x | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
☐ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
Delaware | 06-1594540 |
(State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) |
200 Crossing Boulevard, 8th Floor Bridgewater, New Jersey | 08807 |
(Address of principal executive offices) | (Zip Code) |
Large accelerated filer | ☐ | Accelerated filer | x | |
Non-accelerated filer | ☐ | Smaller Reporting Company | ☐ | |
Emerging growth company | ☐ |
Class | Outstanding at November 02, 2018 | |
Common stock, $0.0001 par value | 42,474,351 |
PAGE NO. | ||
September 30, 2018 | December 31, 2017 | ||||||
ASSETS | |||||||
Current assets: | |||||||
Cash and cash equivalents | $ | 222,438 | $ | 156,299 | |||
Restricted cash** | 4,377 | 89,826 | |||||
Marketable securities, current | 6,989 | 3,111 | |||||
Accounts receivable, net of allowances of $3,492 and $3,107 at September 30, 2018 and December 31, 2017, respectively | 52,617 | 78,186 | |||||
Prepaid expenses | 46,922 | 33,957 | |||||
Other current assets | 14,115 | 9,600 | |||||
Total current assets | 347,458 | 370,979 | |||||
Marketable securities, non-current | 8,716 | — | |||||
Property and equipment, net | 80,519 | 111,825 | |||||
Goodwill | 234,480 | 237,303 | |||||
Intangible assets, net | 117,448 | 132,167 | |||||
Other assets | 8,940 | 5,236 | |||||
Note receivable from related party** | 66,089 | 73,984 | |||||
Equity method investment | 30,694 | 33,917 | |||||
Total assets | $ | 894,344 | $ | 965,411 | |||
LIABILITIES AND STOCKHOLDERS’ EQUITY | |||||||
Current liabilities: | |||||||
Accounts payable | $ | 14,300 | $ | 5,959 | |||
Accrued expenses | 53,794 | 72,739 | |||||
Deferred revenues, current | 54,046 | 75,829 | |||||
Short-term debt | 228,764 | — | |||||
Mandatorily redeemable financial instrument | — | 37,959 | |||||
Total current liabilities | 350,904 | 192,486 | |||||
Lease financing obligation | 10,006 | 11,183 | |||||
Convertible debt, net of debt issuance costs | — | 227,704 | |||||
Deferred tax liabilities | 12,109 | 13,735 | |||||
Deferred revenues, non-current | 29,815 | 25,241 | |||||
Other liabilities | 11,329 | 6,195 | |||||
Commitments and contingencies (Note 12) | |||||||
Redeemable noncontrolling interest | 12,500 | 25,280 | |||||
Series A Convertible Participating Perpetual Preferred Stock, $0.0001 par value; 10,000 shares authorized; 195 shares issued and outstanding at September 30, 2018 | 176,160 | — | |||||
Stockholders’ equity: | |||||||
Common stock, $0.0001 par value; 100,000 shares authorized, 49,817 and 52,024 shares issued; 42,655 and 46,965 outstanding at September 30, 2018 and December 31, 2017, respectively | 5 | 5 | |||||
Treasury stock, at cost (7,162 and 5,059 shares at September 30, 2018 and December 31, 2017, respectively) | (82,087 | ) | (105,584 | ) | |||
Additional paid-in capital | 561,144 | 597,553 | |||||
Accumulated other comprehensive loss | (30,557 | ) | (23,373 | ) | |||
Accumulated deficit | (156,984 | ) | (5,014 | ) | |||
Total stockholders’ equity | 291,521 | 463,587 | |||||
Total liabilities and stockholders’ equity | $ | 894,344 | $ | 965,411 |
** | See Note 5 -Investments in Affiliates and Related Transactions for related party transactions reflected in this account. |
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
2018 | 2017 | 2018 | 2017 | |||||||||||||
Net revenues | $ | 83,286 | $ | 91,015 | $ | 243,737 | $ | 296,102 | ||||||||
Costs and expenses: | ||||||||||||||||
Cost of revenues* | 43,714 | 45,576 | 127,788 | 139,386 | ||||||||||||
Research and development | 18,684 | 20,926 | 59,789 | 67,234 | ||||||||||||
Selling, general and administrative | 27,320 | 34,881 | 99,368 | 103,049 | ||||||||||||
Restructuring charges | 4,539 | 2,312 | 8,425 | 11,715 | ||||||||||||
Depreciation and amortization | 23,658 | 23,459 | 70,330 | 71,098 | ||||||||||||
Total costs and expenses | 117,915 | 127,154 | 365,700 | 392,482 | ||||||||||||
Loss from continuing operations | (34,629 | ) | (36,139 | ) | (121,963 | ) | (96,380 | ) | ||||||||
Interest income | 203 | 3,274 | 7,518 | 9,157 | ||||||||||||
Interest expense | (1,370 | ) | (25,555 | ) | (3,935 | ) | (48,016 | ) | ||||||||
Other (expense) income, net | (13,439 | ) | (256 | ) | (9,180 | ) | 2,374 | |||||||||
Equity method investment income | 283 | 645 | 71 | 1,626 | ||||||||||||
Loss from continuing operations, before taxes | (48,952 | ) | (58,031 | ) | (127,489 | ) | (131,239 | ) | ||||||||
Benefit for income taxes | 2,308 | 12,825 | 1,604 | 17,973 | ||||||||||||
Net loss from continuing operations | (46,644 | ) | (45,206 | ) | (125,885 | ) | (113,266 | ) | ||||||||
Net income (loss) from discontinued operations, net of tax** | — | 8,842 | — | (14,067 | ) | |||||||||||
Net loss | (46,644 | ) | (36,364 | ) | (125,885 | ) | (127,333 | ) | ||||||||
Net (income) loss attributable to redeemable noncontrolling interests | (422 | ) | 1,276 | 2,122 | 6,980 | |||||||||||
Preferred stock dividend | (7,463 | ) | — | (18,076 | ) | — | ||||||||||
Net loss attributable to Synchronoss | $ | (54,529 | ) | $ | (35,088 | ) | $ | (141,839 | ) | $ | (120,353 | ) | ||||
Basic: | ||||||||||||||||
Continuing operations | $ | (1.38 | ) | $ | (0.98 | ) | $ | (3.51 | ) | $ | (2.38 | ) | ||||
Discontinued operations** | — | 0.20 | — | (0.32 | ) | |||||||||||
$ | (1.38 | ) | $ | (0.78 | ) | $ | (3.51 | ) | $ | (2.70 | ) | |||||
Diluted: | ||||||||||||||||
Continuing operations | $ | (1.38 | ) | $ | (0.98 | ) | $ | (3.51 | ) | $ | (2.38 | ) | ||||
Discontinued operations** | — | 0.20 | — | (0.32 | ) | |||||||||||
$ | (1.38 | ) | $ | (0.78 | ) | $ | (3.51 | ) | $ | (2.70 | ) | |||||
Weighted-average common shares outstanding: | ||||||||||||||||
Basic | 39,612 | 44,893 | 40,405 | 44,576 | ||||||||||||
Diluted | 39,612 | 44,893 | 40,405 | 44,576 |
* | Cost of revenues excludes depreciation and amortization which are shown separately. |
** | See Note 3 - Acquisitions and Divestitures for transactions classified as discontinued operations. |
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||
2018 | 2017 | 2018 | 2017 | ||||||||||||
Net loss | $ | (46,644 | ) | $ | (36,364 | ) | $ | (125,885 | ) | $ | (127,333 | ) | |||
Other comprehensive income, net of tax: | |||||||||||||||
Foreign currency translation adjustments | (1,544 | ) | 4,631 | (6,529 | ) | 17,003 | |||||||||
Unrealized loss on available for sale securities | (3 | ) | (7 | ) | (52 | ) | 20 | ||||||||
Net (loss) income on intra-entity foreign currency transactions | (72 | ) | 932 | (603 | ) | 1,940 | |||||||||
Total other comprehensive (loss) income | (1,619 | ) | 5,556 | (7,184 | ) | 18,963 | |||||||||
Comprehensive loss | (48,263 | ) | (30,808 | ) | (133,069 | ) | (108,370 | ) | |||||||
Comprehensive (income) loss attributable to redeemable noncontrolling interests | (422 | ) | 1,276 | 2,122 | 6,980 | ||||||||||
Comprehensive loss attributable to Synchronoss | $ | (48,685 | ) | $ | (29,532 | ) | $ | (130,947 | ) | $ | (101,390 | ) |
Nine Months Ended September 30, | |||||||
2018 | 2017 | ||||||
Operating activities: | |||||||
Net loss from continuing operations | $ | (125,885 | ) | $ | (113,266 | ) | |
Net loss from discontinued operations** | — | (14,067 | ) | ||||
Adjustments to reconcile Net Loss to net cash used in operating activities: | |||||||
Depreciation and amortization expense | 70,330 | 71,098 | |||||
Change in fair value of financial instruments | (3,849 | ) | — | ||||
Amortization of debt issuance costs | 1,060 | 12,523 | |||||
Accrued PIK interest* | (7,037 | ) | (8,805 | ) | |||
Allowance for loan losses* | 18,225 | — | |||||
Loss (earnings) from equity method investments* | (71 | ) | (1,626 | ) | |||
Loss (Gain) on disposals | 277 | (4,947 | ) | ||||
Discontinued operations non-cash and working capital adjustments** | — | 68,377 | |||||
Amortization of bond premium | 75 | 219 | |||||
Deferred income taxes | (1,648 | ) | (8,937 | ) | |||
Stock-based compensation | 22,040 | 14,427 | |||||
Changes in operating assets and liabilities: | |||||||
Accounts receivable, net of allowance for doubtful accounts | 28,789 | 24,029 | |||||
Prepaid expenses and other current assets | (12,844 | ) | (29,143 | ) | |||
Other assets | 947 | 2,768 | |||||
Accounts payable | 8,195 | (2,294 | ) | ||||
Accrued expenses | (24,539 | ) | (16,775 | ) | |||
Other liabilities | (3,886 | ) | 594 | ||||
Deferred revenues | (30,841 | ) | 4,732 | ||||
Net cash used in operating activities | (60,662 | ) | (1,093 | ) | |||
Investing activities: | |||||||
Purchases of fixed assets | (8,565 | ) | (10,315 | ) | |||
Purchases of intangible assets and capitalized software | (11,012 | ) | (7,848 | ) | |||
Proceeds from the sale of SpeechCycle | — | 13,500 | |||||
Purchases of marketable securities available for sale | (15,784 | ) | (219 | ) | |||
Maturity of marketable securities available for sale | 3,050 | 10,856 | |||||
Equity investment distributions | — | 608 | |||||
Investing in discontinued operations** | — | (11,429 | ) | ||||
Investment in note receivable | — | (6,187 | ) | ||||
Business acquired, net of cash | (9,734 | ) | (815,008 | ) | |||
Net cash used in investing activities | (42,045 | ) | (826,042 | ) |
Financing activities: | |||||||
Share-based compensation-related proceeds, net of taxes paid on withholding shares | — | 2,460 | |||||
Taxes paid on withholding shares | — | (410 | ) | ||||
Debt issuance costs related to the Credit Facility | — | (3,692 | ) | ||||
Debt issuance cost related to amendment | — | (16,776 | ) | ||||
Debt issuance costs related to long term debt | — | (19,887 | ) | ||||
Proceeds from issuance of long term debt | — | 900,000 | |||||
Repayment of long term debt | — | (4,500 | ) | ||||
Repayment of revolving line of credit | — | (29,000 | ) | ||||
Proceeds from the sale of treasury stock in connection with an employee stock purchase plan | — | 1,047 | |||||
Proceeds from issuance of preferred stock | 86,220 | — | |||||
Payments on capital obligations | (1,018 | ) | (2,244 | ) | |||
Net cash provided by financing activities | 85,202 | 826,998 | |||||
Effect of exchange rate changes on cash | (1,805 | ) | 4,938 | ||||
Net decrease in cash, restricted cash and cash equivalents | (19,310 | ) | 4,801 | ||||
Cash, restricted cash and cash equivalents, beginning of period | 246,125 | 211,433 | |||||
Cash, restricted cash and cash equivalents, end of period | $ | 226,815 | $ | 216,234 | |||
Supplemental disclosures of non-cash investing and financing activities: | |||||||
Issuance of common stock in connection with Intralinks acquisition | $ | — | $ | 4,700 | |||
Cash and cash equivalents per the Condensed Consolidated Balance Sheets | $ | 222,438 | $ | 210,070 | |||
Restricted cash per the Condensed Consolidated Balance Sheets | 4,377 | 6,164 | |||||
Total cash, cash equivalents and restricted cash | $ | 226,815 | $ | 216,234 |
* | See Note 5 -Investments in Affiliates and Related Transactions for related party transactions reflected in this account. |
** | See Note 3 - Acquisitions and Divestitures for transactions classified as discontinued operations. |
Standard | Description | Effect on the financial statements | ||
Accounting Standards Update (“ASU”) 2017-09 Stock Compensation (Topic 718), Scope of Modification | In May 2017, the Financial Accounting Standards Board (“FASB”) issued guidance which clarifies when changes to the terms or conditions of a share-based payment award must be accounted for as modifications. Entities will apply the modification accounting guidance if the value, vesting conditions or classification of the award changes. The guidance also clarifies that a modification to an award could be significant and therefore require disclosure, even if modification accounting is not required. ASU 2017-09 is effective for fiscal years, and interim periods within those years, beginning after December 31, 2017. Early adoption is permitted as of the beginning of an annual period for which financial statements have not been issued. ASU 2017-09 should be applied prospectively to an award modified on or after the adoption date. | This ASU did not have a material effect on the Company’s condensed consolidated financial statements as of the date of adoption. | ||
Date of adoption: January 1, 2018. |
Standard | Description | Effect on the financial statements | ||
ASU 2018-15 Intangibles - Goodwill and Other - Internal Use Software (Subtopic 350-40): Cloud Computing Arrangements | In August 2018, the FASB issued final guidance requiring a customer in a cloud computing arrangement that is a service contract to follow the internal use software guidance in Accounting Standards Codification (“ASC”) 350-402 Intangibles - Goodwill and Other - Internal Use Software (Subtopic 350-40) to determine which implementation costs to capitalize as assets. The amendments in this ASU are effective for fiscal years beginning after December 15, 2019. Early adoption of the amendments is permitted, including adoption in any interim period, for all entities and should be applied either retrospectively or prospectively to all implementation costs incurred after the date of adoption. | The Company is currently reviewing its cloud computing arrangements to evaluate the impact of adoption of the final guidance but does not expect that the pending adoption of this ASU will have a material effect on its condensed consolidated financial statements. | ||
Date of adoption: January 1, 2020. | ||||
Update 2018-07—Compensation—Stock Compensation (Topic 718): Improvements to Non-employee Share-Based Payment Accounting | In June 2018, the FASB issued ASU 2018-07, regarding ASC Topic 718 “Compensation - Stock Compensation,” which largely aligns the accounting for share-based compensation for non-employees with employees. The amendments in this ASU are effective for public business entities for fiscal years beginning after December 15, 2018, including interim periods within that fiscal year. For all other entities, the amendments are effective for fiscal years beginning after December 15, 2019, and interim periods within fiscal years beginning after December 15, 2020. Early adoption is permitted, but no earlier than an entity’s adoption date of Topic 606. | The Company does not expect the adoption of this standard to have a material effect on its condensed consolidated financial statements. | ||
Date of adoption: January 1, 2019. | ||||
ASU 2016-13 Financial Instruments-Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments | In June 2016, the FASB issued ASU 2016-13 which replaces the incurred loss impairment methodology in current U.S. GAAP with a methodology that reflects expected credit losses and requires consideration of a broader range of reasonable and supportable information to inform credit loss estimates. The ASU is effective for public companies in annual periods beginning after December 15, 2019, and interim periods within those years. Early adoption is permitted beginning after December 15, 2018 and interim periods within those years. | The Company is currently evaluating the impact of the adoption of this ASU on its condensed consolidated financial statements. | ||
Date of adoption: January 1, 2020. |
ASU 2016-02 Leases (Topic 842 or “ASC 842”) | In February 2016, the FASB issued ASU 2016-02 which requires lessees to recognize, for all leases of 12 months or more, a liability to make lease payments and a right-of-use asset representing the right to use the underlying asset for the lease term. Additionally, the guidance requires improved disclosures to help users of financial statements better understand the nature of an entity’s leasing activities. The ASU is effective for public companies in interim and annual periods beginning after December 15, 2018, with early adoption permitted, and must be adopted using a modified retrospective approach. | The Company has elected to apply the transition requirements as of January 1, 2019 and as such, the Company will neither restate comparative periods for the effects of applying ASC 842 nor provide the disclosures required by ASC 842 for the comparative periods. In addition, there are several practical expedients and accounting policy elections offered within ASC 842 to both ease the transition to, and simplify the adoption of, ASC 842. In connection therewith, the Company elected the package of transition practical expedients related to lease identification, lease classification, and initial direct costs. The Company also elected the lessor practical expedient to not separate lease and non-lease components when the requisite criteria is met to be treated as such. In addition, the Company made the following accounting policy elections: (1) the Company will not separate lease and non-lease components by class of underlying asset (2) the Company will apply the portfolio approach, specifically in the development of the Company’s discount rates (3) the Company will apply the short-term lease exemption by class of underlying asset (4) the Company will apply a capitalization threshold policy. | ||
Date of adoption: January 1, 2019. | Adoption of the new standard will result in the recording of additional net lease assets and lease liabilities as of January 1, 2019. The difference between the additional lease assets and lease liabilities, net of the deferred tax impact, will be recorded as an adjustment to retained earnings. The standard will not materially impact our consolidated net earnings and will have no impact on cash flows. |
Performance Obligation | When Performance Obligation is Typically Satisfied | When Payment is Typically Due | How Standalone Selling Price is Typically Estimated | |||
Software License | ||||||
Software License | Upon shipment or made available for download (point in time) | Within 90 days of delivery | Observable transactions or residual approach when prices are highly variable or uncertain | |||
Software License with significant customization | Over the performance of the customization and installation of the software (over time) | Within 90 days of services being performed | Residual approach | |||
Hosting Services | As hosting services are provided (over time) | Within 90 days of services being provided | Estimated using a cost-plus margin approach | |||
Professional Services | ||||||
Consulting | As work is performed (over time) | Within 90 days of services being performed | Observable transactions | |||
Customization | SaaS: Over the remaining term of the SaaS agreement License: Over the performance of the customization and installation of the software (over time) | Within 90 days of services being performed | Observable transactions | |||
Transaction Services | As transaction is processed (over time) | Within 90 days of transaction | Observable transactions | |||
Subscription Services | ||||||
Customer Support | Ratably over the course of the support contract (over time) | At the beginning of the contract period | Observable transactions | |||
SaaS | Over the course of the SaaS service once the system is available for use (over time) | Within 90 days of services being performed | Estimated using a cost-plus margin approach |
Three Months Ended September 30, 2018 | Three Months Ended September 30, 2017 | ||||||||||||||||||||||||||||||
Cloud | Digital | Messaging | Total | Cloud | Digital | Messaging | Total | ||||||||||||||||||||||||
Geography | |||||||||||||||||||||||||||||||
Americas | $ | 41,029 | $ | 24,563 | $ | 2,714 | $ | 68,306 | $ | 49,555 | $ | 28,071 | $ | 2,125 | $ | 79,751 | |||||||||||||||
APAC | — | 2,082 | 4,647 | 6,729 | — | 1,637 | 4,540 | 6,177 | |||||||||||||||||||||||
EMEA | 1,967 | 2,216 | 4,068 | 8,251 | 1,708 | 634 | 2,745 | 5,087 | |||||||||||||||||||||||
Total | $ | 42,996 | $ | 28,861 | $ | 11,429 | $ | 83,286 | $ | 51,263 | $ | 30,342 | $ | 9,410 | $ | 91,015 | |||||||||||||||
Service Line | |||||||||||||||||||||||||||||||
Professional Services | $ | 2,982 | $ | 4,051 | $ | 1,728 | $ | 8,761 | $ | 4,309 | $ | 6,990 | $ | 1,809 | $ | 13,108 | |||||||||||||||
Transaction Services | 1,918 | 2,845 | — | 4,763 | 2,883 | 4,113 | — | 6,996 | |||||||||||||||||||||||
Subscription Services | 38,096 | 20,572 | 7,976 | 66,644 | 41,831 | 17,666 | 5,706 | 65,203 | |||||||||||||||||||||||
License | — | 1,393 | 1,725 | 3,118 | 2,240 | 1,573 | 1,895 | 5,708 | |||||||||||||||||||||||
Total | $ | 42,996 | $ | 28,861 | $ | 11,429 | $ | 83,286 | $ | 51,263 | $ | 30,342 | $ | 9,410 | $ | 91,015 |
Nine Months Ended September 30, 2018 | Nine Months Ended September 30, 2017 | ||||||||||||||||||||||||||||||
Cloud | Digital | Messaging | Total | Cloud | Digital | Messaging | Total | ||||||||||||||||||||||||
Geography | |||||||||||||||||||||||||||||||
Americas | $ | 113,452 | $ | 65,614 | $ | 7,585 | $ | 186,651 | $ | 175,560 | $ | 75,371 | $ | 5,812 | $ | 256,743 | |||||||||||||||
APAC | — | 4,697 | 30,287 | 34,984 | — | 5,157 | 17,864 | 23,021 | |||||||||||||||||||||||
EMEA | 6,568 | 3,747 | 11,787 | 22,102 | 5,248 | 2,630 | 8,460 | 16,338 | |||||||||||||||||||||||
Total | $ | 120,020 | $ | 74,058 | $ | 49,659 | $ | 243,737 | $ | 180,808 | $ | 83,158 | $ | 32,136 | $ | 296,102 | |||||||||||||||
Service Line | |||||||||||||||||||||||||||||||
Professional Services | $ | 10,002 | $ | 14,053 | $ | 8,118 | $ | 32,173 | $ | 23,731 | $ | 19,307 | $ | 5,423 | $ | 48,461 | |||||||||||||||
Transaction Services | 6,703 | 6,740 | — | 13,443 | 9,098 | 15,058 | — | 24,156 | |||||||||||||||||||||||
Subscription Services | 102,891 | 50,103 | 23,709 | 176,703 | 140,224 | 40,107 | 21,708 | 202,039 | |||||||||||||||||||||||
License | 424 | 3,162 | 17,832 | 21,418 | 7,755 | 8,686 | 5,005 | 21,446 | |||||||||||||||||||||||
Total | $ | 120,020 | $ | 74,058 | $ | 49,659 | $ | 243,737 | $ | 180,808 | $ | 83,158 | $ | 32,136 | $ | 296,102 |
Contract Liabilities* | |||
Balance - January 1, 2018 | $ | 115,009 | |
Revenue recognized in the period | (99,405 | ) | |
Amounts billed but not recognized as revenue | 68,257 | ||
Balance - September 30, 2018 | $ | 83,861 |
* | Comprised of Deferred Revenue |
1. | Contracts with an original duration of one year or less, including contracts that can be terminated for convenience without a substantive penalty; |
2. | Contracts for which the Company recognizes revenues based on the right to invoice for services performed; |
3. | Variable consideration allocated entirely to a wholly unsatisfied performance obligation or to a wholly unsatisfied promise to transfer a distinct good or service that forms part of a single performance obligation in accordance with Topic 606 Section 10-25-14(b), for which the criteria in Topic 606 Section 10-32-40 have been met. This applies to a limited number of situations where we are dependent upon data from a third party or where fees are highly variable. |
September 30, 2018 | ||||||||||
As Reported | Impacts of the New Revenue Standard | Adjusted amounts under prior GAAP | ||||||||
ASSETS | ||||||||||
Current assets: | ||||||||||
Cash and cash equivalents | $ | 222,438 | $ | — | $ | 222,438 | ||||
Restricted cash** | 4,377 | — | 4,377 | |||||||
Marketable securities, current | 6,989 | — | 6,989 | |||||||
Accounts receivable, net | 52,617 | 19,718 | 32,899 | |||||||
Prepaid expenses | 46,922 | — | 46,922 | |||||||
Other current assets (2) | 14,115 | (415 | ) | 14,530 | ||||||
Total current assets | 347,458 | 19,303 | 328,155 | |||||||
Marketable securities, non-current | 8,716 | — | 8,716 | |||||||
Property and equipment, net | 80,519 | — | 80,519 | |||||||
Goodwill | 234,480 | — | 234,480 | |||||||
Intangible assets, net | 117,448 | — | 117,448 | |||||||
Other assets (2) | 8,940 | 369 | 8,571 | |||||||
Note receivable from related party** | 66,089 | — | 66,089 | |||||||
Equity method investment | 30,694 | — | 30,694 | |||||||
Total assets | $ | 894,344 | $ | 19,672 | $ | 874,672 | ||||
LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||||
Current liabilities: | ||||||||||
Accounts payable | $ | 14,300 | $ | — | $ | 14,300 | ||||
Accrued expenses | 53,794 | (14,756 | ) | 68,550 | ||||||
Deferred revenues, current (3) | 54,046 | 2,281 | 51,765 | |||||||
Short-term debt | 228,764 | — | 228,764 | |||||||
Total current liabilities | 350,904 | (12,475 | ) | 363,379 | ||||||
Lease financing obligation | 10,006 | — | 10,006 | |||||||
Deferred tax liabilities | 12,109 | — | 12,109 | |||||||
Deferred revenues, non-current (3) | 29,815 | 11,200 | 18,615 | |||||||
Other liabilities | 11,329 | — | 11,329 | |||||||
Redeemable noncontrolling interest | 12,500 | — | 12,500 | |||||||
Commitments and contingencies (Note 12) | ||||||||||
Series A Convertible Participating Perpetual Preferred Stock, $0.0001 par value; 10,000 shares authorized; 195 shares issued and outstanding at September 30, 2018 | 176,160 | — | 176,160 | |||||||
Stockholders’ equity: | ||||||||||
Common stock, $0.0001 par value; 100,000 shares authorized, 49,817 and 52,024 shares issued; 42,655 and 46,965 outstanding at September 30, 2018 and December 31, 2017, respectively | 5 | — | 5 | |||||||
Treasury stock, at cost (7,162 and 5,059 shares at September 30, 2018 and December 31, 2017, respectively) | (82,087 | ) | — | (82,087 | ) | |||||
Additional paid-in capital | 561,144 | — | 561,144 | |||||||
Accumulated other comprehensive loss (4) | (30,557 | ) | 76 | (30,633 | ) | |||||
Accumulated deficit | (156,984 | ) | 20,871 | (177,855 | ) | |||||
Total stockholders’ equity | 291,521 | 20,947 | 270,574 | |||||||
Total liabilities and stockholders’ equity | $ | 894,344 | $ | 19,672 | $ | 874,672 |
** | See Note 5 -Investments in Affiliates and Related Transactions for related party transactions reflected in this account. |
Three Months Ended September 30, 2018 | Nine Months Ended September 30, 2018 | ||||||||||||||||||
As Reported | Impacts of the New Revenue Standard | Adjusted amounts under prior GAAP | As Reported | Impacts of the New Revenue Standard | Adjusted amounts under prior GAAP | ||||||||||||||
Net revenues (3) | $ | 83,286 | $ | 11,605 | $ | 71,681 | $ | 243,737 | $ | 31,871 | $ | 211,866 | |||||||
Costs and expenses: | |||||||||||||||||||
Cost of revenues* (5) | 43,714 | 249 | 43,465 | 127,788 | 613 | 127,175 | |||||||||||||
Research and development | 18,684 | — | 18,684 | 59,789 | — | 59,789 | |||||||||||||
Selling, general and administrative (2) | 27,320 | 51 | 27,269 | 99,368 | 152 | 99,216 | |||||||||||||
Restructuring charges | 4,539 | — | 4,539 | 8,425 | — | 8,425 | |||||||||||||
Depreciation and amortization | 23,658 | — | 23,658 | 70,330 | — | 70,330 | |||||||||||||
Total costs and expenses | 117,915 | 300 | 117,615 | 365,700 | 765 | 364,935 | |||||||||||||
Loss from continuing operations | (34,629 | ) | 11,305 | (45,934 | ) | (121,963 | ) | 31,106 | (153,069 | ) | |||||||||
Interest income | 203 | — | 203 | 7,518 | — | 7,518 | |||||||||||||
Interest expense | (1,370 | ) | (33 | ) | (1,337 | ) | (3,935 | ) | (105 | ) | (3,830 | ) | |||||||
Other expense, net | (13,439 | ) | — | (13,439 | ) | (9,180 | ) | — | (9,180 | ) | |||||||||
Equity method investment income | 283 | — | 283 | 71 | — | 71 | |||||||||||||
Loss from continuing operations, before taxes | (48,952 | ) | 11,272 | (60,224 | ) | (127,489 | ) | 31,001 | (158,490 | ) | |||||||||
Benefit for income taxes | 2,308 | — | 2,308 | 1,604 | — | 1,604 | |||||||||||||
Net loss from continuing operations | (46,644 | ) | 11,272 | (57,916 | ) | (125,885 | ) | 31,001 | (156,886 | ) | |||||||||
Net loss | (46,644 | ) | 11,272 | (57,916 | ) | (125,885 | ) | 31,001 | (156,886 | ) | |||||||||
Net (income) loss attributable to redeemable noncontrolling interests | (422 | ) | — | (422 | ) | 2,122 | — | 2,122 | |||||||||||
Preferred stock dividend | (7,463 | ) | — | (7,463 | ) | (18,076 | ) | — | (18,076 | ) | |||||||||
Net loss attributable to Synchronoss | $ | (54,529 | ) | $ | 11,272 | $ | (65,801 | ) | $ | (141,839 | ) | $ | 31,001 | $ | (172,840 | ) | |||
Basic: | |||||||||||||||||||
Continuing operations | $ | (1.38 | ) | $ | 0.28 | $ | (1.66 | ) | $ | (3.51 | ) | $ | 0.77 | $ | (4.28 | ) | |||
Diluted: | |||||||||||||||||||
Continuing operations | $ | (1.38 | ) | $ | 0.28 | $ | (1.66 | ) | $ | (3.51 | ) | $ | 0.77 | $ | (4.28 | ) | |||
Weighted-average common shares outstanding: | |||||||||||||||||||
Basic | 39,612 | 39,612 | 40,405 | 40,405 | |||||||||||||||
Diluted | 39,612 | 39,612 | 40,405 | 40,405 |
