(State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) |
Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||||||
☒ | Accelerated filer | ☐ | |||||||||||||||||||||
Non-accelerated filer | ☐ | Smaller reporting company | |||||||||||||||||||||
Emerging growth company | |||||||||||||||||||||||
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. | ☐ | ||||||||||||||||||||||
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). | Yes | ☒ | No | ||||||||||||||||||||
Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date. |
Page No. | ||||||||
September 30, | December 31, | ||||||||||
2021 | 2020 | ||||||||||
ASSETS | |||||||||||
Current assets: | |||||||||||
Cash and cash equivalents | $ | $ | |||||||||
Accounts receivable, net of allowance of $ | |||||||||||
Prepaid expenses and other current assets | |||||||||||
Total current assets | |||||||||||
Property and equipment, net | |||||||||||
Right-of-use assets | |||||||||||
Intangible assets, net | |||||||||||
Goodwill | |||||||||||
Deferred tax assets, net | |||||||||||
Other assets | |||||||||||
Total assets | $ | $ | |||||||||
LIABILITIES AND STOCKHOLDERS’ EQUITY | |||||||||||
Current liabilities: | |||||||||||
Accounts payable | $ | $ | |||||||||
Accrued expenses | |||||||||||
Contributor royalties payable | |||||||||||
Deferred revenue | |||||||||||
Other current liabilities | |||||||||||
Total current liabilities | |||||||||||
Deferred tax liability, net | |||||||||||
Lease liabilities | |||||||||||
Other non-current liabilities | |||||||||||
Total liabilities | |||||||||||
Commitments and contingencies (Note 13) | |||||||||||
Stockholders’ equity: | |||||||||||
Common stock, $ | |||||||||||
Treasury stock, at cost; | ( | ( | |||||||||
Additional paid-in capital | |||||||||||
Accumulated comprehensive loss | ( | ( | |||||||||
Retained earnings | |||||||||||
Total stockholders’ equity | |||||||||||
Total liabilities and stockholders’ equity | $ | $ |
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||
2021 | 2020 | 2021 | 2020 | ||||||||||||||||||||
Revenue | $ | $ | $ | $ | |||||||||||||||||||
Operating expenses: | |||||||||||||||||||||||
Cost of revenue | |||||||||||||||||||||||
Sales and marketing | |||||||||||||||||||||||
Product development | |||||||||||||||||||||||
General and administrative | |||||||||||||||||||||||
Total operating expenses | |||||||||||||||||||||||
Income from operations | |||||||||||||||||||||||
Other (expense) / income, net | ( | ( | ( | ( | |||||||||||||||||||
Income before income taxes | |||||||||||||||||||||||
Provision for income taxes | |||||||||||||||||||||||
Net income | $ | $ | $ | $ | |||||||||||||||||||
Earnings per share: | |||||||||||||||||||||||
Basic | $ | $ | $ | $ | |||||||||||||||||||
Diluted | $ | $ | $ | $ | |||||||||||||||||||
Weighted average shares outstanding: | |||||||||||||||||||||||
Basic | |||||||||||||||||||||||
Diluted |
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||
2021 | 2020 | 2021 | 2020 | ||||||||||||||||||||
Net income | $ | $ | $ | $ | |||||||||||||||||||
Foreign currency translation loss | ( | ( | ( | ( | |||||||||||||||||||
Other comprehensive loss | ( | ( | ( | ( | |||||||||||||||||||
Comprehensive income | $ | $ | $ | $ |
Additional Paid-in Capital | Accumulated Other Comprehensive Income / (Loss) | Retained Earnings | |||||||||||||||||||||||||||||||||||||||||||||
Common Stock | Treasury Stock | ||||||||||||||||||||||||||||||||||||||||||||||
Three Months Ended September 30, 2021 | Shares | Amount | Shares | Amount | Total | ||||||||||||||||||||||||||||||||||||||||||
Balance at June 30, 2021 | $ | $ | ( | $ | $ | ( | $ | $ | |||||||||||||||||||||||||||||||||||||||
Equity-based compensation | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||
Issuance of common stock in connection with employee stock option exercises and RSU vesting | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||
Common shares withheld for settlement of taxes in connection with equity-based compensation | ( | — | — | ( | — | — | ( | ||||||||||||||||||||||||||||||||||||||||
Repurchase of treasury shares | — | — | ( | — | — | — | ( | ||||||||||||||||||||||||||||||||||||||||
Cash dividends paid | — | — | — | — | — | — | ( | ( | |||||||||||||||||||||||||||||||||||||||
Other comprehensive income | — | — | — | — | — | ( | — | ( | |||||||||||||||||||||||||||||||||||||||
Net income | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||
Balance at September 30, 2021 | $ | $ | ( | $ | $ | ( | $ | $ | |||||||||||||||||||||||||||||||||||||||
Three Months Ended September 30, 2020 | |||||||||||||||||||||||||||||||||||||||||||||||
Balance at June 30, 2020 | $ | $ | ( | $ | $ | ( | $ | $ | |||||||||||||||||||||||||||||||||||||||
Equity-based compensation | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||
Issuance of common stock, net of issuance costs | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||
Issuance of common stock in connection with employee stock option exercises and RSU vesting | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||
Common shares withheld for settlement of taxes in connection with equity-based compensation | ( | — | — | — | ( | — | — | ( | |||||||||||||||||||||||||||||||||||||||
Cash dividends paid | — | — | — | — | — | — | ( | ( | |||||||||||||||||||||||||||||||||||||||
Other comprehensive loss | — | — | — | — | — | ( | — | ( | |||||||||||||||||||||||||||||||||||||||
Net income | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||
Balance at September 30, 2020 | $ | $ | ( | $ | $ | ( | $ | $ | |||||||||||||||||||||||||||||||||||||||
Nine Months Ended September 30, 2021 | |||||||||||||||||||||||||||||||||||||||||||||||
Balance at December 31, 2020 | $ | $ | ( | $ | $ | ( | $ | $ | |||||||||||||||||||||||||||||||||||||||
Equity-based compensation | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||
Issuance of common stock in connection with employee stock option exercises and RSU vesting | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||
Common shares withheld for settlement of taxes in connection with equity-based compensation | ( | ( | — | — | ( | — | — | ( | |||||||||||||||||||||||||||||||||||||||
Repurchase of treasury shares | — | — | ( | — | — | — | ( | ||||||||||||||||||||||||||||||||||||||||
Cash dividends paid | — | — | — | — | — | — | ( | ( | |||||||||||||||||||||||||||||||||||||||
Other comprehensive loss | — | — | — | — | — | ( | — | ( | |||||||||||||||||||||||||||||||||||||||
Net income | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||
Balance at September 30, 2021 | $ | $ | ( | $ | $ | ( | $ | $ | |||||||||||||||||||||||||||||||||||||||
Nine Months Ended September 30, 2020 | |||||||||||||||||||||||||||||||||||||||||||||||
Balance at December 31, 2019 | $ | $ | ( | $ | $ | ( | $ | $ | |||||||||||||||||||||||||||||||||||||||
— | — | — | — | — | — | ( | ( | ||||||||||||||||||||||||||||||||||||||||
Balance at January 1, 2020 | $ | $ | ( | $ | $ | ( | $ | $ | |||||||||||||||||||||||||||||||||||||||
Equity-based compensation | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||
Issuance of common stock, net of issuance costs | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||
Issuance of common stock in connection with employee stock option exercises and RSU vesting | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||
Common shares withheld for settlement of taxes in connection with equity-based compensation | ( | ( | — | — | ( | — | — | ( | |||||||||||||||||||||||||||||||||||||||
Cash dividends paid | — | — | — | — | — | — | ( | ( | |||||||||||||||||||||||||||||||||||||||
Other comprehensive loss | — | — | — | — | — | ( | — | ( | |||||||||||||||||||||||||||||||||||||||
Net income | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||
Balance at September 30, 2020 | $ | $ | ( | $ | $ | ( | $ | $ |
Nine Months Ended September 30, | |||||||||||
2021 | 2020 | ||||||||||
CASH FLOWS FROM OPERATING ACTIVITIES | |||||||||||
Net income | $ | $ | |||||||||
Adjustments to reconcile net income to net cash provided by operating activities: | |||||||||||
Depreciation and amortization | |||||||||||
Deferred taxes | ( | ||||||||||
Non-cash equity-based compensation | |||||||||||
Bad debt expense | |||||||||||
Changes in operating assets and liabilities: | |||||||||||
Accounts receivable | ( | ( | |||||||||
Prepaid expenses and other current and non-current assets | ( | ||||||||||
Accounts payable and other current and non-current liabilities | |||||||||||
Long-term incentives related to acquisitions | ( | ||||||||||
Contributor royalties payable | ( | ||||||||||
Deferred revenue | |||||||||||
Net cash provided by operating activities | $ | $ | |||||||||
CASH FLOWS FROM INVESTING ACTIVITIES | |||||||||||
Capital expenditures | ( | ( | |||||||||
Business combination, net of cash acquired | ( | ||||||||||
Asset acquisitions | ( | ||||||||||
Acquisition of content | ( | ( | |||||||||
Security deposit (payment) / release | ( | ||||||||||
Net cash used in investing activities | $ | ( | $ | ( | |||||||
CASH FLOWS FROM FINANCING ACTIVITIES | |||||||||||
Net proceeds from issuance of common stock | |||||||||||
Purchase of treasury shares | ( | ||||||||||
Proceeds from exercise of stock options | |||||||||||
Cash paid related to settlement of employee taxes related to RSU vesting | ( | ( | |||||||||
Payment of cash dividend | ( | ( | |||||||||
Net cash (used in) / provided by financing activities | $ | ( | $ | ||||||||
Effect of foreign exchange rate changes on cash | ( | ( | |||||||||
Net (decrease) / increase in cash, cash equivalents and restricted cash | ( | ||||||||||
Cash, cash equivalents and restricted cash, beginning of period | |||||||||||
Cash, cash equivalents and restricted cash, end of period | $ | $ | |||||||||
Supplemental Disclosure of Cash Information: | |||||||||||
Cash paid for income taxes | $ | $ | |||||||||
