Transactions with Related Parties

9 Months Ended

Sep. 30, 2015

Transactions with Related Parties [Abstract]

Transactions with Related Parties

9.  Transactions with Related Parties

Prior to the Separation, our financial statements included direct costs of Rightside incurred by Demand Media on our behalf and an allocation of certain general corporate costs incurred by Demand Media. Direct costs include finance, legal, human resources, technology development, and other services and have been determined based on a direct basis when identifiable, with the remainder allocated on a pro rata basis calculated as a percentage of our revenue, headcount or expenses to Demand Media’s consolidated results. General corporate costs include, but are not limited to, executive oversight, accounting, internal audit, treasury, tax, and legal. The allocations of general corporate costs are based primarily on estimated time incurred and/or activities associated with us. Management believes the allocations of corporate costs from Demand Media are reasonable. Costs incurred by Demand Media to complete the Separation have not been allocated to us. However, the financial statements may not include all of the costs that would have been incurred had we been a stand‑alone company during the periods presented and may not reflect our financial position, results of operations and cash flows had we been a stand‑alone company during the periods presented.

Prior to the Separation, we recorded the following costs incurred and allocated by Demand Media in our statements of operations as follows (in thousands):

	Three months ended		Nine months ended
	September 30, 2014		September 30, 2014
Cost of revenue	$	32	$	215
Sales and marketing		75		1,452
Technology and development		824		6,684
General and administration		1,658		10,768
Depreciation and amortization		328		2,391
Total allocated expenses	$	2,917	$	21,510

The table above includes allocated stock‑based compensation of $0.1 million and $0.8 million for the three and nine months ended September 30, 2014, for the employees of Demand Media whose cost of services was partially allocated to us.