Large accelerated filer
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Accelerated filer
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Non-accelerated filer
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Smaller reporting company
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Class
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Outstanding as of February 22, 2016
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Common Stock, $0.00001 par value
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47,178,441
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Page
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Special Note About Forward-Looking Statements
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Part I
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Item 1.
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Business
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Item 1A.
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Risk Factors
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Item 1B.
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Unresolved Staff Comments
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Item 2.
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Properties
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Item 3.
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Legal Proceedings
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Item 4.
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Mine Safety Disclosures
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Part II
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Item 5.
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Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities
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Item 6.
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Selected Financial Data
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Item 7.
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Management's Discussion and Analysis of Financial Condition and Results of Operations
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Item 7A.
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Quantitative and Qualitative Disclosures About Market Risk
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Item 8.
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Financial Statements and Supplementary Data
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Item 9.
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Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
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Item 9A.
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Controls and Procedures
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Item 9B.
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Other Information
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Part III
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Item 10.
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Directors, Executive Officers and Corporate Governance
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Item 11.
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Executive Compensation
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Item 12.
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Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
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Item 13.
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Certain Relationships and Related Transactions, and Director Independence
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Item 14.
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Principal Accounting Fees and Services
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Part IV
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Item 15.
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Exhibits and Financial Statement Schedules
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Signatures
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our ability to grow rapidly and to manage our growth effectively;
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our ability to develop innovative new technologies and remain a market leader;
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our ability to attract and retain buyers and sellers and increase our business with them;
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our vulnerability to loss of, or reduction in spending by, large buyers;
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the effect on the advertising market and our business of difficult economic conditions;
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the freedom of buyers and sellers to direct their spending and inventory to competing sources of inventory and demand;
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our ability to use our solution to purchase and sell higher value advertising and to expand the use of our solution by buyers and sellers utilizing evolving digital media platforms;
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our ability to introduce new offerings and bring them to market in a timely manner in response to client demands and industry trends, including shifts in digital advertising growth from display to mobile channels;
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uncertainty of our estimates and expectations associated with new offerings, including private marketplace, mobile, Orders, automated guaranteed, video, and intent marketing;
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our ability to maintain a supply of advertising inventory from sellers;
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uncertainty of our estimates and assumptions about the mix of gross and net reported transactions;
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declining take rate associated with our buyer cloud transactions;
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our limited operating history and history of losses;
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our ability to continue to expand into new geographic markets;
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our ability to adapt effectively to shifts in digital advertising to mobile and video channels;
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increased prevalence of ad blocking technologies;
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the slowing growth rate of online digital display advertising;
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the growing percentage of online and mobile advertising spending captured by owned and operated sites (such as Facebook and Google) where we are unable to participate;
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the effects of increased competition in our market and increasing concentration of advertising spending, including mobile spending, in a small number of very large competitors, and our ability to differentiate offerings, compete effectively and to maintain our pricing and take rate;
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requests from buyers and sellers for discounts, fee concessions or revisions, rebates, and greater levels of pricing transparency and specificity;
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potential adverse effects of malicious activity such as fraudulent inventory and malware;
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the effects of seasonal trends on our results of operations;
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costs associated with defending intellectual property infringement and other claims;
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our ability to attract and retain qualified employees and key personnel;
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our ability to consummate and integrate future acquisitions of or investments in complementary companies or technologies and our ability to identify such companies or technologies;
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our ability to comply with, and the effect on our business of, evolving legal standards and regulations, particularly concerning data protection and consumer privacy and evolving labor standards; and
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our ability to develop and maintain our corporate infrastructure, including our finance and information technology systems and controls.
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a comprehensive range of advertising units, including display and video;
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utilizing various inventory types, including (i) direct sale of premium inventory, which we refer to as Orders, on a guaranteed, or fully reserved basis, as well as on a non-guaranteed basis; (ii) real-time bidding, or RTB; and (iii) static bidding;
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across digital channels, including mobile web, mobile application, and desktop, as well as across various out of home channels, such as digital billboards, that are in the early stages of leveraging our advertising automation platform.
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Advertisers: Companies marketing their brands, products and services through advertising campaigns.
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Agencies: Advertising holding companies and their owned agencies that plan and execute advertising campaigns for their commercial clients.
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Agency trading desks, or ATDs: Typically, agencies plan and execute media purchases by interacting with DSPs through their own in-house ATDs. Advertising agencies often centralize their digital advertising expertise into an ATD in order to better optimize advertiser campaigns and digital media purchases.
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DSPs: There are many DSPs in the digital advertising industry and they generally use real-time bidding, or RTB, to purchase advertising inventory from sellers on an automated, impression-by-impression basis. DSPs may earn revenue through arbitrage, like ad networks, or they may charge fees for their services.
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Ad networks: There are hundreds of ad networks that seek to optimize campaigns to achieve advertiser and agency goals. Ad networks often arbitrage by purchasing advertising inventory from sellers and then selling it to advertisers at higher prices.
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Website publishers (desktop): Operators of browser-based websites optimized for desktop computers.
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Website publishers (mobile web): Operators of browser-based websites optimized for mobile devices, such as smartphones or tablets.
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Mobile application developers: Operators of Internet application software designed to efficiently display publisher content on mobile devices such as smartphones or tablets, typically without requiring a browser.
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Ad networks: In certain instances, ad networks can also serve as sellers to advertising automation platforms (such as Rubicon Project) by supplying desktop or mobile inventory via integrations the ad network established with publishers.
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Perishable Inventory.
An Internet user’s visit to a website or mobile application creates a unique opportunity to reach the user by inserting advertisements into one or more of the impressions designed into the website or mobile application. In order to generate revenue for a seller these impressions must be filled before the page content loads. The inventory of available impressions is highly perishable due to the fact that each impression must be identified, valued, auctioned, and successfully purchased, and the advertisement must be delivered into that impression, in the split second between the time a user types in a web-address or is redirected to a website or mobile application and the time the page is loaded. Buyers and sellers need a solution that can analyze and execute on their objectives in an automated fashion at virtually instantaneous speed, or real time.
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Complex Impression-Level Matching.
Sellers aim to sell impressions to maximize revenue while enhancing the users’ experience and preserving the sellers’ brand. Buyers seek to purchase impression-level inventory to maximize targeting of specific audiences and return on investment for their advertising spending. As a result of this dynamic, there is a need for a technology solution that can match buyer and seller objectives at a large scale to optimize the delivery of advertising on an impression-by-impression basis.
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Large Multi-Variate Datasets.
Trillions of data points relating to browsing behavior, geographic information, user preferences, engagement with an advertisement, and effectiveness of an advertisement are created as users visit sellers’ websites and mobile applications. Each piece of data represents a valuable piece of information that can facilitate and improve current and subsequent targeting and monetization of impressions. However, the volume of data available is so large that it is difficult for buyers and sellers to effectively manage the information flow to extract maximum value from the data. As a result, buyers and sellers need a solution capable of analyzing, processing, and interpreting large amounts of data and executing buy and sell orders informed by such data, all in real time.
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Fragmented Buyer and Seller Base.
There is an enormous number and variety of buyers and sellers of digital advertising. Historically, inefficient manual transaction techniques have been inadequate to cope with this fragmentation, making it difficult for sellers to efficiently transact with many buyers to maximize revenue, and for buyers to make large volume buys safely and securely to meet their investment objectives. This inefficiency has created a need for a solution that is capable of seamlessly connecting a highly fragmented global buyer and seller base.
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Brand Security and Inventory Quality Concerns.
Buyers are concerned about being associated with content they consider inappropriate, competitive, or inconsistent with their advertising themes. Sellers want to prevent advertisements that are inappropriate, competitively sensitive, or otherwise do not comport with their brand image from appearing on their websites or mobile applications. As sellers try to make their inventory available to a wider group of buyers, and buyers extend their reach in pursuit of target audiences, the importance of brand security increases for both buyers and sellers. Moreover, the indirect nature of many relationships between buyers and sellers on advertising exchanges or ad networks can, in the absence of sufficient quality controls, result in inferior inventory quality that places the advertiser buyer at risk or inferior quality advertisements that place the publisher at risk. Both buyers and sellers need a solution that is capable of following specified rules to maintain brand integrity and deliver relevant advertisements and inventory that meets quality standards to create a positive user experience, while efficiently executing a large volume of transactions.
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Consumer Experience Concerns.
Consumers prefer digital experiences featuring advertising that is relevant to their personal interests, non-intrusive, and that does not detract from or slow down their enjoyment of digital content.
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Large and Highly Unpredictable Traffic Volumes.
The scale of user traffic and the dollar value of digital advertisements is difficult to manage efficiently. A large seller may have tens of millions of users per month, creating hundreds of millions of monthly impressions. The volume of traffic for any given seller is extremely difficult to predict. Breaking news stories, as an example, create spikes in traffic on news websites for a period of time. As a result, sellers need a platform that can effectively respond to and monetize inventory during unpredictable spikes in volumes.
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Lack of Standardized Ad Formats and Data.
An available advertising impression can vary based on a number of factors, such as seller, ad format, screen size, pricing mechanism, content type, and audience demographic. It is challenging for buyers to efficiently evaluate and bid on trillions of impressions that are based on hundreds of ad formats in the context of millions of highly customized data fields. As a result, buyers and sellers require a platform that can, on a real time basis, match a large variety of available advertising impressions with those potential buyers. Buyers and sellers also often work with multiple technology platforms to develop their advertising automation solutions, creating integration challenges required to manage multiple advertising technology vendors and resulting in significant operational complexity.
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Maximized Revenue Across Inventory Types, Advertising Units, and Channels Without Volume or Geographic Constraints.
We provide applications that help a seller monetize inventory across a comprehensive range of inventory types (Orders, RTB and static bidding), advertising units (display or video) and channels (desktop, mobile web, and mobile application). We enable them to monetize a broad base of advertising inventory with virtually no constraints on the type or volume of inventory that can be sold or the number or location of potential buyers. We support placements throughout various areas of our sellers’ properties, which may include designated in-content placements commonly referred to as engagement, outstream video, and right rail.
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Automated Sales with Leading Buyers Via RTB, Static Bidding, and Orders.
Through our solution, sellers gain instant access to the world’s largest automated digital advertising buyers, including approximately
350
DSPs and ad networks. Our platform offers sellers significant flexibility by enabling them to sell their advertising inventory in an automated fashion on an impression-by-impression basis, such as with RTB, in bulk, or in Orders pursuant to arrangements directly between the seller and the buyer.
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Integrated Solution for Digital Advertising Needs.
We provide sellers with a single web-based interface that serves as their central location to manage, analyze, and maximize digital advertising spending from hundreds of different buyers. This centralized view allows sellers to cost-effectively optimize monetization, control workflow, run analytics, and perform other critical functions across a comprehensive range of inventory placements (Orders, RTB, and static bidding), advertising units (display and video), and channels (desktop and mobile).
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Significantly Streamlined Sales, Operations, and Finance Workflow.
Our platform streamlines the management of digital advertisement sales by aggregating demand and providing a suite of software applications that automate the process of making inventory available for sale. Our expansive marketplace allows sellers to connect quickly and efficiently with hundreds of thousands of brands. Additionally, we provide a web interface that transforms time-consuming and manual order entry and processing into an automated process.
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Security for Brand and User Experience.
Our platform is designed to ensure that advertisements shown on a seller website or mobile application conform to the seller’s guidelines, which specify what advertisers, type of product, or type of advertisement may not be shown on the seller’s website or mobile application. Our systems scan all advertisements to verify, in real time, that each advertisement is appropriate for the seller and conforms to our platform-wide advertising quality requirements.
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Advanced Reporting and Analytics and Actionable Insights.
We have developed a robust set of reporting features that sellers can access and use to analyze the vast array of data we collect for them. We provide sellers with actionable insight in order to leverage that data. Using our analytics, sellers can readily gather impression data, yield optimization data, brand security data, and pricing data needed to manage their digital business effectively. For example, sellers can benefit from big-data-driven insights to understand the optimal pricing of their inventory, including setting optimal price floors for RTB auctions, and leveraging vast quantities of historical bid data to calculate the financial impact of blocking bids from certain advertisers or industry segments.
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Consolidated Payments and Transparent Tracking and Billing System.
We provide consolidated billing and collection for sellers who would otherwise be required to dedicate additional resources to cost-effectively manage financial relationships with a large base of buyers.
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Independence.
Some competitors working with sellers have their own owned and operated properties to which they have an incentive to give preferred treatment, which can lead to sub-optimal pricing and access for others in the market. We believe our independent market position enables us to better serve buyers and sellers because we are not burdened with any structural conflicts.
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Header Bidding Solution that Helps Generate Higher Revenue for Sellers Through More Efficient Allocation of Buyer Demand
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We offer a “header bidding” solution that integrates technology directly on a publisher website or mobile application to enable Rubicon Project to sit much higher in the publisher’s ad stack. The innovation allows the strength and scale of our buyer demand to compete for many more of a seller’s impressions, creating much higher demand, which leads to higher revenue for sellers. Similarly, we offer a solution that helps sellers to maximize revenue across advertising inventory types and sales channels by ensuring that inventory is optimally allocated between direct and indirect demand, thereby creating as much buyer demand as possible for a given impression.
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Direct Access to a Global Audience and Hundreds of Premium Sellers.
By leveraging our platform, buyers can reach approximately
one billion
Internet users globally, including many of the world's largest and most premium sellers. Furthermore, unlike many organizations in the digital advertising industry, we have direct relationships with sellers and can enable buyers to circumvent a multistep, expensive, and inefficient process to connect to the seller.
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Flexible Access to Inventory.
Our platform allows buyers to purchase advertising inventory in their preferred manner, whether by RTB, static bidding, or Orders. Our solution also has the flexibility to allow buyers to integrate their purchases on our platform through their existing buying technologies or to buy directly through our platform.
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Optimized Return on Investment by Consolidating Spending on One Platform.
By concentrating more of their spending on our platform, buyers can construct a larger data set specific to our platform, which results in superior targeting and more effective campaigns over time. They also benefit from our machine-learning algorithms, which are constantly analyzing their data in order to improve the effectiveness of their campaigns. Our solution provides access to a comprehensive range of inventory placements (Orders, RTB, and static bidding), advertising units (display and video), and channels (desktop and mobile).
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Intent Marketing Solution for Efficiently Finding a Target Audience
. Our capabilities for buyers include a marketing solution to enable advertising agencies and brands to build brand awareness, acquire new customers, and re-engage existing customers via site-based retargeting campaigns.
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Ability to Automate the Direct Purchase of Fully Reserved Inventory Through our Guaranteed Orders Platform.
Our direct orders
capability enables buyers to significantly streamline the workflow associated with purchasing fully reserved inventory through our Orders platform, while leveraging their first-party data assets.
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Simplified Order Management and Campaign Tracking.
By eliminating most manual steps, our applications enable buyers to efficiently manage their digital campaigns and significantly reduce the time it would otherwise take to effectively execute their digital advertising programs.
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Ability to Purchase Desktop and Mobile Inventory at Scale.
As of Q4 2015,
84%
of our top 100 sellers were working with Rubicon Project to monetize desktop and mobile inventory. Similarly, in Q4 2015,
99%
of the largest 2,000 advertiser buyers on our platform purchased both desktop and mobile inventory through our marketplace.
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Transparency and Control Over Advertising Spending.
Our platform is designed to let buyers know and control where their dollars are being spent. Buyers can easily navigate through our interface to choose the list of sellers they want to purchase inventory from and see an indicative price range that they should expect to pay.
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Brand Security.
Our suite of brand-security technologies and premium seller base ensure buyers that their advertisements will appear in an environment they have pre-approved.
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Inventory Quality.
We provide systems and processes to detect and minimize questionable inventory, such as non-human traffic.
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Independence.
Some industry participants have incentives to isolate their viewers and deploy specialized technology for their audiences, making buyers dependent on them to reach the users of their particular websites, mobile applications, devices, or other hardware. By comparison, our platform provides access to a wide range of leading sellers globally.
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Increasing Penetration of Our Mobile and Video Offerings into Buyers and Sellers Globally.
We believe we can significantly expand the penetration of our fast-growing mobile and video offerings among existing buyer and seller customers and by attracting new buyer and seller customers across the globe. Consumer consumption of mobile and video content continues to rapidly increase and we see an attractive opportunity to significantly strengthen our presence as a leading global platform for enabling buyers to reach consumers with relevant mobile and video advertising via our existing sellers and by attracting new seller relationships. We intend to aggressively invest in developing additional product features and marketing initiatives to support our mobile and video growth objectives.
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Growing Our Business with Existing Buyers by Promoting Increased Use of Our Complete Technology Solution and Attracting New Buyers to Our Platform.
We believe we can attract a greater portion of buyers’ spending by promoting increased use of our complete technology solution featuring capabilities across a comprehensive range of inventory placements (Orders, RTB, and static bidding), ad units (display and video), and channels (desktop and mobile). We will also focus on delivering continued improvement of our matching and pricing algorithms as well as enhanced features, functionality, and service of our solution. We see an opportunity with existing buyers to offer them additional inventory to make buying more efficient on our platform. We plan to invest in our sales organization to drive increased spending by existing buyers on our platform and to attract new buyers to our platform.
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Increasing Penetration of Existing Sellers by Promoting Increased Use of Our Complete Technology Solution and Attracting New Sellers.
We see an opportunity to increase the share of seller inventory that we currently monetize by promoting increased use of our complete technology solution featuring capabilities across a comprehensive range of inventory placements (Orders, RTB, and static bidding), ad units (display and video), and channels (desktop and mobile). We will also focus on enhancing our cloud and applications, offering additional applications, and increasing our relationships with buyers and sellers that engage in Orders relationships through our solution. In addition, we expect to benefit generally from the growing adoption of automation for sales of advertising inventory, particularly in the Orders market for premium inventory that is a very large global market opportunity that is predominantly a manual sales process currently. We also see an opportunity to form relationships with new sellers for which our platform offers the best solution for monetizing all types of their digital advertising inventory across mobile and desktop channels.
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Enhancing Our Leadership Position by Investing in Innovation and Expansion.
We intend to build upon our current technology and extend our market leadership through innovation. Our investments will focus on improving our machine-learning algorithms, expanding further into mobile and video, data analytics, audience extension, API integration, building additional features to extend further into order management, building self-service capabilities for buyers and sellers, and enhancing and expanding our current server infrastructure.
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Building Our Orders Business.
A significant portion of premium inventory is purchased and sold on a guaranteed basis. We believe that some sellers will continue to rely on their own sales forces for sales of premium inventory, but will benefit from automation to better price, match, and place campaigns, and to automate manual operations such as ad trafficking, quality assurance, and billing and collections. We have invested in workflow capabilities and automation of premium inventory transactions to enable sales teams to increase their productivity and process more sales of inventory at optimal prices. Workflow capabilities enable buyers and sellers to communicate directly and use shared data to execute campaigns. These capabilities support sales functions rather than replacing them, enhancing their adoption without friction. Buyers and sellers can also leverage their first-party data assets in our platform to increase the value of the seller’s inventory and precision of the buyer’s targeting efforts. We plan to build upon these investments to capitalize upon the growth we anticipate in the market for automation of direct transactions. In addition, we believe that our guaranteed orders capabilities will help to position us to automate the purchase and sale of television advertising.
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Expanding Our Buyer Offerings.
