x | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
o | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
Delaware | 11-3547680 | |
(State or other jurisdiction of incorporation or organization) | (IRS Employer Identification No.) | |
23 Main Street, Holmdel, NJ | 07733 | |
(Address of principal executive offices) | (Zip Code) |
Large accelerated filer | x | Accelerated filer | o | |
Non-accelerated filer | o | (Do not check if a smaller reporting company) | ||
Smaller reporting company | o | Emerging growth company | o | |
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. |
Class | Outstanding at | July 31, 2017 | |||
Common Stock, par value $0.001 | 227,345,315 | shares |
Part 1 - Financial Information | ||
Page | ||
Item 1. | Condensed Consolidated Financial Statements and Notes | |
Item 2. | ||
Item 3. | ||
Item 4 | ||
Item 1. | ||
Item 1A. | ||
Item 2. | ||
Item 3. | ||
Item 4. | ||
Item 5. | ||
Item 6. | ||
June 30, 2017 | December 31, 2016 | ||||||
Assets | (unaudited) | (revised) (1) | |||||
Current assets: | |||||||
Cash and cash equivalents | $ | 26,825 | $ | 29,078 | |||
Marketable securities | — | 601 | |||||
Accounts receivable, net of allowance of $3,112 and $2,093, respectively | 36,185 | 36,688 | |||||
Inventory, net of allowance of $137 and $117, respectively | 3,503 | 4,116 | |||||
Deferred customer acquisition costs, current | 1,486 | 2,610 | |||||
Prepaid expenses | 25,833 | 26,041 | |||||
Other current assets | 2,278 | 3,147 | |||||
Total current assets | 96,110 | 102,281 | |||||
Property and equipment, net of accumulated depreciation of $138,644 and $129,166, respectively | 44,688 | 48,415 | |||||
Goodwill | 366,806 | 360,363 | |||||
Software, net of accumulated amortization of $92,361 and $87,626, respectively | 23,867 | 21,971 | |||||
Restricted cash | 1,802 | 1,851 | |||||
Intangible assets, net of accumulated amortization of $107,914 and $88,419, respectively | 188,076 | 199,256 | |||||
Deferred tax assets | 204,286 | 184,210 | |||||
Other assets | 15,761 | 17,319 | |||||
Total assets | $ | 941,396 | $ | 935,666 | |||
Liabilities and Stockholders’ Equity | |||||||
Current liabilities: | |||||||
Accounts payable | $ | 23,045 | $ | 30,751 | |||
Accrued expenses | 84,170 | 109,195 | |||||
Deferred revenue, current portion | 31,157 | 32,442 | |||||
Current maturities of capital lease obligations | 1,021 | 3,288 | |||||
Current portion of notes payable | 18,750 | 18,750 | |||||
Total current liabilities | 158,143 | 194,426 | |||||
Indebtedness under revolving credit facility | 214,000 | 209,000 | |||||
Notes payable, net of debt related costs and current portion | 81,953 | 91,124 | |||||
Capital lease obligations, net of current maturities | 46 | 140 | |||||
Other liabilities | 5,084 | 4,435 | |||||
Total liabilities | 459,226 | 499,125 | |||||
Commitments and Contingencies (Note 7) | |||||||
Stockholders’ Equity | |||||||
Common stock, par value $0.001 per share; 596,950 shares authorized at June 30, 2017 and December 31, 2016; 294,386 and 282,319 shares issued at June 30, 2017 and December 31, 2016, respectively; 227,287 and 219,001 shares outstanding at June 30, 2017 and December 31, 2016, respectively | 294 | 282 | |||||
Additional paid-in capital | 1,349,356 | 1,310,847 | |||||
Accumulated deficit | (627,890 | ) | (641,869 | ) | |||
Treasury stock, at cost, 67,099 shares at June 30, 2017 and 63,318 shares at December 31, 2016 | (243,229 | ) | (219,125 | ) | |||
Accumulated other comprehensive loss | 3,639 | (13,594 | ) | ||||
Total stockholders’ equity | 482,170 | 436,541 | |||||
Total liabilities and stockholders’ equity | $ | 941,396 | $ | 935,666 |
Three Months Ended | Six Months Ended | ||||||||||||||
June 30, | June 30, | ||||||||||||||
2017 | 2016 | 2017 | 2016 | ||||||||||||
(revised) (1) | (revised) (1) | ||||||||||||||
Total revenues | $ | 251,836 | $ | 233,675 | $ | 495,183 | $ | 460,499 | |||||||
Operating Expenses: | |||||||||||||||
Cost of service (exclusive of depreciation and amortization) | 97,674 | 76,078 | 185,270 | 145,228 | |||||||||||
Cost of goods sold | 6,187 | 8,352 | 13,480 | 17,418 | |||||||||||
Sales and marketing | 79,738 | 83,344 | 161,669 | 162,945 | |||||||||||
Engineering and development | 6,670 | 7,243 | 15,040 | 14,077 | |||||||||||
General and administrative | 36,514 | 35,053 | 71,600 | 61,723 | |||||||||||
Depreciation and amortization | 18,394 | 18,218 | 36,341 | 35,197 | |||||||||||
Total operating expenses | 245,177 | 228,288 | 483,400 | 436,588 | |||||||||||
Income from operations | 6,659 | 5,387 | 11,783 | 23,911 | |||||||||||
Other Income (Expense): | |||||||||||||||
Interest income | 4 | 25 | 9 | 46 | |||||||||||
Interest expense | (3,861 | ) | (3,057 | ) | (7,564 | ) | (5,503 | ) | |||||||
Other income (expense), net | 686 | 104 | 466 | 258 | |||||||||||
Total other income (expense), net | (3,171 | ) | (2,928 | ) | (7,089 | ) | (5,199 | ) | |||||||
Income before income taxes | 3,488 | 2,459 | 4,694 | 18,712 | |||||||||||
Income tax benefit (expense) | 1,337 | (2,241 | ) | 6,044 | (10,563 | ) | |||||||||
Net income | $ | 4,825 | $ | 218 | $ | 10,738 | $ | 8,149 | |||||||
Earnings per common share: | |||||||||||||||
Basic | $ | 0.02 | $ | — | $ | 0.05 | $ | 0.04 | |||||||
Diluted | $ | 0.02 | $ | — | $ | 0.04 | $ | 0.04 | |||||||
Weighted-average common shares outstanding: | |||||||||||||||
Basic | 223,492 | 213,558 | 221,930 | 213,800 | |||||||||||
Diluted | 239,938 | 222,700 | 239,923 | 223,978 |
Three Months Ended | Six Months Ended | ||||||||||||||
June 30, | June 30, | ||||||||||||||
2017 | 2016 | 2017 | 2016 | ||||||||||||
(revised) (1) | (revised) (1) | ||||||||||||||
Net income | $ | 4,825 | $ | 218 | $ | 10,738 | $ | 8,149 | |||||||
Other comprehensive income (loss): | |||||||||||||||
Foreign currency translation adjustment | 14,185 | (1,691 | ) | 17,232 | (1,713 | ) | |||||||||
Unrealized gain on available-for-sale securities | (20 | ) | 4 | 1 | 26 | ||||||||||
Total other comprehensive income (loss) | 14,165 | (1,687 | ) | 17,233 | (1,687 | ) | |||||||||
Comprehensive income (loss) | $ | 18,990 | $ | (1,469 | ) | $ | 27,971 | $ | 6,462 |
Six Months Ended | |||||||
June 30, | |||||||
2017 | 2016 (1) | ||||||
Cash flows from operating activities: | |||||||
Net income | $ | 10,738 | $ | 8,149 | |||
Adjustments to reconcile net income to net cash provided by operating activities: | |||||||
Depreciation, amortization and impairment charges | 17,381 | 18,579 | |||||
Amortization of intangibles | 18,826 | 16,618 | |||||
Deferred income taxes | (8,111 | ) | 8,897 | ||||
Allowance for doubtful accounts | 452 | 597 | |||||
Allowance for obsolete inventory | 293 | 352 | |||||
Amortization of debt issuance costs | 204 | 517 | |||||
Gain on sale of business | (928 | ) | — | ||||
Loss on disposal of fixed assets | 134 | — | |||||
Share-based expense | 20,891 | 16,670 | |||||
Changes in operating assets and liabilities, net of acquisitions: | |||||||
Accounts receivable | 1,280 | (7,176 | ) | ||||
Inventory | 353 | 906 | |||||
Prepaid expenses and other current assets | 1,173 | (2,587 | ) | ||||
Deferred customer acquisition costs | 1,129 | 913 | |||||
Accounts payable | (8,124 | ) | 5,095 | ||||
Accrued expenses | (23,787 | ) | (23,311 | ) | |||
Deferred revenue | (1,506 | ) | (1,534 | ) | |||
Other assets and liabilities | 2,295 | (158 | ) | ||||
Net cash provided by operating activities | 32,693 | 42,527 | |||||
Cash flows from investing activities: | |||||||
Capital expenditures | (8,995 | ) | (15,948 | ) | |||
Purchase of marketable securities | — | (5,664 | ) | ||||
Maturities and sales of marketable securities | 602 | 7,524 | |||||
Acquisition and development of software assets | (6,884 | ) | (5,655 | ) | |||
Acquisition of businesses, net of cash acquired | — | (163,042 | ) | ||||
Proceeds from sale of business | 1,000 | — | |||||
Net cash used in investing activities | (14,277 | ) | (182,785 | ) | |||
Cash flows from financing activities: | |||||||
Principal payments on capital lease obligations and other financing obligations | (4,861 | ) | (6,329 | ) | |||
Principal payments on notes and revolving credit facility | (19,375 | ) | (33,437 | ) | |||
Proceeds received from draw down of revolving credit facility and issuance of notes payable | 15,000 | 181,250 | |||||
Debt related costs | — | (1,316 | ) | ||||
Common stock repurchases | (9,542 | ) | (32,902 | ) | |||
Employee taxes paid on withholding shares | (14,562 | ) | (3,966 | ) | |||
Proceeds from exercise of stock options | 11,962 | 3,023 | |||||
Net cash (used)/provided by financing activities | (21,378 | ) | 106,323 | ||||
Effect of exchange rate changes on cash | 660 | (109 | ) | ||||
Net decrease in cash, cash equivalents, and restricted cash | (2,302 | ) | (34,044 | ) | |||
Cash, cash equivalents, and restricted cash, beginning of period | 30,929 | 60,313 | |||||
Cash, cash equivalents, and restricted cash, end of period | $ | 28,627 | $ | 26,269 | |||
Supplemental disclosures of cash flow information: | |||||||
Cash paid during the periods for: | |||||||
Interest | $ | 6,722 | $ | 4,833 | |||
Income taxes | $ | 3,554 | $ | 3,163 | |||
Non-cash investing and financing activities: | |||||||
Capital expenditures included in accounts payable and accrued liabilities | $ | 3,492 | $ | 4,918 | |||
Issuance of common stock in connection with acquisition of business | $ | — | $ | 31,591 | |||
Contingent consideration in connection with acquisition of business | $ | — | $ | 16,472 | |||
Assumption of options in connection with acquisition of business | $ | — | $ | 4,779 |
Shares | Common Stock | Additional Paid-in Capital | Accumulated Deficit | Treasury Stock | Accumulated Other Comprehensive Income (Loss) | Total | ||||||||||||||||||||
Balance at December 31, 2016 (Revised) (1) | 219,001 | $ | 282 | $ | 1,310,847 | $ | (641,869 | ) | $ | (219,125 | ) | $ | (13,594 | ) | $ | 436,541 | ||||||||||
Cumulative effect adjustment upon the adoption of ASU 2016-09 | 5,668 | 3,241 | 8,909 | |||||||||||||||||||||||
Stock option exercises | 12,068 | 12 | 11,950 | 11,962 | ||||||||||||||||||||||
Share-based expense | 20,891 | 20,891 | ||||||||||||||||||||||||
Employee taxes paid on withholding shares | (2,183 | ) | (14,562 | ) | (14,562 | ) | ||||||||||||||||||||
Common stock repurchases | (1,599 | ) | (9,542 | ) | (9,542 | ) | ||||||||||||||||||||
Foreign currency translation adjustment | 17,232 | 17,232 | ||||||||||||||||||||||||
Unrealized loss on available-for-sale securities | 1 | 1 | ||||||||||||||||||||||||
Net income | 10,738 | 10,738 | ||||||||||||||||||||||||
Balance at June 30, 2017 | 227,287 | $ | 294 | $ | 1,349,356 | $ | (627,890 | ) | $ | (243,229 | ) | $ | 3,639 | $ | 482,170 |
December 31, 2016 | |||
Level 1 Assets | |||
Money market fund (1) | $ | 300 | |
Level 2 Assets | |||
Available-for-sale securities (2) | $ | 601 |
June 30, 2017 | December 31, 2016 | ||||||
Cash and cash equivalents | $ | 26,825 | $ | 29,078 | |||
Cash collateralized letter of credit-lease deposits | $ | 1,580 | $ | 1,578 | |||
Cash reserves | 222 | 273 | |||||
Restricted cash | $ | 1,802 | $ | 1,851 | |||
Cash, cash equivalents, and restricted cash | $ | 28,627 | $ | 30,929 |
June 30, 2017 | December 31, 2016 | ||||||
Customer relationships | 129,635 | 133,774 | |||||
Developed technology | 51,882 | 57,245 | |||||
Patents and patent licenses | 4,789 | 5,547 | |||||
Trade names | 698 | 1,033 | |||||
Non-compete agreements | 1,072 | 1,657 | |||||
Intangible assets, net | $ | 188,076 | $ | 199,256 |
June 30, 2017 | December 31, 2016 | ||||||
Compensation and related taxes and temporary labor | $ | 28,294 | $ | 35,308 | |||
Marketing | 11,911 | 11,979 | |||||
Taxes and fees | 14,380 | 18,976 | |||||
Acquisition related consideration accounted for as compensation | 1,733 | 6,608 | |||||
Telecommunications | 16,019 | 14,724 | |||||
Settlement | — | 5,000 | |||||
Other accruals | 8,333 | 12,846 | |||||
Customer credits | 1,200 | 2,074 | |||||
Professional fees | 2,300 | 1,680 | |||||
Accrued expenses | $ | 84,170 | $ | 109,195 |
Consolidated Balance Sheets | ||||||||||||
As of December 31, 2016 | ||||||||||||
As Reported | Adjustment | As Revised | ||||||||||
Deferred tax assets, non-current | $ | 188,966 | $ | 4,756 | $ | 184,210 | ||||||
Total assets | 940,422 | 4,756 | 935,666 | |||||||||
Accumulated deficit | (637,113 | ) | 4,756 | (641,869 | ) | |||||||
Total stockholders' equity | 441,297 | 4,756 | 436,541 | |||||||||
Total liabilities and stockholders' equity | 940,422 | 4,756 | 935,666 |
Condensed Consolidated Statements of Income | ||||||||||||||||||||||||
Three Months Ended | Six Months Ended | |||||||||||||||||||||||
June 30, 2016 | June 30, 2016 | |||||||||||||||||||||||
As Reported | Adjustment | As Revised | As Reported | Adjustment | As Revised | |||||||||||||||||||
Income tax expense | $ | (1,562 | ) | $ | 679 | $ | (2,241 | ) | $ | (9,884 | ) | $ | 679 | $ | (10,563 | ) | ||||||||
Net income | 897 | 679 | 218 | 8,828 | 679 | 8,149 | ||||||||||||||||||
Net income per common share: | ||||||||||||||||||||||||
Basic | $ | — | $ | — | $ | — | $ | 0.04 | $ | — | $ | 0.04 | ||||||||||||
Diluted | $ | — | $ | — | $ | — | $ | 0.04 | $ | — | $ | 0.04 | ||||||||||||
Three Months Ended | Nine Months Ended | |||||||||||||||||||||||
September 30, 2016 | September 30, 2016 | |||||||||||||||||||||||
As Reported | Adjustment | As Revised | As Reported | Adjustment | As Revised | |||||||||||||||||||
Income tax expense | $ | (1,501 | ) | $ | 2,038 | $ | (3,539 | ) | $ | (11,385 | ) | $ | 2,717 | $ | (14,102 | ) | ||||||||
Net income | 9,078 | 2,038 | 7,040 | 17,906 | 2,717 | 15,189 | ||||||||||||||||||
Net income per common share: | ||||||||||||||||||||||||
Basic | $ | 0.04 | $ | 0.01 | $ | 0.03 | $ | 0.08 | $ | 0.01 | $ | 0.07 | ||||||||||||
Diluted | $ | 0.04 | $ | 0.01 | $ | 0.03 | $ | 0.08 | $ | 0.01 | $ | 0.07 | ||||||||||||
Three Months Ended | Year Ended | |||||||||||||||||||||||
December 31, 2016 | December 31, 2016 | |||||||||||||||||||||||
As Reported | Adjustment | As Revised | As Reported | Adjustment | As Revised | |||||||||||||||||||
Income tax expense | $ | (1,553 | ) | $ | 2,039 | $ | (3,592 | ) | $ | (12,938 | ) | $ | 4,756 | $ | (17,694 | ) | ||||||||
Net income | 1 | 2,039 | (2,038 | ) | 17,907 | 4,756 | 13,151 | |||||||||||||||||
Net income per common share: | ||||||||||||||||||||||||
Basic | $ | — | $ | 0.01 | $ | (0.01 | ) | $ | 0.08 | $ | 0.02 | $ | 0.06 | |||||||||||
Diluted | $ | — | $ | 0.01 | $ | (0.01 | ) | $ | 0.08 | $ | 0.02 | $ | 0.06 |
Three Months Ended | Six Months Ended | |||||||||||||||
June 30, | June 30, | |||||||||||||||
2017 | 2016 | 2017 | 2016 | |||||||||||||
Numerator | (revised) (1) | (revised) (1) | ||||||||||||||
Net income | $ | 4,825 | $ | 218 | $ | 10,738 | $ | 8,149 | ||||||||
Denominator | ||||||||||||||||
Basic weighted average common shares outstanding | 223,492 | 213,558 | 221,930 | 213,800 | ||||||||||||
Dilutive effect of stock options and restricted stock units | 16,446 | 9,142 | 17,993 | 10,178 | ||||||||||||
Diluted weighted average common shares outstanding | 239,938 | 222,700 | 239,923 | 223,978 | ||||||||||||
Basic earnings per share | ||||||||||||||||
Basic earnings per share | $ | 0.02 | $ | — | $ | 0.05 | $ | 0.04 | ||||||||
Diluted earnings per share | ||||||||||||||||
Diluted earnings per share | $ | 0.02 | $ | — | $ | 0.04 | $ | 0.04 |
Three Months Ended | Six Months Ended | |||||||||||
June 30, | June 30, | |||||||||||
2017 | 2016 | 2017 | 2016 | |||||||||
Restricted stock units | 4,540 | 12,851 | 3,344 | 12,012 | ||||||||
Stock options | 4,605 | 14,597 | 4,254 | 14,400 | ||||||||
9,145 | 27,448 | 7,598 | 26,412 |
June 30, 2017 | December 31, 2016 | ||||||
2.50-3.25% Term note - due 2020, net of debt related costs | $ | 81,953 | $ | 91,124 | |||
2.50-3.25% Revolving credit facility - due 2020 | 214,000 | 209,000 | |||||
Total Long-term note and revolving credit facility | $ | 295,953 | $ | 300,124 |
Three Months Ended | Six Months Ended | ||||||||||||||
June 30, | June 30, | ||||||||||||||
2017 | 2016 | 2017 | 2016 | ||||||||||||
Shares of common stock repurchased | — | 5,747 | 1,599 | 7,400 | |||||||||||
Value of common stock repurchased | $ | — | $ | 24,754 | $ | 9,510 | $ | 32,762 |
Cash paid at closing (inclusive of cash acquired of $16,094) | $ | 179,186 | |
Stock paid at closing | 31,591 | ||
Contingent consideration (described below) | 16,472 | ||
Employee Payout Amount (described below) | 4,779 | ||
Acquisition Cost | $ | 232,028 |
Acquisition Date Fair Value as of December 31, 2016 | Measurement period adjustments | Revised Acquisition Date Fair Value | |||||||||
Assets | |||||||||||
Current assets: | |||||||||||
Cash and cash equivalents | $ | 16,094 | $ | — | $ | 16,094 | |||||
Accounts receivable | 8,764 | — | 8,764 | ||||||||
Prepaid expenses and other current assets | 3,507 | — | 3,507 | ||||||||
Total current assets | 28,365 | — | 28,365 | ||||||||
Property and equipment | 757 | — | 757 | ||||||||
Software, net | 242 | — | 242 | ||||||||
Intangible assets | 101,770 | — | 101,770 | ||||||||
Restricted cash | 51 | — | 51 | ||||||||
Total assets acquired | 131,185 | — | 131,185 | ||||||||
Liabilities | |||||||||||
Current liabilities: | |||||||||||
Accounts payable | 1,841 | — | 1,841 | ||||||||
Accrued expenses | 9,299 | — | 9,299 | ||||||||
Deferred revenue, current portion | 1,735 | — | 1,735 | ||||||||
Total current liabilities | 12,875 | — | 12,875 | ||||||||
Deferred tax liabilities, net, non-current | 29,355 | (5,482 | ) | 23,873 | |||||||
Total liabilities assumed | 42,230 | (5,482 | ) | 36,748 | |||||||
Net identifiable assets acquired | 88,955 | 5,482 | 94,437 | ||||||||
Goodwill | 143,073 | (5,482 | ) | 137,591 | |||||||
Total purchase price | $ | 232,028 | $ | — | $ | 232,028 |
Amount | |||
Customer relationships | $ | 85,900 | |
Developed technologies | 13,768 | ||
Non-compete agreements | 972 | ||
Trade names | 1,130 | ||
$ | 101,770 |
Balance at December 31, 2016 | $ | 360,363 | ||
Decrease in goodwill related acquisition of Nexmo | (5,482 | ) | ||
Currency translation adjustments | 11,925 | |||
Balance at June 30, 2017 | $ | 366,806 |
Six Months Ended | ||||
June 30, | ||||
2016 | ||||
Revenues | $ | 494,094 | ||
Net income | $ | 5,887 | ||
Earnings per common share - basic | $ | 0.03 | ||
Earnings per common share - diluted | $ | 0.03 |
Three Months Ended | Six Months Ended | ||||||||||||||||||||||
June 30, 2017 | June 30, 2017 | ||||||||||||||||||||||
Business | Consumer | Total | Business | Consumer | Total | ||||||||||||||||||
Revenues | |||||||||||||||||||||||
Service revenues | $ | 103,825 | $ | 115,636 | $ | 219,461 | $ | 196,116 | $ | 234,753 | $ | 430,869 | |||||||||||
Product revenues (1) | 13,392 | 201 | 13,593 | 26,752 | 404 | 27,156 | |||||||||||||||||
Service and product revenues | 117,217 | 115,837 | 233,054 | 222,868 | 235,157 | 458,025 | |||||||||||||||||
USF revenues | 6,497 | 12,285 | 18,782 | 12,648 | 24,510 | 37,158 | |||||||||||||||||
Total revenues | 123,714 | 128,122 | 251,836 | 235,516 | 259,667 | 495,183 | |||||||||||||||||
Cost of revenues | |||||||||||||||||||||||
Service cost of revenues (2) | 49,246 | 21,435 | 70,681 | 88,441 | 43,535 | 131,976 | |||||||||||||||||
Product cost of revenues (1) | 12,456 | 1,942 | 14,398 | 25,658 | 3,958 | 29,616 | |||||||||||||||||
Service and product cost of revenues | 61,702 | 23,377 | 85,079 | 114,099 | 47,493 | 161,592 | |||||||||||||||||
USF cost of revenues | 6,497 | 12,285 | 18,782 | 12,648 | 24,510 | 37,158 | |||||||||||||||||
Total cost of revenues | 68,199 | 35,662 | 103,861 | 126,747 | 72,003 | 198,750 | |||||||||||||||||
Gross margin | |||||||||||||||||||||||
Service margin | 54,579 | 94,201 | 148,780 | 107,675 | 191,218 | 298,893 | |||||||||||||||||
Product margin | 936 | (1,741 | ) | (805 | ) | 1,094 | (3,554 | ) | (2,460 | ) | |||||||||||||
Gross margin ex-USF (Service and product margin) | 55,515 | 92,460 | 147,975 | 108,769 | 187,664 | 296,433 | |||||||||||||||||
USF margin | — | — | — | — | — | — | |||||||||||||||||
Gross margin | $ | 55,515 | $ | 92,460 | $ | 147,975 | $ | 108,769 | $ | 187,664 | $ | 296,433 | |||||||||||
Gross margin % | |||||||||||||||||||||||
Service margin % | 52.6 | % | 81.5 | % | 67.8 | % | 54.9 | % | 81.5 | % | 69.4 | % | |||||||||||
Gross margin ex-USF (Service and product margin %) | 47.4 | % | 79.8 | % | 63.5 | % | 48.8 | % | 79.8 | % | 64.7 | % | |||||||||||
