3. Acquisitions

CardStar

On January 13, 2012, the Company acquired by merger all of the outstanding capital stock of CardStar, Inc. (“CardStar”) for a cash purchase price of $5,750. CardStar is a leading developer of mobile applications that extend the use of loyalty cards and mobile coupons among consumers. The Company purchased CardStar in order to accelerate its entrance into the mobile marketing and loyalty space.

The Company allocated the purchase price as follows:


Purchased technology	$	624
Net deferred tax assets		553
Goodwill		4,573


Total assets acquired	$	5,750

The purchased technology was valued using the cost to replace method and has an estimated economic life of three years.

Goodwill was recognized for the excess purchase price over the fair value of the assets acquired. Goodwill is primarily attributable to CardStar’s knowledge of mobile applications and coupons and loyalty cards. Goodwill from the CardStar acquisition will be included within the Company’s one reporting unit and is included in the Company’s enterprise-level annual review for impairment. Goodwill resulting from the acquisition of CardStar is not deductible for tax purposes. The operations of CardStar prior to the acquisition were not material to the consolidated results of the Company.

SinglePlatform

On June 12, 2012, the Company acquired by merger all of the outstanding capital stock of SinglePlatform. SinglePlatform provides small businesses a single place to update their business information and delivers that information across its publishing network. The Company purchased SinglePlatform in order to expand its product offerings consistent with its strategy of helping small organizations acquire new customers. The purchase price of $75,009 reflected a cash payment of $62,857 and a liability of $12,152 representing the fair value of contingent consideration of up to $30,000 payable to the former shareholders of SinglePlatform upon achievement by SinglePlatform of certain revenue targets. These revenue targets are measured in six month intervals from July 1, 2012 to June 30, 2014. If such targets are achieved, the consideration is payable in cash. Using a discounted cash flow method and a probability weighted estimate of future revenue, the Company recorded an estimated liability of $12,152 as of the acquisition date. The estimated undiscounted range of outcomes for the contingent consideration was $0 to $21,095 at the acquisition date. The first revenue target, assessed at December 31, 2012 was not met. Based on actual performance, the Company revised its revenue forecasts. Under the revised forecasts, no contingent consideration payments will be made. Accordingly, the Company recorded a reduction to expenses of $12,152 relating to this remeasurement of the fair value of the contingent liability in 2012 such that the liability as of December 31, 2012 and March 31, 2013 was $0. The reduction was included in acquisition costs and other related charges in the Company’s consolidated statement of operations for the year ended December 31, 2012. As the first revenue target, measured at December 31, 2012, was not met, the maximum amount of contingent consideration payable was reduced to $22,500. The Company will continue to assess the probability that the remaining revenue targets will be met and at what level, and any subsequent changes in the estimated fair value of the liability will be reflected in earnings until the liability is fully settled.

The following table summarizes the purchase price for SinglePlatform and the allocation of the purchase price:


Purchase consideration:
Total cash paid, net of cash acquired	$	62,546
Cash acquired		311
Fair value of contingent consideration		12,152

Total purchase price consideration	$	75,009


Assets acquired and liabilities assumed:
Cash	$	311
Accounts receivable		48
Prepaid expenses and other current assets		60
Property and equipment		14
Identifiable intangible assets		4,760
Other assets		91
Net deferred tax assets		72
Goodwill		71,997

Total assets acquired		77,353

Accounts payable, accrued expenses and other current liabilities		(1,734	)
Deferred revenue		(610	)

Total liabilities assumed		(2,344	)

Total allocation of purchase price consideration	$	75,009

The developed technology and the customer and publisher relationships were valued using the cost to replace method. The trade name was valued using the relief from royalty method. Acquired intangible assets are amortized over their estimated useful lives based on the pattern of consumption of the economic benefits or, if that pattern cannot be readily determined, on a straight-line basis. The following table presents the estimated fair values and useful lives of identifiable intangible assets acquired:


	Amount		Weighted Average Useful Life
			(in years)
Developed technology	$	850		3
Customer relationships		2,630		3.75
Publisher relationships		710		5
Trade name		570		5

Total identifiable intangible assets	$	4,760		3.95

Goodwill was recognized for the excess purchase price over the fair value of the net assets acquired. Goodwill is primarily attributable to the workforce of the acquired business (which is not eligible for separate recognition as an identifiable intangible asset) and the expected synergistic benefits of being able to market SinglePlatform’s product to the Company’s customer base and being able to market the Company’s products to SinglePlatform’s customer base. Goodwill from the SinglePlatform acquisition is included within the Company’s one reporting unit and is included in the Company’s enterprise-level annual review for impairment. Goodwill resulting from the acquisition of SinglePlatform is not deductible for tax purposes.

The following table presents the pro forma results of the historical consolidated statements of operations of the Company and SinglePlatform for the three months ended March 31, 2012, giving effect to the merger as if it occurred on January 1, 2011:


	Three months ended March 31, 2012
Pro forma revenue	$	60,148
Pro forma net loss		(777	)

The pro forma net loss presented primarily includes adjustments for amortization, interest income and income taxes. This pro forma information does not purport to indicate the results that would have actually been obtained had the acquisition been completed on the assumed date, or which may be realized in the future.

Transaction costs related to acquisitions were $149 for the three months ended March 31, 2012, which the Company recorded as acquisition costs and other related charges. The operating expenses of the acquired entities have been included in the consolidated financial statements beginning on their respective acquisition dates but have not been disclosed as the Company does not account for the results of the acquired entities separate from its own results.