* | Cost of revenues excludes depreciation and amortization which are shown separately. |
(1) | Reflects the impact of changes to the contract term as defined by the new revenue recognition standard. |
(2) | Reflects capitalization of costs to obtain a contract. |
(3) | Reflects the impact of changes in the delayed pattern of recognition on the Company’s professional services, timing of revenue recognition and allocation of purchase price on software license contracts and legally enforceable rights and obligations prior to when persuasive evidence of an arrangement exists. |
(4) | Reflects the impact of foreign currency translation related to the above impacts. |
(5) | Reflects the impact of amortization of third party costs over the term of the contract. |
Cumulative catch up Topic 606 adjustment as of January 1, 2018 | $ | (10,130 | ) |
Net loss from continued operations | 31,001 | ||
Retained Earnings at September 30, 2018 | $ | 20,871 |
• | Level 1 - Observable inputs - quoted prices in active markets for identical assets and liabilities; |
• | Level 2 - Observable inputs other than the quoted prices in active markets for identical assets and liabilities includes quoted prices for similar instruments, quoted prices for identical or similar instruments in inactive markets, and amounts derived from valuation models where all significant inputs are observable in active markets; and |
• | Level 3 - Unobservable inputs - includes amounts derived from valuation models where one or more significant inputs are unobservable and require the Company to develop relevant assumptions. |
September 30, 2018 | |||||||||||||||
Total | (Level 1) | (Level 2) | (Level 3) | ||||||||||||
Assets | |||||||||||||||
Cash, cash equivalents and restricted cash (1) | $ | 226,815 | $ | 226,815 | $ | — | $ | — | |||||||
Marketable securities-short term (2) | 6,989 | — | 6,989 | — | |||||||||||
Marketable securities-long term (2) | 8,716 | — | 8,716 | — | |||||||||||
Total assets | $ | 242,520 | $ | 226,815 | $ | 15,705 | $ | — | |||||||
Temporary equity | |||||||||||||||
Redeemable noncontrolling interests (3) | $ | 12,500 | $ | — | $ | — | $ | 12,500 | |||||||
Total temporary equity | $ | 12,500 | $ | — | $ | — | $ | 12,500 |
December 31, 2017 | |||||||||||||||
Total | (Level 1) | (Level 2) | (Level 3) | ||||||||||||
Assets | |||||||||||||||
Cash, cash equivalents and restricted cash (1) | $ | 246,125 | $ | 246,125 | $ | — | $ | — | |||||||
Marketable securities-short term (2) | 3,111 | — | 3,111 | — | |||||||||||
Total assets | $ | 249,236 | $ | 246,125 | $ | 3,111 | $ | — | |||||||
Liabilities | |||||||||||||||
Contingent interest derivative (4) | $ | 193 | $ | — | $ | — | $ | 193 | |||||||
Mandatorily redeemable financial instrument (5) | $ | 37,959 | $ | — | $ | — | $ | 37,959 | |||||||
Total liabilities | $ | 38,152 | $ | — | $ | — | $ | 38,152 | |||||||
Temporary Equity | |||||||||||||||
Redeemable noncontrolling interests (3) | $ | 25,280 | $ | — | $ | — | $ | 25,280 | |||||||
Total temporary equity | $ | 25,280 | $ | — | $ | — | $ | 25,280 |
(1) | Cash equivalents primarily included money market funds. |
(2) | Marketable securities are comprised of municipal bonds and certificates of deposit. |
(3) | Put arrangements held by the noncontrolling interests in certain of the Company’s joint ventures. |
(4) | Contingent interest derivative related to convertible debt is included in accrued expenses, for further details see Note 6 - Debt. |
(5) | Mandatorily redeemable financial instruments are comprised of the Company’s contractual obligation to deliver a set number of preferred shares at a time in less than twelve months and the option for the Company to receive a set number of common shares. In 2018, this was exchanged as partial consideration in connection with issuance of the Company’s Series A Convertible Participating Perpetual Preferred Stock. |
September 30, 2018 | |||||||||||||||
Amortized Cost | Gross Unrealized Gains | Gross Unrealized Losses | Fair Value | ||||||||||||
Marketable securities: | |||||||||||||||
Certificates of deposit | $ | 3,776 | $ | — | $ | (15 | ) | $ | 3,761 | ||||||
Corporate bonds | 402 | — | (3 | ) | 399 | ||||||||||
Municipal bonds | 11,598 | 1 | (54 | ) | 11,545 | ||||||||||
Total marketable securities | $ | 15,776 | $ | 1 | $ | (72 | ) | $ | 15,705 |
December 31, 2017 | |||||||||||||||
Amortized Cost | Gross Unrealized Gains | Gross Unrealized Losses | Fair Value | ||||||||||||
Marketable securities: | |||||||||||||||
Certificates of deposit | $ | 250 | $ | — | $ | — | $ | 250 | |||||||
Municipal bonds | 2,867 | — | (6 | ) | 2,861 | ||||||||||
Total marketable securities | $ | 3,117 | $ | — | $ | (6 | ) | $ | 3,111 |
September 30, 2018 | |||||||
Amortized Cost | Fair Value | ||||||
Due within one year | $ | 7,006 | $ | 6,989 | |||
Due after 1 year through 5 years | 8,718 | 8,664 | |||||
Due after 5 years through 10 years | 52 | 52 | |||||
Due after 10 years | — | — | |||||
Total available-for-sale debt securities | $ | 15,776 | $ | 15,705 |
Balance at December 31, 2017 | $ | 25,280 | |
Fair value adjustment | (10,658 | ) | |
Net loss attributable to redeemable noncontrolling interests | (2,122 | ) | |
Balance at September 30, 2018 | $ | 12,500 |
Three Months Ended | Nine Months Ended | |||||||
Revenues | $ | 33,119 | $ | 94,758 | ||||
Expenses | 32,177 | 94,523 | ||||||
Net(loss) income | $ | 942 | $ | 235 |
Seller Note | Impairment | Unamortized Discount | Loan Accrued Interest | Distribution Note | Distribution interest | Total | |||||||||||||||
December 31, 2017 | $ | 83,000 | $ | (14,562 | ) | $ | (12,163 | ) | $ | 11,096 | $ | 6,187 | $ | 426 | $ | 73,984 | |||||
Activity | — | (18,225 | ) | 438 | 6,103 | 3,293 | 496 | (7,895 | ) | ||||||||||||
September 30, 2018 | $ | 83,000 | $ | (32,787 | ) | $ | (11,725 | ) | $ | 17,199 | $ | 9,480 | $ | 922 | $ | 66,089 |
September 30, 2018 | December 31, 2017 | ||||||
Restricted cash (A) | $ | — | $ | 118 | |||
Accounts receivable (B) | 22,274 | 18,033 | |||||
Total assets | $ | 22,274 | $ | 18,151 | |||
Accrued expenses (A) | — | 118 | |||||
Total liabilities | $ | — | $ | 118 |
(A) | The Company collected zero and $0.1 million from STIN customers, on behalf of STIN, which remained outstanding as of September 30, 2018 and December 31, 2017, respectively. This amount has been classified in short-term restricted cash and in accrued expenses on the Condensed Consolidated Balance Sheets. |
(B) | These amounts principally included revenues generated from the Cloud and Telephony Support Services agreement and pass-through of vendor expenses incurred during the transition and assignment of vendor contracts. |
September 30, 2018 | December 31, 2017 | ||||||
Convertible Senior Notes | $ | 230,000 | $ | 230,000 | |||
Unamortized debt issuance cost (1) | (1,236 | ) | (2,296 | ) | |||
Total debt, carrying value | $ | 228,764 | $ | 227,704 | |||
Total short-term debt, carrying value | $ | 228,764 | $ | — | |||
Total long-term debt, carrying value | $ | — | $ | 227,704 |
(1) | Unamortized debt issuance cost is related to Convertible Senior Notes. |
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
2018 | 2017 | 2018 | 2017 | |||||||||||||
Amended Credit Facility | ||||||||||||||||
Amortization of debt issuance costs | $ | — | $ | — | $ | — | $ | 748 | ||||||||
Commitment fee | — | — | — | 25 | ||||||||||||
Interest on borrowings | — | — | — | 24 | ||||||||||||
2017 Term Facility | ||||||||||||||||
Amortization of debt issuance costs | — | 1,021 | — | 2,376 | ||||||||||||
Interest on borrowings | — | 12,411 | — | 29,047 | ||||||||||||
Contingent Interest Derivative | — | 2,489 | — | 2,489 | ||||||||||||
Amendment fees paid to third parties | — | 5,716 | — | 5,716 | ||||||||||||
Revolving Facility | ||||||||||||||||
Amortization of debt issuance costs | — | 204 | — | 542 | ||||||||||||
Commitment fee | — | 114 | — | 448 | ||||||||||||
Amendment fees paid to third parties | — | 1,662 | — | 1,662 | ||||||||||||
Convertible Senior Notes | ||||||||||||||||
Amortization of debt issuance costs | 354 | 354 | 1,060 | 1,060 | ||||||||||||
Interest on borrowings | 430 | 431 | 1,292 | 1,294 | ||||||||||||
Additional interest on default | — | — | 192 | 288 | ||||||||||||
Capital leases | 241 | 243 | 724 | 729 | ||||||||||||
Other | 345 | 910 | 667 | 1,568 | ||||||||||||
Total | $ | 1,370 | $ | 25,555 | $ | 3,935 | $ | 48,016 |
Foreign Currency Translation Adjustment | Unrealized (Loss) Income on Intra-Entity Foreign Currency Transactions | Unrealized Holding Gains (Losses) on Available-for-Sale Securities | Total | ||||||||||||
Balance at Balance at December 31, 2017 | $ | (20,284 | ) | $ | (3,085 | ) | $ | (4 | ) | $ | (23,373 | ) | |||
Other comprehensive income | (6,529 | ) | (883 | ) | (52 | ) | (7,464 | ) | |||||||
Tax effect | — | 280 | — | 280 | |||||||||||
Total comprehensive income | (6,529 | ) | (603 | ) | (52 | ) | (7,184 | ) | |||||||
Balance at Balance at September 30, 2018 | $ | (26,813 | ) | $ | (3,688 | ) | $ | (56 | ) | $ | (30,557 | ) |
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||
2018 | 2017 | 2018 | 2017 | ||||||||||||
Cost of revenues | $ | 1,035 | $ | 1,118 | $ | 3,447 | $ | 3,326 | |||||||
Research and development | 1,340 | 1,201 | 4,682 | 4,181 | |||||||||||
Selling, general and administrative | 4,841 | 1,359 | 13,911 | 6,920 | |||||||||||
Total stock-based compensation expense | $ | 7,216 | $ | 3,678 | $ | 22,040 | $ | 14,427 |
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||
2018 | 2017 | 2018 | 2017 | ||||||||||||
Stock options | $ | 1,940 | $ | 1,534 | $ | 5,680 | $ | 4,522 | |||||||
Restricted stock awards | 5,276 | 2,092 | 16,360 | 9,523 | |||||||||||
Employee Stock Purchase Plan | — | 52 | — | 382 | |||||||||||
Total stock-based compensation before taxes | $ | 7,216 | $ | 3,678 | $ | 22,040 | $ | 14,427 | |||||||
Tax benefit | $ | 1,402 | $ | 973 | $ | 4,356 | $ | 2,686 |
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||
2018 | 2017 | 2018 | 2017 | ||||||||||||
Expected stock price volatility | 66.0 | % | 0.0 | % | 65.2 | % | 49.2 | % | |||||||
Risk-free interest rate | 2.7 | % | 0.0 | % | 2.6 | % | 1.7 | % | |||||||
Expected life of options (in years) | 4.29 | 0.00 | 4.11 | 4.03 | |||||||||||
Expected dividend yield | 0.0 | % | 0.0 | % | 0.0 | % | 0.0 | % | |||||||
Weighted-average fair value (grant date) of the options | $ | 3.33 | $ | — | $ | 5.04 | $ | 7.79 |
Options | Number of Options | Weighted-Average Exercise Price | Weighted-Average Remaining Contractual Term (Years) | Aggregate Intrinsic Value | |||||||||
Outstanding at December 31, 2017 | 3,950 | $ | 21.54 | ||||||||||
Options Granted | 1,065 | 9.75 | |||||||||||
Options Exercised | — | — | |||||||||||
Options Cancelled | (464 | ) | 21.81 | ||||||||||
Outstanding at September 30, 2018 | 4,551 | $ | 18.75 | 5.10 | $ | 56 | |||||||
Vested at September 30, 2018 | 1,449 | $ | 31.04 | 3.23 | $ | — | |||||||
Exercisable at September 30, 2018 | 1,449 | $ | 31.04 | 3.23 | $ | — |
Unvested Restricted Stock | Number of Awards | Weighted- Average Grant Date Fair Value | |||||
Unvested at December 31, 2017 | 2,064 | $ | 22.75 | ||||
Granted | 1,801 | 9.15 | |||||
Vested | (738 | ) | 26.75 | ||||
Forfeited | (211 | ) | 17.52 | ||||
Unvested at September 30, 2018 | 2,916 | $ | 13.74 |
Balance at December 31, 2017 | Charges | Payments | Other Adjustments1 | Balance at September 30, 2018 | |||||||||||||||
Employment termination costs | $ | 474 | $ | 8,003 | $ | (6,505 | ) | $ | (38 | ) | $ | 1,934 | |||||||
Facilities consolidation | 24 | 422 | (14 | ) | 1,997 | 2,429 | |||||||||||||
Total | $ | 498 | $ | 8,425 | $ | (6,519 | ) | $ | 1,959 | $ | 4,363 |
(1) | Includes non-cash adjustments. |
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||
2018 | 2017 | 2018 | 2017 | ||||||||||||
Numerator - Basic: | |||||||||||||||
Net loss from continuing operations | $ | (46,644 | ) | $ | (45,206 | ) | $ | (125,885 | ) | $ | (113,266 | ) | |||
Net (income) loss attributable to redeemable noncontrolling interests | (422 | ) | 1,276 | 2,122 | 6,980 | ||||||||||
Preferred stock dividend | (7,463 | ) | — | (18,076 | ) | — | |||||||||
Net (loss) income from continuing operations attributable to Synchronoss | (54,529 | ) | (43,930 | ) | (141,839 | ) | (106,286 | ) | |||||||
Income from discontinued operations, net of taxes** | — | 8,842 | — | (14,067 | ) | ||||||||||
Net (loss) income attributable to Synchronoss | $ | (54,529 | ) | $ | (35,088 | ) | $ | (141,839 | ) | $ | (120,353 | ) | |||
Numerator - Diluted: | |||||||||||||||
Net (loss) income from continuing operations attributable to Synchronoss | $ | (54,529 | ) | $ | (43,930 | ) | $ | (141,839 | ) | $ | (106,286 | ) | |||
Income effect for interest on convertible debt, net of tax | — | — | — | — | |||||||||||
Net loss from continuing operations adjusted for the convertible debt | (54,529 | ) | (43,930 | ) | (141,839 | ) | (106,286 | ) | |||||||
Income from discontinued operations, net of taxes** | — | 8,842 | — | (14,067 | ) | ||||||||||
Net loss attributable to Synchronoss | $ | (54,529 | ) | $ | (35,088 | ) | $ | (141,839 | ) | $ | (120,353 | ) | |||
Denominator: | |||||||||||||||
Weighted average common shares outstanding — basic | 39,612 | 44,893 | 40,405 | 44,576 | |||||||||||
Dilutive effect of: | |||||||||||||||
Shares from assumed conversion of convertible debt 1 | — | — | — | — | |||||||||||
Shares from assumed conversion of preferred stock 2 | — | — | — | — | |||||||||||
Options and unvested restricted shares | — | — | — | — | |||||||||||
Weighted average common shares outstanding — diluted | 39,612 | 44,893 | 40,405 | 44,576 | |||||||||||
Basic EPS | |||||||||||||||
Continuing operations | $ | (1.38 | ) | $ | (0.98 | ) | $ | (3.51 | ) | $ | (2.38 | ) | |||
Discontinued operations** | — | 0.20 | — | (0.32 | ) | ||||||||||
$ | (1.38 | ) | $ | (0.78 | ) | $ | (3.51 | ) | $ | (2.70 | ) | ||||
Diluted EPS | |||||||||||||||
Continuing operations | $ | (1.38 | ) | $ | (0.98 | ) | $ | (3.51 | ) | $ | (2.38 | ) | |||
Discontinued operations** | — | 0.20 | — | (0.32 | ) | ||||||||||
$ | (1.38 | ) | $ | (0.78 | ) | $ | (3.51 | ) | $ | (2.70 | ) | ||||
Anti-dilutive stock options excluded | 4,647 | 3,012 | 4,412 | 2,655 | |||||||||||
Unvested shares of restricted stock awards | 2,916 | 3,259 | 2,916 | 3,259 |
** | See Note 3 - Acquisitions and Divestitures for transactions classified as discontinued operations. |
(1) | The calculation for each period does not include the effect of assumed conversion of convertible debt of 4,325,646 shares, which is based on 18.8072 shares per $1,000 principal amount of the 2019 Notes. |
(2) | The calculation for each period does not include the effect of assumed conversion of preferred stock of 10,843,398 shares, which is based on 55.5556 shares per $1,000 principal amount of the preferred stock, because the effect would have been anti–dilutive. |
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||
2018 | 2017 | 2018 | 2017 | ||||||||||||
FX gains (1) | $ | 38 | $ | (173 | ) | $ | (241 | ) | $ | (2,912 | ) | ||||
PIK Note impairment (2) | (18,225 | ) | — | (18,225 | ) | — | |||||||||
Litigation settlement (3) | 4,495 | — | 4,495 | — | |||||||||||
Remeasurement gain on financial instrument (4) | — | — | 3,849 | — | |||||||||||
Divestiture: SpeechCycle (5) | — | — | — | 4,947 | |||||||||||
Income from Investment (6) | 519 | — | 519 | — | |||||||||||
Royalty income (7) | — | — | 92 | — | |||||||||||
Others (8) | (266 | ) | (83 | ) | 331 | 339 | |||||||||
Total | $ | (13,439 | ) | $ | (256 | ) | $ | (9,180 | ) | $ | 2,374 |
(1) | Fair value of foreign exchange gains and losses |
(2) | PIK Note impairment on the troubled debt restructuring |
(3) | Represents Legal settlement of $4.2M from Open Exchange and $0.3M IP settlement from F-Secure |
(4) | Remeasurement of gain/loss on Put option for common shares held by Siris. |
(5) | Gain on Divestitures: SpeechCycle |
(6) | Represents gain on sale on the Company’s cost investment in Clarity, Money Inc. |
(7) | Includes royalty income in connection with Mirapoint sale |
(8) | Represents individual transactions in other income (expense) that management determined to be immaterial |
Three Months Ended September 30, | |||||||||||
2018 | 2017 | $ Change | |||||||||
Net revenues | $ | 83,286 | $ | 91,015 | $ | (7,729 | ) | ||||
Cost of revenues* | 43,714 | 45,576 | (1,862 | ) | |||||||
Research and development | 18,684 | 20,926 | (2,242 | ) | |||||||
Selling, general and administrative | 27,320 | 34,881 | (7,561 | ) | |||||||
Restructuring charges | 4,539 | 2,312 | 2,227 | ||||||||
Depreciation and amortization | 23,658 | 23,459 | 199 | ||||||||
Total costs and expenses | 117,915 | 127,154 | (9,239 | ) | |||||||
Loss from continuing operations | $ | (34,629 | ) | $ | (36,139 | ) | $ | 1,510 |
* | Cost of revenues excludes depreciation and amortization which are shown separately. |
• | a $14.6 million decrease in Cloud revenues primarily resulting from: |
◦ | a change in the business model from a freemium pricing model to an active premium pricing model, resulting in a $11.4 million decrease and, |
◦ | a $3.2 million reduction from a decline in business volume related to decisions to sunset certain non-strategic cloud customers. |
• | a $5.4 million decrease in Digital Transformation revenues due to: |
◦ | a reduction in professional services revenue of $3.3 million; |
◦ | a decrease in subscription revenue of $1.9 million; |
◦ | a reduction in transaction revenue of $1.3 million; |
◦ | partially offset by an increase in license revenue of $1.1 million. |
• | an increase in Messaging revenue of $0.7 million primarily due to the current quarter impact of new sales in the Japanese market; and |
• | an increase of $11.6 million as a result of the Company’s implementation of Topic 606. This resulted in an increase in Cloud revenues of $6.3 million; Digital Transformation revenue of $4.0 million and Messaging revenue of $1.3 million. |
Nine Months Ended September 30, | |||||||||||
2018 | 2017 | $ Change | |||||||||
Net revenues | $ | 243,737 | $ | 296,102 | $ | (52,365 | ) | ||||
Cost of revenues* | 127,788 | 139,386 | (11,598 | ) | |||||||
Research and development | 59,789 | 67,234 | (7,445 | ) | |||||||
Selling, general and administrative | 99,368 | 103,049 | (3,681 | ) | |||||||
Restructuring charges | 8,425 | 11,715 | (3,290 | ) | |||||||
Depreciation and amortization | 70,330 | 71,098 | (768 | ) | |||||||
Total costs and expenses | 365,700 | 392,482 | (26,782 | ) | |||||||
Loss from continuing operations | $ | (121,963 | ) | $ | (96,380 | ) | $ | (25,583 | ) |
* | Cost of revenues excludes depreciation and amortization which are shown separately. |
• | a $78.1 million decrease in Cloud revenues resulting due to: |
◦ | a change in the business model from a freemium pricing model to an active premium pricing model, resulting in a $50.1 million decrease; |
◦ | a $21.7 million reduction in subscription revenue due to a cumulative adjustment in the the prior year period related to persuasive evidence; and |
◦ | a $7.8 million reduction from a decline in business volume related to decisions to sunset certain non-strategic cloud customers |
• | a $21.9 million decrease in Digital Transformation revenues due to: |
◦ | a reduction in transaction revenue of $8.4 million resulting from a decline in business volume of $7.3 million and the divestiture of the SpeechCycle business of $1.0 million; |
◦ | a reduction in subscription revenue of $6.2 million resulting from a decline in business volume; |
◦ | a reduction in professional services revenue of $5.3 million; and |
◦ | a reduction in license revenue of $2.0 million. |
• | an increase in Messaging revenue of $15.8 million primarily due to the delivery of an advanced messaging solution to a customer in the Japanese market and an uptick in business volume in our core messaging business; and |
• | an increase in revenues of $31.9 million as a result of the Company’s implementation of Topic 606, which resulted in an increase in Cloud revenues of $17.3 million, Digital Transformation revenue of $12.9 million and Messaging revenue of $1.7 million. |
Nine Months Ended September 30, | |||||||
2018 | 2017 | ||||||
Net cash provided by (used in): | |||||||
Operating activities | $ | (60,662 | ) | $ | (1,093 | ) | |
Investing activities | (42,045 | ) | (826,042 | ) | |||
Financing activities | 85,202 | 826,998 |
Payments Due by Period | ||||||||||||||||||||
Total | Remainder of 2018 | 2019 - 2021 | 2022 - 2023 | Thereafter | ||||||||||||||||
Capital lease obligations (1) | $ | 12,742 | $ | 1,302 | $ | 5,566 | $ | 2,563 | $ | 3,311 | ||||||||||
Convertible Senior Notes | 230,000 | — | 230,000 | — | — | |||||||||||||||
Interest (2) | 1,509 | 431 | 1,078 | — | — | |||||||||||||||
Operating lease obligations | 84,289 | 3,312 | 33,704 | 16,037 | 31,236 | |||||||||||||||
Purchase obligations (3) | 9,133 | 349 | 8,784 | — | — | |||||||||||||||
Other long-term liabilities (4) | 1,923 | 859 | 1,064 | — | — | |||||||||||||||
Total | $ | 339,596 | $ | 6,253 | $ | 280,196 | $ | 18,600 | $ | 34,547 |
(1) | Amount includes the Pennsylvania facility lease and the cloud hosting data center in England. |
(2) | Represents the interest on the 2019 Notes. |
(3) | Amount represents obligations associated with colocation agreements and other customer delivery related purchase obligations. |
(4) | Amount represents unrecognized tax positions recorded in our balance sheet. Although the timing of the settlement is uncertain, we believe this amount will be settled within three years. |
2017 Impairment Test | |||||||||||||
Reporting Unit | Discount Rate | Growth rate range | Terminal Growth Rate | Goodwill | Fair Value Exceeds Carrying Value by | Fair Value method | |||||||
A | 10.5 | % | (5.5%) - 12.7% | 3.0 | % | $ | 226,758 | 18.0 | % | Income Approach, Market Approach | |||
B | 11.0 | % | 3% - 67% | 3.0 | % | 9,100 | 34.0 | % | Income Approach |
• | Continued CEO Communication to reinforce compliance |
• | Recruiting and hiring a Director of Revenue Recognition, and other resources to augment our staff to support further enhancement on the controls and procedures surrounding revenue recognition. |
• | The development of a more comprehensive review process and monitoring controls over contracts with customers to ensure accurate accounting for multiple-element arrangements |
• | The Company developed a comprehensive revenue recognition and contract review training program that has been focused on the impacts of adopting Topic 606. This training is focused on senior-level management and customer-facing employees, as well as finance, sales and marketing personnel as of September 30, 2018. |
• | Establishment of an Internal Audit function |
• | Development of a recurring non-recurring transaction review meeting cadence with key stakeholders within the Company to identify and discuss potentially significant transactions. Meetings are attended by process owners across various functions or departments, both domestic and international, to promote regular and effective communication between finance and non-finance personnel, and to ensure that information related to significant transactions is communicated timely as of September 30, 2018. |
• | Increased standardization of contract documentation and revenue analysis for individual transactions, including increased oversight of revenue opportunities and contract review by personnel with the requisite accounting knowledge to identify revenue-impacting terms and consider potential downstream effects; |
• | The development of a more comprehensive review process and monitoring controls over contracts with customers to ensure accurate accounting for multiple-element arrangements |
• | The Company performed a review of key business process controls related to high-risk financial statement accounts, such as revenue, significant transactions, capitalized software, accounts receivable, treasury and financial close, which resulted in the redesign of existing controls and the addition of newly developed / documented control activities, in order to mitigate known risks and strengthen the overall control environments as of September 30, 2018. |
• | Sub-certification Process: Key process owners each quarter (as part of the Form 10-Q and to be annual as part of the 10-K preparation) complete a sub-certification questionnaire and checklist to support how the process owner reached the conclusion that controls are operating effectively in their respective areas and provide an opportunity to highlight any concerns they have related to internal control over financial reporting. |
• | The Company has performed a review of key IT process controls and is in the process of enhancing process to remediate material weakness in the general control environment. |
Exhibit No. | Description | ||
3.1 | |||
3.2 | |||
3.3 | |||
10.4† | |||
31.1 | |||
31.2 | |||
32.1 | |||
32.2 | |||
101.INS | XBRL Instance Document | ||
101.SCH | XBRL Schema Document | ||
101.CAL | XBRL Calculation Linkbase Document | ||
101.DEF | XBRL Taxonomy Extension Definition Linkbase | ||
101.LAB | XBRL Labels Linkbase Document | ||
101.PRE | XBRL Presentation Linkbase Document |
† | Compensation Arrangement. |
Synchronoss Technologies, Inc. | |||
/s/ Glenn Lurie | |||
Glenn Lurie | |||
Chief Executive Officer | |||
(Principal Executive Officer) | |||
/s/ David Clark | |||
David Clark | |||
Chief Financial Officer | |||
1. | I have reviewed this Quarterly Report on Form 10-Q of Synchronoss Technologies, Inc. for the quarter ended September 30, 2018; |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rule 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
a. | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
b. | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
c. | Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
d. | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
5. | The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s Board of Directors (or persons performing the equivalent functions): |
a. | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
b. | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
/s/ Glenn Lurie | |
Glenn Lurie | |
Chief Executive Officer |
1. | I have reviewed this Quarterly Report on Form 10-Q of Synchronoss Technologies, Inc. for the quarter ended September 30, 2018; |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rule 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
a. | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
b. | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
c. | Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
d. | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
5. | The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s Board of Directors (or persons performing the equivalent functions): |
a. | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
b. | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
/s/ David Clark | |
David Clark | |
Chief Financial Officer |
(1) | the Report fully complies with the requirements of Section 13(a) or 15(d), as applicable, of the Securities Exchange Act of 1934, as amended, and |
(2) | the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. |
/s/ Glenn Lurie | |
Glenn Lurie | |
Chief Executive Officer |
(1) | the Report fully complies with the requirements of Section 13(a) or 15(d), as applicable, of the Securities Exchange Act of 1934, as amended, and |
(2) | the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. |
/s/ David Clark | |
David Clark | |
Chief Financial Officer |
Document and Entity Information - shares |
9 Months Ended | |
---|---|---|
Sep. 30, 2018 |
Nov. 02, 2018 |
|
Document and Entity Information | ||
Entity Registrant Name | SYNCHRONOSS TECHNOLOGIES INC | |
Entity Central Index Key | 0001131554 | |
Document Type | 10-Q | |
Document Period End Date | Sep. 30, 2018 | |
Amendment Flag | false | |
Current Fiscal Year End Date | --12-31 | |
Entity Current Reporting Status | Yes | |
Entity Filer Category | Accelerated Filer | |
Entity Small Business | false | |
Entity Emerging Growth Company | false | |
Entity Common Stock, Shares Outstanding (in shares) | 42,474,351 | |
Document Fiscal Year Focus | 2018 | |
