
Deferred revenue | 33 | 1,334 | ||||||
Net cash provided by (used in) operating activities | 4,927 | (118 | ) | |||||
Investing activities | ||||||||
Purchase of property and equipment | (348 | ) | (680 | ) | ||||
Purchase of customer relationships | (55 | ) | (408 | ) | ||||
Purchase business combinations, net of cash acquired | (19,256 | ) | (8,102 | ) | ||||
Net cash used in investing activities | (19,659 | ) | (9,190 | ) | ||||
Financing activities | ||||||||
Payments on capital leases | (331 | ) | (519 | ) | ||||
Proceeds from notes payable, net of issuance costs | 15,927 | 4,987 | ||||||
Payments on notes payable | (6,755 | ) | (309 | ) | ||||
Issuance of common stock, net of issuance costs | 98 | 18 | ||||||
Additional consideration paid to sellers of businesses | (3,585 | ) | — | |||||
Net cash provided by financing activities | 5,354 | 4,177 | ||||||
Effect of exchange rate fluctuations on cash | 37 | 243 | ||||||
Change in cash and cash equivalents | (9,341 | ) | (4,888 | ) | ||||
Cash and cash equivalents, beginning of period | 28,758 | 18,473 | ||||||
Cash and cash equivalents, end of period | $ | 19,417 | $ | 13,585 | ||||
Supplemental disclosures of cash flow information: | ||||||||
Cash paid for interest | $ | 864 | $ | 496 | ||||
Cash paid for taxes | $ | 591 | $ | 2 | ||||
Noncash investing and financing activities: | ||||||||
Equipment acquired pursuant to capital lease obligations | $ | 144 | $ | 221 | ||||
Issuance of common stock in business combination | $ | — | $ | 5,700 |
Preliminary | Finalized | ||||||||||||||
Omtool | API | HipCricket | LeadLander | ||||||||||||
Year Acquired | 2017 | 2016 | 2016 | 2016 | |||||||||||
Cash | $ | 2,957 | $ | 125 | $ | — | $ | 365 | |||||||
Accounts receivable | 784 | 821 | 1,226 | 199 | |||||||||||
Other current assets | 405 | 54 | 273 | 55 | |||||||||||
Property and equipment | 63 | 68 | — | 5 | |||||||||||
Customer relationships | 3,520 | 1,420 | 1,000 | 970 | |||||||||||
Trade name | 170 | 40 | 70 | 70 | |||||||||||
Technology | 4,450 | 810 | 900 | 1,410 | |||||||||||
Goodwill | 13,574 | 3,420 | 8,531 | 13,104 | |||||||||||
Other assets | 33 | 89 | — | 6 | |||||||||||
Total assets acquired | 25,956 | 6,847 | 12,000 | 16,184 | |||||||||||
Accounts payable | (219 | ) | (11 | ) | (44 | ) | — | ||||||||
Accrued expense and other | (906 | ) | (137 | ) | — | (254 | ) | ||||||||
Deferred revenue | (2,618 | ) | (1,699 | ) | (356 | ) | (910 | ) | |||||||
Total liabilities assumed | (3,743 | ) | (1,847 | ) | (400 | ) | (1,164 | ) | |||||||
Total consideration | $ | 22,213 | $ | 5,000 | $ | 11,600 | $ | 15,020 |
Fair Value Measurements at December 31, 2016 | |||||||||||||||
Level 1 | Level 2 | Level 3 | Total | ||||||||||||
Earnout consideration liability | $ | — | $ | — | $ | 2,500 | $ | 2,500 |
Fair Value Measurements at March 31, 2017 | |||||||||||||||
(unaudited) | |||||||||||||||
Level 1 | Level 2 | Level 3 | Total | ||||||||||||
Earnout consideration liability | $ | — | $ | — | $ | — | $ | — |
Ending balance at December 31, 2016 | $ | 2,500 | |
Settlements - cash earnouts | (2,500 | ) | |
March 31, 2017 | $ | — |
Balance at December 31, 2016 | $ | 69,097 | |
Acquired in business combinations | 13,574 | ||
Foreign currency translation adjustment | 132 | ||
Balance at March 31, 2017 | $ | 82,803 |
Estimated Useful Life (Years) | Gross Carrying Amount | Accumulated Amortization | Net Carrying Amount | ||||||||||
March 31, 2017: | |||||||||||||
Customer relationships | 1-10 | $ | 36,358 | $ | 13,396 | $ | 22,962 | ||||||
Trade name | 1.5-3 | 2,808 | 2,564 | 244 | |||||||||
Developed technology | 4-7 | 19,704 | 7,977 | 11,727 | |||||||||
Total intangible assets | $ | 58,870 | $ | 23,937 | $ | 34,933 |
Estimated Useful Life (Years) | Gross Carrying Amount | Accumulated Amortization | Net Carrying Amount | ||||||||||
December 31, 2016: | |||||||||||||
Customer relationships | 1-10 | $ | 32,703 | $ | 12,418 | $ | 20,285 | ||||||
Trade name | 1.5-3 | 2,636 | 2,462 | 174 | |||||||||
Developed technology | 4-7 | 15,228 | 7,175 | 8,053 | |||||||||
Total intangible assets | $ | 50,567 | $ | 22,055 | $ | 28,512 |
March 31, 2017 | December 31, 2016 | ||
Customer relationships | 9.3 | 9.3 | |
Trade name | 2.7 | 2.8 | |
Developed technology | 6.5 | 6.3 | |
Total weighted-average amortization period | 8.0 | 8.0 |
Amortization Expense | |||
Year ending December 31: | |||
Remainder of 2017 | $ | 5,344 | |
2018 | 6,719 | ||
2019 | 5,854 | ||
2020 | 4,887 | ||
2021 and thereafter | 12,129 | ||
Total | $ | 34,933 |
March 31, 2017 | December 31, 2016 | ||||||
Senior secured loans (includes unamortized discount of $1,440 and $1,442 based on an imputed interest rate of 6.4% and 6.6%, at March 31, 2017 and December 31, 2016, respectively) | $ | 57,176 | $ | 47,929 | |||
Less current maturities | (2,685 | ) | (2,190 | ) | |||
Total long-term debt | $ | 54,491 | $ | 45,739 |
• | Incur additional indebtedness or guarantee indebtedness of others; |
• | Create liens on their assets; |
• | Make investments, including certain acquisitions; |
• | Enter into mergers or consolidations; |
• | Dispose of assets; |
• | Pay dividends and make other distributions on the Company’s capital stock, and redeem and repurchase the Company’s capital stock; |
• | Enter into transactions with affiliates; and |
• | Prepay indebtedness or make changes to certain agreements. |
Year ending December 31: | |||
Remaining 2017 | $ | 2,264 | |
2018 | 3,019 | ||
2019 | 3,019 | ||
2020 | 3,019 | ||
2021 | 47,295 | ||
Thereafter | — | ||
$ | 58,616 |
Three Months Ended March 31, | |||||||
2017 | 2016 | ||||||
Numerator: | |||||||
Net Loss | $ | (5,614 | ) | $ | (5,573 | ) | |
Denominator: | |||||||
Weighted–average common shares outstanding, basic and diluted | 16,971,393 | 15,432,405 | |||||
Net loss per common share, basic and diluted | $ | (0.33 | ) | $ | (0.36 | ) |
March 31, | |||||
2017 | 2016 | ||||
Stock options | 731,971 | 751,201 | |||
Restricted stock | 1,410,247 | 983,937 | |||
Total anti–dilutive common share equivalents | 2,142,218 | 1,735,138 |
Number of Restricted Shares Outstanding | Weighted-Average Grant Date Fair Value | ||||||
Unvested balances at December 31, 2016 | 839,477 | $ | 7.55 | ||||
Awards granted | 622,520 | ||||||
Awards vested | (34,749 | ) | |||||
Awards forfeited | (17,001 | ) | |||||
Unvested balances at March 31, 2017 | 1,410,247 | $ | 10.86 |
Number of Options Outstanding | Weighted– Average Exercise Price | ||||||
Outstanding at December 31, 2016 | 759,719 | $ | 6.06 | ||||
Options granted | — | $ | — | ||||
Options exercised | (24,748 | ) | $ | 6.46 | |||
Options forfeited | (2,906 | ) | $ | 6.21 | |||
Options expired | (94 | ) | $ | 6.26 | |||
Outstanding at March 31, 2017 | 731,971 | $ | 6.05 |
Three Months Ended March 31, | |||||||
2017 | 2016 | ||||||
Cost of revenue | $ | 18 | $ | 7 | |||
Research and development | 60 | 14 | |||||
Sales and marketing | 23 | 13 | |||||
General and administrative | 2,203 | 660 | |||||
Total | $ | 2,304 | $ | 694 |
Three Months Ended March 31, | |||||||
2017 | 2016 | ||||||
Revenues: | |||||||
U.S. | $ | 17,609 | $ | 14,430 | |||
Canada | 845 | 1,002 | |||||
Other International | 2,298 | 2,150 | |||||
Total Revenues | $ | 20,752 | $ | 17,582 |
• | our financial performance and our ability to achieve or sustain profitability or predict future results; |
• | our ability to attract and retain customers; |
• | our ability to deliver high-quality customer service; |
• | the growth of demand for enterprise work management applications; |
• | our ability to effectively manage our growth; |
• | our ability to consummate and integrate acquisitions; |
• | maintaining our senior management team and key personnel; |
• | our ability to maintain and expand our direct sales organization; |
• | our ability to obtain financing in the future on acceptable terms or at all; |
• | our ability to adapt to changing market conditions and competition; |
• | our ability to successfully enter new markets and manage our international expansion; |
• | the operation and reliability of our third-party data centers and hosting providers; |
• | our ability to manage our consultants and contractors; |
• | our ability to adapt to technological change and continue to innovate; |
• | economic and financial conditions; |
• | our ability to integrate our applications with other software applications; |
• | maintaining and expanding our relationships with third parties; |
• | costs associated with defending intellectual property infringement and other claims; |
• | our ability to maintain, protect and enhance our brand and intellectual property; |
• | our ability to comply with privacy laws and regulations; and |
• | other risk factors included under “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2016, filed with the SEC on March 30, 2017, as updated by this Quarterly Report on Form 10-Q. |
• | Project & Information Technology (IT) Management. Enables users to manage their organization’s projects, professional workforce and IT costs. |
• | Workflow Automation. Enables users to automate document-intensive workflow business processes across their enterprise and supply chain. |
• | Digital Engagement. Enables users to effectively engage with their customers, prospects and community via the web and mobile technologies. |
Three Months Ended March 31, | |||||||
2017 | 2016 | ||||||
(dollars in thousands) | |||||||
Reconciliation of Net loss to Adjusted EBITDA: | |||||||
Net Loss | $ | (5,614 | ) | $ | (5,573 | ) | |
Add: | |||||||
Depreciation and amortization expense | 2,398 | 2,515 | |||||
Interest expense, net | 935 | 561 | |||||
Other expense, net | 112 | 748 | |||||
Provision for income taxes | 951 | 103 | |||||
Stock-based compensation expense | 2,304 | 694 | |||||
Acquisition-related expense | 3,691 | 2,428 | |||||
Nonrecurring litigation expense | — | 12 | |||||
Purchase accounting deferred revenue discount | 679 | 515 | |||||
Adjusted EBITDA | $ | 5,456 | $ | 2,003 | |||
Weighted average ordinary shares outstanding - basic | 16,971,393 | 15,432,405 | |||||
