Document and Entity Information
Document and Entity Information - USD ($) | 12 Months Ended | ||
Dec. 31, 2021 | Jan. 31, 2022 | Jun. 30, 2021 | |
Document Information [Line Items] | |||
Document Type | 10-K | ||
Amendment Flag | false | ||
Document Period End Date | Dec. 31, 2021 | ||
Document Fiscal Year Focus | 2021 | ||
Document Fiscal Period Focus | FY | ||
Trading Symbol | TTD | ||
Entity Registrant Name | TRADE DESK, INC. | ||
Entity Central Index Key | 0001671933 | ||
Current Fiscal Year End Date | --12-31 | ||
Entity Well-known Seasoned Issuer | Yes | ||
Entity Current Reporting Status | Yes | ||
Entity Voluntary Filers | No | ||
Entity Filer Category | Large Accelerated Filer | ||
Entity Small Business | false | ||
Entity Emerging Growth Company | false | ||
Entity Public Float | $ 33,366,438,121 | ||
Entity Interactive Data Current | Yes | ||
Entity Shell Company | false | ||
Entity File Number | 001-37879 | ||
Entity Incorporation, State or Country Code | DE | ||
Entity Tax Identification Number | 27-1887399 | ||
Entity Address, Address Line One | 42 N. Chestnut Street | ||
Entity Address, City or Town | Ventura | ||
Entity Address, State or Province | CA | ||
Entity Address, Postal Zip Code | 93001 | ||
City Area Code | 805 | ||
Local Phone Number | 585-3434 | ||
Title of 12(b) Security | Class A Common Stock | ||
Security Exchange Name | NASDAQ | ||
ICFR Auditor Attestation Flag | true | ||
Document Annual Report | true | ||
Document Transition Report | false | ||
Auditor Firm ID | 238 | ||
Auditor Name | PricewaterhouseCoopers LLP | ||
Auditor Location | Los Angeles, California | ||
Documents Incorporated by Reference | DOCUMENTS INCORPORATED BY REFERENCE Portions of the registrant’s Proxy Statement for the 2022 Annual Meeting of Stockholders are incorporated by reference in Part III of this Annual Report on Form 10-K to the extent stated herein. Such proxy statement will be filed with the Securities and Exchange Commission within 120 days of the registrant’s fiscal year ended December 31, 2021. | ||
Class A common stock | |||
Document Information [Line Items] | |||
Entity Common Stock, Shares Outstanding | 440,597,630 | ||
Class B common stock | |||
Document Information [Line Items] | |||
Entity Common Stock, Shares Outstanding | 44,234,950 |
CONSOLIDATED BALANCE SHEETS
CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands | Dec. 31, 2021 | Dec. 31, 2020 |
Current assets: | ||
Cash and cash equivalents | $ 754,154 | $ 437,353 |
Short-term investments, net | 204,625 | 186,685 |
Accounts receivable, net of allowance for credit losses of $7,374 and $7,253 as of December 31, 2021 and 2020, respectively | 2,020,720 | 1,584,109 |
Prepaid expenses and other current assets | 112,150 | 102,170 |
TOTAL CURRENT ASSETS | 3,091,649 | 2,310,317 |
Property and equipment, net | 135,856 | 115,863 |
Operating lease assets | 234,091 | 248,143 |
Deferred income taxes | 68,244 | 50,168 |
Other assets, non-current | 47,500 | 29,154 |
TOTAL ASSETS | 3,577,340 | 2,753,645 |
Current liabilities: | ||
Accounts payable | 1,655,684 | 1,348,480 |
Accrued expenses and other current liabilities | 101,472 | 88,335 |
Operating lease liabilities | 46,149 | 37,868 |
TOTAL CURRENT LIABILITIES | 1,803,305 | 1,474,683 |
Operating lease liabilities, non-current | 238,449 | 254,562 |
Other liabilities, non-current | 8,280 | 11,255 |
TOTAL LIABILITIES | 2,050,034 | 1,740,500 |
Commitments and contingencies (Note 13) | ||
STOCKHOLDERS’ EQUITY | ||
Preferred stock, par value $0.000001; 100,000 shares authorized, zero shares issued and outstanding as of December 31, 2021 and 2020 | ||
Common stock, par value $0.000001 Class A, 1,000,000 shares authorized; 439,206 and 423,383 shares issued and outstanding as of December 31, 2021 and 2020, respectively Class B, 95,000 shares authorized; 44,235 and 50,018 shares issued and outstanding as of December 31, 2021 and 2020, respectively | 0 | 0 |
Additional paid-in capital | 915,177 | 538,778 |
Retained earnings | 612,129 | 474,367 |
TOTAL STOCKHOLDERS’ EQUITY | 1,527,306 | 1,013,145 |
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY | $ 3,577,340 | $ 2,753,645 |
CONSOLIDATED BALANCE SHEETS (Pa
CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) $ in Thousands | Dec. 31, 2021 | Dec. 31, 2020 |
Accounts receivable, allowance for credit losses | $ 7,374 | $ 7,253 |
Preferred stock | ||
Preferred stock, par value (in dollars per share) | $ 0.000001 | $ 0.000001 |
Preferred stock, authorized shares | 100,000,000 | 100,000,000 |
Preferred stock, shares issued | 0 | 0 |
Preferred stock, shares outstanding | 0 | 0 |
Common stock | ||
Common stock, par value (in dollars per share) | $ 0.000001 | $ 0.000001 |
Class A common stock | ||
Common stock | ||
Common stock, authorized shares | 1,000,000,000 | 1,000,000,000 |
Common stock, shares issued | 439,206,000 | 423,383,000 |
Common stock, shares outstanding | 439,206,000 | 423,383,000 |
Class B common stock | ||
Common stock | ||
Common stock, authorized shares | 95,000,000 | 95,000,000 |
Common stock, shares issued | 44,235,000 | 50,018,000 |
Common stock, shares outstanding | 44,235,000 | 50,018,000 |
CONSOLIDATED STATEMENTS OF OPER
CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) shares in Thousands, $ in Thousands | 12 Months Ended | ||
Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | |
Income Statement [Abstract] | |||
Revenue | $ 1,196,467 | $ 836,033 | $ 661,058 |
Operating expenses: | |||
Platform operations | 221,554 | 178,812 | 156,180 |
Sales and marketing | 249,298 | 174,742 | 132,882 |
Technology and development | 226,137 | 166,654 | 116,752 |
General and administrative | 374,661 | 171,617 | 143,048 |
Total operating expenses | 1,071,650 | 691,825 | 548,862 |
Income from operations | 124,817 | 144,208 | 112,196 |
Other expense (income): | |||
Interest expense (income), net | 1,030 | (656) | (4,719) |
Foreign currency exchange loss, net | 1,751 | 961 | 695 |
Total other expense (income), net | 2,781 | 305 | (4,024) |
Income before income taxes | 122,036 | 143,903 | 116,220 |
Provision for (benefit from) income taxes | (15,726) | (98,414) | 7,902 |
Net income | $ 137,762 | $ 242,317 | $ 108,318 |
Earnings per share: | |||
Basic | $ 0.29 | $ 0.52 | $ 0.24 |
Diluted | $ 0.28 | $ 0.49 | $ 0.23 |
Weighted-average shares outstanding: | |||
Basic | 476,851 | 462,865 | 445,329 |
Diluted | 498,540 | 489,881 | 478,061 |
CONSOLIDATED STATEMENTS OF STOC
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY - USD ($) shares in Thousands, $ in Thousands | Total | Cumulative Effect, Period of Adoption, Adjustment | Common Stock | Additional Paid-In Capital | Retained Earnings | Retained EarningsCumulative Effect, Period of Adoption, Adjustment | |
Balance at beginning of period at Dec. 31, 2018 | $ 394,567 | $ 270,447 | $ 124,120 | ||||
Balance at beginning of period (in shares) at Dec. 31, 2018 | [1] | 438,642 | |||||
Accounting Standards Update [Extensible List] | us-gaap:AccountingStandardsUpdate201602Member | ||||||
Exercise of common stock options | $ 29,874 | 29,874 | |||||
Exercise of common stock options (in shares) | [1] | 12,641 | |||||
Stock-based compensation | 82,346 | 82,346 | |||||
Issuance of common stock under employee stock purchase plan | 16,746 | 16,746 | |||||
Issuance of common stock under employee stock purchase plan (in shares) | [1] | 2,870 | |||||
Issuance of restricted stock, net of forfeitures and shares withheld for taxes | (19,334) | (19,334) | |||||
Issuance of restricted stock, net of forfeitures and shares withheld for taxes (in shares) | [1] | 603 | |||||
Net income | 108,318 | 108,318 | |||||
Balance at end of period at Dec. 31, 2019 | $ 612,517 | $ (388) | 380,079 | 232,438 | $ (388) | ||
Balance at end of period (in shares) at Dec. 31, 2019 | [1] | 454,755 | |||||
Accounting Standards Update [Extensible List] | us-gaap:AccountingStandardsUpdate201613Member | us-gaap:AccountingStandardsUpdate201613Member | |||||
Exercise of common stock options | $ 76,146 | 76,146 | |||||
Exercise of common stock options (in shares) | [1] | 15,448 | |||||
Stock-based compensation | 114,020 | 114,020 | |||||
Issuance of common stock under employee stock purchase plan | 21,671 | 21,671 | |||||
Issuance of common stock under employee stock purchase plan (in shares) | [1] | 2,685 | |||||
Issuance of restricted stock, net of forfeitures and shares withheld for taxes | (53,138) | (53,138) | |||||
Issuance of restricted stock, net of forfeitures and shares withheld for taxes (in shares) | [1] | 513 | |||||
Net income | 242,317 | 242,317 | |||||
Balance at end of period at Dec. 31, 2020 | $ 1,013,145 | 538,778 | 474,367 | ||||
Balance at end of period (in shares) at Dec. 31, 2020 | [1] | 473,401 | |||||
Accounting Standards Update [Extensible List] | us-gaap:AccountingStandardsUpdate201912Member | ||||||
Exercise of common stock options | $ 61,476 | 61,476 | |||||
Exercise of common stock options (in shares) | [1] | 7,361 | |||||
Stock-based compensation | 340,733 | 340,733 | |||||
Issuance of common stock under employee stock purchase plan | 29,229 | 29,229 | |||||
Issuance of common stock under employee stock purchase plan (in shares) | [1] | 1,719 | |||||
Issuance of restricted stock, net of forfeitures and shares withheld for taxes | (56,855) | (56,855) | |||||
Issuance of restricted stock, net of forfeitures and shares withheld for taxes (in shares) | [1] | 935 | |||||
Issuance of restricted stock related to acquisition | 1,816 | 1,816 | |||||
Issuance of common stock related to acquisition (in shares) | [1] | 25 | |||||
Net income | 137,762 | 137,762 | |||||
Balance at end of period at Dec. 31, 2021 | $ 1,527,306 | $ 915,177 | $ 612,129 | ||||
Balance at end of period (in shares) at Dec. 31, 2021 | [1] | 483,441 | |||||
[1] | Refer to Note 9—Capitalization for discussion of the Company’s two classes of common stock. |
CONSOLIDATED STATEMENTS OF CASH
CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | |
OPERATING ACTIVITIES: | |||
Net income | $ 137,762 | $ 242,317 | $ 108,318 |
Adjustments to reconcile net income to net cash provided by operating activities: | |||
Depreciation and amortization | 42,219 | 28,632 | 21,662 |
Stock-based compensation | 337,413 | 111,775 | 80,758 |
Deferred income taxes | (16,777) | (31,218) | (10,490) |
Allowance for credit losses on accounts receivable | 1,456 | 3,149 | 2,702 |
Noncash lease expense | 40,315 | 33,269 | 21,894 |
Other | 5,803 | 2,190 | (1,939) |
Changes in operating assets and liabilities: | |||
Accounts receivable | (444,342) | (418,054) | (331,369) |
Prepaid expenses and other assets | 1,648 | (66,655) | (19,597) |
Accounts payable | 309,410 | 481,313 | 191,763 |
Accrued expenses and other liabilities | 7,596 | 35,446 | 6,845 |
Operating lease liabilities | (43,990) | (17,095) | (10,342) |
Net cash provided by operating activities | 378,513 | 405,069 | 60,205 |
INVESTING ACTIVITIES: | |||
Purchases of investments | (278,387) | (230,759) | (212,776) |
Sales of investments | 4,539 | ||
Maturities of investments | 253,444 | 167,602 | 89,539 |
Purchases of property and equipment | (54,804) | (74,061) | (35,693) |
Capitalized software development costs | (5,169) | (6,053) | (4,911) |
Business acquisition | (13,261) | ||
Net cash used in investing activities | (93,638) | (143,271) | (163,841) |
FINANCING ACTIVITIES: | |||
Proceeds from line of credit | 143,000 | ||
Repayment on line of credit | (143,000) | ||
Payment of debt financing costs | (1,924) | (6) | |
Proceeds from exercise of stock options | 61,476 | 76,146 | 29,874 |
Proceeds from employee stock purchase plan | 29,229 | 21,671 | 16,746 |
Taxes paid related to net settlement of restricted stock awards | (56,855) | (53,138) | (19,334) |
Net cash provided by financing activities | 31,926 | 44,679 | 27,280 |
Increase (decrease) in cash and cash equivalents | 316,801 | 306,477 | (76,356) |
Cash and cash equivalents—Beginning of year | 437,353 | 130,876 | 207,232 |
Cash and cash equivalents—End of year | 754,154 | 437,353 | 130,876 |
SUPPLEMENTAL CASH FLOW INFORMATION: | |||
Cash paid for income taxes | 3,608 | 4,983 | 19,727 |
Cash paid for interest | 518 | 1,554 | 412 |
Cash paid for operating lease liabilities | 52,974 | 27,448 | 16,923 |
Asset retirement obligation | 1,705 | 2,049 | 3,543 |
Operating lease assets obtained in exchange for operating lease liabilities | 25,356 | 106,833 | 150,467 |
Capitalized assets financed by accounts payable | 5,907 | 6,766 | 9,252 |
Stock-based compensation included in capitalized software development costs | $ 3,320 | $ 2,245 | $ 1,588 |
Nature of Operations
Nature of Operations | 12 Months Ended |
Dec. 31, 2021 | |
Accounting Policies [Abstract] | |
Nature of Operations | Note 1—Nature of Operations The Trade Desk, Inc. (the “Company”) is a global technology company that empowers buyers of advertising. Through the Company’s self-service, cloud-based platform, ad buyers can create, manage and optimize more expressive data-driven digital advertising campaigns across ad formats and channels, including display, video, audio, native and social, on a multitude of devices, such as computers, mobile devices and connected TV (“CTV”). The Company’s platform integrations with major inventory, publisher, and data partners provides ad buyers reach and decisioning capabilities, and the Company’s enterprise application programming interfaces (“APIs”) enable its clients to develop on top of the platform. The Company is a Delaware corporation formed in November 2009 and headquartered in Ventura, California with offices in various cities in North America, Europe, Asia and Australia. |
Basis of Presentation and Summa
Basis of Presentation and Summary of Significant Accounting Policies | 12 Months Ended |
Dec. 31, 2021 | |
Accounting Policies [Abstract] | |
Basis of Presentation and Summary of Significant Accounting Policies | Note 2—Basis of Presentation and Summary of Significant Accounting Policies Basis of Presentation and Principles of Consolidation The accompanying consolidated financial statements are prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) and include the operations of the Company and its wholly owned subsidiaries. All intercompany transactions have been eliminated in consolidation. On June 16, 2021, the Company effected a ten-for-one Use of Estimates The preparation of consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ materially from these estimates. Management regularly evaluates its estimates, primarily those related to: (1) revenue recognition criteria, including the determination of revenue reporting as net versus gross in the Company’s revenue arrangements, (2) allowances for credit losses accounts, (3) operating lease assets and liabilities, including our incremental borrowing rate and terms and provisions of each lease (4) the useful lives of property and equipment and capitalized software development costs, (5) income taxes, (6) assumptions used in the option pricing models to determine the fair value of stock-based compensation and (7) the recognition and disclosure of contingent liabilities. These estimates are based on historical data and experience, as well as various other factors that management believes to be reasonable under the circumstances; the results of which form the basis for making judgments about the carrying value of assets and liabilities that are not readily apparent from other sources. As of December 31, 2021, the impact of the Coronavirus (“COVID-19”) pandemic on the Company’s business continues to evolve. As a result, many of the Company’s estimates and assumptions, including the allowance for credit losses, consider macro-economic factors in the market, which require increased judgment and carry a higher degree of variability and volatility. As events continue to evolve and additional information becomes available, the Company’s estimates may change materially in future periods. Revenue Recognition The Company generates revenue from clients who enter into agreements with the Company to use its platform to purchase advertising inventory, data and other add-on features. The Company charges its clients a platform fee, which is a percentage of a client’s purchases through the platform. In addition, the Company invoices its clients for the cost of advertising inventory purchased, plus data and any add-on features purchased through the platform. The Company determines revenue recognition through the following steps: • Identification of a contract with a client; • Identification of the performance obligations in the contract; • Determination of the transaction price; • Allocation of the transaction price to the performance obligations in the contract; and • Recognition of revenue when or as the performance obligations are satisfied. The Company maintains agreements with each client and supplier in the form of master service agreements, which set out the terms of the relationship and access to the Company’s platform. The Company’s performance obligation is to provide the use of its platform to clients to develop ad campaigns and select the advertising inventory, data and other add-on features. The Company charges clients a platform fee, based on a percentage of a client’s purchases through the platform, and the transaction price is determined based on the consideration to which it expects to be entitled in exchange for the completion of a transaction, that is, when a bid is won. The Company reports revenue net of amounts it pays suppliers for the cost of advertising inventory, third-party data and other add-on features (collectively, “Supplier Features”). Judgment is required to determine whether the Company is the principal and reports revenue on a gross basis for Supplier Features or the agent and reports revenue on a net basis for the amount of platform fees charged to the client. The Company determined that it is not primarily responsible for the purchase of Supplier Features. Rather, the Company’s primary responsibility is to provide the platform that enables clients to bid on advertising inventory and use data and other add-on features in designing and executing their campaigns. The Company does not control the Supplier Features prior to the purchase by the client, and it does not have pricing latitude with respect to the cost of such features. The platform fee the Company charges clients is a percentage of their purchases through its platform, similar to a commission, and the platform fee is not contingent on the results of an advertising campaign. Based on these and other factors, the Company determined that it is not the principal in the purchase and sale of Supplier Features and, therefore, reports revenue on a net basis for the platform fees charged to clients. The Company generally bills clients for the gross amount of Supplier Features they purchase through its platform and the platform fees, net of allowances (“Gross Billings”). When clients have direct payment relationships with advertising inventory suppliers, the Company bills these clients only for third-party data, other add-on features and its platform fees. The Company invoices its clients monthly for the purchases occurring during the month. Invoice payment terms, negotiated on a client-by-client basis, are typically between 30 to 90 days. However, for certain agency clients with sequential liability terms, payments are not due to the Company until such agency client has received payment from its clients who are advertisers. Accounts receivable is recorded based on Gross Billings, which are the amounts the Company is responsible to collect. Accounts payable is recorded at the net amount payable to suppliers. Accordingly, both accounts receivable and accounts payable appear large in relation to revenue reported on a net basis. Refer to Note 12—Segment and Geographic Information Operating Expenses The Company classifies its operating expenses into four categories and allocates overhead such as information technology infrastructure, rent and occupancy charges based on headcount for all these categories: Platform Operations. Platform operations expense consists of expenses related to hosting the Company’s platform, which includes “internet traffic” associated with the viewing of available impressions or queries per second (“QPS”) and providing support to clients. Platform operations expense includes hosting costs, personnel costs, and amortization of