|
|
x
|
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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¨
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
|
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Delaware
|
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27-2440197
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(State or other jurisdiction of incorporation or organization)
|
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(I.R.S. Employer Identification Number)
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1030 E. Washington Street Indianapolis, IN
|
|
46202
|
(Address of principal executive offices)
|
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(Zip Code)
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(888) 888-5478
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(Registrant
’
s telephone number, including area code)
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Large accelerated filer
|
¨
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Accelerated filer
|
x
|
Non-accelerated filer
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¨
(Do not check if a smaller reporting company)
|
Smaller reporting company
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¨
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Emerging growth company
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¨
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Page No.
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June 30,
2017 |
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December 31,
2016 |
||||
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|
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|
||||
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(Unaudited)
|
||||||
Assets
|
|
|
|
|
||||
Cash and cash equivalents
|
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$
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38,362
|
|
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$
|
22,402
|
|
Short-term investments
|
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10,480
|
|
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16,541
|
|
||
Accounts receivable, net of allowance for doubtful accounts of $3,039 and $3,296 at June 30, 2017 and December 31, 2016, respectively
|
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15,006
|
|
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16,371
|
|
||
Prepaid expenses and other current assets
|
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20,251
|
|
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17,002
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||
Total current assets
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84,099
|
|
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72,316
|
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||
Property, equipment and software, net
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77,459
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|
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82,714
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|
||
Goodwill
|
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1,145
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|
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1,145
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|
||
Amortizable intangible assets, net
|
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930
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|
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1,219
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Total assets
|
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$
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163,633
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|
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$
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157,394
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|
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||||
Liabilities and stockholders’ equity
|
|
|
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|
||||
Accounts payable
|
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$
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2,953
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|
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$
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2,886
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Accrued liabilities
|