Gross margin % | 44.9 | % | 72.2 | % | 58.8 | % | 46.2 | % | 72.3 | % | 59.9 | % |
Three Months Ended | Six Months Ended | ||||||||||||||||||||||
June 30, 2016 | June 30, 2016 | ||||||||||||||||||||||
Business | Consumer | Total | Business | Consumer | Total | ||||||||||||||||||
Revenues | |||||||||||||||||||||||
Service revenues | $ | 67,079 | $ | 133,462 | $ | 200,541 | $ | 123,552 | $ | 271,234 | $ | 394,786 | |||||||||||
Product revenues (1) | 13,265 | 160 | 13,425 | 26,177 | 307 | 26,484 | |||||||||||||||||
Service and product revenues | 80,344 | 133,622 | 213,966 | 149,729 | 271,541 | 421,270 | |||||||||||||||||
USF revenues | 5,368 | 14,341 | 19,709 | 9,803 | 29,426 | 39,229 | |||||||||||||||||
Total revenues | 85,712 | 147,963 | 233,675 | 159,532 | 300,967 | 460,499 | |||||||||||||||||
Cost of revenues | |||||||||||||||||||||||
Service cost of revenues (2) | 22,527 | 25,727 | 48,254 | 37,930 | 52,247 | 90,177 | |||||||||||||||||
Product cost of revenues (1) | 12,902 | 3,564 | 16,466 | 25,364 | 7,865 | 33,229 | |||||||||||||||||
Service and product cost of revenues | 35,429 | 29,291 | 64,720 | 63,294 | 60,112 | 123,406 | |||||||||||||||||
USF cost of revenues | 5,369 | 14,341 | 19,710 | 9,814 | 29,426 | 39,240 | |||||||||||||||||
Total cost of revenues | 40,798 | 43,632 | 84,430 | 73,108 | 89,538 | 162,646 | |||||||||||||||||
Gross margin | |||||||||||||||||||||||
Service margin | 44,552 | 107,735 | 152,287 | 85,622 | 218,987 | 304,609 | |||||||||||||||||
Product margin | 363 | (3,404 | ) | (3,041 | ) | 813 | (7,558 | ) | (6,745 | ) | |||||||||||||
Gross margin ex-USF (Service and product margin) | 44,915 | 104,331 | 149,246 | 86,435 | 211,429 | 297,864 | |||||||||||||||||
USF margin | (1 | ) | — | (1 | ) | (11 | ) | — | (11 | ) | |||||||||||||
Gross margin | $ | 44,914 | $ | 104,331 | $ | 149,245 | $ | 86,424 | $ | 211,429 | $ | 297,853 | |||||||||||
Gross margin % | |||||||||||||||||||||||
Service margin % | 66.4 | % | 80.7 | % | 75.9 | % | 69.3 | % | 80.7 | % | 77.2 | % | |||||||||||
Gross margin ex-USF (Service and product margin %) | 55.9 | % | 78.1 | % | 69.8 | % | 57.7 | % | 77.9 | % | 70.7 | % | |||||||||||
Gross margin % | 52.4 | % | 70.5 | % | 63.9 | % | 54.2 | % | 70.2 | % | 64.7 | % |
Three Months Ended | Six Months Ended | ||||||||||||||
June 30, | June 30, | ||||||||||||||
2017 | 2016 | 2017 | 2016 | ||||||||||||
Total reportable gross margin | $ | 147,975 | $ | 149,245 | $ | 296,433 | $ | 297,853 | |||||||
Sales and marketing | 79,738 | 83,344 | 161,669 | 162,945 | |||||||||||
Engineering and development | 6,670 | 7,243 | 15,040 | 14,077 | |||||||||||
General and administrative | 36,514 | 35,053 | 71,600 | 61,723 | |||||||||||
Depreciation and amortization | 18,394 | 18,218 | 36,341 | 35,197 | |||||||||||
Income from operations | 6,659 | 5,387 | 11,783 | 23,911 | |||||||||||
Interest income | 4 | 25 | 9 | 46 | |||||||||||
Interest expense | (3,861 | ) | (3,057 | ) | (7,564 | ) | (5,503 | ) | |||||||
Other income (expense), net | 686 | 104 | 466 | 258 | |||||||||||
Income before income taxes | $ | 3,488 | $ | 2,459 | $ | 4,694 | $ | 18,712 |
Three Months Ended | Six Months Ended | ||||||||||||||
June 30, | June 30, | ||||||||||||||
2017 | 2016 | 2017 | 2016 | ||||||||||||
Revenues: | |||||||||||||||
United States | $ | 214,182 | $ | 217,871 | $ | 427,506 | $ | 435,088 | |||||||
Canada | 9,002 | 6,540 | 16,447 | 12,613 | |||||||||||
United Kingdom | 6,926 | 4,081 | 8,244 | 7,615 | |||||||||||
Other Countries (1) | 21,726 | 5,183 | 42,986 | 5,183 | |||||||||||
$ | 251,836 | $ | 233,675 | $ | 495,183 | $ | 460,499 |
June 30, 2017 | December 31, 2016 | ||||||
Long-lived assets: | |||||||
United States | $ | 622,754 | $ | 629,269 | |||
United Kingdom | 410 | 450 | |||||
Israel | 273 | 286 | |||||
$ | 623,437 | $ | 630,005 |
Three Months Ended | Six Months Ended | |||||||||||||||
June 30, | June 30, | |||||||||||||||
2017 | 2016 | 2017 | 2016 | |||||||||||||
Income before income taxes | $ | 3,488 | $ | 2,459 | $ | 4,694 | $ | 18,712 | ||||||||
Income tax benefit (expense) | 1,337 | (2,241 | ) | 6,044 | (10,563 | ) | ||||||||||
Effective tax rate | (38.3 | )% | 91.1 | % | (128.8 | )% | 56.5 | % |
Item 2. | Management’s Discussion and Analysis of Financial Condition and Results of Operations |
Business | Three Months Ended | Six Months Ended | ||||||||||||||
June 30, | June 30, | |||||||||||||||
2017 | 2016 | 2017 | 2016 | |||||||||||||
Revenues (1) | $ | 123,714 | $ | 85,712 | $ | 235,516 | $ | 159,532 | ||||||||
Average monthly revenues per seat (2) | $ | 43.99 | $ | 44.76 | $ | 43.93 | $ | 44.65 | ||||||||
Seats (at period end) (2) (3) | 683,079 | 591,707 | 683,079 | 591,707 | ||||||||||||
Revenue churn (2) | 1.4 | % | 1.4 | % | 1.4 | % | 1.4 | % |
Consumer | Three Months Ended | Six Months Ended | ||||||||||||||
June 30, | June 30, | |||||||||||||||
2017 | 2016 | 2017 | 2016 | |||||||||||||
Revenues | $ | 128,122 | $ | 147,963 | $ | 259,667 | $ | 300,967 | ||||||||
Average monthly revenues per subscriber line | $ | 26.33 | $ | 26.61 | $ | 26.18 | $ | 26.64 | ||||||||
Subscriber lines (at period end) | 1,594,857 | 1,824,668 | 1,594,857 | 1,824,668 | ||||||||||||
Customer churn | 1.9 | % | 2.1 | % | 2.0 | % | 2.2 | % |
Three Months Ended | Six Months Ended | |||||||||||
June 30, | June 30, | |||||||||||
2017 | 2016 | 2017 | 2016 | |||||||||
Total revenues | 100 | % | 100 | % | 100 | % | 100 | % | ||||
Operating Expenses: | ||||||||||||
Cost of service (exclusive of depreciation and amortization) | 39 | 33 | 37 | 32 | ||||||||
Cost of goods sold | 2 | 3 | 3 | 4 | ||||||||
Sales and marketing | 32 | 36 | 33 | 35 | ||||||||
Engineering and development | 3 | 3 | 3 | 3 | ||||||||
General and administrative | 14 | 15 | 14 | 13 | ||||||||
Depreciation and amortization | 7 | 8 | 7 | 8 | ||||||||
Total operating expenses | 97 | 98 | 97 | 95 | ||||||||
Income from operations | 3 | 2 | 3 | 5 | ||||||||
Other Income (Expense): | ||||||||||||
Interest income | — | — | — | — | ||||||||
Interest expense | (2 | ) | (1 | ) | (2 | ) | (1 | ) | ||||
Other income (expense), net | — | — | — | — | ||||||||
Total other income (expense), net | (2 | ) | (1 | ) | (2 | ) | (1 | ) | ||||
Income before income taxes | 1 | 1 | 1 | 4 | ||||||||
Income tax benefit (expense) | 1 | (1 | ) | 1 | (2 | ) | ||||||
Net income | 2 | % | — | % | 2 | % | 2 | % |
(in thousands, except percentages) | Three Months Ended | Six Months Ended | ||||||||||||||||||||||||||||
June 30, | June 30, | |||||||||||||||||||||||||||||
2017 | 2016 | Dollar Change | Percent Change | 2017 | 2016 | Dollar Change | Percent Change | |||||||||||||||||||||||
Total revenues | $ | 251,836 | $ | 233,675 | $ | 18,161 | 8 | % | $ | 495,183 | $ | 460,499 | $ | 34,684 | 8 | % | ||||||||||||||
Cost of service | 97,674 | 76,078 | 21,596 | 28 | % | 185,270 | 145,228 | 40,042 | 28 | % | ||||||||||||||||||||
Cost of goods sold | 6,187 | 8,352 | (2,165 | ) | (26 | )% | 13,480 | 17,418 | (3,938 | ) | (23 | )% | ||||||||||||||||||
Gross margin | $ | 147,975 | $ | 149,245 | $ | (1,270 | ) | (1 | )% | $ | 296,433 | $ | 297,853 | $ | (1,420 | ) | — | % |
Three Months Ended | Six Months Ended | |||||||||||||||||||||||||||||
June 30, | June 30, | |||||||||||||||||||||||||||||
(in thousands, except percentages) | 2017 | 2016 | Dollar Change | Percent Change | 2017 | 2016 | Dollar Change | Percent Change | ||||||||||||||||||||||
Revenues | ||||||||||||||||||||||||||||||
Service revenues | $ | 103,825 | $ | 67,079 | $ | 36,746 | 55 | % | $ | 196,116 | $ | 123,552 | $ | 72,564 | 59 | % | ||||||||||||||
Product revenues (1) | 13,392 | 13,265 | 127 | 1 | % | 26,752 | 26,177 | 575 | 2 | % | ||||||||||||||||||||
Service and product revenues | 117,217 | 80,344 | 36,873 | 46 | % | 222,868 | 149,729 | 73,139 | 49 | % | ||||||||||||||||||||
USF revenues | 6,497 | 5,368 | 1,129 | 21 | % | 12,648 | 9,803 | 2,845 | 29 | % | ||||||||||||||||||||
Total revenues | 123,714 | 85,712 | 38,002 | 44 | % | 235,516 | 159,532 | 75,984 | 48 | % | ||||||||||||||||||||
Cost of revenues | ||||||||||||||||||||||||||||||
Service cost of revenues (2) | 49,246 | 22,527 | 26,719 | 119 | % | 88,441 | 37,930 | 50,511 | 133 | % | ||||||||||||||||||||
Product cost of revenues (1) | 12,456 | 12,902 | (446 | ) | (3 | )% | 25,658 | 25,364 | 294 | 1 | % | |||||||||||||||||||
Service and product cost of revenues | 61,702 | 35,429 | 26,273 | 74 | % | 114,099 | 63,294 | 50,805 | 80 | % | ||||||||||||||||||||
USF cost of revenues | 6,497 | 5,369 | 1,128 | 21 | % | 12,648 | 9,814 | 2,834 | 29 | % | ||||||||||||||||||||
Total cost of revenues | 68,199 | 40,798 | 27,401 | 67 | % | 126,747 | 73,108 | 53,639 | 73 | % | ||||||||||||||||||||
Gross margin | ||||||||||||||||||||||||||||||
Service margin | 54,579 | 44,552 | 10,027 | 23 | % | 107,675 | 85,622 | 22,053 | 26 | % | ||||||||||||||||||||
Gross margin ex-USF (Service and product margin) | 55,515 | 44,915 | 10,600 | 24 | % | 108,769 | 86,435 | 22,334 | 26 | % | ||||||||||||||||||||
Gross margin | $ | 55,515 | $ | 44,914 | $ | 10,601 | 24 | % | $ | 108,769 | $ | 86,424 | $ | 22,345 | 26 | % |
Gross Margin % | ||||||||||||||||||||
Service margin % | 52.6 | % | 66.4 | % | 54.9 | % | 69.3 | % | ||||||||||||
Gross margin ex-USF (Service and product margin) % | 47.4 | % | 55.9 | % | 48.8 | % | 57.7 | % | ||||||||||||
Gross margin % | 44.9 | % | 52.4 | % | 46.2 | % | 54.2 | % |
(1) | Includes customer premise equipment, access, professional services, and shipping and handling. |
(2) | Excludes depreciation and amortization for the three and six months ended June 30, 2017 of $5,003 and $9,878, respectively and for the three and six months ended June 30, 2016 $4,473, and $8,792, respectively. |
Three Months Ended | Six Months Ended | |||||||||||||||||||||||||||||
June 30, | June 30, | |||||||||||||||||||||||||||||
(in thousands, except percentages) | 2017 | 2016 | Dollar Change | Percent Change | 2017 | 2016 | Dollar Change | Percent Change | ||||||||||||||||||||||
Revenues | ||||||||||||||||||||||||||||||
Service revenues | $ | 115,636 | $ | 133,462 | $ | (17,826 | ) | (13 | )% | $ | 234,753 | $ | 271,234 | $ | (36,481 | ) | (13 | )% | ||||||||||||
Product revenues (1) | 201 | 160 | 41 | 26 | % | 404 | 307 | 97 | 32 | % | ||||||||||||||||||||
Service and product revenues | 115,837 | 133,622 | (17,785 | ) | (13 | )% | 235,157 | 271,541 | (36,384 | ) | (13 | )% | ||||||||||||||||||
USF revenues | 12,285 | 14,341 | (2,056 | ) | (14 | )% | 24,510 | 29,426 | (4,916 | ) | (17 | )% | ||||||||||||||||||
Total revenues | 128,122 | 147,963 | (19,841 | ) | (13 | )% | 259,667 | 300,967 | (41,300 | ) | (14 | )% | ||||||||||||||||||
Cost of revenues | ||||||||||||||||||||||||||||||
Service cost of revenues (2) | 21,435 | 25,727 | (4,292 | ) | (17 | )% | 43,535 | 52,247 | (8,712 | ) | (17 | )% | ||||||||||||||||||
Product cost of revenues (1) | 1,942 | 3,564 | (1,622 | ) | (46 | )% | 3,958 | 7,865 | (3,907 | ) | (50 | )% | ||||||||||||||||||
Service and product cost of revenues | 23,377 | 29,291 | (5,914 | ) | (20 | )% | 47,493 | 60,112 | (12,619 | ) | (21 | )% | ||||||||||||||||||
USF cost of revenues | 12,285 | 14,341 | (2,056 | ) | (14 | )% | 24,510 | 29,426 | (4,916 | ) | (17 | )% | ||||||||||||||||||
Total cost of revenues | 35,662 | 43,632 | (7,970 | ) | (18 | )% | 72,003 | 89,538 | (17,535 | ) | (20 | )% | ||||||||||||||||||
Gross margin | ||||||||||||||||||||||||||||||
Service margin | 94,201 | 107,735 | (13,534 | ) | (13 | )% | 191,218 | 218,987 | (27,769 | ) | (13 | )% | ||||||||||||||||||
Gross margin ex-USF (Service and product margin) | 92,460 | 104,331 | (11,871 | ) | (11 | )% | 187,664 | 211,429 | (23,765 | ) | (11 | )% | ||||||||||||||||||
Gross margin | $ | 92,460 | $ | 104,331 | $ | (11,871 | ) | (11 | )% | $ | 187,664 | $ | 211,429 | $ | (23,765 | ) | (11 | )% |
Gross Margin % | |||||||||||||||||||
Service margin % | 81.5 | % | 80.7 | % | 81.5 | % | 80.7 | % | |||||||||||
Gross margin ex-USF (Service and product margin) % | 79.8 | % | 78.1 | % | 79.8 | % | 77.9 | % | |||||||||||
Gross margin % | 72.2 | % | 70.5 | % | 72.3 | % | 70.2 | % |
(1) | Includes customer premise equipment, professional services, and shipping and handling. |
(2) | Excludes depreciation and amortization for the three and six months ended June 30, 2017 of $1,860 and $3,767, respectively and for the three and six months ended June 30, 2016 $2,512, and $5,026, respectively. |
Three Months Ended | Six Months Ended | |||||||||||||||||||||||||||||
June 30, | June 30, | |||||||||||||||||||||||||||||
2017 | 2016 | Dollar Change | Percent Change | 2017 | 2016 | Dollar Change | Percent Change | |||||||||||||||||||||||
Sales and marketing | $ | 79,738 | $ | 83,344 | $ | (3,606 | ) | (4 | )% | $ | 161,669 | $ | 162,945 | $ | (1,276 | ) | (1 | )% | ||||||||||||
Engineering and development | 6,670 | 7,243 | (573 | ) | (8 | )% | 15,040 | 14,077 | 963 | 7 | % | |||||||||||||||||||
General and administrative | 36,514 | 35,053 | 1,461 | 4 | % | 71,600 | 61,723 | 9,877 | 16 | % | ||||||||||||||||||||
Depreciation and amortization | 18,394 | 18,218 | 176 | 1 | % | 36,341 | 35,197 | 1,144 | 3 | % | ||||||||||||||||||||
Total other operating expenses | $ | 141,316 | $ | 143,858 | $ | (2,542 | ) | (2 | )% | $ | 284,650 | $ | 273,942 | $ | 10,708 | 4 | % |
• | Sales and marketing expense decreased by $3,606 due to a reduction in Consumer marketing reflecting planned actions to enhance profitability by targeting consumers with lower subscriber acquisition cost and churn profiles which was largely offset by an increase in Business marketing as we have shifted marketing investment to attract these more profitable customers and an increase from Nexmo which was acquired in June 2016. |
• | Engineering and development expense decreased by $573 due to decreased costs associated with engineering costs related to Consumer as compared to the prior year. |
• | General and administrative expense increased by $1,461 primarily due to the acquisition of Nexmo during the previous year. |
• | Sales and marketing expense decreased slightly by $1,276 primarily due to a shift in marketing investments from Consumer to Business customers as part of an effort to attract these more profitable customers during the current year. |
• | Engineering and development expense increased by $963 due to incremental investment in new business products and services and the acquisition of Nexmo in June 2016. |
• | General and administrative expense increased by $9,877 primarily due the acquisition of Nexmo during the prior year along with costs associated with restructuring activities during the current year period. |
• | Depreciation and amortization increased by $1,144 primarily due to the amortization of intangibles from the acquisition of Nexmo. |
(in thousands, except percentages) | Three Months Ended | Six Months Ended | ||||||||||||||||||||||||||||
June 30, | June 30, | |||||||||||||||||||||||||||||
2017 | 2016 | Dollar Change | Percent Change | 2017 | 2016 | Dollar Change | Percent Change | |||||||||||||||||||||||
Interest income | $ | 4 | $ | 25 | $ | (21 | ) | (84 | )% | $ | 9 | $ | 46 | $ | (37 | ) | (80 | )% | ||||||||||||
Interest expense | (3,861 | ) | (3,057 | ) | (804 | ) | (26 | )% | (7,564 | ) | (5,503 | ) | (2,061 | ) | (37 | )% | ||||||||||||||
Other income (expense), net | 686 | 104 | 582 | 560 | % | 466 | 258 | 208 | 81 | % | ||||||||||||||||||||
$ | (3,171 | ) | $ | (2,928 | ) | $ | (243 | ) | $ | (7,089 | ) | $ | (5,199 | ) | $ | (1,890 | ) |
Six Months Ended | ||||||||||
June 30, | ||||||||||
2017 | 2016 | Dollar Change | ||||||||
(in thousands) | ||||||||||
Net cash provided by operating activities | $ | 32,693 | $ | 42,527 | (9,834 | ) | ||||
Net cash used in investing activities | (14,277 | ) | (182,785 | ) | 168,508 | |||||
Net cash (used)/provided by financing activities | (21,378 | ) | 106,323 | (127,701 | ) |
Item 3. | Quantitative and Qualitative Disclosures about Market Risk |
• | LIBOR (applicable to one-, two-, three-, six-, or twelve-month periods) plus an applicable margin equal to 2.50% if our consolidated leverage ratio is less than 0.75 to 1.00, 2.75% if our consolidated leverage ratio is greater than or equal to 0.75 to 1.00 and less than 1.50 to 1.00, 3.00% if our consolidated leverage ratio is greater than or equal to 1.50 to 1.00 and less than 2.5 to 1.00, and 3.25% if our consolidated leverage ratio is greater than or equal to 2.50 to 1.00, payable on the last day of each relevant interest period or, if the interest period is longer than three months, each day that is three months after the first day of the interest period, or |
• | the base rate determined by reference to the highest of (a) the prime rate of JPMorgan Chase Bank, N.A., (b) the federal funds effective rate from time to time plus 0.50%, and (c) the adjusted LIBO rate applicable to one month interest periods plus 1.00%, plus an applicable margin equal to 1.50% if our consolidated leverage ratio is less than 0.75 to 1.00, 1.75% if our consolidated leverage ratio is greater than or equal to 0.75 to 1.00 and less than 1.50 to 1.00, 2.00% if our consolidated leverage ratio is greater than or equal to 1.50 to 1.00 and less than 2.50 to 1.00, and 2.25% if our consolidated leverage ratio is greater than or equal to 2.5 to 1.00, payable on the last business day of each March, June, September, and December and the maturity date of the 2016 Credit Facility. |
Item 4. | Controls and Procedures |
Item 1. | Legal Proceedings |
Item 1A. | Risk Factors |
Item 2. | Unregistered Sales of Equity Securities and Use of Proceeds |
Item 3. | Defaults Upon Senior Securities |
Item 4. | Mine Safety Disclosures |
Item 5. | Other Information |
Item 6. | Exhibits |
10.1 | |||
31.1 | |||
31.2 | |||
32.1 | |||
101 | The following financial statements from Vonage Holdings Corp.’s Quarterly Report on Form 10-Q for the three and six months ended June 30, 2017, filed with the Securities and Exchange Commission on August 4, 2017, formatted in XBRL (eXtensible Business Reporting Language): (i) the Condensed Consolidated Balance Sheets; (ii) the Condensed Consolidated Statements of Operations; (iii) the Condensed Consolidated Statements of Comprehensive Income; (iv) the Condensed Consolidated Statements of Cash Flows; (v) the Condensed Consolidated Statements of Stockholders’ Deficit; and (vi) the Notes to Condensed Consolidated Financial Statements. |
* | Management contract or compensatory plan or arrangement. |
VONAGE HOLDINGS CORP. | |||||
Dated: | August 3, 2017 | By: | /s/ David T. Pearson | ||
David T. Pearson Chief Financial Officer and Treasurer (Principal Financial Officer and Duly Authorized Officer) |
10.1 | |||
31.1 | |||
31.2 | |||
32.1 | |||
101 | The following financial statements from Vonage Holdings Corp.’s Quarterly Report on Form 10-Q for the three and six months ended June 30, 2017, filed with the Securities and Exchange Commission on August 4, 2017, formatted in XBRL (eXtensible Business Reporting Language): (i) the Condensed Consolidated Balance Sheets; (ii) the Condensed Consolidated Statements of Operations; (iii) the Condensed Consolidated Statements of Comprehensive Income; (iv) the Condensed Consolidated Statements of Cash Flows; (v) the Condensed Consolidated Statements of Stockholders’ Deficit; and (vi) the Notes to Condensed Consolidated Financial Statements. |
* | Management contract or compensatory plan or arrangement. |
Date: | August 3, 2017 | /s/ Alan Masarek | |
Alan Masarek | |||
Chief Executive Officer |
Date: | August 3, 2017 | /s/ David T. Pearson |
David T. Pearson | ||
Chief Financial Officer and Treasurer |
Date: | August 3, 2017 | /s/ Alan Masarek |
Alan Masarek | ||
Chief Executive Officer |
Date: | August 3, 2017 | /s/ David T. Pearson |
David T. Pearson | ||
Chief Financial Officer and Treasurer |
Document And Entity Information - shares |
6 Months Ended | |
---|---|---|
Jun. 30, 2017 |
Jul. 31, 2017 |
|
Document And Entity Information [Abstract] | ||
Document Type | 10-Q | |
Amendment Flag | false | |
Document Period End Date | Jun. 30, 2017 | |
Entity Registrant Name | VONAGE HOLDINGS CORP | |
Entity Central Index Key | 0001272830 | |
Current Fiscal Year End Date | --12-31 | |
Document Fiscal Year Focus | 2017 | |
Document Fiscal Period Focus | Q2 | |
Entity Filer Category | Large Accelerated Filer | |