Assets acquired and liabilities assumed (in thousands): | PicMonkey1 | TurboSquid | Total | ||||||||
Cash and cash equivalents | $ | $ | $ | ||||||||
Other assets | |||||||||||
Property and equipment | |||||||||||
Right of use asset | |||||||||||
Intangible assets: | |||||||||||
Customer relationships | |||||||||||
Trademarks | |||||||||||
Developed technology | |||||||||||
Content library | |||||||||||
Intangible assets | |||||||||||
Goodwill | |||||||||||
Deferred tax asset | |||||||||||
Total assets acquired | $ | $ | $ | ||||||||
Accounts payable, accrued expenses and other liabilities | ( | ( | ( | ||||||||
Contributor royalties payable | ( | ( | |||||||||
Deferred revenue | ( | ( | |||||||||
Deferred tax liability | ( | ( | ( | ||||||||
Lease liability | ( | ( | |||||||||
Total liabilities assumed | ( | ( | ( | ||||||||
Net assets acquired | $ | $ | $ |
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||
2021 | 2020 | 2021 | 2020 | ||||||||||||||||||||
Revenue | |||||||||||||||||||||||
As Reported | $ | $ | $ | $ | |||||||||||||||||||
Pro Forma | |||||||||||||||||||||||
Income before income taxes | |||||||||||||||||||||||
As Reported | $ | $ | $ | $ | |||||||||||||||||||
Pro Forma |
As of September 30, 2021 | As of December 31, 2020 | ||||||||||
Computer equipment and software | $ | $ | |||||||||
Furniture and fixtures | |||||||||||
Leasehold improvements | |||||||||||
Property and equipment | |||||||||||
Less accumulated depreciation | ( | ( | |||||||||
Property and equipment, net | $ | $ |
Goodwill | |||||
Balance as of December 31, 2020 | $ | ||||
Goodwill related to acquisitions | |||||
Foreign currency translation adjustment | ( | ||||
Balance as of September 30, 2021 | $ |
As of September 30, 2021 | As of December 31, 2020 | ||||||||||||||||||||||||||||||||||||||||
Gross Carrying Amount | Accumulated Amortization | Net Carrying Amount | Weighted Average Life (Years) | Gross Carrying Amount | Accumulated Amortization | Net Carrying Amount | |||||||||||||||||||||||||||||||||||
Amortizing intangible assets: | |||||||||||||||||||||||||||||||||||||||||
Customer relationships | $ | $ | ( | $ | $ | $ | ( | $ | |||||||||||||||||||||||||||||||||
Trade name | ( | ( | |||||||||||||||||||||||||||||||||||||||
Developed technology | ( | ( | |||||||||||||||||||||||||||||||||||||||
Contributor content | ( | ( | |||||||||||||||||||||||||||||||||||||||
Patents | ( | ( | |||||||||||||||||||||||||||||||||||||||
Total | $ | $ | ( | $ | $ | $ | ( | $ |
As of September 30, 2021 | As of December 31, 2020 | ||||||||||
Compensation | $ | $ | |||||||||
Non-income taxes | |||||||||||
Website hosting and marketing fees | |||||||||||
Other expenses | |||||||||||
Total accrued expenses | $ | $ |
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||
2021 | 2020 | 2021 | 2020 | ||||||||||||||||||||
Cost of revenue | $ | ( | $ | $ | $ | ||||||||||||||||||
Sales and marketing | |||||||||||||||||||||||
Product development | |||||||||||||||||||||||
General and administrative | |||||||||||||||||||||||
Total | $ | $ | $ | $ |
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||
2021 | 2020 | 2021 | 2020 | ||||||||||||||||||||
Stock options | $ | $ | $ | $ | |||||||||||||||||||
RSUs | |||||||||||||||||||||||
Total | $ | $ | $ | $ |
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||
2021 | 2020 | 2021 | 2020 | ||||||||||||||||||||
E-commerce | $ | $ | $ | $ | |||||||||||||||||||
Enterprise | |||||||||||||||||||||||
Total Revenues | $ | $ | $ | $ |
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||
2021 | 2020 | 2021 | 2020 | ||||||||||||||||||||
Foreign currency (loss) / gain | $ | ( | $ | ( | $ | ( | $ | ( | |||||||||||||||
Interest income, net | |||||||||||||||||||||||
Total other (expense) / income | $ | ( | $ | ( | $ | ( | $ | ( | |||||||||||||||
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||
2021 | 2020 | 2021 | 2020 | ||||||||||||||||||||
Net income | $ | $ | $ | $ | |||||||||||||||||||
Shares used to compute basic net income per share | |||||||||||||||||||||||
Dilutive potential common shares | |||||||||||||||||||||||
Stock options | |||||||||||||||||||||||
Unvested restricted stock awards | |||||||||||||||||||||||
Shares used to compute diluted net income per share | |||||||||||||||||||||||
Basic net income per share | $ | $ | $ | $ | |||||||||||||||||||
Diluted net income per share | $ | $ | $ | $ | |||||||||||||||||||
Dilutive shares included in the calculation | |||||||||||||||||||||||
Anti-dilutive shares excluded from the calculation |
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||
2021 | 2020 | 2021 | 2020 | ||||||||||||||||||||
North America | $ | $ | $ | $ | |||||||||||||||||||
Europe | |||||||||||||||||||||||
Rest of the world | |||||||||||||||||||||||
Total revenue | $ | $ | $ | $ |
As of September 30, | As of December 31, | ||||||||||
2021 | 2020 | ||||||||||
North America | $ | $ | |||||||||
Europe | |||||||||||
Rest of the world | |||||||||||
Total long-lived tangible assets | $ | $ |
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||
2021 | 2020 | 2021 | 2020 | ||||||||||||||||||||
Subscribers (end of period)1 | 336,000 | 255,000 | 336,000 | 255,000 | |||||||||||||||||||
Subscriber revenue (in millions)1 | $ | 81.5 | $ | 67.6 | $ | 236.1 | $ | 194.2 | |||||||||||||||
Average revenue per customer (last twelve months)1 | $ | 361 | $ | 328 | $ | 361 | $ | 328 | |||||||||||||||
Paid downloads (in millions) | 44.3 | 43.4 | 135.0 | 134.2 | |||||||||||||||||||
Revenue per download | $ | 4.20 | $ | 3.79 | $ | 4.11 | $ | 3.60 | |||||||||||||||
Content in our collection (end of period, in millions): | |||||||||||||||||||||||
Images | 390 | 350 | 390 | 350 | |||||||||||||||||||
Footage clips | 23 | 20 | 23 | 20 |
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||
2021 | 2020 | 2021 | 2020 | ||||||||||||||||||||
E-commerce | $ | 121,707 | $ | 102,816 | $ | 360,822 | $ | 300,716 | |||||||||||||||
Enterprise | 72,732 | 62,411 | 206,810 | 185,026 | |||||||||||||||||||
Total Revenues | $ | 194,439 | $ | 165,227 | $ | 567,632 | $ | 485,742 |
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||
2021 | 2020 | 2021 | 2020 | ||||||||||||||||||||
(in thousands) | |||||||||||||||||||||||
Consolidated Statements of Operations: | |||||||||||||||||||||||
Revenue | $ | 194,439 | $ | 165,227 | $ | 567,632 | $ | 485,742 | |||||||||||||||
Operating expenses: | |||||||||||||||||||||||
Cost of revenue | 69,634 | 60,331 | 199,223 | 193,265 | |||||||||||||||||||
Sales and marketing | 54,456 | 36,655 | 142,273 | 114,872 | |||||||||||||||||||
Product development | 13,565 | 10,617 | 36,289 | 36,171 | |||||||||||||||||||
General and administrative | 34,615 | 28,277 | 96,335 | 83,761 | |||||||||||||||||||
Total operating expenses | 172,270 | 135,880 | 474,120 | 428,069 | |||||||||||||||||||
Income from operations | 22,169 | 29,347 | 93,512 | 57,673 | |||||||||||||||||||
Other (expense) / income, net | (1,749) | (1,168) | (2,888) | (506) | |||||||||||||||||||
Income before income taxes | 20,420 | 28,179 | 90,624 | 57,167 | |||||||||||||||||||
Provision for income taxes | 4,391 | 5,597 | 15,627 | 11,280 | |||||||||||||||||||
Net income | $ | 16,029 | $ | 22,582 | $ | 74,997 | $ | 45,887 |
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||
2021 | 2020 | 2021 | 2020 | ||||||||||||||||||||
Consolidated Statements of Operations: | |||||||||||||||||||||||
Revenue | 100 | % | 100 | % | 100 | % | 100 | % | |||||||||||||||
Operating expenses: | |||||||||||||||||||||||
Cost of revenue | 36 | % | 37 | % | 35 | % | 40 | % | |||||||||||||||
Sales and marketing | 28 | % | 22 | % | 25 | % | 24 | % | |||||||||||||||
Product development | 7 | % | 6 | % | 6 | % | 7 | % | |||||||||||||||
General and administrative | 18 | % | 17 | % | 17 | % | 17 | % | |||||||||||||||
Total operating expenses | 89 | % | 82 | % | 84 | % | 88 | % | |||||||||||||||
Income from operations | 11 | % | 18 | % | 16 | % | 12 | % | |||||||||||||||
Other (expense) / income, net | (1) | % | (1) | % | (1) | % | — | % | |||||||||||||||
Income before income taxes | 11 | % | 17 | % | 16 | % | 12 | % | |||||||||||||||
Provision for income taxes | 2 | % | 3 | % | 3 | % | 2 | % | |||||||||||||||
Net income | 8 | % | 14 | % | 13 | % | 9 | % |
Three Months Ended September 30, | |||||||||||||||||||||||
2021 | 2020 | $ Change | % Change | ||||||||||||||||||||
(in thousands) | |||||||||||||||||||||||
Consolidated Statements of Operations: | |||||||||||||||||||||||
Revenue | $ | 194,439 | $ | 165,227 | $ | 29,212 | 18 | % | |||||||||||||||
Operating expenses: | |||||||||||||||||||||||
Cost of revenue | 69,634 | 60,331 | 9,303 | 15 | |||||||||||||||||||
Sales and marketing | 54,456 | 36,655 | 17,801 | 49 | |||||||||||||||||||
Product development | 13,565 | 10,617 | 2,948 | 28 | |||||||||||||||||||
General and administrative | 34,615 | 28,277 | 6,338 | 22 | |||||||||||||||||||
Total operating expenses | 172,270 | 135,880 | 36,390 | 27 | |||||||||||||||||||
Income from operations | 22,169 | 29,347 | (7,178) | (24) | |||||||||||||||||||
Other (expense) / income, net | (1,749) | (1,168) | (581) | 50 | |||||||||||||||||||
Income before income taxes | 20,420 | 28,179 | (7,759) | (28) | |||||||||||||||||||
Provision for income taxes | 4,391 | 5,597 | (1,206) | (22) | |||||||||||||||||||
Net income | $ | 16,029 | $ | 22,582 | $ | (6,553) | (29) | % |
Nine Months Ended September 30, | |||||||||||||||||||||||
2021 | 2020 | $ Change | % Change | ||||||||||||||||||||
(in thousands) | |||||||||||||||||||||||
Consolidated Statements of Operations Data: | |||||||||||||||||||||||
Revenue | $ | 567,632 | $ | 485,742 | $ | 81,890 | 17 | % | |||||||||||||||
Operating expenses: | |||||||||||||||||||||||
Cost of revenue | 199,223 | 193,265 | 5,958 | 3 | % | ||||||||||||||||||
Sales and marketing | 142,273 | 114,872 | 27,401 | 24 | % | ||||||||||||||||||
Product development | 36,289 | 36,171 | 118 | — | % | ||||||||||||||||||
