Significant Accounting Policies

6 Months Ended

Jun. 30, 2011

Significant Accounting Policies [Abstract]

Significant Accounting Policies

(2) Significant Accounting Policies

Significant Accounting Policies

The Company’s significant accounting policies are disclosed in the audited consolidated financial statements for the year ended December 31, 2010 included in the Company’s Annual Report on Form 10-K (file number 001-34803), filed with the SEC on March 16, 2011. Since the date of those financial statements, there have been no material changes to the Company’s significant accounting policies.

Basis of Presentation and Consolidation

The accompanying unaudited consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries. All material intercompany balances and transactions have been eliminated. Prior year amounts have been reclassified where appropriate to conform to the current year classification for comparative purposes.

Interim Financial Statements

The accompanying interim unaudited consolidated financial statements and related disclosures are unaudited and have been prepared in accordance with U.S. generally accepted accounting principles (“U.S. GAAP”) on the same basis as the audited consolidated financial statements for the year ended December 31, 2010 included in the Company’s Annual Report on Form 10-K, filed with the SEC on March 16, 2011 and, in the opinion of management, include all adjustments of a normal recurring nature considered necessary to present fairly the Company’s financial position, results of operations, and cash flows for the six months ended June 30, 2011 and 2010. The results of operations for the three and six months ended June 30, 2011 and 2010 are not necessarily indicative of the results that may be expected for the year ending December 31, 2011 or any other future periods. Certain information and note disclosures normally included in the financial statements prepared in accordance with U.S. GAAP have been condensed or omitted under the Securities and Exchange Commission’s (“SEC”) rules and regulations. These unaudited interim consolidated financial statements should be read in conjunction with the audited consolidated financial statements and accompanying notes for the year ended December 31, 2010. The accompanying unaudited consolidated financial statements have been prepared in accordance with the instructions to the Quarterly Report on Form 10-Q and, therefore, do not include all information and footnotes required by U.S. GAAP for complete financial statements.

Use of Estimates

The preparation of consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates.

On an ongoing basis, the Company evaluates its estimates, including those related to the accounts receivable allowance, useful lives of long-lived assets, the recoverability of goodwill and other intangible assets, assumptions used for the purpose of determining stock-based compensation expense and income taxes, among others. The Company bases its estimates on historical experience and on various other assumptions that are believed to be reasonable, the results of which form the basis for making judgments about the carrying value of assets and liabilities as well as reported revenue and expenses during the periods presented.

Foreign Currency Translation

The financial statements of the Company’s foreign operations are measured using the local currency as the functional currency. The local currency assets and liabilities are translated at the rate of exchange to the U.S. dollar on the balance sheet date and the local currency revenues and expenses are translated at average rates of exchange to the U.S. dollar during the reporting periods. Foreign currency transaction gains (losses) have been reflected as a component of the Company’s statements of operations and foreign currency translation gains (losses) have been included as a component of accumulated other comprehensive income (loss). Gains and losses from foreign currency transactions are included as a component of other income (expense), net.

Business Combinations

The Company recognizes all of the assets acquired, liabilities assumed and contingent consideration at their fair value on the acquisition date. The purchase price allocation process requires management to make significant estimates and assumptions, especially at the acquisition date, with respect to intangible assets acquired, estimated contingent consideration payments and pre-acquisition contingencies assumed. Unanticipated events and circumstances may occur which may affect the accuracy or validity of such assumptions, estimates or actual results. Additionally, any change in the fair value of the acquisition-related contingent consideration subsequent to the acquisition date, including changes from events after the acquisition date, will be recognized in earnings in the period of the estimated fair value change. All other changes in a valuation allowance or uncertain tax positions are recognized as a reduction of or an increase to income tax expense.

Acquisition-related transaction costs, including legal and accounting fees and other external costs directly related to the acquisition, are recognized separately from the acquisition and expensed as incurred in general and administrative expenses in the unaudited consolidated statements of operations.

Accumulated Comprehensive Income (Loss)

The Company classifies items of accumulated other comprehensive income (loss) separately within stockholders’ equity. For the three and six months ended June 30, 2011 and 2010, accumulated comprehensive income (loss) was:

	Three Months Ended June 30,						Six Months Ended June 30,
	2011			2010			2011			2010
Net income (loss)	$	(2,170	)	$	3,538		$	(6,743	)	$	3,419
Foreign currency translation gain (loss)		203			(1,054	)		2,008			(640	)
Accumulated comprehensive income (loss)	$	(1,967	)	$	2,484		$	(4,735	)	$	2,779

Fair Value of Financial Instruments

The carrying amount of cash and cash equivalents, accounts receivable, other current assets, and accounts payable approximate fair value, due to their short-term nature.