The various buyers in the market, including brand advertisers, agencies, ATDs, ad networks, and DSPs, utilize a variety of inventory placements to purchase inventory. Our offering covers all primary forms of digital inventory placement, giving us the ability to serve all buyers. We intend to expand our relationships across all buyer types and inventory placements. We plan to utilize our offerings that facilitate the direct processing of transactions between buyers and sellers to increase our participation in the direct purchase of premium inventory by agencies and their advertisers through our Orders business.
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Accelerating Our Global Expansion and Entering New Markets.
We currently operate globally from our offices in
ten
countries. We believe we can extend our marketplace platform through international expansion to help automate and improve advertising for buyers and sellers globally. In 2014, we initiated operations in Japan and we intend to grow our market share in our existing international markets. We also plan to further expand our operations in Asia and Latin America.
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Bringing Automation to Additional Media.
Historically, our solution has focused on display advertising. We believe, however, that television and other analog and print media will eventually converge with existing digital channels, creating opportunities for us to expand our solution beyond digital media to analog and print media, such as television, radio, and magazines, as well as out-of-home media like billboards. We intend to extend our solution to track this convergence and support increasingly complex volumes of advertisements spanning multiple media. Our combined offering of inventory placements and advertising units may be packaged for multiple distribution channels, including mobile, desktop, and television (satellite, cable, smart TV, and set-top box). We intend to accelerate our expansion in mobile for both mobile web and mobile applications and to build the foundation to automate television advertising. In addition to platform expansion, we intend to extend beyond our current capabilities for display, video, and engagement to other forms of advertising units as they may arise.
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Pricing Metadata
—We provide information on historical pricing, bids, buyer type and buyers to determine auction winners between RTB and static bidding. This data includes approximately
9 trillion
bid requests per month,
5 million
peak bids per second and data from hundreds of thousands of brands and all major DSPs, ad networks, and ATDs;
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Audience Data
—We reach approximately
one billion
Internet users globally. We have direct relationships with many of the world's largest and most premium sellers. This reach provides us with a large volume of data about users and audiences, such as pricing of advertisements, historical clearing prices, bid responses, what types of ads are allowed on a particular website, which sellers’ websites a buyer prefers, what ad formats are available to be served, advertisement size and location, where a user is located, what users a buyer wants to target, how many ads the user has seen, browser or device information, and sellers’ proprietary data about users.
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Impression Profiling
—to determine key data related to the impression, such as demographic data, geographic data and historical data to send to potential bidders and collect for reporting and analysis by buyers and sellers.
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Algorithmic Pricing
—to adjust pricing for impressions based on historical bidding activity and valuation signals to increase marketplace liquidity.
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Rules Management
—to ensure adherence to seller rules that set minimum prices for advertising inventory, determine which buyers are eligible to purchase advertising, identify buyers and categories of advertisements that are not allowed on a seller’s website, mobile application or other digital media property, and specify security and other criteria.
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FastLane
—A header bidding solution that integrates technology directly on a publisher website or mobile application to enable Rubicon Project to compete for a greater proportion of seller’s impressions than without header bidding.
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Exchange API
—Helps sellers to maximize revenue across all types of advertising inventory and sales channels by ensuring that inventory is optimally allocated between direct and indirect demand, thereby creating as much buyer demand as possible for a given impression.
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Mobile SDK
—Our mobile software development kit (SDK) is a code embedded in a mobile application that performs advertising technology functions within the mobile application, including collecting and displaying ad content, handling device interactions and enhancing the user experience through ad quality intelligence. Advertising formats supported by our SDK include rich media, video and engagement. Our SDK also supports our FastLane header bidding solution that is designed to maximize demand for available impressions.
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Buyer Bidder
—Our buyer bidder allows advertising agencies and brands to connect buyers with their target audience through branding, new customer acquisition and site retargeting campaigns. Our bidder evaluates large volumes of intent marketing data (that is continuously updated in milliseconds) in order to execute buys on highly targeted consumer audiences with intention of providing the highest likelihood of achieving the advertisers’ campaign objectives.
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Protective Screening
—Helps protect sellers and users from malware (software that can infect computers with malicious software), checks advertisements delivered through our solution for the presence of any malicious or questionable activity or characteristics, screens for unsanctioned advertisements, and reduces recurrence.
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AdCheq
—Reviews and categorizes advertisement creatives so that our systems can automatically enforce each seller’s specific advertisement quality policies.
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PubCheq -
Leverages a variety of proprietary and third party data sources to evaluate and categorize websites and mobile applications, score inventory quality and guide the company’s inventory quality team. Maintains a comprehensive database of all inventory reviewed by internal systems and teams and powers a global blacklist that blocks fraudulent or otherwise problematic seller properties from entering the Rubicon Project marketplace.
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Brand Security Dashboard
—Provides visibility into quality-related activity, showing how different buyers behave relating to advertisement quality, details on the level of malware threats, and data leakage reporting (shows questionable activity related to third parties gathering data on their inventory).
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Vantage
—An extension for Web browsers that lets sellers monitor ads served in context on their sites, providing insight, diagnostic applications, and ad-quality controls.
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Creative Approval API
—A programmatic interface that sellers can use to retrieve a comprehensive set of individual advertising creatives that have bid or served on their sites, and instruct our delivery systems to approve or reject those creatives for future impressions.
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build and maintain our reputation for innovation and solutions that meet the evolving needs of buyers and sellers;
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distinguish ourselves from the wide variety of solutions available in our industry;
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maintain and expand our relationships with buyers and sellers;
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respond to evolving industry standards and government regulations that impact our business, particularly in the areas of data collection and consumer privacy;
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prevent or otherwise mitigate failures or breaches of security or privacy;
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attract, hire, integrate and retain qualified employees;
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effectively execute upon our international expansion plans;
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evaluate new acquisition targets, and successfully integrate acquired companies’ business and technologies;
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grow our share of online and mobile ad spending and the supply of advertising impressions available to us notwithstanding the growing share of online impressions that is controlled by owned and operated sites (such as Facebook and Google) who may not make their advertising inventory available to us;
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maintain our cloud-based technology solution continuously without interruption 24 hours a day, seven days a week; and
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anticipate and respond to varying product life cycles, regularly enhance our existing advertising solutions, and introduce new advertising solutions and pricing models on a timely basis, including by developing our capabilities in evolving areas of the business, such as mobile and video.
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seasonality in demand for digital advertising;
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changes in pricing of advertising inventory or pricing for our solutions and our competitors’ offerings, including potential reductions in our pricing and overall take rate as a result of competitive pressure, changes in supply, improvements in technology and extension of automation to higher-value inventory, uncertainty regarding rate of adoption, changes in the allocation of demand spend by buyers, changes in revenue mix, auction dynamics, pricing discussions or negotiations with clients and potential clients, and other factors;
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diversification of our revenue mix to include new services, some of which may have lower pricing than our historic lower-value inventory business or may cannibalize existing business;
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the addition or loss of buyers or sellers;
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changes in the advertising strategies or budgets or financial condition of advertisers;
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the performance of our technology and the cost, timeliness and results of our technology innovation efforts;
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advertising technology and digital media industry conditions and the overall demand for advertising, or changes and uncertainty in the regulatory environment for us or buyers or sellers, including with respect to privacy regulation;
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the introduction of new technologies or service offerings by our competitors and market acceptance of such technologies or services;
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our level of expenses, including investment required to support our technology development, scale our technology infrastructure and business expansion efforts, including acquisitions, hiring and capital expenditures, or expenses related to litigation;
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the impact of changes in our stock price on valuation of stock-based compensation, warrants or other instruments that are marked to market;
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•
|
the effect of our efforts to maintain the quality of transactions on our platform, including the blocking of non-human inventory and traffic, which could cause a reduction in our revenue if there are fewer transactions consummated through our platform even though the overall quality of the transactions may have improved;
|
•
|
the effectiveness of our financial and information technology infrastructure and controls;
|
•
|
foreign exchange rate fluctuations; and
|
•
|
changes in accounting policies and principles and the significant judgments and estimates made by management in the application of these policies and principles.
|
•
|
Buyers of advertising inventory are increasingly using technology, often provided by third parties, to assess viewability of impressions for use as a bidding or purchasing criterion, or to determine value for purposes of determining pricing.
|
•
|
Assessment of viewability is imperfect, but technology can be expected to improve as data providers, DSPs, and buyers themselves develop viewability assessment tools and build viewability factors into their algorithms for bidding, purchasing, and pricing decisions.
|
•
|
Inventory viewability and value correlate. More viewable inventory is more valuable, and viewability of inventory increases in importance with the price paid for that inventory.
|
•
|
Viewability can be used as an inventory differentiator, by domain or on an impression level, with higher viewability generally associated with higher value and pricing, and lower viewability generally associated with lower value and pricing.
|
•
|
The identification, acquisition and integration of acquired businesses require substantial attention from management. The diversion of management’s attention and any difficulties encountered in the transition process could hurt our business.
|
•
|
The identification, acquisition and integration of acquired businesses requires significant investment, including to determine which new service offerings we might wish to acquire, harmonize service offerings, expand management capabilities and market presence, and improve or increase development efforts and technology features and functions.
|
•
|
The anticipated benefits from the acquisition may not be achieved, including as a result of loss of customers or personnel of the target, other difficulties in supporting and transitioning the target’s customers, the inability to realize expected synergies from an acquisition, or negative culture effects arising from the integration of new personnel.
|
•
|
We may face difficulties in integrating the personnel, technologies, solutions, operations, and existing contracts of the acquired business.
|
•
|
We may fail to identify all of the problems, liabilities or other shortcomings or challenges of an acquired company, technology, or solution, including issues related to intellectual property, solution quality or architecture, income tax and other regulatory compliance practices, revenue recognition or other accounting practices, or employee or customer issues.
|
•
|
To pay for future acquisitions, we could issue additional shares of our common stock or pay cash. Issuance of shares would dilute stockholders. Use of cash reserves could diminish our ability to respond to other opportunities or challenges. Borrowing to fund any cash purchase price would result in increased fixed obligations and could also include covenants or other restrictions that would impair our ability to manage our operations.
|
•
|
Acquisitions expose us to the risk of assumed known and unknown liabilities including contract, tax, and other obligations incurred by the acquired business or fines or penalties, for which indemnity obligations, escrow arrangements or insurance may not be available or may not be sufficient to provide coverage.
|
•
|
New business acquisitions can generate significant intangible assets that result in substantial related amortization charges and possible impairments.
|
•
|
The operations of acquired businesses, or our adaptation of those operations, may require that we apply revenue recognition or other accounting methodologies, assumptions, and estimates that are different from those we use in our current business, which could complicate our financial statements, expose us to additional accounting and audit costs, and increase the risk of accounting errors.
|
•
|
Acquired businesses may have insufficient internal controls that we must remediate, and the integration of acquired businesses may require us to modify or enhance our own internal controls, in each case resulting in increased administrative expense and risk that we fail to comply with the requirements of Section 404 of the Sarbanes-Oxley Act of 2002 or that our independent registered public accounting firm is unable to express an opinion as to the effectiveness of our internal control over financial reporting, resulting in late filing of our periodic reports, loss of investor confidence, regulatory investigations, and litigation.
|
•
|
Acquisition of businesses based outside the U.S. would require us to operate in foreign languages and manage non-U.S. currency, billing, and contracting needs and require us to comply with laws and regulations, including labor laws and privacy laws that in some cases may be more restrictive on our operations than laws applicable to our business in the U.S.
|
•
|
Acquisitions can sometimes lead to disputes with the former owners of the acquired company, which can result in increased legal expenses, management distraction and the risk that we may suffer an adverse judgment if we are not the prevailing party in the dispute.
|
•
|
dispose of or sell our assets;
|
•
|
make material changes in our business or management;
|
•
|
consolidate or merge with other entities;
|
•
|
incur additional indebtedness;
|
•
|
create liens on our assets;
|
•
|
pay dividends;
|
•
|
make investments;
|
•
|
enter into transactions with affiliates; and
|
•
|
pay off or redeem subordinated indebtedness.
|
•
|
announcements of new offerings, products, services or technologies, commercial relationships, acquisitions, or other events by us or our competitors;
|
•
|
price and volume fluctuations in the overall stock market from time to time;
|
•
|
significant volatility in the market price and trading volume of technology companies in general and of companies in the digital advertising industry in particular;
|
•
|
fluctuations in the trading volume of our shares or the size of our public float;
|
•
|
actual or anticipated changes or fluctuations in our results of operations;
|
•
|
actual or anticipated changes in the expectations of investors or securities analysts, and whether our results of operations meet these expectations;
|
•
|
litigation involving us, our industry, or both;
|
•
|
regulatory developments in the United States, foreign countries, or both;
|
•
|
general economic conditions and trends;
|
•
|
major catastrophic events;
|
•
|
breaches or system outages;
|
•
|
departures of officers or other key employees; or
|
•
|
an adverse impact on the company resulting from other causes, including any of the other risks described in this report.
|
•
|
Our certificate of incorporation gives our board of directors the authority to issue shares of preferred stock in one or more series, and to establish the number of shares in each series and to fix the price, designations, powers, preferences and relative, participating, optional or other rights, if any, and the qualifications, limitations, or restrictions of each series of the preferred stock without any further vote or action by stockholders. The issuance of shares of preferred stock may discourage, delay or prevent a merger or acquisition of the company by significantly diluting the ownership of a hostile acquirer, resulting in the loss of voting power and reduced ability to cause a takeover or effect other changes.
|
•
|
Our certificate of incorporation provides that our board of directors is classified, with only one of its three classes elected each year, and directors may be removed only for cause and only with the vote of 66
2
/
3
% of the voting power of stock outstanding and entitled to vote thereon. Further, the number of directors is determined solely by our board of directors, and because we do not allow for cumulative voting rights, holders of a majority of shares of common stock entitled to vote may elect all of the directors standing for election. These provisions could delay the ability of stockholders to change the membership of a majority of our board of directors.
|
•
|
Under our bylaws, only the board of directors or a majority of remaining directors, even if less than a quorum, may fill vacancies resulting from an increase in the authorized number of directors or the resignation, death or removal of a director.
|
•
|
Our certificate of incorporation prohibits stockholder action by written consent, so any action by stockholders may only be taken at an annual or special meeting.
|
•
|
Our certificate of incorporation provides that a special meeting of stockholders may be called only by the board of directors. This could delay any effort by stockholders to force consideration of a proposal or to take action, including the removal of directors.
|
•
|
Under our bylaws, advance notice must be given to nominate directors or submit proposals for consideration at stockholders’ meetings. This gives our board of directors time to defend against takeover attempts and could discourage or deter a potential acquirer from soliciting proxies or making proposals related to an unsolicited takeover attempt.
|
•
|
The provisions of our certificate of incorporation noted above may be amended only with the affirmative vote of holders of at least 66
2
/
3
% of the voting power of all of the then-outstanding shares of the company’s voting stock, voting together as a single class. The same two-thirds vote is required to amend the provision of our certificate of incorporation imposing these supermajority voting requirements. Further, our bylaws may be amended only by our board of directors or by the same percentage vote of stockholders noted above as required to amend our certificate of incorporation. These supermajority voting requirements may inhibit the ability of a potential acquirer to effect such amendments to facilitate an unsolicited takeover attempt.
|
•
|
Our board of directors may amend our bylaws by majority vote. This could allow the board to use bylaw amendments to delay or prevent an unsolicited takeover, and limits the ability of an acquirer to amend the bylaws to facilitate an unsolicited takeover attempt.
|
|
|
High
|
|
Low
|
||||
Fiscal 2014 Quarters Ended:
|
|
|
|
|
||||
June 30, 2014 (from April 1, 2014)
|
|
$
|
23.20
|
|
|
$
|
11.15
|
|
September 30, 2014
|
|
$
|
13.45
|
|
|
$
|
8.76
|
|
December 31, 2014
|
|
$
|
17.00
|
|
|
$
|
8.76
|
|
Fiscal 2015 Quarters Ended:
|
|
|
|
|
||||
March 31, 2015
|
|
$
|
20.59
|
|
|
$
|
14.14
|
|
June 30, 2015
|
|
$
|
19.21
|
|
|
$
|
14.78
|
|
September 30, 2015
|
|
$
|
18.59
|
|
|
$
|
13.08
|
|
December 31, 2015
|
|
$
|
16.97
|
|
|
$
|
13.53
|
|
|
|
Year Ended
|
||||||||||||||||||
|
|
December 31, 2015
|
|
December 31, 2014
|
|
December 31, 2013
|
|
December 31, 2012
|
|
December 31, 2011
|
||||||||||
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
|
(in thousands, except per share data)
|
||||||||||||||||||
Revenue
|
|
$
|
248,484
|
|
|
$
|
125,295
|
|
|
$
|
83,830
|
|
|
$
|
57,072
|
|
|
$
|
37,059
|
|
Expenses:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Costs of revenue
(1) (2)
|
|
58,495
|
|
|
20,754
|
|
|
15,358
|
|
|
12,367
|
|
|
12,893
|
|
|||||
Sales and marketing
(1) (2)
|
|
83,333
|
|
|
43,203
|
|
|
25,811
|
|
|
20,458
|
|
|
17,748
|
|
|||||
Technology and development
(1) (2)
|
|
42,055
|
|
|
22,718
|
|
|
18,615
|
|
|
13,115
|
|
|
12,496
|
|
|||||
General and administrative
(1) (2)
|
|
70,199
|
|
|
57,398
|
|
|
27,926
|
|
|
12,331
|
|
|
8,926
|
|
|||||
Total expenses
|
|
254,082
|
|
|
144,073
|
|
|
87,710
|
|
|
58,271
|
|
|
52,063
|
|
|||||
Loss from operations
|
|
(5,598
|
)
|
|
(18,778
|
)
|
|
(3,880
|
)
|
|
(1,199
|
)
|
|
(15,004
|
)
|
|||||
Other (income) expense
|
|
(1,459
|
)
|
|
(277
|
)
|
|
5,122
|
|
|
1,029
|
|
|
269
|
|
|||||
Loss before income taxes
|
|
(4,139
|
)
|
|
(18,501
|
)
|
|
(9,002
|
)
|
|
(2,228
|
)
|
|
(15,273
|
)
|
|||||
Provision (benefit) for income taxes
|
|
(4,561
|
)
|
|
172
|
|
|
247
|
|
|
134
|
|
|
136
|
|
|||||
Net income (loss)
|
|
422
|
|
|
(18,673
|
)
|
|
(9,249
|
)
|
|
(2,362
|
)
|
|
(15,409
|
)
|
|||||
Cumulative preferred stock dividends
(3)
|
|
—
|
|
|
(1,116
|
)
|
|
(4,244
|
)
|
|
(4,255
|
)
|
|
(4,244
|
)
|
|||||
Net income (loss) attributable to common stockholders
|
|
$
|
422
|
|
|
$
|
(19,789
|
)
|
|
$
|
(13,493
|
)
|
|
$
|
(6,617
|
)
|
|
$
|
(19,653
|
)
|
Net income (loss) per share attributable to common stockholders
(4) (5)
:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Basic
|
|
$
|
0.01
|
|
|
$
|
(0.70
|
)
|
|
$
|
(1.17
|
)
|
|
$
|
(0.60
|
)
|
|
$
|
(1.95
|
)
|
Diluted
|
|
$
|
0.01
|
|
|
$
|
(0.70
|
)
|
|
$
|
(1.17
|
)
|
|
$
|
(0.60
|
)
|
|
$
|
(1.95
|
)
|
Weighted-average shares used to compute net income (loss) per share attributable to common stockholders
(5)
:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Basic
|
|
39,663
|
|
|
28,217
|
|
|
11,488
|
|
|
11,096
|
|
|
10,099
|
|
|||||
Diluted
|
|
44,495
|
|
|
28,217
|
|
|
11,488
|
|
|
11,096
|
|
|
10,099
|
|
(1)
|
Stock-based compensation expense included in our expenses was as follows:
|
|
|
Year Ended
|
||||||||||||||||||
|
|
December 31, 2015
|
|
December 31, 2014
|
|
December 31, 2013
|
|
December 31, 2012
|
|
December 31, 2011
|
||||||||||
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
|
(in thousands)
|
||||||||||||||||||
Cost of revenue
|
|
$
|
240
|
|
|
$
|
166
|
|
|
$
|
87
|
|
|
$
|
78
|
|
|
$
|
270
|
|
Sales and marketing
|
|
7,415
|
|
|
3,217
|
|
|
1,105
|
|
|
1,039
|
|
|
309
|
|
|||||
Technology and development
|
|
4,963
|
|
|
2,228
|
|
|
1,645
|
|
|
828
|
|
|
858
|
|
|||||
General and administrative
|
|
17,966
|
|
|
18,235
|
|
|
3,515
|
|
|
1,099
|
|
|
831
|
|
|||||
Total
|
|
$
|
30,584
|
|
|
$
|
23,846
|
|
|
$
|
6,352
|
|
|
$
|
3,044
|
|
|
$
|
2,268
|
|
(2)
|
Depreciation and amortization expense included in our expenses was as follows:
|
|
|
Year Ended
|
||||||||||||||||||
|
|
December 31, 2015
|
|
December 31, 2014
|
|
December 31, 2013
|
|
December 31, 2012
|
|
December 31, 2011
|
||||||||||
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
|
(in thousands)
|
||||||||||||||||||
Cost of revenue
|
|
$
|
19,290
|
|
|
$
|
10,494
|
|
|
$
|
6,926
|
|
|
$
|
5,809
|
|
|
$
|
4,876
|
|
Sales and marketing
|
|
8,168
|
|
|
669
|
|
|
355
|
|
|
280
|
|
|
255
|
|
|||||
Technology and development
|
|
1,815
|
|
|
802
|
|
|
796
|
|
|
502
|
|
|
211
|
|
|||||
General and administrative
|
|
1,737
|
|
|
552
|
|
|
361
|
|
|
266
|
|
|
196
|
|
|||||
Total
|
|
$
|
31,010
|
|
|
$
|
12,517
|
|
|
$
|
8,438
|
|
|
$
|
6,857
|
|
|
$
|
5,538
|
|
(3)
|
The holders of our convertible preferred stock were entitled to cumulative dividends prior and in preference to common stock. Because the holders of our convertible preferred stock were entitled to participate in dividends, net income (loss) attributable to common stockholders is equal to net income (loss) adjusted for cumulative preferred stock dividends for the period. Immediately upon the closing of the initial public offering in April 2014, each outstanding share of convertible preferred stock was automatically converted into one-half of a share of our common stock and these holders were no longer entitled to the cumulative dividends. See Note 12 to our consolidated financial statements for a description of our convertible preferred stock.