General and administrative | 96,335 | 83,761 | 12,574 | 15 | % | ||||||||||||||||||
Total operating expenses | 474,120 | 428,069 | 46,051 | 11 | % | ||||||||||||||||||
Income from operations | 93,512 | 57,673 | 35,839 | 62 | % | ||||||||||||||||||
Other (expense) / income, net | (2,888) | (506) | (2,382) | * | |||||||||||||||||||
Income before income taxes | 90,624 | 57,167 | 33,457 | 59 | % | ||||||||||||||||||
Provision for income taxes | 15,627 | 11,280 | 4,347 | 39 | % | ||||||||||||||||||
Net income | $ | 74,997 | $ | 45,887 | $ | 29,110 | 63 | % |
Nine Months Ended September 30, | |||||||||||
2021 | 2020 | ||||||||||
Net cash provided by operating activities | $ | 161,858 | $ | 100,225 | |||||||
Net cash used in investing activities | $ | (242,407) | $ | (22,088) | |||||||
Net cash (used in) / provided by financing activities | $ | (46,426) | $ | 1,674 |
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||
2021 | 2020 | 2021 | 2020 | ||||||||||||||||||||
Non-GAAP Financial Measures: | (in thousands) | ||||||||||||||||||||||
Adjusted EBITDA | $ | 44,400 | $ | 47,382 | $ | 153,882 | $ | 106,474 | |||||||||||||||
Adjusted net income | 26,354 | 29,326 | 100,925 | 60,647 | |||||||||||||||||||
Free cash flow | $ | 44,318 | $ | 57,041 | $ | 132,801 | $ | 85,600 | |||||||||||||||
Revenue growth on a constant currency basis | 17 | % | 3 | % | 15 | % | 1 | % |
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||
2021 | 2020 | 2021 | 2020 | ||||||||||||||||||||
(in thousands) | |||||||||||||||||||||||
Net income | $ | 16,029 | $ | 22,582 | $ | 74,997 | $ | 45,887 | |||||||||||||||
Add / (less) Non-GAAP adjustments: | |||||||||||||||||||||||
Depreciation and amortization | 13,488 | 9,750 | 33,731 | 31,120 | |||||||||||||||||||
Non-cash equity-based compensation | 8,743 | 8,285 | 26,639 | 17,681 | |||||||||||||||||||
Other adjustments, net(1) | 1,749 | 1,168 | 2,888 | 506 | |||||||||||||||||||
Provision for income taxes | 4,391 | 5,597 | 15,627 | 11,280 | |||||||||||||||||||
Adjusted EBITDA | $ | 44,400 | $ | 47,382 | $ | 153,882 | $ | 106,474 | |||||||||||||||
Adjusted EBITDA margin | 22.8 | % | 28.7 | % | 27.1 | % | 21.9 | % |
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||
2021 | 2020 | 2021 | 2020 | ||||||||||||||||||||
(in thousands) | |||||||||||||||||||||||
Net income | $ | 16,029 | $ | 22,582 | $ | 74,997 | $ | 45,887 | |||||||||||||||
Add / (less) Non-GAAP adjustments: | |||||||||||||||||||||||
Non-cash equity-based compensation | 8,743 | 8,285 | 26,639 | 17,681 | |||||||||||||||||||
Tax effect of non-cash equity-based compensation(1) | (2,055) | (1,947) | (6,260) | (4,155) | |||||||||||||||||||
Acquisition-related amortization expense | 4,754 | 531 | 7,253 | 1,613 | |||||||||||||||||||
Tax effect of acquisition-related amortization expense(1) | (1,117) | (125) | (1,704) | (379) | |||||||||||||||||||
Adjusted net income | $ | 26,354 | $ | 29,326 | $ | 100,925 | $ | 60,647 | |||||||||||||||
Adjusted net income per diluted common share | $ | 0.70 | $ | 0.80 | $ | 2.71 | $ | 1.68 | |||||||||||||||
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||
2021 | 2020 | 2021 | 2020 | ||||||||||||||||||||
(in thousands) | |||||||||||||||||||||||
Reported revenue (in thousands) | $ | 194,439 | $ | 165,227 | $ | 567,632 | $ | 485,742 | |||||||||||||||
Revenue growth | 18 | % | 4 | % | 17 | % | — | % | |||||||||||||||
Revenue growth on a constant currency basis | 17 | % | 3 | % | 15 | % | 1 | % | |||||||||||||||
E-commerce reported revenue (in thousands) | $ | 121,707 | $ | 102,816 | $ | 360,822 | $ | 300,716 | |||||||||||||||
E-commerce revenue growth | 18 | % | 7 | % | 20 | % | 3 | % | |||||||||||||||
E-commerce revenue growth on a constant currency basis | 18 | % | 6 | % | 18 | % | 3 | % | |||||||||||||||
Enterprise reported revenue (in thousands) | $ | 72,732 | $ | 62,411 | $ | 206,810 | $ | 185,026 | |||||||||||||||
Enterprise revenue growth | 17 | % | (1) | % | 12 | % | (4) | % | |||||||||||||||
Enterprise revenue growth on a constant currency basis | 15 | % | (1) | % | 9 | % | (4) | % |
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||
2021 | 2020 | 2021 | 2020 | ||||||||||||||||||||
(in thousands) | |||||||||||||||||||||||
Net cash provided by operating activities | $ | 54,642 | $ | 63,882 | $ | 161,858 | $ | 100,225 | |||||||||||||||
Capital expenditures | (5,830) | (6,311) | (21,167) | (20,277) | |||||||||||||||||||
Content acquisitions | (4,494) | (530) | (7,890) | (2,107) | |||||||||||||||||||
Payments related to long-term incentives related to acquisitions | — | — | — | 7,759 | |||||||||||||||||||
Free Cash Flow | $ | 44,318 | $ | 57,041 | $ | 132,801 | $ | 85,600 |
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||||||||||||||||||||||||||||||||||||
2021 | 2020 | 2021 | 2020 | |||||||||||||||||||||||||||||||||||||||||||||||
U.S. Dollars | Originating Currency | U.S. Dollars | Originating Currency | U.S. Dollars | Originating Currency | U.S. Dollars | Originating Currency | |||||||||||||||||||||||||||||||||||||||||||
Euro | $ | 35,930 | € | 30,333 | $ | 32,949 | € | 28,940 | $ | 112,573 | € | 94,876 | $ | 99,397 | € | 60,095 | ||||||||||||||||||||||||||||||||||
British pounds | 14,678 | £ | 10,681 | 12,439 | £ | 9,743 | 43,587 | £ | 31,802 | 35,916 | £ | 18,509 | ||||||||||||||||||||||||||||||||||||||
All other non-U.S. currencies(1) | 14,261 | 12,567 | 42,290 | 35,770 | ||||||||||||||||||||||||||||||||||||||||||||||
Total foreign currency | 64,869 | 57,955 | 198,450 | 171,083 | ||||||||||||||||||||||||||||||||||||||||||||||
U.S. dollar | 129,570 | 107,272 | 369,182 | 314,659 | ||||||||||||||||||||||||||||||||||||||||||||||
Total revenue | $ | 194,439 | $ | 165,227 | $ | 567,632 | $ | 485,742 | ||||||||||||||||||||||||||||||||||||||||||
Exhibit | ||||||||
Number | Exhibit Description | |||||||
31.1# | ||||||||
31.2# | ||||||||
32# | ||||||||
101.INS | XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL 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 | |||||||
104 | Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101) |
SHUTTERSTOCK, INC. | ||||||||
Dated: October 26, 2021 | By: | /s/ Jarrod Yahes | ||||||
Jarrod Yahes | ||||||||
Chief Financial Officer | ||||||||
(Principal Financial Officer) | ||||||||
Dated: October 26, 2021 | By: | /s/ Steven Ciardiello | ||||||
Steven Ciardiello | ||||||||
Chief Accounting Officer | ||||||||
(Principal Accounting Officer) | ||||||||
Date: October 26, 2021 | By: | /s/ Stan Pavlovsky | ||||||
Stan Pavlovsky | ||||||||
Chief Executive Officer | ||||||||
(Principal Executive Officer) |
Date: October 26, 2021 | By: | /s/ Jarrod Yahes | ||||||
Jarrod Yahes | ||||||||
Chief Financial Officer | ||||||||
(Principal Financial Officer) |
Date: October 26, 2021 | By: | /s/ Stan Pavlovsky | ||||||
Stan Pavlovsky | ||||||||
Chief Executive Officer | ||||||||
(Principal Executive Officer) |
Date: October 26, 2021 | By: | /s/ Jarrod Yahes | ||||||
Jarrod Yahes | ||||||||
Chief Financial Officer | ||||||||
(Principal Financial Officer) |
Consolidated Balance Sheets (Parenthetical) - USD ($) shares in Thousands, $ in Thousands |
Sep. 30, 2021 |
Dec. 31, 2020 |
---|---|---|
Statement of Financial Position [Abstract] | ||
Allowance for doubtful accounts | $ 2,463 | $ 4,942 |
Common stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Common stock, shares authorized (in shares) | 200,000 | 200,000 |
Common stock, shares issued (in shares) | 39,191 | 38,803 |
Common stock, shares outstanding (in shares) | 36,591 | 36,245 |
Treasury stock, shares held in treasury (in shares) | 2,600 | 2,558 |
Consolidated Statements of Operations - USD ($) shares in Thousands, $ in Thousands |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2021 |
Sep. 30, 2020 |
Sep. 30, 2021 |
Sep. 30, 2020 |
|
Income Statement [Abstract] | ||||
Revenue | $ 194,439 | $ 165,227 | $ 567,632 | $ 485,742 |
Operating expenses: | ||||
Cost of revenue | 69,634 | 60,331 | 199,223 | 193,265 |
Sales and marketing | 54,456 | 36,655 | 142,273 | 114,872 |
Product development | 13,565 | 10,617 | 36,289 | 36,171 |
General and administrative | 34,615 | 28,277 | 96,335 | 83,761 |
Total operating expenses | 172,270 | 135,880 | 474,120 | 428,069 |
Income from operations | 22,169 | 29,347 | 93,512 | 57,673 |
Other (expense) / income, net | (1,749) | (1,168) | (2,888) | (506) |
Income before income taxes | 90,624 | 57,167 | ||
Provision for income taxes | 4,391 | 5,597 | 15,627 | 11,280 |
Net income | $ 16,029 | $ 22,582 | $ 74,997 | $ 45,887 |
Earnings per share: | ||||
Basic (in dollars per share) | $ 0.44 | $ 0.63 | $ 2.05 | $ 1.28 |
Diluted (in dollars per share) | $ 0.43 | $ 0.62 | $ 2.01 | $ 1.27 |
Weighted average shares outstanding: | ||||
Basic (in shares) | 36,622 | 35,962 | 36,510 | 35,713 |
Diluted (in shares) | 37,417 | 36,494 | 37,285 | 36,095 |
Consolidated Statements of Comprehensive Income - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2021 |
Sep. 30, 2020 |
Sep. 30, 2021 |
Sep. 30, 2020 |
|
Statement of Comprehensive Income [Abstract] | ||||
Net income | $ 16,029 | $ 22,582 | $ 74,997 | $ 45,887 |
Foreign currency translation loss | (1,842) | (714) | (1,552) | (2,908) |
Other comprehensive loss | (1,842) | (714) | (1,552) | (2,908) |
Comprehensive income | $ 14,187 | $ 21,868 | $ 73,445 | $ 42,979 |
Summary of Operations and Significant Accounting Policies |
9 Months Ended |
---|---|
Sep. 30, 2021 | |
Accounting Policies [Abstract] | |
