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Document and Entity Information - shares	3 Months Ended
Document and Entity Information - shares	Mar. 31, 2014	May 07, 2014
Document and Entity Information
Entity Registrant Name	Shutterstock, Inc.
Entity Central Index Key	0001549346
Document Type	10-Q
Document Period End Date	Mar. 31, 2014
Amendment Flag	false
Current Fiscal Year End Date	--12-31
Entity Current Reporting Status	Yes
Entity Filer Category	Accelerated Filer
Entity Common Stock, Shares Outstanding		35,197,284
Document Fiscal Year Focus	2014
Document Fiscal Period Focus	Q1

Consolidated Balance Sheets - USD ($) $ in Thousands	Mar. 31, 2014	Dec. 31, 2013
Current assets:
Cash and cash equivalents	$ 157,978	$ 155,355
Short-term investments	54,994	54,429
Credit card receivables	3,012	2,083
Accounts receivable, net	8,143	6,081
Prepaid expenses and other current assets	22,472	19,809
Deferred tax assets, net	3,948	5,431
Total current assets	250,547	243,188
Property and equipment, net	25,798	20,256
Intangible assets, net	4,717	853
Goodwill	10,186	1,423
Deferred tax assets, net	13,417	10,720
Other assets	2,095	2,048
Total assets	306,760	278,488
Current liabilities:
Accounts payable	5,446	4,164
Accrued expenses	18,999	23,638
Contributor royalties payable	10,942	9,180
Deferred revenue	60,855	52,100
Other liabilities	1,845	2,846
Total current liabilities	98,087	91,928
Other non-current liabilities	9,552	3,961
Total liabilities	107,639	95,889
Commitments and contingencies (Note 8)
Stockholders' equity:
Common stock, $0.01 par value; 200,000 shares authorized; 35,196 and 35,071 shares outstanding as of March 31, 2014 and December 31, 2013, respectively	352	351
Additional paid-in capital	139,035	127,443
Accumulated comprehensive income	20	9
Retained earnings	59,714	54,796
Total stockholders' equity	199,121	182,599
Total liabilities and stockholders' equity	$ 306,760	$ 278,488

Consolidated Balance Sheets (Parenthetical) - $ / shares shares in Thousands	Mar. 31, 2014	Dec. 31, 2013
Consolidated Balance Sheets
Common stock, par value (in dollars per share)	$ 0.01	$ 0.01
Common stock, shares authorized	200,000	200,000
Common stock, shares outstanding	35,196	35,071

Consolidated Statements of Operations - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2014	Mar. 31, 2013
Consolidated Statements of Operations
Revenue	$ 72,777	$ 51,117
Operating expenses:
Cost of revenue	29,108	19,821
Sales and marketing	19,276	11,978
Product development	7,777	4,555
General and administrative	7,517	4,780
Total operating expenses	63,678	41,134
Income from operations	9,099	9,983
Other income (expense), net	21	(12)
Income before income taxes	9,120	9,971
Provision for income taxes	4,202	4,406
Net income	4,918	5,565
Less:
Preferred interest distributed	0	0
Undistributed earnings to participating stockholder/members	11	19
Net income available to common stockholders/members	$ 4,907	$ 5,546
Net income per basic share available to common stockholders/members:
Distributed (in dollars per share)	$ 0.00	$ 0.00
Undistributed (in dollars per share)	0.14	0.17
Basic (in dollars per share)	0.14	0.17
Net income per diluted share available to common stockholders/members:
Distributed (in dollars per share)	0.00	0.00
Undistributed (in dollars per share)	0.14	0.16
Diluted (in dollars per share)	$ 0.14	$ 0.16
Weighted average shares outstanding:
Basic (in shares)	35,027,480	33,398,797
Diluted (in shares)	35,838,853	33,851,843

Consolidated Statements of Comprehensive Income - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2014	Mar. 31, 2013
Consolidated Statements of Comprehensive Income
Net income	$ 4,918	$ 5,565
Foreign currency translation gain	4
Unrealized gain on investments	7
Other comprehensive income	11
Comprehensive income	$ 4,929	$ 5,565

Consolidated Statements of Cash Flows - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2014	Mar. 31, 2013
CASH FLOWS FROM OPERATING ACTIVITIES
Net income	$ 4,918	$ 5,565
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	1,551	779
Write-off of property and equipment	367
Deferred taxes	(402)	(1,692)
Non-cash equity-based compensation	3,137	1,016
Excess tax benefit from the exercise of stock options	(6,345)
Bad debt reserve	62	84
Chargeback reserve and sales refund reserve	45	20
Amortization of deferred financing fees		125
Changes in operating assets and liabilities:
Credit card receivables	(928)	(845)
Accounts receivable	(2,124)	(964)
Prepaid expenses and other current and non-current assets	3,693	(259)
Accounts payable and other liabilities	2,221	(1,069)
Contributors royalties payable	1,762	1,002
Income taxes payable		4,626
Deferred revenue	7,672	5,402
Net cash provided by operating activities	15,629	13,790
CASH FLOWS FROM INVESTING ACTIVITIES
Capital expenditures	(10,881)	(1,127)
Purchase of investments	(70,492)
Sale and maturities of investments	69,935
Acquisition of business	(10,056)
Security deposit payment	(49)	(1,779)
Net cash used in investing activities	(21,543)	(2,906)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from exercise of stock options	2,188	53
Excess tax benefit from the exercise of stock options	6,345
Payment of term loan		(6,000)
Payment of offering fees		(20)
Net cash provided by (used in) financing activities	8,533	(5,967)
Effect of foreign exchange rates changes on cash	4
Net increase in cash and cash equivalents	2,623	4,917
Cash and cash equivalents-Beginning	155,355	102,096
Cash and cash equivalents-Ending	157,978	107,013
Cash paid for:
Income taxes	55	1,264
Interest		$ 34
Supplemental Disclosure of Non-Cash Investing and Financing Activities:
Capital expenditures in accounts payable and other liabilities	$ 3,473

Summary of Operations and Significant Accounting Policies

3 Months Ended

Mar. 31, 2014

Summary of Operations and Significant Accounting Policies

Summary of Operations and Significant Accounting Policies

(1) Summary of Operations and Significant Accounting Policies

Summary of Operations

Shutterstock, Inc. (the “Company” or “Shutterstock”) operates an industry-leading global marketplace for commercial digital imagery. Commercial digital imagery consists of licensed photographs, illustrations and videos that companies use in their visual communications, such as websites, digital and print marketing materials, corporate communications, books, publications and video content. The Company licenses commercial digital imagery to its customers. Contributors upload their digital imagery to the Company’s website in exchange for a royalty payment based on customer download activity. The Company is headquartered in New York City with offices in London, Berlin, Chicago, Denver and San Francisco.

Principles of Consolidation

The consolidated financial statements reflect the operations of the Company and its wholly-owned subsidiaries. All significant intercompany balances and transactions have been eliminated in consolidation.

Reorganization

In May 2012, in connection with the filing of a registration statement for the Company’s initial public offering (the “IPO”), Shutterstock Images LLC, a New York limited liability company (the “LLC”) formed Shutterstock, Inc., a Delaware corporation, as a wholly-owned subsidiary of the LLC. On October 5, 2012, the LLC reorganized, by way of a merger of the LLC with and into Shutterstock, Inc. with Shutterstock, Inc. surviving in the merger (the “Reorganization”). In connection with the Reorganization, the preferred and common membership interests in the LLC, including any interests that vested upon the Reorganization, were exchanged for an aggregate of 28,338,281 shares of Shutterstock, Inc. common stock.

Unaudited Interim Financial Statements

The interim consolidated balance sheet as of March 31, 2014 and the consolidated statements of operations, comprehensive income and cash flows for the three months ended March 31, 2014 and 2013 are unaudited. The unaudited interim financial statements have been prepared on a basis consistent with the annual financial statements and, in the opinion of management, reflect all adjustments, which include only normal recurring adjustments, necessary to state fairly the Company’s financial position as of March 31, 2014 and its results of consolidated operations, comprehensive income and cash flows for the three months ended March 31, 2014 and 2013. The financial data and the other financial information disclosed in these notes to the financial statements related to these periods are also unaudited. The results of operations for the three months ended March 31, 2014 are not necessarily indicative of the results to be expected for the year ending December 31, 2014 or for any other future annual or interim period.

There have been no changes in the significant accounting policies from those that were disclosed in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2013 filed on February 28, 2014. These financial statements should also be read in conjunction with the audited Consolidated Financial Statements and Notes thereto for the year ended December 31, 2013. Certain information and note disclosures normally included in the financial statements prepared in accordance with GAAP have been omitted pursuant to such rules and regulations. The consolidated balance sheet as of December 31, 2013 included herein was derived from the audited financial statements as of that date, but does not include all disclosures required by GAAP.

Acquisition of Virtual Moment, LLC

On March 14, 2014, the Company acquired certain assets and certain liabilities of Virtual Moment, LLC (dba WebDAM) (“WebDAM”) pursuant to an asset purchase arrangement. The transaction was accounted for using the acquisition method, and accordingly, the results of the acquired business have been included in the Company’s results of operations from the acquisition date. The acquisition did not have a material impact on the Company’s reported operating results.