|
(4)
|
See Note 3 to our consolidated financial statements for a description of the method used to compute basic and diluted net (income) loss per share attributable to common stockholders.
|
(5)
|
All share, per-share and related information has been retroactively adjusted, where applicable, to reflect the impact of a 1-for-2 reverse stock split, including an adjustment to the preferred stock conversion ratio, which was effected on March 18, 2014.
|
|
|
At December 31
|
||||||||||||||||||
|
|
2015
|
|
2014
|
|
2013
|
|
2012
|
|
2011
|
||||||||||
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
|
(in thousands)
|
||||||||||||||||||
Cash and cash equivalents
|
|
$
|
116,499
|
|
|
$
|
97,196
|
|
|
$
|
29,956
|
|
|
$
|
21,616
|
|
|
$
|
16,252
|
|
Marketable securities, current and non-current
|
|
$
|
36,732
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Accounts receivable, net
|
|
$
|
218,235
|
|
|
$
|
133,267
|
|
|
$
|
94,722
|
|
|
$
|
67,335
|
|
|
$
|
40,580
|
|
Property, equipment and capitalized software, net
|
|
$
|
39,332
|
|
|
$
|
26,697
|
|
|
$
|
15,916
|
|
|
$
|
12,697
|
|
|
$
|
10,411
|
|
Total assets
|
|
$
|
536,736
|
|
|
$
|
296,481
|
|
|
$
|
149,887
|
|
|
$
|
108,014
|
|
|
$
|
71,142
|
|
Debt and capital lease obligations, current and non-current
|
|
$
|
—
|
|
|
$
|
105
|
|
|
$
|
4,181
|
|
|
$
|
5,215
|
|
|
$
|
5,504
|
|
Total liabilities
|
|
$
|
258,635
|
|
|
$
|
167,729
|
|
|
$
|
133,727
|
|
|
$
|
90,005
|
|
|
$
|
55,341
|
|
Convertible preferred stock
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
52,571
|
|
|
$
|
52,571
|
|
|
$
|
52,571
|
|
Common stockholders’ equity (deficit)
|
|
$
|
278,101
|
|
|
$
|
128,752
|
|
|
$
|
(36,411
|
)
|
|
$
|
(34,562
|
)
|
|
$
|
(36,770
|
)
|
|
|
Year Ended
|
||||||||||||||||||
|
|
December 31, 2015
|
|
December 31, 2014
|
|
December 31, 2013
|
|
December 31, 2012
|
|
December 31, 2011
|
||||||||||
Operational Measures:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Managed revenue (in thousands)
|
|
$
|
1,004,751
|
|
|
$
|
667,796
|
|
|
$
|
485,080
|
|
|
$
|
338,918
|
|
|
$
|
238,838
|
|
Paid impressions (in billions)
|
|
920
|
|
|
999
|
|
|
1,336
|
|
|
1,431
|
|
|
980
|
|
|||||
Average CPM
|
|
$
|
1.09
|
|
|
$
|
0.67
|
|
|
$
|
0.36
|
|
|
$
|
0.24
|
|
|
$
|
0.24
|
|
Take Rate
|
|
22.6
|
%
|
|
18.8
|
%
|
|
17.3
|
%
|
|
16.8
|
%
|
|
15.5
|
%
|
|||||
Financial Measures:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Revenue (in thousands)
|
|
$
|
248,484
|
|
|
$
|
125,295
|
|
|
$
|
83,830
|
|
|
$
|
57,072
|
|
|
$
|
37,059
|
|
Non-GAAP net revenue (in thousands)
|
|
$
|
227,321
|
|
|
$
|
125,295
|
|
|
$
|
83,830
|
|
|
$
|
57,072
|
|
|
$
|
37,059
|
|
Adjusted EBITDA (in thousands)
|
|
$
|
59,466
|
|
|
$
|
19,098
|
|
|
$
|
11,223
|
|
|
$
|
9,205
|
|
|
$
|
(6,698
|
)
|
|
|
Year Ended
|
||||||||||||||
|
|
December 31, 2015
|
|
December 31, 2014
|
|
December 31, 2013
|
|
December 31, 2012
|
||||||||
|
|
|
|
|
|
|
|
|
||||||||
|
|
(in thousands)
|
||||||||||||||
Managed revenue by inventory type:
|
|
|
|
|
|
|
|
|
||||||||
RTB
|
|
$
|
766,258
|
|
|
$
|
505,156
|
|
|
$
|
314,830
|
|
|
$
|
171,195
|
|
Static
|
|
70,575
|
|
|
93,000
|
|
|
148,703
|
|
|
165,232
|
|
||||
Orders
|
|
167,918
|
|
|
69,640
|
|
|
21,547
|
|
|
2,491
|
|
||||
Total managed revenue
|
|
$
|
1,004,751
|
|
|
$
|
667,796
|
|
|
$
|
485,080
|
|
|
$
|
338,918
|
|
|
|
|
|
|
|
|
|
|
||||||||
Managed revenue by channel:
|
|
|
|
|
|
|
|
|
||||||||
Desktop
|
|
$
|
747,543
|
|
|
$
|
553,922
|
|
|
$
|
475,475
|
|
|
$
|
338,703
|
|
Mobile
|
|
257,208
|
|
|
113,874
|
|
|
9,605
|
|
|
215
|
|
||||
Total managed revenue
|
|
$
|
1,004,751
|
|
|
$
|
667,796
|
|
|
$
|
485,080
|
|
|
$
|
338,918
|
|
|
|
Year Ended
|
||||||||||
|
|
December 31, 2015
|
|
December 31, 2014
|
|
December 31, 2013
|
|
December 31, 2012
|
||||
Managed revenue by inventory type:
|
|
|
|
|
|
|
|
|
||||
RTB
|
|
76
|
%
|
|
76
|
%
|
|
65
|
%
|
|
50
|
%
|
Static
|
|
7
|
%
|
|
14
|
%
|
|
31
|
%
|
|
49
|
%
|
Orders
|
|
17
|
%
|
|
10
|
%
|
|
4
|
%
|
|
1
|
%
|
Total managed revenue
|
|
100
|
%
|
|
100
|
%
|
|
100
|
%
|
|
100
|
%
|
|
|
|
|
|
|
|
|
|
||||
Managed revenue by channel:
|
|
|
|
|
|
|
|
|
||||
Desktop
|
|
74
|
%
|
|
83
|
%
|
|
98
|
%
|
|
100
|
%
|
Mobile
|
|
26
|
%
|
|
17
|
%
|
|
2
|
%
|
|
—
|
%
|
Total managed revenue
|
|
100
|
%
|
|
100
|
%
|
|
100
|
%
|
|
100
|
%
|
|
|
Year Ended
|
||||||||||||||||||
|
|
December 31, 2015
|
|
December 31, 2014
|
|
December 31, 2013
|
|
December 31, 2012
|
|
December 31, 2011
|
||||||||||
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
|
(in thousands)
|
||||||||||||||||||
Revenue
|
|
$
|
248,484
|
|
|
$
|
125,295
|
|
|
$
|
83,830
|
|
|
$
|
57,072
|
|
|
$
|
37,059
|
|
Less amounts paid to sellers
|
|
21,163
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Non-GAAP net revenue
|
|
$
|
227,321
|
|
|
$
|
125,295
|
|
|
$
|
83,830
|
|
|
$
|
57,072
|
|
|
$
|
37,059
|
|
•
|
Adjusted EBITDA is widely used by investors and securities analysts to measure a company’s performance without regard to items such as those we exclude in calculating this measure, which can vary substantially from company to company depending upon their financing, capital structures, and the method by which assets were acquired
|
•
|
our management uses Adjusted EBITDA in conjunction with GAAP financial measures for planning purposes, including the preparation of our annual operating budget, as a measure of performance and the effectiveness of our business strategies, and in communications with our board of directors concerning our performance, and the compensation committee of our board of directors uses Adjusted EBITDA in connection with the determination of compensation for our executive officers; and
|
•
|
Adjusted EBITDA provides consistency and comparability with our past performance, facilitates period-to-period comparisons of operations, and also facilitates comparisons with other peer companies, many of which use similar non-GAAP financial measures to supplement their GAAP results.
|
•
|
stock-based compensation is a non-cash charge and is and will remain an element of our long-term incentive compensation package, although we exclude it as an expense when evaluating our ongoing operating performance for a particular period;
|
•
|
depreciation and amortization are non-cash charges, and the assets being depreciated or amortized will often have to be replaced in the future, but Adjusted EBITDA does not reflect any cash requirements for these replacements;
|
•
|
Adjusted EBITDA does not reflect non-cash charges related to acquisition and related items, such as amortization of acquired intangible assets and changes in the fair value of contingent consideration;
|
•
|
Adjusted EBITDA does not reflect changes in, or cash requirements for, acquisition and related items, such as transaction expenses and expenses associated with earn-out amounts;
|
•
|
Adjusted EBITDA does not reflect changes in our working capital needs, capital expenditures, or contractual commitments;
|
•
|
Adjusted EBITDA does not reflect cash requirements for income taxes and the cash impact of other income or expense; and
|
•
|
other companies may calculate Adjusted EBITDA differently than we do, limiting its usefulness as a comparative measure.
|
|
|
Year Ended
|
||||||||||||||||||
|
|
December 31, 2015
|
|
December 31, 2014
|
|
December 31, 2013
|
|
December 31, 2012
|
|
December 31, 2011
|
||||||||||
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
|
(in thousands)
|
||||||||||||||||||
Financial Measures:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Net income (loss)
|
|
$
|
422
|
|
|
$
|
(18,673
|
)
|
|
$
|
(9,249
|
)
|
|
$
|
(2,362
|
)
|
|
$
|
(15,409
|
)
|
Add back (deduct):
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Depreciation and amortization expense, excluding amortization of acquired intangible assets
|
|
15,297
|
|
|
11,607
|
|
|
7,539
|
|
|
5,864
|
|
|
4,888
|
|
|||||
Amortization of acquired intangibles
|
|
15,713
|
|
|
910
|
|
|
899
|
|
|
993
|
|
|
650
|
|
|||||
Stock-based compensation expense
|
|
30,584
|
|
|
23,846
|
|
|
6,352
|
|
|
3,044
|
|
|
2,268
|
|
|||||
Acquisition and related items
|
|
3,470
|
|
|
1,513
|
|
|
313
|
|
|
503
|
|
|
500
|
|
|||||
Interest (income) expense, net
|
|
(59
|
)
|
|
110
|
|
|
273
|
|
|
343
|
|
|
252
|
|
|||||
Change in fair value of preferred stock warrant liabilities
|
|
—
|
|
|
732
|
|
|
4,121
|
|
|
515
|
|
|
304
|
|
|||||
Foreign currency (gain) loss, net
|
|
(1,400
|
)
|
|
(1,119
|
)
|
|
728
|
|
|
171
|
|
|
216
|
|
|||||
Other income
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(503
|
)
|
|||||
Provision (benefit) for income taxes
|
|
(4,561
|
)
|
|
172
|
|
|
247
|
|
|
134
|
|
|
136
|
|
|||||
Adjusted EBITDA
|
|
$
|
59,466
|
|
|
$
|
19,098
|
|
|
$
|
11,223
|
|
|
$
|
9,205
|
|
|
$
|
(6,698
|
)
|
•
|
a comprehensive range of advertising units, including display and video;
|
•
|
utilizing various inventory types, including (i) direct sale of premium inventory, which we refer to as Orders, on a guaranteed, or fully reserved, basis, as well as on a non-guaranteed basis; (ii) real-time bidding, or RTB; and (iii) static bidding;
|
•
|
across digital channels, including mobile web, mobile application and desktop, as well as across various out of home channels, such as digital billboards, that are in the early stages of leveraging our advertising automation platform.
|
|
|
Year Ended
|
||||||||||
|
|
December 31, 2015
|
|
December 31, 2014
|
|
December 31, 2013
|
||||||
Operational Measures:
|
|
|
|
|
|
|
||||||
Managed revenue (in thousands)
|
|
$
|
1,004,751
|
|
|
$
|
667,796
|
|
|
$
|
485,080
|
|
Paid impressions (in billions)
|
|
920
|
|
|
999
|
|
|
1,336
|
|
|||
Average CPM
|
|
$
|
1.09
|
|
|
$
|
0.67
|
|
|
$
|
0.36
|
|
Take Rate
|
|
22.6
|
%
|
|
18.8
|
%
|
|
17.3
|
%
|
|||
Financial Measures:
|
|
|
|
|
|
|
||||||
Revenue (in thousands)
|
|
$
|
248,484
|
|
|
$
|
125,295
|
|
|
$
|
83,830
|
|
Non-GAAP net revenue (in thousands)
|
|
$
|
227,321
|
|
|
$
|
125,295
|
|
|
$
|
83,830
|
|
Adjusted EBITDA (in thousands)
|
|
$
|
59,466
|
|
|
$
|
19,098
|
|
|
$
|
11,223
|
|
|
|
Year Ended
|
||||||||||
|
|
December 31, 2015
|
|
December 31, 2014
|
|
December 31, 2013
|
||||||
|
|
|
|
|
|
|
||||||
|
|
(in thousands)
|
||||||||||
Managed revenue by inventory type:
|
|
|
|
|
|
|
||||||
RTB
|
|
$
|
766,258
|
|
|
$
|
505,156
|
|
|
$
|
314,830
|
|
Static
|
|
70,575
|
|
|
93,000
|
|
|
148,703
|
|
|||
Orders
|
|
167,918
|
|
|
69,640
|
|
|
21,547
|
|
|||
Total managed revenue
|
|
$
|
1,004,751
|
|
|
$
|
667,796
|
|
|
$
|
485,080
|
|
|
|
|
|
|
|
|
||||||
Managed revenue by channel:
|
|
|
|
|
|
|
||||||
Desktop
|
|
$
|
747,543
|
|
|
$
|
553,922
|
|
|
$
|
475,475
|
|
Mobile
|
|
257,208
|
|
|
113,874
|
|
|
9,605
|
|
|||
Total managed revenue
|
|
$
|
1,004,751
|
|
|
$
|
667,796
|
|
|
$
|
485,080
|
|
|
|
Year Ended
|
|||||||
|
|
December 31, 2015
|
|
December 31, 2014
|
|
December 31, 2013
|
|||
Managed revenue by inventory type:
|
|
|
|
|
|
|
|||
RTB
|
|
76
|
%
|
|
76
|
%
|
|
65
|
%
|
Static
|
|
7
|
%
|
|
14
|
%
|
|
31
|
%
|
Orders
|
|
17
|
%
|
|
10
|
%
|
|
4
|
%
|
Total managed revenue
|
|
100
|
%
|
|
100
|
%
|
|
100
|
%
|
|
|
|
|
|
|
|
|||
Managed revenue by channel:
|
|
|
|
|
|
|
|||
Desktop
|
|
74
|
%
|
|
83
|
%
|
|
98
|
%
|
Mobile
|
|
26
|
%
|
|
17
|
%
|
|
2
|
%
|
Total managed revenue
|
|
100
|
%
|
|
100
|
%
|
|
100
|
%
|
|
|
Year Ended
|
||||||||||
|
|
December 31, 2015
|
|
December 31, 2014
|
|
December 31, 2013
|
||||||
|
|
|
|
|
|
|
||||||
|
|
(in thousands)
|
||||||||||
Revenue
|
|
$
|
248,484
|
|
|
$
|
125,295
|
|
|
$
|
83,830
|
|
Less amounts paid to sellers
|
|
21,163
|
|
|
—
|
|
|
—
|
|
|||
Non-GAAP net revenue
|
|
$
|
227,321
|
|
|
$
|
125,295
|
|
|
$
|
83,830
|
|
•
|
Adjusted EBITDA is widely used by investors and securities analysts to measure a company’s performance without regard to items such as those we exclude in calculating this measure, which can vary substantially from company to company depending upon their financing, capital structures, and the method by which assets were acquired
|
•
|
our management uses Adjusted EBITDA in conjunction with GAAP financial measures for planning purposes, including the preparation of our annual operating budget, as a measure of performance and the effectiveness of our business strategies, and in communications with our board of directors concerning our performance, and the compensation committee of our board of directors uses Adjusted EBITDA in connection with the determination of compensation for our executive officers; and
|
•
|
Adjusted EBITDA provides consistency and comparability with our past performance, facilitates period-to-period comparisons of operations, and also facilitates comparisons with other peer companies, many of which use similar non-GAAP financial measures to supplement their GAAP results.