Summary of Operations and Significant Accounting Policies | Summary of Operations and Significant Accounting Policies Summary of Operations Shutterstock, Inc. (the “Company” or “Shutterstock”) is a leading global creative platform offering full-service solutions, high-quality content, and applications for brands, businesses and media companies. The Company’s platform brings together users and contributors of content by providing readily-searchable content that our customers pay to license and by compensating contributors as their content is licensed. Contributors upload their content to the Company’s web properties in exchange for royalty payments based on customer download activity. The Company’s key offerings include: •Images - consisting of photographs, vectors and illustrations. Images are typically used in visual communications, such as websites, digital and print marketing materials, corporate communications, books, publications and other similar uses. •Footage - consisting of video clips, premium footage filmed by industry experts and cinema grade video effects, available in HD and 4K formats. Footage is often integrated into websites, social media, marketing campaigns and cinematic productions. •Music - consisting of high-quality music tracks and sound effects, which are often used to complement images and footage. •3D - consisting of 3D models, used in a variety of industries such as advertising, media and video production, gaming, retail, education, design and architecture, following the Company’s acquisition of TurboSquid, Inc. on February 1, 2021. See Note 3 Acquisitions. •Creative Design Software - consisting of the Company’s online graphic design and image editing platform. On September 3, 2021, the Company completed the acquisition of substantially all of the assets and assumption of certain liabilities from PicMonkey, LLC. See Note 3 Acquisitions. Basis of Presentation The unaudited condensed consolidated financial statements and accompanying notes have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, these financial statements do not include all information and footnotes required by GAAP for complete financial statements. The interim Consolidated Balance Sheet as of September 30, 2021, and the Consolidated Statements of Operations, Comprehensive Income and Stockholders’ Equity for the three and nine months ended September 30, 2021 and 2020, and the Consolidated Statements of Cash Flows for the nine months ended September 30, 2021 and 2020, are unaudited. The Consolidated Balance Sheet as of December 31, 2020, included herein, was derived from the audited financial statements as of that date, but does not include all disclosures required by GAAP. These unaudited interim financial statements have been prepared on a basis consistent with the Company’s annual financial statements and, in the opinion of management, reflect all adjustments, which include all normal recurring adjustments necessary to fairly state the Company’s financial position as of September 30, 2021, and its consolidated results of operations, comprehensive income and stockholders’ equity for the three and nine months ended September 30, 2021 and 2020, and its cash flows for the nine months ended September 30, 2021 and 2020. The financial data and the other financial information disclosed in the notes to the financial statements related to these periods are also unaudited. The results of operations for the nine months ended September 30, 2021 are not necessarily indicative of the results to be expected for the fiscal year ending December 31, 2021 or for any other future annual or interim period. These financial statements should be read in conjunction with the Company’s audited consolidated financial statements and notes thereto as of and for the year ended December 31, 2020 included in the Company’s Annual Report on Form 10-K, which was filed with the SEC on February 11, 2021. The unaudited consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries. All intercompany balances and transactions have been eliminated in consolidation. Certain immaterial changes in presentation have been made to conform the prior period presentation to current period reporting. Use of Estimates The preparation of the consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported and disclosed in the financial statements. Actual results could differ from those estimates. Such estimates include, but are not limited to, the determination of the allowance for doubtful accounts, the volume of expected unused licenses for our subscription-based products, the assessment of recoverability of property and equipment, the fair value of acquired goodwill and intangible assets, the amount of non-cash equity-based compensation, the assessment of recoverability of deferred tax assets, the measurement of income tax and contingent non-income tax liabilities and the determination of the incremental borrowing rate used to calculate the lease liability. Cash and Cash Equivalents The Company’s cash and cash equivalents consist primarily of bank deposits and money market funds. Allowance for Doubtful Accounts The Company’s accounts receivable consists of customer obligations due under normal trade terms, carried at their face value less an allowance for doubtful accounts, if required. The Company determines its allowance for doubtful accounts based on an evaluation of (i) the aging of its accounts receivable considering historical receivables loss rates, (ii) on a customer-by-customer basis, where appropriate, and (iii) the economic environments in which the Company operates. During the nine months ended September 30, 2021, the Company recorded bad debt expense of $0.2 million. As of September 30, 2021 and December 31, 2020, the Company’s allowance for doubtful accounts was approximately $2.5 million and $4.9 million, respectively. The allowance for doubtful accounts is included as a reduction of accounts receivable on the Consolidated Balance Sheets. The Company adopted ASU 2016-13, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses of Financial Instruments (“ASU 2016-13”) on January 1, 2020, using the modified retrospective method and recorded a cumulative-effect adjustment of $0.2 million, net of tax, in retained earnings as of January 1, 2020. Chargeback and Sales Refund Allowance The Company establishes a chargeback allowance and sales refund reserve allowance based on factors surrounding historical credit card chargeback trends, historical sales refund trends and other information. As of September 30, 2021 and December 31, 2020, the Company’s combined allowance for chargebacks and sales refunds was $0.5 million, which was included as a component of other current liabilities on the Consolidated Balance Sheets. Revenue Recognition The majority of the Company’s revenue is earned from the license of content. Content licenses are generally purchased on a monthly or annual basis, whereby a customer pays for a predetermined quantity of content that may be downloaded over a specific period of time, or, on a transactional basis, whereby a customer pays for individual content licenses at the time of download. The Company recognizes revenue upon the satisfaction of performance obligations, which generally occurs when content is downloaded by a customer. The Company recognizes revenue on both its subscription-based and transaction-based products when content is downloaded, at which time the license is provided. In addition, management estimates expected unused licenses for subscription-based products and recognizes the estimated revenue associated with the unused licenses as digital content is downloaded and licenses are obtained for such content by the customer during the subscription period. The estimate of unused licenses is based on historical download activity, and future changes in the estimate could impact the timing of revenue recognition of the Company’s subscription products. The Company expenses contract acquisition costs as incurred, to the extent that the amortization period would otherwise be one year or less. Collectability is reasonably assured at the time the electronic order or contract is entered. The majority of the Company’s customers purchase products by making an electronic payment with a credit card at the time of a transaction. Customer payments received in advance of revenue recognition are contract liabilities and are recorded as deferred revenue. Customers that do not pay in advance are invoiced and are required to make payments under standard credit terms. Collectability for customers who pay on credit terms allowing for payment beyond the date at which service commences is based on a credit evaluation for certain new customers and transaction history with existing customers. The Company recognizes revenue gross of contributor royalties because the Company is the principal in the transaction, as it is the party responsible for the performance obligation and it controls the product or service before transferring it to the customer. The Company also licenses content to customers through third-party resellers. Third-party resellers sell the Company’s products directly to customers as the principal in those transactions. Accordingly, the Company recognizes revenue net of costs paid to resellers. Recently Adopted Accounting Standard Updates In December 2019, the FASB issued ASU 2019-12, Income Taxes (Topic 740), Simplifying the Accounting for Income Taxes (“ASU-2019-12”). ASU 2019-12 eliminates certain exceptions to the guidance in Topic 740 related to the approach for intra-period tax allocation, the methodology for calculating income taxes in an interim period and the recognition of deferred tax liabilities for outside basis differences. The new guidance also simplifies aspects of the accounting for franchise taxes, enacted changes in tax laws or rates and clarifies the accounting transactions that result in a step-up in the tax basis of goodwill. The guidance is effective for fiscal years beginning after December 15, 2020 and interim periods within those fiscal years. The Company adopted ASU 2019-12, effective January 1, 2021. The impact of adoption of this standard on the consolidated financial statements, including accounting policies, processes and systems, was not material.
