Document and Entity Information
6 Months Ended
Document and Entity Information [Abstract]
Entity Registrant Name QUINSTREET, INC
Entity Central Index Key 0001117297
Document Type 10-Q
Document Period End Date Dec. 31, 2011
Amendment Flag false
Document Fiscal Year Focus 2012
Document Fiscal Period Focus Q2
Current Fiscal Year End Date --06-30
Entity Filer Category Accelerated Filer
Entity Common Stock, Shares Outstanding 45,153,228
- Definition
If the value is true, then the document as an amendment to previously-filed/accepted document.
+ References
No definition available.
Name: dei_AmendmentFlag
Namespace Prefix: dei_
Data Type: xbrli:booleanItemType
Balance Type: na
Period Type: duration
End date of current fiscal year in the format --MM-DD.
Name: dei_CurrentFiscalYearEndDate
Data Type: xbrli:gMonthDayItemType
This is focus fiscal period of the document report. For a first quarter 2006 quarterly report, which may also provide financial information from prior periods, the first fiscal quarter should be given as the fiscal period focus. Values: FY, Q1, Q2, Q3, Q4, H1, H2, M9, T1, T2, T3, M8, CY.
Name: dei_DocumentFiscalPeriodFocus
Data Type: dei:fiscalPeriodItemType
This is focus fiscal year of the document report in CCYY format. For a 2006 annual report, which may also provide financial information from prior periods, fiscal 2006 should be given as the fiscal year focus. Example: 2006.
Name: dei_DocumentFiscalYearFocus
Data Type: xbrli:gYearItemType
The end date of the period reflected on the cover page if a periodic report. For all other reports and registration statements containing historical data, it is the date up through which that historical data is presented. If there is no historical data in the report, use the filing date. The format of the date is CCYY-MM-DD.
Name: dei_DocumentPeriodEndDate
Data Type: xbrli:dateItemType
The type of document being provided (such as 10-K, 10-Q, N-1A, etc). The document type is limited to the same value as the supporting SEC submission type, minus any "/A" suffix. The acceptable values are as follows: S-1, S-3, S-4, S-11, F-1, F-3, F-4, F-9, F-10, 6-K, 8-K, 10, 10-K, 10-Q, 20-F, 40-F, N-1A, 485BPOS, 497, NCSR, N-CSR, N-CSRS, N-Q, 10-KT, 10-QT, 20-FT, POS AM and Other.
Name: dei_DocumentType
Data Type: dei:submissionTypeItemType
A unique 10-digit SEC-issued value to identify entities that have filed disclosures with the SEC. It is commonly abbreviated as CIK.
Reference 1: http://www.xbrl.org/2003/role/presentationRef
-Publisher SEC
-Name Regulation 12B
-Number 240
-Section 12b
-Subsection 1
Name: dei_EntityCentralIndexKey
Data Type: dei:centralIndexKeyItemType
Indicate number of shares outstanding of each of registrant's classes of common stock, as of latest practicable date. Where multiple classes exist define each class by adding class of stock items such as Common Class A [Member], Common Class B [Member] onto the Instrument [Domain] of the Entity Listings, Instrument
Name: dei_EntityCommonStockSharesOutstanding
Data Type: xbrli:sharesItemType
Period Type: instant
Indicate whether the registrant is one of the following: (1) Large Accelerated Filer, (2) Accelerated Filer, (3) Non-accelerated Filer, or (4) Smaller Reporting Company. Definitions of these categories are stated in Rule 12b-2 of the Exchange Act. This information should be based on the registrant's current or most recent filing containing the related disclosure.
Name: dei_EntityFilerCategory
Data Type: dei:filerCategoryItemType
The exact name of the entity filing the report as specified in its charter, which is required by forms filed with the SEC.
Name: dei_EntityRegistrantName
Data Type: xbrli:normalizedStringItemType
Name: qnst_DocumentAndEntityInformationAbstract
Namespace Prefix: qnst_
Data Type: xbrli:stringItemType
Condensed Consolidated Balance Sheets (Unaudited) (USD $)
In Thousands, unless otherwise specified
Cash and cash equivalents $ 105,557 $ 132,290
Marketable securities 38,946 34,927
Accounts receivable, net 50,551 48,225
Deferred tax assets 10,253 10,253
Prepaid expenses and other assets 4,107 5,773
Total current assets 209,414 231,468
Property and equipment, net 9,453 8,875
Goodwill 235,157 211,856
Other intangible assets, net 68,117 65,847
Deferred tax assets, noncurrent 5,861 5,866
Other assets, noncurrent 1,014 1,012
Total assets 529,016 524,924
Accounts payable 24,056 23,300
Accrued liabilities 25,944 33,238
Deferred revenue 2,096 2,531
Debt 16,472 10,038
Total current liabilities 68,568 69,107
Debt, noncurrent 97,600 96,010
Other liabilities, noncurrent 5,261 4,418
Total liabilities 171,429 169,535
Commitments and contingencies (See Note 8)
Common stock: $0.001 par value; 100,000,000 shares authorized; 49,832,054 and 49,564,877 shares issued, and 45,866,202 and 47,387,425 shares outstanding at December 31, 2011 and June 30, 2011, respectively 50 50
Additional paid-in capital 264,511 255,689
Treasury stock, at cost (3,965,852 and 2,177,452 shares at December 31, 2011 and June 30, 2011) (24,362) (7,779)
Accumulated other comprehensive income 83 51
Retained earnings 117,305 107,378
Total stockholders' equity 357,587 355,389
Total liabilities and stockholders' equity $ 529,016 $ 524,924
Carrying value as of the balance sheet date of liabilities incurred (and for which invoices have typically been received) and payable to vendors for goods and services received that are used in an entity's business. Used to reflect the current portion of the liabilities (due within one year or within the normal operating cycle if longer).
-Name Regulation S-X (SX)
-Section 02
-Paragraph 19
-Subparagraph a
-Article 5
-Publisher FASB
-Name Accounting Standards Codification
-Topic 210
-SubTopic 10
-Section S99
-Paragraph 1
-Subparagraph (SX 210.5-02.19(a))
-URI http://asc.fasb.org/extlink&oid=6877327&loc=d3e13212-122682
Name: us-gaap_AccountsPayableCurrent
Namespace Prefix: us-gaap_
Data Type: xbrli:monetaryItemType
Balance Type: credit
Amount due from customers or clients, within one year of the balance sheet date (or the normal operating cycle, whichever is longer), for goods or services (including trade receivables) that have been delivered or sold in the normal course of business, reduced to the estimated net realizable fair value by an allowance established by the entity of the amount it deems uncertain of collection.
-Subparagraph a(1)
-Subparagraph (SX 210.5-02.3-4)
Name: us-gaap_AccountsReceivableNetCurrent
Balance Type: debit
Carrying value as of the balance sheet date of obligations incurred and payable, pertaining to costs that are statutory in nature, are incurred on contractual obligations, or accumulate over time and for which invoices have not yet been received or will not be rendered. Examples include taxes, interest, rent and utilities. Used to reflect the current portion of the liabilities (due within one year or within the normal operating cycle if longer).
-Subparagraph (SX 210.5-02.20)
Name: us-gaap_AccruedLiabilitiesCurrent
Accumulated change in equity from transactions and other events and circumstances from non-owner sources, net of tax effect, at period end. Excludes Net Income (Loss), and accumulated changes in equity from transactions resulting from investments by owners and distributions to owners. Includes foreign currency translation items, certain pension adjustments, unrealized gains and losses on certain investments in debt and equity securities, other than temporary impairment (OTTI) losses related to factors other than credit losses on available-for-sale and held-to-maturity debt securities that an entity does not intend to sell and it is not more likely than not that the entity will be required to sell before recovery of the amortized cost basis, as well as changes in the fair value of derivatives related to the effective portion of a designated cash flow hedge.
-Publisher AICPA
-Name Accounting Principles Board Opinion (APB)
-Number 12
-LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy.
-Name Statement of Financial Accounting Standard (FAS)
-Paragraph 14, 17, 26
-URI http://asc.fasb.org/extlink&oid=6920043&loc=d3e637-108580
-Name FASB Staff Position (FSP)
-Number FAS115-1/124-1
-Paragraph 15D
Name: us-gaap_AccumulatedOtherComprehensiveIncomeLossNetOfTax
Value received from shareholders in common stock-related transactions that are in excess of par value or stated value and amounts received from other stock-related transactions. Includes only common stock transactions (excludes preferred stock transactions). May be called contributed capital, capital in excess of par, capital surplus, or paid-in capital.
-Subparagraph (SX 210.5-02.30(a)(1))
Name: us-gaap_AdditionalPaidInCapitalCommonStock
Sum of the carrying amounts as of the balance sheet date of all assets that are recognized. Assets are probable future economic benefits obtained or controlled by an entity as a result of past transactions or events.