Weighted average ordinary shares outstanding - diluted | 17,761,803 | 15,702,270 | |||||
Adjusted EBITDA per share - basic | $ | 0.32 | $ | 0.13 | |||
Adjusted EBITDA per share - diluted | $ | 0.31 | $ | 0.13 | |||
Total revenue plus purchase accounting deferred revenue discount | $ | 21,431 | $ | 18,097 | |||
Adjusted EBITDA margin | 26 | % | 11 | % |
• | Adjusted EBITDA is widely used by investors and securities analysts to measure a company’s operating performance without regard to items that can vary substantially from company to company depending upon their financing, capital structures and the method by which assets were acquired; |
• | Our management uses Adjusted EBITDA in conjunction with GAAP financial measures for planning purposes, in the preparation of our annual operating budget, as a measure of our operating performance, to assess the effectiveness of our business strategies and to communicate with our board of directors concerning our financial performance because Adjusted EBITDA eliminates the impact of items that we do not consider indicative of our core operating performance; and |
• | Adjusted EBITDA provides more consistency and comparability with our past financial performance, facilitates period-to-period comparisons of our operations and also facilitates comparisons with other companies, many of which use similar non-GAAP financial measures to supplement their GAAP results. |
• | Depreciation and amortization are non-cash charges, and the assets being depreciated or amortized will often have to be replaced in the future and Adjusted EBITDA does not reflect cash requirements for such replacements; however, much of the depreciation and amortization currently reflected relates to amortization of acquired intangible assets as a result of business combination purchase accounting adjustments, which will not need to be replaced in the future; |
• | Adjusted EBITDA may not reflect changes in, or cash requirements for, our working capital needs or contractual commitments; |
• | Adjusted EBITDA does not reflect the potentially dilutive impact of stock-based compensation; |
• | Adjusted EBITDA does not reflect interest or tax payments that could reduce cash available for use; and, |
• | Other companies, including companies in our industry, might calculate Adjusted EBITDA or similarly titled measures differently, which reduces their usefulness as comparative measures. |
Three Months Ended March 31, | |||||||||||||
2017 | 2016 | ||||||||||||
Amount | Percent of Revenue | Amount | Percent of Revenue | ||||||||||
(dollars in thousands, except share and per share data) | |||||||||||||
Revenue: | |||||||||||||
Subscription and support | $ | 18,135 | 87 | % | $ | 15,241 | 87 | % | |||||
Perpetual license | 694 | 3 | % | 318 | 2 | % | |||||||
Total product revenue | 18,829 | 90 | % | 15,559 | 89 | % | |||||||
Professional services | 1,923 | 10 | % | 2,023 | 11 | % | |||||||
Total revenue | 20,752 | 100 | % | 17,582 | 100 | % | |||||||
Cost of revenue: | |||||||||||||
Subscription and support (1)(3) | 5,893 | 28 | % | 5,226 | 30 | % | |||||||
Professional services (1) | 1,135 | 6 | % | 1,624 | 9 | % | |||||||
Total cost of revenue | 7,028 | 34 | % | 6,850 | 39 | % | |||||||
Gross profit | 13,724 | 66 | % | 10,732 | 61 | % | |||||||
Operating expenses: | |||||||||||||
Sales and marketing (1) | 3,221 | 16 | % | 3,069 | 17 | % | |||||||
Research and development (1) | 3,477 | 17 | % | 3,910 | 22 | % | |||||||
Refundable Canadian tax credits | (117 | ) | (1 | )% | (109 | ) | (1 | )% | |||||
General and administrative (1)(2) | 5,904 | 28 | % | 4,123 | 23 | % | |||||||
Depreciation and amortization | 1,164 | 6 | % | 1,472 | 8 | % | |||||||
Acquisition-related expenses | 3,691 | 18 | % | 2,428 | 16 | % | |||||||
Total operating expenses | 17,340 | 84 | % | 14,893 | 85 | % | |||||||
Loss from operations | (3,616 | ) | (18 | )% | (4,161 | ) | (24 | )% | |||||
Other Expense: | |||||||||||||
Interest expense, net | (935 | ) | (5 | )% | (561 | ) | (3 | )% | |||||
Other expense, net | (112 | ) | — | % | (748 | ) | (4 | )% | |||||
Total other expense | (1,047 | ) | (5 | )% | (1,309 | ) | (7 | )% | |||||
Loss before provision for income taxes | (4,663 | ) | (23 | )% | (5,470 | ) | (31 | )% | |||||
Provision for income taxes | (951 | ) | (4 | )% | (103 | ) | (1 | )% | |||||
Net loss | $ | (5,614 | ) | (27 | )% | $ | (5,573 | ) | (32 | )% | |||
Loss per common share, basic and diluted | $ | (0.33 | ) | $ | (0.36 | ) | |||||||
Weighted-average common shares outstanding, basic and diluted | 16,971,393 | 15,432,405 | |||||||||||
(1) Includes stock-based compensation detailed under Share-based Compensation in Note 9 — Stockholders' Equity. | |||||||||||||
(2) Includes General and administrative stock-based compensation of $2,203 and $660 for the three months ended March 31, 2017 and 2016, respectively. | |||||||||||||
(3) Includes depreciation and amortization of $1,234 and $1,043 for the three months ended March 31, 2017 and 2016, respectively. |
Three Months Ended March 31, | ||||||||||
2017 | 2016 | % Change | ||||||||
(dollars in thousands) | ||||||||||
Revenue: | ||||||||||
Subscription and support | $ | 18,135 | $ | 15,241 | 19 | % | ||||
Perpetual license | 694 | 318 | 118 | % | ||||||
Total product revenue | 18,829 | 15,559 | 21 | % | ||||||
Professional services | 1,923 | 2,023 | (5 | )% | ||||||
Total revenue | $ | 20,752 | $ | 17,582 | 18 | % | ||||
Percentage of revenue: | ||||||||||
Subscription and support | 87 | % | 87 | % | ||||||
Perpetual license | 3 | % | 2 | % | ||||||
Total product revenue | 90 | % | 89 | % | ||||||
Professional services | 10 | % | 11 | % | ||||||
Total revenue | 100 | % | 100 | % |
Three Months Ended March 31, | |||||||||||
2017 | 2016 | % Change | |||||||||
(dollars in thousands) | |||||||||||
Cost of revenue: | |||||||||||
Subscription and support (1) | $ | 5,893 | $ | 5,226 | 13 | % | |||||
Professional services | 1,135 | 1,624 | (30 | )% | |||||||
Total cost of revenue | 7,028 | 6,850 | 3 | % | |||||||
Gross profit | $ | 13,724 | $ | 10,732 | 28 | % | |||||
Percentage of total revenue: | |||||||||||
Subscription and support (1) | 28 | % | 30 | % | |||||||
Professional services | 6 | % | 9 | % | |||||||
Total cost of revenue | 34 | % | 39 | % | |||||||
Gross profit | 66 | % | 61 | % | |||||||
(1) Includes depreciation and amortization expense as follows: | |||||||||||
Depreciation | $ | 449 | $ | 445 | |||||||
Amortization | $ | 785 | $ | 598 |
Three Months Ended March 31, | |||||||||
2017 | 2016 | % Change | |||||||
(dollars in thousands) | |||||||||
Sales and marketing | $3,221 | $ | 3,069 | 5 | % | ||||
Percentage of total revenue | 16 | % | 17 | % |
Three Months Ended March 31, | ||||||||||
2017 | 2016 | % Change | ||||||||
(dollars in thousands) | ||||||||||
Research and development | $ | 3,477 | $ | 3,910 | (11 | )% | ||||
Refundable Canadian tax credits | (117 | ) | (109 | ) | 7 | % | ||||
Total research and development | $ | 3,360 | $ | 3,801 | (12 | )% | ||||
Percentage of total revenue: | ||||||||||
Research and development | 17 | % | 22 | % | ||||||
Refundable Canadian tax credits | (1 | )% | (1 | )% | ||||||
Total research and development | 39 | % | 37 | % |
Three Months Ended March 31, | ||||||||||
2017 | 2016 | % Change | ||||||||
(dollars in thousands) | ||||||||||
General and administrative | $ | 5,904 | $ | 4,123 | 43 | % | ||||
Percentage of total revenue | 28 | % | 23 | % |
Three Months Ended March 31, | ||||||||||
2017 | 2016 | % Change | ||||||||
(dollars in thousands) | ||||||||||
Depreciation and amortization: | ||||||||||
Depreciation | $ | 113 | $ | 149 | (24 | )% | ||||
Amortization | 1,051 | 1,323 | (21 | )% | ||||||
Total depreciation and amortization | $ | 1,164 | $ | 1,472 | (21 | )% | ||||
Percentage of total revenue: | ||||||||||
Depreciation | 1 | % | 1 | % | ||||||
Amortization | 5 | % | 8 | % | ||||||
Total depreciation and amortization | 6 | % | 9 | % |
Three Months Ended March 31, | ||||||||||
2017 | 2016 | % Change | ||||||||
(dollars in thousands) | ||||||||||
Acquisition-related expenses | $ | 3,691 | $ | 2,428 | 52 | % | ||||
Percentage of total revenue | 18 | % | 16 | % |
Three Months Ended March 31, | ||||||||||
2017 | 2016 | % Change | ||||||||
(dollars in thousands) | ||||||||||
Other expense: | ||||||||||
Interest expense, net | $ | (935 | ) | $ | (561 | ) | (67 | )% | ||
Other expense, net | (112 | ) | (748 | ) | 85 | % | ||||
Total other expense | $ | (1,047 | ) | $ | (1,309 | ) | (20 | )% | ||
Percentage of total revenue: | ||||||||||
Interest expense, net | (5 | )% | (3 | )% | ||||||
Other expense, net | — | % | (4 | )% | ||||||
Total other expense | (5 | )% | (7 | )% |
Three Months Ended March 31, | ||||||||||
2017 | 2016 | % Change | ||||||||
(dollars in thousands) | ||||||||||
Provision for income taxes | $ | (951 | ) | $ | (103 | ) | 823 | % | ||
Percentage of total revenue | (4 | )% | (1 | )% |
Three Months Ended March 31, | |||||||
2017 | 2016 | ||||||
(dollars in thousands) | |||||||
Consolidated Statements of Cash Flow Data: | |||||||
Net cash provided by operating activities | $ | 4,927 | $ | (118 | ) | ||
Net cash used in investing activities | (19,659 | ) | (9,190 | ) | |||
Net cash provided by financing activities | 5,354 | 4,177 | |||||
Effect of exchange rate fluctuations on cash | 37 | 243 | |||||
Change in cash and cash equivalents | (9,341 | ) | (4,888 | ) | |||
Cash and cash equivalents, beginning of period | 28,758 | 18,473 | |||||
Cash and cash equivalents, end of period | $ | 19,417 | $ | 13,585 |
• | Incur additional indebtedness or guarantee indebtedness of others; |
• | Create liens on their assets; |
• | Make investments, including certain acquisitions; |
• | Enter into mergers or consolidations; |
• | Dispose of assets; |
• | Pay dividends and make other distributions on the Company’s capital stock, and redeem and repurchase the Company’s capital stock; |
• | Enter into transactions with affiliates; and |
• | Prepay indebtedness or make changes to certain agreements. |