acquired technology and capitalized software costs for platform development. Personnel costs include salaries, bonuses, stock-based compensation, and employee benefit costs attributable to personnel who support the platform and provide clients with platform support. The Company capitalizes certain costs associated with platform development in other assets, non-current on its consolidated balance sheet and amortizes these costs into platform operations expense over their estimated useful lives. Sales and Marketing. Sales and marketing expense consists primarily of personnel costs, including salaries, bonuses, stock-based compensation, employee benefits costs and commission costs, for the Company’s sales and marketing personnel. Sales and marketing expense also includes costs for market development programs, advertising and promotional, and other marketing activities. Commissions costs are expensed as incurred. Technology and Development. The Company’s technology and development expense consists primarily of personnel costs, including salaries, bonuses, stock-based compensation and employee benefits costs; third-party consultant costs associated with the ongoing development of the Company’s platform and integrations with our advertising and data inventory suppliers; and the amortization of capitalized third-party software used in platform development. Technology and development costs are expensed as incurred, except to the extent that such costs are associated with software development that qualif ies for capitalization, which are then recorded as capitalized software development costs included in other assets, non-current on the Company’s consolidated balance sheet. The Company amortizes capitalized software development costs relating to the Company’s platform to platform operations expense . General and Administrative. The Company’s general and administrative expense consists primarily of personnel costs, including salaries, bonuses, stock-based compensation, and employee benefits costs associated with the Company’s executive, finance, legal, human resources, compliance, and other administrative personnel, as well as accounting and legal professional services fees and credit loss expense. Stock-Based Compensation Stock-based compensation expense related to stock options, restricted stock awards and units (collectively, “restricted stock”), and awards granted under the Company’s employee stock purchase plan (“ESPP”) is measured and recognized in the consolidated financial statements based on the fair value of the awards granted. The fair values of the ESPP and stock option awards are estimated on the grant date using the Black-Scholes option-pricing model, except for the CEO Performance Option that is estimated using the Monte Carlo valuation model. The fair value of restricted stock is calculated using the closing market price of the Company’s common stock on the date of grant. Determining the fair value of stock options and ESPP awards requires judgment. The Company’s use of the valuation models requires the input of subjective assumptions. The assumptions used in the Company’s valuation models represent management’s best estimates, which involve inherent uncertainties and the application of management’s judgment. These assumptions and estimates are as follows: Risk-Free Interest Rate. The risk-free interest rate is based on the yields of U.S. Treasury securities with maturities approximating the expected term of the awards. Expected Term. For stock options, given the insufficient historical data relating to stock option exercises, the Company applies the simplified approach in which the expected term of an award is presumed to be the mid-point between the vesting date and the expiration date of the award. For ESPP awards, the expected term is the time period from the grant date to the respective purchase dates included within each offering period. Volatility. Prior to 2020, the Company determined the price volatility based on a blend of the historical volatilities of a publicly traded peer group, implied volatilities from its traded options, and its historical volatility, based on daily price observations over a period equivalent to the expected term of the award. During 2020, the Company eliminated the peer group from this analysis and began to determine its price volatility based on a blend of historical and implied volatilities. Dividend Yield. The dividend yield assumption is based on the Company’s history and current expectations of dividend payouts. The Company has never declared or paid any cash dividends on its common stock and does not anticipate paying any cash dividends in the foreseeable future, so the Company used an expected dividend yield of zero. Derived Service Period . The stock-compensation expense attribution period for the CEO Performance Option is developed based on a Monte Carlo simulation of daily stock prices over the performance period. Stock-based compensation expense related to stock options and restricted stock is recognized on a straight-line basis over the requisite service periods of the awards, which is generally four years. Stock-based compensation for the CEO Performance Option is recognized on a graded-vesting basis over a derived service period of approximately five years but may be accelerated if the vesting criteria are met prior to the estimated performance period. Stock-based compensation expense for ESPP awards is recognized on a graded-vesting attribution basis over the requisite service period of each award. The Company accounts for forfeitures as they occur. Income Taxes Deferred income tax assets and liabilities are determined based upon the net tax effects of the differences between the Company’s consolidated financial statements carrying amounts and the tax basis of assets and liabilities and are measured using the enacted tax rate expected to apply to taxable income in the years in which the differences are expected to be reversed. A valuation allowance is used to reduce some or all of the deferred tax assets if, based upon the weight of available evidence, it is more likely than not that those deferred tax assets will not be realized. The Company recognizes the tax benefit from an uncertain tax position only if it is more likely than not that the tax position will be sustained on examination by the taxing authorities, based on the technical merits of the position. The tax benefits recognized in the consolidated financial statements from such positions are then measured based on the largest benefit that has a greater than 50% likelihood of being realized. The Company recognizes interest and penalties accrued related to its uncertain tax positions in its income tax provision in the accompanying consolidated statements of operations . The Company makes assumptions, judgments and estimates to determine the current income tax provision, tax benefits from uncertain tax positions, deferred tax asset and liabilities, and valuation allowance recorded against a deferred tax asset. The assumptions, judgments and estimates relative to the current income tax provision (benefit) take into account current tax laws, their interpretation and possible results of foreign and domestic tax audits. Changes in tax law, and their interpretation, could significantly impact the income taxes provided in the Company’s consolidated financial statements. The evaluation of the Company’s uncertain tax positions involves significant judgment in the interpretation and application of GAAP and complex domestic and international tax laws, and matters related to the allocation of international taxation rights between countries. Although management believes the Company’s reserves are reasonable, no assurance can be given that the final tax outcome of these matters will not be different from that which is reflected in the Company’s reserves. Reserves are adjusted considering changing facts and circumstances, such as the closing of a tax examination or the refinement of an estimate. Assumptions, judgments and estimates relative to the amount of deferred income taxes, and any applicable valuation allowances, take into account future taxable income. Any of the assumptions, judgments and estimates mentioned above could cause the actual income tax obligations to differ from estimates. Earnings Per Share Basic earnings per share is calculated by dividing net income by the weighted-average number of common stock shares outstanding. Diluted earnings per share is calculated by dividing net income by the weighted-average number of common stock shares outstanding adjusted for the potentially dilutive impact of stock options, restricted stock and ESPP using the using the two-class method required for participating securities. We consider restricted stock awards to be participating securities due to their non-forfeitable dividend rights. Cash, Cash Equivalents and Marketable Securities The Company classifies all investments that are readily convertible to known amounts of cash and have maturities of three months or less from the date of purchase as cash equivalents, which consist primarily of money market funds and commercial paper, and those with stated maturities of greater than three months as marketable securities, which primarily consist of corporate debt securities and U.S. government and agency securities. Investments in marketable securities with maturities beyond one year are also classified as short-term available-for-sale securities based on their highly liquid nature and because they are available for current operations. Cash equivalents and marketable securities are carried at fair value. Realized gains and losses are recognized in other expense (income), net on the consolidated statement of operations. Unrealized gains and losses, net of taxes, are included in stockholders' equity. The Company uses Financial Instruments-Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments to assess the investment portfolio for impairment at the individual security level and evaluates all securities in an unrealized loss position to determine if the impairment is credit related (resulting in realized credit loss, recorded in earnings) or non-credit related (resulting in an unrealized loss, recorded in stockholders' equity). We have not recorded any impairment charges for unrealized losses in the periods presented. Refer to Note 6—Cash, Cash Equivalents and Short-Term Investments, Net Accounts Receivable and Allowance for Credit Losses Accounts receivable are recorded at the invoiced amount, are unsecured, and do not bear interest. The Company performs ongoing credit evaluations of its clients and certain advertisers when the Company’s agreements with its clients contain sequential liability terms such that client payments are not due to the Company until the client has received payment from its clients who are advertisers. The Company maintains an allowance for credit losses for expected uncollectible accounts receivable, which is recorded as an offset to accounts receivable and changes in such are classified as general and administrative expense on the consolidated statements of operations. On January 1, 2020 . Industry-specific default rates are applied to the advertiser’s industry if the receivables are subject to sequential liability or the Company is engaged with the advertiser directly. For the years ended December 31, 2021 and 2020, the Company’s assessment considered business and market disruptions caused by the COVID-19 pandemic and estimates of credit defaults by industry. The Company continues to monitor the financial implications of the COVID-19 pandemic on expected credit losses by reviewing the allowance for credit losses on a quarterly basis. Account balances are charged off against the allowance when the Company believes it is probable the receivable will not be recovered. The following table presents changes in the accounts receivable allowance for credit losses (in thousands): Year Ended December 31, 2021 2020 2019 Beginning balance $ 7,253 $ 3,920 $ 2,973 Add: impact upon adoption of new accounting standard — 553 — Add: bad debt expense 1,456 3,149 2,702 Less: write-offs, net of recoveries (1,335 ) (369 ) (1,755 ) Ending balance $ 7,374 $ 7,253 $ 3,920 Property and Equipment, Net Property and equipment are recorded at historical cost, less accumulated depreciation and amortization. Depreciation is computed using the straight-line method based upon the following estimated useful lives: Years Computer equipment 2 – 3 Purchased software 3 – 5 Furniture, fixtures and office equipment 5 Leasehold improvements * _________________ * Leasehold improvements are amortized on a straight-line basis over the term of the lease, or the useful life of the assets, whichever is shorter. Repair and maintenance costs are charged to expense as incurred, while improvements are capitalized. When assets are retired or otherwise disposed of, the cost and related accumulated depreciation are removed from the accounts and any resulting gain or loss is reflected in the Company’s operating results. Capitalized Software Development Costs The Company capitalizes certain costs associated with creating and enhancing internally developed software related to the Company’s technology infrastructure. These costs include personnel and benefit-related expenses for employees who are directly associated with and devote time to software development projects, and external direct costs of materials and services consumed in developing or obtaining the software. Software development costs that do not qualify for capitalization, as further discussed below, are expensed as incurred and recorded in technology and development expenses in the consolidated statements of operations. Software development activities typically consist of three stages: (1) the planning phase; (2) the application and infrastructure development stage; and (3) the post-implementation stage. Costs incurred in the planning and post implementation phases, including costs associated with the post-configuration training and repairs and maintenance of the developed technologies, are expensed as incurred. The Company capitalizes costs associated with software developed when the preliminary project stage is completed, management implicitly or explicitly authorizes and commits to funding the project and it is probable that the project will be completed and perform as intended. Costs incurred in the application and infrastructure development phases, including significant enhancements and upgrades, are capitalized. Capitalization ends once a project is substantially complete and the software is ready for its intended purpose. Software development costs are amortized using a straight-line method over the estimated useful life of two years, commencing when the software is ready for its intended use. The straight-line recognition method approximates the manner in which the expected benefit will be derived. The Company does not transfer ownership of its internally developed software, or lease its software, to third parties. Cloud computing arrangements (“CCAs”), such as software as a service and other hosting arrangements, are evaluated for capitalized implementation costs in a similar manner as capitalized software development costs. If a CCA includes a software license, the software license element of the arrangement is accounted for in a manner consistent with the acquisition of other software licenses. If a CCA does not include a software license, the service element of the arrangement is accounted for as a service contract. The Company capitalized certain implementation costs its CCAs that are service contracts, which are included in . The Company amortizes capitalized implementation costs in a CCA over the life of the service contract. Operating Leases On January 1, 2019, the Company adopted ASU No. 2016-02, codified as ASC 842, using the modified retrospective adoption approach. The Company elected the transition option provided by ASU No. 2018-11, Leases (Topic 842): Targeted Improvements, to not restate comparative periods, but rather to initially adopt the requirements of ASC 842 on January 1, 2019. The most significant impact of the adoption of ASC 842 resulted in the recognition of operating lease right-of-use assets (“operating lease assets”) of approximately $41 million, net of deferred rent and direct costs, and operating lease liabilities of approximately $47 million on its consolidated balance sheet. The impact on the Company’s consolidated statements of operations and cash flows was not material. ASC 842 provides various optional transition practical expedients. Upon transition to ASC 842, the Company elected the use of the package of practical expedients to not reassess: whether a contract is or contains a lease, lease classification and indirect costs. The Company did not elect the hindsight practical expedient in transition. The Company has elected to not separate lease and non-lease components. The Company has operating leases for its offices, which have remaining lease terms of up to 10 years, some of which include options to extend the leases for up to five years, and some of which include options to terminate the leases within one year with proper notification. The Company determines if an arrangement is, or contains, a lease at inception. Operating lease assets represent the Company’s right to control the use of an identified asset for a period of time, or term, in exchange for consideration, and operating lease liabilities represent its obligation to make lease payments arising from the aforementioned right. Operating lease assets and liabilities are initially recorded based on the present value of lease payments over the lease term, which includes the minimum unconditional term of the lease, and may include options to extend or terminate the lease when it is reasonably certain at the commencement date that such options will be exercised. As the rate implicit for each of the Company’s leases is not readily determinable, the Company uses its incremental borrowing rate, based on the information available at the lease commencement date in determining the present value of its expected lease payments. Operating lease assets also include any initial direct costs and any lease payments made prior to the lease commencement date and are reduced by any lease incentives received. Leases with an initial term of 12 months or less are not recorded on the balance sheet. The Company does not have finance leases. Operating lease assets are amortized on a straight-line basis as operating lease cost over the lease term on the consolidated statements of operations. The related amortization, referred to as noncash lease expense, along with the change in the operating lease liabilities are separately presented within the cash flows from operating activities on the consolidated statements of cash flows. The Company records rent expense for operating leases, some of which have escalating rent payments, on a straight-line basis over the lease term. Certain leases contain provisions for property-related costs that are variable in nature for which the Company is responsible, including common area maintenance and other property operating services. These costs are calculated based on a variety of factors including property values, tax and utility rates, property services fees, and other factors. Refer to Note 8—Leases Fair Value of Financial Instruments Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. Valuation techniques used to measure fair value must maximize the use of observable inputs and minimize the use of unobservable inputs. Fair value measurements are based on a fair value hierarchy, based on three levels of inputs, of which the first two are considered observable and the last unobservable, which are the following: Level 1—Quoted prices (unadjusted) in active markets for identical assets or liabilities that the Company has the ability to access at the measurement date. Level 2—Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly, such as quoted market prices for similar assets and liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the asset or liability. Level 3—Unobservable inputs. Observable inputs are based on market data obtained from independent sources. The carrying amounts of accounts receivable, prepaid expenses and other current assets, accounts