v3.8.0.1

Income Taxes | 12 Months Ended
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Dec. 31, 2017
Income Taxes |
Income Taxes | 9. Income Taxes The following table presents the components of loss before income taxes:
|  | Year Ended December 31, |
|  | 2017 |  | 2016 |  | 2015 |
|  | (in thousands) |
Loss before income taxes: |  |  |  |  |  |  |  |  |  |
United States |  | $ | (25,002 | ) | $ | (20,684 | ) | $ | (26,733 | )
Foreign |  |  | (5,718 | ) |  | — |  |  | — |
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Total |  | $ | (30,720 | ) | $ | (20,684 | ) | $ | (26,733 | )
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For the year ended December 31, 2017, the Company had a tax benefit of $1.3 million, which is solely related to a deferred tax benefit. For the years ended December 31, 2016 and 2015, the Company did not have a current or deferred tax provision or benefit. A reconciliation between the Company's statutory federal income tax rate and the effective tax rate is presented below:
|  | Year ended December 31, |
|  | 2017 |  | 2016 |  | 2015 |
U.S. statutory federal income tax rate |  |  | 35.0 | % |  | 35.0 | % |  | 35.0 | %
Increase (decrease) resulting from: |  |  |  |  |  |  |  |  |  |
U.S. state income taxes, net of federal benefits |  |  | 9.9 |  |  | 5.5 |  |  | 7.7 |
Foreign tax rate differential |  |  | (1.4 | ) |  | — |  |  | — |
Non-deductible expenses |  |  | (1.8 | ) |  | (1.5 | ) |  | (1.0 | )
Stock-based compensation |  |  | 40.9 |  |  | (2.9 | ) |  | (1.0 | )
Change in valuation allowance |  |  | 29.8 |  |  | (36.6 | ) |  | (39.1 | )
Change in tax rate |  |  | (108.0 | ) |  | — |  |  | — |
Other |  |  | (0.2 | ) |  | 0.5 |  |  | (1.6 | )
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Effective tax rate |  |  | 4.2 | % |  | 0.0 | % |  | 0.0 | %
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The significant components of the Company's deferred tax assets and liabilities are as follows:
|  | As of December 31, |
|  | 2017 |  | 2016 |
|  | (in thousands) |
Deferred tax assets: |  |  |  |  |  |  |
Accrued expenses and other |  | $ | 2,395 |  | $ | 2,757 |
Accrued compensation and related benefits |  |  | 3,524 |  |  | 4,317 |
Rebate reserve |  |  | 20 |  |  | 126 |
Deferred rent |  |  | 6,924 |  |  | 1,028 |
Stock-based compensation |  |  | 6,874 |  |  | 7,127 |
Deferred income |  |  | 191 |  |  | — |
Foreign net operating loss carryforwards |  |  | 1,704 |  |  | — |
U.S net operating loss carryforwards |  |  | 69,425 |  |  | 61,995 |
Valuation allowance |  |  | (71,101 | ) |  | (62,297 | )
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Total deferred tax assets |  | $ | 19,956 |  | $ | 15,053 |
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Deferred tax liabilities: |  |  |  |  |  |  |
Prepaid expenses and other |  | $ | (355 | ) | $ | (1,524 | )
Capitalized content development costs |  |  | (8,600 | ) |  | (9,368 | )
Capitalized software development costs |  |  | (4,356 | ) |  | (3,848 | )
Property and equipment |  |  | (4,720 | ) |  | (313 | )
Intangibles |  |  | (12,012 | ) |  | — |
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
Total deferred tax liabilities |  | $ | (30,043 | ) | $ | (15,053 | )
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Net deferred tax liabilities |  | $ | (10,087 | ) | $ | — |
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Deferred tax valuation allowances and changes in deferred tax valuation allowances are as follows:
|  | Balance at Beginning of Period |  | Additions Charged to Expense |  | Deductions |  | Balance at End of Period |
|  | (in thousands) |
Income tax valuation allowance: |  |  |  |  |  |  |  |  |  |  |  |  |
Year ended December 31, 2017 |  | $ | 62,297 |  | $ | 17,967 |  | $ | (9,163 | ) | $ | 71,101 |
Year ended December 31, 2016 |  |  | 54,739 |  |  | 7,558 |  |  | — |  |  | 62,297 |
Year ended December 31, 2015 |  |  | 44,309 |  |  | 10,430 |  |  | — |  |  | 54,739 |