|
•
|
stock-based compensation is a non-cash charge and is and will remain an element of our long-term incentive compensation package, although we exclude it as an expense when evaluating our ongoing operating performance for a particular period;
|
•
|
depreciation and amortization are non-cash charges, and the assets being depreciated or amortized will often have to be replaced in the future, but Adjusted EBITDA does not reflect any cash requirements for these replacements;
|
•
|
Adjusted EBITDA does not reflect non-cash charges related to acquisition and related items, such as amortization of acquired intangible assets and changes in the fair value of contingent consideration;
|
•
|
Adjusted EBITDA does not reflect changes in, or cash requirements for, acquisition and related items, such as transaction expenses and expenses associated with earn-out amounts;
|
•
|
Adjusted EBITDA does not reflect changes in our working capital needs, capital expenditures, or contractual commitments;
|
•
|
Adjusted EBITDA does not reflect cash requirements for income taxes and the cash impact of other income or expense; and
|
•
|
other companies may calculate Adjusted EBITDA differently than we do, limiting its usefulness as a comparative measure.
|
|
|
Year Ended
|
||||||||||
|
|
December 31, 2015
|
|
December 31, 2014
|
|
December 31, 2013
|
||||||
|
|
|
|
|
|
|
||||||
|
|
(in thousands)
|
||||||||||
Financial Measures:
|
|
|
|
|
|
|
||||||
Net income (loss)
|
|
$
|
422
|
|
|
$
|
(18,673
|
)
|
|
$
|
(9,249
|
)
|
Add back (deduct):
|
|
|
|
|
|
|
||||||
Depreciation and amortization expense, excluding amortization of acquired intangible assets
|
|
15,297
|
|
|
11,607
|
|
|
7,539
|
|
|||
Amortization of acquired intangibles
|
|
15,713
|
|
|
910
|
|
|
899
|
|
|||
Stock-based compensation expense
|
|
30,584
|
|
|
23,846
|
|
|
6,352
|
|
|||
Acquisition and related items
|
|
3,470
|
|
|
1,513
|
|
|
313
|
|
|||
Interest (income) expense, net
|
|
(59
|
)
|
|
110
|
|
|
273
|
|
|||
Change in fair value of preferred stock warrant liabilities
|
|
—
|
|
|
732
|
|
|
4,121
|
|
|||
Foreign currency (gain) loss, net
|
|
(1,400
|
)
|
|
(1,119
|
)
|
|
728
|
|
|||
Provision (benefit) for income taxes
|
|
(4,561
|
)
|
|
172
|
|
|
247
|
|
|||
Adjusted EBITDA
|
|
$
|
59,466
|
|
|
$
|
19,098
|
|
|
$
|
11,223
|
|
|
|
Year Ended
|
||||||||||
|
|
December 31, 2015
|
|
December 31, 2014
|
|
December 31, 2013
|
||||||
|
|
|
|
|
|
|
||||||
|
|
(in thousands, except per share data)
|
||||||||||
Revenue
|
|
$
|
248,484
|
|
|
$
|
125,295
|
|
|
$
|
83,830
|
|
Expenses:
|
|
|
|
|
|
|
||||||
Costs of revenue
(1)(2)
|
|
58,495
|
|
|
20,754
|
|
|
15,358
|
|
|||
Sales and marketing
(1)(2)
|
|
83,333
|
|
|
43,203
|
|
|
25,811
|
|
|||
Technology and development
(1)(2)
|
|
42,055
|
|
|
22,718
|
|
|
18,615
|
|
|||
General and administrative
(1)(2)
|
|
70,199
|
|
|
57,398
|
|
|
27,926
|
|
|||
Total expenses
|
|
254,082
|
|
|
144,073
|
|
|
87,710
|
|
|||
Loss from operations
|
|
(5,598
|
)
|
|
(18,778
|
)
|
|
(3,880
|
)
|
|||
Other (income) expense
|
|
(1,459
|
)
|
|
(277
|
)
|
|
5,122
|
|
|||
Loss before income taxes
|
|
(4,139
|
)
|
|
(18,501
|
)
|
|
(9,002
|
)
|
|||
Provision (benefit) for income taxes
|
|
(4,561
|
)
|
|
172
|
|
|
247
|
|
|||
Net income (loss)
|
|
$
|
422
|
|
|
$
|
(18,673
|
)
|
|
$
|
(9,249
|
)
|
(1)
|
Stock-based compensation expense included in our expenses was as follows:
|
|
|
Year Ended
|
||||||||||
|
|
December 31, 2015
|
|
December 31, 2014
|
|
December 31, 2013
|
||||||
|
|
|
|
|
|
|
||||||
|
|
(in thousands)
|
||||||||||
Cost of revenue
|
|
$
|
240
|
|
|
$
|
166
|
|
|
$
|
87
|
|
Sales and marketing
|
|
7,415
|
|
|
3,217
|
|
|
1,105
|
|
|||
Technology and development
|
|
4,963
|
|
|
2,228
|
|
|
1,645
|
|
|||
General and administrative
|
|
17,966
|
|
|
18,235
|
|
|
3,515
|
|
|||
Total stock-based compensation expense
|
|
$
|
30,584
|
|
|
$
|
23,846
|
|
|
$
|
6,352
|
|
(2)
|
Depreciation and amortization expense included in our expenses was as follows:
|
|
|
Year Ended
|
||||||||||
|
|
December 31, 2015
|
|
December 31, 2014
|
|
December 31, 2013
|
||||||
|
|
|
|
|
|
|
||||||
|
|
(in thousands)
|
||||||||||
Cost of revenue
|
|
$
|
19,290
|
|
|
$
|
10,494
|
|
|
$
|
6,926
|
|
Sales and marketing
|
|
8,168
|
|
|
669
|
|
|
355
|
|
|||
Technology and development
|
|
1,815
|
|
|
802
|
|
|
796
|
|
|||
General and administrative
|
|
1,737
|
|
|
552
|
|
|
361
|
|
|||
Total depreciation and amortization expense
|
|
$
|
31,010
|
|
|
$
|
12,517
|
|
|
$
|
8,438
|
|
|
|
Year Ended *
|
|||||||
|
|
December 31, 2015
|
|
December 31, 2014
|
|
December 31, 2013
|
|||
Revenue
|
|
100
|
%
|
|
100
|
%
|
|
100
|
%
|
Cost of revenue
|
|
24
|
%
|
|
17
|
%
|
|
18
|
%
|
Sales and marketing
|
|
34
|
%
|
|
34
|
%
|
|
31
|
%
|
Technology and development
|
|
17
|
%
|
|
18
|
%
|
|
22
|
%
|
General and administrative
|
|
28
|
%
|
|
46
|
%
|
|
33
|
%
|
Total expenses
|
|
102
|
%
|
|
115
|
%
|
|
105
|
%
|
Loss from operations
|
|
(2
|
)%
|
|
(15
|
)%
|
|
(5
|
)%
|
Other (income) expense, net
|
|
(1
|
)%
|
|
—
|
%
|
|
6
|
%
|
Loss before income taxes
|
|
(2
|
)%
|
|
(15
|
)%
|
|
(11
|
)%
|
Provision (benefit) for income taxes
|
|
(2
|
)%
|
|
—
|
%
|
|
—
|
%
|
Net income (loss)
|
|
—
|
%
|
|
(15
|
)%
|
|
(11
|
)%
|
|
|
Year Ended
|
||||||||||
|
|
December 31, 2015
|
|
December 31, 2014
|
|
December 31, 2013
|
||||||
|
|
|
|
|
|
|
||||||
|
|
(in thousands)
|
||||||||||
Revenue
|
|
$
|
248,484
|
|
|
$
|
125,295
|
|
|
$
|
83,830
|
|
|
|
Year Ended
|
||||||||||
|
|
December 31, 2015
|
|
December 31, 2014
|
|
December 31, 2013
|
||||||
|
|
|
|
|
|
|
||||||
|
|
(in thousands, except percentages)
|
||||||||||
Cost of revenue
|
|
$
|
58,495
|
|
|
$
|
20,754
|
|
|
$
|
15,358
|
|
Percent of revenue
|
|
24
|
%
|
|
17
|
%
|
|
18
|
%
|
|
|
Year Ended
|
||||||||||
|
|
December 31, 2015
|
|
December 31, 2014
|
|
December 31, 2013
|
||||||
|
|
|
|
|
|
|
||||||
|
|
(in thousands, except percentages)
|
||||||||||
Sales and marketing
|
|
$
|
83,333
|
|
|
$
|
43,203
|
|
|
$
|
25,811
|
|
Percent of revenue
|
|
34
|
%
|
|
34
|
%
|
|
31
|
%
|
|
|
Year Ended
|
||||||||||
|
|
December 31, 2015
|
|
December 31, 2014
|
|
December 31, 2013
|
||||||
|
|
|
|
|
|
|
||||||
|
|
(in thousands, except percentages)
|
||||||||||
Technology and development
|
|
$
|
42,055
|
|
|
$
|
22,718
|
|
|
$
|
18,615
|
|
Percent of revenue
|
|
17
|
%
|
|
18
|
%
|
|
22
|
%
|
|
|
Year Ended
|
||||||||||
|
|
December 31, 2015
|
|
December 31, 2014
|
|
December 31, 2013
|
||||||
|
|
|
|
|
|
|
||||||
|
|
(in thousands, except percentages)
|
||||||||||
General and administrative
|
|
$
|
70,199
|
|
|
$
|
57,398
|
|
|
$
|
27,926
|
|
Percent of revenue
|
|
28
|
%
|
|
46
|
%
|
|
33
|
%
|
|
|
Year Ended
|
||||||||||
|
|
December 31, 2015
|
|
December 31, 2014
|
|
December 31, 2013
|
||||||
|
|
|
|
|
|
|
||||||
|
|
(in thousands)
|
||||||||||
Interest (income) expense, net
|
|
$
|
(59
|
)
|
|
$
|
110
|
|
|
$
|
273
|
|
Change in fair value of preferred stock warrant liabilities
|
|
—
|
|
|
732
|
|
|
4,121
|
|
|||
Foreign exchange (gain) loss, net
|
|
(1,400
|
)
|
|
(1,119
|
)
|
|
728
|
|
|||
Total other (income) expense, net
|
|
$
|
(1,459
|
)
|
|
$
|
(277
|
)
|
|
$
|
5,122
|
|
|
|
Three Months Ended
|
|||||||||||||||||||||||||||||||
|
|
Mar. 31, 2014
|
|
June 30, 2014
|
|
Sept. 30, 2014
|
|
Dec. 31, 2014
|
|
Mar. 31, 2015
|
|
June 30, 2015
|
|
Sept. 30, 2015
|
|
Dec. 31, 2015
|
|||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||
|
|
(in thousands)
|
|||||||||||||||||||||||||||||||
Revenue
|
|
$
|
23,015
|
|
|
$
|
28,283
|
|
|
$
|
32,165
|
|
|
$
|
41,832
|
|
|
$
|
37,178
|
|
|
$
|
53,046
|
|
|
$
|
64,253
|
|
|
$
|
94,007
|
|
|
Expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||
Costs of revenue
(1)(2)
|
|
4,460
|
|
|
4,852
|
|
|
5,144
|
|
|
6,298
|
|
|
6,561
|
|
|
14,009
|
|
|
16,556
|
|
|
21,369
|
|
|||||||||
Sales and marketing
(1)(2)
|
|
9,027
|
|
|
10,296
|
|
|
11,540
|
|
|
12,340
|
|
|
15,049
|
|
|
22,161
|
|
|
22,817
|
|
|
23,306
|
|
|||||||||
Technology and development
(1)(2)
|
|
4,677
|
|
|
4,598
|
|
|
5,766
|
|
|
7,677
|
|
|
8,414
|
|
|
10,390
|
|
|
11,822
|
|
|
11,429
|
|
|||||||||
General and administrative
(1)(2)
|
|
11,320
|
|
|
15,653
|
|
15,653
|
|
15,157
|
|
|
15,268
|
|
|
14,279
|
|
|
17,984
|
|
|
18,225
|
|
|
19,711
|
|
||||||||
Total expenses
|
|
29,484
|
|
|
35,399
|
|
|
37,607
|
|
|
41,583
|
|
|
44,303
|
|
|
64,544
|
|
|
69,420
|
|
|
75,815
|
|
|||||||||
Income (loss) from operations
|
|
(6,469
|
)
|
|
(7,116
|
)
|
|
(5,442
|
)
|
|
249
|
|
|
(7,125
|
)
|
|
(11,498
|
)
|
|
(5,167
|
)
|
|
18,192
|
|
|||||||||
Other (income) expense, net
|
|
(405
|
)
|
|
2,138
|
|
|
(803
|
)
|
|
(1,207
|
)
|
|
(2,178
|
)
|
|
858
|
|
|
(75
|
)
|
|
(64
|
)
|
|||||||||
Income (loss) before income taxes
|
|
(6,064
|
)
|
|
(9,254
|
)
|
|
(4,639
|
)
|
|
1,456
|
|
|
(4,947
|
)
|
|
(12,356
|
)
|
|
(5,092
|
)
|
|
18,256
|
|
|||||||||
Provision (benefit) for income taxes
|
|
50
|
|
|
112
|
|
|
(17
|
)
|
|
27
|
|
|
84
|
|
|
(413
|
)
|
|
(2,083
|
)
|
|
(2,149
|
)
|
|||||||||
Net income (loss)
|
|
$
|
(6,114
|
)
|
|
$
|
(9,366
|
)
|
|
$
|
(4,622
|
)
|
|
$
|
1,429
|
|
|
$
|
(5,031
|
)
|
|
$
|
(11,943
|
)
|
|
$
|
(3,009
|
)
|
|
$
|
20,405
|
|
|
Net income (loss) per share attributable to common stockholders:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||
Basic
|
|
$
|
(0.59
|
)
|
|
$
|
(0.29
|
)
|
|
$
|
(0.14
|
)
|
|
$
|
0.04
|
|
|
$
|
(0.14
|
)
|
|
$
|
(0.30
|
)
|
|
$
|
(0.07
|
)
|
|
$
|
0.48
|
|
|
Diluted
|
|
$
|
(0.59
|
)
|
|
$
|
(0.29
|
)
|
|
$
|
(0.14
|
)
|
|
$
|
0.04
|
|
|
$
|
(0.14
|
)
|
|
$
|
(0.30
|
)
|
|
$
|
(0.07
|
)
|
|
$
|
0.43
|
|
|
Weighted-average shares used to compute net income (loss) per share attributable to common stockholders:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||
Basic
|
|
12,215
|
|
|
32,266
|
|
|
33,673
|
|
|
34,411
|
|
|
35,758
|
|
|
39,414
|
|
|
41,308
|
|
|
42,083
|
|
|||||||||
Diluted
|
|
12,215
|
|
|
32,266
|
|
|
33,673
|
|
|
38,052
|
|
|
35,758
|
|
|
39,414
|
|
|
41,308
|
|
|
47,396
|
|
(1)
|
Stock-based compensation expense included in our expenses was as follows:
|
|
|
Three Months Ended
|
||||||||||||||||||||||||||||||
|
|
Mar. 31, 2014
|
|
June 30, 2014
|
|
Sept. 30, 2014
|
|
Dec. 31, 2014
|
|
Mar. 31, 2015
|
|
June 30, 2015
|
|
Sept. 30, 2015
|
|
Dec. 31, 2015
|
||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
|
|
(in thousands)
|
||||||||||||||||||||||||||||||
Cost of revenue
|
|
$
|
31
|
|
|
$
|
57
|
|
|
$
|
39
|
|
|
$
|
39
|
|
|
$
|
42
|
|
|
$
|
70
|
|
|
$
|
65
|
|
|
$
|
63
|
|
Sales and marketing
|
|
577
|
|
|
700
|
|
|
793
|
|
|
1,147
|
|
|
1,125
|
|
|
1,858
|
|
|
2,197
|
|
|
2,235
|
|
||||||||
Technology and development
|
|
303
|
|
|
424
|
|
|
530
|
|
|
971
|
|
|
790
|
|
|
1,116
|
|
|
1,525
|
|
|
1,532
|
|
||||||||
General and administrative
|
|
1,567
|
|
|
5,918
|
|
|
5,788
|
|
|
4,962
|
|
|
3,541
|
|
|
4,695
|
|
|
5,013
|
|
|
4,717
|
|
||||||||
Total stock-based compensation expense
|
|
$
|
2,478
|
|
|
$
|
7,099
|
|
|
$
|
7,150
|
|
|
$
|
7,119
|
|
|
$
|
5,498
|
|
|
$
|
7,739
|
|
|
$
|
8,800
|
|
|
$
|
8,547
|
|
(2)
|
Depreciation and amortization expense included in our expenses was as follows:
|
|
|
Three Months Ended
|
||||||||||||||||||||||||||||||
|
|
Mar. 31, 2014
|
|
June 30, 2014
|
|
Sept. 30, 2014
|
|
Dec. 31, 2014
|
|
Mar. 31, 2015
|
|
June 30, 2015
|
|
Sept. 30, 2015
|
|
Dec. 31, 2015
|
||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
|
|
(in thousands)
|
||||||||||||||||||||||||||||||
Cost of revenue
|
|
$
|
1,985
|
|
|
$
|
2,241
|
|
|
$
|
2,607
|
|
|
$
|
3,661
|
|
|
$
|
3,471
|
|
|
$
|
5,258
|
|
|
$
|
5,270
|
|
|
$
|
5,291
|
|
Sales and marketing
|
|
80
|
|
|
109
|
|
|
143
|
|
|
337
|
|
|
505
|
|
|
3,240
|
|
|
2,286
|
|
|
2,137
|
|
||||||||
Technology and development
|
|
198
|
|
|
192
|
|
|
171
|
|
|
241
|
|
|
254
|
|
|
479
|
|
|
526
|
|
|
556
|
|
||||||||
General and administrative
|
|
112
|
|
|
136
|
|
|
149
|
|
|
155
|
|
|
160
|
|
|
482
|
|
|
539
|
|
|
556
|
|
||||||||
Total depreciation and amortization expense
|
|
$
|
2,375
|
|
|
$
|
2,678
|
|
|
$
|
3,070
|
|
|
$
|
4,394
|
|
|
$
|
4,390
|
|
|
$
|
9,459
|
|
|
$
|
8,621
|
|
|
$
|
8,540
|
|
|
|
Three Months Ended*
|
||||||||||||||||||||||
|
|
Mar. 31, 2014
|
|
June 30, 2014
|
|
Sept. 30, 2014
|
|
Dec. 31, 2014
|
|
Mar. 31, 2015
|
|
June 30, 2015
|
|
Sept. 30, 2015
|
|
Dec. 31, 2015
|
||||||||
Revenue
|
|
100
|
%
|
|
100
|
%
|
|
100
|
%
|
|
100
|
%
|
|
100
|
%
|
|
100
|
%
|
|
100
|
%
|
|
100
|
%
|
Expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Cost of revenue
|
|
19
|
|
|
17
|
|
|
16
|
|
|
15
|
|
|
18
|
|
|
26
|
|
|
26
|
|
|
23
|
|
Sales and marketing
|
|
39
|
|
|
36
|
|
|
36
|
|
|
29
|
|
|
40
|
|
|
42
|
|
|
36
|
|
|
25
|
|
Technology and development
|
|
20
|
|
|
16
|
|
|
18
|
|
|
18
|
|
|
23
|
|
|
20
|
|
|
18
|
|
|
12
|
|
General and administrative
|
|
49
|
|
|
55
|
|
|
47
|
|
|
36
|
|
|
38
|
|
|
34
|
|
|
28
|
|
|
21
|
|
Total expenses
|
|
128
|
|
|
125
|
|
|
117
|
|
|
99
|
|
|
119
|
|
|
122
|
|
|
108
|
|
|
81
|
|
Income (loss) from operations
|
|
(28
|
)
|
|
(25
|
)
|
|
(17
|
)
|
|
1
|
|
|
(19
|
)
|
|
(22
|
)
|
|
(8
|
)
|
|
19
|
|
Other (income) expense, net
|
|
(2
|
)
|
|
8
|
|
|
(2
|
)
|
|
(3
|
)
|
|
(6
|
)
|
|
2
|
|
|
—
|
|
|
—
|
|
Income (loss) before income taxes
|
|
(26
|
)
|
|
(33
|
)
|
|
(14
|
)
|
|
4
|
|
|
(13
|
)
|
|
(23
|
)
|
|
(8
|
)
|
|
19
|
|
Provision (benefit) for income taxes
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(1
|
)
|
|
(3
|
)
|
|
(2
|
)
|
Net income (loss)
|
|
(27
|
)%
|
|
(33
|
)%
|
|
(14
|
)%
|
|
4
|
%
|
|
(14
|
)%
|
|
(23
|
)%
|
|
(5
|
)%
|
|
22
|
%
|
|
|
Three Months Ended
|
||||||||||||||||||||||||||||||
|
|
Mar. 31, 2014
|
|
June 30, 2014
|
|
Sept. 30, 2014
|
|
Dec. 31, 2014
|
|
Mar. 31, 2015
|
|
June 30, 2015
|
|
Sept. 30, 2015
|
|
Dec. 31, 2015