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30,452
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|
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23,128
|
|
||
Deferred membership revenue
|
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20,255
|
|
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23,208
|
|
||
Deferred advertising revenue
|
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40,661
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|
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42,297
|
|
||
Current maturities of long-term debt
|
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3,000
|
|
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1,500
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||
Total current liabilities
|
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97,321
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|
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93,019
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Long-term debt, net
|
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55,092
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56,142
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||
Deferred membership revenue, noncurrent
|
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1,404
|
|
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2,032
|
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Deferred advertising revenue, noncurrent
|
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328
|
|
|
456
|
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Other liabilities, noncurrent
|
|
654
|
|
|
1,245
|
|
||
Total liabilities
|
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154,799
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|
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152,894
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|
||
Commitments and contingencies (Note 8)
|
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||||
Stockholders’ equity:
|
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|
||||
Preferred stock, $0.001 par value: 10,000,000 shares authorized, no shares issued or outstanding at June 30, 2017 and December 31, 2016
|
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—
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|
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—
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||
Common stock, $0.001 par value: 300,000,000 shares authorized, 69,437,866 and 67,979,486 shares issued and 60,877,344 and 59,420,774 shares outstanding at June 30, 2017 and December 31, 2016, respectively
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69
|
|
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68
|
|
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Additional paid-in-capital
|
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300,612
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290,182
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|
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Treasury stock, at cost: 8,560,522 and 8,558,712 shares of common stock at June 30, 2017 and December 31, 2016, respectively
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(23,734
|
)
|
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(23,719
|
)
|
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Accumulated deficit
|
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(268,113
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)
|
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(262,031
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)
|
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Total stockholders’ equity
|
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8,834
|
|
|
4,500
|
|
||
Total liabilities and stockholders’ equity
|
|
$
|
163,633
|
|
|
$
|
157,394
|
|
|
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Three Months Ended
June 30, |
|
Six Months Ended
June 30, |
||||||||||||
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2017
|
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2016
|
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2017
|
|
2016
|
||||||||
|
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||||||||
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(Unaudited)
|
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(Unaudited)
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||||||||||||
Revenue
|
|
|
|
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|