WebDAM sells digital asset management software services through its cloud-based platform to marketing and creative enterprise organizations. WebDAM’s products help organizations manage, search, distribute and collaborate on creative digital files in order to grow their brands and reach new audiences. WebDAM’s offerings are particularly attractive to large enterprises, which make up a significant portion of their client base. The Company believes that this acquisition will increase its strategic position with its enterprise customers as well as broaden its product availability to seize market opportunity.

The fair value of consideration transferred in this business combination is allocated to the intangible assets acquired and liabilities assumed at the acquisition date, with the remaining unallocated amount, if any, recorded as goodwill. The allocation of the acquisition price for this acquisition has been prepared on a preliminary basis, and changes to those allocations may occur as additional information becomes available.

The total preliminary purchase price of $12,416 consists of an initial cash payment of $10,056 and $2,360 in contingent consideration based on certain performance criteria of post-acquisition revenue. As of March 31, 2014, the fair value of the post-acquisition revenue performance-based contingent consideration is included in other non-current liabilities. The fair value of the contingent consideration was determined using a Monte-Carlo simulation approach. The preliminary aggregate purchase price was allocated to the assets acquired and liabilities assumed as follows:

Intangible assets:
Trade name	$	500
Customer relationships	2,800
Developed technology	600
Goodwill	8,763
Total assets acquired	836
Total liabilities assumed	(1,083		)
Total	$	12,416

The identifiable intangible assets have a weighted average life of approximately 7 years and are being amortized on a straight-line basis. The fair value of the customer relationships was determined using a variation of the income approach known as excess earnings method. The fair values of the trade name and developed technology were both determined using the relief-from-royalty method. The goodwill arising from the transaction is primarily attributable to expected operational synergies and is deductible for income tax purposes. As a result of the acquisition, the Company recorded approximately $300 of professional fees for the three months ended March 31, 2014 which is included in general and administrative expense.

Pro forma results of operations have not been presented because the effect of this business combination was not material to the Company’s consolidated results of operations.

Use of Estimates

The preparation of the consolidated financial statements in conformity with accounting principles generally accepted in the United States of America requires the Company’s management to make a number of estimates and assumptions relating to the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the consolidated financial statements, and the reported amounts of revenue and expenses during the period. The Company evaluates its significant estimates on an ongoing basis, including, but not limited to allowance for doubtful accounts, sales refund reserve, goodwill, intangibles, non-cash equity-based compensation, income tax provision and for certain non-income tax accruals. The Company bases its estimates on historical experience and on various other assumptions that it believes to be reasonable under the circumstances, the results of which form the basis for making judgments about carrying values of assets and liabilities that are not readily apparent from other sources. Actual results could differ from those estimates.

Restricted Cash

The Company’s restricted cash relates to security deposits for leased office locations. As of March 31, 2014 and December 31, 2013, the Company had $243 of restricted cash recorded in prepaid expenses and other current assets that related to a leased office location that expires in 2014 and had $2,017 of restricted cash recorded in other assets that related to leased office locations that expire in 2015 and 2024, respectively. The carrying value of restricted cash approximates fair value.

Revenue Recognition

All revenue, net of chargebacks and refunds, is generated from the license of digital content through subscription or usage based plans. The Company’s three primary plans are: subscription plans, On Demand plans, and credit pack plans. The Company recognizes revenue when all of the following basic criteria are met: there is persuasive evidence of an arrangement, performance or delivery of services has occurred, the sales price is fixed or determinable, and collectability is reasonably assured. The Company considers persuasive evidence of an arrangement to be an electronic order form, or a signed contract, which contains the fixed pricing terms. Performance or delivery is considered to have occurred upon the ratable passage of time for subscription plans, the download of digital content or the expiration of a contract period for which there are unused downloads or credits. Collectability is reasonably assured since most of the Company’s customers purchase products by making electronic payments at the time of a transaction with a credit card. The Company establishes a chargeback allowance and sales refund reserve allowance based on factors surrounding historical credit card chargeback trends, historical sales refund trends and other information. As of March 31, 2014 and December 31, 2013, the Company has recorded a chargeback allowance and sales refund allowance of $470 and $425, respectively, which is included in other liabilities. Collectability is assessed for customers who pay on credit based on a credit evaluation for new customers, when necessary, and transaction history with existing customers. Any cash received in advance of revenue recognition is recorded as deferred revenue.

Subscription plans range in length from thirty days to one year. Subscription plan revenues are recognized on a straight-line basis using a daily convention method over the plan term. On Demand plans are typically for a one-year term and permit the customer to download up to a fixed amount of digital content. On Demand revenues are recognized at the time the customer downloads the digital content on a per unit basis. Revenue related to unused digital content, if any, is recognized in full at the end of the plan term assuming no further Company obligation remains. Credit pack plans are generally for a one-year term and enable the customer to purchase a fixed number of credits which can then be utilized to pay for downloaded digital content. The number of credits utilized for each download depends on the digital content size and format. Credit pack revenue is recognized based on customer usage on a per credit basis as digital content is downloaded. Revenue related to unused credits, if any, is recognized in full at the end of the plan term assuming no further Company obligation remains. Most plans automatically renew at the end of the plan term unless the customer elects not to renew. The Company recognizes revenue from its three types of plans on a gross basis in accordance with the authoritative guidance on principal-agent considerations as the Company is the primary obligor in the arrangement, has control in establishing the product’s price, performs a detailed review of the digital content before accepting it to its collection to ensure it is of high quality before it may be purchased by the customers, can reject contributor’s images in its sole discretion, and has credit risk.

Customers typically pay in advance (or upon commencement of the term) via credit card, wire or check. Fees paid or invoiced in advance are deferred and recognized as described above. Customers that do not pay in advance are invoiced and are required to make payment under standard credit terms. The Company does not generally offer refunds or the right of return to customers. There are situations in which a customer may receive a refund but the determination is made on a case-by-case basis.

The Company also licenses digital content to customers through third party resellers. The Company contracts with third party resellers around the world to access markets where the Company does not have a significant presence. Third party resellers sell the Company’s products directly to end-user customers and remit a fixed amount to the Company based on the type of plan sold. The terms of the reseller program indicate that the third party reseller is the primary obligor to the end-user customer and bears the risks and rewards as principal in the transaction. In assessing whether the Company’s revenue should be reported on a gross or net basis with respect to our reseller program, the Company follows the authoritative guidance in ASC 605-45, “Principal Agent Considerations.” The Company recognizes revenue net of reseller commission in accordance with the type of plan sold, consistent with the plan descriptions above. The Company generally does not offer refunds or the right of return to resellers.

Equity-Based Compensation

The Company measures and recognizes non-cash equity-based compensation expense for all equity-based payment awards made to employees based on estimated fair values. The value portion of the award that is ultimately expected to vest is recognized as expense over the requisite service period. For awards with a change of control condition, an evaluation is made at the grant date and future periods as to the likelihood of the condition being met. Compensation expense is adjusted in future periods for subsequent changes in the expected outcome of the change of control conditions until the vesting date. Forfeitures are estimated at the time of grant and revised, if necessary, in subsequent periods if actual forfeitures differ from those estimates.

The Company uses the Black Scholes option pricing model to determine the fair value of stock options and other equity-based awards granted pursuant to the Value Appreciation Rights Plan (“VAR Plan”), 2012 Omnibus Equity Incentive Plan (the “2012 Plan”) and stock purchased pursuant to the Employee Stock Purchase Plan (“2012 ESPP”), which are discussed further in Note 11, Equity-Based Compensation.

The determination of the grant date fair value using an option-pricing model requires judgment as well as assumptions regarding a number of other complex and subjective variables. These variables include the Company’s fair value of the common ownership interest pre-IPO, the Company’s closing market price at the grant date post-IPO, the expected unit price volatility over the expected term of the awards, awards’ exercise and cancellation behaviors, risk-free interest rates, and expected dividends, which are estimated as follows:

Fair Value of Common Membership Unit. Prior to completion of the IPO, the Company’s fair value of common ownership interest was estimated internally and approved by the Board of Managers (“BOM”) because the Company was not publicly traded. The Company’s intention upon granting VAR Plan awards was for the granted award to have exercisable price per unit that was not less than the per unit fair value of the Company’s common equity on the date of grant. The valuations of the Company’s common equity unit were prepared in accordance with the American Institute of Certified Public Accountants Statement on Standards for Valuation Services 1: Valuation of a Business, Business Ownership Interest, Security, or Intangible Asset. The assumptions used in the valuation model were based on future expectations combined with the Company’s judgment. In the absence of a public trading market, the Company exercised significant judgment and considered numerous objective and subjective factors to determine the fair value of the common equity unit as of the date of each VAR Plan award grant. Some but not all of these factors included operating and financial performance, current business conditions and projections, the hiring of key personnel, the Company’s history and introduction of new functionality and services, the Company’s stage of development, the likelihood of achieving a liquidity event for the common ownership interests, any adjustment necessary to recognize a lack of marketability for our common ownership interests, the market performance of comparable publicly traded companies, and U.S. and global capital market conditions. The Company also obtained independent third party valuations on a periodic basis. After October 11, 2012, the date the Company’s common stock began trading on the NYSE, the grant date fair value for stock-based awards is based on the closing price of the Company’s common stock on the NYSE on the date of grant and fair value for all other purposes related to stock-based awards shall be the closing price of the Company’s common stock on the NYSE on the relevant date.