-Name Statement of Financial Accounting Concepts (CON)
-Number 6
Name: us-gaap_Assets
Sum of the carrying amounts as of the balance sheet date of all assets that are expected to be realized in cash, sold, or consumed within one year (or the normal operating cycle, if longer). Assets are probable future economic benefits obtained or controlled by an entity as a result of past transactions or events.
-Subparagraph (SX 210.5-02.9)
-URI http://asc.fasb.org/extlink&oid=6361293&loc=d3e6676-107765
Name: us-gaap_AssetsCurrent
Name: us-gaap_AssetsCurrentAbstract
Includes currency on hand as well as demand deposits with banks or financial institutions. It also includes other kinds of accounts that have the general characteristics of demand deposits in that the Entity may deposit additional funds at any time and also effectively may withdraw funds at any time without prior notice or penalty. Cash equivalents, excluding items classified as marketable securities, include short-term, highly liquid investments that are both readily convertible to known amounts of cash, and so near their maturity that they present minimal risk of changes in value because of changes in interest rates. Generally, only investments with original maturities of three months or less qualify under that definition. Original maturity means original maturity to the entity holding the investment. For example, both a three-month US Treasury bill and a three-year Treasury note purchased three months from maturity qualify as cash equivalents. However, a Treasury note purchased three years ago does not become a cash equivalent when its remaining maturity is three months. Compensating balance arrangements that do not legally restrict the withdrawal or usage of cash amounts may be reported as Cash and Cash Equivalents, while legally restricted deposits held as compensating balances against borrowing arrangements, contracts entered into with others, or company statements of intention with regard to particular deposits are not generally reported as cash and cash equivalents. Includes cash and cash equivalents associated with the entity's continuing operations. Excludes cash and cash equivalents associated with the disposal group (and discontinued operation).
-Paragraph 8, 9
-Footnote 1
-Paragraph 7, 26
-Glossary Cash
-URI http://asc.fasb.org/extlink&oid=6506951
-Glossary Cash Equivalents
-Subparagraph (a)
Name: us-gaap_CashAndCashEquivalentsAtCarryingValue
Represents the caption on the face of the balance sheet to indicate that the entity has entered into (1) purchase or supply arrangements that will require expending a portion of its resources to meet the terms thereof, and (2) is exposed to potential losses or, less frequently, gains, arising from (a) possible claims against a company's resources due to future performance under contract terms, and (b) possible losses or likely gains from uncertainties that will ultimately be resolved when one or more future events that are deemed likely to occur do occur or fail to occur.
-SubTopic 210
-URI http://asc.fasb.org/extlink&oid=6876686&loc=d3e534808-122878
-Subparagraph (SX 210.7-03.(a),19)
Name: us-gaap_CommitmentsAndContingencies
Aggregate par or stated value of issued nonredeemable common stock (or common stock redeemable solely at the option of the issuer). This item includes treasury stock repurchased by the entity. Note: elements for number of nonredeemable common shares, par value and other disclosure concepts are in another section within stockholders' equity.
Name: us-gaap_CommonStockValue
Carrying value as of the balance sheet date of the sum of short-term debt and current maturities of long-term debt and capital lease obligations, which are due within one year (or one business cycle if longer).
-Subparagraph (SX 210.5-02.19,20)
Name: us-gaap_DebtCurrent
The carrying amount of consideration received or receivable as of the balance sheet date on potential earnings that were not recognized as revenue in conformity with GAAP, and which are expected to be recognized as such within one year or the normal operating cycle, if longer, including sales, license fees, and royalties, but excluding interest income.
-Name Accounting Research Bulletin (ARB)
-Chapter 3
-Section A
-Name Staff Accounting Bulletin (SAB)
-Number Topic 13
-Subparagraph (SAB TOPIC 13.A.4(a).Q1)
-Subparagraph (b)
Name: us-gaap_DeferredRevenueCurrent
The current portion of the aggregate tax effects as of the balance sheet date of all future tax deductions arising from temporary differences between tax basis and generally accepted accounting principles basis recognition of assets, liabilities, revenues and expenses, which can only be deducted for tax purposes when permitted under enacted tax laws; after deducting the allocated valuation allowance, if any, to reduce such amount to net realizable value. Deferred tax liabilities and assets are classified as current or noncurrent based on the classification of the related asset or liability for financial reporting. A deferred tax liability or asset that is not related to an asset or liability for financial reporting, including deferred tax assets related to carryforwards, are classified according to the expected reversal date of the temporary difference. An unrecognized tax benefit that is directly related to a position taken in a tax year that results in a net operating loss carryforward is presented as a reduction of the related deferred tax asset.
Name: us-gaap_DeferredTaxAssetsNetCurrent
The noncurrent portion as of the balance sheet date of the aggregate carrying amount of all future tax deductions arising from temporary differences between tax basis and generally accepted accounting principles basis recognition of assets, liabilities, revenues and expenses, which can only be deducted for tax purposes when permitted under enacted tax laws; after the valuation allowance, if any, to reduce such amount to net realizable value. Deferred tax liabilities and assets are classified as current or noncurrent based on the classification of the related asset or liability for financial reporting. A deferred tax liability or asset that is not related to an asset or liability for financial reporting, including deferred tax assets related to carryforwards, is classified according to the expected reversal date of the temporary difference.
Name: us-gaap_DeferredTaxAssetsNetNoncurrent
Carrying amount as of the balance sheet date, which is the cumulative amount paid and (if applicable) the fair value of any noncontrolling interest in the acquiree, adjusted for any amortization recognized prior to the adoption of any changes in generally accepted accounting principles (as applicable) and for any impairment charges, in excess of the fair value of net assets acquired in one or more business combination transactions.
-Subparagraph e
-Number 141R
-Subparagraph l
-Subparagraph d
-Clause 1
Name: us-gaap_Goodwill
Sum of the carrying amounts of all intangible assets, excluding goodwill, as of the balance sheet date, net of accumulated amortization and impairment charges.
-Paragraph 42, 45
-Subparagraph ((a)(1),(b))
Name: us-gaap_IntangibleAssetsNetExcludingGoodwill
Sum of the carrying amounts as of the balance sheet date of all liabilities that are recognized. Liabilities are probable future sacrifices of economic benefits arising from present obligations of an entity to transfer assets or provide services to other entities in the future.
-Subparagraph (SX 210.5-02.19-26)
Name: us-gaap_Liabilities
Total of all Liabilities and Stockholders' Equity items (or Partners' Capital, as applicable), including the portion of equity attributable to noncontrolling interests, if any.
Name: us-gaap_LiabilitiesAndStockholdersEquity
Total obligations incurred as part of normal operations that are expected to be paid during the following twelve months or within one business cycle, if longer.
Name: us-gaap_LiabilitiesCurrent
Name: us-gaap_LiabilitiesCurrentAbstract
Sum of the carrying values as of the balance sheet date of all long-term debt, which is debt initially having maturities due after one year from the balance sheet date or beyond the operating cycle, if longer, but excluding the portions thereof scheduled to be repaid within one year (current maturities) or the normal operating cycle, if longer, and after deducting unamortized discount or premiums, if any.
Name: us-gaap_LongTermDebtNoncurrent
Total debt and equity financial instruments including: (1) securities held-to-maturity, (2) trading securities, and (3) securities available-for-sale which are intended to be held for less than one year or the normal operating cycle, whichever is longer.
-Subparagraph (f)
Name: us-gaap_MarketableSecuritiesCurrent
Aggregate carrying amount, as of the balance sheet date, of noncurrent assets not separately disclosed in the balance sheet. Noncurrent assets are expected to be realized or consumed after one year (or the normal operating cycle, if longer).
Name: us-gaap_OtherAssetsNoncurrent
Aggregate carrying amount, as of the balance sheet date, of noncurrent obligations not separately disclosed in the balance sheet. Noncurrent liabilities are expected to be paid after one year (or the normal operating cycle, if longer).
Name: us-gaap_OtherLiabilitiesNoncurrent
The total of the amounts paid in advance for capitalized costs that will be expensed with the passage of time or the occurrence of a triggering event, and will be charged against earnings within one year or the normal operating cycle, if longer, and the aggregate carrying amount of current assets, as of the balance sheet date, not separately presented elsewhere in the balance sheet. Current assets are expected to be realized or consumed within one year (or the normal operating cycle, if longer).
Name: us-gaap_PrepaidExpenseAndOtherAssetsCurrent
Tangible assets that are held by an entity for use in the production or supply of goods and services, for rental to others, or for administrative purposes and that are expected to provide economic benefit for more than one year; net of accumulated depreciation. Examples include land, buildings, machinery and equipment, and other types of furniture and equipment including, but not limited to, office equipment, furniture and fixtures, and computer equipment and software.
-Subparagraph b, c
Name: us-gaap_PropertyPlantAndEquipmentNet
The cumulative amount of the reporting entity's undistributed earnings or deficit.