|
Fair Value Measurements and Long-term Investments |
9 Months Ended |
---|---|
Sep. 30, 2021 | |
Fair Value Disclosures [Abstract] | |
Fair Value Measurements and Long-term Investments | Fair Value Measurements and Long-term Investments Fair Value Measurements The Company had no assets or liabilities requiring fair value hierarchy disclosures as of September 30, 2021 or December 31, 2020, except as noted below. Cash Equivalents Cash equivalents includes money market accounts and are classified as a level 1 measurement based on quoted prices in active markets for identical assets that the reporting entity can access at the measurement date. As of September 30, 2021 and December 31, 2020, the Company had cash equivalent balances of $205.1 million and $250.0 million, respectively. Other Fair Value Measurements The carrying amounts of cash and cash equivalents, accounts receivable, accounts payable and accrued expenses approximate fair value because of the short-term nature of these instruments. The Company’s non-financial assets, which include property and equipment, intangible assets and goodwill, are not required to be measured at fair value on a recurring basis. However, if the Company is required to evaluate a non-financial asset for impairment, whether due to certain triggering events or because annual impairment testing is required, a resulting asset impairment would require that the non-financial asset be recorded at fair value. Long-term Investments As of September 30, 2021 and December 31, 2020, the Company’s long-term investments were in equity securities with no readily determinable fair value, totaled $20.0 million, and were reported within other assets on the Consolidated Balance Sheets. The Company uses the measurement alternative for these equity investments and their carrying value is reported at cost, adjusted for impairments or any observable price changes in ordinary transactions with identical or similar investments. On a quarterly basis, the Company evaluates the carrying value of its long-term investments for impairment, which includes an assessment of revenue growth, earnings performance, working capital and general market conditions. As of September 30, 2021, no adjustments to the carrying values of the Company’s long-term investments were identified as a result of this assessment. Changes in performance negatively impacting operating results and cash flows of these investments could result in the Company recording an impairment charge in future periods.
|
Acquisitions |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Business Combination and Asset Acquisition [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Acquisitions | Acquisitions PicMonkey, LLC On September 3, 2021, the Company completed the acquisition of substantially all of the assets and assumption of certain liabilities from PicMonkey, LLC (“PicMonkey”), for approximately $110 million. The total purchase price was paid with existing cash on hand in the three months ended September 30, 2021. In connection with the acquisition, the Company incurred approximately $2 million of transaction costs, which is included in general and administrative expenses on the Consolidated Statements of Operations. PicMonkey is a Washington-based company that operates an online graphic design and image editing platform that enables creators of any skill level to design high-quality visual assets. The Company believes this acquisition provides Shutterstock’s global customer community with professional-grade, easy-to-use design tools. The identifiable intangible assets, which include customer relationships, developed technology and trade names, have a weighted average life of approximately 9.8 years. The goodwill arising from the transaction is primarily attributable to expected operational synergies and is expected to be deductible for income tax purposes. The allocation of the purchase price is preliminary and will be finalized within the allowable measurement period once independent valuations of the fair value of the assets acquired and liabilities assumed are completed. TurboSquid, Inc. On February 1, 2021, the Company completed its acquisition of all of the outstanding shares of TurboSquid, Inc. (“TurboSquid”), for approximately $77.3 million. The total purchase price was paid with existing cash on hand in the three months ended March 31, 2021. In connection with the acquisition, the Company incurred approximately $1.6 million of transaction costs, which is included in general and administrative expenses on the Consolidated Statements of Operations. TurboSquid is a Louisiana-based company that operates a marketplace offering more than one million 3D models, a marketplace for 2D images derived from 3D objects and a digital asset management solution. The Company believes this acquisition establishes Shutterstock as the premium destination for 3D models as well as 3D models in an easy-to-use 2D format. The identifiable intangible assets, which include customer relationships, developed technology, trade names and contributor content, have a weighted average life of approximately 8.2 years. The goodwill arising from the transaction is primarily attributable to expected operational synergies and is not deductible for income tax purposes. The PicMonkey and TurboSquid transactions were accounted for using the acquisition method and, accordingly, the results of the acquired businesses have been included in the Company’s results of operations from the respective acquisition dates. For the three and nine months ended September 30, 2021, revenue of $8.9 million and $20.6 million, respectively, was included in the Consolidated Statements of Operations related to these acquired companies. The fair value of consideration transferred in these business combinations have been allocated to the intangible and tangible assets acquired and liabilities assumed at the acquisition date, with the remaining unallocated amount recorded as goodwill. The identifiable intangible assets of these acquisitions are being amortized on a straight-line basis. The fair value of the customer relationships was determined using a variation of the income approach known as the multiple-period excess earnings method. The fair value of the trade names and developed technology were determined using the relief-from-royalty method, and the fair value of the contributor content was determined using the cost-to-recreate method. The aggregate purchase price for these acquisitions have been allocated to the assets acquired and liabilities assumed as follows (in thousands):
____________________________________________________ 1 The allocation of the purchase price is preliminary and will be finalized within the allowable measurement period once independent valuations of the fair value of the assets acquired and liabilities assumed are completed. The following unaudited pro forma consolidated financial information (in thousands) reflects the results of operations of the Company for the three and nine months ended September 30, 2021 and 2020, as if the PicMonkey and TurboSquid acquisitions had been completed on January 1, 2020, after giving effect to certain purchase accounting adjustments, primarily related to intangible assets and transaction costs. These pro forma results have been prepared for comparative purposes only and are not necessarily indicative of what the Company’s operating results would have been, had the acquisitions actually taken place at the beginning of the previous annual period:
Asset Acquisitions In July 2021, the Company completed the acquisitions of Pattern89, Inc., Datasine Limited and assets from Shotzr, Inc. These three entities provide data driven insights through their artificial intelligence platforms. The aggregate purchase price for these transactions was approximately $35 million, and is subject to customary working capital and other adjustments and was paid from existing cash on hand. Approximately $3.6 million of the total purchase consideration was subject to contractual holdback provisions and is expected to be paid within the next 12 months. The Company has accounted for these transactions as asset acquisitions and has recorded a total of $41 million of developed technology intangible assets, which are being amortized on a straight-line basis over a useful life of three years.
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Property and Equipment |
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Property, Plant and Equipment [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Property and Equipment | Property and Equipment Property and equipment is summarized as follows (in thousands):
Depreciation expense related to property and equipment was $7.9 million and $8.4 million for the three months ended September 30, 2021 and 2020, respectively, and $23.8 million and $27.3 million for the nine months ended September 30, 2021 and 2020, respectively. Cost of revenues included depreciation expense of $7.1 million and $7.5 million for the three months ended September 30, 2021 and 2020, respectively, and $21.3 million and $24.3 million for the nine months ended September 30, 2021 and 2020, respectively. General and administrative expense included depreciation expense of $0.8 million and $0.9 million for the three months ended September 30, 2021 and 2020, respectively, and $2.5 million and $3.0 million for the nine months ended September 30, 2021 and 2020, respectively. Capitalized Internal-Use Software The Company capitalized costs related to the development of internal-use software of $6.7 million and $6.1 million for the three months ended September 30, 2021 and 2020, respectively, and $20.9 million and $19.3 million for the nine months ended September 30, 2021 and 2020, respectively. Capitalized amounts are included as a component of property and equipment under computer equipment and software on the Consolidated Balance Sheets. The portion of total depreciation expense related to capitalized internal-use software was $6.7 million and $7.1 million for the three months ended September 30, 2021 and 2020, respectively, and $20.1 million and $22.0 million for the nine months ended September 30, 2021 and 2020, respectively. Depreciation expense related to capitalized internal-use software is included in cost of revenue in the Consolidated Statements of Operations. As of September 30, 2021 and December 31, 2020, the Company had capitalized internal-use software of $38.8 million and $38.0 million, respectively, net of accumulated depreciation, which was included in property and equipment, net.
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Goodwill and Intangible Assets |
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Goodwill and Intangible Assets Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Goodwill and Intangible Assets | Goodwill and Intangible Assets Goodwill The Company’s goodwill balance is attributable to its Content reporting unit and is tested for impairment annually on October 1 or upon a triggering event. No triggering events were identified during the nine months ended September 30, 2021. The following table summarizes the changes in the Company’s goodwill balance during the nine months ended September 30, 2021 (in thousands):
Intangible Assets Intangible assets consisted of the following as of September 30, 2021 and December 31, 2020 (in thousands):
Amortization expense was $5.6 million and $1.3 million for the three months ended September 30, 2021 and 2020, respectively, and $9.9 million and $3.8 million for the nine months ended September 30, 2021 and 2020, respectively. Cost of revenue included amortization expense of $4.2 million and $0.7 million for the three months ended September 30, 2021 and 2020, respectively, and $6.5 million and $2.0 million for the nine months ended September 30, 2021 and 2020, respectively. General and administrative expense included amortization expense of $1.4 million and $0.6 million for the three months ended September 30, 2021 and 2020, respectively, and $3.4 million and $1.8 million for the nine months ended September 30, 2021 and 2020, respectively. The Company determined that there was no indication of impairment of the intangible assets for any period presented. Estimated amortization expense is: $7.1 million for the remaining three months of 2021, $28.3 million in 2022, $27.9 million in 2023, $20.8 million in 2024, $10.1 million in 2025, $8.1 million in 2026 and $27.9 million thereafter.