·		*Expected Term.* The expected term is estimated using the simplified method allowed under Securities and Exchange Commission (“SEC”) guidance.

·		*Volatility.* As the Company does not have a trading history for its common ownership interest pre-IPO or a significant range of its common stock post-IPO, the expected price volatility for the common ownership interest and common stock was estimated by taking the average historic price volatility for industry peers based on daily price observations over a period equivalent to the expected term of the VAR Plan awards and stock options granted post-IPO. Industry peers consist of several public companies similar in size, stage of life cycle and financial leverage. The Company did not rely on implied volatilities of traded options in the industry peers’ common stock because the volume of activity was relatively low. The Company intends to continue to consistently apply this process using the same or similar public companies until a sufficient amount of historical information regarding the volatility of the Company’s own common stock becomes available, or unless circumstances change such that the identified companies are no longer similar to the Company, in which case, more suitable companies whose share prices are publicly available would be utilized in the calculation.

·		*Risk-free Interest Rate.* The risk-free interest rate is based on the yields of U.S. Treasury securities with maturities similar to the expected term of each award group.

·		*Dividend Yield.* Prior to the Reorganization, the Company has historically paid cash dividends or distributions to its members. Following the Reorganization, the Company has not paid cash distributions to its stockholders and it does not intend to do so for the foreseeable future. As a result, the Company used an expected dividend yield of zero.

If any of the assumptions used in the Black-Scholes model changes significantly, the fair value for future awards may differ materially compared with the awards granted previously. The awards granted pursuant to the VAR Plan, the 2012 Plan, and the 2012 ESPP are subject to a time-based vesting requirement. The majority of stock option awards granted under the 2012 Plan vest over four years while the majority of the restricted stock units granted under the 2012 Plan vest over three years. The 2012 ESPP provides for purchase periods approximately every six months and a participant must be employed on the purchase date to participate. The VAR Plan awards had a condition that a change of control (as defined in the VAR Plan) must occur for a payment to trigger with respect to the VAR Plan awards. In connection with the Company’s Reorganization, all of the VAR Plan awards were exchanged for options to purchase shares of common stock of Shutterstock, Inc. As of December 31, 2011, no equity-based compensation expense had been recognized with respect to the VAR Plan awards because the qualifying event had not occurred. As a result of the completion of the initial public offering (“IPO”) in October 2012, the Company began recording stock-based compensation expense using the accelerated attribution method, net of forfeitures, based on the grant date fair value of the VAR Plan awards that were exchanged for options to purchase shares of common stock of Shutterstock, Inc. as part of the Company’s Reorganization.

For any equity based awards that qualified for liability classification pre-IPO, the Company has elected to use the intrinsic value method to value the common membership interest in accordance with authoritative guidance on stock compensation. See Note 11, Equity Based Compensation, for further information.

Income Taxes

The Company is a Delaware corporation. Significant management judgment is required in projecting ordinary income/(loss) in order to determine the Company’s estimated effective tax rate.

The Company accounts for unrecognized tax benefits using a more-likely-than-not threshold for financial statement recognition and measurement of tax positions taken or expected to be taken in a tax return. The Company establishes reserves for tax-related uncertainties based on estimates of whether, and the extent to which, additional taxes will be due. The Company records an income tax liability, if any, for the difference between the benefit recognized and measured and the tax position taken or expected to be taken on the Company’s tax returns. To the extent that the assessment of such tax positions changes, the change in estimate is recorded in the period in which the determination is made. The reserves are adjusted in light of changing facts and circumstances, such as the outcome of a tax audit or lapses in statutes of limitations. Any reserve for uncertain tax provisions, if any, and related penalties and interest, if any, are included in the income tax provision.

The Company assessed the realizability of deferred tax assets and determined that based on the available evidence, including a history of taxable income and estimates of future taxable income, it is more likely than not that the deferred tax assets will be realized. The Company will continue to evaluate its ability to realize deferred tax assets on a quarterly basis. Significant management judgment is required in determining the provision for income taxes and deferred tax assets and liabilities. In the event that actual results differ from these estimates, the Company will adjust these estimates in future periods which may result in a change in the effective tax rate in a future year.

The Company is subject to certain compliance requirements for non income taxes, value added and sales based taxes. Where appropriate, the Company has made accruals for these taxes, which are reflected in the Company’s consolidated financial statements.

Net Income Per Share

Basic net income per share is computed by dividing the net income attributable to common stockholders/members by the weighted average number of common shares outstanding during the period. The Company applies the two class method for calculating and presenting income per share. Under the two-class method, net income is allocated between shares of common stock and other participating securities based on their contractual participating rights to share in the earnings as if all of the earnings for the period have been distributed. Participating securities are defined as securities that participate in dividends with common stock according to a pre-determined formula or a contractual obligation to share in the income of the entity. Any potential issuance of common shares, including those that are contingent and do not participate in dividends, are excluded from weighted average number of common shares outstanding. Undistributed net income (loss) for a given period is apportioned to participating members based on the weighted average number of each class of securities outstanding during the applicable period as a percentage of the combined weighted average number of these securities outstanding during the period. Income available to common shareholders/members is computed by deducting dividends paid to preferred members, accretion to redemption value on preferred members shares, less income allocated to participating securities including unvested shares for the restricted award holder since these unvested shares have participating rights. See Note 11, Equity Based Compensation, for further discussion.

Diluted net income per share is computed by dividing the net income available to common shareholders/members adjusted for any changes in income that would result from the assumed conversion of the potential common shares by the weighted average common shares outstanding and all potential common shares, if they are dilutive. Diluted net income available to common stockholders/members for the three months ended March 31, 2014 and 2013 includes the effect of 2,088,181 and 1,837,251 shares, respectively, while 179,883 and 53,750 shares, respectively, were excluded since they were anti-dilutive.

A reconciliation of assumed exercised shares used in calculating basic and diluted income (loss) share available to common stockholders/members follows:

	Three Ended March 31,
	2014	2013
Basic	35,027,480	33,398,797
Stock options and employee stock purchase plan shares	705,980	442,258
Unvested restricted stock awards	105,393	10,788
Diluted	35,838,853	33,851,843

Recently Issued Accounting Standard Updates

None of the recently issued accounting standard updates is expected to have a material impact.

Short-Term Investments and Fair Value Measurements

3 Months Ended

Mar. 31, 2014

Short-Term Investments and Fair Value Measurements

Short-Term Investments and Fair Value Measurements

(2) Short Term Investments and Fair Value Measurements

Short term investments are summarized as follows:

	As of March 31, 2014
	Amortized Cost		Unrealized Gains		Unrealized Losses			Estimated Fair Market Value
Commercial Paper	$	54,997	$	—	$	(3	)	$	54,994
Total	$	54,997	$	—	$	(3	)	$	54,994

	As of December 31, 2013
	Amortized Cost		Unrealized Gains		Unrealized Losses			Estimated Fair Market Value
Commercial Paper	$	54,431	$	—	$	(2	)	$	54,429
Total	$	54,431	$	—	$	(2	)	$	54,429

The following table represents the Company’s fair value hierarchy for its financial assets:

	As of March 31, 2014
	Aggregate Fair Value		Level 1		Level 2		Level 3
Commercial Paper	$	54,994	$	—	$	54,994	$	—
Total	$	54,994	$	—	$	54,994	$	—

	As of December 31, 2013
	Aggregate Fair Value		Level 1		Level 2		Level 3
Commercial Paper	$	54,429	$	—	$	54,429	$	—
Total	$	54,429	$	—	$	54,429	$	—

The Company’s investments classified as level 2 are priced using quoted market prices for identical assets which are subject to infrequent transactions. Cash and cash equivalents, accounts receivable, restricted cash, accounts payable, accrued expenses and deferred revenue carrying amounts approximate fair value because of the short maturity of these instruments. The Company’s non-financial assets, which include property and equipment, intangible assets and goodwill, are not required to be measured at fair value on a recurring basis. However, if certain triggering events occur, or if an annual impairment test is required and the Company is required to evaluate the non-financial asset for impairment, a resulting asset impairment would require that the non-financial asset be recorded at the fair value.

- Definition

The entire disclosure for the fair value of financial instruments (as defined), including financial assets and financial liabilities (collectively, as defined), and the measurements of those instruments as well as disclosures related to the fair value of non-financial assets and liabilities. Such disclosures about the financial instruments, assets, and liabilities would include: (1) the fair value of the required items together with their carrying amounts (as appropriate); (2) for items for which it is not practicable to estimate fair value, disclosure would include: (a) information pertinent to estimating fair value (including, carrying amount, effective interest rate, and maturity, and (b) the reasons why it is not practicable to estimate fair value; (3) significant concentrations of credit risk including: (a) information about the activity, region, or economic characteristics identifying a concentration, (b) the maximum amount of loss the entity is exposed to based on the gross fair value of the related item, (c) policy for requiring collateral or other security and information as to accessing such collateral or security, and (d) the nature and brief description of such collateral or security; (4) quantitative information about market risks and how such risks are managed; (5) for items measured on both a recurring and nonrecurring basis information regarding the inputs used to develop the fair value measurement; and (6) for items presented in the financial statement for which fair value measurement is elected: (a) information necessary to understand the reasons for the election, (b) discussion of the effect of fair value changes on earnings, (c) a description of [similar groups] items for which the election is made and the relation thereof to the balance sheet, the aggregate carrying value of items included in the balance sheet that are not eligible for the election; (7) all other required (as defined) and desired information.