|
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|
||||||||
Membership
|
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$
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10,193
|
|
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$
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15,645
|
|
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$
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21,717
|
|
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$
|
31,979
|
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Service provider
|
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62,557
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|
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67,415
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124,165
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134,937
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||||
Total revenue
|
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72,750
|
|
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83,060
|
|
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145,882
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166,916
|
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||||
Operating expenses
|
|
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|
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|
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||||||||
Operations and support
|
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6,928
|
|
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10,172
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15,215
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|
|
22,381
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||||
Selling
|
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23,153
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|
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26,983
|
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|
49,510
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|
|
54,815
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|
||||
Marketing
|
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20,618
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|
|
14,432
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|
|
30,441
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|
|
33,547
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|
||||
Product and technology
|
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14,905
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|
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13,323
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|
|
29,218
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|
|
23,357
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|
||||
General and administrative
|
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13,729
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|
|
12,135
|
|
|
24,595
|
|
|
30,820
|
|
||||
Operating income (loss)
|
|
(6,583
|
)
|
|
6,015
|
|
|
(3,097
|
)
|
|
1,996
|
|
||||
Interest expense, net
|
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1,469
|
|
|
1,352
|
|
|
2,965
|
|
|
1,968
|
|
||||
Income (loss) before income taxes
|
|
(8,052
|
)
|
|
4,663
|
|
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(6,062
|
)
|
|
28
|
|
||||
Income tax expense
|
|
10
|
|
|
6
|
|
|
20
|
|
|
13
|
|
||||
Net income (loss)
|
|
$
|
(8,062
|
)
|
|
$
|
4,657
|
|
|
$
|
(6,082
|
)
|
|
$
|
15
|
|
|
|
|
|
|
|
|
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||||||||
Net income (loss) per common share — basic
|
|
$
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(0.13
|
)
|
|
$
|
0.08
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|
|
$
|
(0.10
|
)
|
|
$
|
0.00
|
|
Net income (loss) per common share — diluted
|
|
$
|
(0.13
|
)
|
|
$
|
0.08
|
|
|
$
|
(0.10
|
)
|
|
$
|
0.00
|
|
|
|
|
|
|
|
|
|
|
||||||||
Weighted-average number of common shares outstanding — basic
|
|
60,273,980
|
|
|
58,710,321
|
|
|
59,893,356
|
|
|
58,662,100
|
|
||||
Weighted-average number of common shares outstanding — diluted
|
|
60,273,980
|
|
|
59,643,950
|
|
|
59,893,356
|
|
|
59,637,852
|
|
|
|
Six Months Ended
June 30, |
||||||
|
|
2017
|
|
2016
|
||||
|
|
|
|
|
||||
|
|
(Unaudited)
|
||||||
Operating activities
|
|
|
|
|
||||
Net income (loss)
|
|
$
|
(6,082
|
)
|
|
$
|
15
|
|
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
|
|
|
|
|
||||
Depreciation and amortization