Entity Common Stock, Shares Outstanding | 227,345,315 |
Condensed Consolidated Balance Sheets (Parenthetical) - USD ($) $ in Thousands |
Jun. 30, 2017 |
Dec. 31, 2016 |
---|---|---|
Statement of Financial Position [Abstract] | ||
Accounts receivable, allowance | $ 3,112 | $ 2,093 |
Inventory, allowance | 137 | 117 |
PP&E, accumulated amortization | 138,644 | 129,166 |
Software, accumulated amortization | 92,361 | 87,626 |
Intangible assets, accumulated amortization | $ 107,914 | $ 88,419 |
Common stock, par value (USD per share) | $ 0.001 | $ 0.001 |
Common stock, shares authorized (in shares) | 596,950,000 | 596,950,000 |
Common stock, shares issued n(in shares) | 294,386,000 | 282,319,000 |
Common stock, shares outstanding (in shares) | 227,287,000 | 219,001,000 |
Treasury stock, shares (in shares) | 67,099,000 | 63,318,000 |
Condensed Consolidated Statements of Income - USD ($) shares in Thousands, $ in Thousands |
3 Months Ended | 6 Months Ended | ||||||
---|---|---|---|---|---|---|---|---|
Jun. 30, 2017 |
Jun. 30, 2016 |
[1] | Jun. 30, 2017 |
Jun. 30, 2016 |
[1] | |||
Income Statement [Abstract] | ||||||||
Total revenues | $ 251,836 | $ 233,675 | $ 495,183 | $ 460,499 | ||||
Operating Expenses: | ||||||||
Cost of service (exclusive of depreciation and amortization) | 97,674 | 76,078 | 185,270 | 145,228 | ||||
Cost of goods sold | 6,187 | 8,352 | 13,480 | 17,418 | ||||
Sales and marketing | 79,738 | 83,344 | 161,669 | 162,945 | ||||
Engineering and development | 6,670 | 7,243 | 15,040 | 14,077 | ||||
General and administrative | 36,514 | 35,053 | 71,600 | 61,723 | ||||
Depreciation and amortization | 18,394 | 18,218 | 36,341 | 35,197 | ||||
Total operating expenses | 245,177 | 228,288 | 483,400 | 436,588 | ||||
Income from operations | 6,659 | 5,387 | 11,783 | 23,911 | ||||
Other Income (Expense): | ||||||||
Interest income | 4 | 25 | 9 | 46 | ||||
Interest expense | (3,861) | (3,057) | (7,564) | (5,503) | ||||
Other income (expense), net | 686 | 104 | 466 | 258 | ||||
Total other income (expense), net | (3,171) | (2,928) | (7,089) | (5,199) | ||||
Income before income taxes | 3,488 | 2,459 | 4,694 | 18,712 | ||||
Income tax benefit (expense) | 1,337 | (2,241) | 6,044 | (10,563) | ||||
Net income | $ 4,825 | $ 218 | $ 10,738 | $ 8,149 | ||||
Earnings per common share: | ||||||||
Basic (usd per share) | $ 0.02 | $ 0.00 | $ 0.05 | $ 0.04 | ||||
Diluted (usd per share) | $ 0.02 | $ 0.00 | $ 0.04 | $ 0.04 | ||||
Weighted-average common shares outstanding: | ||||||||
Basic (in shares) | 223,492 | 213,558 | 221,930 | 213,800 | ||||
Diluted (in shares) | 239,938 | 222,700 | 239,923 | 223,978 | ||||
|
Condensed Consolidated Statements of Comprehensive Income - USD ($) $ in Thousands |
3 Months Ended | 6 Months Ended | ||||||
---|---|---|---|---|---|---|---|---|
Jun. 30, 2017 |
Jun. 30, 2016 |
[1] | Jun. 30, 2017 |
Jun. 30, 2016 |
[1] | |||
Statement of Comprehensive Income [Abstract] | ||||||||
Net income | $ 4,825 | $ 218 | $ 10,738 | $ 8,149 | ||||
Other comprehensive income (loss): | ||||||||
Foreign currency translation adjustment | 14,185 | (1,691) | 17,232 | (1,713) | ||||
Unrealized gain on available-for-sale securities | (20) | 4 | 1 | 26 | ||||
Total other comprehensive income (loss) | 14,165 | (1,687) | 17,233 | (1,687) | ||||
Comprehensive income (loss) | $ 18,990 | $ (1,469) | $ 27,971 | $ 6,462 | ||||
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Condensed Consolidated Statements of Cash Flows - USD ($) $ in Thousands |
6 Months Ended | ||||
---|---|---|---|---|---|
Jun. 30, 2017 |
Jun. 30, 2016 |
[1] | |||
Cash flows from operating activities: | |||||
Net income | $ 10,738 | $ 8,149 | |||
Adjustments to reconcile net income to net cash provided by operating activities: | |||||
Depreciation, amortization and impairment charges | 17,381 | 18,579 | |||
Amortization of intangibles | 18,826 | 16,618 | |||
Deferred income taxes | (8,111) | 8,897 | |||
Allowance for doubtful accounts | 452 | 597 | |||
Allowance for obsolete inventory | 293 | 352 | |||
Amortization of debt issuance costs | 204 | 517 | |||
Gain on sale of business | (928) | 0 | |||
Loss on disposal of fixed assets | 134 | 0 | |||
Share-based expense | 20,891 | 16,670 | |||
Changes in operating assets and liabilities, net of acquisitions: | |||||
Accounts receivable | 1,280 | (7,176) | |||
Inventory | 353 | 906 | |||
Prepaid expenses and other current assets | 1,173 | (2,587) | |||
Deferred customer acquisition costs | 1,129 | 913 | |||
Accounts payable | (8,124) | 5,095 | |||
Accrued expenses | (23,787) | (23,311) | |||
Deferred revenue | (1,506) | (1,534) | |||
Other assets and liabilities | 2,295 | (158) | |||
Net cash provided by operating activities | 32,693 | 42,527 | |||
Cash flows from investing activities: | |||||
Capital expenditures | (8,995) | (15,948) | |||
Purchase of marketable securities | 0 | (5,664) | |||
Maturities and sales of marketable securities | 602 | 7,524 | |||
Acquisition and development of software assets | (6,884) | (5,655) | |||
Acquisition of businesses, net of cash acquired | 0 | (163,042) | |||
Proceeds from sale of business | 1,000 | 0 | |||
Net cash used in investing activities | (14,277) | (182,785) | |||
Cash flows from financing activities: | |||||
Principal payments on capital lease obligations and other financing obligations | (4,861) | (6,329) | |||
Principal payments on notes and revolving credit facility | (19,375) | (33,437) | |||
Proceeds received from draw down of revolving credit facility and issuance of notes payable | 15,000 | 181,250 | |||
Debt related costs | 0 | (1,316) | |||
Common stock repurchases | (9,542) | (32,902) | |||
Employee taxes paid on withholding shares | (14,562) | (3,966) | |||
Proceeds from exercise of stock options | 11,962 | 3,023 | |||
Net cash (used)/provided by financing activities | (21,378) | 106,323 | |||
Effect of exchange rate changes on cash | 660 | (109) | |||
Net decrease in cash, cash equivalents, and restricted cash | (2,302) | (34,044) | |||
Cash, cash equivalents, and restricted cash, beginning of period | 30,929 | 60,313 | |||
Cash, cash equivalents, and restricted cash, end of period | 28,627 | 26,269 | |||
Cash paid during the periods for: | |||||
Interest | 6,722 | 4,833 | |||
Income taxes | 3,554 | 3,163 | |||
Non-cash investing and financing activities: | |||||
Capital expenditures included in accounts payable and accrued liabilities | 3,492 | 4,918 | |||
Issuance of common stock in connection with acquisition of business | 0 | 31,591 | |||
Contingent consideration in connection with acquisition of business | 0 | 16,472 | |||
Assumption of options in connection with acquisition of business | $ 0 | $ 4,779 | |||
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Condensed Consolidated Statement of Stockholders' Equity - 6 months ended Jun. 30, 2017 - USD ($) shares in Thousands, $ in Thousands |
Total |
Common Stock |
Additional Paid-in Capital |
Accumulated Deficit |
Treasury Stock |
Accumulated Other Comprehensive Income (Loss) |
|||
---|---|---|---|---|---|---|---|---|---|
Balance at Dec. 31, 2016 | [1] | $ 436,541 | $ 282 | $ 1,310,847 | $ (641,869) | $ (219,125) | $ (13,594) | ||
Common stock, shares outstanding (in shares) at Dec. 31, 2016 | 219,001 | 219,001 | [1] | ||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||||
Cumulative effect adjustment upon the adoption of ASU 2016-09 | $ 8,909 | 5,668 | 3,241 | ||||||
Stock option exercises | 11,962 | $ 12 | 11,950 | ||||||
Stock option exercises (in shares) | 12,068 | ||||||||
Share-based expense | 20,891 | 20,891 | |||||||
Employee taxes paid on withholding shares | (14,562) | (14,562) | |||||||
Common stock repurchases (in shares) | (2,183) | ||||||||
Common stock repurchases | (9,542) | (9,542) | |||||||
Common stock repurchases (in shares) | (1,599) | ||||||||
Foreign currency translation adjustment | 17,232 | 17,232 | |||||||
Unrealized gain on available-for-sale securities | 1 | 1 | |||||||
Net income | $ 10,738 | 10,738 | |||||||
Common stock, shares outstanding (in shares) at Jun. 30, 2017 | 227,287 | 227,287 | |||||||
Balance at Jun. 30, 2017 | $ 482,170 | $ 294 | $ 1,349,356 | $ (627,890) | $ (243,229) | $ 3,639 | |||
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Basis of Presentation |
6 Months Ended |
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Jun. 30, 2017 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Basis of Presentation | Basis of Presentation Nature of Operations Vonage Holdings Corp. (“Vonage”, “Company”, “we”, “our”, “us”) is incorporated as a Delaware corporation. We are a leading provider of cloud communications services for business. We transform the way people work and businesses operate through a portfolio of cloud-based communications solutions that enable internal collaboration among employees, while also keeping companies closely connected with their customers, across any mode of communication, on any device. Through our Nexmo subsidiary which was acquired on June 3, 2016, we are a global leader in the Communications-Platform-as-a-Service ("CPaaS") segment of the cloud communications market, providing innovative communication application program interfaces ("APIs") for text messaging and voice communications, allowing developers and enterprises to embed contextual communications into mobile apps, websites and business workflows via text, social media, chat apps and voice. With just few lines of code, developers can send and receive text messages and build programmable voice applications. Nexmo, the Vonage API Platform can scale from one API call to billions. The platform makes it easy for any of our developers to access communication services via software and APIs. Through Nexmo we have a global network of interconnected carriers delivering our API-based communications platform, enabling businesses to communicate with their customers reliably and with ease, no matter where in the world they are located. The addition of our Nexmo products to our business offering allows our customers to address their full communications needs, from employee to employee communications through business to customer communications. We also provide a robust suite of feature-rich residential communication solutions. Customers in the United States represented 85% and 93% of our consolidated revenues for the three months ended June 30, 2017 and 2016 and 86% and 94% for the six months ended June 30, 2017 and 2016, respectively, with the balance in Canada, the United Kingdom, and other countries. Nexmo Inc. ("Nexmo") has operations in the United States, United Kingdom, Hong Kong, and Singapore, and provides CPaaS solutions to our customers located in many countries around the world. Unaudited Interim Financial Information The accompanying unaudited interim condensed consolidated financial statements and information have been prepared in accordance with accounting principles generally accepted in the United States and in accordance with the SEC's regulations for interim financial information and with the instructions for Form 10-Q. Accordingly, they do not include all of the information and disclosures required by accounting principles generally accepted in the United States for complete financial statements. In the opinion of management, these financial statements contain all normal and recurring adjustments considered necessary to present fairly the financial position, results of operations, cash flows, and statement of stockholders’ equity for the periods presented. The results for the three and six months ended June 30, 2017 are not necessarily indicative of the results to be expected for the full year. These unaudited interim condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and related notes included in our Annual Report on Form 10-K for the year ended December 31, 2016 filed with the Securities and Exchange Commission on February 28, 2017. Use of Estimates Our condensed consolidated financial statements are prepared in conformity with accounting principles generally accepted in the United States, which require management to make estimates and assumptions that affect the amounts reported and disclosed in the condensed consolidated financial statements and the accompanying notes. Actual results could differ materially from these estimates. Reclassifications Reclassifications have been made to our condensed consolidated financial statements for the prior year period to conform to classification used in the current year period. The reclassifications did not affect results from operations or net assets. |
Summary of Significant Accounting Policies |
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Accounting Policies [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of Significant Accounting Policies | Summary of Significant Accounting Policies This footnote should be read in conjunction with the complete description of our significant accounting policies under Note 1, Basis of Presentation and Significant Accounting Policies to our Annual Report on Form 10-K for the year ended December 31, 2016. Cost of Services Cost of services excludes depreciation and amortization expense of $6,863 and $6,985 for the three months ended June 30, 2017 and 2016 and $13,645 and $13,818 for the six months ended June 30, 2017 and 2016, respectively. Advertising Costs We incurred advertising costs included in sales and marketing of $14,994 and $20,079 for the three months ended June 30, 2017 and 2016 and $32,337 and $36,958 for the six months ended June 30, 2017 and 2016, respectively. Engineering and Development Expenses Engineering and development expenses primarily include personnel and related costs for developers responsible for new products, and software engineers maintaining and enhancing existing products. Research and development costs related to new product development included in engineering and development were $5,349 and $5,402 for the three months ended June 30, 2017 and 2016 and $11,695 and $10,310 for the six months ended June 30, 2017 and 2016, respectively. Restructuring Activities During the three months ended June 30, 2017, we recognized $4 million of costs associated with restructuring activities included in general and administrative expense and is primarily comprised of costs associated with severance and other employee related costs. As of June 30, 2017, the accrued severance of $4 million is expected to be paid during the third quarter of 2017. Fair Value of Financial Instruments The Company records certain of its financial assets at fair value on a recurring basis. The Company's financial instruments, which includes cash and cash equivalents, accounts receivable and accounts payable, approximate fair value because of their short-term maturities. The carrying amounts of our capital leases approximate fair value of these obligations based upon management’s best estimates of interest rates that would be available for similar debt obligations at June 30, 2017 and December 31, 2016. We believe the fair value of our debt at June 30, 2017 was approximately the same as its carrying amount as market conditions, including available interest rates, credit spread relative to our credit rating, and illiquidity, remain relatively unchanged from the issuance date of our debt on June 3, 2016 for a similar debt instrument. As of June 30, 2017, we did not have any assets or liabilities that are measured and recognized at fair value on a recurring basis. The following table presents the assets and liabilities that are measured and recognized at fair value on a recurring basis classified under the appropriate level of the fair value hierarchy as of December 31, 2016:
(1) Included in cash and cash equivalents on our condensed consolidated balance sheet. (2) Included in marketable securities on our condensed consolidated balance sheet. Supplemental Balance Sheet Information Cash, cash equivalents and restricted cash
Intangible assets, net
Accrued expenses
Recent Accounting Pronouncements In January 2017, FASB issued ASU 2017-04, "Intangibles - Goodwill and Other". The ASU simplifies the subsequent measurement of goodwill and eliminates Step 2 from the goodwill impairment test. This ASU is effective for an annual or any interim goodwill impairment tests in fiscal years beginning after December 15, 2019 on a prospective basis. Early adoption is permitted for interim or annual goodwill impairment tests performed on testing dates after January 1, 2017. We are currently evaluating the impact of adopting ASU 2017-04 on our condensed consolidated financial statements and related disclosures. In May 2014, FASB issued ASU 2014-09, "Revenue from Contracts with Customers (Topic 606)" which was further amended through various updates issued by the FASB thereafter. The amendments of Topic 606 clarify the principles for recognizing revenue and provide a common revenue standard for U.S. GAAP and International Financial Reporting Standards, or IFRS, and to improve financial reporting. The core principle of these standards are that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. Topic 606 also amends the current guidance for the recognition of costs to obtain and fulfill contracts with customers requiring that all incremental costs of obtaining and direct costs of fulfilling contracts with customers such as commissions be deferred and recognized over the expected customer life. In August 2015, an ASU was issued by the FASB which deferred the effective date to annual and interim periods beginning on or after December 15, 2017. We will adopt the requirements of the new standard in the first quarter of 2018 and anticipate using the modified retrospective transition method under which the standard will be applied only to the most current period presented and the cumulative effect of applying the standard will be recognized at the date of initial application. We are in the process of evaluating the impact of the standard with respect to the terms of our revenue arrangements and expect our review to be substantially completed during the third quarter of 2017. We expect the timing of recognition of our sales commissions will also be impacted as a substantial portion of these costs which are currently expensed will be capitalized under the revised standard and amortized over the period of benefit. In October 2016, FASB issued ASU 2016-16, "Income Taxes". This ASU improves the accounting for income tax consequences of intra-entity transfers of assets other than inventory. This ASU is effective for fiscal years beginning after December 15, 2017 on a modified retrospective basis through a cumulative-effect adjustment directly to retained earnings as of the beginning of the period of adoption. Early adoption is permitted as of the beginning of an annual reporting period for which financial statements have not been issued or made available for issuance. We are currently evaluating the impact of adopting ASU 2016-16 on our condensed consolidated financial statements and related disclosures. In August 2016, FASB issued ASU 2016-15, "Statement of Cash Flows". This ASU addresses eight specific cash flow issues with the objective of reducing the existing diversity in practice. This ASU is effective for fiscal years beginning after December 15, 2017 on a retrospective basis. Early adoption is permitted, including adoption in an interim period. The adoption of ASU 2016-15 will not have a material impact on our condensed consolidated financial statements and related disclosures. In February 2016, FASB issued ASU 2016-02, "Leases". This ASU increases transparency and comparability among organizations by recognizing lease assets and lease liabilities on the balance sheet and disclosing key information about leasing arrangements. This ASU is effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. Early adoption is permitted for all entities. The adoption of this ASU will increase assets and liabilities for operating leases. We will adopt these ASUs when effective. We are currently evaluating the effect of adopting ASU 2016-02 on our condensed consolidated financial statements and related disclosures. In January 2016, FASB issued ASU 2016-01, "Recognition and Measurement of Financial Assets and Financial Liabilities". This ASU provide guidance concerning certain matters involving the recognition, measurement, and