+ References + Details

Information About Revenue By Geographic Areas

3 Months Ended

Mar. 31, 2014

Information About Revenue By Geographic Areas

Information About Revenue By Geographic Areas

(3) Information About Revenue By Geographic Areas

The following represents our geographic revenue based on customer location:

	Three Months Ended March 31,
	2014		2013
North America	$	26,504	$	18,363
Europe	26,649		19,040
Rest of the world	19,624		13,714
Total revenue	$	72,777	$	51,117

Included in North America is the United States which comprises 32% of total revenue for three months ended March 31, 2014 and 2013. No other country accounts for more than 10% of the Company’s revenue in any period. All long-lived assets are located in North America.

- Definition

The entire disclosure for reporting segments including data and tables. Reportable segments include those that meet any of the following quantitative thresholds a) it's reported revenue, including sales to external customers and intersegment sales or transfers is 10 percent or more of the combined revenue, internal and external, of all operating segments b) the absolute amount of its reported profit or loss is 10 percent or more of the greater, in absolute amount of 1) the combined reported profit of all operating segments that did not report a loss or 2) the combined reported loss of all operating segments that did report a loss c) its assets are 10 percent or more of the combined assets of all operating segments.

+ References

Reference 1: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 280
-SubTopic 10
-Section 50
-Paragraph 34
-URI http://asc.fasb.org/extlink&oid=6534315&loc=d3e8981-108599

Reference 2: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 280
-SubTopic 10
-Section 50
-Paragraph 41
-URI http://asc.fasb.org/extlink&oid=6534315&loc=d3e9038-108599

Reference 3: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 280
-SubTopic 10
-Section 50
-Paragraph 33
-URI http://asc.fasb.org/extlink&oid=6534315&loc=d3e8971-108599

Reference 4: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 280
-SubTopic 10
-Section 50
-Paragraph 12
-URI http://asc.fasb.org/extlink&oid=6534315&loc=d3e8595-108599

Reference 5: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
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-Paragraph 1
-URI http://asc.fasb.org/extlink&oid=6534315&loc=d3e8380-108599

Reference 6: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
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-SubTopic 10
-Section 50
-Paragraph 32
-URI http://asc.fasb.org/extlink&oid=6534315&loc=d3e8933-108599

Reference 7: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 280
-SubTopic 10
-Section 50
-Paragraph 26
-URI http://asc.fasb.org/extlink&oid=6534315&loc=d3e8844-108599

Reference 8: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 280
-SubTopic 10
-Section 50
-Paragraph 35
-URI http://asc.fasb.org/extlink&oid=6534315&loc=d3e8984-108599

Reference 9: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
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-Section 50
-Paragraph 40
-URI http://asc.fasb.org/extlink&oid=6534315&loc=d3e9031-108599

Reference 10: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 280
-SubTopic 10
-Section 50
-Paragraph 42
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Reference 11: http://www.xbrl.org/2003/role/presentationRef
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-Name Accounting Standards Codification
-Topic 280
-SubTopic 10
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Reference 12: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 280
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Reference 13: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 280
-SubTopic 10
-Section 50
-Paragraph 31
-URI http://asc.fasb.org/extlink&oid=6534315&loc=d3e8924-108599

Reference 14: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 280
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-URI http://asc.fasb.org/extlink&oid=6534315&loc=d3e8906-108599

+ Details

Goodwill and Intangible Assets

3 Months Ended

Mar. 31, 2014

Goodwill and Intangible Assets

Goodwill and Intangible Assets

(4) Goodwill and Intangible Assets

The Company’s goodwill balance is attributable to its Bigstockphoto, Inc. (“Bigstock”) and WebDAM reporting units and is tested for impairment at least annually on October 1 or upon a triggering event. The following table summarizes the changes in the Company’s goodwill balance through March 31, 2014:

	Bigstock		WebDAM		Consolidated
Balance as of December 31, 2013	$	1,423	$	—	$	1,423
Goodwill related to acquisitions	—		8,763		8,763
Balance as of March 31, 2014	$	1,423	$	8,763	$	10,186

Intangible assets consist of the following as of March 31, 2014 and December 31, 2013:

	As of March 31, 2014
	Gross Carrying Amount		Accumulated Amortization			Net Carrying Amount		Weighted Average Life (Years)
	(unaudited)
Amortizing intangible assets:
Customer relationship	$	3,400	$	(620	)	2,780		6
Trade name	900		(131		)	769		9
Developed technology	600		(4		)	596		7
Contributor content	450		(135		)	315		15
Patents	193		(23		)	170		17
Domain name	97		(10		)	87		14
Total	$	5,640	$	(923	)	$	4,717

	As of December 31, 2013
	Gross Carrying Amount		Accumulated Amortization			Net Carrying Amount		Weighted Average Life (Years)
Amortizing intangible assets:
Customer relationship	$	600	$	(600	)	$	—	4
Trade name	400		(119		)	281		14
Contributor content	450		(127		)	323		15
Patents	193		(21		)	172		17
Domain name	86		(9		)	77		15
Total	$	1,729	$	(876	)	$	853

Amortization expense was $47 and $56 for the three months ended March 31, 2014 and 2013, respectively. The Company also determined that there was no indication of impairment of the intangible assets for any period presented. Estimated amortization expense for the next five years is: $499 for the remaining nine months of 2014, $666 in 2015, $666 in 2016, $666 in 2017, $666 in 2018 and $1,554 thereafter.

- Definition

The entire disclosure for the aggregate amount of goodwill and a description of intangible assets, which may include (a) for amortizable intangible assets (also referred to as finite-lived intangible assets), the carrying amount, the amount of any significant residual value, and the weighted-average amortization period, (b) for intangible assets not subject to amortization (also referred to as indefinite-lived intangible assets), the carrying amount, and (c) the amount of research and development assets acquired and written off in the period, including the line item in the income statement in which the amounts written off are aggregated, if not readily apparent from the income statement. Also discloses (a) for amortizable intangibles assets in total and by major class, the gross carrying amount and accumulated amortization, the total amortization expense for the period, and the estimated aggregate amortization expense for each of the five succeeding fiscal years, (b) for intangible assets not subject to amortization the carrying amount in total and by major class, and (c) for goodwill, in total and for each reportable segment, the changes in the carrying amount of goodwill during the period (including the aggregate amount of goodwill acquired, the aggregate amount of impairment losses recognized, and the amount of goodwill included in the gain (loss) on disposal of a reporting unit). If any part of goodwill has not been allocated to a reportable segment, discloses the unallocated amount and the reasons for not allocating. For each impairment loss recognized related to an intangible asset (excluding goodwill), discloses: (a) a description of the impaired intangible asset and the facts and circumstances leading to the impairment, (b) the amount of the impairment loss and the method for determining fair value, (c) the caption in the income statement or the statement of activities in which the impairment loss is aggregated, and (d) the segment in which the impaired intangible asset is reported. For each goodwill impairment loss recognized, discloses: (a) a description of the facts and circumstances leading to the impairment, (b) the amount of the impairment loss and the method of determining the fair value of the associated reporting unit, and (c) if a recognized impairment loss is an estimate not finalized and the reasons why the estimate is not final. May also disclose the nature and amount of any significant adjustments made to a previous estimate of an impairment loss.

+ References + Details

Property and Equipment

3 Months Ended

Mar. 31, 2014

Property and Equipment

Property and Equipment

(5) Property and Equipment

Property and equipment is summarized as follows:

	March 31, 2014			December 31, 2013
Computer equipment and software	$	17,812		$	14,108
Furniture and fixtures	1,965			2,588
Leasehold improvements	13,886			10,669
Property and equipment	33,663			27,365
Less accumulated depreciation	(7,865		)	(7,109		)
Property and equipment, net	$	25,798		$	20,256

Depreciation expense amounted to $1,504 and $723 for the three months ended March 31, 2014 and 2013, respectively. Depreciation expense is included in cost of revenue and general and administrative expense based on the nature of the asset. In connection with its move to its new headquarters, the Company recorded a loss on disposal of certain fixed assets in the amount of $367 for the three months ended March 31, 2014. There was no loss on disposal for the three months ended March 31, 2013.