Document Fiscal Period Focus | Q3 |
CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited) (Parenthetical) - USD ($) $ in Thousands |
Sep. 30, 2018 |
Dec. 31, 2017 |
---|---|---|
Statement of Financial Position [Abstract] | ||
Accounts receivable, allowance for doubtful accounts (in dollars) | $ 3,492 | $ 3,107 |
Preferred stock, par value (in dollars per share) | $ 0.0001 | $ 0.0001 |
Preferred stock, shares authorized (shares) | 10,000,000 | 10,000,000 |
Preferred stock, shares issued (shares) | 195,000 | 0 |
Preferred stock, shares outstanding (shares) | 195,000 | 0 |
Common stock, par value (in dollars per share) | $ 0.0001 | $ 0.0001 |
Common stock, shares authorized (shares) | 100,000,000 | 100,000,000 |
Common stock, shares issued (shares) | 49,817,000 | 52,024,000 |
Common stock, shares outstanding (shares) | 42,655,000 | 46,965,000 |
Treasury stock, shares (shares) | 7,162,000 | 5,059,000 |
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) - USD ($) shares in Thousands, $ in Thousands |
3 Months Ended | 9 Months Ended | |||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Sep. 30, 2018 |
Sep. 30, 2017 |
Sep. 30, 2018 |
Sep. 30, 2017 |
||||||||||
Income Statement [Abstract] | |||||||||||||
Net revenues | $ 83,286 | $ 91,015 | $ 243,737 | $ 296,102 | |||||||||
Costs and expenses: | |||||||||||||
Cost of revenues | [1] | 43,714 | 45,576 | 127,788 | 139,386 | ||||||||
Research and development | 18,684 | 20,926 | 59,789 | 67,234 | |||||||||
Selling, general and administrative | 27,320 | 34,881 | 99,368 | 103,049 | |||||||||
Restructuring charges | 4,539 | 2,312 | 8,425 | 11,715 | |||||||||
Depreciation and amortization | 23,658 | 23,459 | 70,330 | 71,098 | |||||||||
Total costs and expenses | 117,915 | 127,154 | 365,700 | 392,482 | |||||||||
Loss from continuing operations | (34,629) | (36,139) | (121,963) | (96,380) | |||||||||
Interest income | 203 | 3,274 | 7,518 | 9,157 | |||||||||
Interest expense | (1,370) | (25,555) | (3,935) | (48,016) | |||||||||
Other (expense) income, net | (13,439) | (256) | (9,180) | 2,374 | |||||||||
Equity method investment income | 283 | 645 | 71 | 1,626 | |||||||||
Loss from continuing operations, before taxes | (48,952) | (58,031) | (127,489) | (131,239) | |||||||||
Benefit for income taxes | 2,308 | 12,825 | 1,604 | 17,973 | |||||||||
Net loss from continuing operations | (46,644) | (45,206) | (125,885) | (113,266) | |||||||||
Net loss from discontinued operations, net of tax | [2] | 0 | 8,842 | 0 | [3] | (14,067) | [3] | ||||||
Net loss | (46,644) | (36,364) | (125,885) | (127,333) | |||||||||
Net (income) loss attributable to redeemable noncontrolling interests | (422) | 1,276 | 2,122 | 6,980 | |||||||||
Preferred stock dividend | (7,463) | 0 | (18,076) | 0 | |||||||||
Net loss attributable to Synchronoss | $ (54,529) | $ (35,088) | $ (141,839) | $ (120,353) | |||||||||
Basic: | |||||||||||||
Continuing operations (usd per share) | $ (1.38) | $ (0.98) | $ (3.51) | $ (2.38) | |||||||||
Discontinued operations (usd per share) | [2] | 0.00 | 0.20 | 0.00 | (0.32) | ||||||||
Basic (usd per share) | (1.38) | (0.78) | (3.51) | (2.70) | |||||||||
Diluted: | |||||||||||||
Continuing operations (usd per share) | (1.38) | (0.98) | (3.51) | (2.38) | |||||||||
Discontinued operations (usd per share) | [2] | 0.00 | 0.20 | 0.00 | (0.32) | ||||||||
Diluted (usd per share) | $ (1.38) | $ (0.78) | $ (3.51) | $ (2.70) | |||||||||
Weighted-average common shares outstanding: | |||||||||||||
Basic (in shares) | 39,612 | 44,893 | 40,405 | 44,576 | |||||||||
Diluted (in shares) | 39,612 | 44,893 | 40,405 | 44,576 | |||||||||
|
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE (LOSS) (Unaudited) Statement - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2018 |
Sep. 30, 2017 |
Sep. 30, 2018 |
Sep. 30, 2017 |
|
Statement of Comprehensive Income [Abstract] | ||||
Net loss | $ (46,644) | $ (36,364) | $ (125,885) | $ (127,333) |
Other comprehensive income, net of tax: | ||||
Foreign currency translation adjustments | (1,544) | 4,631 | (6,529) | 17,003 |
Unrealized loss on available for sale securities | (3) | (7) | (52) | 20 |
Net (loss) income on intra-entity foreign currency transactions | (72) | 932 | (603) | 1,940 |
Total comprehensive income | (1,619) | 5,556 | (7,184) | 18,963 |
Comprehensive loss | (48,263) | (30,808) | (133,069) | (108,370) |
Comprehensive (income) loss attributable to redeemable noncontrolling interests | (422) | 1,276 | 2,122 | 6,980 |
Comprehensive loss attributable to Synchronoss | $ (48,685) | $ (29,532) | $ (130,947) | $ (101,390) |
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) - USD ($) shares in Thousands, $ in Thousands |
9 Months Ended | ||||||
---|---|---|---|---|---|---|---|
Sep. 30, 2018 |
Sep. 30, 2017 |
||||||
Operating activities: | |||||||
Net loss from continuing operations | $ (125,885) | $ (113,266) | |||||
Income from discontinued operations, net of taxes | [1],[2] | 0 | (14,067) | ||||
Adjustments to reconcile Net Loss to net cash used in operating activities: | |||||||
Depreciation and amortization expense | 70,330 | 71,098 | |||||
Change in fair value of financial instruments | (3,849) | 0 | |||||
Amortization of debt issuance costs | 1,060 | 12,523 | |||||
Accrued PIK interest | (7,037) | (8,805) | |||||
Allowance for loan losses | 18,225 | 0 | |||||
Loss (earnings) from equity method investments | (71) | (1,626) | |||||
Loss (Gain) on disposals | 277 | (4,947) | |||||
Discontinued operations non-cash and working capital adjustments | [2] | 0 | 68,377 | ||||
Amortization of bond premium | 75 | 219 | |||||
Deferred income taxes | (1,648) | (8,937) | |||||
Stock-based compensation | 22,040 | 14,427 | |||||
Changes in operating assets and liabilities: | |||||||
Accounts receivable, net of allowance for doubtful accounts | 28,789 | 24,029 | |||||
Prepaid expenses and other current assets | (12,844) | (29,143) | |||||
Other assets | 947 | 2,768 | |||||
Accounts payable | 8,195 | (2,294) | |||||
Accrued expenses | (24,539) | (16,775) | |||||
Other liabilities | (3,886) | 594 | |||||
Deferred revenues | (30,841) | 4,732 | |||||
Net cash used in operating activities | (60,662) | (1,093) | |||||
Investing activities: | |||||||
Purchases of fixed assets | (8,565) | (10,315) | |||||
Purchases of intangible assets and capitalized software | (11,012) | (7,848) | |||||
Proceeds from the sale of SpeechCycle | 0 | 13,500 | |||||
Purchases of marketable securities available for sale | (15,784) | (219) | |||||
Maturity of marketable securities available for sale | 3,050 | 10,856 | |||||
Equity investment distributions | 0 | 608 | |||||
Investing in discontinued operations | [2] | 0 | (11,429) | ||||
Investment in note receivable | 0 | (6,187) | |||||
Business acquired, net of cash | (9,734) | (815,008) | |||||
Net cash used in investing activities | (42,045) | (826,042) | |||||
Financing activities: | |||||||
Share-based compensation-related proceeds, net of taxes paid on withholding shares | 0 | 2,460 | |||||
Taxes paid on withholding shares | 0 | (410) | |||||
Proceeds from issuance of long term debt | 0 | 900,000 | |||||
Repayment of long term debt | 0 | (4,500) | |||||
Repayment of revolving line of credit | 0 | (29,000) | |||||
Proceeds from the sale of treasury stock in connection with an employee stock purchase plan | 0 | 1,047 | |||||
Proceeds from issuance of preferred stock | 86,220 | 0 | |||||
Payments on capital obligations | (1,018) | (2,244) | |||||
Net cash provided by financing activities | 85,202 | 826,998 | |||||
Effect of exchange rate changes on cash | (1,805) | 4,938 | |||||
Net decrease in cash, restricted cash and cash equivalents | (19,310) | 4,801 | |||||
Cash, restricted cash and cash equivalents, beginning of period | 246,125 | 211,433 | |||||
Cash, restricted cash and cash equivalents, end of period | $ 226,815 | $ 216,234 | |||||
Supplemental disclosures of non-cash investing and financing activities: | |||||||
Issuance of common stock in connection with Intralinks acquisition | 0 | 4,700 | |||||
Total cash, cash equivalents and restricted cash | |||||||
Total cash, cash equivalents and restricted cash | $ 246,125 | $ 211,433 | |||||
Revolving Facility | |||||||
Financing activities: | |||||||
Payments of debt issuance costs | 0 | (3,692) | |||||
Amendment | |||||||
Financing activities: | |||||||
Payments of debt issuance costs | 0 | (16,776) | |||||
Long-term Debt | |||||||
Financing activities: | |||||||
Payments of debt issuance costs | $ 0 | $ (19,887) | |||||
|
Description of Business |
9 Months Ended |
---|---|
Sep. 30, 2018 | |
Description of Business | |
Description of Business | Description of Business General Synchronoss Technologies, Inc. (“Synchronoss” or the “Company”) is a global software and services company that provides essential technologies for the mobile transformation of business. The Company’s portfolio, contains offerings such as personal cloud, secure-mobility, identity management, digital transformation and scalable messaging platforms, products and solutions. These essential technologies create a better way of delivering the transformative mobile experiences that our customers need to help them stay ahead of the curve in competition, innovation, productivity, growth and operational efficiency. Synchronoss’ products and platforms are designed to be carrier-grade, flexible and scalable, enabling multiple converged communication services to be managed across a range of distribution channels including e-commerce, m-commerce, telesales, customer stores, indirect and other retail outlets. This business model allows the Company to meet the rapidly changing converged services and connected devices offered by their customers. Synchronoss’ products, platforms and solutions enable its customers to acquire, retain and service subscribers and employees quickly, reliably and cost-effectively with white label and custom-branded solutions. Synchronoss’ customers can simplify the processes associated with managing the customer experience for procuring, activating, connecting, backing-up, synchronizing and sharing/collaboration with connected devices and contents from these devices and associated services. The extensibility, scalability, reliability and relevance of the Company’s platforms enable new revenue streams and retention opportunities for their customers through new subscriber acquisitions, sale of new devices, accessories and new value-added service offerings in the Cloud. By using the Company’s technologies, Synchronoss’ customers can optimize their cost of operations while enhancing their customer experience. The Company currently operates in and markets its solutions and services directly through its sales organizations in the United States, Canada and Latin America (collectively, the “Americas”); Europe, Middle East and Africa (collectively, “EMEA”); and Australia, Japan, Southeast Asia and China (collectively, “APAC”). Service Providers, Retailers, OEMs, Re-sellers and Service Integrators The Company’s products and platforms provide end-to-end seamless integration between customer-facing channels/applications, communication services, or devices and “back-office” infrastructure-related systems and processes. Synchronoss’ customers rely on these solutions and technology to automate the process of activation and content and settings management for their subscribers’ devices while delivering additional communication services. Synchronoss’ portfolio includes: cloud-based sync, backup, storage and content engagement capabilities, broadband connectivity solutions, analytics, white label messaging, identity/access management that enable communications service providers (“CSPs”), cable operators/multi-services operators (“MSOs”) and original equipment manufacturers (“OEMs”) with embedded connectivity (e.g. smartphones, laptops, tablets and mobile internet devices (“MIDs”) such as automobiles, wearables for personal health and wellness, and connected homes), multi-channel retailers, as well as other customers to accelerate and monetize value-add services for secure and broadband networks and connected devices. |
Basis of Presentation and Consolidation |
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Organization, Consolidation and Presentation of Financial Statements [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Basis of Presentation and Consolidation | Basis of Presentation and Consolidation Basis of Presentation and Consolidation The accompanying interim unaudited condensed consolidated financial statements have been prepared by Synchronoss and in the opinion of management, include all adjustments necessary for a fair presentation of the Company’s financial position, results of operations and cash flows for the interim periods. They do not include all of the information and footnotes required by U.S. generally accepted accounting principles (“GAAP”) for complete financial statements and should be read in conjunction with the Company’s audited consolidated financial statements and related notes included in the Company’s Annual Report on Form 10-K/A for the year ended December 31, 2017. The results of operations for the three and nine months ended September 30, 2018 are not necessarily indicative of the results to be expected for the year ending December 31, 2018. The condensed consolidated financial statements include the accounts of the Company, its wholly-owned subsidiaries and variable interest entities (“VIE”) in which the Company is the primary beneficiary and entities in which the Company has a controlling interest. Investments in less than majority-owned companies in which the Company does not have a controlling interest, but does have significant influence, are accounted for as equity method investments. Investments in less than majority-owned companies in which the Company does not have the ability to exert significant influence over the operating and financial policies of the investee are accounted for using the cost method. All material intercompany transactions and accounts are eliminated in consolidation. Certain prior year amounts have been reclassified to conform to the current year's presentation. For further information about the Company’s basis of presentation and consolidation or its significant accounting policies, refer to the consolidated financial statements and footnotes thereto included in the Company’s Annual Report on Form 10-K/A for the year ended December 31, 2017. Restricted Cash Restricted cash includes amounts to various deposits, escrows and other cash collateral that are restricted by contractual obligation. During the nine months ended September 30, 2018, $87.3 million was released from escrow on notification that Siris Capital Group, LLC (“Siris”) would exercise its option on the issuance of preferred stock. These funds were restricted from the proceeds received upon the sale of Intralinks, through the date of issuance of preferred stock. Remaining amounts were primarily attributed to cash held in transit, and operating cash held by the Company’s consolidated joint venture Zentry, LLC (“Zentry”), which cannot be used to fulfill the obligations of the Company as a whole. Out of Period Adjustments The Company as a part of implementation of more comprehensive reconciliation controls and other ongoing remediation efforts related to the material weaknesses described in Part II, Item 9A of its Annual Report on Form 10-K/A for the year ended December 31, 2017, identified certain adjustments that were not recorded in its financial statements for March 31, 2018 and June 30, 2018 quarterly periods. Specifically, the Company identified an adjustment to cost of revenues, which resulted in reporting an understatement for the three-month period ended March 31, 2018, of approximately $4.9 million, as well as other immaterial adjustments. The Company, considered the effects of all adjustments identified on its current period and prior period financial statements and determined that the adjustments did not have a material effect on its financial statements presented for the nine-month period ended September 30, 2018. Accordingly, the Company recorded this material adjustment of approximately $4.9 million as an out-of-period adjustment to cost of revenues in the three-month period ended September 30, 2018. Recently Issued Accounting Standards Recent accounting pronouncements adopted
Standards issued not yet adopted
In May 2014, the FASB issued a new accounting standard related to revenue recognition, ASU 2014-09, “Revenue from Contracts with Customers,” (“Topic 606”). The new standard supersedes the existing revenue recognition requirements under U.S. GAAP and requires entities to recognize revenue when they transfer control of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled to in exchange for those goods or services. It also requires increased disclosures regarding the nature, amount, timing, and uncertainty of revenues and cash flows arising from contracts with customers. On January 1, 2018, the Company adopted Topic 606 applying the modified retrospective method to all contracts that were not completed as of January 1, 2018. Results for reporting periods beginning after January 1, 2018 are presented under Topic 606, while prior period amounts are not adjusted and continue to be reported under the accounting standards in effect for the prior period. The Company recorded a net reduction to opening retained earnings of approximately $10.1 million as of January 1, 2018 due to the cumulative impact of adopting Topic 606. The impact to revenues for the nine months ended September 30, 2018 was an increase of $31.9 million as a result of adopting Topic 606. The impact to costs was not material. The impact of adoption primarily relates to (1) the delayed pattern of recognition under Topic 606 for certain professional services revenue when such professional services involve the customization of features and functionality for subscription services customers, and (2) the earlier pattern of recognition under Topic 606 for license revenue when the Company provides hosting services for on-premise license customers. In the case of professional services that involve the customization of features and functionality for subscription services, under historic accounting policies the professional services were considered to have standalone value, and as a result were recognized as the services were performed. Under Topic 606, such professional services are not considered to be a distinct performance obligation within the context of the subscription services contract, and as such each month’s customization services revenue is recognized over the shorter of the estimated remaining life of the subscription software (typically three years) or the remaining term of the subscription services contract. In the case of license contracts sold in association with hosting, under historic accounting policies the license revenue was recognized over the hosting term due to the lack of vendor specific objective evidence (“VSOE”) of fair value for the hosting services. Under Topic 606, VSOE is no longer required in order separate revenue between the license and the hosting elements, and the license revenue is generally recognized upon delivery of the software based on the relative allocation of the contract price based on the established standalone selling price (“SSP”). Additional impacts of adoption include (1) in certain cases changes in the amount allocated to the various performance obligations in accordance with the relative standalone selling price method required by Topic 606 compared to the amount allocated to the various elements in accordance with the residual method or the relative selling price method, as applicable, under historic accounting policies, (2) the capitalization and subsequent amortization of certain sales commissions as costs to obtain a contract under ASC 340-40, whereas under historic accounting policies all such amounts were expensed as incurred (3) the timing and amount of revenue recognition for certain sales contracts that are considered to involve variable consideration under Topic 606, but were considered to either not be fixed or determinable or to involve contingent revenue features under historic accounting policies, (4) in certain limited cases, the accounting for discounted customer options to purchase future software or services as material rights under Topic 606, as well as (5) the income tax impact of the above items, as applicable. Changes in accounting policies as a result of adopting Topic 606 and nature of goods The following is a description of principal activities from which the Company generates revenue. Revenues are recognized when control of the promised goods or services are transferred to the Company’s customers, in an amount that reflects the consideration that the Company expects to receive in exchange for those goods or services. The Company generates all of its revenue from contracts with customers. Subscription and Transaction revenues consist of revenues derived from the processing of transactions through the Company’s service platforms, providing enterprise portal management services on a subscription basis and maintenance agreements on software licenses. The Company generates revenue from Subscription services from monthly active user fees, software as a service (“SaaS”) fees, hosting and storage fees, and fees for the related maintenance support for those services. In most cases, the subscription or transaction arrangement is a single performance obligation comprised of a series of distinct services that are substantially the same and that have the same pattern of transfer (i.e., distinct days of service). The Company applies a measure of progress (typically time-based) to any fixed consideration and allocates variable consideration to the distinct periods of service based on usage, under Topic 606 Section 10-25-14(b). When the Company does not allocate variable consideration to distinct periods of service, the total estimated transaction price is recognized ratably over the term of the contract, where the level of service provided to the customer does not vary significantly from one period to another. Transaction service arrangements include services such as processing equipment orders, new account set‑up and activation, number port requests, credit checks and inventory management. Transaction revenues are principally based on a contractual price per transaction and are recognized based on the number of transactions processed during each reporting period. Revenues are recorded based on the total number of transactions processed at the applicable price established in the relevant contract. Many of the Company’s contracts guarantee minimum volume transactions from the customer. In these instances, if the customer’s total estimated transaction volume for the period is expected to be less than the contractual amount, the Company records revenues at the minimum guaranteed amount on a straight line based over the period covered by the minimum. Set‑up fees for transactional service arrangements are deferred until set up activities are completed and recognized on a straight‑line basis over remaining expected customer relationship period. Revenues are presented net of discounts, which are volume level driven. In accordance with Topic 606 Section 10-50-20, any credits due to customers, which are generally performance driven and based upon system availability or response times to incidents, are determined and accounted for in the period in which the services are provided. The Company recognizes revenues from support and maintenance performance obligations over the service delivery period. The Company’s software licenses typically provide for a perpetual or term right to use the Company’s software. The Company has concluded that in most cases its software license is distinct as the customer can benefit from the software on its own. Software revenue is typically recognized when the software is delivered to the customer. Contracts that include software customization or specified upgrades may result in the combination of the customization services with the software license as one performance obligation. The Company does not have a history of returns, or refunds of is software licenses, however, in limited instances, the Company may constrain consideration to high-risk customers, until collection is resolved. The Company’s professional services include software development and customization. The contracts generally include project deliverables specified by each customer. The performance obligations in the agreements are generally combined into one deliverable and generally result in the transfer of control over time. The underlying deliverable is owned and controlled by the customer and does not create an asset with an alternative use to us. The Company recognizes revenue on fixed fee contracts on the proportion of labor hours expended to the total hours expected to complete the contract performance obligation. Most of the Company’s contracts with customers contain multiple performance obligations which generally include either 1) a perpetual software license with support and maintenance and sometimes a hosting agreement or 2) a term SaaS agreement, in many cases these are sold along with professional services. For these contracts, the Company accounts for individual goods and services separately if they are distinct performance obligations. This often requires significant judgment based upon knowledge of the products, the solution provided and the structure of the sales contract. In SaaS agreements, the Company provides a service to the customer which combines the software functionality, maintenance and hosting into a single performance obligation when the customer doesn’t have the ability to take possession of the underlying software license. The Company may also sell the same three goods and services in a contract, but there may be three performance obligations, where the customer has the right to take possession of the software license without significant penalty. The transaction price is allocated to the separate performance obligations on a relative standalone selling price basis. The Company estimates standalone selling prices of software based on observable inputs of past transactions to similarly situated customers. When such observable data is not available for certain software licenses because there is a limited number of transactions or prices are highly variable, the Company will estimate the standalone selling price using the residual approach. Standalone selling prices of services are typically determined based on observable transactions when these services are sold on a standalone basis to similarly situated customers or estimated using a cost plus margin approach. Estimating the transaction price of variable consideration including the variable quantity subscription or transaction contracts in a multiple performance obligation arrangement requires significant judgment. The Company generally estimates this variable consideration at the most likely amount to which the Company expects to be entitled and in certain cases based on the expected value. The Company includes estimated amounts in the transaction price to the extent it is probable that a significant reversal of cumulative revenue recognized will not occur when the uncertainty associated with the variable consideration is resolved. The Company’s estimates of variable consideration and determination of whether to include estimated amounts in the transaction price are based largely on an assessment of the Company’s anticipated performance and all information (historical, current and forecasted) that is reasonably available to us. The Company reviews and update these estimates on a quarterly basis. The Company’s typical performance obligations include the following:
Disaggregation of revenue The Company disaggregates revenue from contracts with customers into the nature of the products and services and geographical regions. The Company’s geographic regions are the Americas, EMEA, and APAC. The majority of the Company’s revenue is from the Technology, Media and Telecom (collectively, “TMT”) sector.