payable, accrued expenses and other current liabilities approximate fair value due to the short-term nature of these instruments. The carrying value of the line of credit approximates fair value based on borrowing rates currently available to the Company for financing with similar terms and were determined to be Level 2. Certain long-lived assets including capitalized software development costs are also subject to measurement at fair value on a non-recurring basis if they are deemed to be impaired as a result of an impairment review. To date, no material impairments have been recorded on those assets. Concentration of Risk Financial instruments that potentially subject the Company to concentration of credit risk consist principally of cash and cash equivalents, short-term investments and accounts receivable. The Company maintains its cash and cash equivalents with financial institutions, and its cash levels exceed the Federal Deposit Insurance Corporation federally insured limits. Short-term investments consist of investments in U.S. government securities, U.S. government agency securities, and high-credit quality corporate debt securities . If all of our individual client contractual relationships were aggregated at the holding company level, two holding companies would each represent more than 10% of our Gross Billings in 2021, 2020 and 2019. In 2021, two holding companies accounted for 11% and 10% of Gross Billings. In 2020, two holding companies each accounted for 11% of Gross Billings. In 2019, two holding companies accounted for 13% and 10% of Gross Billings. We do not have contractual relationships with these holding companies. Rather, we enter into separate contracts and billing relationships with various of their individual agencies and account for those agencies as separate clients. As of December 31, 2021, three clients each accounted for at least 10%, and collectively accounted for 41%, of consolidated accounts receivable. As of December 31, 2020, four clients each accounted for at least 10%, and collectively accounted for 51%, of consolidated accounts receivable. As of December 31, 2021, one supplier accounted for 17% of consolidated accounts payable. As of December 31, 2020, no supplier accounted for more than 10% of consolidated accounts payable. Foreign Currency Transactions The Company’s reporting currency is the U.S. Dollar, and the functional currency of each of our subsidiaries is the U.S. Dollar. Transactions in foreign currencies are translated into U.S. Dollars at the rates of exchange in effect at the date of the transaction. Net transaction losses are included in foreign currency exchange loss, net in the accompanying consolidated statements of operations. The Company enters into forward contracts to hedge foreign currency exposures related primarily to the Company’s foreign currency denominated accounts receivable. The Company does not designate the foreign exchange forward contracts as hedges for accounting purposes and changes in the fair value of the foreign exchange forward contracts are recorded in foreign currency exchange loss, net in the accompanying consolidated statements of operations. The Company’s forward contracts generally have terms of 30-60 days. As of December 31, 2021, and 2020, the Company had open forward contracts with aggregate notional amounts of $250.7 million and $169.9 million, respectively. The fair value of the open forward contracts was not material. Business Combinations The results of a business combination are included in the Company’s consolidated financial statements from the date of the acquisition. Purchase accounting results in assets and liabilities of an acquired business are generally recorded at their estimated fair values on the acquisition date, which may require management to use significant judgment and estimates, including the selection of valuation methodologies, estimates of future revenue, costs and cash flows, discount rates, and selection of comparable companies. The Company engages valuation specialists to assist in determining the fair values of these acquired assets and liabilities. Any excess consideration over the fair value of these acquired assets and liabilities assumed is recognized as goodwill. In July 2021, the Company acquired all of the equity interests of a technology company for a GAAP purchase price of $17.8 million, subject to purchase price adjustments. The purchase consideration was primarily attributable to non-deductible goodwill of $11.4 million, with the remainder allocated to acquired technology and other assets Recent Accounting Pronouncements In December 2019, the FASB issued Accounting Standard Update No. 2019-12 , Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes (ASU 2019-12) , which simplifies the accounting for income taxes. The Company adopted |
Earnings Per Share
Earnings Per Share | 12 Months Ended |
Dec. 31, 2021 | |
Earnings Per Share [Abstract] | |
Earnings Per Share | Note 3—Earnings Per Share The Company has two classes of common stock, Class A and Class B. Basic and diluted earnings per share (“EPS”) attributable to common stockholders for Class A and Class B common stock were the same because they were entitled to the same liquidation and dividend rights. The computation of basic and diluted EPS is as follows (in thousands, except per share amounts): Year Ended December 31, 2021 2020 2019 Numerator: Net income $ 137,762 $ 242,317 $ 108,318 Denominator: Weighted-average shares outstanding—basic 476,851 462,865 445,329 Effect of dilutive securities 21,689 27,016 32,732 Weighted-average shares outstanding—diluted 498,540 489,881 478,061 Basic EPS $ 0.29 $ 0.52 $ 0.24 Diluted EPS $ 0.28 $ 0.49 $ 0.23 Anti-dilutive equity awards under stock-based award plans excluded from the determination of diluted EPS 1,699 316 6,915 |
Property and Equipment, Net
Property and Equipment, Net | 12 Months Ended |
Dec. 31, 2021 | |
Property Plant And Equipment [Abstract] | |
Property and Equipment, Net | Note 4—Property and Equipment, Net Major classes of property and equipment were as follows (in thousands): As of December 31, 2021 2020 Computer equipment $ 53,587 $ 28,528 Purchased software 10,179 10,179 Furniture and fixtures 22,156 17,971 Construction in progress (1) 6,810 13,862 Leasehold improvements 112,014 87,803 204,746 158,343 Less: Accumulated depreciation (68,890 ) (42,480 ) $ 135,856 $ 115,863 ______________ (1) Includes leasehold improvement projects which are not yet ready for intended use. Depreciation expense for 2021, 2020 and 2019 was $34.2 million, $21.2 million and $14.9 million, respectively. For the years ended December 31, 2021, 2020 and 2019 there were no impairment charges to property and equipment. |
Capitalized Software Developmen
Capitalized Software Development Costs | 12 Months Ended |
Dec. 31, 2021 | |
Goodwill And Intangible Assets Disclosure [Abstract] | |
Capitalized Software Development Costs | Note 5—Capitalized Software Development Costs Capitalized software development costs, included in other assets, non-current, were as follows (in thousands): As of December 31, 2021 2020 Capitalized software development costs, gross $ 18,191 $ 16,730 Less: Accumulated amortization (3,857 ) (5,225 ) Capitalized software development costs, net $ 14,334 $ 11,505 Amortization expense was $4.7 million, $5.8 million and $5.5 million for 2021, 2020 and 2019, respectively. |
Cash, Cash Equivalents and Shor
Cash, Cash Equivalents and Short-Term Investments, Net | 12 Months Ended |
Dec. 31, 2021 | |
Cash Cash Equivalents And Short Term Investments [Abstract] | |
Cash, Cash Equivalents and Short-Term Investments, Net | Note 6—Cash, Cash Equivalents and Short-Term Investments, Net Cash, cash equivalents and net short-term investments in marketable securities were as follows (in thousands): As of December 31, 2021 Cash and Cash Short-Term Equivalents Investments, Net Total Cash $ 272,058 — $ 272,058 Level 1: Money market funds 431,299 — 431,299 Level 2: Commercial paper 47,544 70,804 118,348 Corporate debt securities 3,253 85,425 88,678 U.S. government and agency securities — 48,396 48,396 Total $ 754,154 $ 204,625 $ 958,779 As of December 31, 2020 Cash and Cash Short-Term Equivalents Investments, Net Total Cash $ 132,372 — $ 132,372 Level 1: Money market funds 259,434 — 259,434 Level 2: Commercial paper 45,547 63,372 108,919 Corporate debt securities — 79,342 79,342 U.S. government and agency securities — 43,971 43,971 Total $ 437,353 $ 186,685 $ 624,038 The Company’s gross unrealized gains or losses from its short-term investments, recorded at fair value, for the years ended December 31, 2021, 2020 and 2019 were immaterial. The contractual maturities of the Company’s short-term investments are as follows (in thousands): December 31, 2021 Due in one year $ 177,655 Due in one to two years 26,970 Total $ 204,625 |
Debt
Debt | 12 Months Ended |
Dec. 31, 2021 | |
Debt Disclosure [Abstract] | |
Debt | Note 7—Debt Credit Facility On June 15, 2021, the Company and a syndicate of banks, led by JPMorgan Chase Bank, N.A., as agent, entered into a Loan and Security Agreement Loans under the Credit Facility bear interest through maturity at a variable rate based upon, at the Company’s option, an annual rate of either a Base Rate or an adjusted LIBOR rate, plus an applicable margin (“Base Rate Borrowings” and “LIBOR Rate Borrowings”). The Base Rate is defined as a rate per annum for any day equal to the greatest of (1) the rate of interest last quoted by The Wall Street Journal as the “Prime Rate” in the United States, (2) the NYFRB Rate in effect on such day plus half of 1% and (3) the adjusted LIBOR rate for a one-month interest period on such day plus 1%. The applicable margin is between 0.25% to 1.25% for Base Rate Borrowings and between 1.25% and 2.25% for LIBOR Rate Borrowings based on the Company maintaining certain leverage ratios. The fee for undrawn amounts under the Credit Facility ranges, based on the applicable leverage, from 0.200% to 0.350%. The Company is also required to pay customary letter of credit fees, as necessary. On December 17, 2021, the Company amended the Credit Facility to expand the process for issuing letters of credit and the related invoicing, particularly with respect to letters of credit not denominated in U.S. Dollars. As of December 31, 2021, the Company did not have an outstanding debt balance under the Credit Facility. Availability under the Credit Facility was $443.9 million as of December 31, 2021, which is net of outstanding letters of credit of $6.1 million. The Credit Facility matures, and all outstanding amounts become due and payable, on June 15, 2026. The Credit Facility contains customary conditions to borrowings, events of default and covenants, including covenants that restrict the Company’s ability to sell assets, make changes to the nature of the Company’s business, engage in mergers or acquisitions, incur, assume or permit to exist additional indebtedness and guarantees, create or permit to exist liens, pay dividends, issue equity instruments, make distributions or redeem or repurchase capital stock or make other investments, engage in transactions with affiliates and make payments in respect of subordinated debt. The Credit Facility also requires the Company to maintain compliance with a maximum ratio of consolidated funded debt to consolidated EBITDA of 3.50 to 1.00. As of December 31, 2021, the Company was in compliance with all covenants. |
Leases
Leases | 12 Months Ended |
Dec. 31, 2021 | |
Leases [Abstract] | |
Leases | Note 8—Leases The components of lease expense were as follows (in thousands): Year Ended December 31, 2021 2020 Operating lease cost $ 50,798 $ 42,272 Short-term lease cost 969 908 Variable lease cost 6,742 5,984 Sublease income (2,734 ) (3,645 ) Total lease cost $ 55,775 $ 45,519 Rent expense for non-cancelable operating leases was $28.1 million for the year ended December 31, 2019. Supplemental information related to leases were as follows: Year Ended December 31, 2021 2020 Weighted-average remaining lease term 7.1 years 7.9 years Weighted-average discount rate 3.0 % 3.4 % Maturities of lease commitments as of December 31, 2021 were as follows (in thousands): Year Amount 2022 $ 53,990 2023 50,201 2024 43,740 2025 39,020 2026 35,397 Thereafter 96,113 Total undiscounted lease commitments 318,461 Less: commitments for leases not yet commenced (249 ) Less: interest (33,614 ) Present value of lease liabilities 284,598 Less: operating lease liabilities, current (46,149 ) Operating lease liabilities, non-current $ 238,449 |
Capitalization
Capitalization | 12 Months Ended |
Dec. 31, 2021 | |
Equity [Abstract] | |
Capitalization | Note 9—Capitalization The Class A and Class B common stock have the same rights and preferences including rights to dividends, except the Class B is entitled to ten votes per share and the Class A is entitled to one vote per share. Each share of Class B common stock is convertible at any time at the option of the holder into one share of Class A common stock. In addition, each share of Class B common stock will convert automatically into one share of Class A common stock upon any transfer, except for certain transfers described in the Company’s restated certificate of incorporation, including, without limitation, certain transfers for tax and estate planning purposes. Our certificate of incorporation provides that all Class B common stock will convert automatically into Class A common stock on December 22, 2025 unless converted prior to such date. The Company’s board of directors has the discretion to determine the rights, preferences, privileges and restrictions, including voting rights, dividend rights, conversion rights, redemption privileges and liquidation preferences, of each series of preferred stock. |
Stock-Based Compensation
Stock-Based Compensation | 12 Months Ended |
Dec. 31, 2021 | |
Disclosure Of Compensation Related Costs Sharebased Payments [Abstract] | |
Stock-Based Compensation | Note 10—Stock-Based Compensation Stock-Based Compensation Expense Stock-based compensation expense recorded in the consolidated statements of operations was as follows (in thousands): Year Ended December 31, 2021 2020 2019 Platform operations $ 15,913 $ 8,794 $ 5,350 Sales and marketing 50,671 29,726 20,769 Technology and development 57,791 36,672 26,553 General and administrative 213,038 36,583 28,086 Total $ 337,413 $ 111,775 $ 80,758 For the years ended December 31, 2021, 2020 and 2019, the Company recognized tax benefits on total stock-based compensation expense, which are reflected in the provision for income taxes in the consolidated statements of operations, of $104.4 million, $134.6 million, and $43.1 million, respectively. For the years ended December 31, 2021, 2020 and 2019, tax benefit realized related to restricted stock vested and stock options exercised during the period was $120.6 million, $151.0 million and $51.0 million, respectively. Stock-Based Award Plans The Company is authorized to issue stock options, restricted stock awards, restricted stock units, stock appreciation rights and other stock-based and cash-based awards under its 2016 Incentive Award Plan. As of December 31, 2021, 56.4 million shares remained available for grant under the Company’s 2016 Incentive Award Plan. The number of shares authorized for grant is subject to increase each year on January 1, equal to the lesser of (a) 4% of the common stock outstanding (on an as-converted basis) on the final day of the immediately preceding calendar year and (b) such smaller number of shares as determined by the board of directors. On January 1, 2022, the number of shares authorized for grant under the Company’s 2016 Incentive Award Plan was increased by 19.3 million shares in accordance with plan provisions. Stock Options Stock options granted under the Company’s stock incentive plans generally vest over four years, subject to the holder’s continued service through the vesting date and expire no later than 10 years from the date of grant. The following summarizes stock option activity: Shares Under Option (in thousands) Weighted- Average Exercise Price Weighted- Average Contractual Life (years) Aggregate Intrinsic Value (in thousands) Outstanding as of December 31, 2020 26,481 $ 10.73 Granted 1,212 74.85 Exercised (7,361 ) 8.36 Expired/forfeited (1,348 ) 19.18 Outstanding as of December 31, 2021 18,984 $ 15.14 6.4 $ 1,452,528 Exercisable as of December 31, 2021 13,008 $ 8.69 5.7 $ 1,079,090 The fair value of options on the date of grant was estimated based on the Black-Scholes option pricing model. The weighted- average assumptions used to value options granted to employees for the periods presented were as follows: Year Ended December 31, 2021 2020 2019 Expected term (years) 6.0 6.0 6.0 Expected volatility 64.3 % 60.5 % 53.2 % Risk-free interest rate 1.04 % 0.57 % 2.26 % Estimated dividend yield — % — % — % The weighted-average grant date fair value per share of stock options granted for the years ended December 31, 2021, 2020 and 2019 and were $43.57, $17.25 and $9.49, respectively. The total intrinsic value of options exercised during the years ended December 31, 2021, 2020 and 2019 were $538.0 million, $594.5 million and $222.0 million, respectively. At December 31, 2021, the Company had unrecognized stock-based compensation relating to stock options of approximately $93.4 million, which is expected to be recognized over a weighted-average period of 1.8 years. CEO Performance Option In October 2021, the Company granted a market-based performance award to the Company’s Chief Executive Officer (the “CEO Performance Option”) under the Company’s 2016 Incentive Award Plan. If specified target goals for the per share price of the Company’s Class A common stock (ranging from $90.00 to $340.00 per share) and certain other vesting conditions are satisfied, including the CEO’s continued service, the CEO may purchase up to a target amount of 16.0 million shares of Class A common stock, subject to adjustment as discussed in the following sentence, to be earned in eight equal tranches over a maximum term of 10 years. These target shares are subject to decrease or increase by up to 20% for each tranche based on the relative total shareholder return (“TSR”) of the Company’s Class A common stock as compared to the TSR of the Nasdaq-100 Index at each vesting tranche, for a maximum of 19.2 million shares. At December 31, 2021, the CEO Performance Option had 2.4 million exercisable options with an aggregate intrinsic value of $56.0 million, and a weighted-average contractual life of 9.8 years. At December 31, 2021, the CEO Performance Option had outstanding options of 19.2 million with an aggregate intrinsic value of $448.3 million and a weighted-average contractual life of 9.8 years. No options were exercised, forfeited or expired as of December 31, 2021. Expected volatility 63.4 % Risk-free interest rate 1.55 % Estimated dividend yield — % The CEO Performance Option has a one-year On December 10, 2021, the expense related to the first tranche of the award was accelerated due to early stock price achievement. Stock-based compensation expense of $157.7 million for the CEO Performance Option, including the accelerated tranche, was recorded as a component of general and administrative expense in the fourth quarter of 2021. At December 31, 2021, the Company had unrecognized stock-based compensation relating to the CEO Performance Option of $661.3 million which, assuming no acceleration of vesting, is expected to be recognized over a weighted-average period of 3.0 years. Restricted Stock Restricted stock awards generally vest over four years, subject to the holder’s continued service through the vesting date. The following summarizes restricted stock activity: Shares (in thousands) Weighted- Average Grant Date Fair Value Per Share Unvested as of December 31, 2020 5,698 $ 26.10 Granted 2,818 77.41 Vested (2,225 ) 24.80 Forfeited (694 ) 33.48 Unvested as of December 31, 2021 5,597 $ 51.54 At December 31, 2021, the Company had unrecognized stock-based compensation relating to restricted stock of approximately $265.4 million, which is expected to be recognized over a weighted-average period of 2.8 years. Employee Stock Purchase Plan In September 2016, the Company established an ESPP with 8.0 million shares of Class A common stock available for issuance. As of December 31, 2021, 7.6 million shares remained available for grant under this plan. The number of shares authorized for grant is subject to increase each year on January 1, equal to the lesser of (a) 8.0 million shares, (b) 1% of the Class A common stock outstanding (on an as-converted basis) on the final day of the immediately preceding calendar year, and (c) such smaller number of shares as determined by the Company’s board of directors. On January 1, 20 2 2 , the number of shares available for issuance under the Company’s ESPP increased by million shares in accordance with plan provisions. Under the ESPP, all eligible employees are permitted to authorize payroll deductions of up to 100% of their compensation to purchase shares of Class A common stock, subject to applicable ESPP and statutory limits. The ESPP provides for offering periods generally up to two years, with purchases occurring and new offering periods commencing generally every six months. ESPP purchases generally occur on May 15th and November 15th each year. At each purchase date, employees are able to purchase shares at 85% of the lower of (1) the closing market price per share of Class A common stock on the employee’s enrollment into the applicable offering period and (2) the closing market price per share of Class A common stock on the purchase date. The ESPP has an automatic reset feature, whereby the offering period resets if the fair value of the Company’s common stock on a purchase date is less than that on the original offering date. The fair value of ESPP shares was estimated using the Black-Scholes option pricing model with the following weighted-average assumptions: Year ended December 31, 2021 2020 2019 Expected term (years) 0.6 0.6 0.7 Expected volatility 62.3 % 61.9 % 53.2 % Risk-free interest rate 0.09 % 0.40 % 2.08 % Estimated dividend yield — % — % — % The ESPP has a six-month |