Accrued Expenses

3 Months Ended

Mar. 31, 2014

Accrued Expenses

Accrued Expenses

(6) Accrued Expenses

Accrued expenses consisted of the following:

	March 31,		December 31,
	2014		2013
Compensation	$	2,934	$	6,379
Royalty tax withholdings	5,433		5,305
Construction costs	945		4,501
Non income taxes	4,204		3,994
Professional fees	487		605
Marketing	729		475
Other expenses	4,267		2,379
Total accrued expenses	$	18,999	$	23,638

Income Taxes	3 Months Ended
Income Taxes	Mar. 31, 2014
Income Taxes
Income Taxes	(7) Income Taxes The Company’s effective tax rates for the three month periods ended March 31, 2014 and 2013 were 46.1% and 44.2%, respectively. The Company incurred a discrete tax expense primarily relating to a change in state tax rates and its state apportionment percentage during the three months ended March 31, 2014 and 2013 which increased the effective tax rate by 6.2% and 4.4%, respectively. Excluding this discrete expense, the effective rate would have been 39.9% and 39.8% during the three months ended March 31, 2014 and 2013, respectively. The Company has computed the provision for income taxes based on the estimated annual effective tax rates and applying discrete items, if any, in the applicable period. The effective tax rate differs from the statutory tax rate due primarily to non-deductible expense related to non-cash equity-based compensation, and meals and entertainment. During the three months ended March 31, 2014 and 2013, the Company did not record an unrecognized tax benefit for uncertain tax positions taken in prior years. As of March 31, 2014 and December 31, 2013, the Company’s gross unrecognized tax benefit for uncertain tax positions taken in prior years was $1,500 for both periods. To the extent these unrecognized tax benefits are ultimately recognized, the Company’s effective tax rate may be impacted in future periods. The Company recognizes interest expense and tax penalties related to unrecognized tax benefits in income tax expense in the consolidated statements of operations. The Company accrued interest and penalties in the amount of $22 and $9 related to unrecognized tax benefits for the three months ended March 31, 2014 and 2013, respectively. It is the Company’s practice and intention to indefinitely reinvest the earnings of its foreign subsidiaries in those operations. As of March 31, 2014, the excess of the amount for financial reporting over the tax basis of investment in these foreign subsidiaries is insignificant and the unrecognized deferred tax liability is not material.

Term Loan Facility	3 Months Ended
Term Loan Facility	Mar. 31, 2014
Term Loan Facility
Term Loan Facility	(8) Term Loan Facility On September 21, 2012, the Company entered into a Loan and Security Agreement with Silicon Valley Bank providing for a $12,000 term loan facility, which the Company refers to as the term loan facility. On December 24, 2012, the Company paid down $6,000 of the term loan facility. On March 25, 2013, the Company paid off the remaining $6,000 of the loan facility. The Company capitalizes costs directly associated with acquiring third party financing. During the three months ended March 31, 2013, the Company accelerated and recognized $125 as a result of paying off the term loan facility. The Company was in compliance with the financial covenants and other covenants applicable to it under the term loan facility during the three months ended March 31, 2013 prior to paying off the term loan facility on March 25, 2013.

Commitments and Contingencies	3 Months Ended
Commitments and Contingencies	Mar. 31, 2014
Commitments and Contingencies.
Commitments and Contingencies	(9) Commitments and Contingencies The Company leases facilities under agreements accounted for as operating leases. Rental expense, inclusive of operating leases, for the three months ended March 31, 2014 and 2013 was $1,192 and $498, respectively. Some leases have defined escalating rent provisions, which are expensed over the term of the related lease on a straight-line basis commencing with the date of possession. Any rent allowance or abatement is netted in this calculation. All leases require payment of real estate tax and operating expense increases. On March 21, 2013, the Company entered into an operating lease agreement to lease its new office facility in New York, New York. The Company took possession of the premises during the third quarter of 2013, and as a result, the lease commenced. The Company also entered into a letter of credit in the amount of $1,829 as a security deposit for the leased facilities. The letter of credit was collateralized by $1,829 of cash as of March 31, 2014 and December 31, 2013, and as such, is considered to be restricted cash and is included in other assets on the consolidated balance sheet. The lease term is eleven years from the commencement date and aggregate future minimum lease payments are approximately $38,200. *Capital Expenditures* As of March 31, 2014, the Company had no significant purchase commitments related to data server equipment. *Unconditional Purchase Obligations* As of March 31, 2014 and December 31, 2013, the Company had unconditional purchase obligations in the amount of $10,522 and $5,864, which consisted primarily of contracts related to infrastructure services and contractual commitments for marketing services. As of March 31, 2014, the Company’s unconditional purchase obligations for the remainder of 2014 and for the years ending December 31, 2015, 2016 and 2017 are $4,668, $4,447, $1,343 and $64, respectively. As of December 31, 2013, the Company’s unconditional purchase obligations for the years ending December 31, 2014, 2015 and 2016 are $3,454, $1,845 and $565, respectively. *Legal Matters* From time to time, the Company may become party to litigation in the ordinary course of business, including direct claims brought by or against the Company with respect to intellectual property, contracts, employment and other matters, as well as claims brought against the Company’s customers for whom the Company has a contractual indemnification obligation. The Company assesses the likelihood of any adverse judgments or outcomes with respect to these matters and determines loss contingency assessments on a gross basis after assessing the probability of incurrence of a loss and whether a loss is reasonably estimable. In addition, the Company considers other relevant factors that could impact its ability to reasonably estimate a loss. A determination of the amount of reserves required, if any, for these contingencies is made after analyzing each matter. The Company reviews reserves, if any, at least quarterly and may change the amount in the future due to new developments or changes in strategy in handling these matters. Although the results of litigation and threats of litigation, investigations and claims cannot be predicted with certainty, the Company currently believes that the final outcome of these matters will not have a material adverse effect on its business, consolidated financial position, results of operations, or cash flows. Regardless of the outcome, litigation can have an adverse impact on the Company because of defense and settlement costs, diversion of management resources and other factors. The Company currently has no material active litigation matters and, as such, no material reserves related to litigation. *Indemnifications* In the ordinary course of business, the Company enters into contractual arrangements under which it agrees to provide indemnification of varying scope and terms to customers with respect to certain matters, including, but not limited to, losses arising out of the breach of Company’s intellectual property warranties for damages to the customer directly attributable to the Company’s breach. The Company is not responsible for any damages, costs, or losses to the extent such damages, costs or losses arise as a result of the modifications made by the customer, or the context in which an image is used. The standard maximum aggregate obligation and liability to any one customer for all claims is limited to $10. The Company offers certain of its customers greater levels of indemnification, including unlimited indemnification. As of March 31, 2014 and as of December 31, 2013, the Company has recorded no liabilities related to indemnification obligations in accordance with the authoritative guidance for loss contingencies. Additionally, the Company believes that it has the appropriate insurance coverage in place to adequately cover such indemnification obligations, if necessary. *Employment Agreements* The Company has entered into employment and change of control arrangements with certain executive officers and with certain employees. The agreements specify various employment-related matters, including annual compensation, performance incentive bonuses, and severance benefits in the event of termination with or without cause.

Employee Benefit Plans	3 Months Ended
Employee Benefit Plans	Mar. 31, 2014
Employee Benefit Plans
Employee Benefit Plans	(10) Employee Benefit Plans The Company has a 401(k) defined contribution plan (“401(k) Plan”) and provides for annual discretionary employer matching contributions not to exceed 3% of employees’ compensation per year. Matching contributions also are fully vested and non-forfeitable at all times. The Company recorded employer matching contributions of $209 and $139 for the three months ended March 31, 2014 and 2013, respectively.

Equity-Based Compensation

3 Months Ended

Mar. 31, 2014

Equity-Based Compensation

Equity-Based Compensation

(11) Equity-Based Compensation

Stock Option Activity

The following is a summary of the Company’s stock option awards activity for the three months ended March 31, 2014:

	Plan Options		Weighted Average Exercise Price
Options outstanding at December 31, 2013	1,861,761		$	26.09
Options granted	42,750		79.52
Options exercised	(125,079	)	17.49
Options cancelled or forfeited	(66,369	)	37.70
Options outstanding at March 31, 2014	1,713,063		$	27.83
Vested and exercisable at March 31, 2014	558,408		$	16.83

The intrinsic value of the total stock options outstanding at March 31, 2014 and at December 31, 2013 was approximately $76,700 and $107,100, respectively. The intrinsic value of the total stock options vested and exercisable at March 31, 2014 and at December 31, 2013 was approximately $31,100 and $38,900, respectively.

The following weighted average assumptions were used in the fair value calculation for the three months ended March 31, 2014 and 2013:

	Three Months Ended March 31, 2014		Three Months Ended March 31, 2013
Expected term (in years)	6.3		6.3
Volatility	49	%	49	%
Risk-free interest rate	2.1% - 2.4	%	1.4	%
Dividend yield	0	%	0	%

The Company recognized non-cash stock-based compensation expense of $1,686 and $613, net of estimated forfeitures, in connection with the vesting of stock options during the three months ended March 31, 2014 and 2013, respectively. As of March 31, 2014, the total unrecognized compensation charge related to the 2012 Plan non-vested options was approximately $15,600, which is expected to be recognized through fiscal year 2018.

Restricted Stock Units and Restricted Stock Awards

The following is a summary of the Company’s restricted stock units (“RSUs”) activity for the three months ended March 31, 2014:

	Plan Options	Weighted Average Fair Value
Non-vested balance at December 31, 2013	10,000	$	47.17
Units granted	338,025	95.30
Units vested	—	—
Units cancelled or forfeited	—	—
Non-vested balance at March 31, 2014	348,025	$	93.92

The Company recognized non-cash stock-based compensation expense of $901 and $0, net of estimated forfeitures, in connection with the vesting of RSUs during the three months ended March 31, 2014 and 2013, respectively.