Name: us-gaap_RetainedEarningsAccumulatedDeficit
Total of all stockholders' equity (deficit) items, net of receivables from officers, directors, owners, and affiliates of the entity which are attributable to the parent. The amount of the economic entity's stockholders' equity attributable to the parent excludes the amount of stockholders' equity which is allocable to that ownership interest in subsidiary equity which is not attributable to the parent (noncontrolling interest, minority interest). This excludes temporary equity and is sometimes called permanent equity.
-Number Topic 4
-Section E
-Subparagraph (SAB TOPIC 4.E)
-Paragraph A3
-Appendix A
Name: us-gaap_StockholdersEquity
Name: us-gaap_StockholdersEquityAbstract
The amount allocated to treasury stock. Treasury stock is common and preferred shares of an entity that were issued, repurchased by the entity, and are held in its treasury.
-Name FASB Technical Bulletin (FTB)
-Number 85-6
Name: us-gaap_TreasuryStockValue
Condensed Consolidated Balance Sheets (Unaudited) (Parenthetical) (USD $)
Condensed Consolidated Balance Sheets [Abstract]
Common stock, par value $ 0.001 $ 0.001
Common stock, shares authorized 100,000,000 100,000,000
Common stock, shares issued 49,832,054 49,564,877
Common stock, shares outstanding 45,866,202 47,387,425
Treasury stock, shares 3,965,852 2,177,452
Face amount or stated value of common stock per share; generally not indicative of the fair market value per share.
Name: us-gaap_CommonStockParOrStatedValuePerShare
Data Type: num:perShareItemType
The maximum number of common shares permitted to be issued by an entity's charter and bylaws.
Name: us-gaap_CommonStockSharesAuthorized
Total number of common shares of an entity that have been sold or granted to shareholders (includes common shares that were issued, repurchased and remain in the treasury). These shares represent capital invested by the firm's shareholders and owners, and may be all or only a portion of the number of shares authorized. Shares issued include shares outstanding and shares held in the treasury.
Name: us-gaap_CommonStockSharesIssued
Total number of shares of common stock held by shareholders. May be all or portion of the number of common shares authorized. These shares represent the ownership interest of the common shareholders. Shares outstanding equals shares issued minus shares held in treasury and other adjustments, if any.
-Subparagraph (SX 210.3-04)
Name: us-gaap_CommonStockSharesOutstanding
Name: us-gaap_StatementOfFinancialPositionAbstract
Number of common and preferred shares that were previously issued and that were repurchased by the issuing entity and held in treasury on the financial statement date. This stock has no voting rights and receives no dividends.
Name: us-gaap_TreasuryStockShares
Condensed Consolidated Statements of Operations (Unaudited) (USD $)
In Thousands, except Per Share data, unless otherwise specified
Condensed Consolidated Statements of Operations [Abstract]
Net revenue $ 90,523 $ 97,582 $ 191,747 $ 201,198
Cost of revenue (1) 68,396 [1] 70,662 [1] 144,144 [1] 144,291 [1]
Gross profit 22,127 26,920 47,603 56,907
Product development 5,102 [1] 5,933 [1] 11,176 [1] 11,484 [1]
Sales and marketing 3,686 [1] 4,665 [1] 7,720 [1] 9,410 [1]
General and administrative 4,847 [1] 4,943 [1] 10,064 [1] 9,665 [1]
Operating income 8,492 11,379 18,643 26,348
Interest income 36 47 74 114
Interest expense (1,115) (1,028) (2,198) (2,017)
Other income (expense), net (93) (79) (124) 85
Income before income taxes 7,320 10,319 16,395 24,530
Provision for taxes (2,887) (3,391) (6,468) (10,101)
Net income $ 4,433 $ 6,928 $ 9,927 $ 14,429
Net income per share:
Basic $ 0.09 $ 0.15 $ 0.21 $ 0.32
Diluted $ 0.09 $ 0.14 $ 0.20 $ 0.30
Weighted average shares used in computing net income per share:
Basic 47,054 45,858 47,266 45,478
Diluted 47,937 49,194 48,442 48,153
[1] (1) Cost of revenue and operating expenses include stock-based compensation expense as follows:
The aggregate cost of goods produced and sold and services rendered during the reporting period.
Name: us-gaap_CostOfRevenue
Name: us-gaap_EarningsPerShareAbstract
The amount of net income (loss) for the period per each share of common stock or unit outstanding during the reporting period.
-Name Emerging Issues Task Force (EITF)
Reference 10: http://www.xbrl.org/2003/role/presentationRef
Name: us-gaap_EarningsPerShareBasic
The amount of net income (loss) for the period available to each share of common stock or common unit outstanding during the reporting period and to each share or unit that would have been outstanding assuming the issuance of common shares or units for all dilutive potential common shares or units outstanding during the reporting period.
Name: us-gaap_EarningsPerShareDiluted
The aggregate total of expenses of managing and administering the affairs of an entity, including affiliates of the reporting entity, which are not directly or indirectly associated with the manufacture, sale or creation of a product or product line.
Name: us-gaap_GeneralAndAdministrativeExpense
Aggregate revenue less cost of goods and services sold or operating expenses directly attributable to the revenue generation activity.
-Subparagraph (SX 210.5-03.1,2)
Name: us-gaap_GrossProfit
Sum of operating profit and nonoperating income or expense before Income or Loss from equity method investments, income taxes, extraordinary items, and noncontrolling interest.
-Paragraph h
-Subparagraph 1(i)
-Subparagraph (SX 210.4-08.(h)(1)(i))
Name: us-gaap_IncomeLossFromContinuingOperationsBeforeIncomeTaxesMinorityInterestAndIncomeLossFromEquityMethodInvestments
Name: us-gaap_IncomeStatementAbstract
The sum of the current income tax expense or benefit and the deferred income tax expense or benefit pertaining to continuing operations.
-Subparagraph a, b
-Subparagraph (SX 210.4-08.(h))
-Glossary Income Tax Expense (or Benefit)
-Subparagraph (a),(b)
Name: us-gaap_IncomeTaxExpenseBenefit
The cost of borrowed funds accounted for as interest that was charged against earnings during the period.
-Publisher OTS
-Name Federal Regulation (FR)
-Number Title 12
-Chapter V
-Section 563c.102
-Subsection II
-LegacyDoc This is a non-GAAP reference that was included in the 2009 taxonomy. It will be removed from future versions of this taxonomy.
Name: us-gaap_InterestExpense
Income derived from investments in debt securities and on cash and cash equivalents the earnings of which reflect the time value of money or transactions in which the payments are for the use or forbearance of money.
-Subparagraph (SX 210.5-03.7(b))
Name: us-gaap_InvestmentIncomeInterest
The portion of profit or loss for the period, net of income taxes, which is attributable to the parent.
-Number 87-21
-Glossary Net Income
-Glossary Other Comprehensive Income
Name: us-gaap_NetIncomeLoss
Name: us-gaap_OperatingExpensesAbstract
The net result for the period of deducting operating expenses from operating revenues.
Name: us-gaap_OperatingIncomeLoss
The net amount of other income and expense amounts, the components of which are not separately disclosed on the income statement, resulting from ancillary business-related activities (that is, excluding major activities considered part of the normal operations of the business) also known as other nonoperating income (expense) recognized for the period. Such amounts may include: (a) dividends, (b) interest on securities, (c) net gains or losses on securities, (d) unusual costs, (e) gains or losses on foreign exchange transactions, and (f) miscellaneous other income and expense items.
Name: us-gaap_OtherNonoperatingIncomeExpense
The aggregate costs incurred (1) in a planned search or critical investigation aimed at discovery of new knowledge with the hope that such knowledge will be useful in developing a new product or service, a new process or technique, or in bringing about a significant improvement to an existing product or process; or (2) to translate research findings or other knowledge into a plan or design for a new product or process or for a significant improvement to an existing product or process whether intended for sale or the entity's use, during the reporting period charged to research and development projects, including the costs of developing computer software up to the point in time of achieving technological feasibility, and costs allocated in accounting for a business combination to in-process projects deemed to have no alternative future use.
-Subparagraph g
Name: us-gaap_ResearchAndDevelopmentExpense
Aggregate revenue recognized during the period (derived from goods sold, services rendered, insurance premiums, or other activities that constitute an entity's earning process). For financial services companies, also includes investment and interest income, and sales and trading gains.
Name: us-gaap_Revenues
The aggregate total amount of expenses directly related to the marketing or selling of products or services.
Name: us-gaap_SellingAndMarketingExpense
The average number of shares or units issued and outstanding that are used in calculating diluted EPS or earnings per unit (EPU), determined based on the timing of issuance of shares or units in the period.
Name: us-gaap_WeightedAverageNumberOfDilutedSharesOutstanding
Name: us-gaap_WeightedAverageNumberOfSharesOutstandingAbstract
Number of [basic] shares or units, after adjustment for contingently issuable shares or units and other shares or units not deemed outstanding, determined by relating the portion of time within a reporting period that common shares or units have been outstanding to the total time in that period.