• | sell, lease, license or otherwise dispose of assets; |
• | undergo a change in control; |
• | consolidate or merge with or into other entities; |
• | make or own loans, investments and acquisitions; |
• | create, incur or assume guarantees in respect of obligations of other persons; |
• | create, incur or assume liens and other encumbrances; or |
• | pay dividends or make distributions on, or purchase or redeem, our capital stock. |
UPLAND SOFTWARE, INC. | |
Dated: May 12, 2017 | /s/ Michael D. Hill |
Michael D. Hill | |
Chief Financial Officer |
Exhibit Number | Exhibit Description | Incorporated by Reference | ||||||||
Form | File No. | Exhibit | Filing Date | |||||||
3.1 | Amended and Restated Certificate of Incorporation, as currently in effect | S-1 | 333-198574 | 3.2 | October 27, 2014 | |||||
3.2 | Amended and Restated Bylaws, as currently in effect | S-1 | 333-198574 | 3.4 | October 27, 2014 | |||||
31.1* | Certification of Chief Executive Officer pursuant to Exchange Act Rules 13a-14(a) and 15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 | |||||||||
31.2* | Certification of Chief Financial Officer pursuant to Exchange Act Rules 13a-14(a) and 15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 | |||||||||
32.1** | Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 | |||||||||
32.2** | Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 | |||||||||
101.INS*** | XBRL Instance Document | |||||||||
101.SCH*** | XBRL Taxonomy Extension Schema Document | |||||||||
101.CAL*** | XBRL Taxonomy Extension Calculation Linkbase Document | |||||||||
101.DEF*** | XBRL Taxonomy Extension Definition Linkbase Document | |||||||||
101.LAB*** | XBRL Taxonomy Extension Label Linkbase Document | |||||||||
101.PRE*** | XBRL Taxonomy Extension Presentation Linkbase Document |
* | Filed herewith. |
** | Furnished herewith. |
*** | The financial information contained in these XBRL documents is unaudited and these are not the official publicly filed financial statements of Upland Software, Inc. Investors should continue to rely on the official filed version of the furnished documents and not rely on this information in making investment decisions. In accordance with Rule 402 of Regulation S-T, the information in these exhibits shall not be deemed to be “filed” for purposes of Section 18 of the Exchange Act, or otherwise subject to the liability of that section, and shall not be incorporated by reference into any registration statement or other document filed under the Securities Act, or the Exchange Act, except as shall be expressly set forth by specific reference in such filing. |
1. | I have reviewed this Quarterly Report on Form 10-Q of Upland Software, Inc.; |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal controls over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
a. | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
b. | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
c. | Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
d. | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
5. | The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): |
a. | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
b. | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
Date: | May 12, 2017 |
/s/ John T. McDonald |
John T. McDonald |
Chief Executive Officer |
(Principal Executive Officer) |
1. | I have reviewed this Quarterly Report on Form 10-Q of Upland Software, Inc.; |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal controls over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
a. | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
b. | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
c. | Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
d. | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
5. | The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): |
a. | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
b. | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
/s/ Michael D. Hill |
Michael D. Hill |
Chief Financial Officer |
(Principal Financial Officer) |
/s/ John T. McDonald |
John T. McDonald |
Chief Executive Officer |
/s/ Michael D. Hill |
Michael D. Hill |
Chief Financial Officer |
Document and Entity Information - shares |
3 Months Ended | |
---|---|---|
Mar. 31, 2017 |
May 05, 2017 |
|
Document and Entity Information [Abstract] | ||
Entity Registrant Name | Upland Software, Inc. | |
Entity Central Index Key | 0001505155 | |
Current Fiscal Year End Date | --12-31 | |
Entity Filer Category | Non-accelerated Filer | |
Document Type | 10-Q | |
Document Period End Date | Mar. 31, 2017 | |
Document Fiscal Year Focus | 2017 | |
Document Fiscal Period Focus | Q1 | |
Amendment Flag | false | |
Entity Common Stock, Shares Outstanding | 18,437,943 |
Condensed Consolidated Balance Sheets (Parenthetical) - USD ($) $ in Thousands |
Mar. 31, 2017 |
Dec. 31, 2016 |
---|---|---|
Statement of Financial Position [Abstract] | ||
Allowance for doubtful accounts | $ 622 | $ 658 |
Unamortized discount, current | 334 | 329 |
Unamortized discount, noncurrent | $ 1,106 | $ 1,113 |
Par value (in USD per share) | $ 0.0001 | $ 0.0001 |
Shares authorized (in shares) | 50,000,000 | 50,000,000 |
Shares issued (in shares) | 18,391,917 | 17,785,288 |
Shares outstanding (in shares) | 18,391,917 | 17,785,288 |
Condensed Consolidated Statements of Comprehensive Loss - USD ($) $ in Thousands |
3 Months Ended | |
---|---|---|
Mar. 31, 2017 |
Mar. 31, 2016 |
|
Statement of Comprehensive Income [Abstract] | ||
Net loss | $ (5,614) | $ (5,573) |
Foreign currency translation adjustment | 78 | 476 |
Comprehensive loss | $ (5,536) | $ (5,097) |
Summary of Significant Accounting Policies |
3 Months Ended |
---|---|
Mar. 31, 2017 | |
Accounting Policies [Abstract] | |
Summary of Significant Accounting Policies | 1. Summary of Significant Accounting Policies Basis of Presentation These condensed consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States ("GAAP"). The condensed consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries. All intercompany accounts and transactions have been eliminated in consolidation. The accompanying unaudited interim condensed consolidated financial statements have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission (the "SEC") for interim financial reporting. In the opinion of management of the Company, the unaudited interim condensed consolidated financial statements have been prepared on the same basis as the audited consolidated financial statements and include all adjustments necessary for a fair presentation. The results of operations for the three months ended March 31, 2017 are not necessarily indicative of the results to be expected for the year ending December 31, 2017 or for any other period. The financial statements should be read in conjunction with the consolidated financial statements and notes thereto included in the Company’s 2016 Annual Report on Form 10-K filed with the SEC on March 30, 2017. Use of Estimates The preparation of the accompanying condensed consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the consolidated financial statements, and the reported amounts of revenues and expenses. Significant items subject to such estimates include allowance for doubtful accounts, stock-based compensation, contingent consideration, acquired intangible assets, the useful lives of intangible assets and property and equipment, and income taxes. In accordance with GAAP, management bases its estimates on historical experience and on various other assumptions that management believes are reasonable under the circumstances. Management regularly evaluates its estimates and assumptions using historical experience and other factors; however, actual results could differ from those estimates. Concentrations of Credit Risk and Significant Customers Financial instruments that potentially subject the Company to credit risk consist of cash and cash equivalents and accounts receivable. The Company’s cash and cash equivalents are placed with high-quality financial institutions, which, at times, may exceed federally insured limits. The Company has not experienced any losses in these accounts, and the Company does not believe it is exposed to any significant credit risk related to cash and cash equivalents. The Company provides credit, in the normal course of business, to a number of its customers. The Company performs periodic credit evaluations of its customers and generally does not require collateral. No individual customer represented more than 10% of total revenues in the three months ended March 31, 2017 or 2016 or for the year ended December 31, 2016, or more than 10% of accounts receivable as of March 31, 2017 or December 31, 2016. Fair Value of Financial Instruments The Company’s financial instruments consist principally of cash and cash equivalents, accounts receivable, and accounts payable, and long–term debt. The carrying value of cash and cash equivalents, accounts receivable, accounts payable approximate fair value, primarily due to short maturities. The carrying values of the Company’s debt instruments approximated their fair value based on rates currently available to the Company. Recent Accounting Pronouncements Recently issued accounting pronouncements not yet adopted In May 2014, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") 2014-09, Revenue from Contracts with Customers. This ASU amends the existing accounting standards for revenue recognition and is based on the principle that revenue should be recognized to depict the transfer of goods or services to a customer at an amount that reflects the consideration a company expects to receive in exchange for those goods or services. The Company will adopt this ASU on January 1, 2018, and we expect to use the modified retrospective application method. The Company is currently evaluating each of its revenue streams to identify any differences in the timing, measurement or presentation of revenue recognition under the new standard. We expect to have our