|
||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
|
|
(in thousands, except for percentages)
|
||||||||||||||||||||||||||||||
Operational Measures:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Managed revenue
|
|
$
|
129,566
|
|
|
$
|
153,540
|
|
|
$
|
168,213
|
|
|
$
|
216,477
|
|
|
$
|
197,220
|
|
|
$
|
227,152
|
|
|
$
|
244,358
|
|
|
$
|
336,021
|
|
Take Rate
|
|
17.8
|
%
|
|
18.4
|
%
|
|
19.1
|
%
|
|
19.3
|
%
|
|
18.9
|
%
|
|
21.4
|
%
|
|
23.7
|
%
|
|
24.9
|
%
|
||||||||
Financial Measures:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Revenue
|
|
$
|
23,015
|
|
|
$
|
28,283
|
|
|
$
|
32,165
|
|
|
$
|
41,832
|
|
|
$
|
37,178
|
|
|
$
|
53,046
|
|
|
$
|
64,253
|
|
|
$
|
94,007
|
|
Non-GAAP net revenue
|
|
$
|
23,015
|
|
|
$
|
28,283
|
|
|
$
|
32,165
|
|
|
$
|
41,832
|
|
|
$
|
37,178
|
|
|
$
|
48,544
|
|
|
$
|
57,867
|
|
|
$
|
83,732
|
|
Adjusted EBITDA
|
|
$
|
(1,616
|
)
|
|
$
|
2,661
|
|
|
$
|
4,778
|
|
|
$
|
13,275
|
|
|
$
|
4,192
|
|
|
$
|
6,667
|
|
|
$
|
12,575
|
|
|
$
|
36,032
|
|
|
|
Three Months Ended
|
||||||||||||||||||||||||||||||
|
|
Mar. 31, 2014
|
|
June 30, 2014
|
|
Sept. 30, 2014
|
|
Dec. 31, 2014
|
|
Mar. 31, 2015
|
|
June 30, 2015
|
|
Sept. 30, 2015
|
|
Dec. 31, 2015
|
||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
|
|
(in thousands)
|
||||||||||||||||||||||||||||||
Revenue
|
|
$
|
23,015
|
|
|
$
|
28,283
|
|
|
$
|
32,165
|
|
|
$
|
41,832
|
|
|
$
|
37,178
|
|
|
$
|
53,046
|
|
|
$
|
64,253
|
|
|
$
|
94,007
|
|
Less amounts paid to sellers
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
4,502
|
|
|
6,386
|
|
|
10,275
|
|
||||||||
Non-GAAP net revenue
|
|
$
|
23,015
|
|
|
$
|
28,283
|
|
|
$
|
32,165
|
|
|
$
|
41,832
|
|
|
$
|
37,178
|
|
|
$
|
48,544
|
|
|
$
|
57,867
|
|
|
$
|
83,732
|
|
|
|
Three Months Ended
|
||||||||||||||||||||||||||||||
|
|
Mar. 31, 2014
|
|
June 30, 2014
|
|
Sept. 30, 2014
|
|
Dec. 31, 2014
|
|
Mar. 31, 2015
|
|
June 30, 2015
|
|
Sept. 30, 2015
|
|
Dec. 31, 2015
|
||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
|
|
(in thousands)
|
||||||||||||||||||||||||||||||
Financial Measures:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Net income (loss)
|
|
$
|
(6,114
|
)
|
|
$
|
(9,366
|
)
|
|
$
|
(4,622
|
)
|
|
$
|
1,429
|
|
|
$
|
(5,031
|
)
|
|
$
|
(11,943
|
)
|
|
$
|
(3,009
|
)
|
|
$
|
20,405
|
|
Add back (deduct):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Depreciation and amortization expense, excluding amortization of acquired intangible assets
|
|
2,232
|
|
|
2,560
|
|
|
3,002
|
|
|
3,813
|
|
|
3,374
|
|
|
4,191
|
|
|
3,832
|
|
|
3,900
|
|
||||||||
Amortization of acquired intangibles
|
|
143
|
|
|
118
|
|
|
68
|
|
|
581
|
|
|
1,016
|
|
|
5,268
|
|
|
4,789
|
|
|
4,640
|
|
||||||||
Stock-based compensation expense
|
|
2,478
|
|
|
7,099
|
|
|
7,150
|
|
|
7,119
|
|
|
5,498
|
|
|
7,739
|
|
|
8,800
|
|
|
8,547
|
|
||||||||
Acquisition and related items
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1,513
|
|
|
1,429
|
|
|
967
|
|
|
321
|
|
|
753
|
|
||||||||
Interest (income) expense, net
|
|
57
|
|
|
14
|
|
|
23
|
|
|
16
|
|
|
12
|
|
|
11
|
|
|
(37
|
)
|
|
(45
|
)
|
||||||||
Change in fair value of preferred stock warrant liabilities
|
|
(1,010
|
)
|
|
1,742
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||||
Foreign currency (gain) loss, net
|
|
548
|
|
|
382
|
|
|
(826
|
)
|
|
(1,223
|
)
|
|
(2,190
|
)
|
|
847
|
|
|
(38
|
)
|
|
(19
|
)
|
||||||||
Provision (benefit) for income taxes
|
|
50
|
|
|
112
|
|
|
(17
|
)
|
|
27
|
|
|
84
|
|
|
(413
|
)
|
|
(2,083
|
)
|
|
(2,149
|
)
|
||||||||
Adjusted EBITDA
|
|
$
|
(1,616
|
)
|
|
$
|
2,661
|
|
|
$
|
4,778
|
|
|
$
|
13,275
|
|
|
$
|
4,192
|
|
|
$
|
6,667
|
|
|
$
|
12,575
|
|
|
$
|
36,032
|
|
|
|
Year Ended
|
||||||||||
|
|
December 31, 2015
|
|
December 31, 2014
|
|
December 31, 2013
|
||||||
|
|
|
|
|
|
|
||||||
|
|
(in thousands)
|
||||||||||
Cash flows provided by operating activities
|
|
$
|
76,856
|
|
|
$
|
6,645
|
|
|
$
|
21,092
|
|
Cash flows used in investing activities
|
|
(72,861
|
)
|
|
(23,123
|
)
|
|
(11,862
|
)
|
|||
Cash flows provided by (used in) financing activities
|
|
15,468
|
|
|
83,794
|
|
|
(796
|
)
|
|||
Effects of exchange rate changes on cash and cash equivalents
|
|
(160
|
)
|
|
(76
|
)
|
|
(94
|
)
|
|||
Change in cash and cash equivalents
|
|
$
|
19,303
|
|
|
$
|
67,240
|
|
|
8,340
|
|
|
|
2016
|
|
2017
|
|
2018
|
|
2019
|
|
2020
|
|
Thereafter
|
|
Total
|
||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
|
|
(in thousands)
|
||||||||||||||||||||||||||
Operating lease obligations
|
|
6,432
|
|
|
5,835
|
|
|
5,656
|
|
|
4,910
|
|
|
3,197
|
|
|
1,626
|
|
|
27,656
|
|
|||||||
Total minimum payments
|
|
$
|
6,432
|
|
|
$
|
5,835
|
|
|
$
|
5,656
|
|
|
$
|
4,910
|
|
|
$
|
3,197
|
|
|
$
|
1,626
|
|
|
$
|
27,656
|
|
|
Year Ended
|
||||||||||
|
December 31, 2015
|
|
December 31, 2014
|
|
December 31, 2013
|
||||||
Common stock price
|
$
|
16.82
|
|
|
$
|
13.88
|
|
|
$
|
8.76
|
|
Expected term (in years)
|
4.5
|
|
|
5.7
|
|
|
6.0
|
|
|||
Risk-free interest rate
|
1.30
|
%
|
|
1.75
|
%
|
|
1.28
|
%
|
|||
Expected volatility
|
47
|
%
|
|
51
|
%
|
|
58
|
%
|
|||
Dividend yield
|
—
|
%
|
|
—
|
%
|
|
—
|
%
|
|
|
Report of Independent Registered Public Accounting Firm
|
|
|
|
Consolidated Financial Statements:
|
|
Consolidated Balance Sheets
|
|
Consolidated Statements of Operations
|
|
Consolidated Statements of Comprehensive Income (Loss)
|
|
Consolidated Statements of Convertible Preferred Stock and Stockholders' Equity (Deficit)
|
|
Consolidated Statements of Cash Flows
|
|
Notes to Consolidated Financial Statements
|
|
December 31, 2015
|
|
December 31, 2014
|
||||
ASSETS
|
|
|
|
||||
Current assets:
|
|
|
|
||||
Cash and cash equivalents
|
$
|
116,499
|
|
|
$
|
97,196
|
|
Accounts receivable, net
|
218,235
|
|
|
133,267
|
|
||
Marketable securities, prepaid expenses, and other current assets
|
30,973
|
|
|
7,514
|
|
||
TOTAL CURRENT ASSETS
|
365,707
|
|
|
237,977
|
|
||
Property and equipment, net
|
25,403
|
|
|
15,196
|
|
||
Internal use software development costs, net
|
13,929
|
|
|
11,501
|
|
||
Goodwill
|
65,705
|
|
|
16,290
|
|
||
Intangible assets, net
|
50,783
|
|
|
14,090
|
|
||
Marketable securities and other assets, non-current
|
15,209
|
|
|
1,427
|
|
||
TOTAL ASSETS
|
$
|
536,736
|
|
|
$
|
296,481
|
|
LIABILITIES AND STOCKHOLDERS’ EQUITY
|
|
|
|
||||
Current liabilities:
|
|
|
|
||||
Accounts payable and accrued expenses
|
$
|
247,967
|
|
|
$
|
151,021
|
|
Debt and capital lease obligations, current portion
|
—
|
|
|
105
|
|
||
Other current liabilities
|
2,196
|
|
|
3,276
|
|
||
TOTAL CURRENT LIABILITIES
|
250,163
|
|
|
154,402
|
|
||
Other liabilities, non-current
|
2,247
|
|
|
1,272
|
|
||
Deferred tax liability, net
|
6,225
|
|
|
607
|
|
||
Contingent consideration liabilities
|
—
|
|
|
11,448
|
|
||
TOTAL LIABILITIES
|
258,635
|
|
|
167,729
|
|
||
Commitments and contingencies (Note 17)
|
|
|
|
|
|
||
STOCKHOLDERS’ EQUITY
|
|
|
|
||||
Preferred stock, $0.00001 par value, 10,000 shares authorized at December 31, 2015 and December 31, 2014; 0 shares issued and outstanding at December 31, 2015 and December 31, 2014
|
—
|
|
|
—
|
|
||
Common stock, $0.00001 par value; 500,000 shares authorized at December 31, 2015 and December 31, 2014; 46,600 and 37,192 shares issued and outstanding at December 31, 2015 and December 31, 2014, respectively
|
—
|
|
|
—
|
|
||
Additional paid-in capital
|
358,406
|
|
|
209,472
|
|
||
Accumulated other comprehensive loss
|
(15)
|
|
|
(8)
|
|
||
Accumulated deficit
|
(80,290)
|
|
|
(80,712)
|
|
||
TOTAL STOCKHOLDERS’ EQUITY
|
278,101
|
|
|
128,752
|
|
||
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY
|
$
|
536,736
|
|
|
$
|
296,481
|
|
|
Year Ended
|
||||||||||
|
December 31, 2015
|
|
December 31, 2014
|
|
December 31, 2013
|
||||||
Revenue
|
$
|
248,484
|
|
|
$
|
125,295
|
|
|
$
|
83,830
|
|
Expenses:
|
|
|
|
|
|
||||||
Cost of revenue
|
58,495
|
|
|
20,754
|
|
|
15,358
|
|
|||
Sales and marketing
|
83,333
|
|
|
43,203
|
|
|
25,811
|
|
|||
Technology and development
|
42,055
|
|
|
22,718
|
|
|
18,615
|
|
|||
General and administrative
|
70,199
|
|
|
57,398
|
|
|
27,926
|
|
|||
Total expenses
|
254,082
|
|
|
144,073
|
|
|
87,710
|
|
|||
Loss from operations
|
(5,598
|
)
|
|
(18,778
|
)
|
|
(3,880
|
)
|
|||
Other (income) expense
|
|
|
|
|
|
||||||
Interest (income) expense, net
|
(59
|
)
|
|
110
|
|
|
273
|
|
|||
Change in fair value of preferred stock warrant liabilities
|
—
|
|
|
732
|
|
|
4,121
|
|
|||
Foreign exchange (gain) loss, net
|
(1,400
|
)
|
|
(1,119
|
)
|
|
728
|
|
|||
Total other (income) expense, net
|
(1,459
|
)
|
|
(277
|
)
|
|
5,122
|
|
|||
Loss before income taxes
|
(4,139
|
)
|
|
(18,501
|
)
|
|
(9,002
|
)
|
|||
Provision (benefit) for income taxes
|
(4,561
|
)
|
|
172
|
|
|
247
|
|
|||
Net income (loss)
|
422
|
|
|
(18,673
|
)
|
|
(9,249
|
)
|
|||
Cumulative preferred stock dividends
|
—
|
|
|
(1,116
|
)
|
|
(4,244
|
)
|
|||
Net income (loss) attributable to common stockholders
|
$
|
422
|
|
|
$
|
(19,789
|
)
|
|
$
|
(13,493
|
)
|
Net income (loss) per share attributable to common stockholders:
|
|
|
|
|
|
||||||
Basic
|
$
|
0.01
|
|
|
$
|
(0.70
|
)
|
|
$
|
(1.17
|
)
|
Diluted
|
$
|
0.01
|
|
|
$
|
(0.70
|
)
|
|
$
|
(1.17
|
)
|
Weighted-average shares used to compute net income (loss) per share attributable to common stockholders:
|
|
|
|
|
|
||||||
Basic
|
39,663
|
|
|
28,217
|
|
|
11,488
|
|
|||
Diluted
|
44,495
|
|
|
28,217
|
|
|
11,488
|
|
|
Year Ended
|
||||||||||
|
December 31, 2015
|
|
December 31, 2014
|
|
December 31, 2013
|
||||||
Net income (loss)
|
$
|
422
|
|
|
$
|
(18,673
|
)
|
|
$
|
(9,249
|
)
|
Other comprehensive income (loss):
|
|
|
|
|
|
||||||
Unrealized loss on investments, net of tax
|
(68
|
)
|
|
—
|
|
|
—
|
|
|||
Foreign currency translation adjustments
|
61
|
|
|
(104
|
)
|
|
1
|
|
|||
Comprehensive income (loss)
|
$
|
415
|
|
|
$
|
(18,777
|
)
|
|
$
|
(9,248
|
)
|
|
Preferred Stock
|
|
Common Stock
|
|
Additional
Paid-In Capital |
|
Accumulated Other
Comprehensive Income (Loss) |
|
Accumulated
Deficit |
|
Total
Stockholders’ Equity (Deficit) |
||||||||||||||||||
|
Shares
|
|
Amount
|
|
Shares
|
|
Amount
|
|
|||||||||||||||||||||
Balance at December 31, 2012
|
28,820
|
|
|
$
|
52,571
|
|
|
11,401
|
|
|
$
|
—
|
|
|
$
|
18,133
|
|
|
$
|
95
|
|
|
$
|
(52,790
|
)
|
|
$
|
(34,562
|
)
|
Exercise of common stock options
|
—
|
|
|
—
|
|
|
454
|
|
|
—
|
|
|
866
|
|
|
—
|
|
|
—
|
|
|
866
|
|
||||||
Stock-based compensation
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
6,533
|
|
|
—
|
|
|
—
|
|
|
6,533
|
|
||||||
Foreign exchange translation adjustment
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1
|
|
|
—
|
|
|
1
|
|
||||||
Net loss
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(9,249
|
)
|
|
(9,249
|
)
|
||||||
Balance at December 31, 2013
|
28,820
|
|
|
52,571
|
|
|
11,855
|
|
|
—
|
|
|
25,532
|
|
|
96
|
|
|
(62,039
|
)
|
|
(36,411
|
)
|
||||||
Exercise of common stock options
|
—
|
|
|
—
|
|
|
1,360
|
|
|
—
|
|
|
3,498
|
|
|
—
|
|
|
—
|
|
|
3,498
|
|
||||||
Restricted stock awards
|
—
|
|
|
—
|
|
|
2,168
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Shares withheld related to net share settlement
|
—
|
|
|
—
|
|
|
(174
|
)
|
|
—
|
|
|
(2,324
|
)
|
|
—
|
|
|
—
|
|
|
(2,324
|
)
|
||||||
Issuance of common stock related to RSU vesting
|
—
|
|
|
—
|
|
|
4
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Net exercise of warrant for convertible preferred stock
|
572
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
5,983
|
|
|
—
|
|
|
—
|
|
|
5,983
|
|
||||||
Conversion of convertible preferred stock to common stock
|
(29,392
|
)
|
|
(52,571
|
)
|
|
14,696
|
|
|
—
|
|
|
52,571
|
|
|
—
|
|
|
—
|
|
|
52,571
|
|
||||||
Conversion of warrant for convertible preferred stock to common stock warrant
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
200
|
|
|
—
|
|
|
—
|
|
|
200
|
|
||||||
Issuance of common stock from initial public offering, net of issuance costs
|
—
|
|
|
—
|
|
|
6,432
|
|
|
—
|
|
|
86,200
|
|
|
—
|
|
|
—
|
|
|
86,200
|
|
||||||
Net exercise of warrant for common stock
|
—
|
|
|
—
|
|
|
10
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Issuance of common stock and exchange of stock options related to acquisitions
|
—
|
|
|
—
|
|
|
841
|
|
|
—
|
|
|
13,342
|
|
|
—
|
|
|
—
|
|
|
13,342
|
|
||||||
Stock-based compensation
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
24,470
|
|
|
—
|
|
|
—
|
|
|
24,470
|
|
||||||
Foreign exchange translation adjustment
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(104
|
)
|
|
—
|
|
|
(104
|
)
|
||||||
Net loss
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(18,673
|
)
|
|
(18,673
|
)
|
||||||
Balance at December 31, 2014
|
—
|
|
|
—
|
|
|
37,192
|
|
|
—
|
|
|
209,472
|
|
|
(8
|
)
|
|
(80,712
|
)
|
|
128,752
|
|
||||||
Exercise of common stock options
|
—
|
|
|
—
|
|
|
2,552
|
|
|
—
|
|
|
13,533
|
|
|
—
|
|
|
—
|
|
|
13,533
|
|
||||||
Restricted stock awards
|
—
|
|
|
—
|
|
|
479
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Issuance of common stock related to RSU vesting
|
—
|
|
|
—
|
|
|
229
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Issuance of common stock related to employee stock purchase plan
|
—
|
|
|
—
|
|
|
170
|
|
|
—
|
|
|
2,040
|
|
|
—
|
|
|
—
|
|
|
2,040
|
|
||||||
Issuance of common stock and exchange of stock options related to acquisition
|
—
|
|
|
—
|
|
|
4,425
|
|
|
—
|
|
|
76,350
|
|
|
—
|
|
|
—
|
|
|
76,350
|
|
||||||
Issuance of common stock for contingent consideration associated with acquisitions
|
—
|
|
|
—
|
|
|
1,553
|
|
|
—
|
|
|
25,608
|
|
|
—
|
|
|
—
|
|
|
25,608
|
|
||||||
Stock-based compensation
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
31,403
|
|
|
—
|
|
|
—
|
|
|
31,403
|
|
||||||