-Paragraph 171
-Glossary Weighted-Average Number of Common Shares Outstanding
Name: us-gaap_WeightedAverageNumberOfSharesOutstandingBasic
Condensed Consolidated Statements of Operations (Unaudited) (Parenthetical) (USD $)
Stock-based compensation $ 6,895 $ 7,346
Stock-based compensation 1,197 1,129 2,376 2,273
Stock-based compensation 682 691 1,342 1,415
Stock-based compensation $ 801 $ 804 $ 1,557 $ 1,460
The aggregate amount of noncash, equity-based employee remuneration. This may include the value of stock or unit options, amortization of restricted stock or units, and adjustment for officers' compensation. As noncash, this element is an add back when calculating net cash generated by operating activities using the indirect method.
Name: us-gaap_ShareBasedCompensation
Condensed Consolidated Statements of Cash Flows (Unaudited) (USD $)
Net income $ 9,927 $ 14,429
Provision for sales returns and doubtful accounts receivable (32) (468)
Stock-based compensation 6,895 7,346
Excess tax benefits from stock-based compensation (97) (5,312)
Other non-cash adjustments, net 875 85
Changes in assets and liabilities, net of effects of acquisitions:
Accounts receivable 412 123
Prepaid expenses and other assets 1,668 (2,705)
Other assets, noncurrent (6) 167
Accounts payable 552 5,255
Accrued liabilities (10,287) (2,654)
Deferred revenue (493) 440
Other liabilities, noncurrent 906 392
Net cash provided by operating activities 24,945 29,718
Capital expenditures (1,384) (2,947)
Business acquisitions, net of notes payable and cash acquired (31,203) (86,628)
Internal software development costs (1,082) (880)
Purchases of marketable securities (22,686) (18,916)
Proceeds from sales and maturities of marketable securities 18,035
Other investing activities 30 (6)
Net cash used in investing activities (38,290) (109,377)
Payments for issuance of common stock (106)
Proceeds from exercise of common stock options 2,187 9,614
Proceeds from bank debt 5,884 24,800
Principal payments on bank debt (2,625) (1,775)
Payment of bank loan upfront fees (1,370)
Principal payments on acquisition-related notes payable (1,771) (7,111)
Excess tax benefits from stock-based compensation 97 5,312
Withholding taxes related to restricted stock net share settlement (262)
Repurchases of common stock (15,556)
Net cash (used in) provided by financing activities (13,416) 30,734
Effect of exchange rate changes on cash and cash equivalents 28 (24)
Net decrease in cash and cash equivalents (26,733) (48,949)
Cash and cash equivalents at beginning of period 132,290 155,770
Cash and cash equivalents at end of period 105,557 106,821
Supplemental Disclosure of Cash Flow Information
Cash paid for interest 1,855 1,940
Cash paid for taxes 4,941 12,974
Supplemental Disclosure of Noncash Investing and Financing Activities
Notes payable issued in connection with business acquisitions $ 3,167 $ 2,956
Payment Of Bank Loan Up front Fees.
Name: qnst_PaymentOfBankLoanUpfrontFees
Business acquisitions, net of notes payable and cash acquired
Name: qnst_PaymentsToAcquireBusinessesNetOfCashAcquiredAndNotesPayable
Provision for sales returns and doubtful accounts receivable
Name: qnst_ProvisionForDoubtfulAccountsAndSalesReturns
Name: us-gaap_AdjustmentsToReconcileNetIncomeLossToCashProvidedByUsedInOperatingActivitiesAbstract
The increase (decrease) during the reporting period in cash and cash equivalents. While for technical reasons this element has no balance attribute, the default assumption is a debit balance consistent with its label.
Name: us-gaap_CashAndCashEquivalentsPeriodIncreaseDecrease
Name: us-gaap_CashFlowNoncashInvestingAndFinancingActivitiesDisclosureAbstract
The aggregate expense recognized in the current period that allocates the cost of tangible assets, intangible assets, or depleting assets to periods that benefit from use of the assets.
Name: us-gaap_DepreciationDepletionAndAmortization
The effect of exchange rate changes on cash balances held in foreign currencies.
Name: us-gaap_EffectOfExchangeRateOnCashAndCashEquivalents
Reductions in the entity's income taxes that arise when compensation cost (from non-qualified share-based compensation) recognized on the entity's tax return exceeds compensation cost from equity-based compensation recognized in financial statements. This element represents the cash inflow reported in the enterprise's financing activities.
-Paragraph A240
-Subparagraph i
Name: us-gaap_ExcessTaxBenefitFromShareBasedCompensationFinancingActivities
Reductions in the entity's income taxes that arise when compensation cost (from non-qualified equity-based compensation) recognized on the entity's tax return exceeds compensation cost from equity-based compensation recognized in financial statements. This element reduces net cash provided by operating activities.
-Paragraph A96
Name: us-gaap_ExcessTaxBenefitFromShareBasedCompensationOperatingActivities
The amount of cash paid during the current period to foreign, federal, state, and local authorities as taxes on income.
-Subparagraph f
Name: us-gaap_IncomeTaxesPaid
The increase (decrease) during the reporting period in the aggregate amount of liabilities incurred (and for which invoices have typically been received) and payable to vendors for goods and services received that are used in an entity's business.
Name: us-gaap_IncreaseDecreaseInAccountsPayable
The increase (decrease) during the reporting period in amount due within one year (or one business cycle) from customers for the credit sale of goods and services.
Name: us-gaap_IncreaseDecreaseInAccountsReceivable
The increase (decrease) during the reporting period in the aggregate amount of expenses incurred but not yet paid.
Name: us-gaap_IncreaseDecreaseInAccruedLiabilities
The increase (decrease) during the reporting period, excluding the portion taken into income, in the liability reflecting revenue yet to be earned for which cash or other forms of consideration was received or recorded as a receivable.
Name: us-gaap_IncreaseDecreaseInDeferredRevenue
Name: us-gaap_IncreaseDecreaseInOperatingCapitalAbstract
The increase (decrease) during the reporting period in other assets used in operating activities not separately disclosed in the statement of cash flows. May include changes in other current assets, other noncurrent assets, or a combination of other current and noncurrent assets.
Name: us-gaap_IncreaseDecreaseInOtherOperatingAssets
The increase (decrease) during the reporting period in other liabilities used in operating activities not separately disclosed in the statement of cash flows. May include changes in other current liabilities, other noncurrent liabilities, or a combination of other current and noncurrent liabilities.
Name: us-gaap_IncreaseDecreaseInOtherOperatingLiabilities
The increase (decrease) during the reporting period in the value of prepaid expenses and other assets not separately disclosed in the statement of cash flows, for example, deferred expenses, intangible assets,or income taxes.
Name: us-gaap_IncreaseDecreaseInPrepaidDeferredExpenseAndOtherAssets
The amount of cash paid for interest during the period.
-Subparagraph (e)
Name: us-gaap_InterestPaid
The net cash inflow or outflow from financing activity for the period.
Name: us-gaap_NetCashProvidedByUsedInFinancingActivities
Name: us-gaap_NetCashProvidedByUsedInFinancingActivitiesAbstract
The net cash inflow or outflow from investing activity.
Name: us-gaap_NetCashProvidedByUsedInInvestingActivities
Name: us-gaap_NetCashProvidedByUsedInInvestingActivitiesAbstract
The net cash from (used in) all of the entity's operating activities, including those of discontinued operations, of the reporting entity. Operating activities generally involve producing and delivering goods and providing services. Operating activity cash flows include transactions, adjustments, and changes in value that are not defined as investing or financing activities. While for technical reasons this element has no balance attribute, the default assumption is a debit balance consistent with its label.
Name: us-gaap_NetCashProvidedByUsedInOperatingActivities
Name: us-gaap_NetCashProvidedByUsedInOperatingActivitiesAbstract
The fair value of notes issued in noncash investing and financing activities.
Name: us-gaap_NotesIssued1
Other income (expense) included in net income that results in no cash inflows or outflows in the period. Includes noncash adjustments to reconcile net income (loss) to cash provided by (used in) operating activities that are not separately disclosed.
Name: us-gaap_OtherNoncashIncomeExpense
The net cash outflow or inflow from other investing activities. This element is used when there is not a more specific and appropriate element in the taxonomy.
-Glossary Investing Activities
Name: us-gaap_PaymentsForProceedsFromOtherInvestingActivities
The cash outflow to reacquire common stock during the period.
-Glossary Financing Activities
Name: us-gaap_PaymentsForRepurchaseOfCommonStock
The cash outflow for cost incurred directly with the issuance of an equity security.
Name: us-gaap_PaymentsOfStockIssuanceCosts
The cash outflow paid by the company to cover an employee's income tax withholding obligation as part of a net-share settlement of a share-based award.