Income Taxes
Income Taxes | 12 Months Ended |
Dec. 31, 2021 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | Note 11—Income Taxes The following are the domestic and foreign components of the Company’s income before income taxes (in thousands): Year Ended December 31, 2021 2020 2019 Domestic $ 193,048 $ 212,531 $ 162,252 Foreign (71,012 ) (68,628 ) (46,032 ) Income before income taxes $ 122,036 $ 143,903 $ 116,220 The following are the components of the provision for (benefit from) income taxes (in thousands): Year Ended December 31, 2021 2020 2019 Current: Federal $ 10,332 $ (50,096 ) $ 9,180 State and local (10,417 ) (19,650 ) 7,800 Foreign 2,435 2,550 1,412 Total current provision 2,350 (67,196 ) 18,392 Deferred: Federal (21,287 ) (20,900 ) (6,316 ) State and local 3,193 (9,079 ) (5,339 ) Foreign 18 (1,239 ) 1,165 Total deferred provision (18,076 ) (31,218 ) (10,490 ) Total provision for (benefit from) income taxes $ (15,726 ) $ (98,414 ) $ 7,902 A reconciliation of the statutory tax rate to the effective tax rate for the periods presented is as follows: Year Ended December 31, 2021 2020 2019 U.S. federal statutory income tax rate 21.0 % 21.0 % 21.0 % State and local income taxes, net of federal benefit (5.3 ) (15.7 ) 1.7 Foreign income at other than U.S. rates (1) 14.2 10.9 10.5 Stock-based compensation (29.9 ) (59.6 ) (20.5 ) Meals and entertainment 0.2 0.2 0.7 Nondeductible compensation 1.7 0.6 (1.3 ) Research and development credit (15.3 ) (14.1 ) (5.0 ) Other permanent items 0.5 0.1 (0.3 ) Benefit from carryback of NOLs — (11.8 ) — Effective income tax rate (12.9%) (68.4)% 6.8 % __________ (1) For the years ended December 31, 2021, 2020, and 2019, includes the impact of the valuation allowance associated with the United Kingdom (“U.K.”). For additional information, see discussion below. Set forth below are the tax effects of temporary differences that give rise to a significant portion of the deferred tax assets and deferred tax liabilities (in thousands): As of December 31, 2021 2020 Deferred tax assets (liabilities): Reserves and allowances $ 6,161 $ 5,521 Accrued expenses 8,103 8,977 Net operating losses 142,708 58,813 Research and development tax credit 53,472 30,138 Stock-based compensation 16,621 13,584 Prepaid expenses (1,674 ) (1,365 ) Property and equipment (21,924 ) (14,375 ) Intangibles (1) 219,492 184,965 Capitalized software development costs (3,565 ) (2,836 ) Operating lease assets (46,435 ) (55,685 ) Operating lease liabilities 56,415 64,359 Other 484 487 Valuation allowance (361,614 ) (242,415 ) Total deferred tax assets, net $ 68,244 $ 50,168 (1) As of December 31, 2021 and 2020, includes intangibles associated with our international restructuring, net of amortization, offset by a reserve for uncertain tax position. See discussion below. As of each reporting date, the Company’s management considers new evidence, both positive and negative, that could impact management’s view with regard to future realization of deferred tax assets. During 2021, management recorded an additional valuation allowance of $119.2 million against its U.K. net deferred tax assets, based on the history of cumulative losses and the conclusion that future taxable profit may not be available for the utilization of the deferred tax assets for U.K. income tax purposes. As of December 31, 2021, the Company had federal, state, and foreign net operating loss carryforwards of approximately $5.4 million, $53.1 million, and $592.4 million, respectively. The federal, state, and foreign net operating loss carryforwards are subject to limitations under applicable federal, state, and foreign tax law. Federal net operating loss carryforward of $0.9 million will expire in 2037 if not utilized, and $4.5 million will carry forward indefinitely. State net operating loss carryforwards will begin to expire in 2040. Our foreign net operating losses carry forward indefinitely. As of December 31, 2021, the Company had federal, state, and foreign research and development tax credits of approximately $51.2 million, $28.0 million and $0.9 million, respectively, which can be carried forward as prescribed under applicable federal, state. and foreign tax law. Federal research and development tax credits will begin to expire in 2033. State and foreign research and development tax credits carry forward indefinitely. As of December 31, 2021, unremitted earnings of the subsidiaries outside of the United States were approximately $3.2 million, on which no state taxes have been paid. The Company’s intention is to indefinitely reinvest these earnings outside the United States Upon distribution of those earnings in the form of a dividend or otherwise, the Company would be subject to both state income taxes and withholding taxes payable to various foreign countries. The amounts of such tax liabilities that might be payable upon repatriation of foreign earnings are not material. As of December 31, 2021, the Company had gross unrecognized tax benefits of approximately $86.3 million, $84.7 million of which is a reduction to deferred tax assets and the remaining $1.6 million which would affect the Company’s effective tax rate if recognized. As of December 31, 2020, the Company had gross unrecognized tax benefits of approximately $66.9 million, $63.1 million of which is a reduction to deferred tax assets and the remaining $3.8 million The following table presents changes in gross unrecognized tax benefits (in thousands): Year Ended December 31, 2021 (1) 2020 (1) 2019 (1) Beginning balance $ 66,875 $ 53,213 $ 4,330 Increases related to prior year tax positions 13,075 5,378 — Decreases related to prior year tax positions — — (20 ) Increases related to current year tax positions 6,381 9,206 49,100 Settlements — (520 ) (197 ) Expiration of statute of limitations — (402 ) — Ending balance $ 86,331 $ 66,875 $ 53,213 ______________ (1) Interest and penalties related to the Company’s unrecognized tax benefits accrued as of December 31, 2021 were not material. The Company files U.S. federal, state, and foreign tax returns. The Company is currently under examination by the Internal Revenue Service for the year ended December 31, 2018. Additionally, the Company is currently under examination by the Illinois Department of Revenue for the years ended December 31, 2018 and 2019. The Company does not expect to reduce its unrecognized tax benefits during the next twelve months. The Company remains subject to examination for its federal and state tax returns for the periods 2016 through 2020, and 2018 through 2020, respectively. The majority of the Company’s foreign subsidiaries remain subject to examination by local taxing authorities for 2016 and subsequent years. |
Segment and Geographic Informat
Segment and Geographic Information | 12 Months Ended |
Dec. 31, 2021 | |
Segments Geographical Areas [Abstract] | |
Segment and Geographic Information | Note 12—Segment and Geographic Information The Company has one primary business activity and operates in one reportable and operating segment. The Company reports revenue net of amounts it pays suppliers for the cost of Supplier Features. The Company generally bills clients based on Gross Billings, which is the gross amount of Supplier Features they purchase through its platform and the platform fees, net of allowances. The Company’s accounts receivable are recorded at the amount of Gross Billings for the amounts it is responsible to collect, and accounts payable are recorded at the net amount payable to suppliers. Accordingly, both accounts receivable and accounts payable appear large in relation to revenue reported on a net basis. Gross Billings, based on the billing address of the clients or client affiliates, were as follows Year Ended December 31, 2021 2020 2019 US $ 5,286,191 $ 3,605,665 $ 2,639,497 International 843,436 562,595 456,190 Total $ 6,129,627 $ 4,168,260 $ 3,095,687 Property and equipment, net and operating lease assets presented by principal geographic area, were as follows (in thousands): December 31, 2021 December 31, 2020 US $ 282,650 $ 263,891 International 87,297 100,115 Total $ 369,947 $ 364,006 |
Commitments and Contingencies
Commitments and Contingencies | 12 Months Ended |
Dec. 31, 2021 | |
Commitments And Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | Note 13—Commitments and Contingencies As of December 31 Refer to Note 8 — Leases for additional information regarding lease commitments. As of December 31, 2021, the Company had non-cancelable commitments to its hosting services providers, marketing contracts and commitments to providers of software as a service. Year Amount 2022 $ 60,833 2023 38,283 2024 1,239 2025 105 2026 52 $ 100,512 Guarantees and Indemnification In the ordinary course of business, the Company may provide indemnifications of varying scope and terms to clients, vendors, lessors, business partners and other parties with respect to certain matters, including, but not limited to, losses arising out of breach of such agreements, services to be provided by the Company or from intellectual property infringement claims made by third parties. In addition, the Company has entered into indemnification agreements with directors and certain officers and employees that will require the Company, among other things, to indemnify them against certain liabilities that may arise by reason of their status or service as directors, officers or employees. No demands have been made upon the Company to provide indemnification under such agreements, and thus, there are no claims that the Company is aware of that could have a material effect on the Company’s balance sheet, statement of operations or statement of cash flows. Accordingly, no amounts for any obligation have been recorded as of December 31, 2021 and 2020. Litigation From time to time, the Company is subject to various legal proceedings and claims, either asserted or unasserted, that arise in the ordinary course of business. Although the outcome of the various legal proceedings and claims cannot be predicted with certainty, management does not believe that any of these proceedings or other claims will have a material adverse effect on the Company’s business, financial condition, results of operations or cash flows. On June 28, 2021, a class action lawsuit was filed against the Company, the members of the Company’s board of directors, and one of the Company’s executive officers (collectively, the “Defendants”) in the Court of Chancery of the State of Delaware. The complaint alleges generally that the Defendants breached their fiduciary duties to the Company’s stockholders in connection with the negotiation and approval of the amendments to the Company’s certificate of incorporation and related matters voted on at the Special Meeting of Stockholders held on December 22, 2020 (the “Amendments”). The plaintiff is seeking a court order rescinding the Amendments, as well as monetary damages. On November 29, 2021, the plaintiff filed a supplement to the complaint, adding factual allegations related to the CEO Performance Option. On February 1, 2022, the Defendants moved to dismiss the complaint. A hearing on Defendants’ motions is scheduled for April 11, 2022. The Company believes that all of the claims asserted in the complaint are without merit and intends to defend against them vigorously. However, litigation is inherently uncertain and there can be no assurance regarding the likelihood that the Defendants’ defense of the action will be successful. Employment Contracts The Company has entered into agreements with severance terms with certain employees and officers, all of whom are employed on an at-will basis, subject to certain severance obligations in the event of certain involuntary terminations. The Company may be required to accelerate the vesting of certain stock options in the event of changes in control, as defined and involuntary terminations. |
Basis of Presentation and Sum_2
Basis of Presentation and Summary of Significant Accounting Policies (Policies) | 12 Months Ended |
Dec. 31, 2021 | |
Accounting Policies [Abstract] | |
Basis of Presentation and Principles of Consolidation | Basis of Presentation and Principles of Consolidation The accompanying consolidated financial statements are prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) and include the operations of the Company and its wholly owned subsidiaries. All intercompany transactions have been eliminated in consolidation. On June 16, 2021, the Company effected a ten-for-one |
Use of Estimates | Use of Estimates The preparation of consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ materially from these estimates. Management regularly evaluates its estimates, primarily those related to: (1) revenue recognition criteria, including the determination of revenue reporting as net versus gross in the Company’s revenue arrangements, (2) allowances for credit losses accounts, (3) operating lease assets and liabilities, including our incremental borrowing rate and terms and provisions of each lease (4) the useful lives of property and equipment and capitalized software development costs, (5) income taxes, (6) assumptions used in the option pricing models to determine the fair value of stock-based compensation and (7) the recognition and disclosure of contingent liabilities. These estimates are based on historical data and experience, as well as various other factors that management believes to be reasonable under the circumstances; the results of which form the basis for making judgments about the carrying value of assets and liabilities that are not readily apparent from other sources. As of December 31, 2021, the impact of the Coronavirus (“COVID-19”) pandemic on the Company’s business continues to evolve. As a result, many of the Company’s estimates and assumptions, including the allowance for credit losses, consider macro-economic factors in the market, which require increased judgment and carry a higher degree of variability and volatility. As events continue to evolve and additional information becomes available, the Company’s estimates may change materially in future periods. |
Revenue Recognition | Revenue Recognition The Company generates revenue from clients who enter into agreements with the Company to use its platform to purchase advertising inventory, data and other add-on features. The Company charges its clients a platform fee, which is a percentage of a client’s purchases through the platform. In addition, the Company invoices its clients for the cost of advertising inventory purchased, plus data and any add-on features purchased through the platform. The Company determines revenue recognition through the following steps: • Identification of a contract with a client; • Identification of the performance obligations in the contract; • Determination of the transaction price; • Allocation of the transaction price to the performance obligations in the contract; and • Recognition of revenue when or as the performance obligations are satisfied. The Company maintains agreements with each client and supplier in the form of master service agreements, which set out the terms of the relationship and access to the Company’s platform. The Company’s performance obligation is to provide the use of its platform to clients to develop ad campaigns and select the advertising inventory, data and other add-on features. The Company charges clients a platform fee, based on a percentage of a client’s purchases through the platform, and the transaction price is determined based on the consideration to which it expects to be entitled in exchange for the completion of a transaction, that is, when a bid is won. The Company reports revenue net of amounts it pays suppliers for the cost of advertising inventory, third-party data and other add-on features (collectively, “Supplier Features”). Judgment is required to determine whether the Company is the principal and reports revenue on a gross basis for Supplier Features or the agent and reports revenue on a net basis for the amount of platform fees charged to the client. The Company determined that it is not primarily responsible for the purchase of Supplier Features. Rather, the Company’s primary responsibility is to provide the platform that enables clients to bid on advertising inventory and use data and other add-on features in designing and executing their campaigns. The Company does not control the Supplier Features prior to the purchase by the client, and it does not have pricing latitude with respect to the cost of such features. The platform fee the Company charges clients is a percentage of their purchases through its platform, similar to a commission, and the platform fee is not contingent on the results of an advertising campaign. Based on these and other factors, the Company determined that it is not the principal in the purchase and sale of Supplier Features and, therefore, reports revenue on a net basis for the platform fees charged to clients. The Company generally bills clients for the gross amount of Supplier Features they purchase through its platform and the platform fees, net of allowances (“Gross Billings”). When clients have direct payment relationships with advertising inventory suppliers, the Company bills these clients only for third-party data, other add-on features and its platform fees. The Company invoices its clients monthly for the purchases occurring during the month. Invoice payment terms, negotiated on a client-by-client basis, are typically between 30 to 90 days. However, for certain agency clients with sequential liability terms, payments are not due to the Company until such agency client has received payment from its clients who are advertisers. Accounts receivable is recorded based on Gross Billings, which are the amounts the Company is responsible to collect. Accounts payable is recorded at the net amount payable to suppliers. Accordingly, both accounts receivable and accounts payable appear large in relation to revenue reported on a net basis. Refer to Note 12—Segment and Geographic Information |