disclosure of financial assets and financial liabilities. The guidance does not alter the basic framework for classifying debt instruments held as financial assets. This ASU is effective for fiscal years beginning after December 15, 2017, including interim periods within those fiscal years. Early adoption is not permitted, with some exceptions. The adoption of ASU 2016-01 will not have a material impact on our condensed consolidated financial statements and related disclosures. The following standards were adopted by the Company during the current year: In November 2016, FASB issued ASU 2016-18, "Statement of Cash Flows". This ASU requires that a statement of cash flows explains the change during the period in the total of cash, cash equivalents, and amounts generally described as restricted cash or restricted cash equivalents. As a result, amounts generally described as restricted cash and restricted cash equivalents should be included with cash and cash equivalents when reconciling the beginning-of-period and end-of-period total amounts shown on the statement of cash flows. This ASU is effective for fiscal years beginning after December 15, 2017, and interim periods within those fiscal years. Early adoption is permitted, including adoption in an interim period, any adjustments should be reflected as of the beginning of the fiscal year that includes that interim period. We adopted this ASU in the first quarter of 2017 and applied the retrospective transition method for each period presented. For the six months ended June 30, 2016, $690 and $10 were reclassified from investing activity and effect of exchange rate changes on cash, respectively, and $51, $2,587 and $1,938 were adjusted to acquisition of business, net of cash acquired, cash, cash equivalents, and restricted cash, beginning of the period and end of the period balances, respectively. In March 2016, FASB issued ASU 2016-09, "Improvements to Employee Share-Based Payment Accounting". This ASU is issued as part of its Simplification Initiative. The areas for simplification in this ASU involve several aspects of the accounting for share- based payment transactions, including the income tax consequences, recognition of share-based expense, classification of awards as either equity or liabilities, and classification on the statement of cash flows. This ASU is effective for fiscal years beginning after December 15, 2016, including interim periods within those fiscal years. Early adoption is permitted for any entity in any interim or annual period. We adopted this ASU in the first quarter of 2017. We elected to account for forfeitures when they occur versus our prior practice of estimating the number of awards that are expected to vest. The election of this new ASU resulted in a one-time adjustment in 2017 to accumulated deficit and to additional paid-in-capital of $5,668 and the corresponding benefit to our accumulated deficit and deferred tax asset of $2,285 related to the reversal of forfeiture rate as of December 31, 2016. In addition, a benefit to our accumulated deficit and deferred tax asset of $6,624 was recorded for excess tax benefits on equity compensation as of December 31, 2016. We also classified cash paid by us when directly withholding shares for tax-withholding purposes as a financing activity. As a result, $3,966 was reclassified from operating activity to financing activity for the six months ended June 30, 2016. In July 2015, FASB issued ASU 2015-11, "Simplifying the Measurement of Inventory". This ASU applies to inventory that is measured using first-in, first-out ("FIFO") or average cost. Under the updated guidance, an entity should measure inventory that is within scope at the lower of cost and net realizable value, which is the estimated selling prices in the ordinary course of business, less reasonably predicable costs of completion, disposal and transportation. Subsequent measurement is unchanged for inventory that is measured using last-in, first-out ("LIFO") or the retail inventory. This ASU is effective for annual and interim periods beginning after December 15, 2016, and should be applied prospectively with early adoption on permitted at the beginning of an interim and annual reporting period. We adopted ASU 2015-11 in the first quarter of 2017 and the adoption of this ASU did not have a material impact on our condensed consolidated financial statements and related disclosures. |
Correction of Prior Period Financial Statements |
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Accounting Changes and Error Corrections [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Correction of Prior Period Financial Statements | Correction of Prior Period Financial Statements In connection with the preparation of our condensed consolidated financial statements for the quarter ended March 31, 2017, and our remediation efforts related to the material weakness in our internal control over financial reporting related to our controls over the preparation of the annual tax provision, we identified an error as of December 31, 2016 in our recognition of a deferred tax asset related to contingent consideration with vesting requirements paid in connection with the acquisition of Nexmo. Based in part upon the vesting requirements of contingent consideration, we recorded the consideration as compensation expense in general and administrative expense in our consolidated statements of operations. However, for tax purposes the contingent consideration should have been recorded as merger consideration and not deductible compensation. The correction of this error requires the reversal of the deferred tax asset on the consolidated balance sheets and related tax benefits of $4,756 as of December 31, 2016. In accordance with Staff Accounting Bulletin (“SAB”) No. 99, Materiality, and SAB No. 108, Considering the Effects of Prior Year Misstatements when Quantifying Misstatements in Current Year Financial Statements, we evaluated the error and determined that the related impact was not material to our results of operations or financial position for any prior annual or interim period, but that correcting the $4,756 cumulative impact of the error would be material to our results of operations for the three months ended March 31, 2017. Accordingly, we have corrected the consolidated balance sheets as of December 31, 2016 and will correct this error in all prior periods presented by revising the appropriate condensed consolidated financial statements. This error had no impact on the three months ended March 31, 2016. The impact to the consolidated balance sheet as of December 31, 2016 and the consolidated statements of income for the three and six months ended June 30, 2016, the three and nine months ended September 30, 2016, and the three months and year ended December 31, 2016 is as follows:
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Earnings Per Share |
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Earnings Per Share [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Earnings Per Share | Earnings Per Share The following table sets forth the computation for basic and diluted earnings per share for the three and six months ended June 30, 2017 and 2016:
(1) see Note 3. Correction of Prior Period Financial Statements For the three and six months ended June 30, 2017 and 2016, the following were excluded from the calculation of diluted earnings per common share because of their anti-dilutive effects:
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Long-Term Note and Revolving Credit Facility |
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Debt Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||
Long-Term Note and Revolving Credit Facility | Long-Term Note and Revolving Credit Facility This footnote should be read in conjunction with the complete description of our financing arrangements under Note 6, Long-Term Debt and Revolving Credit Facility to our Annual Report on Form 10-K for the year ended December 31, 2016. A schedule of long-term note and revolving credit facility at June 30, 2017 and December 31, 2016 is as follows:
2016 Financing On June 3, 2016, we entered into Amendment No. 1 to the Amended and Restated Credit Agreement (the “2016 Credit Facility”) consisting of a $125.0 million term note and a $325.0 million revolving credit facility. The co-borrowers under the 2016 Credit Facility are the Company and Vonage America Inc., the Company’s wholly owned subsidiary. Obligations under the 2016 Credit Facility are guaranteed, fully and unconditionally, by the Company’s other United States material subsidiaries and are secured by substantially all of the assets of each borrower and each guarantor. We used $197.8 million of the net available proceeds of the 2016 Credit Facility to retire all of the debt under our 2015 Credit Facility. We used $179.0 million from our 2016 Credit Facility in connection with the acquisition of Nexmo on June 3, 2016. Remaining proceeds from the term note and the undrawn revolving credit facility under the 2016 Credit Facility will be used for general corporate purposes. During the six months ended June 30, 2017, we made mandatory repayments of $9.4 million under the term note and $10.0 million under the revolving credit facility, respectively, and borrowed $15.0 million under the revolving credit facility. In addition, the effective interest rate was 4.25% as of June 30, 2017. Interest Rate Swap On July 14, 2017, we executed on three interest rate swap agreements in order to hedge the variability of expected future cash interest payments related to the 2016 Credit Facility. The swaps have an aggregate notional amount of $150 million and are effective on July 31, 2017 through June 3, 2020 concurrent with the term of the 2016 Credit Facility. Under the swaps our interest rate is fixed at 4.7%. The interest rate swaps will be accounted for as cash flow hedges in accordance with ASC 815, Derivatives and Hedging. |
Common Stock |
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Common Stock | Common Stock As of June 30, 2017 and December 31, 2016, the Company had 596,950 shares of common stock authorized and had 11,369 shares available for grants under our share-based compensation programs as of June 30, 2017. For a detailed description of our share-based compensation programs refer to Note 9, Employee Benefit Plans in our Annual Report on Form 10-K for the year ended December 31, 2016. Common Stock Repurchases On December 9, 2014, Vonage's Board of Directors authorized a program for the Company to repurchase up to $100.0 million of its outstanding common stock (the "2014 $100.0 million repurchase program"). Repurchases under the 2014 $100.0 million repurchase program are expected to be made over a four-year period ending on December 31, 2018. We repurchased the following shares of common stock with cash resources under the 2014 $100.0 million repurchase program during the three and six months ended June 30, 2017 and 2016:
As of June 30, 2017, $42,533 remained of our 2014 $100.0 million repurchase program. The repurchase program expires on December 31, 2018 but may be suspended or discontinued at any time without notice. In any period under the 2014 $100.0 million repurchase program, cash used in financing activities related to common stock repurchases may differ from the comparable change in stockholders' equity, reflecting timing differences between the recognition of share repurchase transactions and their settlement for cash. |
Commitments and Contingencies |
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Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | Commitments and Contingencies From time to time, in addition to those identified below, we are subject to legal proceedings, claims, investigations, and proceedings in the ordinary course of business, including claims of alleged infringement of third-party patents and other intellectual property rights, commercial, employment, and other matters. From time to time we receive letters or other communications from third parties inviting us to obtain patent licenses that might be relevant to our business or alleging that our services infringe upon third party patents or other intellectual property. In accordance with generally accepted accounting principles, we make a provision for a liability when it is both probable that a liability has been incurred and the amount of the loss or range of loss can be reasonably estimated. These provisions, if any, are reviewed at least quarterly and adjusted to reflect the impacts of negotiations, settlements, rulings, advice of legal counsel, and other information and events pertaining to a particular case. Litigation is inherently unpredictable. We believe that we have valid defenses with respect to the legal matters pending against us and are vigorously defending these matters. Given the uncertainty surrounding litigation and our inability to assess the likelihood of a favorable or unfavorable outcome in the matters noted below and our inability to reasonably estimate the amount of loss or range of loss, it is possible that the resolution of one or more of these matters could have a material adverse effect on our condensed consolidated financial position, cash flows or results of operations. Litigation IP Matters Bear Creek Technologies, Inc. On June 26, 2017, the litigations brought by Bear Creek Technologies, Inc. against Vonage Holdings Corp. and certain of its subsidiaries were dismissed with prejudice pursuant to stipulation, with no settlement paid by the Company. RPost Holdings, Inc. On August 24, 2012, RPost Holdings, Inc., RPost Communications Limited, and RMail Limited (collectively, “RPost”) filed a lawsuit against StrongMail Systems, Inc. (“StrongMail”) in the United States District Court for the Eastern District of Texas alleging that StrongMail’s products and services, including its electronic mail marketing services, are covered by United States Patent Nos. 8,224,913, 8,209,389, 8,161,104, 7,966,372, and 6,182,219. On February 11, 2013, RPost filed an amended complaint, adding 27 new defendants, including Vonage America Inc. RPost’s amended complaint alleges willful infringement of the RPost patents by Vonage and each of the other new defendants because they are customers of StrongMail. StrongMail has agreed to fully defend and indemnify Vonage in this lawsuit. Vonage answered the complaint on May 7, 2013. On September 17, 2015, the Court ordered the consolidation for pre-trial purposes of this case with other cases by RPost. The lead case has been administratively closed and stayed since January 30, 2014 due to multiple pending actions by third parties regarding ownership of the patents at issue. On June 1, 2017, the parties in the consolidated actions filed a joint notice regarding status of the co-pending actions. Plaintiffs requested that the stay be lifted, while defendants maintain that the stay should remain in place. AIP Acquisition LLC. On January 3, 2014, AIP Acquisition LLC (“AIP”), filed a lawsuit against Vonage Holdings Corp., Vonage America, Inc., and Vonage Marketing LLC in the U.S. District Court for the District of Delaware alleging that Vonage’s products and services are covered by United States Patent No. 7,269,247. Vonage filed an answer and counterclaims on February 25, 2014. AIP filed an amended complaint on March 18, 2014, which Vonage answered on April 4, 2014. On April 8, 2014, the Court stayed the case pending final resolution of non-party Level 3’s inter partes review request of United States Patent No. 7,724,879, which is a continuation of the ‘247 patent. On October 8, 2014, the Patent Office issued a Final Written Decision, finding all challenged claims of the ‘879 patent to be invalid. On November 10, 2015, the Federal Circuit rejected AIP’s appeal and affirmed the Patent Office’s rejection of the ‘879 patent. Cisco petitioned for inter partes review of the ‘247 patent on November 25, 2014, which was granted on May 20, 2015. On May 18, 2016, the Patent Office issued a Final Written Decision, finding all challenged claims of the ‘247 patent to be invalid. AIP appealed to the Federal Circuit, filing its opening brief on December 15, 2016. On December 20, 2016, the Patent Office filed a notice of intervention in the appellate proceedings. Briefing on the appeal is complete, with oral argument to be scheduled. Commercial Litigation Merkin & Smith, et al. On September 27, 2013, Arthur Merkin and James Smith filed a putative class action lawsuit against Vonage America, Inc. in the Superior Court of the State of California, County of Los Angeles, alleging that Vonage violated California’s Unfair Competition Law by charging its customers fictitious 911 taxes and fees. On October 30, 2013, Vonage filed a notice removing the case to the United States District Court for the Central District of California. On November 26, 2013, Vonage filed its Answer to the Complaint. On December 4, 2013, Vonage filed a Motion to Compel Arbitration, which the Court denied on February 4, 2014. On March 5, 2014, Vonage appealed that decision to the United States Court of Appeals for the Ninth Circuit. On March 26, 2014, the district court proceedings were stayed pending the appeal. On February 29, 2016, the Ninth Circuit reversed the district court’s ruling and remanded with instructions to grant the motion to compel arbitration. On March 22, 2016, Merkin and Smith filed a petition for rehearing. On May 4, 2016, the Ninth Circuit withdrew its February 29, 2016 decision and issued a new order reversing the district court’s order and remanded with instructions to compel arbitration. The Ninth Circuit also declared as moot the petition for rehearing. On June 27, 2016, the lower court stayed the case pending arbitration. A joint status report was filed with the District Court on December 23, 2016. A second joint status report was filed with the District Court on March 23, 2017. A third joint status report was filed with the District Court on June 27, 2017. Regulation Telephony services are subject to a broad spectrum of state and federal regulations. Because of the uncertainty over whether Voice over Internet Protocol (“VoIP”) should be treated as a telecommunications or information service, we have been involved in a substantial amount of state and federal regulatory activity. Implementation and interpretation of the existing laws and regulations is ongoing and is subject to litigation by various federal and state agencies and courts. Due to the uncertainty over the regulatory classification of VoIP service, there can be no assurance that we will not be subject to new regulations or existing regulations under new interpretations, and that such change would not introduce material additional costs to our business. Federal - Net Neutrality Clear and enforceable net neutrality rules make it more difficult for broadband Internet service providers to block or discriminate against Vonage service. In addition, explicitly applying net neutrality rules to wireless broadband Internet service providers could create greater opportunities for VoIP applications that run on wireless broadband Internet service. In December 2010, the FCC adopted net neutrality rules that applied strong net neutrality rules to wired broadband Internet service providers and limited rules to wireless broadband Internet service providers. On January 14, 2014, the D.C. Circuit Court of Appeals vacated a significant portion of the 2010 rules. On May 15, 2014, the FCC issued a Notice of Proposed Rulemaking (NPRM) proposing new net neutrality rules. After public response to the NPRM, the FCC adopted new neutrality rules on February 26, 2015. These rules prohibit broadband Internet service providers from: (1) blocking or throttling lawful content applications, or services; (2) imposing paid prioritization arrangements; and (3) unreasonably interfering or unreasonably disadvantaging consumers or edge providers. In addition, broadband Internet service providers are required to make certain disclosures regarding their network management practices, network performance, and commercial terms. These net neutrality rules apply the same requirements to wired and wireless broadband Internet service providers. Several parties filed appeals which are