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Accrued Expenses |
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Payables and Accruals [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Accrued Expenses | Accrued Expenses Accrued expenses consisted of the following (in thousands):
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Stockholders’ Equity and Equity-Based Compensation |
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Share-based Payment Arrangement [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Stockholders’ Equity and Equity-Based Compensation | Stockholders’ Equity and Equity-Based Compensation Stockholders’ Equity Common Stock The Company issued approximately 18,000 and 15,000 shares of common stock during the three months ended September 30, 2021 and 2020, respectively, and 388,000 and 206,000 for the nine months ended September 30, 2021 and 2020, respectively, related to the exercise of stock options and the vesting of Restricted Stock Units. Treasury Stock In October 2015, the Company’s Board of Directors approved a share repurchase program, authorizing the Company to purchase up to $100 million of its common stock. In February 2017, the Company’s Board of Directors approved an increase to the share repurchase program, authorizing the Company to repurchase up to an additional $100 million of its outstanding common stock. The Company expects to fund future repurchases, if any, through a combination of cash on hand, cash generated by operations and future financing transactions, if appropriate. Accordingly, the share repurchase program is subject to the Company having available cash to fund repurchases. Under the share repurchase program, management is authorized to purchase shares of the Company’s common stock from time to time through open market purchases or privately negotiated transactions at prevailing prices as permitted by securities laws and other legal requirements, and subject to market conditions and other factors. During the three and nine months ended September 30, 2021, the Company repurchased approximately 41,900 shares of its common stock at an average per share cost of $115.95. During the nine months ended September 30, 2020, the Company did not repurchase any shares of its common stock under the share repurchase program. As of September 30, 2021, the Company had $95 million of remaining authorization for purchases under the share repurchase program. Dividends The Company declared and paid cash dividends of $0.21 and $0.63 per share of common stock, or $7.7 million and $23.0 million, during the three and nine months ended September 30, 2021, respectively, and $0.17 and $0.51 per share of common stock, or $6.1 million and $18.2 million, during the three and nine months ended September 30, 2020, respectively. On October 18, 2021, the Company’s Board of Directors declared a quarterly cash dividend of $0.21 per share of outstanding common stock payable on December 16, 2021 to stockholders of record at the close of business on December 2, 2021. Future declarations of dividends are subject to the final determination of the Board of Directors, and will depend on, among other things, the Company’s future financial condition, results of operations, capital requirements, capital expenditure requirements, contractual restrictions, anticipated cash needs, business prospects, provisions of applicable law and other factors the Board of Directors may deem relevant. Equity-Based Compensation The Company recognizes stock-based compensation expense for all equity-based payment awards, including employee Restricted Stock Units and Performance-based Restricted Stock Units (“PRSUs” and, collectively with Restricted Stock Units, “RSUs”) and stock options granted under the Company’s Amended and Restated 2012 Omnibus Equity Incentive Plan (the “2012 Plan”), based on the fair value of each award on the grant date. The following table summarizes non-cash equity-based compensation expense, net of forfeitures, by financial statement line item included in the accompanying Consolidated Statements of Operations for the three and nine months ended September 30, 2021 and 2020 (in thousands):
The following table summarizes non-cash equity-based compensation expense, net of forfeitures, by award type included in the accompanying Consolidated Statements of Operations for the three and nine months ended September 30, 2021 and 2020 (in thousands):
Stock Option Awards During the nine months ended September 30, 2021, no options to purchase shares of its common stock were granted. As of September 30, 2021, there were approximately 318,000 options vested and exercisable with a weighted average exercise price of $34.38. As of September 30, 2021, the total unrecognized compensation charge related to non-vested options was approximately $1.1 million, which is expected to be recognized through 2023. Restricted Stock Unit Awards During the nine months ended September 30, 2021, the Company had RSU grants, net of forfeitures, of approximately 367,000. As of September 30, 2021, there are approximately 1,203,000 non-vested RSUs outstanding with a weighted average grant-date fair value of $59.37. As of September 30, 2021, the total unrecognized non-cash equity-based compensation charge related to the non-vested RSUs was approximately $49.8 million, which is expected to be recognized through 2024. During the nine months ended September 30, 2021 and 2020, shares of common stock with an aggregate value of $21.3 million and $3.9 million were withheld upon vesting of RSUs and paid in connection with related remittance of employee withholding taxes to taxing authorities.
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Revenue |
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Revenue from Contract with Customer [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Revenue | Revenue The Company distributes its content offerings through two primary channels: E-commerce: The majority of the Company’s customers license content directly through the Company’s self-service web properties. E-commerce customers have the flexibility to purchase a subscription plan that is paid on a monthly or annual basis or to license content on a transactional basis. These customers generally license content under the Company’s standard or enhanced licenses, with additional licensing options available to meet customers’ individual needs. E-commerce customers typically pay the full amount of the purchase price in advance or at the time of license, generally with a credit card. Enterprise: The Company also has a base of customers with unique content, licensing and workflow needs. These customers benefit from communication with dedicated sales professionals, service and research teams which provide a number of tailored enhancements to their creative workflows including non-standard licensing rights, multi-seat access, ability to pay on credit terms, multi-brand licensing packages, increased indemnification protection and content licensed for use-cases outside of those available on the E-commerce platform. The Company’s revenues by distribution channel for the three and nine months ended September 30, 2021 and 2020 are as follows (in thousands):
The September 30, 2021 deferred revenue balance will be earned as content is downloaded or upon the expiration of subscription-based products, and nearly all is expected to be earned within the next twelve months. $125.5 million of total revenue recognized for the nine months ended September 30, 2021 was reflected in deferred revenue as of December 31, 2020.
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Other (Expense) / Income, net |
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Other Nonoperating Income (Expense) [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Other (Expense) / Income, net | Other (Expense) / Income, netThe following table presents a summary of the Company’s other income and expense activity included in the accompanying Consolidated Statements of Operations for the three and nine months ended September 30, 2021 and 2020 (in thousands):
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Income Taxes |
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Sep. 30, 2021 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | Income Taxes The Company’s effective tax rates yielded a net expense of 21.5% and 19.9% for the three months ended September 30, 2021 and 2020, respectively, and a net expense of 17.2% and 19.7% for the nine months ended September 30, 2021 and 2020, respectively. During the three months ended September 30, 2021, the net effect of discrete items increased the effective tax rate by 1.3%. For the nine months ended September 30, 2021, the net effect of discrete items decreased the effective tax rate by 3.0%. The discrete items for the nine months ended September 30, 2021, primarily relate to windfall tax benefits associated with equity-based compensation. Excluding discrete items, the Company’s effective tax rate would have been 20.2% for the three and nine months ended September 30, 2021. During the three months ended September 30, 2020, the net effect of discrete items increased the effective tax rate by 2.9%. For the nine months ended September 30, 2020, the effective tax rate increased by 0.9% as a result of a loss jurisdiction with no tax benefit. Discrete items further increased the effective tax rate by 1.8%. Excluding the discrete items, the Company’s effective tax rate would have been 17.0% for the three and nine months ended September 30, 2020. The Company has computed the provision for income taxes based on the estimated annual effective tax rate excluding a loss jurisdiction with no tax benefit and the application of discrete items, if any, in the applicable period. During the three and nine months ended September 30, 2021 and 2020, uncertain tax positions recorded by the Company were not significant. To the extent the remaining uncertain tax positions are ultimately recognized, the Company’s effective tax rate may be impacted in future periods. The Company recognizes interest expense and tax penalties related to unrecognized tax benefits in income tax expense in the Consolidated Statements of Operations. The Company’s accrual for interest and penalties related to unrecognized tax benefits was not significant for the three and nine months ended September 30, 2021 and 2020. During the nine months ended September 30, 2021 and 2020, the Company paid net cash taxes of $14.8 million and $2.8 million, respectively.
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Net Income Per Share |
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Earnings Per Share [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net Income Per Share | Net Income Per Share Basic net income per share is computed using the weighted average number of shares of common stock outstanding for the period, excluding unvested RSUs and stock options. Diluted net income per share is based upon the weighted average shares of common stock outstanding for the period plus dilutive potential shares of common stock, including unvested RSUs and stock options using the treasury stock method. The following table sets forth the computation of basic and diluted net income per share for the three and nine months ended September 30, 2021 and 2020 (in thousands):
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Geographic Information |
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Segment Reporting [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Geographic Information | Geographic Information The following table presents the Company’s revenue based on customer location (in thousands):
The United States, included in North America in the above table, accounted for 33% and 32% of consolidated revenue for the nine months ended September 30, 2021 and 2020, respectively. No other country accounts for more than 10% of the Company’s revenue in any period presented. The Company’s long-lived tangible assets were located as follows (in thousands):
The United States, included in North America in the above table, accounted for 76% and 75% of total long-lived tangible assets as of September 30, 2021 and December 31, 2020, respectively. Ireland, included in Europe in the above table, accounted for 11% of total long-lived tangible assets as of September 30, 2021. No other country accounts for more than 10% of the Company’s long-lived tangible assets in any period presented.