Name: us-gaap_PaymentsRelatedToTaxWithholdingForShareBasedCompensation
The cash outflow from purchases of trading, available-for-sale securities and held-to-maturity securities.
-Subparagraph b
Name: us-gaap_PaymentsToAcquireMarketableSecurities
The cash outflow associated with the acquisition of long-lived, physical assets that are used in the normal conduct of business to produce goods and services and not intended for resale; includes cash outflows to pay for construction of self-constructed assets.
-Subparagraph c
-Subparagraph (c)
Name: us-gaap_PaymentsToAcquirePropertyPlantAndEquipment
The cash outflow associated with the development or modification of software programs or applications for internal use (that is, not to be sold, leased or otherwise marketed to others) that qualify for capitalization.
Name: us-gaap_PaymentsToDevelopSoftware
The cash inflow from bank borrowing during the year.
Name: us-gaap_ProceedsFromBankDebt
The cash inflow associated with the aggregate amount received by the entity through sale or maturity of marketable securities (held-to-maturity or available-for-sale) during the period.
Name: us-gaap_ProceedsFromSaleAndMaturityOfMarketableSecurities
The cash inflow associated with the amount received from holders exercising their stock options. This item inherently excludes any excess tax benefit, which the entity may have realized and reported separately.
-Subparagraph (j)
Name: us-gaap_ProceedsFromStockOptionsExercised
The cash outflow to settle a bank borrowing during the year.
Name: us-gaap_RepaymentsOfBankDebt
The cash outflow for a borrowing supported by a written promise to pay an obligation.
Name: us-gaap_RepaymentsOfNotesPayable
Name: us-gaap_SupplementalCashFlowInformationAbstract
The Company [Abstract]
1. The Company
QuinStreet, Inc. (the "Company") is an online vertical marketing and media company. The Company was incorporated in California on April 16, 1999 and reincorporated in Delaware on December 31, 2009. The Company provides vertically oriented customer acquisition programs for its clients. The Company also provides hosted solutions for direct selling companies. The corporate headquarters are located in Foster City, California, with offices in Arkansas, Florida, Kentucky, Massachusetts, Nevada, New Jersey, New York, North Carolina, Ohio, Oklahoma, Oregon, India and the United Kingdom.
Name: us-gaap_OrganizationConsolidationAndPresentationOfFinancialStatementsAbstract
The entire disclosure for organization, consolidation and basis of presentation of financial statements disclosure.
-URI http://asc.fasb.org/subtopic&trid=2122524
-Number FAS140-4/FIN46(R)-8
-Paragraph 8, C1, C7
-URI http://asc.fasb.org/extlink&oid=6970148&loc=SL6228881-111685
-Paragraph 2-6
-Name Statement of Position (SOP)
-Name FASB Interpretation (FIN)
-Number 46R
-Paragraph 4, 14, 15
Name: us-gaap_OrganizationConsolidationAndPresentationOfFinancialStatementsDisclosureTextBlock
Data Type: nonnum:textBlockItemType
Summary of Significant Accounting Policies
Summary of Significant Accounting Policies [Abstract]
Principles of Consolidation
The condensed consolidated financial statements include the accounts of the Company and its subsidiaries. Intercompany balances and transactions have been eliminated in consolidation.
Unaudited Interim Financial Information
The accompanying condensed consolidated financial statements and the notes to the condensed consolidated financial statements as of December 31, 2011 and for the three and six months ended December 31, 2011 and 2010 are unaudited. These unaudited interim condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States ("GAAP") and applicable rules and regulations of the Securities and Exchange Commission ("SEC") regarding interim financial reporting. Certain information and note disclosures normally included in the financial statements prepared in accordance with GAAP have been condensed or omitted pursuant to such rules and regulations. Accordingly, these interim condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto contained in the Company's Annual Report on Form 10-K for the fiscal year ended June 30, 2011, as filed with the SEC on August 30, 2011. The condensed consolidated balance sheet at June 30, 2011 included herein was derived from the audited financial statements as of that date, but does not include all disclosures, including notes required by GAAP.
The unaudited interim condensed consolidated financial statements have been prepared on the same basis as the audited consolidated financial statements and in the opinion of management include all adjustments (consisting only of normal recurring adjustments) necessary for the fair statement of the Company's condensed consolidated balance sheet at December 31, 2011, its condensed consolidated statements of operations for the three and six months ended December 31, 2011 and 2010, and its condensed consolidated statements of cash flows for the six months ended December 31, 2011 and 2010. The results of operations for the six months ended December 31, 2011 are not necessarily indicative of the results to be expected for the fiscal year ending June 30, 2012, or any other future period.
The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements and reported amounts of revenue and expenses during the reporting period. On an ongoing basis, management evaluates these estimates, judgments and assumptions, including those related to revenue recognition, stock-based compensation, goodwill, intangible assets, long-lived assets and income taxes. The Company bases these estimates on historical and anticipated results and trends and on various other assumptions that the Company believes are reasonable under the circumstances, including assumptions as to future events. These estimates form the basis for making judgments about the carrying values of assets and liabilities and recorded revenue and expenses that are not readily apparent from other sources. Actual results could differ from those estimates, and such differences could affect the results of operations reported in future periods.
Accounting Policies
The significant accounting policies are described in Note 2 to the consolidated financial Statements included in the Annual Report on Form 10-K for the fiscal year ended June 30, 2011. There have been no significant changes in the accounting policies subsequent to June 30, 2011.
Concentrations of Credit Risk
No client accounted for 10% or more of total revenue for the three or six months ended December 31, 2011 or for the same period in fiscal year 2011. No client accounted for 10% or more of net accounts receivable as of December 31, 2011 or June 30, 2011.
Fair Value of Financial Instruments
The Company's financial instruments consist principally of cash equivalents, accounts receivable, accounts payable, acquisition-related promissory notes, and a term loan. The fair value of the Company's cash equivalents is determined based on quoted prices in active markets for identical assets. The recorded values of the Company's accounts receivable and accounts payable approximate their current fair values due to the relatively short-term nature of these accounts. The fair value of acquisition-related promissory notes approximates their recorded amounts as the interest rates on similar financing arrangements available to the Company at December 31, 2011 approximates the interest rates implied when these acquisition-related promissory notes were originally issued and recorded. The Company believes that the fair values of the term loan approximate their recorded amounts at December 31, 2011 as the interest rates on these instruments are variable and based on market interest rates and after consideration of default and credit risk.
In September 2011, the FASB issued an update to the accounting standard for goodwill and intangibles. The revised standard is intended to simplify the goodwill impairment test by providing an option to first perform a qualitative assessment to determine whether further impairment testing is necessary. The revised standard is effective for annual and interim goodwill impairment tests performed for fiscal years beginning after December 15, 2011, with early adoption permitted. The Company does not anticipate that its adoption of the revised standard on July 1, 2012 will have a material effect on its consolidated financial statements.
Name: us-gaap_AccountingPoliciesAbstract
The entire disclosure for all significant accounting policies of the reporting entity.
Name: us-gaap_SignificantAccountingPoliciesTextBlock
Net Income Attributable to Common Stockholders and Net Income per Share
Earnings Per Share [Abstract]
3. Net Income Attributable to Common Stockholders and Net Income per Share
Basic net income per share is computed by dividing net income by the weighted average number of shares of common stock outstanding during the period. Diluted net income per share is computed by using the weighted-average number of shares of common stock outstanding, including potential dilutive shares of common stock assuming the dilutive effect of outstanding stock options and restricted stock units using the treasury stock method.
The following table presents the calculation of basic and diluted net income per share:
December 31, Six Months Ended
(In thousands, except per share data) (In thousands, except per share data)
Numerator:
Basic and Diluted:
$ 4,433 $ 6,928 $ 9,927 $ 14,429
Denominator:
Basic:
Weighted average shares of common stock used in computing basic net income per share
Diluted:
Weighted average effect of dilutive securities:
Weighted average shares of common stock used in computing diluted net income per share
$ 0.09 $ 0.15 $ 0.21 $ 0.32
Securities excluded from weighted average shares used in computing diluted net income per share because the effect would have been anti-dilutive: (1)
These weighted shares relate to anti-dilutive stock options and restricted stock units as calculated using the treasury stock method and could be dilutive in the future.
The entire disclosure for earnings per share.
Name: us-gaap_EarningsPerShareTextBlock
Marketable Securities and Fair Value Measurements
Marketable Securities and Fair Value Measurements [Abstract]
4. Marketable Securities and Fair Value Measurements
All liquid investments with maturities of three months or less at the date of purchase are classified as cash equivalents. Investments with maturities greater than three months at the date of purchase are classified as marketable securities. The Company's marketable securities have been classified and accounted for as available-for-sale. Management determines the appropriate classification of its investments at the time of purchase and reevaluates the available-for-sale designation as of each balance sheet date. Available-for-sale securities are carried at fair value, with unrealized gains and losses, net of tax, reported as a component of stockholders' equity.