|
|
8,211
|
|
|
5,254
|
|
||
Amortization of debt discount, deferred financing fees and bond premium
|
|
450
|
|
|
333
|
|
||
Non-cash stock-based compensation expense
|
|
6,030
|
|
|
7,496
|
|
||
Non-cash long-lived asset impairment charge
|
|
190
|
|
|
—
|
|
||
Non-cash loss on disposal of long-lived assets
|
|
3
|
|
|
171
|
|
||
Deferred income taxes
|
|
10
|
|
|
—
|
|
||
Changes in certain assets:
|
|
|
|
|
||||
Accounts receivable, net
|
|
1,365
|
|
|
129
|
|
||
Prepaid expenses and other current assets
|
|
(3,249
|
)
|
|
728
|
|
||
Changes in certain liabilities:
|
|
|
|
|
||||
Accounts payable
|
|
318
|
|
|
(2,542
|
)
|
||
Accrued liabilities
|
|
6,776
|
|
|
9,557
|
|
||
Deferred advertising revenue
|
|
(1,764
|
)
|
|
(2,769
|
)
|
||
Deferred membership revenue
|
|
(3,581
|
)
|
|
(4,086
|
)
|
||
Net cash provided by operating activities
|
|
8,677
|
|
|
14,286
|
|
||
|
|
|
|
|
||||
Investing activities
|
|
|
|
|
||||
Purchases of investments
|
|
(5,960
|
)
|
|
(11,274
|
)
|
||
Sales of investments
|
|
12,021
|
|
|
11,320
|
|
||
Property, equipment and software
|
|
(199
|
)
|
|
(3,208
|
)
|
||
Capitalized website and software development costs
|
|
(2,854
|
)
|
|
(8,973
|
)
|
||
Intangible assets
|
|
(70
|
)
|
|
(129
|
)
|
||
Net cash provided by (used in) investing activities
|
|
2,938
|
|
|
(12,264
|
)
|
||
|
|
|
|
|
||||
Financing activities
|
|
|
|
|
||||
Proceeds from exercise of stock options
|
|
5,919
|
|
|
500
|
|
||
Proceeds from employee stock purchase plan
|
|
462
|
|
|
—
|
|
||
Taxes paid on behalf of employees related to net share settlement
|
|
(1,980
|
)
|
|
(430
|
)
|
||
Purchases of treasury stock
|
|
(15
|
)
|
|
—
|
|
||
Payments on capital lease obligation
|
|
(41
|
)
|
|
(116
|
)
|
||
Net cash provided by (used in) financing activities
|
|
4,345
|
|
|
(46
|
)
|
||
Net increase in cash and cash equivalents
|
|
$
|
15,960
|
|
|
$
|
1,976
|
|
Cash and cash equivalents, beginning of period
|
|
22,402
|
|
|
32,599
|
|
||
Cash and cash equivalents, end of period
|
|
$
|
38,362
|
|
|
$
|
34,575
|
|
|
|
|
|
|
||||
Supplemental cash flow disclosures
|
|
|
|
|
||||
Capital expenditures incurred but not yet paid
|
|
$
|
65
|
|
|
$
|
820
|
|
|
|
Three Months Ended
June 30, |
|
Six Months Ended
June 30, |
||||||||
|
|
2017
|
|
2016
|
|
2017
|
|
2016
|
||||
Weighted-average number of common shares outstanding — basic
|
|
60,273,980
|
|
|
58,710,321
|
|
|
59,893,356
|
|
|
58,662,100
|
|
Total dilutive effect of outstanding share-based payments
|
|
—
|
|
|
933,629
|
|
|
—
|
|
|
975,752
|
|
Weighted-average number of common shares outstanding — diluted
|
|
60,273,980
|
|
|
59,643,950
|
|
|
59,893,356
|
|
|
59,637,852
|
|
|
|
Three Months Ended
June 30, |
|
Six Months Ended
June 30, |
||||||||
|
|
2017
|
|
2016
|
|
2017
|
|
2016
|
||||
Stock options
|
|
5,238,465
|
|
|
7,376,383
|
|
|
5,633,489
|
|
|
7,358,351
|
|
Restricted stock units
|
|
1,484,597
|
|
|
2,315,818
|
|
|
1,877,066
|
|
|
2,274,574
|
|
Performance awards of restricted stock units
|
|
2,781,424
|
|
|
3,614,784
|
|
|
2,758,462
|
|
|
3,631,937
|
|
Shares to be purchased under employee stock purchase plan
|
|
12,562
|
|
|
12,537
|
|
|
6,316
|
|
|
6,303
|
|
|
|
|
|
Fair Value Measurement at June 30, 2017 Using
|
||||||||||||
|
|
Carrying Value at
June 30, 2017 |
|
Quoted Prices in Active Markets
for Identical Assets
(Level 1)
|
|
Significant Other
Observable Inputs
(Level 2)
|
|
Significant
Unobservable Inputs
(Level 3)
|
||||||||
Cash equivalents:
|
|
|
|
|
|
|
|
|
||||||||
Money market funds
|
|
$
|
8,552
|
|
|
$
|
8,552
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Investments:
|
|
|
|
|
|
|
|
|
||||||||
Certificates of deposit
|
|
9,280
|
|
|
—
|
|
|
9,276
|
|
|
—
|
|
||||
U.S. Treasury securities
|
|
1,200
|
|
|
—
|
|
|
1,199
|
|
|
—
|
|
||||
Total assets
|
|
$
|
19,032
|
|
|
$
|
8,552
|
|
|
$
|
10,475
|
|
|
$
|
—
|
|
|
|
|
|
Fair Value Measurement at December 31, 2016 Using
|
||||||||||||
|
|
Carrying Value at
December 31, 2016 |
|
Quoted Prices in Active Markets
for Identical Assets
(Level 1)
|
|
Significant Other
Observable Inputs
(Level 2)
|
|
Significant
Unobservable Inputs
(Level 3)
|
||||||||
Cash equivalents:
|
|
|
|
|
|
|
|
|
||||||||
Money market funds
|
|
$
|
2,419
|
|
|
$
|
2,419
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Investments:
|
|
|
|
|
|
|
|
|
||||||||
Certificates of deposit
|
|
13,840
|
|
|
—
|
|
|
13,837
|
|
|
—
|
|
||||
U.S. Treasury securities
|
|
2,701
|
|
|
—
|
|
|
2,702
|
|
|
—
|
|
||||
Total assets
|
|
$
|
18,960
|
|
|
$
|
2,419
|
|
|
$
|
16,539
|
|
|
$