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Commitments and Contingencies |
9 Months Ended |
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Sep. 30, 2021 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | Commitments and Contingencies As of September 30, 2021, the Company had total non-lease obligations in the amount of approximately $59.0 million, which consisted primarily of minimum royalty guarantees and unconditional purchase obligations related to contracts for infrastructure and other business services. As of September 30, 2021, the Company’s non-lease obligations for the remainder of 2021 and for the years ending December 31, 2022, 2023, 2024, 2025 and 2026 were approximately $21.5 million, $17.7 million, $12.7 million, $4.7 million, $2.1 million and $0.3 million, respectively. Legal Matters From time to time, the Company may become party to litigation in the ordinary course of business, including direct claims brought by or against the Company with respect to intellectual property, contracts, employment and other matters, as well as claims brought against the Company’s customers for whom the Company has a contractual indemnification obligation. The Company assesses the likelihood of any adverse judgments or outcomes with respect to these matters and determines loss contingency assessments on a gross basis after assessing the probability of incurrence of a loss and whether a loss is reasonably estimable. In addition, the Company considers other relevant factors that could impact its ability to reasonably estimate a loss. A determination of the amount of reserves required, if any, for these contingencies is made after analyzing each matter. The Company reviews reserves, if any, at least quarterly and may change the amount of any such reserve in the future due to new developments or changes in strategy in handling these matters. Although the results of litigation and threats of litigation, investigations and claims cannot be predicted with certainty, the Company currently believes that the final outcome of these matters will not have a material adverse effect on its business, consolidated financial position, results of operations, or cash flows. Regardless of the outcome, litigation can have an adverse impact on the Company because of defense and settlement costs, diversion of management resources and other factors. The Company currently has no material active litigation matters and, accordingly, no material reserves related to litigation. Indemnification and Employment Agreements In the ordinary course of business, the Company enters into contractual arrangements under which it agrees to provide indemnification of varying scope and terms to customers with respect to certain matters, including, but not limited to, losses arising out of the breach of the Company’s intellectual property warranties for damages to the customer directly attributable to the Company’s breach. The Company is not responsible for any damages, costs, or losses to the extent such damages, costs or losses arise as a result of any modifications made by the customer, or the context in which content is used. The standard maximum aggregate obligation and liability to any one customer for any single claim is generally limited to ten thousand dollars but can range to $250,000, with certain exceptions for which our indemnification obligation are uncapped. As of September 30, 2021, the Company had recorded no material liabilities related to indemnification obligations for loss contingencies. Additionally, the Company believes that it has the appropriate insurance coverage in place to adequately cover such indemnification obligations, if necessary. Pursuant to the Company’s charter documents and separate written indemnification agreements, the Company has certain indemnification obligations to its executive officers, certain employees and directors, as well as certain former officers and directors. The Company has also entered into employment agreements with its executive officers and certain employees. These agreements specify various employment-related matters, including annual compensation, performance incentive bonuses, and severance benefits in the event of termination in the event of a change in control or otherwise, with or without cause.
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Summary of Operations and Significant Accounting Policies (Policies) |
9 Months Ended |
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Sep. 30, 2021 | |
Accounting Policies [Abstract] | |
Basis of Presentation | Basis of PresentationThe unaudited condensed consolidated financial statements and accompanying notes have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, these financial statements do not include all information and footnotes required by GAAP for complete financial statements. |
Unaudited Interim Financial Statements | The interim Consolidated Balance Sheet as of September 30, 2021, and the Consolidated Statements of Operations, Comprehensive Income and Stockholders’ Equity for the three and nine months ended September 30, 2021 and 2020, and the Consolidated Statements of Cash Flows for the nine months ended September 30, 2021 and 2020, are unaudited. The Consolidated Balance Sheet as of December 31, 2020, included herein, was derived from the audited financial statements as of that date, but does not include all disclosures required by GAAP. These unaudited interim financial statements have been prepared on a basis consistent with the Company’s annual financial statements and, in the opinion of management, reflect all adjustments, which include all normal recurring adjustments necessary to fairly state the Company’s financial position as of September 30, 2021, and its consolidated results of operations, comprehensive income and stockholders’ equity for the three and nine months ended September 30, 2021 and 2020, and its cash flows for the nine months ended September 30, 2021 and 2020. The financial data and the other financial information disclosed in the notes to the financial statements related to these periods are also unaudited. The results of operations for the nine months ended September 30, 2021 are not necessarily indicative of the results to be expected for the fiscal year ending December 31, 2021 or for any other future annual or interim period.These financial statements should be read in conjunction with the Company’s audited consolidated financial statements and notes thereto as of and for the year ended December 31, 2020 included in the Company’s Annual Report on Form 10-K, which was filed with the SEC on February 11, 2021. The unaudited consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries. All intercompany balances and transactions have been eliminated in consolidation. Certain immaterial changes in presentation have been made to conform the prior period presentation to current period reporting. |
Use of Estimates | Use of EstimatesThe preparation of the consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported and disclosed in the financial statements. Actual results could differ from those estimates. Such estimates include, but are not limited to, the determination of the allowance for doubtful accounts, the volume of expected unused licenses for our subscription-based products, the assessment of recoverability of property and equipment, the fair value of acquired goodwill and intangible assets, the amount of non-cash equity-based compensation, the assessment of recoverability of deferred tax assets, the measurement of income tax and contingent non-income tax liabilities and the determination of the incremental borrowing rate used to calculate the lease liability. |
Cash and Cash Equivalents | Cash and Cash EquivalentsThe Company’s cash and cash equivalents consist primarily of bank deposits and money market funds. |
Allowance for Doubtful Accounts | Allowance for Doubtful AccountsThe Company’s accounts receivable consists of customer obligations due under normal trade terms, carried at their face value less an allowance for doubtful accounts, if required. The Company determines its allowance for doubtful accounts based on an evaluation of (i) the aging of its accounts receivable considering historical receivables loss rates, (ii) on a customer-by-customer basis, where appropriate, and (iii) the economic environments in which the Company operates. |
Chargeback and Sales Refund Allowance and Revenue Recognition | Chargeback and Sales Refund Allowance The Company establishes a chargeback allowance and sales refund reserve allowance based on factors surrounding historical credit card chargeback trends, historical sales refund trends and other information. As of September 30, 2021 and December 31, 2020, the Company’s combined allowance for chargebacks and sales refunds was $0.5 million, which was included as a component of other current liabilities on the Consolidated Balance Sheets. Revenue Recognition The majority of the Company’s revenue is earned from the license of content. Content licenses are generally purchased on a monthly or annual basis, whereby a customer pays for a predetermined quantity of content that may be downloaded over a specific period of time, or, on a transactional basis, whereby a customer pays for individual content licenses at the time of download. The Company recognizes revenue upon the satisfaction of performance obligations, which generally occurs when content is downloaded by a customer. The Company recognizes revenue on both its subscription-based and transaction-based products when content is downloaded, at which time the license is provided. In addition, management estimates expected unused licenses for subscription-based products and recognizes the estimated revenue associated with the unused licenses as digital content is downloaded and licenses are obtained for such content by the customer during the subscription period. The estimate of unused licenses is based on historical download activity, and future changes in the estimate could impact the timing of revenue recognition of the Company’s subscription products. The Company expenses contract acquisition costs as incurred, to the extent that the amortization period would otherwise be one year or less. Collectability is reasonably assured at the time the electronic order or contract is entered. The majority of the Company’s customers purchase products by making an electronic payment with a credit card at the time of a transaction. Customer payments received in advance of revenue recognition are contract liabilities and are recorded as deferred revenue. Customers that do not pay in advance are invoiced and are required to make payments under standard credit terms. Collectability for customers who pay on credit terms allowing for payment beyond the date at which service commences is based on a credit evaluation for certain new customers and transaction history with existing customers. The Company recognizes revenue gross of contributor royalties because the Company is the principal in the transaction, as it is the party responsible for the performance obligation and it controls the product or service before transferring it to the customer. The Company also licenses content to customers through third-party resellers. Third-party resellers sell the Company’s products directly to customers as the principal in those transactions. Accordingly, the Company recognizes revenue net of costs paid to resellers.
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Recently Adopted and Issued Accounting Standard Updates | Recently Adopted Accounting Standard UpdatesIn December 2019, the FASB issued ASU 2019-12, Income Taxes (Topic 740), Simplifying the Accounting for Income Taxes (“ASU-2019-12”). ASU 2019-12 eliminates certain exceptions to the guidance in Topic 740 related to the approach for intra-period tax allocation, the methodology for calculating income taxes in an interim period and the recognition of deferred tax liabilities for outside basis differences. The new guidance also simplifies aspects of the accounting for franchise taxes, enacted changes in tax laws or rates and clarifies the accounting transactions that result in a step-up in the tax basis of goodwill. The guidance is effective for fiscal years beginning after December 15, 2020 and interim periods within those fiscal years. The Company adopted ASU 2019-12, effective January 1, 2021. The impact of adoption of this standard on the consolidated financial statements, including accounting policies, processes and systems, was not material. |
Acquisitions (Tables) |
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Business Combination and Asset Acquisition [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Aggregate Purchase Price Allocation to Assets Acquired and Liabilities Assumed | The aggregate purchase price for these acquisitions have been allocated to the assets acquired and liabilities assumed as follows (in thousands):
____________________________________________________ 1 The allocation of the purchase price is preliminary and will be finalized within the allowable measurement period once independent valuations of the fair value of the assets acquired and liabilities assumed are completed.