Trade Accounts Receivable and Contract balances The Company classifies its right to consideration in exchange for deliverables as either a receivable or a contract asset. A receivable is a right to consideration that is unconditional (i.e. only the passage of time is required before payment is due). For example, the Company recognizes a receivable for revenues related to its time and materials and transaction or volume-based contracts. The Company presents such receivables in Trade accounts receivable, net in its consolidated statements of financial position at their net estimated realizable value. The Company maintains an allowance for doubtful accounts to provide for the estimated amount of receivables that may not be collected. The allowance is based upon an assessment of customer creditworthiness, historical payment experience, the age of outstanding receivables and other applicable factors. A contract asset is a right to consideration that is conditional upon factors other than the passage of time. For example, the Company would record a contract asset if it records revenue on a professional services engagement but are not entitled to bill until the Company achieves specified milestones. Contract asset balance at September 30, 2018 is $3.6 million. Amounts collected in advance of services being provided are accounted for as contract liabilities, which are presented as deferred revenue on the accompanying balance sheet and are realized with the associated revenue recognized under the contract. Nearly all of the Company's contract liabilities balance is related to services revenue, primarily subscription services contracts. The Company’s contract assets and liabilities are reported in a net position on a customer basis at the end of each reporting period. Significant changes in the contract liabilities balance (current and noncurrent) during the period are as follows (in thousands):
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Revenues recognized during the nine months ended September 30, 2018 for performance obligations satisfied or partially satisfied in previous periods were immaterial. Contract acquisition costs In connection with the adoption of Topic 606 and the related cost accounting guidance under Accounting Standards Codification (“ASC”) 340, the Company is required to capitalize certain contract acquisition costs consisting primarily of commissions and bonuses paid when contracts are signed. The Company adopted Topic 606 on January 1, 2018 and capitalized $0.7 million in contract acquisition costs related to contracts that were not completed. For contracts that have a duration of less than one year, the Company follows a Topic 606 practical expedient and expenses these costs over the estimated customer life, because it does not pay commissions upon renewals that are commensurate with the initial contract. In the nine months ended September 30, 2018, the amount of amortization was immaterial and there was no impairment loss in relation to costs capitalized. Contract Fulfillment Costs Under ASC 340-40, the Company evaluates whether or not it should capitalize the costs of fulfilling a contract. Such costs would be capitalized when they are not within the scope of other standards and: (1) are directly related to a contract; (2) generate or enhance resources that will be used to satisfy performance obligations; and (3) are expected to be recovered. No such costs were capitalized as of September 30, 2018. Transaction price allocated to the remaining performance obligations Topic 606 requires that the Company disclose the aggregate amount of transaction price that is allocated to performance obligations that have not yet been satisfied as of September 30, 2018. The Company has elected not to disclose transaction price allocated to remaining performance obligations for:
Many of the Company’s performance obligations meet one or more of these exemptions. Specifically, the Company has excluded the following from our remaining performance obligations, all of which will be resolved in the period in which amounts are known: •consideration for future transactions, above any contractual minimums •consideration for success-based transactions contingent on third party data •credits for failure to meet future service level requirements As of September 30, 2018, the aggregate amount of transaction price allocated to remaining performance obligations, other than those meeting the exclusion criteria above, was $401.9 million, of which approximately 87.4% is expected to be recognized as revenues within 2 years, and the remainder thereafter. Estimates of revenue expected to be recognized in future periods also exclude unexercised customer options to purchase services that do not represent material rights to the customer. Customer options that do not represent a material right are only accounted for in accordance with Topic 606 when the customer exercises its option to purchase additional goods or services. In accordance with Topic 606, the disclosure of the impact of adoption to the Company’s Condensed Consolidated Balance Sheet and Condensed Consolidated Statement of Operations was as follows:
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The table below shows Topic 606 Retained earnings reconciliation:
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Acquisitions and Divestitures |
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Business Combinations [Abstract] | |
Acquisitions and Divestitures | Acquisitions and Divestitures Acquisition-Related Costs Total acquisition-related costs recognized during the nine months ended September 30, 2018 and 2017 including transaction costs such as legal, accounting, valuation and other professional services, were $1.9 million and $13.4 million, respectively, and are included in selling, general and administrative expense in the Condensed Consolidated Statements of Operations. Acquisition of honeybee In May 2018, the Company completed the acquisition of the honeybee software business (“honeybee”), a provider of digital solutions targeted at optimizing the customer experience from Dixons Carphone plc which offers a digital transformation platform that makes it easier for companies to design and launch omni-channel customer journeys. Consideration paid by the Company consisted of approximately $9.7 million in cash at the time of closing and deferred consideration of $8.7 million to be paid over the next three years. As of September 30, 2018, the preliminary opening balance sheet reflected intangible assets and net working capital in the amount of $8.0 million and $10.4 million respectively. The Company is currently evaluating the impact of any changes in net working capital balances. Customers of the honeybee platform, such as mobile operators and other communication service providers, can rapidly create and adapt digital sales processes for contact centers, retail stores, and online channels. This helps reduce complexity for the end-user as well as internal employees, while delivering a single customer experience at all touch-points and improved business outcomes such as reduced cost and increased revenue. The acquisition did not have a material impact on the Company’s Condensed Consolidated Statements of Operations. Divestitures 2018 Transactions SNCR, LLC On November 16, 2015, the Company formed a venture with Goldman Sachs (“Goldman”), referred to as SNCR, LLC in order to develop and deploy the Synchronoss Secure Mobility Suite, which would include integration of Synchronoss Workspace platform with Goldman's internally developed mobile security intellectual property to help provide a safe, secure mobile device environment that also effectively supports bring your own device (“BYOD”). During the fourth quarter of 2017, the Company entered into a termination agreement with Goldman to terminate the venture, and provide a perpetual, irrevocable license of the venture’s intellectual property for use in Goldman’s back-office. As part of the agreement, the Company was relieved of any future obligations to support Goldman’s use of the software. The venture formally ended in the first quarter of 2018 resulting in the elimination of the Company’s associated noncontrolling interest balance and an increase to additional paid in capital balance of $12.8 million on the Company’s Condensed Consolidated Balance Sheets. 2017 Transactions Intralinks On January 19, 2017, the Company purchased all outstanding shares of Intralinks Holdings, Inc. (“Intralinks”) for approximately $815.0 million, net of cash acquired. In connection with the acquisition, the Company entered into a $900.0 million senior secured term loan (the “2017 Term Facility”). Intralinks is a global technology provider of SaaS solutions for secure enterprise content collaboration within and among organizations. Intralinks’ cloud-based solutions enable organizations to securely manage, control, track, search, exchange and collaborate on sensitive information inside and outside the firewall. The total purchase price consideration consisted of the repayment of existing Intralinks indebtedness, and non-cash consideration for services rendered on unvested Intralinks equity awards that were converted into the Company equity awards on the acquisition date. The acquisition was primarily funded from the proceeds of the $900.0 million credit agreement. On June 23, 2017, the Company received a non-binding indication of interest from Siris to acquire the Company. In light of the indication of interest, the Board of Directors decided to explore a broad range of strategic alternatives that would have the potential to unlock shareholder value. In October 2017, the Company concluded its review of strategic alternatives and determined that the best approach for the Company to achieve the goal of maximizing shareholder value was to focus on its core TMT business, divest non-core assets and improve its balance sheet strength, cash position and potential profitability. Under the terms of certain definitive agreements, investment funds affiliated with Siris acquired all of the stock of the Company’s wholly-owned subsidiary, Intralinks, for consideration of cash and an investment in convertible preferred equity of the Company. On October 17, 2017, the Company announced its entry into definitive agreements for the sale of Intralinks, and the right to sell a newly created series of preferred stock of Synchronoss to affiliates of Siris. Subject to the terms and conditions set forth in a share purchase agreement, dated as of October 17, 2017 (the “Share Purchase Agreement”), among Synchronoss, Intralinks and Impala Private Holdings II, LLC, an affiliate of Siris (“Impala”), Impala agreed to acquire from the Company, the issued and outstanding shares of common stock of Intralinks for approximately $977.3 million in cash plus a potential contingent payment of up to $25.0 million, subject to an adjustment for cash, debt and working capital (the “Intralinks Transaction”). The total amount of funds used to complete the Intralinks Transaction and related transactions and pay related fees and expenses was approximately $1.0 billion, which was funded through a combination of equity and debt financing obtained by Impala. Subsequently, on November 14, 2017, the Company sold Intralinks to Impala, for approximately $991.0 million in cash, subject to post-closing adjustments for changes in cash, debt and working capital. As a result of the sale, the Company prepaid the remaining balance on the 2017 Term Facility. If, in the future, Impala receives net cash proceeds in excess of $440.0 million from any sale of equity or assets of Intralinks, or a dividend or distribution in respect of the shares of Intralinks, then Impala is required to pay the Company up to an additional $25.0 million in cash or publicly traded securities. Immediately following the consummation of the Intralinks Transaction, the Company paid to Impala $5.0 million as partial reimbursement of the out-of-pocket fees and expenses incurred by Impala, Siris and their respective affiliates in connection with the execution of the Share Purchase Agreement and the Intralinks Transaction. Amounts reimbursed were recorded as a reduction in the gain on sale. The operations of Intralinks were presented as discontinued operations in 2017. SpeechCycle On February 1, 2017, the Company completed a divestiture of its SpeechCycle business, to an unrelated third party, for consideration of $13.5 million. As part of the divestiture, the Company entered into a one-year transition services agreement with the acquirer to support various indirect activities such as customer software support, technical support services and maintenance and support services. These services were terminated during the first quarter of 2018. The Company recorded a pre-tax gain of $4.9 million as a result of the divestiture which is included in other income (expense), net in the Condensed Consolidated Statement of Operations. |
Fair Value Measurements of Assets and Liabilities |
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Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value Measurements of Assets and Liabilities | Fair Value Measurements of Assets and Liabilities In accordance with accounting principles generally accepted in the United States, fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. A three-level hierarchy prioritizes the inputs used to measure fair value as follows:
The following is a summary of assets, liabilities and redeemable noncontrolling interests and their related classifications under the fair value hierarchy:
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Available-for-Sale Securities The Company utilizes the market approach to measure fair value for its financial assets. The market approach uses prices and other relevant information generated by market transactions involving identical or comparable assets. The Company’s marketable securities investments classified as Level 2 primarily utilize broker quotes in a non-active market for valuation of these securities. No transfers of assets between Level 1, Level 2 and Level 3 of the fair value measurement hierarchy occurred during the nine months ended September 30, 2018. Unrealized gains and losses are reported as a component of accumulated other comprehensive income in stockholders’ equity. There were no sales of marketable securities during the nine months ended September 30, 2018 and 2017. The cost of securities sold is based on the specific identification method. The Company evaluates investments with unrealized losses to determine if the losses are other than temporary. The Company has determined that the gross unrealized losses at September 30, 2018 and 2017 are temporary. In making this determination, the Company considered the financial condition, credit ratings and near-term prospects of the issuers, the underlying collateral of the investments, and the magnitude of the losses as compared to the cost and the length of time the investments have been in an unrealized loss position. Additionally, while the Company classifies the securities as available for sale, the Company does not currently intend to sell such investments and it is more likely than not to recover the carrying value prior to being required to sell such investments. At September 30, 2018 and December 31, 2017, the estimated fair value of investments classified as available-for-sale, were as follows:
As of September 30, 2018, there were no accumulated unrealized losses related to investments that have been in a continuous unrealized loss position for 12 months or longer. The aggregate related fair value of investment with unrealized losses was less than $14.8 million.