Foreign exchange translation adjustment
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
61
|
|
|
—
|
|
|
61
|
|
||||||
Unrealized loss on investments, net of tax
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(68
|
)
|
|
—
|
|
|
(68
|
)
|
||||||
Net income
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
422
|
|
|
422
|
|
||||||
Balance at December 31, 2015
|
—
|
|
|
$
|
—
|
|
|
46,600
|
|
|
$
|
—
|
|
|
$
|
358,406
|
|
|
$
|
(15
|
)
|
|
$
|
(80,290
|
)
|
|
$
|
278,101
|
|
|
Year Ended
|
||||||||||
|
December 31, 2015
|
|
December 31, 2014
|
|
December 31, 2013
|
||||||
OPERATING ACTIVITIES:
|
|
|
|
|
|
||||||
Net income (loss)
|
$
|
422
|
|
|
$
|
(18,673
|
)
|
|
$
|
(9,249
|
)
|
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
|
|
|
|
|
|
||||||
Depreciation and amortization
|
31,010
|
|
|
12,517
|
|
|
8,438
|
|
|||
Stock-based compensation
|
30,584
|
|
|
23,846
|
|
|
6,352
|
|
|||
Loss (gain) on disposal of property and equipment, net
|
58
|
|
|
202
|
|
|
(7
|
)
|
|||
Change in fair value of preferred stock warrant liabilities
|
—
|
|
|
732
|
|
|
4,121
|
|
|||
Change in fair value of contingent consideration
|
306
|
|
|
66
|
|
|
—
|
|
|||
Unrealized foreign currency (gains) losses, net
|
(72
|
)
|
|
(763
|
)
|
|
68
|
|
|||
Deferred income taxes
|
(5,286
|
)
|
|
(145
|
)
|
|
—
|
|
|||
Changes in operating assets and liabilities, net of effect of business acquisitions:
|
|
|
|
|
|
||||||
Accounts receivable
|
(71,796
|
)
|
|
(38,023
|
)
|
|
(27,102
|
)
|
|||
Prepaid expenses and other assets
|
(1,073
|
)
|
|
(2,152
|
)
|
|
(1,966
|
)
|
|||
Accounts payable and accrued expenses
|
93,135
|
|
|
29,861
|
|
|
39,168
|
|
|||
Other liabilities
|
(432
|
)
|
|
(823
|
)
|
|
1,269
|
|
|||
Net cash provided by operating activities
|
76,856
|
|
|
6,645
|
|
|
21,092
|
|
|||
INVESTING ACTIVITIES:
|
|
|
|
|
|
||||||
Purchases of property and equipment, net
|
(20,104
|
)
|
|
(10,706
|
)
|
|
(6,785
|
)
|
|||
Capitalized internal use software development costs
|
(8,333
|
)
|
|
(8,779
|
)
|
|
(3,926
|
)
|
|||
Acquisitions, net of cash acquired
|
(8,647
|
)
|
|
(3,983
|
)
|
|
—
|
|
|||
Investments in available-for-sale securities
|
(48,801
|
)
|
|
—
|
|
|
—
|
|
|||
Maturities of available-for-sale securities
|
12,001
|
|
|
—
|
|
|
—
|
|
|||
Change in restricted cash
|
1,023
|
|
|
345
|
|
|
(1,151
|
)
|
|||
Net cash used in investing activities
|
(72,861
|
)
|
|
(23,123
|
)
|
|
(11,862
|
)
|
|||
FINANCING ACTIVITIES:
|
|
|
|
|
|
||||||
Proceeds from the issuance of common stock in initial public offering, net of underwriting discounts and commissions
|
—
|
|
|
89,733
|
|
|
—
|
|
|||
Payments of initial public offering costs
|
—
|
|
|
(3,037
|
)
|
|
(496
|
)
|
|||
Proceeds from exercise of stock options
|
13,533
|
|
|
3,498
|
|
|
866
|
|
|||
Proceeds from issuance of common stock under employee stock purchase plan
|
2,040
|
|
|
—
|
|
|
—
|
|
|||
Taxes paid related to net share settlement
|
—
|
|
|
(2,324
|
)
|
|
—
|
|
|||
Repayment of debt and capital lease obligations
|
(105
|
)
|
|
(4,076
|
)
|
|
(1,166
|
)
|
|||
Net cash provided by (used in) financing activities
|
15,468
|
|
|
83,794
|
|
|
(796
|
)
|
|||
EFFECT OF EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS
|
(160
|
)
|
|
(76
|
)
|
|
(94
|
)
|
|||
CHANGE IN CASH AND CASH EQUIVALENTS
|
19,303
|
|
|
67,240
|
|
|
8,340
|
|
|||
CASH AND CASH EQUIVALENTS--Beginning of period
|
97,196
|
|
|
29,956
|
|
|
21,616
|
|
|||
CASH AND CASH EQUIVALENTS--End of period
|
$
|
116,499
|
|
|
$
|
97,196
|
|
|
$
|
29,956
|
|
SUPPLEMENTAL DISCLOSURES OF OTHER CASH FLOW INFORMATION:
|
|
|
|
|
|
||||||
Cash paid for income taxes
|
$
|
1,069
|
|
|
$
|
403
|
|
|
$
|
307
|
|
Cash paid for interest
|
$
|
62
|
|
|
$
|
122
|
|
|
$
|
241
|
|
Capitalized assets financed by accounts payable and accrued expenses
|
$
|
342
|
|
|
$
|
1,872
|
|
|
$
|
194
|
|
Leasehold improvements paid by landlord
|
$
|
—
|
|
|
$
|
803
|
|
|
$
|
—
|
|
Capitalized stock-based compensation
|
$
|
819
|
|
|
$
|
624
|
|
|
$
|
181
|
|
Conversion of preferred stock to common stock
|
$
|
—
|
|
|
$
|
52,571
|
|
|
$
|
—
|
|
Reclassification of preferred stock warrant liabilities to additional-paid-in-capital
|
$
|
—
|
|
|
$
|
6,183
|
|
|
$
|
—
|
|
Reclassification of deferred offering costs to additional-paid-in-capital
|
$
|
—
|
|
|
$
|
3,533
|
|
|
$
|
—
|
|
Deferred offering costs included in accounts payable and accrued expenses
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
865
|
|
Common stock and options issued for business acquisitions
|
$
|
76,534
|
|
|
$
|
13,342
|
|
|
$
|
—
|
|
Conversion of contingent consideration to common stock
|
$
|
25,608
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
Years
|
Computer equipment and network hardware
|
3
|
Furniture, fixtures and office equipment
|
5 to 7
|
Leasehold improvements
|
Shorter of useful
life or life of lease |
Computer equipment under capital leases
|
Shorter of useful
life or life of lease |
•
|
Level 1 – Quoted prices (unadjusted) in active markets for identical assets or liabilities that the Company has the ability to access at the measurement date.
|
•
|
Level 2 – Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly.
|
•
|
Level 3 – Unobservable inputs.
|
|
|
Year Ended
|
||||||||||
|
|
December 31, 2015
|
|
December 31, 2014
|
|
December 31, 2013
|
||||||
|
|
|
|
|
|
|
||||||
|
|
(In thousands, except per share data)
|
||||||||||
Basic EPS:
|
|
|
|
|
|
|
||||||
Net income (loss) attributable to common stockholders
|
|
$
|
422
|
|
|
$
|
(19,789
|
)
|
|
$
|
(13,493
|
)
|
Weighted-average common shares outstanding
|
|
42,067
|
|
|
29,921
|
|
|
11,540
|
|
|||
Weighted-average unvested restricted shares
|
|
(1,677
|
)
|
|
(1,704
|
)
|
|
(52
|
)
|
|||
Weighted-average escrow shares
|
|
(727
|
)
|
|
—
|
|
|
—
|
|
|||
Weighted-average common shares outstanding used to compute net income (loss) per share attributable to common stockholders
|
|
39,663
|
|
|
28,217
|
|
|
11,488
|
|
|||
Basic net income (loss) per share attributable to common stockholders
|
|
$
|
0.01
|
|
|
$
|
(0.70
|
)
|
|
$
|
(1.17
|
)
|
Diluted EPS:
|
|
|
|
|
|
|
||||||
Net income (loss) attributable to common stockholders
|
|
$
|
422
|
|
|
$
|
(19,789
|
)
|
|
$
|
(13,493
|
)
|
Weighted-average common shares used in basic EPS
|
|
39,663
|
|
|
28,217
|
|
|
11,488
|
|
|||
Dilutive effect of weighted-average common stock options
|
|
2,510
|
|
|
—
|
|
|
—
|
|
|||
Dilutive effect of weighted-average restricted stock awards
|
|
532
|
|
|
—
|
|
|
—
|
|
|||
Dilutive effect of weighted-average restricted stock units
|
|
426
|
|
|
—
|
|
|
—
|
|
|||
Dilutive effect of weighted-average ESPP
|
|
25
|
|
|
—
|
|
|
—
|
|
|||
Dilutive effect of weighted-average escrow shares
|
|
591
|
|
|
—
|
|
|
—
|
|
|||
Dilutive effect of weighted-average contingent shares
|
|
748
|
|
|
—
|
|
|
—
|
|
|||
Weighted-average shares used to compute diluted net income (loss) per share attributable to common stockholders
|
|
44,495
|
|
|
28,217
|
|
|
11,488
|
|
|||
Diluted net income (loss) per share attributable to common stockholders
|
|
$
|
0.01
|
|
|
$
|
(0.70
|
)
|
|
$
|
(1.17
|
)
|
|
|
December 31, 2015
|
|
December 31, 2014
|
|
December 31, 2013
|
|||
|
|
|
|
|
|
|
|||
|
|
(in thousands)
|
|||||||
Options to purchase common stock
|
|
—
|
|
|
8,113
|
|
|
8,360
|
|
Unvested restricted stock awards
|
|
—
|
|
|
1,750
|
|
|
—
|
|
Unvested restricted stock units
|
|
—
|
|
|
845
|
|
|
—
|
|
Shares held in escrow
|
|
—
|
|
|
125
|
|
|
—
|
|
Contingent shares
|
|
704
|
|
|
—
|
|
|
—
|
|
Conversion of convertible preferred stock
|
|
—
|
|
|
—
|
|
|
14,410
|
|
Conversion of preferred stock warrants
|
|
—
|
|
|
—
|
|
|
436
|
|
Total shares excluded from net income (loss) per share attributable to common stockholders
|
|
704
|
|
|
10,833
|
|
|
23,206
|
|
|
Amortized
Cost |
|
Gross
Unrealized Gains |
|
Gross
Unrealized Losses |
|
Fair
Value |
||||||||
|
|
|
|
|
|
|
|
||||||||
|
(in thousands)
|
||||||||||||||
Available-for-sale - short-term:
|
|
||||||||||||||
U.S. Treasury, government and agency debt securities
|
$
|
10,485
|
|
|
$
|
—
|
|
|
$
|
(22
|
)
|
|
$
|
10,463
|
|
Corporate debt securities
|
12,786
|
|
|
—
|
|
|
—
|
|
|
12,786
|
|
||||
Total
|
$
|
23,271
|
|
|
$
|
—
|
|
|
$
|
(22
|
)
|
|
$
|
23,249
|
|
Available-for-sale - long-term:
|
|
|
|
|
|
|
|
||||||||
U.S. Treasury, government and agency debt securities
|
$
|
13,529
|
|
|
$
|
—
|
|
|
$
|
(46
|
)
|
|
$
|
13,483
|
|
|
Amortized Cost
|
|
Fair Value
|
||||
|
|
|
|
||||
|
(in thousands)
|
||||||
Due in less than 1 year
|
$
|
23,271
|
|
|
$
|
23,249
|
|
Due within 1-2 years
|
13,529
|
|
|
13,483
|
|
||
Total
|
$
|
36,800
|
|
|
$
|
36,732
|
|
|
|
December 31, 2015
|
|
December 31, 2014
|
||||
|
|
|
|
|
||||
|
|
(in thousands)
|
||||||
Purchased software
|
|
$
|
1,706
|
|
|
$
|
1,651
|
|
Computer equipment and network hardware
|
|
40,765
|
|
|
24,673
|
|
||
Furniture, fixtures and office equipment
|
|
1,959
|
|
|
1,491
|
|
||
Leasehold improvements
|
|
3,237
|
|
|
2,994
|
|
||
Gross property and equipment
|
|
47,667
|
|
|
30,809
|
|
||
Accumulated depreciation
|
|
(22,264
|
)
|
|
(15,613
|
)
|
||
Net property and equipment
|
|
$
|
25,403
|
|
|
$
|
15,196
|
|
|
|
December 31, 2015
|
|
December 31, 2014
|
||||
|
|
|
|
|
||||
|
|
(in thousands)
|
||||||
Internal use software development costs, gross
|
|
$
|
27,265
|
|
|
$
|
20,926
|
|
Accumulated amortization
|
|
(13,336
|
)
|
|
(9,425
|
)
|
||
Internal use software development costs, net
|
|
$
|
13,929
|
|
|
$
|
11,501
|
|
Shares of the Company's common stock
|
$
|
72,477
|
|
Estimated fair value of contingent consideration
|
16,171
|
|
|
Fair value of stock-based awards exchanged
|
4,058
|
|
|
Cash paid
|
9,097
|
|
|
Working capital adjustment
|
(184
|
)
|
|
Total purchase consideration
|
101,619
|
|
|
Cash
|
450
|
|
|
Accounts receivable
|
13,333
|
|
|
Prepaid and other assets
|
1,025
|
|
|
Fixed assets
|
265
|
|
|
Intangible assets, including in process research and development of $580
|
52,420
|
|
|
Goodwill
|
51,732
|
|
|
Total assets acquired
|
$
|
119,225
|
|
Accounts payable and accrued expenses
|
5,825
|
|
|
Other liabilities
|
443
|
|
|
Deferred tax liability, net
|
11,338
|
|
|
Total liabilities assumed
|
17,606
|
|
|
Total net assets acquired
|
$
|
101,619
|
|
|
|
Year Ended
|
||||||
|
|
December 31, 2015
|
|
December 31, 2014
|
||||
|
|
|
|
|
||||
|
|
(in thousands, except per share data)
|
||||||
Pro forma revenues
|
|
$
|
265,134
|
|
|
$
|
167,860
|
|
Pro forma net income (loss)
|
|
$
|
673
|
|
|
$
|
(39,225
|
)
|
Pro forma net income (loss) per share, basic
|
|
$
|
0.02
|
|
|
$
|
(1.27
|
)
|
Pro forma net income(loss) per share, diluted
|
|
$
|
0.01
|
|
|
$
|
(1.27
|
)
|
Fair value of common stock
|
$
|
11,200
|
|
Fair value of contingent consideration
|
9,065
|
|
|
Fair value attributed to pre-acquisition stock options exchanged
|
2,142
|
|
|
Total purchase consideration, including contingent consideration
|
22,407
|
|
|
Other assets, including cash acquired of $0.6 million
|
1,521
|
|
|
Intangible assets
|
12,193
|
|
|
Goodwill
|
9,461
|
|
|
Other liabilities
|
(768
|
)
|
|
Net assets acquired
|
$
|
22,407
|
|
|
|
Estimated Useful Life
|
||
Developed technology
|
$
|
9,310
|
|
5.0 years
|
Customer Relationships
|
2,880
|
|
2.5 years
|
|
Trademarks
|
3
|
|
0.5 years
|
|
Total intangible assets acquired
|
$
|
12,193
|
|
|
Cash purchase consideration (excluding $0.7 million tied to continued employment)
|
$
|
4,651
|
|
Other assets, including cash acquired of $0.1 million
|
737
|
|
|
Intangible assets
|
2,300
|
|
|
Goodwill
|
3,021
|
|
|
Other liabilities
|
(1,407
|
)
|
|
Net assets acquired
|
$
|
4,651
|
|
|
|
Estimated Useful Life
|
||
Developed technology
|
$
|
1,360
|
|
3.0 years
|
Customer relationships
|
450
|
|
2.5 years
|
|
Non-compete agreements
|
490
|
|
3.0 years
|
|
Total intangible assets acquired
|
$
|
2,300
|
|
|
|
|
Year Ended
|
||||||
|
|
December 31, 2014
|
|
December 31, 2013
|
||||
|
|
|
|
|
||||
|
|
(in thousands, except per share data)
|
||||||
Pro forma revenues
|
|
$
|
125,834
|
|
|
$
|
84,249
|
|
Pro forma net loss
|
|
$
|
(27,659
|
)
|
|
$
|
(23,419
|
)
|
Pro forma net loss per share, basic and diluted
|
|
$
|
(0.95
|
)
|
|
$
|
(1.92
|
)
|
|
|
December 31, 2015
|
|
December 31, 2014
|
||||
|
|
|
|
|
||||
|
|
(in thousands)
|
||||||
Beginning balance
|
|
$
|
16,290
|
|
|
$
|
1,491
|
|
Additions from the acquisition of iSocket
|
|
—
|
|
|
11,778
|
|
||
Additions from the acquisition of Shiny
|
|
—
|
|
|
3,021
|
|
||
Additions from the acquisition of Chango
|
|
52,513
|
|
|
—
|
|
||
Error correction related to iSocket (See Note 7)
|
|
(2,317
|
)
|
|
—
|
|
||
Measurement period adjustment related to Chango (See Note 7)
|
|
(520
|
)
|
|
—
|
|
||
Other adjustment related to Chango (See Note 7)
|
|
(261
|
)
|
|
—
|
|
||
Ending balance
|
|
$
|
65,705
|
|
|
$
|
16,290
|
|
|
|
December 31, 2015
|
|
December 31, 2014
|
||||
|
|
|
|
|
||||
|
|
(in thousands)
|
||||||
Amortizable intangible assets:
|
|
|
|
|
||||
Developed technology
|
|
$
|
35,756
|
|
|
$
|
13,176
|
|
Customer relationships
|
|
25,330
|
|
|
3,330
|
|
||
Non-compete agreements
|
|
4,990
|
|
|
490
|
|
||
Trademarks
|
|
—
|
|
|
3
|
|
||
Total identifiable intangible assets, gross
|
|
66,076
|
|
|
16,999
|
|
||
Total accumulated amortization—intangible assets
|
|
(15,293
|
)
|
|
(2,909
|
)
|
||
Total identifiable intangible assets, net
|
|
$
|
50,783
|
|
|
$
|
14,090
|
|
Fiscal Year
|
Amount
|
||
|
(in thousands)
|
||
2016
|
$
|
16,227
|
|
2017
|
13,725
|
|
|
2018
|
9,941
|
|
|
2019
|
8,680
|
|
|
2020 and thereafter
|
2,210
|
|
|
Total
|
$
|
50,783
|
|
•
|
Level 1 – Quoted prices (unadjusted) in active markets for identical assets or liabilities that the Company has the ability to access at the measurement date.