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Business Acquisition, Pro Forma Information | These pro forma results have been prepared for comparative purposes only and are not necessarily indicative of what the Company’s operating results would have been, had the acquisitions actually taken place at the beginning of the previous annual period:
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Property and Equipment (Tables) |
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Sep. 30, 2021 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Property, Plant and Equipment [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of Property and Equipment | Property and equipment is summarized as follows (in thousands):
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Goodwill and Intangible Assets (Tables) |
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Goodwill and Intangible Assets Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Changes in Goodwill | The following table summarizes the changes in the Company’s goodwill balance during the nine months ended September 30, 2021 (in thousands):
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Schedule of Intangible Assets | Intangible assets consisted of the following as of September 30, 2021 and December 31, 2020 (in thousands):
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Accrued Expenses (Tables) |
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Payables and Accruals [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Accrued Expenses | Accrued expenses consisted of the following (in thousands):
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Stockholders’ Equity and Equity-Based Compensation (Tables) |
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Share-based Payment Arrangement [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of Non-cash Equity-based Compensation Expense Included in the Company's Statement of Operations | The following table summarizes non-cash equity-based compensation expense, net of forfeitures, by financial statement line item included in the accompanying Consolidated Statements of Operations for the three and nine months ended September 30, 2021 and 2020 (in thousands):
The following table summarizes non-cash equity-based compensation expense, net of forfeitures, by award type included in the accompanying Consolidated Statements of Operations for the three and nine months ended September 30, 2021 and 2020 (in thousands):
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Revenue (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2021 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Revenue from Contract with Customer [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Disaggregation of Revenue | The Company’s revenues by distribution channel for the three and nine months ended September 30, 2021 and 2020 are as follows (in thousands):
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Other (Expense) / Income, net (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Other Nonoperating Income (Expense) [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of the Company's other (expense) income, net activity | The following table presents a summary of the Company’s other income and expense activity included in the accompanying Consolidated Statements of Operations for the three and nine months ended September 30, 2021 and 2020 (in thousands):
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Net Income Per Share (Tables) |
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Earnings Per Share [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Weighted Average Number of Shares | The following table sets forth the computation of basic and diluted net income per share for the three and nine months ended September 30, 2021 and 2020 (in thousands):
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Geographic Information (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2021 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Segment Reporting [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Revenue from External Customers by Geographic Areas | The following table presents the Company’s revenue based on customer location (in thousands):
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Long-lived Assets by Geographic Areas | The Company’s long-lived tangible assets were located as follows (in thousands):
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Summary of Operations and Significant Accounting Policies - Allowance for Doubtful Accounts and Chargeback and Sales Refund Allowance (Details) - USD ($) $ in Thousands |
9 Months Ended | ||
---|---|---|---|
Sep. 30, 2021 |
Sep. 30, 2020 |
Dec. 31, 2020 |
|
Accounting Policies [Abstract] | |||
Bad debt expense | $ 182 | $ 1,586 | |
Allowance for doubtful accounts | 2,463 | $ 4,942 | |
Chargeback and sales refund allowances | $ 500 | $ 500 |
Fair Value Measurements and Other Long-term Investments (Details) - USD ($) $ in Millions |
Sep. 30, 2021 |
Dec. 31, 2020 |
---|---|---|
Fair Value Disclosures [Abstract] | ||
Cash equivalents | $ 205.1 | $ 250.0 |
Long-term investments | $ 20.0 | $ 20.0 |
Acquisitions - Narrative (Details) - USD ($) $ in Millions |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 03, 2021 |
Feb. 01, 2021 |
Sep. 30, 2021 |
Sep. 30, 2021 |
|
Business Acquisition [Line Items] | ||||
Revenue of acquiree | $ 8.9 | $ 20.6 | ||
PicMonkey | ||||
Business Acquisition [Line Items] | ||||
Purchase price | $ 110.0 | |||
Transaction costs | $ 2.0 | |||
Estimated useful life | 9 years 9 months 18 days | |||
TurboSquid, Inc. | ||||
Business Acquisition [Line Items] | ||||
Purchase price | $ 77.3 | |||
Transaction costs | $ 1.6 | |||
Estimated useful life | 8 years 2 months 12 days |
Acquisitions - Pro Forma (Details) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2021 |
Sep. 30, 2020 |
Sep. 30, 2021 |
Sep. 30, 2020 |
|
Business Acquisition [Line Items] | ||||
Revenue - As Reported | $ 194,439 | $ 165,227 | $ 567,632 | $ 485,742 |
Income before income taxes - As Reported | 90,624 | 57,167 | ||
TurboSquid, Inc. | ||||
Business Acquisition [Line Items] | ||||
Revenue - As Reported | 194,439 | 165,227 | 567,632 | 485,742 |
Revenue - Pro Forma | 199,090 | 178,965 | 589,715 | 525,037 |
Income before income taxes - As Reported | 20,420 | 28,179 | 90,624 | 57,167 |
Income before income taxes - Pro Forma | $ 22,884 | $ 29,090 | $ 95,738 | $ 52,983 |
Acquisitions - Asset Acquisitions (Details) $ in Thousands |
1 Months Ended | 9 Months Ended |
---|---|---|
Jul. 31, 2021
USD ($)
business
|
Sep. 30, 2021 |
|
Developed technology | ||
Business Acquisition [Line Items] | ||
Useful life | 4 years | |
Pattern89, Inc., Datasine Limited And Assets Of Shotzr, Inc. | ||
Business Acquisition [Line Items] | ||
Number of entities | business | 3 | |
Aggregate cash consideration | $ 35,000 | |
Purchase consideration subject to contractual holdback | 3,600 | |
Pattern89, Inc., Datasine Limited And Assets Of Shotzr, Inc. | Developed technology | ||
Business Acquisition [Line Items] | ||
Intangible assets acquired | $ 41,000 | |
Useful life | 3 years |
Goodwill and Intangible Assets - Changes in Goodwill (Details) $ in Thousands |
9 Months Ended |
---|---|
Sep. 30, 2021
USD ($)
| |
Changes in goodwill | |
Balance at the beginning of the period | $ 89,413 |
Goodwill related to acquisitions | 130,738 |
Foreign currency translation adjustment | (329) |
Balance at the end of the period | $ 219,822 |
Goodwill and Intangible Assets - Narrative (Details) - USD ($) $ in Millions |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2021 |
Sep. 30, 2020 |
Sep. 30, 2021 |
Sep. 30, 2020 |
|
Amortizing intangible assets | ||||
Amortization expense | $ 5.6 | $ 1.3 | $ 9.9 | $ 3.8 |
Remainder of 2021 | 7.1 | 7.1 | ||
2022 | 28.3 | 28.3 | ||
2023 | 27.9 | 27.9 | ||
2024 | 20.8 | 20.8 | ||
2025 | 10.1 | 10.1 | ||
2026 | 8.1 | 8.1 | ||
Thereafter | 27.9 | 27.9 | ||
Cost of revenue | ||||
Amortizing intangible assets | ||||
Amortization expense | 4.2 | 0.7 | 6.5 | 2.0 |
Selling, General and Administrative Expenses | ||||
Amortizing intangible assets | ||||
Amortization expense | $ 1.4 | $ 0.6 | $ 3.4 | $ 1.8 |
Accrued Expenses (Details) - USD ($) $ in Thousands |
Sep. 30, 2021 |
Dec. 31, 2020 |
---|---|---|
Payables and Accruals [Abstract] | ||
Compensation | $ 38,257 | $ 31,499 |
Non-income taxes | 20,784 | 17,164 |
Website hosting and marketing fees | 16,385 | 9,991 |
Other expenses | 19,617 | 9,255 |
Total accrued expenses | $ 95,043 | $ 67,909 |
Revenue (Details) $ in Thousands |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2021
USD ($)
channel
|
Sep. 30, 2020
USD ($)
|
Sep. 30, 2021
USD ($)
channel
|
Sep. 30, 2020
USD ($)
|
|
Segment Reporting Information [Line Items] | ||||
Number of primary channels for content offerings | channel | 2 | 2 | ||
Total revenue | $ 194,439 | $ 165,227 | $ 567,632 | $ 485,742 |
Disposal group deferred revenue | 125,500 | |||
E-commerce | ||||
Segment Reporting Information [Line Items] | ||||
Total revenue | 121,707 | 102,816 | 360,822 | 300,716 |
Enterprise | ||||
Segment Reporting Information [Line Items] | ||||
Total revenue | $ 72,732 | $ 62,411 | $ 206,810 | $ 185,026 |
Other (Expense) / Income, net (Details) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2021 |
Sep. 30, 2020 |
Sep. 30, 2021 |
Sep. 30, 2020 |
|
Other Nonoperating Income (Expense) [Abstract] | ||||
Foreign currency (loss) / gain | $ (1,761) | $ (1,170) | $ (2,994) | $ (1,636) |
Interest income, net | 12 | 2 | 106 | 1,130 |
Total other (expense) / income | $ (1,749) | $ (1,168) | $ (2,888) | $ (506) |
Income Taxes (Details) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2021 |
Sep. 30, 2020 |
Sep. 30, 2021 |
Sep. 30, 2020 |
|
Income Tax Disclosure [Abstract] | ||||
Effective tax rate, expense | 21.50% | 19.90% | 17.20% | 19.70% |
Effective tax rate increase (decrease) due to windfall tax benefits associated with equity-based compensation | 1.30% | (3.00%) | ||
Effective tax rate, excluding discrete items | 20.20% | 20.20% | 17.00% | |
Increase in effective tax rate, loss jurisdiction | 2.90% | 0.90% | ||
Increase in effective tax rate, effect of discrete items | (1.80%) | |||
Cash paid for income taxes | $ 14,811 | $ 2,767 |
Net Income Per Share (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2021 |
Sep. 30, 2020 |
Sep. 30, 2021 |
Sep. 30, 2020 |
|
Earnings Per Share [Abstract] | ||||
Net income | $ 16,029 | $ 22,582 | $ 74,997 | $ 45,887 |
Shares used to compute basic net income per share (in shares) | 36,622 | 35,962 | 36,510 | 35,713 |
Dilutive potential common shares | ||||
Stock options (in shares) | 255 | 104 | 240 | 70 |
Unvested restricted stock awards (in shares) | 540 | 428 | 535 | 312 |
Shares used to compute diluted net income per share (in shares) | 37,417 | 36,494 | 37,285 | 36,095 |
Basic net income per share (in dollars per share) | $ 0.44 | $ 0.63 | $ 2.05 | $ 1.28 |
Diluted net income per share (in dollars per share) | $ 0.43 | $ 0.62 | $ 2.01 | $ 1.27 |
Dilutive securities included in the calculation (in shares) | 1,279 | 1,385 | 1,312 | 1,182 |
Anti-dilutive securities excluded from the calculation (in shares) | 4 | 778 | 8 | 1,024 |
Commitments and Contingencies - Narrative (Details) |
Sep. 30, 2021
USD ($)
|
---|---|
Other Commitments [Line Items] | |
Other obligations | $ 59,000,000 |
Maturity of unconditional purchase obligations | |
Remainder of 2021 | 21,500,000 |
2022 | 17,700,000 |
2023 | 12,700,000 |
2024 | 4,700,000 |
2025 | 2,100,000 |
2026 | 300,000 |
Indemnifications | |
Maximum aggregate obligation and liability for customer | 250,000 |
Indemnification Agreement | |
Indemnifications | |
Maximum possible loss per customer | $ 10,000 |
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