preliminary evaluation, including the selection of an adoption method, completed by the end of the first half of 2017. In August 2016, the FASB issued ASU No. 2016-15, Classification of Certain Cash Receipts and Cash Payments. ASU 2016-15 is intended to add or clarify guidance on the classification of certain cash receipts and payments in the statement of cash flows and to eliminate the diversity in practice related to such classifications. The guidance in ASU 2016-15 is required for annual reporting periods beginning after December 15, 2017, with early adoption permitted. The Company is currently evaluating the effect that the adoption of ASU 2016-15 will have on its financial statements. In January 2017, the FASB issued ASU 2017-01, “Clarifying the Definition of a Business” (“ASU 2017-01”), which revises the definition of a business and assists in the evaluation of when a set of transferred assets and activities is a business. ASU 2017-01 is effective for interim and annual reporting periods beginning after December 15, 2017, and should be applied prospectively. Early adoption is permitted under certain circumstances. In February 2016, the FASB issued ASU 2016-02, Leases. The core change with ASU 2016-2 is the requirement for the recognition of lease assets and lease liabilities by lessees for those leases classified as operating leases under previous GAAP. The new standard is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2018, with early adoption permitted. The Company is currently evaluating the effect that the adoption of ASU 2016-02 will have on its financial statements. In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments - Credit Losses: Measurement of Credit Losses on Financial Instruments, which changes the impairment model for most financial assets. The new model uses a forward-looking expected loss method, which will generally result in earlier recognition of allowances for losses. ASU 2016-13 is effective for annual and interim periods beginning after December 15, 2019 and early adoption is permitted for annual and interim periods beginning after December 15, 2018. The Company is currently evaluating the effect that the adoption of ASU 2016-13 will have on its financial statements. In January 2017, the FASB issued ASU No. 2017-04, Intangibles - Goodwill and Other: Simplifying the Test for Goodwill Impairment. ASU 2017-04 eliminates step two of the goodwill impairment test and specifies that goodwill impairment should be measured by comparing the fair value of a reporting unit with its carrying amount. Additionally, the amount of goodwill allocated to each reporting unit with a zero or negative carrying amount of net assets should be disclosed. ASU 2017-04 is effective for annual or interim goodwill impairment tests performed in fiscal years beginning after December 15, 2019; early adoption is permitted. We currently anticipate that the adoption of ASU 2017-04 will not have a material impact on our consolidated financial statements. Recently adopted accounting pronouncements In August 2014, the FASB issued ASU No. 2014-15, Presentation of Financial Statements - Going Concern: Disclosure of Uncertainties about an Entity's Ability to Continue as a Going Concern. The new standard provides guidance around management's responsibility to evaluate whether there is substantial doubt about an entity's ability to continue as a going concern and to provide related footnote disclosures. The new standard is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2016, with early adoption permitted. The Company adopted ASU 2014-15 during the first quarter of 2017. No additional disclosure was deemed necessary upon the adoption of ASU 2014-15. This standard would not result in an amount being recorded. In March 2016, the FASB issued ASU 2016-09, Stock Compensation. The core change with ASU 2016-09 is the simplification of several aspects of the accounting for share-based payment transactions, including the income tax consequences, classifications of awards as either equity or liabilities, and classification on the statement of cash flows. The new standard is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2016, with early adoption permitted. The Company adopted ASU 2016-09 during the first quarter of 2017. No impact on the financial statements was recorded as a result of the adoption of ASU 2016-09. |
Acquisitions |
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Business Combinations [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Acquisitions | 2. Acquisitions 2017 Acquisitions On January 10, 2017, the Company completed its purchase of Omtool, Ltd, a document capture, fax and workflow solution company. The purchase price consideration paid was approximately $19.3 million in cash payable at closing (net of approximately $3.0 million of cash acquired). Revenues recorded since the acquisition date through March 31, 2017 were approximately $2.0 million. See Note 12 — Subsequent Events for more information regarding the acquisition of RightAnswers, Inc. in April, 2017. 2016 Acquisitions On January 7, 2016, the Company completed its purchase of LeadLander, Inc., a website analytics provider. The purchase price consideration paid was approximately $8.0 million in cash payable at closing (net of approximately $0.4 million of cash acquired) and a $1.2 million cash holdback payable in 12 months (subject to indemnification claims), which was fully paid after December 31, 2016. Revenues recorded since the acquisition date through March 31, 2017 were approximately $4.3 million. In addition, the Asset Purchase Agreement included a contingent share consideration component pursuant to which Upland issued an aggregate of $2.4 million in common stock on July 25, 2016. On March 14, 2016, the Company completed its purchase of HipCricket, Inc., a cloud-based mobile messaging software provider. The consideration paid to the seller consisted of the issuance of one million shares of the Company's common stock and the transfer of the Company's EPM Live product business. The value of the shares on the closing date of the transaction was approximately $5.7 million and the fair value of the EPM Live product business was approximately $5.9 million. The Company recognized a loss on the transfer in conjunction with the EPM Live net asset value of approximately $0.7 million in Other expense, net. Prior to the transaction, HipCricket was owned by an affiliate of ESW Capital, LLC, which is a shareholder of Upland. Raymond James & Co. provided a fairness opinion to Upland in connection with the transaction. Revenues recorded since the acquisition date through March 31, 2017 were approximately $5.5 million. On April 27, 2016, the Company acquired Advanced Processing & Imaging, Inc. ("API"), a content management platform driving workflow in governments and schools. The purchase price consideration consisted of $4.1 million in cash payable at closing (net of $0.1 million of cash acquired), and a $0.8 million cash holdback payable in 12 months (subject to indemnification claims). Revenues recorded since the acquisition date through March 31, 2017 were approximately $2.5 million. The following condensed table presents the preliminary acquisition-date fair value of the assets acquired and liabilities assumed for the acquisitions, as well as assets and liabilities (in thousands):
Tangible assets were valued at their respective carrying amounts, which approximates their estimated fair value. The valuation of identifiable intangible assets reflects management’s estimates based on, among other factors, use of established valuation methods. Customer relationships were valued using an income approach, which estimates fair value based on the earnings and cash flow capacity of the subject asset. The value of the marketing-related intangibles was determined using a relief-from-royalty method, which estimates fair value based on the value the owner of the asset receives from not having to pay a royalty to use the asset. Developed technology was valued using a cost-to-recreate approach. The Company recorded the purchase of the acquisitions described above using the acquisition method of accounting and, accordingly, recognized the assets acquired and liabilities assumed at their fair values as of the date of the acquisition. The purchase price allocations for the 2017 acquisition of Omtool, is preliminary as the Company has not obtained and evaluated all of the detailed information necessary to finalize the opening balance sheet amount in all respects. The purchase price allocations for the 2015 acquisition of Ultriva and the 2016 acquisitions of LeadLander and HipCricket are final, and API is preliminary as the Company has not obtained and evaluated all of the detailed information necessary to finalize the opening balance sheet amounts in all respects. Management has recorded the purchase price allocations based upon acquired company information that is currently available. Management expects to finalize its purchase price allocations for Omtool and API in the the second quarter of 2017. Goodwill deductible for tax purposes is $4.9 million for the LeadLander acquisition and $8.2 million for HipCricket. There was no goodwill deductible for tax purposes for the API and Omtool acquisitions. |
Fair Value Measurements |
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Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value Measurements | 3. Fair Value Measurements Fair value is defined as the exit price, or the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants as of the measurement date. GAAP sets forth a three–tier fair value hierarchy, which prioritizes the inputs used in measuring fair value. The three tiers are Level 1, defined as observable inputs, such as quoted market prices in active markets; Level 2, defined as inputs other than quoted prices in active markets that are either directly or indirectly observable; and Level 3, defined as unobservable inputs in which little or no market data exists, therefore, requiring an entity to develop its own assumptions. Changes to the fair value of earnout liabilities are recorded to other expense, net. Liabilities measured at fair value on a recurring basis are summarized below (in thousands):