Revenue Recognition Gross and Net Revenue | The Company generally bills clients for the gross amount of Supplier Features they purchase through its platform and the platform fees, net of allowances (“Gross Billings”). When clients have direct payment relationships with advertising inventory suppliers, the Company bills these clients only for third-party data, other add-on features and its platform fees. The Company invoices its clients monthly for the purchases occurring during the month. Invoice payment terms, negotiated on a client-by-client basis, are typically between 30 to 90 days. However, for certain agency clients with sequential liability terms, payments are not due to the Company until such agency client has received payment from its clients who are advertisers. Accounts receivable is recorded based on Gross Billings, which are the amounts the Company is responsible to collect. Accounts payable is recorded at the net amount payable to suppliers. Accordingly, both accounts receivable and accounts payable appear large in relation to revenue reported on a net basis. Refer to Note 12—Segment and Geographic Information |
Operating Expenses | Operating Expenses The Company classifies its operating expenses into four categories and allocates overhead such as information technology infrastructure, rent and occupancy charges based on headcount for all these categories: Platform Operations. Platform operations expense consists of expenses related to hosting the Company’s platform, which includes “internet traffic” associated with the viewing of available impressions or queries per second (“QPS”) and providing support to clients. Platform operations expense includes hosting costs, personnel costs, and amortization of acquired technology and capitalized software costs for platform development. Personnel costs include salaries, bonuses, stock-based compensation, and employee benefit costs attributable to personnel who support the platform and provide clients with platform support. The Company capitalizes certain costs associated with platform development in other assets, non-current on its consolidated balance sheet and amortizes these costs into platform operations expense over their estimated useful lives. Sales and Marketing. Sales and marketing expense consists primarily of personnel costs, including salaries, bonuses, stock-based compensation, employee benefits costs and commission costs, for the Company’s sales and marketing personnel. Sales and marketing expense also includes costs for market development programs, advertising and promotional, and other marketing activities. Commissions costs are expensed as incurred. Technology and Development. The Company’s technology and development expense consists primarily of personnel costs, including salaries, bonuses, stock-based compensation and employee benefits costs; third-party consultant costs associated with the ongoing development of the Company’s platform and integrations with our advertising and data inventory suppliers; and the amortization of capitalized third-party software used in platform development. Technology and development costs are expensed as incurred, except to the extent that such costs are associated with software development that qualif ies for capitalization, which are then recorded as capitalized software development costs included in other assets, non-current on the Company’s consolidated balance sheet. The Company amortizes capitalized software development costs relating to the Company’s platform to platform operations expense . General and Administrative. The Company’s general and administrative expense consists primarily of personnel costs, including salaries, bonuses, stock-based compensation, and employee benefits costs associated with the Company’s executive, finance, legal, human resources, compliance, and other administrative personnel, as well as accounting and legal professional services fees and credit loss expense. |
Sales and Marketing | Sales and Marketing. Sales and marketing expense consists primarily of personnel costs, including salaries, bonuses, stock-based compensation, employee benefits costs and commission costs, for the Company’s sales and marketing personnel. Sales and marketing expense also includes costs for market development programs, advertising and promotional, and other marketing activities. Commissions costs are expensed as incurred. |
Technology and Development | Technology and Development. The Company’s technology and development expense consists primarily of personnel costs, including salaries, bonuses, stock-based compensation and employee benefits costs; third-party consultant costs associated with the ongoing development of the Company’s platform and integrations with our advertising and data inventory suppliers; and the amortization of capitalized third-party software used in platform development. Technology and development costs are expensed as incurred, except to the extent that such costs are associated with software development that qualif ies for capitalization, which are then recorded as capitalized software development costs included in other assets, non-current on the Company’s consolidated balance sheet. The Company amortizes capitalized software development costs relating to the Company’s platform to platform operations expense . |
Stock-Based Compensation | Stock-Based Compensation Stock-based compensation expense related to stock options, restricted stock awards and units (collectively, “restricted stock”), and awards granted under the Company’s employee stock purchase plan (“ESPP”) is measured and recognized in the consolidated financial statements based on the fair value of the awards granted. The fair values of the ESPP and stock option awards are estimated on the grant date using the Black-Scholes option-pricing model, except for the CEO Performance Option that is estimated using the Monte Carlo valuation model. The fair value of restricted stock is calculated using the closing market price of the Company’s common stock on the date of grant. Determining the fair value of stock options and ESPP awards requires judgment. The Company’s use of the valuation models requires the input of subjective assumptions. The assumptions used in the Company’s valuation models represent management’s best estimates, which involve inherent uncertainties and the application of management’s judgment. These assumptions and estimates are as follows: Risk-Free Interest Rate. The risk-free interest rate is based on the yields of U.S. Treasury securities with maturities approximating the expected term of the awards. Expected Term. For stock options, given the insufficient historical data relating to stock option exercises, the Company applies the simplified approach in which the expected term of an award is presumed to be the mid-point between the vesting date and the expiration date of the award. For ESPP awards, the expected term is the time period from the grant date to the respective purchase dates included within each offering period. Volatility. Prior to 2020, the Company determined the price volatility based on a blend of the historical volatilities of a publicly traded peer group, implied volatilities from its traded options, and its historical volatility, based on daily price observations over a period equivalent to the expected term of the award. During 2020, the Company eliminated the peer group from this analysis and began to determine its price volatility based on a blend of historical and implied volatilities. Dividend Yield. The dividend yield assumption is based on the Company’s history and current expectations of dividend payouts. The Company has never declared or paid any cash dividends on its common stock and does not anticipate paying any cash dividends in the foreseeable future, so the Company used an expected dividend yield of zero. Derived Service Period . The stock-compensation expense attribution period for the CEO Performance Option is developed based on a Monte Carlo simulation of daily stock prices over the performance period. Stock-based compensation expense related to stock options and restricted stock is recognized on a straight-line basis over the requisite service periods of the awards, which is generally four years. Stock-based compensation for the CEO Performance Option is recognized on a graded-vesting basis over a derived service period of approximately five years but may be accelerated if the vesting criteria are met prior to the estimated performance period. Stock-based compensation expense for ESPP awards is recognized on a graded-vesting attribution basis over the requisite service period of each award. The Company accounts for forfeitures as they occur. |
Income Taxes | Income Taxes Deferred income tax assets and liabilities are determined based upon the net tax effects of the differences between the Company’s consolidated financial statements carrying amounts and the tax basis of assets and liabilities and are measured using the enacted tax rate expected to apply to taxable income in the years in which the differences are expected to be reversed. A valuation allowance is used to reduce some or all of the deferred tax assets if, based upon the weight of available evidence, it is more likely than not that those deferred tax assets will not be realized. The Company recognizes the tax benefit from an uncertain tax position only if it is more likely than not that the tax position will be sustained on examination by the taxing authorities, based on the technical merits of the position. The tax benefits recognized in the consolidated financial statements from such positions are then measured based on the largest benefit that has a greater than 50% likelihood of being realized. The Company recognizes interest and penalties accrued related to its uncertain tax positions in its income tax provision in the accompanying consolidated statements of operations . The Company makes assumptions, judgments and estimates to determine the current income tax provision, tax benefits from uncertain tax positions, deferred tax asset and liabilities, and valuation allowance recorded against a deferred tax asset. The assumptions, judgments and estimates relative to the current income tax provision (benefit) take into account current tax laws, their interpretation and possible results of foreign and domestic tax audits. Changes in tax law, and their interpretation, could significantly impact the income taxes provided in the Company’s consolidated financial statements. The evaluation of the Company’s uncertain tax positions involves significant judgment in the interpretation and application of GAAP and complex domestic and international tax laws, and matters related to the allocation of international taxation rights between countries. Although management believes the Company’s reserves are reasonable, no assurance can be given that the final tax outcome of these matters will not be different from that which is reflected in the Company’s reserves. Reserves are adjusted considering changing facts and circumstances, such as the closing of a tax examination or the refinement of an estimate. Assumptions, judgments and estimates relative to the amount of deferred income taxes, and any applicable valuation allowances, take into account future taxable income. Any of the assumptions, judgments and estimates mentioned above could cause the actual income tax obligations to differ from estimates. |
Earnings Per Share | Earnings Per Share Basic earnings per share is calculated by dividing net income by the weighted-average number of common stock shares outstanding. Diluted earnings per share is calculated by dividing net income by the weighted-average number of common stock shares outstanding adjusted for the potentially dilutive impact of stock options, restricted stock and ESPP using the using the two-class method required for participating securities. We consider restricted stock awards to be participating securities due to their non-forfeitable dividend rights. |
Cash, Cash Equivalents and Marketable Securities | Cash, Cash Equivalents and Marketable Securities The Company classifies all investments that are readily convertible to known amounts of cash and have maturities of three months or less from the date of purchase as cash equivalents, which consist primarily of money market funds and commercial paper, and those with stated maturities of greater than three months as marketable securities, which primarily consist of corporate debt securities and U.S. government and agency securities. Investments in marketable securities with maturities beyond one year are also classified as short-term available-for-sale securities based on their highly liquid nature and because they are available for current operations. Cash equivalents and marketable securities are carried at fair value. Realized gains and losses are recognized in other expense (income), net on the consolidated statement of operations. Unrealized gains and losses, net of taxes, are included in stockholders' equity. The Company uses Financial Instruments-Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments to assess the investment portfolio for impairment at the individual security level and evaluates all securities in an unrealized loss position to determine if the impairment is credit related (resulting in realized credit loss, recorded in earnings) or non-credit related (resulting in an unrealized loss, recorded in stockholders' equity). We have not recorded any impairment charges for unrealized losses in the periods presented. Refer to Note 6—Cash, Cash Equivalents and Short-Term Investments, Net |
Accounts Receivable and Allowance for Credit Losses | Accounts Receivable and Allowance for Credit Losses Accounts receivable are recorded at the invoiced amount, are unsecured, and do not bear interest. The Company performs ongoing credit evaluations of its clients and certain advertisers when the Company’s agreements with its clients contain sequential liability terms such that client payments are not due to the Company until the client has received payment from its clients who are advertisers. The Company maintains an allowance for credit losses for expected uncollectible accounts receivable, which is recorded as an offset to accounts receivable and changes in such are classified as general and administrative expense on the consolidated statements of operations. On January 1, 2020 . Industry-specific default rates are applied to the advertiser’s industry if the receivables are subject to sequential liability or the Company is engaged with the advertiser directly. For the years ended December 31, 2021 and 2020, the Company’s assessment considered business and market disruptions caused by the COVID-19 pandemic and estimates of credit defaults by industry. The Company continues to monitor the financial implications of the COVID-19 pandemic on expected credit losses by reviewing the allowance for credit losses on a quarterly basis. Account balances are charged off against the allowance when the Company believes it is probable the receivable will not be recovered. The following table presents changes in the accounts receivable allowance for credit losses (in thousands): Year Ended December 31, 2021 2020 2019 Beginning balance $ 7,253 $ 3,920 $ 2,973 Add: impact upon adoption of new accounting standard — 553 — Add: bad debt expense 1,456 3,149 2,702 Less: write-offs, net of recoveries (1,335 ) (369 ) (1,755 ) Ending balance $ 7,374 $ 7,253 $ 3,920 |
Property and Equipment, Net | Property and Equipment, Net Property and equipment are recorded at historical cost, less accumulated depreciation and amortization. Depreciation is computed using the straight-line method based upon the following estimated useful lives: Years Computer equipment 2 – 3 Purchased software 3 – 5 Furniture, fixtures and office equipment 5 Leasehold improvements * _________________ * Leasehold improvements are amortized on a straight-line basis over the term of the lease, or the useful life of the assets, whichever is shorter. Repair and maintenance costs are charged to expense as incurred, while improvements are capitalized. When assets are retired or otherwise disposed of, the cost and related accumulated depreciation are removed from the accounts and any resulting gain or loss is reflected in the Company’s operating results. |
Capitalized Software Development Costs | Capitalized Software Development Costs The Company capitalizes certain costs associated with creating and enhancing internally developed software related to the Company’s technology infrastructure. These costs include personnel and benefit-related expenses for employees who are directly associated with and devote time to software development projects, and external direct costs of materials and services consumed in developing or obtaining the software. Software development costs that do not qualify for capitalization, as further discussed below, are expensed as incurred and recorded in technology and development expenses in the consolidated statements of operations. Software development activities typically consist of three stages: (1) the planning phase; (2) the application and infrastructure development stage; and (3) the post-implementation stage. Costs incurred in the planning and post implementation phases, including costs associated with the post-configuration training and repairs and maintenance of the developed technologies, are expensed as incurred. The Company capitalizes costs associated with software developed when the preliminary project stage is completed, management implicitly or explicitly authorizes and commits to funding the project and it is probable that the project will be completed and perform as intended. Costs incurred in the application and infrastructure development phases, including significant enhancements and upgrades, are capitalized. Capitalization ends once a project is substantially complete and the software is ready for its intended purpose. Software development costs are amortized using a straight-line method over the estimated useful life of two years, commencing when the software is ready for its intended use. The straight-line recognition method approximates the manner in which the expected benefit will be derived. The Company does not transfer ownership of its internally developed software, or lease its software, to third parties. Cloud computing arrangements (“CCAs”), such as software as a service and other hosting arrangements, are evaluated for capitalized implementation costs in a similar manner as capitalized software development costs. If a CCA includes a software license, the software license element of the arrangement is accounted for in a manner consistent with the acquisition of other software licenses. If a CCA does not include a software license, the service element of the arrangement is accounted for as a service contract. The Company capitalized certain implementation costs its CCAs that are service contracts, which are included in . The Company amortizes capitalized implementation costs in a CCA over the life of the service contract. |