As of December 31, 2017, the aggregate related fair value of investment with unrealized losses was approximately $2.9 million. The contractual maturities of marketable debt securities were as follows:
Redeemable Noncontrolling Interests The redeemable noncontrolling interests recorded at fair value are put arrangements held by the noncontrolling interests in certain of the Company’s joint ventures. The Company recognizes changes in the redemption value immediately as they occur and adjusts the carrying value of the noncontrolling interest to the greater of the estimated redemption value, which approximates fair value, at the end of each reporting period or the initial carrying amount. The fair value of the redeemable noncontrolling interests was estimated by applying an income approach using a discounted cash flow analysis. This fair value measurement is based on significant inputs that are not observable in the market and thus represents a Level 3 measurement. Significant changes in the underlying assumptions used to value the redeemable noncontrolling interests could significantly increase or decrease the fair value estimates recorded in the Condensed Consolidated Balance Sheets. The changes in fair value of the Company’s Level 3 redeemable noncontrolling interests during the nine months ended September 30, 2018 were as follows:
Fair Value of PIK Note The fair value of the PIK note was estimated by applying an income approach using a discounted cash flow analysis to derive the fair value of the STIH’s interest in STIN, the collateral supporting the PIK Note. Additionally, the Company considered synthetic credit ratings of comparable notes in the market. This fair value measurement is based on significant inputs that are not observable in the market and thus represents a Level 3 measurement. Significant changes in the underlying assumptions used to value the PIK note, for impairment, such as discount rate, credit rating, and growth rates could significantly increase or decrease the fair value estimates recorded in the Condensed Consolidated Balance Sheets. For further details see Note 5 - Investments in Affiliates and Related Transactions. |
Investments in Affiliates and Related Transactions |
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Equity Method Investments and Joint Ventures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Investments in Affiliates and Related Transactions | Investments in Affiliates and Related Transactions Sequential Technology International, LLC The Company includes investments, which are accounted for using the equity method, under the caption equity method investment on the Company’s Condensed Consolidated Balance Sheets. As of September 30, 2018, the Company’s investments in equity interests was comprised of $30.7 million related to a 30% equity interest in Sequential Technology International, LLC (“STIN”). Sequential Technology International Holdings LLC (“STIH”), which holds a 70% equity interest in STIN, also holds a senior note issued by a Third Party (“Third-Party Note” or “Seller Note”). The Third-Party Note is secured against STIH’s equity interest in STIN and is senior to the Company’s equity interest in STIN. Under the arrangement, cash dividends due to the Company from STIN, other than required cash distributions made for tax purposes, are deferred until the Third-Party Note is paid in full. As of September 30, 2018, all the amounts under the Third-Party Note are paid in full. Under the terms of a paid-in-kind purchase money note (the “PIK Note”) issued to the Company by STIH, deferred distributions are added to the amounts outstanding under the PIK Note. In connection with the divestiture of the exception handling business of the Company, Synchronoss entered into a three-year Cloud Telephony and Support services agreement to grant STIN access to certain Synchronoss software and private branch exchange systems to facilitate exception handling operations required to support STIN customers. For the three months ended September 30, 2018 and 2017, the Company recognized $6.4 million and $8.3 million, respectively, in revenue related to Cloud Telephony and Support services, and $0.9 million and $1.0 million, respectively, in revenue related to all other services. For the nine months ended September 30, 2018 and 2017, the Company recognized $12.8 million and $12.5 million, respectively in revenue related to Cloud Telephony and Support services, and $8.2 million and $1.9 million, respectively, in revenue related to all other services. STIN - Selected financial data The following table displays certain key financial data pertaining to the operations of STIN for the three and nine months ended September 30, 2018:
PIK Note The following is a summary of the PIK Note related balances:
During the nine months ended September 30, 2018, STIN distributed approximately $3.3 million to the Company, which was recognized as reduction in the Company’s equity investment in STIN and a corresponding adjustment to increase the PIK Note. Amounts were used by STIH to facilitate accelerated payment on the Third-Party Note held by STIH. Amendment to PIK Note During the three months ended September 30, 2018, the Company entered into an amendment with STIH to modify the terms, of the PIK Note (“PIK Amendment”). The PIK Amendment modified the terms of the arrangement, lowering the interest rate from LIBOR plus 1100 basis points to a rate equal to the sum of LIBOR plus 300 basis points per annum. Additionally, the PIK Amendment provided relief on required payments, to allow STIH to continue its operations. Concurrent with the modification described above, STIH and the Company agreed to modify the liquidation preferences set forth in the PIK Note, which would allow for cash distributions, senior to the PIK Note, as amended by the PIK Amendment, in the amount of $24.0 million, which would be distributed evenly in the event of sale. The Company determined that the above modifications qualified as a troubled debt restructuring, due primarily to the following factors (i) STIN continues to experience declines in its business, deteriorating the overall EBITDA available to provide adequate payment for debt, (ii) the terms of the debt modification, and in combination with the preference payments agreed to in the operating agreement provided a return-of-capital claim senior to the debt, and waived the Company’s right to include such future distribution as a qualified distribution subject to PIK under the distribution note and (iii) the terms of the arrangement were significantly below market for which no consideration was granted to the Company. The troubled debt restructuring resulted in an impairment on the PIK Note, as amended by the PIK Amendment, in the amount of $18.2 million, as reflected in the table above. Subsequent to modification and based on the concessions made under the troubled debt restructuring, the Company determined that collectability beyond the impaired carrying value is no longer probable and will account the PIK Note, as amended by the PIK Amendment, on a modified cost recovery basis, recognizing into income, only those amounts collected above the impaired carrying value of $66.1 million. STIN affiliate balances The STIN affiliate balances and their classification in the Condensed Consolidated Balance Sheet as of September 30, 2018, were as follows:
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Debt Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Debt | Debt Total debt consists of the following:
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Convertible Senior Notes On August 12, 2014, the Company issued $230.0 million aggregate principal amount of its 0.75% Convertible Senior Notes due in 2019 (the “2019 Notes”). The 2019 Notes mature on August 15, 2019, and bear interest at a rate of 0.75% per annum payable semi-annually in arrears on February 15 and August 15 of each year. The Company accounted for the $230.0 million face value of the debt as a liability and capitalized approximately $7.1 million of financing fees, related to the issuance which are presented net of the face value of the 2019 Notes on the Condensed Consolidated Balance Sheets. The 2019 Notes are senior, unsecured obligations of the Company, and are convertible into shares of its common stock based on a conversion rate of 18.8072 shares per $1,000 principal amount of 2019 Notes which is equivalent to an initial conversion price of approximately $53.17 per share. The Company will satisfy any conversion of the 2019 Notes with shares of the Company’s common stock. The 2019 Notes are convertible at the note holders’ option prior to their maturity and if specified corporate transactions occur. The issue price of the 2019 Notes was equal to their face amount. Holders of the 2019 Notes who convert their notes in connection with a qualifying fundamental change, as defined in the related indenture, may be entitled to a make-whole premium in the form of an increase in the conversion rate. Additionally, following the occurrence of a fundamental change, holders may require that the Company repurchase some or all of the 2019 Notes for cash at a repurchase price equal to 100% of the principal amount of the notes being repurchased, plus accrued and unpaid interest, if any. As of September 30, 2018, none of these conditions existed with respect to the 2019 Notes. Included in the definition of a fundamental change is whether the Company’s common stock ceases to be listed or quoted on Nasdaq. In May 2018, trading of the Company’s common stock was suspended on Nasdaq, however, it was not delisted. On September 26, 2018, the Company received notice, that the Nasdaq Listing Qualifications Staff (the “Staff”) approved the listing of its common stock on Nasdaq. The result of this approval caused the suspension of trading in Company’s common stock on The Nasdaq Stock Market to be lifted. For further details see Note 14 - Subsequent Events Review. The 2019 Notes are the Company’s direct senior unsecured obligations and rank equal in right of payment to all of the Company’s existing and future unsecured and unsubordinated indebtedness. During the three and nine months ended September 30, 2018, interest expense for the Company’s 2019 Notes related to the contractual interest coupon was $0.4 million and $1.3 million, respectively. At September 30, 2018, the carrying amount of the liability was $228.8 million and the outstanding principal of the 2019 Notes was $230.0 million, with an effective interest rate of approximately 1.37%. The fair value of the 2019 Notes was $222.9 million at September 30, 2018. The fair value of the liability of the 2019 Notes was determined using a discounted cash flow model based on current market interest rates available to the Company. These inputs are corroborated by observable market data for similar liabilities and therefore classified within Level 2 of the fair-value hierarchy. The Company is required to meet all SEC filing requirements and deadlines to be compliant with the 2019 Notes. In the event that the Company does not meet the filing requirements, the Company will be in default under the 2019 Notes unless it elects to pay the noteholders additional interest of 0.25% up to 180 days from the date of the notice of default and 0.50% thereafter up to 360 days. The Company may agree to pay additional interest to the holders by notifying holders and the trustee within 90 days from the notice of default. If the Company decides to pay the additional interest but has not remedied its failure to meet all SEC filing requirements within 360 days from the notice of default, it will be in default. If the Company fails to elect to pay the additional interest, it will be in default if it does not remedy its failure to meet all SEC filing requirements within the 90 days from the notice of default. The Company received a notice of default from holders of more than 25% of the outstanding principal amount of the 2019 Notes on October 13, 2017. In accordance with the terms of the 2019 Notes, the Company elected to begin paying additional interest starting January 11, 2018 (the 90th day following the Company’s receipt of the notice of default). As a result of the Company regaining compliance with its SEC filing requirements, the Company was no longer required to pay the additional interest as of July 9, 2018. The Company was required to record a derivative related to this contingent interest as a liability and expense in its financial statements due to the late filings of the Company’s quarterly reports on Form 10-Q in 2017. At September 30, 2018, the recorded contingent interest derivative liability within accrued expenses was zero as a result of Company regaining compliance with its SEC filing requirements. 2019 Notes Notice On June 13, 2018, The Bank of New York Mellon, in its capacity as trustee (the “Trustee”) under the indenture dated as of August 12, 2014 (the “Indenture”) governing for the 2019 Notes, filed a verified complaint with the Court of Chancery of the State of Delaware, captioned The Bank of New York Mellon, as Indenture Trustee v. Synchronoss Technologies, Inc. (the “BNY Action”). The BNY Action complaint alleges that a “Fundamental Change” has occurred under the Indenture as a result of the Company’s Common Stock ceasing to be listed or quoted on Nasdaq and that an event of default under the Indenture has occurred as a result of the Company’s failure to provide a notice of such Fundamental Change which, if true, following notice from holders of more than 25% of the outstanding principal under the Notes would trigger the acceleration of the principal and interest outstanding under the 2019 Notes, which otherwise mature on August 15, 2019. On November 2018, the parties filed a stipulation of dismissal of the BNY Action. For further details, see Note 14 - Subsequent Events Review. On November 2, 2018, the Company retired $116.0 million of 2019 Notes as a part of settlement agreement entered into on November 1, 2018, among the Company, Indaba Capital Fund, L.P. (“Indaba”) and Westwood Management Corp. (“Westwood”) related to the BNY Action. For further details see Note 12 - Commitments and Contingencies. Interest expense The following table summarizes the Company’s interest expense:
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Accumulated Other Comprehensive Income/ (Loss) | Accumulated Other Comprehensive Income/ (Loss) The changes in accumulated other comprehensive (loss) during the nine months ended September 30, 2018, were as follows:
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Stockholders' Equity |
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Stockholders' Equity Note [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Stockholders' Equity | Stockholders’ Equity There were no significant changes to Company’s authorized capital stock and preferred stock during the three and nine months ended September 30, 2018. Common Stock Each holder of common stock is entitled to vote on all matters and is entitled to one vote for each share held. Dividends on common stock will be paid when, and if, declared by the Company’s Board of Directors. No dividends have ever been declared or paid by the Company. Preferred Stock There were no shares of preferred stock outstanding as of December 31, 2017. The Board of Directors is authorized to issue preferred shares and has the discretion to determine the rights, preferences, privileges and restrictions, including voting rights, dividend rights, conversion rights, redemption privileges and liquidation preferences of preferred stock. In accordance with the terms of the Share Purchase Agreement dated as of October 17, 2017 (the “PIPE Purchase Agreement”), with Silver Private Holdings I, LLC, an affiliate of Siris (“Silver”), on February 15, 2018, the Company issued to Silver 185,000 shares of its newly issued Series A Convertible Participating Perpetual Preferred Stock (the “Series A Preferred Stock”), par value $0.0001 per share, with an initial liquidation preference of $1,000 per share, in exchange for $97.7 million in cash and the transfer from Silver to the Company of the 5,994,667 shares of the Company’s common stock held by Silver (the “Preferred Transaction”). As of September 30, 2018, there were 195,181 shares of Series A Preferred Stock outstanding, including the initial issuance of 185,000 shares of Series A Preferred Stock and the issuance of 10,181 shares as preferred dividends. In accordance with the terms of the PIPE Purchase Agreement with Silver on February 15, 2018, the Company exercised its option to complete the Preferred Transaction. In connection with the issuance of the Series A Preferred Stock, the Company (i) filed the certificate of designations to its certificate of incorporation to establish the rights, preferences, privileges, qualifications, restrictions and limitations of the Series A Preferred Stock (the “Series A Certificate”) and (ii) entered into the Investor Rights Agreement setting forth certain registration, governance and preemptive rights of Silver with respect to Synchronoss. Pursuant to the PIPE Purchase Agreement, at the closing, the Company paid to Siris $5.0 million as a reimbursement of Silver’s reasonable costs and expenses incurred in connection with the Preferred Transaction. In connection with execution of the Preferred Transaction, Silver delivered 5,994,667 shares of Synchronoss common stock, which have been recorded as Treasury shares as of September 30, 2018. Certificate of Designation of the Series A Preferred Stock The rights, preferences, privileges, qualifications, restrictions and limitations of the shares of Series A Preferred Stock are set forth in the Series A Certificate. Under the Series A Certificate, the holders of the Series A Preferred Stock are entitled to receive, on each share of Series A Preferred Stock on a quarterly basis, an amount equal to the dividend rate of 14.5% divided by four and multiplied by the then-applicable Liquidation Preference (as defined in the Series A Certificate) per share of Series A Preferred Stock (collectively, the “Preferred Dividends”). The Preferred Dividends are due on January 1, April 1, July 1 and October 1 of each year (each, a “Series A Dividend Payment Date”). The Company may choose to pay the Preferred Dividends in cash or in additional shares of Series A Preferred Stock. In the event the Company does not declare and pay a dividend in-kind or in cash on any Series A Dividend Payment Date, the unpaid amount of the Preferred Dividend will be added to the Liquidation Preference. In addition, the Series A Preferred Stock participates in dividends declared and paid on shares of the Company’s common stock. Each share of Series A Preferred Stock is convertible, at the option of the holder, into the number of shares of common stock equal to the “Conversion Price” (as that term is defined in the Series A Certificate) multiplied by the then applicable “Conversion Rate” (as that term is defined in the Series A Certificate). Each share of Series A Preferred Stock is initially convertible into 55.5556 shares of common stock, representing an initial “conversion price” of approximately $18.00 per share of common stock. The Conversion Rate is subject to equitable proportionate adjustment in the event of stock splits, recapitalizations and other events set forth in the Series A Certificate. On and after the fifth anniversary of February 15, 2018, holders of shares of Series A Preferred Stock have the right to cause the Company to redeem each share of Series A Preferred Stock for cash in an amount equal to the sum of the current liquidation preference and any accrued dividends. Each share of Series A Preferred Stock is also redeemable at the option of the holder upon the occurrence of a “Fundamental Change” (as that term is defined in the Series A Certificate) at a specified premium (“Liquidation Value”). In addition, the Company is also permitted to redeem all outstanding shares of the Series A Preferred Stock at any time (i) within the first 30 months of the date of issuance for the sum of the then-applicable Liquidation Preference, accrued but unpaid dividends and a make whole amount (known as “Redemption Value”) and (ii) following the 30-month anniversary of the date of issuance for the sum of the then-applicable Liquidation Preference and the accrued but unpaid dividends. As of September 30, 2018, the Liquidation Value and Redemption Value of the Preferred Shares was $323.5 million and $251.9 million respectively. The holders of a majority of the Series A Preferred Stock, voting separately as a class, are entitled at each of the Company’s annual meetings of stockholders or at any special meeting called for the purpose of electing directors (or by written consent signed by the holders of a majority of the then-outstanding shares of Series A Preferred Stock in lieu of such a meeting): (i) to nominate and elect two members of the Company’s Board of Directors for so long as the Preferred Percentage (as defined in the Series A Certificate) is equal to or greater than 10%; and (ii) to nominate and elect one member of the Company’s Board of Directors for so long as the Preferred Percentage is equal to or greater than 5% but less than 10%. For so long as the holders of shares of Series A Preferred Stock have the right to nominate at least one director, the Company is required to obtain the prior approval of Silver prior to taking certain actions, including: (i) certain dividends, repayments and redemptions; (ii) any amendment to the Company’s certificate of incorporation that adversely effects the rights, preferences, privileges or voting powers of the Series A Preferred Stock; (iii) issuances of stock ranking senior or equivalent to shares of Series A Preferred Stock (including additional shares of Series A Preferred Stock) in the priority of payment of dividends or in the distribution of assets upon any liquidation, dissolution or winding up of the Company; (iv) changes in the size of the Company’s Board of Directors; (v) any amendment, alteration, modification or repeal of the charter of the Company’s Nominating and Corporate Governance Committee of the Board of Directors and related documents; and (vi) any change in the Company’s principal business or the entry into any line of business outside of the Company’s existing lines of businesses. In addition, in the event that the Company is in EBITDA Non-Compliance (as defined in the Series A Certificate) or the undertaking of certain actions would result in the Company exceeding a specified pro forma leverage ratio, then the prior approval of Silver would be required to incur indebtedness (or alter any debt document) in excess of $10.0 million, enter or consummate any transaction where the fair market value exceeds $5.0 million individually or $10.0 million in the aggregate in a fiscal year or authorize or commit to capital expenditures in excess of $25.0 million in a fiscal year. Each holder of Series A Preferred Stock has one vote per share on any matter on which holders of Series A Preferred Stock are entitled to vote separately as a class, whether at a meeting or by written consent. The holders of Series A Preferred Stock are permitted to take any action or consent to any action with respect to such rights without a meeting by delivering a consent in writing or electronic transmission of the holders of the Series A Preferred Stock entitled to cast not less than the minimum number of votes that would be necessary to authorize, take or consent to such action at a meeting of stockholders. In addition to any vote (or action taken by written consent) of the holders of the shares of Series A Preferred Stock as a separate class provided for in the Series A Certificate or by the General Corporation Law of the State of Delaware, the holders of shares of the Series A Preferred Stock are entitled to vote with the holders of shares of common stock (and any other class or series that may similarly be entitled to vote on an as-converted basis with the holders of common stock) on all matters submitted to a vote or to the consent of the stockholders of the Company (including the election of directors) as one class. Under the Series A Certificate, if Silver and certain of its affiliates have elected to effect a conversion of some or all of their shares of Series A Preferred Stock and if the sum, without duplication, of (i) the aggregate number of shares of the Company’s common stock issued to such holders upon such conversion and any shares of the Company’s common stock previously issued to such holders upon conversion of Series A Preferred Stock and then held by such holders, plus (ii) the number of shares of the Company’s common stock underlying shares of Series A Preferred Stock that would be held at such time by such holders (after giving effect to such conversion), would exceed the 19.9% of the issued and outstanding shares of the Company’s voting stock on an as converted basis (the “Conversion Cap”), then such holders would only be entitled to convert such number of shares as would result in the sum of clauses (i) and (ii) (after giving effect to such conversion) being equal to the Conversion Cap (after giving effect to any such limitation on conversion). Any shares of Series A Preferred Stock which a holder has elected to convert but which, by reason of the previous sentence, are not so converted, will be treated as if the holder had not made such election to convert and such shares of Series A Preferred Stock will remain outstanding. Also, under the Series A Certificate, if the sum, without duplication, of (i) the aggregate voting power of the shares previously issued to Silver and certain of its affiliates held by such holders at the record date, plus (ii) the aggregate voting power of the shares of Series A Preferred Stock held by such holders as of such record date, would exceed 19.99% of the total voting power of the Company’s outstanding voting stock at such record date, then, with respect to such shares, Silver and certain of its affiliates are only entitled to cast a number of votes equal to 19.99% of such total voting power. The limitation on conversion and voting ceases to apply upon receipt of the requisite approval of holders of the Company’s common stock under the applicable listing standards. Form of Investor Rights Agreement Concurrently with the closing of the Preferred Transaction, Synchronoss and Silver entered into an Investor Rights Agreement. Under the terms of the Investor Rights Agreement, Silver and Synchronoss have agreed that, effective as of the closing of the Preferred Transaction, the Board of Directors of Synchronoss will consist of ten members. From and after the closing of the Preferred Transaction, so long as the holders of Series A Preferred Stock have the right to nominate a member to the Board of Directors pursuant to the Series A Certificate, the Board of Directors of Synchronoss will consist of (i) two directors nominated and elected by the holders of shares of Series A Preferred Stock; (ii) four directors who meet the independence criteria set forth in the applicable listing standards (each of whom will be initially agreed upon by Synchronoss and Silver); and (iii) four other directors, two of whom shall satisfy the independence criteria of the applicable listing standards and, as of the closing of the Preferred Transaction, one of whom shall be the individual then serving as chief executive officer of Synchronoss and one of whom shall be the current chairman of the Board of Directors of Synchronoss as of the date of execution of the Investors Rights Agreement. Following the closing of the Preferred Transaction, so long as the holders of Series A Preferred Stock have the right to nominate at least one director to the Board of Directors of Synchronoss pursuant to the Series A Certificate, Silver will have the right to designate two members of the Nominating and Corporate Governance Committee of the Board of Directors. Pursuant to the terms of the Investor Rights Agreement, neither Silver nor its affiliates may transfer any shares of Series A Preferred Stock subject to certain exceptions (including transfers to affiliates that agree to be bound by the terms of the Investor Rights Agreement). For so long as Silver has the right to appoint a director to the Board of Directors of Synchronoss, without the prior approval by a majority of directors voting who are not appointed by the holders of shares of Series A Preferred Stock, neither Silver nor its affiliates will directly or indirectly purchase or acquire any debt or equity securities of Synchronoss (including equity-linked derivative securities) if such purchase or acquisition would result in Silver’s Standstill Percentage (as defined in the Investor Rights Agreement) being in excess of 30%. However, the foregoing standstill restrictions would not prohibit the purchase of shares pursuant to the PIPE Purchase Agreement or the receipt of shares of Series A Preferred Stock issued as Preferred Dividends pursuant to the Series A Certificate, shares of Common Stock received upon conversion of shares of Series A Preferred Stock or receipt of any shares of Series A Preferred Stock, Common Stock or other securities of the Company otherwise paid as dividends or as an increase of the Liquidation Preference (as defined in the Series A Certificate) or distributions thereon. Silver will also have preemptive rights with respect to issuances of securities of Synchronoss to maintain its ownership percentage. Under the terms of the Investor Rights Agreement, Silver will be entitled to (i) three demand registrations, with no more than two demand registrations in any single calendar year and provided that each demand registration must include at least 10% of the shares of Common Stock held by Silver, including shares of Common Stock issuable upon conversion of shares of Series A Preferred Stock and (ii) unlimited piggyback registration rights with respect to primary issuances and all other issuances. Registration Rights There were no significant changes to Company’s registration rights during the three and nine months ended September 30, 2018. Stock Plans There were no significant changes to Company’s Stock Plans during the three and nine months ended September 30, 2018. As of September 30, 2018, there were zero shares available for the grant or award under the Company’s 2015 Plan and 0.6 million shares available for the grant or award under the Company’s new hire equity incentive plan. During the nine-months ended September 30, 2018, the Company granted awards to purchase an aggregate of 0.6 million shares under the Company’s 2015 Plan, none of which awards are vested as of September 30, 2018. If there is an insufficient number of shares available under the 2015 Plan for issuance upon vesting and subsequent exercise of such awards, the Company intends to settle such awards for cash. These awards as well the Company’s performance awards granted to executives under the 2018 grant have been accounted for as liability awards, due to the Company’s intent and the ability to settle such awards in cash upon vesting and has reflected such awards in accrued expenses. As of September 30, 2018, the liability for such awards is approximately $0.7 million. Stock-Based Compensation The following table summarizes stock-based compensation expense related to all of the Company’s stock awards included by operating expense categories, as follows:
The following table summarizes stock-based compensation expense related to all of the Company’s stock awards included by award types, as follows:
The total stock-based compensation cost related to unvested equity awards as of September 30, 2018 was approximately $48.1 million. The expense is expected to be recognized over a weighted-average period of approximately 2.42 years. Replacement Awards On January 19, 2017, certain equity awards granted under the Intralinks Holdings, Inc. 2010 Equity Incentive Plan and the Intralinks Holdings, Inc. 2007 Stock Option and Grant Plan (together, the “Intralinks Plans”) were assumed by the Company’s 2015 Equity Incentive Plan (the “2015 Plan”). The assumed awards are subject to the vesting and service conditions of the 2015 Plan. Subsequently, these were accelerated as part of the Intralinks Transaction. Among the equity awards assumed were restricted stock units subject to market-based performance targets in order for them to vest. Vesting is subject to continued service requirements through the vesting date. The grant date fair value for such unvested restricted stock units was estimated using a Monte Carlo simulation that incorporates option-pricing inputs covering the period from the grant date through the end of the performance period. Stock-based compensation expense for such unvested restricted stock units is recognized on a straight-line basis over the vesting period, regardless of whether the market condition is satisfied. All of these awards were canceled during 2017 pursuant to termination of related employees. Stock Options There were no significant changes to Company’s Stock Option Plans during the three and nine months ended September 30, 2018. The Company uses the Black-Scholes option pricing model for determining the estimated fair value for stock options. The weighted-average assumptions used in the Black-Scholes option pricing model are as follows:
The following table summarizes information about stock options outstanding as of September 30, 2018:
For the three months ended September 30, 2018 and 2017, the Company recognized nil for both periods, the total intrinsic value for stock options exercised. For the nine months ended September 30, 2018 and 2017, the Company recognized nil and $1.0 million, respectively in the total intrinsic value for stock options exercised. Awards of Restricted Stock and Performance Stock There were no significant changes to Company’s restricted stock award (“Restricted Stock”) and performance stock plan during the three and nine months ended September 30, 2018. A summary of the Company’s unvested restricted stock at September 30, 2018, and changes during the nine months ended September 30, 2018, is presented below:
Restricted stock awards are granted subject to other service conditions or service and performance conditions (“Performance-Based Awards”). Restricted stock and performance-based awards are measured at the closing stock price at the date of grant and are recognized straight line over the requisite service period. Share Repurchase Program There were no repurchases in 2018. In 2018, the Company retired 3.9 million shares of Common Stock that were previously repurchased in prior years. Any related additional paid in capital and par values were removed from the Common Stock numbers. |
Restructuring |
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Restructuring | Restructuring Throughout 2017, the Company initiated a work-force reduction as part of a corporate restructuring, with reductions occurring across all levels and departments within the Company, primarily to reduce costs subsequent to an acquisition or divestiture. As part of these efforts, the Company continues to identify facilities consolidation and workforce optimization opportunities to better align the Company’s resources with its key strategic priorities. These measures were intended to reduce costs and to align the Company’s resources with its key strategic priorities. The Company authorized additional work force reduction initiatives in July 2018 and in the period ending September 30, 2018. As of September 30, 2018, there were $4.4 million of accrued restructuring charges on the Condensed Consolidated Balance Sheets. A summary of the Company’s restructuring accrual at September 30, 2018 and changes during the nine months ended September 30, 2018, are presented below:
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Income Taxes |
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Income Tax Disclosure [Abstract] | |
Income Taxes | Income Taxes The Company recognized approximately $1.6 million and $18.0 million in related income tax benefits during the nine months ended September 30, 2018 and 2017, respectively. The effective tax rate was approximately 1.3% for the nine months ended September 30, 2018, which was lower than the U.S. federal statutory rate primarily due to the full valuation allowances recorded in the fourth quarter of 2017 and the benefits recorded discretely in the third quarter of 2018 from the expiration of the statute of limitations for uncertain tax positions. The Company considered all available evidence, including historical profitability and projections of future taxable income together with new evidence, both positive and negative, that could affect the view of the future realization of deferred tax assets. As a result of the assessment, no change was recorded by the Company to the valuation allowance during the nine months ended September 30, 2018. |
Earnings per Common Share (EPS) |
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Earnings per Common Share (EPS) | Earnings per Common Share (“EPS”) Basic EPS is computed based upon the weighted average number of common shares outstanding for the year. Diluted EPS is computed based upon the weighted average number of common shares outstanding for the year plus the dilutive effect of common stock equivalents using the treasury stock method and the average market price of the Company’s common stock for the year. The Company includes participating securities (Redeemable Convertible Preferred Stock - Participation with Dividends on Common Stock that contain preferred dividend) in the computation of EPS pursuant to the two-class method. The two-class method of computing earnings per share is an allocation method that calculates earnings per share for common stock and participating securities. During periods of net loss, no effect is given to the participating securities because they do not share in the losses of the Company. The following table provides a reconciliation of the numerator and denominator used in computing basic and diluted net income attributable to common stockholders per common share from continued and discontinued operations.