pending at the D.C. Circuit Court of Appeals. Oral arguments at the D.C. Circuit Court of Appeals were held on December 4, 2015. On June 14, 2016, the D.C. Circuit of Appeals denied the appeals. Several parties filed a petition for rehearing en banc on July 29, 2016, which was denied on May 1, 2017. Federal - Rural Call Completion Issues On February 7, 2013, the FCC released a Notice of Proposed Rulemaking (NPRM) on rural call completion issues. The NPRM proposed new detailed reporting requirements to gauge rural call completion performance. Rural carriers have argued that VoIP provider call completion performance to rural areas is generally poor. On October 28, 2013, the FCC adopted an order on rural call completion imposing new reporting obligations and restricting certain call signaling practices. The call signaling rules went into effect on January 31, 2014. We filed for extensions of the rules, which the FCC granted, and as of April 17, 2014, we were compliant with the FCC call signaling rules. The effective date for the reporting requirements was April 1, 2015. We could be subject to an FCC enforcement action in the future in the event the FCC took the position that our rural call completion performance is inadequate or we were not compliant with the FCC’s order. On June 22, 2017, the FCC issued a Second Further Notice of Proposed Rulemaking. The FCC has proposed changes to the FCC's rules that allegedly would more effectively address rural call completion problems while reducing burdens on covered providers. Vonage is reviewing and evaluating the FCC's proposed changes. State Telecommunications Regulation In general, the focus of interconnected VoIP telecommunications regulation is at the federal level. On November 12, 2004, the FCC issued a declaratory ruling providing that our service is subject to federal regulation and preempted the Minnesota Public Utilities Commission (“MPUC”) from imposing certain of its regulations on us. The FCC's decision was based on its conclusion that our service is interstate in nature and cannot be separated into interstate and intrastate components. On March 21, 2007, the United States Court of Appeals for the 8th Circuit affirmed the FCC's declaratory ruling preempting state regulation of our service. While this ruling does not exempt us from all state oversight of our service, it effectively prevents state telecommunications regulators from imposing certain burdensome and inconsistent market entry requirements and certain other state utility rules and regulations on our service. State regulators continue to probe the limits of federal preemption in their attempts to apply state telecommunications regulation to interconnected VoIP service. On July 16, 2009, the Nebraska Public Service Commission and the Kansas Corporation Commission filed a petition with the FCC seeking a declaratory ruling or, alternatively, adoption of a rule declaring that state authorities may apply universal service funding requirements to nomadic VoIP providers. We participated in the FCC proceedings on the petition. On November 5, 2010, the FCC issued a declaratory ruling that allowed states to assess state USF on nomadic VoIP providers on a going forward basis provided that the states comply with certain conditions to ensure that imposing state USF does not conflict with federal law or policy. More recently on July 28, 2015, the MPUC found that it has authority to regulate Charter’s fixed, interconnected VoIP service. Charter challenged the MPUC’s order at the U.S. District Court for Minnesota. This challenge is currently pending. We expect that state public utility commissions and state legislators will continue their attempts to apply state telecommunications regulations to nomadic VoIP service. State and Municipal Taxes In accordance with generally accepted accounting principles, we make a provision for a liability for taxes when it is both probable that a liability has been incurred and the amount of the liability or range of liability can be reasonably estimated. These provisions are reviewed at least quarterly and adjusted to reflect the impacts of negotiations, settlements, rulings, advice of legal counsel, and other information and events pertaining to a particular case. For a period of time, we did not collect or remit state or municipal taxes (such as sales, excise, utility, use, and ad valorem taxes), fees or surcharges (“Taxes”) on the charges to our customers for our services, except that we historically complied with the New Jersey sales tax. We have received inquiries or demands from a number of state and municipal taxing and 911 agencies seeking payment of Taxes that are applied to or collected from customers of providers of traditional public switched telephone network services. Although we have consistently maintained that these Taxes do not apply to our service for a variety of reasons depending on the statute or rule that establishes such obligations, we are now collecting and remitting sales taxes in certain of those states including a number of states that have changed their statutes to expressly include VoIP. In addition, many states address how VoIP providers should contribute to support public safety agencies, and in those states we remit fees to the appropriate state agencies. We could also be contacted by state or municipal taxing and 911 agencies regarding Taxes that do explicitly apply to VoIP and these agencies could seek retroactive payment of Taxes. As such, we have reserves of $653 and $1,763 as of June 30, 2017 and December 31, 2016, respectively, as our best estimate of the potential tax exposure for any retroactive assessment. We believe the maximum estimated exposures for retroactive assessments are approximately $2,000 and $2,600 as of June 30, 2017 and December 31, 2016, respectively. |
Acquisitions and Dispositions |
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Acquisitions and Dispositions | Acquisitions and Dispositions Sale of Hosted Infrastructure Product Line On May 31, 2017, we completed the sale of our Hosted Infrastructure product line for up to $4.0 million consideration comprised of $1.0 million received upon closing and the potential for an additional $0.5 million to be paid six months from closing and up to $2.5 million based on the achievement of financial objectives for net sales during the 18 months following closing. The results of our Hosted Infrastructure product line have been included within our business segment. As a result of the sale, we recorded a gain of $928 within other income for the three months ended June 30, 2017. This disposal did not represent a strategic shift in operations and, therefore, did not qualify for presentation as discontinued operations. Acquisition of Nexmo Nexmo is a global leader in the Communications-Platform-as-a-Service (“CPaaS”) segment of the cloud communications market. Nexmo provides innovative communication application program interfaces (“APIs”) for text messaging and voice communications, allowing developers and enterprises to embed contextual communications into mobile apps, websites and business workflows via text, social media, chat apps and voice. Pursuant to the Agreement and Plan of Merger dated May 5, 2016, by and among the Company, Neptune Acquisition Corp., a Delaware corporation and newly formed indirect, wholly owned subsidiary of Vonage (“Merger Sub”), Nexmo, a Delaware corporation, and Shareholder Representative Services LLC, a Colorado limited liability company, as representative of the security holders of Nexmo, on June 3, 2016, Merger Sub, on the terms and subject to the conditions thereof, merged with and into Nexmo, and Nexmo became a wholly owned indirect subsidiary of Vonage. On June 2, 2016, Vonage, Merger Sub, Nexmo and the Representative entered into Amendment No. 1 to the Merger Agreement (the “Amendment”). The Amendment amended the Merger Agreement to, among other things, (1) increase the purchase price payable to the Nexmo security holders by the amount of unrestricted cash and cash equivalents of Nexmo in lieu of the declaration of a dividend or other distribution of such unrestricted cash and cash equivalents to the Nexmo security holders, (2) clarify the treatment of enterprise management incentive options issued by Nexmo to certain of its employees located in the United Kingdom, and (3) add certain technical provisions with respect to deposits made to the escrow agent and the exchange agent in connection with the closing of the transactions contemplated by the Merger Agreement. Under the agreement, Nexmo shareholders received consideration of $231,122, with an additional earn-out opportunity (the "contingent consideration") of up to $20,000 contingent upon Nexmo achieving certain performance targets. Of the consideration, $194,684 (net of cash acquired of $16,094) was paid at close, consisting of $163,093 of cash (net of $16,094 of cash acquired) and 6,823 in shares of Vonage common stock valued at $31,591. The remaining $36,438 of the $231,122 purchase price is in the form of restricted cash, restricted stock and options held by Nexmo management and employees (the "Employee Payout Amount"), subject to vesting requirements over time and to be amortized to compensation expense quarterly until vested. We financed the transaction with $179,000 from our 2016 Credit Facility. The purchase price was subject to adjustments pursuant to the merger agreement for closing cash and working capital of Nexmo, reductions for indebtedness and transaction expenses of Nexmo that remained unpaid as of closing, and escrow fund deposits. The aggregate consideration will be allocated among Nexmo equity holders. The consideration was allocated to acquisition cost as follows:
In addition, Nexmo shareholders were eligible to earn a Variable Payout Amount of up to $20,000, subject to the achievement of certain performance targets during the 12 month period following the closing of the transaction. The contingent consideration payable to the holders of Nexmo stock is determined based on (i) the achievement of certain revenue targets for the calendar year 2016, and (ii) Nexmo’s revenues received from its top customers following the closing. The contingent consideration may be in the form of cash, a number of shares of Vonage common stock or a combination thereof, at our sole discretion. We estimated using probability weighting that the value of the contingent consideration is $17,840 at the acquisition date and included that amount in acquisition cost at the net present value amount of $16,472. As of December 31, 2016, Nexmo did not achieve the performance targets necessary to earn the Variable Payout Amount but the parties agreed to a $5,000 settlement that the parties were paid in the first quarter of 2017. The $5,000 settlement was reflected in accrued expenses within the condensed consolidated balance sheets and in general and administrative expenses in the condensed consolidated statements of income during the year ended December 31, 2016. In addition, Nexmo management and employees were eligible to earn an Employee Payout Amount of $36,438 attributable to restricted cash, restricted stock and assumed options, of which $4,779 is included in acquisition cost as service had been provided pre-acquisition and $31,659 will be recorded as post-acquisition expense assuming all amounts vest, of which $31,087 will be recorded as compensation expense and $572 will be recorded as interest expense as continued employment is a condition of receiving consideration. Pursuant to the merger agreement, $20,372 of the cash consideration and $5,081 of the stock consideration were placed in escrow for unknown liabilities that may have existed as of the acquisition date. For the three months ended June 30, 2017 and June 30, 2016, we incurred approximately $10 and $5,059, respectively, in acquisition related transaction costs, which were recorded in general and administrative expense in the accompanying condensed consolidated statements of income. For the full year 2016, we incurred approximately $5.5 million in acquisition related transaction costs. The acquisition was accounted for using the acquisition method of accounting under which assets and liabilities of Nexmo were recorded at their respective fair values including an amount for goodwill representing the difference between the acquisition consideration and the fair value of the identifiable net assets. We do not expect any portion of this goodwill to be deductible for tax purposes. The goodwill attributable to the acquisition has been recorded as a non-current asset and is not amortized, but is subject to an annual review for impairment. The factors that contributed to goodwill include synergies that are specific to our consolidated business, the acquisition of a talented workforce that provides us with expertise in the small and medium business markets, as well as other intangible assets that do not qualify for separate recognition. The acquisition price was allocated to the tangible and identified intangible assets acquired and liabilities assumed as of the closing date. The fair values assigned to identifiable intangible assets assumed were based on management’s current estimates and assumptions. The accounting for the Nexmo acquisition was completed during the three months ended June 30, 2017, at which point the fair values became final. The table below summarizes the provisional amounts recognized for assets acquired and liabilities assumed as of December 31, 2016 as well as adjustments made through the three months ended June 30, 2017, when the allocation became final. Measurement period adjustments primarily reflect the tax impact of the acquisition date fair values. The purchase price was allocated as follows:
Identifiable intangible assets recognized in connection with the acquisition included:
Goodwill The following table provides a summary of the changes in the carrying amounts of goodwill which is attributable to our business segment:
Pro forma financial information The following unaudited supplemental pro forma information presents the combined historical results of operations of Vonage and Nexmo for the six months ended June 30, 2016, as if the acquisition had been completed at the beginning of 2016.
The pro forma financial information includes certain adjustments to reflect expenses in the appropriate pro forma periods as though the companies were combined as of the beginning of 2016 and includes the pro-forma impact of amortization of identifiable intangibles assets and interest expense on borrowings under our revolving line of credit utilized to, in part, finance the acquisition. The pro forma data was also adjusted to eliminate non-recurring transaction costs incurred by us as well as the related tax impact. The pro forma results are not necessarily indicative of the results that we would have achieved had the transaction actually occurred on January 1, 2016 and does not purport to be indicative of future financial operating results nor does it reflect any operating efficiencies and cost savings that may be realized from the integration of the acquisition. |
Industry Segment and Geographic Information |
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Segment Reporting [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Industry Segment and Geographic Information | Industry Segment and Geographic Information ASC 280 "Segment Reporting" establishes reporting standards for an enterprise's business segments and related disclosures about its products, services, geographic areas and major customers. Under ASC 280, the method for determining what information to report is based upon the way management organizes the operating segments within the Company for making operating decisions and assessing financial performance. Our chief operating decision-maker reviews revenue and gross margin information for each of our reportable segments, but does not review operating expenses on a segment by segment basis. In addition, with the exception of goodwill and intangible assets, we do not identify or allocate our assets by the reportable segments. Business For our Business customers, we provide innovative, cloud-based Unified Communications as a Service, or UCaaS, solutions, comprised of integrated voice, text, video, data, collaboration, and mobile applications over our flexible, scalable Session Initiation Protocol (SIP) based Voice over Internet Protocol, or VoIP, network. Through Nexmo, the Vonage API Platform, we also offer Communications Platform as a Service, or CPaaS, solutions designed to enhance the way businesses communicate with their customers embedding communications into apps, websites and business processes. Together we have a robust set of product families tailored to serve the full range of the business value chain, from the small and medium business, or SMB, market, through mid-market and enterprise markets. We provide customers with multiple deployment options, designed to provide the reliability and quality of service they demand. We provide customers the ability to integrate our cloud communications platform with many cloud-based productivity and CRM solutions, including Google’s G Suite, Zendesk, Salesforce’s Sales Cloud, Oracle, Clio, and other CRM solutions. In combination, our products and services permit our business customers to communicate with their customers and employees through any cloud-connected device, in any place, at any time without the often costly investment required with on-site equipment. Consumer For our Consumer customers, we enable users to access and utilize our UCaaS services and features, via a single “identity,” either a number or user name, regardless of how they are connected to the Internet, including over 3G, LTE, Cable, or DSL broadband networks. This technology enables us to offer our Consumer customers attractively priced voice and messaging services and other features around the world on a variety of devices. For our segments we categorize revenues as follows: Services revenues. Services revenues consists primarily of revenue attributable to our communication services for Consumer and Software Defined Wide Area Network, or SD-WAN, UCaaS and CPaaS services for Business, Product revenues. Product revenues includes equipment sold to customers, shipping and handling, professional services, and broadband access. USF revenues. USF revenues represent contributions to the Federal Universal Service Fund (“USF”) and related fees. For our segments we categorize cost of revenues as follows: Services cost of revenues. Services cost of revenues consists of costs associated with network operations and technical support personnel, communication origination, and termination services provided by third party carriers and excludes depreciation and amortization. Product cost of revenues. Product cost of revenues includes equipment sold to customers, shipping and handling, professional services, cost of certain products including equipment or services that we give customers as promotions, and broadband access. USF cost of revenues. USF cost of revenues represents contributions to the Federal Universal Service Fund (“USF”) and related fees. Information about our segment results for the three and six months ended June 30, 2017 were as follows:
(1) Includes customer premise equipment, access, professional services, and shipping and handling. (2) Excludes depreciation and amortization of $5,003 and $1,860 for the three months ended June 30, 2017 and $9,878 and $3,767 for the six months ended June 30, 2017, respectively. Information about our segment results for the three and six months ended June 30, 2016 were as follows:
(1) Includes customer premise equipment, access, professional services, and shipping and handling. (2) Excludes depreciation and amortization of $4,473 and $2,512 for the three months ended June 30, 2016 and $8,792 and $5,026 for six months ended June 30, 2016, respectively A reconciliation of the total of the reportable segments' gross margin to consolidated income before provision for income taxes is as follows:
Information about our operations by geographic location is as follows:
(1) No individual other international country represented greater than 10% of total revenue during the periods presented.