The following table summarizes unrealized gains and losses related to available-for-sale securities held by the Company as of December 31, 2011 and June 30, 2011:
As of December 31, 2011
Cost Gross
Unrealized
Gains Gross
Losses Estimated
U.S. municipal securities
$ 33,326 $ 7 $ — $ 33,333
9,120 — 1 9,119
56,783 — — 56,783
$ 99,229 $ 7 $ 1 $ 99,235
As of June 30, 2011
$ 23,625 $ 12 $ — $ 23,637
19,046 — 10 19,036
$ 94,325 $ 12 $ 10 $ 94,327
The Company did not realize any gains or losses from sales of its securities in the periods presented. As of December 31, 2011 and June 30, 2011, the Company did not hold securities that had maturity dates greater than one year.
Fair Value Measurements
Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability ("exit price") in an orderly transaction between market participants at the measurement date. The FASB has established a fair value hierarchy that distinguishes between (1) market participant assumptions developed based on market data obtained from independent sources (observable inputs) and (2) an entity's own assumptions about market participant assumptions developed based on the best information available in the circumstances (unobservable inputs). The fair value hierarchy consists of three broad levels, which gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1) and the lowest priority to unobservable inputs (Level 3).
The three levels of the fair value hierarchy under the guidance for fair value measurement are described below:
Level 1 — Inputs are unadjusted quoted prices in active markets for identical assets or liabilities. Pricing inputs are based upon quoted prices in active markets for identical assets or liabilities that the reporting entity has the ability to access at the measurement date. The valuations are based on quoted prices of the underlying security that are readily and regularly available in an active market, and accordingly, a significant degree of judgment is not required. As of December 31, 2011, the Company used Level 1 assumptions for its money market funds.
Level 2 — Pricing inputs are based upon quoted prices for similar instruments in active markets, quoted prices for identical or similar instruments in markets that are not active, and model-based valuation techniques for which all significant assumptions are observable in the market or can be corroborated by observable market data for substantially the full term of the assets or liabilities. As of December 31, 2011, the Company used Level 2 assumptions for its U.S. municipal securities and certificates of deposits.
Level 3 — Pricing inputs are generally unobservable for the assets or liabilities and include situations where there is little, if any, market activity for the investment. The inputs into the determination of fair value require management's judgment or estimation of assumptions that market participants would use in pricing the assets or liabilities. The fair values are therefore determined using model-based techniques that include option pricing models, discounted cash flow models, and similar techniques. As of December 31, 2011, the Company did not have any Level 3 financial assets or liabilities.
The securities held by the Company as of December 31, 2011 and June 30, 2011 were categorized as follows in the fair value hierarchy:
Fair Value Measurements as of December 31, 2011 Using
Active Markets
for Identical Assets
(Level 1) Significant Other
(Level 2) Total
$ — $ 33,333 $ 33,333
— 9,119 9,119
56,783 — 56,783
$ 56,783 $ 42,452 $ 99,235
Fair Value Measurements as of June 30, 2011 Using
— 19,036 19,036
Name: qnst_MarketableSecuritiesAndFairValueMeasurementsAbstract
Name: qnst_MarketableSecuritiesAndFairValueMeasurementsTextBlock
Acquisitions [Abstract]
5. Acquisitions
Acquisitions in Fiscal Year 2012
Acquisition of NarrowCast Group, LLC ("IT Business Edge" or "ITBE")
On August 25, 2011, the Company acquired 100% of the outstanding equity interests of ITBE, in exchange for $23,961 in cash paid upon closing of the acquisition. The results of ITBE's operations have been included in the consolidated financial statements since the acquisition date. The Company acquired ITBE to broaden its media access in the business-to-business market.
The acquisition was accounted for as a purchase business combination. The Company allocated the purchase price to tangible assets acquired, liabilities assumed and identifiable intangible assets acquired based on their estimated fair values. The excess of the purchase price over the aggregate fair value was recorded as goodwill. The goodwill is deductible for tax purposes. The following table summarizes the preliminary allocation of the purchase price and the estimated useful lives of the identifiable intangible assets acquired as of the date of the acquisition:
Fair Value Estimated
Useful Life
Tangible assets acquired
Liabilities assumed
(1,868 )
Customer/publisher/advertiser relationships
3,230 5 years
420 2 years
Website/trade/domain names
Registered user database and other
Noncompete agreements
12,042 Indefinite
Other Acquisitions in Fiscal Year 2012
During the six months ended December 31, 2011, in addition to the acquisition of ITBE, the Company acquired operations from six other online publishing businesses in exchange for $7,621 in cash paid upon closing of the acquisitions, $3,125 in non-interest-bearing promissory notes payable over a period of two years, secured by the assets acquired in respect to which the notes were issued and $165 in non-interest-bearing, unsecured promissory notes payable over a period of one year. The Company also recorded $4,500 in earn-out payments related to a prior period acquisition as an addition to goodwill; the payment is due in January 2012 and is reflected in debt as of December 31, 2011. The aggregate purchase price recorded was as follows:
Fair value of debt (net of $123 of imputed interest)
The acquisitions were accounted for as purchase business combinations. In each of the acquisitions, the Company allocated the purchase price to identifiable intangible assets acquired based on their estimated fair values. The excess of the purchase price over the aggregate fair value was recorded as goodwill. The goodwill is deductible for tax purposes. The following table summarizes the preliminary allocation of the purchase prices of these other acquisitions during the six months ended December 31, 2011 and the estimated useful lives of the identifiable intangible assets acquired as of the respective dates of these acquisitions:
$ 187 3 years
2,521 2-3 years
Acquired technology and other
560 4-5 years
78 1-3 years
In fiscal year 2011, the Company acquired 100% of the outstanding shares of Car Insurance.com, Inc., a Florida-based online insurance business, and certain of its affiliated companies, for its capacity to generate online visitors in the financial services market, the website business of Insurance.com, an Ohio-based online insurance business for its capacity to generate online visitors in the financial services market, as well as 13 other online publishing businesses. The Company also recorded $4,500 in earn-out payments related to a prior period acquisition as addition to goodwill.
The total purchase prices recorded were as follows:
Fiscal Year 2011 acquisitions
CarInsurance.com Insurance.com Other Total
$ 49,655 $ 33,000 $ 9,222 $ 91,877
Fair value of debt (net of imputed interest)
— 2,483 828 3,311
$ 49,655 $ 35,483 $ 10,050 $ 95,188
The acquisitions were accounted for as purchase business combinations. The Company allocated the purchase price to tangible assets acquired, liabilities assumed and identifiable intangible assets acquired based on their estimated fair values. The excess of the purchase price over the aggregate fair value was recorded as goodwill. The goodwill is deductible for tax purposes. The following table summarizes the allocation of the purchase price and the estimated useful lives of the identifiable intangible assets acquired as of the date of the acquisitions:
CarInsurance.com Insurance.com Other Total Estimated
$ 661 $ 1,204 $ — $ 1,865
(807 ) — — (807 )
260 2,120 233 2,613 3-7 years
16,130 4,290 1,274 21,694 3-7 years
4,350 2,940 541 7,831 4-10 years
Acquired technology
3,000 5,530 — 8,530 2-4 years
40 60 88 188 1-5 years
26,021 19,339 7,914 53,274 Indefinite
Pro Forma Financial Information
The unaudited pro forma financial information in the table below summarizes the combined results of operations for the Company and other companies that were acquired since the beginning of fiscal year 2011. The pro forma financial information includes the business combination accounting effects resulting from these acquisitions, including amortization charges from acquired intangible assets and the related tax effects as though the acquisitions were effected as of the beginning of fiscal year 2011. The unaudited pro forma financial information as presented below is for informational purposes only and is not indicative of the results of operations that would have been achieved if the acquisitions had taken place at the beginning of fiscal year 2011.
$ 90,523 $ 100,895 $ 193,390 $ 208,849
4,222 6,055 9,353 13,464
Basic net income per share
Diluted net income per share
The entire disclosure for a business combination (or series of individually immaterial business combinations) completed during the period, including background, timing, and recognized assets and liabilities. The disclosure may include leverage buyout transactions (as applicable).
-Appendix F
-Paragraph F4
-Paragraph 67-73
Name: us-gaap_BusinessCombinationDisclosureTextBlock
Name: us-gaap_BusinessCombinationsAbstract
Intangible Assets, Net and Goodwill
Intangible Assets, Net and Goodwill [Abstract]
6. Intangible Assets, Net and Goodwill
Intangible assets, net balances, excluding goodwill, consisted of the following:
December 31, 2011 June 30, 2011
Amount Accumulated
Amortization Net
Amount Gross
$ 32,687 $ (19,740 ) $ 12,947 $ 29,269 $ (16,892 ) $ 12,377
59,603 (29,792 ) 29,811 56,663 (25,142 ) 31,521
26,436 (10,496 ) 15,940 23,533 (8,569 ) 14,964
Acquired technology and others
25,147 (15,728 ) 9,419 20,190 (13,205 ) 6,985
$ 143,873 $ (75,756 ) $ 68,117 $ 129,655 $ (63,808 ) $ 65,847
Amortization of intangible assets was $6,162 and $11,948 in the three and six months ended December 31, 2011, respectively, and $5,529 and $10,451 in the three and six months ended December 31, 2010, respectively.