|
•
|
Level 2 – Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly.
|
•
|
Level 3 – Unobservable inputs.
|
|
December 31, 2015
|
|
Fair Value Measurements at Reporting Date Using
|
||||||||||||
|
|
Quoted Prices in
Active Markets for Identical Assets (Level 1) |
|
Significant Other
Observable Inputs (Level 2) |
|
Significant
Unobservable Inputs (Level 3) |
|||||||||
|
|
|
|
|
|
|
|
||||||||
|
(in thousands)
|
||||||||||||||
Money market funds
|
$
|
19,257
|
|
|
$
|
19,257
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Corporate debt securities
|
$
|
12,786
|
|
|
$
|
12,786
|
|
|
$
|
—
|
|
|
$
|
—
|
|
U.S. Treasury, government and agency debt securities
|
$
|
23,946
|
|
|
$
|
23,946
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
December 31, 2014
|
|
Fair Value Measurements at Reporting Date Using
|
||||||||||||
|
|
Quoted Prices in
Active Markets for Identical Assets (Level 1) |
|
Significant Other
Observable Inputs (Level 2) |
|
Significant
Unobservable Inputs (Level 3) |
|||||||||
|
|
|
|
|
|
|
|
||||||||
|
(in thousands)
|
||||||||||||||
Money market funds
|
$
|
55,963
|
|
|
$
|
55,963
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Contingent consideration liability
|
$
|
11,448
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
11,448
|
|
|
|
Year Ended
|
||||||||||
|
|
December 31, 2015
|
|
December 31, 2014
|
|
December 31, 2013
|
||||||
|
|
|
|
|
|
|
||||||
|
|
(in thousands)
|
||||||||||
Beginning balance
|
|
$
|
—
|
|
|
$
|
5,451
|
|
|
$
|
1,330
|
|
Change in value of preferred stock warrants recorded in other expense, net
|
|
—
|
|
|
732
|
|
|
4,121
|
|
|||
Net exercise of preferred stock warrant and conversion of preferred stock warrant to common stock warrant
|
|
—
|
|
|
(6,183
|
)
|
|
—
|
|
|||
Ending balance
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
5,451
|
|
|
|
Series B December 31,
2013 |
|
Series C
December 31, 2013 |
||||
Risk-free interest rate
|
|
0.18
|
%
|
|
0.13
|
%
|
||
Expected term (in years)
|
|
0.69
|
|
|
0.50
|
|
||
Estimated dividend yield
|
|
2.00
|
%
|
|
2.00
|
%
|
||
Weighted-average estimated volatility
|
|
64
|
%
|
|
63
|
%
|
||
Fair value (in thousands)
|
|
$
|
173
|
|
|
$
|
5,278
|
|
|
|
Year Ended
|
||||||||||
|
|
December 31, 2015
|
|
December 31, 2014
|
|
December 31, 2013
|
||||||
|
|
|
|
|
|
|
||||||
|
|
(in thousands)
|
||||||||||
Beginning balance
|
|
$
|
11,448
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Increase to contingent consideration liability related to the iSocket acquisition (See Note 7)
|
|
—
|
|
|
11,382
|
|
|
—
|
|
|||
Increase to contingent consideration liability related to the Chango acquisition (See Note 7)
|
|
16,171
|
|
|
—
|
|
|
—
|
|
|||
Change in fair value of contingent consideration liabilities recorded in general and administrative expense
|
|
306
|
|
|
66
|
|
|
—
|
|
|||
Decrease in iSocket contingent consideration liability related to goodwill adjustment (See Note 7)
|
|
(2,317
|
)
|
|
—
|
|
|
—
|
|
|||
Issuance of shares associated with iSocket and Chango contingent consideration
|
|
(25,608
|
)
|
|
—
|
|
|
—
|
|
|||
Ending balance
|
|
$
|
—
|
|
|
$
|
11,448
|
|
|
$
|
—
|
|
|
December 31, 2015
|
|
December 31, 2014
|
||||
|
|
|
|
||||
|
(in thousands)
|
||||||
Accounts payable—seller
|
$
|
228,850
|
|
|
$
|
138,366
|
|
Accounts payable—trade
|
6,962
|
|
|
5,350
|
|
||
Accrued employee-related payables
|
12,155
|
|
|
7,305
|
|
||
Total
|
$
|
247,967
|
|
|
$
|
151,021
|
|
|
December 31, 2015
|
|
December 31, 2014
|
||||
|
|
|
|
||||
|
(in thousands)
|
||||||
Line of credit
|
$
|
—
|
|
|
$
|
—
|
|
Capital lease obligations
|
—
|
|
|
105
|
|
||
Total
|
$
|
—
|
|
|
$
|
105
|
|
|
|
December 31, 2013
|
||||||||||||
|
|
Shares
Authorized |
|
Shares
Outstanding |
|
Carrying
Values |
|
Liquidation
Preference |
||||||
|
|
|
|
|
|
|
|
|
||||||
|
|
|
|
|
|
(Dollars in thousands)
|
||||||||
Series A
|
|
6,154,000
|
|
|
6,154,000
|
|
|
$
|
4,000
|
|
|
$
|
6,118
|
|
Series B
|
|
13,588,160
|
|
|
13,562,986
|
|
|
21,087
|
|
|
30,754
|
|
||
Series C
|
|
4,765,173
|
|
|
3,919,306
|
|
|
9,484
|
|
|
12,779
|
|
||
Series D
|
|
5,184,191
|
|
|
5,184,189
|
|
|
18,000
|
|
|
23,121
|
|
||
Total
|
|
29,691,524
|
|
|
28,820,481
|
|
|
$
|
52,571
|
|
|
$
|
72,772
|
|
|
|
Original Issue
Price per share |
|
Conversion Price
per share |
||||
Series A
|
|
$
|
0.65
|
|
|
$
|
1.30
|
|
Series B
|
|
$
|
1.55556
|
|
|
$
|
3.11112
|
|
Series C
|
|
$
|
2.42729
|
|
|
$
|
4.85458
|
|
Series D
|
|
$
|
3.55603
|
|
|
$
|
7.11206
|
|
|
Shares Under Option
|
|
Weighted- Average Exercise Price
|
|
Weighted- Average Contractual Life
|
|
Aggregate Intrinsic Value
|
|||||
|
(in thousands)
|
|
|
|
|
|
(in thousands)
|
|||||
Outstanding at December 31, 2014
|
8,113
|
|
|
$
|
8.05
|
|
|
|
|
|
||
Granted
|
874
|
|
|
$
|
16.59
|
|
|
|
|
|
||
Options assumed in acquisitions
|
428
|
|
|
$
|
4.43
|
|
|
|
|
|
||
Exercised
|
(2,562
|
)
|
|
$
|
5.35
|
|
|
|
|
|
||
Canceled
|
(650
|
)
|
|
$
|
11.56
|
|
|
|
|
|
||
Outstanding at December 31, 2015
|
6,203
|
|
|
$
|
9.76
|
|
|
7.40 years
|
|
$
|
41,871
|
|
Vested and expected to vest at December 31, 2015
|
6,126
|
|
|
$
|
9.71
|
|
|
7.38 years
|
|
$
|
41,635
|
|
Exercisable at December 31, 2015
|
3,502
|
|
|
$
|
7.77
|
|
|
6.75 years
|
|
$
|
30,393
|
|
|
|
Year Ended
|
|||||||
|
|
December 31, 2015
|
|
December 31, 2014
|
|
December 31, 2013
|
|||
Expected term (in years)
|
|
4.5
|
|
|
5.7
|
|
|
6.0
|
|
Risk-free interest rate
|
|
1.30
|
%
|
|
1.75
|
%
|
|
1.28
|
%
|
Expected volatility
|
|
47
|
%
|
|
51
|
%
|
|
58
|
%
|
Dividend yield
|
|
—
|
%
|
|
—
|
%
|
|
—
|
%
|
|
Number of Shares
|
|
|
(in thousands)
|
|
Nonvested shares of restricted stock outstanding at December 31, 2014
|
1,750
|
|
Granted
|
552
|
|
Canceled
|
(73
|
)
|
Vested
|
(750
|
)
|
Nonvested shares subject to restricted stock outstanding at December 31, 2015
|
1,479
|
|
|
Number of Shares
|
|
|
(in thousands)
|
|
Nonvested shares of restricted stock units outstanding at December 31, 2014
|
845
|
|
Granted
|
2,356
|
|
Canceled
|
(325
|
)
|
Vested
|
(229
|
)
|
Nonvested shares subject to restricted stock units outstanding at December 31, 2015
|
2,647
|
|
|
|
Year Ended
|
||||||||||
|
|
December 31, 2015
|
|
December 31, 2014
|
|
December 31, 2013
|
||||||
|
|
|
|
|
|
|
||||||
|
|
(in thousands)
|
||||||||||
Cost of revenue
|
|
$
|
240
|
|
|
$
|
166
|
|
|
$
|
87
|
|
Sales and marketing
|
|
7,415
|
|
|
3,217
|
|
|
1,105
|
|
|||
Technology and development
|
|
4,963
|
|
|
2,228
|
|
|
1,645
|
|
|||
General and administrative
|
|
17,966
|
|
|
18,235
|
|
|
3,515
|
|
|||
Total stock-based compensation expense
|
|
$
|
30,584
|
|
|
$
|
23,846
|
|
|
$
|
6,352
|
|
|
|
Year Ended
|
||||||||||
|
|
December 31, 2015
|
|
December 31, 2014
|
|
December 31, 2013
|
||||||
|
|
|
|
|
|
|
||||||
|
|
(in thousands)
|
||||||||||
Domestic
|
|
$
|
15,723
|
|
|
$
|
(19,081
|
)
|
|
$
|
(9,535
|
)
|
International
|
|
(19,862
|
)
|
|
580
|
|
|
533
|
|
|||
Loss before income taxes
|
|
$
|
(4,139
|
)
|
|
$
|
(18,501
|
)
|
|
$
|
(9,002
|
)
|
|
|
Year Ended
|
||||||||||
|
|
December 31, 2015
|
|
December 31, 2014
|
|
December 31, 2013
|
||||||
|
|
|
|
|
|
|
||||||
|
|
(in thousands)
|
||||||||||
Current:
|
|
|
|
|
|
|
||||||
Federal
|
|
$
|
196
|
|
|
$
|
—
|
|
|
$
|
—
|
|
State
|
|
90
|
|
|
16
|
|
|
58
|
|
|||
Foreign
|
|
367
|
|
|
308
|
|
|
189
|
|
|||
Total current provision
|
|
653
|
|
|
324
|
|
|
247
|
|
|||
Deferred:
|
|
|
|
|
|
|
||||||
Federal
|
|
—
|
|
|
(10
|
)
|
|
9
|
|
|||
State
|
|
1
|
|
|
(1
|
)
|
|
1
|
|
|||
Foreign
|
|
(5,215
|
)
|
|
(141
|
)
|
|
(10
|
)
|
|||
Total deferred benefit
|
|
(5,214
|
)
|
|
(152
|
)
|
|
—
|
|
|||
Total provision (benefit) for income taxes
|
|
$
|
(4,561
|
)
|
|
$
|
172
|
|
|
$
|
247
|
|
|
|
Year Ended
|
|||||||
|
|
December 31, 2015
|
|
December 31, 2014
|
|
December 31, 2013
|
|||
U.S. federal statutory income tax rate
|
|
34.0
|
%
|
|
34.0
|
%
|
|
34.0
|
%
|
State income taxes, net of federal benefit
|
|
(1.4
|
)%
|
|
(0.1
|
)%
|
|
(0.4
|
)%
|
Foreign income at other than U.S. rates
|
|
(31.0
|
)%
|
|
0.8
|
%
|
|
—
|
%
|
Stock-based compensation expense
|
|
(31.5
|
)%
|
|
(4.4
|
)%
|
|
(10.0
|
)%
|
Meals and entertainment
|
|
(14.2
|
)%
|
|
(1.7
|
)%
|
|
(1.3
|
)%
|
Acquisition and related items
|
|
(8.6
|
)%
|
|
(0.1
|
)%
|
|
—
|
%
|
Non-deductible gifts
|
|
(0.8
|
)%
|
|
(0.1
|
)%
|
|
(0.2
|
)%
|
Research and development tax credits
|
|
42.3
|
%
|
|
4.7
|
%
|
|
5.6
|
%
|
Tax effect of intercompany financing
|
|
11.2
|
%
|
|
—
|
%
|
|
—
|
%
|
Other permanent items
|
|
(0.5
|
)%
|
|
(1.6
|
)%
|
|
(0.5
|
)%
|
Provision to return adjustments
|
|
(9.4
|
)%
|
|
(0.2
|
)%
|
|
—
|
%
|
Change in valuation allowance
|
|
120.1
|
%
|
|
(32.2
|
)%
|
|
(29.9
|
)%
|
Effective income tax rate
|
|
110.2
|
%
|
|
(0.9
|
)%
|
|
(2.7
|
)%
|
|
|
December 31, 2015
|
|
December 31, 2014
|
||||
|
|
|
|
|
||||
|
|
(in thousands)
|
||||||
Deferred Tax Assets:
|
|
|
|
|
||||
Accrued liabilities
|
|
$
|
1,777
|
|
|
$
|
649
|
|
Stock-based compensation
|
|
7,737
|
|
|
6,401
|
|
||
Net operating loss carryovers
|
|
18,609
|
|
|
23,241
|
|
||
Research tax credit carryovers
|
|
7,931
|
|
|
4,596
|
|
||
Other
|
|
1,926
|
|
|
1,357
|
|
||
Total deferred tax assets
|
|
37,980
|
|
|
36,244
|
|
||
Less valuation allowance
|
|
(29,255
|
)
|
|
(32,481
|
)
|
||
Deferred tax assets, net of valuation allowance
|
|
8,725
|
|
|
3,763
|
|
||
Deferred Tax Liabilities:
|
|
|
|
|
||||
Fixed assets
|
|
(2,630
|
)
|
|
(777
|
)
|
||
Intangible assets
|
|
(12,198
|
)
|
|
(3,036
|
)
|
||
Other
|
|
—
|
|
|
—
|
|
||
Total deferred tax liabilities
|
|
(14,828
|
)
|
|
(3,813
|
)
|
||
Net deferred tax liability
|
|
$
|
(6,103
|
)
|
|
$
|
(50
|
)
|
|
|
Amount
|
||
|
|
(in thousands)
|
||
Balance at January 1, 2013
|
|
$
|
1,067
|
|
Increases related to current year tax positions
|
|
408
|
|
|
Decreases related to prior year tax positions
|
|
(21
|
)
|
|
Balance at December 31, 2013
|
|
1,454
|
|
|
Increases related to current year tax positions
|
|
679
|
|
|
Decreases related to prior year tax positions
|
|
(2
|
)
|
|
Balance as of December 31, 2014
|
|
2,131
|
|
|
Increases related to current year tax positions
|
|
2,194
|
|
|
Decreases related to prior year tax positions
|
|
—
|
|
|
Balance as of December 31, 2015
|
|
$
|
4,325
|
|
|
|
Year Ended
|
||||||||||
|
|
December 31, 2015
|
|
December 31, 2014
|
|
December 31, 2013
|
||||||
|
|
|
|
|
|
|
||||||
|
|
(in thousands)
|
||||||||||
United States
|
|
$
|
172,188
|
|
|
$
|
73,277
|
|
|
$
|
51,461
|
|
United Kingdom
|
|
20,355
|
|
|
16,047
|
|
|
10,590
|
|
|||
Other international
|
|
55,941
|
|
|
35,971
|
|
|
21,779
|
|
|||
Total
|
|
$
|
248,484
|
|
|
$
|
125,295
|
|
|
$
|
83,830
|
|
|
|
December 31, 2015
|
|
December 31, 2014
|
||||
|
|
|
|
|
||||
|
|
(in thousands)
|
||||||
United States
|
|
$
|
21,782
|
|
|
$
|
12,680
|
|
Other international
|
|
3,621
|
|
|
2,516
|
|
||
Total
|
|
$
|
25,403
|
|
|
$
|
15,196
|
|
Fiscal Year
|
Amount
|
||
|
(in thousands)
|
||
2016
|
$
|
6,432
|
|
2017
|
5,835
|
|
|
2018
|
5,656
|
|
|
2019
|
4,910
|
|
|
2020
|
3,197
|
|
|
Thereafter
|
1,626
|
|
|
Total
|
$
|
27,656
|
|
Report of Independent Registered Public Accounting Firm
|
|
Consolidated Balance Sheets
|
|
Consolidated Statements of Operations
|
|
Consolidated Statements of Comprehensive Income (Loss)
|
|
Consolidated Statements of Convertible Preferred Stock and Common Stockholders' Equity (Deficit)
|
|
Consolidated Statements of Cash Flows
|
|
Notes to Consolidated Financial Statements
|
|
THE RUBICON PROJECT, INC.