|
—
|
|
|
|
June 30,
2017 |
|
December 31,
2016 |
||||
Prepaid and deferred commissions
|
|
$
|
10,742
|
|
|
$
|
8,869
|
|
Other prepaid expenses and current assets
|
|
9,509
|
|
|
8,133
|
|
||
Total prepaid expenses and other current assets
|
|
$
|
20,251
|
|
|
$
|
17,002
|
|
|
|
June 30,
2017 |
|
December 31,
2016 |
||||
Furniture and equipment
|
|
$
|
14,689
|
|
|
$
|
16,439
|
|
Land
|
|
3,466
|
|
|
3,466
|
|
||
Buildings and improvements
|
|
20,459
|
|
|
20,768
|
|
||
Software
|
|
5,738
|
|
|
5,853
|
|
||
Capitalized website and software development costs
|
|
63,279
|
|
|
60,811
|
|
||
Total property, equipment and software
|
|
107,631
|
|
|
107,337
|
|
||
Less accumulated depreciation
|
|
(30,172
|
)
|
|
(24,623
|
)
|
||
Total property, equipment and software, net
|
|
$
|
77,459
|
|
|
$
|
82,714
|
|
|
|
June 30,
2017 |
|
December 31,
2016 |
||||
Accrued sales commissions
|
|
$
|
2,397
|
|
|
$
|
1,469
|
|
Sales and use tax
|
|
3,789
|
|
|
3,792
|
|
||
Accrued compensation
|
|
7,512
|
|
|
7,369
|
|
||
Uninvoiced accounts payable
|
|
13,363
|
|
|
4,333
|
|
||
Legal settlement accrual
|
|
—
|
|
|
2,601
|
|
||
Other accrued liabilities
|
|
3,391
|
|
|
3,564
|
|
||
Total accrued liabilities
|
|
$
|
30,452
|
|
|
$
|
23,128
|
|
|
|
June 30,
2017 |
|
December 31,
2016 |
||||
Term loan
|
|
$
|
60,000
|
|
|
$
|
60,000
|
|
Unamortized deferred financing fees
|
|
(875
|
)
|
|
(1,071
|
)
|
||
Unamortized fees paid to lender
|
|
(1,033
|
)
|
|
(1,287
|
)
|
||
Total debt, net
|
|
58,092
|
|
|
57,642
|
|
||
Less current maturities
|
|
(3,000
|
)
|
|
(1,500
|
)
|
||
Total long-term debt, net
|
|
$
|
55,092
|
|
|
$
|
56,142
|
|
•
|
greater than
$20,000
but less than
$25,000
, the applicable LIBOR interest rate is
8.5%
, and the applicable reference interest rate is
7.5%
;
|
•
|
greater than
$25,000
but less than
$30,000
, the applicable LIBOR interest rate is
7.5%
, and the applicable reference interest rate is
6.5%
; or
|
•
|
greater than
$30,000
, the applicable LIBOR interest rate is
6.5%
, and the applicable reference interest rate is
5.5%
.
|
|
|
Three Months Ended
June 30, |
|
Six Months Ended
June 30, |
||||||||||||
|
|
2017
|
|
2016
|
|
2017
|
|
2016
|
||||||||
Total free memberships (end of period)
|
|
4,303,566
|
|
|
152,586
|
|
|
4,303,566
|
|
|
152,586
|
|
||||
Total paid memberships (end of period)
|
|
2,083,328
|
|
|
3,147,566
|
|
|
2,083,328
|
|
|
3,147,566
|
|
||||
Total memberships (end of period)
|
|
6,386,894
|
|
|
3,300,152
|
|
|
6,386,894
|
|
|
3,300,152
|
|
||||
|
|
|
|
|
|
|
|
|
||||||||
Gross free memberships added (in period)
|
|
914,042
|
|
|
152,586
|
|
|
1,763,907
|
|
|
152,586
|
|
||||
Gross paid memberships added (in period)
|
|
14,093
|
|
|
129,534
|
|
|
24,449
|
|
|
317,776
|
|
||||
Gross memberships added (in period)
|
|
928,135
|
|
|
282,120
|
|
|
1,788,356
|
|
|
470,362
|
|
||||
|
|
|
|
|
|
|
|
|
||||||||
Average paid membership renewal rate (in period)
|
|
65
|
%
|
|
73
|
%
|
|
66
|
%
|
|
74
|
%
|
||||
|
|
|
|
|
|
|
|
|
||||||||
Participating service providers (end of period)
|
|
48,782
|
|
|
49,674
|
|
|
48,782
|
|
|
49,674
|
|
||||
Total service provider contract value (end of period, in thousands)
|
|
$
|
246,303
|
|
|
$
|
258,467
|
|
|
$
|
246,303
|
|
|
$
|
258,467
|
|
Total service provider contract value backlog (end of period, in thousands)
|
|
$
|
147,022
|
|
|
$
|
151,813
|
|
|
$
|
147,022
|
|
|
$
|
151,813
|
|
|
|
Three Months Ended
June 30, |
|
Six Months Ended
June 30, |
||||||||||||
|
|
2017
|
|
2016
|
|
2017
|
|
2016
|
||||||||
|
|
|
|
|
|
|
|
|
||||||||
|
|
(in thousands)
|
|
(in thousands)
|
||||||||||||
Revenue
|
|
|
|
|
|
|
||||||||||
Membership
|
|
$
|
10,193
|
|
|
$
|
15,645
|
|
|
$
|
21,717
|
|
|
$
|
31,979
|
|
Service provider
|
|
62,557
|
|
|
67,415
|
|
|
124,165
|
|
|
134,937
|
|
||||
Total revenue
|
|
72,750
|
|
|
83,060
|
|
|
145,882
|
|
|
166,916
|
|
||||
Operating expenses
|
|
|
|
|
|
|
|
|
||||||||
Operations and support
(1)
|
|
6,928
|
|
|
10,172
|
|
|
15,215
|
|
|
22,381
|
|
||||
Selling
(1)
|
|
23,153
|
|
|
26,983
|
|
|
49,510
|
|
|
54,815
|
|
||||
Marketing
(1)
|
|
20,618
|
|
|
14,432
|
|
|
30,441
|
|
|
33,547
|
|
||||
Product and technology
(1)
|
|
14,905
|
|
|
13,323
|
|
|
29,218
|
|
|
23,357
|
|
||||
General and administrative
(1)
|
|
13,729
|
|
|
12,135
|
|
|
24,595
|
|
|
30,820
|
|
||||
Operating income (loss)
|
|
(6,583
|
)
|
|
6,015
|
|
|
(3,097
|
)
|
|
1,996
|
|
||||
Interest expense, net
|
|
1,469
|
|
|
1,352
|
|
|
2,965
|
|
|
1,968
|
|
||||
Income (loss) before income taxes
|
|
(8,052
|
)
|
|
4,663
|
|
|
(6,062