The earnout consideration liability consists of amounts associated with the acquisition of LeadLander. The $2.5 million Level 3 earnout consideration liability was settled during the three months ended March 31, 2017. The following table presents additional information about liabilities measured at fair value on a recurring basis and for which we have utilized significant unobservable (Level 3) inputs to determine fair value (in thousands):
The fair value of the earnout consideration was determined using the Binary Option model based on the present value of the probability-weighted earnout consideration. Debt The Company believes the carrying value of its long-term debt at March 31, 2017 approximates its fair value based on the variable interest rate feature or based upon interest rates currently available to the Company. The estimated fair value and carrying value of the Company's debt at March 31, 2017 and December 31, 2016 is $58.6 million and $49.4 million, respectively, based on valuation methodologies using interest rates currently available to the Company which are Level 2 inputs. |
Goodwill and Other Intangible Assets |
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Goodwill and Other Intangible Assets | 4. Goodwill and Other Intangible Assets Changes in the Company’s goodwill balance for the three months ended March 31, 2017 are summarized in the table below (in thousands):
Intangible assets, net, include the estimated acquisition-date fair values of customer relationships, marketing-related assets, and developed technology that the Company recorded as part of its business acquisitions. The following is a summary of the Company’s intangible assets, net (in thousands):
The following table summarizes the Company's weighted-average amortization period, in total and by major finite-lived intangible asset class (in years), as of:
The Company periodically reviews the estimated useful lives of its identifiable intangible assets, taking into consideration any events or circumstances that might result in either a diminished fair value or revised useful life. There have been no indicators of impairment or change in the useful life during the three months ended March 31, 2017 and 2016. Total amortization expense was $1.8 million and $1.9 million during the three months ended March 31, 2017 and 2016, respectively. Estimated annual amortization expense for the next five years and thereafter is as follows (in thousands):
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Income Taxes |
3 Months Ended |
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Mar. 31, 2017 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | 5. Income Taxes The Company’s income tax provision for the three months ended March 31, 2017 and 2016 reflects its estimate of the effective tax rates expected to be applicable for the full years, adjusted for any discrete events that are recorded in the period in which they occur. The estimates are re-evaluated each quarter based on the estimated tax expense for the full year. The tax provision for the three months ended March 31, 2017 and 2016 is primarily related to foreign income taxes associated with our Canadian operations, changes in deferred tax liabilities associated with amortization of United States tax deductible goodwill, alternative minimum tax and state taxes in certain states in which the Company does not file on a consolidated basis or have net operating loss carryforwards. The Company has historically incurred operating losses in the United States and, given its cumulative losses and limited history of profits, has recorded a valuation allowance against its United States net deferred tax assets, exclusive of tax deductible goodwill, at March 31, 2017 and 2016. The Company has reflected any uncertain tax positions within its current taxes payable, but none in deferred taxes. Federal, state, and foreign income tax returns have been filed in jurisdictions with varying statutes of limitations. Varying among the separate companies, tax years 1998 through 2016 remain subject to examination by federal and most state tax authorities due to our net operating loss carryforwards. In foreign jurisdictions, tax years 2008 through 2016 remain subject to examination. The Company increased both its net operating loss deferred tax asset and its valuation allowance by $152 thousand upon adoption of ASU No. 2016-09 relating to certain tax deductions associated with stock option transactions greater than the stock-related compensation expense for financial statement purposes. |
Debt |
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Debt | 6. Debt Long-term debt consisted of the following at March 31, 2017 and December 31, 2016 (in thousands):
Loan and Security Agreements On November 15, 2016, Upland Software, Inc. (the “Company”) amended its Credit Agreement (the “Credit Agreement”) with a consortium of lenders (the “Lenders”), Wells Fargo Capital Finance, as agent, providing for a secured credit facility (the “Loan Facility”). As of March 31, 2017, there were no amounts drawn on its (i) U.S. revolving loans outstanding under the Credit Agreement, or on its (ii) Canadian revolving credit facility, and there was (iii) $53.1 million in U.S. term loans outstanding under the Credit Agreement; and (iv) $5.5 million in Canadian term loans outstanding under the Credit Agreement. See Note 12 of the Notes to Unaudited Condensed Consolidated Financial Statements for more information regarding additions to this facility. Loans The Credit Agreement provides for up to $90.0 million of financing credit as outlined below. The Credit Agreement provides (i) a U.S. revolving credit facility in an aggregate principal amount of up to $9.0 million (the “U.S. Revolver”), (ii) a U.S. term loan facility in an aggregate principal amount of up to $44.4 million (the “U.S. Term Loan”) which is fully drawn, (iii) a delayed draw term loan facility in an aggregate principal amount of up to $10.0 million (the “DDTL”), which was fully drawn during January, 2017 to finance the acquisition of Omtool, (iv) a Canadian revolving credit facility in an aggregate principal amount of up to $1.0 million (the “Canadian Revolver” and, together with the U.S. Revolver, the “Revolver”); and (v) a Canadian term loan facility in an aggregate principal amount of up to $5.6 million (the “Canadian Term Loan” and, together with the U.S. Term Loan, the “Term Loan”). The Credit Agreement also includes provisions for optional, uncommitted increases in the maximum size of the loan facility available under the Credit Agreement by an aggregate principal amount of $20.0 million upon the satisfaction of the terms and conditions set forth in the Credit Agreement. The Credit Agreement also provides for, among other things, (i) a maturity date of November 15, 2021, (ii) a maximum amount of permitted stock repurchases of $8.3 million, and (iii) a maximum amount of seller subordinated indebtedness permitted to be incurred in connection with permitted acquisitions of $16.7 million. Terms of Revolver Loans under the Revolver are available up to the lesser of (i) $10.0 million (the “Maximum Revolver Amount”) or (ii) the result of (a) 100% multiplied by (subject to step-downs beginning December 31, 2016) of certain subsidiaries' recurring revenues on a trailing twelve month basis, minus (b) the outstanding balance of the Term Loans and any swing line loans made under the Credit Agreement (such amount, the “Credit Amount”). The Revolver provides a subfacility whereby Borrowers may request letters of credit (the “Letters of Credit”) in an aggregate amount not to exceed, at any one time outstanding, $0.5 million and $0.25 million, from the U.S & Canadian facilities, respectively. The aggregate amount of outstanding Letters of Credit are reserved against the credit availability under the Maximum Revolver Amount and the Credit Amount. Loans under the Revolver may be borrowed, repaid and reborrowed until November 15, 2021 (the “Maturity Date”), at which time all amounts borrowed under the Credit Agreement must be repaid. Terms of Term Loans The Term Loans are repayable, on a quarterly basis beginning December 31, 2016, by an amount equal to 5.0% per annum of the original principal amount of such loan. Any amount remaining unpaid is due and payable in full on the Maturity Date. Terms of Delay Draw Term Loan Pursuant to the terms of the Credit Agreement, the DDTL is to be used to finance acquisitions. The DDTL can be drawn upon until November 15, 2018, and was drawn in full in January, 2017 to finance the acquisition of Omtool. The DDTL is repayable, on a quarterly basis, by an amount equal to 5.0% per annum of the original funded amount of the DDTL. Any amount remaining unpaid would be due and payable in full on the Maturity Date. Other Terms of Loan Facility At the option of the Company, U.S. loans accrue interest at a per annum rate based on (i) the U.S. base rate plus a margin ranging from 3.0% to 4.0% depending on the leverage ratio or (ii) the U.S. LIBOR rate determined in accordance with the Credit Agreement (based on 1, 2, 3 or 6-month interest periods) plus a margin ranging from 4.0% to 5.0% depending on the leverage ratio. The U.S. base rate is a rate equal to the highest of the federal funds rate plus a margin equal to 0.5%, the U.S. LIBOR rate for a 1-month interest period plus 1.0% and Wells Fargo Capital Finance’s prime rate. At the option of the Company, the Canadian loans accrue interest at a per annum rate based on (i) the Canadian prime rate or the U.S. base rate plus a margin ranging from 3.0% to 4.0% depending on the leverage ratio or (ii) the U.S. LIBOR rate determined in accordance with the Credit Agreement (based on 1, 2, 3 or 6-month interest periods) (or the Canadian Bankers Acceptance ("Canadian BA") rate determined in accordance with the Credit Agreement for obligations in Canadian dollars) plus a margin ranging from 4.0% to 5.0% depending on the leverage ratio. Accrued interest on the loans will be paid monthly, or, with respect to loans that are accruing interest based on the U.S. LIBOR rate or Canadian BA rate, at the end of the applicable U.S. LIBOR or Canadian BA interest rate period. Lenders are entitled to a premium (the “Prepayment Premium”) in the event of certain prepayments of the loans in an amount equal to (i) from November 15, 2016 to November 15, 2017, 2.0% times the sum of (a) the Maximum Revolver Amount plus (b) the outstanding principal amount of the Term Loan and DDTL on the date immediately prior to the date of the prepayment (such sum, the “Prepayment Amount”) (ii) from November 15, 2017 to November 15, 2018, 1.0% times the Prepayment Amount and (iii) during the period from and after November 15, 2018 to the Maturity Date, 0.0% times the Prepayment Amount. The Company may also be subject to prepayment fees in the case of commitment reductions of the Revolver and also may be obligated to prepay loans upon the occurrence of certain events. The Company is also obligated to pay other customary servicing fees, letter of credit fees and unused credit facility fees. The Loan Facility contains customary affirmative and negative covenants. The negative covenants limit the ability of the Company and its subsidiaries to, among other things (in each case subject to customary exceptions for a credit facility of this size and type):
There are certain financial covenants that become more restrictive starting March 31, 2017. If an event of default occurs, at the election of the Lenders, a default interest rate shall apply on all obligations during an event of default, at a rate per annum equal to 2.00% above the applicable interest rate. The Loan Facility limits the Company's ability to buyback its capital stock, subject to restrictions including a minimum liquidity requirement of $20.0 million before and after any such buyback. Interest Rate and Financing Costs Cash interest costs averaged 5.8% and 5.7% under the new Credit Agreement for the three months ended March 31, 2017 and for the year ended December 31, 2016, respectively. In addition, the Company incurred $2.0 million of financing costs associated with the Credit Agreement since inception through March 31, 2017. These financing costs will be amortized to non-cash interest expense over the term of the Credit Agreement. Debt Maturities Future debt maturities of long-term debt (excluding financing costs) at March 31, 2017 are as follows (in thousands):
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Net Loss Per Share |
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Net Loss Per Share | 7. Net Loss Per Share The following table sets forth the computations of loss per share (in thousands, except share and per share amounts):
Due to the net losses for the three months ended March 31, 2017 and 2016, basic and diluted loss per share were the same, as the effect of all potentially dilutive securities would have been anti–dilutive. The following table sets forth the anti–dilutive common share equivalents (which does not include 318,302 common shares issued July 25, 2016 in conjunction with the acquisition of our website analytics business, as a result of the achievement of certain revenue targets):
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Commitments and Contingencies |
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Mar. 31, 2017 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | 8. Commitments and Contingencies Purchase Commitments During the fiscal three months ended March 31, 2017 and 2016, the Company purchased software development services pursuant to a technology services agreement with DevFactory FZ-LLC, in the amount of $0.6 million, and $0.6 million, respectively. See Note 11 — Related Party Transactions for more information regarding regarding our purchase commitment to this related party. On March 28, 2017, the Company entered into an amendment to the Amended and Restated Technology Services Agreement with DevFactory FZ-LLC to extend the initial term end date from December 31, 2017 to December 31, 2021. Additionally, the Company amended the option for either party to renew annually for one additional year. The effective date of the amendment is January 1, 2017. Litigation In the normal course of business, the Company may become involved in various lawsuits and legal proceedings. At this time, the Company is not involved in any current or pending legal proceedings and does not anticipate any legal proceedings that may have a material adverse affect on the consolidated financial position or results of operations of the Company. |
Stockholders' Equity |
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Stockholders' Equity | 9. Stockholders' Equity Restricted Stock Awards Restricted share activity during the three months ended March 31, 2017 was as follows:
Stock Option Activity Stock option activity during the three months ended March 31, 2017 was as follows:
Share-based Compensation The Company recognized share-based compensation expense from all awards in the following expense categories (in thousands):
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Domestic and Foreign Operations |
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Domestic and Foreign Operations | 10. Domestic and Foreign Operations Revenue by geography is based on the ship-to address of the customer, which is intended to approximate where the customer’s users are located. The ship-to country is generally the same as the billing country. The Company has operations in the U.S., Canada and Europe. Information about these operations is presented below (in thousands):
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Related Party Transactions |
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Mar. 31, 2017 | |
Related Party Transactions [Abstract] | |
Related Party Transactions | 11. Related Party Transactions During the fiscal three months ended March 31, 2017 and 2016, the Company purchased software development services pursuant to a technology services agreement with DevFactory FZ-LLC, in the amount of $0.6 million, and $0.6 million, respectively. On March 28, 2017, the Company entered into an amendment to the Amended and Restated Technology Services Agreement to extend the initial term end date from December 31, 2017 to December 31, 2021. Additionally, the Company amended the option for either party to renew annually for one additional year. The effective date of the amendment is January 1, 2017. The Company has an outstanding purchase commitment in 2017 for software development services pursuant to a technology services agreement in the amount of $2.5 million. For years after 2017, the purchase commitment amount for software development services will be equal to the prior year purchase commitment increased (decreased) by the percentage change in total revenue for the prior year as compared to the preceding year. For example, if 2017 total revenues increase by 10% as compared to 2016 total revenues, then the 2018 purchase commitment will increase by approximately $250,000 from the 2017 purchase commitment amount to approximately $2.8 million. The Company purchased approximately $752,000 and $62,000 in services from Crossover, Inc. during the three months ended March 31, 2017 and 2016, respectively. While there are no purchase commitments with this company, the Company continues to use their services in 2017. The Company has an arrangement with a former subsidiary to provide management, human resource/payroll and administrative services, the fees for which the Company received fees during the three months ended March 31, 2017 and 2016 totaling $90,000 in each period. |
Subsequent Events |
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Mar. 31, 2017 | |
Subsequent Events [Abstract] | |
Subsequent Events | 12. Subsequent Events Acquisitions On April 21, 2017, the Company acquired RightAnswers, Inc., a cloud-based knowledge management system. The purchase price was $17.2 million in cash at closing, net of cash acquired, and a $2.5 million cash holdback payable in one year (a portion of which is available to satisfy indemnification claims) and excludes potential future earn-out payments tied to additional performance-based goals. Amendment of Credit Agreement On April 21, 2017, the Company entered into a Fourth Amendment to the Credit Agreement (the “Amendment”) that amended its Credit Agreement dated as of May 14, 2015 (the “Credit Agreement”) among the Company, certain of its domestic and Canadian subsidiaries and each of the lenders party thereto. After giving effect to the Amendment, the Credit Agreement provides for an additional term loan of $15,000,000, which was fully funded in conjunction with the acquisition of RightAnswers, Inc. under the Company’s existing $90,000,000 credit facility. The Amendment also provides for, among other things, (i) the availability of U.S. and Canadian revolving loans up to the lesser of (x) $10,000,000 and (y) 108.75% (subject to step-downs beginning June 30, 2017) of the Borrowers’ recurring revenues on a trailing twelve month pro forma basis minus the outstanding balance of loans and letters of credit made under the Credit Agreement, (ii) an allowance for earn-outs in relation to permitted acquisitions, and (iii) an increase in the maximum amount of purchase consideration payable in respect of all permitted acquisitions $75,000,000 to $150,000,000. |
Summary of Significant Accounting Policies (Policies) |
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Mar. 31, 2017 | |
Accounting Policies [Abstract] | |