Operating Leases | Operating Leases On January 1, 2019, the Company adopted ASU No. 2016-02, codified as ASC 842, using the modified retrospective adoption approach. The Company elected the transition option provided by ASU No. 2018-11, Leases (Topic 842): Targeted Improvements, to not restate comparative periods, but rather to initially adopt the requirements of ASC 842 on January 1, 2019. The most significant impact of the adoption of ASC 842 resulted in the recognition of operating lease right-of-use assets (“operating lease assets”) of approximately $41 million, net of deferred rent and direct costs, and operating lease liabilities of approximately $47 million on its consolidated balance sheet. The impact on the Company’s consolidated statements of operations and cash flows was not material. ASC 842 provides various optional transition practical expedients. Upon transition to ASC 842, the Company elected the use of the package of practical expedients to not reassess: whether a contract is or contains a lease, lease classification and indirect costs. The Company did not elect the hindsight practical expedient in transition. The Company has elected to not separate lease and non-lease components. The Company has operating leases for its offices, which have remaining lease terms of up to 10 years, some of which include options to extend the leases for up to five years, and some of which include options to terminate the leases within one year with proper notification. The Company determines if an arrangement is, or contains, a lease at inception. Operating lease assets represent the Company’s right to control the use of an identified asset for a period of time, or term, in exchange for consideration, and operating lease liabilities represent its obligation to make lease payments arising from the aforementioned right. Operating lease assets and liabilities are initially recorded based on the present value of lease payments over the lease term, which includes the minimum unconditional term of the lease, and may include options to extend or terminate the lease when it is reasonably certain at the commencement date that such options will be exercised. As the rate implicit for each of the Company’s leases is not readily determinable, the Company uses its incremental borrowing rate, based on the information available at the lease commencement date in determining the present value of its expected lease payments. Operating lease assets also include any initial direct costs and any lease payments made prior to the lease commencement date and are reduced by any lease incentives received. Leases with an initial term of 12 months or less are not recorded on the balance sheet. The Company does not have finance leases. Operating lease assets are amortized on a straight-line basis as operating lease cost over the lease term on the consolidated statements of operations. The related amortization, referred to as noncash lease expense, along with the change in the operating lease liabilities are separately presented within the cash flows from operating activities on the consolidated statements of cash flows. The Company records rent expense for operating leases, some of which have escalating rent payments, on a straight-line basis over the lease term. Certain leases contain provisions for property-related costs that are variable in nature for which the Company is responsible, including common area maintenance and other property operating services. These costs are calculated based on a variety of factors including property values, tax and utility rates, property services fees, and other factors. Refer to Note 8—Leases |
Fair Value of Financial Instruments | Fair Value of Financial Instruments Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. Valuation techniques used to measure fair value must maximize the use of observable inputs and minimize the use of unobservable inputs. Fair value measurements are based on a fair value hierarchy, based on three levels of inputs, of which the first two are considered observable and the last unobservable, which are the following: Level 1—Quoted prices (unadjusted) in active markets for identical assets or liabilities that the Company has the ability to access at the measurement date. Level 2—Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly, such as quoted market prices for similar assets and liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the asset or liability. Level 3—Unobservable inputs. Observable inputs are based on market data obtained from independent sources. The carrying amounts of accounts receivable, prepaid expenses and other current assets, accounts payable, accrued expenses and other current liabilities approximate fair value due to the short-term nature of these instruments. The carrying value of the line of credit approximates fair value based on borrowing rates currently available to the Company for financing with similar terms and were determined to be Level 2. Certain long-lived assets including capitalized software development costs are also subject to measurement at fair value on a non-recurring basis if they are deemed to be impaired as a result of an impairment review. To date, no material impairments have been recorded on those assets. |
Concentration of Risk | Concentration of Risk Financial instruments that potentially subject the Company to concentration of credit risk consist principally of cash and cash equivalents, short-term investments and accounts receivable. The Company maintains its cash and cash equivalents with financial institutions, and its cash levels exceed the Federal Deposit Insurance Corporation federally insured limits. Short-term investments consist of investments in U.S. government securities, U.S. government agency securities, and high-credit quality corporate debt securities . If all of our individual client contractual relationships were aggregated at the holding company level, two holding companies would each represent more than 10% of our Gross Billings in 2021, 2020 and 2019. In 2021, two holding companies accounted for 11% and 10% of Gross Billings. In 2020, two holding companies each accounted for 11% of Gross Billings. In 2019, two holding companies accounted for 13% and 10% of Gross Billings. We do not have contractual relationships with these holding companies. Rather, we enter into separate contracts and billing relationships with various of their individual agencies and account for those agencies as separate clients. As of December 31, 2021, three clients each accounted for at least 10%, and collectively accounted for 41%, of consolidated accounts receivable. As of December 31, 2020, four clients each accounted for at least 10%, and collectively accounted for 51%, of consolidated accounts receivable. As of December 31, 2021, one supplier accounted for 17% of consolidated accounts payable. As of December 31, 2020, no supplier accounted for more than 10% of consolidated accounts payable. |
Foreign Currency Transactions | Foreign Currency Transactions The Company’s reporting currency is the U.S. Dollar, and the functional currency of each of our subsidiaries is the U.S. Dollar. Transactions in foreign currencies are translated into U.S. Dollars at the rates of exchange in effect at the date of the transaction. Net transaction losses are included in foreign currency exchange loss, net in the accompanying consolidated statements of operations. The Company enters into forward contracts to hedge foreign currency exposures related primarily to the Company’s foreign currency denominated accounts receivable. The Company does not designate the foreign exchange forward contracts as hedges for accounting purposes and changes in the fair value of the foreign exchange forward contracts are recorded in foreign currency exchange loss, net in the accompanying consolidated statements of operations. The Company’s forward contracts generally have terms of 30-60 days. As of December 31, 2021, and 2020, the Company had open forward contracts with aggregate notional amounts of $250.7 million and $169.9 million, respectively. The fair value of the open forward contracts was not material. |
Business Combinations | Business Combinations The results of a business combination are included in the Company’s consolidated financial statements from the date of the acquisition. Purchase accounting results in assets and liabilities of an acquired business are generally recorded at their estimated fair values on the acquisition date, which may require management to use significant judgment and estimates, including the selection of valuation methodologies, estimates of future revenue, costs and cash flows, discount rates, and selection of comparable companies. The Company engages valuation specialists to assist in determining the fair values of these acquired assets and liabilities. Any excess consideration over the fair value of these acquired assets and liabilities assumed is recognized as goodwill. In July 2021, the Company acquired all of the equity interests of a technology company for a GAAP purchase price of $17.8 million, subject to purchase price adjustments. The purchase consideration was primarily attributable to non-deductible goodwill of $11.4 million, with the remainder allocated to acquired technology and other assets |
Recent Accounting Pronouncements | Recent Accounting Pronouncements In December 2019, the FASB issued Accounting Standard Update No. 2019-12 , Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes (ASU 2019-12) , which simplifies the accounting for income taxes. The Company adopted ASU 2019-12 in the first quarter of 2021 and the adoption had no material impact to the Company’s consolidated financial statements. In March 2020, the FASB issued ASU No. 2020-04, Reference Rate Reform (Topic 848) (“ASU 2020-04”), which provides optional expedients and exceptions for applying GAAP to contracts, hedging relationships, and other transactions affected by the discontinuation of the London Interbank Offered Rate or by another reference rate expected to be discontinued. The amendments are effective for all entities through December 31, 2022 and can be adopted as of any date from the beginning of an interim period that includes or is subsequent to March 12, 2020. The adoption of the amendment did not have a material impact on the Company’s consolidated financial statements |
Basis of Presentation and Sum_3
Basis of Presentation and Summary of Significant Accounting Policies (Tables) | 12 Months Ended |
Dec. 31, 2021 | |
Accounting Policies [Abstract] | |
Schedule of Changes in Accounts Receivable Allowance for Credit Losses | The following table presents changes in the accounts receivable allowance for credit losses (in thousands): Year Ended December 31, 2021 2020 2019 Beginning balance $ 7,253 $ 3,920 $ 2,973 Add: impact upon adoption of new accounting standard — 553 — Add: bad debt expense 1,456 3,149 2,702 Less: write-offs, net of recoveries (1,335 ) (369 ) (1,755 ) Ending balance $ 7,374 $ 7,253 $ 3,920 |
Schedule of Useful lives of PPE | Depreciation is computed using the straight-line method based upon the following estimated useful lives: Years Computer equipment 2 – 3 Purchased software 3 – 5 Furniture, fixtures and office equipment 5 Leasehold improvements * _________________ * Leasehold improvements are amortized on a straight-line basis over the term of the lease, or the useful life of the assets, whichever is shorter. |
Earnings Per Share (Tables)
Earnings Per Share (Tables) | 12 Months Ended |
Dec. 31, 2021 | |
Earnings Per Share [Abstract] | |
Computation of Basic and Diluted EPS | The computation of basic and diluted EPS is as follows (in thousands, except per share amounts): Year Ended December 31, 2021 2020 2019 Numerator: Net income $ 137,762 $ 242,317 $ 108,318 Denominator: Weighted-average shares outstanding—basic 476,851 462,865 445,329 Effect of dilutive securities 21,689 27,016 32,732 Weighted-average shares outstanding—diluted 498,540 489,881 478,061 Basic EPS $ 0.29 $ 0.52 $ 0.24 Diluted EPS $ 0.28 $ 0.49 $ 0.23 Anti-dilutive equity awards under stock-based award plans excluded from the determination of diluted EPS 1,699 316 6,915 |
Property and Equipment, Net (Ta
Property and Equipment, Net (Tables) | 12 Months Ended |
Dec. 31, 2021 | |
Property Plant And Equipment [Abstract] | |
Schedule of Major Classes of Property and Equipment | Major classes of property and equipment were as follows (in thousands): As of December 31, 2021 2020 Computer equipment $ 53,587 $ 28,528 Purchased software 10,179 10,179 Furniture and fixtures 22,156 17,971 Construction in progress (1) 6,810 13,862 Leasehold improvements 112,014 87,803 204,746 158,343 Less: Accumulated depreciation (68,890 ) (42,480 ) $ 135,856 $ 115,863 (1) Includes leasehold improvement projects which are not yet ready for intended use. |
Capitalized Software Developm_2
Capitalized Software Development Costs (Tables) | 12 Months Ended |
Dec. 31, 2021 | |
Goodwill And Intangible Assets Disclosure [Abstract] | |
Summary of Capitalized Software Development Costs | Capitalized software development costs, included in other assets, non-current, were as follows (in thousands): As of December 31, 2021 2020 Capitalized software development costs, gross $ 18,191 $ 16,730 Less: Accumulated amortization (3,857 ) (5,225 ) Capitalized software development costs, net $ 14,334 $ 11,505 |
Cash, Cash Equivalents and Sh_2
Cash, Cash Equivalents and Short-Term Investments, Net (Tables) | 12 Months Ended |
Dec. 31, 2021 | |
Cash Cash Equivalents And Short Term Investments [Abstract] | |
Schedule of Cash, Cash Equivalents and Net Short-term Investments in Marketable Securities | Cash, cash equivalents and net short-term investments in marketable securities were as follows (in thousands): As of December 31, 2021 Cash and Cash Short-Term Equivalents Investments, Net Total Cash $ 272,058 — $ 272,058 Level 1: Money market funds 431,299 — 431,299 Level 2: Commercial paper 47,544 70,804 118,348 Corporate debt securities 3,253 85,425 88,678 U.S. government and agency securities — 48,396 48,396 Total $ 754,154 $ 204,625 $ 958,779 As of December 31, 2020 Cash and Cash Short-Term Equivalents Investments, Net Total Cash $ 132,372 — $ 132,372 Level 1: Money market funds 259,434 — 259,434 Level 2: Commercial paper 45,547 63,372 108,919 Corporate debt securities — 79,342 79,342 U.S. government and agency securities — 43,971 43,971 Total $ 437,353 $ 186,685 $ 624,038 |
Schedule of Contractual Maturities of Short-Term Investments | The contractual maturities of the Company’s short-term investments are as follows (in thousands): December 31, 2021 Due in one year $ 177,655 Due in one to two years 26,970 Total $ 204,625 |
Leases (Tables)
Leases (Tables) | 12 Months Ended |
Dec. 31, 2021 | |
Leases [Abstract] | |
Summary of Components of Lease Expense | The components of lease expense were as follows (in thousands): Year Ended December 31, 2021 2020 Operating lease cost $ 50,798 $ 42,272 Short-term lease cost 969 908 Variable lease cost 6,742 5,984 Sublease income (2,734 ) (3,645 ) Total lease cost $ 55,775 $ 45,519 |
Summary of Supplemental Information Related to Leases | Supplemental information related to leases were as follows: Year Ended December 31, 2021 2020 Weighted-average remaining lease term 7.1 years 7.9 years Weighted-average discount rate 3.0 % 3.4 % |
Summary of Maturities of Lease Commitments | Maturities of lease commitments as of December 31, 2021 were as follows (in thousands): Year Amount 2022 $ 53,990 2023 50,201 2024 43,740 2025 39,020 2026 35,397 Thereafter 96,113 Total undiscounted lease commitments 318,461 Less: commitments for leases not yet commenced (249 ) Less: interest (33,614 ) Present value of lease liabilities 284,598 Less: operating lease liabilities, current (46,149 ) Operating lease liabilities, non-current $ 238,449 |
Stock-Based Compensation (Table
Stock-Based Compensation (Tables) | 12 Months Ended |
Dec. 31, 2021 | |
Schedule of Stock-Based Compensation Expense | Stock-based compensation expense recorded in the consolidated statements of operations was as follows (in thousands): Year Ended December 31, 2021 2020 2019 Platform operations $ 15,913 $ 8,794 $ 5,350 Sales and marketing 50,671 29,726 20,769 Technology and development 57,791 36,672 26,553 General and administrative 213,038 36,583 28,086 Total $ 337,413 $ 111,775 $ 80,758 |
Summary of Stock Option Activity | The following summarizes stock option activity: Shares Under Option (in thousands) Weighted- Average Exercise Price Weighted- Average Contractual Life (years) Aggregate Intrinsic Value (in thousands) Outstanding as of December 31, 2020 26,481 $ 10.73 Granted 1,212 74.85 Exercised (7,361 ) 8.36 Expired/forfeited (1,348 ) 19.18 Outstanding as of December 31, 2021 18,984 $ 15.14 6.4 $ 1,452,528 Exercisable as of December 31, 2021 13,008 $ 8.69 5.7 $ 1,079,090 |
Schedule of Weighted-Average Assumptions Used to Value Options Granted to Employees | The fair value of options on the date of grant was estimated based on the Black-Scholes option pricing model. The weighted- average assumptions used to value options granted to employees for the periods presented were as follows: Year Ended December 31, 2021 2020 2019 Expected term (years) 6.0 6.0 6.0 Expected volatility 64.3 % 60.5 % 53.2 % Risk-free interest rate 1.04 % 0.57 % 2.26 % Estimated dividend yield — % — % — % |
Summary of Restricted Stock Activity | The following summarizes restricted stock activity: Shares (in thousands) Weighted- Average Grant Date Fair Value Per Share Unvested as of December 31, 2020 5,698 $ 26.10 Granted 2,818 77.41 Vested (2,225 ) 24.80 Forfeited (694 ) 33.48 Unvested as of December 31, 2021 5,597 $ 51.54 |
Schedule of Weighted-Average Assumptions Used to Estimate the Fair Value of ESPP Shares | The fair value of ESPP shares was estimated using the Black-Scholes option pricing model with the following weighted-average assumptions: Year ended December 31, 2021 2020 2019 Expected term (years) 0.6 0.6 0.7 Expected volatility 62.3 % 61.9 % 53.2 % Risk-free interest rate 0.09 % 0.40 % 2.08 % Estimated dividend yield — % — % — % |
Performance Option | |
Schedule of Weighted-Average Assumptions Used to Value Options Granted to Employees | The CEO Performance Option has an exercise price of $68.29 per share and a grant-date fair value of approximately $819.0 million, which was estimated based on a Monte Carlo valuation model using the following assumptions: Expected volatility 63.4 % Risk-free interest rate 1.55 % Estimated dividend yield — % |
Income Taxes (Tables)
Income Taxes (Tables) | 12 Months Ended |
Dec. 31, 2021 | |
Income Tax Disclosure [Abstract] | |
Domestic and Foreign Components of Income Before Income Taxes | The following are the domestic and foreign components of the Company’s income before income taxes (in thousands): Year Ended December 31, 2021 2020 2019 Domestic $ 193,048 $ 212,531 $ 162,252 Foreign (71,012 ) (68,628 ) (46,032 ) Income before income taxes $ 122,036 $ 143,903 $ 116,220 |
Components of Provision for (Benefit from) Income Taxes | The following are the components of the provision for (benefit from) income taxes (in thousands): Year Ended December 31, 2021 2020 2019 Current: Federal $ 10,332 $ (50,096 ) $ 9,180 State and local (10,417 ) (19,650 ) 7,800 Foreign 2,435 2,550 1,412 Total current provision 2,350 (67,196 ) 18,392 Deferred: Federal (21,287 ) (20,900 ) (6,316 ) State and local 3,193 (9,079 ) (5,339 ) Foreign 18 (1,239 ) 1,165 Total deferred provision (18,076 ) (31,218 ) (10,490 ) Total provision for (benefit from) income taxes $ (15,726 ) $ (98,414 ) $ 7,902 |
Reconciliation of Statutory Tax Rate to Effective Tax Rate | A reconciliation of the statutory tax rate to the effective tax rate for the periods presented is as follows: Year Ended December 31, 2021 2020 2019 U.S. federal statutory income tax rate 21.0 % 21.0 % 21.0 % State and local income taxes, net of federal benefit (5.3 ) (15.7 ) 1.7 Foreign income at other than U.S. rates (1) 14.2 10.9 10.5 Stock-based compensation (29.9 ) (59.6 ) (20.5 ) Meals and entertainment 0.2 0.2 0.7 Nondeductible compensation 1.7 0.6 (1.3 ) Research and development credit (15.3 ) (14.1 ) (5.0 ) Other permanent items 0.5 0.1 (0.3 ) Benefit from carryback of NOLs — (11.8 ) — Effective income tax rate (12.9%) (68.4)% 6.8 % __________ (1) For the years ended December 31, 2021, 2020, and 2019, includes the impact of the valuation allowance associated with the United Kingdom (“U.K.”). For additional information, see discussion below. |
Tax Effects of Temporary Differences that Give Rise to a Significant Portion of Deferred Tax Assets and Deferred Tax Liabilities | Set forth below are the tax effects of temporary differences that give rise to a significant portion of the deferred tax assets and deferred tax liabilities (in thousands): As of December 31, 2021 2020 Deferred tax assets (liabilities): Reserves and allowances $ 6,161 $ 5,521 Accrued expenses 8,103 8,977 Net operating losses 142,708 58,813 Research and development tax credit 53,472 30,138 Stock-based compensation 16,621 13,584 Prepaid expenses (1,674 ) (1,365 ) Property and equipment (21,924 ) (14,375 ) Intangibles (1) 219,492 184,965 Capitalized software development costs (3,565 ) (2,836 ) Operating lease assets (46,435 ) (55,685 ) Operating lease liabilities 56,415 64,359 Other 484 487 Valuation allowance (361,614 ) (242,415 ) Total deferred tax assets, net $ 68,244 $ 50,168 (1) As of December 31, 2021 and 2020, includes intangibles associated with our international restructuring, net of amortization, offset by a reserve for uncertain tax position. See discussion below. |
Schedule of Changes in Gross Unrecognized Tax Benefits | The following table presents changes in gross unrecognized tax benefits (in thousands): Year Ended December 31, 2021 (1) 2020 (1) 2019 (1) Beginning balance $ 66,875 $ 53,213 $ 4,330 Increases related to prior year tax positions 13,075 5,378 — Decreases related to prior year tax positions — — (20 ) Increases related to current year tax positions 6,381 9,206 49,100 Settlements — (520 ) (197 ) Expiration of statute of limitations — (402 ) — Ending balance $ 86,331 $ 66,875 $ 53,213 ______________ (1) |