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Income Taxes | Income Taxes Effective Tax Rate The income tax provision consisted of the following:
We recognize income tax expense equal to pre-tax income multiplied by our effective income tax rate. In addition, adjustments are recorded for discrete period items and changes to our state effective tax rate which can cause the rate to fluctuate from quarter to quarter. For the three months and six months ended June 30, 2017, our effective tax rate was different than the statutory rate due to discrete period tax benefits of $8,325 and $1,433 which were recognized related to excess tax benefits on equity compensation recognized primarily in the first quarter of 2017 as well as an adjustment to our deferred asset related to stock compensation. For the three and six months ended June 30, 2016, our effective tax rate was different than the statutory rate due to a discrete period tax expense of $1,220 was recorded related to expired stock options recognized in the first quarter of 2016 which was partially offset by $389 which was recorded during the second quarter of 2016. The provision also includes the federal alternative minimum tax and state and local income taxes. We do not have any uncertain tax positions as of June 30, 2017 and December 31, 2016. Net Operating Loss Carry Forwards ("NOLs") As of December 31, 2016, we had cumulative domestic Federal NOLs of $575,476 and cumulative state NOLs of $158,848, expiring at various times from years ending 2017 through 2036. In addition, we had NOLs for United Kingdom tax purposes of $43,006 with no expiration date. In connection with the completion of our accounting of the acquisition of Nexmo, we adjusted our cumulative domestic Federal NOLs to $585,622 as of June 30, 2017 and did not impact our cumulative state NOLs or the United Kingdom. On June 8, 2017, at the Vonage 2017 annual meeting of stockholders, stockholders ratified the extension of the Tax Benefits Preservation Plan ("Preservation Plan") through June 30, 2019. Refer to Note 8, Common Stock to our Annual Report on Form 10-K for the year ended December 31, 2016 for a complete description of the Preservation Plan. |
Summary of Significant Accounting Policies (Policies) |
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Accounting Policies [Abstract] | |
Unaudited Interim Financial Information | Unaudited Interim Financial Information The accompanying unaudited interim condensed consolidated financial statements and information have been prepared in accordance with accounting principles generally accepted in the United States and in accordance with the SEC's regulations for interim financial information and with the instructions for Form 10-Q. Accordingly, they do not include all of the information and disclosures required by accounting principles generally accepted in the United States for complete financial statements. In the opinion of management, these financial statements contain all normal and recurring adjustments considered necessary to present fairly the financial position, results of operations, cash flows, and statement of stockholders’ equity for the periods presented. The results for the three and six months ended June 30, 2017 are not necessarily indicative of the results to be expected for the full year. These unaudited interim condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and related notes included in our Annual Report on Form 10-K for the year ended December 31, 2016 filed with the Securities and Exchange Commission on February 28, 2017. |
Use of Estimates | Use of Estimates Our condensed consolidated financial statements are prepared in conformity with accounting principles generally accepted in the United States, which require management to make estimates and assumptions that affect the amounts reported and disclosed in the condensed consolidated financial statements and the accompanying notes. Actual results could differ materially from these estimates. |
Cost of Services | Cost of Services Cost of services excludes depreciation and amortization expense of $6,863 and $6,985 for the three months ended June 30, 2017 and 2016 and $13,645 and $13,818 for the six months ended June 30, 2017 and 2016, respectively. |
Advertising Costs | Advertising Costs We incurred advertising costs included in sales and marketing of $14,994 and $20,079 for the three months ended June 30, 2017 and 2016 and $32,337 and $36,958 for the six months ended June 30, 2017 and 2016, respectively. |
Engineering and Development Expenses | Engineering and Development Expenses Engineering and development expenses primarily include personnel and related costs for developers responsible for new products, and software engineers maintaining and enhancing existing products. Research and development costs related to new product development included in engineering and development were $5,349 and $5,402 for the three months ended June 30, 2017 and 2016 and $11,695 and $10,310 for the six months ended June 30, 2017 and 2016, respectively. |
Restructuring Activities | Restructuring Activities During the three months ended June 30, 2017, we recognized $4 million of costs associated with restructuring activities included in general and administrative expense and is primarily comprised of costs associated with severance and other employee related costs. As of June 30, 2017, the accrued severance of $4 million is expected to be paid during the third quarter of 2017. |
Fair Value of Financial Instruments | Fair Value of Financial Instruments The Company records certain of its financial assets at fair value on a recurring basis. The Company's financial instruments, which includes cash and cash equivalents, accounts receivable and accounts payable, approximate fair value because of their short-term maturities. The carrying amounts of our capital leases approximate fair value of these obligations based upon management’s best estimates of interest rates that would be available for similar debt obligations at June 30, 2017 and December 31, 2016. We believe the fair value of our debt at June 30, 2017 was approximately the same as its carrying amount as market conditions, including available interest rates, credit spread relative to our credit rating, and illiquidity, remain relatively unchanged from the issuance date of our debt on June 3, 2016 for a similar debt instrument. |
Recent Accounting Pronouncements | Recent Accounting Pronouncements In January 2017, FASB issued ASU 2017-04, "Intangibles - Goodwill and Other". The ASU simplifies the subsequent measurement of goodwill and eliminates Step 2 from the goodwill impairment test. This ASU is effective for an annual or any interim goodwill impairment tests in fiscal years beginning after December 15, 2019 on a prospective basis. Early adoption is permitted for interim or annual goodwill impairment tests performed on testing dates after January 1, 2017. We are currently evaluating the impact of adopting ASU 2017-04 on our condensed consolidated financial statements and related disclosures. In May 2014, FASB issued ASU 2014-09, "Revenue from Contracts with Customers (Topic 606)" which was further amended through various updates issued by the FASB thereafter. The amendments of Topic 606 clarify the principles for recognizing revenue and provide a common revenue standard for U.S. GAAP and International Financial Reporting Standards, or IFRS, and to improve financial reporting. The core principle of these standards are that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. Topic 606 also amends the current guidance for the recognition of costs to obtain and fulfill contracts with customers requiring that all incremental costs of obtaining and direct costs of fulfilling contracts with customers such as commissions be deferred and recognized over the expected customer life. In August 2015, an ASU was issued by the FASB which deferred the effective date to annual and interim periods beginning on or after December 15, 2017. We will adopt the requirements of the new standard in the first quarter of 2018 and anticipate using the modified retrospective transition method under which the standard will be applied only to the most current period presented and the cumulative effect of applying the standard will be recognized at the date of initial application. We are in the process of evaluating the impact of the standard with respect to the terms of our revenue arrangements and expect our review to be substantially completed during the third quarter of 2017. We expect the timing of recognition of our sales commissions will also be impacted as a substantial portion of these costs which are currently expensed will be capitalized under the revised standard and amortized over the period of benefit. In October 2016, FASB issued ASU 2016-16, "Income Taxes". This ASU improves the accounting for income tax consequences of intra-entity transfers of assets other than inventory. This ASU is effective for fiscal years beginning after December 15, 2017 on a modified retrospective basis through a cumulative-effect adjustment directly to retained earnings as of the beginning of the period of adoption. Early adoption is permitted as of the beginning of an annual reporting period for which financial statements have not been issued or made available for issuance. We are currently evaluating the impact of adopting ASU 2016-16 on our condensed consolidated financial statements and related disclosures. In August 2016, FASB issued ASU 2016-15, "Statement of Cash Flows". This ASU addresses eight specific cash flow issues with the objective of reducing the existing diversity in practice. This ASU is effective for fiscal years beginning after December 15, 2017 on a retrospective basis. Early adoption is permitted, including adoption in an interim period. The adoption of ASU 2016-15 will not have a material impact on our condensed consolidated financial statements and related disclosures. In February 2016, FASB issued ASU 2016-02, "Leases". This ASU increases transparency and comparability among organizations by recognizing lease assets and lease liabilities on the balance sheet and disclosing key information about leasing arrangements. This ASU is effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. Early adoption is permitted for all entities. The adoption of this ASU will increase assets and liabilities for operating leases. We will adopt these ASUs when effective. We are currently evaluating the effect of adopting ASU 2016-02 on our condensed consolidated financial statements and related disclosures. In January 2016, FASB issued ASU 2016-01, "Recognition and Measurement of Financial Assets and Financial Liabilities". This ASU provide guidance concerning certain matters involving the recognition, measurement, and disclosure of financial assets and financial liabilities. The guidance does not alter the basic framework for classifying debt instruments held as financial assets. This ASU is effective for fiscal years beginning after December 15, 2017, including interim periods within those fiscal years. Early adoption is not permitted, with some exceptions. The adoption of ASU 2016-01 will not have a material impact on our condensed consolidated financial statements and related disclosures. The following standards were adopted by the Company during the current year: In November 2016, FASB issued ASU 2016-18, "Statement of Cash Flows". This ASU requires that a statement of cash flows explains the change during the period in the total of cash, cash equivalents, and amounts generally described as restricted cash or restricted cash equivalents. As a result, amounts generally described as restricted cash and restricted cash equivalents should be included with cash and cash equivalents when reconciling the beginning-of-period and end-of-period total amounts shown on the statement of cash flows. This ASU is effective for fiscal years beginning after December 15, 2017, and interim periods within those fiscal years. Early adoption is permitted, including adoption in an interim period, any adjustments should be reflected as of the beginning of the fiscal year that includes that interim period. We adopted this ASU in the first quarter of 2017 and applied the retrospective transition method for each period presented. For the six months ended June 30, 2016, $690 and $10 were reclassified from investing activity and effect of exchange rate changes on cash, respectively, and $51, $2,587 and $1,938 were adjusted to acquisition of business, net of cash acquired, cash, cash equivalents, and restricted cash, beginning of the period and end of the period balances, respectively. In March 2016, FASB issued ASU 2016-09, "Improvements to Employee Share-Based Payment Accounting". This ASU is issued as part of its Simplification Initiative. The areas for simplification in this ASU involve several aspects of the accounting for share- based payment transactions, including the income tax consequences, recognition of share-based expense, classification of awards as either equity or liabilities, and classification on the statement of cash flows. This ASU is effective for fiscal years beginning after December 15, 2016, including interim periods within those fiscal years. Early adoption is permitted for any entity in any interim or annual period. We adopted this ASU in the first quarter of 2017. We elected to account for forfeitures when they occur versus our prior practice of estimating the number of awards that are expected to vest. The election of this new ASU resulted in a one-time adjustment in 2017 to accumulated deficit and to additional paid-in-capital of $5,668 and the corresponding benefit to our accumulated deficit and deferred tax asset of $2,285 related to the reversal of forfeiture rate as of December 31, 2016. In addition, a benefit to our accumulated deficit and deferred tax asset of $6,624 was recorded for excess tax benefits on equity compensation as of December 31, 2016. We also classified cash paid by us when directly withholding shares for tax-withholding purposes as a financing activity. As a result, $3,966 was reclassified from operating activity to financing activity for the six months ended June 30, 2016. In July 2015, FASB issued ASU 2015-11, "Simplifying the Measurement of Inventory". This ASU applies to inventory that is measured using first-in, first-out ("FIFO") or average cost. Under the updated guidance, an entity should measure inventory that is within scope at the lower of cost and net realizable value, which is the estimated selling prices in the ordinary course of business, less reasonably predicable costs of completion, disposal and transportation. Subsequent measurement is unchanged for inventory that is measured using last-in, first-out ("LIFO") or the retail inventory. This ASU is effective for annual and interim periods beginning after December 15, 2016, and should be applied prospectively with early adoption on permitted at the beginning of an interim and annual reporting period. We adopted ASU 2015-11 in the first quarter of 2017 and the adoption of this ASU did not have a material impact on our condensed consolidated financial statements and related disclosures. |
Income Taxes | We recognize income tax expense equal to pre-tax income multiplied by our effective income tax rate. In addition, adjustments are recorded for discrete period items and changes to our state effective tax rate which can cause the rate to fluctuate from quarter to quarter. |
Summary of Significant Accounting Policies (Tables) |
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Accounting Policies [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value, Assets Measured on Recurring Basis | The following table presents the assets and liabilities that are measured and recognized at fair value on a recurring basis classified under the appropriate level of the fair value hierarchy as of December 31, 2016:
(1) Included in cash and cash equivalents on our condensed consolidated balance sheet. (2) Included in marketable securities on our condensed consolidated balance sheet. |
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Schedule of Restricted Cash | Cash, cash equivalents and restricted cash
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Schedule of Intangible Assets, Net | Intangible assets, net
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Schedule of Accrued Expenses | Accrued expenses
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Correction of Prior Period Financial Statements (Tables) |
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Accounting Changes and Error Corrections [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Error Corrections and Prior Period Adjustments | The impact to the consolidated balance sheet as of December 31, 2016 and the consolidated statements of income for the three and six months ended June 30, 2016, the three and nine months ended September 30, 2016, and the three months and year ended December 31, 2016 is as follows:
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Earnings Per Share (Tables) |
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Earnings Per Share [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Earnings Per Share, Basic and Diluted | The following table sets forth the computation for basic and diluted earnings per share for the three and six months ended June 30, 2017 and 2016:
(1) see Note 3. Correction of Prior Period Financial Statements |
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Schedule of Antidilutive Securities Excluded from Computation of Earnings Per Share | For the three and six months ended June 30, 2017 and 2016, the following were excluded from the calculation of diluted earnings per common share because of their anti-dilutive effects:
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Long-Term Note and Revolving Credit Facility (Tables) |
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Debt Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Long-Term Debt | A schedule of long-term note and revolving credit facility at June 30, 2017 and December 31, 2016 is as follows:
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Common Stock (Tables) |
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Equity [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Common Stock Repurchases | We repurchased the following shares of common stock with cash resources under the 2014 $100.0 million repurchase program during the three and six months ended June 30, 2017 and 2016:
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Acquisitions and Dispositions (Tables) |
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Business Combinations [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Consideration Allocated to Acquisition | The consideration was allocated to acquisition cost as follows:
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Estimated Fair Values of Assets Acquired and Liabilities Assumed | The table below summarizes the provisional amounts recognized for assets acquired and liabilities assumed as of December 31, 2016 as well as adjustments made through the three months ended June 30, 2017, when the allocation became final. Measurement period adjustments primarily reflect the tax impact of the acquisition date fair values. The purchase price was allocated as follows:
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Intangible Assets Acquired | Identifiable intangible assets recognized in connection with the acquisition included:
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Schedule of Goodwill | The following table provides a summary of the changes in the carrying amounts of goodwill which is attributable to our business segment:
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Business Acquisition, Pro Forma Information | The following unaudited supplemental pro forma information presents the combined historical results of operations of Vonage and Nexmo for the six months ended June 30, 2016, as if the acquisition had been completed at the beginning of 2016.
