Basis of Presentation and Summary of Significant Accounting Policies (Tables)
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9 Months Ended |
Sep. 30, 2016 |
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| Accounting Policies [Abstract] |
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| Schedule of Segment Reporting Information, by Segment |
Segment revenue, expenses and contribution profit for the three and nine month periods ended September 30, 2016 and 2015 derived from the Company's Content and Connectivity segments were as follows (in thousands):
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Three Months Ended September 30, |
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2016 |
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2015 |
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Content |
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Connectivity |
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Consolidated |
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Content |
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Connectivity |
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Consolidated |
Revenue: |
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Licensing and services |
$ |
79,014 |
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$ |
59,231 |
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$ |
138,245 |
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$ |
81,574 |
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$ |
24,838 |
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$ |
106,412 |
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Equipment |
— |
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8,664 |
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8,664 |
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— |
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|
3,702 |
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|
3,702 |
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Total revenue |
79,014 |
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67,895 |
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146,909 |
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81,574 |
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28,540 |
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110,114 |
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Operating expenses: |
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Cost of sales |
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Licensing and services |
53,132 |
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42,428 |
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95,560 |
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53,995 |
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14,654 |
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68,649 |
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Equipment |
— |
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7,788 |
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7,788 |
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— |
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2,807 |
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2,807 |
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Total cost of sales |
53,132 |
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50,216 |
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103,348 |
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53,995 |
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17,461 |
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71,456 |
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Contribution profit |
25,882 |
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17,679 |
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43,561 |
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27,579 |
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11,079 |
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38,658 |
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Other Operating Expenses |
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71,745 |
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42,039 |
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(Loss) from Operations |
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$ |
(28,184 |
) |
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$ |
(3,381 |
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Nine Months Ended September 30, |
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2016 |
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2015 |
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Content |
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Connectivity |
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Consolidated |
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Content |
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Connectivity |
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Consolidated |
Revenue: |
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Licensing and services |
$ |
241,330 |
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$ |
110,625 |
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$ |
351,955 |
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$ |
227,037 |
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$ |
71,602 |
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$ |
298,639 |
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Equipment |
— |
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21,036 |
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21,036 |
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— |
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14,156 |
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14,156 |
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Total revenue |
241,330 |
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131,661 |
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372,991 |
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227,037 |
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85,758 |
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312,795 |
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Operating expenses: |
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Cost of sales |
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Licensing and services |
161,708 |
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75,381 |
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237,089 |
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152,044 |
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42,730 |
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194,774 |
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Equipment |
— |
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18,113 |
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18,113 |
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— |
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12,191 |
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12,191 |
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Total Cost of sales |
161,708 |
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93,494 |
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255,202 |
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152,044 |
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54,921 |
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206,965 |
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Contribution profit |
79,622 |
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38,167 |
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117,789 |
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74,993 |
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30,837 |
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105,830 |
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Other operating expenses |
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192,769 |
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112,694 |
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Loss from operations |
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$ |
(74,980 |
) |
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$ |
(6,864 |
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| Schedule of Earnings Per Share, Basic and Diluted |
The computation for basic and diluted EPS was as follows (in thousands, except per share data):
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Three Months Ended
September 30, |
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Nine Months Ended
September 30, |
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2016 |
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2015 |
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2016 |
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2015 |
Net income (loss) (numerator): |
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Net income (loss) for basic EPS |
$ |
19,354 |
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$ |
(6,872 |
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$ |
(21,218 |
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$ |
2,684 |
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Less: adjustment for change in fair value on warrants liability for diluted EPS after assumed exercise of warrants liability |
— |
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— |
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— |
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13,866 |
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Net income (loss) for dilutive EPS |
$ |
19,354 |
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$ |
(6,872 |
) |
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$ |
(21,218 |
) |
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$ |
(11,182 |
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Shares (denominator): |
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Weighted-average shares for basic EPS |
82,874 |
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77,753 |
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79,892 |
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77,249 |
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Effect of dilutive securities |
88 |
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— |
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— |
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— |
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Effect of assumed exercise of liability contracts settleable in stock |
2,119 |
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— |
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— |
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1,200 |
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Adjusted weighted-average share for diluted EPS |
85,081 |
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77,753 |
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79,892 |
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78,449 |
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Basic income (loss) income per share |
$ |
0.23 |
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$ |
(0.09 |
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$ |
(0.27 |
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$ |
0.03 |
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Diluted income (loss) per share |
$ |
0.23 |
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$ |
(0.09 |
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$ |
(0.27 |
) |
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$ |
(0.14 |
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| Schedule of Antidilutive Securities Excluded from Computation of Earnings Per Share |
Securities not included in the calculation of diluted (loss) income per share were as follows (in thousands, except as stated in footnotes to the table):
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Three Months Ended
September 30, |
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Nine Months Ended
September 30, |
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2016 |
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2015 |
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2016 |
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2015 |
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Employee stock options |
6,600 |
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3,545 |
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6,076 |
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3,004 |
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Restricted stock units |
147 |
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190 |
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253 |
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44 |
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Non-employee stock options |
— |
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— |
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— |
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2 |
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Equity warrants (1)
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1,163 |
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392 |
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1,163 |
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475 |
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Liability warrants (2)
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6,173 |
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411 |
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6,173 |
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— |
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Convertible notes |
4,447 |
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4,447 |
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4,447 |
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3,663 |
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EMC deferred consideration (3)
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— |
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— |
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503 |
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— |
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Contingently issuable shares (4)
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509 |
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— |
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171 |
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— |
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(1) |
Legacy Row 44 warrants originally issuable for Row 44 common stock and Row 44 Series C preferred stock, and now issuable for our Common Stock. |
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(2) |
Warrants issued in our initial public offering to non-sponsor shareholders ("Public SPAC Warrants"). |
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(3) |
In connection with the EMC Acquisition, the Company is obligated to pay $25.0 million in cash or stock, at the Company's option, on July 27, 2017.