Segment and Geographic Inform_2
Segment and Geographic Information (Tables) | 12 Months Ended |
Dec. 31, 2021 | |
Segments Geographical Areas [Abstract] | |
Gross Billings, Based on Billing Address of Clients or Client Affiliates | Gross Billings, based on the billing address of the clients or client affiliates, were as follows Year Ended December 31, 2021 2020 2019 US $ 5,286,191 $ 3,605,665 $ 2,639,497 International 843,436 562,595 456,190 Total $ 6,129,627 $ 4,168,260 $ 3,095,687 |
Property and Equipment, Net and Operating Lease Assets, Presented by Principal Geographic Area | Property and equipment, net and operating lease assets presented by principal geographic area, were as follows (in thousands): December 31, 2021 December 31, 2020 US $ 282,650 $ 263,891 International 87,297 100,115 Total $ 369,947 $ 364,006 |
Commitments and Contingencies (
Commitments and Contingencies (Tables) | 12 Months Ended |
Dec. 31, 2021 | |
Commitments And Contingencies Disclosure [Abstract] | |
Schedule of Purchase Obligations | Year Amount 2022 $ 60,833 2023 38,283 2024 1,239 2025 105 2026 52 $ 100,512 |
Basis of Presentation and Sum_4
Basis of Presentation and Summary of Significant Accounting Policies - Basis of Presentation and Principles of Consolidation (Details) | Jun. 16, 2021 |
Organization Consolidation And Presentation Of Financial Statements [Abstract] | |
Stock split ratio | 0.1 |
Basis of Presentation and Sum_5
Basis of Presentation and Summary of Significant Accounting Policies - Revenue Recognition (Detail) | 12 Months Ended |
Dec. 31, 2021 | |
Accounting Standards Update 2014-09 | |
Disaggregation Of Revenue [Line Items] | |
Revenue, performance obligation, description of payment terms | The Company invoices its clients monthly for the purchases occurring during the month. Invoice payment terms, negotiated on a client-by-client basis, are typically between 30 to 90 days. However, for certain agency clients with sequential liability terms, payments are not due to the Company until such agency client has received payment from its clients who are advertisers. |
Basis of Presentation and Sum_6
Basis of Presentation and Summary of Significant Accounting Policies - Stock-Based Compensation (Detail) | 12 Months Ended |
Dec. 31, 2021 | |
Basis of Presentation and Summary of Significant Accounting Policies | |
Expected term, description | For stock options, given the insufficient historical data relating to stock option exercises, the Company applies the simplified approach in which the expected term of an award is presumed to be the mid-point between the vesting date and the expiration date of the award. For ESPP awards, the expected term is the time period from the grant date to the respective purchase dates included within each offering period. |
Dividend yield | 0.00% |
Requisite service period | 4 years |
Forfeiture method | The Company accounts for forfeitures as they occur. |
Performance Option | Chief Executive Officer | |
Basis of Presentation and Summary of Significant Accounting Policies | |
Dividend yield | 0.00% |
Derived service period | 5 years |
Basis of Presentation and Sum_7
Basis of Presentation and Summary of Significant Accounting Policies - Accounts Receivable and Allowance for Credit Losses (Detail) | Sep. 30, 2021 | Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 |
Organization And Significant Accounting Policies Additional Textual [Abstract] | ||||
Change in accounting principle, accounting standards update, adopted | true | true | true | true |
Accounting Standards Update [Extensible List] | us-gaap:AccountingStandardsUpdate202004Member | us-gaap:AccountingStandardsUpdate201912Member | us-gaap:AccountingStandardsUpdate201613Member | us-gaap:AccountingStandardsUpdate201602Member |
Change in accounting principle, accounting standards update, adoption date | Jan. 1, 2020 | Jan. 1, 2019 | ||
Change in accounting principle, accounting standards update, immaterial effect | true | true | true |
Basis of Presentation and Sum_8
Basis of Presentation and Summary of Significant Accounting Policies - Schedule of Changes in Accounts Receivable Allowance for Credit Losses (Detail) - USD ($) $ in Thousands | Sep. 30, 2021 | Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 |
Accounts receivable, allowance for credit loss [Roll Forward] | ||||
Beginning balance | $ 7,253 | $ 3,920 | $ 2,973 | |
Accounting Standards Update [Extensible List] | us-gaap:AccountingStandardsUpdate202004Member | us-gaap:AccountingStandardsUpdate201912Member | us-gaap:AccountingStandardsUpdate201613Member | us-gaap:AccountingStandardsUpdate201602Member |
Add: bad debt expense | $ 1,456 | $ 3,149 | $ 2,702 | |
Less: write-offs, net of recoveries | (1,335) | (369) | (1,755) | |
Ending balance | $ 7,374 | 7,253 | 3,920 | |
Cumulative Effect, Period of Adoption, Adjustment | ||||
Accounts receivable, allowance for credit loss [Roll Forward] | ||||
Beginning balance | $ 553 | |||
Accounting Standards Update [Extensible List] | us-gaap:AccountingStandardsUpdate201613Member | |||
Ending balance | $ 553 |
Basis of Presentation and Sum_9
Basis of Presentation and Summary of Significant Accounting Policies - Property and Equipment, Net (Detail) | 12 Months Ended | |
Dec. 31, 2021 | ||
Computer Equipment | Minimum | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment, useful life | 2 years | |
Computer Equipment | Maximum | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment, useful life | 3 years | |
Purchased Software | Minimum | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment, useful life | 3 years | |
Purchased Software | Maximum | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment, useful life | 5 years | |
Furniture, fixtures and office equipment | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment, useful life | 5 years | |
Leasehold Improvements | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment, useful life | [1] | |
[1] | Leasehold improvements are amortized on a straight-line basis over the term of the lease, or the useful life of the assets, whichever is shorter. |
Basis of Presentation and Su_10
Basis of Presentation and Summary of Significant Accounting Policies - Capitalized Software Development Costs (Detail) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | |
Basis of Presentation and Summary of Significant Accounting Policies | |||
Software development cost, amortization period | 2 years | ||
Capitalized Software Development | |||
Basis of Presentation and Summary of Significant Accounting Policies | |||
Service contracts included in other assets , noncurrent | $ 14,334 | $ 11,505 | |
Amortization expenses | 4,700 | 5,800 | $ 5,500 |
ASU 2018-15 | Capitalized Software Development | |||
Basis of Presentation and Summary of Significant Accounting Policies | |||
Service contracts included in other assets , noncurrent | 1,700 | 1,000 | |
Amortization expenses | $ 1,000 | $ 900 |
Basis of Presentation and Su_11
Basis of Presentation and Summary of Significant Accounting Policies - Operating Leases (Detail) - USD ($) $ in Thousands | Sep. 30, 2021 | Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | Jan. 01, 2019 |
New Accounting Pronouncements Or Change In Accounting Principle [Line Items] | |||||
Change in accounting principle, accounting standards update, adopted | true | true | true | true | |
Change in accounting principle, accounting standards update, adoption date | Jan. 1, 2020 | Jan. 1, 2019 | |||
Accounting Standards Update [Extensible List] | us-gaap:AccountingStandardsUpdate202004Member | us-gaap:AccountingStandardsUpdate201912Member | us-gaap:AccountingStandardsUpdate201613Member | us-gaap:AccountingStandardsUpdate201602Member | |
Operating lease, right-of-use assets | $ 234,091 | $ 248,143 | $ 41,000 | ||
Operating lease, liabilities | $ 284,598 | $ 47,000 | |||
Lease term description | lease terms of up to 10 years, some of which include options to extend the leases for up to five years, and some of which include options to terminate the leases within one year with proper notification. | ||||
Remaining lease term | 10 years | ||||
Lessee, operating lease, existence of option to extend | true | ||||
Options to extend the leases | up to five years | ||||
Lessee, operating lease, existence of option to terminate | true | ||||
Options to terminate the leases | within one year | ||||
Maximum | |||||
New Accounting Pronouncements Or Change In Accounting Principle [Line Items] | |||||
Initial term | 12 months |
Basis of Presentation and Su_12
Basis of Presentation and Summary of Significant Accounting Policies - Fair Value of Financial Instruments (Detail) - USD ($) | 12 Months Ended | ||
Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | |
Basis of Presentation and Summary of Significant Accounting Policies | |||
Impairments of long-lived assets | $ 0 | $ 0 | $ 0 |
Basis of Presentation and Su_13
Basis of Presentation and Summary of Significant Accounting Policies - Concentration of Risk (Detail) | 12 Months Ended | ||
Dec. 31, 2021HoldingCompanyClientSupplier | Dec. 31, 2020HoldingCompanyClientSupplier | Dec. 31, 2019HoldingCompany | |
Gross Billings | |||
Concentration Risk [Line Items] | |||
Number of holding company | HoldingCompany | 2 | 2 | 2 |
Gross Billings | Two Customers | Minimum | Holding Companies | |||
Concentration Risk [Line Items] | |||
Concentration risk, percentage | 10.00% | 10.00% | 10.00% |
Gross Billings | Customer One | Holding Companies | |||
Concentration Risk [Line Items] | |||
Concentration risk, percentage | 11.00% | 11.00% | 13.00% |
Gross Billings | Customer Two | Holding Companies | |||
Concentration Risk [Line Items] | |||
Concentration risk, percentage | 10.00% | 11.00% | 10.00% |
Consolidated Accounts Receivable | |||
Concentration Risk [Line Items] | |||
Number of client | Client | 3 | 4 | |
Consolidated Accounts Receivable | Customer One | Minimum | Clients | |||
Concentration Risk [Line Items] | |||
Concentration risk, percentage | 10.00% | 10.00% | |
Consolidated Accounts Receivable | Customer Two | Minimum | Clients | |||
Concentration Risk [Line Items] | |||
Concentration risk, percentage | 10.00% | 10.00% | |
Consolidated Accounts Receivable | Customer Three | Minimum | Clients | |||
Concentration Risk [Line Items] | |||
Concentration risk, percentage | 10.00% | 10.00% | |
Consolidated Accounts Receivable | Customer Four | Minimum | Clients | |||
Concentration Risk [Line Items] | |||
Concentration risk, percentage | 10.00% | ||
Consolidated Accounts Receivable | All Customers | Clients | |||
Concentration Risk [Line Items] | |||
Concentration risk, percentage | 41.00% | 51.00% | |
Trade Accounts Payables | Supplier Concentration Risk | |||
Concentration Risk [Line Items] | |||
Number of supplier | Supplier | 1 | 0 | |
Trade Accounts Payables | Supplier Concentration Risk | Maximum | Supplier | |||
Concentration Risk [Line Items] | |||
Concentration risk, percentage | 17.00% | 10.00% |
Basis of Presentation and Su_14
Basis of Presentation and Summary of Significant Accounting Policies - Foreign Currency Transactions (Detail) - USD ($) | 12 Months Ended | |
Dec. 31, 2021 | Dec. 31, 2020 | |
Minimum | ||
Foreign Currency Translation [Line Items] | ||
Forward contracts terms | 30 days | |
Maximum | ||
Foreign Currency Translation [Line Items] | ||
Forward contracts terms | 60 days | |
Forward Contracts | ||
Foreign Currency Translation [Line Items] | ||
Notional amounts of open forward contracts | $ 250,700,000 | $ 169,900,000 |
Basis of Presentation and Su_15
Basis of Presentation and Summary of Significant Accounting Policies - Business Combinations (Details) - Technology Company $ in Millions | 1 Months Ended |
Jul. 31, 2021USD ($) | |
Business Acquisition [Line Items] | |
Business combination, purchase price | $ 17.8 |
Non-deductible goodwill | $ 11.4 |
Basis of Presentation and Su_16
Basis of Presentation and Summary of Significant Accounting Policies - Recent Accounting Pronouncements (Details) | Sep. 30, 2021 | Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 |
Organization Consolidation And Presentation Of Financial Statements [Abstract] | ||||
Change in accounting principle, accounting standards update, adopted | true | true | true | true |
Accounting Standards Update [Extensible List] | us-gaap:AccountingStandardsUpdate202004Member | us-gaap:AccountingStandardsUpdate201912Member | us-gaap:AccountingStandardsUpdate201613Member | us-gaap:AccountingStandardsUpdate201602Member |
Change in accounting principle, accounting standards update, adoption date | subsequent to March 12, 2020 | first quarter of 2021 | ||
Change in accounting principle, accounting standards update, immaterial effect | true | true | true |
Earnings Per Share - Additional
Earnings Per Share - Additional Information (Detail) | Dec. 31, 2021Class |
Earnings Per Share | |
Number of classes of common stock | 2 |
Earnings Per Share - Computatio
Earnings Per Share - Computation of Basic and Diluted EPS (Detail) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands | 12 Months Ended | ||
Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | |
Numerator: | |||
Net income | $ 137,762 | $ 242,317 | $ 108,318 |
Denominator: | |||
Weighted-average shares outstanding—basic | 476,851 | 462,865 | 445,329 |
Effect of dilutive securities | 21,689 | 27,016 | 32,732 |
Weighted-average shares outstanding—diluted | 498,540 | 489,881 | 478,061 |
Basic EPS | $ 0.29 | $ 0.52 | $ 0.24 |
Diluted EPS | $ 0.28 | $ 0.49 | $ 0.23 |
Anti-dilutive equity awards under stock-based award plans excluded from the determination of diluted EPS | 1,699 | 316 | 6,915 |
Property and Equipment, Net - S
Property and Equipment, Net - Schedule of Major Classes of Property and Equipment (Detail) - USD ($) $ in Thousands | Dec. 31, 2021 | Dec. 31, 2020 | |
Property, Plant and Equipment [Line Items] | |||
Property and equipment, Gross | $ 204,746 | $ 158,343 | |
Less: Accumulated depreciation | (68,890) | (42,480) | |
Property and equipment, Net | 135,856 | 115,863 | |
Computer Equipment | |||
Property, Plant and Equipment [Line Items] | |||
Property and equipment, Gross | 53,587 | 28,528 | |
Purchased Software | |||
Property, Plant and Equipment [Line Items] | |||
Property and equipment, Gross | 10,179 | 10,179 | |
Furniture and Fixtures | |||
Property, Plant and Equipment [Line Items] | |||
Property and equipment, Gross | 22,156 | 17,971 | |
Construction in Progress | |||
Property, Plant and Equipment [Line Items] | |||
Property and equipment, Gross | [1] | 6,810 | 13,862 |
Leasehold Improvements | |||
Property, Plant and Equipment [Line Items] | |||
Property and equipment, Gross | $ 112,014 | $ 87,803 | |
[1] | Includes leasehold improvement projects which are not yet ready for intended use. |
Property and Equipment, Net - A
Property and Equipment, Net - Additional Information (Detail) - USD ($) | 12 Months Ended | ||
Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | |
Property Plant And Equipment [Abstract] | |||
Depreciation expense | $ 34,200,000 | $ 21,200,000 | $ 14,900,000 |
Impairment charges to property and equipment | $ 0 | $ 0 | $ 0 |
Capitalized Software Developm_3
Capitalized Software Development Costs (Detail) - Capitalized Software Development - USD ($) $ in Thousands | Dec. 31, 2021 | Dec. 31, 2020 |
Capitalized Computer Software Net [Line Items] | ||
Capitalized software development costs, gross | $ 18,191 | $ 16,730 |
Less: Accumulated amortization | (3,857) | (5,225) |
Capitalized software development costs, net | $ 14,334 | $ 11,505 |
Capitalized Software Developm_4
Capitalized Software Development Costs - Additional Information (Detail) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | |
Capitalized Software Development | |||
Capitalized Computer Software Net [Line Items] | |||
Amortization expenses | $ 4.7 | $ 5.8 | $ 5.5 |
Cash, Cash Equivalents and Sh_3
Cash, Cash Equivalents and Short-Term Investments, Net - Schedule of Cash, Cash Equivalents and Net Short-term Investments in Marketable Securities (Detail) - USD ($) $ in Thousands | Dec. 31, 2021 | Dec. 31, 2020 |
Schedule Of Available For Sale Securities [Line Items] | ||
Cash and cash equivalents | $ 754,154 | $ 437,353 |
Short-Term Investments, Net | 204,625 | 186,685 |
Available For Sale | ||
Schedule Of Available For Sale Securities [Line Items] | ||
Cash and cash equivalents | 754,154 | 437,353 |
Short-Term Investments, Net | 204,625 | 186,685 |
Total | 958,779 | 624,038 |
Available For Sale | Cash | ||
Schedule Of Available For Sale Securities [Line Items] | ||
Cash and cash equivalents | 272,058 | 132,372 |
Total | 272,058 | 132,372 |
Available For Sale | Level 1 | Money Market Funds | ||
Schedule Of Available For Sale Securities [Line Items] | ||
Cash and cash equivalents | 431,299 | 259,434 |
Total | 431,299 | 259,434 |
Available For Sale | Level 2 | Commercial Paper | ||
Schedule Of Available For Sale Securities [Line Items] | ||
Cash and cash equivalents | 47,544 | 45,547 |
Short-Term Investments, Net | 70,804 | 63,372 |
Total | 118,348 | 108,919 |
Available For Sale | Level 2 | Corporate Debt Securities | ||
Schedule Of Available For Sale Securities [Line Items] | ||
Cash and cash equivalents | 3,253 | |
Short-Term Investments, Net | 85,425 | 79,342 |
Total | 88,678 | 79,342 |
Available For Sale | Level 2 | U.S. Government and Agency Securities | ||
Schedule Of Available For Sale Securities [Line Items] | ||
Short-Term Investments, Net | 48,396 | 43,971 |
Total | $ 48,396 | $ 43,971 |
Cash, Cash Equivalents and Sh_4
Cash, Cash Equivalents and Short - Schedule of Contractual Maturities of Short-Term Investments (Detail) $ in Thousands | Dec. 31, 2021USD ($) |
Available For Sale Securities Debt Maturities Fair Value [Abstract] | |
Due in one year | $ 177,655 |
Due in one to two years | 26,970 |
Total | $ 204,625 |
Debt - Additional Information (
Debt - Additional Information (Detail) - USD ($) | Jun. 15, 2021 | Dec. 31, 2021 |
Loan and Security Agreement Revolving Loan Facility | ||
Long-term debt: | ||
Line of credit facility | $ 450,000,000 | |
Loan and Security Agreement Revolving Loan Facility Swingline Borrowings | ||
Long-term debt: | ||
Line of credit facility | 20,000,000 | |
Loan and Security Agreement Revolving Loan Facility Letter of Credit | ||
Long-term debt: | ||
Line of credit facility | 15,000,000 | |
Outstanding letters of credit | $ 6,100,000 | |
Loan and Security Agreement | ||
Long-term debt: | ||
Line of credit maximum amount right to increase | $ 300,000,000 | |
Interest rate description | The Base Rate is defined as a rate per annum for any day equal to the greatest of (1) the rate of interest last quoted by The Wall Street Journal as the “Prime Rate” in the United States, (2) the NYFRB Rate in effect on such day plus half of 1% and (3) the adjusted LIBOR rate for a one-month interest period on such day plus 1%. The applicable margin is between 0.25% to 1.25% for Base Rate Borrowings and between 1.25% and 2.25% for LIBOR Rate Borrowings based on the Company maintaining certain leverage ratios. | |
Outstanding debt balance | $ 0 | |
Availability under the credit facility | $ 443,900,000 | |
Credit facility, maturity | Jun. 15, 2026 | |
Maximum ratio of consolidated funded debt to consolidated EBITDA | 350.00% | |
Loan and Security Agreement | Minimum | ||
Long-term debt: | ||
Fee percentage for undrawn amounts | 0.20% | |
Loan and Security Agreement | Maximum | ||
Long-term debt: | ||
Fee percentage for undrawn amounts | 0.35% | |
Loan and Security Agreement | NYFRB Rate | ||
Long-term debt: | ||
Description of variable rate basis | day plus half of 1% | |
Basis spread on variable rate | 1.00% | |
Loan and Security Agreement | LIBOR Rate | ||
Long-term debt: | ||
Description of variable rate basis | one-month interest period on such day plus 1% | |
Basis spread on variable rate | 1.00% | |
Loan and Security Agreement | LIBOR Rate | Minimum | ||
Long-term debt: | ||
Basis spread on variable rate | 1.25% | |
Loan and Security Agreement | LIBOR Rate | Maximum | ||
Long-term debt: | ||
Basis spread on variable rate | 2.25% | |
Loan and Security Agreement | Base Rate | Minimum | ||
Long-term debt: | ||
Basis spread on variable rate | 0.25% | |