In connection with the Reorganization, membership interest in the LLC was exchanged for restricted and unrestricted shares of the Company’s stock. The Amended and Restated Restricted Stock Agreement entered into by the Company with an executive governs the terms of the restricted stock inclusive of service vesting terms. As the restricted shares vest, the award’s restrictions will be removed. The Company recognized non-cash equity-based compensation expense of $259 and $259, which is included in general and administrative expense, during the three months ended March 31, 2014 and 2013, respectively, in connection with the normal vesting of restricted stock.

In connections with the WebDAM acquisition, in order to retain the services of certain former WebDAM employees, the Company granted non-vested RSUs that will vest over two years from the date of acquisition. As these equity awards are subject to post-acquisition employment, the Company is accounting for them as compensation expense. A portion of these equity awards are accounted for as liability-classified awards, because the obligations are based on fixed monetary amounts that are known at inception of the obligation, to be settled with a variable number of shares of the Company’s common stock when the equity awards vests. The Company recognized non-cash stock-based compensation expense of $77, in connection with the vesting of these obligations during the three months ended March 31, 2014. There was no non-cash stock-based compensation expense related to these obligations during the three months ended March 31, 2013.

As of March 31, 2014, the total unrecognized non-cash stock-based compensation charge related to the 2012 Plan non-vested restricted stock and RSUs is approximately $35,600, which is expected to be recognized through fiscal year 2017.

Employee Stock Purchase Plan

On October 10, 2012, the Company’s 2012 ESPP became effective. The Company has recognized a non-cash stock-based compensation expense of $214 and $144, net of estimated forfeitures, in connection with the 2012 ESPP for the three months ended March 31, 2014 and 2013. As of March 31, 2014, 94,917 shares have been issued under the 2012 ESPP.

The following table summarizes non-cash equity-based compensation expense included in the Company’s statement of operations for the three months ended March 31, 2014 and 2013:

	Three Months Ended March 31,
	2014		2013
Cost of revenue	$	249	$	55
Sales and marketing	902		203
Product development	949		255
General and administrative	1,037		503
Total	$	3,137	$	1,016

Summary of Operations and Significant Accounting Policies (Policies)

3 Months Ended

Mar. 31, 2014

Summary of Operations and Significant Accounting Policies

Principles of Consolidation

Principles of Consolidation

Reorganization

Reorganization

Unaudited Interim Financial Statements

Unaudited Interim Financial Statements

Acquisition of Virtual Moment, LLC

Acquisition of Virtual Moment, LLC

Intangible assets:
Trade name	$	500
Customer relationships	2,800
Developed technology	600
Goodwill	8,763
Total assets acquired	836
Total liabilities assumed	(1,083		)
Total	$	12,416

Pro forma results of operations have not been presented because the effect of this business combination was not material to the Company’s consolidated results of operations.

Use of Estimates

Use of Estimates

Restricted Cash

Restricted Cash

Revenue Recognition

Revenue Recognition

Equity-Based Compensation

Equity-Based Compensation

·		*Expected Term.* The expected term is estimated using the simplified method allowed under Securities and Exchange Commission (“SEC”) guidance.

·		*Volatility.* As the Company does not have a trading history for its common ownership interest pre-IPO or a significant range of its common stock post-IPO, the expected price volatility for the common ownership interest and common stock was estimated by taking the average historic price volatility for industry peers based on daily price observations over a period equivalent to the expected term of the VAR Plan awards and stock options granted post-IPO. Industry peers consist of several public companies similar in size, stage of life cycle and financial leverage. The Company did not rely on implied volatilities of traded options in the industry peers’ common stock because the volume of activity was relatively low. The Company intends to continue to consistently apply this process using the same or similar public companies until a sufficient amount of historical information regarding the volatility of the Company’s own common stock becomes available, or unless circumstances change such that the identified companies are no longer similar to the Company, in which case, more suitable companies whose share prices are publicly available would be utilized in the calculation.

·		*Risk-free Interest Rate.* The risk-free interest rate is based on the yields of U.S. Treasury securities with maturities similar to the expected term of each award group.

·		*Dividend Yield.* Prior to the Reorganization, the Company has historically paid cash dividends or distributions to its members. Following the Reorganization, the Company has not paid cash distributions to its stockholders and it does not intend to do so for the foreseeable future. As a result, the Company used an expected dividend yield of zero.

Income Taxes

Income Taxes

The Company is a Delaware corporation. Significant management judgment is required in projecting ordinary income/(loss) in order to determine the Company’s estimated effective tax rate.

Net Income Per Share

Net Income Per Share

A reconciliation of assumed exercised shares used in calculating basic and diluted income (loss) share available to common stockholders/members follows:

	Three Ended March 31,
	2014	2013
Basic	35,027,480	33,398,797
Stock options and employee stock purchase plan shares	705,980	442,258
Unvested restricted stock awards	105,393	10,788
Diluted	35,838,853	33,851,843

Recently Issued Accounting Standard Updates

Recently Issued Accounting Standard Updates

None of the recently issued accounting standard updates is expected to have a material impact.

Summary of Operations and Significant Accounting Policies (Tables)

3 Months Ended

Mar. 31, 2014

Summary of Operations and Significant Accounting Policies

Schedule of preliminary aggregate purchase price allocated to assets acquired and liabilities assumed

Intangible assets:
Trade name	$	500
Customer relationships	2,800
Developed technology	600
Goodwill	8,763
Total assets acquired	836
Total liabilities assumed	(1,083		)
Total	$	12,416

Schedule of reconciliation of assumed exercised shares used in calculating basic and diluted net income (loss) share available to common stockholders/members

	Three Ended March 31,
	2014	2013
Basic	35,027,480	33,398,797
Stock options and employee stock purchase plan shares	705,980	442,258
Unvested restricted stock awards	105,393	10,788
Diluted	35,838,853	33,851,843

Short-Term Investments and Fair Value Measurements (Tables)

3 Months Ended

Mar. 31, 2014

Short-Term Investments and Fair Value Measurements

Schedule of short-term investments

	As of March 31, 2014
	Amortized Cost		Unrealized Gains		Unrealized Losses			Estimated Fair Market Value
Commercial Paper	$	54,997	$	—	$	(3	)	$	54,994
Total	$	54,997	$	—	$	(3	)	$	54,994

	As of December 31, 2013
	Amortized Cost		Unrealized Gains		Unrealized Losses			Estimated Fair Market Value
Commercial Paper	$	54,431	$	—	$	(2	)	$	54,429
Total	$	54,431	$	—	$	(2	)	$	54,429

Schedule of fair value hierarchy for financial assets

	As of March 31, 2014
	Aggregate Fair Value		Level 1		Level 2		Level 3
Commercial Paper	$	54,994	$	—	$	54,994	$	—
Total	$	54,994	$	—	$	54,994	$	—

	As of December 31, 2013
	Aggregate Fair Value		Level 1		Level 2		Level 3
Commercial Paper	$	54,429	$	—	$	54,429	$	—
Total	$	54,429	$	—	$	54,429	$	—

- Definition

Tabular disclosure of available-for-sale securities which includes, but is not limited to, changes in the cost basis and fair value, fair value and gross unrealized gain (loss), fair values by type of security, contractual maturity and classification, amortized cost basis, contracts to acquire securities to be accounted for as available-for-sale, debt maturities, transfers to trading, change in net unrealized holding gain (loss) net of tax, continuous unrealized loss position fair value, aggregate losses qualitative disclosures, other than temporary impairment (OTTI) losses or other disclosures related to available for sale securities.

+ References + Details

Information About Revenue By Geographic Areas (Tables)

3 Months Ended

Mar. 31, 2014

Information About Revenue By Geographic Areas

Schedule of revenue based on customer location

	Three Months Ended March 31,
	2014		2013
North America	$	26,504	$	18,363
Europe	26,649		19,040
Rest of the world	19,624		13,714
Total revenue	$	72,777	$	51,117

Goodwill and Intangible Assets (Tables)

3 Months Ended

Mar. 31, 2014

Goodwill and Intangible Assets

Schedule of changes in goodwill

	Bigstock		WebDAM		Consolidated
Balance as of December 31, 2013	$	1,423	$	—	$	1,423
Goodwill related to acquisitions	—		8,763		8,763
Balance as of March 31, 2014	$	1,423	$	8,763	$	10,186

Schedule of intangible assets

	As of March 31, 2014
	Gross Carrying Amount		Accumulated Amortization			Net Carrying Amount		Weighted Average Life (Years)
	(unaudited)
Amortizing intangible assets:
Customer relationship	$	3,400	$	(620	)	2,780		6
Trade name	900		(131		)	769		9
Developed technology	600		(4		)	596		7
Contributor content	450		(135		)	315		15
Patents	193		(23		)	170		17
Domain name	97		(10		)	87		14
Total	$	5,640	$	(923	)	$	4,717