At December 31, 2017, the Company had a U.S. net operating loss ("NOL") carryforward of approximately $253.2 million, which expires between 2029 and 2037. The gross amount of the state NOL carryforwards is equal to or less than the federal NOL carryforwards and expires over various periods based on individual state tax laws. The Company also had an NOL carryforward of $6.7 million in its foreign jurisdictions which do not expire. A full valuation allowance has been established to offset its net deferred tax assets in the U.S. and certain foreign jurisdictions as the Company has not generated taxable income since inception and does not have sufficient deferred tax liabilities to recover the deferred tax assets in these jurisdictions. The total increase in the valuation allowance was $8.8 million for the year ended December 31, 2017. The utilization of the NOL carryforwards to reduce future income taxes will depend on the Company's ability to generate sufficient taxable income prior to the expiration of the NOL carryforwards. Under the provisions of Internal Revenue Code Section 382, certain substantial changes in the Company's ownership may result in a limitation on the amount of U.S. net operating loss carryforwards that could be utilized annually to offset future taxable income and taxes payable. The Company does not expect such limitation, if any, to impact the use of the net operating losses prior to their expiration. As of December 31, 2017 and 2016, the Company has not recognized any amounts for uncertain tax positions. The Company has analyzed its filing positions in all significant federal, state and foreign jurisdictions where it is required to file income tax returns, as well as open tax years in these jurisdictions. With few exceptions, the Company is no longer subject to U.S. federal, state and local tax examinations by tax authorities for the years prior to 2014, though the NOL carryforwards can be adjusted upon audit and could impact taxes owed in open tax years. No income tax returns are currently under examination by the taxing authorities. On December 22, 2017, the Tax Act and Jobs Act of 2017 (the "Tax Act") was enacted into law and the new legislation contains certain key tax provisions that affected the Company. The Tax Act affects the Company by (i) reducing the U.S. tax rate to 21% effective January 1, 2018, (ii) impacting the values of the Company's deferred assets and liabilities, (iii) changing the Company's ability to utilize future net operating losses and (iv) requiring a one-time tax on any of the Company's unrepatriated foreign earnings and profits ("E&P") in 2017. Pursuant to U.S. GAAP, changes in tax rates and tax laws are accounted for in the period of enactment, and the resulting effects are included as components of the income tax provision related to continuing operations within the same period. Therefore, the following changes in the tax laws have been accounted for in 2017. The Company's deferred tax assets and liabilities and offsetting valuation allowance have been remeasured at the new enacted tax rate as of December 31, 2017. The amount of U.S. net operating losses that the Company has available and the Company's ability to utilize them to reduce future taxable income is not impacted by the Tax Act. However, the Tax Act may impact the amount and ability to utilize net operating losses generated by the Company in the future. Additionally, the Company believes that any undistributed amounts of foreign earnings and profits potentially included in taxable income would be offset by net operating losses; therefore, no transition tax is due by the Company in 2017. The Company is required to recognize the effect of the tax law changes in the period of enactment, such as re-measuring its U.S. deferred tax assets and liabilities as well as reassessing the net realizability of deferred tax assets and liabilities. In December 2017, the SEC issued Staff Accounting Bulletin No. 118, Income Tax Accounting Implications of the Tax Cuts and Jobs Act ("SAB 118"), which allows entities to record provisional amounts during a measurement period not to extend beyond one year of the enactment date. The Company considers the E&P and other items to be provisional and expects to complete its analysis within the measurement period in accordance with SAB 118, although it does not expect there to be any adjustment to the income tax benefit (expense) on the Company's consolidated statements of operations and comprehensive loss during the re-measurement period.

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- Definition The entire disclosure for income taxes. Disclosures may include net deferred tax liability or asset recognized in an enterprise's statement of financial position, net change during the year in the total valuation allowance, approximate tax effect of each type of temporary difference and carryforward that gives rise to a significant portion of deferred tax liabilities and deferred tax assets, utilization of a tax carryback, and tax uncertainties information. + References Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -URI http://asc.fasb.org/topic&trid=2144680 + Details
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