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(4) |
In connection with the settlement of the sound recording litigation, the Company is obligated to issue up to an aggregate of 900,000 shares of its common stock at such time the share price exceeds designated thresholds.
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| Fair Value Measurements, Recurring and Nonrecurring |
The following tables summarize the Company's financial assets and liabilities measured at fair value on a recurring basis as of September 30, 2016, and December 31, 2015, respectively (in thousands, except as stated in footnotes to the tables):
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September 30, 2016 |
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Quotes Prices in Active Markets (Level 1) |
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Significant Other Observable Inputs (Level 2) |
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Significant Other Unobservable Inputs (Level 3) |
Earn-out liability (1)
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$ |
4,162 |
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$ |
— |
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$ |
— |
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$ |
4,162 |
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Public SPAC Warrants (2)
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6,235 |
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6,235 |
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— |
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— |
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Contingently issuable shares (3)
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6,276 |
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— |
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— |
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6,276 |
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Total financial liabilities |
$ |
16,673 |
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$ |
6,235 |
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$ |
— |
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$ |
10,438 |
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December 31, 2015 |
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Quotes Prices in Active Markets (Level 1) |
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Significant Other Observable Inputs (Level 2) |
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Significant Other Unobservable Inputs (Level 3) |
Earn-out liability (1)
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$ |
9,652 |
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$ |
— |
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$ |
— |
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$ |
9,652 |
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Public SPAC Warrants (2)
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24,076 |
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24,076 |
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— |
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— |
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Total financial liabilities |
$ |
33,728 |
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$ |
24,076 |
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$ |
— |
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$ |
9,652 |
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(1) |
Includes $4.2 million and $9.7 million as of September 30, 2016 and December 31, 2015, respectively, of earn-out liability for the Company's acquisitions of Western Outdoor Interactive Pvt. Ltd. ("WOI"), certain assets of RMG Networks Holding Corporation (the "RMG Assets"), navAero AB ("navAero") and Marks Systems, Inc. (doing business as masFlight ("masFlight")) assumed in business combinations for the year ended December 31, 2015.
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(2) |
Includes 6,173,228 warrants issued in our initial public offering to non-sponsor shareholders.
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(3) |
In connection with the settlement of the sound recording litigation, the Company is obligated to issue up to an aggregate of 900,000 shares of its common stock at such time the share price exceeds designated thresholds. Based on conditions of the award, such contingently issuable shares are classified as liabilities and are remeasured to fair value each reporting period.
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| Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation |
The following table presents the fair value roll-forward reconciliation of level 3 assets and liabilities measured at fair value basis for the nine months ended September 30, 2016 (in thousands):
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Earn-Out Liability |
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Contingently Issuable Shares |
Balance as of December 31, 2015 |
$ |
9,652 |
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$ |
— |
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Fair value of contingently issuable shares associated with sound recording litigation settlement |
— |
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|
6,417 |
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Change in value |
(5,490 |
) |
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(141 |
) |
Balance as of September 30, 2016 |
$ |
4,162 |
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$ |
6,276 |
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| Fair Value, by Balance Sheet Grouping |
The following table shows the carrying amounts and the fair values of the Company's financial liabilities in the condensed consolidated financial statements at September 30, 2016 and December 31, 2015, respectively (in thousands, except as stated in footnote to the table):
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September 30, 2016 |
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December 31, 2015 |
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Carrying Amount |
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Fair Value |
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Carrying Amount |
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Fair Value |
Financial liabilities: |
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Convertible senior notes (1)
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$ |
68,851 |
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$ |
68,941 |
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$ |
68,335 |
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$ |
78,557 |
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Term loans with banks |
371,857 |
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370,588 |
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|
886 |
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|
886 |
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Other debt |
816 |
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|
816 |
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|
1,343 |
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1,343 |
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(1) |
The fair value of the convertible senior notes is exclusive of the conversion feature, which was originally allocated for reporting purposes at $13.0 million, and is included in the condensed consolidated balance sheets within "Additional paid-in capital" (seeNote 11).
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| Schedule of New Accounting Pronouncements and Changes in Accounting Principles [Table Text Block] |
The table below shows the effect of the reclassification of unamortized debt issuance costs associated with our convertible senior notes in our previously reported condensed consolidated balance sheet as of December 31, 2015 (in thousands):
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As presented December 31, 2015 |
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Reclassifications |
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As reclassified December 31, 2015 |
Other non-current assets |
$ |
13,702 |
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$ |
(1,678 |
) |
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$ |
12,024 |
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Notes payable and accrued interest, non-current |
71,493 |
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(1,678 |
) |
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69,815 |
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