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Commitments and Contingencies |
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Sep. 30, 2018 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | Commitments and Contingencies In the ordinary course of business, the Company is regularly subject to various claims, suits, regulatory inquiries and investigations. The Company records a liability for specific legal matters when it determines that the likelihood of an unfavorable outcome is probable, and the loss can be reasonably estimated. Management has also identified certain other legal matters where they believe an unfavorable outcome is not probable and, therefore, no reserve is established. Although management currently believes that resolving claims against the Company, including claims where an unfavorable outcome is reasonably possible, will not have a material impact on the Company’s business, financial position, results of operations, or cash flows, these matters are subject to inherent uncertainties and management’s view of these matters may change in the future. The Company also evaluates other contingent matters, including income and non-income tax contingencies, to assess the likelihood of an unfavorable outcome and estimated extent of potential loss. It is possible that an unfavorable outcome of one or more of these lawsuits or other contingencies could have a material impact on the liquidity, results of operations, or financial condition of the Company. Legal Matters On May 1, 2017, May 2, 2017, June 8, 2017 and June 14, 2017, four putative class actions were filed against the Company and certain of its officers and directors in the United States District Court for the District of New Jersey (the “Securities Law Action”). After these cases were consolidated, the court appointed as lead plaintiff Employees’ Retirement System of the State of Hawaii, which filed, on November 20, 2017, a consolidated amended complaint purportedly on behalf of purchasers of the Company’s common stock between February 3, 2016 and June 13, 2017. On February 2, 2018, the defendants moved to dismiss the consolidated amended complaint in its entirety, with prejudice. Before that motion was decided, on August 24, 2018, lead plaintiff filed a second consolidated amended complaint purportedly on behalf of purchasers of our common stock between October 28, 2014 and June 13, 2017. The second consolidated amended complaint asserts claims under Sections 10(b) and 20(a) of the Securities Exchange Act of 1934, as amended, and it alleges, among other things, that the defendants made false and misleading statements of material information concerning the Company’s financial results, business operations, and prospects. The plaintiff seeks unspecified damages, fees, interest, and costs. The Company believes that the asserted claims lack merit, and the Company intends to defend against all of the claims vigorously. Due to the inherent uncertainties of litigation, the Company cannot predict the outcome of the actions at this time and can give no assurance that the asserted claims will not have a material adverse effect on the financial position or results of operations of the Company. On September 15, 2017, October 24, 2017, October 27, 2017 and October 30, 2017, Synchronoss shareholders filed derivative lawsuits against certain of the Company’s officers and directors and the Company (as nominal defendant) in the United States District Court for the District of New Jersey (the “Derivative Suits”). On May 24, 2018, the Court consolidated the Derivative Suits and appointed Lisa LeBoeuf as lead plaintiff. The lead plaintiff designated as the Operative Complaint the complaint she previously had filed on October 27, 2017, which alleges claims related to breaches of fiduciary duties and unjust enrichment. The Operative Complaint’s allegations relate to substantially the same facts as those underlying the Securities Law Action described above. Plaintiff seeks unspecified damages and for the Company to take steps to improve its corporate governance and internal procedures. Defendants’ motion to dismiss the Operative Complaint is due November 14, 2018. The Company believes that the asserted claims lack merit, and the Company intends to defend against all of the claims vigorously. Due to the inherent uncertainties of litigation, the Company cannot predict the outcome of the Derivative Suits at this time, and the Company can give no assurance that the asserted claims will not have a material adverse effect on the Company’s financial position or results of operations. On July 11, 2017, Shareholder Representative Services LLC, on behalf of the persons entitled to receive merger consideration (the “Sellers”) in connection with the Company’s acquisition of Razorsight, commenced arbitration against the Company with respect to a dispute over the amount due to the Sellers as additional consideration. Under the Razorsight purchase agreement, the Sellers are entitled to a percentage of any revenue recognized by the Company generated from the sale or licensing of Razorsight products in 2016 after a specific revenue threshold is obtained. The parties disagreed over the determination of the amount of revenue recognized in 2016. The parties entered into an agreement resolving the arbitration in May 2018. On June 13, 2018, The Bank of New York Mellon, in its capacity as trustee (the “Trustee”) under the indenture dated as of August 12, 2014 (the “Indenture”) governing for the 2019 Notes, filed a verified complaint with the Court of Chancery of the State of Delaware, captioned The Bank of New York Mellon, as Indenture Trustee v. Synchronoss Technologies, Inc. (the “BNY Action”). The BNY Action complaint alleges that a “Fundamental Change” has occurred under the Indenture as a result of the Company’s Common Stock ceasing to be listed or quoted on Nasdaq and that an event of default under the Indenture has occurred as a result of the Company’s failure to provide a notice of such Fundamental Change which, if true, following notice from holders of more than 25% of the outstanding principal under the Notes would trigger the acceleration of the principal and interest outstanding under the 2019 Notes, which otherwise mature on August 15, 2019. On November 2, 2018, the parties filed a stipulation of dismissal of the BNY Action. For further details, see Note 14 - Subsequent Events Review. Except as set forth above, the Company is not currently subject to any legal proceedings that could have a material adverse effect on its operations; however, it may from time to time become a party to various legal proceedings arising in the ordinary course of its business. The Company is currently the plaintiff in several patent infringement cases. The defendants in several of these cases have filed counterclaims. Although the Company cannot predict the outcome of the cases at this time due to the inherent uncertainties of litigation, the Company continues to pursue its claims and believes that the counterclaims are without merit, and the Company intends to defend against all of such counterclaims. Nasdaq Compliance On September 26, 2018, the Company received notice that the Nasdaq Listing Qualifications Staff (the “Staff”) approved the listing of its common stock on The Nasdaq Stock Market (“Nasdaq”). Previously, the Company’s common stock had been suspended from trading on Nasdaq for failure to comply with the timely filing of certain periodic reports with the SEC. For further details see Note 14 - Subsequent Events Review. |
Additional Financial Information |
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Other Income and Expenses [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Additional Financial Information | Additional Financial Information Other (expense) income, net The following table sets forth the components of Other (expense) income, net included in the Condensed Consolidated Statements of Operations:
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Subsequent Events Review |
9 Months Ended |
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Sep. 30, 2018 | |
Subsequent Events [Abstract] | |
Subsequent Events Review | Subsequent Events Review Nasdaq listing On October 1, 2018, the suspension of trading in the Company’s common stock on The Nasdaq Global Select Market was lifted and the Company’s common stock resumed trading under the symbol “SNCR”. Repayment of Convertible Note & legal settlement On November 2, 2018, the Company retired approximately $116.0 million of 2019 Notes as a part of settlement agreement entered into on November 1, 2018, among the Company, Indaba Capital Fund, L.P. (“Indaba”) and Westwood Management Corp. (“Westwood”) related to BNY Action, and as a result the parties filed a stipulation of dismissal. For further details see Note 12 - Commitments and Contingencies. Contingent receivable During September, Impala (an affiliate of Siris) announced its sale of Intralinks to SS&C Technologies, which is expected to close during the fourth quarter. As part of the Company’s sale of Intralinks, it can earn up $25.0 million from Siris’ sale, which is expected to be earned upon consummation into discontinued operations on the Condensed Consolidated Statement of Operations. For further details on the sale of Intralinks to Impala (a Siris affiliate), see Note 3- Acquisition and Divestitures. The Company has evaluated all subsequent events through the filing date of this form 10-Q for appropriate accounting and disclosures, and there are no subsequent event disclosures required aside from the foregoing events. |
Basis of Presentation and Consolidation (Policies) |
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Organization, Consolidation and Presentation of Financial Statements [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Basis of Presentation and Consolidation | Basis of Presentation and Consolidation The accompanying interim unaudited condensed consolidated financial statements have been prepared by Synchronoss and in the opinion of management, include all adjustments necessary for a fair presentation of the Company’s financial position, results of operations and cash flows for the interim periods. They do not include all of the information and footnotes required by U.S. generally accepted accounting principles (“GAAP”) for complete financial statements and should be read in conjunction with the Company’s audited consolidated financial statements and related notes included in the Company’s Annual Report on Form 10-K/A for the year ended December 31, 2017. The results of operations for the three and nine months ended September 30, 2018 are not necessarily indicative of the results to be expected for the year ending December 31, 2018. The condensed consolidated financial statements include the accounts of the Company, its wholly-owned subsidiaries and variable interest entities (“VIE”) in which the Company is the primary beneficiary and entities in which the Company has a controlling interest. Investments in less than majority-owned companies in which the Company does not have a controlling interest, but does have significant influence, are accounted for as equity method investments. Investments in less than majority-owned companies in which the Company does not have the ability to exert significant influence over the operating and financial policies of the investee are accounted for using the cost method. All material intercompany transactions and accounts are eliminated in consolidation. Certain prior year amounts have been reclassified to conform to the current year's presentation. For further information about the Company’s basis of presentation and consolidation or its significant accounting policies, refer to the consolidated financial statements and footnotes thereto included in the Company’s Annual Report on Form 10-K/A for the year ended December 31, 2017. |
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Restricted Cash | Restricted Cash Restricted cash includes amounts to various deposits, escrows and other cash collateral that are restricted by contractual obligation. |
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Recently Issued Accounting Standards | Recently Issued Accounting Standards Recent accounting pronouncements adopted
Standards issued not yet adopted
In May 2014, the FASB issued a new accounting standard related to revenue recognition, ASU 2014-09, “Revenue from Contracts with Customers,” (“Topic 606”). The new standard supersedes the existing revenue recognition requirements under U.S. GAAP and requires entities to recognize revenue when they transfer control of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled to in exchange for those goods or services. It also requires increased disclosures regarding the nature, amount, timing, and uncertainty of revenues and cash flows arising from contracts with customers. On January 1, 2018, the Company adopted Topic 606 applying the modified retrospective method to all contracts that were not completed as of January 1, 2018. Results for reporting periods beginning after January 1, 2018 are presented under Topic 606, while prior period amounts are not adjusted and continue to be reported under the accounting standards in effect for the prior period. The Company recorded a net reduction to opening retained earnings of approximately $10.1 million as of January 1, 2018 due to the cumulative impact of adopting Topic 606. The impact to revenues for the nine months ended September 30, 2018 was an increase of $31.9 million as a result of adopting Topic 606. The impact to costs was not material. The impact of adoption primarily relates to (1) the delayed pattern of recognition under Topic 606 for certain professional services revenue when such professional services involve the customization of features and functionality for subscription services customers, and (2) the earlier pattern of recognition under Topic 606 for license revenue when the Company provides hosting services for on-premise license customers. In the case of professional services that involve the customization of features and functionality for subscription services, under historic accounting policies the professional services were considered to have standalone value, and as a result were recognized as the services were performed. Under Topic 606, such professional services are not considered to be a distinct performance obligation within the context of the subscription services contract, and as such each month’s customization services revenue is recognized over the shorter of the estimated remaining life of the subscription software (typically three years) or the remaining term of the subscription services contract. In the case of license contracts sold in association with hosting, under historic accounting policies the license revenue was recognized over the hosting term due to the lack of vendor specific objective evidence (“VSOE”) of fair value for the hosting services. Under Topic 606, VSOE is no longer required in order separate revenue between the license and the hosting elements, and the license revenue is generally recognized upon delivery of the software based on the relative allocation of the contract price based on the established standalone selling price (“SSP”). Additional impacts of adoption include (1) in certain cases changes in the amount allocated to the various performance obligations in accordance with the relative standalone selling price method required by Topic 606 compared to the amount allocated to the various elements in accordance with the residual method or the relative selling price method, as applicable, under historic accounting policies, (2) the capitalization and subsequent amortization of certain sales commissions as costs to obtain a contract under ASC 340-40, whereas under historic accounting policies all such amounts were expensed as incurred (3) the timing and amount of revenue recognition for certain sales contracts that are considered to involve variable consideration under Topic 606, but were considered to either not be fixed or determinable or to involve contingent revenue features under historic accounting policies, (4) in certain limited cases, the accounting for discounted customer options to purchase future software or services as material rights under Topic 606, as well as (5) the income tax impact of the above items, as applicable. Changes in accounting policies as a result of adopting Topic 606 and nature of goods The following is a description of principal activities from which the Company generates revenue. Revenues are recognized when control of the promised goods or services are transferred to the Company’s customers, in an amount that reflects the consideration that the Company expects to receive in exchange for those goods or services. The Company generates all of its revenue from contracts with customers. Subscription and Transaction revenues consist of revenues derived from the processing of transactions through the Company’s service platforms, providing enterprise portal management services on a subscription basis and maintenance agreements on software licenses. The Company generates revenue from Subscription services from monthly active user fees, software as a service (“SaaS”) fees, hosting and storage fees, and fees for the related maintenance support for those services. In most cases, the subscription or transaction arrangement is a single performance obligation comprised of a series of distinct services that are substantially the same and that have the same pattern of transfer (i.e., distinct days of service). The Company applies a measure of progress (typically time-based) to any fixed consideration and allocates variable consideration to the distinct periods of service based on usage, under Topic 606 Section 10-25-14(b). When the Company does not allocate variable consideration to distinct periods of service, the total estimated transaction price is recognized ratably over the term of the contract, where the level of service provided to the customer does not vary significantly from one period to another. Transaction service arrangements include services such as processing equipment orders, new account set‑up and activation, number port requests, credit checks and inventory management. Transaction revenues are principally based on a contractual price per transaction and are recognized based on the number of transactions processed during each reporting period. Revenues are recorded based on the total number of transactions processed at the applicable price established in the relevant contract. Many of the Company’s contracts guarantee minimum volume transactions from the customer. In these instances, if the customer’s total estimated transaction volume for the period is expected to be less than the contractual amount, the Company records revenues at the minimum guaranteed amount on a straight line based over the period covered by the minimum. Set‑up fees for transactional service arrangements are deferred until set up activities are completed and recognized on a straight‑line basis over remaining expected customer relationship period. Revenues are presented net of discounts, which are volume level driven. In accordance with Topic 606 Section 10-50-20, any credits due to customers, which are generally performance driven and based upon system availability or response times to incidents, are determined and accounted for in the period in which the services are provided. The Company recognizes revenues from support and maintenance performance obligations over the service delivery period. The Company’s software licenses typically provide for a perpetual or term right to use the Company’s software. The Company has concluded that in most cases its software license is distinct as the customer can benefit from the software on its own. Software revenue is typically recognized when the software is delivered to the customer. Contracts that include software customization or specified upgrades may result in the combination of the customization services with the software license as one performance obligation. The Company does not have a history of returns, or refunds of is software licenses, however, in limited instances, the Company may constrain consideration to high-risk customers, until collection is resolved. The Company’s professional services include software development and customization. The contracts generally include project deliverables specified by each customer. The performance obligations in the agreements are generally combined into one deliverable and generally result in the transfer of control over time. The underlying deliverable is owned and controlled by the customer and does not create an asset with an alternative use to us. The Company recognizes revenue on fixed fee contracts on the proportion of labor hours expended to the total hours expected to complete the contract performance obligation. Most of the Company’s contracts with customers contain multiple performance obligations which generally include either 1) a perpetual software license with support and maintenance and sometimes a hosting agreement or 2) a term SaaS agreement, in many cases these are sold along with professional services. For these contracts, the Company accounts for individual goods and services separately if they are distinct performance obligations. This often requires significant judgment based upon knowledge of the products, the solution provided and the structure of the sales contract. In SaaS agreements, the Company provides a service to the customer which combines the software functionality, maintenance and hosting into a single performance obligation when the customer doesn’t have the ability to take possession of the underlying software license. The Company may also sell the same three goods and services in a contract, but there may be three performance obligations, where the customer has the right to take possession of the software license without significant penalty. The transaction price is allocated to the separate performance obligations on a relative standalone selling price basis. The Company estimates standalone selling prices of software based on observable inputs of past transactions to similarly situated customers. When such observable data is not available for certain software licenses because there is a limited number of transactions or prices are highly variable, the Company will estimate the standalone selling price using the residual approach. Standalone selling prices of services are typically determined based on observable transactions when these services are sold on a standalone basis to similarly situated customers or estimated using a cost plus margin approach. Estimating the transaction price of variable consideration including the variable quantity subscription or transaction contracts in a multiple performance obligation arrangement requires significant judgment. The Company generally estimates this variable consideration at the most likely amount to which the Company expects to be entitled and in certain cases based on the expected value. The Company includes estimated amounts in the transaction price to the extent it is probable that a significant reversal of cumulative revenue recognized will not occur when the uncertainty associated with the variable consideration is resolved. The Company’s estimates of variable consideration and determination of whether to include estimated amounts in the transaction price are based largely on an assessment of the Company’s anticipated performance and all information (historical, current and forecasted) that is reasonably available to us. The Company reviews and update these estimates on a quarterly basis. The Company’s typical performance obligations include the following:
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Fair Value Measurement | In accordance with accounting principles generally accepted in the United States, fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. A three-level hierarchy prioritizes the inputs used to measure fair value as follows:
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Basis of Presentation and Consolidation (Tables) |
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Organization, Consolidation and Presentation of Financial Statements [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction | The Company’s typical performance obligations include the following:
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Disaggregation of Revenue | The Company disaggregates revenue from contracts with customers into the nature of the products and services and geographical regions. The Company’s geographic regions are the Americas, EMEA, and APAC. The majority of the Company’s revenue is from the Technology, Media and Telecom (collectively, “TMT”) sector.
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Contract with Customer, Asset and Liability | Significant changes in the contract liabilities balance (current and noncurrent) during the period are as follows (in thousands):
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Schedule of New Accounting Pronouncements and Changes in Accounting Principles | The table below shows Topic 606 Retained earnings reconciliation:
In accordance with Topic 606, the disclosure of the impact of adoption to the Company’s Condensed Consolidated Balance Sheet and Condensed Consolidated Statement of Operations was as follows:
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Recent accounting pronouncements adopted
Standards issued not yet adopted
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Fair Value Measurements of Assets and Liabilities (Tables) |
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Fair Value Measurements of Assets and Liabilities | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of assets and liabilities held and their related classifications under the fair value hierarchy | The following is a summary of assets, liabilities and redeemable noncontrolling interests and their related classifications under the fair value hierarchy:
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Schedule of estimated fair value of investments classified as available for sale | At September 30, 2018 and December 31, 2017, the estimated fair value of investments classified as available-for-sale, were as follows:
As of September 30, 2018, there were no accumulated unrealized losses related to investments that have been in a continuous unrealized loss position for 12 months or longer. The aggregate related fair value of investment with unrealized losses was less than $14.8 million.
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Expected maturities | The contractual maturities of marketable debt securities were as follows:
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Redeemable Noncontrolling Interests | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value Measurements of Assets and Liabilities | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of changes in fair value of Level 3 | The changes in fair value of the Company’s Level 3 redeemable noncontrolling interests during the nine months ended September 30, 2018 were as follows:
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Investments in Affiliates and Related Transactions (Tables) |
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Equity Method Investments and Joint Ventures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Equity Method Investments | The STIN affiliate balances and their classification in the Condensed Consolidated Balance Sheet as of September 30, 2018, were as follows:
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STIN - Selected financial data The following table displays certain key financial data pertaining to the operations of STIN for the three and nine months ended September 30, 2018:
PIK Note The following is a summary of the PIK Note related balances:
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Debt (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Debt Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Debt | Total debt consists of the following:
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Schedule of Long-term Debt Instruments | The following table summarizes the Company’s interest expense:
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Accumulated Other Comprehensive Income/ (Loss) (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Accumulated Other Comprehensive Income (Loss), Net of Tax [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of changes in accumulated other comprehensive income (loss) | The changes in accumulated other comprehensive (loss) during the nine months ended September 30, 2018, were as follows:
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Stockholders' Equity (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of stock-based compensation | The following table summarizes stock-based compensation expense related to all of the Company’s stock awards included by operating expense categories, as follows:
The following table summarizes stock-based compensation expense related to all of the Company’s stock awards included by award types, as follows:
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Stock options | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of fair value assumptions | The Company uses the Black-Scholes option pricing model for determining the estimated fair value for stock options. The weighted-average assumptions used in the Black-Scholes option pricing model are as follows:
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Schedule of information about stock options outstanding | The following table summarizes information about stock options outstanding as of September 30, 2018:
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Restricted stock awards | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of unvested restricted stock | A summary of the Company’s unvested restricted stock at September 30, 2018, and changes during the nine months ended September 30, 2018, is presented below:
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Restructuring (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Restructuring and Related Activities [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of the restructuring accrual and changes | A summary of the Company’s restructuring accrual at September 30, 2018 and changes during the nine months ended September 30, 2018, are presented below:
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Earnings per Common Share (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Earnings Per Share [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of reconciliation of the numerator and denominator used in computing basic and diluted net income attributable to common stockholders per common share | The following table provides a reconciliation of the numerator and denominator used in computing basic and diluted net income attributable to common stockholders per common share from continued and discontinued operations.