|
)
|
|
28
|
|
||||
Income tax expense
|
|
10
|
|
|
6
|
|
|
20
|
|
|
13
|
|
||||
Net income (loss)
|
|
$
|
(8,062
|
)
|
|
$
|
4,657
|
|
|
$
|
(6,082
|
)
|
|
$
|
15
|
|
(1) Includes non-cash stock-based compensation expense as follows:
|
|
|
|
|
|
|
|
|
||||||||
Operations and support
|
|
$
|
56
|
|
|
$
|
57
|
|
|
$
|
98
|
|
|
$
|
88
|
|
Selling
|
|
243
|
|
|
430
|
|
|
691
|
|
|
709
|
|
||||
Marketing
|
|
83
|
|
|
121
|
|
|
135
|
|
|
227
|
|
||||
Product and technology
|
|
432
|
|
|
566
|
|
|
1,001
|
|
|
875
|
|
||||
General and administrative
|
|
1,960
|
|
|
2,657
|
|
|
4,105
|
|
|
5,597
|
|
||||
Total non-cash stock-based compensation expense
|
|
$
|
2,774
|
|
|
$
|
3,831
|
|
|
$
|
6,030
|
|
|
$
|
7,496
|
|
|
|
Three Months Ended
June 30, |
|
Six Months Ended
June 30, |
||||||||
|
|
2017
|
|
2016
|
|
2017
|
|
2016
|
||||
Revenue
|
|
|
|
|
|
|
|
|
||||
Membership
|
|
14
|
%
|
|
19
|
%
|
|
15
|
%
|
|
19
|
%
|
Service provider
|
|
86
|
%
|
|
81
|
%
|
|
85
|
%
|
|
81
|
%
|
Total revenue
|
|
100
|
%
|
|
100
|
%
|
|
100
|
%
|
|
100
|
%
|
Operating expenses
|
|
|
|
|
|
|
|
|
||||
Operations and support
|
|
10
|
%
|
|
12
|
%
|
|
10
|
%
|
|
13
|
%
|
Selling
|
|
32
|
%
|
|
33
|
%
|
|
34
|
%
|
|
33
|
%
|
Marketing
|
|
28
|
%
|
|
17
|
%
|
|
21
|
%
|
|
20
|
%
|
Product and technology
|
|
20
|
%
|
|
16
|
%
|
|
20
|
%
|
|
14
|
%
|
General and administrative
|
|
19
|
%
|
|
15
|
%
|
|
17
|
%
|
|
19
|
%
|
Operating income (loss)
|
|
(9)
|
%
|
|
7
|
%
|
|
(2)
|
%
|
|
1
|
%
|
Interest expense, net
|
|
2
|
%
|
|
2
|
%
|
|
2
|
%
|
|
1
|
%
|
Income (loss) before income taxes
|
|
(11)
|
%
|
|
5
|
%
|
|
(4)
|
%
|
|
—
|
%
|
Income tax expense
|
|
—
|
%
|
|
—
|
%
|
|
—
|
%
|
|
—
|
%
|
Net income (loss)
|
|
(11)
|
%
|
|
5
|
%
|
|
(4)
|
%
|
|
—
|
%
|
|
|
Three Months Ended
June 30, |
|
|
|||||||
|
|
2017
|
|
2016
|
|
% Change
|
|||||
|
|
|
|
|
|
|
|||||
|
|
(dollars in thousands)
|
|
|
|||||||
Revenue
|
|
|
|
|
|
|
|||||
Membership
|
|
$
|
10,193
|
|
|
$
|
15,645
|
|
|
(35)
|
%
|
Service provider
|
|
62,557
|
|
|
67,415
|
|
|
(7)
|
%
|
||
Total revenue
|
|
$
|
72,750
|
|
|
$
|
83,060
|
|
|
(12)
|
%
|
|
|
|
|
|
|
|
|||||
Percentage of revenue by type
|
|
|
|
|
|
|
|||||
Membership
|
|
14
|
%
|
|
19
|
%
|
|
|
|
||
Service provider
|
|
86
|
%
|
|
81
|
%
|
|
|
|
||
Total revenue
|
|
100
|
%
|
|
100
|
%
|
|
|
|
|
|
Three Months Ended
June 30, |
|
|
|||||||
|
|
2017
|
|
2016
|
|
% Change
|
|||||
|
|
|
|
|
|
|
|||||
|
|
(dollars in thousands)
|
|
|
|||||||
Operations and support
|
|
$
|
6,928
|
|
|
$
|
10,172
|
|
|
(32)
|
%
|
Percentage of revenue
|
|
10
|
%
|
|
12
|
%
|
|
|
|
||
Non-cash stock-based compensation expense
|
|
$
|
56
|
|
|
$
|
57
|
|
|
|
|
|
Three Months Ended
June 30, |
|
|
|||||||
|
|
2017
|
|
2016
|
|
% Change
|
|||||
|
|
|
|
|
|
|
|||||
|
|
(dollars in thousands)
|
|
|
|||||||
Selling
|
|
$
|
23,153
|
|
|
$
|
26,983
|
|
|
(14)
|
%
|
Percentage of revenue
|
|
32
|
%
|
|
33
|
%
|
|
|
|
||
Non-cash stock-based compensation expense
|
|
$
|
243
|
|
|
$
|
430
|
|
|
|
|
|
Three Months Ended
June 30, |
|
|
|||||||
|
|
2017
|
|
2016
|
|
% Change
|
|||||
|
|
|
|
|
|
|
|||||
|
|
(dollars in thousands)
|
|
|
|||||||
Marketing
|
|
$
|
20,618
|
|
|
$
|
14,432
|
|
|
43
|
%
|
Percentage of revenue
|
|
28
|
%
|
|
17
|
%
|
|
|
|
||
Non-cash stock-based compensation expense
|
|
$
|
83
|
|
|
$
|
121
|
|
|
|
|
|
Three Months Ended
June 30, |
|
|
|||||||
|
|
2017
|
|
2016
|
|
% Change
|
|||||
|
|
|
|
|
|
|
|||||
|
|
(dollars in thousands)
|
|
|
|||||||
Product and technology
|
|
$
|
14,905
|
|
|
$
|
13,323
|
|
|
12
|
%
|
Percentage of revenue
|
|
20
|
%
|
|
16
|
%
|
|
|
|
||
Non-cash stock-based compensation expense
|
|
$
|
432
|
|
|
$
|
566
|
|
|
|
|
|
|
Three Months Ended
June 30, |
|
|
|||||||
|
|
2017
|
|
2016
|
|
% Change
|
|||||
|
|
|
|
|
|
|
|||||
|
|
(dollars in thousands)
|
|
|
|||||||
General and administrative
|
|
$
|
13,729
|
|
|
$
|
12,135
|
|
|
13
|
%
|
Percentage of revenue
|
|
19
|
%
|
|
15
|
%
|
|
|
|
||
Non-cash stock-based compensation expense
|
|
$
|
1,960
|
|
|
$
|
2,657
|
|
|
|
|
|
|
Six Months Ended
June 30, |
|
|
|||||||
|
|
2017
|
|
2016
|
|
% Change
|
|||||
|
|
|
|
|
|
|
|||||
|
|
(dollars in thousands)
|
|
|
|||||||
Revenue
|
|
|
|
|
|
|
|||||
Membership
|
|
$
|
21,717
|
|
|
$
|
31,979
|
|
|
(32)
|
%
|
Service provider
|
|
124,165
|
|
|
134,937
|
|
|
(8)
|
%
|
||
Total revenue
|
|
$
|
145,882
|
|
|
$
|
166,916
|
|
|
(13)
|
%
|
|
|
|
|
|
|
|
|||||
Percentage of revenue by type
|
|
|
|
|
|
|
|||||
Membership
|
|
15
|
%
|
|
19
|
%
|
|
|
|
||
Service provider
|
|
85
|
%
|
|
81
|
%
|
|