(Registrant) |
|
/s/ Todd Tappin |
|
Todd Tappin
|
|
Chief Operating Officer and Chief Financial Officer
(Principal Financial Officer) |
Name
|
Title
|
Date
|
/s/ Frank Addante
|
Chief Executive Officer and Director
(Principal Executive Officer)
|
March 4, 2016
|
Frank Addante
|
||
/s/ Todd Tappin
|
Chief Operating Officer and Chief Financial Officer
(Principal Financial Officer)
|
March 4, 2016
|
Todd Tappin
|
||
/s/ David Day
|
Chief Accounting Officer
(Principal Accounting Officer)
|
March 4, 2016
|
David Day
|
||
/s/ Robert J. Frankenberg
|
Director
|
March 4, 2016
|
Robert J. Frankenberg
|
||
/s/ Sumant Mandal
|
Director
|
March 4, 2016
|
Sumant Mandal
|
||
/s/ Gregory R. Raifman
|
Director
|
March 4, 2016
|
Gregory R. Raifman
|
||
/s/ Robert F. Spillane
|
Director
|
March 4, 2016
|
Robert F. Spillane
|
||
/s/ Lisa L. Troe
|
Director
|
March 4, 2016
|
Lisa L. Troe
|
||
/s/ Lewis W. Coleman
|
Director
|
March 4, 2016
|
Lewis W. Coleman
|
Number
|
|
Description
|
|
|
|
2.1
|
|
Agreement and Plan of Merger, dated November 13, 2014, by and among the Registrant, Pluto 2014 Acquisition Corp., iSocket, Inc., Shareholder Representative Services LLC, solely in its capacity as the initial Holder Representative thereunder, and certain persons delivering joinder agreements therewith (incorporated by reference to Exhibit 2.1 to the Registrant's Current Report on Form 8-K filed with the Commission on November 17, 2014).†
|
2.2
|
|
Arrangement Agreement, dated March 31, 2015, by and among the Registrant, Chango Inc., 2459502 Ontario Inc., the Supporting Shareholders, Fortis Advisors LLC, as the Securityholder Representative, and certain persons delivering joinder agreements therewith (incorporated by reference to Exhibit 2.1 to the Registrant’s Current Report on Form 8-K filed with the Commission on March 31, 2015). †
|
2.3
|
|
Amendment Agreement, dated as of April 20, 2015, by and among the Registrant, Chango Inc., and Fortis Advisors LLC, as the Securityholder Presentative (incorporated by reference to Exhibit 2.1 to the Registrant’s Current Report on Form 8-K filed with the Commission on April 27, 2015).
|
3.1
|
|
Sixth Amended and Restated Certificate of Incorporation of the Registrant (incorporated by reference to Exhibit 3.1 to the Registrant's Quarterly Report on Form 10-Q filed with the Commission on May 15, 2014).
|
3.2
|
|
Amended and Restated Bylaws of the Registrant (incorporated by reference to Exhibit 3.2 to the Registrant's Quarterly Report on Form 10-Q filed with the Commission on May 15, 2014).
|
10.1+
|
|
The Rubicon Project, Inc. 2007 Stock Incentive Plan and forms of agreements for employees thereunder (incorporated by reference to Exhibit 10.1 to the Registrant's Registration Statement on Form S-1/A filed with the Commission on March 20, 2014).
|
10.2+
|
|
The Rubicon Project, Inc. 2014 Equity Incentive Plan (incorporated by reference to Exhibit 99.1 to the Registrant's Registration Statement on Form S-8 filed with the Commission on May 15, 2014).
|
10.3+
|
|
Form of Stock Option Grant Notice and Award Agreement for Employees under The Rubicon Project, Inc. 2014 Equity Incentive Plan (incorporated by reference to Exhibit 10.2(B) to the Registrant’s Annual Report on Form 10-K filed with the Commission on March 6, 2015).
|
10.4+
|
|
Form of Restricted Stock Unit Grant Notice and Award Agreement for Employees under The Rubicon Project, Inc. 2014 Equity Incentive Plan (incorporated by reference to Exhibit 10.2(C) to the Registrant’s Annual Report on Form 10-K filed with the Commission on March 6, 2015).
|
10.5+
|
|
Form of Stock Option Grant Notice and Award Agreement for Non-Employee Directors under The Rubicon Project, Inc. 2014 Equity Incentive Plan (incorporated by reference to Exhibit 10.2(D) to the Registrant’s Annual Report on Form 10-K filed with the Commission on March 6, 2015).
|
10.6+
|
|
Form of Restricted Stock Unit Grant Notice and Award Agreement for Non-Employee Directors under The Rubicon Project, Inc. 2014 Equity Incentive Plan (incorporated by reference to Exhibit 10.2(E) to the Registrant’s Annual Report on Form 10-K filed with the Commission on March 6, 2015).
|
10.7+*
|
|
Form Market Stock Award Notice and Award Agreement under The Rubicon Project, Inc. 2014 Equity Incentive Plan.
|
10.8+
|
|
The Rubicon Project, Inc. 2014 Employee Stock Purchase Plan (incorporated by reference to Exhibit 99.2 to the Registrant's Registration Statement on Form S-8 filed with the Commission on May 15, 2014).
|
10.9+
|
|
Form of Enrollment Agreement under The Rubicon Project, Inc. 2014 Employee Stock Purchase Plan (incorporated by reference to Exhibit 10.3(B) to the Registrant’s Annual Report on Form 10-K filed with the Commission on March 6, 2015).
|
10.10+
|
|
The Rubicon Project, Inc. 2014 Inducement Grant Equity Incentive Plan (incorporated by reference to Exhibit 4.6 to the Registrant's Registration Statement on Form S-8 filed with the Commission on December 19, 2014).
|
10.11+
|
|
Form of Restricted Stock Unit Grant Notice under The Rubicon Project, Inc. 2014 Inducement Grant Equity Incentive Plan (incorporated by reference to Exhibit 4.7 to the Registrant’s Registration Statement on Form S-8 filed with the Commission on December 19, 2014).
|
10.12+
|
|
Form of Stock Option Grant Notice under The Rubicon Project, Inc. 2014 Inducement Grant Equity Incentive Plan (incorporated by reference to Exhibit 4.8 to the Registrant’s Registration Statement on Form S-8 filed with the Commission on December 19, 2014).
|
10.13+
|
|
Form of Restricted Stock Grant Notice under The Rubicon Project, Inc. 2014 Inducement Grant Equity Incentive Plan (incorporated by reference to Exhibit 4.9 to the Registrant’s Registration Statement on Form S-8 filed with the Commission on December 19, 2014).
|
10.14+
|
|
The Rubicon Project, Inc. 2015 Executive Cash Incentive Plan (incorporated by reference to Exhibit A to the Registrant’s Definitive Proxy Statement on Schedule 14A filed with the Commission on April 2, 2015).
|
10.15
|
|
Amended and Restated Investors' Rights Agreement, dated October 29, 2010, by and among The Rubicon Project, Inc. and certain of its stockholders (incorporated by reference to Exhibit 10.3 to the Registrant’s Registration Statement on Form S-1/A filed with the Commission on March 20, 2014).
|
10.16+
|
|
Executive Employment Agreement, dated May 4, 2007, between adMonitor, Inc. and the Registrant's Chief Executive Officer, as amended December 14, 2007 (incorporated by reference to Exhibit 10.4 to the Registrant’s Registration Statement on Form S-1 filed with the Commission on February 4, 2014).
|
10.17+
|
|
Offer Letter, dated January 17, 2013, between The Rubicon Project, Inc. and the Registrant's President (incorporated by reference to Exhibit 10.5 to the Registrant’s Registration Statement on Form S-1 filed with the Commission on February 4, 2014).
|
10.18+
|
|
Offer Letter, dated January 17, 2013, between The Rubicon Project, Inc. and the Registrant's Chief Operating Officer and Chief Financial Officer (incorporated by reference to Exhibit 10.6 to the Registrant’s Registration Statement on Form S-1 filed with the Commission on February 4, 2014).
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10.19
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Loan and Security Agreement, dated September 27, 2011, by and among Silicon Valley Bank, the Registrant, and the other Borrowers thereunder (incorporated by reference to Exhibit 10.7 to the Registrant’s Registration Statement on Form S-1 filed with the Commission on February 4, 2014).
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10.20
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Consent and Amendment to Loan and Security Agreement, dated May 22, 2012, by and among Silicon Valley Bank, the Registrant, and the other Borrowers thereunder (incorporated by reference to Exhibit 10.8 to the Registrant’s Registration Statement on Form S-1 filed with the Commission on February 4, 2014).
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10.21
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First Amendment to Loan and Security Agreement, dated July 24, 2012, by and among Silicon Valley Bank, the Registrant, and the other Borrowers thereunder (incorporated by reference to Exhibit 10.9 to the Registrant’s Registration Statement on Form S-1 filed with the Commission on February 4, 2014).
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10.22
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Assumption and Second Amendment to Loan and Security Agreement, dated September 14, 2012, by and among Silicon Valley Bank, the Registrant, and the other Borrowers thereunder (incorporated by reference to Exhibit 10.10 to the Registrant’s Registration Statement on Form S-1 filed with the Commission on February 4, 2014).
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10.23
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Third Amendment to Loan and Security Agreement, dated September 28, 2012, by and among Silicon Valley Bank, the Registrant, and the other Borrowers thereunder (incorporated by reference to Exhibit 10.11 to the Registrant’s Registration Statement on Form S-1 filed with the Commission on February 4, 2014).
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10.24
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Fourth Amendment to Loan and Security Agreement, dated February 8, 2013, by and among Silicon Valley Bank, the Registrant, and the other Borrowers thereunder (incorporated by reference to Exhibit 10.12 to the Registrant’s Registration Statement on Form S-1 filed with the Commission on February 4, 2014).
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10.25
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Fifth Amendment to Loan and Security Agreement, dated September 30, 2013, by and among Silicon Valley Bank, the Registrant, and the other Borrowers thereunder (incorporated by reference to Exhibit 10.13 to the Registrant’s Registration Statement on Form S-1 filed with the Commission on February 4, 2014).
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10.26
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Sixth Amendment to Loan and Security Agreement, dated December 9, 2013, by and among Silicon Valley Bank, the Registrant, and the other Borrowers thereunder (incorporated by reference to Exhibit 10.14 to the Registrant’s Registration Statement on Form S-1 filed with the Commission on February 4, 2014).
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10.27
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Seventh Amendment to Loan and Security Agreement, dated as of July 29, 2015, by and among Silicon Valley Bank, the Registrant, and the other Borrowers thereunder (incorporated by reference to Exhibit 10.2 to the Registrant’s Quarterly Report on Form 10-Q filed with the Commission on August 5, 2015).
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10.28
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Stock Pledge Agreement, dated October 3, 2013, by and between Silicon Valley Bank and the Registrant (incorporated by reference to Exhibit 10.15 to the Registrant’s Registration Statement on Form S-1 filed with the Commission on February 4, 2014).
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10.29
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First Amendment to Stock Pledge Agreement, dated as of July 29, 2015, by and between Silicon Valley Bank and the Registrant (incorporated by reference to Exhibit 10.3 to the Registrant’s Quarterly Report on Form 10-Q filed with the Commission on August 5, 2015).
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10.30
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Stock Pledge Agreement, dated as of July 29, 2015, by and between Silicon Valley Bank and Rubicon Project Unlatch, Inc. (incorporated by reference to Exhibit 10.4 to the Registrant’s Quarterly Report on Form 10-Q filed with the Commission on August 5, 2015).
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10.31
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Additional Borrower Joinder Supplement, dated as of July 29, 2015, by and between Silicon Valley Bank, the Registrant, and the Additional Borrowers thereunder (incorporated by reference to Exhibit 10.5 to the Registrant’s Quarterly Report on Form 10-Q filed with the Commission on August 5, 2015).
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10.32
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Form of Indemnification Agreement entered into between the Registrant and each of its directors and executive officers (incorporated by reference to Exhibit 10.17 to the Registrant’s Registration Statement on Form S-1/A filed with the Commission on March 20, 2014).
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10.33+
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Form of Severance Agreement between the Registrant and certain of its executive officers (incorporated by reference to Exhibit 10.18 to the Registrant’s Registration Statement on Form S-1 filed with the Commission on February 4, 2014).
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10.34+
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Form of Amendment No. 1 to Executive Severance and Vesting Acceleration Agreement between the Registrant and certain of its executive officers (incorporated by reference to Exhibit 10.1 to the Registrant Quarterly Report on Form 10-Q filed with the Commission on August 5, 2015).
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10.35
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Sublease, dated January 9, 2013, by and between Fox Interactive Media, Inc. and the Registrant (incorporated by reference to Exhibit 10.19 to the Company’s Registration Statement on Form S-1 filed with the Commission on February 4, 2014).
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21.1*
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List of Subsidiaries of The Rubicon Project, Inc.
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23.1*
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Consent of PricewaterhouseCoopers LLP.
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31.1*
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Certification of Principal Executive Officer Pursuant To Exchange Act Rules 13a-14(a) and 15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
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31.2*
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Certification of Principal Financial Officer Pursuant To Exchange Act Rules 13a-14(a) and 15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
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32*
(1)
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Certification of the Principal Executive Officer and Principal Financial Officer Pursuant To 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
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101.ins
(2)
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XBRL Instance Document
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101.sch
(2)
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XBRL Taxonomy Schema Linkbase Document
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101.cal
(2)
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XBRL Taxonomy Calculation Linkbase Document
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101.def
(2)
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XBRL Taxonomy Definition Linkbase Document
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101.lab
(2)
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XBRL Taxonomy Label Linkbase Document
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101.pre
(2)
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XBRL Taxonomy Presentation Linkbase Document
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Common Stock
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Common stock of the Company, par value $.0001 per share.
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Issuance Date
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_______
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Issuance Date Fair Market Value
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$____, which is the Fair Market Value on the Issuance Date.
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Issuance Date Performance Value
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$_______, which is the arithmetic mean of the closing prices for the Common Stock on the New York Stock Exchange as reported by _______ for each of the 20 consecutive trading days ending on and including the Issuance Date.
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Issued Shares
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_____
shares of Common Stock, which is 150% of the initial Target Shares (rounded to the nearest whole share with a result ending in .5 being rounded to the next higher whole share).
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Measurement Date
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The first to occur of (i) _______, (ii) the effective date of a Sale Transaction, or (iii) the date of termination of Participant’s Continuous Service as a result of an Involuntary Termination, death, or Disability.
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Measurement Date Performance Value
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The arithmetic mean of the closing prices for the Common Stock on the New York Stock Exchange (or such other exchange or market system as may then be the primary exchange or market system upon which the Common Stock trades for at least a majority of the 20 trading days included in the average) as reported by _______ (or if _______ is not then reporting closing prices, then by a source of national standing that the Board or Committee deems reliable) for each of the 20 consecutive trading days ending on and including the Measurement Date, except that if the Measurement Date is the effective Date of a Sale Transaction, then the Measurement Date Performance Value is the effective value per share of Common Stock in the Sale Transaction rather than a trailing average.
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Performance Factor
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If the Calculated Quotient is less than 50%, the Performance Factor is zero. If the Calculated Quotient is more than 150%, the Performance Factor is 150%. If the Calculated Quotient is at least 50% but not more than 150%, the Performance Factor is equal to the Calculated Quotient. For this purpose, the “Calculated Quotient” is obtained by dividing the Measurement Date Performance Value by the Issuance Date Performance Value.
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Severance Agreement
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That certain Executive Severance and Vesting Acceleration Agreement between the Company and Participant.
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Target Shares
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Is initially
_____
shares of Common Stock, which is determined as the quotient obtained by dividing$___________ by the Issuance Date Fair Market Value (rounded to the nearest whole share with a result ending in .5 being rounded to the next higher whole share). Subject to
Section 3
of this Notice, if Participant’s Continuous Service terminates before the earlier of _______ and the effective date of a Sale Transaction, on account of Participant’s (i) death, (ii) Disability, (iii) Involuntary Termination not in connection with a Sale Transaction , or (iv) voluntary termination initiated by Participant, then the Target Shares shall be reduced to an amount equal to the product obtained by multiplying the initial Target Shares by a fraction, the numerator of which is the number of days from the Issuance Date to the date of termination of Participant’s Continuous Service and the denominator of which is 1,066.
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Vested Shares
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The number of shares of Common Stock, consisting of none, some, or all of the Issued Shares, determined as the product obtained by multiplying the Performance Factor times the Target Shares as of the Measurement Date, after giving effect to any reduction in the number of Target Shares that results from termination of Participant’s Continuous Service for any reason set forth in the section entitled “Target Shares”.
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Vesting Date
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The date that the Board or Committee certifies the Measurement Date Performance Value, the Performance Factor, and the Vested Shares, as calculated by the Company as of the Measurement Date. If the Measurement Date is _______, it is anticipated that the Board or Committee will certify on May 15, _______, so that the Vesting Date coincides with the Company’s regular May 15 vesting date for restricted stock and restricted stock unit awards, but the Board or Committee is not required to certify on May 15, _______.
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1.
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As of the Issuance Date, the Company shall issue to Participant all of the Issued Shares.
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PARTICIPANT:
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THE RUBICON PROJECT, INC.
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By:
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Signature
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THE RUBICON PROJECT, INC.
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By:
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GRANTEE
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NAME
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ESCROW AGENT
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PARTICIPANT:
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Signature
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Print Name
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Date:
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Rubicon Project Hopper, Inc.
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(Delaware)
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Rubicon Project Unlatch, Inc.
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(Delaware)
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Rubicon Project Turing, Inc.
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(Delaware)
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Advertising Automation Accelerator, LLC
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(Delaware)
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Rubicon Project Edison, Inc.
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(Delaware)
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Rubicon Project Curie, Inc.
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(Delaware)
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Rubicon Project Bell, Inc.
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(Delaware)
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Chango USA, Inc.
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(Delaware)
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5monkeys, Inc.
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(Delaware)
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Caviar Acquisition Corp.
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(Delaware)
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Rubicon Project Daylight, Inc.
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(Delaware)
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Project Daylight, LLC
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(Delaware)
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The Rubicon Project Chango, Inc.
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(Canada)
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The Rubicon Project Canada, Inc.
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(Canada)
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The Rubicon Project Ltd.
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(United Kingdom)
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The Rubicon Project GmbH
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(Germany)
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The Rubicon Project SARL
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(France)
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The Rubicon Project SRL
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(Italy)
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Rubicon Project K.K.
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(Japan)
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The Rubicon Project Singapore Pte. Ltd.
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(Singapore)
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The Rubicon Project Australia PTY Limited
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(Australia)
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Rubicon Project Serviços De Internet LTDA.
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(Brazil)
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1.
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I have reviewed this Annual Report on Form 10-K of The Rubicon Project, Inc.;
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2.
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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;
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3.
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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;
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4.
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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)) for the registrant and have:
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a.
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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;
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b.
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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;
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c.
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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
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d.
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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
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5.
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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):
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a.
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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
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b.
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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.
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Signature:
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/s/ Frank Addante
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Frank Addante
Chief Executive Officer and Chairman of the Board
(Principal Executive Officer)
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1.
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I have reviewed this Annual Report on Form 10-K of The Rubicon Project, Inc.;
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2.
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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;
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3.
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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;
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4.
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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)) for the registrant and have:
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a.
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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;
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b.
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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;
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c.
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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
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d.
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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
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5.
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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):
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a.
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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
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b.
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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.
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Signature:
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/s/ Todd Tappin
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Todd Tappin
Chief Operating Officer and Chief Financial Officer
(Principal Financial Officer)
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/s/ Frank Addante
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Frank Addante
Chief Executive Officer and Chairman of the Board
(Principal Executive Officer)
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/s/ Todd Tappin
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Todd Tappin
Chief Operating Officer and Chief Financial Officer (Principal Financial Officer) |