Basis of Presentation | Basis of Presentation These condensed consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States ("GAAP"). The condensed consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries. All intercompany accounts and transactions have been eliminated in consolidation. The accompanying unaudited interim condensed consolidated financial statements have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission (the "SEC") for interim financial reporting. In the opinion of management of the Company, the unaudited interim condensed consolidated financial statements have been prepared on the same basis as the audited consolidated financial statements and include all adjustments necessary for a fair presentation. The results of operations for the three months ended March 31, 2017 are not necessarily indicative of the results to be expected for the year ending December 31, 2017 or for any other period. The financial statements should be read in conjunction with the consolidated financial statements and notes thereto included in the Company’s 2016 Annual Report on Form 10-K filed with the SEC on March 30, 2017. |
Use of Estimates | Use of Estimates The preparation of the accompanying condensed consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the consolidated financial statements, and the reported amounts of revenues and expenses. Significant items subject to such estimates include allowance for doubtful accounts, stock-based compensation, contingent consideration, acquired intangible assets, the useful lives of intangible assets and property and equipment, and income taxes. In accordance with GAAP, management bases its estimates on historical experience and on various other assumptions that management believes are reasonable under the circumstances. Management regularly evaluates its estimates and assumptions using historical experience and other factors; however, actual results could differ from those estimates. |
Concentrations of Credit Risk and Significant Customers | Concentrations of Credit Risk and Significant Customers Financial instruments that potentially subject the Company to credit risk consist of cash and cash equivalents and accounts receivable. The Company’s cash and cash equivalents are placed with high-quality financial institutions, which, at times, may exceed federally insured limits. The Company has not experienced any losses in these accounts, and the Company does not believe it is exposed to any significant credit risk related to cash and cash equivalents. The Company provides credit, in the normal course of business, to a number of its customers. The Company performs periodic credit evaluations of its customers and generally does not require collateral. No individual customer represented more than 10% of total revenues in the three months ended March 31, 2017 or 2016 or for the year ended December 31, 2016, or more than 10% of accounts receivable as of March 31, 2017 or December 31, 2016. |
Fair Value of Financial Instruments | Fair Value of Financial Instruments The Company’s financial instruments consist principally of cash and cash equivalents, accounts receivable, and accounts payable, and long–term debt. The carrying value of cash and cash equivalents, accounts receivable, accounts payable approximate fair value, primarily due to short maturities. The carrying values of the Company’s debt instruments approximated their fair value based on rates currently available to the Company. |
Recent Accounting Pronouncements | Recent Accounting Pronouncements Recently issued accounting pronouncements not yet adopted In May 2014, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") 2014-09, Revenue from Contracts with Customers. This ASU amends the existing accounting standards for revenue recognition and is based on the principle that revenue should be recognized to depict the transfer of goods or services to a customer at an amount that reflects the consideration a company expects to receive in exchange for those goods or services. The Company will adopt this ASU on January 1, 2018, and we expect to use the modified retrospective application method. The Company is currently evaluating each of its revenue streams to identify any differences in the timing, measurement or presentation of revenue recognition under the new standard. We expect to have our preliminary evaluation, including the selection of an adoption method, completed by the end of the first half of 2017. In August 2016, the FASB issued ASU No. 2016-15, Classification of Certain Cash Receipts and Cash Payments. ASU 2016-15 is intended to add or clarify guidance on the classification of certain cash receipts and payments in the statement of cash flows and to eliminate the diversity in practice related to such classifications. The guidance in ASU 2016-15 is required for annual reporting periods beginning after December 15, 2017, with early adoption permitted. The Company is currently evaluating the effect that the adoption of ASU 2016-15 will have on its financial statements. In January 2017, the FASB issued ASU 2017-01, “Clarifying the Definition of a Business” (“ASU 2017-01”), which revises the definition of a business and assists in the evaluation of when a set of transferred assets and activities is a business. ASU 2017-01 is effective for interim and annual reporting periods beginning after December 15, 2017, and should be applied prospectively. Early adoption is permitted under certain circumstances. In February 2016, the FASB issued ASU 2016-02, Leases. The core change with ASU 2016-2 is the requirement for the recognition of lease assets and lease liabilities by lessees for those leases classified as operating leases under previous GAAP. The new standard is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2018, with early adoption permitted. The Company is currently evaluating the effect that the adoption of ASU 2016-02 will have on its financial statements. In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments - Credit Losses: Measurement of Credit Losses on Financial Instruments, which changes the impairment model for most financial assets. The new model uses a forward-looking expected loss method, which will generally result in earlier recognition of allowances for losses. ASU 2016-13 is effective for annual and interim periods beginning after December 15, 2019 and early adoption is permitted for annual and interim periods beginning after December 15, 2018. The Company is currently evaluating the effect that the adoption of ASU 2016-13 will have on its financial statements. In January 2017, the FASB issued ASU No. 2017-04, Intangibles - Goodwill and Other: Simplifying the Test for Goodwill Impairment. ASU 2017-04 eliminates step two of the goodwill impairment test and specifies that goodwill impairment should be measured by comparing the fair value of a reporting unit with its carrying amount. Additionally, the amount of goodwill allocated to each reporting unit with a zero or negative carrying amount of net assets should be disclosed. ASU 2017-04 is effective for annual or interim goodwill impairment tests performed in fiscal years beginning after December 15, 2019; early adoption is permitted. We currently anticipate that the adoption of ASU 2017-04 will not have a material impact on our consolidated financial statements. Recently adopted accounting pronouncements In August 2014, the FASB issued ASU No. 2014-15, Presentation of Financial Statements - Going Concern: Disclosure of Uncertainties about an Entity's Ability to Continue as a Going Concern. The new standard provides guidance around management's responsibility to evaluate whether there is substantial doubt about an entity's ability to continue as a going concern and to provide related footnote disclosures. The new standard is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2016, with early adoption permitted. The Company adopted ASU 2014-15 during the first quarter of 2017. No additional disclosure was deemed necessary upon the adoption of ASU 2014-15. This standard would not result in an amount being recorded. In March 2016, the FASB issued ASU 2016-09, Stock Compensation. The core change with ASU 2016-09 is the simplification of several aspects of the accounting for share-based payment transactions, including the income tax consequences, classifications of awards as either equity or liabilities, and classification on the statement of cash flows. The new standard is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2016, with early adoption permitted. The Company adopted ASU 2016-09 during the first quarter of 2017. No impact on the financial statements was recorded as a result of the adoption of ASU 2016-09. |
Acquisitions (Tables) |
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Mar. 31, 2017 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Business Combinations [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Assets and Liabilities Acquired | The following condensed table presents the preliminary acquisition-date fair value of the assets acquired and liabilities assumed for the acquisitions, as well as assets and liabilities (in thousands):
|
Fair Value Measurements (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2017 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Fair Value, Assets and Liabilities Measured on Recurring Basis | Liabilities measured at fair value on a recurring basis are summarized below (in thousands):
|
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Schedule of Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation | The following table presents additional information about liabilities measured at fair value on a recurring basis and for which we have utilized significant unobservable (Level 3) inputs to determine fair value (in thousands):
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Goodwill and Other Intangible Assets (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2017 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Goodwill and Intangible Assets Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of goodwill | Changes in the Company’s goodwill balance for the three months ended March 31, 2017 are summarized in the table below (in thousands):