Stock-Based Compensation

The Company recognizes the cost of stock-based compensation based on the fair value of those awards at the date of grant over the requisite service period. The Company uses the Black-Scholes-Merton (“Black-Scholes”) option pricing model to determine the fair value of common stock option awards. The fair value of a restricted stock unit is determined by using the fair value of the Company’s common stock on the date of grant. Stock-based compensation plans, related expenses and assumptions used in the Black-Scholes option pricing model are more fully described in Note 8 to these unaudited consolidated financial statements. The estimated fair value of stock-based compensation awards on the date of grant is amortized on a straight-line basis over the requisite service period. Stock-based compensation expense is recorded within cost of revenue, sales and marketing, research and development, and general and administrative expenses.

The following table sets forth the total stock-based compensation expense included in the unaudited consolidated statements of operations for the three and six months ended June 30, 2011 and 2010:

	Three Months Ended June 30,				Six Months Ended June 30,
	2011		2010		2011		2010
Cost of revenue	$	156	$	26	$	252	$	52
Sales and marketing		1,079		308		1,928		568
Research and development		91		21		133		42
General and administrative		674		194		1,187		387
	$	2,000	$	549	$	3,500	$	1,049

Net Income (Loss) Attributable to Common Share

The following table sets forth the computation of basic and diluted net income (loss) per common share for the periods indicated:

	Three Months Ended June 30,						Six Months Ended June 30,
	2011			2010			2011			2010
Basic net income (loss) per common share calculation:
Net income (loss)	$	(2,170	)	$	3,538		$	(6,743	)	$	3,419
Less: Undistributed earnings allocated to participating securities		—			(3,129	)		—			(3,056	)
Net income (loss) attributable to common shares		(2,170	)		409			(6,743	)		363
Weighted average common shares outstanding		81,724,971			17,222,001			80,486,401			17,035,083
Net income (loss) per share — Basic	$	(0.03	)	$	0.02		$	(0.08	)	$	0.02
Diluted net (loss) income per common share calculation:
Net income (loss)	$	(2,170	)	$	3,538		$	(6,743	)	$	3,419
Less: Undistributed earnings allocated to participating securities		—			(3,129	)		—			(3,056	)
Net income (loss) attributable to common shares		(2,170	)		409			(6,743	)		363
Weighted average shares used to compute basic net income (loss) per share		81,724,971			17,222,001			80,486,401			17,035,083
Effect of potentially dilutive securities:
Employee stock options		—			7,489,968			—			7,115,587
Weighted average shares used to compute diluted net income (loss) per share		81,724,971			24,711,969			80,486,401			24,150,670
Diluted net income (loss) per share	$	(0.03	)	$	0.02		$	(0.08	)	$	0.02

Diluted net income (loss) per common share for the periods presented does not reflect the following potential common shares as the effect would be anti-dilutive:

	Three Months Ended June 30,				Six Months Ended June 30,
	2011		2010		2011		2010
Common stock options		9,269,794		725,000		9,269,794		725,000
Restricted stock units		57,312		—		57,312		—
Common stock warrants		—		474,282		—		474,282
		9,327,106		1,199,282		9,327,106		1,199,282

Recent Accounting Pronouncements

From time to time, new accounting pronouncements are issued by the Financial Accounting Standards Board (“FASB”) or other standard setting bodies that are adopted by the Company as of the specified effective date. Unless otherwise discussed, the Company believes that the impact of recently issued standards that are not yet effective will not have a material impact on its financial position or results of operations upon adoption.

In January 2010, the FASB updated the accounting guidance related to fair value measurements disclosures. The updated guidance (i) requires separate disclosure of significant transfers in and out of Level 1 and Level 2 fair value measurements, (ii) requires disclosure of Level 3 fair value measurements activity on a gross basis, (iii) clarifies existing disaggregation requirements, and (iv) clarifies existing input and valuation technique disclosure requirements. The updated guidance was effective for the Company for interim or annual periods beginning after January 1, 2010, except for Level 3 fair value measurement disclosure requirements, which are effective for fiscal years beginning after January 1, 2011. The Company adopted the aspects of the guidance on January 1, 2010 and adopted the remaining guidance on January 1, 2011. The adoption of the guidance had no material impact on the consolidated financial statements.

In June 2010, the FASB issued an Accounting Standards Update to the Comprehensive Income Topic in the ASC aimed at increasing the prominence of items reported in other comprehensive income in the financial statements. This update requires companies to present comprehensive income in a single statement below net income or in a separate statement of comprehensive income immediately following the income statement. Companies will no longer be allowed to present comprehensive income on the statement of changes in shareholders’ equity. In both options, companies must present the components of net income, total net income, the components of other comprehensive income, total other comprehensive income and total comprehensive income. This update does not change which items are reported in other comprehensive income or the requirement to report reclassifications of items from other comprehensive income to net income. This requirement will become effective for the Company beginning with the Quarterly Report on Form 10-Q for the quarter ended March 31, 2012 and will require retrospective application for all periods presented.