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Additional Financial Information (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Other Income and Expenses [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Components of other (expense) income, net | The following table sets forth the components of Other (expense) income, net included in the Condensed Consolidated Statements of Operations:
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Basis of Presentation and Consolidation - Narrative (Details) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | |||
---|---|---|---|---|---|
Sep. 30, 2018 |
Sep. 30, 2017 |
Sep. 30, 2018 |
Sep. 30, 2017 |
Dec. 31, 2017 |
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Organization, Consolidation and Presentation of Financial Statements [Abstract] | |||||
Decrease in restricted cash | $ 87,300 | ||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||||
Reduction to retained earnings | $ 156,984 | 156,984 | $ 5,014 | ||
Net revenues | 83,286 | $ 91,015 | 243,737 | $ 296,102 | |
Capitalized contract cost | 700 | ||||
Net revenues | 83,286 | $ 91,015 | 243,737 | $ 296,102 | |
Accounting Standards Update 2014-09 | Impacts of the New Revenue Standard | |||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||||
Reduction to retained earnings | (20,871) | (20,871) | $ 10,100 | ||
Net revenues | $ 11,605 | $ 31,871 |
Basis of Presentation and Consolidation - Out of Period Adjustments (Details) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||||
---|---|---|---|---|---|---|
Sep. 30, 2018 |
Sep. 30, 2017 |
Sep. 30, 2018 |
Sep. 30, 2017 |
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Error Corrections and Prior Period Adjustments Restatement [Line Items] | ||||||
Cost of revenues | [1] | $ 43,714 | $ 45,576 | $ 127,788 | $ 139,386 | |
Restatement Adjustment | ||||||
Error Corrections and Prior Period Adjustments Restatement [Line Items] | ||||||
Cost of revenues | $ 4,900 | |||||
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Basis of Presentation and Consolidation - Disaggregation of Revenue (Details) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2018 |
Sep. 30, 2017 |
Sep. 30, 2018 |
Sep. 30, 2017 |
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Disaggregation of Revenue [Line Items] | ||||
Net revenues | $ 83,286 | $ 91,015 | $ 243,737 | $ 296,102 |
Americas | ||||
Disaggregation of Revenue [Line Items] | ||||
Net revenues | 68,306 | 79,751 | 186,651 | 256,743 |
APAC | ||||
Disaggregation of Revenue [Line Items] | ||||
Net revenues | 6,729 | 6,177 | 34,984 | 23,021 |
EMEA | ||||
Disaggregation of Revenue [Line Items] | ||||
Net revenues | 8,251 | 5,087 | 22,102 | 16,338 |
Professional Services | ||||
Disaggregation of Revenue [Line Items] | ||||
Net revenues | 8,761 | 13,108 | 32,173 | 48,461 |
Transaction Services | ||||
Disaggregation of Revenue [Line Items] | ||||
Net revenues | 4,763 | 6,996 | 13,443 | 24,156 |
Subscription Services | ||||
Disaggregation of Revenue [Line Items] | ||||
Net revenues | 66,644 | 65,203 | 176,703 | 202,039 |
License | ||||
Disaggregation of Revenue [Line Items] | ||||
Net revenues | 3,118 | 5,708 | 21,418 | 21,446 |
Cloud | ||||
Disaggregation of Revenue [Line Items] | ||||
Net revenues | 42,996 | 51,263 | 120,020 | 180,808 |
Cloud | Americas | ||||
Disaggregation of Revenue [Line Items] | ||||
Net revenues | 41,029 | 49,555 | 113,452 | 175,560 |
Cloud | APAC | ||||
Disaggregation of Revenue [Line Items] | ||||
Net revenues | 0 | 0 | 0 | 0 |
Cloud | EMEA | ||||
Disaggregation of Revenue [Line Items] | ||||
Net revenues | 1,967 | 1,708 | 6,568 | 5,248 |
Cloud | Professional Services | ||||
Disaggregation of Revenue [Line Items] | ||||
Net revenues | 2,982 | 4,309 | 10,002 | 23,731 |
Cloud | Transaction Services | ||||
Disaggregation of Revenue [Line Items] | ||||
Net revenues | 1,918 | 2,883 | 6,703 | 9,098 |
Cloud | Subscription Services | ||||
Disaggregation of Revenue [Line Items] | ||||
Net revenues | 38,096 | 41,831 | 102,891 | 140,224 |
Cloud | License | ||||
Disaggregation of Revenue [Line Items] | ||||
Net revenues | 0 | 2,240 | 424 | 7,755 |
Digital | ||||
Disaggregation of Revenue [Line Items] | ||||
Net revenues | 28,861 | 30,342 | 74,058 | 83,158 |
Digital | Americas | ||||
Disaggregation of Revenue [Line Items] | ||||
Net revenues | 24,563 | 28,071 | 65,614 | 75,371 |
Digital | APAC | ||||
Disaggregation of Revenue [Line Items] | ||||
Net revenues | 2,082 | 1,637 | 4,697 | 5,157 |
Digital | EMEA | ||||
Disaggregation of Revenue [Line Items] | ||||
Net revenues | 2,216 | 634 | 3,747 | 2,630 |
Digital | Professional Services | ||||
Disaggregation of Revenue [Line Items] | ||||
Net revenues | 4,051 | 6,990 | 14,053 | 19,307 |
Digital | Transaction Services | ||||
Disaggregation of Revenue [Line Items] | ||||
Net revenues | 2,845 | 4,113 | 6,740 | 15,058 |
Digital | Subscription Services | ||||
Disaggregation of Revenue [Line Items] | ||||
Net revenues | 20,572 | 17,666 | 50,103 | 40,107 |
Digital | License | ||||
Disaggregation of Revenue [Line Items] | ||||
Net revenues | 1,393 | 1,573 | 3,162 | 8,686 |
Messaging | ||||
Disaggregation of Revenue [Line Items] | ||||
Net revenues | 11,429 | 9,410 | 49,659 | 32,136 |
Messaging | Americas | ||||
Disaggregation of Revenue [Line Items] | ||||
Net revenues | 2,714 | 2,125 | 7,585 | 5,812 |
Messaging | APAC | ||||
Disaggregation of Revenue [Line Items] | ||||
Net revenues | 4,647 | 4,540 | 30,287 | 17,864 |
Messaging | EMEA | ||||
Disaggregation of Revenue [Line Items] | ||||
Net revenues | 4,068 | 2,745 | 11,787 | 8,460 |
Messaging | Professional Services | ||||
Disaggregation of Revenue [Line Items] | ||||
Net revenues | 1,728 | 1,809 | 8,118 | 5,423 |
Messaging | Transaction Services | ||||
Disaggregation of Revenue [Line Items] | ||||
Net revenues | 0 | 0 | 0 | 0 |
Messaging | Subscription Services | ||||
Disaggregation of Revenue [Line Items] | ||||
Net revenues | 7,976 | 5,706 | 23,709 | 21,708 |
Messaging | License | ||||
Disaggregation of Revenue [Line Items] | ||||
Net revenues | $ 1,725 | $ 1,895 | $ 17,832 | $ 5,005 |
Basis of Presentation and Consolidation - Assets and Liabilities (Details) $ in Thousands |
9 Months Ended |
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Sep. 30, 2018
USD ($)
| |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Contract Asset, balance | $ 3,600 |
Contract Liabilities, beginning balance | 115,009 |
Revenue recognized in the period | (99,405) |
Amounts billed but not recognized as revenue | 68,257 |
Contract Liabilities, ending balance | $ 83,861 |
Basis of Presentation and Consolidation - Remaining Performance Obligations (Details) $ in Millions |
9 Months Ended |
---|---|
Sep. 30, 2018
USD ($)
| |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Remaining performance obligation | $ 401.9 |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2018-10-01 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Remaining performance obligation, expected timing of satisfaction, percent | 87.00% |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | |
Revenue, remaining performance obligation, expected timing of satisfaction, period | 2 years |
Basis of Presentation and Consolidation - Schedule of Effect of New Accounting Pronouncement (Details) - USD ($) $ / shares in Units, $ in Thousands |
Sep. 30, 2018 |
Dec. 31, 2017 |
Sep. 30, 2017 |
|||
---|---|---|---|---|---|---|
Current assets: | ||||||
Cash and cash equivalents | $ 222,438 | $ 156,299 | $ 210,070 | |||
Restricted cash | [1] | 4,377 | 89,826 | |||
Marketable securities, current | 6,989 | 3,111 | ||||
Accounts receivable, net | 52,617 | 78,186 | ||||
Prepaid expenses | 46,922 | 33,957 | ||||
Other current assets | 14,115 | 9,600 | ||||
Total current assets | 347,458 | 370,979 | ||||
Marketable securities, non-current | 8,716 | 0 | ||||
Property and equipment, net | 80,519 | 111,825 | ||||
Goodwill | 234,480 | 237,303 | ||||
Intangible assets, net | 117,448 | 132,167 | ||||
Other assets | 8,940 | 5,236 | ||||
Note receivable from related party | [1] | 66,089 | 73,984 | |||
Equity method investment | 30,694 | 33,917 | ||||
Total assets | 894,344 | 965,411 | ||||
Current liabilities: | ||||||
Accounts payable | 14,300 | 5,959 | ||||
Accrued expenses | 53,794 | 72,739 | ||||
Deferred revenues, current | 54,046 | 75,829 | ||||
Short-term debt | 228,764 | 0 | ||||
Total current liabilities | 350,904 | 192,486 | ||||
Lease financing obligation | 10,006 | 11,183 | ||||
Deferred tax liabilities | 12,109 | 13,735 | ||||
Deferred revenues, non-current | 29,815 | 25,241 | ||||
Other liabilities | 11,329 | 6,195 | ||||
Redeemable noncontrolling interest | 12,500 | 25,280 | ||||
Series A Convertible Participating Perpetual Preferred Stock, $0.0001 par value; 10,000 shares authorized; 195 shares issued and outstanding at September 30, 2018 | $ 176,160 | $ 0 | ||||
Preferred stock, par value (in dollars per share) | $ 0.0001 | $ 0.0001 | ||||
Preferred stock, shares authorized (shares) | 10,000,000 | 10,000,000 | ||||
Preferred stock, shares issued (shares) | 195,000 | 0 | ||||
Preferred stock, shares outstanding (shares) | 195,000 | 0 | ||||
Stockholders’ equity: | ||||||
Common stock, $0.0001 par value; 100,000 shares authorized, 49,817 and 52,024 shares issued; 42,655 and 46,965 outstanding at September 30, 2018 and December 31, 2017, respectively | $ 5 | $ 5 | ||||
Common stock, par value (in dollars per share) | $ 0.0001 | $ 0.0001 | ||||
Common stock, shares authorized (shares) | 100,000,000 | 100,000,000 | ||||
Common stock, shares issued (shares) | 49,817,000 | 52,024,000 | ||||
Common stock, shares outstanding (shares) | 42,655,000 | 46,965,000 | ||||
Treasury stock, at cost (7,162 and 5,059 shares at September 30, 2018 and December 31, 2017, respectively) | $ (82,087) | $ (105,584) | ||||
Treasury stock, shares (shares) | 7,162,000 | 5,059,000 | ||||
Additional paid-in capital | $ 561,144 | $ 597,553 | ||||
Accumulated other comprehensive loss | (30,557) | (23,373) | ||||
Accumulated deficit | (156,984) | (5,014) | ||||
Total stockholders’ equity | 291,521 | 463,587 | ||||
Total liabilities and stockholders’ equity | 894,344 | 965,411 | ||||
Adjusted amounts under prior GAAP | ||||||
Current assets: | ||||||
Cash and cash equivalents | 222,438 | |||||
Restricted cash | 4,377 | |||||
Marketable securities, current | 6,989 | |||||
Accounts receivable, net | 32,899 | |||||
Prepaid expenses | 46,922 | |||||
Other current assets | 14,530 | |||||
Total current assets | 328,155 | |||||
Marketable securities, non-current | 8,716 | |||||
Property and equipment, net | 80,519 | |||||
Goodwill | 234,480 | |||||
Intangible assets, net | 117,448 | |||||
Other assets | 8,571 | |||||
Note receivable from related party | 66,089 | |||||
Equity method investment | 30,694 | |||||
Total assets | 874,672 | |||||
Current liabilities: | ||||||
Accounts payable | 14,300 | |||||
Accrued expenses | 68,550 | |||||
Deferred revenues, current | 51,765 | |||||
Short-term debt | 228,764 | |||||
Total current liabilities | 363,379 | |||||
Lease financing obligation | 10,006 | |||||
Deferred tax liabilities | 12,109 | |||||
Deferred revenues, non-current | 18,615 | |||||
Other liabilities | 11,329 | |||||
Redeemable noncontrolling interest | 12,500 | |||||
Series A Convertible Participating Perpetual Preferred Stock, $0.0001 par value; 10,000 shares authorized; 195 shares issued and outstanding at September 30, 2018 | 176,160 | |||||
Stockholders’ equity: | ||||||
Common stock, $0.0001 par value; 100,000 shares authorized, 49,817 and 52,024 shares issued; 42,655 and 46,965 outstanding at September 30, 2018 and December 31, 2017, respectively | 5 | |||||
Treasury stock, at cost (7,162 and 5,059 shares at September 30, 2018 and December 31, 2017, respectively) | (82,087) | |||||
Additional paid-in capital | 561,144 | |||||
Accumulated other comprehensive loss | (30,633) | |||||
Accumulated deficit | (177,855) | |||||
Total stockholders’ equity | 270,574 | |||||
Total liabilities and stockholders’ equity | 874,672 | |||||
Accounting Standards Update 2014-09 | Impacts of the New Revenue Standard | ||||||
Current assets: | ||||||
Accounts receivable, net | 19,718 | |||||
Prepaid expenses | 0 | |||||
Other current assets | (415) | |||||
Total current assets | 19,303 | |||||
Other assets | 369 | |||||
Total assets | 19,672 | |||||
Current liabilities: | ||||||
Accrued expenses | (14,756) | |||||
Deferred revenues, current | 2,281 | |||||
Total current liabilities | (12,475) | |||||
Deferred revenues, non-current | 11,200 | |||||
Stockholders’ equity: | ||||||
Accumulated other comprehensive loss | 76 | |||||
Accumulated deficit | 20,871 | $ (10,100) | ||||
Total stockholders’ equity | 20,947 | |||||
Total liabilities and stockholders’ equity | $ 19,672 | |||||
|
Basis of Presentation and Consolidation - Schedule of Income Statement Effect of New Accounting Pronouncements (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands |
3 Months Ended | 9 Months Ended | ||||
---|---|---|---|---|---|---|
Sep. 30, 2018 |
Sep. 30, 2017 |
Sep. 30, 2018 |
Sep. 30, 2017 |
|||
Revenue, Initial Application Period Cumulative Effect Transition [Line Items] | ||||||
Net revenues | $ 83,286 | $ 91,015 | $ 243,737 | $ 296,102 | ||
Costs and expenses: | ||||||
Cost of revenues | [1] | 43,714 | 45,576 | 127,788 | 139,386 | |
Research and development | 18,684 | 20,926 | 59,789 | 67,234 | ||
Selling, general and administrative | 27,320 | 34,881 | 99,368 | 103,049 | ||
Restructuring charges | 4,539 | 2,312 | 8,425 | 11,715 | ||
Depreciation and amortization | 23,658 | 23,459 | 70,330 | 71,098 | ||
Total costs and expenses | 117,915 | 127,154 | 365,700 | 392,482 | ||
Loss from continuing operations | (34,629) | (36,139) | (121,963) | (96,380) | ||
Interest income | 203 | 3,274 | 7,518 | 9,157 | ||
Interest expense | (1,370) | (25,555) | (3,935) | (48,016) | ||
Equity method investment income | (13,439) | (256) | (9,180) | 2,374 | ||
Equity method investment income | 283 | 645 | 71 | 1,626 | ||
Loss from continuing operations, before taxes | (48,952) | (58,031) | (127,489) | (131,239) | ||
Benefit for income taxes | 2,308 | 12,825 | 1,604 | 17,973 | ||
Net loss from continuing operations | (46,644) | (45,206) | (125,885) | (113,266) | ||
Net loss | (46,644) | (36,364) | (125,885) | (127,333) | ||
Net (income) loss attributable to redeemable noncontrolling interests | (422) | 1,276 | 2,122 | 6,980 | ||
Preferred stock dividend | (7,463) | 0 | (18,076) | 0 | ||
Net loss from continued operations | $ (54,529) | $ (35,088) | $ (141,839) | $ (120,353) | ||
Basic: | ||||||
Continuing operations (usd per share) | $ (1.38) | $ (0.98) | $ (3.51) | $ (2.38) | ||
Diluted: | ||||||
Continuing operations (usd per share) | $ (1.38) | $ (0.98) | $ (3.51) | $ (2.38) | ||
Weighted Average Number of Shares Outstanding, Basic [Abstract] | ||||||
Weighted average common shares outstanding - basic (shares) | 39,612 | 44,893 | 40,405 | 44,576 | ||
Weighted average common shares outstanding - diluted (shares) | 39,612 | 44,893 | 40,405 | 44,576 | ||
Adjusted amounts under prior GAAP | ||||||
Revenue, Initial Application Period Cumulative Effect Transition [Line Items] | ||||||
Net revenues | $ 71,681 | $ 211,866 | ||||
Costs and expenses: | ||||||
Cost of revenues | 43,465 | 127,175 | ||||
Research and development | 18,684 | 59,789 | ||||
Selling, general and administrative | 27,269 | 99,216 | ||||
Restructuring charges | 4,539 | 8,425 | ||||
Depreciation and amortization | 23,658 | 70,330 | ||||
Total costs and expenses | 117,615 | 364,935 | ||||
Loss from continuing operations | (45,934) | (153,069) | ||||
Interest income | 203 | 7,518 | ||||
Interest expense | (1,337) | (3,830) | ||||
Equity method investment income | (13,439) | (9,180) | ||||
Equity method investment income | 283 | 71 | ||||
Loss from continuing operations, before taxes | (60,224) | (158,490) | ||||
Benefit for income taxes | 2,308 | 1,604 | ||||
Net loss from continuing operations | (57,916) | (156,886) | ||||
Net loss | (57,916) | (156,886) | ||||
Net (income) loss attributable to redeemable noncontrolling interests | (422) | 2,122 | ||||
Preferred stock dividend | (7,463) | (18,076) | ||||
Net loss from continued operations | $ (65,801) | $ (172,840) | ||||
Basic: | ||||||
Continuing operations (usd per share) | $ (1.66) | $ (4.28) | ||||
Diluted: | ||||||
Continuing operations (usd per share) | $ (1.66) | $ (4.28) | ||||
Weighted Average Number of Shares Outstanding, Basic [Abstract] | ||||||
Weighted average common shares outstanding - basic (shares) | 39,612 | 40,405 | ||||
Weighted average common shares outstanding - diluted (shares) | 39,612 | 40,405 | ||||
Accounting Standards Update 2014-09 | Impacts of the New Revenue Standard | ||||||
Revenue, Initial Application Period Cumulative Effect Transition [Line Items] | ||||||
Net revenues | $ 11,605 | $ 31,871 | ||||
Costs and expenses: | ||||||
Cost of revenues | 249 | 613 | ||||
Research and development | 0 | 0 | ||||
Selling, general and administrative | 51 | 152 | ||||
Depreciation and amortization | 0 | 0 | ||||
Total costs and expenses | 300 | 765 | ||||
Loss from continuing operations | 11,305 | 31,106 | ||||
Interest income | 0 | 0 | ||||
Interest expense | (33) | (105) | ||||
Equity method investment income | 0 | 0 | ||||
Equity method investment income | 0 | 0 | ||||
Loss from continuing operations, before taxes | 11,272 | 31,001 | ||||
Benefit for income taxes | 0 | 0 | ||||
Net loss from continuing operations | 11,272 | 31,001 | ||||
Net loss | 11,272 | 31,001 | ||||
Net (income) loss attributable to redeemable noncontrolling interests | 0 | 0 | ||||
Preferred stock dividend | 0 | 0 | ||||
Net loss from continued operations | $ 11,272 | $ 31,001 | ||||
Basic: | ||||||
Continuing operations (usd per share) | $ 0.28 | $ 0.77 | ||||
Diluted: | ||||||
Continuing operations (usd per share) | $ 0.28 | $ 0.77 | ||||
|
Basis of Presentation and Consolidation - Equity Impact (Details) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | |||
---|---|---|---|---|---|
Sep. 30, 2018 |
Sep. 30, 2017 |
Sep. 30, 2018 |
Sep. 30, 2017 |
Dec. 31, 2017 |
|
Revenue, Initial Application Period Cumulative Effect Transition [Line Items] | |||||
Net loss from continued operations | $ (54,529) | $ (35,088) | $ (141,839) | $ (120,353) | |
Retained Earnings at September 30, 2018 | (156,984) | (156,984) | $ (5,014) | ||
Accounting Standards Update 2014-09 | Impacts of the New Revenue Standard | |||||
Revenue, Initial Application Period Cumulative Effect Transition [Line Items] | |||||
Cumulative catch up Topic 606 adjustment as of January 1, 2018 | (10,130) | ||||
Net loss from continued operations | 11,272 | 31,001 | |||
Retained Earnings at September 30, 2018 | $ 20,871 | $ 20,871 | $ (10,100) |
Acquisitions and Divestitures - Acquisitions (Details) - USD ($) |
1 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Jan. 19, 2017 |
May 31, 2018 |
Sep. 30, 2018 |
Sep. 30, 2017 |
|
Honeybee Software | ||||
Acquisition | ||||
Total preliminary cash consideration transferred | $ 9,700,000 | |||
Additional consideration transferred | $ 8,700,000 | |||
Additional consideration transferred, period (in years) | 3 years | |||
Intangible assets acquired | $ 8,000,000 | |||
Net working capital | 10,400,000 | |||
Goldman Sachs Bank USA | 2017 Term Facility | ||||
Acquisition | ||||
Total preliminary consideration transferred | $ 815,000,000 | |||
Borrowing capacity | 900,000,000.0 | |||
Proceeds from credit agreement | $ 900,000,000 | |||
Selling, general and administrative | ||||
Acquisition | ||||
Transaction costs | $ 1,900,000 | $ 13,400,000 |
Acquisitions and Divestitures - Divestitures (Details) - USD ($) |
3 Months Ended | 9 Months Ended | ||||||||
---|---|---|---|---|---|---|---|---|---|---|
Feb. 15, 2018 |
Nov. 14, 2017 |
Oct. 17, 2017 |
Feb. 01, 2017 |
Sep. 30, 2018 |
Mar. 31, 2018 |
Sep. 30, 2017 |
Sep. 30, 2018 |
Sep. 30, 2017 |
Dec. 31, 2017 |
|
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | ||||||||||
Decrease in noncontrolling interest | $ 12,800,000 | |||||||||
Increase to Additional Paid in Capital | $ 12,800,000 | |||||||||
Contingent interest derivative | $ 193,000 | |||||||||
Gain on divestiture | $ 0 | $ 0 | $ 0 | $ 4,947,000 | ||||||
Divestiture of SpeechCycle | ||||||||||
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | ||||||||||
Divestiture consideration | $ 13,500,000 | |||||||||
Period of transition services agreement | 1 year | |||||||||
Gain on divestiture | $ 4,900,000 | |||||||||
Intralinks Holdings, Inc. | ||||||||||
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | ||||||||||
Payment of reimbursement fees | $ 5,000,000 | $ 5,000,000 | ||||||||
Intralinks Holdings, Inc. | Impala | ||||||||||
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | ||||||||||
Consideration transferred, equity interests issued and issuable | $ 977,300,000 | |||||||||
Total preliminary consideration transferred | 1,000,000,000 | |||||||||
Total preliminary cash consideration transferred | 991,000,000 | |||||||||
Potential cash proceeds | 440,000,000 | |||||||||
Maximum | Intralinks Holdings, Inc. | ||||||||||
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | ||||||||||
Contingent interest derivative | $ 25,000,000.0 | |||||||||
Maximum | Intralinks Holdings, Inc. | Impala | ||||||||||
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | ||||||||||
Contingent interest derivative | $ 25,000,000.0 |
Fair Value Measurements of Assets and Liabilities - Hierarchy (Details) - USD ($) |
9 Months Ended | |
---|---|---|
Sep. 30, 2018 |
Dec. 31, 2017 |
|
Assets | ||
Cash, cash equivalents and restricted cash | $ 226,815,000 | $ 246,125,000 |
Marketable securities-short term | 6,989,000 | 3,111,000 |
Marketable securities-long term | 8,716,000 | 0 |
Total assets | 242,520,000 | 249,236,000 |
Liabilities | ||
Contingent interest derivative | 193,000 | |
Mandatorily redeemable financial instrument | 37,959,000 | |
Total liabilities | 38,152,000 | |
Temporary equity | ||
Redeemable noncontrolling interests | 12,500,000 | 25,280,000 |
Total temporary equity | 12,500,000 | 25,280,000 |
Transfers between Levels | ||
Fair value of asset transfers between Levels 1, 2, and 3 | 0 | |
Level 1 | ||
Assets | ||
Cash, cash equivalents and restricted cash | 226,815,000 | 246,125,000 |
Marketable securities-short term | 0 | 0 |
Marketable securities-long term | 0 | |
Total assets | 226,815,000 | 246,125,000 |
Liabilities | ||
Contingent interest derivative | 0 | |
Mandatorily redeemable financial instrument | 0 | |
Total liabilities | 0 | |
Temporary equity | ||
Redeemable noncontrolling interests | 0 | 0 |
Total temporary equity | 0 | 0 |
Level 2 | ||
Assets | ||
Cash, cash equivalents and restricted cash | 0 | 0 |
Marketable securities-short term | 6,989,000 | 3,111,000 |
Marketable securities-long term | 8,716,000 | |
Total assets | 15,705,000 | 3,111,000 |
Liabilities | ||
Contingent interest derivative | 0 | |
Mandatorily redeemable financial instrument | 0 | |
Total liabilities | 0 | |
Temporary equity | ||
Redeemable noncontrolling interests | 0 | 0 |
Total temporary equity | 0 | 0 |
Level 3 | ||
Assets | ||
Cash, cash equivalents and restricted cash | 0 | 0 |
Marketable securities-short term | 0 | 0 |
Marketable securities-long term | 0 | |
Total assets | 0 | 0 |
Liabilities | ||
Contingent interest derivative | 193,000 | |
Mandatorily redeemable financial instrument | 37,959,000 | |
Total liabilities | 38,152,000 | |
Temporary equity | ||
Redeemable noncontrolling interests | 12,500,000 | 25,280,000 |
Total temporary equity | $ 12,500,000 | $ 25,280,000 |
Fair Value Measurements of Assets and Liabilities - AFS Securities (Details) - USD ($) $ in Thousands |
Sep. 30, 2018 |
Dec. 31, 2017 |
---|---|---|
Amortized Cost to Fair Value | ||
Amortized Cost | $ 15,776 | $ 3,117 |
Gross Unrealized Gains | 1 | 0 |
Gross Unrealized Losses | (72) | (6) |
Fair Value | 15,705 | 3,111 |
Corporate bonds | ||
Amortized Cost to Fair Value | ||
Amortized Cost | 402 | |
Gross Unrealized Gains | 0 | |
Gross Unrealized Losses | (3) | |
Fair Value | 399 | |
Municipal bonds | ||
Amortized Cost to Fair Value | ||
Amortized Cost | 11,598 | 2,867 |
Gross Unrealized Gains | 1 | 0 |
Gross Unrealized Losses | (54) | (6) |
Fair Value | 11,545 | 2,861 |
Certificates of deposit | ||
Amortized Cost to Fair Value | ||
Amortized Cost | 3,776 | 250 |
Gross Unrealized Gains | 0 | 0 |
Gross Unrealized Losses | (15) | 0 |
Fair Value | $ 3,761 | $ 250 |
Fair Value Measurements of Assets and Liabilities - AFS Securities in Unrealized Loss Position (Details) - USD ($) $ in Millions |
Sep. 30, 2018 |
Dec. 31, 2017 |
---|---|---|
Fair Value Disclosures [Abstract] | ||
Securities in unrealized loss position (as of September 30, 2018, less than $14.8 million) | $ 14.8 | $ 2.9 |
Fair Value Measurements of Assets and Liabilities - AFS Securities Expected Maturities (Details) $ in Thousands |
Sep. 30, 2018
USD ($)
|
---|---|
Amortized Cost | |
Due within one year | $ 7,006 |
Due after 1 year through 5 years | 8,718 |