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Industry Segment and Geographic Information (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Segment Reporting [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Revenue from External Customers by Geographic Areas | Information about our segment results for the three and six months ended June 30, 2017 were as follows:
(1) Includes customer premise equipment, access, professional services, and shipping and handling. (2) Excludes depreciation and amortization of $5,003 and $1,860 for the three months ended June 30, 2017 and $9,878 and $3,767 for the six months ended June 30, 2017, respectively. Information about our segment results for the three and six months ended June 30, 2016 were as follows:
(1) Includes customer premise equipment, access, professional services, and shipping and handling. (2) Excludes depreciation and amortization of $4,473 and $2,512 for the three months ended June 30, 2016 and $8,792 and $5,026 for six months ended June 30, 2016, respectively A reconciliation of the total of the reportable segments' gross margin to consolidated income before provision for income taxes is as follows:
Information about our operations by geographic location is as follows:
(1) No individual other international country represented greater than 10% of total revenue during the periods presented. |
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Long-lived Assets by Geographic Areas |
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Incomes Taxes (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2017 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Income Tax Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Effective Income Tax Rate Reconciliation | The income tax provision consisted of the following:
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Basis of Presentation - Nature of Operation (Details) |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2017 |
Jun. 30, 2016 |
Jun. 30, 2017 |
Jun. 30, 2016 |
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United States | ||||
Concentration Risk [Line Items] | ||||
Customer representation of revenue, percentage | 85.00% | 93.00% | 86.00% | 94.00% |
Summary of Significant Accounting Policies - Cost of Services (Details) - USD ($) $ in Thousands |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2017 |
Jun. 30, 2016 |
Jun. 30, 2017 |
Jun. 30, 2016 |
|
Accounting Policies [Abstract] | ||||
Depreciation and amortization | $ 6,863 | $ 6,985 | $ 13,645 | $ 13,818 |
Summary of Significant Accounting Policies - Advertising Cost (Details) - USD ($) $ in Thousands |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2017 |
Jun. 30, 2016 |
Jun. 30, 2017 |
Jun. 30, 2016 |
|
Accounting Policies [Abstract] | ||||
Advertising Expense | $ 14,994 | $ 20,079 | $ 32,337 | $ 36,958 |
Summary of Significant Accounting Policies - Engineering and Development Expenses (Details) - USD ($) $ in Thousands |
3 Months Ended | 6 Months Ended | ||||||
---|---|---|---|---|---|---|---|---|
Jun. 30, 2017 |
Jun. 30, 2016 |
Jun. 30, 2017 |
Jun. 30, 2016 |
|||||
Research and Development Arrangement, Contract to Perform for Others [Line Items] | ||||||||
Engineering and development | $ 6,670 | $ 7,243 | [1] | $ 15,040 | $ 14,077 | [1] | ||
Product revenues | ||||||||
Research and Development Arrangement, Contract to Perform for Others [Line Items] | ||||||||
Engineering and development | $ 5,349 | $ 5,402 | $ 11,695 | $ 10,310 | ||||
|
Summary of Significant Accounting Policies - Restructuring Activities (Details) - Employee Severance $ in Millions |
3 Months Ended |
---|---|
Jun. 30, 2017
USD ($)
| |
Restructuring Cost and Reserve [Line Items] | |
Restructuring costs | $ 4 |
Restructuring costs expected to be paid | $ 4 |
Summary of Significant Accounting Policies - Fair Value of Financial Instruments (Details) - USD ($) $ in Thousands |
Jun. 30, 2017 |
Dec. 31, 2016 |
|||
---|---|---|---|---|---|
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||||
Available-for-sale securities | $ 0 | $ 601 | [1] | ||
Money market fund (1) | Fair value, measurements, recurring | |||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||||
Money market fund | 300 | ||||
Available-for-sale securities (2) | Fair value, measurements, recurring | |||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||||
Available-for-sale securities | $ 601 | ||||
|
Summary of Significant Accounting Policies - Cash, Cash Equivalents and Restricted Cash (Details) - USD ($) $ in Thousands |
Jun. 30, 2017 |
Dec. 31, 2016 |
Jun. 30, 2016 |
[2] | Dec. 31, 2015 |
[2] | |||||
---|---|---|---|---|---|---|---|---|---|---|---|
Cash, Cash Equivalents, and Restricted Cash [Line Items] | |||||||||||
Cash and cash equivalents | $ 26,825 | $ 29,078 | [1] | ||||||||
Restricted cash and cash equivalents | 1,802 | 1,851 | |||||||||
Cash, cash equivalents, and restricted cash | 28,627 | 30,929 | $ 26,269 | $ 60,313 | |||||||
Standby letters of credit | |||||||||||
Cash, Cash Equivalents, and Restricted Cash [Line Items] | |||||||||||
Restricted cash and cash equivalents | 1,580 | 1,578 | |||||||||
Cash reserve | |||||||||||
Cash, Cash Equivalents, and Restricted Cash [Line Items] | |||||||||||
Restricted cash and cash equivalents | $ 222 | $ 273 | |||||||||
|
Summary of Significant Accounting Policies - Intangible Assets, Net (Details) - USD ($) $ in Thousands |
Jun. 30, 2017 |
Dec. 31, 2016 |
|||
---|---|---|---|---|---|
Finite-Lived Intangible Assets [Line Items] | |||||
Intangible assets, net of accumulated amortization of $107,914 and $88,419, respectively | $ 188,076 | $ 199,256 | [1] | ||
Customer relationships | |||||
Finite-Lived Intangible Assets [Line Items] | |||||
Intangible assets, net of accumulated amortization of $107,914 and $88,419, respectively | 129,635 | 133,774 | |||
Developed technologies | |||||
Finite-Lived Intangible Assets [Line Items] | |||||
Intangible assets, net of accumulated amortization of $107,914 and $88,419, respectively | 51,882 | 57,245 | |||
Patents and patent licenses | |||||
Finite-Lived Intangible Assets [Line Items] | |||||
Intangible assets, net of accumulated amortization of $107,914 and $88,419, respectively | 4,789 | 5,547 | |||
Trade names | |||||
Finite-Lived Intangible Assets [Line Items] | |||||
Intangible assets, net of accumulated amortization of $107,914 and $88,419, respectively | 698 | 1,033 | |||
Non-compete agreements | |||||
Finite-Lived Intangible Assets [Line Items] | |||||
Intangible assets, net of accumulated amortization of $107,914 and $88,419, respectively | $ 1,072 | $ 1,657 | |||
|
Summary of Significant Accounting Policies - Accrued Expenses (Details) - USD ($) $ in Thousands |
Jun. 30, 2017 |
Dec. 31, 2016 |
|||
---|---|---|---|---|---|
Accounting Policies [Abstract] | |||||
Compensation and related taxes and temporary labor | $ 28,294 | $ 35,308 | |||
Marketing | 11,911 | 11,979 | |||
Taxes and fees | 14,380 | 18,976 | |||
Acquisition related consideration accounted for as compensation | 1,733 | 6,608 | |||
Telecommunications | 16,019 | 14,724 | |||
Settlement | 0 | 5,000 | |||
Other accruals | 8,333 | 12,846 | |||
Accrued Customer Credits, Current | 1,200 | 2,074 | |||
Accrued Professional Fees, Current | 2,300 | 1,680 | |||
Accrued expenses | $ 84,170 | $ 109,195 | [1] | ||
|
Summary of Significant Accounting Policies - Recent Accounting Pronouncements (Details) - USD ($) $ in Thousands |
3 Months Ended | 6 Months Ended | 12 Months Ended | ||||||
---|---|---|---|---|---|---|---|---|---|
Mar. 31, 2017 |
Jun. 30, 2017 |
Jun. 30, 2016 |
Dec. 31, 2016 |
Dec. 31, 2015 |
[1] | ||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||||||||
Net Cash Provided by (Used in) Investing Activities | $ (14,277) | $ (182,785) | [1] | ||||||
Net cash provided by operating activities | 32,693 | 42,527 | [1] | ||||||
Effect of exchange rate changes on cash | 660 | (109) | [1] | ||||||
Restricted cash and cash equivalents | 1,802 | $ 1,851 | |||||||
Cash, cash equivalents, and restricted cash | 28,627 | 26,269 | [1] | 30,929 | $ 60,313 | ||||
Accounting Standards Update 2016-18 | New Accounting Pronouncement, Early Adoption, Effect | |||||||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||||||||
Net Cash Provided by (Used in) Investing Activities | 690 | ||||||||
Effect of exchange rate changes on cash | 10 | ||||||||
Restricted cash and cash equivalents | 51 | ||||||||
Cash, cash equivalents, and restricted cash | $ 2,587 | 1,938 | |||||||
Accounting Standards Update 2016-09 | |||||||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||||||||
Net cash provided by operating activities | $ 3,966 | ||||||||
Accumulated Deficit | Accounting Standards Update 2016-09 | |||||||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||||||||
New accounting pronouncement or change in accounting principle, effect of adoption, quantification | $ 5,668 | ||||||||
Effective income tax rate reconciliation share based compensation excess tax benefit amount | $ 2,285 | ||||||||
Deferred Tax Assets | Accounting Standards Update 2016-09 | |||||||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||||||||
New accounting pronouncement or change in accounting principle, effect of adoption, quantification | $ 6,624 | ||||||||
|
Correction of Prior Period Financial Statements - Narrative (Details) - USD ($) $ in Thousands |
Jun. 30, 2017 |
Mar. 31, 2017 |
Dec. 31, 2016 |
|||
---|---|---|---|---|---|---|
Deferred tax assets | $ 204,286 | $ 184,210 | [1] | |||
Accumulated deficit | $ (627,890) | (641,869) | [1] | |||
Adjustment | ||||||
Deferred tax assets | 4,756 | |||||
Accumulated deficit | $ 4,756 | $ 4,756 | ||||
|
Correction of Prior Period Financial Statements - Schedule of Impact (Details) - USD ($) $ / shares in Units, $ in Thousands |
3 Months Ended | 6 Months Ended | 9 Months Ended | 12 Months Ended | |||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jun. 30, 2017 |
Dec. 31, 2016 |
Sep. 30, 2016 |
Jun. 30, 2016 |
Jun. 30, 2017 |
Jun. 30, 2016 |
Sep. 30, 2016 |
Dec. 31, 2016 |
Mar. 31, 2017 |
|||||||||
Error Corrections and Prior Period Adjustments Restatement [Line Items] | |||||||||||||||||
Deferred tax assets | $ 204,286 | $ 184,210 | [1] | $ 204,286 | $ 184,210 | [1] | |||||||||||
Total assets | 941,396 | 935,666 | [1] | 941,396 | 935,666 | [1] | |||||||||||
Accumulated deficit | (627,890) | (641,869) | [1] | (627,890) | (641,869) | [1] | |||||||||||
Total stockholders' equity | 482,170 | 436,541 | [1] | 482,170 | 436,541 | [1] | |||||||||||
Total liabilities and stockholders’ equity | 941,396 | 935,666 | [1] | 941,396 | 935,666 | [1] | |||||||||||
Income tax expense | 1,337 | (3,592) | $ (3,539) | $ (2,241) | [2] | 6,044 | $ (10,563) | [2] | $ (14,102) | (17,694) | |||||||
Net income | $ 4,825 | $ (2,038) | $ 7,040 | $ 218 | [2] | $ 10,738 | $ 8,149 | [2] | $ 15,189 | $ 13,151 | |||||||
Earnings per common share: | |||||||||||||||||
Basic (usd per share) | $ 0.02 | $ (0.01) | $ 0.03 | $ 0.00 | [2] | $ 0.05 | $ 0.04 | [2] | $ 0.07 | $ 0.06 | |||||||
Diluted (usd per share) | $ 0.02 | $ (0.01) | $ 0.03 | $ 0.00 | [2] | $ 0.04 | $ 0.04 | [2] | $ 0.07 | $ 0.06 | |||||||
As Reported | |||||||||||||||||
Error Corrections and Prior Period Adjustments Restatement [Line Items] | |||||||||||||||||
Deferred tax assets | $ 188,966 | $ 188,966 | |||||||||||||||
Total assets | 940,422 | 940,422 | |||||||||||||||
Accumulated deficit | (637,113) | (637,113) | |||||||||||||||
Total stockholders' equity | 441,297 | 441,297 | |||||||||||||||
Total liabilities and stockholders’ equity | 940,422 | 940,422 | |||||||||||||||
Income tax expense | (1,553) | $ (1,501) | $ (1,562) | $ (9,884) | $ (11,385) | (12,938) | |||||||||||
Net income | $ 1 | $ 9,078 | $ 897 | $ 8,828 | $ 17,906 | $ 17,907 | |||||||||||
Earnings per common share: | |||||||||||||||||
Basic (usd per share) | $ 0.00 | $ 0.04 | $ 0.00 | $ 0.04 | $ 0.08 | $ 0.08 | |||||||||||
Diluted (usd per share) | $ 0.00 | $ 0.04 | $ 0.00 | $ 0.04 | $ 0.08 | $ 0.08 | |||||||||||
Adjustment | |||||||||||||||||
Error Corrections and Prior Period Adjustments Restatement [Line Items] | |||||||||||||||||
Deferred tax assets | $ 4,756 | $ 4,756 | |||||||||||||||
Total assets | 4,756 | 4,756 | |||||||||||||||
Accumulated deficit | 4,756 | 4,756 | $ 4,756 | ||||||||||||||
Total stockholders' equity | 4,756 | 4,756 | |||||||||||||||
Total liabilities and stockholders’ equity | 4,756 | 4,756 | |||||||||||||||
Income tax expense | 2,039 | $ 2,038 | $ 679 | $ 679 | $ 2,717 | 4,756 | |||||||||||
Net income | $ 2,039 | $ 2,038 | $ 679 | $ 679 | $ 2,717 | $ 4,756 | |||||||||||
Earnings per common share: | |||||||||||||||||
Basic (usd per share) | $ 0.01 | $ 0.01 | $ 0.00 | $ 0.00 | $ 0.01 | $ 0.02 | |||||||||||
Diluted (usd per share) | $ 0.01 | $ 0.01 | $ 0.00 | $ 0.00 | $ 0.01 | $ 0.02 | |||||||||||
|
Earnings Per Share - Schedule of Earnings Per Share Basic and Diluted (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands |
3 Months Ended | 6 Months Ended | 9 Months Ended | 12 Months Ended | ||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jun. 30, 2017 |
Dec. 31, 2016 |
Sep. 30, 2016 |
Jun. 30, 2016 |
Jun. 30, 2017 |
Jun. 30, 2016 |
Sep. 30, 2016 |
Dec. 31, 2016 |
|||||||
Numerator | ||||||||||||||
Net income | $ 4,825 | $ (2,038) | $ 7,040 | $ 218 | [1] | $ 10,738 | $ 8,149 | [1] | $ 15,189 | $ 13,151 | ||||
Denominator | ||||||||||||||
Basic (in shares) | 223,492 | 213,558 | [1] | 221,930 | 213,800 | [1] | ||||||||
Dilutive effect of stock options and restricted stock units (in shares) | 16,446 | 9,142 | [2] | 17,993 | 10,178 | [2] | ||||||||
Diluted (in shares) | 239,938 | 222,700 | [1] | 239,923 | 223,978 | [1] | ||||||||
Basic earnings per share | ||||||||||||||
Basic earnings per share (usd per share) | $ 0.02 | $ (0.01) | $ 0.03 | $ 0.00 | [1] | $ 0.05 | $ 0.04 | [1] | $ 0.07 | $ 0.06 | ||||
Diluted earnings per share | ||||||||||||||
Diluted earnings per share (usd per share) | $ 0.02 | $ (0.01) | $ 0.03 | $ 0.00 | [1] | $ 0.04 | $ 0.04 | [1] | $ 0.07 | $ 0.06 | ||||
|
Earnings Per Share - Schedule of Antidilutive Securities (Details) - shares shares in Thousands |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2017 |
Jun. 30, 2016 |
Jun. 30, 2017 |
Jun. 30, 2016 |
|
Earnings per share, antidilutive securities: | ||||
Antidilutive securities excluded from earnings per common share (in shares) | 9,145 | 27,448 | 7,598 | 26,412 |
Restricted stock units | ||||
Earnings per share, antidilutive securities: | ||||
Antidilutive securities excluded from earnings per common share (in shares) | 4,540 | 12,851 | 3,344 | 12,012 |
Stock options | ||||
Earnings per share, antidilutive securities: | ||||
Antidilutive securities excluded from earnings per common share (in shares) | 4,605 | 14,597 | 4,254 | 14,400 |
Long-Term Note and Revolving Credit Facility - Schedule of Long-Term Debt (Details) - USD ($) $ in Thousands |
Jun. 30, 2017 |
Dec. 31, 2016 |
---|---|---|
Debt Instrument [Line Items] | ||
Long-term debt | $ 295,953 | $ 300,124 |
Term note | Secured debt | 2.50-3.25% Term note - due 2020 | ||
Debt Instrument [Line Items] | ||
Long-term debt | $ 81,953 | 91,124 |
Term note | Minimum | Secured debt | 2.50-3.25% Term note - due 2020 | ||
Debt Instrument [Line Items] | ||
Debt instrument, stated percentage | 2.50% | |
Term note | Maximum | Secured debt | 2.50-3.25% Term note - due 2020 | ||
Debt Instrument [Line Items] | ||
Debt instrument, stated percentage | 3.25% | |
Revolving credit facility | Line of credit | 2.50-3.25% Revolving credit facility - due 2020 | ||
Debt Instrument [Line Items] | ||
Long-term debt | $ 214,000 | $ 209,000 |
Revolving credit facility | Minimum | Line of credit | 2.50-3.25% Revolving credit facility - due 2020 | ||
Debt Instrument [Line Items] | ||
Debt instrument, stated percentage | 2.50% | |
Revolving credit facility | Maximum | Line of credit | 2.50-3.25% Revolving credit facility - due 2020 | ||
Debt Instrument [Line Items] | ||
Debt instrument, stated percentage | 3.25% |
Long-Term Note and Revolving Credit Facility - Narrative (Details) - USD ($) |
6 Months Ended | |||||
---|---|---|---|---|---|---|
Jun. 03, 2016 |
Jun. 30, 2017 |
Jun. 30, 2016 |
[1] | |||
Debt Instrument [Line Items] | ||||||
Repayments of long-term debt | $ 19,375,000 | $ 33,437,000 | ||||
Proceeds received from draw down of revolving credit facility and issuance of notes payable | 15,000,000 | $ 181,250,000 | ||||
Derivative, Amount of Hedged Item | $ 150,000,000 | |||||
Derivative, Fixed Interest Rate | 4.70% | |||||
Term note | Secured debt | ||||||
Debt Instrument [Line Items] | ||||||
Repayments of long-term debt | $ 9,400,000 | |||||
Revolving credit facility | Secured debt | ||||||
Debt Instrument [Line Items] | ||||||
Proceeds received from draw down of revolving credit facility and issuance of notes payable | $ 15,000,000 | |||||
2016 Credit Facility | ||||||
Debt Instrument [Line Items] | ||||||
Repayments of debt | $ (197,800,000) | |||||
Line of credit facility, interest rate at period end | 4.25% | |||||
2016 Credit Facility | Nexmo | ||||||
Debt Instrument [Line Items] | ||||||
Payments to acquire businesses borrowed from credit facility | 179,000,000 | |||||
2016 Credit Facility | Term note | Secured debt | ||||||
Debt Instrument [Line Items] | ||||||
Debt instrument, face amount | 125,000,000 | |||||
2016 Credit Facility | Revolving credit facility | Secured debt | ||||||
Debt Instrument [Line Items] | ||||||
Repayments of long-term debt | $ 10,000,000 | |||||
2016 Credit Facility | Revolving credit facility | Line of credit | ||||||
Debt Instrument [Line Items] | ||||||
Line of credit, maximum borrowing capacity | $ 325,000,000 | |||||
|
Common Stock - Narrative (Details) - USD ($) |
Dec. 09, 2014 |
Jun. 30, 2017 |
Dec. 31, 2016 |
---|---|---|---|
Common stock repurchases: | |||
Common stock, shares authorized (in shares) | 596,950,000 | 596,950,000 | |
Shares available for grant (in shares) | 11,369,000 | ||