	As of December 31, 2013
	Gross Carrying Amount		Accumulated Amortization			Net Carrying Amount		Weighted Average Life (Years)
Amortizing intangible assets:
Customer relationship	$	600	$	(600	)	$	—	4
Trade name	400		(119		)	281		14
Contributor content	450		(127		)	323		15
Patents	193		(21		)	172		17
Domain name	86		(9		)	77		15
Total	$	1,729	$	(876	)	$	853

Property and Equipment (Tables)

3 Months Ended

Mar. 31, 2014

Property and Equipment

Summary of property and equipment

	March 31, 2014			December 31, 2013
Computer equipment and software	$	17,812		$	14,108
Furniture and fixtures	1,965			2,588
Leasehold improvements	13,886			10,669
Property and equipment	33,663			27,365
Less accumulated depreciation	(7,865		)	(7,109		)
Property and equipment, net	$	25,798		$	20,256

Accrued Expenses (Tables)

3 Months Ended

Mar. 31, 2014

Accrued Expenses

Schedule of accrued expenses

	March 31,		December 31,
	2014		2013
Compensation	$	2,934	$	6,379
Royalty tax withholdings	5,433		5,305
Construction costs	945		4,501
Non income taxes	4,204		3,994
Professional fees	487		605
Marketing	729		475
Other expenses	4,267		2,379
Total accrued expenses	$	18,999	$	23,638

Equity-Based Compensation (Tables)

3 Months Ended

Mar. 31, 2014

Equity-Based Compensation

Schedule of stock options awards activity

	Plan Options		Weighted Average Exercise Price
Options outstanding at December 31, 2013	1,861,761		$	26.09
Options granted	42,750		79.52
Options exercised	(125,079	)	17.49
Options cancelled or forfeited	(66,369	)	37.70
Options outstanding at March 31, 2014	1,713,063		$	27.83
Vested and exercisable at March 31, 2014	558,408		$	16.83

Schedule of weighted average assumptions used in the fair value calculation

	Three Months Ended March 31, 2014		Three Months Ended March 31, 2013
Expected term (in years)	6.3		6.3
Volatility	49	%	49	%
Risk-free interest rate	2.1% - 2.4	%	1.4	%
Dividend yield	0	%	0	%

Schedule of restricted stock units ("RSUs") activity

	Plan Options	Weighted Average Fair Value
Non-vested balance at December 31, 2013	10,000	$	47.17
Units granted	338,025	95.30
Units vested	—	—
Units cancelled or forfeited	—	—
Non-vested balance at March 31, 2014	348,025	$	93.92

Summary of non-cash equity-based compensation expense included in the statement of operations

	Three Months Ended March 31,
	2014		2013
Cost of revenue	$	249	$	55
Sales and marketing	902		203
Product development	949		255
General and administrative	1,037		503
Total	$	3,137	$	1,016

Summary of Operations and Significant Accounting Policies (Details) - USD ($) $ in Thousands			3 Months Ended
	Mar. 14, 2014	Oct. 05, 2012	Mar. 31, 2014	Dec. 31, 2013
Reorganization
Shares of common stock exchanged with preferred and common membership interests in connection with Reorganization		28,338,281
Acquisition of Virtual Moment, LLC
Initial cash payment			$ 10,056
Allocation of preliminary aggregate purchase price to assets acquired and liabilities assumed
Goodwill			10,186	$ 1,423
Virtual Moment, LLC
Acquisition of Virtual Moment, LLC
Initial cash payment	$ 10,056
Contingent consideration	2,360
Allocation of preliminary aggregate purchase price to assets acquired and liabilities assumed
Goodwill	8,763
Total assets acquired	836
Total liabilities assumed	(1,083)
Total	$ 12,416
Weighted average life of identifiable intangible assets	7 years
Professional fees			$ 300
Virtual Moment, LLC \| Trade name
Allocation of preliminary aggregate purchase price to assets acquired and liabilities assumed
Intangible assets:	$ 500
Virtual Moment, LLC \| Customer relationships
Allocation of preliminary aggregate purchase price to assets acquired and liabilities assumed
Intangible assets:	2,800
Virtual Moment, LLC \| Developed technology
Allocation of preliminary aggregate purchase price to assets acquired and liabilities assumed
Intangible assets:	$ 600

Summary of Operations and Significant Accounting Policies (Details 2) - USD ($) $ in Thousands	Mar. 31, 2014	Dec. 31, 2013
Prepaid expenses and other current assets
Restricted Cash
Restricted cash related to security deposits for leased office locations that expires in 2014	$ 243	$ 243
Other assets
Restricted Cash
Restricted cash related to security deposits for leased office locations that expires in 2015 and 2024	$ 2,017	$ 2,017

Summary of Operations and Significant Accounting Policies (Details 3) $ in Thousands	3 Months Ended
	Mar. 31, 2014 USD ($) item	Dec. 31, 2013 USD ($)
Revenue recognition
Number of subscription or usage based plans \| item	3
Chargeback and sales refund allowances \| $	$ 470	$ 425
Subscription plans \| Minimum
Revenue recognition
Plan term	30 days
Subscription plans \| Maximum
Revenue recognition
Plan term	1 year
On Demand plans
Revenue recognition
Plan term	1 year
Credit-pack plans
Revenue recognition
Plan term	1 year

Summary of Operations and Significant Accounting Policies (Details 4) - shares	3 Months Ended
	Mar. 31, 2014	Mar. 31, 2013
Net Income Per Share
Number of shares to purchase, the effect of which is included in diluted net income available to common stockholders/members	2,088,181	1,837,251
Anti-dilutive shares excluded from diluted net income available to common stockholders/members	179,883	53,750
Reconciliation of assumed exercised shares used in calculating basic and diluted net income (loss) share available to common shareholders/members
Basic (in shares)	35,027,480	33,398,797
Stock options and employee stock purchase plan shares	705,980	442,258
Unvested restricted stock awards	105,393	10,788
Diluted (in shares)	35,838,853	33,851,843
Stock Option
Equity-Based Compensation
Expected dividend yield (as a percent)	0.00%	0.00%
VAR Plan
Equity-Based Compensation
Expected dividend yield (as a percent)	0.00%
2012 Plan \| Stock Option
Equity-Based Compensation
Vesting period	4 years
2012 Plan \| Restricted stock units
Equity-Based Compensation
Vesting period	3 years
2012 ESPP \| Employee stock purchase plan
Equity-Based Compensation
Vesting period	6 months

Short-Term Investments and Fair Value Measurements (Details) - USD ($) $ in Thousands	3 Months Ended	12 Months Ended
	Mar. 31, 2014	Dec. 31, 2013
Short term investments and fair value measurements
Amortized Cost	$ 54,997	$ 54,431
Unrealized Losses	(3)	(2)
Estimated Fair Market Value	54,994	54,429
Commercial Paper
Short term investments and fair value measurements
Amortized Cost	54,997	54,431
Unrealized Losses	(3)	(2)
Estimated Fair Market Value	$ 54,994	$ 54,429

Short-Term Investments and Fair Value Measurements (Details 2) - USD ($) $ in Thousands	Mar. 31, 2014	Dec. 31, 2013
Short Term Investments and Fair Value Measurements
Total	$ 54,994	$ 54,429
Commercial Paper
Short Term Investments and Fair Value Measurements
Total	54,994	54,429
Recurring Basis \| Aggregate Fair Value
Short Term Investments and Fair Value Measurements
Total	54,994	54,429
Recurring Basis \| Aggregate Fair Value \| Commercial Paper
Short Term Investments and Fair Value Measurements
Total	54,994	54,429
Recurring Basis \| Level 2
Short Term Investments and Fair Value Measurements
Total	54,994	54,429
Recurring Basis \| Level 2 \| Commercial Paper
Short Term Investments and Fair Value Measurements
Total	$ 54,994	$ 54,429

Information About Revenue By Geographic Areas (Details 4) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2014	Mar. 31, 2013
Geographic revenue based on customer location
Revenue	$ 72,777	$ 51,117
North America
Geographic revenue based on customer location
Revenue	$ 26,504	$ 18,363
United States \| Total revenue \| Geographic concentration
Geographic revenue based on customer location
Concentration risk percentage	32.00%	32.00%
Europe
Geographic revenue based on customer location
Revenue	$ 26,649	$ 19,040
Rest of the world
Geographic revenue based on customer location
Revenue	$ 19,624	$ 13,714

Goodwill and Intangible Assets (Details) $ in Thousands	3 Months Ended
Goodwill and Intangible Assets (Details) $ in Thousands	Mar. 31, 2014 USD ($)
Changes in goodwill
Balance at the beginning of the period	$ 1,423
Goodwill related to acquisitions	8,763
Balance at the end of the period	10,186
Bigstock
Changes in goodwill
Balance at the beginning of the period	1,423
Balance at the end of the period	1,423
WebDAM
Changes in goodwill
Goodwill related to acquisitions	8,763
Balance at the end of the period	$ 8,763