|
|
||
Total revenue
|
|
100
|
%
|
|
100
|
%
|
|
|
|
|
|
Six Months Ended
June 30, |
|
|
|||||||
|
|
2017
|
|
2016
|
|
% Change
|
|||||
|
|
|
|
|
|
|
|||||
|
|
(dollars in thousands)
|
|
|
|||||||
Operations and support
|
|
$
|
15,215
|
|
|
$
|
22,381
|
|
|
(32)
|
%
|
Percentage of revenue
|
|
10
|
%
|
|
13
|
%
|
|
|
|
||
Non-cash stock-based compensation expense
|
|
$
|
98
|
|
|
$
|
88
|
|
|
|
|
|
Six Months Ended
June 30, |
|
|
|||||||
|
|
2017
|
|
2016
|
|
% Change
|
|||||
|
|
|
|
|
|
|
|||||
|
|
(dollars in thousands)
|
|
|
|||||||
Selling
|
|
$
|
49,510
|
|
|
$
|
54,815
|
|
|
(10)
|
%
|
Percentage of revenue
|
|
34
|
%
|
|
33
|
%
|
|
|
|
||
Non-cash stock-based compensation expense
|
|
$
|
691
|
|
|
$
|
709
|
|
|
|
|
|
Six Months Ended
June 30, |
|
|
|||||||
|
|
2017
|
|
2016
|
|
% Change
|
|||||
|
|
|
|
|
|
|
|||||
|
|
(dollars in thousands)
|
|
|
|||||||
Marketing
|
|
$
|
30,441
|
|
|
$
|
33,547
|
|
|
(9)
|
%
|
Percentage of revenue
|
|
21
|
%
|
|
20
|
%
|
|
|
|
||
Non-cash stock-based compensation expense
|
|
$
|
135
|
|
|
$
|
227
|
|
|
|
|
|
Six Months Ended
June 30, |
|
|
|||||||
|
|
2017
|
|
2016
|
|
% Change
|
|||||
|
|
|
|
|
|
|
|||||
|
|
(dollars in thousands)
|
|
|
|||||||
Product and technology
|
|
$
|
29,218
|
|
|
$
|
23,357
|
|
|
25
|
%
|
Percentage of revenue
|
|
20
|
%
|
|
14
|
%
|
|
|
|
||
Non-cash stock-based compensation expense
|
|
$
|
1,001
|
|
|
$
|
875
|
|
|
|
|
|
|
Six Months Ended
June 30, |
|
|
|||||||
|
|
2017
|
|
2016
|
|
% Change
|
|||||
|
|
|
|
|
|
|
|||||
|
|
(dollars in thousands)
|
|
|
|||||||
General and administrative
|
|
$
|
24,595
|
|
|
$
|
30,820
|
|
|
(20)
|
%
|
Percentage of revenue
|
|
17
|
%
|
|
19
|
%
|
|
|
|
||
Non-cash stock-based compensation expense
|
|
$
|
4,105
|
|
|
$
|
5,597
|
|
|
|
|
|
|
Six Months Ended
June 30, |
||||||
|
|
2017
|
|
2016
|
||||
|
|
|
|
|
||||
|
|
(in thousands)
|
||||||
Net cash provided by operating activities
|
|
$
|
8,677
|
|
|
$
|
14,286
|
|
Net cash provided by (used in) investing activities
|
|
2,938
|
|
|
(12,264
|
)
|
||
Net cash provided by (used in) financing activities
|
|
4,345
|
|
|
(46
|
)
|
•
|
greater than
$20.0 million
but less than
$25.0 million
, the applicable LIBOR interest rate is
8.5%
, and the applicable reference interest rate is
7.5%
;
|
•
|
greater than
$25.0 million
but less than
$30.0 million
, the applicable LIBOR interest rate is
7.5%
, and the applicable reference interest rate is
6.5%
; or
|
•
|
greater than
$30.0 million
, the applicable LIBOR interest rate is
6.5%
, and the applicable reference interest rate is
5.5%
.
|
•
|
we will be required to pay IAC a termination fee of $20.0 million if the Merger Agreement is terminated in specified circumstances;
|
•
|
time and resources spent or committed by our management to matters relating to the Transactions (including integration planning and expenses for professional services and other transaction costs, many of which are payable by us regardless of whether or not the Transactions are consummated) that could otherwise have been devoted to pursuing other beneficial opportunities will have been largely wasted;
|
•
|
negative publicity and a negative impression of us in the business community; and
|
•
|
if the Merger Agreement is terminated and our board of directors seeks an alternative business combination, our stockholders cannot be certain that we will be able to find a party willing to enter into a transaction agreement on terms equivalent to, or more attractive than, the terms that IAC has agreed to in the Transactions.
|
•
|
the rights of some executive officers to receive payments or other benefits, including the conversion of certain stock options and restricted stock unit awards, acceleration of the vesting of certain equity awards, and possible payments due upon certain terminations of employment during a specified period prior to or following a change in control;
|
•
|
the expected service of Angela R. Hicks Bowman and Thomas R. Evans as directors of ANGI Homeservices following the Merger;
|
•
|
an employment agreement expected to be entered into between ANGI Homeservices and Angela R. Hicks Bowman providing for her continued service to ANGI Homeservices following the closing of the Merger; and
|
•
|
the continued indemnification of our directors and officers after the completion of the Transactions for acts or omissions that occurred in their capacity as directors or officers prior to the closing of the Transactions.
|
|
|
Incorporated by Reference
|
|
|||
Exhibit
No.
|
Exhibit Description
|
Form
|
File No.