2014 repurchase program | |||
Common stock repurchases: | |||
Authorized amount of stock repurchased | $ 100,000,000 | ||
Stock repurchase program, period in force | 4 years | ||
Remaining authorized amount of stock repurchased program | $ 42,533,000 | ||
Common Stock | |||
Common stock repurchases: | |||
Common stock, shares authorized (in shares) | 596,950,000 |
Common Stock - Schedule of Common Stock Repurchases (Details) - 2014 repurchase program - USD ($) shares in Thousands, $ in Thousands |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2017 |
Jun. 30, 2016 |
Jun. 30, 2017 |
Jun. 30, 2016 |
|
Common stock repurchases: | ||||
Shares of common stock repurchased (in shares) | 0 | 5,747 | 1,599 | 7,400 |
Value of common stock repurchased | $ 0 | $ 24,754 | $ 9,510 | $ 32,762 |
Commitments and Contingencies - Narrative (Details) $ in Thousands |
Feb. 11, 2013
Defendant
|
Jun. 30, 2017
USD ($)
|
Dec. 31, 2016
USD ($)
|
---|---|---|---|
Pending litigation | RPost Holdings, Inc. Vs. Vonage America Inc. | Patent claims | |||
Loss Contingencies [Line Items] | |||
Number of defendants | Defendant | 27 | ||
Threatened litigation | Collection And Remittance Of State And Municipal Taxes | |||
Loss Contingencies [Line Items] | |||
Reserve for potential tax liability pending new requirements from state or municipal agencies | $ 653 | $ 1,763 | |
Maximum | Threatened litigation | Collection And Remittance Of State And Municipal Taxes | |||
Loss Contingencies [Line Items] | |||
Estimated maximum potential exposure for retroactive tax assessments | $ 2,000 | $ 2,600 |
Acquisitions and Dispositions - Narrative (Details) - USD ($) shares in Thousands |
3 Months Ended | 6 Months Ended | 12 Months Ended | ||||||||
---|---|---|---|---|---|---|---|---|---|---|---|
Jun. 03, 2016 |
May 05, 2016 |
Jun. 30, 2017 |
Jun. 30, 2016 |
Jun. 30, 2017 |
Jun. 30, 2016 |
[1] | Dec. 31, 2016 |
May 31, 2017 |
|||
Business Acquisition [Line Items] | |||||||||||
Restricted cash and cash equivalents | $ 1,802,000 | $ 1,802,000 | $ 1,851,000 | ||||||||
Acquisition related consideration accounted for as compensation | 1,733,000 | 1,733,000 | 6,608,000 | ||||||||
Acquisition of businesses, net of cash acquired | 0 | $ 163,042,000 | |||||||||
Settlement | 0 | 0 | 5,000,000 | ||||||||
Nexmo | |||||||||||
Business Acquisition [Line Items] | |||||||||||
Business combination, consideration transferred | $ 232,028,000 | $ 231,122,000 | |||||||||
Business consideration, paid at closing excluding cash acquired | 194,684,000 | ||||||||||
Cash acquired | 16,094,000 | 16,094,000 | 16,094,000 | $ 16,094,000 | 16,094,000 | ||||||
Acquisition of businesses, net of cash acquired | $ 163,093,000 | ||||||||||
Business acquisition, equity interest issued or Issuable (in shares) | 6,823 | ||||||||||
Stock paid at closing | $ 31,591,000 | $ 31,591,000 | |||||||||
Business acquisition, contingent consideration, performance target period | 12 months | ||||||||||
Settlement | 5,000,000 | ||||||||||
Escrow deposit, cash | $ 20,372,000 | ||||||||||
Escrow deposit, stock | 5,081,000 | ||||||||||
Acquisition related transaction costs | 10,000 | $ 5,059,000 | $ 5,500,000 | ||||||||
2016 Credit Facility | Nexmo | |||||||||||
Business Acquisition [Line Items] | |||||||||||
Payments to acquire businesses borrowed from credit facility | 179,000,000 | ||||||||||
Services provided | Nexmo | |||||||||||
Business Acquisition [Line Items] | |||||||||||
Acquisition related consideration accounted for as compensation | 4,779,000 | ||||||||||
Interest expense | Nexmo | |||||||||||
Business Acquisition [Line Items] | |||||||||||
Acquisition related consideration accounted for as compensation | 572,000 | ||||||||||
General and administrative expense | Nexmo | |||||||||||
Business Acquisition [Line Items] | |||||||||||
Acquisition related consideration accounted for as compensation | 31,087,000 | ||||||||||
Acquisition-related costs | Nexmo | |||||||||||
Business Acquisition [Line Items] | |||||||||||
Acquisition related consideration accounted for as compensation | 31,659,000 | ||||||||||
Reported Value Measurement | Nexmo | |||||||||||
Business Acquisition [Line Items] | |||||||||||
Acquisition related consideration accounted for as compensation | 17,840,000 | ||||||||||
Estimate of Fair Value Measurement | Nexmo | |||||||||||
Business Acquisition [Line Items] | |||||||||||
Acquisition related consideration accounted for as compensation | 16,472,000 | ||||||||||
Management | Maximum | Nexmo | |||||||||||
Business Acquisition [Line Items] | |||||||||||
Acquisition related consideration accounted for as compensation | 36,438,000 | 36,438,000 | |||||||||
Shareholders | Maximum | Nexmo | |||||||||||
Business Acquisition [Line Items] | |||||||||||
Acquisition related consideration accounted for as compensation | $ 20,000,000 | $ 20,000,000 | |||||||||
Hosted Infrastructure | Disposal Group, Not Discontinued Operations | |||||||||||
Business Acquisition [Line Items] | |||||||||||
Disposal group, consideration | $ 4,000,000 | ||||||||||
Disposal group, consideration received at closing | 1,000,000 | ||||||||||
Disposal group, consideration to be received six months from closing | 500,000 | ||||||||||
Disposal Group, consideration to be received based on achievement of financial objectives | $ 2,500,000 | ||||||||||
Disposal Group, Including Discontinued Operation, Gain on Sale | $ 928,000 | ||||||||||
|
Acquisitions and Dispositions - Acquisition Cost (Details) - Nexmo - USD ($) $ in Thousands |
Jun. 03, 2016 |
May 05, 2016 |
Jun. 30, 2017 |
Dec. 31, 2016 |
---|---|---|---|---|
Business Acquisition [Line Items] | ||||
Cash paid at closing (inclusive of cash acquired of $16,094) | $ 179,186 | |||
Cash acquired | 16,094 | $ 16,094 | $ 16,094 | $ 16,094 |
Stock paid at closing | 31,591 | 31,591 | ||
Contingent consideration | 16,472 | |||
Employee payout amounts | 4,779 | |||
Acquisition Cost | $ 232,028 | $ 231,122 |
Acquisitions and Dispositions - Assets Acquired and Liabilities Assumed (Details) - USD ($) $ in Thousands |
3 Months Ended | ||||||
---|---|---|---|---|---|---|---|
Jun. 30, 2017 |
Dec. 31, 2016 |
Jun. 03, 2016 |
May 05, 2016 |
||||
Current liabilities: | |||||||
Goodwill | $ 366,806 | $ 360,363 | [1] | ||||
Nexmo | |||||||
Current assets: | |||||||
Cash and cash equivalents | 16,094 | 16,094 | $ 16,094 | $ 16,094 | |||
Accounts receivable | 8,764 | 8,764 | |||||
Prepaid expenses and other current assets | 3,507 | 3,507 | |||||
Total current assets | 28,365 | 28,365 | |||||
Property and equipment | 757 | 757 | |||||
Software | 242 | 242 | |||||
Intangible assets | 101,770 | 101,770 | |||||
Restricted cash | 51 | 51 | |||||
Total assets acquired | 131,185 | 131,185 | |||||
Current liabilities: | |||||||
Accounts payable | 1,841 | 1,841 | |||||
Accrued expenses | 9,299 | 9,299 | |||||
Deferred revenue, current portion | 1,735 | 1,735 | |||||
Total current liabilities | 12,875 | 12,875 | |||||
Deferred tax liabilities, net, non-current | 23,873 | 29,355 | |||||
Deferred tax liabilities, net, non-current, adjustment | (5,482) | ||||||
Total liabilities assumed | 36,748 | 42,230 | |||||
Total liabilities assumed, adjustment | (5,482) | ||||||
Net identifiable assets acquired | 94,437 | 88,955 | |||||
Net identifiable assets acquired, adjustment | 5,482 | ||||||
Goodwill | 137,591 | 143,073 | |||||
Goodwill, adjustment | (5,482) | ||||||
Total purchase price | $ 232,028 | $ 232,028 | |||||
|
Acquisitions and Dispositions - Intangible Assets Acquired (Details) - Nexmo $ in Thousands |
Jun. 03, 2016
USD ($)
|
---|---|
Acquired Finite-Lived Intangible Assets [Line Items] | |
Intangible assets acquired | $ 101,770 |
Customer relationships | |
Acquired Finite-Lived Intangible Assets [Line Items] | |
Intangible assets acquired | 85,900 |
Developed technologies | |
Acquired Finite-Lived Intangible Assets [Line Items] | |
Intangible assets acquired | 13,768 |
Non-compete agreements | |
Acquired Finite-Lived Intangible Assets [Line Items] | |
Intangible assets acquired | 972 |
Trade names | |
Acquired Finite-Lived Intangible Assets [Line Items] | |
Intangible assets acquired | $ 1,130 |
Acquisitions and Dispositions - Goodwill (Details) $ in Thousands |
6 Months Ended | |||
---|---|---|---|---|
Jun. 30, 2017
USD ($)
| ||||
Goodwill [Roll Forward] | ||||
Goodwill, beginning balance | $ 360,363 | [1] | ||
Goodwill, ending balance | 366,806 | |||
Nexmo | ||||
Goodwill [Roll Forward] | ||||
Goodwill, beginning balance | 143,073 | |||
Decrease in goodwill related acquisition of Nexmo | (5,482) | |||
Currency translation adjustments | 11,925 | |||
Goodwill, ending balance | $ 137,591 | |||
|
Acquisitions and Dispositions - Pro Forma Financial Information (Details) - Nexmo $ / shares in Units, $ in Thousands |
6 Months Ended |
---|---|
Jun. 30, 2016
USD ($)
$ / shares
| |
Business Acquisition [Line Items] | |
Revenues | $ | $ 494,094 |
Net income | $ | $ 5,887 |
Earnings per common share - basic (usd per share) | $ / shares | $ 0.03 |
Earnings per common share - diluted (usd per share) | $ / shares | $ 0.03 |
Industry Segment and Geographic Information - Schedule of Segment Results (Details) - USD ($) $ in Thousands |
3 Months Ended | 6 Months Ended | |||||||
---|---|---|---|---|---|---|---|---|---|
Jun. 30, 2017 |
Jun. 30, 2016 |
Jun. 30, 2017 |
Jun. 30, 2016 |
||||||
Segment Reporting Information [Line Items] | |||||||||
Revenues | $ 251,836 | $ 233,675 | $ 495,183 | $ 460,499 | |||||
Cost of revenues | 103,861 | 84,430 | 198,750 | 162,646 | |||||
Gross margin | $ 147,975 | $ 149,245 | $ 296,433 | $ 297,853 | |||||
Gross margin % | 58.80% | 63.90% | 59.90% | 64.70% | |||||
Business | |||||||||
Segment Reporting Information [Line Items] | |||||||||
Revenues | $ 123,714 | $ 85,712 | $ 235,516 | $ 159,532 | |||||
Cost of revenues | 68,199 | 40,798 | 126,747 | 73,108 | |||||
Gross margin | $ 55,515 | $ 44,914 | $ 108,769 | $ 86,424 | |||||
Gross margin % | 44.90% | 52.40% | 46.20% | 54.20% | |||||
Consumer | |||||||||
Segment Reporting Information [Line Items] | |||||||||
Revenues | $ 128,122 | $ 147,963 | $ 259,667 | $ 300,967 | |||||
Cost of revenues | 35,662 | 43,632 | 72,003 | 89,538 | |||||
Gross margin | $ 92,460 | $ 104,331 | $ 187,664 | $ 211,429 | |||||
Gross margin % | 72.20% | 70.50% | 72.30% | 70.20% | |||||
Service revenues | |||||||||
Segment Reporting Information [Line Items] | |||||||||
Revenues | $ 219,461 | $ 200,541 | $ 430,869 | $ 394,786 | |||||
Cost of revenues | [1] | 70,681 | 48,254 | 131,976 | 90,177 | ||||
Gross margin | $ 148,780 | $ 152,287 | $ 298,893 | $ 304,609 | |||||
Gross margin % | 67.80% | 75.90% | 69.40% | 77.20% | |||||
Service revenues | Business | |||||||||
Segment Reporting Information [Line Items] | |||||||||
Revenues | $ 103,825 | $ 67,079 | $ 196,116 | $ 123,552 | |||||
Cost of revenues | [1] | 49,246 | 22,527 | 88,441 | 37,930 | ||||
Gross margin | $ 54,579 | $ 44,552 | $ 107,675 | $ 85,622 | |||||
Gross margin % | 52.60% | 66.40% | 54.90% | 69.30% | |||||
Depreciation and amortization | $ 5,003 | $ 4,473 | $ 9,878 | $ 8,792 | |||||
Service revenues | Consumer | |||||||||
Segment Reporting Information [Line Items] | |||||||||
Revenues | 115,636 | 133,462 | 234,753 | 271,234 | |||||
Cost of revenues | [1] | 21,435 | 25,727 | 43,535 | 52,247 | ||||
Gross margin | $ 94,201 | $ 107,735 | $ 191,218 | $ 218,987 | |||||
Gross margin % | 81.50% | 80.70% | 81.50% | 80.70% | |||||
Depreciation and amortization | $ 1,860 | $ 2,512 | $ 3,767 | $ 5,026 | |||||
Product revenues | |||||||||
Segment Reporting Information [Line Items] | |||||||||
Revenues | [2] | 13,593 | 13,425 | 27,156 | 26,484 | ||||
Cost of revenues | [2] | 14,398 | 16,466 | 29,616 | 33,229 | ||||
Gross margin | (805) | (3,041) | (2,460) | (6,745) | |||||
Product revenues | Business | |||||||||
Segment Reporting Information [Line Items] | |||||||||
Revenues | [2] | 13,392 | 13,265 | 26,752 | 26,177 | ||||
Cost of revenues | [2] | 12,456 | 12,902 | 25,658 | 25,364 | ||||
Gross margin | 936 | 363 | 1,094 | 813 | |||||
Product revenues | Consumer | |||||||||
Segment Reporting Information [Line Items] | |||||||||
Revenues | [2] | 201 | 160 | 404 | 307 | ||||
Cost of revenues | [2] | 1,942 | 3,564 | 3,958 | 7,865 | ||||
Gross margin | (1,741) | (3,404) | (3,554) | (7,558) | |||||
Service and product revenues | |||||||||
Segment Reporting Information [Line Items] | |||||||||
Revenues | 233,054 | 213,966 | 458,025 | 421,270 | |||||
Cost of revenues | 85,079 | 64,720 | 161,592 | 123,406 | |||||
Gross margin | $ 147,975 | $ 149,246 | $ 296,433 | $ 297,864 | |||||
Gross margin % | 63.50% | 69.80% | 64.70% | 70.70% | |||||
Service and product revenues | Business | |||||||||
Segment Reporting Information [Line Items] | |||||||||
Revenues | $ 117,217 | $ 80,344 | $ 222,868 | $ 149,729 | |||||
Cost of revenues | 61,702 | 35,429 | 114,099 | 63,294 | |||||
Gross margin | $ 55,515 | $ 44,915 | $ 108,769 | $ 86,435 | |||||
Gross margin % | 47.40% | 55.90% | 48.80% | 57.70% | |||||
Service and product revenues | Consumer | |||||||||
Segment Reporting Information [Line Items] | |||||||||
Revenues | $ 115,837 | $ 133,622 | $ 235,157 | $ 271,541 | |||||
Cost of revenues | 23,377 | 29,291 | 47,493 | 60,112 | |||||
Gross margin | $ 92,460 | $ 104,331 | $ 187,664 | $ 211,429 | |||||
Gross margin % | 79.80% | 78.10% | 79.80% | 77.90% | |||||
USF revenues | |||||||||
Segment Reporting Information [Line Items] | |||||||||
Revenues | $ 18,782 | $ 19,709 | $ 37,158 | $ 39,229 | |||||
Cost of revenues | 18,782 | 19,710 | 37,158 | 39,240 | |||||
Gross margin | 0 | (1) | 0 | (11) | |||||
USF revenues | Business | |||||||||
Segment Reporting Information [Line Items] | |||||||||
Revenues | 6,497 | 5,368 | 12,648 | 9,803 | |||||
Cost of revenues | 6,497 | 5,369 | 12,648 | 9,814 | |||||
Gross margin | 0 | (1) | 0 | (11) | |||||
USF revenues | Consumer | |||||||||
Segment Reporting Information [Line Items] | |||||||||
Revenues | 12,285 | 14,341 | 24,510 | 29,426 | |||||
Cost of revenues | 12,285 | 14,341 | 24,510 | 29,426 | |||||
Gross margin | $ 0 | $ 0 | $ 0 | $ 0 | |||||
|
Industry Segment and Geographic Information - Reconciliation of the Reportable Segments' Gross Margin (Details) - USD ($) $ in Thousands |
3 Months Ended | 6 Months Ended | ||||||
---|---|---|---|---|---|---|---|---|
Jun. 30, 2017 |
Jun. 30, 2016 |
Jun. 30, 2017 |
Jun. 30, 2016 |
|||||
Segment Reporting [Abstract] | ||||||||
Gross margin | $ 147,975 | $ 149,245 | $ 296,433 | $ 297,853 | ||||
Sales and marketing | 79,738 | 83,344 | [1] | 161,669 | 162,945 | [1] | ||
Engineering and development | 6,670 | 7,243 | [1] | 15,040 | 14,077 | [1] | ||
General and administrative | 36,514 | 35,053 | [1] | 71,600 | 61,723 | [1] | ||
Depreciation and amortization | 18,394 | 18,218 | [1] | 36,341 | 35,197 | [1] | ||
Income from operations | 6,659 | 5,387 | [1] | 11,783 | 23,911 | [1] | ||
Interest income | 4 | 25 | [1] | 9 | 46 | [1] | ||
Interest Expense | (3,861) | (3,057) | [1] | (7,564) | (5,503) | [1] | ||
Other income (expense), net | 686 | 104 | [1] | 466 | 258 | [1] | ||
Income before income taxes | $ 3,488 | $ 2,459 | [1] | $ 4,694 | $ 18,712 | [1] | ||
|
Industry Segment and Geographic Information - Schedule of Revenue by Geographic Location (Details) - USD ($) $ in Thousands |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2017 |
Jun. 30, 2016 |
Jun. 30, 2017 |
Jun. 30, 2016 |
|
Segment Reporting Information [Line Items] | ||||
Revenues | $ 251,836 | $ 233,675 | $ 495,183 | $ 460,499 |
United States | ||||
Segment Reporting Information [Line Items] | ||||
Revenues | 214,182 | 217,871 | 427,506 | 435,088 |
Canada | ||||
Segment Reporting Information [Line Items] | ||||
Revenues | 9,002 | 6,540 | 16,447 | 12,613 |
United Kingdom | ||||
Segment Reporting Information [Line Items] | ||||
Revenues | 6,926 | 4,081 | 8,244 | 7,615 |
Other Countries | ||||
Segment Reporting Information [Line Items] | ||||
Revenues | $ 21,726 | $ 5,183 | $ 42,986 | $ 5,183 |
Industry Segment and Geographic Information - Schedule of Long Lived Assets (Details) - USD ($) $ in Thousands |
Jun. 30, 2017 |
Dec. 31, 2016 |
---|---|---|
Segment Reporting Information [Line Items] | ||
Long-lived assets | $ 623,437 | $ 630,005 |
United States | ||
Segment Reporting Information [Line Items] | ||
Long-lived assets | 622,754 | 629,269 |
United Kingdom | ||
Segment Reporting Information [Line Items] | ||
Long-lived assets | 410 | 450 |
Israel | ||
Segment Reporting Information [Line Items] | ||
Long-lived assets | $ 273 | $ 286 |
Income Taxes - Effective Tax Rate (Details) - USD ($) $ in Thousands |
3 Months Ended | 6 Months Ended | 9 Months Ended | 12 Months Ended | ||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|
Jun. 30, 2017 |
Dec. 31, 2016 |
Sep. 30, 2016 |
Jun. 30, 2016 |
Jun. 30, 2017 |
Jun. 30, 2016 |
Sep. 30, 2016 |
Dec. 31, 2016 |
|||||
Income Tax Disclosure [Abstract] | ||||||||||||
Income before income taxes | $ 3,488 | $ 2,459 | [1] | $ 4,694 | $ 18,712 | [1] | ||||||
Income tax benefit (expense) | $ 1,337 | $ (3,592) | $ (3,539) | $ (2,241) | [1] | $ 6,044 | $ (10,563) | [1] | $ (14,102) | $ (17,694) | ||
Effective tax rate | (38.30%) | 91.10% | (128.80%) | 56.50% | ||||||||
|
Income Taxes - Narrative (Details) - USD ($) $ in Thousands |
3 Months Ended | 6 Months Ended | |||
---|---|---|---|---|---|
Mar. 31, 2017 |
Jun. 30, 2016 |
Mar. 31, 2016 |
Jun. 30, 2017 |
Dec. 31, 2016 |
|
Operating Loss Carryforwards [Line Items] | |||||
Effective tax rate | $ (8,325) | $ 389 | $ 1,220 | $ (1,433) | |
Foreign Tax Authority | Her Majesty's Revenue and Customs (HMRC) | |||||
Operating Loss Carryforwards [Line Items] | |||||
Operating loss carryforwards | $ 43,006 | ||||
State and Local Jurisdiction | |||||
Operating Loss Carryforwards [Line Items] | |||||
Operating loss carryforwards | 158,848 | ||||
Domestic Tax Authority | |||||
Operating Loss Carryforwards [Line Items] | |||||
Operating loss carryforwards | $ 585,622 | $ 575,476 |
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