Loan and Security Agreement | Base Rate | Maximum | ||
Long-term debt: | ||
Basis spread on variable rate | 1.25% |
Leases - Summary of Components
Leases - Summary of Components of Lease Expense (Detail) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2021 | Dec. 31, 2020 | |
Lease Cost [Abstract] | ||
Operating lease cost | $ 50,798 | $ 42,272 |
Short-term lease cost | 969 | 908 |
Variable lease cost | 6,742 | 5,984 |
Sublease income | (2,734) | (3,645) |
Total lease cost | $ 55,775 | $ 45,519 |
Leases - Additional Information
Leases - Additional Information (Detail) $ in Millions | 12 Months Ended |
Dec. 31, 2019USD ($) | |
Leases [Abstract] | |
Rent expense for non-cancelable operating leases | $ 28.1 |
Leases - Summary of Supplementa
Leases - Summary of Supplemental Information Related to Leases (Detail) | Dec. 31, 2021 | Dec. 31, 2020 |
Leases [Abstract] | ||
Weighted-average remaining lease term | 7 years 1 month 6 days | 7 years 10 months 24 days |
Weighted-average discount rate | 3.00% | 3.40% |
Leases - Summary of Maturities
Leases - Summary of Maturities of Lease Commitments (Detail) - USD ($) $ in Thousands | Dec. 31, 2021 | Dec. 31, 2020 | Jan. 01, 2019 |
Operating Lease Liabilities Payments Due [Abstract] | |||
2022 | $ 53,990 | ||
2023 | 50,201 | ||
2024 | 43,740 | ||
2025 | 39,020 | ||
2026 | 35,397 | ||
Thereafter | 96,113 | ||
Total undiscounted lease commitments | 318,461 | ||
Less: commitments for leases not yet commenced | (249) | ||
Less: interest | (33,614) | ||
Present value of lease liabilities | 284,598 | $ 47,000 | |
Less: operating lease liabilities, current | (46,149) | $ (37,868) | |
Operating lease liabilities, non-current | $ 238,449 | $ 254,562 |
Capitalization - Common and Pre
Capitalization - Common and Preferred Stock (Detail) | Dec. 31, 2021Vote |
Class B common stock | |
Class of Stock [Line Items] | |
Number of votes per share of common stock | 10 |
Ratio for conversion into Class A common stock | 1 |
Class A common stock | |
Class of Stock [Line Items] | |
Number of votes per share of common stock | 1 |
Stock-Based Compensation - Sche
Stock-Based Compensation - Schedule of Stock-Based Compensation Expense (Detail) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | |
Stock-based compensation expense, by operating expense category | |||
Stock-based compensation expense | $ 337,413 | $ 111,775 | $ 80,758 |
Platform operations | |||
Stock-based compensation expense, by operating expense category | |||
Stock-based compensation expense | 15,913 | 8,794 | 5,350 |
Sales and marketing | |||
Stock-based compensation expense, by operating expense category | |||
Stock-based compensation expense | 50,671 | 29,726 | 20,769 |
Technology and development | |||
Stock-based compensation expense, by operating expense category | |||
Stock-based compensation expense | 57,791 | 36,672 | 26,553 |
General and administrative | |||
Stock-based compensation expense, by operating expense category | |||
Stock-based compensation expense | $ 213,038 | $ 36,583 | $ 28,086 |
Stock-Based Compensation - Stoc
Stock-Based Compensation - Stock-Based Compensation Expense - Additional Information (Detail) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | |
Disclosure Of Compensation Related Costs Sharebased Payments [Abstract] | |||
Tax benefit on stock-based compensation expense | $ 104.4 | $ 134.6 | $ 43.1 |
Tax benefit to stock options exercised | $ 120.6 | $ 151 | $ 51 |
Stock-Based Compensation - St_2
Stock-Based Compensation - Stock-Based Award Plans - Additional Information (Detail) - 2016 Incentive Award Plan - shares shares in Millions | Jan. 01, 2022 | Dec. 31, 2021 |
Stock-Based Compensation | ||
Shares remained available for grant | 56.4 | |
Maximum annual increase in shares available for issuance, percentage of outstanding shares | 4.00% | |
Subsequent Event | ||
Stock-Based Compensation | ||
Number of additional shares authorized for grant | 19.3 |
Stock-Based Compensation - St_3
Stock-Based Compensation - Stock Options - Additional Information (Detail) - USD ($) $ / shares in Units, $ in Millions | 12 Months Ended | ||
Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | |
Share-based Payment Arrangement, Option | |||
Weighted average assumptions used to value options granted to employees | |||
Weighted average grant date fair value per share | $ 43.57 | $ 17.25 | $ 9.49 |
Total intrinsic value of options exercised | $ 538 | $ 594.5 | $ 222 |
Stock Options, additional disclosures | |||
Unrecognized stock-based compensation | $ 93.4 | ||
Unrecognized stock-based compensation, recognition period | 1 year 9 months 18 days | ||
2016 Incentive Award Plan | |||
Stock-Based Compensation | |||
Vesting period | 4 years | ||
Stock incentive plans, expiration period | 10 years |
Stock-Based Compensation - Summ
Stock-Based Compensation - Summary of Stock Option Activity (Detail) - Share-based Payment Arrangement, Option - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands | 12 Months Ended | ||
Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | |
Shares Under Option | |||
Outstanding at the beginning of the period (in shares) | 26,481 | ||
Granted (in shares) | 1,212 | ||
Exercised (in shares) | (7,361) | ||
Expired/forfeited (in shares) | (1,348) | ||
Outstanding at the end of the period (in shares) | 18,984 | 26,481 | |
Exercisable as of December 31, 2021 | 13,008 | ||
Weighted-Average Exercise Price | |||
Outstanding at the beginning of the period (in dollars per share) | $ 10.73 | ||
Granted (in dollars per share) | 74.85 | ||
Exercised (in dollars per share) | 8.36 | ||
Expired/forfeited (in dollars per share) | 19.18 | ||
Outstanding at the end of the period (in dollars per share) | 15.14 | $ 10.73 | |
Exercisable as of December 31, 2021 | $ 8.69 | ||
Stock Options, additional disclosures | |||
Weighted-Average Contractual Life, outstanding | 6 years 4 months 24 days | ||
Weighted-Average Contractual Life, exercisable | 5 years 8 months 12 days | ||
Aggregate Intrinsic Value, Exercised | $ 538,000 | $ 594,500 | $ 222,000 |
Aggregate Intrinsic Value, Outstanding | 1,452,528 | ||
Aggregate Intrinsic Value, Exercisable | $ 1,079,090 |
Stock-Based Compensation - Sc_2
Stock-Based Compensation - Schedule of Weighted-Average Assumptions Used to Value Options Granted to Employees (Detail) | 12 Months Ended | ||
Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | |
Weighted average assumptions used to value options granted to employees | |||
Estimated dividend yield | 0.00% | ||
Share-based Payment Arrangement, Option | |||
Weighted average assumptions used to value options granted to employees | |||
Expected term (years) | 6 years | 6 years | 6 years |
Volatility (as a percent) | 64.30% | 60.50% | 53.20% |
Risk-free interest rate (as a percent) | 1.04% | 0.57% | 2.26% |
Estimated dividend yield | 0.00% | 0.00% | 0.00% |
Stock-Based Compensation - CEO
Stock-Based Compensation - CEO Performance Option - Additional Information (Detail) - Performance Option - Chief Executive Officer $ / shares in Units, $ in Millions | Dec. 10, 2021USD ($) | Oct. 31, 2021Tranche$ / sharesshares | Dec. 31, 2021USD ($)$ / sharesshares |
Stock-Based Compensation | |||
Derived service period | 5 years | ||
2016 Incentive Award Plan | |||
Stock-Based Compensation | |||
Stock-based compensation expense | $ | $ 157.7 | ||
Unrecognized stock-based compensation | $ | $ 661.3 | ||
Weighted-average period for recognition of stock based expense | 3 years | ||
2016 Incentive Award Plan | Class A common stock | |||
Stock-Based Compensation | |||
Target amount of shares that can be purchased | 16,000,000 | ||
Number of tranches | Tranche | 8 | ||
Increase/decrease of shares to be purchased based on relative shareholder return | 20.00% | ||
Vesting period | 10 years | ||
Holding period for sales after the first offering period | 1 year | ||
Derived service period | 5 years | ||
Granted (in shares) | 19,200,000 | ||
Share-based compensation, exercisable options | 2,400,000 | ||
Share-based compensation, options exercisable with aggregate intrinsic value | $ | $ 56 | ||
Share-based compensation, options exercisable with weighted-average contractual life | 9 years 9 months 18 days | ||
Share-based compensation, options granted | 19,200,000 | ||
Share-based compensation, options outstanding with aggregate intrinsic value | $ | $ 448.3 | ||
Share-based compensation, options outstanding with weighted average contractual life | 9 years 9 months 18 days | ||
Exercise of common stock options (in shares) | 0 | ||
Share-based compensation, options forfeited or expired | 0 | ||
Exercise price | $ / shares | $ 68.29 | ||
Grant-date fair value | $ | $ 819 | ||
2016 Incentive Award Plan | Class A common stock | Maximum | |||
Stock-Based Compensation | |||
Target price per share | $ / shares | $ 340 | ||
2016 Incentive Award Plan | Class A common stock | Minimum | |||
Stock-Based Compensation | |||
Target price per share | $ / shares | $ 90 |
Stock-Based Compensation - CE_2
Stock-Based Compensation - CEO Performance Option (Detail) | 12 Months Ended |
Dec. 31, 2021 | |
Stock-Based Compensation | |
Estimated dividend yield | 0.00% |
Performance Option | Chief Executive Officer | |
Stock-Based Compensation | |
Volatility (as a percent) | 63.40% |
Risk-free interest rate (as a percent) | 1.55% |
Estimated dividend yield | 0.00% |
Stock-Based Compensation - Rest
Stock-Based Compensation - Restricted Stock - Additional Information (Detail) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | |
Stock-Based Compensation | |||
Stock-based compensation expense | $ 337,413 | $ 111,775 | $ 80,758 |
Restricted Stock | |||
Stock-Based Compensation | |||
Vesting period | 4 years | ||
Unrecognized employee stock-based compensation | $ 265,400 | ||
Weighted-average period for recognition of stock based expense | 2 years 9 months 18 days |
Stock-Based Compensation - Su_2
Stock-Based Compensation - Summary of Restricted Stock Activity (Detail) shares in Thousands | 12 Months Ended |
Dec. 31, 2021$ / sharesshares | |
Disclosure Of Compensation Related Costs Sharebased Payments [Abstract] | |
Unvested, Shares, beginning balance | shares | 5,698 |
Granted, Shares | shares | 2,818 |
Vested, Shares | shares | (2,225) |
Forfeited, Shares | shares | (694) |
Unvested, Shares, ending balance | shares | 5,597 |
Unvested, Weighted-Average Grant Date Fair Value Per Share, beginning balance | $ / shares | $ 26.10 |
Granted, Weighted-Average Grant Date Fair Value Per Share | $ / shares | 77.41 |
Vested, Weighted-Average Grant Date Fair Value Per Share | $ / shares | 24.80 |
Forfeited, Weighted-Average Grant Date Fair Value Per Share | $ / shares | 33.48 |
Unvested, Weighted-Average Grant Date Fair Value Per Share, ending balance | $ / shares | $ 51.54 |
Stock-Based Compensation - ESPP
Stock-Based Compensation - ESPP - Additional Information (Detail) - USD ($) $ in Thousands | Jan. 01, 2021 | Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2016 | Sep. 30, 2016 |
Stock-Based Compensation | ||||||
Stock-based compensation expense | $ 337,413 | $ 111,775 | $ 80,758 | |||
ESPP | ||||||
Stock-Based Compensation | ||||||
Shares remained available for grant | 7,600,000 | |||||
Maximum annual increase in shares available for grant (in shares) | 8,000,000 | |||||
Number of additional shares authorized for grant | 4,400,000 | |||||
Maximum employee payroll deduction (as a percent) | 100.00% | |||||
Maximum offering period | 2 years | |||||
Period between purchases | 6 months | |||||
Price of ESPP shares as percentage of market price | 85.00% | |||||
Holding period for purchases after the first offering period | 6 months | |||||
Stock-based compensation expense | $ 62,200 | $ 33,000 | $ 25,700 | |||
Unrecognized employee stock-based compensation | $ 41,400 | |||||
Unrecognized stock-based compensation, recognition period | 6 months | |||||
ESPP | Class A common stock | ||||||
Stock-Based Compensation | ||||||
Stock available for issuance (in shares) | 8,000,000 | |||||
Maximum annual increase in shares available for issuance, percentage of outstanding shares | 1.00% |
Stock-Based Compensation - ES_2
Stock-Based Compensation - ESPP (Detail) | 12 Months Ended | ||
Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | |
Weighted-average assumptions used to estimate the fair value of ESPP shares | |||
Estimated dividend yield | 0.00% | ||
ESPP | |||
Weighted-average assumptions used to estimate the fair value of ESPP shares | |||
Expected term (years) | 7 months 6 days | 7 months 6 days | 8 months 12 days |
Volatility (as a percent) | 62.30% | 61.90% | 53.20% |
Risk-free interest rate (as a percent) | 0.09% | 0.40% | 2.08% |
Estimated dividend yield | 0.00% | 0.00% | 0.00% |
Income Taxes - Domestic and For
Income Taxes - Domestic and Foreign Components of Income Before Income Taxes (Detail) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | |
Income before income taxes | $ 122,036 | $ 143,903 | $ 116,220 |
UNITED STATES | |||
Income before income taxes | 193,048 | 212,531 | 162,252 |
Foreign | |||
Income before income taxes | $ (71,012) | $ (68,628) | $ (46,032) |
Income Taxes - Components of Pr
Income Taxes - Components of Provision for (Benefit from) Income Taxes (Detail) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | |
Current: | |||
Federal | $ 10,332 | $ (50,096) | $ 9,180 |
State and local | (10,417) | (19,650) | 7,800 |
Foreign | 2,435 | 2,550 | 1,412 |
Total current provision | 2,350 | (67,196) | 18,392 |
Deferred: | |||
Federal | (21,287) | (20,900) | (6,316) |
State and local | 3,193 | (9,079) | (5,339) |
Foreign | 18 | (1,239) | 1,165 |
Total deferred provision | (18,076) | (31,218) | (10,490) |
Total provision for (benefit from) income taxes | $ (15,726) | $ (98,414) | $ 7,902 |
Income Taxes - Reconciliation o
Income Taxes - Reconciliation of Statutory Tax Rate to Effective Tax Rate (Detail) | 12 Months Ended | |||
Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | ||
Income Tax Disclosure [Abstract] | ||||
U.S. federal statutory income tax rate | 21.00% | 21.00% | 21.00% | |
State and local income taxes, net of federal benefit | (5.30%) | (15.70%) | 1.70% | |
Foreign income at other than U.S. rates | [1] | 14.20% | 10.90% | 10.50% |
Stock-based compensation | (29.90%) | (59.60%) | (20.50%) | |
Meals and entertainment | 0.20% | 0.20% | 0.70% | |
Nondeductible compensation | 1.70% | 0.60% | (1.30%) | |
Research and development credit | (15.30%) | (14.10%) | (5.00%) | |
Other permanent items | 0.50% | 0.10% | (0.30%) | |
Benefit from carryback of NOLs | (11.80%) | |||
Effective income tax rate | (12.90%) | (68.40%) | 6.80% | |
[1] | For the years ended December 31, 2021, 2020, and 2019, includes the impact of the valuation allowance associated with the United Kingdom (“U.K.”). For additional information, see discussion below. |
Income Taxes - Tax Effects of T
Income Taxes - Tax Effects of Temporary Differences that Give Rise to Significant Portion of Deferred Tax Assets and Deferred Tax Liabilities (Detail) - USD ($) $ in Thousands | Dec. 31, 2021 | Dec. 31, 2020 | |
Deferred tax assets (liabilities): | |||
Reserves and allowances | $ 6,161 | $ 5,521 | |
Accrued expenses | 8,103 | 8,977 | |
Net operating losses | 142,708 | 58,813 | |
Research and development tax credit | 53,472 | 30,138 | |
Stock-based compensation | 16,621 | 13,584 | |
Prepaid expenses | (1,674) | (1,365) | |
Property and equipment | (21,924) | (14,375) | |
Intangibles | [1] | 219,492 | 184,965 |
Capitalized software development costs | (3,565) | (2,836) | |
Operating lease assets | (46,435) | (55,685) | |
Operating lease liabilities | 56,415 | 64,359 | |
Other | 484 | 487 | |
Valuation allowance | (361,614) | (242,415) | |
Total deferred tax assets, net | $ 68,244 | $ 50,168 | |
[1] | As of December 31, 2021 and 2020, includes intangibles associated with our international restructuring, net of amortization, offset by a reserve for uncertain tax position. See discussion below. |
Income Taxes - Additional Infor
Income Taxes - Additional Information (Detail) - USD ($) $ in Thousands | 12 Months Ended | ||||
Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 | ||
Valuation allowance | $ 361,614 | $ 242,415 | |||
Research and development tax credits | 53,472 | 30,138 | |||
Cash paid for income taxes | 3,608 | 4,983 | $ 19,727 | ||
Gross unrecognized tax benefits | [1] | 86,331 | 66,875 | $ 53,213 | $ 4,330 |
Unrecognized tax benefits, reduction to deferred tax assets | 84,700 | 63,100 | |||
Unrecognized tax benefits that would impact effective tax rate | 1,600 | 3,800 | |||
Other Liabilities, Non current | |||||
Gross unrecognized tax benefits | 86,300 | $ 66,900 | |||
Federal | |||||
Operating loss carryforwards | 5,400 | ||||
Net operating loss carryforwards subject to expire | $ 900 | ||||
Net operating loss carryforwards expiration year | 2037 | ||||
Net operating loss carryforward indefinitely | $ 4,500 | ||||
Research and development tax credits | 51,200 | ||||
State | |||||
Operating loss carryforwards | 53,100 | ||||
Research and development tax credits | $ 28,000 | ||||
State | Beginning Year to Expire | |||||
Net operating loss carryforwards expiration year | 2040 | ||||
Foreign | |||||
Operating loss carryforwards | $ 592,400 | ||||
Research and development tax credits | 900 | ||||
UNITED KINGDOM | |||||
Valuation allowance | 119,200 | ||||
International | |||||
Unremitted earnings of subsidiaries, foreign | 3,200 | ||||
Cash paid for income taxes | $ 0 | ||||
[1] | Includes the impact of a statutory rate change in the U.K |
Income Taxes - Schedule of Chan
Income Taxes - Schedule of Changes in Gross Unrecognized Tax Benefits (Detail) - USD ($) $ in Thousands | 12 Months Ended | |||
Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | ||
Income Tax Disclosure [Abstract] | ||||
Beginning balance | [1] | $ 66,875 | $ 53,213 | $ 4,330 |
Increases related to prior year tax positions | [1] | 13,075 | 5,378 | |
Decreases related to prior year tax positions | [1] | (20) | ||
Increases related to current year tax positions | [1] | 6,381 | 9,206 | 49,100 |
Settlements | [1] | (520) | (197) | |
Expiration of statute of limitations | [1] | (402) | ||
Ending balance | [1] | $ 86,331 | $ 66,875 | $ 53,213 |
[1] | Includes the impact of a statutory rate change in the U.K |
Segment and Geographical Inform
Segment and Geographical Information - Additional Information (Detail) | 12 Months Ended |
Dec. 31, 2021BusinessSegment | |
Segments Geographical Areas [Abstract] | |
Number of business activity | Business | 1 |
Number of operating segments | 1 |
Number of reportable segments | 1 |
Segment and Geographical Info_2
Segment and Geographical Information - Gross Billings, Based on Billing Address of Clients or Client Affiliates (Detail) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | |
Revenues From External Customers And Long Lived Assets [Line Items] | |||
Gross Billings | $ 6,129,627 | $ 4,168,260 | $ 3,095,687 |
US | |||
Revenues From External Customers And Long Lived Assets [Line Items] | |||
Gross Billings | 5,286,191 | 3,605,665 | 2,639,497 |
International | |||
Revenues From External Customers And Long Lived Assets [Line Items] | |||
Gross Billings | $ 843,436 | $ 562,595 | $ 456,190 |
Segment and Geographical Info_3
Segment and Geographical Information - Property and Equipment, Net and Operating Lease Assets, Presented by Principal Geographic Area (Detail) - USD ($) $ in Thousands | Dec. 31, 2021 | Dec. 31, 2020 |
Revenues From External Customers And Long Lived Assets [Line Items] | ||
Property and equipment, net and operating lease assets | $ 369,947 | $ 364,006 |
US | ||
Revenues From External Customers And Long Lived Assets [Line Items] | ||
Property and equipment, net and operating lease assets | 282,650 | 263,891 |
International | ||
Revenues From External Customers And Long Lived Assets [Line Items] | ||
Property and equipment, net and operating lease assets | $ 87,297 | $ 100,115 |
Commitments and Contingencies -
Commitments and Contingencies - Schedule of Purchase Obligations (Detail) $ in Thousands | Dec. 31, 2021USD ($) |
Purchase obligations | |
2022 | $ 60,833 |
2023 | 38,283 |
2024 | 1,239 |
2025 | 105 |
2026 | 52 |
Total | $ 100,512 |
Commitments and Contingencies_2
Commitments and Contingencies - Additional Information (Detail) - USD ($) | Dec. 31, 2021 | Dec. 31, 2020 |
Indemnifications | ||
Commitments and Contingencies | ||
Recorded obligation | $ 0 | $ 0 |