|
Exhibit
|
Filing
Date
|
Filed
Herewith
|
Agreement and Plan of Merger by and among Angie’s List, Inc., IAC/InterActiveCorp, Halo TopCo, Inc. and Casa Merger Sub, Inc., dated as of May 1, 2017
|
8-K
|
001-35339
|
2.1
|
5/3/2017
|
|
|
Third Amended and Restated Certificate of Incorporation
|
S-1/A
|
333-176503
|
3.1
|
10/31/2011
|
|
|
Amended and Restated Bylaws
|
S-1/A
|
333-176503
|
3.2
|
10/31/2011
|
|
|
Angie’s List, Inc. Employee Stock Purchase Plan †
|
DEF 14A
|
001-35339
|
Appendix A
|
4/30/2015
|
|
|
Angie’s List, Inc. 2017 Omnibus Incentive Plan †
|
DEF 14A
|
001-35339
|
Appendix A
|
4/28/2017
|
|
|
Certification of the Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act
|
|
|
|
|
X
|
|
Certification of the Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act
|
|
|
|
|
X
|
|
Certification of the Chief Executive Officer Pursuant to Section 906 of the Sarbanes-Oxley Act *
|
|
|
|
|
X
|
|
Certification of the Chief Financial Officer Pursuant to Section 906 of the Sarbanes-Oxley Act *
|
|
|
|
|
X
|
|
101
|
Interactive Data Files Pursuant to Rule 405 of Regulation S-T: (i) Condensed Consolidated Balance Sheets as of June 30, 2017 and December 31, 2016, (ii) Condensed Consolidated Statements of Operations for the three and six months ended June 30, 2017 and 2016, (iii) Condensed Consolidated Statements of Cash Flows for the three and six months ended June 30, 2017 and 2016 and (iv) Notes to Condensed Consolidated Financial Statements
|
|
|
|
|
X
|
|
ANGIE’S LIST, INC.
|
|
|
|
|
|
By:
|
/s/ CHARLES HUNDT
|
|
Name:
|
Charles Hundt
|
|
Title:
|
Chief Accounting Officer
(Duly Authorized Officer and
Principal Accounting Officer)
|
|
|
Incorporated by Reference
|
|
|||
Exhibit
No. |
Exhibit Description
|
Form
|
File No.
|
Exhibit
|
Filing
Date |
Filed
Herewith |
Agreement and Plan of Merger by and among Angie’s List, Inc., IAC/InterActiveCorp, Halo TopCo, Inc. and Casa Merger Sub, Inc., dated as of May 1, 2017
|
8-K
|
001-35339
|
2.1
|
5/3/2017
|
|
|
Third Amended and Restated Certificate of Incorporation
|
S-1/A
|
333-176503
|
3.1
|
10/31/2011
|
|
|
Amended and Restated Bylaws
|
S-1/A
|
333-176503
|
3.2
|
10/31/2011
|
|
|
Angie’s List, Inc. Employee Stock Purchase Plan †
|
DEF 14A
|
001-35339
|
Appendix A
|
4/30/2015
|
|
|
Angie’s List, Inc. 2017 Omnibus Incentive Plan †
|
DEF 14A
|
001-35339
|
Appendix A
|
4/28/2017
|
|
|
Certification of the Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act
|
|
|
|
|
X
|
|
Certification of the Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act
|
|
|
|
|
X
|
|
Certification of the Chief Executive Officer Pursuant to Section 906 of the Sarbanes-Oxley Act*
|
|
|
|
|
X
|
|
Certification of the Chief Financial Officer Pursuant to Section 906 of the Sarbanes-Oxley Act*
|
|
|
|
|
X
|
|
101
|
Interactive Data Files Pursuant to Rule 405 of Regulation S-T: (i) Condensed Consolidated Balance Sheets as of June 30, 2017 and December 31, 2016, (ii) Condensed Consolidated Statements of Operations for the three and six months ended June 30, 2017 and 2016, (iii) Condensed Consolidated Statements of Cash Flows for the three and six months ended June 30, 2017 and 2016 and (iv) Notes to Condensed Consolidated Financial Statements
|
|
|
|
|
X
|
1.
|
I have reviewed this Quarterly Report on Form 10-Q of Angie’s List, Inc.;
|
|
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
|
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
|
|
4.
|
The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
|
(a)
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
|
|
|
|
(b)
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
|
|
|
|
(c)
|
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
|
|
|
|
(d)
|
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
|
5.
|
The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
|
|
(a)
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
|
|
|
|
|
(b)
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
|
/s/ SCOTT A. DURCHSLAG
|
Scott A. Durchslag
|
Chief Executive Officer
|
(Principal Executive Officer)
|
1.
|
I have reviewed this Quarterly Report on Form 10-Q of Angie’s List, Inc.;
|
|
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
|
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
|
|
4.
|
The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
|
(a)
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
|
|
|
|
(b)
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
|
|
|
|
(c)
|
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
|
|
|
|
(d)
|
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
|
5.
|
The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
|
|
(a)
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
|
|
|
|
|
(b)
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
|
/s/ THOMAS R. FOX
|
Thomas R. Fox
|
Chief Financial Officer
|
(Principal Financial Officer)
|
/s/ SCOTT A. DURCHSLAG
|
Scott A. Durchslag
|
Chief Executive Officer
|
(Principal Executive Officer)
|
|
July 27, 2017
|
Date
|
/s/ THOMAS R. FOX
|
Thomas R. Fox
|
Chief Financial Officer
|
(Principal Financial Officer)
|
|
July 27, 2017
|
Date
|