Goodwill and Intangible Assets (Details 2) - USD ($) $ in Thousands	3 Months Ended		12 Months Ended
	Mar. 31, 2014	Mar. 31, 2013	Dec. 31, 2013
Amortizing intangible assets:
Gross Carrying Amount	$ 5,640		$ 1,729
Accumulated Amortization	(923)		(876)
Net Carrying Amount	4,717		853
Amortization expense	47	$ 56
Estimated amortization expense
Remaining nine months of 2014	499
2015	666
2016	666
2017	666
2018	666
Thereafter	1,554
Customer relationships
Amortizing intangible assets:
Gross Carrying Amount	3,400		600
Accumulated Amortization	(620)		$ (600)
Net Carrying Amount	$ 2,780
Weighted Average Life	6 years		4 years
Trade name
Amortizing intangible assets:
Gross Carrying Amount	$ 900		$ 400
Accumulated Amortization	(131)		(119)
Net Carrying Amount	$ 769		$ 281
Weighted Average Life	9 years		14 years
Developed technology
Amortizing intangible assets:
Gross Carrying Amount	$ 600
Accumulated Amortization	(4)
Net Carrying Amount	$ 596
Weighted Average Life	7 years
Contributor content
Amortizing intangible assets:
Gross Carrying Amount	$ 450		$ 450
Accumulated Amortization	(135)		(127)
Net Carrying Amount	$ 315		$ 323
Weighted Average Life	15 years		15 years
Patents
Amortizing intangible assets:
Gross Carrying Amount	$ 193		$ 193
Accumulated Amortization	(23)		(21)
Net Carrying Amount	$ 170		$ 172
Weighted Average Life	17 years		17 years
Domain name
Amortizing intangible assets:
Gross Carrying Amount	$ 97		$ 86
Accumulated Amortization	(10)		(9)
Net Carrying Amount	$ 87		$ 77
Weighted Average Life	14 years		15 years

Property and Equipment (Details) - USD ($) $ in Thousands	3 Months Ended
Property and Equipment (Details) - USD ($) $ in Thousands	Mar. 31, 2014	Mar. 31, 2013	Dec. 31, 2013
Property and Equipment
Property and equipment	$ 33,663		$ 27,365
Less accumulated depreciation	(7,865)		(7,109)
Property and equipment, net	25,798		20,256
Depreciation	1,504	$ 723
Loss on disposal	367	$ 0
Computer equipment and software
Property and Equipment
Property and equipment	17,812		14,108
Furniture and fixtures
Property and Equipment
Property and equipment	1,965		2,588
Leasehold improvements
Property and Equipment
Property and equipment	$ 13,886		$ 10,669

Accrued Expenses (Details) - USD ($) $ in Thousands	Mar. 31, 2014	Dec. 31, 2013
Accrued Expenses
Compensation	$ 2,934	$ 6,379
Royalty tax withholdings	5,433	5,305
Construction costs	945	4,501
Non-income taxes	4,204	3,994
Professional fees	487	605
Marketing	729	475
Other expenses	4,267	2,379
Total accrued expenses	$ 18,999	$ 23,638

Income Taxes (Details) - USD ($) $ in Thousands	3 Months Ended		12 Months Ended
Income Taxes (Details) - USD ($) $ in Thousands	Mar. 31, 2014	Mar. 31, 2013	Dec. 31, 2013
Income Taxes
Effective tax rate (as a percent)	46.10%	44.20%
State and local taxes, net of federal benefit (as a percent)	6.20%	4.40%
Effective tax rate before discrete tax expense relating to a change in state apportionment (as a percent)	39.90%	39.80%
Gross additions for tax positions for prior years	$ 1,500		$ 1,500
Unrecognized tax benefits, interest and penalties accrued	$ 22	$ 9

Term Loan Facility (Details) - USD ($) $ in Thousands			3 Months Ended
Term Loan Facility (Details) - USD ($) $ in Thousands	Mar. 25, 2013	Dec. 24, 2012	Mar. 31, 2014	Mar. 31, 2013	Sep. 21, 2012
Term Loan Facility
Payment of term loan facility				$ 6,000
Amortization of financing costs				$ 125
Term Loan
Term Loan Facility
Amount borrowed					$ 12,000
Payment of term loan facility	$ 6,000	$ 6,000
Amortization of financing costs			$ 125

Commitments and Contingencies (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2014	Mar. 31, 2013	Dec. 31, 2013
Commitments and Contingencies.
Rental expense inclusive of operating leases	$ 1,192	$ 498
Letter of credit as a security deposit for the leased facilities	1,829
Letter of credit collateralized as restricted cash	$ 1,829		$ 1,829
Term of lease	11 years
Total minimum lease payments	$ 38,200
Capital Expenditures
Commitment to purchase data server equipment	0
Unconditional Purchase Obligations
Unconditional purchase obligations for contracts related to infrastructure services and contractual commitments for marketing services	10,522		5,864
Maturity of unconditional purchase obligations
Remainder of 2014	4,668
2014			3,454
2015	4,447		1,845
2016	1,343		565
2017	64
Indemnifications
Standard maximum aggregate obligation and liability to any one customer for all claims	10
Indemnification obligation	$ 0		$ 0

Employee Benefit Plans (Details) - USD ($) $ in Thousands	3 Months Ended
Employee Benefit Plans (Details) - USD ($) $ in Thousands	Mar. 31, 2014	Mar. 31, 2013
Employee Benefit Plans
Annual discretionary employer matching contributions (as a percent)	3.00%
Employer matching contributions	$ 209	$ 139

Equity-Based Compensation (Details) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended
	Mar. 31, 2014	Mar. 31, 2013	Dec. 31, 2013
Additional disclosures
Non-cash stock-based compensation expense, net of estimated forfeitures	$ 3,137	$ 1,016
Stock Option
Plan Options
Options outstanding at December 31, 2013	1,861,761
Options granted	42,750
Options exercised	(125,079)
Options cancelled or forfeited	(66,369)
Options outstanding at March 31, 2014	1,713,063
Vested and exercisable at March 31, 2014	558,408
Weighted Average Exercise Price
Options outstanding at the beginning of the period (in dollars per unit)	$ 26.09
Options granted (in dollars per share)	79.52
Options exercised (in dollars per share)	17.49
Options cancelled or forfeited (in dollars per share)	37.70
Options outstanding at the end of the period (in dollars per unit)	27.83
Vested and exercisable at the end of the period (in dollars per share)	$ 16.83
Intrinsic values
Intrinsic value of total stock options and notional units outstanding	$ 76,700		$ 107,100
Intrinsic value of total stock options vested and exercisable	$ 31,100		$ 38,900
Weighted average assumptions used in fair value calculation
Expected term	6 years 3 months 18 days	6 years 3 months 18 days
Volatility (as a percent)	49.00%	49.00%
Risk-free interest rate (as a percent)		1.40%
Dividend yield	0.00%	0.00%
Additional disclosures
Non-cash stock-based compensation expense, net of estimated forfeitures	$ 1,686	$ 613
Stock Option \| Minimum
Weighted average assumptions used in fair value calculation
Risk-free interest rate (as a percent)	2.10%
Stock Option \| Maximum
Weighted average assumptions used in fair value calculation
Risk-free interest rate (as a percent)	2.40%
Stock Option \| 2012 Plan
Additional disclosures
Total unrecognized compensation charge related non-vested options	$ 15,600

Equity-Based Compensation (Details 2) - USD ($) $ / shares in Units, $ in Thousands		3 Months Ended
	Mar. 14, 2014	Mar. 31, 2014	Mar. 31, 2013
Weighted Average Fair Value
Recognized compensation charge		$ 3,137	$ 1,016
Restricted Stock Units and Restricted Stock Awards \| 2012 Plan
Weighted Average Fair Value
Unrecognized compensation charge		35,600
Restricted stock
Weighted Average Fair Value
Recognized compensation charge		$ 259	259
Restricted stock units
Plan Options
Non-vested balance at the beginning of the period (in shares)		10,000
Units granted (in shares)		338,025
Non-vested balance at the end of the period (in shares)		348,025
Weighted Average Fair Value
Non-vested balance at the beginning of the period (in dollars per share)		$ 47.17
Units granted (in dollars per share)		95.30
Non-vested balance at the end of the period (in dollars per share)		$ 93.92
Recognized compensation charge		$ 901	0
Restricted stock units \| Virtual Moment, LLC
Weighted Average Fair Value
Recognized compensation charge		$ 77	0
Vesting period of granted award	2 years
Restricted stock units \| 2012 Plan
Weighted Average Fair Value
Vesting period of granted award		3 years
Employee stock purchase plan \| 2012 ESPP
Weighted Average Fair Value
Non-cash stock-based compensation expense net of estimated forfeitures recognized in connection with one-time acceleration charge		$ 214	$ 144
Vesting period of granted award		6 months
Number of shares issued under ESPP		94,917

Equity-Based Compensation (Details 3) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2014	Mar. 31, 2013
Non-cash equity-based compensation expense related to the 2012 Plan and 2012 ESPP
Total	$ 3,137	$ 1,016
Cost of revenue
Non-cash equity-based compensation expense related to the 2012 Plan and 2012 ESPP
Total	249	55
Sales and marketing
Non-cash equity-based compensation expense related to the 2012 Plan and 2012 ESPP
Total	902	203
Product development
Non-cash equity-based compensation expense related to the 2012 Plan and 2012 ESPP
Total	949	255
General and administrative
Non-cash equity-based compensation expense related to the 2012 Plan and 2012 ESPP
Total	$ 1,037	$ 503