Future amortization expense for the Company's acquisition-related intangible assets as of December 31, 2011 was as follows:
Year Ending June 30,
2012 (remaining six months)
Thereafter
The change in the carrying amount of goodwill for the six months ended December 31, 2011 was as follows:
DMS DSS Total
Balance at June 30, 2011
$ 210,625 $ 1,231 $ 211,856
Balance at December 31, 2011
In the six months ended December 31, 2011, the additions to goodwill relate to the Company's acquisitions as described in Note 5, and primarily reflect the value of the synergies expected to be generated from combining the Company's technology and know-how with the acquired businesses' access to online visitors.
Name: us-gaap_GoodwillAndIntangibleAssetsDisclosureAbstract
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.
-Paragraph 42, 43, 44, 45, 46, 47
Name: us-gaap_GoodwillAndIntangibleAssetsDisclosureTextBlock
Debt [Abstract]
7. Debt
During the six months ended December 31, 2011 and 2010, the Company issued total promissory notes for the acquisition of businesses of $3,290 and $2,956, respectively, net of imputed interest amounts of $123 and $184, respectively. For these notes, interest was imputed such that the notes carry an interest rate commensurate with that available to the Company in the market for similar debt instruments. The Company recorded accretion of promissory notes of $87 and $167 as interest expense for the three and six months ended December 31, 2011, respectively, and $127 and $303 for the three and six months ended December 31, 2010, respectively. Certain of the promissory notes are secured by the assets acquired in respect to which the notes were issued.
Credit Facility
On November 4, 2011, the Company replaced its annual existing $225,000 credit facility with a new $300,000 credit facility. The new facility consists of a $100,000 five-year term loan, with annual principal amortization of 5%, 10%, 15%, 20% and 50%, and a $200,000 five-year revolving credit line.
Borrowings under the credit facility are collateralized by the Company's assets and interest is payable at specified margins above either the Eurodollar Margin or the Prime Rate. The interest rate varies dependent upon the ratio of funded debt to adjusted EBITDA and ranges from Eurodollar Margin + 1.625% to 2.375% or Prime + 1.00% for the revolving credit line and from Eurodollar Margin + 2.00% to 2.75% or Prime + 1.00% for the term loan. Adjusted EBITDA is defined as net income less provision for taxes, depreciation expense, amortization expense, stock-based compensation expense, interest and other income (expense), and acquisition costs for business combinations. The interest rate margins for the new facility are 0.50% less than the commensurate margins under the Company's previous credit facility. The revolving credit line requires an annual facility fee of 0.375% of the revolving credit line capacity. The credit facility expires in November 2016. The credit facility agreement restricts the Company's ability to raise additional debt financing and pay dividends. In addition, the Company is required to maintain financial ratios computed as follows:
1. Fixed charge coverage: ratio of (i) trailing twelve months of adjusted EBITDA to (ii) the sum of capital expenditures, net cash interest expense, cash taxes, cash dividends and trailing twelve months payments of indebtedness. Payment of unsecured indebtedness is excluded to the degree that sufficient unused revolving credit line exists such that the relevant debt payment could be made from the credit facility.
2. Funded debt to adjusted EBITDA: ratio of (i) the sum of all obligations owed to lending institutions, the face amount of any letters of credit, indebtedness owed in connection with acquisition-related notes and indebtedness owed in connection with capital lease obligations to (ii) trailing twelve months of adjusted EBITDA.
Under the terms of the credit facility, the Company must maintain a minimum fixed charge coverage ratio of 1.15:1.00 and cannot exceed a maximum funded debt to adjusted EBITDA ratio of 3.00:1.00, and the terms also require the Company to comply with other nonfinancial covenants. The Company was in compliance with the covenants of this new credit facility as of December 31, 2011.
Upfront arrangement fees incurred in connection with the credit facility totaled $1,500 and will be deferred and amortized over the remaining term of the arrangement. As of December 31, 2011, $100,000 was outstanding under the term loan and there was no outstanding balance under the revolving credit line.
As of June 30, 2011, $30,188 was outstanding under the term loan under the previous credit facility. As of June 30, 2011, $66,553 was outstanding under the revolving credit line of the previous credit facility. The Company was in compliance with the covenants of its previous credit facility as of June 30, 2011.
Debt Maturities
The maturities of debt as of December 31, 2011 were as follows:
Promissory
Notes Credit
— 40,000
Less: imputed interest and unamortized discounts
(454 ) (2,370 )
Less: current portion
(11,916 ) (4,556 )
Noncurrent portion of debt
$ 4,526 $ 93,074
The Company has a $350 letter of credit agreement with a financial institution that is used as collateral for fidelity bonds placed with an insurance company and a $500 letter of credit agreement with a financial institution that is used as collateral for the Company's corporate headquarters' operating lease. The letters of credit automatically renew annually without amendment unless cancelled by the financial institutions within 30 days of the annual expiration date.
Name: us-gaap_DebtDisclosureAbstract
The entire disclosure for information about short-term and long-term debt arrangements, which includes amounts of borrowings under each line of credit, note payable, commercial paper issue, bonds indenture, debenture issue, own-share lending arrangements and any other contractual agreement to repay funds, and about the underlying arrangements, rationale for a classification as long-term, including repayment terms, interest rates, collateral provided, restrictions on use of assets and activities, whether or not in compliance with debt covenants, and other matters important to users of the financial statements, such as the effects of refinancing and noncompliance with debt covenants.
-Subparagraph (SX 210.5-02.19,20,22)
Name: us-gaap_DebtDisclosureTextBlock
Commitments and Contingencies
Commitments and Contingencies [Abstract]
The Company leases office space and equipment under non-cancelable operating leases with various expiration dates through 2018. Rent expense for the three and six months ended December 31, 2011 was $841 and $1,694, respectively, and for the three and six months ended December 31, 2010 was $1,017 and $1,687, respectively. The Company recognizes rent expense on a straight-line basis over the lease period and accrues for rent expense incurred but not paid.
Future annual minimum lease payments under noncancelable operating leases as of December 31, 2011 were as follows:
2017 and thereafter
The lease for the Company's previous corporate headquarters located at 1051 Hillsdale Boulevard, Foster City, California expired in October 2010.
In February 2010, the Company entered into a new lease agreement for office space located at 950 Tower Lane, Foster City, California. The term of the lease began on November 1, 2010 and expires on October 31, 2018. The Company has the option to extend the term of the lease twice by one additional year. The monthly base rent was abated for the first year of the lease, is $118 in the current lease year and will be $182 in the third year of the lease term. In the following years the monthly base rent will increase approximately 3% annually.
Guarantor Arrangements
The Company has agreements whereby it indemnifies its officers and directors for certain events or occurrences while the officer or director is, or was, serving at the Company's request in such capacity. The term of the indemnification period is for the officer or director's lifetime. The maximum potential amount of future payments the Company could be required to make under these indemnification agreements is unlimited; however, the Company has a director and officer insurance policy that limits its exposure and enables the Company to recover a portion of any future amounts paid under certain circumstances and subject to deductibles and exclusions. As a result of its insurance policy coverage, the Company believes the estimated fair value of these indemnification agreements is not material. Accordingly, the Company had no liabilities recorded for these agreements as of December 31, 2011 and June 30, 2011.
In the ordinary course of its business, the Company enters into standard indemnification provisions in its agreements with its clients. Pursuant to these provisions, the Company indemnifies its clients for certain losses suffered or incurred, including losses arising from violations of applicable law by the company or its third party publishers, actions or omissions of third party publishers and third-party claims that a Company product infringed upon any United States patent, copyright or other intellectual property rights. Where applicable, the Company generally limits such indemnities. With respect to its DSS products, the Company also generally reserves the right to resolve such claims by designing a non-infringing alternative or by obtaining a license on reasonable terms, and failing that, to terminate its relationship with the client. Subject to these limitations, the term of such indemnity provisions is generally coterminous with the corresponding agreements, but in some cases survives for a short period of time after termination of the agreement.
The potential amount of future payments to defend lawsuits or settle indemnified claims under these indemnification provisions is generally limited and the Company believes the estimated fair value of these indemnity provisions is not material, and accordingly, the Company had no liabilities recorded for these agreements as of December 31, 2011 and June 30, 2011.