Due after 5 years through 10 years | 52 |
Due after 10 years | 0 |
Total available-for-sale debt securities | 15,776 |
Fair Value | |
Due within one year | 6,989 |
Due after 1 year through 5 years | 8,664 |
Due after 5 years through 10 years | 52 |
Due after 10 years | 0 |
Total available-for-sale debt securities | $ 15,705 |
Fair Value Measurements of Assets and Liabilities - Level 3 Redeemable Noncontrolling Interests (Details) - Redeemable Noncontrolling Interests $ in Thousands |
9 Months Ended |
---|---|
Sep. 30, 2018
USD ($)
| |
Changes in fair value of the Company’s Level 3 redeemable noncontrolling interests | |
Beginning Balance | $ 25,280 |
Fair value adjustment | (10,658) |
Net loss attributable to redeemable noncontrolling interests | (2,122) |
Ending Balance | $ 12,500 |
Investments in Affiliates and Related Transactions (Details) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | 12 Months Ended | ||
---|---|---|---|---|---|
Sep. 30, 2018 |
Sep. 30, 2017 |
Sep. 30, 2018 |
Sep. 30, 2017 |
Dec. 31, 2017 |
|
Schedule of Equity Method Investments [Line Items] | |||||
Equity method investment | $ 30,694 | $ 30,694 | $ 33,917 | ||
Equity method investment, ownership interest | 30.00% | 30.00% | |||
Sequential Technology International, LLC | BPO Divestiture | |||||
Schedule of Equity Method Investments [Line Items] | |||||
Duration of services agreement | 3 years | ||||
STIH | |||||
Schedule of Equity Method Investments [Line Items] | |||||
Equity method investment, ownership interest | 70.00% | 70.00% | |||
Discontinued Operations, Disposed of by Sale | BPO Divestiture | |||||
Schedule of Equity Method Investments [Line Items] | |||||
Discontinued operation after disposal, revenue | $ 900 | $ 1,000 | $ 8,200 | $ 1,900 | |
Cloud Technology and Support | Discontinued Operations, Disposed of by Sale | BPO Divestiture | |||||
Schedule of Equity Method Investments [Line Items] | |||||
Discontinued operation after disposal, revenue | $ 6,400 | $ 8,300 | $ 12,800 | $ 12,500 |
Investments in Affiliates and Related Transactions - Note Receivable (Details) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2018 |
Sep. 30, 2017 |
Sep. 30, 2018 |
Sep. 30, 2017 |
|
Schedule of Equity Method Investments [Line Items] | ||||
Modification to liquidation preference | $ 24,000 | |||
Movement in Financing Receivable [Roll Forward] | ||||
Impairment, activity | (18,225) | $ 0 | $ (18,225) | $ 0 |
Variable Interest Entity, Primary Beneficiary | Sequential Technology International, LLC | ||||
Movement in Financing Receivable [Roll Forward] | ||||
Seller Note, beginning balance | 83,000 | |||
Impairment, beginning balance | (14,562) | |||
Unamortized Discount, beginning balance | (12,163) | |||
Loan Accrued Interest, beginning balance | 11,096 | |||
Distribution Note, beginning balance | 6,187 | |||
Distribution interest, beginning balance | 426 | |||
Total, beginning balance | 73,984 | |||
Seller Note, activity | 0 | |||
Impairment, activity | (18,225) | |||
Unamortized Discount, activity | 438 | |||
Loan Accrued Interest, activity | 6,103 | |||
Distribution Note, activity | 3,293 | |||
Distribution interest, activity | 496 | |||
Total, activity | (7,895) | |||
Seller Note, ending balance | 83,000 | 83,000 | ||
Impairment, ending balance | (32,787) | (32,787) | ||
Unamortized Discount, ending balance | (11,725) | (11,725) | ||
Loan Accrued Interest, ending balance | 17,199 | 17,199 | ||
Distribution Note, ending balance | 9,480 | 9,480 | ||
Distribution interest, ending balance | 922 | 922 | ||
Total, ending balance | 66,089 | 66,089 | ||
Sequential Technology International Holdings, LLC | Goldman Sachs Bank USA | Discontinued Operations, Disposed of by Sale | BPO Divestiture | Indirect Guarantee of Indebtedness | Sequential Technology International, LLC | ||||
Schedule of Equity Method Investments [Line Items] | ||||
Reduction in equity investment | $ 3,300 | $ 3,300 |
Investments in Affiliates and Related Transactions - Equity Method Investment (Details) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | |
---|---|---|---|
Sep. 30, 2018 |
Sep. 30, 2018 |
Dec. 31, 2017 |
|
Balance Sheet | |||
Restricted cash | $ 0 | $ 0 | $ 118 |
Accounts receivable | 22,274 | 22,274 | 18,033 |
Total assets | 22,274 | 22,274 | 18,151 |
Accrued expenses | 0 | 0 | 118 |
Total liabilities | 0 | 0 | 118 |
STI | |||
Balance Sheet | |||
Restricted cash | 0 | 0 | $ 118 |
Sequential Technology International, LLC | |||
Income Statement | |||
Revenues | 33,119 | 94,758 | |
Expenses | 32,177 | 94,523 | |
Net(loss) income | $ 942 | $ 235 |
Debt - Schedule of Debt (Details) - USD ($) $ in Thousands |
Sep. 30, 2018 |
Dec. 31, 2017 |
---|---|---|
Debt Disclosure [Abstract] | ||
Convertible Senior Notes | $ 230,000 | $ 230,000 |
Unamortized debt issuance cost | (1,236) | (2,296) |
Total long-term debt, carrying value | 228,764 | 227,704 |
Total short-term debt, carrying value | 228,764 | 0 |
Total long-term debt, carrying value | $ 0 | $ 227,704 |
Debt - Convertible Senior Notes (Details) - USD ($) |
3 Months Ended | 9 Months Ended | ||||||
---|---|---|---|---|---|---|---|---|
Aug. 12, 2014 |
Sep. 30, 2018 |
Sep. 30, 2017 |
Sep. 30, 2018 |
Sep. 30, 2017 |
Jun. 13, 2018 |
Dec. 31, 2017 |
Oct. 13, 2017 |
|
Debt Instrument [Line Items] | ||||||||
Principal amount | $ 230,000,000 | $ 230,000,000 | $ 230,000,000 | |||||
Liability at fair value | 0 | 0 | ||||||
2019 Notes | ||||||||
Debt Instrument [Line Items] | ||||||||
Convertible senior notes | $ 230,000,000.0 | 230,000,000 | 230,000,000 | |||||
Interest rate, as a percent | 0.75% | |||||||
Principal amount | $ 230,000,000 | 228,800,000 | $ 228,800,000 | |||||
Debt issuance costs | $ 7,100,000 | |||||||
Conversion ratio | 0.0188072 | 0.0188072 | ||||||
Conversion price | $ 53.17 | |||||||
Repurchase price, expressed as a percentage of principal of debt repurchased | 100.00% | |||||||
Interest expense on borrowings | $ 430,000 | $ 431,000 | $ 1,292,000 | $ 1,294,000 | ||||
Interest rate, effective percentage | 1.37% | 1.37% | ||||||
Total debt, carrying value | $ 222,900,000 | $ 222,900,000 | ||||||
Additional interest for non-compliance, percent | 0.25% | |||||||
Second additional interest for non-compliance, percent | 0.50% | |||||||
Debt default, percent of holders | 25.00% | 25.00% | ||||||
Notice of holders of 2019 Notes threshold for acceleration of notes due (percent) | 25.00% | 25.00% |
Debt - Interest Expense (Details) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2018 |
Sep. 30, 2017 |
Sep. 30, 2018 |
Sep. 30, 2017 |
|
Debt Instrument [Line Items] | ||||
Amortization of debt issuance costs | $ 1,060 | $ 12,523 | ||
Non-cash interest on leased facility | $ 241 | $ 243 | 724 | 729 |
Other | 345 | 910 | 667 | 1,568 |
Interest Expense | 1,370 | 25,555 | 3,935 | 48,016 |
2019 Notes | ||||
Debt Instrument [Line Items] | ||||
Amortization of debt issuance costs | 354 | 354 | 1,060 | 1,060 |
Interest expense on borrowings | 430 | 431 | 1,292 | 1,294 |
Additional interest on default | 0 | 0 | 192 | 288 |
2017 Term Facility | Goldman Sachs Bank USA | ||||
Debt Instrument [Line Items] | ||||
Amortization of debt issuance costs | 0 | 1,021 | 0 | 2,376 |
Interest expense on borrowings | 0 | 12,411 | 0 | 29,047 |
Contingent Interest Derivative | 0 | 2,489 | 0 | 2,489 |
Amendment fees paid to third parties | 0 | 5,716 | 0 | 5,716 |
Revolving Facility | Goldman Sachs Bank USA | ||||
Debt Instrument [Line Items] | ||||
Amortization of debt issuance costs | 0 | 204 | 0 | 542 |
Commitment fees | 0 | 114 | 0 | 448 |
Amendment fees paid to third parties | 0 | 1,662 | 0 | 1,662 |
Amended Credit Facility | Credit Facility | ||||
Debt Instrument [Line Items] | ||||
Amortization of debt issuance costs | 0 | 0 | 0 | 748 |
Commitment fees | 0 | 0 | 0 | 25 |
Interest expense on borrowings | $ 0 | $ 0 | $ 0 | $ 24 |
Accumulated Other Comprehensive Income/ (Loss) - Changes in AOCI (Details) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2018 |
Sep. 30, 2017 |
Sep. 30, 2018 |
Sep. 30, 2017 |
|
Changes in accumulated other comprehensive income (loss) | ||||
Beginning Balance | $ 463,587 | |||
Total comprehensive income | $ (1,619) | $ 5,556 | (7,184) | $ 18,963 |
Ending Balance | 291,521 | 291,521 | ||
Accumulated Other Comprehensive Income (Loss) | ||||
Changes in accumulated other comprehensive income (loss) | ||||
Beginning Balance | (23,373) | |||
Other comprehensive income | (7,464) | |||
Tax effect | 280 | |||
Total comprehensive income | (7,184) | |||
Ending Balance | (30,557) | (30,557) | ||
Foreign Currency Translation Adjustment | ||||
Changes in accumulated other comprehensive income (loss) | ||||
Beginning Balance | (20,284) | |||
Other comprehensive income | (6,529) | |||
Tax effect | 0 | |||
Total comprehensive income | (6,529) | |||
Ending Balance | (26,813) | (26,813) | ||
Unrealized (Loss) Income on Intra-Entity Foreign Currency Transactions | ||||
Changes in accumulated other comprehensive income (loss) | ||||
Beginning Balance | (3,085) | |||
Other comprehensive income | (883) | |||
Tax effect | 280 | |||
Total comprehensive income | (603) | |||
Ending Balance | (3,688) | (3,688) | ||
Unrealized Holding Gains (Losses) on Available-for-Sale Securities | ||||
Changes in accumulated other comprehensive income (loss) | ||||
Beginning Balance | (4) | |||
Other comprehensive income | (52) | |||
Tax effect | 0 | |||
Total comprehensive income | (52) | |||
Ending Balance | $ (56) | $ (56) |
Stockholders' Equity - Narrative (Details) |
9 Months Ended | |||
---|---|---|---|---|
Feb. 15, 2018
USD ($)
director
member
vote
registration
$ / shares
shares
|
Nov. 14, 2017
USD ($)
|
Sep. 30, 2018
USD ($)
vote
$ / shares
shares
|
Dec. 31, 2017
$ / shares
shares
|
|
Class of Stock [Line Items] | ||||
Dividends | $ | $ 0 | |||
Preferred stock, shares outstanding (shares) | 195,000 | 0 | ||
Preferred stock, shares issued (shares) | 195,000 | 0 | ||
Preferred stock, par value (in dollars per share) | $ / shares | $ 0.0001 | $ 0.0001 | ||
Dividend rate, percentage | 14.50% | |||
Convertible preferred stock, conversion price per share | $ / shares | $ 18.00 | |||
Number of elected directors | director | 4 | |||
Number of board of director members | director | 10 | |||
Number of board of director members elected by preferred stock holders | director | 2 | |||
Number of board of directors agreed upon to be elected meeting independence criteria | director | 4 | |||
Number of board of directors elected meeting independence criteria | director | 2 | |||
Minimum number of board of director members that preferred stock holders can appoint pursuant to certification | director | 1 | |||
Maximum ownership threshold allowed for director election rights, percent | 30.00% | |||
Demand registrations allowed under agreement | registration | 3 | |||
Demand registrations allowed under agreement annually | registration | 2 | |||
Demand registration, minimum percentage of shares | 10.00% | |||
Common Stock | ||||
Class of Stock [Line Items] | ||||
Number of votes per share (vote) | vote | 1 | |||
Series A Preferred Stock | ||||
Class of Stock [Line Items] | ||||
Number of votes per share (vote) | vote | 1 | |||
Preferred stock, shares outstanding (shares) | 195,181 | |||
Preferred stock, shares issued (shares) | 185,000 | |||
Preferred stock, dividends (shares) | 10,181 | |||
Preferred stock, liquidation preference | $ | $ 323,500,000 | |||
Preferred stock, redemption amount | $ | $ 251,900,000 | |||
Intralinks Holdings, Inc. | ||||
Class of Stock [Line Items] | ||||
Payment of reimbursement fees | $ | $ 5,000,000 | $ 5,000,000 | ||
Ten Percent or Greater Ownership | ||||
Class of Stock [Line Items] | ||||
Number of elected directors | member | 2 | |||
Preferred stock, ownership percentage | 10.00% | |||
Greater than Five and Less than Ten Percent Ownership | ||||
Class of Stock [Line Items] | ||||
Number of elected directors | member | 1 | |||
Minimum | Greater than Five and Less than Ten Percent Ownership | ||||
Class of Stock [Line Items] | ||||
Preferred stock, ownership percentage | 5.00% | |||
Maximum | Greater than Five and Less than Ten Percent Ownership | ||||
Class of Stock [Line Items] | ||||
Preferred stock, ownership percentage | 10.00% | |||
Silver Private Holdings I, LLC | ||||
Class of Stock [Line Items] | ||||
Preferred stock, shares issued (shares) | 185,000 | |||
Preferred stock, par value (in dollars per share) | $ / shares | $ 0.0001 | |||
Preferred stock, liquidation preference (dollars per share) | $ / shares | $ 1,000 | |||
Consideration received on transaction | $ | $ 97,700,000 | |||
Number of shares repurchased under program (shares) | 5,994,667 | |||
Fair value, approval threshold | $ | 10,000,000 | |||
Fair market value of transaction, individual | $ | 5,000,000 | |||
Fair market value of transaction, aggregate | $ | 10,000,000 | |||
Capital expenditure threshold | $ | $ 25,000,000 | |||
Percentage ownership after conversion | 19.90% | |||
Voting percentage threshold of ownership | 19.99% | |||
Minimum number of board of director members that preferred stock holders can appoint pursuant to certification | director | 2 | |||
Chief Executive Officer | ||||
Class of Stock [Line Items] | ||||
Number of elected directors | director | 1 | |||
Board of Directors Chairman | ||||
Class of Stock [Line Items] | ||||
Number of elected directors | director | 1 | |||
Series A Preferred Stock | ||||
Class of Stock [Line Items] | ||||
Conversion ratio | 0.0555556 | |||
Equity Incentive Plan 2015 | ||||
Class of Stock [Line Items] | ||||
Shares available for grant | 0 | |||
Liability, accrued expenses, non-vested | $ | $ 700,000 | |||
New Hire Equity Incentive Plan 2017 | ||||
Class of Stock [Line Items] | ||||
Shares available for grant | 600,000 | |||
Restricted stock awards | ||||
Class of Stock [Line Items] | ||||
Granted (in shares) | 1,801,000 | |||
Vested (in shares) | (738,000) | |||
Restricted stock awards | Equity Incentive Plan 2015 | ||||
Class of Stock [Line Items] | ||||
Granted (in shares) | 600,000 | |||
Vested (in shares) | 0 |
Stockholders' Equity - Stock-Based Compensation (Details) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2018 |
Sep. 30, 2017 |
Sep. 30, 2018 |
Sep. 30, 2017 |
|
Share-based compensation expense | ||||
Total stock-based compensation expense | $ 7,216 | $ 3,678 | $ 22,040 | $ 14,427 |
Total stock-based compensation before taxes | 7,216 | 3,678 | 22,040 | 14,427 |
Tax benefit | 1,402 | 973 | 4,356 | 2,686 |
Stock-based compensation cost related to non-vested equity awards not yet recognized as an expense | $ 48,100 | 48,100 | ||
Weighted-average period over which stock-based compensation cost related to non-vested equity awards is expected to be recognized | 2 years 5 months 1 day | |||
Employee Stock Purchase Plan | ||||
Share-based compensation expense | ||||
Total stock-based compensation expense | $ 0 | 52 | 0 | 382 |
Stock options | ||||
Share-based compensation expense | ||||
Total stock-based compensation expense | 1,940 | 1,534 | 5,680 | 4,522 |
Restricted stock awards | ||||
Share-based compensation expense | ||||
Total stock-based compensation expense | 5,276 | 2,092 | 16,360 | 9,523 |
Cost of revenues | ||||
Share-based compensation expense | ||||
Total stock-based compensation expense | 1,035 | 1,118 | 3,447 | 3,326 |
Research and development | ||||
Share-based compensation expense | ||||
Total stock-based compensation expense | 1,340 | 1,201 | 4,682 | 4,181 |
Selling, general and administrative | ||||
Share-based compensation expense | ||||
Total stock-based compensation expense | $ 4,841 | $ 1,359 | $ 13,911 | $ 6,920 |
Stockholders’ Equity - Black-Scholes Assumptions (Details) - Stock options - $ / shares |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2018 |
Sep. 30, 2017 |
Sep. 30, 2018 |
Sep. 30, 2017 |
|
Weighted-average assumptions | ||||
Expected stock price volatility | 66.00% | 0.00% | 65.20% | 49.20% |
Risk-free interest rate | 2.70% | 0.00% | 2.60% | 1.70% |
Expected life of options (in years) | 4 years 3 months 15 days | 0 days | 4 years 1 month 10 days | 4 years 11 days |
Expected dividend yield | 0.00% | 0.00% | 0.00% | 0.00% |
Weighted-average fair value (grant date) of the options (in dollars per share) | $ 3.33 | $ 0.00 | $ 5.04 | $ 7.79 |
Stockholders' Equity - Stock Options (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2018 |
Sep. 30, 2017 |
Sep. 30, 2018 |
Sep. 30, 2017 |
|
Number of Options | ||||
Options outstanding at the beginning of the period (in shares) | 3,950 | |||
Options Granted (in shares) | 1,065 | |||
Options Exercised (in shares) | 0 | |||
Options Cancelled (in shares) | (464) | |||
Options outstanding at the end of the period (in shares) | 4,551 | 4,551 | ||
Vested or expected to vest (in shares) | 1,449 | 1,449 | ||
Exercisable (in shares) | 1,449 | 1,449 | ||
Weighted-Average Exercise Price | ||||
Balance at the beginning of the period (in dollars per share) | $ 21.54 | |||
Options Granted (in dollars per share) | 9.75 | |||
Options Exercised (in dollars per share) | 0.00 | |||
Options Cancelled (in dollars per share) | 21.81 | |||
Balance at the end of the period (in dollars per share) | $ 18.75 | 18.75 | ||
Vested or expected to vest (in dollars per share) | 31.04 | 31.04 | ||
Exercisable (in dollars per share) | $ 31.04 | $ 31.04 | ||
Weighted-Average Remaining Contractual Term (Years) | ||||
Outstanding | 5 years 1 month 6 days | |||
Vested or expected to vest | 3 years 2 months 23 days | |||
Exercisable | 3 years 2 months 23 days | |||
Aggregate Intrinsic Value | ||||
Outstanding | $ 56 | $ 56 | ||
Vested or expected to vest | 0 | 0 | ||
Exercisable | 0 | 0 | ||
Additional disclosures related to stock options | ||||
Total intrinsic value for stock options exercised | $ 0 | $ 0 | $ 0 | $ 1,000 |
Stockholders' Equity - Restricted Stock (Details) - Restricted stock awards shares in Thousands |
9 Months Ended |
---|---|
Sep. 30, 2018
$ / shares
shares
| |
Number of Awards | |
Non-vested at the beginning of the period (in shares) | shares | 2,064 |
Granted (in shares) | shares | 1,801 |
Vested (in shares) | shares | (738) |
Forfeited (in shares) | shares | (211) |
Non-vested at the end of the period (in shares) | shares | 2,916 |
Weighted-Average Grant Date Fair Value | |
Non-vested at the beginning of the period (in dollars per share) | $ / shares | $ 22.75 |
Granted (in dollars per share) | $ / shares | 9.15 |
Vested (in dollars per share) | $ / shares | 26.75 |
Forfeited (in dollars per share) | $ / shares | 17.52 |
Non-vested at the end of the period (in dollars per share) | $ / shares | $ 13.74 |
Stockholders' Equity - Treasury Stock (Details) - 2016 Share Repurchase Program |
9 Months Ended |
---|---|
Sep. 30, 2018
shares
| |
Treasury Stock | |
Number of shares repurchased under program (shares) | 0 |
Shares retired | 3,900,000 |
Restructuring (Details) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2018 |
Sep. 30, 2017 |
Sep. 30, 2018 |
Sep. 30, 2017 |
|
Restructuring accrual and changes | ||||
Charges | $ 4,539 | $ 2,312 | $ 8,425 | $ 11,715 |
Accrued expenses | ||||
Restructuring accrual and changes | ||||
Balance at December 31, 2017 | 498 | |||
Charges | 8,425 | |||
Payments | (6,519) | |||
Other adjustments | 1,959 | |||
Balance at September 30, 2018 | 4,363 | 4,363 | ||
Employment termination costs | Accrued expenses | ||||
Restructuring accrual and changes | ||||
Balance at December 31, 2017 | 474 | |||
Charges | 8,003 | |||
Payments | (6,505) | |||
Other adjustments | (38) | |||
Balance at September 30, 2018 | 1,934 | 1,934 | ||
Facilities consolidation | Accrued expenses | ||||
Restructuring accrual and changes | ||||
Balance at December 31, 2017 | 24 | |||
Charges | 422 | |||
Payments | (14) | |||
Other adjustments | 1,997 | |||
Balance at September 30, 2018 | $ 2,429 | $ 2,429 |
Income Taxes (Details) - USD ($) |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2018 |
Sep. 30, 2017 |
Sep. 30, 2018 |
Sep. 30, 2017 |
|
Income Tax Disclosure [Abstract] | ||||
Provision (benefit) for income taxes | $ (2,308,000) | $ (12,825,000) | $ (1,604,000) | $ (17,973,000) |
Effective income tax rate, percent | 1.30% | |||
Change in valuation allowance | $ 0 |
Earnings per Common Share (Details) $ / shares in Units, $ in Thousands |
3 Months Ended | 9 Months Ended | ||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|
Aug. 12, 2014 |
Sep. 30, 2018
USD ($)
$ / shares
shares
|
Sep. 30, 2017
USD ($)
$ / shares
shares
|
Sep. 30, 2018
USD ($)
$ / shares
shares
|
Sep. 30, 2017
USD ($)
$ / shares
shares
|
||||||||
Net Income (Loss) Available to Common Stockholders, Diluted [Abstract] | ||||||||||||
Net loss from continuing operations | $ | $ (46,644) | $ (45,206) | $ (125,885) | $ (113,266) | ||||||||
Net (income) loss attributable to redeemable noncontrolling interests | $ | (422) | 1,276 | 2,122 | 6,980 | ||||||||
Preferred stock dividend | $ | (7,463) | 0 | (18,076) | 0 | ||||||||
Net (loss) income from continuing operations attributable to Synchronoss | $ | (54,529) | (43,930) | (141,839) | (106,286) | ||||||||
Income from discontinued operations, net of taxes | $ | [1] | 0 | 8,842 | 0 | [2] | (14,067) | [2] | |||||
Income effect for interest on convertible debt, net of tax | $ | 0 | 0 | 0 | 0 | ||||||||
Net loss from continuing operations adjusted for the convertible debt | $ | (54,529) | (43,930) | (141,839) | (106,286) | ||||||||
Net loss attributable to Synchronoss | $ | $ (54,529) | $ (35,088) | $ (141,839) | $ (120,353) | ||||||||
Weighted-average common shares outstanding: | ||||||||||||
Weighted average common shares outstanding - basic (shares) | 39,612,000 | 44,893,000 | 40,405,000 | 44,576,000 | ||||||||
Incremental Weighted Average Shares Attributable to Dilutive Effect [Abstract] | ||||||||||||
Shares from assumed conversion of convertible debt (shares) | 0 | 0 | 0 | 0 | ||||||||
Shares from assumed conversion of preferred stock (shares) | 0 | 0 | 0 | 0 | ||||||||
Options and unvested restricted shares (shares) | 0 | 0 | 0 | 0 | ||||||||
Weighted average common shares outstanding - diluted (shares) | 39,612,000 | 44,893,000 | 40,405,000 | 44,576,000 | ||||||||
Basic: | ||||||||||||
Continuing operations (usd per share) | $ / shares | $ (1.38) | $ (0.98) | $ (3.51) | $ (2.38) | ||||||||
Discontinued operations (usd per share) | $ / shares | [1] | 0.00 | 0.20 | 0.00 | (0.32) | |||||||
Basic (usd per share) | $ / shares | (1.38) | (0.78) | (3.51) | (2.70) | ||||||||
Diluted: | ||||||||||||
Continuing operations (usd per share) | $ / shares | (1.38) | (0.98) | (3.51) | (2.38) | ||||||||
Discontinued operations (usd per share) | $ / shares | [1] | 0.00 | 0.20 | 0.00 | (0.32) | |||||||
Diluted (usd per share) | $ / shares | $ (1.38) | $ (0.78) | $ (3.51) | $ (2.70) | ||||||||
2019 Notes | ||||||||||||
Diluted: | ||||||||||||
Conversion ratio | 0.0188072 | 0.0188072 | ||||||||||
Restricted stock awards | ||||||||||||
Diluted: | ||||||||||||
Anti-dilutive stock options excluded (shares) | 2,916,000 | 3,259,000 | 2,916,000 | 3,259,000 | ||||||||
Convertible Debt Securities | ||||||||||||
Diluted: | ||||||||||||
Anti-dilutive stock options excluded (shares) | 4,325,646 | |||||||||||
Employee Stock Option | ||||||||||||
Diluted: | ||||||||||||
Anti-dilutive stock options excluded (shares) | 4,647,000 | 3,012,000 | 4,412,000 | 2,655,000 | ||||||||
Series A Preferred Stock | ||||||||||||
Diluted: | ||||||||||||
Anti-dilutive stock options excluded (shares) | 10,843,398 | |||||||||||
Conversion ratio | 0.0555556 | |||||||||||
|
Commitments and Contingencies (Details) - claim |
1 Months Ended | ||
---|---|---|---|
Jun. 14, 2017 |
Jun. 13, 2018 |
Oct. 13, 2017 |
|
Pending Litigation | The Securities Law Actions | |||
Legal Matters | |||
Number of complaints filed | 4 | ||
2019 Notes | |||
Legal Matters | |||
Debt default, percent of holders | 25.00% | 25.00% |
Additional Financial Information (Details) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2018 |
Sep. 30, 2017 |
Sep. 30, 2018 |
Sep. 30, 2017 |
|
FX gains | $ 38 | $ (173) | $ (241) | $ (2,912) |
PIK Note impairment | (18,225) | 0 | (18,225) | 0 |
Litigation settlement | 4,495 | 0 | 4,495 | 0 |
Remeasurement gain on financial instrument | 0 | 0 | 3,849 | 0 |
Divestiture: SpeechCycle | 0 | 0 | 0 | 4,947 |
Income from Investment | 519 | 0 | 519 | 0 |
Royalty income | 0 | 0 | 92 | 0 |
Others | (266) | (83) | 331 | 339 |
Total | $ (13,439) | $ (256) | (9,180) | $ 2,374 |
Open Exchange | ||||
Litigation settlement | 4,200 | |||
F-Secure Settlement | ||||
Litigation settlement | $ 300 |
Subsequent Events Review (Details) - USD ($) $ in Millions |
3 Months Ended | |
---|---|---|
Nov. 02, 2018 |
Dec. 31, 2018 |
|
2019 Notes | Subsequent Event | ||
Subsequent Event [Line Items] | ||
Debt retired as part of settlement agreement | $ 116.0 | |
Maximum | Forecast | ||
Subsequent Event [Line Items] | ||
Proceeds from previous disposition | $ 25.0 |
Label | Element | Value |
---|---|---|
Restricted Cash | us-gaap_RestrictedCash | $ 6,164,000 |
Restricted Cash | us-gaap_RestrictedCash | $ 4,377,000 |
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