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Summary of intangible assets, net | The following is a summary of the Company’s intangible assets, net (in thousands):
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Schedule of weighted-average amortization period | The following table summarizes the Company's weighted-average amortization period, in total and by major finite-lived intangible asset class (in years), as of:
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Estimated annual amortization expense | Estimated annual amortization expense for the next five years and thereafter is as follows (in thousands):
|
Debt (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2017 | |||||||||||||||||||||||||||||||||||||||||||||||||
Debt Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Long-term Debt Instruments | Long-term debt consisted of the following at March 31, 2017 and December 31, 2016 (in thousands):
|
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Schedule of Maturities of Long-term Debt | Future debt maturities of long-term debt (excluding financing costs) at March 31, 2017 are as follows (in thousands):
|
Net Loss Per Share (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Mar. 31, 2017 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Earnings Per Share [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Computations of loss per share | The following table sets forth the computations of loss per share (in thousands, except share and per share amounts):
|
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Schedule of anti–dilutive common share equivalents | The following table sets forth the anti–dilutive common share equivalents (which does not include 318,302 common shares issued July 25, 2016 in conjunction with the acquisition of our website analytics business, as a result of the achievement of certain revenue targets):
|
Stockholders' Equity (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Mar. 31, 2017 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Equity [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of restricted stock activity | Restricted share activity during the three months ended March 31, 2017 was as follows:
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of stock option activity | Stock option activity during the three months ended March 31, 2017 was as follows:
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of allocated share-based compensation expense | The Company recognized share-based compensation expense from all awards in the following expense categories (in thousands):
|
Domestic and Foreign Operations (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Mar. 31, 2017 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Segment Reporting [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of revenues by geographical area | The Company has operations in the U.S., Canada and Europe. Information about these operations is presented below (in thousands):
|
Goodwill and Other Intangible Assets (Schedule of Goodwill) (Details) $ in Thousands |
3 Months Ended |
---|---|
Mar. 31, 2017
USD ($)
| |
Goodwill [Roll Forward] | |
Balance at December 31, 2016 | $ 69,097 |
Acquired in business combinations | 13,574 |
Foreign currency translation adjustment | 132 |
Balance at March 31, 2017 | $ 82,803 |
Goodwill and Other Intangible Assets (Weighted-Average Amortization Period) (Details) |
3 Months Ended | |
---|---|---|
Mar. 31, 2017 |
Mar. 31, 2016 |
|
Acquired Finite-Lived Intangible Assets [Line Items] | ||
Weighted average amortization period (in years) | 8 years | 8 years |
Customer Relationships [Member] | ||
Acquired Finite-Lived Intangible Assets [Line Items] | ||
Weighted average amortization period (in years) | 9 years 110 days | 9 years 3 months 18 days |
Trade Name [Member] | ||
Acquired Finite-Lived Intangible Assets [Line Items] | ||
Weighted average amortization period (in years) | 2 years 262 days | 2 years 9 months 18 days |
Developed Technology [Member] | ||
Acquired Finite-Lived Intangible Assets [Line Items] | ||
Weighted average amortization period (in years) | 6 years 170 days | 6 years 3 months 18 days |
Goodwill and Other Intangible Assets (Estimated Annual Amortization Expense) (Details) - USD ($) $ in Thousands |
3 Months Ended | ||
---|---|---|---|
Mar. 31, 2017 |
Mar. 31, 2016 |
Dec. 31, 2016 |
|
Goodwill and Intangible Assets Disclosure [Abstract] | |||
Amortization charge of intangible assets | $ 1,800 | $ 1,900 | |
Finite-Lived Intangible Assets, Amortization Expense, Maturity Schedule [Abstract] | |||
Remainder of 2017 | 5,344 | ||
2018 | 6,719 | ||
2019 | 5,854 | ||
2020 | 4,887 | ||
2021 and thereafter | 12,129 | ||
Net Carrying Amount | $ 34,933 | $ 28,512 |
Income Taxes 1 (Details) - Accounting Standards Update 2016-09 [Member] $ in Thousands |
Mar. 31, 2017
USD ($)
|
---|---|
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |
Increase in net operating loss deferred tax asset | $ 152 |
Increase in valuation allowance | $ 152 |
Debt (Long-term Debt) (Details) - USD ($) $ in Thousands |
3 Months Ended | 12 Months Ended |
---|---|---|
Mar. 31, 2017 |
Dec. 31, 2016 |
|
Debt Instrument [Line Items] | ||
Less current maturities | $ (2,685) | $ (2,190) |
Total long-term debt | 54,491 | 45,739 |
Senior Secured Notes [Member] | ||
Debt Instrument [Line Items] | ||
Long-term debt | 57,176 | 47,929 |
Note discount | $ 1,440 | $ 1,442 |
Implied interest rate | 6.40% | 6.60% |
Debt (New Loan and Security Agreements) (Details) |
Mar. 31, 2017
USD ($)
|
---|---|
Revolving Credit Facility [Member] | U.S. [Member] | |
Line of Credit Facility [Line Items] | |
Outstanding borrowings | $ 0 |
Revolving Credit Facility [Member] | Canadian [Member] | |
Line of Credit Facility [Line Items] | |
Outstanding borrowings | 0 |
Term Loan [Member] | U.S. [Member] | |
Line of Credit Facility [Line Items] | |
Outstanding borrowings | 53,100,000 |
Term Loan [Member] | Canadian [Member] | |
Line of Credit Facility [Line Items] | |
Outstanding borrowings | $ 5,500,000 |
Debt (Future Debt Maturities of Long-term Debt) (Details) $ in Thousands |
Mar. 31, 2017
USD ($)
|
---|---|
Debt Disclosure [Abstract] | |
Remaining 2017 | $ 2,264 |
2018 | 3,019 |
2019 | 3,019 |
2020 | 3,019 |
2021 | 47,295 |
Thereafter | 0 |
Long-term debt | $ 58,616 |
Net Loss Per Share (Computation of Loss Per Share) (Details) - USD ($) $ / shares in Units, $ in Thousands |
3 Months Ended | |
---|---|---|
Mar. 31, 2017 |
Mar. 31, 2016 |
|
Numerator: | ||
Net loss | $ (5,614) | $ (5,573) |
Denominator: | ||
Weighted–average common shares outstanding, basic and diluted | 16,971,393 | 15,432,405 |
Net loss per common share, basic and diluted (in USD per share) | $ (0.33) | $ (0.36) |
Net Loss Per Share (Anti–Dilutive Common Share Equivalents) (Details) - shares |
3 Months Ended | ||
---|---|---|---|
Jul. 25, 2016 |
Mar. 31, 2017 |
Mar. 31, 2016 |
|
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | |||
Anti–dilutive common share equivalents (in shares) | 2,142,218 | 1,735,138 | |
Website Analytic Business [Member] | |||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | |||
Numbers of share issued in acquisition (in shares) | 318,302 | ||
Employee Stock Option [Member] | |||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | |||
Anti–dilutive common share equivalents (in shares) | 731,971 | 751,201 | |
Restricted Stock [Member] | |||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | |||
Anti–dilutive common share equivalents (in shares) | 1,410,247 | 983,937 |
Commitments and Contingencies (Details) - Investor [Member] - USD ($) $ in Millions |
3 Months Ended | ||
---|---|---|---|
Mar. 28, 2017 |
Mar. 31, 2017 |
Mar. 31, 2016 |
|
Long-term Purchase Commitment [Line Items] | |||
Amount of related party transaction | $ 0.6 | $ 0.6 | |
Option to renew purchase commitment, term (in years) | 1 year |
Stockholders' Equity (Restricted Stock Activity) (Details) - Restricted Stock [Member] - $ / shares |
3 Months Ended | |
---|---|---|
Mar. 31, 2017 |
Dec. 31, 2016 |
|
Number of Restricted Shares Outstanding | ||
Unvested balances at beginning of period (in shares) | 839,477 | |
Awards granted (in shares) | 622,520 | |
Awards vested (in shares) | (34,749) | |
Awards forfeited (in shares) | (17,001) | |
Unvested balances at end of period (in shares) | 1,410,247.000 | |
Weighted-Average Grant Date Fair Value | ||
Weighted-Average Grant Date Fair Value (in USD per share) | $ 10.86 | $ 7.55 |
Stockholders' Equity (Stock Option Activity) (Details) |
3 Months Ended |
---|---|
Mar. 31, 2017
$ / shares
shares
| |
Number of Options Outstanding | |
Outstanding at beginning of period (in shares) | shares | 759,719 |
Options granted (in shares) | shares | 0 |
Options exercised (in shares) | shares | (24,748) |
Options forfeited (in shares) | shares | (2,906) |
Options expired (in shares) | shares | (94) |
Outstanding at end of period (in shares) | shares | 731,971.000 |
Weighted Average Exercise Price | |
Outstanding at beginning of period (in USD per share) | $ / shares | $ 6.06 |
Options granted (in USD per share) | $ / shares | 0.00 |
Options exercised (in USD per share) | $ / shares | 6.46 |
Options forfeited (in USD per share) | $ / shares | 6.21 |
Options expired (in USD per share) | $ / shares | 6.26 |
Outstanding at end of period (in USD per share) | $ / shares | $ 6.05 |
Domestic and Foreign Operations (Details) - USD ($) $ in Thousands |
3 Months Ended | |
---|---|---|
Mar. 31, 2017 |
Mar. 31, 2016 |
|
Revenues from External Customers and Long-Lived Assets [Line Items] | ||
Revenues | $ 20,752 | $ 17,582 |
U.S. [Member] | ||
Revenues from External Customers and Long-Lived Assets [Line Items] | ||
Revenues | 17,609 | 14,430 |
Canada [Member] | ||
Revenues from External Customers and Long-Lived Assets [Line Items] | ||
Revenues | 845 | 1,002 |
Other International [Member] | ||
Revenues from External Customers and Long-Lived Assets [Line Items] | ||
Revenues | $ 2,298 | $ 2,150 |
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