In September 2010, a patent infringement lawsuit was filed against the Company by LendingTree, LLC ("LendingTree") in the United States District Court for the Western District of North Carolina, seeking a judgment that the Company has infringed a certain patent held by LendingTree, an injunctive order against the alleged infringing activities and an award for damages. Subsequently, LendingTree filed a first amended complaint adding an additional defendant. If an injunction is granted, it could force the Company to stop or alter certain of its business activities, such as its lead generation in certain client verticals. Currently, the case is in the pre-claims construction stage. While the Company intends to vigorously defend its position, neither the outcome of the litigation nor the amount and range of potential damages or exposure associated with the litigation can be assessed at this time.
Name: us-gaap_CommitmentsAndContingenciesDisclosureAbstract
The entire disclosure for commitments and contingencies.
-Paragraph 9, 10, 11, 12
Name: us-gaap_CommitmentsAndContingenciesDisclosureTextBlock
Stock Benefit Plans
Stock Benefit Plans [Abstract]
9. Stock Benefit Plans
Stock Incentive Plans
The Company may grant incentive stock options ("ISOs"), nonstatutory stock options ("NQSOs"), restricted stock, restricted stock units, stock appreciation rights, performance-based stock awards and other forms of equity compensation, as well as performance cash awards under its 2010 Equity Incentive Plan (the "2010 Incentive Plan"), or NQSOs and restricted stock units to non-employee directors under the 2010 Non-Employee Directors' Stock Award Plan (the "Directors' Plan"). To date, the Company has issued only ISOs, NQSOs and restricted stock units under the plans.
As of December 31, 2011, 4,905,132 shares were reserved and 2,983,468 shares were available for issuance under the 2010 Incentive Plan and 820,000 shares were reserved and 550,000 shares were available for issuance under the Directors' Plan.
The Company estimates the fair value of stock options at the date of grant using the Black-Scholes option-pricing model. Options are granted with an exercise price equal to the fair value of the common stock at the date of grant. The weighted average Black-Scholes model assumptions and the weighted average grant date fair value of employee stock options for the three and six months ended December 31, 2011 and 2010 were as follows:
Expected dividend yield
0.0 % 0.0 % 0.0 % 0.0 %
Risk-free interest rate
Grant date fair value
The fair value of restricted stock units is determined based on the closing price of the Company's common stock on the grant date.
Compensation expense is amortized net of estimated forfeitures on a straight-line basis over the requisite service period of the stock-based compensation awards.
Name: us-gaap_DisclosureOfCompensationRelatedCostsSharebasedPaymentsAbstract
The entire disclosure for compensation-related costs for equity-based compensation, which may include disclosure of policies, compensation plan details, allocation of equity compensation, incentive distributions, equity-based arrangements to obtain goods and services, deferred compensation arrangements, employee stock ownership plan details and employee stock purchase plan details.
-Paragraph 64, 65, A240
Name: us-gaap_DisclosureOfCompensationRelatedCostsShareBasedPaymentsTextBlock
Stockholders' Equity [Abstract]
10. Stockholders' Equity
The following table sets forth the components of comprehensive income for the three and six months ended December 31, 2011 and 2010:
Other comprehensive income (loss)
Unrealized gain (loss) on investments
— (13 ) 4 (13 )
Foreign currency translation adjustment
3 (5 ) 28 (24 )
On November 3, 2011, the Board of Directors authorized a stock repurchase program allowing the Company to repurchase outstanding shares of its common stock up to $50,000. The repurchase program expires in November 2012. Repurchases under this program may take place in the open market or in privately negotiated transactions and may be made under a Rule 10b5-1 plan. There is no guarantee as to the exact number of shares that will be repurchased by the Company, and the Company may discontinue repurchases at any time. The amount authorized by the Company's board of directors excludes broker commissions.
As of December 31, 2011, the Company had repurchased an aggregate of 1,788,400 shares of its common stock under this repurchase program at an average price of $9.25 per share for a total of $16,547 and the remaining amount available for the repurchase of the Company's common stock was $33,453.
Name: us-gaap_EquityAbstract
The entire disclosure for shareholders' equity, comprised of portions attributable to the parent entity and noncontrolling interest, if any, including other comprehensive income (as applicable). Including, but not limited to: (1) balances of common stock, preferred stock, additional paid-in capital, other capital and retained earnings; (2) accumulated balance for each classification of other comprehensive income and total amount of comprehensive income; (3) amount and nature of changes in separate accounts, including the number of shares authorized and outstanding, number of shares issued upon exercise and conversion, and for other comprehensive income, the adjustments for reclassifications to net income; (4) rights and privileges of each class of stock authorized; (5) basis of treasury stock, if other than cost, and amounts paid and accounting treatment for treasury stock purchased significantly in excess of market; (6) dividends paid or payable per share and in the aggregate for each class of stock for each period presented; (7) dividend restrictions and accumulated preferred dividends in arrears (in aggregate and per share amount); (8) retained earnings appropriations or restrictions, such as dividend restrictions; (9) impact of change in accounting principle, initial adoption of new accounting principle and correction of an error in previously issued financial statements; (10) shares held in trust for Employee Stock Ownership Plan (ESOP); (11) deferred compensation related to issuance of capital stock; (12) note received for issuance of stock; (13) unamortized discount on shares; (14) description, terms, and number of warrants or rights outstanding; (15) shares under subscription and subscription receivables, effective date of new retained earnings after quasi-reorganization and deficit eliminated by quasi-reorganization and, for a period of at least ten years after the effective date, the point in time from which the new retained dates; and (16) retroactive effective of subsequent change in capital structure.
-Subparagraph (SX 210.4-08.(d),(e))
-Subparagraph (SAB TOPIC 4.C)
-Section C
-Glossary Preferred Stock
-Paragraph d
-Section B
-Paragraph 7, 11A
-Paragraph 2, 3, 4, 5, 6, 7, 8
Name: us-gaap_StockholdersEquityNoteDisclosureTextBlock
Segment Information [Abstract]
11. Segment Information
Operating segments are defined as components of an enterprise about which separate financial information is available that is evaluated regularly by the chief operating decision maker, or decision making group, in deciding how to allocate resources and in assessing performance. The Company's chief operating decision maker is its chief executive officer. The Company's chief executive officer reviews financial information presented on a consolidated basis, accompanied by information about operating segments, including net sales and operating income before depreciation, amortization and stock-based compensation expense.
The Company determined its operating segments to be DMS, which derives revenue from fees earned through the delivery of qualified leads, clicks and, to a lesser extent, impressions, and DSS, which derives revenue from the sale of direct selling services through a hosted solution. The Company's reportable operating segments consist of DMS and DSS. The accounting policies of the two reportable operating segments are the same as those described in Note 2.
The Company evaluates the performance of its operating segments based on net sales and operating income before depreciation, amortization and stock-based compensation expense.
The Company does not allocate most of its assets, as well as its depreciation and amortization expense, stock-based compensation expense, interest income, interest expense and income tax expense by segment. Accordingly, the Company does not report such information.
Summarized information by segment was as follows:
Net revenue by segment:
$ 90,145 $ 97,228 $ 190,986 $ 200,534
Total net revenue
90,523 97,582 191,747 201,198
Segment operating income before depreciation, amortization, and stock-based compensation expense:
Total segment operating income before depreciation, amortization, and stock-based compensation expense
(7,517 ) (6,723 ) (14,625 ) (12,620 )
(3,521 ) (3,616 ) (6,895 ) (7,346 )
Total operating income
$ 8,492 $ 11,379 $ 18,643 $ 26,348
The following tables set forth net revenue and long-lived assets by geographic area:
Net revenue:
December 31 June 30,
Long-lived assets:
Total long-lived assets
Name: us-gaap_SegmentReportingAbstract
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.
Name: us-gaap_SegmentReportingDisclosureTextBlock
Subsequent Events
Subsequent Events [Abstract]
12. Subsequent Events
Acquisition of Ziff Davis Enterprise
On February 3, 2012, the Company acquired certain assets of Ziff Davis Enterprise from Enterprise Media Group, Inc., a New York-based online media and marketing company in the business-to-business technology market, for $17,526 in cash paid upon closing of the acquisition. The results of Ziff Davis Enterprise's operations will be included in the consolidated financial statements following the acquisition date.
The Company is currently evaluating the purchase price allocation following the consummation of the transaction. It is not possible to disclose the preliminary purchase price allocation or unaudited pro forma combined financial information given the short period of time between the acquisition date and the filing date of this report.
Name: us-gaap_SubsequentEventsAbstract
The entire disclosure for significant events or transactions that occurred after the balance sheet date through the date the financial statements were issued or the date the financial statements were available to be issued. Examples include: the sale of a capital stock issue, purchase of a business, settlement of litigation, catastrophic loss, significant foreign exchange rate changes, loans to insiders or affiliates, and transactions not in the ordinary course of business.
Name: us-gaap_SubsequentEventsTextBlock